Document:

Exhibit 4.1

 

Execution Copy

 

 

 

 

THE CINCINNATI GAS
& ELECTRIC COMPANY

 

AND

 

FIFTH THIRD BANK,

Trustee

 

 

 

Seventh Supplemental
Indenture

 

Dated as of June 15,
2003

 

To

 

Indenture

 

Dated as of May 15,
1995

 

 

 

2003 Series A 5.40%
Debentures Due 2033

2003 Series B 5 3/8 % Debentures Due 2033

 

 

 

 

SEVENTH
SUPPLEMENTAL INDENTURE, dated as of June 15, 2003, between The Cincinnati Gas
& Electric Company, a corporation duly organized and existing under the
laws of the State of Ohio (herein called the “Company”), having its principal
office at 139 East Fourth Street, Cincinnati, Ohio 45202, and Fifth Third Bank,
an Ohio banking corporation, as Trustee (herein called the “Trustee”), under
the Indenture, dated as of May 15, 1995, between the Company and the Trustee
(the “Indenture”).

 

Recitals of the Company

 

The Company
has executed and delivered the Indenture to the Trustee to provide for the
issuance from time to time of its unsecured debentures, notes or other
evidences of indebtedness (the “Securities”), to be issued in one or more
series as provided in the Indenture.

 

Pursuant to
the terms of the Indenture, the Company desires to provide for the
establishment of two new series of its Securities to be known as its 2003
Series A 5.40 % Debentures Due 2033 (the “Series A Debentures”) and its 2003
Series B 5 3/8% Debentures Due 2033 (the “Series B Debentures” and,
together with the Series A Debenture, the “Debentures”) in this Seventh
Supplemental Indenture.

 

All things
necessary to make this Seventh Supplemental Indenture a valid agreement of the
Company have been done.

 

Now,
Therefore, This Seventh Supplemental Indenture Witnesseth:

 

For and in
consideration of the premises and the purchase of the Debentures by the Holders
thereof, it is mutually agreed, for the equal and proportionate benefit of all
Holders of the Debentures, as follows:

 

ARTICLE ONE

 

Terms of the Debentures

 

Section
101.  There is hereby authorized a
series of Securities designated the “2003 Series A 5.40% Debentures Due 2033”
(which shall be the Series A Debentures hereinbefore referred to) and a series
of Securities designated the “2003 Series B 5 3/8% Debentures Due 2033”
(which shall be the Series B Debentures hereinbefore referred to).  The Debentures shall mature and the
principal shall be due and payable together with all accrued and unpaid
interest thereon on June 15, 2033.  Each
of the Series A Debentures and the Series B Debentures shall be issued in the
form of a registered Global Security without coupons, registered in the name of
Cede & Co., as nominee of The Depository Trust Company (the “Depository”).

 

1

 

The initial
issue of the Series A Debentures and the Series B Debentures shall each be
limited in aggregate principal amount to $200,000,000 (except as provided in
Section 301(2) of the Indenture). 
However, the Company may, from time to time, without notice to or the
consent of the registered holders of the Series A Debentures or the Series B
Debentures then outstanding, issue additional Series A Debentures or Series B
Debentures, as the case may be, without limitation as to the aggregate
principal amount thereof.

 

Section
102.  The provisions of Section 305 of
the Indenture applicable to Global Securities shall apply to the Debentures.

 

Section
103.  Interest on each of the Debentures
shall be payable semiannually on June 15 and December 15 in each year (each
an  “Interest Payment Date”), commencing
on December 15, 2003, at the rate per annum specified in the designation of the
Debentures from June 16, 2003, or from the most recent Interest Payment Date to
which interest has been paid or duly provided for. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will be paid
to the Person in whose name such Debenture (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the Business Day immediately preceding such
Interest Payment Date. The amount of interest payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months.  As used herein,  “Business Day” means any day, other than a Saturday or Sunday, or
a day on which banking institutions in New York, New York are authorized or
obligated by law or executive order to be closed.

 

Section
104.  Subject to agreements with or the
rules of the Depository or any successor book-entry security system or similar
system with respect to Global Securities, payments of interest will be made by
check mailed to the Holder of each Debenture at the address shown in the
Security Register, and payments of the principal amount of each Debenture will
be made at maturity by check against presentation of the Debenture at the
office or agency of the Trustee.

 

Section
105.  The Debentures shall be issued in
denominations of $1,000 or any integral multiple of $1,000.

