UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
Washington, DC 20549-1004
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 8, 2016
INSIGNIA SYSTEMS, INC.
(Exact name of registrant as specified in its chapter)
Minnesota |
|
1-13471 |
|
41-1656308 |
8799 Brooklyn Blvd., Minneapolis, Minnesota |
|
55445 |
Registrants telephone number, including area code (763) 392-6200
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On April 8, 2016, Kristine Glancy was appointed Chief Executive Officer of Insignia Systems, Inc. (the Company), effective as of May 9, 2016. In connection with Ms. Glancys appointment the Company and Ms. Glancy entered into an Employment Agreement and a Change in Control Agreement, each to be effective as of May 9, 2016. The material terms of the Employment Agreement and the Change in Control Agreement are described below.
Ms. Glancy, 38, joins the Company from Kraft Foods, now Kraft Heinz Company, an international food and beverage company, where she has held the position of Customer Vice President since May 2013. Prior to becoming Customer Vice President, Ms. Glancy was Director of Sales from June 2012 to May 2013 and National Customer Manager from November 2010 to June 2012.
Ms. Glancy has not been a participant in, or is to be a participant in, any related-person transaction or proposed related-person transaction required to be disclosed by Item 404(a) of Regulation S-K under the Securities Exchange Act of 1934.
Employment Agreement
The Employment Agreement has an initial term of three years ending on May 9, 2019, provided that beginning on May 9, 2019 and on each anniversary date thereafter, the term will be automatically renewed for an additional one-year period unless either party notifies the other in writing, at least one-hundred and twenty days in advance of the relevant anniversary date, of its intent not to renew for the additional one-year period. Pursuant to the Employment Agreement, Ms. Glancy will be entitled to:
· an annual base salary of $275,000, subject to increase by the Companys Board of Directors (the Board) from time to time;
· earn a target annual incentive compensation award, beginning with the 2016 fiscal year, of 50% of her base salary with a maximum potential annual incentive compensation award of 150% of her base salary, based on the achievement of performance targets set by the Board;
· a cash signing bonus in the amount of $180,000, of which $100,000 will be paid on or as soon as practicable following the effective date of the Employment Agreement and $80,000 of which will be paid on the one year anniversary of the effective date; provided that, in the event that, prior to the one year anniversary of the effective date, (i) Ms. Glancy voluntarily terminates her employment without good reason (as defined in the Employment Agreement) or (ii) the Company terminates Ms. Glancys employment for cause (as defined in the Employment Agreement), Ms. Glancy is required to reimburse the Company the initial $100,000 payment;
· participate in all employee benefit plans and programs maintained by the Company and made available to employees generally, and all executive benefit plans maintained by the Company and made available to senior executives generally, in each case to the extent she is eligible under the terms of such plans; and
· certain fringe benefits as determined by the Board.
The Employment Agreement also provides for a grant of 100,000 shares of time-vesting restricted stock (the Inducement Restricted Stock) upon the commencement of Ms. Glancys employment on May 9, 2016. One-fifth of the shares will vest on the first anniversary of the effective date of the Employment Agreement and one-fifth of the shares will vest on each subsequent anniversary of the effective date, through and including the fifth anniversary of the effective date. The Inducement Restricted Stock will be governed by the terms of the Companys 2013 Omnibus Stock and Incentive Plan.
The Employment Agreement includes a clawback provision providing that if there is a restatement of the Companys financial results (other than a prophylactic or voluntary restatement due to a change in applicable accounting rules or interpretations) due to material noncompliance with financial reporting requirements and the Board determines in good faith that any compensation granted to Ms. Glancy was awarded or determined based on such material noncompliance, the Board or a committee thereof may recover any compensation granted to Ms. Glancy (or reduce any compensation not yet paid) based on the erroneous financial data in excess of what would have been paid (or in the case of unpaid compensation, what should be paid) to Ms. Glancy under the accounting restatement.
In the event of Ms. Glancys involuntary termination without cause or voluntary termination with good reason, Ms. Glancy will be entitled to accrued and unpaid compensation as provided in the Employment Agreement as well as the following severance pay and benefits, conditioned on the execution and continued effectiveness of a release: (1) the annual
incentive compensation she would have been entitled to receive for the year in which her termination occurs as if she had continued until the end of that fiscal year, determined based on the Companys actual performance for that year relative to the performance goals applicable to Ms. Glancy, prorated for the number of days in the fiscal year through her termination date and generally payable in a cash lump sum at the time such incentive awards are payable to other participants; (2) the applicable percentage (as used in Section 9(d) the Employment Agreement) of Ms. Glancys annual base salary as in effect at the time of Termination, payable in a single lump sum payment no later than 60 days following the termination date; and (3) welfare benefit continuation for four months following termination. In the event of Ms. Glancys death, disability (as defined in the Employment Agreement), involuntary termination for cause or voluntary termination without Good Reason, Ms. Glancy will be entitled to accrued and unpaid compensation as provided in the Employment Agreement.
During the one year period following Ms. Glancys cessation of employment with the Company she will be subject to a covenant not to compete with the Company and a covenant not to solicit employees or customers of the Company.
A copy of the Employment Agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Change in Control Agreement
The Change in Control has an initial term of three years ending on May 9, 2019, provided that beginning on May 9, 2019, and on each anniversary date thereafter, the term will be automatically renewed for an additional one-year period unless either party notifies the other in writing, at least one-hundred and twenty days in advance of the relevant anniversary date, of its intent not to renew for the additional one-year period. Additionally, if a change in control (as defined in the Change in Control Agreement) occurs during the term of the Change in Control Agreement, such agreement will continue in effect for a period of not less than twenty-four (24) months beyond the month in which the change in control occurred.
Under the Change in Control Agreement, upon a qualifying termination (as defined in the Change in Control Agreement) Ms. Glancy will be entitled to the following, conditioned on the execution of a release and subject to offset by the amount of any severance previously paid to her under any employment agreement with the Company: (1) a lump sum severance payment equal to one-hundred percent of her base salary, (2) cash payment equal to the sum of (x) unpaid incentive compensation that has been allocated or awarded to Ms. Glancy for a completed fiscal year preceding the date of the Qualifying Termination which is contingent only upon the continued employment to a subsequent date plus (y) a pro rata portion to the date of the Qualifying Termination of her target bonus for the year calculated through the date of the Qualifying Termination, (3) welfare benefit continuation for a period of 12 months, (4) certain post-retirement health care or life insurance benefits if Ms. Glancy would have become eligible for such benefits during the 24 months after the date of termination, (5) a lump sum payment equal to all earned but unused paid time off days, and (6) outplacement fees not to exceed $5,000. In addition, any amounts paid under the Change in Control Agreement will be reduced to the maximum amount that can be paid without being subject to the excise tax imposed under Internal Revenue Code Section 4999, but only if the after-tax benefit of the reduced amount is higher than the after-tax benefit of the unreduced amount. For purposes of the Change in Control Agreement, a Qualifying Termination means a termination by the Company without cause (as defined in the Change in Control Agreement) or a termination by Ms. Glancy with good reason (as defined in the Change in Control Agreement), in each case either concurrent with or within 24 months following a change in control, or a termination by the Company without cause within six months prior to a change in control if termination is in connection with or in anticipation of the change in control.
The Change in Control Agreement also provides for certain non-severance payments to Ms. Glancy if she fails to perform her full-time duties as a result of a disability (as defined in the Change in Control Agreement). In such a case, the Company will pay her current base salary and all compensation and benefits payable to her under any compensation or benefit plan the Company maintains during that period, until her employment is terminated. Additionally, if Ms. Glancys employment is terminated for any reason following a change in control and during the term of the Change in Control Agreement, the Company will pay her base salary through the date of termination and all compensation and benefits to which she is entitled for all periods preceding the date of termination under the terms of our compensation and benefit plans.
During the one year period following Ms. Glancys cessation of employment with the Company she will be subject to a covenant not to compete with the Company and a covenant not to solicit employees or customers of the Company.
A copy of the Change in Control Agreement is filed as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated herein by reference.
John C. Gonsior will no longer serve as the Companys acting President, effective as of May 9, 2016, but will remain in his current roles as Chief Financial Officer, Secretary and Treasurer.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number |
|
Description |
|
|
|
10.1 |
|
Employment Agreement, dated April 8, 2016, between Insignia Systems, Inc. and Kristine Glancy |
|
|
|
10.2 |
|
Change in Control Agreement, dated April 8, 2016, between Insignia Systems, Inc. and Kristine Glancy |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
Insignia Systems, Inc. | |
|
|
(Registrant) |
|
|
|
|
|
|
Date: April 13, 2016 |
By |
/s/ John C. Gonsior |
|
|
John C. Gonsior |
|
|
President and Chief Financial Officer |
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the Agreement) is hereby entered into as of April 8, 2016 (the Execution Date) and is effective as of May 9, 2016 (the Effective Date), by and between Insignia Systems, Inc. (the Company) and Kristine Glancy (Executive) (each hereinafter referred to as a party and collectively as the parties).
In consideration of the respective agreements of the parties contained herein, it is agreed as follows:
1. Term. The initial term of Executives employment under this Agreement shall be for the period commencing on the Effective Date and ending, subject to earlier termination as set forth in Section 8, on the third anniversary of the Effective Date (such term, as may be hereafter extended, the Employment Term); provided, however, that commencing with the third anniversary of the Effective Date and on each anniversary thereof (each an Anniversary Date), the Employment Term shall be automatically renewed for one (1) additional year beyond the term otherwise established, unless one party provides written notice to the other party, at least one-hundred and twenty (120) days in advance of an Anniversary Date, of its intent not to renew the Employment Term for an additional one year period.
2. Employment. During the Employment Term:
(a) Executive shall (i) serve as the Chief Executive Officer of the Company, with such authority, power, duties and responsibilities as are commensurate with such position and as are customarily exercised by a person situated in a similar executive capacity at a similar company; and (ii) report directly to the Board of Directors of the Company (the Board).
(b) Executive shall devote her full-time business attention to the business and affairs of the Company and she shall perform her duties faithfully and efficiently subject to the directions of the Board. Executive may manage personal and family investments and affairs, participate in industry organizations and deliver lectures at educational institutions, so long as such activities do not interfere with the performance of Executives responsibilities hereunder. Executive shall be subject to and shall abide by each of the Companys personnel policies applicable to other senior executives.
3. Annual Compensation.
(a) Base Salary. The Company agrees to pay or cause to be paid to Executive during the Employment Term a base salary at the annual rate of $275,000 or such increased amount as the Board may from time to time determine (hereinafter referred to as the Base Salary); provided, however, that the Base Salary may be reduced by no more than 15% in connection with an across-the-board salary reduction by the Company similarly affecting all senior executives of the
Company. The Base Salary shall be payable in accordance with the Companys customary practices applicable to its executives. Such Base Salary shall be reviewed at least annually by the Board pursuant to the Companys normal performance review policies for senior executives.
