Document:

THIS NOTE IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY.  THIS NOTE
IS NOT EXCHANGEABLE FOR NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS
A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE
REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

Unless
this Note is presented by an authorized representative of The Depository Trust
Company, a New York corporation (55 Water Street, New York, New York) ("DTC"),
to the Corporation or its agent for registration of transfer, exchange or
payment, and this Note is registered in the name of Cede & Co. or such
other name as requested by an authorized representative of DTC, and unless any
payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner
hereof, Cede & Co., has an interest herein.

THIS
NOTE IS NOT A SAVINGS ACCOUNT OR A DEPOSIT, IS NOT AN OBLIGATION OF OR
GUARANTEED BY ANY BANKING OR NONBANKING AFFILIATE OF BANK OF AMERICA
CORPORATION, AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENTAL AGENCY.  

REGISTERED                                                                         $250,000,000

NUMBER R-2                                                                       CUSIP:
060505 CN 2

ORIGINAL ISSUE DATE:  August
14, 2006

MATURITY DATE:  August 15, 2016

BASE RATE:  Three-Month LIBOR                                                                                

INDEX MATURITY: Three Months                                                                                                               

SPREAD:  0.33%

INTEREST PAYMENT DATES: February 15, May 15, August 15 and
November 15 of each year beginning November 15, 2006

INTEREST RESET DATES: February
15, May 15, August 15 and November 15 of each year

INTEREST DETERMINATION DATES: 
Two London banking days prior to each Interest Payment Date

RECORD DATES:  February 1, May
1, August 1 and November 1 of each year

REDEMPTION DATES:  N/A

INITIAL REDEMPTION PERCENTAGE:  N/A                                                              

CALCULATION AGENT:  The Bank of New York

 

BANK OF AMERICA
CORPORATION

FLOATING RATE SUBORDINATED NOTES, DUE 2016

BANK OF
AMERICA CORPORATION, a Delaware corporation (herein called the "Corporation,"
which term includes any successor corporation under the Indenture referred to
on the reverse hereof), for value received, hereby promises to pay to CEDE
& CO., or registered assigns, the principal sum of TWO HUNDRED FIFTY MILLION
DOLLARS ($250,000,000) on August 15, 2016 (except to the extent redeemed or
repaid prior to that date).  The Corporation will pay interest on such
principal amount from the Original Issue Date to the Maturity Date for each
quarterly interest period at a floating rate equal to Three-Month LIBOR plus
the Spread of 0.33%.  Interest shall be payable commencing on the first
Interest Payment Date succeeding the Original Issue Date and on each Interest
Payment Date thereafter and on the Maturity Date.  If the Corporation shall
default in the payment of interest due on an Interest Payment Date, then this
Note shall bear interest from the next preceding Interest Payment Date to which
interest has been paid, or, if no interest has been paid on the Notes, from August
14, 2006.  

 

Interest on
this Note will accrue from the Original Issue Date until the principal amount
is paid or duly provided for and will be computed as described in this Note. 
Interest payable on this Note on any Interest Payment Date or on the Maturity
Date will include interest accrued from, and including, the preceding Interest
Payment Date in respect of which interest has been paid or duly provided for
(or from, and including, the Original Issue Date specified above if no interest
has been paid or duly provided for, as the case may be) to, but excluding, such
Interest Payment Date or Maturity Date, as the case may be.  If any Interest
Payment Date falls on a day that is not a Business Day (as defined below), such
Interest Payment Date shall be the following day that is a Business Day (and no
interest will accrue as a result of that postponement); and if the Maturity
Date falls on a day that is not a Business Day, principal or interest payable
with respect to such Maturity Date will be paid on the next Business Day with
the same force and effect as if made on such Maturity Date, and no additional
interest shall accrue for the period from and after such Maturity Date. 
Interest will be calculated using the actual number of days in an interest period
and a 360-day year. 

An interest
period is the period beginning on the Original Issue Date or an Interest
Payment Date and ending on the date immediately preceding the next following
Interest Payment Date or Maturity Date, as the case may be.  The interest rate
on this Note in effect for each interest period will be determined by the
Calculation Agent using Three-Month LIBOR on the Interest Determination Date
for that interest period.  The Calculation Agent will add Three-Month LIBOR as
determined on the Interest Determination Date to the Spread to calculate the
interest rate in effect for the applicable interest period.  

