Attached files
| file | filename |
|---|---|
| 10-Q - INSIGNIA SYSTEMS INC 10-Q 03-31-2018 - INSIGNIA SYSTEMS INC/MN | isig_form10q.htm |
| EX-32 - EXHIBIT 32 - INSIGNIA SYSTEMS INC/MN | exh32.htm |
| EX-31.2 - EXHIBIT 31.2 - INSIGNIA SYSTEMS INC/MN | exh31_2.htm |
| EX-31.1 - EXHIBIT 31.1 - INSIGNIA SYSTEMS INC/MN | exh31_1.htm |
EXHIBIT 10.1
INSIGNIA SYSTEMS, INC.
DEFERRED COMPENSATION PLAN FOR DIRECTORS
SECTION 1. INTRODUCTION
1.1 ESTABLISHMENT.
Insignia Systems, Inc. a Minnesota corporation (the
“Company”), hereby establishes the Insignia Systems,
Inc. Deferred Compensation Plan for Directors (the
“Plan”) for those Directors of the Company who are
neither officers nor employees of the Company. The Plan provides
the opportunity for Directors to defer receipt of all or a part of
their cash compensation and thereby be credited with Common Stock
Equivalents.
1.2 PURPOSES.
The purposes of the Plan are to align the interests of Directors
more closely with the interests of other shareholders of the
Company, to encourage the highest level of Director performance by
providing the Directors with a direct interest in the
Company’s attainment of its financial goals, and to provide a
financial incentive that will help attract and retain the most
qualified Directors.
1.3 EFFECTIVE
DATE. This Plan was originally effective as of January 1,
2018.
SECTION 2. DEFINITIONS
2.1 DEFINITIONS.
The following terms shall have the meanings set forth
below:
(a) “Affiliate” means
a corporation or other entity that, directly or through one or more
intermediaries, controls, is controlled by or is under common
control with, the Company.
(b) “Board”
means the Board of Directors of the Company.
(c) “Change
in Control” means any of the events set forth
below:
(i) any
“person” as defined in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the “Exchange Act”)
(or more than one person acting as a group) is or becomes the
“beneficial owner” (as defined in Rule 13d-3 of the
Exchange Act), directly or indirectly of securities representing
fifty percent (50%) or more of the total fair market value of the
Company’s outstanding securities or thirty percent (30%) or
more of the total voting power of the Company’s outstanding
securities;
(ii) a
majority of the members of the Board are replaced during any twelve
(12) month period by Directors whose appointment or election is not
endorsed by a majority of the Board before the date of appointment
or election;
(iii)
any person (or more than one person acting as a group) acquires (or
has acquired during the twelve (12) month period ending on the date
of the most recent acquisition) assets from the Company that have a
total gross fair market value equal to or more than 40% of the
total gross fair market value of all of the assets of the Company
immediately before such acquisition(s);
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(iv)
there is consummated a merger or consolidation of the Company or
any subsidiary with any other corporation or other entity, other
than (A) a merger or consolidation immediately following which
(x) the voting securities of the Company outstanding
immediately prior to such merger or consolidation continue to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent
thereof), in combination with the ownership of any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or any subsidiary, at least fifty percent (50%) of the
combined voting power of the securities of the Company or such
surviving entity or any parent thereof outstanding immediately
after such merger or consolidation and (y) the individuals who
comprise the Board immediately prior thereto constitute a majority
of the board of directors of the Company, the entity surviving such
merger or consolidation or, if the Company or the entity surviving
such merger is then a subsidiary, the ultimate parent thereof, or
(B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which
no person is or becomes the beneficial owner, directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such person any securities
acquired directly from the Company or its affiliates) representing
more than fifty percent (50%) of the combined voting power of the
Company’s then outstanding securities; or
(v) the stockholders of the Company approve a plan
of complete liquidation or dissolution of the Company or there is
consummated an agreement for the sale or disposition by the Company
of all or substantially all of the Company’s assets (it being
conclusively presumed that any sale or disposition is a sale or
disposition by the Company of all or substantially all of its
assets if the consummation of the sale or disposition is contingent
upon approval by the Company’s stockholders unless the Board
expressly determines in writing that such approval
is
required solely by
reason of any relationship between the Company and any other person
or an affiliate of the Company and any other person), other than a
sale or disposition by the Company of all or substantially all of
the Company’s assets to an entity (A) at least fifty
percent (50%) of the combined voting power of the voting securities
of which are owned by stockholders of the Company in substantially
the same proportions as their ownership of the Company immediately
prior to such sale or disposition and (B) the majority of
whose board of directors immediately following such sale or
disposition consists of individuals who comprise the Board
immediately prior thereto.