(b) Annual Incentive Compensation. For each fiscal year of the Company ending during the Employment Term, beginning with the 2016 fiscal year, Executive shall be eligible to receive a target annual cash incentive compensation of 50% of Base Salary as in effect on the final day of such fiscal year (such target incentive compensation, as may hereafter be increased, the Target Annual Incentive) with the opportunity to receive maximum annual cash incentive compensation of 150% of Base Salary as in effect on the final day of such fiscal year, as approved by the Board in its sole discretion, if the Company and Executive achieve certain performance targets as proposed by management and approved by the Board. Such annual incentive compensation (Annual Incentive Compensation) shall be paid in no event later than the 15th day of the third month following the end of the taxable year (of the Company or Executive, whichever is later) in which the performance targets have been achieved.
4. Sign-On Compensation.
(a) Cash Bonus. Executive shall receive a cash signing bonus in the amount of $180,000, of which $100,000 (the Effective Date Bonus Payment) will be paid on or as soon as practicable following the Effective Date and $80,000 of which will be paid on the one year anniversary of the Effective Date. In the event that, prior to the one year anniversary of the Effective Date, (i) Executive voluntarily terminates the Employment Term and Executives employment hereunder without Good Reason or (ii) the Company terminates the Employment Term and Executives employment hereunder for Cause, Executive shall reimburse the Company an amount equal to the Effective Date Bonus Payment within fifteen (15) days of the termination date.
(b) Inducement Time-Vesting Restricted Stock Grant. On or as soon as practicable following the Effective Date, the Company shall grant Executive 100,000 shares of time-vesting restricted stock (the Inducement Restricted Stock). One-fifth of these shares will vest on the first anniversary of the Effective Date and one-fifth of these shares will vest on each subsequent anniversary of the Effective Date, through and including the fifth anniversary of the Effective Date. Further terms and conditions of the Inducement Restricted Stock shall include those terms and conditions set forth in the Companys 2013 Omnibus Stock and Incentive Plan and in Exhibit A.
5. Other Benefits.
(a) Employee Benefits. During the Employment Term and any renewals, Executive shall be entitled to participate in all employee benefit plans, practices and programs maintained by the Company and made available to employees of the
Company generally (other than plans in effect on the date hereof that are closed to new participants), to the extent Executive is eligible under the terms of such plans. Executives participation in such plans, practices and programs shall be on the same basis and terms as are applicable to employees of the Company generally.
(b) Executive Benefits. During the Employment Term, Executive shall be entitled to participate in such executive benefit plans maintained by the Company and made available to senior executives of the Company generally, on the same basis and terms as are applicable to such senior executives generally. No additional compensation provided under any of such plans shall be deemed to modify or otherwise affect the terms of this Agreement or any of Executives entitlements hereunder.
(c) Fringe Benefits. During the Employment Term, Executive shall be entitled to such fringe benefits as shall be determined by the Board.
(d) Business Expenses. Upon submission of proper invoices in accordance with the Companys policies, Executive shall be entitled to receive prompt reimbursement of all reasonable out-of-pocket business, entertainment and travel expenses incurred by Executive in connection with the performance of Executives duties hereunder and otherwise incurred in accordance with the Companys travel and entertainment policy in effect from time to time. Such reimbursement shall be made as soon as practicable and in no event later than the end of the calendar year following the calendar year in which the expenses were incurred.
(e) Office and Facilities. During the Employment Term, Executive shall be provided with an appropriate office at the Companys headquarters, with such secretarial and other support facilities as are commensurate with Executives status with the Company and adequate for the performance of Executives duties hereunder.
(f) Paid Time Off (PTO). Executive shall be entitled, without loss of pay, to up to three (3) weeks of vacation per calendar year.
6. Recoupment. In the event of a restatement of the Companys financial results (other than a prophylactic or voluntary restatement due to a change in applicable accounting rules or interpretations) due to material noncompliance with financial reporting requirements, with respect to any compensation granted (whether already paid or only calculated as payable and yet to be paid) to Executive if the Board determines in good faith that such compensation was awarded (or in the case of unpaid compensation, determined for award) based on such material noncompliance then the Board or a committee thereof comprised of independent (as defined under the rules of the NASDAQ Stock Market) Board members shall be entitled on behalf of the Company to recover all of the Executives compensation (or in the case of unpaid compensation, to reduce such compensation) based on the erroneous financial data in excess of what would have been paid (or in the case of unpaid compensation, what should be paid) to the Executive under the accounting restatement. Such recovery period shall comprise up to the three (3)
completed fiscal years preceding the date on which the Company is required to prepare the accounting restatement.
In determining whether to seek recovery of compensation, the Board or applicable committee thereof may take into account any considerations it deems appropriate, including whether the assertion of a claim may violate applicable law or adversely impact the interests of the Company in any related proceeding or investigation and the extent to which the Executive was responsible for the error that resulted in the restatement. This Section 6 shall be deemed amended to the extent reasonably necessary to conform to any applicable law or to any Company recoupment policy adopted by the Board for its senior executives.
7. Termination. The Employment Term and Executives employment hereunder may be terminated under the circumstances set forth below; provided, however, that notwithstanding anything contained herein to the contrary, Executive shall not have any duties or responsibilities to the Company after Executives termination of employment during the Employment Term or upon expiration of the Employment Term that would preclude Executive from having a separation from service from the Company within the meaning of Section 409A of the Internal Revenue Code (the Code), upon expiration of the Employment Term.
(a) Disability. The Company may terminate the Employment Term and Executives employment hereunder, on written notice to Executive after having reasonably established Executives Disability. For purposes of this Agreement, Executive will be deemed to have a Disability if, as a result of the Executives incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executives duties with the Company for a period of six (6) consecutive months, the Company shall have given the Executive a Notice of Termination for Disability, and, within thirty (30) days after such Notice of Termination is given, the Executive shall not have returned to the full-time performance of the Executives duties. Executive shall be entitled to the compensation and benefits provided for under this Agreement for any period prior to Executives termination by reason of Disability during which Executive is unable to work due to a physical or mental infirmity in accordance with the Companys policies for similarly-situated executives.
(b) Death. The Employment Term and Executives employment hereunder shall be terminated as of the date of Executives death.
(c) Cause. The Company may terminate the Employment Term and Executives employment hereunder for Cause by providing a Notice of Termination (as defined in Section 8 below) that notifies Executive of her termination for Cause, effective as of the date of such notice. Cause shall mean, for purposes of this Agreement: (a) the deliberate and continued failure to substantially perform Executives duties and responsibilities under this Agreement; (b) the criminal felony conviction of, or a plea of guilty or nolo contendere by, Executive; (c) the material violation of Company policy; (d) the act of fraud or dishonesty resulting
or intended to result in personal enrichment at the expense of the Company; (e) the gross misconduct in performance of duties that results in material economic harm to the Company; or (f) the material breach of this Agreement by Executive. Notwithstanding the foregoing, in order to establish Cause for Executives termination for purposes of clauses (a), (c) and (f) above, the Company must deliver a written demand to Executive which specifically identifies the conduct that may provide grounds for Cause, and the Executive must have failed to cure such conduct within thirty (30) days after such demand. Reference in this paragraph to the Company shall also include direct and indirect subsidiaries of the Company.
(d) Without Cause. The Company may terminate the Employment Term and Executives employment hereunder other than for Cause, Disability or death. The Company shall deliver to Executive a Notice of Termination (as defined in Section 8 below) prior to such termination other than for Cause, Disability or death, which notice shall specify the termination date.
(e) Good Reason. Executive may terminate the Employment Term and her employment hereunder with the Company for Good Reason (as defined below) by delivering to the Company a Notice of Termination not less than thirty (30) days prior to such termination for Good Reason. The Company shall have the option of terminating Executives duties and responsibilities prior to the expiration of such thirty-day notice period. For purposes of this Agreement, Good Reason means any of the following: (a) a material and adverse change in Executives duties, title or position, provided, however, that a change in the Companys status as a publicly held corporation filing reports with the Securities and Exchange Commission shall not be deemed to constitute Good Reason hereunder; (b) a reduction in the Executives Base Salary, provided, however, that Good Reason shall not exist in the event that Executives Base Salary is reduced no more than 15% in connection with an across-the-board salary reduction by the Company similarly affecting all senior executives of the Company; or (c) a material breach by the Company of its obligations under this Agreement. Good Reason shall not exist unless Executive shall provide notice of the existence of the Good Reason condition within ninety (90) days of the date Executive learns of the condition. The Company shall have a period of thirty (30) days during which it may remedy the condition, and in case of full remedy such condition shall not be deemed to constitute Good Reason hereunder.
(f) Without Good Reason. Executive may voluntarily terminate the Employment Term and Executives employment hereunder without Good Reason by delivering to the Company a Notice of Termination not less than thirty (30) days prior to such termination and the Company shall have the option of terminating Executives duties and responsibilities, but not the employment relationship, prior to the expiration of such thirty-day notice period.
8. Notice of Termination. Any purported termination by the Company or by Executive shall be communicated by written Notice of Termination to the other party hereto. For
purposes of this Agreement, a Notice of Termination shall mean a notice that indicates a termination date, the specific termination provision in this Agreement relied upon and sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executives employment under the provision so indicated. For purposes of this Agreement, no such purported termination of Executives employment hereunder shall be effective without such Notice of Termination (unless waived by the party entitled to receive such notice, in the manner described in Section 16(f)).
9. Compensation upon Termination. Upon termination of Executives employment during the Employment Term, Executive shall be entitled to the following benefits:
(a) Termination by the Company for Cause or by Executive without Good Reason. If Executives employment is terminated by the Company for Cause or by Executive without Good Reason, the Company shall provide Executive with the following payments and benefits (collectively, the Accrued Compensation):
(i) any accrued and unpaid Base Salary;
(ii) any Annual Incentive Compensation earned but unpaid in respect of any completed fiscal year preceding the termination date;
(iii) reimbursement for any and all monies advanced or expenses incurred in connection with Executives employment for reasonable and necessary expenses incurred by Executive on behalf of the Company for the period ending on the termination date;
(iv) any previous compensation that Executive has previously deferred (including any interest earned or credited thereon), in accordance with the terms and conditions of the applicable deferred compensation plans or arrangements then in effect, to the extent vested as of Executives termination date; and
(v) any amount or benefit as provided under any plan, program, agreement or corporate governance document of the Company or its affiliates that are then-applicable (the Company Arrangements), in accordance with the terms thereof.
(b) Termination by the Company for Disability. If Executives employment is terminated by the Company for Disability, Executive shall be entitled to the Accrued Compensation.
(c) Termination By Reason of Death. If Executives employment is terminated by reason of Executives death, Executive shall be entitled to the Accrued Compensation.