"Three-Month LIBOR"
means the London interbank offered rate for deposits of at least $1,000,000 in
U.S. dollars having an index maturity of three months, as that rate appears on
Telerate page 3750 at approximately 11:00 a.m., London time, on the Interest
Determination Date.  A "London banking day" is any day on which dealings in
deposits in U.S. dollars are transacted in the London interbank market.

If no offered
rate appears on Telerate page 3750 on an Interest Determination Date at
approximately 11:00 a.m., London time, then the Calculation Agent (after
consultation with the Corporation) will select four major banks in the London
interbank market and will request each of their principal London offices to
provide a quotation of the rate at which three-month deposits in U.S. dollars
in amounts of at least $1,000,000 are offered by it to prime banks in the
London interbank market, on that date and at that time, that is representative
of single transactions at that time.  If at least two quotations are provided, Three-Month
LIBOR will be the arithmetic average of the quotations provided.  Otherwise,
the Calculation Agent will select three major banks in New York City and shall
request each of them to provide a quotation of the rate offered by it at
approximately 11:00 a.m., New York City time, on the Interest Determination
Date for loans in U.S. dollars to leading European banks having an index
maturity of three months for the applicable interest period in an amount of at
least $1,000,000 that is representative of single transactions at that time. 
If three quotations are provided, Three-Month LIBOR will be the arithmetic
average of the quotations provided.  Otherwise, Three-Month LIBOR for the next
interest period will be equal to Three-Month LIBOR in effect for the then
current interest period.

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 this Note (or one or more
predecessor

                                                                                        
2

 Notes evidencing all or a portion of the same debt as this Note) is
registered at the close of business on the Record Date for such Interest
Payment Date, whether or not a Business Day.  "Business Day" means any weekday
that is not a legal holiday in New York, New York or Charlotte, North Carolina
and is not a day on which banking institutions in those cities are authorized
or required by law or regulation to be closed.  

The principal
of and interest on this Note are payable in immediately available funds in such
coin or currency of the United States as at the time of payment is legal tender
for payment of public and private debts, at the office or agency of the
Corporation in New York or such other places that the Corporation shall
designate as provided in such Indenture; provided, however, that interest may
be paid, at the option of the Corporation, by check mailed to the person
entitled thereto at his address last appearing on the registry books of the
Corporation relating to the Notes.  Notwithstanding the preceding sentence,
payments of principal of and interest payable on the Maturity Date will be made
by wire transfer of immediately available funds to a designated account maintained
in the United States upon (i) receipt of written notice by the Issuing and
Paying Agent (as described on the reverse hereof) from the registered holder
hereof not less than one Business Day prior to the due date of such principal
and (ii) presentation of this Note to the Issuing and Paying Agent, at The Bank
of New York, 101 Barclay Street, New York, New York 10286.  Any interest not
punctually paid or duly provided for shall be payable as provided in such
Indenture.   

Reference is
made to the further provisions of this Note set forth on the reverse hereof,
which shall have the same effect as though fully set forth at this place.

Unless the
certificate of authentication hereon has been executed by the Trustee or by an
authenticating agent on behalf of the Trustee by manual signature, this Note
shall not be entitled to any benefit under such Indenture or be valid or
obligatory for any purpose.

                                                                          
3

IN WITNESS
WHEREOF, the Corporation has caused this Note to be duly executed, by manual or
facsimile signature, under its corporate seal or a facsimile thereof.

BANK OF
AMERICA CORPORATION

By:
_______________________________

[SEAL]                                                            Title:
Senior Vice President

ATTEST:

By:______________________

   Assistant Secretary

 

                                                                                   
4

CERTIFICATE
OF AUTHENTICATION

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

Dated:  August 14, 2006

THE BANK OF NEW YORK, 

                                                                          as Trustee

By:__________________________

                     Authorized Signatory

         
5

[Reverse
of Note]

BANK OF AMERICA CORPORATION

FLOATING RATE
SUBORDINATED NOTES, DUE 2016

SECTION 1.  General. 
This Note is one of a duly authorized series of Securities of the Corporation
unlimited in aggregate principal amount issued and to be issued under an
Indenture dated as of January 1, 1995 (as supplemented from time to time, the
"Indenture"), between the Corporation (successor to NationsBank Corporation)
and The Bank of New York, as Trustee (herein called the "Trustee," which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights thereunder of the Corporation, the Trustee and the holders of
the Notes, and the terms upon which the Notes are, and are to be, authenticated
and delivered.  The series of which this Note is a part also is designated as
the Corporation's Floating Rate Subordinated Notes, due 2016 (herein called the
"Notes"), initially in the aggregate principal amount of $500,000,000.   The
amount of Notes of this series may be increased by the Corporation in the
future.  The Trustee initially shall act as Security Registrar, Authenticating
Agent, Transfer Agent, and Issuing and Paying Agent in connection with the
Notes.  

