As filed with the Securities and Exchange Commission on June 9, 1999
Registration No. 333-______
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------------------
INSIGNIA SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1656308
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5025 CHESHIRE LANE
PLYMOUTH, MN 55446
(Address of Principal Executive Offices and zip code)
----------------------------
INSIGNIA SYSTEMS, INC.
1990 STOCK PLAN
(Full title of the Plan)
----------------------------
Scott F. Drill Copy to:
Chief Executive Officer and President
Insignia Systems, Inc. Richard D. McNeil
5025 Cheshire Lane Kristin L. Johnson
Plymouth, MN 55446 Lindquist & Vennum P.L.L.P.
(612) 392-6200 4200 IDS Center
(Name, address, including zip code and 80 South Eighth Street
telephone number of agent for service) Minneapolis, MN 55402
(612) 371-3211
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered Per Share(1) Price(1) Fee
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 250,000 shares(2) $1.75(1) $437,500 $122
$.01 par value
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(c) and (h) and based upon the closing price of the
Company's Common Stock on the Nasdaq SmallCap Market System on June 7,
1999.
(2) 520,000 shares were registered on Form S-8 (No. 33-47003) on April 6, 1992,
100,000 shares were registered on Form S-8 (No. 33-92376) on May 16, 1995,
300,000 shares were registered on Form S-8 (No. 333-43781) on January 6,
1998, and 600,000 shares were registered on Form S-8 (No. 333-59709) on
July 23, 1998.
<PAGE>
INCORPORATION OF CONTENTS OF REGISTRATION STATEMENT
BY REFERENCE
A Registration Statement on Form S-8 (File No. 33-47003) was filed with the
Securities and Exchange Commission on April 6, 1992 covering the registration of
520,000 shares initially authorized for issuance under the Company's 1990 Stock
Plan (the "Plan"). Registration Statements on Form S-8 (File Nos. 33-92376, 333-
43781 and 333-59706) were filed with the Securities and Exchange Commission on
May 16, 1995, January 6, 1998 and July 23, 1998 covering the registration of an
additional 100,000, 300,000 and 600,000 shares, respectively, authorized for
issuance under the Plan. Pursuant to General Instruction E of Form S-8, this
Registration Statement is being filed to register the additional 250,000 shares
authorized under the Plan. An amendment to the Plan to increase the number of
shares under the Plan by 250,000 shares was authorized by the Company's Board of
Directors and was approved by the shareholders on May 20, 1999. This
Registration Statement should also be considered a post-effective amendment to
the prior Registration Statements. The contents of the prior Registration
Statements are incorporated herein by reference.
PART I
Pursuant to the Note to Part I of Form S-8, the information required by
Items 1 and 2 of Form S-8 is not filed as a part of this Registration Statement.
PART II
Item 3. Incorporation of Documents by Reference.
The following documents filed with the Securities and Exchange Commission
are hereby incorporated by reference herein:
(a) The Annual Report of the Company on Form 10-K for the year ended
December 31, 1998.
(b) The Definitive Proxy Statement dated April 12, 1999 for the Annual
Meeting of Shareholders held on May 20, 1999.
(c) The Quarterly Report of the Company on Form 10-Q for the quarter ended
March 31, 1998.
(d) The description of the Company's capital stock as set forth in the
Company's Form S-18 Registration Statement dated June 17, 1991 (File No.
33-40765-C), including any amendment or report filed for the purpose of updating
such description.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934, prior to the filing
of a post-effective amendment which indicates that all securities offered have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement and to be
a part hereof from the date of filing of such documents.
Item 4. Description of Securities.
Not applicable.
-2-
<PAGE>
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
The Company's Bylaws provide that the Company shall indemnify its officers,
directors, committee members and employees in accordance with, and to the
fullest extent permitted by, the provisions of the Minnesota Business
Corporation Act, as it may be amended from time to time.