Notwithstanding the
foregoing, no event will constitute a Change in Control unless such
event is a change in the ownership or effective control of the
corporation, or in the ownership of a substantial portion of the
assets of the Corporation within the meaning of Section
409A(2)(A)(v) of the Internal Revenue Code and the regulations
thereunder.
(d) “Common
Stock Equivalent” means a hypothetical share of Stock which
shall have a value on any date equal to the Fair Market Value of
one share of Stock on that date.
(e) “Deferred
Stock Account” means the bookkeeping account established by
the Company in respect to each Director pursuant to
Section 5.3 hereof and to which shall be credited Common Stock
Equivalents pursuant to the Plan.
(f) “Director”
means a member of the Board.
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(g) “Directors
Deferred Compensation Plan Committee” means a committee of
the Board of Directors of the Company composed solely of two or
more Non-Employee Directors.
(h) “Exchange
Act” means the Securities Exchange Act of 1934, as amended
from time to time.
(i) “Fair
Market Value” means as of any applicable date: (i) if
Stock is listed on an established stock exchange or any automated
quotation system that provides sale quotations, the closing sale
price for a share of Stock on such exchange or quotation system on
the applicable date, or if no sale of the Stock shall have been
made on that day, on the next preceding day on which there was a
sale of the Stock; or (ii) if the Stock is not listed on any
exchange or quotation system, but bid and asked prices are quoted
and published, the average between the quoted bid and asked prices
on the applicable date, and if bid and asked prices are not
available on such day, on the next preceding day on which such
prices were available. However, if the Stock is not regularly
traded or the bid and asked prices reflect trades of a minimal
number of shares of Stock and the Directors Deferred Compensation
Plan Committee determines that the average of the quoted bid and
asked prices does not accurately reflect fair market value, then
Fair Market Value shall be equal to the fair market value of a
share of Stock as determined by the Board by the reasonable
application of a reasonable valuation method and in accordance with
Section 409A of the Internal Revenue Code, including, but not
limited to (x) an independent valuation no more than 12 months old
at the date of determination, (y) a fair market valuation formula
also used for business transactions, or (z) a written report
prepared by an experienced individual (who need not be independent)
that takes into account all relevant factors, including control
premiums or discounts for lack of marketability, all in compliance
with the requirements of Section 409A of the Internal Revenue
Code.
(j) “Internal
Revenue Code” means the Internal Revenue Code of 1986, as
amended from time to time.
(k) “Non-Employee
Director” means a Director who (x) is not currently an
officer (as defined in Rule 16a-1(f) of the United States
Securities and Exchange Commission) of the Company or a subsidiary
of the Company, or otherwise currently employed by the Company or a
subsidiary of the Company; (y) does not receive compensation,
either directly or indirectly, from the Company or a subsidiary of
the Company, for services rendered as a consultant or in any
capacity other than as a Director, except for an amount that does
not exceed the dollar amount for which disclosure would be required
pursuant to Item 404(a) of Regulation S-K of the United States
Securities and Exchange Commission; and (z) does not possess an
interest in any other transaction for which disclosure would be
required pursuant to Item 404(a) of Regulation S-K.
(l) “Stock”
means the $.01 par value common stock of the Company.
(m) “Quarterly
Payment Date” means each of the four dates each year on which
the Company pays retainer fees to Directors.
2.2 GENDER
AND NUMBER. Except when otherwise indicated by the context,
the masculine gender shall also include the feminine gender, and
the definitions of any term herein in the singular shall also
include the plural.
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SECTION 3. PLAN ADMINISTRATION
The
Plan shall be administered by the Committee. Subject to the
limitations of the Plan, the Directors Deferred Compensation Plan
Committee shall have the sole and complete authority: (i) to
impose such limitations, restrictions and conditions upon such
awards as it shall deem appropriate, (ii) to interpret the
Plan and to adopt, amend and rescind administrative guidelines and
other rules and regulations relating to the Plan and (iii) to
make all other determinations and to take all other actions
necessary or advisable for the implementation and administration of
the Plan. Notwithstanding the foregoing, the shall have no
authority, discretion or power to select the Directors who will
receive awards pursuant to the Plan, determine the awards to be
granted pursuant to the Plan, the number of shares of Stock to be
issued thereunder or the time at which such awards are to be
granted, established the duration and nature of awards or alter any
other terms or conditions specified in the Plan, except in the
sense of administering the Plan subject to the provisions of the
Plan. The determinations of the Directors Deferred Compensation
Plan Committee on matters within its authority shall be conclusive
and binding upon the Company and other persons. The Directors
Deferred Compensation Plan Committee may delegate such of its
powers and authority under the Plan as it deems appropriate to
designated officers or employees of the Company.
