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<SEC-DOCUMENT>0000897101-10-001591.txt : 20100809
<SEC-HEADER>0000897101-10-001591.hdr.sgml : 20100809
<ACCEPTANCE-DATETIME>20100809162129
ACCESSION NUMBER:		0000897101-10-001591
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		9
CONFORMED PERIOD OF REPORT:	20100630
FILED AS OF DATE:		20100809
DATE AS OF CHANGE:		20100809

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			INSIGNIA SYSTEMS INC/MN
		CENTRAL INDEX KEY:			0000875355
		STANDARD INDUSTRIAL CLASSIFICATION:	MISCELLANEOUS MANUFACTURING INDUSTRIES [3990]
		IRS NUMBER:				411656308
		STATE OF INCORPORATION:			MN
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-13471
		FILM NUMBER:		101001886

	BUSINESS ADDRESS:	
		STREET 1:		8799 BROOKLYN BLVD.
		CITY:			MINNEAPOLIS
		STATE:			MN
		ZIP:			55445
		BUSINESS PHONE:		7633926200

	MAIL ADDRESS:	
		STREET 1:		8799 BROOKLYN BLVD.
		CITY:			MINNEAPOLIS
		STATE:			MN
		ZIP:			55445
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>insignia103820_10-q.htm
<DESCRIPTION>FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2010
<TEXT>

<HTML>
<HEAD><TITLE>INSIGNIA SYSTEMS, INC. FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2010</TITLE></HEAD>
<BODY>

<BR>

<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P>

<HR WIDTH="100%" SIZE="4" COLOR=BLACK NOSHADE STYLE="MARGIN-TOP: -5PX">
<HR WIDTH="100%" SIZE="1" COLOR=BLACK NOSHADE STYLE="MARGIN-TOP: -10PX">


<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="30%" VALIGN=TOP>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 <TD WIDTH="40%" VALIGN=TOP>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 <TD WIDTH="30%" VALIGN=TOP>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=4><B>UNITED STATES SECURITIES AND EXCHANGE COMMISSION</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>Washington, D. C. 20549</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=2><B>&nbsp;</B></FONT></P>


 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>&nbsp;</B></FONT></P>


 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>

 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=6><B>FORM 10-Q</B></FONT></P>


 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>

 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=2><B>&nbsp;</B></FONT></P>


 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>

 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=3  FACE=WINGDINGS>x</FONT><FONT  SIZE=3> QUARTERLY REPORT PURSUANT TO SECTION
 13 OR 15(d) OF</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=3>THE SECURITIES
 EXCHANGE ACT OF 1934</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=3><B>for
 the quarterly period ended June 30, 2010 </B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=3>or</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=3  FACE=WINGDINGS>o</FONT><FONT  SIZE=3> TRANSITION REPORT PURSUANT TO SECTION
 13 OR 15(d) OF THE SECURITIES</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=3>EXCHANGE ACT OF 1934</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=3>for
 the transition period from ___________________ to _________________</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=3>Commission File Number:
 1-13471</FONT></P>


 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>

<TR>
 <TD VALIGN=TOP COLSPAN=3>
<center><div STYLE='BORDER-BOTTOM:SOLID BLACK .5PT;width:40%'></div></center>

 </TD>
 </TR>


 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE="5"><B>INSIGNIA
SYSTEMS, INC.</B> </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>(Exact
 name of registrant as specified in its charter)</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="48%" VALIGN=TOP>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="47%" VALIGN=TOP>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=3><B>Minnesota</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=3><B>41-1656308</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>(State
 or other jurisdiction of incorporation or organization)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>(IRS
 Employer Identification No.)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=3><B>8799
 Brooklyn Blvd.</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=3><B>Minneapolis,
 MN 55445</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>(Address
 of principal executive offices)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=3><B> (763)
 392-6200</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>(Registrant&#146;s
 telephone number, including area code)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=3><B>Not
 applicable.</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>(Former
 name, former address and former fiscal year if changed since last report)</FONT></P>
 </TD>
 </TR>

<TR>
 <TD VALIGN=TOP COLSPAN=3>
<center><div STYLE='BORDER-BOTTOM:SOLID BLACK .5PT;width:40%'></div></center>
 </TD>
 </TR>

</TABLE>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate
by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such report(s), and (2) has been subject to such filing
requirements for the past 90 days. <BR>
Yes <FONT FACE=WINGDINGS>x </FONT>No
<FONT FACE=WINGDINGS>o</FONT></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (&sect;232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). <BR>
Yes <FONT FACE=WINGDINGS>o</FONT>&nbsp;&nbsp;&nbsp;No
<FONT FACE=WINGDINGS>o</FONT></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of &#147;accelerated filer and
large accelerated filer&#148; in Rule 12b-2 of the Exchange Act. (Check one): </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Large
accelerated filer <FONT FACE=WINGDINGS>o </FONT>Accelerated filer <FONT FACE=WINGDINGS>o </FONT>Non-accelerated filer <FONT FACE=WINGDINGS>x </FONT>Smaller Reporting Company <FONT FACE=WINGDINGS>o</FONT></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).<BR>
Yes <FONT FACE=WINGDINGS>o </FONT>No
<FONT FACE=WINGDINGS>x</FONT></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Number
of shares outstanding of Common Stock, $.01 par value, as of July 30, 2010, was
15,546,210. </FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>1</FONT></P>

<HR WIDTH="100%" SIZE="1" COLOR=BLACK noshade style="margin-top: -2px">
<HR WIDTH="100%" SIZE="4" COLOR=BLACK noshade style="margin-top: -10px">

<P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P ALIGN=CENTER><FONT SIZE=2><B>Insignia Systems, Inc.</B></FONT></P>

<P ALIGN=CENTER><FONT SIZE=2><B><A NAME="toc">TABLE OF CONTENTS</A></B></FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="10%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="82%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="4%" VALIGN=TOP>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="4%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2><B><A HREF="#A103820A001_V1">PART I.</a></B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2><B><A HREF="#A103820A001_V1">FINANCIAL INFORMATION</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2><B><A HREF="#A103820A002_V1">Item 1.</a></B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2><B><A HREF="#A103820A002_V1">Financial Statements</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>3</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><A  HREF="#A103820A003_V1">Balance Sheets
 &#150; June 30, 2010 and December 31, 2009 (unaudited)</A></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>3</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><A  HREF="#A103820A004_V1">Statements of
 Operations &#150; Three and six months ended June 30, 2010 and 2009 (unaudited)</A></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>4</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><A  HREF="#A103820A005_V1">Statements of
 Shareholders&#146; Equity &#150; Six months ended June 30, 2010 and 2009 (unaudited)</A></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>5</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><A  HREF="#A103820A006_V1">Statements of
 Cash Flows &#150; Six months ended June 30, 2010 and 2009 (unaudited)</A></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>6</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><A  HREF="#A103820A007_V1">Notes to
 Financial Statements &#150; June 30, 2010 (unaudited)</A></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>7</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2><B><A HREF="#A103820A008_V1">Item 2.</a></B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2><B><A HREF="#A103820A008_V1">Management&#146;s Discussion and Analysis of
 Financial Condition and Results of Operations</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>10</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2><B><A HREF="#A103820A009_V1">Item 3.</a></B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2><B><A HREF="#A103820A009_V1">Quantitative and Qualitative Disclosures About
 Market Risk</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>15</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2><B><A HREF="#A103820A010_V1">Item 4.</a></B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2><B><A HREF="#A103820A010_V1">Controls and Procedures</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>15</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2><B><A HREF="#A103820A011_V1">PART II.</a></B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2><B><A HREF="#A103820A011_V1">OTHER INFORMATION</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2><B><A HREF="#A103820A012_V1">Item 1.</a></B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2><B><A HREF="#A103820A012_V1">Legal Proceedings</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>16</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2><B><A HREF="#A103820A013_V1">Item 1A.</a></B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2><B><A HREF="#A103820A013_V1">Risk Factors</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>16</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2><B><A HREF="#A103820A014_V1">Item 2.</a></B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2><B><A HREF="#A103820A014_V1">Unregistered Sales of Equity Securities and
 Use of Proceeds</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>17</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2><B><A HREF="#A103820A015_V1">Item 3.</a></B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2><B><A HREF="#A103820A015_V1">Defaults Upon Senior Securities</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>17</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2><B><A HREF="#A103820A016_V1">Item 4.</a></B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2><B><A HREF="#A103820A016_V1">Removed and Reserved</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>17</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2><B><A HREF="#A103820A017_V1">Item 5.</a></B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2><B><A HREF="#A103820A017_V1">Other Information</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>17</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2><B><A HREF="#A103820A018_V1">Item 6.</a></B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2><B><A HREF="#A103820A018_V1">Exhibits</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>17</FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN=CENTER><FONT SIZE=2>2</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P><BR>

<P><FONT SIZE=2><B>PART I. F<A NAME="A103820A001_V1"></A>INANCIAL INFORMATION </B></FONT></P>

<P><FONT SIZE=2><B>Item 1. F<A NAME="A103820A002_V1"></A>inancial
Statements</B> </FONT></P>

<P ALIGN=CENTER><FONT SIZE=2><B>Insignia Systems, Inc. <BR>
B</B><A NAME="A103820A003_V1"></A><B>ALANCE S</B><B>HEETS<BR>
</B>(Unaudited)</FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="70%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="10%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="10%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>June 30,</B><FONT SIZE=1><B><BR>
 2010</B></FONT></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>December 31,</B><FONT SIZE=1><B><BR>
 2009</B></FONT></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><B>ASSETS</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><B>Current Assets:</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Cash and cash equivalents</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>8,249,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>8,797,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Short-term investments</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>3,400,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>4,400,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Accounts receivable, net of allowance for doubtful accounts of $8,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>4,590,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>2,890,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Inventories</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>403,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>389,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR BGCOLOR="#D6F3E8">
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Prepaid expenses and other</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>

 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>235,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>394,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Total Current Assets</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>16,877,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>16,870,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><B>Other Assets:</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Property and equipment, net</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>1,041,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>927,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR BGCOLOR="#D6F3E8">
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Other</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>

 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>42,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>42,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><B>Total Assets</B></FONT></P>

 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>

 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>17,960,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>17,839,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><B>LIABILITIES AND SHAREHOLDERS&#146; EQUITY</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><B>Current Liabilities:</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Current maturities of long-term liabilities</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>219,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>219,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Accounts payable</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>2,345,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>2,253,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Accrued liabilities</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Compensation</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>833,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>778,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Retailer payments</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>563,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>1,022,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Legal</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>381,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>257,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Employee stock purchase plan</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>93,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>131,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Other</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>400,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>389,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR BGCOLOR="#D6F3E8">
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Deferred revenue</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>

 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>580,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>1,105,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Total Current Liabilities</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>5,414,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>6,154,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><B>Long-Term Liabilities, less current maturities</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><B>Commitments and Contingencies</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><B>Shareholders&#146; Equity:</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Common stock, par value $.01:</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Authorized shares &#150; 40,000,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Issued and outstanding shares &#150; 15,544,000 at June 30, 2010 and
 15,181,000 at December 31, 2009</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>155,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>152,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Additional paid-in capital</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>33,217,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>32,578,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Accumulated deficit</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>

 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>(20,826,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>)</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>(21,045,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>)</FONT></P>


 </TD>
 </TR>
 <TR BGCOLOR="#D6F3E8">
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Total Shareholders&#146; Equity</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>

 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>12,546,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>11,685,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><B>Total Liabilities and Shareholders&#146; Equity</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>

 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>17,960,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>17,839,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
</TABLE>

<P><FONT SIZE=2><I>See accompanying notes to financial statements. </I></FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>3</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P><BR>
<P ALIGN=CENTER><FONT SIZE=2><B>Insignia Systems, Inc. <BR>
S</B><A NAME="A103820A004_V1"></A><B>TATEMENTS OF O</B><B>PERATIONS <BR>
</B>(Unaudited)</FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="42%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="10%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="10%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="10%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="10%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=5 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Three Months Ended<BR>
 June 30</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=5 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Six Months Ended<BR>
 June 30</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>2010</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>2009</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>2010</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>2009</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Services revenues</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>7,562,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>5,285,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>12,699,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>10,916,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Products sold</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>

 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>764,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>488,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>1,510,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>1,043,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Total Net Sales</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>8,326,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>5,773,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>14,209,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>11,959,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Cost of services</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>3,482,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>2,422,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>5,918,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>5,005,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR BGCOLOR="#D6F3E8">
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Cost of goods sold</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>

 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>499,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>326,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>1,016,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>706,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Total Cost of Sales</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>

 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>3,981,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>2,748,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>6,934,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>5,711,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Gross Profit</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>4,345,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>3,025,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>7,275,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>6,248,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><B>Operating Expenses:</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Selling</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>1,775,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>1,511,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>3,411,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>3,018,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Marketing</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>411,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>345,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>806,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>734,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>General and administrative</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>1,508,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>1,044,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>2,855,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>2,469,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Insurance settlement proceeds</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>

 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>



 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>(1,387,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>)</FONT></P>


 </TD>
 </TR>
 <TR BGCOLOR="#D6F3E8">
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Total Operating Expenses</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P>

 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>3,694,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>2,900,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>7,072,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>4,834,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Operating Income</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>651,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>125,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>203,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>1,414,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><B>Other Income (Expense):</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Interest income</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>8,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>31,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>26,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>69,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR BGCOLOR="#D6F3E8">
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Interest expense</FONT></P>
 </TD>

 <TD VALIGN=BOTTOM>
  <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>

 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>(5,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>)</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>(10,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>)</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>(10,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>)</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>(20,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>)</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Total Other Income</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>

 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>3,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>21,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>16,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>49,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Income Before Taxes</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>654,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>146,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>219,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>1,463,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Income tax expense</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>

 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>36,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>



 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>36,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR BGCOLOR="#D6F3E8">
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><B>Net Income</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>

 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>654,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>110,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>219,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>1,427,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Net income per share:</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Basic</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>0.04</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>0.01</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>0.01</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>0.09</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Diluted</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>

 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>0.04</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>0.01</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>0.01</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>0.09</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Shares used in calculation of net income per share:</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Basic</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>15,487,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>15,129,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>15,434,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>15,129,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR BGCOLOR="#D6F3E8">
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Diluted</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>

 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>16,924,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>15,783,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>16,815,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>15,513,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
</TABLE>

<P><FONT SIZE=2><I>See accompanying notes to financial statements. </I></FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>4</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P><BR>
<P ALIGN=CENTER><FONT SIZE=2><B>Insignia Systems, Inc. <BR>
St<A NAME="A103820A005_V1"></A>atements of Shareholders&#146; Equity <BR>
</B>(Unaudited)</FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="28%" VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="10%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="10%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="10%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="10%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="10%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=5 VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1><B>Additional</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=5 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Common Stock</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1><B>Paid-In</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1><B>Accumulated</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">


 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Shares</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">


 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Amount</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">


 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Capital</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">


 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Deficit</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">


 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Total</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><U><B>Six Months Ended June 30, 2010</B></U></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><B>Balance at December 31, 2009</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>15,181,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>152,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>32,578,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>(21,045,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>11,685,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Issuance of common stock, net</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>448,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>4,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>705,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>709,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Repurchase of common stock, net</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>(85,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>(1,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>(468,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>(469,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Value of stock-based compensation</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>402,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>402,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Net income</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>219,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>219,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><B>Balance at June 30, 2010</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>

 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>15,544,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>155,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>33,217,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>(20,826,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>)</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>12,546,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><U><B>Six Months Ended June 30, 2009</B></U></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><B>Balance at December 31, 2008</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>15,069,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>151,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>31,881,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>(24,761,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>7,271,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Issuance of common stock, net</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>60,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>44,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>44,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Value of stock-based compensation</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>298,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>298,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Net income</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>1,427,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>1,427,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><B>Balance at June 30, 2009</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>

