Exhibit 10.2

 

CHANGE IN CONTROL SEVERANCE AGREEMENT

 

This CHANGE IN CONTROL SEVERANCE AGREEMENT (“Agreement”) is made as of this 28th
day of April, 2014 by and between Insignia Systems, Inc., a Minnesota
corporation (the “Company”), and Tim Halfmann (the “Executive”).

 

WHEREAS, Employee is the sole member of TLM Holdings LLC (“TLM”);

 

WHEREAS, Employee has been providing certain services to the Company by and
through TLM;

 

WHEREAS, the Company has agreed to retain Employee as an employee of the Company
pursuant to the terms of an employment agreement entered into by and between the
Company and Executive as of the same date as this Agreement;

 

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;

 

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; and

 

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 followed by a
qualifying termination under this Agreement.

 

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;

 

(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

 

1

--------------------------------------------------------------------------------

 

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 twenty-four (24) months of Executive’s 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.

 

Payment due under this Agreement shall be made on the 60th day after Executive’s
termination of employment, except that if Executive is then a “key employee” of
the Company, as defined in Section 409A of the Internal Revenue Code, payment
shall be made on the date which is six months after termination of employment,
or to his heirs upon his death if earlier; provided, however, that no payment
shall be made unless Executive has first delivered to the Company the Release
described in Section 11, and the Release has not been rescinded during any
applicable rescission period.

 

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 disability;

 

(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), including retirement.

 

For purposes of this Section 4, the following defined terms have the meanings
indicated:

 

“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 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

 

2

--------------------------------------------------------------------------------

 

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 at 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 in 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 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. This Agreement supersedes all prior
agreements on this subject matter.

 

3

--------------------------------------------------------------------------------

 

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.

 

10.                               Exclusive Benefits.  The benefits provided by
this Agreement are in lieu of all other severance, change in control, or similar
benefits payable to Executive due to termination following a Change in Control.

 

11.                               Release.  As a condition to receiving any
benefits under this Agreement, Executive shall be required to deliver a standard
release to the Company releasing the Company and its shareholder, directors,
officers, employees, agents and affiliates from any and all claims relating to
Executive’s employment and termination of employment.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

 

EXECUTIVE:

 

INSIGNIA SYSTEMS, INC.

 

 

 

 

 

 

/s/ Tim J. Halfmann

 

By

/s/ Glen Dall

 

 

 

 

 

Its

/s/ President and CEO

 

4

--------------------------------------------------------------------------------