SECTION 4. STOCK SUBJECT TO THE PLAN
4.1 NUMBER
OF SHARES. There shall be authorized for issuance under the
Plan in accordance with the provisions of the Plan 300,000 shares
of Stock. This authorization may be increased from time to time by
approval of the Board and by the shareholders of the Company if
such shareholder approval is required. The Company shall at all
times during the term of the Plan retain as authorized and unissued
Stock at least the number of shares from time to time required
under the provisions of the Plan, or otherwise assure itself of its
ability to perform its obligations hereunder. The shares of Stock
issuable hereunder shall be authorized and unissued shares or
previously issued and outstanding shares of Common Stock reacquired
by the Company.
4.2 OTHER
SHARES OF STOCK. Any shares of Stock that are subject to a
Common Stock Equivalent and for any reason are not issued to a
Director shall automatically become available again for use under
the Plan.
4.3 ADJUSTMENTS
UPON CHANGES IN STOCK. If there shall be any change in the
Stock of the Company, through merger, consolidation,
reorganization, recapitalization, stock dividend, stock split,
spinoff, split up, dividend in kind or other change in the
corporate structure or distribution to the shareholders,
appropriate adjustments shall be made by the Committee (or if the
Company is not the surviving corporation in any such transaction,
the board of directors of the surviving corporation) in the
aggregate number and kind of shares subject to the Plan, and the
number and kind of shares which may be issued under the Plan.
Appropriate adjustments may also be made by the Directors Deferred
Compensation Plan Committee in the terms of Common Stock
Equivalents under the Plan to reflect such changes and to modify
any other terms of outstanding awards on an equitable basis as the
Directors Deferred Compensation Plan Committee in its discretion
determines.
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SECTION 5. COMMON STOCK EQUIVALENT AWARDS
5.1 DEFERRAL
ELECTIONS. A Director may elect to defer receipt of all or a
specified portion of the annual retainer, chair and/or meeting fees
otherwise payable in cash to the Director for serving on the Board
or any committee thereof. A Director may make the elections
permitted hereunder by giving written notice to the Company in a
form approved by the Committee. The notice shall include:
(i) the percentage of chair and/or meeting fees or annual
retainer to be deferred, and (ii) the time as of which
deferral is to commence. Amounts deferred by a Director pursuant to
this Section 5.1 shall be converted into Common Stock
Equivalents in accordance with Section 5.3.
5.2 TIME
FOR ELECTING DEFERRAL. Any election to defer annual
retainer, chair and/or meeting fees shall be made prior to the
first day of the calendar year in which such fees are earned by the
Director. Any subsequent election to (i) alter the portion of
such amounts deferred or (ii) revoke an election to defer such
amounts will become effective on the first day of the calendar year
following the date on which such election is filed. Notwithstanding
the foregoing, when a Director first becomes eligible to
participate in the Plan, a Director may file an initial election to
defer annual retainer, chair and/or meeting fees at any time during
the 30-day period beginning on the date of such Directors date of
initial participation. Such election shall apply to fees earned
after the date such election is filed.
5.3 DEFERRED
STOCK ACCOUNTS. A Deferred Stock Account shall be
established for each Director. Fees deferred by a Director shall be
credited to such Account as of the date such amounts would have
otherwise been paid in cash to the Director, and shall be
converted, based on Fair Market Value as of the date such amounts
would have otherwise been paid in cash to the Director, into
additional Common Stock Equivalents. A Director’s Deferred
Stock Account shall also be credited with dividends and other
distributions pursuant to Section 5.4.
5.4 HYPOTHETICAL
DIVIDENDS ON COMMON STOCK EQUIVALENTS. Dividends and other
distributions on Common Stock Equivalents shall be deemed to have
been paid as if such Common Stock Equivalents were actual shares of
Stock issued and outstanding on the respective record or
distribution dates. Common Stock Equivalents shall be credited to
the Deferred Stock Account in respect of cash dividends and any
other securities or property issued on the Stock in connection with
reclassifications, spinoffs and the like on the basis of the value
of the dividend or other asset distributed and the Fair Market
Value of the Common Stock Equivalents on the date of the
announcement of the dividend or asset distribution, all at the same
time and in the same amount as dividends or other distributions are
paid or issued on the Stock. Fractional shares shall be credited to
a Director’s Deferred Stock Account cumulatively but the
balance of shares of Common Stock Equivalents in a Director’s
Deferred Stock Account shall be rounded to the next highest whole
share for any payment to such Director pursuant to Section 5.6
hereof.