 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>15,129,000</FONT></P>



 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>151,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>32,223,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>(23,334,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>)</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>9,040,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
</TABLE>

<P><FONT SIZE=2><I>See accompanying notes to financial statements. </I></FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>5</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P><BR>
<P ALIGN=CENTER><FONT SIZE=2><B>Insignia Systems, Inc. <BR>
S</B><A NAME="A103820A006_V1"></A><B>TATEMENTS OF C</B><B>ASH F</B><B>LOWS <BR>
</B>(Unaudited)</FONT></P>


<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="70%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="10%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="10%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1><B>Six Months
 Ended June 30</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>2010</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>2009</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><B>Operating Activities:</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Net income</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>219,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>1,427,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Adjustments to reconcile net income to net cash used in operating
 activities:</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Depreciation and amortization</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>161,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>203,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Provision for income taxes</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>36,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Provision for bad debt expense</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>7,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Stock-based compensation</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>402,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>298,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Changes in operating assets and liabilities:</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Accounts receivable</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>(1,700,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>(1,323,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Inventories</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>(14,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>14,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Prepaid expenses and other</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>159,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>(56,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Accounts payable</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>92,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>(814,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Accrued liabilities</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>(307,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>(2,583,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Deferred revenue</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>(525,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>)</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>358,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:.6IN;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Net
 cash used in operating activities</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>(1,513,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>(2,433,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><B>Investing Activities:</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Purchases of property and equipment</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>(275,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>(38,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Purchases of investments</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>(2,600,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>(1,900,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Proceeds from sale of investments</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>3,600,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:.6IN;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Net
 cash provided by (used in) investing activities</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>725,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>(1,938,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><B>Financing Activities:</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Payment of long-term liabilities</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>(23,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Proceeds from issuance of common stock, net</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>714,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>44,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Repurchase of common stock, net</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>(474,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>)</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:.6IN;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Net
 cash provided by financing activities</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>240,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>21,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Decrease in cash and cash equivalents</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>(548,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>(4,350,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Cash and cash equivalents at beginning of period</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>8,797,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>11,052,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Cash and cash equivalents at end of period</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>

 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>8,249,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>6,702,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><B>Supplemental disclosures for cash flow information:</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Cash paid during periods for income taxes</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>

  <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>40,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>13,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
</TABLE>

<P><FONT SIZE=2><I>See accompanying notes to financial statements. </I></FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>6</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P><BR>
<BR>

<TABLE ALIGN=CENTER BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="100%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>Insignia Systems, Inc.</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>N</B><A  NAME="A103820A007_V1"></A><B>OTES T</B><B>O F</B><B>INANCIAL S</B><B>TATEMENTS</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>(Unaudited)</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE ALIGN=CENTER BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="94%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>1.</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>Summary
 of Significant Accounting Policies. </B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><I><B>Description of Business</B>.</I> Insignia Systems, Inc. (the &#147;Company&#148;)
 markets in-store advertising programs, services and products to retailers and
 consumer packaged goods manufacturers. The Company&#146;s services and products
 include the Insignia Point-of-Purchase Services (POPS) in-store advertising
 program, thermal sign card supplies for the Company&#146;s SIGNright and Impulse
 systems, Stylus software and laser printable cardstock and label supplies. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><I><B>Basis of Presentation</B>.</I> Financial statements for the interim
 periods included herein are unaudited; however, they contain all adjustments,
 including normal recurring accruals, which in the opinion of management, are
 necessary to present fairly the financial position of the Company at June 30,
 2010, its results of operations for the three and six months ended June 30,
 2010 and 2009, and its cash flows for the six months ended June 30, 2010 and
 2009. Results of operations for the periods presented are not necessarily
 indicative of the results to be expected for the full year. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>The financial statements
 do not include certain footnote disclosures and financial information
 normally included in financial statements prepared in accordance with
 accounting principles generally accepted in the United States of America and,
 therefore, should be read in conjunction with the financial statements and
 notes included in the Company&#146;s Annual Report on Form 10-K for the year ended
 December 31, 2009. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>The Summary of Significant
 Accounting Policies in the Company&#146;s 2009 Annual Report on Form 10-K
 describes the Company&#146;s accounting policies. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><I><B>Inventories</B>.</I> Inventories are primarily comprised of
 parts and supplies for Impulse and SIGNright machines, sign cards, and
 rollstock. Inventory is valued at the lower of cost or market using the
 first-in, first-out (FIFO) method, and consists of the following: </FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE ALIGN=CENTER BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="80%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="63%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>June 30,<BR>
 2010</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>December 31,<BR>
 2009</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>Raw materials</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>53,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>57,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>Work-in-process</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>44,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>52,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=2>Finished goods</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>306,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>280,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>403,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>389,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
</TABLE>

<br>
<TABLE ALIGN=CENTER BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:2PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="94%" VALIGN=TOP>
 <P><FONT SIZE=2><I><B>Property and Equipment</B>. </I>Property and equipment consists of the
following: </FONT></P>
 </TD>
 </TR></TABLE>



<TABLE ALIGN=CENTER BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="90%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="69%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="9%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="9%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>June 30,<BR>
 2010</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>December 31,<BR>
 2009</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Production tooling, machinery and equipment</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>2,336,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>2,226,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Office furniture and fixtures</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>258,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>255,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Computer equipment and software</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>841,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>758,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Web site</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>38,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>38,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Leasehold improvements</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>351,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>322,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>3,824,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>3,599,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Accumulated depreciation and amortization</FONT></P>

 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>(2,783,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=2>)</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>(2,672,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=2>)</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Net Property and Equipment</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>1,041,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>927,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
</TABLE>
<P ALIGN=CENTER><FONT SIZE=2>7</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P><BR>

<BR>

<TABLE ALIGN=CENTER BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="95%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><I><B>Stock-Based Compensation</B></I><B>.</B> The Company measures and recognizes
 compensation expense for all stock-based payments at fair value using the
 Black-Scholes option pricing model to determine the weighted average fair
 value of options and employee stock purchase plan rights. The Company
 recognizes stock-based compensation expense on a straight-line method over
 the requisite service period of the award. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>There were 334,500 stock
 option awards granted during the six months ended June 30, 2010, and the
 Company estimated the fair value of these awards using the following weighted
 average assumptions: expected life of 3.5 years, expected volatility of 55%,
 dividend yield of 0% and risk-free interest rate of 1.28%. The Company
 estimated the fair value of stock-based rights granted during the six months
 ended June 30, 2010, under the employee stock purchase plan using the
 following weighted average assumptions: expected life of 1 year, expected
 volatility of 55%, dividend yield of 0% and risk-free interest rate of 0.45%.
 Total stock-based compensation expense recorded for the six months ended June
 30, 2010 and 2009, was $402,000 and $298,000, respectively. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><I><B>Net Income Per Share.</B></I> Basic net income per share is computed by
 dividing net income by the weighted average shares outstanding and excludes
 any dilutive effects of options, warrants and convertible securities. Diluted
 net income per share gives effect to all diluted potential common shares
 outstanding during the period. Options and warrants to purchase approximately
 481,000 and 1,988,000 shares of common stock with weighted average exercise
 prices of $7.73 and $4.73 were outstanding at June 30, 2010 and 2009 and were
 not included in the computation of common stock equivalents for the three
 months ended June 30, 2010 and 2009 because their exercise prices were higher
 than the average fair market value of the common shares during the reporting
 period. Options and warrants to purchase approximately 459,000 and 2,433,000
 shares of common stock with weighted average exercise prices of $7.87 and
 $4.17 were outstanding at June 30, 2010 and 2009 and were not included in the
 computation of common stock equivalents for the six months ended June 30,
 2010 and 2009 because their exercise prices were higher than the average fair
 market value of the common shares during the reporting period. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Weighted average common
 shares outstanding for the three and six months ended June 30, 2010 and 2009
 were as follows: </FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE ALIGN=CENTER BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="90%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="41%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="9%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="10%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="10%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="10%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=5 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Three Months Ended<BR>
 June 30</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=5 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Six Months Ended<BR>
 June 30</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>2010</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>2009</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>2010</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>2009</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Denominator for basic net income per share &#150; weighted average shares</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>15,487,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>15,129,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>15,434,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>15,129,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Effect of dilutive securities:</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Stock options and warrants</FONT></P>

 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>1,437,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>654,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>1,381,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>384,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Denominator for diluted net income per share &#150; adjusted weighted
 average shares</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>16,924,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>15,783,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>16,815,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>15,513,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
</TABLE>

<BR>

<P ALIGN=CENTER><FONT SIZE=2>8</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P><BR>


<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="95%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>2.</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>Commitments
 and Contingencies. </B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><I><B>Legal</B></I><B>.</B>
 On September 23, 2004, the Company brought suit against News America
 Marketing In-Store, Inc. (News America) and Albertson&#146;s Inc. (Albertson&#146;s) in
 Federal District Court in Minneapolis, Minnesota, for violations of federal
 and state antitrust and false advertising laws, alleging that News America
 has acquired and maintained monopoly power through various wrongful acts
 designed to harm the Company in the in-store advertising and promotion
 products and services market. The suit seeks injunctive relief  </FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="95%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>sufficient to
 prevent further antitrust injury and an award of treble damages to be
 determined at trial for the harm caused to the Company. On September 20,
 2006, the State of Minnesota through its Attorney General intervened as a
 co-plaintiff in the business disparagement portion of the case. In December
 2006, News America filed
 counterclaims in the case that included claims of alleged interference with
 contracts and alleged libel and slander against Insignia and one of its
 officers. On February 4, 2008, the Court approved a consent decree entered
 into by News America and the State of Minnesota under which News America
 agreed to not violate Minnesota&#146;s statutes prohibiting commercial
 disparagement. On July 29, 2008, the Company and Albertson&#146;s entered into a
 settlement agreement and mutual release, in which they each agreed to release
 all claims against the other, and the Company agreed to dismiss its lawsuit
 against Albertson&#146;s. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>On September 30, 2009, the
 Court ruled on motions by both the Company and News America for Summary
 Judgment. The Court awarded Summary Judgment to the Company and one of its
 executive officers on all of News America&#146;s counterclaims and third-party
 claims. The Court also denied News America&#146;s Motion for Summary Judgment on
 the Company&#146;s claims against News America other than granting News America&#146;s
 uncontested motion on one claim in the Amended Complaint related to
 retailers. The Court&#146;s rulings set the stage for a trial on the Company&#146;s
 antitrust and unfair-competition claims against News America. At a status
 conference on May 4, 2010, the Court set December 6, 2010, as the date
 certain for starting the trial. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>The Company filed claims
 in December 2006 and January 2007 with its director&#146;s and officer&#146;s liability
 and general liability insurers related to the defense costs and insurance
 coverage for claims asserted against the Company and one of its officers in
 News America&#146;s counterclaims. On August 9, 2007, the Company filed a
 complaint against the insurers in Hennepin County District Court, State of
 Minnesota requesting a declaratory judgment that the insurers owed the
 Company and its officer such defense costs and insurance coverage. In
 December 2007, the Company settled its claim against one of the insurers. In
 March 2009, the Company settled with the other insurer and received a payment
 of $1,387,000 as part of the settlement. The Company recorded the payment in
 general and administrative expenses for the quarter ended March 31, 2009, and
 the litigation with the insurers is now concluded. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>During the six months
 ended June 30, 2010, the Company incurred legal fees of $927,000 related to
 the News America litigation. Management currently expects the amount of legal
 fees and expenses that will be incurred in connection with the ongoing
 lawsuit against News America to be significant throughout the remainder of
 2010 and into 2011. Legal fees and expenses are expensed as incurred and are
 included in general and administrative expenses in the statements of operations.
 </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>The Company is subject to
 various other legal proceedings in the normal course of business. Management
 believes the outcome of these proceedings will not have a material adverse
 effect on the Company&#146;s financial position or results of operations. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>3.</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>Income
 Taxes.</B> The Company
 carried a full valuation allowance against its net deferred tax asset at both
 June 30, 2010 and 2009. The Company did not record income tax expense for the
 six months ended June 30, 2010, due to the lack of taxable income for the
 period and the presence of a full valuation allowance against the deferred
 tax asset. The Company recorded income tax expense of $36,000 for the six
 months ended June 30, 2009, related to alternative minimum tax liability. The
 valuation allowance has been established due to uncertainties regarding the
 realization of deferred tax assets. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR></table>


<P ALIGN=CENTER><FONT SIZE=2>9</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P><BR>






<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="95%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>4.</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>Concentrations.</B> During the six months ended June 30 2010,
 Valassis Sales and Marketing Services, Inc., General Mills, Inc., and Nestle
 Co. accounted for 20%, 19% and 17%, respectively, of the Company&#146;s total net
 sales. At June 30, 2010, these customers represented 26%, 13% and 15%,
 respectively, of the Company&#146;s total accounts receivable. During the six
 months ended June 30, 2009, Valassis Sales and Marketing Services, Inc.,
 General Mills, Inc., and Nestle Co. accounted for 20%, 19% and 14%,
 respectively, of the Company&#146;s total net sales. At June 30, 2009, these
 customers represented 10%, 31% and 18%, respectively, of the Company&#146;s total
 accounts receivable. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Although there are a
 number of customers that the Company sells to, the loss of a major customer
 could cause a delay in and possible loss of sales, which would adversely
 affect operating results. Additionally, the loss of a major retailer from the
 Company&#146;s retail network could adversely affect operating results.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>5.</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>New
 Accounting Pronouncements.</B> In December 2009, the Financial Accounting Standards Board (FASB)
 issued Accounting Standards Update (ASU) No. 2010-06, <I>Fair Value Measurements and Disclosures Topic 820
 &#147;Improving Disclosures about Fair Value Measurements&#148;.</I> This ASU
 requires some new disclosures and clarifies some existing disclosure
 requirements about fair value measurement as set forth in Codification
 Subtopic 820-10. The FASB&#146;s objective is to improve these disclosures and,
 thus, increase the transparency in financial reporting. Some of the new
 disclosures are effective for reporting periods beginning after December 15,
 2009, with the remaining new disclosures effective for reporting periods
 beginning after December 15, 2010. The adoption of this ASU will not have a
 material impact on our financial statements.</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="12%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="88%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=3><B>I<A  NAME="A103820A008_V1"></A>tem 2.</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=3><B>Management&#146;s
 Discussion and Analysis of Financial Condition and Results of Operations </B></FONT></P>
 </TD>
 </TR>
</TABLE>

<P><FONT SIZE=2><B>Overview </B></FONT></P>

<P><FONT SIZE=2>Insignia Systems, Inc.
markets in-store advertising programs, services and products to retailers and
consumer packaged goods manufacturers. The Company&#146;s services and products
include the Insignia Point-of-Purchase Services (POPS) in-store advertising
program, thermal sign card supplies for the Company&#146;s SIGNright and Impulse
systems, Stylus software and laser printable cardstock and label supplies. </FONT></P>

<P><FONT SIZE=2><B>Results of Operations </B></FONT></P>

<P><FONT SIZE=2>The following table sets
forth, for the periods indicated, certain items in the Company&#146;s Statements of
Operations as a percentage of total net sales. </FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="54%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="7%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="7%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="7%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="7%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=5 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Three Months Ended<BR>
 June 30</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=5 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Six Months Ended<BR>
 June 30</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>

 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>2010</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>2009</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>2010</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>2009</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>

 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Net sales</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>100.0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>%</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>100.0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>%</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>100.0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>%</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>100.0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>%</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Cost of sales</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>47.8</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>47.6</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>48.8</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>47.8</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Gross profit</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>52.2</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>52.4</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>51.2</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>52.2</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Operating expenses:</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Selling</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>21.3</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>26.1</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>24.0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>25.2</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Marketing</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>5.0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>6.0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>5.7</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>6.1</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>General and administrative</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>18.1</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>18.1</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>20.1</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>20.7</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Insurance settlement proceeds</FONT></P>