(d) Termination by the Company Other Than for Cause, Disability or Death, or by Executive with Good Reason. If Executives employment with the Company shall be terminated (x) by the Company other than for Cause, Disability or death,
or (y) by Executive with Good Reason, Executive shall be entitled to the following payments and benefits; provided that, in the case of clauses (ii) and (iii) below, Executive shall have executed and not revoked a release of claims in substantially the form set forth in Exhibit B hereto:
(i) the Accrued Compensation;
(ii) an amount equal to the product of (A) the Annual Incentive Compensation that Executive would have been entitled to receive in respect of the fiscal year in which Executives termination date occurs, had Executive continued in employment until the end of such fiscal year, which amount shall be determined based on the Companys actual performance for such year relative to the Company performance goals applicable to Executive without any exercise of negative discretion with respect to Executive in excess of that applied either to senior executives of the Company generally for the applicable performance period or in accordance with the Companys historical past practice), and (B) a fraction (x) the numerator of which is the number of days in such fiscal year through the termination date and (y) the denominator of which is 365; such amount shall be payable in a cash lump sum payment at the time such incentive awards are payable to other participants (but no later than the fifteenth day of the third month of the following fiscal year of the Company);
(iii) in lieu of any further Base Salary or other compensation or benefits not described in clauses (i), (ii), or (iv) for periods subsequent to the termination date, an amount in cash equal to the applicable percentage of Executives annual Base Salary as in effect at the time of Termination which amount shall be payable in a single lump sum payment no later than 60 days following the termination date; and
(iv) the Company shall provide Executive and Executives dependents with continued coverage under any health, medical, dental, vision or life insurance program or policy in which Executive was eligible to participate as of the time of Executives employment termination, for four (4) months following such termination on terms no less favorable to Executive and Executives dependents (including with respect to payment for the costs thereof) than those in effect immediately prior to such termination, which coverage shall cease, on a benefit-by-benefit basis, once any coverage is made available to Executive by a subsequent employer. COBRA continuation coverage shall run concurrently with such four-month period. Following the four-month continuation period, Executive will be eligible to receive COBRA benefits for any remaining portion of the applicable COBRA period at normal COBRA rates. Anything herein to the contrary notwithstanding, the terms of this Section 9(d)(iv) shall be modified to the extent required to meet the provisions of any federal law applicable to the healthcare plans and arrangements of the Company, including to the extent required to maintain the grandfathered status of such plans or
arrangements under federal law. Any failure to provide the coverage specified herein shall not in and of itself constitute a breach of this Agreement, provided, however, that the Company shall use its reasonable efforts to provide economically equivalent payments or benefits to Executive to the extent possible without adverse effects on the Company, to the extent permitted by law.
For purposes of Section 9(d)(iii) above, during the period from the Effective Date to the first anniversary of the Effective Date, the applicable percentage shall be 50% and during the period after the first anniversary of the Effective Date, the applicable percentage shall be 100%.
(e) Expiration of Employment Term After Notice of Non-Renewal by the Company. If the Executives employment terminates at the end of the Employment Term because the Company has delivered a notice of non-renewal (as described in Section 1), Executive shall be entitled to the following payments and benefits:
(i) the Accrued Compensation; and
(ii) COBRA benefits for the applicable COBRA period at normal COBRA rates.
(f) No Mitigation. Executive shall not be required to mitigate the amount of any payment provided for under this Agreement by seeking other employment or otherwise and, except as provided in Sections 9(d)(iv) above, no such payment shall be offset or reduced by the amount of any compensation or benefits provided to Executive in any subsequent employment.
10. Section 409A. Notwithstanding anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A of the Code, (i) no amounts shall be paid to Executive under Section 9 of this Agreement until Executive would be considered to have incurred a separation from service from the Company within the meaning of Section 409A of the Code, and (ii) amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to this Agreement during the six-month period immediately following Executives separation from service shall instead be paid on the first business day after the date that is six months following Executives separation from service (or death, if earlier). Each amount to be paid or benefit to be provided to Executive pursuant to this Agreement, which constitutes deferred compensation subject to Section 409A, shall be construed as a separate identified payment for purposes of Section 409A. To the extent required to avoid an accelerated or additional tax under Section 409A, amounts reimbursable to Executive under this Agreement shall be paid to Executive on or before the last day of the year following the year in which the expense was incurred and the amount of expenses eligible for reimbursement (and in-kind benefits provided to Executive) during any one year may not effect amounts reimbursable or provided in any subsequent year; provided, however, that with respect to any reimbursements for any taxes which Executive would become entitled to under the terms of this Agreement, the payment of such
reimbursements shall be made by the Company no later than the end of the calendar year following the calendar year in which Executive remits the related taxes.
11. Records and Confidential Data; Inventions.
(a) Executive acknowledges that in connection with the performance of Executives duties during the Employment Term, the Company will make available to Executive, or Executive will develop and have access to, certain Confidential Information (as defined below) of the Company and its subsidiaries. Executive acknowledges and agrees that any and all Confidential Information learned or obtained by Executive during the course of Executives employment by the Company or otherwise, whether developed by Executive alone or in conjunction with others or otherwise, shall be and is the property of the Company and its subsidiaries.
(b) Executive shall keep confidential all Confidential Information, shall not use Confidential Information in any manner that is detrimental to the Company, shall not use Confidential Information other than in connection with Executives discharge of Executives duties hereunder, and shall safeguard the Confidential Information from unauthorized disclosure; provided, however, that Confidential Information may be disclosed by Executive (i) to the Company and its affiliates, or to any authorized agent or representative of any of them, (ii) in connection with performing her duties hereunder, (iii) subject to Section 12(c), when required to do so by law or by a court, governmental agency, legislative body, arbitrator or other person with apparent jurisdiction to order her to divulge, disclose or make accessible such information, provided that Executive notify the Company prior to such disclosure, (iv) in the course of any proceeding under Sections 13 or 14 of this Agreement or (v) in confidence to an attorney or other professional advisor for the purpose of securing professional advice, so long as such attorney or advisor is subject to confidentiality restrictions no less restrictive than those applicable to Executive hereunder.
(c) As soon as possible following the termination of Executives employment hereunder, Executive shall return to the Company all written Confidential Information that is in her possession or control and destroy all of her copies of any analyses, compilations, studies or other documents containing or reflecting any Confidential Information. Within five (5) business days of the receipt of such request by Executive, Executive shall, upon written request of the Company, deliver to the Company a document certifying that such written Confidential Information has been returned or destroyed in accordance with this Section 11(c).
(d) For the purposes of this Agreement, Confidential Information shall mean all confidential and proprietary information of the Company and its subsidiaries, including, without limitation,
(i) trade secrets concerning the business and affairs of the Company and its subsidiaries, product specifications, data, know-how, formulae,
compositions, processes, non-public patent applications, designs, sketches, photographs, graphs, drawings, samples, inventions and ideas, past, current, and planned research and development, current and planned manufacturing or distribution methods and processes, customer lists, current and anticipated customer requirements, price lists, market studies, business plans, computer software and programs (including object code and source code), computer software and database technologies, systems, structures, and architectures (and related formulae, compositions, processes, improvements, devices, know-how, inventions, discoveries, concepts, ideas, designs, methods and information);
(ii) information concerning the business and affairs of the Company and its subsidiaries (which includes unpublished financial statements, financial projections and budgets, unpublished and projected sales, capital spending budgets and plans, the names and backgrounds of key personnel, to the extent not publicly known, personnel training and techniques and materials) however documented; and
(iii) notes, analysis, compilations, studies, summaries, and other material prepared by or for the Company or its subsidiaries containing or based, in whole or in part, on any information included in the foregoing. For purposes of this Agreement, the Confidential Information shall not include and Executives obligations shall not extend to (i) information that is generally available to the public, (ii) information obtained by Executive other than pursuant to or in connection with her employment and (iii) information that is required to be disclosed by law or legal process.
(e) Executive will grant and does hereby grant to the Company the sole and exclusive ownership of, including the sole and exclusive right to reproduce, use or disclose for any purpose, any and all reports, drawings, blueprints, software code, computer programs, data, writings and technical information made or prepared by Executive alone or with others during the term of Executives employment, whether or not made or prepared in the course of Executives employment, that relate to apparatus, compositions of matter or methods pertaining to the Companys business. Executive acknowledges that all such reports, drawings blueprints, software code, computer programs, data, writings and technical information are property of the Company.
(f) Executive will promptly disclose to the Company in writing all inventions and proprietary information that Executive alone or with others conceive, generate, or reduce to practice, during or after working hours, while Executive is an employee of the Company; and all such inventions and proprietary information shall be the exclusive property of the Company and are hereby assigned to the Company, except as otherwise specifically agreed to by the Company in writing.
(g) Executive will, at the Companys expense, give the Company all assistance it reasonably requires to perfect, protect and use its rights to inventions and
proprietary information. In particular, but without limitation, Executive will sign all documents, do all things, and supply all information that the Company may deem necessary or desirable to (1) transfer or record the transfer of Executives entire right, title and interest in inventions and proprietary information; and (2) enable the Company to obtain patent, copyright or trademark protection for inventions anywhere in the world.
(h) The obligations of Sections 11(e)-(h) shall not apply to (1) all patents issued in Executives name, alone or with others, prior to the Effective Date; (2) inventions for which no equipment, supplies, facility or trade secret information of the Company were used and which are developed entirely on Executives own time, and (a) which do not relate directly to the business of the Company or to the Companys actual or demonstrably anticipated research or development, or (b) which do not result from any work performed by Executive for the Company.
12. Covenant Not to Solicit, Not to Compete, Not to Disparage and to Cooperate in Litigation.
(a) Covenant Not to Solicit. To protect the Confidential Information and other trade secrets of the Company as well as the goodwill and competitive business of the Company, Executive agrees, during the Employment Term and for a period of twelve (12) months after Executives cessation of employment with the Company, (i) not to solicit or participate in or assist in any way in the solicitation of any employees of the Company and (ii) not to solicit, influence or attempt to influence any person who was a customer of the Company or its affiliates during the period of Executives employment hereunder or solicit, influence or attempt to influence potential customers who are or were identified through leads developed during the course of employment with the Company, or otherwise divert or attempt to divert any existing business of the Company and its affiliates. For purposes of clause (i) of this covenant, solicit or solicitation means directly or indirectly influencing or attempting to influence employees of the Company to cease employment with the Company (except in the course of Executives duties to the Company) or to become employed with any other person, partnership, firm, corporation or other entity, provided, that solicitation through general advertising not targeted at the Companys employees or the provision of references shall not constitute a breach of such obligations. Executive agrees that the covenants contained in this Section 12(a) are reasonable and desirable to protect the Confidential Information of the Company.
(b) Covenant Not to Compete.