SECTION 2.  Subordination. 
THE INDEBTEDNESS OF THE CORPORATION EVIDENCED BY THE NOTES, INCLUDING THE
PRINCIPAL THEREOF AND INTEREST THEREON, IS, TO THE EXTENT AND IN THE MANNER SET
FORTH IN THE INDENTURE, SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT TO ITS
OBLIGATIONS TO HOLDERS OF SENIOR INDEBTEDNESS, AS DEFINED IN THE INDENTURE, AND
EACH HOLDER OF THE NOTES, BY THE ACCEPTANCE HEREOF, AGREES TO AND SHALL BE
BOUND BY SUCH PROVISIONS OF THE INDENTURE.

SECTION 2.  No
Sinking Fund.  This Note is not subject to any sinking fund.

SECTION 3.  Redemption
and Repayment.  The Notes of this series are not subject to redemption at
the option of the Corporation or repayment at the option of the holder prior to
maturity. 

            SECTION 4.  Defeasance.  The provisions of Sections
14.02 and 14.03 of the Indenture do not apply to the Notes.

            SECTION 5. Events of Default.  If an Event of
Default (defined in the Indenture as certain events involving the bankruptcy of
the Corporation) shall occur with respect to the Notes, the principal of,
interest accrued on, and other amounts then payable on, the Notes may be
declared due and payable in the manner and with the effect provided in the
Indenture.  THERE IS NO RIGHT OF ACCELERATION PROVIDED IN THE INDENTURE IN CASE
OF A DEFAULT IN THE PAYMENT OF INTEREST OR THE PERFORMANCE OF ANY OTHER
COVENANT BY THE CORPORATION.

SECTION 6.  Modifications
and Waivers.  The Indenture permits, with certain exceptions as therein
provided, the amendment of the Indenture and the modification of the rights and
obligations of the Corporation and the rights of the holders of the Notes under
the

 

 Indenture at any time by the Corporation with the consent of the holders of
not less than 66 2/3% in aggregate principal amount of the Notes then
outstanding and all other Securities then outstanding under the Indenture and
affected by such amendment and modification.  The Indenture also contains
provisions permitting the holders of a majority in aggregate principal amount
of the Notes then outstanding and all other Securities then outstanding under
the Indenture and affected thereby, on behalf of the holders of all such
Securities, to waive compliance by the Corporation 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 Note shall be
conclusive and binding upon such holder and upon all future holders of this
Note and of any Note 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 Note.

            No recourse shall be had for the payment of the
principal of or the interest on this Note, or for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the Indenture or any
indenture supplemental thereto, against any incorporator, stockholder, officer,
or director, as such, past, present, or future, of the Corporation or any
predecessor or successor corporation, whether by virtue of any constitution,
statute, or rule of law, or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part of
the consideration for issue hereof, expressly waived and released.

           SECTION 7.  Obligations Unconditional.  No
reference herein to the Indenture and no provision of this Note or of the
Indenture shall alter or impair the obligation of the Corporation, which is
absolute and unconditional, to pay the principal of and interest on this Note
at the times, place, and rate, and in the coin or currency, herein prescribed.

           SECTION 8.  Authorized Denominations.  The Notes
are issuable only as registered Notes without coupons in the denominations of
$5,000 and any integral multiple in excess thereof.  As provided in the
Indenture, and subject to certain limitations therein set forth, the Notes are
exchangeable for a like aggregate principal amount of Notes of different
authorized denominations, as requested by the holder surrendering the same.

           SECTION 9.  Registration of Transfer.  As
provided in the Indenture and subject to certain limitations therein set forth,
the transfer of this Note may be registered on the Security Register of the
Corporation relating to the Notes, upon surrender of this Note for registration
of transfer at the office or agency of the Corporation designated by it
pursuant to the Indenture, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Corporation and the Trustee
or the Security Registrar duly executed by, the registered holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Notes, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.

