SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
INSIGNIA SYSTEMS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
<PAGE>
[LOGO]
INSIGNIA(R) SYSTEMS, INC.
5025 Cheshire Lane North * Plymouth, MN 55446
----------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1999
- --------------------------------------------------------------------------------
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 20, 1999 at 9:00 a.m., Central Daylight Savings Time, at the
Radisson Hotel and Conference Center, 3131 Campus Drive, Plymouth, Minnesota,
for the following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected;
2. To ratify an amendment to the Company's Stock Plan to increase by
250,000 shares the number of shares available under the Plan;
3. To ratify the appointment of Ernst & Young LLP as independent
auditors for the Company for the current year; and
4. 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 29,
1999 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
Plymouth, Minnesota
April 12, 1999
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.
<PAGE>
[LOGO]
INSIGNIA(R) 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 20, 1999 or
any adjournment thereof (the "Meeting"). The mailing of this Proxy Statement to
stockholders commenced on or about April 12, 1999.
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 5025
Cheshire Lane North, Plymouth, Minnetonka, Minnesota 55446.
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 8,651,496 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 29, 1999 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.
Page 1
<PAGE>
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, 1999 (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, 1999.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature Percent of
Beneficial Owner of Beneficial Ownership Shares
- ----------------------------------------------- ----------------------- ----------
<S> <C> <C>
Perkins Capital Management, Inc. 1,919,600(1) 21.2%
708 East Lake Street
Wayzata, MN 55391
W. Robert Ramsdell 1,091,567(2) 12.0%
474 Paseo Miramar
Pacific Palisades, CA 90272
G. L. Hoffman 847,900(3) 9.9%
5025 Cheshire Lane North
Plymouth, MN 55446
Scott F. Drill 214,500(4) 2.5%
5025 Cheshire Lane North
Plymouth, MN 55446
Erwin A. Kelen 155,000(5) 1.8%
Kelen Ventures
5500 Wayzata Blvd., Suite 1045
Golden Valley, MN 55416
Don E. Schultz 35,000(6) .4%
Agora, Inc.
1007 Church Street, Suite 105
Evanston, IL 60201
Gordon F. Stofer 88,774(7) 1.0%
Cherry Tree Ventures III
Centennial Lakes Office Park
7601 France Ave. So., Suite 225
Edina, MN 55435
Frank D. Trestman 155,000(8) 1.8%
Trestman Enterprises
5500 Wayzata Blvd., Suite 1045
Golden Valley, MN 55416
John R. Whisnant 47,419(9) .6%
5025 Cheshire Lane North
Plymouth, MN 55446
</TABLE>
Page 2
<PAGE>
<TABLE>
<S> <C> <C>
All current Directors and Officers as a Group 1,592,970(10) 18.6%
(8 persons)
</TABLE>
- ------------------------------------------------
(1) Includes 457,500 shares subject to warrants which are currently
exercisable.
(2) Includes 280,000 shares subject to warrants which are currently
exercisable.
(3) Includes 62,500 shares subject to options and warrants which are currently
exercisable.
(4) Includes 214,500 shares subject to options and warrants which are
currently exercisable.
(5) Includes 105,000 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.
(6) Includes 35,000 shares subject to options and warrants which are currently
exercisable.
(7) Consists of 5,000 shares subject to options which are currently
exercisable by Mr. Stofer and 75,000 shares held by Cherry Tree Ventures
III, over which Mr. Stofer, as the Managing General Partner, has shared
voting and investment power.
(8) Includes 55,000 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.
(9) Includes 20,000 shares subject to options and warrants which are currently
exercisable.
(10) Includes 573,877 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.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table shows, for the fiscal years ending December 31,
1996, 1997 and 1998, the cash compensation paid by the Company, as well as
certain compensation paid or accrued for such years, to Scott Drill, the
Company's President and Chief Executive Officer, and to each other executive
officer of the Company (together with Mr. Drill, the "Named Executives") whose
total cash compensation exceeded $100,000 during Fiscal 1996, 1997 and 1998 in
all capacities in which they served:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
Fiscal Year ------------------- -----------------
Ended Stock Options All Other
Name and Position December 31, Salary Bonus and Awards Compensation(1)
- --------------------------- ------------ ---------- ------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
G. L. Hoffman 1998 $160,000 -- -- $6,409
Chairman and Secretary 1997 $158,800 -- -- $6,375
1996 $132,300 -- 50,000(2) $6,286
Scott Drill 1998 $169,743 -- 400,000(3) $1,125
President and CEO 1997 N/A N/A N/A N/A
1996 N/A N/A N/A N/A
John R. Whisnant 1998 $100,000 -- 35,000(4) $6,286
Vice President, Finance 1997 $92,500 -- -- $6,285
1996 $85,000 -- -- $6,072
</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 400,000 shares at $1.07 per share.
