Exhibit 10.1

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS AGREEMENT made as of the 1st day of June, 2003, by and between BALLANTYNE
OF OMAHA, INC. (“Ballantyne”), a Delaware corporation, with its principal
offices at 4350 McKinley Street, Omaha, Nebraska 68112 (the “Company”), and DAN
FALTIN, an individual residing at 2415 Riverview Drive, Grand Island, Nebraska 
68801 (the “Executive”).

 

WITNESSETH:

 

THIS AGREEMENT IS MADE WITH REFERENCE TO THE FOLLOWING FACTS AND OBJECTIVES:

 

A.                                   The Company has offered to appoint
Executive as Vice-President and Chief Operating Officer of Ballantyne of Omaha,
Inc. in accordance with the terms and conditions set forth in this Agreement for
the term provided in this Agreement; and

 

B.                                     Executive has expressed his willingness
to become Executive Vice-President and Chief Operating Officer of Ballantyne of
Omaha, Inc. in accordance with the terms and conditions set forth in this
Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual promises and covenants herein
contained, the parties hereto agree as follows:

 

1.                                       Employment.

 

The Company hereby employs the Executive and the Executive hereby agrees to be
employed by the Company under the terms and conditions hereinafter set forth.

 

2.                                       Duties and Services.

 

2.1                                 The Executive shall serve as Executive
Vice-President and Chief Operating Officer of the Company.  Executive shall
perform those duties set forth on Exhibit “A” attached hereto and by this
reference incorporated herein.  In addition, Executive shall perform such other
duties as may be assigned to him from time to time by the President or the Board
of Directors.  Executive shall report to the President of the Company, with
access to the Board of Directors.

 

2.2                                 The Executive shall devote his full business
time and attention to the business of the Company and to the promotion of the
Company’s best interests, subject to vacations, holidays, normal illnesses and a
reasonable amount of time for civic, community and industry affairs.

 

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2.3                                 The Executive shall undertake such travel as
may be necessary and desirable to promote the business and affairs of the
Company, consistent with Executive’s position with the Company.  If the Company
shall require Executive to relocate his residence, the Company shall pay (or
reimburse Executive for) all reasonable moving expenses incurred by Executive in
connection with such relocation.

 

3.                                       Compensation.

 

3.1                                 Basic Compensation.

 

For all of the services to be rendered by the Executive in any capacity
hereunder, the Company shall pay the Executive a salary at the annual rate of
One Hundred Eighty Thousand Dollars ($180,000.00).  The compensation paid
hereunder to the Executive shall be paid in accordance with the payroll
practices conducted by the Company and shall be subject to the customary
withholding taxes and other employment taxes as required with respect to
compensation paid by a corporation to an employee.

 

3.2                                 Upon termination of employment for any
reason, the Executive shall be entitled to receive the basic compensation
accrued but unpaid as of the date of termination.

 

4.                                       Expenses and Vacations.

 

4.1                                 The Company shall reimburse the Executive
for all reasonable and necessary travel and entertainment expenses incurred by
the Executive in the performance of the Executive’s duties hereunder upon
submission of vouchers and receipts evidencing such expenses.

 

4.2                                 The Executive shall be entitled to three (3)
weeks vacation during each twelve (12) months of employment in accordance with
applicable Company policy.  All vacations shall be in addition to recognized
national holidays.  During all vacations, the Executive’s compensation and other
benefits as stated herein shall continue to be paid in full.  Such vacations
shall be taken only at such times convenient for the Company, as approved by the
President.

 

5.                                       Travel and Moving Expenses.

 

The Company shall reimburse Executive the fair and reasonable expenses, not to
exceed $35,000.00, for the amount of travel and moving expenses incurred in
moving his immediately family and their personal possessions from Grand Island,
Nebraska, to Omaha, Nebraska, provided that the Executive shall first have
obtained and submitted to the Company two bids for such moving expenses, and the
Company reserves the right to accept the low bid.  Executive shall submit paid
receipts for all other moving expenses.

 

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6.                                       Other Benefits.

 

In addition to the compensation and to the rights provided for elsewhere in this
Agreement, the Executive shall be entitled to participate in each plan of the
Company now or hereafter adopted for the benefit of Executive employees of the
Company, to the extent permitted by such plans and by applicable law, including,
but not limited to, (a) Profit Sharing Plan, (b) Medical Expense Insurance
Program, (c) Pension Plan, and (d) Incentive Compensation Plan.

 

7.                                       Term of Agreement.

 

Except as otherwise hereinafter specifically provided, the term of this
Employment Agreement shall commence on June 1, 2003, and shall expire on January
31, 2006.