The Notes are
being issued by means of a book-entry system with no physical distribution of
certificates to be made except as provided in the Indenture.  The book-entry
system maintained by The Depository Trust Company ("DTC") will evidence
ownership of the Notes, with transfers of ownership effected on the records of
DTC and its participants pursuant to rules and procedures established by DTC
and its participants.  The Corporation will recognize Cede & Co., as
nominee of DTC, while the registered holder of the Notes, as the owner of the

                                                                                         
7

 Notes for all purposes, including payment of principal (premium, if any) and
interest, notices, and voting. Transfer of principal, premium (if any),
interest, and other amounts payable to participants of DTC will be the
responsibility of DTC, and transfer of principal (premium, if any) and interest
to beneficial owners of the Notes by participants of DTC will be the
responsibility of such participants and other nominees of such beneficial
owners.  So long as the book-entry system is in effect, the selection of any Notes
to be redeemed will be determined by DTC pursuant to rules and procedures
established by DTC and its participants.  The Corporation will not be
responsible or liable for such transfers or payments or for maintaining,
supervising, or reviewing the records maintained by DTC, its participants, or
persons acting through such participants.

            No service charge will be made for any such registration
of transfer or exchange, but the Corporation may require payment of a sum
sufficient to cover any tax, assessment, or other governmental charge,
including, without limitation, any withholding tax, payable in connection
therewith.

            Prior to due presentment for registration of transfer of
this Note, the Corporation, the Trustee, the Issuing and Paying Agent, and any
agent of the Corporation may treat the person in whose name this Note is
registered as the owner hereof for all purposes.

           SECTION 10.  Authentication Date.  The Notes of
this series shall be dated the date of their authentication.

           SECTION 11.  Defined Terms.  All terms used in
this Note which are not defined herein, but are defined in the Indenture shall
have the meanings assigned to them in the Indenture.

SECTION 12.  Governing
Law.  THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS
OF LAWS.

                                                                        
8

ABBREVIATIONS

The following
abbreviations, when used in the inscription on the face of the within Note
shall be construed as though they were written out in full according to
applicable laws or regulations:

TEN COM‐‐   as tenants
in common

                        TEN ENT‐‐     as
tenants by the entireties

                        JT TEN‐‐         as
joint tenants with right of survivorship and not as tenants in common

                        UNIF GIFT MIN ACT‐‐............................as
Custodian for..............................

                                                                       (Cust)                                      
(Minor)

Under Uniform Gifts to Minors Act

.........................................................

                                                                    (State)

Additional
abbreviations may also be used though not in the above list.

__________________________________

ASSIGNMENT

FOR VALUE
RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto

[PLEASE PRINT OR
TYPEWRITE NAME AND ADDRESS

INCLUDING
ZIP CODE, OF ASSIGNEE]

_____________________________________________________________________________

_____________________________________________________________________________

_____________________________________________________________________________

Please Insert Social Security or Other 

          Identifying
Number of Assignee: ______________________________

the within Note and all rights
thereunder, hereby irrevocably constituting and appointing
_____________________________________ Attorney to transfer said Note on the
books of the Corporation, with full power of substitution in the premises.

Dated: _______________________               _________________________________________

NOTICE: The signature to this
assignment must correspond with the name as it appears upon the face of the
within Note in every particular, without alteration or enlargement or any
change whatever and must be guaranteed.Exhibit 4.1 to Insignia Systems, Inc. Form S-8 dated August 14, 2006

EXHIBIT 4.1

 

INSIGNIA SYSTEMS, INC.

EMPLOYEE STOCK PURCHASE PLAN

(Amended through February 16, 2006)

 

1.           Establishment
of Plan.   Insignia Systems, Inc. (hereinafter referred to as the “Company”)
proposes to grant to certain employees of the Company the opportunity to purchase common stock of the Company. Such common stock
shall be purchased pursuant to the plan herein set forth which shall be known as the “INSIGNIA SYSTEMS, INC. EMPLOYEE STOCK
PURCHASE PLAN” (hereinafter referred to as the “Plan”). The Company intends that the Plan shall qualify as an
“Employee Stock Purchase Plan” under Section 423 of the Internal Revenue Code of 1986, as amended, and shall be
construed in a manner consistent with the requirements of said Section 423 and the regulations thereunder. 

