[LOGO]
INSIGNIA SYSTEMS, INC.
10801 Red Circle Drive
Minnetonka, MN 55343
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 8, 1997
TO THE STOCKHOLDERS OF INSIGNIA SYSTEMS, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Insignia Systems, Inc. (the "Company"), a Minnesota corporation, will be held on
Thursday, May 8, 1997 at 3:30 p.m., Central Standard Time, at Holiday Inn
Express, 10985 Red Circle Drive, Minnetonka, Minnesota, for the following
purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected;
2. To ratify the appointment of Ernst & Young LLP as independent auditors
for the Company for the current year; and
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on March 24,
1997 as the record date for the determination of shareholders entitled to notice
of and to vote at the meeting.
By Order of the Board of Directors
G. L. Hoffman
Secretary
Minnetonka, Minnesota
April 4, 1997
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
HOWEVER, TO ENSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE URGED TO VOTE,
SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE POSTAGE-PAID
ENVELOPE ENCLOSED FOR THAT PURPOSE.
[LOGO]
INSIGNIA SYSTEMS, INC.
-----------------------------------
PROXY STATEMENT
---------------------------------------------------
This Proxy Statement is furnished to the stockholders of Insignia
Systems, Inc. in connection with the Board of Directors' solicitation of proxies
to be voted at the annual meeting of stockholders to be held on May 8, 1997 or
any adjournment thereof (the "Meeting"). The mailing of this Proxy Statement to
stockholders commenced on or about April 4, 1997.
All expenses in connection with solicitation of proxies will be borne
by the Company. The Company will pay brokers, nominees, fiduciaries, or other
custodians their reasonable expenses for sending proxy material to, and
obtaining instructions from, persons for whom they hold stock of the Company.
The Company expects to solicit proxies by mail, but directors, officers, and
other employees of the Company may also solicit in person, by telephone, by
telegraph or by mail. The Company's principal offices are located at 10801 Red
Circle Drive, Minnetonka, Minnesota 55343.
Any proxy may be revoked at any time before it is voted by written
notice, mailed or delivered to the Secretary of the Company, or by revocation in
person at the Meeting; but if not so revoked, the shares represented by such
proxy will be voted in the manner directed by the shareholder. If no direction
is made, proxies received from stockholders will be noted "for" the proposals
set forth in the Notice of Meeting.
The Company has 6,860,081 shares of common stock, par value $.01 per
share (the "Common Stock") outstanding and entitled to vote at the Meeting. Each
share of Common Stock is entitled to one vote. Only stockholders of record at
the close of business on March 24, 1997 are entitled to vote at the meeting and
at any continuation or adjournment thereof. The presence, in person or by proxy,
of the holders of a majority of the shares of Common Stock entitled to vote at
the meeting will constitute a quorum for the transaction of business.
Under Minnesota law, each item of business properly presented at a
meeting of stockholders generally must be approved by the affirmative vote of
the holders of a majority of the voting power of the shares present, in person
or by proxy, and entitled to vote on that item of business. However, if the
shares present and entitled to vote on that item of business would not
constitute a quorum for the transaction of business at the meeting, then the
item must be approved by a majority of the voting power of the minimum number of
shares that would constitute such a quorum. Votes cast by proxy or in person at
the Meeting will be tabulated at the Meeting to determine whether or not a
quorum is present. Abstentions will be treated as unvoted for purposes of
determining the approval of the matter submitted to the shareholders for a vote.
If a broker indicates on the proxy that it does not have discretionary authority
as to certain shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that matter.
SECURITY OWNERSHIP OF
PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table presents information provided to the Company as to
the beneficial ownership of Common Stock as of February 28, 1997 (i) by persons
known to the Company to hold 5% or more of such stock, (ii) each of the
directors of the Company, (iii) each of the executive officers named in the
Summary Compensation Table on page 3 and (iv) by all current officers and
directors as a group. Beneficial ownership includes shares available for
purchase under warrants or options which are either currently exercisable or
exercisable within 60 days after February 28, 1997.