 

Section
106.  Principal and interest on the
Debentures shall be payable in the coin or currency of the United States of
America, which, at the time of payment, is legal tender for public and private
debts.

 

Section
107.  The Debentures shall be subject to
defeasance and covenant defeasance, at the Company’s option, as provided for in
Sections 1302 and 1303 of the Indenture.

 

2

 

Section
108.  Subject to the terms of Article
Eleven of the Indenture, the Company shall have the right to redeem the Series
A Debentures and the Series B Debentures, at any time in whole or from time to
time in part, as provided in the form of the applicable series of Debentures
hereinbelow set forth.

 

ARTICLE TWO

 

Form of the Debentures

 

Section
201.  The Series A Debentures and the
Series B Debentures are to be substantially in the following forms and shall
include substantially the legend shown in such form so long as such series of
Debentures are Global Securities:

 

 

[The remainder of this page has been left
blank intentionally.]

 

3

 

(FORM OF FACE OF SERIES A DEBENTURE)

 

	
  No.

  	
  $

  

 

CUSIP No.: 172070 CP 7

ISIN No.: US172070CP76

 

THE CINCINNATI GAS & ELECTRIC COMPANY

 

2003 SERIES A 5.40% DEBENTURE DUE 2033

 

UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A
NEW YORK CORPORATION (“DTC”), TO ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE, OR PAYMENT AND SUCH CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.

 

THE CINCINNATI
GAS & ELECTRIC COMPANY, a corporation duly organized and existing under the
laws of the State of Ohio (herein called the “Company,” which term includes any
successor Person under the Indenture hereafter referred to), for value received,
hereby promises to pay to CEDE & CO., or registered assigns, the principal
sum of
                                          
and No/100 Dollars
($                  )
on June 15, 2033, and to pay interest thereon from June 16, 2003 or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for, semiannually on June 15 and December 15 in each year, commencing
December 15, 2003, at the rate of 5.40% per annum, until the principal hereof
is paid or made available for payment. 
The amount of interest payable on any Interest Payment Date shall be
computed on the basis of a 360-day year of twelve 30-day months.  The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the Business Day immediately
preceding such Interest Payment Date. Any such interest not so punctually paid
or duly provided for will forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Securities
of this series not 

 

4

 

less than 10 days prior to such
Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in the Indenture.

 

Payment of the
principal of and interest on this Security will be made at the corporate trust
office of the Trustee maintained for that purpose in the City of Cincinnati, in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts; provided, however,
that at the option of the Company payment of interest may be made by check
mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register.

 

Any payment on
this Security due on any day which is not a Business Day in the City of New
York need not be made on such day, but may be made on the next succeeding Business
Day with the same force and effect as if made on the due date and no interest
shall accrue for the period from and after such date, unless such payment is a
payment at maturity or upon redemption, in which case interest shall accrue
thereon at the stated rate for such additional days.

 

As used
herein, “Business Day” means any day, other than a Saturday or Sunday, or a day
on which banking institutions in New York, New York are authorized or obligated
by law or executive order to be closed.

 

Reference is
hereby made to the further provisions of this Security set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as
if set forth at this place.

 

Unless the
certificate of authentication hereon has been executed by the Trustee referred
to on the reverse hereof by manual signature, this Security shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.

 

In Witness
Whereof, the Company has caused this instrument to be duly executed.

 

	
   

  	
  THE CINCINNATI GAS & ELECTRIC

  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  

 

5

 

CERTIFICATE OF AUTHENTICATION

 

Dated:

 

This is one of
the Securities of the series designated therein referred to in the
within-mentioned Indenture.

 

 

	
   

  	
  FIFTH THIRD BANK,

  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized
  Signatory

  	
   

  

 

 

(FORM OF REVERSE OF SERIES A DEBENTURE)

 

This Security
is one of a duly authorized issue of securities of the Company (herein called
the “Securities”), issued and to be issued in one or more series under an
Indenture, dated as of May 15, 1995 (herein called the “Indenture,” which term
shall have the meaning assigned to it in such instrument), between the Company
and Fifth Third Bank, as Trustee (herein called the “Trustee,” which term
includes any successor trustee under the Indenture), and reference is hereby
made to the Indenture for a statement of the respective rights, limitations of
rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Securities and of the terms upon which the Securities are, and
are to be, authenticated and delivered. This Security is one of the series
designated on the face hereof, which series is issuable without limitation as
to the aggregate principal amount thereof.