 

2.           Purpose.   The
Plan is intended to encourage stock ownership by employees of the Company, and as an incentive to them to remain in employment,
improve operations, increase profits, and contribute more significantly to the Company’s success.

 

3.           Administration.   The
Plan shall be administered by a stock purchase committee (hereinafter referred to as the “Committee”) consisting of not
less than three directors or employees of the Company, as designated by the Board of Directors of the Company (hereinafter
referred to as the “Board of Directors”). The Board of Directors shall fill all vacancies in the Committee and may
remove any member of the Committee at any time, with or without cause. The Committee shall select its own chairman and hold its
meetings at such times and places as it may determine. All determinations of the Committee shall be made by a majority of its
members. Any decision which is made in writing and signed by a majority of the members of the Committee shall be effective as
fully as though made by a majority vote at a meeting duly called and held. The determinations of the Committee shall be made in
accordance with its judgment as to the best interests of the Company, its employees and it shareholders and in accordance with the
purposes of the Plan; provided, however, that the provisions of the Plan shall be construed in a manner consistent with the
requirements of Section 423 of the Internal Revenue Code, as amended. Such determinations shall be binding upon the Company and
the participants in the Plan unless otherwise determined by the Board of Directors. The Company shall pay all expenses of
administering the Plan. No member of the Board of Directors or the Committee shall be liable for any action or determination made
in good faith with respect to the Plan or any option granted under it.

 

4.           Duration
and Phases of the Plan.   (a)  The Plan will commence on January 1, 1993, and
will continue until terminated by the Board pursuant to Section 15, except that any phase commenced prior to such termination
shall, if necessary, be allowed to continue beyond such termination until completion. 

 

(b)         The Plan shall be carried out in one or more phases, each phase being for a period of one year. Each phase shall commence immediately after the termination of the preceding phase. The existence and date of commencement of a phase (the “Commencement Date”) shall be determined by the Committee, provided that the commencement of the first phase shall be within twelve (12) months before or after the date of approval of the Plan by the shareholders of the Company. In the event all of the stock reserved for grant of options hereunder is issued pursuant to the terms hereof prior to the commencement of one or more phases scheduled by the Committee or the number of shares remaining is so small, in the opinion of the Committee, as to render administration of any succeeding phase impracticable, such phase or phases shall be canceled.
Phases shall be numbered successively as Phase 1, Phase 2 and Phase 3.

 

(c)          The
Board of Directors may elect to accelerate the termination date of any phase effective on the date specified by the Board of
Directors in the event of (i) any consolidation or merger of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares would be converted into cash, securities or other property, other than a merger of the
Company in which shareholders immediately prior to the 

1

merger have the same proportionate ownership of stock
in the surviving corporation immediately after the merger; (ii) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of the assets of the Company, or (iii) any plan or
liquidation or dissolution of the Company.

 

5.           Eligibility. All Employees, as defined in Paragraph 19 hereof, who are employed by the Company at least one day prior to the Commencement Date of a phase shall be eligible to participate in such phase.

 

6.           Participation. Participation in the Plan is voluntary. An eligible Employee may elect to participate in any phase of the plan, and thereby become a “Participant” in the Plan, by completing the Plan payroll deduction form provided by the Company and delivering it to the Company or its designated representative prior to the Commencement Date of that phase. Payroll deductions for a Participant shall commence on the first payday after the Commencement Date of the phase and shall terminate on the last payday immediately prior to or coinciding with the termination date of that phase unless sooner terminated by the Participant as provided in Paragraph 9 hereof.

 

7.           Payroll Deductions. (a) Upon enrollment, a Participant shall elect to make contributions to the Plan by payroll deductions (in full dollar amounts and in amounts calculated to be as uniform as practicable throughout the period of the phase), in the aggregate amount not in excess of 10% of such Participant’s Base Pay for the term of the Phase, as determined according to Paragraph 19 hereof.

 

The minimum authorized payroll deduction must aggregate to not less than $10 per pay period.