Section 302A.521 of the Minnesota Business Corporation Act provides that a
corporation shall indemnify a person made or threatened to be made a party to a
proceeding by reason of the former or present official capacity of the person
against judgments, penalties, fines, including, without limitation, excise taxes
assessed against the person with respect to an employee benefit plan,
settlements, and reasonable expenses, including attorneys' fees and
disbursements, incurred by the person in connection with the proceeding, if,
with respect to the acts or omissions of the person complained of in the
proceeding, the person:
(1) Has not been indemnified by another organization or employee
benefit plan for the same judgments, penalties, fines, including,
without limitation, excise taxes assessed against the person with
respect to an employee benefit plan, settlements, and reasonable
expenses, including attorneys' fees and disbursements, incurred by
the person in connection with the proceeding with respect to the
same acts or omissions;
(2) Acted in good faith;
(3) Received no improper personal benefit and section 302A.255
(Director Conflicts of Interest), if applicable, has been
satisfied;
(4) In the case of a criminal proceeding, had no reasonable cause to
believe the conduct was unlawful; and
(5) In the case of acts or omissions occurring in the official
capacity described in subdivision 1, paragraph (c), clause (1) or
(2), reasonably believed that the conduct was in the best
interests of the corporation, or in the case of acts or omissions
occurring in the official capacity described in subdivision 1,
paragraph (c), clause (3), reasonably believed that the conduct
was not opposed to the best interests of the corporation. If the
person's acts or omissions complained of in the proceeding relate
to conduct as a director, officer, trustee, employee, or agent of
an employee benefit plan, the conduct is not considered to be
opposed to the best interests of the corporation if the person
reasonably believed that the conduct was in the best interests of
the participants or beneficiaries of the employee benefit plan.
Item 7. Exemption from Registration Claimed.
Not applicable.
-3-
<PAGE>
Item 8. Exhibits.
Exhibit
-------
4.1 Insignia Systems, Inc. 1990 Stock Plan, as amended
5.1 Opinion of Lindquist & Vennum P.L.L.P.
23.1 Consent of Lindquist & Vennum (included in Exhibit 5.1)
23.2 Consent of Ernst & Young, LLP independent public accountants
24.1 Power of Attorney (set forth on the signature page hereof)
Item 9. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represents a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3 or Form S-8 and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section
-4-
<PAGE>
15(d) of the Securities Exchange Act of 1934 that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
director, officer, or controlling person connected with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
-5-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Minneapolis, State of Minnesota, on June 8, 1999.
INSIGNIA SYSTEMS, INC.
By /s/ Scott F. Drill
------------------------------------------------------
Scott F. Drill, President and Chief Executive Officer
POWER OF ATTORNEY
The undersigned officers and directors of Insignia Systems, Inc. hereby
constitute and appoint Scott Drill and John Whisnant, or either of them, with
power to act one without the other, our true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for us and in our
stead, in any and all capacities to sign any and all amendments (including
post-effective amendments) to this Registration Statement and all documents
relating thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing necessary or advisable to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities indicated on the 8th day of June, 1999.
<TABLE>
<CAPTION>
Signature Title
- --------- -----
<S> <C>
/s/ G.L. Hoffman Chairman and Secretary
- -----------------------------
G.L. Hoffman
/s/ Scott F. Drill President, Chief Executive
- ----------------------------- Officer and Director (principal executive officer)
Scott F. Drill
/s/ John R. Whisnant Vice President, Finance (principal financial and accounting
- ----------------------------- officer)
John R. Whisnant
/s/ Gary L. Vars Executive Vice President and Director
- -----------------------------
Gary L. Vars
/s/ Donald E. Schultz Director
- -----------------------------
Donald E. Schultz
/s/ Erwin A. Kelen Director
- -----------------------------
Erwin A. Kelen
/s/ Gordon F. Stofer Director
- -----------------------------
Gordon F. Stofer
/s/ Frank D. Trestman Director
- -----------------------------
Frank D. Trestman
</TABLE>
Exhibit 4.1
INSIGNIA SYSTEMS, INC.
1990 STOCK PLAN
SECTION 1. General Purpose of Plan; Definitions.
The name of this Plan is The Insignia Systems, Inc. 1990 Stock Plan
(the "Plan"). The purpose of the Plan is to enable Insignia Systems, Inc. (the
"Company") and its Subsidiaries to retain and attract executives and other key
employees and consultants who contribute to the Company's success by their
ability, ingenuity and industry, and to enable such individuals to participate
in the long-term success and growth of the Company by giving them a proprietary
interest in the Company.
For purposes of the Plan, the following terms shall be defined as set
forth below:
a. "Board" means the Board of Directors of the Company.
b. "Cause" means a felony conviction of a participant or the
failure of a participant to contest prosecution for a felony,
or a participant's willful misconduct or dishonesty, any of
which is directly and materially harmful to the business or
reputation of the Company.
c. "Code" means the Internal Revenue Code of 1986, as amended.
d. "Committee" means the Committee referred to in Section 2 of
the Plan. If at any time no Committee shall be in office, then
the functions of the Committee specified in the Plan shall be
exercised by the Board.
e. "Company" means Insignia Systems, Inc., a corporation
organized under the laws of the State of Minnesota (or any
successor corporation).
f. "Disability" means permanent and total disability as
determined by the Committee.
g. "Disinterested Person" shall have the meaning set forth in
Rule 16b-3(d)(3) as promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, or any
successor definition adopted by the Commission.
h. "Early Retirement" means retirement, with consent of the
Committee at the time of retirement, from active employment
with the Company and any Subsidiary or Parent Corporation of
the Company.