(4) Includes a stock option to purchase 35,000 shares at $1.75 per share.
Page 3
<PAGE>
STOCK OPTIONS
The Company's Stock Plan (the "Plan") provides for the granting of
stock options or restricted stock awards to key employees, consultants and
directors. An aggregate of 1,520,000 shares of common stock have been issued or
reserved for issuance under the Plan, as amended by the Board of Directors on
February 24, 1998, when 600,000 shares were added to the Plan.
As of February 28, 1999, there are options outstanding under the
Plan for 980,000 shares. During the last three years (January 1, 1996 to
December 31, 1998), the Company has granted under the Plan options for a total
of 745,000 shares to executive officers at an average price of $1.34 per share,
options for a total of 45,000 shares to directors who are not executive officers
at an average price of $2.70 per share and options for a total of 399,400 shares
to other employees and to consultants at exercise prices ranging from $1.28 to
$3.625 per share. No options were exercised in 1996. In 1997 options to purchase
13,768 shares were exercised by current and former employees. In 1998 options to
purchase 40,066 shares were exercised by current and former employees. As of
February 28, 1999, options covering 735,343 shares have terminated with exercise
prices ranging from $.50 to $4.50 per share.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
% of Total Options
Granted to
Number of Employees in Exercise
Shares Covered Fiscal Year Ended Price Expiration
Name by Option Grants Dec. 31, 1998 Per Share Date
- -------------------- ---------------- ------------------ ----------- ------------
<S> <C> <C> <C> <C>
Scott Drill 400,000(1) 53% $1.063(2) 2/24/2003
John R. Whisnant 35,000(3) 5% $1.75(2) 5/21/2003
</TABLE>
- --------------------
(1) As of December 31, 1998 options for 166,000 shares had become exercisable
and the options for the remaining 234,000 shares vest over time or upon
the occurance of certain events.
(2) Reflects the market value of the Company's Common Stock on the date of the
grants.
(3) The option is exercisable for 8,750 shares after one year, 8,750 shares
after two years, 8,750 shares after three years, and 8,750 shares after
four 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, 1998 as of December 31, 1997(1)
Acquired Value ----------------------------- -----------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ----------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
G. L. Hoffman -- -- 33,333 16,667 -- --
Scott Drill -- -- 166,000 234,000 $41,500 $58,500
John R. Whisnant -- -- 15,000 35,000 -- --
</TABLE>
- --------------------
(1) Based on the market price of $1.31 per share for the Company's Common
Stock on December 31, 1998.
Page 4
<PAGE>
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 one late report in February
1999 concerning four transactions in March, 1998.
ITEM I
ELECTION OF DIRECTORS
The Board of Directors has fixed at seven 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.
<TABLE>
<CAPTION>
Name and Age Occupation Director Since
- ---------------------- ----------------------------------------------- --------------
<S> <C> <C>
G. L. Hoffman (49) Chairman and Secretary of the Company 1990
Scott F. Drill (46) President and Chief Executive Officer 1998
Gary L. Vars (58) Executive Vice President and General Manager 1999
Erwin A. Kelen (63) Private Investor, Consultant 1990
Don E. Schultz (65) Professor, Consultant 1997
Gordon F. Stofer (52) Managing General Partner, Venture Capital Firm 1990
Frank D. Trestman (64) Private Investor, Consultant 1990
</TABLE>
BUSINESS EXPERIENCE
G. L. Hoffman, age 49, a co-founder of the Company, has been the
Chairman and Secretary of the Company since it was incorporated in January 1990
and was President and Chief Executive Officer from January 1990 until February
1998. 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.
Scott F. Drill, age 46, has been President and Chief Executive
Officer of the Company since February 24, 1998. Since May 1996, Mr. Drill was a
partner in Minnesota Management Partners (MMP), a venture capital firm located
in Minneapolis, Minnesota. He remains a partner in MMP, which completed
investment of its capital in January 1998. From 1983 through March 1996 Mr.
Drill was President and Chief Executive Officer of Varitronic Systems and
Chairman since 1990. Prior to starting Varitronics, Mr. Drill held senior
management positions in sales and marketing at Conklin Company and Kroy, Inc.
Page 5
<PAGE>
Gary L. Vars, age 58, has been Executive Vice President and General
Manager of the POPS Division since September 15, 1998. Prior to joining Insignia
Systems, Mr. Vars spent 22 years as a marketing and business development
consultant to Fortune 500 companies. From 1966 to 1976 Mr. Vars held various
management positions at the Pillsbury Co., including Director of Marketing and
New Product Development, Grocery Products Division.