 

The Securities
of this series are subject to optional redemption at any time in whole or from
time to time in part, until maturity (such redemption, a “Make-Whole
Redemption”), at a Redemption Price equal to the sum of (i) the principal
amount of the Securities being redeemed plus accrued and unpaid interest
thereon to the Redemption Date, and (ii) the Make-Whole Amount (as defined
below), if any, with respect to the Securities being redeemed.

 

“Make-Whole
Amount” means, in connection with any Make-Whole Redemption of any Securities,
the excess, if any, of (i) the sum, as determined by a Quotation Agent of the
present value of the principal amount of such Securities to be redeemed,
together with scheduled payments of interest thereon from the Redemption Date
to June 15, 2033 (not including any portion of such payments of interest
accrued as of the Redemption Date), in each case discounted to the Redemption
Date on a semi-annual basis (assuming a 360-day year consisting of twelve
30-day months) at the Adjusted Treasury Rate over (ii) 100% of the principal
amount of the Securities to be redeemed.

 

6

 

“Adjusted
Treasury Rate” means, with respect to any Redemption Date for a Make-Whole
Redemption, the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, calculated using a price for the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such Redemption Date, calculated on
the third Business Day preceding the Redemption Date, plus in each case .20%
(20 basis points).

 

“Comparable
Treasury Issue” means the United States Treasury security selected by the
Quotation Agent as having a maturity comparable to the remaining term from the
Redemption Date to the Stated Maturity of the Securities that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of the Securities.

 

“Quotation
Agent” means the Reference Treasury Dealer selected by the Trustee after
consultation with the Company. “Reference Treasury Dealer” means a primary U.S.
Government securities dealer.

 

“Comparable
Treasury Price” means, with respect to any Redemption Date for a Make-Whole
Redemption, (i) the average of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
on the third Business Day preceding such Redemption Date, as set forth in the
daily statistical release designated “H.15” (or any successor release)
published by the Board of Governors of the Federal Reserve System or (ii) if
such release (or any successor release) is not published or does not contain
such prices on such Business Day, (A) the average of the Reference Treasury
Dealer Quotations for such Redemption Date, after excluding the highest and
lowest of such Reference Treasury Dealer Quotations, or (B) if the Trustee obtains
fewer than three such Reference Treasury Dealer Quotations, the average of such
Quotations.

 

“Reference
Treasury Dealer Quotations” means, with respect to each Reference Treasury
Dealer and any Redemption Date for a Make-Whole Redemption, the average, as
determined by the Trustee (after consultation with the Company), of the bid and
asked prices for the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) quoted in writing to the Trustee by such
Reference Treasury Dealer at 5:00 p.m., New York City time, on the third
Business Day preceding such Redemption Date.

 

Notice of any
redemption by the Company will be mailed at least 30 days but not more than 60
days before any Redemption Date to each Holder of Securities to be
redeemed.  If less than all the
Securities are to be redeemed at the option of the Company, the Trustee shall
select, in such manner as it shall deem fair and appropriate, the Securities to
be redeemed.

 

7

 

Unless the
Company defaults in payment of the Redemption Price, on and after any
Redemption Date, interest will cease to accrue on the Securities or portions
thereof called for redemption.

 

The Indenture
contains provisions for defeasance at any time of the entire indebtedness of
this Security or certain restrictive covenants and Events of Default with
respect to this Security upon compliance with certain conditions set forth in
the Indenture.

 

If an Event of
Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.

 

The Indenture
permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of
the Holders of the Securities of each series to be affected under the Indenture
at any time by the Company and the Trustee with the consent of the Holders of a
majority in principal amount of the Securities at the time Outstanding of each
series to be affected.  The Indenture
also contains provisions permitting the Holders of a majority in principal
amount of the Securities of each series at the time Outstanding, on behalf of
the Holders of all Securities of such series, to waive compliance by the
Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. 
Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.

 

As provided in
and subject to the provisions of the Indenture, the Holder of this Security
shall not have the right to institute any proceeding with respect to the
Indenture or for the appointment of a receiver or trustee or for any other
remedy thereunder, unless such Holder shall have previously given the Trustee
written notice of a continuing Event of Default with respect to the Securities
of this series, the Holders of not less than 35% in principal amount of the Securities
of this series at the time Outstanding shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default as Trustee
and offered the Trustee reasonably satisfactory  indemnity, and the Trustee shall not have received from the
Holders of a majority in principal amount of Securities of this series at the
time Outstanding a direction inconsistent with such request, and shall have
failed to institute any such proceeding, for 60 days after receipt of such
notice, request and offer of indemnity. The foregoing shall not apply to any
suit instituted by the Holder of this Security for the enforcement of any
payment of principal hereof or any premium or interest hereon on or after the
respective due dates expressed herein.