  <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>



 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>(11.6</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=2>)</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Total operating expenses</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>44.4</FONT></P>

 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>50.2</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>49.8</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>40.4</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Operating income</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>7.8</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>2.2</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>1.4</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>11.8</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Other income</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>0.3</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>0.1</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>0.4</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Income before taxes</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>7.8</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>2.5</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>1.5</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>12.2</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Income tax expense</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>0.6</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>0.3</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Net income</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>7.8</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
 <P><FONT SIZE=2>%</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>1.9</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
 <P><FONT SIZE=2>%</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>1.5</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
 <P><FONT SIZE=2>%</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>11.9</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
 <P><FONT SIZE=2>%</FONT></P>


 </TD>
 </TR>
</TABLE>
<P ALIGN=CENTER><FONT SIZE=2>10</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P><BR>
<P><FONT SIZE=2>Increased net sales in the
first six months of 2010 compared to the first six months of 2009 resulted in
increased gross profit for the 2010 period. This increased gross profit for the
2010 period was largely offset by increased operating expenses for the 2010
period. Also, during the first six months of 2009 the Company received proceeds
of $1,387,000 as part of a settlement in the Company&#146;s claims against one of
its insurers for defense costs in the News America litigation. Net income for
the first six months of 2010 was $179,000 higher than net income for the first
six months of 2009 when excluding the insurance settlement proceeds for the
first six months of 2009. </FONT></P>

<P><FONT SIZE=2><B>Three and Six Months ended June 30, 2010 Compared to Three
and Six Months Ended June 30, 2009 </B></FONT></P>

<P><FONT SIZE=2><I><B>Net Sales.</B></I> Net sales for the three months ended June
30, 2010, increased 44.2% to $8,326,000 compared to $5,773,000 for the three
months ended June 30, 2009. Net sales for the six months ended June 30, 2010,
increased 18.8% to $14,209,000 compared to $11,959,000 for the six months ended
June 30, 2009. </FONT></P>

<P><FONT SIZE=2>Service revenues from our
POPSign programs for the three months ended June 30, 2010, increased 43.1% to
$7,562,000 compared to $5,285,000 for the three months ended June 30, 2009,
primarily due to an increase in the number of POPSign programs executed for
customers (consumer packaged goods manufacturers) at stores in the Company&#146;s
retail network. Service revenues from our POPSign programs for the six months
ended June 30, 2010, increased 16.3% to $12,699,000 compared to $10,916,000 for
the six months ended June 30, 2009. The increase in service revenues for the
six month 2010 period was due to an increase in the number of POPSign programs
executed for customers and an increase in the average program price. </FONT></P>

<P><FONT SIZE=2>Product sales for the three
months ended June 30, 2010, increased 56.6% to $764,000 compared to $488,000
for the three months ended June 30, 2009. Product sales for the six months
ended June 30, 2010, increased 44.8% to $1,510,000 compared to $1,043,000 for
the six months ended June 30, 2009. The increases in both 2010 periods were
primarily due to higher sales of laser printer supplies based on increased
demand for those products from one of our customers. </FONT></P>

<P><FONT SIZE=2><I><B>Gross Profit.</B></I> Gross profit for the three months ended June
30, 2010, increased 43.6% to $4,345,000 compared to $3,025,000 for the three months
ended June 30, 2009. Gross profit for the six months ended June 30, 2010,
increased 16.4% to $7,275,000 compared to $6,248,000 for the six months ended
June 30, 2009. Gross profit as a percentage of total net sales decreased to
52.2% for the three months ended June 30, 2010, compared to 52.4% for the three
months ended June 30, 2009. Gross profit as a percentage of total net sales
decreased to 51.2% for the six months ended June 30, 2010, compared to 52.2%
for the six months ended June 30, 2009. </FONT></P>

<P><FONT SIZE=2>Gross profit from our
POPSign program revenues for the three months ended June 30, 2010, increased
42.5% to $4,080,000 compared to $2,863,000 for the three months ended June 30,
2009. Gross profit from our POPSign program revenues for the six months ended June
30, 2010, increased 14.7% to $6,781,000 compared to $5,911,000 for the six
months ended June 30, 2009. The increases in both 2010 periods were primarily
due to increased sales which were partially offset by increased retailer
expenses. Gross profit as a percentage of POPSign program revenues for the
three months ended June 30, 2010, decreased to 54.0% compared to 54.2% for the
three months ended June 30, 2009. Gross profit as a percentage of POPSign
program revenues for the six months ended June 30, 2010, decreased to 53.4%
compared to 54.2% for the six months ended June 30, 2009. The decreases in
gross profit as a percentage of POPSign program revenues in both 2010 periods
were primarily due to the effect of increased variable retailer expenses which
were partially offset by the effect of fixed costs. </FONT></P>



<P ALIGN=CENTER><FONT SIZE=2>11</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P><BR>
<P><FONT SIZE=2>Gross profit from our
product sales for the three months ended June 30, 2010, increased 63.6% to
$265,000 compared to $162,000 for the three months ended June 30, 2009. Gross
profit from our product sales for the six months ended June 30, 2010, increased
46.6% to $494,000 compared to $337,000 for the six months ended June 30, 2009.
The increases in both 2010 periods were primarily due to increased sales. Gross
profit as a percentage of product sales was 34.7% for the three months ended
June 30, 2010, compared to 33.2% for the three months ended June 30, 2009.
Gross profit as a percentage of product sales
was 32.7% for the six months ended June 30, 2010, compared to 32.3% for the six
months ended June 30, 2009. The increases in both 2010 periods were due to the
effect of fixed costs which more than offset the effect of significantly
increased sales of lower margin products.</FONT></P>

<P><FONT SIZE=2><I><B>Operating Expenses </B></I></FONT></P>

<P><FONT SIZE="2"><B><I>Selling.</I></B> Selling expenses for the three months ended June 30, 2010, increased
17.5% to $1,775,000 compared to $1,511,000 for the three months ended June 30,
2009. Selling expenses for the six months ended June 30, 2010, increased 13.0%
to $3,411,000 compared to $3,018,000 for the six months ended June 30, 2009.
Increases in the 2010 periods were primarily due to increased sales
commissions, increased staffing levels and benefits, and increased travel
related expenses. The increased sales commissions were due to increased POPSign
program revenues. </FONT> </P>

<P><FONT SIZE=2>Selling expenses as a
percentage of total net sales decreased to 21.3% for the three months ended
June 30, 2010, compared to 26.1% for the three months ended June 30, 2009.
Selling expenses as a percentage of total net sales decreased to 24.0% for the
six months ended June 30, 2010, compared to 25.2% for the six months ended June
30, 2009. The decreases in the selling expenses as a percentage of total net
sales in the 2010 periods were due to the effect of the increased costs
discussed above in combination with the effect of increased sales. </FONT></P>

<P><FONT SIZE=2><I><B>Marketing.</B></I> Marketing expenses for the three months
ended June 30, 2010, increased 19.1% to $411,000 compared to $345,000 for the
three months ended June 30, 2009. Marketing expenses for the six months ended
June 30, 2010, increased 9.8% to $806,000 compared to $734,000 for the six
months ended June 30, 2009. Increased expenses in the 2010 periods were
primarily the result of increased staffing levels, employee benefit costs and
data acquisition costs. </FONT></P>

<P><FONT SIZE=2>Marketing expenses as a
percentage of total net sales decreased to 5.0% for the three months ended June
30, 2010, compared to 6.0% for the three months ended June 30, 2009. Marketing
expenses as a percentage of total net sales decreased to 5.7% for the six
months ended June 30, 2010, compared to 6.1% for the six months ended June 30,
2009. The decreases in marketing expenses as a percentage of total net sales in
the 2010 periods were primarily due to the effect of the increased costs
discussed above in combination with the effect of increased sales. </FONT></P>

<P><FONT SIZE=2><I><B>General and administrative.</B></I> General and administrative expenses for the
three months ended June 30, 2010, increased 44.4% to $1,508,000 compared to
$1,044,000 for the three months ended June 30, 2009. General and administrative
expenses for the six months ended June 30, 2010, increased 15.6% to $2,855,000
compared to $2,469,000 for the six months ended June 30, 2009. The increase in
the second quarter 2010 period was primarily due to increased legal expense,
staffing levels and travel related expenses. The increased legal expenses were
related to the News America litigation. The increase in the six month 2010
period was primarily due to increased staffing levels and travel related
expenses. </FONT></P>

<P><FONT SIZE=2>General and administrative
expenses as a percentage of total net sales was 18.1% for both the three months
ended June 30, 2010 and June 30, 2009. General and administrative expenses as
percentage of total net sales decreased to 20.1% for the six months ended June
30, 2010, compared to 20.7% for the six months ended June 30, 2009. The lack of
change in the second quarter 2010 period and the decrease in the six month 2010
period were primarily due to the increased costs discussed above in relation to
increased sales. </FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>12</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P><BR>
<P><FONT SIZE=2>Legal fees and expenses were
$566,000 for the three months ended June 30, 2010, compared to $317,000 for the
three months ended June 30, 2009. Legal fees and expenses were $1,089,000 for
the six months ended June 30, 2010, compared to $1,059,000 for the six months
ended June 30, 2009. The legal fees in each quarter were incurred primarily in
connection with the News America lawsuit described in Note 2 to the financial
statements. We currently expect the amount of additional legal fees that will
be incurred in connection with the ongoing lawsuit to be significant throughout
the remainder of 2010 and into 2011 as trial preparation continues and as the
trial is conducted. A negative outcome of this litigation could affect
long-term competitive aspects of the Company&#146;s business. </FONT></P>

<P><FONT SIZE=2><I><B>Insurance settlement proceeds.</B></I> The Company received a payment of $1,387,000
in the first quarter of 2009 from an insurer as part of a settlement of the
Company&#146;s claim that the insurer owed the Company defense costs for claims
asserted against the Company and one of its officers in the News America
litigation. </FONT></P>

<P><FONT SIZE=2><I><B>Other Income.</B></I> Other income for the three months ended June
30, 2010, was $3,000 compared to $21,000 for the three months ended June 30,
2009. Other income for the six months ended June 30, 2010, was $16,000 compared
to $49,000 for the six months ended June 30, 2009. Lower other income in the
2010 periods was primarily due to decreased interest income in the 2010 periods
as a result of lower interest rates which more than offset the higher cash,
cash equivalents and short-term investment balances in the 2010 periods. </FONT></P>

<P><FONT SIZE=2><I><B>Income Taxes.</B></I> The Company carried a full valuation
allowance against its net deferred tax asset at both June 30, 2010, and June
30, 2009. The Company did not record income tax expense for the three and six
months ended June 30, 2010, due to the combination of the full valuation
allowance and the lack of taxable income for the period. The Company recorded
income tax expense of $36,000 for the three and six months ended June 30, 2009,
related to alternative minimum tax liability. The valuation allowance has been
established due to uncertainties regarding the realization of deferred tax
assets. The Company updates its deferred tax asset and valuation allowance
analysis quarterly to confirm the appropriateness of its valuation allowance. </FONT></P>

<P><FONT SIZE=2><I><B>Net Income.</B></I> Net income for the three months ended June
30, 2010, was $654,000 compared to $110,000 for the three months ended June 30,
2009. Net income for the six months ended June 30, 2010, was $219,000 compared
to $1,427,000 for the six months ended June 30, 2009. </FONT></P>

<P><FONT SIZE=2><B>Liquidity and Capital Resources </B></FONT></P>

<P><FONT SIZE=2>The Company has financed its
operations with proceeds from public and private stock sales and sales of its
services and products. At June 30, 2010, working capital was $11,463,000
compared to $10,716,000 at December 31, 2009. During the six months ended June
30, 2010, cash, cash equivalents and short-term investments decreased
$1,548,000 from $13,197,000 at December 31, 2009, to $11,649,000 at June 30,
2010. </FONT></P>

<P><FONT SIZE=2>Net cash used in operating
activities during the six months ended June 30, 2010 was $1,513,000. Net income
of $219,000 and non-cash expenses of $563,000 (depreciation and stock-based
compensation expense) for the six months ended June 30, 2010, were more than
offset by changes in operating assets and liabilities, primarily decreases in
accrued liabilities and deferred revenue and an increase in accounts
receivable. Accounts receivable increased $1,700,000 during the six months
ended June 30, 2010, primarily due to higher revenue in the two months
preceding June 30, 2010, as compared to the two months preceding December 31,
2009, and due to variability in customer billing arrangements and terms. The
Company expects accounts receivable, accounts payable, accrued liabilities and
deferred revenue to fluctuate during 2010 depending on the level of quarterly
POPSign revenues and related business activity as well as billing arrangements
with customers. </FONT></P>



<P ALIGN=CENTER><FONT SIZE=2>13</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P><BR>
<P><FONT SIZE=2>Net cash of $725,000 was
provided by investing activities during the six months ended June 30, 2010, due
to short-term investment activity and expenditures of $275,000 for property and
equipment. Purchases of short-term investments of $2,600,000 and proceeds of
$3,600,000 during the six months consisted entirely of purchases and redemptions of
twenty-six week certificates of deposit. Capital expenditures of $275,000
during the six months consisted of digital printing related equipment and
related leasehold modifications as well as information technology equipment and
software. The Company expects capital expenditures of up to $150,000 for the
remainder of 2010. </FONT></P>

<P><FONT SIZE=2>Net cash of $240,000 was
provided by financing activities during the six months ended June 30, 2010, as
a result of $714,000 of proceeds (net) from the issuance of common stock from
the exercise of stock options and the employee stock purchase plan which was
partially offset by $474,000 of stock repurchased by the Company pursuant to a
plan adopted on February 23, 2010. The stock repurchase plan allows for the
repurchase of up to $2,000,000 of the Company&#146;s common stock on or before
January 31, 2011. </FONT></P>

<P><FONT SIZE=2>The Company believes that
based upon current business conditions, its existing cash balance and future
cash from operations will be sufficient for its cash requirements in the
foreseeable future. However, there can be no assurances that this will occur or
that the Company will be able to secure additional financing from public or
private stock sales or from other financing agreements if needed. </FONT></P>

<P><FONT SIZE=2><B>Critical Accounting Policies </B></FONT></P>

<P><FONT SIZE=2>The discussion and analysis
of our financial condition and results of operations are based upon our
financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States of America. The preparation
of these financial statements requires us to make estimates and judgments that
affect the reported amounts of assets and liabilities, revenues and expenses,
and related disclosure of contingent assets and liabilities at the date of our
financial statements. Actual results may differ from these estimates under
different assumptions or conditions. </FONT></P>

<P><FONT SIZE=2>Our significant accounting
policies are described in Note 1 to the annual financial statements as of and
for the year ended December 31, 2009, included in our Form 10-K filed with the Securities
and Exchange Commission on March 31, 2010. We believe our most critical
accounting policies and estimates include the following: </FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="90%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>revenue recognition; </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>allowance for doubtful
 accounts; </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>accounting for deferred
 income taxes; and </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>stock-based compensation.</FONT></P>
 </TD>
 </TR>
</TABLE>

<P><FONT SIZE=2><B>Cautionary Statement Regarding Forward-Looking Information </B></FONT></P>

