EXHIBIT 10.4


 


CHANGE IN CONTROL SEVERANCE AGREEMENT


 


AGREEMENT made as of this 13th day of June,
2011 by and between Insignia Systems, Inc., a Minnesota corporation (the “Company”), and John Gonsior (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:


 


		(1)	the closing of the sale of all or substantially all
of the assets of the Company;



 


		(2)	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;



 


		(3)	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



 




    	 



    	 



    


 


		(4)	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:


 


		(1)	Executive’s death or disability;



 


		(2)	termination of Executive by the Company for Cause (as
defined below); or



 


		(3)	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;



 


 


 




    	2



    	 



    


 


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 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.


 


 




    	3



    	 



    


 


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.


 


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.


 


 




    	4



    	 



    


 


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


 


	EXECUTIVE:	 	INSIGNIA SYSTEMS, INC.
	 	 	 	 	 
	 	 	 	 	 
	/s/ John Gonsior	 	By	/s/ Scott Drill
	 	 	 	 
	 	 	 	Its  	CEO


 


 


 


 


 


 


 


 


 


 


 


 



    	5