5.5 STATEMENT
OF ACCOUNTS. A statement will be sent to each Director as to
the balance of his or her Deferred Stock Account at least once each
calendar year.
5.6 PAYMENT
OF ACCOUNTS. A Director shall receive a distribution of his
or her Deferred Stock Account as soon as practicable following his
or her separation from service with the Company (as that term is
defined in Section 409A of the Internal Revenue Code and the
regulations thereunder). Such distribution shall consist of one
share of Stock for each Common Stock Equivalent credited to such
Director’s Deferred Stock Account as of the Quarterly Payment
Date immediately preceding the date of distribution.
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5.7 PAYMENTS
TO A DECEASED DIRECTOR’S ESTATE. In the event of a
Director’s death before the balance of his or her Deferred
Stock Account is fully paid to him, payment of the balance of the
Director’s Deferred Stock Account shall then be made to his
estate in the time and manner selected by the Directors Deferred
Compensation Plan Committee in the absence of a designation of a
beneficiary pursuant to Section 5.8 hereof. The Directors
Deferred Compensation Plan Committee may take into account the
application of any duly appointed administrator or executor of a
Director’s estate and direct that the balance of the
Director’s Deferred Stock Account be paid to his estate in
the manner requested by such application.
5.8 DESIGNATION
OF BENEFICIARY. A Director may designate a beneficiary on a
form approved by the Committee.
5.9 CHANGE
IN CONTROL. Notwithstanding any provision of this Plan to
the contrary, in the event a Change in Control of the Company
occurs, within ten (10) days after the date of such Change in
Control, each Director shall receive a lump sum distribution in
cash equal to the value of all Common Stock Equivalents credited to
such Director’s Deferred Stock Account as of the Quarterly
Payment Date immediately preceding the date of distribution (based
upon the highest Fair Market Value during the 30 days
immediately preceding the Change in Control).
SECTION 6. ASSIGNABILITY
The
right to receive payments or distributions hereunder shall not be
transferable or assignable by a Director other than by will or the
laws of descent and distribution.
SECTION 7. PLAN TERMINATION AND AMENDMENT
7.1 PLAN
TERMINATION. The Board may, in its sole discretion,
terminate this Plan at any time as provided in the Section 7.1, and
will determine the effective date of such termination consistent
with the requirements of Section 409A of the Internal Revenue Code.
However, a termination of the Plan will not be effective to cause a
deferral election in place under the Plan for a Plan year to be
modified or discontinued prior to the end of such Plan year, unless
the Plan is liquidated and terminated. The Board may terminate and
liquidate the Plan pursuant to Treasury Regulation
§1.409A-3(j)(4)(ix) and provide for the acceleration and
liquidation of all benefits remaining due under the Plan. If such a
termination and liquidation occurs, all deferrals under the Plan
will be discontinued as of the termination date established by the
Board, and a complete distribution of each Director’s
Deferred Stock Account will be made in a lump-sum in such form as
is set forth in Section 5.7 at the time specified by the Board as
part of the action terminating the Plan and consistent with
Treasury Regulation §1.409A-3(j)(4)(ix). The Board may also
terminate this Plan other than pursuant to Treasury Regulation
§1.409A-3(j)(4)(ix), in which case all deferrals under the
Plan will be discontinued as of the end of the then current Plan
year, but all benefits remaining payable under the Plan will be
paid at the same time and in the same form as provided in Section
5.7 as if the termination had not occurred, that is the termination
will not result in any acceleration of any distribution under the
Plan.
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7.2 PLAN
AMENDMENT. The Board may, in its sole discretion, amend the
Plan, and will determine the effective date of any such amendment
to the Plan consistent with the requirements of Section 409A of the
Internal Revenue Code. No amendment shall have the effect of
reducing the balance of any Director’s Deferred Stock
Account, unless the Board determines in good faith that either the
amendment is required by law or the failure to adopt such amendment
would have adverse tax consequences to the Director affected by
such amendment,
SECTION 8. GOVERNING LAW
The
Plan and all agreements hereunder shall be construed in accordance
with and governed by the laws of the State of
Minnesota.
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