<P><FONT SIZE=2>Statements made in this
quarterly report on Form 10-Q, in the Company&#146;s other SEC filings, in press
releases and in oral statements to shareholders and securities analysts, which
are not statements of historical or current facts, are &#147;forward-looking
statements.&#148; Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results or performance
of the Company to be materially different from the results or performance
expressed or implied by such forward-looking statements. The words &#147;believes,&#148;
&#147;expects,&#148; &#147;anticipates,&#148; &#147;seeks&#148; and similar expressions identify
forward-looking statements. Readers are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the date the
statement was made. These statements are subject to the risks and uncertainties
that could cause actual results to differ materially and adversely from the
forward-looking statements. These risks and uncertainties include, but are not
limited to, the risks presented in our Annual Report on Form 10-K for the year
ended December 31, 2009, and updated in Part II, Item 1A of this Quarterly
Report on Form 10-Q. </FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>14</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P><BR>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="12%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="88%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=3><B>I<A  NAME="A103820A009_V1"></A>tem 3.</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=3><B>Quantitative
 and Qualitative Disclosures About Market Risk </B></FONT></P>
 </TD>
 </TR>
</TABLE>

<P><FONT SIZE=2>Not applicable. </FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="12%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="88%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=3><B>I<A  NAME="A103820A010_V1"></A>tem 4.</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=3><B>Controls
 and Procedures </B></FONT></P>
 </TD>
 </TR>
</TABLE>

<P><FONT SIZE=2>(a) Evaluation of Disclosure
Controls and Procedures </FONT></P>

<P><FONT SIZE=2>The Company&#146;s management
carried out an evaluation, under the supervision and with the participation of
the Company&#146;s Chief Executive Officer and the Company&#146;s Chief Financial
Officer, of the effectiveness of the design and operation of the Company&#146;s
disclosure controls and procedures (as such term is defined in Rules 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the
end of the period covered by this report, pursuant to Exchange Act Rule 13a-15.
Based upon that evaluation, the Company&#146;s Chief Executive Officer and the Company&#146;s
Chief Financial Officer concluded that the Company&#146;s disclosure controls and
procedures are effective as of the end of the period covered by this report.
Disclosure controls and procedures ensure that information required to be
disclosed by us in reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms, and are designed to
ensure that information required to be disclosed by us in these reports is
accumulated and communicated to the Company&#146;s management, including its Chief
Executive Office and Chief Financial Officer, as appropriate to allow timely
decisions regarding disclosures. </FONT></P>

<P><FONT SIZE=2>(b) Changes in Internal
Controls Over Financial Reporting </FONT></P>

<P><FONT SIZE=2>There was no change in our
internal controls over financial reporting that occurred during the last fiscal
quarter that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting. </FONT></P>

<P ALIGN=CENTER STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:0IN; '><FONT SIZE=2>15</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P><BR>

<P ALIGN=CENTER><FONT SIZE=2><B>P<A NAME="A103820A011_V1"></A>ART II. OTHER
INFORMATION</B></FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="12%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="88%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>Item 1.</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>L<A NAME="A103820A012_V1"></A>egal Proceedings </B></FONT></P>
 </TD>
 </TR>
</TABLE>

<P><FONT SIZE=2>On September
23, 2004, the Company brought suit against News America Marketing In-Store,
Inc. (News America) and Albertson&#146;s Inc. (Albertson&#146;s) in Federal District
Court in Minneapolis, Minnesota, for violations of federal and state antitrust
and false advertising laws, alleging that News America has acquired and
maintained monopoly power through various wrongful acts designed to harm the
Company in the in-store advertising and promotion products and services market.
The suit seeks injunctive relief sufficient to prevent further antitrust injury
and an award of treble damages to be determined at trial for the harm caused to
the Company. On September 20, 2006, the State of Minnesota through its Attorney
General intervened as a co-plaintiff in the business disparagement portion of
the case. In December 2006, News America filed counterclaims in the case that
included claims of alleged interference with contracts and alleged libel and
slander against Insignia and one of its officers. On February 4, 2008, the
Court approved a consent decree entered into by News America and the State of
Minnesota under which News America agreed to not violate Minnesota&#146;s statutes
prohibiting commercial disparagement. On July 29, 2008, the Company and
Albertson&#146;s entered into a settlement agreement and mutual release, in which
they each agreed to release all claims against the other, and the Company
agreed to dismiss its lawsuit against Albertson&#146;s. </FONT></P>

<P><FONT SIZE=2>On September
30, 2009, the Court ruled on motions by both the Company and News America for
Summary Judgment. The Court awarded Summary Judgment to the Company and one of
its executive officers on all of News America&#146;s counterclaims and third-party
claims. The Court also denied News America&#146;s Motion for Summary Judgment on the
Company&#146;s claims against News America other than granting News America&#146;s
uncontested motion on one claim in the Amended Complaint related to retailers.
The Court&#146;s rulings set the stage for a trial on the Company&#146;s antitrust and
unfair-competition claims against News America. At a status conference on May
4, 2010, the Court set December 6, 2010, as the date certain for starting the
trial. </FONT></P>

<P><FONT SIZE=2>The Company
filed claims in December 2006 and January 2007 with its director&#146;s and
officer&#146;s liability and general liability insurers related to the defense costs
and insurance coverage for claims asserted against the Company and one of its
officers in News America&#146;s counterclaims. On August 9, 2007, the Company filed
a complaint against the insurers in Hennepin County District Court, State of
Minnesota requesting a declaratory judgment that the insurers owed the Company
and its officer such defense costs and insurance coverage. In December 2007,
the Company settled its claim against one of the insurers. In March 2009, the
Company settled with the other insurer and received a payment of $1,387,000 as
part of the settlement. The Company recorded the payment in general and
administrative expenses for the quarter ended March 31, 2009, and the
litigation with the insurers is now concluded. </FONT></P>

<P><FONT SIZE=2>During the six
months ended June 30, 2010, the Company incurred legal fees of $927,000 related
to the News America litigation. Management currently expects the amount of
legal fees and expenses that will be incurred in connection with the ongoing
lawsuit against News America to be significant throughout the remainder of 2010
and into 2011. Legal fees and expenses are expensed as incurred and are
included in general and administrative expenses in the statements of
operations. </FONT></P>

<P><FONT SIZE=2>The Company is
subject to various other legal proceedings in the normal course of business.
Management believes the outcome of these proceedings will not have a material
adverse effect on the Company&#146;s financial position or results of operations. </FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="12%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="88%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>Item 1A.</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>R<A NAME="A103820A013_V1"></A>isk Factors </B></FONT></P>
 </TD>
 </TR>
</TABLE>

<P><FONT SIZE=2>Not
applicable. </FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>16</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P><BR>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="12%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="88%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>Item 2.</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>U<A NAME="A103820A014_V1"></A>nregistered Sales of Equity Securities
 and Use of Proceeds</B></FONT></P>
 </TD>
 </TR>
</TABLE>

<P><FONT SIZE=2>On February
23, 2010, the Board of Directors authorized the repurchase of up to $2,000,000
of the Company&#146;s common stock on or before January 31, 2011. The plan does not
obligate the Company to repurchase any particular number of shares, and may be
suspended at any time at the Company&#146;s discretion. </FONT></P>

<P><FONT SIZE=2>Our share
repurchase program activity for the three months ended June 30, 2010 was: </FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="34%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="2%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="10%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="2%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="9%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="2%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="13%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="2%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="15%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Total Number<BR>
 Of Shares<BR>
 Repurchased</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Average<BR>
 Price Paid<BR>
 Per Share</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Total Number Of <BR>
 Shares Purchased As<BR>
 Part Of Publicly<BR>
 Announced Plans<BR>
 Or Programs</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Approximate Dollar <BR>
 Value of Shares That<BR>
 May Yet Be Purchased<BR>
 Under The Plans <BR>
 Or Programs</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>April 1-30,
 2010</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>1,591,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>May 1-31,
 2010</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>10,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>5.60</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>85,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>1,535,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>June 1-30,
 2010</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>1,535,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="12%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="88%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>I<A NAME="A103820A015_V1"></A>tem 3. </B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>Defaults upon Senior Securities</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>None. </FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>I<A NAME="A103820A016_V1"></A>tem 4. </B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>Removed and Reserved</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>I<A NAME="A103820A017_V1"></A>tem 5. </B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>Other Information</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>None. </FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>I<A NAME="A103820A018_V1"></A>tem 6. </B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>Exhibits</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>The
 following exhibits are included herewith: </FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="12%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="83%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>10.1</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Amended
 Change in Control Severance Agreement <SUP>(1)</SUP> with Scott F. Drill
 dated May 26, 2010 </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>10.2</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Amended
 Change in Control Severance Agreement <SUP>(1)</SUP> with Justin W. Shireman
 dated May 26, 2010 </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>10.3</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Amended
 Change in Control Severance Agreement <SUP>(1)</SUP> with Scott J. Simcox
 dated May 26, 2010 </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>10.4</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Amended
 Change in Control Severance Agreement <SUP>(1)</SUP> with Alan Jones dated
 May 26, 2010 </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>10.5</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Amended
 Change in Control Severance Agreement <SUP>(1)</SUP> with A. Thomas Lucas
 dated May 26, 2010 </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>31.1</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Certification
 of Principal Executive Officer </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>31.2</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Certification
 of Principal Financial Officer </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>32</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Section 1350
 Certification </FONT></P>
 </TD>
 </TR>
</TABLE>

<P><FONT SIZE=2>(1) The
Amended Change in Control Severance Agreement contains non-substantive
technical changes designed to comply with Internal Revenue Service Code Section
409A regulations regarding deferred compensation, and other non-substantive
technical changes. </FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>17</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P><BR>
<P ALIGN=CENTER><FONT SIZE=2><B>SIGNATURES</B></FONT></P>

<P><FONT SIZE=2>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,
thereunto duly authorized. </FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="25%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="25%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="50%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>Dated:
 August 9, 2010</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=2>Insignia Systems, Inc.</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>(Registrant)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=2>/s/ Scott F.
 Drill</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Scott F.
 Drill</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>President
 and Chief Executive Officer</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>(principal
 executive officer)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=2>/s/ Justin
 W. Shireman</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Justin W.
 Shireman</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Vice
 President, Finance and</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Chief Financial
 Officer</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>(principal
 financial officer)</FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN=CENTER><FONT SIZE=2>18</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P><BR>

<P ALIGN="CENTER"><FONT SIZE=2><B>EXHIBIT INDEX </B></FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="12%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="83%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>10.1</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Amended
 Change in Control Severance Agreement<SUP>(1)</SUP> with Scott F. Drill dated
 May 26, 2010 </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>10.2</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Amended
 Change in Control Severance Agreement <SUP>(1)</SUP> with Justin W. Shireman
 dated May 26, 2010 </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>10.3</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Amended
 Change in Control Severance Agreement <SUP>(1)</SUP> with Scott J. Simcox
 dated May 26, 2010 </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>10.4</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Amended
 Change in Control Severance Agreement <SUP>(1)</SUP> with Alan Jones dated
 May 26, 2010 </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>10.5</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Amended
 Change in Control Severance Agreement <SUP>(1)</SUP> with A. Thomas Lucas
 dated May 26, 2010 </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>31.1</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Certification
 of Principal Executive Officer </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>31.2</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Certification
 of Principal Financial Officer </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>32</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Section 1350
 Certification </FONT></P>
 </TD>
 </TR>
</TABLE>

<P><FONT SIZE=2>(1) The
Amended Change in Control Severance Agreement contains non-substantive
technical changes designed to comply with Internal Revenue Service Code Section
409A regulations regarding deferred compensation, and other non-substantive
technical changes.</FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>19</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>insignia103820_ex10-1.htm
<DESCRIPTION>AMENDED CHANGE IN CONTROL SEVERANCE AGREEMENT BETWEEN INSIGNIA SYSTEMS, INC. AND SCOTT DRILL
<TEXT>

<HTML>
<HEAD>
   <TITLE>EXHIBIT 10.1 TO INSIGNIA SYSTEMS, INC. FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2010</TITLE>
</HEAD>