(i) To protect the Confidential Information and other trade secrets of the Company as well as the goodwill and competitive business of the Company, Executive agrees, during the Employment Term and for a period of twelve (12) months after Executives cessation of employment with the Company, that Executive will not, except in the course of Executives employment hereunder, directly or indirectly for the
Executive or any third party, manage, operate, control, or participate in the management, operation, or control of, be employed by, associated with, or in any manner connected with, lend Executives name to, or render services or advice to, any third party, or any business, whose services or products compete (including as described below) with the material services or products of the Company; provided, however, that Executive may in any event (x) own up to a 5% passive ownership interest in any public or private entity, and (y) be employed by, or otherwise have material association with, any business whose services or products compete with the material services or products of the Company so long as her employment or association is solely with a separately managed and operated division or affiliate of such business that does not compete with the Company.
(ii) For purposes of this Section 12(b), any third party, or any business, whose products compete includes any entity engaged in any business or activity which is directly in competition with any services or products sold by, or any business or activity engaged in by, the Company or any of its affiliates, or any entity with which the Company has a product(s) licensing agreement at the end of the Employment Term and any entity with which the Company is, at the time of termination, negotiating, and eventually concludes within twelve (12) months of the Employment Term, a product licensing or acquisition agreement.
(c) Cooperation in Any Investigations and Litigation. Executive agrees that Executive will reasonably cooperate with the Company, and its counsel, in connection with any investigation, inquiry, administrative proceeding or litigation relating to any matter in which Executive becomes involved or of which Executive has knowledge as a result of Executives service with the Company by providing truthful information. The Company agrees to promptly reimburse Executive for reasonable expenses (including attorneys fees and other expenses of counsel) reasonably incurred by Executive, in connection with Executives cooperation pursuant to this Section 12(c). Such reimbursements shall be made as soon as practicable, and in no event later than the calendar year following the year in which the expenses are incurred. Executive agrees that, in the event Executive is subpoenaed by any person or entity (including, but not limited to, any government agency) to give testimony (in a deposition, court proceeding or otherwise) which in any way relates to Executives employment by the Company, Executive will, to the extent not legally prohibited from doing so, give prompt notice of such request to the Chief Financial Officer of the Company so that the Company may contest the right of the requesting person or entity to such disclosure before making such disclosure. Nothing in this provision shall require Executive to violate Executives obligation to comply with valid legal process.
(d) Nondisparagement. Executive covenants that during and following the Employment Term, Executive will not willfully and materially disparage or encourage or induce others to disparage the Company or its subsidiaries, together
with all of their respective past and present directors, managers, officers, shareholders, partners, employees, agents, attorneys, servants and customers and each of their predecessors, successors and assigns; provided that such limitation shall extend to past and present managers, officers, shareholders, partners, employees, agents, attorneys, servants and customers only in their capacities as such or in respect of their relationship with the Company and its subsidiaries. Nothing in this Agreement is intended to or shall prevent Executive from providing, or limiting testimony in response to a valid subpoena, court order, regulatory request or other judicial, administrative or legal process or otherwise as required by law.
(e) Blue Pencil. It is the intent and desire of Executive and the Company that the provisions of this Section 12 be enforced to the fullest extent permissible under the laws and public policies as applied in each jurisdiction in which enforcement is sought. If any particular provision of this Section 12 shall be determined to be invalid or unenforceable, such covenant shall be amended, without any action on the part of either party hereto, to delete there from the portion so determined to be invalid or unenforceable, such deletion to apply only with respect to the operation of such covenant in the particular jurisdiction in which such adjudication is made.
(f) Survival. Executives obligations under this Section 12 shall survive the termination of the Employment Term.
13. Remedies for Breach of Obligations under Sections 11 or 12 hereof. Executive acknowledges that the Company will suffer irreparable injury, not readily susceptible of valuation in monetary damages, if Executive breaches Executives obligations under Sections 11 or 12 hereof. Accordingly, Executive agrees that the Company will be entitled, in addition to any other available remedies, to obtain injunctive relief against any breach or prospective breach by Executive of Executives obligations under Sections 11 or 12 hereof in any Federal or state court sitting in the State of Minnesota, or, at the Companys election, in any other state in which Executive maintains Executives principal residence or Executives principal place of business. Executive hereby submits to the non-exclusive jurisdiction of all those courts for the purposes of any actions or proceedings instituted by the Company to obtain that injunctive relief, and Executive agrees that process in any or all of those actions or proceedings may be served by registered mail, addressed to the last address provided by Executive to the Company, or in any other manner authorized by law.
14. Resolution of Disputes. Any claim or dispute arising out of or relating to this Agreement, including, without limitation, Sections 6 and 7 hereof, any other Company Arrangement, Executives employment with the Company, or any termination thereof (collectively, Covered Claims) shall (except to the extent otherwise provided in Section 13 with respect to certain requests for injunctive relief) be resolved (x) if mutually agreed by the Company and Executive, by confidential mediation with the assistance of an independent mediator selected by mutual agreement of the parties, or (y) if such mediation is not successful or if such mediation is not mutually agreed by the Company or Executive, by litigation to occur in the District Court of the Second Judicial District, County of Ramsey,
State of the Minnesota or the United States District Court for the District of Minnesota. Each party shall bear its (or her) own costs, including, without limitation, the fees and expenses of its (or her) own attorney, and the fees and expenses of the arbitrator shall be borne equally by each party.
15. Representations and Warranties.
(a) The Company represents and warrants that (i) it is fully authorized by action of the Board of Directors of the Company (and of any other person or body whose action is required) to enter into this Agreement and to perform its obligations under it, (ii) the execution, delivery and performance of this Agreement by it does not violate any applicable law, regulation, order, judgment or decree or any agreement, arrangement, plan or corporate governance document (x) to which it is a party or (y) by which it is bound, and (iii) upon the execution and delivery of this Agreement by the parties, this Agreement shall be its valid and binding obligation, enforceable against it in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors rights generally.
(b) Executive represents and warrants to the Company that Executive is not a party to or otherwise bound by any agreement or arrangement (including, without limitation, any license, covenant, or commitment of any nature), or subject to any judgment, decree, or order of any court or administrative agency, that would conflict with or will be in conflict with or in any way preclude, limit or inhibit Executives ability to execute this Agreement or to carry out Executives duties and responsibilities hereunder.
16. Miscellaneous.
(a) Successors and Assigns.
(i) This Agreement shall be binding upon and shall inure to the benefit of the Company, its successors and permitted assigns and the Company shall require any successor or assign to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession or assignment had taken place. The Company may not assign or delegate any rights or obligations hereunder except to a successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company. The term the Company as used herein shall include a corporation or other entity acquiring all or substantially all the assets and business of the Company (including this Agreement) whether by operation of law or otherwise.
(ii) Neither this Agreement nor any right or interest hereunder shall be assignable or transferable by Executive, Executives beneficiaries or legal representatives, except by will or by the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by Executives legal personal representatives.
(b) Indemnification. The Company shall indemnify Executive as provided in Companys by-laws and Articles of Incorporation.
(c) Right to Counsel. Executive acknowledges that Executive has had the opportunity to consult with legal counsel of Executives choice in connection with the drafting, negotiation and execution of this Agreement and related employment arrangements.
(d) Fees and Expenses. The Company shall pay reasonable and documented legal fees and related expenses, up to a maximum amount of $3,000, incurred by Executive in connection with the negotiation of this Agreement. Such reimbursement shall be made as soon as practicable, but in no event later than the end of the taxable year of Executive following the taxable year in which the expenses were incurred.
(e) Notice. For the purposes of this Agreement, notices and all other communications provided for in the Agreement (including the Notice of Termination) shall be in writing and shall be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage prepaid, addressed to the respective addresses last given by each party to the other, provided that all notices to the Company shall be directed to the attention of the Chief Financial Officer of the Company. All notices and communications shall be deemed to have been received on the date of delivery thereof or on the third business day after the mailing thereof, except that notice of change of address shall be effective only upon receipt.
(f) Withholding. The Company shall be entitled to withhold the amount, if any, of all taxes of any applicable jurisdiction required to be withheld by an employer with respect to any amount paid to Executive hereunder. The Company, in its sole and absolute discretion, shall make all determinations as to whether it is obligated to withhold any taxes hereunder and the amount hereof.
(g) Modification. 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 Executive and the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or 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 subsequent time. No agreement or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which is not expressly set forth in this Agreement.
(h) Effect of Other Law. Anything herein to the contrary notwithstanding, the terms of this Agreement shall be modified to the extent required to meet the provisions
of any federal law applicable to the employment arrangements between Executive and the Company. Any delay in providing benefits or payments, any failure to provide a benefit or payment, or any repayment of compensation that is required under the preceding sentence shall not in and of itself constitute a breach of this Agreement, provided, however, that the Company shall provide economically equivalent payments or benefits to Executive to the extent permitted by law.
(i) Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Minnesota applicable to contracts executed in and to be performed entirely within such State, without giving effect to the conflict of law principles thereof.
(j) Inconsistencies. In the event of any inconsistency between any provision of this Agreement and any provision of any employee handbook, personnel manual, program, policy, or arrangement of the Company or its affiliates (including, without limitation, any provisions relating to notice requirements and post-employment restrictions), the provisions of this Agreement and the Exhibits hereto, shall control, unless the parties otherwise agree in a writing that expressly refers to the provision of this Agreement whose control she is waiving.
(k) Beneficiaries/References. In the event of Executives death or a judicial determination of her incompetence, references in this Agreement to Executive shall be deemed, where appropriate, to refer to her beneficiary, estate or other legal representative.
(l) Survivorship. Except as otherwise set forth in this Agreement, the respective rights and obligations of the parties hereunder shall survive the Employment Term and any termination of the Executives employment.
(m) Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.
(n) Entire Agreement. Upon the Execution Date, this Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements, if any, understandings and arrangements, oral or written, between the parties hereto with respect to the subject matter hereof; provided, however, that this Agreement shall not supersede the Change in Control Agreement between the Company and the Executive entered into as of April 8, 2016 (the Change in Control Agreement). Notwithstanding anything to the contrary contained herein, no payments shall be made (nor benefits provided) under Section 9 of this Agreement in the event that the Executive is entitled to payments or benefits under the Change in Control Agreement.
(o) Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same agreement.
[Remainder of Page Intentionally Left Blank.]
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and Executive has executed this Agreement as of the day and year first above written.
|
INSIGNIA SYSTEMS, INC. | |
|
| |
|
| |
|
By: |
/s/ F. Peter Zaballos |
|
Name: |
F. Peter Zaballos |
|
Title: |
Co-Chairman of the Board of Directors |
|
|
|
|
|
|
|
KRISTINE GLANCY | |
|
| |
|
| |
|
By: |
/s/ Kristine Glancy |
Signature Page to Employment Agreement
EXHIBIT A
[Representative Terms and Conditions]
Subject: Restricted Stock Award
Dear Ms. Glancy:
This letter is to inform you that the Board of Directors of Insignia Systems, Inc. has granted to you 100,000 shares of Restricted Stock effective April 8, 2016:
The award is subject to the terms of the 2013 Omnibus Stock and Incentive Plan and this grant letter.