 

8.                                       Termination Prior to the End of Term.

 

8.1                                 Termination Due to Death or Incapacity. 
This Agreement shall be terminated upon the Executive’s death or by the Company,
at its discretion, because of the Executive’s failure to perform substantially
all of the material duties of his position for a period of at least one hundred
eighty (180) consecutive calendar days due to physical or mental illness or
injury.

 

8.1.1                        If the Company elects to terminate this Agreement
because of the Executive’s incapacity, it shall send him written notice thereof,
setting forth in reasonable detail the facts and circumstances that provide a
basis for said termination.  If the Company and Executive disagree as to
Executive’s incapacity, each may appoint a medical doctor to certify his opinion
as to Executive’s incapacity, and if the doctors do not agree as to Executive’s
incapacity, then the two doctors will appoint a third medical doctor to certify
his or her opinion as to Executive’s incapacity, and the decision of a majority
of the three doctors will prevail.  The Company will bear all expenses for this
procedure.

 

8.1.2                        In the event of termination by reason of death, the
Executive’s estate shall be paid all accrued sums due and owing under Section 3
above and any benefits provided by the Company under Section 6 above.

 

8.1.3                        In the event of incapacity, Executive shall
continue to receive his full compensation during the one hundred eighty (180)
day period prior to any notice of termination.  After that termination,
Executive shall be entitled to any accrued amounts due and owing him under
Section 3 above and such other benefits as may be provided by Section 6 above.

 

8.2                                 Termination for Cause.

 

8.2.1                        The Company may terminate, at any time, the
Executive’s

 

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employment for cause.  The term for “cause” for purposes of this Agreement shall
mean that the Executive did any of the following:

 

(a)                                  Acted dishonestly or incompetently or
engaged in willful misconduct in the performance of Executive’s duties;

 

(b)                                 Breached fiduciary duties owed to the
Company;

 

(c)                                  Intentionally failed to perform reasonably
assigned duties;

 

(d)                                 Willfully violated any law, rule, or
regulation, or court order (other than minor traffic violations or similar
offenses), or otherwise committed any act which would have a material adverse
impact on the business of the Company; or

 

(e)                                  Is in breach of this Agreement and such
breach is not cured by Executive within ten (10) days’ written notice to him.

 

8.2.2                        Executive shall be sent written notice of
termination that specifically sets forth in reasonable detail the facts and
circumstances upon which the Board of Directors believes that the Executive has
given the Company cause for termination of Executive’s employment.  Said notice
shall give the Executive an opportunity, together with legal counsel, to be
heard before the Board of Directors of the Company.  Termination for cause shall
be based on a finding by two-thirds (2/3) of the Board of Directors (not
including Executive, should he be a member of the Board of Directors), and said
Board shall specify its findings concerning said termination in detail.  For
purposes of this Subsection, no acts, or failure to act, on the Executive’s part
will be considered willful or willfully done unless done, or admitted to be
done, by the Executive in bad faith and without reasonable belief that the
Executive’s action or omission was in the best interest of the Company.

 

8.2.3                        Notwithstanding the foregoing, however, any
conviction of the Executive for any criminal act involving any violence,
dishonesty, fraud, or breach of trust or other felonious behavior, shall result
in the automatic termination of Executive’s employment, without notice, and
without any of the procedures specified in Subsection 8.2.2 above.

 

8.2.4                        In the event that the Executive is terminated for
cause, then he shall be entitled to receive any accrued compensation that may be
due and owing him under Section 3 above, and such other benefits as may be
provided by Section 6 above.

 

8.3                                 Termination without Cause.  In the event the
Company terminates this Agreement without cause, Employee shall be entitled to
compensation equal to the lesser of the amount of compensation due during the
remaining term of Employee’s contract or one year’s salary.  In the event of
such termination, said compensation shall

 

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be paid in equal installments during the period of which said compensation is to
be paid, on the Company’s regular pay dates.

 

8.4                                 Termination by the Executive for Breach by
the Company.  This Agreement may be terminated by the Executive in the event
that the Company breaches this Agreement and such breach is not cured by the
Company within ten (10) days after written notice, identifying the said breach
or breaches in detail.

 

8.5                                 Date of Termination.  For purposes of this
Agreement, the date of the termination of Executive’s employment (“Date of
Termination”) will be:

 

A.                                   if Executive’s employment is terminated by
his death, the end of the month in which his death occurs,

 

B.                                     if Executive’s employment is terminated
for incapacity, thirty (30) days after Notice of Termination is given, or

 

C.                                     if Executive’s employment is terminated
by Executive or the Company for any other reason, the date specified in the
Notice of Termination, which will not be later than thirty (30) days after the
date on which the Notice of Termination is given.