 

8

 

No reference
herein to the Indenture and no provision of this Security or of the Indenture
shall alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of and interest on this Security at the
times, place and rate, and in the coin or currency, herein prescribed.

 

As provided in
the Indenture and subject to certain limitations therein set forth, the
transfer of this Security is registrable in the Security Register, upon
surrender of this Security for registration of transfer at the office or agency
of the Company in any place where the principal of and interest on this
Security are payable, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities of this series and of like tenor, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.

 

The Securities
of this series are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof.  As provided in the Indenture and subject to
certain limitations therein set forth, Securities of this series are
exchangeable for a like aggregate principal amount of Securities of this series
and of like tenor of a different authorized denomination, as requested by the
Holder surrendering the same.

 

No service
charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.

 

Prior to due
presentment of this Security for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in
whose name this Security is registered as the owner hereof for all purposes,
whether or not this Security be overdue, and neither the Company, the Trustee
nor any such agent shall be affected by notice to the contrary.

 

All terms used
in this Security which are defined in the Indenture shall have the meanings
assigned to them in the Indenture.

 

9

 

(FORM OF FACE OF SERIES B DEBENTURE)

 

	
  No.

  	
  $

  

 

CUSIP No.: 172070 CQ 5

ISIN No.: US172070CQ59

 

THE CINCINNATI GAS & ELECTRIC COMPANY

 

2003 SERIES B 5 3/8% DEBENTURE DUE 2033

 

UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A
NEW YORK CORPORATION (“DTC”), TO ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE, OR PAYMENT AND SUCH CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.

 

THE CINCINNATI
GAS & ELECTRIC COMPANY, a corporation duly organized and existing under the
laws of the State of Ohio (herein called the “Company,” which term includes any
successor Person under the Indenture hereafter referred to), for value
received, hereby promises to pay to CEDE & CO., or registered assigns, the
principal sum of
                                             
and No/100 Dollars ($                        )
on June 15, 2033, and to pay interest thereon from June 16, 2003 or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for, semiannually on June 15 and December 15 in each year, commencing
December 15, 2003, at the rate of 5 3/8% per annum, until the principal
hereof is paid or made available for payment. 
The amount of interest payable on any Interest Payment Date shall be
computed on the basis of a 360-day year of twelve 30-day months.  The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the Business Day immediately
preceding such Interest Payment Date. Any such interest not so punctually paid
or duly provided for will forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Securities
of this series not 

 

10

 

less than 10 days prior to such
Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in the Indenture.

 

Payment of the
principal of and interest on this Security will be made at the corporate trust
office of the Trustee maintained for that purpose in the City of Cincinnati, in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts; provided, however,
that at the option of the Company payment of interest may be made by check
mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register.

 

Any payment on
this Security due on any day which is not a Business Day in the City of New
York need not be made on such day, but may be made on the next succeeding
Business Day with the same force and effect as if made on the due date and no
interest shall accrue for the period from and after such date, unless such payment
is a payment at maturity or upon redemption, in which case interest shall
accrue thereon at the stated rate for such additional days.

 

As used
herein, “Business Day” means any day, other than a Saturday or Sunday, or a day
on which banking institutions in New York, New York are authorized or obligated
by law or executive order to be closed.

 

Reference is
hereby made to the further provisions of this Security set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as
if set forth at this place.

 

Unless the
certificate of authentication hereon has been executed by the Trustee referred
to on the reverse hereof by manual signature, this Security shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.

 

In Witness
Whereof, the Company has caused this instrument to be duly executed.

 

	
   

  	
  THE CINCINNATI GAS & ELECTRIC

  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  

 

11

 

CERTIFICATE OF AUTHENTICATION

 

Dated:

 

This is one of
the Securities of the series designated therein referred to in the
within-mentioned Indenture.