Erwin A. Kelen, age 63, 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.
Don E. Schultz, age 65, has been a Director of the Company since
September 1997. Since 1977 Mr. Schultz has been a professor at Northwestern
University. Mr. Schultz is also President of the consulting firm, Agora, Inc.
and is a Senior Partner in Targetbase Marketing International and The Targetbase
Institute.
Gordon F. Stofer, age 52, 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 Verdant Brands, Inc. (formerly
Ringer Corporation), a lawn care products manufacturer and distributor in Eden
Prairie, Minnesota; and Coda Music Technology, Inc., a developer and marketer of
proprietary music technology products located in Eden Prairie, Minnesota.
Frank D. Trestman, age 64, 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 1998.
The Board of Directors met four times during 1998. 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.
Page 6
<PAGE>
ITEM II
AMENDMENT TO STOCK PLAN
The Board of Directors has adopted, subject to shareholder approval,
an amendment to the Company's Stock Plan (the "Plan"). The amendment provides
for an increase in the total number of shares available under the Plan by
250,000 shares to a total of 1,770,000 shares. As of February 28, 1999, a total
of 423,557 shares had been issued upon the exercise of options under the Plan
and there were options outstanding to purchase 980,000 shares under the Plan.
Therefore, without shareholder approval of the amendment to the Plan, the
Company believes that the remaining shares will be insufficient to cover future
option grants and awards. The Board of Directors deemed it prudent to increase
the shares available for grant under the Plan by 250,000 shares to facilitate
future option grants and restricted stock awards.
SUMMARY OF THE PLAN
The Plan provides for the granting of stock options or restricted
stock awards to key employees, consultants and directors. An aggregate of
1,520,000 shares of Common Stock have been issued or reserved for issuance under
the Plan, as amended by the Board of Directors. Shares covered by expired or
terminated stock options and forfeited shares of restricted stock may be used
for subsequent awards under the Plan.
The Plan is administered by the Company's Board of Directors or, if
the Board so determines, by a committee of "disinterested persons" as defined in
the Plan who are appointed by the Board. The Board or the committee has the
power to select recipients, make awards of stock options or restricted shares,
and adopt regulations and procedures for the Plan.
The Plan permits the award of both stock options that qualify as
"incentive stock options" under the Internal Revenue Code and options that do
not so qualify ("non-qualified options"). Incentive stock options differ as to
their tax treatment and are subject to a number of limitations under the
Internal Revenue Code. The exercise price of non-qualified options may not be
less than 85% of the fair market value of the stock on the date the option is
granted. Incentive stock options may not be granted with an exercise price less
than 100% of the fair market value of the Common Stock on the date of the grant
(or, for an option granted to a person holding more than 10% of the Company's
voting stock, at less than 110% of fair market value).
Following an optionee's death, disability or retirement, the
optionee's options may be exercised by the optionee (or the optionee's legal
representative or legatee) for a period of three years or until the expiration
of the stated term of the option, whichever is less. If an optionee's employment
with the Company terminates for any other reason, such optionee's options will
immediately terminate, except if such optionee is involuntarily terminated
without "cause," in which even the optionee's vested options are exercisable for
the lesser of three months or the remaining term of the option. Options may not
be transferred other than by will or the laws of descent and distribution, and
during the lifetime of an optionee may be exercised only by the optionee.
The term of each option, which is fixed by the committee or the
Board at the time of grant, may not exceed ten years from the date the option is
granted (except that an incentive option granted to a person holding more than
10% of the Company's voting stock may be exercisable only for five years).
Options may be made exercisable in whole or in installments, as determined by
the committee or the Board. The vesting of options may be accelerated upon a
change in control of the Company.
The committee or the Board may also grant restrictive stock awards
under the Plan that result in shares of Common Stock being issued to a
participant subject to restrictions against disposition during a restricted
period established by the committee or the Board. The committee or the Board may
condition the grant of restricted stock upon the attainment of specified
performance goals or service requirements. The
Page 7
<PAGE>
provisions of restricted stock awards need not be the same with respect to each
recipient. The shares of restricted stock awarded under the Plan are to be held
in custody by the Company until the restrictions thereon have lapsed. During the
period of the restrictions, a participant has the right to vote the shares of
restricted stock and to receive dividends and distributions unless the committee
or the Board requires such dividends and distributions to be held by the Company
subject to the same restrictions as the restricted stock. If a participant
terminates employment during the period of the restrictions, all shares still
subject to restrictions will be forfeited and returned to the Company, subject
to the right of the committee or the Board to waive such restrictions in the
event of a participant's death, total disability, retirement or under special
circumstances approved by the committee or the Board.