Amount and Nature
Name and Address of of Beneficial Percent of
Beneficial Owner Ownership Shares
- --------------------------------------- ------------------- ----------
G. L. Hoffman 990,967(1) 14.7%
10801 Red Circle Drive
Minnetonka, MN 55343
Perkins Capital Management, Inc. 2,698,300(2) 37.6%
708 East Lake Street
Wayzata, MN 55391
Erwin A. Kelen 150,000(3) 2.2%
Kelen Ventures
5500 Wayzata Blvd., Suite 1045
Golden Valley, MN 55416
Gordon F. Stofer 275,000(4) 4.0%
Cherry Tree Ventures III
1400 Northland Plaza, 3800 W. 80th Street
Minneapolis, MN 55431
Frank D. Trestman 150,000(5) 2.2%
Trestman Enterprises
5500 Wayzata Blvd., Suite 1045
Golden Valley, MN 55416
Paul A. Moquist 194,356(6) 2.8%
10801 Red Circle Drive
Minnetonka, MN 55343
All current Directors and
Officers as a Group (6 persons) 1,787,528(7) 26.2%
- -------------------------------------------
(1) Includes 29,167 shares subject to options and warrants which are
currently exercisable.
(2) Includes 505,000 shares subject to warrants which are currently
exercisable.
(3) Includes 100,000 shares subject to options and warrants which are
currently exercisable and 30,000 shares held in trust for Mr. Kelen's
children, as to which he disclaims beneficial ownership.
(4) Consists of 250,000 shares held by and 25,000 shares subject to options
which are currently exercisable by Cherry Tree Ventures III, over which
Mr. Stofer, as the Managing General Partner, has shared voting and
investment power.
(5) Includes 50,000 shares subject to options and warrants which are
currently exercisable. Also includes 40,000 shares held in trust for
Mr. Trestman's wife and children and 50,000 shares subject to warrants
currently exercisable by the trust, as to which Mr. Trestman disclaims
beneficial ownership.
(6) Includes 136,667 shares subject to options which are currently
exercisable and 10,600 shares held by Mr. Moquist's wife, as to which
Mr. Moquist disclaims beneficial ownership.
(7) Includes 400,834 shares subject to options and warrants currently
exercisable by officers and directors of the Company, 30,000 shares
held in trust for the children of a director, 40,000 shares held in
trust for the wife and children of another director and 10,600 shares
held by the wife of an officer.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table shows, for the fiscal years ending December 31,
1994, 1995 and 1996, the cash compensation paid by the Company, as well as
certain compensation paid or accrued for such years, to G. L. Hoffman, the
Company's President and Chief Executive Officer, and to each other executive
officer of the Company (together with Mr. Hoffman, the "Named Executives") whose
total cash compensation exceeded $100,000 during Fiscal 1994, 1995 and 1996 in
all capacities in which they served:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
Fiscal Year -------------------------- ----------------
Ended December Stock Options All Other
Name and Position 31, Salary Bonus and Awards Compensation (1)
- ------------------------- ---------------- ------------ --------- ---------------- ------------------
<S> <C> <C> <C> <C> <C>
G. L. Hoffman 1996 $132,300 -- 50,000(2) $6,286
Chairman, President, 1995 $126,000 -- -- $6,244
CEO and Secretary 1994 $120,000 $8,400 -- $6,244
Paul A. Moquist 1996 $112,000 -- 85,000(3) $6,357
Exec. Vice President, 1995 $105,000 -- 50,000(4) $6,317
Sales & Marketing 1994 $100,000 $8,400 -- $6,248
</TABLE>
- ---------------------------
(1) Includes amounts for car allowance and payment of life insurance
premiums.
(2) Includes a stock option to purchase 50,000 shares at $1.38 per share.
(3) Includes a stock option to purchase 75,000 shares at $1.38 per share
which was granted to replace a canceled 75,000 share option with an
exercise price of $2.00 per share. Also includes a stock option to
purchase 10,000 shares at $1.38 per share.
(4) Includes a stock option to purchase 50,000 shares at $1.50 per share.
STOCK OPTIONS
The Company's Stock Purchase Plan (the "Plan") provides for the
granting of stock options or restricted stock awards to key employees,
consultants and directors. An aggregate of 820,000 shares of common stock have
been issued or reserved for issuance under the Plan, as amended.
There are currently options outstanding under the Plan for 459,200
shares. During the last three years (January 1, 1994 to December 31, 1996), the
Company has granted under the Plan options for a total of 185,000 shares to
executive officers at an average price of $1.41 per share, options for a total
of 45,000 shares to directors who are not executive officers at an average price
of $2.08 per share and options for a total of 184,800 shares to other employees
and to consultants at exercise prices ranging from $1.00 to $3.375 per share. In
1994 options to purchase 108,647 shares were exercised by current and former
employees, one of whom was a former executive officer. In 1995 options to
purchase 54,077 shares were exercised by current and former employees, one of
whom was a former executive officer. No options were exercised in 1996. To date,
options covering 463,143 shares have been canceled with exercise prices ranging
from $.50 to $4.50 per share.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
% of Total Options
Granted to Employees
Number of Shares in Exercise
Covered by Option Fiscal Year Ended Price
Name Grants Dec. 31, 1996 Per Share Expiration Date
- ------------------- ----------------- --------------------- ----------- ---------------
<S> <C> <C> <C> <C>
G. L. Hoffman 50,000(1) 22% $1.38(2) 2/21/2001
Paul A. Moquist 85,000(3) 38% $1.38(2) 2/21/2001
</TABLE>
- -------------------
(1) The option is exercisable for 16,667 shares after one year, 16,666
shares after two years and 16,666 shares after three years.
