Document:

EXHIBIT 4.1

 

INSIGNIA SYSTEMS, INC.

2003 INCENTIVE STOCK OPTION PLAN

(Adopted by Board of Directors February 24, 2003)

(Approved by Shareholders on May 20, 2003)

(Amended through February 21, 2012; Approved by Shareholders
on May 23, 2012)

 

 

1.            Purpose.  The
purpose of this Plan is to provide a means whereby Insignia Systems, Inc. (the “Company”), may be able, by granting
options to purchase stock in the Company, to attract, retain and motivate capable and loyal employees, directors, consultants and
advisors of the Company and its subsidiaries, for the benefit of the Company and its shareholders.  Both incentive stock
options which qualify for favorable tax treatment under Section 422 of the Internal Revenue Code (the “Code”), and
nonqualified stock options which do not qualify for favorable tax treatment, may be granted under the Plan.

 

2.            Reservation
of Shares.  A total of 3,675,000 shares of the authorized but unissued shares of Common Stock of the Company,
par value $.01 per share, is reserved for issue upon the exercise of options granted under the Plan.  If any option expires
or terminates for any reason without having been exercised in full, the unpurchased shares covered thereby shall become available
for additional options which may be issued to persons eligible under the Plan so long as it remains in effect.  Shares
reserved for issue as provided herein shall cease to be reserved upon termination of the Plan.

 

3.            Administration.  The
Plan shall be administered by the Compensation Committee of the Board of Directors (the “Committee”).  The
Committee shall be appointed by the Board of Directors and shall be comprised solely of two or more “non-employee directors”
within the meaning of SEC Rule 16b-3.  Each member of the Committee shall also be an “outside director” within
the meaning of Code Section 162(m).  The Committee shall have the full power to construe and interpret the Plan and to
establish and amend rules and regulations for its administration.  The Committee shall determine which persons shall
be granted options hereunder, the number of shares for which each option shall be granted, the types of options to be granted,
and any limitations on the exercise of options in addition to those imposed by this Plan.  The Committee may also waive
any restrictions on the exercise of outstanding options and approve amendments to outstanding options, provided there is no conflict
with the terms of the Plan.  The Committee shall apply such criteria as it deems appropriate in determining the persons
to whom options are granted and the number of shares to be covered by each option.

 

4.            Eligibility.  An
option may be granted to any employee, director, consultant or advisor of the Company or its subsidiaries, except that no consultant
or advisor shall be granted options in connection with the offer and sale of securities in a capital raising transaction on behalf
of the Company.  The maximum number of shares for which any person may be granted options under the Plan in any year
is limited to 100,000 shares.

 

5.            Option
Grants To Outside Directors.  Each outside director of the Company shall automatically be granted an option to
purchase 10,000 shares of Common Stock on the date first appointed or elected as a director.  Each outside director shall
also automatically be granted an option to purchase 5,000 shares of Common Stock on (a) the date of each subsequent annual meeting
of the shareholders, provided the outside director is either reelected or continues to serve as an outside director, or (b) the
anniversary of the prior year’s grant in any year in which there is no meeting of the shareholders.  In no event
shall a director receive more than one grant in any fiscal year.

 

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The period within which an option
granted to an outside director must be exercised shall be the earlier of (a) ten years from the date of grant, or (b) 90 days after
the director ceases to be a director for any reason.  Options granted to outside directors shall be immediately exercisable
in full when granted.

 

6.            Exercise
Price.  The per share exercise price for each option shall be determined by the Committee at the time of grant,
provided that the per share exercise price for any incentive stock option, and any option granted to an outside director, shall
be not less than the fair market value of the Common Stock on the date the option is granted.  In making such determination,
the Committee shall rely on market quotations, if available, but if not available, upon independent appraisals of the stock or
such other information deemed appropriate by the Committee.

 

7.            Changes
in Present Stock.  In the event of a recapitalization, merger, consolidation, reorganization, stock dividend,
stock split or other change in capitalization affecting the Company’s present capital stock, appropriate adjustment may be
made by the Committee in the number and kind of shares and the option price of shares which are or may become subject to options
granted or to be granted hereunder.