<BODY bgcolor="#ffffff">


<A name="page_1"></A>
<a name="_bclPageBorder1"></a><DIV style="PADDING-RIGHT: 0%; PADDING-LEFT: 0%; WIDTH: 100%">
<a name="_bclHeader1"></a><DIV>
<P style="MARGIN: 0in 0in 0pt"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
</DIV>
<P style="MARGIN: 0in 0in 0.15in 1.1in; TEXT-ALIGN: right" align=right><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'" color=black>Exhibit 10.1</FONT></B></P>
<P style="MARGIN: 0in 1.1in 0.15in; TEXT-ALIGN: center"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'" color=black>AMENDED CHANGE IN CONTROL SEVERANCE<BR>
AGREEMENT</FONT></B></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>AGREEMENT made as of May 26, 2010 by and between Insignia Systems, Inc., a Minnesota corporation (the &#147;Company&#148;), and Scott F. Drill (the &#147;Executive&#148;).</FONT></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>WHEREAS, the Company, as a publicly held corporation, recognizes the possibility of a change in control of the Company, and that such possibility and the uncertainty and questions which it may raise could result in Executive leaving the Company or in distraction of Executive in the performance of Executive&#146;s duties to the detriment of the Company and its shareholders; and</FONT></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>WHEREAS, it is in the best interests of the Company and its shareholders to encourage the availability of Executive&#146;s services to parties who may in the future acquire control of the Company and to provide an incentive for Executive to remain with the Company during any period of uncertainty leading up to a change in control;</FONT></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>WHEREAS, based on the foregoing, the Company wishes to provide that, in the event of a change in control of the Company, Executive will receive certain benefits if Executive&#146;s employment by the Company ceases for certain reasons within a specified period following the change in control;</FONT></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>NOW, THEREFORE, in consideration of the foregoing and the provisions of this Agreement, the parties hereto agree as follows:</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>1.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>General Provisions</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>. This Company shall pay Executive a lump sum severance payment if Executive ceases to be employed by the Company within two years following a Change in Control (as defined below) for certain reasons specified in this Agreement. Nothing in this Agreement alters the &#147;at will&#148; nature of Executive&#146;s employment by the Company. This means that either before or after a Change in Control, either the Company or the Executive may terminate Execu
tive&#146;s employment by the Company, either with or without cause, for any reason or no reason. This Agreement relates only to whether Executive shall be entitled to certain severance payments following cessation of employment. No right to severance payments shall arise under this Agreement unless and until there occurs a Change in Control.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>2.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Definition of Change in Control</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>. For purposes of this Agreement, a &#147;Change in Control&#148; shall be considered to occur if any of the following occurs after the date of this Agreement:</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>the closing of the sale of all or substantially all of the assets of the Company;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>(b)</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>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 Company&#146;s capital stock immediately following such event;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>(c)</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>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 Company&#146;s outstanding voting securities, of beneficial ownership of securities representing 40% or more of the combined voting power or the Company&#146;s then outstanding securities; or</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>(d)</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>the election to the Company&#146;s 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.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>3.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Amount of Severance Payment.</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black> If a Change in Control occurs after the date of this Agreement and Executive subsequently ceases to be employed by the Company prior to the second anniversary of the Change in Control, then the Company shall pay Executive a lump sum severance payment equal to twenty-four (24) months of Executive&#146;s base salary which was in effect immediately prior to the Change in Control, if (a) the Change in Control is a &#147;hostile takeover&#148; a
nd the Executive ceases to be employed for any reason (including voluntary resignation) other than death or cause (as defined below), or (b) the Change in Control is not a &#147;hostile takeover&#148; and the Executive ceases to be employed due to a reason not precluding payment under Section 4.&nbsp; The Company shall be entitled to deduct from the lump sum severance payment any amounts which the Company is required by law to withhold from such a payment.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; For purposes of this Section 3 a &#147;hostile takeover&#148; means a Change in Control (a) that is not approved in advance of a public announcement by the Company&#146;s Board of Directors or a committee of the Board of Directors authorized by the Board to consider the Change in Control, or (b) in which the acquiring entity is a direct competitor of the Company.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payment due under this Agreement shall be made on the 60<SUP>th</SUP> day after Executive&#146;s termination of employment, except that if Executive is then a &#147;key employee&#148; of the Company, as defined in Section 409A of the Internal Revenue Code, payment shall be made on the date which is six months after termination of employment, or to his heirs upon his death if earlier; provided, however, that no payment shall be made unless Executive has first delivered to the Company the Release described in Section 11, and the Release has not been rescinded during any applicable rescission period.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>4.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Circumstances in Which Severance Shall Not Be Paid</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>. Notwithstanding the provisions of Section 3(b) above, the Company shall not be obligated to make any lump sum severance payment under this Agreement if, following a Change in Control, Executive ceased to be employed by the Company due to:</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>(b)</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>resignation by Executive for any reason other than a Good Reason (as defined below), including retirement.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>For purposes of this Section 4, the following defined terms have the meanings indicated:</FONT></P>
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<P style="MARGIN: 0in 0.6in 0pt 0.5in"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>&#147;Cause&#148; means termination by the Company of Executive&#146;s employment due to:</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 1.5in; TEXT-INDENT: -0.5in"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>(1)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=black>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>conviction of a felony;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 1.5in; TEXT-INDENT: -0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>(2)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=black>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>the willful and continued failure of Executive to perform his essential duties; or</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 1.5in; TEXT-INDENT: -0.5in"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>(3)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=black>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>gross misconduct which is materially injurious to the Company;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>provided, however</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>, that the matters referred to in clause (2) or (3) shall not be deemed to constitute &#147;Cause&#148; unless the Company has first given Executive written notice specifying the conduct by Executive that constitutes such failure or gross misconduct and Executive has failed to remedy the same to the reasonable satisfaction of the Company&#146;s Board of Directors.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>&#147;Good Reason&#148; shall mean any of the following, unless Executive gives his or her prior written consent:</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>the assignment to Executive of any duties inconsistent with Executive&#146;s status or position with the Company, or a substantial reduction in the nature or status of Executive&#146;s responsibilities from those in effect immediately prior to the Change in Control;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>(2)</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>a reduction by the Company in Executive&#146;s annual base salary in effect immediately prior to the Change in Control;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>(3)</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>the relocation of the Company&#146;s principal executive offices to a location more than fifty miles from Minneapolis, Minnesota or the Company requiring Executive to be based anywhere other than the Company&#146;s principal executive offices, except for required travel on the Company&#146;s business to an extent substantially consistent with Executive&#146;s prior business travel obligations;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>(4)</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>the failure by the Company to continue to provide Executive with benefits at least as favorable to those enjoyed by Executive under any of the Company&#146;s pension, life insurance, medical, health and accident, disability, deferred compensation, incentive awards, incentive stock options, or savings plans in which Executive was participating at the time of the Change in Control, the taking of any action by the Company which would directly or indirectly materially reduce any of such benefits or deprive Executive of any material fringe benefit enjoyed at the time of the Change in Control, or the failure by the Company to provide Executive with the number of paid vacation days to which Executive is entitled at the time of the Change in Control, provided, however, that the Company may amend any such plan or programs as long as such amendments do not reduce any benefits to which Executive would be entitled upo
n termination; or</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>(5)</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>any termination of Executive&#146;s employment which is not made pursuant to a Notice of Termination satisfying the requirements in Section 5 below.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>5.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Notice of Termination</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>. Any termination of Executive&#146;s employment by the Company or by Executive shall be communicated by written Notice of Termination to the other party hereto in accordance with the notice provisions of Section 6. For purposes of this Agreement, a &#147;Notice of Termination&#148; shall mean a notice which indicates the specific facts and circumstances claimed to provide the basis for termination.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>6.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Method of Giving Notice</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>. All 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 or certified mail, return receipt requested, postage pre-paid, addressed to the last known residence address of the Executive, or in the case of the Company, to its principal office to the attention of each of the then directors of the Company with a copy to i
ts Secretary, 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 receipt.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>7.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Miscellaneous</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>. 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 parties. No waiver by either party thereto at any time of any breach by the other party to this Agreement, or 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 similar time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. This Agreement shall be governed by the laws of the State of Minnesota.&nbsp; This Agreement supersedes all prior agreements on this subject matter. </FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>8.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Arbitration of Disputes</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>. Any and all disputes between the parties relating to this Agreement or any alleged breach of this Agreement shall be resolved by binding arbitration held in the City of Minneapolis pursuant to the Commercial Arbitration Rules of the American Arbitration Association before a single arbitrator. In the event that Executive is determined by the arbitrator to be the prevailing party in such an arbitration, the arbitrator shall award Executive, as an
 additional element of damages, his or her attorneys&#146; fees and legal expenses actually incurred in the enforcement of this Agreement and in the arbitration proceeding. Judgment on the arbitration award may be entered by any court having jurisdiction.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>9.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Successors</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>. This Agreement shall be binding upon and inure to the benefit of the respective heirs, personal representatives, successors and assigns of the parties hereto.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>10.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Exclusive Benefits.</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>&nbsp; The benefits provided by this Agreement are in lieu of all other severance, change in control, or similar benefits payable to Executive due to termination following a Change in Control.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>11.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Release.</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>&nbsp; As a condition to receiving any benefits under this Agreement, Executive shall be required to deliver a standard release to the Company releasing the Company and its shareholder, directors, officers, employees, agents and affiliates from any and all claims relating to Executive&#146;s employment and termination of employment.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>EXECUTIVE:</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>INSIGNIA SYSTEMS, INC.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>/s/ Scott F. Drill</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>/s/ Justin W. Shireman</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Scott F. Drill</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>V.P. Finance, Treasurer and CFO</FONT></P>
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<TYPE>EX-10.2
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<FILENAME>insignia103820_ex10-2.htm
<DESCRIPTION>AMENDED CHANGE IN CONTROL SEVERANCE AGREEMENT BETWEEN INSIGNIA SYSTEMS, INC. AND JUSTIN SHIREMAN
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   <TITLE>EXHIBIT 10.2 TO INSIGNIA SYSTEMS, INC. FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2010</TITLE>
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<P style="MARGIN: 0in 0in 0.15in; TEXT-ALIGN: right" align=right><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'" color=black>Exhibit 10.2</FONT></B></P>
<P style="MARGIN: 0in 0in 0.15in; TEXT-ALIGN: center"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'" color=black>AMENDED CHANGE IN CONTROL SEVERANCE<BR>
AGREEMENT</FONT></B></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>AGREEMENT made as of May 26, 2010 by and between Insignia Systems, Inc., a Minnesota corporation (the &#147;Company&#148;), and Justin Shireman (the &#147;Executive&#148;).</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>WHEREAS, the Company, as a publicly held corporation, recognizes the possibility of a change in control of the Company, and that such possibility and the uncertainty and questions which it may raise could result in Executive leaving the Company or in distraction of Executive in the performance of Executive&#146;s duties to the detriment of the Company and its shareholders; and</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>WHEREAS, it is in the best interests of the Company and its shareholders to encourage the availability of Executive&#146;s services to parties who may in the future acquire control of the Company and to provide an incentive for Executive to remain with the Company during any period of uncertainty leading up to a change in control;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>WHEREAS, based on the foregoing, the Company wishes to provide that, in the event of a change in control of the Company, Executive will receive certain benefits if Executive&#146;s employment by the Company ceases for certain reasons within a specified period following the change in control;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>NOW, THEREFORE, in consideration of the foregoing and the provisions of this Agreement, the parties hereto agree as follows:</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>1.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>General Provisions</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>. This Company shall pay Executive a lump sum severance payment if Executive ceases to be employed by the Company within two years following a Change in Control (as defined below) for certain reasons specified in this Agreement. Nothing in this Agreement alters the &#147;at will&#148; nature of Executive&#146;s employment by the Company. This means that either before or after a Change in Control, either the Company or the Executive may terminate Execu
tive&#146;s employment by the Company, either with or without cause, for any reason or no reason. This Agreement relates only to whether Executive shall be entitled to certain severance payments following cessation of employment. No right to severance payments shall arise under this Agreement unless and until there occurs a Change in Control.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>2.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Definition of Change in Control</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>. For purposes of this Agreement, a &#147;Change in Control&#148; shall be considered to occur if any of the following occurs after the date of this Agreement:</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>the closing of the sale of all or substantially all of the assets of the Company;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>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 Company&#146;s capital stock immediately following such event;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>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 Company&#146;s outstanding voting securities, of beneficial ownership of securities representing 40% or more of the combined voting power or the Company&#146;s then outstanding securities; or</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>(d)</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>the election to the Company&#146;s 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.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>3.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Amount of Severance Payment.</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black> If a Change in Control occurs after the date of this Agreement and Executive subsequently ceases to be employed by the Company prior to the second anniversary of the Change in Control, then the Company shall pay Executive a lump sum severance payment equal to twenty-four (24) months of Executive&#146;s base salary which was in effect immediately prior to the Change in Control. The Company shall be entitled to deduct from the lump sum severa
nce payment any amounts which the Company is required by law to withhold from such a payment.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Payment due under this Agreement shall be made on the 60<SUP>th</SUP> day after Executive&#146;s termination of employment, except that if Executive is then a &#147;key employee&#148; of the Company, as defined in Section 409A of the Internal Revenue Code, payment shall be made on the date which is six months after termination of employment, or to his heirs upon his death if earlier; provided, however, that no payment shall be made unless Executive has first delivered to the Company the Release described in Section 11, and the Release has not been rescinded during any applicable rescission period.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>4.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Circumstances in Which Severance Shall Not Be Paid</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>. Notwithstanding the provisions of Section 3 above, the Company shall not be obligated to make any lump sum severance payment under this Agreement if, following a Change in Control, Executive ceased to be employed by the Company due to:</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>termination of Executive by the Company for Cause (as defined below); or</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>(c)</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>resignation by Executive for any reason other than a Good Reason (as defined below), including retirement.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>For purposes of this Section 4, the following defined terms have the meanings indicated:</FONT></P>
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<P style="MARGIN: 0in 0.6in 0pt 0.4in"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>&#147;Cause&#148; means termination by the Company of Executive&#146;s employment due to:</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 1.5in; TEXT-INDENT: -0.5in"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>(1)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=black>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>conviction of a felony;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 1.5in; TEXT-INDENT: -0.5in"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>(2)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=black>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>the willful and continued failure of Executive to perform his essential duties; or</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 1.5in; TEXT-INDENT: -0.5in"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>(3)</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=black>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>gross misconduct which is materially injurious to the Company;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>provided, however</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>, that the matters referred to in clause (2) or (3) shall not be deemed to constitute &#147;Cause&#148; unless the Company has first given Executive written notice specifying the conduct by Executive that constitutes such failure or gross misconduct and Executive has failed to remedy the same to the reasonable satisfaction of the Company&#146;s Board of Directors.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>2</FONT></P>
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<P style="MARGIN: 0in 0in 0pt 0.5in"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>&#147;Good Reason&#148; shall mean any of the following, unless Executive gives his or her prior written consent:</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>the assignment to Executive of any duties inconsistent with Executive&#146;s status or position with the Company, or a substantial reduction in the nature or status of Executive&#146;s responsibilities from those in effect immediately prior to the Change in Control;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>(2)</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>a reduction by the Company in Executive&#146;s annual base salary in effect immediately prior to the Change in Control;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>the relocation of the Company&#146;s principal executive offices to a location more than fifty miles from Minneapolis, Minnesota or the Company requiring Executive to be based anywhere other than the Company&#146;s principal executive offices, except for required travel on the Company&#146;s business to an extent substantially consistent with Executive&#146;s prior business travel obligations;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>the failure by the Company to continue to provide Executive with benefits at least as favorable to those enjoyed by Executive under any of the Company&#146;s pension, life insurance, medical, health and accident, disability, deferred compensation, incentive awards, incentive stock options, or savings plans in which Executive was participating at the time of the Change in Control, the taking of any action by the Company which would directly or indirectly materially reduce any of such benefits or deprive Executive of any material fringe benefit enjoyed at the time of the Change in Control, or the failure by the Company to provide Executive with the number of paid vacation days to which Executive is entitled at the time of the Change in Control, provided, however, that the Company may amend any such plan or programs as long as such amendments do not reduce any benefits to which Executive would be entitled upo
n termination; or</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>any termination of Executive&#146;s employment which is not made pursuant to a Notice of Termination satisfying the requirements in Section 5 below.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>5.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Notice of Termination</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>. Any termination of Executive&#146;s employment by the Company or by Executive shall be communicated by written Notice of Termination to the other party hereto in accordance with the notice provisions of Section 6. For purposes of this Agreement, a &#147;Notice of Termination&#148; shall mean a notice which indicates the specific facts and circumstances claimed to provide the basis for termination.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>6.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Method of Giving Notice</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>. All 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 or certified mail, return receipt requested, postage pre-paid, addressed to the last known residence address of the Executive, or in the case of the Company, to its principal office to the attention of each of the then directors of the Company with a copy to i
ts Secretary, 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 receipt.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>7.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Miscellaneous</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>. 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 parties. No waiver by either party thereto at any time of any breach by the other party to this Agreement, or 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 similar time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. This Agreement shall be governed by the laws of the State of Minnesota. This Agreement supersedes all prior agreements on this subject matter.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center" align=center><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>3</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>8.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Arbitration of Disputes</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>. Any and all disputes between the parties relating to this Agreement or any alleged breach of this Agreement shall be resolved by binding arbitration held in the City of Minneapolis pursuant to the Commercial Arbitration Rules of the American Arbitration Association before a single arbitrator. In the event that Executive is determined by the arbitrator to be the prevailing party in such an arbitration, the arbitrator shall award Executive, as an
 additional element of damages, his or her attorneys&#146; fees and legal expenses actually incurred in the enforcement of this Agreement and in the arbitration proceeding. Judgment on the arbitration award may be entered by any court having jurisdiction.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>9.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Successors</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>. This Agreement shall be binding upon and inure to the benefit of the respective heirs, personal representatives, successors and assigns of the parties hereto.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>10.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Exclusive Benefits.</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>&nbsp; The benefits provided by this Agreement are in lieu of all other severance, change in control, or similar benefits payable to Executive due to termination following a Change in Control.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>11.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Release.</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>&nbsp; As a condition to receiving any benefits under this Agreement, Executive shall be required to deliver a standard release to the Company releasing the Company and its shareholder, directors, officers, employees, agents and affiliates from any and all claims relating to Executive&#146;s employment and termination of employment.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>INSIGNIA SYSTEMS, INC.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>/s/ Justin W. Shireman</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>/ s/ Scott Drill</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Justin Shireman</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Its&nbsp;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>CEO</FONT></P>
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<TYPE>EX-10.3
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<FILENAME>insignia103820_ex10-3.htm
<DESCRIPTION>AMENDED CHANGE IN CONTROL SEVERANCE AGREEMENT BETWEEN INSIGNIA SYSTEMS, INC. AND SCOTT SIMCOX
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   <TITLE>EXHIBIT 10.3 TO INSIGNIA SYSTEMS, INC. FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2010</TITLE>
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<p align=right style="margin-bottom:.15in;margin-left:1.1in;margin-right:0in;margin-top:0in;text-align:right;"><b><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:12.0pt;">Exhibit 10.3</font></b></p>

<p style="margin-bottom:.15in;margin-left:1.1in;margin-right:1.1in;margin-top:0in;text-align:center;"><b><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:12.0pt;">AMENDED CHANGE IN CONTROL SEVERANCE<br>
AGREEMENT</font></b></p>

<p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">AGREEMENT made as of May 26, 2010 by
and between Insignia Systems, Inc., a Minnesota corporation (the &#8220;Company&#8221;),
and Scott Simcox (the &#8220;Executive&#8221;).</font></p>

<p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">WHEREAS, the
Company, as a publicly held corporation, recognizes the possibility of a change
in control of the Company, and that such possibility and the uncertainty and
questions which it may raise could result in Executive leaving the Company or
in distraction of Executive in the performance of Executive&#8217;s duties to the
detriment of the Company and its shareholders; and</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:justify;text-indent:.5in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">WHEREAS, it is in the best interests of the Company
and its shareholders to encourage the availability of Executive&#8217;s services to
parties who may in the future acquire control of the Company and to provide an
incentive for Executive to remain with the Company during any period of
uncertainty leading up to a change in control;</font></p>