(2) Reflects the market value of the Company's Common Stock on February 21,
1996, the date of the grant.
(3) One option is exercisable for 75,000 shares immediately. The option was
granted to replace a canceled 75,000 share option with an exercise price
of $2.00 per share, which was fully vested. The other option is
exercisable for 3,334 shares after one year, 3,333 shares after two
years and 3,333 shares after three years.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the Named
Executives concerning the exercise of options during the last fiscal year and
unexercised options held as of the end of the fiscal year:
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised Options In-the-Money Options
Shares at December 31, 1996 as of December 31, 1996(1)
Acquired Value ---------------------------- ------------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
G. L. Hoffman -- -- -- 50,000 -- 31,250
Paul A. Moquist -- -- 116,667 43,333 55,208 22,917
</TABLE>
- --------------------
(1) Based on the market price of $2.00 per share for the Company's Common
Stock on December 31, 1996.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(1) of the Securities Act of 1934 requires the Company's
executive officers and directors to file reports with the Securities and
Exchange Commission concerning their initial ownership and changes in ownership
of Company securities. To the Company's knowledge, all such reports were filed
in a timely manner, except that G. L. Hoffman filed two late reports in February
1997 concerning one transaction in March 1996 and another transaction in June
1996.
ITEM I
ELECTION OF DIRECTORS
The Board of Directors has fixed at four the size of the Board of
Directors to be elected at the Meeting and has nominated as the management slate
all of its current members. It is anticipated that proxies will be voted for the
management slate, and that each nominee will serve if elected. Should any
nominee be unable to serve, the persons named in the proxies may in their
discretion vote for a substitute.
The names and ages of the management slate of nominees, their principal
occupations and other information is set forth below, based upon information
furnished to the Company by the nominees.
Director
Name and Age Occupation Since
- ---------------------- ---------------------------- ----------
G. L. Hoffman (47) Chairman, President, CEO and
Secretary of the Company 1990
Erwin A. Kelen (61) Private Investor, Consultant 1990
Gordon F. Stofer (50) Managing General Partner,
Venture Capital Firm 1990
Frank D. Trestman (62) Private Investor, Consultant 1990
BUSINESS EXPERIENCE
G. L. Hoffman, age 47, a co-founder of the Company, has been the
Chairman, President, Chief Executive Officer and Secretary of the Company since
it was incorporated in January 1990. Prior to that time he was a co-founder of
Varitronic Systems, Inc., which develops, manufactures and markets business
graphic products. Mr. Hoffman was employed as Chairman, Executive Vice President
and Secretary of Varitronics from 1983 until January 1990. Mr. Hoffman had
primary responsibility for developing Varitronics' international marketing and
private label distribution systems.
Erwin A. Kelen, age 61, has been a Director of the Company since August
1990. Since October 1990 Mr. Kelen has served as President of Kelen Ventures, a
venture capital investment and consulting firm located in Minneapolis,
Minnesota. From January 1984 to October 1990 Mr. Kelen was President and Chief
Executive Officer of DataMyte Corporation, a manufacturer of computerized
factory data collection systems based in Minneapolis, Minnesota. He is a
director of Printronix, Inc., a manufacturer of printers for computer based
systems located in Irvine, California; Computer Network Technologies, Inc., a
Minneapolis-based designer and manufacturer of high-speed computer networking
equipment; and CyberOptics a Minneapolis-based manufacturer of laser sensors and
sensor systems.
Gordon F. Stofer, age 50, has been a Director of the Company since
February 1990. Since 1980 Mr. Stofer has been the managing general partner of
Cherry Tree Ventures, a venture capital investment firm located in Minneapolis,
Minnesota. Mr. Stofer is also a director of Ringer Corporation, a lawn care
products manufacturer and distributor in Eden Prairie, Minnesota; Harmony Brook
Inc., a water purification and dispensing systems company located in Burnsville,
Minnesota; and Coda Music Technology, Inc., a developer and marketer of
proprietary music technology products located in Eden Prairie, Minnesota.
