Current Report — Form 8-K Filing Table of Contents
Document/ExhibitDescriptionPagesSize 1: 8-K Current Report HTML 30K
2: EX-10.1 Employment Agreement HTML 95K
3: EX-10.2 Change in Control Agreement HTML 84K
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392-6200
(Former name or former address, if changed since last
report)
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pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
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Indicate
by check mark whether the registrant is an emerging growth company
as defined in Rule 405 of the Securities Act of 1933 (§
230.405 of this chapter) or Rule 12b-2 of the Securities Exchange
Act of 1934 (§ 240.12b-2 of this chapter):
Emerging growth company ☐
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
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Item 5.02. Departure of Directors or
Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain
Officers.
On
June 30, 2017, Jeffrey Jagerson was appointed Chief Financial
Officer of Insignia Systems, Inc. (the “Company”),
effective as of July 17, 2017. Mr. Jagerson will also serve in the
roles of principal financial officer, principal accounting officer
and treasurer. In connection with Mr. Jagerson’s appointment,
the Company and Mr. Jagerson entered into an Employment Agreement
and a Change in Control Agreement, each to be effective as of July17, 2017. The material terms of the Employment Agreement and the
Change in Control Agreement are described below.
Mr.
Jagerson, 50, brings with him 29 years of accounting and finance
experience. During that time, his roles have included Vice
President of Finance and Corporate Controller at Digital River, and
Chief Financial Officer at Christiansen Farms. Mr. Jagerson
graduated with a B.S. in Accounting from Minnesota State
University, Mankato and an MBA from the Carlson School of Business
at the University of Minnesota.
Mr.
Jagerson 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 July 17, 2020, provided that beginning on
July 17, 2020 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, Mr.
Jagerson will be entitled
to:
●
an
annual base salary of $235,000, subject to increase by the
Company’s Board of Directors (the “Board”) from
time to time;
●
earn
a target annual incentive compensation award, beginning with the
2017 fiscal year, of 50% of his base salary based on the
achievement of performance targets set by the Board;
and
●
participate
in all employee benefit plans and programs maintained by the
Company and made available to employees generally, to the extent he
is eligible under the terms of such plans.
The
Employment Agreement also provides for a grant of 60,000 shares of
time-vesting restricted stock (the “Inducement Restricted
Stock”) on September 1, 2017. One-half of the shares will
vest on the first anniversary of the grant date and one-half of the
shares will vest on the second anniversary of the grant date. The
Inducement Restricted Stock will be governed by the terms of the
Company’s 2013 Omnibus Stock and Incentive Plan.
The
Employment Agreement includes a clawback provision providing that
if there is a restatement of the Company’s 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 Mr.
Jagerson was awarded or determined based on such material
noncompliance, the Board or a committee thereof may recover any
compensation granted to Mr. Jagerson (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 Mr. Jagerson under the accounting
restatement.
In
the event of Mr. Jagerson’s involuntary termination without
“cause” or voluntary termination with “good
reason”, Mr. Jagerson 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 he would have been entitled to receive for the year in
which his termination occurs as if he had continued until the end
of that fiscal year, determined based on the Company’s actual
performance for that year relative to the performance goals
applicable to Mr. Jagerson, prorated for the number of days in the
fiscal year through his termination date and generally payable in a
cash lump sum at the time such incentive awards are payable to
other participants; (2) fifty percent (50%) of Mr. Jagerson’s
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 three
months following termination. In the event of Mr. Jagerson’s
death, “disability” (as defined in the Employment
Agreement), involuntary termination for “cause” or
voluntary termination without “Good Reason,” Mr.
Jagerson will be entitled to accrued and unpaid compensation as
provided in the Employment Agreement.
During
the one year period following Mr. Jagerson’s cessation of
employment with the Company he 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 July17, 2020, provided that beginning on July 17, 2020, 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)
Mr. Jagerson 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 him under any employment agreement
with the Company: (1) a lump sum severance payment equal to
seventy-five percent of his base salary, (2) cash payment equal to
the sum of (x) unpaid incentive compensation that has been
allocated or awarded to Mr. Jagerson 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 his target bonus for the year calculated through the
date of the Qualifying Termination, (3) welfare benefit
continuation for a period of 6 months, (4) certain post-retirement
health care or life insurance benefits if Mr. Jagerson 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 Mr. Jagerson 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 Mr. Jagerson if he fails to perform his 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
his current base salary and all compensation and benefits payable
to his under any compensation or benefit plan the Company maintains
during that period, until is employment is terminated.
Additionally, if Mr. Jagerson’s 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
his base salary through the date of termination and all
compensation and benefits to which he 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 Mr. Jagerson’s cessation of
employment with the Company he 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.
As
previously announced, Mark Cherrey’s departure from the
Company was effective on June 30, 2017. In connection with Mr.
Cherrey’s departure, the Board of Directors of the Company
appointed Kristine Glancy to serve in the additional positions of
interim principal financial officer, interim principal accounting
officer, and interim treasurer effective June 30, 2017 and until
Mr. Jagerson assumes such roles on July 17, 2017.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number
Description
10.1
Employment
Agreement, dated June 30, 2017, between Insignia Systems, Inc. and Jeffrey Jagerson
10.2
Change
in Control Agreement, dated June 30, 2017, between Insignia Systems, Inc. and Jeffrey Jagerson
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.