Vesting Schedule. Except as otherwise provided herein, provided that you remain employed with the Company through the applicable vesting date, the Restricted Stock will vest in accordance with the following schedule:
Vesting Date |
|
Shares of Common Stock |
First Anniversary of Effective Date |
|
20,000 Shares |
Second Anniversary of Effective Date |
|
20,000 Shares |
Third Anniversary of Effective Date |
|
20,000 Shares |
Fourth Anniversary of Effective Date |
|
20,000 Shares |
Fifth Anniversary of Effective Date |
|
20,000 Shares |
Taxes. The company will use share tax withholding to satisfy your tax obligations unless you provide a payment to cover the taxes.
Employment Events. The following chart outlines the provisions which apply to the grant for various employment events.
Event |
|
Restricted Stock |
Voluntary resignation |
|
Forfeit unvested shares |
Termination for Cause (as defined in the Employment Agreement between you and the Company dated April 8, 2016 (the Employment Agreement)) |
|
Forfeit unvested shares |
Involuntary termination without Cause |
|
Unvested shares eligible to vest on the next applicable vesting date shall vest on termination date, all other unvested shares forfeited. |
Voluntary termination for Good Reason (as defined in Employment Agreement) |
|
Unvested shares eligible to vest on the next applicable vesting date shall vest on termination date, all other unvested shares forfeited. |
Death |
|
Unvested shares eligible to vest on the next applicable vesting date shall vest on termination date, all other unvested shares forfeited. |
Disability (as defined in the Employment Agreement) |
|
Unvested shares eligible to vest on the next applicable vesting date shall vest on termination date, all other unvested shares forfeited. |
Change in Control |
|
If the continuing or successor entity fails to assume or replace awards with new awards of equivalent value, then accelerated vesting of all unvested shares |
Dividends. If the company makes cash dividend payments during the restriction period, the value of the dividends will accrue in a non-interest bearing account. You will receive a cash payment for the accrued dividends at the end of the restriction period. The payment would be adjusted proportionate to the earned shares. Please contact the Chief Financial Officer if you have questions.
|
Sincerely, |
|
|
|
|
|
F. Peter Zaballos |
|
Co-Chairman of the Board of Directors |
EXHIBIT B
FORM OF RELEASE AGREEMENT
THIS RELEASE AGREEMENT (the Release) is made as of this day of , , by and between Kristine Glancy (Executive) and Insignia Systems, Inc., a Minnesota corporation (the Company).
1. FOR AND IN CONSIDERATION of the payments and benefits provided in the Employment Agreement between Executive and the Company dated as of April 8, 2016, (as such agreement may be amended, restated or replaced, the Employment Agreement), Executive, for herself, her successors and assigns, executors and administrators, now and forever hereby releases and discharges the Company, together with all of its past and present parents, subsidiaries, and affiliates, together with each of their officers, directors, stockholders, partners, employees, agents, representatives and attorneys, and each of their subsidiaries, affiliates, estates, predecessors, successors, and assigns (hereinafter collectively referred to as the Releasees) from any and all rights, claims, charges, actions, causes of action, complaints, sums of money, suits, debts, covenants, contracts, agreements, promises, obligations, damages, demands or liabilities of every kind whatsoever, in law or in equity, whether known or unknown, suspected or unsuspected, which Executive or Executives executors, administrators, successors or assigns ever had, now has or may hereafter claim to have by reason of any matter, cause or thing whatsoever; arising from the beginning of time up to the date of the Release: (i) relating in any way to Executives employment relationship with the Company or any of the Releasees, or the termination of Executives employment relationship with the Company or any of the Releasees; (ii) arising under or relating to the Employment Agreement; (iii) arising under any federal, local or state statute or regulation, including, without limitation, the Age Discrimination in Employment Act of 1967, as amended by the Older Workers Benefit Protection Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, the Employee Retirement Income Security Act of 1974, and/or the applicable state law against discrimination, each as amended; (iv) relating to wrongful employment termination or breach of contract; or (v) arising under or relating to any policy, agreement, understanding or promise, written or oral, formal or informal, between the Company and any of the Releasees and Executive; provided, however, that notwithstanding the foregoing, nothing contained in the Release shall in any way diminish or impair: (i) the Executives ability to enforce Section 9(d) of the Employment Agreement; (ii) any direct or indirect holdings of equity in the Company; (iii) any claims for accrued and vested benefits under any of the Companys employee retirement and welfare benefit plans; (iv) any rights to indemnification as an officer of the Company under Minnesota law; and (v) any rights or claims Executive may have that cannot be waived under applicable law; (collectively, the Excluded Claims). Executive further acknowledges and agrees that, except with respect to Excluded Claims, the Company and the Releasees have fully satisfied any and all obligations whatsoever owed to Executive arising out of Executives employment with the Company or any of the Releasees, and that no further payments or benefits are owed to Executive by the Company or any of the Releasees.
2. Executive understands and agrees that, except for the Excluded Claims, Executive has knowingly relinquished, waived and forever released any and all rights to any personal recovery in any action or proceeding that may be commenced on Executives behalf arising out of the aforesaid employment relationship or the termination thereof, including, without limitation, claims for back pay, front pay, liquidated damages, compensatory damages, general damages, special damages, punitive damages, exemplary damages, costs, expenses and attorneys fees.
3. Executive acknowledges and agrees that Executive has been advised to consult with an attorney of Executives choosing prior to signing the Release. Executive understands and agrees that Executive has the right and has been given the opportunity to review the Release with an attorney of Executives choice should Executive so desire. Executive also agrees that Executive has entered into the Release freely and voluntarily. Executive further acknowledges and agrees that Executive has had at least forty-five (45) calendar days to consider the Release, although Executive may sign it sooner if Executive wishes. In addition, once Executive has signed the Release, Executive shall have seven (7) additional days from the date of execution to revoke Executives consent and may do so by writing to: Insignia Systems, Inc., 8799 Brooklyn Blvd., Minneapolis, Minnesota 55445, Attention: . The Release shall not be effective, and no payments shall be due under Section 9(d)(ii)-(iii) of the Employment Agreement, until the eighth (8th) day after Executive shall have executed the Release and returned it to the Company, assuming that Executive had not revoked Executives consent to the Release prior to such date.
4. It is understood and agreed by Executive that the payment made to Executive is not to be construed as an admission of any liability whatsoever on the part of the Company or any of the other Releasees, by whom liability is expressly denied.
5. The Release is executed by Executive voluntarily and is not based upon any representations or statements of any kind made by the Company or any of the other Releasees as to the merits, legal liabilities or value of Executives claims. Executive further acknowledges that Executive has had a full and reasonable opportunity to consider the Release and that Executive has not been pressured or in any way coerced into executing the Release.
6. The exclusive venue for any disputes arising hereunder shall be the state or federal courts located in the State of Minnesota, and each of the parties hereto irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. Each of the parties hereto also agrees that any final and unappealable judgment against a party hereto in connection with any action, suit or other proceeding may be enforced in any court of competent jurisdiction, either within or outside of the United States. A certified or exemplified copy of such award or judgment shall be conclusive evidence of the fact and amount of such award or judgment.
7. The Release and the rights and obligations of the parties hereto shall be governed and construed in accordance with the laws of the State of Minnesota. If any provision hereof is unenforceable or is held to be unenforceable, such provision shall be fully severable, and this document and its terms shall be construed and enforced as if such unenforceable provision had never comprised a part hereof, the remaining provisions hereof shall remain in full force and effect, and the court construing the provisions shall add as a part hereof a provision as similar in terms and effect to such unenforceable provision as may be enforceable, in lieu of the unenforceable provision.
8. The Release shall inure to the benefit of and be binding upon the Company and its successors and assigns.
[Remainder of Page Intentionally Left Blank.]
IN WITNESS WHEREOF, Executive and the Company have executed the Release as of the date and year first written above.
|
INSIGNIA SYSTEMS, INC. | ||
|
| ||
|
| ||
|
By: |
| |
|
Name: | ||
|
Title: | ||
|
| ||
|
KRISTINE GLANCY | ||
|
| ||
|
| ||
|
By: |
| |
Signature Page to Release Agreement
EXHIBIT 10.2
CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT, is hereby entered into on April 8, 2016 and is effective as of May 9, 2016 (the Effective Date), by and between Insignia Systems, Inc., a Minnesota corporation (the Company), and Kristine Glancy (the Executive).
WHEREAS, the Board of Directors of the Company (the Board) recognizes that, as is the case with many business organizations, the possibility of a Change in Control exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company; and
WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Companys management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control.
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and Executive hereby agree as follows:
1. Defined Terms. The definitions of capitalized terms used in this Agreement are provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the Effective Date and shall continue in effect for a period of three (3) years thereafter. Commencing on the third anniversary of the Effective Date and on each anniversary thereafter (Anniversary Date), this Agreement shall automatically be renewed for one (1) additional year beyond the term otherwise established, unless one party provides written notice to the other party, at least one-hundred and twenty (120) days in advance of an Anniversary Date, of its intent not to renew this Agreement for an additional one year term. Notwithstanding the foregoing, if a Change in Control shall have occurred after the Effective Date and during the term of this Agreement, this Agreement shall continue in effect for a period of not less than twenty-four (24) months beyond the month in which a Change in Control occurred.
3. Compensation Other Than Severance Payments.
3.1 Following a Change in Control and during the term of this Agreement, during any period that the Executive fails to perform the Executives full-time duties with the Company as a result of a disability (as defined in Treas. Reg. § 1.409A-3(i)(4)), the Company shall pay the Executives current base salary to the Executive at the rate in effect at the commencement of any such period, together with all compensation and benefits payable to the Executive under the terms of any compensation or benefit plan, program or arrangement maintained by the Company during such period, until the Executives employment is terminated by the Company.
3.2 If the Executives employment shall be terminated for any reason following a Change in Control and during the term of this Agreement, the Company shall pay the
Executives current base salary through the Date of Termination, together with all compensation and benefits to which the Executive is entitled in respect of all periods preceding the Date of Termination under the terms of the Companys compensation and benefit plans, programs or arrangements.