 

(b)         In the event that the Participant’s compensation for any pay period is terminated or reduced from the compensation rate for such a period as of the Commencement Date of the phase for any reason so that the amount actually withheld on behalf of the Participant as of the termination date of the phase is less than the amount anticipated to be withheld over the phase year as determined on the Commencement Date of the phase, then the extent to which the Participant may exercise his option shall be based on the amount actually withheld on his behalf. In the event of a change in the pay period of any Participant, such as from bi-weekly to monthly, an appropriate adjustment shall be made to the deduction in each new pay period so as to ensure the deduction of the proper amount authorized by the Participant. 

 

(c)         All payroll deductions made for Participants shall be credited to their accounts under the Plan. A Participant may not make any separate cash payments into such account. 

 

(d)         Except for his right to discontinue participation in the Plan as provided in Paragraph 9, no Participant shall be entitled to increase or decrease the amount to be deducted in a given phase after the Commencement Date.

 

8.           Options.

 

(a)         Grant of Options.

 

	
             
 	
            (i)
 	
            A Participant who is employed by the Company as of the Commencement Date of a phase shall be granted an option as of such date to purchase a number of full shares of Company common stock to be determined by dividing the total amount to be credited to that Participant’s account under Paragraph 7 hereof by the option price set forth in Paragraph 8(a)(ii)(A) hereof, subject to the limitations of Paragraph 10 hereof.
 

 

	
             
 	
            (ii)
 	
            The option price for such shares of common stock shall be the lower of:
 

 

	
             
 	
            A.
 	
            Eighty-five percent (85%) of the fair market value of such shares of common stock on the Commencement Date of the phase; or
 

2

	
             
 	
            B.
 	
            Eighty-five percent (85%) of the fair market value of such shares of common stock on the termination date of the phase.
 

 

	
             
 	
            (iii)
 	
            The fair market value of shares of common stock of the Company shall be determined by the Committee for each valuation date in a manner acceptable under Section 423 of the Internal Revenue Code of 1986.
 

 

	
             
 	
            (iv)
 	
            Anything herein to the contrary notwithstanding, no Employee shall be granted an option hereunder:
 

 

	
             
 	
            A.
 	
            Which permits his rights to purchase stock under all employee stock purchase plans of the Company, its subsidiaries or its parent, if any to accrue at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) of the fair market value of such stock (determined at the time such option is granted) for each calendar year in which such option is outstanding at any time;
 

 

	
             
 	
            B.
 	
            If immediately after the grant such Employee would own and/or hold outstanding options to purchase stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company, its parent, if any, or of any subsidiary of the Company. For purposes of determining stock ownership under this Paragraph, the rules of Section 424(d) of the Internal Revenue Code, as amended, shall apply; or
 

 

	
             
 	
            C.
 	
            Which can be exercised after the expiration of 27 months from the date the option is granted.
 

 

	
             
 	
            (d)
 	
            Exercise of Option.
 

 

	
             
 	
            (i)
 	
            Unless a Participant gives written notice to the Company pursuant to Paragraph 8(b)(ii) or Paragraph 9 prior to the termination date of a phase, his option for the purchase of shares will be exercised automatically for him as of such termination date for the purchase of the number of full shares of Company common stock which the accumulated payroll deductions in his account at that time will purchase at the applicable option price, subject to the limitations set forth in Paragraph 10 hereof. 
 

 

	
             
 	
            (ii)
 	
            A Participant may, by written notice to the Company at any time during the thirty (30) day period immediately preceding the termination date of a phase, elect, effective as of the termination date of that phase, to exercise his option for a specified number of full shares less than the maximum number which may be purchased under his option. 
 

 

	
             
 	
            (iii)
 	
            As promptly as practicable after the termination date of any phase, the Company will deliver to each Participant herein the common stock purchased upon the exercise of his option, together with a cash payment equal to the balance, if any, of his account which was not used for the purchase of common stock with interest accrued thereon. 
 

 

9.           Withdrawal
or Termination of Participation.   (a)  A Participant may, at any time prior to
the termination date of a phase, withdraw all payroll deductions then credited to his account by giving written notice to the
Company. Promptly upon receipt of such notice of withdrawal, all payroll deductions credited to the Participant’s account
will be paid to him with interest accrued thereon and no further payroll deductions will be made during the phase. In such event,
the option granted the Participant under that phase of the Plan shall lapse immediately. Partial withdrawals of payroll deductions
hereunder may not be made.

