Insignia Systems 10-Q dated March 31, 2005



EXHIBIT 10.1  



CHANGE IN CONTROL
SEVERANCE AGREEMENT 



        AGREEMENT
made as of this 5th day of May, 2003 by and between Insignia Systems, Inc., a
Minnesota corporation (the “Company”), and Justin Shireman (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; 






	  	  	(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











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	  	  	(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 nine (9) 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 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:  









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	  	  	  	(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 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. 









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	  	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.
	
/s/ Justin W. Shireman 	 	
 By     /s/ Scott Drill 
	
	 	

		 	Its      President and CEO
                                                                               
		 	




















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