<PAGE>
i. "Fair Market Value" means the value of the Stock on a given
date as determined by the Committee in accordance with the
applicable Treasury Department regulations under Section 422A
of the Code with respect to "incentive stock options."
j. "Incentive Stock Option" means any Stock Option intended to be
and designated as an "Incentive Stock Option" within the
meaning of Section 422A of the Code.
k. "Non-Qualified Stock Option" means any Stock Option that is
not an Incentive Stock Option, and is intended to be and is
designated as a "Non-Qualified Stock Option."
l. "Normal Retirement" means retirement from active employment
with the Company and any Subsidiary or Parent Corporation of
the Company on or after age 60.
m. "Parent Corporation" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the
Company if each of the corporations (other than the Company)
owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations
in the chain.
n. "Restricted Stock" means an award of shares of Stock that are
subject to restrictions under Section 6 below.
o. "Retirement" means Normal Retirement or Early Retirement.
p. "Stock" means the Common Stock, $.01 par value per share, of
the Company.
q. "Stock Option" means any option to purchase shares of Stock
granted pursuant to Section 5 below.
r. "Subsidiary" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company
if each of the corporations (other than the last corporation
in the unbroken chain) owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one
of the other corporations in the chain.
SECTION 2. Administration.
The Plan shall be administered by the Board of Directors or by a
Committee of not less than three Disinterested Persons, who shall be appointed
by the Board of Directors of the Company and who shall serve at the pleasure of
the Board.
The Committee shall have the power and authority to grant to eligible
employees and consultants of the Company (which consultants shall serve pursuant
to a written agreement with the Company), pursuant to the terms of the Plan: (i)
Stock Options, or (ii) Restricted Stock.
<PAGE>
In particular, the Committee shall have the authority:
(i) to select the officers and other key employees of the
Company and its Subsidiaries and consultants to whom
Stock Options and/or Restricted Stock awards may from
time to time be granted hereunder;
(ii) to determine whether and to what extent Incentive
Stock Options, Non-Qualified Stock Options or
Restricted Stock awards, or a combination of the
foregoing, are to be granted hereunder;
(iii) to determine the number of shares to be covered by each such
award granted hereunder;
(iv) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award
granted hereunder (including, but not limited to, any
restriction on any Stock Option or other award and/or
the shares of Stock relating thereto); and
(v) to determine whether, to what extent and under what
circumstances Stock and other amounts payable with
respect to an award under this Plan shall be deferred
either automatically or at the election of the
participant.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable; to interpret the terms and provisions of the
Plan and any award issued under the Plan (and any agreements relating thereto);
and to otherwise supervise the administration of the Plan. The Committee may
delegate its authority to officers of the Company for the purpose of selecting
employees who are not officers of the Company for purposes of (i) above.
All decisions made by the Committee pursuant to the provisions of the
Plan shall be final and binding on all persons, including the Company and Plan
participants.
SECTION 3. Stock Subject to Plan.
The total number of shares of Stock reserved and available for
distribution under the Plan shall be 1,770,000. Such shares may consist, in
whole or in part, of authorized and unissued shares.
If any shares that have been optioned ceased to be subject to Options,
or if any shares subject to any Restricted Stock award granted hereunder are
forfeited or such award otherwise terminates without a payment being made to the
participant, such shares shall again be available for distribution in connection
with future awards under the Plan.
<PAGE>
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, other change in corporate structure affecting
the Stock, or spin-off or other distribution of assets to shareholders, such
substitution or adjustment shall be made in the aggregate number of shares
reserved for issuance under the Plan, in the number and option price of shares
subject to outstanding options granted under the Plan, and in the number of
shares subject to Restricted Stock awards granted under the Plan as may be
determined to be appropriate by the Committee, in its sole discretion, provided
that the number of shares subject to any award shall always be a whole number.
SECTION 4. Eligibility.
Officers, consultants (which consultants shall serve pursuant to a
written agreement with the Company) and other key employees of the Company and
Subsidiaries who are responsible for or contribute to the management, growth
and/or profitability of the business of the Company and its Subsidiaries are
eligible to be granted Stock Options or Restricted Stock awards under the Plan.
The optionees and participants under the Plan shall be selected from time to
time by the Committee, in its sole discretion, from among those eligible, and
the Committee shall determine, in its sole discretion, the number of shares
covered by each award.
SECTION 5. Stock Options.
Any Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve.
The Stock Options granted under the Plan may be of two types: (i)
Incentive Stock Options and (ii) Non-Qualified Stock Options. No Incentive Stock
Options shall be granted under the Plan more than ten years after the Plan is
adopted.