 

8.            Exercise
of Option.  Receipt by the Company of a written notice from an optionee, specifying the number of shares to be
purchased, and accompanied by payment of the purchase price for such shares, shall constitute exercise of the option as to such
shares.  The date of receipt by the Company of such written notice shall be the date of exercise of the option.  The
Company may accept payment from a broker and, upon receipt of written instructions from the optionee, deliver the purchased shares
to the broker.

 

9.            Option
Agreement Provisions.  Each option granted under the Plan shall be evidenced by a Stock Option Agreement executed
by the Company and the optionee, and shall be subject to the following terms and conditions, and such other terms and conditions
as may be prescribed by the Committee:

 

		(a)	Payment.  The full purchase price of the shares acquired upon exercise
of an option shall be paid in cash, certified or cashier’s check, or in the form of Common Stock of the Company with a market
value equal to the option exercise price and free and clear of all liens and encumbrances.

 

The Committee in its sole discretion may
also permit the “cashless exercise” of an option.  In the event of a cashless exercise, the optionee shall
surrender the option to the Company, and the Company shall issue the optionee the number of shares determined as follows:

 

	X =  	Y (A-B) /A where:
	 	 
	X =	the number of shares to be issued to the optionee.
	 	 
	Y =	the number of shares with respect to which the option is being exercised.
	 	 
	A =	the closing sale price of the Common Stock on the date of exercise, or in the absence thereof, the fair market value on the date of exercise.
	 	 
	B =	the option exercise price.

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		(b)	Exercise Period.  The period within which an option must be exercised shall
be fixed by the Committee, and shall not exceed ten years from the date of grant for an incentive stock option.  The
Committee may provide that an option will vest and become exercisable upon the completion of specified periods of employment, or
the attainment of specified performance goals.  To the extent exercisable, an option may be exercised in whole or in
part.  Outstanding unvested options shall become immediately exercisable in full in the event the Company is acquired
by merger, purchase of all or substantially all of the Company’s assets, or purchase of a majority of the outstanding stock
by a single party or a group acting in concert.

 

		(c)	Rights of Optionee Before Exercise.  The holder of an option shall not
have the rights of a shareholder with respect to the shares covered by his or her option until such shares have been issued to
him or her upon exercise of the option.

 

		(d)	No Rights to Continued Employment.  Nothing in the Plan or in any Stock
Option Agreement entered into pursuant hereto shall be construed to confer upon any optionee any right to continue in the employ
of his or her employer or interfere in any way with the right of his or her employer to terminate his or her employment at any
time.

 

		(e)	Death of Optionee.  Upon the death of an optionee, the option, or any portion
thereof, may be exercised to the extent the optionee was entitled to do so at the time of the optionee’s death, by his or
her executor or administrator or other person entitled by law to the optionee’s rights under the option, at any time within
one year subsequent to the date of death.  The option shall automatically expire one year after the optionee’s
death to the extent not exercised.

 

		(f)	Disability of Optionee.  If an optionee is an employee of the Company or
its subsidiaries, and if the optionee’s employment is terminated due to his or her disability, the optionee may, within one
year of such termination, exercise any unexercised portion of the option to the extent he or she was entitled to do so at the time
of such termination.  The option shall automatically expire one year after such termination to the extent not exercised.

 

		(g)	Other Termination of Employment.  If an optionee is an employee of the
Company or its subsidiaries, and if the optionee’s employment is terminated other than by death, disability, or conduct which
is contrary to the best interests of his or her employer, the optionee may, within 90 days of such termination, exercise any unexercised
portion of the option to the extent he or she was entitled to do so at the time of such termination.  The option shall
automatically expire 90 days after such termination to the extent not exercised.  If the optionee’s employment
is terminated by his or her employer for conduct which is contrary to the best interests of his or her employer, or if the optionee
violates any written nondisclosure agreement with his or her employer, as determined in either case by the optionee’s employer
in its sole discretion, the unexercised portion of the optionee’s option shall automatically expire at that time.  Inter-company
transfers and approved leaves of absence for up to 90 days shall not be considered termination of employment.