4. Severance Payments.
4.1 If a Qualifying Termination shall occur, in addition to any payments and benefits to which the Executive is entitled under Section 3 hereof, the Company shall pay the Executive the payments described in this Section 4.1 (the Severance Payments); provided, however, that, in the case of clauses (A), (B), (C), (D) and (F) below, the Executive shall have executed and not revoked a release of claims in the form set forth in Exhibit A hereto. The Executive shall also be entitled to the Severance Payments (and any payments and benefits under Section 3) if the Executives employment is terminated by the Company other than (x) for Cause or (y) by reason of death or Disability within the six (6) month period immediately preceding a Change in Control and the Executive reasonably demonstrates that such termination is otherwise in connection with or in anticipation of a Change in Control that actually occurs during the term of the Agreement (a Pre-Change in Control Termination); provided, however, that, in the case of clauses (A), (B), (C), (D) and (F) below, Executive shall have executed and not revoked a release of claims in the form set forth in Exhibit A hereto; and provided further, however, that any such payments shall be offset by the amount of severance previously paid to the Executive under any employment agreement between the Executive and the Company and, to the extent permitted by Section 409A of the Code, any other severance policy, plan or program of the Company.
(A) In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to one hundred (100%) of the Executives annual base salary then in effect (or immediately prior to any reduction resulting in a termination for Good Reason, if applicable) (the Change in Control Salary).
(B) Notwithstanding any provision of any annual incentive plan to the contrary, the Company shall pay to the Executive an amount, in cash, equal to the sum of (i) any unpaid incentive compensation which has been allocated or awarded to the Executive for a completed fiscal year preceding the Date of Termination under any such plan and which, as of the Date of Termination, is contingent only upon the continued employment of the Executive to a subsequent date, and (ii) a pro rata portion to the Date of Termination of Executives target bonus for the year in which the Date of Termination occurs (or the target in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason), calculated by multiplying such target bonus by the fraction obtained by dividing the number of full months and any fractional portion of a month during such year through the Date of Termination by twelve (12).
(C) For the twelve month period immediately following the Date of Termination, the Company shall arrange to provide the Executive (which includes the Executives eligible dependents for purposes of this subsection (C)) with life, disability, accident
and health insurance benefits substantially similar to those which the Executive was receiving immediately prior to the Date of Termination (or immediately prior to any reduction resulting in a termination for Good Reason, if applicable); provided, however, that (i) the Executives and her qualified dependents COBRA eligibility period shall include the period during which the Company is providing benefits under this subsection (C); (ii) unless the Executive consents to a different method (or elects COBRA coverage at applicable COBRA rates), such health insurance benefits shall be provided through a third-party insurer; and (iii) the Executive shall be responsible for the payment of premiums for such benefits in the same amount as active employees of the Company. Benefits otherwise receivable by the Executive pursuant to this subsection (C) shall be reduced to the extent comparable benefits (including continued coverage for any preexisting medical condition of any person covered by the benefits provided to the Executive and her eligible dependents immediately prior to the Date of Termination) are actually received by or made available to the Executive by a subsequent employer during the twenty-four month period following the Executives Date of Termination (and any such benefits actually received by or made available to the Executive shall be reported to the Company by the Executive). Notwithstanding the foregoing, in the event of a Pre-Change in Control Termination, on the sixtieth (60th) day following the Change in Control the Company shall pay or reimburse the Executive for any amounts or benefits it would have been responsible to pay or provide to the Executive under this Section 4.1(C) during the period prior to the Change in Control, had the Change in Control occurred on the Date of Termination.
(D) If the Executive would have become entitled to benefits under the Companys post-retirement health care or life insurance plans (as in effect immediately prior to the Date of Termination (or immediately prior to any reduction resulting in a termination for Good Reason, if applicable)) had the Executives employment terminated at any time during the period of twenty four months after the Date of Termination, the Company shall provide such post-retirement health care or life insurance benefits to the Executive (subject to any employee contributions required under the terms of such plans in the same amounts as active employees of the Company) commencing on the later of (i) the date that such coverage would have first become available or (ii) the date that benefits described in subsection (C) of this Section 4.1 terminate.
(E) The Company shall pay the Executive, at a daily salary rate calculated from the Executives annual base salary in effect immediately prior to the Date of Termination (or immediately prior to any reduction resulting in a termination for Good Reason, if applicable), a lump sum amount equal to all earned but unused paid time off days through the Date of Termination.
(F) The Company shall pay, no later than the last day of the calendar year in which they are incurred, the reasonable fees and expenses of a full service nationally recognized executive outplacement firm until the earlier of the date the Executive secures new employment or the date which is twenty-four months following the Executives Date of Termination; provided that in no event shall the aggregate amount of such payments exceed $5,000.
4.2 Benefit Limitation.
(A) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment (including any acceleration of vesting of stock based benefits) or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (a Payment) would be subject to the excise tax imposed by Section 4999 of the Code (the Excise Tax), the amounts and benefits payable under this Agreement shall be reduced by an amount that would result in no Excise Tax being imposed; provided that the amounts and benefits payable under this Agreement shall not be reduced unless the amounts and benefits the Executive would receive after such reduction would be greater than the amounts and benefits the Executive would receive if there were no reduction and the Excise Tax were paid by the Executive (such reduction, the Cut Back). For purposes of determining whether any Payments should be subject to the Cut-Back, (i) Executive shall be deemed to pay federal income tax at the highest marginal rate of federal income taxation in the calendar year in which the Date of Termination occurs and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executives residence on the Date of Termination, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes, (ii) no portion of the Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as not to constitute a payment within the meaning of section 280G(b) of the Code shall be taken into account, (iii) no portion of the Payments shall be taken into account which, in the opinion of the Accounting Firm, does not constitute a parachute payment within the meaning of section 280G(b)(2) of the Code, including by reason of section 280G(b)(4)(A) of the Code, (iv) the Severance Payments shall be reduced only to the extent necessary so that the Payments in their entirety constitute reasonable compensation for services actually rendered within the meaning of section 280G(b)(4)(B) of the Code or are otherwise not subject to disallowance as deductions by reason of section 280G of the Code, in the opinion of the Accounting Firm, and (v) the value of any noncash benefit or any deferred payment or benefit included in the Payments shall be determined by the Accounting Firm in accordance with the principles of sections 280G(d)(3) and (4) of the Code. Unless the Executive shall have given prior written notice to the Company specifying a different order of payments and benefits to be reduced to achieve the Cut-Back, any payments and benefits to be reduced hereunder shall be determined in a manner that has the least economic cost to the Executive, on an after-tax basis, and to the extent the economic cost is equivalent, such payments and benefits shall be reduced in the inverse order of when the payments and benefits would have been made or provided to the Executive until the reduction specified herein is achieved. The Executive may specify the order of reduction of the payments and benefits only to the extent that doing so does not directly or indirectly alter the time or method of payment of any amount that is deferred compensation subject to (and not exempt from) Section 409A of the Code.
(B) All determinations required to be made under this Section 4.2 shall be made by a nationally recognized accounting firm designated by the Company (the Accounting Firm) which shall provide detailed supporting calculations both to the Company and the Executive within fifteen (15) business days after there has been a Cut-Back, or such earlier time as requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Company shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm instead shall be the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by the Company. Any determination by the Accounting Firm shall be binding upon the Company and the Executive.
4.3 Payment of Severance Payments.
(A) Each payment provided for in Section 4.1 hereof is intended to constitute a separate payment within the meaning of Section 409A of the Code. The payments provided for in subsections (A) and (C) of Section 4.1 hereof shall be made on the sixtieth (60th) day following the Date of Termination subject to Section 4.3(B) below; and in the event the Executive becomes entitled to Severance Payments pursuant to the second sentence of Section 4.1, the payments provided for in subsections (A) and (C) of Section 4.1 hereof shall be made on the sixtieth (60th) day following the actual Change in Control that triggered the Severance Payments.
(B) If any payment, compensation or other benefit provided to the Executive in connection with her employment termination is determined, in whole or in part, to constitute nonqualified deferred compensation within the meaning of Section 409A of the Code and the Executive is a specified employee, as such term is defined under Section 409A(a)(2)(B)(i) of the Code, all such payments shall be suspended during the six-month period following the Executives separation from service within the meaning of Treas. Reg. § 1.409A-1(h) or any successor thereto. The Company is entitled to determine whether any amounts under this Agreement are to be suspended, and the Company shall have no liability to the Executive for any such determination or any errors made by the Company in identifying the Executive as a specified employee. If any amounts are suspended pursuant to the foregoing, such amounts shall be paid on the earlier of (i) the first business day following the expiration of the six-month period referred to in the first sentence of this subsection or (ii) the date of the Executives death. Any amounts so suspended shall earn interest thereon, if applicable, calculated based upon the then prevailing monthly short-term applicable federal rate. Notwithstanding the foregoing, to the extent that the foregoing applies to the provision of any ongoing welfare benefits to the Executive that would not be required to be delayed if the premiums therefor were paid by the Executive, the Executive shall pay the full cost of premiums for such welfare benefits during the six-month period and the Company shall pay the Executive an amount equal to the amount of such premiums paid by the Executive during such six-month period on the first business day of the month following the expiration of the six-month period referred to above.
(C) A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits subject to Section 409A of the Code upon or following a termination of employment unless such termination is also a separation from service as defined in Treas. Reg. § 1.409A-1(h) or any successor thereto, including the default presumptions thereunder, and for purposes of any such provision of this Agreement, references to a resignation, termination, terminate, termination of employment or like terms shall mean separation from service.
(D) The parties hereto acknowledge and agree that the interpretation of Section 409A of the Code and its application to the terms of this Agreement is uncertain and may be subject to change as additional guidance and interpretations become available. Anything to the contrary herein notwithstanding, all benefits or payments provided by the Company to the
Executive that would be deemed to constitute nonqualified deferred compensation within the meaning of Section 409A of the Code are intended to comply with Section 409A of the Code. If, however, any such benefit or payment is deemed not to comply with Section 409A of the Code, the Company and the Executive agree to renegotiate in good faith any such benefit or payment (including, without limitation, as to the timing of any severance payments payable hereunder) so that either (i) Section 409A of the Code will not apply or (ii) compliance with Section 409A of the Code will be achieved.
(E) Notwithstanding anything to the contrary contained in this Agreement, any reimbursement for a cost or expense under this Agreement shall be paid in no event later than the end of the taxable year following the taxable year in which the Executive incurs such cost or expense. With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Section 409A of the Code, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (ii) the amount of expenses eligible for reimbursements or in-kind benefits provided during any taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year; provided, however, that the foregoing clause (ii) shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period the arrangement is in effect.
4.4 The Company shall reimburse the Executive for all reasonable legal fees and expenses incurred by the Executive in attempting to obtain or enforce rights or benefits provided by this Agreement, if, with respect to any such right or benefit, the Executive is successful in obtaining or enforcing such right or benefit (including by negotiated settlement).