3

 (b)         In
the event of the death of a Participant, the person or persons specified in Paragraph 14 may give notice to the Company within
sixty (60) days of the death of the Participant electing to purchase the number of full shares which the accumulated payroll
deductions in the account of such deceased Participant will purchase at the option price specified in Paragraph 8(a)(ii) and have
the balance in the account distributed in cash with interest accrued thereon. If no such notice is received by the Company within
said sixty (60) days, the accumulated payroll deductions will be distributed in full in cash with interest accrued
thereon.

 

 (c)          Upon
termination of Participant’s employment for any reason other than death of the Participant, the payroll deductions credited
to his account, plus interest, shall be returned to him.

 

10.         Stock
Reserved for Options.   (a)  Nine Hundred Fifty Thousand (950,000) shares of the
Company’s common stock are reserved for issuance upon the exercise of options to be granted under the Plan. Shares subject to
the unexercised portion of any lapsed or expired option may again be subject to option under the Plan.

 

 (b)         If
the total number of shares of the Company common stock for which options are to be granted for a given phase as specified in
Paragraph 8 exceeds the number of shares then remaining available under the Plan (after deduction of all shares for which options
have been exercised or are then outstanding) and if the Committee does not elect to cancel such phase pursuant to Paragraph 4, the
Committee shall make a pro rata allocation of the shares remaining available in as uniform and equitable a manner as it shall
consider practicable. In such event, the options to be granted and the payroll deductions to be made pursuant to the Plan which
would otherwise be effected may, in the discretion of the Committee, be reduced accordingly. The Committee shall give written
notice of such reduction to each Participant affected.

 

 (c)          The Participant (or a joint tenant named pursuant to Paragraph 10(d) hereof) shall have no rights as a shareholder with respect to any shares subject to the Participant’s option until the date of the issuance of a stock certificate evidencing such shares. No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property), distributions or other rights for which the record date is prior to the date such stock certificate is actually issued, except as otherwise provided in Paragraph 12 hereof.

 

 (d)         The shares of the Company common stock to be delivered to a Participant pursuant to the exercise of an option under the Plan will be registered in the name of the Participant or, if the Participant so directs by written notice to the Committee prior to the termination date of that phase of the Plan, in the names of the Participant and one other person the Participant may designate as his joint tenant with rights of survivorship, to the extent permitted by law.

 

11.         Accounting and Use of Funds. Payroll deductions for each Participant shall be credited to an account established for him under the Plan. A Participant may not make any separate case payments into such account. Such account shall be solely for bookkeeping purposes and no separate fund or trust shall be established hereunder and the Company shall not be obligated to segregate such funds. All funds from payroll deductions received or held by the Company under the Plan may be used, without limitation, for any corporate purpose by the Company. 

 

12.         Adjustment Provision. (a) Subject to any required action by the shareholders of the Company, the number of shares covered by each outstanding option, and the price per share thereof in each such option, shall be proportionately adjusted for any increase or decrease in the number of issued shares of the Company common stock resulting from a subdivision or consolidation of shares or the payment of a share dividend (but only on the shares) or any other increase or decrease in the number of such shares effected without receipt of consideration by the Company.

 

 (b)         In the event of a change in the shares of the Company as presently constituted, which is limited to a change of all its authorized shares with par value into the same number of shares with a different part value or without par value, the shares resulting from any such change shall be deemed to be the shares within the meaning of this Plan.

 

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13.         Non-Transferability
of Options.   (a)  Options granted under any phase of the Plan shall not be
transferable except under the laws of descent and distribution and shall be exercisable only by the Participant during his
lifetime and after his death only by his beneficiary of the representative of his estate as provided in Paragraph 9(b)
hereof.

 

 (b)         Neither
payroll deductions credited to a Participant’s account, nor any rights with regard to the exercise of an option or to receive
common stock under any phase of the Plan may be assigned, transferred, pledged, or otherwise disposed of in any way by the
Participant. Any such attempted assignment, transfer, pledge or other disposition shall be null and void and without effect,
except that the Company may, at its option, treat such act as an election to withdraw funds in accordance with Paragraph 9.