<p style="margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:justify;text-indent:0in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">WHEREAS, based
on the foregoing, the Company wishes to provide that, in the event of a change
in control of the Company, Executive will receive certain benefits if Executive&#8217;s
employment by the Company ceases for certain reasons within a specified period
following the change in control;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">NOW, THEREFORE, in consideration of
the foregoing and the provisions of this Agreement, the parties hereto agree as
follows:</font></p>

<p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-left:0in;text-align:justify;text-indent:.5in;"><font color=windowtext face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">1.</font><font color=windowtext face="'Times New Roman'" lang=EN-US style="font-size:7.0pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">General Provisions</font></u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">. This Company shall pay Executive a
lump sum severance payment if Executive ceases to be employed by the Company
within two years following a Change in Control (as defined below) for certain
reasons specified in this Agreement. Nothing in this Agreement alters the &#8220;at
will&#8221; nature of Executive&#8217;s employment by the Company. This means that either
before or after a Change in Control, either the Company or the Executive may
terminate Executive&#8217;s employment by the Company, either with or without cause,
for any reason or no reason. This Agreement relates only to whether Executive
shall be entitled to certain severance payments following cessation of
employment. No right to severance payments shall arise under this Agreement
unless and until there occurs a Change in Control.</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-left:0in;text-align:justify;text-indent:.5in;"><font color=windowtext face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">2.</font><font color=windowtext face="'Times New Roman'" lang=EN-US style="font-size:7.0pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">Definition of Change in Control</font></u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">. For purposes of this
Agreement, a &#8220;Change in Control&#8221; shall be considered to occur if any of the
following occurs after the date of this Agreement:</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<div align=left><table cellpadding=0 cellspacing=0 border=0 style="border-collapse:collapse;margin-left:.5in;width:93.34%;">
 <tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">the closing of the sale of all
  or substantially all of the assets of the Company;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(b)</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">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 Company&#8217;s capital stock immediately
  following such event;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(c)</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">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 Company&#8217;s outstanding voting securities, of beneficial ownership
  of securities representing 40% or more of the combined voting power or the
  Company&#8217;s then outstanding securities; or</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(d)</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">the election to the Company&#8217;s
  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.</font></p>
  </td>
 </tr>
</table></div>

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<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-left:0in;text-align:justify;text-indent:.5in;"><font color=windowtext face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">3.</font><font color=windowtext face="'Times New Roman'" lang=EN-US style="font-size:7.0pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">Amount of Severance Payment.</font></u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;"> If a Change in Control occurs
after the date of this Agreement and Executive subsequently ceases to be
employed by the Company prior to the second anniversary of the Change in
Control, then the Company shall pay Executive a lump sum severance payment
equal to twenty-four (24) months of Executive&#8217;s base salary which was in effect
immediately prior to the Change in Control. The Company shall be entitled to
deduct from the lump sum severance payment any amounts which the Company is
required by law to withhold from such a payment.</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Payment
due under this Agreement shall be made on the 60<sup>th</sup> day after
Executive&#8217;s termination of employment, except that if Executive is then a &#8220;key
employee&#8221; of the Company, as defined in Section 409A of the Internal Revenue
Code, payment shall be made on the date which is six months after termination
of employment, or to his heirs upon his death if earlier; provided, however,
that no payment shall be made unless Executive has first delivered to the
Company the Release described in Section 11, and the Release has not been
rescinded during any applicable rescission period.</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-left:0in;text-align:justify;text-indent:.5in;"><font color=windowtext face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">4.</font><font color=windowtext face="'Times New Roman'" lang=EN-US style="font-size:7.0pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">Circumstances in Which Severance Shall Not Be Paid</font></u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">.
Notwithstanding the provisions of Section 3 above, the Company shall not be
obligated to make any lump sum severance payment under this Agreement if,
following a Change in Control, Executive ceased to be employed by the Company
due to:</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<div align=left><table cellpadding=0 cellspacing=0 border=0 style="border-collapse:collapse;margin-left:.5in;width:93.34%;">
 <tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">Executive&#8217;s death or
  disability;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(b)</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">termination of Executive by the
  Company for Cause (as defined below); or</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(c)</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">resignation by Executive for
  any reason other than a Good Reason (as defined below), including retirement.</font></p>
  </td>
 </tr>
</table></div>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">For purposes of this Section 4, the following defined terms
have the meanings indicated:</font></p>

<p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-right:.3in;text-indent:.5in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&#8220;Cause&#8221; means
termination by the Company of Executive&#8217;s employment due to:</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-right:.3in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-left:1.5in;text-indent:-.5in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">(1)</font><font color=black face="'Times New Roman'" lang=EN-US style="font-size:7.0pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">conviction of a felony;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-left:1.5in;text-indent:-.5in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">(2)</font><font color=black face="'Times New Roman'" lang=EN-US style="font-size:7.0pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">the willful and continued failure of Executive to perform his essential
duties; or</font></p>

<p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-left:1.5in;text-indent:-.5in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">(3)</font><font color=black face="'Times New Roman'" lang=EN-US style="font-size:7.0pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">gross misconduct which is materially injurious to the Company;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">provided, however</font></u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">, that
the matters referred to in clause (2) or (3) shall not be deemed to constitute &#8220;Cause&#8221;
unless the Company has first given Executive written notice specifying the
conduct by Executive that constitutes such failure or gross misconduct and
Executive has failed to remedy the same to the reasonable satisfaction of the
Company&#8217;s Board of Directors.</font></p>





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<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin-bottom:.0001pt;margin-left:.5in;margin-right:0in;margin-top:0in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&#8220;Good Reason&#8221; shall mean any of the following, unless
Executive gives his or her prior written consent:</font></p>

<p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<div align=left><table cellpadding=0 cellspacing=0 border=0 style="border-collapse:collapse;margin-left:1.0in;width:86.66%;">
 <tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">the assignment to Executive of any duties inconsistent
  with Executive&#8217;s status or position with the Company, or a substantial
  reduction in the nature or status of Executive&#8217;s responsibilities from those
  in effect immediately prior to the Change in Control;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(2)</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">a reduction by the Company in Executive&#8217;s annual base
  salary in effect immediately prior to the Change in Control;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(3)</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">the relocation of the Company&#8217;s principal executive
  offices to a location more than fifty miles from Minneapolis, Minnesota or
  the Company requiring Executive to be based anywhere other than the Company&#8217;s
  principal executive offices, except for required travel on the Company&#8217;s
  business to an extent substantially consistent with Executive&#8217;s prior
  business travel obligations;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(4)</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">the failure by the Company to continue to provide
  Executive with benefits at least as favorable to those enjoyed by Executive
  under any of the Company&#8217;s pension, life insurance, medical, health and
  accident, disability, deferred compensation, incentive awards, incentive
  stock options, or savings plans in which Executive was participating at the
  time of the Change in Control, the taking of any action by the Company which
  would directly or indirectly materially reduce any of such benefits or
  deprive Executive of any material fringe benefit enjoyed at the time of the
  Change in Control, or the failure by the Company to provide Executive with
  the number of paid vacation days to which Executive is entitled at the time
  of the Change in Control, provided, however, that the Company may amend any
  such plan or programs as long as such amendments do not reduce any benefits
  to which Executive would be entitled upon termination; or</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(5)</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">any termination of Executive&#8217;s employment which is not
  made pursuant to a Notice of Termination satisfying the requirements in
  Section 5 below.</font></p>
  </td>
 </tr>
</table></div>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-left:0in;text-align:justify;text-indent:.5in;"><font color=windowtext face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">5.</font><font color=windowtext face="'Times New Roman'" lang=EN-US style="font-size:7.0pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">Notice of Termination</font></u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">. Any termination of Executive&#8217;s
employment by the Company or by Executive shall be communicated by written
Notice of Termination to the other party hereto in accordance with the notice
provisions of Section 6. For purposes of this Agreement, a &#8220;Notice of
Termination&#8221; shall mean a notice which indicates the specific facts and
circumstances claimed to provide the basis for termination.</font></p>

<p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-left:0in;text-align:justify;text-indent:.5in;"><font color=windowtext face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">6.</font><font color=windowtext face="'Times New Roman'" lang=EN-US style="font-size:7.0pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">Method of Giving Notice</font></u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">. All 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 or certified mail, return receipt requested, postage pre-paid,
addressed to the last known residence address of the Executive, or in the case
of the Company, to its principal office to the attention of each of the then
directors of the Company with a copy to its Secretary, 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
receipt.</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;text-decoration:none;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-left:0in;text-align:justify;text-indent:.5in;"><font color=windowtext face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">7.</font><font color=windowtext face="'Times New Roman'" lang=EN-US style="font-size:7.0pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">Miscellaneous</font></u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">. 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 parties. No waiver by either party thereto
at any time of any breach by the other party to this Agreement, or 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 similar time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly
set forth in this Agreement. This Agreement shall be governed by the laws of
the State of Minnesota. This Agreement supersedes all prior agreements on this
subject matter.</font></p>





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<p align=center style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color=black face="'Times New Roman,serif'" style="text-line-through:none;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;letter-spacing:0pt;text-decoration:none;">&nbsp;</font></font></p>



<p align=center style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color=black face="'Times New Roman,serif'" style="text-line-through:none;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;letter-spacing:0pt;text-decoration:none;">3</font></font></p>



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<a name="_bclHeader4"></a><DIV>
<P style="MARGIN: 0in 0in 0pt"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
</DIV>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt; TEXT-DECORATION: none" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>8.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Arbitration of Disputes</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>. Any and all disputes between the parties relating to this Agreement or any alleged breach of this Agreement shall be resolved by binding arbitration held in the City of Minneapolis pursuant to the Commercial Arbitration Rules of the American Arbitration Association before a single arbitrator. In the event that Executive is determined by the arbitrator to be the prevailing party in such an arbitration, the arbitrator shall award Executive, as an
 additional element of damages, his or her attorneys&#146; fees and legal expenses actually incurred in the enforcement of this Agreement and in the arbitration proceeding. Judgment on the arbitration award may be entered by any court having jurisdiction.</FONT></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt; TEXT-DECORATION: none" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>9.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Successors</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>. This Agreement shall be binding upon and inure to the benefit of the respective heirs, personal representatives, successors and assigns of the parties hereto.</FONT></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>10.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Exclusive Benefits.</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>&nbsp; The benefits provided by this Agreement are in lieu of all other severance, change in control, or similar benefits payable to Executive due to termination following a Change in Control.</FONT></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>11.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Release.</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>&nbsp; As a condition to receiving any benefits under this Agreement, Executive shall be required to deliver a standard release to the Company releasing the Company and its shareholder, directors, officers, employees, agents and affiliates from any and all claims relating to Executive&#146;s employment and termination of employment.</FONT></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.</FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
<DIV align=left>
<TABLE style="WIDTH: 95%" cellSpacing=0 cellPadding=0 border=0>
<TR>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="25%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>EXECUTIVE:</FONT></P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="47%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top noWrap width="28%" colSpan=2>
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>INSIGNIA SYSTEMS, INC.</FONT></P>
</TD></TR>
<TR>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="25%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="47%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top noWrap width="3%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
</TD></TR>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
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     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in; BORDER-BOTTOM: windowtext 1pt solid" vAlign=top width="25%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>/s/ Scott Simcox</FONT></P>
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     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="47%">
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>By </FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>/ s/ Scott Drill</FONT></P>
</TD></TR>
<TR>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="25%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Scott Simcox</FONT></P>
</TD>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Its&nbsp;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>CEO</FONT></P>
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<TYPE>EX-10.4
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<FILENAME>insignia103820_ex10-4.htm
<DESCRIPTION>AMENDED CHANGE IN CONTROL SEVERANCE AGREEMENT BETWEEN INSIGNIA SYSTEMS, INC. AND ALAN JONES
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   <TITLE>EXHIBIT 10.4 TO INSIGNIA SYSTEMS, INC. FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2010</TITLE>
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<P style="MARGIN: 0in 0in 0pt 1.1in; TEXT-ALIGN: right" align=right><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'" color=black>Exhibit 10.4</FONT></B></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: center"><B><FONT lang=EN-US style="FONT-SIZE: 12pt" face="'Times New Roman,serif'" color=black>AMENDED CHANGE IN CONTROL SEVERANCE<BR>
AGREEMENT</FONT></B></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>AGREEMENT made as of May 26, 2010 by and between Insignia Systems, Inc., a Minnesota corporation (the &#147;Company&#148;), and Alan Jones (the &#147;Executive&#148;).</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>WHEREAS, the Company, as a publicly held corporation, recognizes the possibility of a change in control of the Company, and that such possibility and the uncertainty and questions which it may raise could result in Executive leaving the Company or in distraction of Executive in the performance of Executive&#146;s duties to the detriment of the Company and its shareholders; and</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>WHEREAS, it is in the best interests of the Company and its shareholders to encourage the availability of Executive&#146;s services to parties who may in the future acquire control of the Company and to provide an incentive for Executive to remain with the Company during any period of uncertainty leading up to a change in control;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>WHEREAS, based on the foregoing, the Company wishes to provide that, in the event of a change in control of the Company, Executive will receive certain benefits if Executive&#146;s employment by the Company ceases for certain reasons within a specified period following the change in control;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>NOW, THEREFORE, in consideration of the foregoing and the provisions of this Agreement, the parties hereto agree as follows:</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>1.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>General Provisions</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>. This Company shall pay Executive a lump sum severance payment if Executive ceases to be employed by the Company within two years following a Change in Control (as defined below) for certain reasons specified in this Agreement. Nothing in this Agreement alters the &#147;at will&#148; nature of Executive&#146;s employment by the Company. This means that either before or after a Change in Control, either the Company or the Executive may terminate Execu
tive&#146;s employment by the Company, either with or without cause, for any reason or no reason. This Agreement relates only to whether Executive shall be entitled to certain severance payments following cessation of employment. No right to severance payments shall arise under this Agreement unless and until there occurs a Change in Control.</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>2.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Definition of Change in Control</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>. For purposes of this Agreement, a &#147;Change in Control&#148; shall be considered to occur if any of the following occurs after the date of this Agreement:</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>the closing of the sale of all or substantially all of the assets of the Company;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>(b)</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>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 Company&#146;s capital stock immediately following such event;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>(c)</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>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 Company&#146;s outstanding voting securities, of beneficial ownership of securities representing 40% or more of the combined voting power or the Company&#146;s then outstanding securities; or</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>(d)</FONT></P>
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<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>the election to the Company&#146;s 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.</FONT></P>
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<p style="margin:0in;margin-bottom:.0001pt;margin-left:0in;text-align:justify;text-indent:.5in;"><font color=windowtext face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">3.</font><font color=windowtext face="'Times New Roman'" lang=EN-US style="font-size:7.0pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">Amount of Severance Payment.</font></u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;"> If a Change in Control occurs
after the date of this Agreement and Executive subsequently ceases to be
employed by the Company prior to the second anniversary of the Change in
Control, then the Company shall pay Executive a lump sum severance payment
equal to twenty-four (24) months of Executive&#8217;s base salary which was in effect
immediately prior to the Change in Control, plus commissions earned the twenty-four
(24) months prior to the Change in Control. The Company shall be entitled to
deduct from the lump sum severance payment any amounts which the Company is
required by law to withhold from such a payment.</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Payment
due under this Agreement shall be made on the 60<sup>th</sup> day after
Executive&#8217;s termination of employment, except that if Executive is then a &#8220;key
employee&#8221; of the Company, as defined in Section 409A of the Internal Revenue
Code, payment shall be made on the date which is six months after termination
of employment, or to his heirs upon his death if earlier; provided, however,
that no payment shall be made unless Executive has first delivered to the
Company the Release described in Section 11, and the Release has not been
rescinded during any applicable rescission period.</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-left:0in;text-align:justify;text-indent:.5in;"><font color=windowtext face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">4.</font><font color=windowtext face="'Times New Roman'" lang=EN-US style="font-size:7.0pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">Circumstances in Which Severance Shall Not Be Paid</font></u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">.
Notwithstanding the provisions of Section 3 above, the Company shall not be
obligated to make any lump sum severance payment under this Agreement if,
following a Change in Control, Executive ceased to be employed by the Company
due to:</font></p>