 

9.                                       Employment by a Subsidiary.

 

Either the Company or a Subsidiary may be Executive’s legal employer.  For
purposes of this Agreement, any reference to Executive’s termination of
employment with the Company means termination of employment with the Company and
all Subsidiaries, and does not include a transfer of employment between any of
them.  The obligations created under this Agreement are obligations of the
Company.  For purposes of this paragraph, a “Subsidiary” means an entity more
than fifty percent (50%) of whose equity interests are owned directly or
indirectly by the Company.

 

10.                                 Restrictive Covenant.

 

10.1                           Need for Protection.  Executive acknowledges
that, because of his Senior Executive position with the Company, his knowledge
of the affairs of the Company and his relations with its dealers, distributors
and customers are such that he could do serious damage to the financial welfare
of the Company, should he compete or assist others in competing with the
business of the Company.  Consequently, and in consideration of his continued
employment with the Company, and for the benefits he is to receive under this
Agreement, and for other good and valuable consideration, the receipt of which
he hereby acknowledges, the Executive agrees as follows:

 

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10.2                           Confidential Information.

 

A.                                   Non-Disclosure.  Except as the Company may
permit or direct in writing, during the term of this Agreement and thereafter,
Executive agrees that he will never disclose to any person or entity any
confidential or proprietary information, knowledge, or data of the Company,
which he may have obtained while in the employ of the Company, relating to any
customers, customer lists, methods of distribution, sales, prices, profits,
costs, contracts, inventories, suppliers, dealers, distributors, business
prospects, business methods, manufacturing ideas, formulas, plans or techniques,
research, trade secrets, or know how of the Company.

 

B.                                     Return of Records.  All records,
documents, software, computer disks, and any other form of information relating
to the business of the Company, which are or were prepared or created by
Executive, or which may or did come into his possession during the term of his
employment with the Company, including any and all copies thereof, shall be
returned to or, as the case may be, shall remain in the possession of the
Company.

 

C.                                     Future Employment.  Nothing in this
section shall limit the Executive’s right to carry the Executive’s accumulated
career knowledge and professional skills to any future employment, subject to
the specific limitations of the foregoing provisions of this section and the
respective covenants set forth below.

 

10.3                           Covenant Not To Solicit.  Executive agrees that
he will not, for a period of one (1) year after his employment with the Company
has terminated:

 

A.                                   directly or indirectly, on behalf of
himself or any person or entity, engage in, or assist any other person or entity
to engage in, the manufacture, assembly, distribution, or sale to any customer,
distributor or dealer of the Company, wherever located, of said motion picture
theater equipment, restaurant equipment, or any other type of product
manufactured, assembled distributed or sold by the Company, if said customer,
distributor or dealer is one with whom he had contact on whose account he worked
on during the twelve (12) months prior to the termination of his employment, or,

 

B.                                     directly or indirectly request or advise
any of the aforesaid customers, distributors or dealers referred to in Paragraph
A. above, of this subsection, to curtail their business with the Company or to
patronize another business which is in competition with the Company, or

 

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C.                                     directly or indirectly, on behalf of
himself or any other person or entity, request, advise, or solicit any employee
of the Company to leave that employment in order to engage in, or assist any
other person or entity to engage in, competition with the Company.

 

10.4                           Termination Without Cause.  It is understood and
agreed that, in the event the Company terminates the Executive’s employment
without cause, prior to the expiration of the term of employment specified in
this Agreement, Subsection 10.3 shall be applicable and remain in force and
effect for the greater of the remaining term of Executive’s employment under
this Agreement, or one (1) year from the date of termination, whichever occurs
later.

 

10.5                           Breach of Agreement by Company.  In the event
that the Company breaches this Agreement, and does not cure said breach after
thirty (30) days’ written notice, Subsection 10.3 shall be null and void and of
no further force and effect.

 

10.6                           Judicial Modification.  In the event that any
court of law or equity shall consider or hold any aspect of this section to be
unreasonable or otherwise unenforceable, the parties hereto agree that the
aspects of this section so found may be reduced or modified by appropriate order
of the court, and shall thereafter continue, as so modified, in full force and
effect.

 

10.7                           Injunctive Relief.  The parties hereto
acknowledge that the remedies at law for breach of this section will be
inadequate, and the Company shall be entitled to injunctive relief for violation
thereof; provided, however, that nothing herein shall be construed as
prohibiting the Company from pursuing any other remedies available for such
breach or threatened breach, including the recovery of damages from the
Executive.

 

11.                                 Inventions and Discoveries.

 

The Executive hereby sells, transfers and assigns to the Company or to any
person or entity designated by the Company all of the entire right, title and
interest of the Executive in and to all inventions, ideas, disclosures and
improvements, whether patented or unpatented, and copyrightable material made or
conceived by the Executive, solely or jointly, during the term hereof which
relate to the products and services provided by the Company or which otherwise
relate or pertain to the business, functions or operations of the Company.  The
Executive agrees to communicate promptly and to disclose to the Company, in such
form as the Executive may be required to do so, all information, details and
data pertaining to such inventions. ideas, disclosures and improvements and to
execute and deliver to the Company such formal transfers and assignments and
such other papers and documents as may be required of the Executive to permit
the Company or any person or entity designated by the Company to file and
prosecute the patent applications, and, as to copyrightable material, to obtain
copyrights thereof.