 

14.         Designation
of Beneficiary.   A Participant may file a written designation of a beneficiary who is to
receive any cash to the Participant’s credit plus interest thereon under any phase of the Plan in the event of such
Participant’s death prior to exercise of his option pursuant to Paragraph 9(b) hereof, or to exercise his option and become
entitled to any stock and/or cash upon such exercise in the event of the Participant’s death prior to exercise of the option
pursuant to Paragraph 9(b) hereof. The beneficiary designation may be changed by the Participant at any time by written notice to
the Company. 

 

Upon the death of a Participant and upon receipt by the Company of proof deemed adequate by it of the identity and existence at the Participant’s death of a beneficiary validly designated under the Plan, the Company shall in the event of the Participant’s death under the circumstances described in Paragraph 9(b) hereof, allow such beneficiary to exercise the Participant’s option pursuant to Paragraph 9(b) if such beneficiary is living on the termination date of the phase and deliver to such beneficiary the appropriate stock and/or cash after exercise of the option. In the event there is no validly designated beneficiary under the Plan who is living at the time of the Participant’s death under the circumstances described in Paragraph 9(b) or in the event the option lapses, the Company shall deliver the cash credited to the account of the Participant with interest to the
executor or administrator of the estate of the Participant, or if no such executor or administrator has been appointed to the knowledge of the Company, it may, in its discretion, deliver such cash to the spouse or to any one or more dependents or relatives of the Participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate. The Company will not be responsible for or be required to give effect to the disposition of any cash or stock or the exercise of any option in accordance with any will or other testamentary disposition made by such Participant or in accordance with the provision of any law concerning intestacy, or otherwise. No designated beneficiary shall, prior to the death of a Participant by whom he has been designated, acquire any interest in any stock or in any option or in the cash credited to the Participant under any phase of the Plan.

 

15.         Amendment
and Termination.   The Plan may be terminated at any time by the Board of Directors
provided that, except as permitted in Paragraph 4(c) with respect to an acceleration of the termination date of any phase, no such
termination will take effect with respect to any options then outstanding. Also, the Board may, from time to time, amend the Plan
as it may deem proper and in the best interests of the Company or as may be necessary to comply with Section 423 of the Internal
Revenue Code of 1986, as amended, or other applicable laws or regulations; provided, however, that no such amendment shall,
without prior approval of the shareholders of the Company (1) increase the total number of shares for which options may be granted
under the Plan (except as provided in Paragraph 12 herein), (2) permit aggregate payroll deductions in excess of ten percent (10%)
of a Participant’s compensation as of the Compensation Date of a phase, or (3) impair any outstanding option.

 

16.         Interest.   In
any situation where the Plan provides for the payment of interest on a Participant’s payroll deductions, such interest shall
be determined by averaging the month-end balances in the Participant’s account for the period of his participation and
computing interest thereon at the initial rate of three percent (3%) per annum. This interest rate may be adjusted periodically by
the Committee as it deems appropriate. 

 

5

17.         Notices.   All
notices or other communications in connection with the Plan or any phase thereof shall be in the form specified by the Committee
and shall be deemed to have been duly given when received by the Participant or his designated personal representative or
beneficiary or by the Company or its designated representative, as the case may be.

 

18.         Participation
of Subsidiaries.   The Employees of any Subsidiary of the Company shall be entitled to
participate in the Plan on the same basis as Employees of the Company, unless the Board of Directors determines otherwise.
Effective as of the date of coverage of any Subsidiary, any references herein to the “Company” shall be interpreted as
referring to such Subsidiary as well as to Insignia Systems, Inc.

 

In the event that any Subsidiary
which is covered under the Plan ceases to be a Subsidiary of Insignia Systems, Inc. the employees of such Subsidiary shall be
considered to have terminated their employment for purposes of Paragraph 9 hereof as of the date such Subsidiary ceases to be such
a Subsidiary. 

 

19.         Definitions.   (a)  “Subsidiary”
shall include any corporation defined as a subsidiary of the Company in Section 424(f) of the Internal Revenue Code of 1986, as
amended.

 

(b)         “Employee”
shall mean any employee, including an officer, of the Company who as of the day immediately preceding the Commencement Date of a
phase is customarily employed by the Company for more than twenty (20) hours per week and more than five (5) months in a calendar
year.

 

(c)          “Base Pay”
is the regular pay for employment for each employee as annualized for a twelve (12) month period, exclusive of overtime,
commissions, bonuses, disability payments, shift differentials, incentives and other similar payments, determined as of the
Commencement Date of each phase. 

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