 

 

	
   

  	
  FIFTH THIRD BANK,

  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized
  Signatory

  	
   

  

 

(FORM OF REVERSE OF SERIES B DEBENTURE)

 

This Security
is one of a duly authorized issue of securities of the Company (herein called
the “Securities”), issued and to be issued in one or more series under an
Indenture, dated as of May 15, 1995 (herein called the “Indenture,” which term
shall have the meaning assigned to it in such instrument), between the Company
and Fifth Third Bank, as Trustee (herein called the “Trustee,” which term
includes any successor trustee under the Indenture), and reference is hereby
made to the Indenture for a statement of the respective rights, limitations of
rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Securities and of the terms upon which the Securities are, and
are to be, authenticated and delivered. This Security is one of the series
designated on the face hereof, which series is issuable without limitation as
to the aggregate principal amount thereof.

 

The Securities
of this series are subject to optional redemption at any time in whole or from
time to time in part, until maturity (such redemption, a “Make-Whole
Redemption”), at a Redemption Price equal to the sum of (i) the principal
amount of the Securities being redeemed plus accrued and unpaid interest
thereon to the Redemption Date, and (ii) the Make-Whole Amount (as defined
below), if any, with respect to the Securities being redeemed.

 

“Make-Whole
Amount” means, in connection with any Make-Whole Redemption of any Securities,
the excess, if any, of (i) the sum, as determined by a Quotation Agent of the
present value of the principal amount of such Securities to be redeemed,
together with scheduled payments of interest thereon from the Redemption Date
to June 15, 2033 (not including any portion of such payments of interest
accrued as of the Redemption Date), in each case discounted to the Redemption
Date on a semi-annual basis (assuming a 360-day year consisting of twelve
30-day months) at the Adjusted Treasury Rate over (ii) 100% of the principal
amount of the Securities to be redeemed.

 

12

 

“Adjusted
Treasury Rate” means, with respect to any Redemption Date for a Make-Whole
Redemption, the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, calculated using a price for the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such Redemption Date, calculated on
the third Business Day preceding the Redemption Date, plus in each case .20%
(20 basis points).

 

“Comparable
Treasury Issue” means the United States Treasury security selected by the
Quotation Agent as having a maturity comparable to the remaining term from the
Redemption Date to the Stated Maturity of the Securities that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of the Securities.

 

“Quotation
Agent” means the Reference Treasury Dealer selected by the Trustee after
consultation with the Company. “Reference Treasury Dealer” means a primary U.S.
Government securities dealer.

 

“Comparable
Treasury Price” means, with respect to any Redemption Date for a Make-Whole
Redemption, (i) the average of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
on the third Business Day preceding such Redemption Date, as set forth in the
daily statistical release designated “H.15” (or any successor release)
published by the Board of Governors of the Federal Reserve System or (ii) if
such release (or any successor release) is not published or does not contain
such prices on such Business Day, (A) the average of the Reference Treasury
Dealer Quotations for such Redemption Date, after excluding the highest and
lowest of such Reference Treasury Dealer Quotations, or (B) if the Trustee
obtains fewer than three such Reference Treasury Dealer Quotations, the average
of such Quotations.

 

“Reference
Treasury Dealer Quotations” means, with respect to each Reference Treasury
Dealer and any Redemption Date for a Make-Whole Redemption, the average, as
determined by the Trustee (after consultation with the Company), of the bid and
asked prices for the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) quoted in writing to the Trustee by such
Reference Treasury Dealer at 5:00 p.m., New York City time, on the third
Business Day preceding such Redemption Date.

 

Notice of any
redemption by the Company will be mailed at least 30 days but not more than 60
days before any Redemption Date to each Holder of Securities to be
redeemed.  If less than all the
Securities are to be redeemed at the option of the Company, the Trustee shall
select, in such manner as it shall deem fair and appropriate, the Securities to
be redeemed.

 

13

 

Unless the
Company defaults in payment of the Redemption Price, on and after any
Redemption Date, interest will cease to accrue on the Securities or portions
thereof called for redemption.

 

The Indenture
contains provisions for defeasance at any time of the entire indebtedness of
this Security or certain restrictive covenants and Events of Default with
respect to this Security upon compliance with certain conditions set forth in
the Indenture.

 

If an Event of
Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of this series may be declared due
and payable in the manner and with the effect provided in the Indenture.

 

The Indenture
permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of
the Holders of the Securities of each series to be affected under the Indenture
at any time by the Company and the Trustee with the consent of the Holders of a
majority in principal amount of the Securities at the time Outstanding of each
series to be affected.  The Indenture
also contains provisions permitting the Holders of a majority in principal
amount of the Securities of each series at the time Outstanding, on behalf of
the Holders of all Securities of such series, to waive compliance by the
Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. 
Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.