 

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12.                                 Modification and Waiver.

 

No provision of this Agreement may be modified, waived or discharged unless that
waiver, modification or discharge is agreed to in writing by Executive and that
officer as may be specifically designated by the Board of Directors of the
Company.  No waiver by either party at any time of any breach by the other party
of, or compliance with, any condition or provision of this Agreement to be
performed by that other party will be deemed a waiver of similar or dissimilar
provisions or conditions at the time or at any prior or subsequent time.

 

13.                                 Construction.

 

This Agreement supersedes any oral agreement between Executive and the Company
and any oral representation by the Company to Executive with respect to the
subject matter of this Agreement.  The validity, interpretation, construction
and performance of this Agreement will be governed by the laws of the State of
Nebraska.

 

14.                                 Severability.

 

If any one or more of the provisions of this Agreement, including but not
limited to Section 10 hereof, or any word, phrase, clause, sentence or other
portion of a provision is deemed illegal or unenforceable for any reason, that
provision or portion will be modified or deleted in such a manner as to make
this Agreement as modified legal and enforceable to the fullest extent permitted
under applicable laws.  The validity and enforceability of the remaining
provisions or portions will remain in full force and effect.

 

15.                                 Counterparts.

 

This Agreement may be executed in two (2) or more counterparts, each of which
will take effect as an original and all of which will evidence one and the same
agreement.

 

16.                                 Successors and Assigns.

 

This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, beneficiaries, personal representatives,
successors and assigns.

 

17.                                 Notice.

 

For purposes of this Agreement, notices and all other communications provided
for in this Agreement will be in writing and will be deemed to have been duly
given when delivered or mailed by United States registered mail, return receipt
requested, postage pre-paid, addressed to the respective addresses set forth on
the first page of this Agreement, or to that other address as either party may
have furnished to the other in writing in accordance with this Section 9,
provided that all notices to the

 

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Company will be directed to the attention of the Secretary of the Company, and
except that notice of change of address will be effective only upon receipt.

 

18.                                 Remedies of Executive.

 

In the event that the Executive makes any claim or demand based upon this
Agreement, or the breach thereof, the Executive hereby agrees that the damages
which he may recover shall be limited to the maximum amount of benefits to which
he could possibly be entitled under this Agreement.

 

19.                                 Entire Agreement.

 

This Agreement contains the entire agreement of the parties.  All prior
arrangements or understandings are merged herein.  It may not be changed orally,
but only by an agreement in writing signed by the party against whom enforcement
of any waiver, change, modification, extension or discharge is sought.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
and year first above written.

 

 

BALLANTYNE OF OMAHA, INC.

 

 

 

 

 

By:

/s/ John P. Wilmers

 

 

President

 

 

 

 

 

/s/ Dan Faltin

 

 

Dan Faltin, Executive

 

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EXHIBIT “A”

TO
EXECUTIVE EMPLOYMENT AGREEMENT

 

Executive shall be responsible for the following operations:

 

1.                                       Manufacturing;

 

2.                                       Engineering and research and
development;

 

3.                                       Administrative and finance;

 

4.                                       Design and Manufacturing division;

 

5.                                       Establishing pricing policies and
practices which clearly define minimum acceptable margins, pricing thresholds
and authority levels;

 

6.                                       Determining the sales and profit
potential of new product ideas;

 

7.                                       Setting priorities for research and
development efforts based on profitability potential of projects;

 

8.                                       Final determination of which products
are worked on and which ones are put on hold;

 

9.                                       Jointly determining with the President
of the Company the level that Ballantyne can financially afford for marketing
programs, including trade shows, advertising development of marketing materials;

 

10.                                 Review/Develop financial analysis that shows
which, if any, international markets the Company can profitably compete in, and
approving plans and expenditures required to develop those markets;

 

11.                                 Joint approval, along with the Chief
Financial Officer and President, for all capital expenditures;

 

12.                                 Joint approval with the President for
decisions related to the cost reduction and product line rationalization
initiatives;

 

13.                                 Product discontinuation;

 

14.                                 Cost reduction initiatives;

 

15.                                 Insuring that credit policies and practices
are established to manage risk and protect assets;

 

16.                                 Joint approval with the President for
improvements to administrative and manufacturing operations;

 

17.                                 Bringing in outside consulting resources,
with prior Board approval, to assist in Kaizen events and changing the Company’s
culture.

 

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