 

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		(h)	Non-transferability of Option.  No option shall be transferable by the
optionee other than by will or by the laws of descent and distribution, and each option shall be exercisable during the optionee’s
lifetime only by the optionee.  No option may be attached or subject to levy by an optionee’s creditors.

 

		(i)	Date of Grant.  The date on which the Committee approves the granting of
an option shall be considered the date on which such option is granted.

 

10.           Additional
Provisions for Incentive Stock Options.  

 

		(a)	Dollar Limit.  Each option granted to an employee shall constitute an incentive
stock option, provided that no more than $100,000 of such options (based upon the fair market value of the underlying shares as
of the date of grant) can first become exercisable for any employee in any calendar year.  To the extent an option grant
exceeds the $100,000 limitation, it shall constitute a non-qualified stock option.  Each Stock Option Agreement with
an employee shall specify the extent to which it is an incentive and/or non-qualified stock option.  For purposes of
applying the $100,000 limitation, options granted under this Plan and all other incentive stock option plans of the Company and
any parent or subsidiary corporation shall be included.

 

		(b)	Ten Percent Shareholders.  No incentive stock option shall be granted to
any employee who at the time directly or indirectly owns more than 10 percent of the combined voting power of all classes of stock
of the Company or of a parent or subsidiary corporation, unless the exercise price is not less than 110 percent of the fair market
value of such stock on the date of grant, and unless the option is not exercisable more than five years after the date of grant.

 

11.           Restrictions on Transfer. During
any period in which the offering of the shares under the Plan is not registered under federal and state securities laws, an optionee
shall agree in his or her option agreement that he or she is acquiring shares under the Plan for investment purposes, and not for
resale, and that the shares cannot be resold or otherwise transferred except pursuant to registration or unless, in the opinion
of counsel for the Company, registration is not required.

 

Any restrictions upon shares acquired
upon exercise of an option pursuant to the Plan and the Stock Option Agreement shall be binding upon the optionee, and his or her
heirs, executors, and administrators.  Any stock certificate issued under the Plan which is subject to restrictions shall
be endorsed so as to refer to the restrictions on transfer imposed by the Plan, and by applicable securities laws.

 

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12.           Withholding of Taxes.  The
Company shall make such provisions and take such steps as it may deem necessary or appropriate for the withholding of any taxes
that the Company is required by any law or regulation to withhold in connection with any option including, but not limited to,
withholding a portion of the shares issuable on exercise of an option, or requiring the optionee to pay to the Company, in cash,
an amount sufficient to cover the Company’s withholding obligations.

 

13.           Duration of Plan.  The
Plan shall terminate ten years after the date of its adoption by the Board of Directors, unless sooner terminated by issuance of
all shares reserved for issuance hereunder, or by the Board of Directors pursuant to Section 13.  No option shall be
granted under the Plan after such termination date.

 

14.           Termination or Amendment
of the Plan.  The Board of Directors may at any time terminate the Plan, or make such modifications to the Plan
as it shall deem advisable.  No termination or amendment of the Plan may, without the consent of the optionee to whom
any option shall previously have been granted, adversely affect the rights of such optionee under such option.

 

15.           Shareholder Approval.  The
Board of Directors shall submit the Plan to the shareholders for their approval within 12 months of the date of its adoption by
the Board.  Options granted prior to such approval are contingent on receipt of such approval, and shall automatically
lapse if such approval is not granted.  The Board shall also submit any amendments to the shareholders for approval if
required by applicable law or regulation.

 

16.           Interpretation.  The
Plan shall be interpreted in accordance with Minnesota law.

 

 

 

    	5EXHIBIT 4.2

INSIGNIA SYSTEMS, INC.

EMPLOYEE STOCK PURCHASE PLAN

(Amended through February 21, 2012; Approved by Shareholders
on May 23, 2012)

 

 

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.

 

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(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 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.

 

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8.             Options.

 

		(a)	Grant of Option.

 

		(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

 

		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 exceeds a 10,000 share limit per Employee for each plan phase;

 

		B.	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;

 

		C.	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

 

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

 

		(b)	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.

 

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		(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.

 

(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)   One Million Four Hundred Thousand (1,400,000) 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.

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(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.

 

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.

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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.

 

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.

 

    	6

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