Frank D. Trestman, age 62, has been a Director of the Company since
August 1990. Since November 1986 Mr. Trestman has served as President of
Trestman Enterprises, a Minneapolis-based investment and consulting firm. Mr.
Trestman also serves as a director of Best Buy Co., Inc., a national retailer of
consumer electronic products based in Minneapolis, Minnesota, and Metris
Companies, an information based direct marketer of consumer credit products,
extended service plans and other fee based products and services to moderate
income consumers. Metris Companies is located in Minneapolis, Minnesota.
The Board of Directors has two standing committees, the Audit Committee
and the Compensation Committee, each consisting of Mr. Kelen, Mr. Stofer and Mr.
Trestman. The Audit Committee met once and the Compensation Committee met once
during 1996.
The Board of Directors met four times during 1996. Each director
attended at least 75% of the meetings held. The Company's directors do not
receive any fees for their service on the Board of Directors, other than
reimbursement of reasonable out-of-pocket expenses incurred on behalf of the
Company. The Company's amended Stock Plan provides for the annual grant to each
non-employee director of a non-qualified option to purchase 5,000 shares of
common stock at an exercise price equal to the closing market price on the date
of grant.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" ELECTION
OF THE MANAGEMENT SLATE OF NOMINEES.
ITEM II
APPROVAL OF AUDITORS
Ernst & Young LLP, independent auditors, have been the Company's
auditors since 1990. They have been reappointed by the Board of Directors as the
Company's auditors for the year ending December 31, 1997. Although shareholder
approval is not required, the Board of Directors requests it. In the event the
appointment should not be approved by the shareholders, the Board of Directors
will make another appointment to be effective at the earliest possible time.
A representative of Ernst & Young LLP is expected to be present at the
Meeting, will be given the opportunity to make a statement and will be available
to answer appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP.
OTHER BUSINESS
The Management of the Company knows of no matters other than the
foregoing to be brought before the Meeting. However, the enclosed proxy gives
discretionary authority in the event any additional matters should be presented.
The proxy rules of the Securities and Exchange Commission permit
shareholders, after timely notice to issuers, to present proposals for
shareholder action in issuer proxy statements where such proposals are
consistent with applicable law, pertain to matters appropriate for shareholder
action and are not properly omitted by issuer action in accordance with the
proxy rules. The Company's next meeting of Shareholders (for the year ending
December 31, 1997) is expected to be held on or about May 7, 1998 and proxy
materials in connection with that meeting are expected to be mailed on or about
March 31, 1998. Any shareholder proposals prepared in accordance with the proxy
rules for inclusion in the Company's proxy materials must be received by the
Company on or before December 1, 1997.
The Company's Annual Report to Shareholders for the year ended December
31, 1996 is being mailed to shareholders with this Proxy Statement. Shareholders
may receive, without charge, a copy of the Company's Annual Report on Form 10-K,
including financial statements and schedules thereto, as filed with the
Securities and Exchange Commission, by writing to: Vice President of Finance,
Insignia Systems, Inc., 10801 Red Circle Drive, Minnetonka, MN 55343, or by
calling the Company at (612) 930-8200.
By Order of the Board of Directors
G. L. Hoffman,
Secretary
PROXY
INSIGNIA SYSTEMS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints G. L. HOFFMAN and JOHN R. WHISNANT, or
either of them acting alone, with full power of substitution, as proxies to
represent and vote, as designated below, all shares of Common Stock of Insignia
Systems, Inc. registered in the name of the undersigned, at the Annual Meeting
of the Shareholders, to be held on Thursday, May8, 1997, at 3:30p.m., Central
Standard Time, at the Holiday Inn Express, 10985 Red Circle Drive, Minnetonka,
Minnesota, and at any adjournment thereof:
1. ELECTION OF DIRECTORS
Nominees: G. L. HOFFMAN, ERWIN A. KELEN,
GORDON F. STOFER AND FRANK D. TRESTMAN
[ ] FOR all nominees listed above [ ] WITHHOLD AUTHORITY
(except those whose names to vote for all nominees listed above
have been stricken above)
(To withhold authority to vote for any individual nominee, strike a line
through the nominees name in the list above.)
(CONTINUED, AND TO BE COMPLETED AND SIGNED ON THE REVERSE SIDE)
(CONTINUED FROM THE OTHER SIDE)
2. TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS
FOR THE CURRENT YEAR:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Dated: , 1997
----------------------------
------------------------------------------
------------------------------------------
PLEASE DATE AND SIGN ABOVE exactly as name
appears at the left, indicating, where
appropriate, official position or
representative capacity. If stock is held in
joint tenancy, each joint owner should sign.