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  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
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  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">Executive&#8217;s death or
  disability;</font></p>
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  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(b)</font></p>
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  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">termination of Executive by the
  Company for Cause (as defined below); or</font></p>
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  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(c)</font></p>
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  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">resignation by Executive for
  any reason other than a Good Reason (as defined below), including retirement.</font></p>
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<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">For purposes of this Section 4, the following defined terms
have the meanings indicated:</font></p>

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<p style="margin:0in;margin-bottom:.0001pt;margin-left:.5in;margin-right:.6in;margin-top:0in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&#8220;Cause&#8221; means termination by the
Company of Executive&#8217;s employment due to:</font></p>

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<p style="margin:0in;margin-bottom:.0001pt;margin-left:1.5in;text-indent:-.5in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">(1)</font><font color=black face="'Times New Roman'" lang=EN-US style="font-size:7.0pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">conviction of a felony;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-left:1.5in;text-indent:-.5in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">(2)</font><font color=black face="'Times New Roman'" lang=EN-US style="font-size:7.0pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">the willful and continued failure of Executive to perform his essential
duties; or</font></p>

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<p style="margin:0in;margin-bottom:.0001pt;margin-left:1.5in;text-indent:-.5in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">(3)</font><font color=black face="'Times New Roman'" lang=EN-US style="font-size:7.0pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">gross misconduct which is materially injurious to the Company;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">provided, however</font></u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">, that
the matters referred to in clause (2) or (3) shall not be deemed to constitute &#8220;Cause&#8221;
unless the Company has first given Executive written notice specifying the
conduct by Executive that constitutes such failure or gross misconduct and
Executive has failed to remedy the same to the reasonable satisfaction of the
Company&#8217;s Board of Directors.</font></p>

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any of the following, unless Executive gives his or her prior written consent:</font></p>

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<div align=left><table cellpadding=0 cellspacing=0 border=0 style="border-collapse:collapse;margin-left:1.0in;width:86.66%;">
 <tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">the assignment to Executive of any duties inconsistent
  with Executive&#8217;s status or position with the Company, or a substantial
  reduction in the nature or status of Executive&#8217;s responsibilities from those
  in effect immediately prior to the Change in Control;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(2)</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">a reduction by the Company in Executive&#8217;s annual base
  salary in effect immediately prior to the Change in Control;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(3)</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">the relocation of the Company&#8217;s principal executive
  offices to a location more than fifty miles from Minneapolis, Minnesota or
  the Company requiring Executive to be based anywhere other than the Company&#8217;s
  principal executive offices, except for required travel on the Company&#8217;s
  business to an extent substantially consistent with Executive&#8217;s prior
  business travel obligations;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(4)</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">the failure by the Company to continue to provide
  Executive with benefits at least as favorable to those enjoyed by Executive
  under any of the Company&#8217;s pension, life insurance, medical, health and
  accident, disability, deferred compensation, incentive awards, incentive
  stock options, or savings plans in which Executive was participating at the
  time of the Change in Control, the taking of any action by the Company which
  would directly or indirectly materially reduce any of such benefits or
  deprive Executive of any material fringe benefit enjoyed at the time of the
  Change in Control, or the failure by the Company to provide Executive with
  the number of paid vacation days to which Executive is entitled at the time
  of the Change in Control, provided, however, that the Company may amend any
  such plan or programs as long as such amendments do not reduce any benefits
  to which Executive would be entitled upon termination; or</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(5)</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">any termination of Executive&#8217;s employment which is not
  made pursuant to a Notice of Termination satisfying the requirements in
  Section 5 below.</font></p>
  </td>
 </tr>
</table></div>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-left:0in;text-align:justify;text-indent:.5in;"><font color=windowtext face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">5.</font><font color=windowtext face="'Times New Roman'" lang=EN-US style="font-size:7.0pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">Notice of Termination</font></u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">. Any termination of Executive&#8217;s
employment by the Company or by Executive shall be communicated by written
Notice of Termination to the other party hereto in accordance with the notice
provisions of Section 6. For purposes of this Agreement, a &#8220;Notice of
Termination&#8221; shall mean a notice which indicates the specific facts and
circumstances claimed to provide the basis for termination.</font></p>

<p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-left:0in;text-align:justify;text-indent:.5in;"><font color=windowtext face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">6.</font><font color=windowtext face="'Times New Roman'" lang=EN-US style="font-size:7.0pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">Method of Giving Notice</font></u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">. All 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 or certified mail, return receipt requested, postage pre-paid,
addressed to the last known residence address of the Executive, or in the case
of the Company, to its principal office to the attention of each of the then
directors of the Company with a copy to its Secretary, 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
receipt.</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;text-decoration:none;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-left:0in;text-align:justify;text-indent:.5in;"><font color=windowtext face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">7.</font><font color=windowtext face="'Times New Roman'" lang=EN-US style="font-size:7.0pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">Miscellaneous</font></u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">. 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 parties. No waiver by either party
thereto at any time of any breach by the other party to this Agreement, or 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 similar time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly
set forth in this Agreement. This Agreement shall be governed by the laws of
the State of Minnesota. This Agreement supersedes all prior agreements on this
subject matter.</font></p>





<a name="_bclFooter3"></a><DIV>





<p align=center style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color=black face="'Times New Roman,serif'" style="text-line-through:none;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;letter-spacing:0pt;text-decoration:none;">&nbsp;</font></font></p>



<p align=center style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color=black face="'Times New Roman,serif'" style="text-line-through:none;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;letter-spacing:0pt;text-decoration:none;">3</font></font></p>



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<a name="_bclHeader4"></a><DIV>
<P style="MARGIN: 0in 0in 0pt"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
</DIV>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt; TEXT-DECORATION: none" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>8.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Arbitration of Disputes</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>. Any and all disputes between the parties relating to this Agreement or any alleged breach of this Agreement shall be resolved by binding arbitration held in the City of Minneapolis pursuant to the Commercial Arbitration Rules of the American Arbitration Association before a single arbitrator. In the event that Executive is determined by the arbitrator to be the prevailing party in such an arbitration, the arbitrator shall award Executive, as an
 additional element of damages, his or her attorneys&#146; fees and legal expenses actually incurred in the enforcement of this Agreement and in the arbitration proceeding. Judgment on the arbitration award may be entered by any court having jurisdiction.</FONT></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt; TEXT-DECORATION: none" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>9.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Successors</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>. This Agreement shall be binding upon and inure to the benefit of the respective heirs, personal representatives, successors and assigns of the parties hereto.</FONT></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>10.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Exclusive Benefits.</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>&nbsp; The benefits provided by this Agreement are in lieu of all other severance, change in control, or similar benefits payable to Executive due to termination following a Change in Control.</FONT></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>11.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Release</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>.&nbsp; As a condition to receiving any benefits under this Agreement, Executive shall be required to deliver a standard release to the Company releasing the Company and its shareholders, directors, officers, employees, agents and affiliates from any and all claims relating to Executive&#146;s employment and termination of employment.</FONT></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.</FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
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<TABLE style="WIDTH: 95%" cellSpacing=0 cellPadding=0 border=0>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>EXECUTIVE:</FONT></P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="47%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>INSIGNIA SYSTEMS, INC.</FONT></P>
</TD></TR>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>/s/ Alan Jones</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>By </FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>/ s/ Scott Drill</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Alan Jones</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Its&nbsp;</FONT></P>
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<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>6
<FILENAME>insignia103820_ex10-5.htm
<DESCRIPTION>AMENDED CHANGE IN CONTROL SEVERANCE AGREEMENT BETWEEN INSIGNIA SYSTEMS, INC. AND THOMAS LUCAS
<TEXT>

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   <TITLE>EXHIBIT 10.5 TO INSIGNIA SYSTEMS, INC. FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2010</TITLE>
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<p align=right style="margin-bottom:.0001pt;margin-left:1.1in;margin-right:0in;margin-top:0in;text-align:right;"><b><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:12.0pt;">Exhibit 10.5</font></b></p>

<p align=left style="margin:0in;margin-bottom:.0001pt;text-align:left;"><b><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:12.0pt;">&nbsp;</font></b></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:center;"><b><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:12.0pt;">AMENDED CHANGE IN
CONTROL SEVERANCE<br>
AGREEMENT</font></b></p>

<p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">AGREEMENT made as of May 26, 2010 by
and between Insignia Systems, Inc., a Minnesota corporation (the &#8220;Company&#8221;),
and A. Thomas Lucas (the &#8220;Executive&#8221;).</font></p>

<p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">WHEREAS, the
Company, as a publicly held corporation, recognizes the possibility of a change
in control of the Company, and that such possibility and the uncertainty and
questions which it may raise could result in Executive leaving the Company or
in distraction of Executive in the performance of Executive&#8217;s duties to the
detriment of the Company and its shareholders; and</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:justify;text-indent:.5in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">WHEREAS, it is in the best interests of the Company
and its shareholders to encourage the availability of Executive&#8217;s services to
parties who may in the future acquire control of the Company and to provide an
incentive for Executive to remain with the Company during any period of
uncertainty leading up to a change in control;</font></p>

<p style="margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:justify;text-indent:0in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">WHEREAS, based
on the foregoing, the Company wishes to provide that, in the event of a change
in control of the Company, Executive will receive certain benefits if Executive&#8217;s
employment by the Company ceases for certain reasons within a specified period
following the change in control;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-indent:.5in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">NOW, THEREFORE, in consideration of
the foregoing and the provisions of this Agreement, the parties hereto agree as
follows:</font></p>

<p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-left:0in;text-align:justify;text-indent:.5in;"><font color=windowtext face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">1.</font><font color=windowtext face="'Times New Roman'" lang=EN-US style="font-size:7.0pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">General Provisions</font></u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">. This Company shall pay Executive a
lump sum severance payment if Executive ceases to be employed by the Company
within two years following a Change in Control (as defined below) for certain
reasons specified in this Agreement. Nothing in this Agreement alters the &#8220;at
will&#8221; nature of Executive&#8217;s employment by the Company. This means that either
before or after a Change in Control, either the Company or the Executive may
terminate Executive&#8217;s employment by the Company, either with or without cause,
for any reason or no reason. This Agreement relates only to whether Executive
shall be entitled to certain severance payments following cessation of
employment. No right to severance payments shall arise under this Agreement
unless and until there occurs a Change in Control.</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-left:0in;text-align:justify;text-indent:.5in;"><font color=windowtext face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">2.</font><font color=windowtext face="'Times New Roman'" lang=EN-US style="font-size:7.0pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">Definition of Change in Control</font></u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">. For purposes of this
Agreement, a &#8220;Change in Control&#8221; shall be considered to occur if any of the
following occurs after the date of this Agreement:</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<div align=left><table cellpadding=0 cellspacing=0 border=0 style="border-collapse:collapse;margin-left:.5in;width:93.34%;">
 <tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">the closing of the sale of all
  or substantially all of the assets of the Company;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(b)</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">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 Company&#8217;s capital stock immediately
  following such event;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(c)</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">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 Company&#8217;s outstanding voting securities, of beneficial ownership
  of securities representing 40% or more of the combined voting power or the
  Company&#8217;s then outstanding securities; or</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(d)</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">the election to the Company&#8217;s
  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.</font></p>
  </td>
 </tr>
</table></div>

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<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-left:0in;text-align:justify;text-indent:.5in;"><font color=windowtext face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">3.</font><font color=windowtext face="'Times New Roman'" lang=EN-US style="font-size:7.0pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">Amount of Severance Payment.</font></u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;"> If a Change in Control occurs
after the date of this Agreement and Executive subsequently ceases to be
employed by the Company prior to the second anniversary of the Change in
Control, then the Company shall pay Executive a lump sum severance payment equal
to twenty-four (24) months of Executive&#8217;s base salary which was in effect
immediately prior to the Change in Control. The Company shall be entitled to
deduct from the lump sum severance payment any amounts which the Company is
required by law to withhold from such a payment.</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Payment
due under this Agreement shall be made on the 60<sup>th</sup> day after
Executive&#8217;s termination of employment, except that if Executive is then a &#8220;key
employee&#8221; of the Company, as defined in Section 409A of the Internal Revenue
Code, payment shall be made on the date which is six months after termination
of employment, or to his heirs upon his death if earlier; provided, however,
that no payment shall be made unless Executive has first delivered to the
Company the Release described in Section 11, and the Release has not been
rescinded during any applicable rescission period.</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-left:0in;text-align:justify;text-indent:.5in;"><font color=windowtext face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">4.</font><font color=windowtext face="'Times New Roman'" lang=EN-US style="font-size:7.0pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">Circumstances in Which Severance Shall Not Be Paid</font></u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">.
Notwithstanding the provisions of Section 3 above, the Company shall not be
obligated to make any lump sum severance payment under this Agreement if,
following a Change in Control, Executive ceased to be employed by the Company
due to:</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<div align=left><table cellpadding=0 cellspacing=0 border=0 style="border-collapse:collapse;margin-left:.5in;width:93.34%;">
 <tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">Executive&#8217;s death or
  disability;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(b)</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">termination of Executive by the
  Company for Cause (as defined below); or</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(c)</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">resignation by Executive for
  any reason other than a Good Reason (as defined below), including retirement.</font></p>
  </td>
 </tr>
</table></div>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">For purposes of this Section 4, the following defined terms
have the meanings indicated:</font></p>

<p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-left:.4in;margin-right:.6in;margin-top:0in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&#8220;Cause&#8221; means termination by the
Company of Executive&#8217;s employment due to:</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-right:.6in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-left:1.5in;text-indent:-.5in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">(1)</font><font color=black face="'Times New Roman'" lang=EN-US style="font-size:7.0pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">conviction of a felony;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-left:1.5in;text-indent:-.5in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">(2)</font><font color=black face="'Times New Roman'" lang=EN-US style="font-size:7.0pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">the willful and continued failure of Executive to perform his essential
duties; or</font></p>

<p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-left:1.5in;text-indent:-.5in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">(3)</font><font color=black face="'Times New Roman'" lang=EN-US style="font-size:7.0pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">gross misconduct which is materially injurious to the Company;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">provided, however</font></u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">, that
the matters referred to in clause (2) or (3) shall not be deemed to constitute &#8220;Cause&#8221;
unless the Company has first given Executive written notice specifying the
conduct by Executive that constitutes such failure or gross misconduct and
Executive has failed to remedy the same to the reasonable satisfaction of the
Company&#8217;s Board of Directors.</font></p>

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<p style="margin-bottom:.0001pt;margin-left:.5in;margin-right:0in;margin-top:0in;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&#8220;Good Reason&#8221; shall mean any of the following, unless
Executive gives his or her prior written consent:</font></p>