5. Restrictive Covenants.
5.1 During the Executives employment with the Company and for a period of twelve (12) months thereafter:
(A) the Executive shall not, directly for the Executive or any third party, become engaged in any business or activity which is directly in competition with any services or products sold by, or any business or activity engaged in by, the Company or any of its affiliates; provided, however, that this provision shall not restrict the Executive from owning or investing in publicly traded securities, so long as the Executives aggregate holdings in any company do not exceed 5% of the outstanding equity of such company and such investment is passive;
(B) the Executive shall not solicit any person who was a customer of the Company or any of its affiliates during the period of the Executives employment hereunder, or solicit potential customers who are or were identified through leads developed during the course of employment with the Company, or otherwise divert or attempt to divert any existing business of the Company or any of its affiliates; and
(C) the Executive shall not, directly for the Executive or any third party, solicit, induce, recruit or cause another person in the employment of the Company or any of its affiliates to terminate such employees employment for the purposes of joining, associating, or
becoming employed with any business or activity which is in competition with any services or products sold, or any business or activity engaged in, by the Company or any of its affiliates.
5.2 The Executive agrees that she will not, while employed with the Company or at any time thereafter for any reason, in any fashion, form or manner, either directly or indirectly, divulge, disclose or communicate to any person, firm, corporation or other business entity, in any manner whatsoever, any confidential information or trade secrets concerning the business of the Company, including, without limiting the generality of the foregoing, any customer lists or other customer identifying information, the techniques, methods or systems of the Companys operation or management, any information regarding its financial matters, or any other material information concerning the business of the Company, its manner of operation, its plans or other material data. The provisions of this Section 5.2 shall not apply to (i) information that is public knowledge other than as a result of disclosure by the Executive in breach of this Section 5.2; (ii) information disseminated by the Company to third parties in the ordinary course of business; (iii) information lawfully received by the Executive from a third party who, based upon inquiry by the Executive, is not bound by a confidential relationship to the Company, or (iv) information disclosed under a requirement of law or as directed by applicable legal authority having jurisdiction over the Executive.
5.3 The Executive agrees that she will not, while employed with the Company or at any time thereafter for any reason, in any fashion, form or manner, either directly or indirectly, disparage or criticize the Company, or otherwise speak of the Company, in any negative or unflattering way to anyone with regard to any matters relating to the Executives employment by the Company or the business or employment practices of the Company. The Company agrees that it will not, in any fashion, form or manner, either directly or indirectly, disparage or criticize the Executive or otherwise speak of the Executive in any negative or unflattering way to anyone with regard to any matters relating to the Executives employment with the Company. This Section shall not operate as a bar to (i) statements reasonably necessary to be made in any judicial, administrative or arbitral proceeding, or (ii) internal communications between and among the employees of the Company with a job-related need to know about this Agreement or matters related to the administration of this Agreement.
5.4 The Executive understands that in the event of a violation of any provision of Section 5, the Company shall have the right to (i) seek injunctive relief, in addition to any other existing rights provided in this Agreement or by operation of law, without the requirement of posting bond and (ii) stop making any future payments or providing benefits under this Agreement. The remedies provided in this Section 5.4 shall be in addition to any legal or equitable remedies existing at law or provided for in any other agreement between the Executive and the Company or any of its affiliates, and shall not be construed as a limitation upon, or as an alternative or in lieu of, any such remedies. If any provisions of Section 5 shall be determined by a court of competent jurisdiction to be unenforceable in part by reason of it being too great a period of time or covering too great a geographical area, it shall be in full force and effect as to that period of time or geographical area determined to be reasonable by the court.
5.5 The Executive acknowledges that the provisions of Section 5 shall extend to any business that becomes an affiliate of or successor to the Company or any of its affiliates on account of such Change in Control.
6. Requirement of Release. Notwithstanding anything in this Agreement to the contrary, the release of claims referenced in Section 4.1 above shall completely release the Company, its parent and affiliates and their respective officers, directors and employees (collectively the Released Parties and individually a Released Party) and which shall forever waive all claims of any nature that the Executive may have against any Released Party, including without limitation all claims arising out of Executives employment within the Company or the termination of that employment. If the Executive does not execute an effective release, such release does not become irrevocable or such release is revoked, in each case, prior to the time of payment prescribed in Section 4.1 above, the Companys obligations to provide the benefits described in Section 4.1(C) hereof shall cease immediately.
7. Termination Procedures.
7.1 Notice of Termination. After a Change in Control and during the term of this Agreement, any purported termination of the Executives employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 10 hereof. For purposes of this Agreement, a Notice of Termination shall mean a notice which shall indicate whether the termination is for Cause, without Cause, by reason of Disability, for Good Reason or otherwise and shall set forth in reasonable detail the facts and circumstances claimed to provide the basis for termination of the Executives employment; provided, that the failure of the Executive or the Company to set forth in the Notice of Termination any particular facts or circumstances shall not waive any right of such party or preclude such party from asserting such facts or circumstances in enforcing her or its rights hereunder.
7.2 Date of Termination. Date of Termination, with respect to any purported termination of the Executives employment after a Change in Control and during the term of this Agreement, shall mean (i) if the Executives employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that the Executive shall not have returned to the full-time performance of the Executives duties during such thirty (30) day period), and (ii) if the Executives employment is terminated for any other reason, the date specified in the Notice of Termination (which, in the case of a termination by the Company, shall not be less than thirty (30) days (except in the case of a termination for Cause) and, in the case of a termination by the Executive, shall not be less than fifteen (15) days nor more than sixty (60) days, respectively, from the date such Notice of Termination is given). Date of Termination, with respect to any Pre-Change in Control Termination shall mean the date of such termination as reasonably determined by the Company.
8. No Mitigation. The Company agrees that, if the Executives employment with the Company terminates during the term of this Agreement, the Executive shall not be required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 4 hereof. Further, the amount of any payment or benefit provided for in this Agreement (other than Section 4.1 (C) hereof) shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise.
9. Successors; Binding Agreement.
9.1 In addition to any obligations imposed by law upon any successor to the Company, the Company shall require (i) any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company (on a consolidated basis) and (ii) in the case of a disposition of all or substantially all of the business or assets of the Company (on a consolidated basis) to more than one entity in a single transaction or series of related transactions, the entity that will employ the Executive immediately after such disposition (such successor or other entity in clause (i) or (ii), a Successor) to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or disposition had taken place prior to the effectiveness of any such succession or disposition. If such assumption and agreement is obtained prior to the effectiveness of any such succession or disposition and the Executive accepts employment with the Successor, the Executives employment shall not be treated as a termination of the Executives employment with the Company (unless otherwise required in order to comply with the definition of separation from service as set forth in Treas. Reg. § 1.409A-1(h) or any successor regulation thereto).
9.2 This Agreement shall inure to the benefit of and be enforceable by the Executives personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive shall die while any amount would still be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executives estate.
10. Notices. For the purpose of this Agreement, 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 mail, return receipt requested, postage prepaid, addressed, if to the Executive, to the address shown for the Executive in the personnel records of the Company and, if to the Company, to the address set forth below, 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 actual receipt:
To the Company:
Insignia Systems, Inc.
8799 Brooklyn Blvd., Minneapolis, MN 55445
Attention: Chief Financial Officer
11. 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 Executive and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or of any lack 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 subsequent time. This Agreement supersedes any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof which have
been made by either party; provided, however, that this Agreement shall supersede any agreement setting forth the terms and conditions of the Executives termination of employment with the Company only in the event that the Executives employment with the Company is terminated on or following a Change in Control, by the Company without Cause or by the Executive for Good Reason, as defined herein, or the Executive incurs a Pre-Change in Control Termination, as defined herein. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Minnesota. All references to sections of the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law and any additional withholding to which the Executive has agreed. The obligations of the Company and the Executive under Sections 4 and 5 hereof shall survive the expiration of the term of this Agreement. This Agreement is not intended by the parties hereto to constitute an employee benefit plan subject to the Employee Retirement Income Security Act of 1974, as amended.
12. Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
13. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.
14. Settlement of Disputes; Arbitration. All claims by the Executive for benefits under this Agreement shall be directed in writing to and determined by the Committee, which shall give full consideration to the evidentiary standards set forth in this Agreement. Any denial by the Committee of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon. The Committee shall afford a reasonable opportunity to the Executive for a review of the decision denying a claim and shall further allow the Executive to appeal to the Committee a decision of the Committee within sixty (60) days after notification by the Committee that the Executives claim has been denied. Any further dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Minneapolis, Minnesota in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrators award in any court having jurisdiction.
15. Definitions. For purposes of this Agreement, the following terms shall have the meanings indicated below:
(A) Accounting Firm shall have the meaning stated in Section 4.2(B) hereof.
(B) Anniversary Date shall have the meaning stated in Section 2 hereof.
(C) Board shall mean the Board of Directors of the Company.
(D) Cause for termination by the Company of the Executives employment shall mean (i) the deliberate and continued failure by the Executive to devote substantially all the Executives business time and best efforts to the performance of the Executives duties after a demand for substantial performance is delivered to the Executive by the Board which specifically identifies the manner in which the Executive has not substantially performed such duties; (ii) the deliberate engaging by the Executive in gross misconduct which is demonstrably and materially injurious to the Company, monetarily or otherwise; or (iii) the Executives conviction of, or plea of guilty or nolo contendere to, a felony or any criminal charge involving moral turpitude. For the purposes of this Agreement, no act, or failure to act, on the part of the Executive shall be considered deliberate unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that such action or omission was in the best interests of the Company.
(E) A Change in Control shall be deemed to have occurred if any of the following shall have occurred after the Effective Date:
(i) the closing of the sale of all or substantially all of the assets of the Company;
(ii) 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 Companys capital stock immediately following such event;
(iii) 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 Companys outstanding voting securities, of beneficial ownership of securities representing 40% or more of the combined voting power or the Companys then outstanding securities; or
(iv) the election to the Companys 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.
Notwithstanding anything to the contrary herein, solely for the purpose of determining the timing of payment or timing of distribution of any compensation or benefit that constitutes non-qualified deferred compensation within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, a Change in Control shall not be deemed to occur under this Agreement unless the events that have occurred would also constitute a Change in the Ownership or Effective Control of a Corporation or in the Ownership of a Substantial Portion of the Assets of a Corporation under Treasury Department Final Regulation 1.409A-3(i)(5), or any successor provision.
(F) Change in Control Salary shall have the meaning stated in Section 4.1(A)(i) hereof.
(G) COBRA shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended from time to time.
(H) Code shall mean the Internal Revenue Code of 1986, as amended from time to time.
(I) Committee shall mean (i) the individuals (not fewer than three in number) who, on the date six (6) months before a Change in Control, constitute the Compensation Committee of the Board (or its successor), plus (ii) in the event that fewer than three individuals are available from the group specified in clause (i) above for any reason, such individuals otherwise constituting members of the Board as may be appointed by the individual or individuals so available (including for this purpose any individual or individuals previously so appointed under this clause (ii)); provided, that, if after such appointments fewer than three individuals constitute the Committee, then the Board shall appoint additional members of the Committee so that the Committee shall have no fewer than three members, a majority of which additional appointees, if available, shall be independent directors (as defined under the rules of the Nasdaq Stock Market).
