EXHIBIT 10
CHANGE IN CONTROL SEVERANCE AGREEMENT
AGREEMENT made as of this ____________ by and between Insignia Systems,
Inc., a Minnesota corporation (the "Company") and ____________ (the
"Executive").
WHEREAS, the Company, as a publicly held corporation, recognizes the
possibility of a change in control of the Company, and that such possibility and
the uncertainty and questions which it may raise could result in Executive
leaving the Company or in distraction of Executive in the performance of
Executive's duties to the detriment of the Company and its shareholders; and
WHEREAS, it is in the best interests of the Company and its
shareholders to encourage the availability of Executive's services to parties
who may in the future acquire control of the Company and to provide an incentive
for Executive to remain with the Company during any period of uncertainty
leading up to a change in control;
WHEREAS, based on the foregoing, the Company wishes to provide that, in
the event of a change in control of the Company, Executive will receive certain
benefits if Executive's employment by the Company ceases for certain reasons
within a specified period following the change in control;
NOW, THEREFORE, in consideration of the foregoing and the provisions of
this Agreement, the parties hereto agree as follows:
1. General Provisions. This Company shall pay Executive a lump sum
severance payment if Executive ceases to be employed by the Company within two
years following a Change in Control (as defined below) for certain reasons
specified in this Agreement. Nothing in this Agreement alters the "at will"
nature of Executive's employment by the Company. This means that either before
or after a Change in Control, either the Company or the Executive may terminate
Executive's employment by the Company, either with or without cause, for any
reason or no reason. This Agreement relates only to whether Executive shall be
entitled to certain severance payments following cessation of employment. No
right to severance payments shall arise under this Agreement unless and until
there occurs a Change in Control.
2. Definition of Change in Control. For purposes of this Agreement, a
"Change in Control" shall be considered to occur if any of the following occurs
after the date of this Agreement:
(a) the closing of the sale of all or substantially all of the assets
of the Company;
(b) the closing of a merger, consolidation or corporate reorganization
of the Company which results in the stockholders of the Company immediately
prior to such event owning less than 50% of the combined voting power of the
Company's capital stock immediately following such event;
Page 11 of 15
(c) the acquisition by any person (or persons who would be considered a
group under the federal securities laws) who as of the date of this Agreement
own less than 25% of the voting power of the Company's outstanding voting
securities, of beneficial ownership of securities representing 40% or more of
the combined voting power or the Company's then outstanding securities; or
(d) the election to the Company's board of directors of persons who
constitute a majority of the board of directors and who were not nominated for
election by the board of directors as part of a management slate.
3. Amount of Severance Payment. If a Change in Control occurs after the
date of this Agreement and Executive subsequently ceases to be employed by the
Company prior to the second anniversary of the Change in Control, then the
Company shall pay Executive a lump sum severance payment equal to _________
months of Executive's gross base salary which was in effect immediately prior to
the Change in Control. The Company shall be entitled to deduct from the lump sum
severance payment any amounts which the Company is required by law to withhold
from such a payment, and the net amount shall be paid to Executive not later
than the ten days after employment ceases.
4. Circumstances in Which Severance Shall Not Be Paid. Notwithstanding
the provisions of Section 3 above, the Company shall not be obligated to make
any lump sum severance payment under this Agreement if, following a Change in
Control, Executive ceased to be employed by the Company due to:
(a) Executive's death or Retirement (as defined below);
(b) termination of Executive by the Company for Cause (as
defined below); or
(c) resignation by Executive for any reason other than a Good
Reason (as defined below).
For purposes of this Section 4, the following defined terms have the meanings
indicated:
"Retirement" means retirement at or after the date the Executive has
attained age 65;
"Cause" means termination by the Company of Executive's employment due
to:
(1) conviction of a felony;
(2) the willful and continued failure of Executive to
perform his essential duties; or
(3) gross misconduct which is materially injurious to
the Company;
provided, however, that the matters referred to in clause (2) or (3) shall not
be deemed to constitute "Cause" unless the Company has first given Executive
written notice specifying the
Page 12 of 15
conduct by Executive that constitutes such failure or gross misconduct and
Executive has failed to remedy the same to the reasonable satisfaction of the
Company's Board of Directors.
"Good Reason" shall mean any of the following, unless Executive gives
his or her prior written consent:
(1) the assignment to Executive of any duties
inconsistent with Executive's status or position with the
Company, or a substantial reduction in the nature or status of
Executive's responsibilities from those in effect immediately
prior to the Change in Control;
(2) a reduction by the Company in Executive's annual
base salary in effect immediately prior to the Change in
Control;
(3) the relocation of the Company's principal
executive offices to a location more than fifty miles from
Minneapolis, Minnesota or the Company requiring Executive to
be based anywhere other than the Company's principal executive
offices, except for required travel on the Company's business
to an extent substantially consistent with Executive's prior
business travel obligations;
(4) the failure by the Company to continue to provide
Executive with benefits a least as favorable to those enjoyed
by Executive under any of the Company's pension, life
insurance, medical, health and accident, disability, deferred
compensation, incentive awards, incentive stock options, or
savings plans in which Executive was participating at the time
of the Change in Control, the taking of any action by the
Company which would directly or indirectly materially reduce
any of such benefits or deprive Executive of any material
fringe benefit enjoyed at the time of the Change in Control,
or the failure by the Company to provide Executive with the
number of paid vacation days to which Executive is entitled at
the time of the Change in Control, provided, however, that the
Company may amend any such plan or programs as long as such
amendments do not reduce any benefits to which Executive would
be entitled upon termination; or
(5) any termination of Executive's employment which
is not made pursuant to a Notice of Termination satisfying the
requirements Section 5 below.
5. Notice of Termination. Any termination of Executive's employment by
the Company or by Executive shall be communicated by written Notice of
Termination to the other party hereto in accordance with the notice provisions
of Section 6. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which indicates the specific facts and circumstances claimed to
provide the basis for termination.
6. Method of Giving Notice. All notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered or
certified mail, return receipt requested, postage pre-paid, addressed to the
last known residence address of the Executive, or in the case of the Company, to
Page 13 of 15
its principal office to the attention of each of the then directors of the
Company with a copy to its Secretary, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.
7. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the parties. No waiver by either party thereto at any
time of any breach by the other party to this Agreement, or of compliance with
any condition or provision of this Agreement to be performed by such other
party, shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or similar time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement. This Agreement shall be governed by the laws of the
State of Minnesota.
8. Arbitration of Disputes. Any and all disputes between the parties
relating to this Agreement or any alleged breach of this Agreement shall be
resolved by binding arbitration held in the City of Minneapolis pursuant to the
Commercial Arbitration Rules of the American Arbitration Association before a
single arbitrator. In the event that Executive is determined by the arbitrator
to be the prevailing party in such an arbitration, the arbitrator shall award
Executive, as an additional element of damages, his or her attorneys' fees and
legal expenses actually incurred in the enforcement of this Agreement and in the
arbitration proceeding. Judgment on the arbitration award may be entered by any
court having jurisdiction.
9. Successors. This Agreement shall be binding upon and inure to the
benefit of the respective heirs, personal representatives, successors and
assigns of the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
EXECUTIVE: INSIGNIA SYSTEMS, INC.
By
----------------------------------
-----------------------------
Its
---------------------------------
Page 14 of 15