<p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<div align=left><table cellpadding=0 cellspacing=0 border=0 style="border-collapse:collapse;margin-left:1.0in;width:86.66%;">
 <tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">the assignment to Executive of any duties inconsistent
  with Executive&#8217;s status or position with the Company, or a substantial
  reduction in the nature or status of Executive&#8217;s responsibilities from those
  in effect immediately prior to the Change in Control;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(2)</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">a reduction by the Company in Executive&#8217;s annual base
  salary in effect immediately prior to the Change in Control;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(3)</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">the relocation of the Company&#8217;s principal executive
  offices to a location more than fifty miles from Minneapolis, Minnesota or
  the Company requiring Executive to be based anywhere other than the Company&#8217;s
  principal executive offices, except for required travel on the Company&#8217;s
  business to an extent substantially consistent with Executive&#8217;s prior
  business travel obligations;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(4)</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">the failure by the Company to continue to provide
  Executive with benefits at least as favorable to those enjoyed by Executive
  under any of the Company&#8217;s pension, life insurance, medical, health and
  accident, disability, deferred compensation, incentive awards, incentive
  stock options, or savings plans in which Executive was participating at the
  time of the Change in Control, the taking of any action by the Company which
  would directly or indirectly materially reduce any of such benefits or
  deprive Executive of any material fringe benefit enjoyed at the time of the
  Change in Control, or the failure by the Company to provide Executive with
  the number of paid vacation days to which Executive is entitled at the time
  of the Change in Control, provided, however, that the Company may amend any
  such plan or programs as long as such amendments do not reduce any benefits
  to which Executive would be entitled upon termination; or</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">&nbsp;</font></p>
  </td>
 </tr>
<tr>
  <td nowrap valign=top width=3% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">(5)</font></p>
  </td>
 <td valign=top width=97% style="padding:0in 0in 0in 0in;">
  <p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" style="font-size:10.0pt;">any termination of Executive&#8217;s employment which is not
  made pursuant to a Notice of Termination satisfying the requirements in
  Section 5 below.</font></p>
  </td>
 </tr>
</table></div>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-left:0in;text-align:justify;text-indent:.5in;"><font color=windowtext face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">5.</font><font color=windowtext face="'Times New Roman'" lang=EN-US style="font-size:7.0pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">Notice of Termination</font></u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">. Any termination of Executive&#8217;s
employment by the Company or by Executive shall be communicated by written
Notice of Termination to the other party hereto in accordance with the notice
provisions of Section 6. For purposes of this Agreement, a &#8220;Notice of
Termination&#8221; shall mean a notice which indicates the specific facts and
circumstances claimed to provide the basis for termination.</font></p>

<p style="margin:0in;margin-bottom:.0001pt;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-left:0in;text-align:justify;text-indent:.5in;"><font color=windowtext face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">6.</font><font color=windowtext face="'Times New Roman'" lang=EN-US style="font-size:7.0pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">Method of Giving Notice</font></u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">. All 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 or certified mail, return receipt requested, postage pre-paid,
addressed to the last known residence address of the Executive, or in the case
of the Company, to its principal office to the attention of each of the then
directors of the Company with a copy to its Secretary, 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
receipt.</font></p>

<p style="margin:0in;margin-bottom:.0001pt;text-align:justify;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;text-decoration:none;">&nbsp;</font></p>

<p style="margin:0in;margin-bottom:.0001pt;margin-left:0in;text-align:justify;text-indent:.5in;"><font color=windowtext face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">7.</font><font color=windowtext face="'Times New Roman'" lang=EN-US style="font-size:7.0pt;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</font><u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">Miscellaneous</font></u><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;">. 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 parties. No waiver by either party
thereto at any time of any breach by the other party to this Agreement, or 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 similar time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly
set forth in this Agreement. This Agreement shall be governed by the laws of
the State of Minnesota. This Agreement supersedes all prior agreements on this
subject matter.</font></p>





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<p align=center style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color=black face="'Times New Roman,serif'" style="text-line-through:none;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;letter-spacing:0pt;text-decoration:none;">&nbsp;</font></font></p>



<p align=center style="margin:0in;margin-bottom:.0001pt;text-align:center;"><font color=black face="'Times New Roman,serif'" style="text-line-through:none;"><font color=black face="'Times New Roman,serif'" lang=EN-US style="font-size:10.0pt;letter-spacing:0pt;text-decoration:none;">3</font></font></p>



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<a name="_bclHeader4"></a><DIV>
<P style="MARGIN: 0in 0in 0pt"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
</DIV>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt; TEXT-DECORATION: none" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>8.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Arbitration of Disputes</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>. Any and all disputes between the parties relating to this Agreement or any alleged breach of this Agreement shall be resolved by binding arbitration held in the City of Minneapolis pursuant to the Commercial Arbitration Rules of the American Arbitration Association before a single arbitrator. In the event that Executive is determined by the arbitrator to be the prevailing party in such an arbitration, the arbitrator shall award Executive, as an
 additional element of damages, his or her attorneys&#146; fees and legal expenses actually incurred in the enforcement of this Agreement and in the arbitration proceeding. Judgment on the arbitration award may be entered by any court having jurisdiction.</FONT></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt; TEXT-DECORATION: none" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>9.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Successors</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>. This Agreement shall be binding upon and inure to the benefit of the respective heirs, personal representatives, successors and assigns of the parties hereto.</FONT></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>10.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Exclusive Benefits</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>. The benefits provided by this Agreement are in lieu of all other severance, change in control, or similar benefits payable to Executive due to termination following a Change in Control.</FONT></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=windowtext>11.</FONT><FONT lang=EN-US style="FONT-SIZE: 7pt" face="'Times New Roman'" color=windowtext>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </FONT><U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Release</FONT></U><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>. As a condition to receiving any benefits under this Agreement, Executive shall be required to deliver a standard release to the Company releasing the Company and its shareholders, directors, officers, employees, agents and affiliates from any and all claims relating to Executive&#146;s employment and termination of employment.</FONT></P>
<P style="MARGIN: 0in 0in 0pt; TEXT-ALIGN: justify"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
<P style="MARGIN: 0in 0in 0pt; TEXT-INDENT: 0.5in"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.</FONT></P>
<P style="MARGIN: 0in 0in 0pt"><FONT lang=EN-US style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
<DIV align=left>
<TABLE style="WIDTH: 95%" cellSpacing=0 cellPadding=0 border=0>
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     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="25%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>EXECUTIVE:</FONT></P>
</TD>
     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top width="47%">
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
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     <TD style="PADDING-RIGHT: 0in; PADDING-LEFT: 0in; PADDING-BOTTOM: 0in; PADDING-TOP: 0in" vAlign=top noWrap width="28%" colSpan=2>
<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>INSIGNIA SYSTEMS, INC.</FONT></P>
</TD></TR>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black></FONT>&nbsp;</P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>/s/ A. Thomas Lucas</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>By </FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>/ s/ Scott Drill</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>A. Thomas Lucas</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>Its&nbsp;</FONT></P>
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<P style="MARGIN: 0in 0in 0pt"><FONT style="FONT-SIZE: 10pt" face="'Times New Roman,serif'" color=black>CEO</FONT></P>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>7
<FILENAME>insignia103820_ex31-1.htm
<DESCRIPTION>CERTIFICATION OF CEO PURSUANT TO SECTION 302
<TEXT>

<HTML>
<HEAD><TITLE>EXHIBIT 31.1 TO INSIGNIA SYSTEMS, INC. FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2010</TITLE></HEAD>
<BODY>

<P ALIGN=RIGHT><FONT SIZE=2><B>Exhibit 31.1</B></FONT></P>

<P ALIGN=CENTER><FONT SIZE=2><B>CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER</B></FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="85%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=4 VALIGN=TOP>
 <P><FONT SIZE=2>I, Scott F.
 Drill, certify that: </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>1.</FONT></P>
 </TD>
 <TD COLSPAN=3 VALIGN=TOP>
 <P><FONT SIZE=2>I have
 reviewed this quarterly report on Form 10-Q of Insignia Systems, Inc.; </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>2.</FONT></P>
 </TD>
 <TD COLSPAN=3 VALIGN=TOP>
 <P><FONT SIZE=2>Based on my
 knowledge, this report does not contain any untrue statement of a material
 fact or omit to state a material fact necessary to make the statements made,
 in light of the circumstances under which such statements were made, not
 misleading with respect to the period covered by this report; </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>3.</FONT></P>
 </TD>
 <TD COLSPAN=3 VALIGN=TOP>
 <P><FONT SIZE=2>Based on my
 knowledge, the financial statements, and other financial information included
 in this report, fairly present in all material respects the financial
 condition, results of operations and cash flows of the registrant as of, and
 for, the periods presented in this report; </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>4.</FONT></P>
 </TD>
 <TD COLSPAN=3 VALIGN=TOP>
 <P><FONT SIZE=2>The registrant&#146;s
 other certifying officer and I are responsible for establishing and
 maintaining disclosure controls and procedures (as defined in Exchange Act
 Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting
 (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant
 and have: </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>a)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Designed
 such disclosure controls and procedures, or caused such disclosure controls
 and procedures to be designed under our supervision, to ensure that material
 information relating to the registrant is made known to us by others within
 the Registrant, particularly during the period in which this report is being
 prepared; and </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>b)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Designed
 such internal control over financial reporting, or caused such internal
 control over financial reporting to be designed under our supervision, to
 provide reasonable assurance regarding the reliability of financial reporting
 and the preparation of financial statements for external purposes in
 accordance with generally accepted accounting principles; and</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>c)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Evaluated
 the effectiveness of the registrant&#146;s disclosure controls and procedures and
 presented in this report our conclusions about the effectiveness of the
 disclosure controls and procedures, as of the end of the period covered by
 this report based on such evaluation; and</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>d)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Disclosed in
 this report any change in the registrant&#146;s internal control over financial
 reporting that occurred during the registrant&#146;s most recent fiscal quarter
 that has materially affected, or is reasonably likely to materially affect,
 the registrant&#146;s internal control over financial reporting;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>5.</FONT></P>
 </TD>
 <TD COLSPAN=3 VALIGN=TOP>
 <P><FONT SIZE=2>The
 registrant&#146;s other certifying officer and I have disclosed, based on our most
 recent evaluation of internal control over financial reporting, to the registrant&#146;s
 auditors and the audit committee of the registrant&#146;s board of directors (or
 persons performing the equivalent functions): </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>a)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>All
 significant deficiencies and material weaknesses in the design or operation
 of internal control over financial reporting which are reasonably likely to
 adversely affect the registrant&#146;s ability to record, process, summarize and
 report financial information; and </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>b)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Any fraud,
 whether or not material, that involves management or other employees who have
 a significant role in the registrant&#146;s internal controls over financial
 reporting.</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="50%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="26%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="23%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Date: August
 9, 2010</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=2>/s/ Scott F.
 Drill</FONT></P>


 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>Scott F.
 Drill</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>President
 and Chief Executive Officer</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>(principal
 executive officer)</FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN=CENTER><FONT SIZE=2>20</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>8
<FILENAME>insignia103820_ex31-2.htm
<DESCRIPTION>CERTIFICATION OF CFO PURSUANT TO SECTION 302
<TEXT>

<HTML>
<HEAD><TITLE>EXHIBIT 31.2 TO INSIGNIA SYSTEMS, INC. FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2010</TITLE></HEAD>
<BODY>


<P ALIGN=RIGHT><FONT SIZE=2><B>Exhibit 31.2 </B></FONT></P>

<P ALIGN=CENTER><FONT SIZE=2><B>CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER</B></FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="85%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=4 VALIGN=TOP>
 <P><FONT SIZE=2>I, Justin W.
 Shireman, certify that: </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>1.</FONT></P>
 </TD>
 <TD COLSPAN=3 VALIGN=TOP>
 <P><FONT SIZE=2>I have
 reviewed this quarterly report on Form 10-Q of Insignia Systems, Inc.; </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>2.</FONT></P>
 </TD>
 <TD COLSPAN=3 VALIGN=TOP>
 <P><FONT SIZE=2>Based on my
 knowledge, this report does not contain any untrue statement of a material fact
 or omit to state a material fact necessary to make the statements made, in
 light of the circumstances under which such statements were made, not
 misleading with respect to the period covered by this report; </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>3.</FONT></P>
 </TD>
 <TD COLSPAN=3 VALIGN=TOP>
 <P><FONT SIZE=2>Based on my
 knowledge, the financial statements, and other financial information included
 in this report, fairly present in all material respects the financial
 condition, results of operations and cash flows of the registrant as of, and
 for, the periods presented in this report; </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>4.</FONT></P>
 </TD>
 <TD COLSPAN=3 VALIGN=TOP>
 <P><FONT SIZE=2>The
 registrant&#146;s other certifying officer and I are responsible for establishing
 and maintaining disclosure controls and procedures (as defined in Exchange
 Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
 reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
 registrant and have: </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>a)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Designed
 such disclosure controls and procedures, or caused such disclosure controls
 and procedures to be designed under our supervision, to ensure that material
 information relating to the registrant is made known to us by others within
 the Registrant, particularly during the period in which this report is being
 prepared; and </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>b)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Designed
 such internal control over financial reporting, or caused such internal
 control over financial reporting to be designed under our supervision, to
 provide reasonable assurance regarding the reliability of financial reporting
 and the preparation of financial statements for external purposes in
 accordance with generally accepted accounting principles; and </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>c)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Evaluated
 the effectiveness of the registrant&#146;s disclosure controls and procedures and
 presented in this report our conclusions about the effectiveness of the
 disclosure controls and procedures, as of the end of the period covered by
 this report based on such evaluation; and </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>d)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Disclosed in
 this report any change in the registrant&#146;s internal control over financial
 reporting that occurred during the registrant&#146;s most recent fiscal quarter
 that has materially affected, or is reasonably likely to materially affect,
 the registrant&#146;s internal control over financial reporting; </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>5.</FONT></P>
 </TD>
 <TD COLSPAN=3 VALIGN=TOP>
 <P><FONT SIZE=2>The
 registrant&#146;s other certifying officer and I have disclosed, based on our most
 recent evaluation of internal control over financial reporting, to the
 registrant&#146;s auditors and the audit committee of the registrant&#146;s board of
 directors (or persons performing the equivalent functions): </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>a)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>All
 significant deficiencies and material weaknesses in the design or operation
 of internal control over financial reporting which are reasonably likely to
 adversely affect the registrant&#146;s ability to record, process, summarize and
 report financial information; and </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>b)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Any fraud,
 whether or not material, that involves management or other employees who have
 a significant role in the registrant&#146;s internal controls over financial
 reporting.</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="50%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="26%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="23%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Date: August
 9, 2010</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=2>/s/ Justin
 W. Shireman</FONT></P>


 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>Justin W.
 Shireman</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>Vice
 President, Finance and</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>Chief
 Financial Officer</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>(principal
 financial officer)</FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN=CENTER><FONT SIZE=2>21</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3>
</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>9
<FILENAME>insignia103820_ex32.htm
<DESCRIPTION>CERTIFICATION OF CEO/CFO PURSUANT TO SECTION 906
<TEXT>

<HTML>
<HEAD><TITLE>EXHIBIT 32 TO INSIGNIA SYSTEMS, INC. FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2010</TITLE></HEAD>
<BODY>

<P ALIGN=RIGHT><FONT SIZE=2><B>Exhibit 32 </B></FONT></P>

<P ALIGN=CENTER><FONT SIZE=2><B>SECTION 1350 CERTIFICATION</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
undersigned certify that: </FONT></P>

<P><FONT SIZE=2>(1) The
accompanying Quarterly Report on Form 10-Q for the period ended June 30, 2010,
fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and </FONT></P>

<P><FONT SIZE=2>(2) The
information contained in the accompanying Quarterly Report fairly presents, in
all material respects, the financial condition and results of operations of the
Company. </FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="50%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="26%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="23%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Date: August
 9, 2010</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=2>/s/ Scott F.
 Drill</FONT></P>


 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>Scott F.
 Drill</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>President
 and Chief Executive Officer</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>(principal
 executive officer)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Date: August
 9, 2010</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=2>/s/ Justin
 W. Shireman</FONT></P>


 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>Justin W.
 Shireman</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>Vice
 President, Finance and</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>Chief
 Financial Officer</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>(principal
 financial officer)</FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN=CENTER><FONT SIZE=2>22</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3>
</BODY>
</HTML>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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