(J) Company shall mean Insignia Systems, Inc., as hereinbefore defined, or any Successor that has assumed this Agreement pursuant to Section 10.1 hereof.
(K) Cut Back shall have the meaning stated in Section 4.2(A) hereof.
(L) Date of Termination shall have the meaning stated in Section 7.2 hereof.
(M) Disability shall be deemed the reason for the termination by the Company of the Executives employment, if, as a result of the Executives incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executives duties with the Company for a period of six (6) consecutive months, the Company shall have given the Executive a Notice of Termination for Disability, and, within thirty (30) days after such Notice of Termination is given, the Executive shall not have returned to the full-time performance of the Executives duties.
(N) Exchange Act shall mean the Securities Exchange Act of 1934, as amended from time to time.
(O) Excise Tax shall have the meaning stated in Section 4.2(A) hereof.
(P) Good Reason for termination by the Executive of the Executives employment shall mean the occurrence (without the Executives express written consent), during the term of this Agreement, of any one of the following acts by the Company, or failures by the Company to act:
(i) a material diminution in the Executives authority, duties, or responsibilities or the assignment to Executive of duties or responsibilities that are materially inconsistent from those in effect immediately prior to the Change in Control, provided, however, that a change in the Companys status as a publicly held corporation filing reports under the Exchange Act shall not be deemed to constitute Good Reason hereunder;
(ii) a reduction of fifteen percent (15%) or more by the Company in the Executives annual base salary as in effect on the date hereof or as the same may be increased from time to time except for across-the-board salary reductions similarly affecting all senior executive officers of the Company;
(iii) the failure by the Company to continue in effect any compensation plan in which the Executive participates immediately prior to the Change in Control which is material to the Executives total compensation, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue the Executives participation therein (or in such substitute or alternative plan) on a basis not materially less favorable in terms of compensation opportunity (materially less favorable shall be a reduction of fifteen percent (15%) or more in the compensation opportunity), as existed immediately prior to the Change in Control except for across-the-board compensation plan reductions similarly affecting all senior executive officers of the Company;
(iv) the failure by the Company to continue to provide the Executive with benefits substantially similar to those enjoyed by the Executive under any of the Companys retirement, life insurance, medical, health and accident, or disability plans in which the Executive was participating immediately prior to the Change in Control, the taking of any action by the Company which would directly or indirectly materially reduce any of such benefits (a material reduction shall be a reduction of ten percent (10%) or more in the value of the aggregate benefits), or deprive the Executive of any material fringe benefit enjoyed by the Executive at the time of the Change in Control except for (i) across-the-board benefit reductions similarly affecting all senior executive officers of the Company or (ii) reduction or elimination of Executives annual comprehensive executive physical examinations, financial planning or other perquisites; or
(v) a material breach by the Company of its obligations under this Agreement; or
The Executives continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.
The Executives right to terminate employment for Good Reason shall be subject to the following conditions: (i) any amounts payable upon a Good Reason termination shall be paid only if the Executive actually terminates employment within one hundred and eighty (180) days following the initial existence of the Good Reason condition and (ii) the amount, time and form of payment upon a termination of employment for Good Reason shall be the same as the amount, time and form of payment payable upon an involuntary termination without Cause. The Executive must also provide notice to the Company of the Good Reason condition within ninety (90) days of the initial existence of such condition and the Company must be given at least thirty (30) days to remedy such situation.
(Q) Notice of Termination shall have the meaning stated in Section 7.1 hereof.
(R) Payment shall have the meaning stated in Section 4.2(A) hereof.
(S) Pre-Change in Control Termination shall have the meaning stated in Section 4.1 hereof.
(T) Qualifying Termination shall mean a termination of the Executives employment, concurrent with, or during the twenty-four month period following, a Change in Control, unless such termination is (i) by the Company for Cause, (ii) by reason of death or Disability, or (iii) by the Executive without Good Reason.
(U) Released Parties or Released Party shall have the meaning stated in Section 6 hereof.
(V) Severance Payments shall mean those payments described in Section 4.1 hereof.
(W) Successor shall have the meaning stated in Section 10.1 hereof.
[Remainder of Page Intentionally Left Blank.]
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and Executive has executed this Agreement as of the day and year first above written.
|
INSIGNIA SYSTEMS, INC. | |
|
| |
|
| |
|
By: |
/s/ F. Peter Zaballos |
|
Name: |
F. Peter Zaballos |
|
Title: |
Co-Chairman of the Board of Directors |
|
| |
|
| |
|
KRISTINE GLANCY | |
|
| |
|
| |
|
By: |
/s/ Kristine Glancy |
Signature Page to Change in Control Agreement
EXHIBIT A
FORM OF RELEASE AGREEMENT
THIS RELEASE AGREEMENT (the Release) is made as of this day of , , by and between Kristine Glancy (Executive) and Insignia Systems, Inc., a Minnesota corporation (the Company).
1. FOR AND IN CONSIDERATION of the payments and benefits provided in the Change in Control Agreement between Executive and the Company dated as of April 8, 2016, (as such agreement may be amended, restated or replaced, the Change in Control Agreement), Executive, for herself, her successors and assigns, executors and administrators, now and forever hereby releases and discharges the Company, together with all of its past and present parents, subsidiaries, and affiliates, together with each of their officers, directors, stockholders, partners, employees, agents, representatives and attorneys, and each of their subsidiaries, affiliates, estates, predecessors, successors, and assigns (hereinafter collectively referred to as the Releasees) from any and all rights, claims, charges, actions, causes of action, complaints, sums of money, suits, debts, covenants, contracts, agreements, promises, obligations, damages, demands or liabilities of every kind whatsoever, in law or in equity, whether known or unknown, suspected or unsuspected, which Executive or Executives executors, administrators, successors or assigns ever had, now has or may hereafter claim to have by reason of any matter, cause or thing whatsoever; arising from the beginning of time up to the date of the Release: (i) relating in any way to Executives employment relationship with the Company or any of the Releasees, or the termination of Executives employment relationship with the Company or any of the Releasees; (ii) arising under or relating to the Change in Control Agreement; (iii) arising under any federal, local or state statute or regulation, including, without limitation, the Age Discrimination in Employment Act of 1967, as amended by the Older Workers Benefit Protection Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, the Employee Retirement Income Security Act of 1974, and/or the applicable state law against discrimination, each as amended; (iv) relating to wrongful employment termination or breach of contract; or (v) arising under or relating to any policy, agreement, understanding or promise, written or oral, formal or informal, between the Company and any of the Releasees and Executive; provided, however, that notwithstanding the foregoing, nothing contained in the Release shall in any way diminish or impair: (i) the Executives ability to enforce the provisions of Section 4.1 of the Change in Control Agreement; (ii) any direct or indirect holdings of equity in the Company; (iii) any claims for accrued and vested benefits under any of the Companys employee retirement and welfare benefit plans; (iv) any rights or claims Executive may have that cannot be waived under applicable law; and (v) any rights to indemnification as an officer of the Company under Minnesota law (collectively, the Excluded Claims). Executive further acknowledges and agrees that, except with respect to Excluded Claims, the Company and the Releasees have fully satisfied any and all obligations whatsoever owed to Executive arising out of Executives employment with the Company or any of the Releasees, and that no further payments or benefits are owed to Executive by the Company or any of the Releasees.
2. Executive understands and agrees that, except for the Excluded Claims, Executive has knowingly relinquished, waived and forever released any and all rights to any personal recovery in any action or proceeding that may be commenced on Executives behalf arising out of the aforesaid employment relationship or the termination thereof, including, without limitation, claims for back pay, front pay, liquidated damages, compensatory damages, general damages, special damages, punitive damages, exemplary damages, costs, expenses and attorneys fees.
3. Executive acknowledges and agrees that Executive has been advised to consult with an attorney of Executives choosing prior to signing the Release. Executive understands and agrees that Executive has the right and has been given the opportunity to review the Release with an attorney of Executives choice should Executive so desire. Executive also agrees that Executive has entered into the Release freely and voluntarily. Executive further acknowledges and agrees that Executive has had at least forty-five (45) calendar days to consider the Release, although Executive may sign it sooner if Executive wishes. In addition, once Executive has signed the Release, Executive shall have seven (7) additional days from the date of execution to revoke Executives consent and may do so by writing to: Insignia Systems, Inc., 8799 Brooklyn Blvd., Minneapolis, Minnesota 55445, Attention: . The Release shall not be effective, and no payments shall be due under Section 4 of the Change in Control Agreement, until the eighth (8th) day after Executive shall have executed the Release and returned it to the Company, assuming that Executive had not revoked Executives consent to the Release prior to such date.
4. It is understood and agreed by Executive that the payment made to Executive is not to be construed as an admission of any liability whatsoever on the part of the Company or any of the other Releasees, by whom liability is expressly denied.
5. The Release is executed by Executive voluntarily and is not based upon any representations or statements of any kind made by the Company or any of the other Releasees as to the merits, legal liabilities or value of Executives claims. Executive further acknowledges that Executive has had a full and reasonable opportunity to consider the Release and that Executive has not been pressured or in any way coerced into executing the Release.
6. The exclusive venue for any disputes arising hereunder shall be the state or federal courts located in the State of Minnesota, and each of the parties hereto irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. Each of the parties hereto also agrees that any final and unappealable judgment against a party hereto in connection with any action, suit or other proceeding may be enforced in any court of competent jurisdiction, either within or outside of the United States. A certified or exemplified copy of such award or judgment shall be conclusive evidence of the fact and amount of such award or judgment.
7. The Release and the rights and obligations of the parties hereto shall be governed and construed in accordance with the laws of the State of Minnesota. If any provision hereof is unenforceable or is held to be unenforceable, such provision shall be fully severable, and this document and its terms shall be construed and enforced as if such unenforceable provision had never comprised a part hereof, the remaining provisions hereof shall remain in full force and effect, and the court construing the provisions shall add as a part hereof a provision as similar in terms and effect to such unenforceable provision as may be enforceable, in lieu of the unenforceable provision.
8. The Release shall inure to the benefit of and be binding upon the Company and its successors and assigns.
[Remainder of Page Intentionally Left Blank.]
IN WITNESS WHEREOF, Executive and the Company have executed the Release as of the date and year first written above.
|
INSIGNIA SYSTEMS, INC. | |
|
| |
|
| |
|
By: |
|
|
Name: |
|
|
Title: |
|
|
| |
|
| |
|
KRISTINE GLANCY | |
|
| |
|
| |
|
By: |
|
Signature Page to Release Agreement