GRANTS OF OPTIONS
As of February 28, 1999, there are options outstanding under the
Plan for 980,000 shares. During the last three years (January 1, 1996 to
December 31, 1998), the Company has granted under the Plan options for a total
of 745,000 shares to executive officers at an average price of $1.34 per share,
options for a total of 45,000 shares to directors who are not executive officers
at an average price of $2.70 per share and options for a total of 399,400 shares
to other employees and to consultants at exercise prices ranging from $1.28 to
$3.625 per share. No options were exercised in 1996. In 1997 options to purchase
13,768 shares were exercised by current and former employees. In 1998 options to
purchase 40,066 shares were exercised by current and former employees. As of
February 28, 1999, options covering 735,343 shares have terminated with exercise
prices ranging from $.50 to $4.50 per share.
FEDERAL INCOME TAX TREATMENT
Generally the grant of either an incentive stock option or a
non-qualified option under the Plan will not cause recognition of income by the
optionee or entitle the Company to an income tax deduction. Upon exercise of an
option the tax treatment will generally vary depending on whether the option is
an incentive stock option or a non-qualified option. The exercise of an
incentive stock option will generally not cause recognition of income by the
optionee or entitle the Company to a tax deduction. However, the amount by which
the fair market value of the shares obtained exceeds the exercise price on the
date of exercise is an item of tax preference to the optionee for alternative
minimum tax purposes.
The exercise of a non-qualified option will generally cause the
optionee to recognize taxable income equal to the difference between the
exercise price and the fair market value of the stock obtained on the day of
exercise. The Company must then in most cases obtain from the optionee funds to
meet tax withholding requirements arising from that income recognition. The
exercise of a non-qualified option will also generally entitle the Company to an
income tax deduction equal to the amount of the income recognized by the
exercising option holder.
The foregoing discussion of the federal income tax treatment of
options is necessarily general and any option holder should consult his tax
advisor as to his own particular circumstances and applicable laws and
regulations.
SHAREHOLDER APPROVAL
Approval of the amendment to the Plan requires the affirmative vote
of a majority of the shares present and entitled to vote at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
APPROVAL OF THE PROPOSED AMENDMENT TO THE PLAN.
Page 8
<PAGE>
ITEM III
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, 1999. 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, 1999) is expected to be held on or about May 18, 2000 and proxy
materials in connection with that meeting are expected to be mailed on or about
April 6, 2000. 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, 1999.
The Company's Annual Report on Form 10-K for the year ended December
31, 1998 is being mailed to shareholders with this Proxy Statement.
By Order of the Board of Directors
G. L. Hoffman
Secretary
Page 9
<PAGE>
[LOGO]
INSIGNIA(R) SYSTEMS, INC.
ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, MAY 20, 1999
9:00 A.M.
RADISSON HOTEL AND CONFERENCE CENTER
3131 CAMPUS DRIVE
PLYMOUTH, MN 55441
[LOGO]
INSIGNIA(R) SYSTEMS, INC.
5025 CHESHIRE LANE NORTH, PLYMOUTH, MN 55446 PROXY
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THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING
ON MAY 20, 1999.
The shares of stock you hold in your account will be voted as you specify below.
IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED "FOR" ITEMS 1, 2 AND 3.
By signing the proxy, you revoke all prior proxies and appoint Scott F. Drill
and John R. Whisnant, and each of them, with full power of substitution, to vote
your shares on the matters shown on the reverse side and any other matters which
may come before the Annual Meeting and all adjournments.
SEE REVERSE FOR VOTING INSTRUCTIONS.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
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1. Election of Directors: 01 G. L. Hoffman [ ] Vote FOR [ ] Vote WITHHELD
02 Scott F. Drill all nominees from all nominees
03 Gary L. Vars
04 Erwin A. Kelen
05 Don E. Schultz
06 Gordon F. Stofer
07 Frank D. Trestman
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY ________________________________________________
INDICATED NOMINEE, WRITE THE NUMBER(S) OF THE | |
NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) |________________________________________________|
2. To ratify an amendment to the Company's Stock Plan
to increase the number of shares available under
the plan. [ ] For [ ] Against [ ] Abstain
3. To ratify the appointment of Ernst & Young LLP as
independent auditors for the current year. [ ] For [ ] Against [ ] Abstain
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE
VOTED FOR EACH PROPOSAL.
Address Change? Mark Box [ ] Indicate changes below: Dated: _________________________, 1999.
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Signature(s) in Box
Please sign exactly as your name(s) appear on Proxy.
If held in joint tenancy, all persons must sign.
Trustees, administrators, etc., should include title
and authority. Corporations should provide full name
of corporation and title of authorized officer
signing the proxy.
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