 

As provided in
and subject to the provisions of the Indenture, the Holder of this Security
shall not have the right to institute any proceeding with respect to the
Indenture or for the appointment of a receiver or trustee or for any other
remedy thereunder, unless such Holder shall have previously given the Trustee
written notice of a continuing Event of Default with respect to the Securities
of this series, the Holders of not less than 35% in principal amount of the
Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of Default
as Trustee and offered the Trustee reasonably satisfactory  indemnity, and the Trustee shall not have
received from the Holders of a majority in principal amount of Securities of
this series at the time Outstanding a direction inconsistent with such request,
and shall have failed to institute any such proceeding, for 60 days after
receipt of such notice, request and offer of indemnity. The foregoing shall not
apply to any suit instituted by the Holder of this Security for the enforcement
of any payment of principal hereof or any premium or interest hereon on or
after the respective due dates expressed herein.

 

14

 

No reference
herein to the Indenture and no provision of this Security or of the Indenture
shall alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of and interest on this Security at the
times, place and rate, and in the coin or currency, herein prescribed.

 

As provided in
the Indenture and subject to certain limitations therein set forth, the
transfer of this Security is registrable in the Security Register, upon
surrender of this Security for registration of transfer at the office or agency
of the Company in any place where the principal of and interest on this
Security are payable, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities of this series and of like tenor, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.

 

The Securities
of this series are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof.  As provided in the Indenture and subject to
certain limitations therein set forth, Securities of this series are exchangeable
for a like aggregate principal amount of Securities of this series and of like
tenor of a different authorized denomination, as requested by the Holder
surrendering the same.

 

No service
charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.

 

Prior to due
presentment of this Security for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in
whose name this Security is registered as the owner hereof for all purposes,
whether or not this Security be overdue, and neither the Company, the Trustee
nor any such agent shall be affected by notice to the contrary.

 

All terms used
in this Security which are defined in the Indenture shall have the meanings
assigned to them in the Indenture.

 

15

 

ARTICLE THREE

 

Issuance of Debentures

 

Section
301.  An initial issue of the Series A
Debentures and the Series B Debentures each in the aggregate principal amount
of $200,000,000 may, upon execution of this Seventh Supplemental Indenture, or
from time to time hereafter, be executed by the Company and delivered to the
Trustee for authentication, and the Trustee shall thereupon authenticate and
deliver said Debentures upon a Company Order without any further action by the
Company.  Additional Series A Debentures
and Series B Debentures may be issued by the Company pursuant to the terms of
the Indenture and this Seventh Supplemental Indenture.

 

ARTICLE FOUR

 

Paying Agent and Security Registrar

 

Section
401.  Fifth Third Bank will be the
Paying Agent and Security Registrar for the Debentures.

 

ARTICLE FIVE

 

Sundry Provisions

 

Section
501.  Except as otherwise expressly
provided in this Seventh Supplemental Indenture or in the form of the Series A
Debenture or Series B Debenture, as the case may be, or otherwise clearly
required by the context hereof or thereof, all terms used herein or in said
forms of Debenture that are defined in the Indenture shall have the several
meanings respectively assigned to them thereby.

 

Section
502.  The Indenture, as supplemented by
this Seventh Supplemental Indenture, is in all respects ratified and confirmed,
and this Seventh Supplemental Indenture shall be deemed part of the Indenture
in the manner and to the extent herein and therein provided.

 

16

 

This
instrument may be executed in any number of counterparts, each of which so
executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.

 

In Witness
Whereof, the parties hereto have caused this Seventh Supplemental Indenture to
be duly executed as of the date first above written.

 

 

	
   

  	
  THE CINCINNATI GAS & ELECTRIC

  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Wendy L.
  Aumiller

  	
   

  
	
   

  	
   

  	
  Wendy L.
  Aumiller

  Treasurer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FIFTH THIRD BANK, as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Christine M. Schaub

  	
   

  
	
   

  	
   

  	
  Christine M.
  Schaub

  Vice President

  	
   

  

 

17Exhibit
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.

 

1

 

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.

 

2

 

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

 

3

 

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

 

4

 

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:

 

5

 

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

 

6

 

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.

 

7

 

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

 

8

 

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

  
				

 

9

 

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.

 

10

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