The Committee shall have the authority to grant any optionee Incentive
Stock Options, Non-Qualified Stock Options, or both types of options. To the
extent that any option does not qualify as an Incentive Stock Option, it shall
constitute a separate Non-Qualified Stock Option.
Anything in the Plan to the contrary notwithstanding, no term of this
Plan relating to Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be so
exercised, so as to disqualify either the Plan or any Incentive Stock Option
under Section 422A of the Code. The preceding sentence shall not preclude any
modification or amendment to an outstanding Incentive Stock Option, whether or
not such modification or amendment results in disqualification of such Option as
an Incentive Stock Option, provided the optionee consents in writing to the
modification or amendment.
Options granted under the Plan shall be subject to the following terms
and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable.
<PAGE>
(a) Option Price. The option price per share of Stock purchasable under
a Stock Option shall be determined by the Committee at the time of grant and
may, except as provided in this paragraph, be less than the Fair Market Value of
the Stock on the date of the grant of the Option. In no event shall the option
price per share of Stock purchasable under an Incentive Stock Option be less
than 100% of the Fair Market Value of the Stock on the date of the grant of the
option. If an employee owns or is deemed to own (by reason of the attribution
rules applicable under Section 425(d) of the Code) more than 10% of the combined
voting power of all classes of stock of the Company or any Parent Corporation or
Subsidiary and an Incentive Stock Option is granted to such employee, the option
price shall be no less than 110% of the Fair Market Value of the Stock on the
date the option is granted. No Non-Qualified Stock Option shall have an option
price less than 85% of the Fair Market Value of the Stock on the date of grant.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than ten
years after the date the option is granted. If an employee owns or is deemed to
own (by reason of the attribution rules of Section 425(d) of the Code) more than
10% of the combined voting power of all classes of stock of the Company or any
Parent Corporation or Subsidiary and an Incentive Stock Option is granted to
such employee, the term of such option shall be no more than five years from the
date of grant.
(c) Exercisability. Stock Options shall be exercisable at such time or
times as determined by the Committee at or after grant. If the Committee
provides, in its discretion, that any option is exercisable only in
installments, the Committee may waive such installment exercise provisions at
any time.
(d) Method of Exercise. Stock Options may be exercised in whole or in
part at any time during the option period by giving written notice of exercise
to the Company specifying the number of shares to be purchased. Such notice
shall be accompanied by payment in full of the purchase price, either by
certified or bank check, or by any other form of legal consideration deemed
sufficient by the Committee and consistent with the Plan's purpose and
applicable law, including promissory notes or a properly executed exercise
notice together with irrevocable instructions to a broker acceptable to the
Company to promptly deliver to the Company the amount of sale or loan proceeds
to pay the exercise price. As determined by the Committee, in its sole
discretion, payment in full or in part may also be made in the form of
unrestricted Stock already owned by the optionee or, in the case of the exercise
of a Non-Qualified Stock Option or Restricted Stock subject to an award
hereunder (based, in each case, on the Fair Market Value of the Stock on the
date the option is exercised, as determined by the Committee); provided,
however, that, in the case of an Incentive Stock Option, the right to make a
payment in the form of already owned shares may be authorized only at the time
the option is granted, and provided further that in the event payment is made in
the form of shares of Restricted Stock, the optionee will receive a portion of
the option shares in the form of, and in an amount equal to, the Restricted
Stock award tendered as payment by the optionee. If the terms of an option so
permit, an optionee may elect to pay all or part of the option exercise price by
having the Company withhold from the shares of Stock that would otherwise be
issued upon exercise that number of shares of Stock having a Fair Market Value
equal to the aggregate option
<PAGE>
exercise price for the shares with respect to which such election is made. No
shares of Stock shall be issued until full payment therefor has been made. An
optionee shall generally have the rights to dividends and other rights of a
shareholder with respect to shares subject to the option when the optionee has
given written notice of exercise, has paid in full for such shares, and, if
requested, has given the representation described in paragraph (a) of Section
10.
(e) Non-transferability of Options. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of descent
and distribution, and all Stock Options shall be exercisable, during the
optionee's lifetime, only by the optionee.
(f) Termination by Death. If an optionee's employment by the Company
and any Subsidiary or Parent Corporation terminates by reason of death, the
Stock Option may thereafter be immediately exercised, to the extent then
exercisable (or on such accelerated basis as the Committee shall determine at or
after grant), by the legal representative of the estate or by the legatee of the
optionee under the will of the optionee, for a period of three years (or such
shorter period as the Committee shall specify at grant) from the date of such
death or until the expiration of the stated term of the option, whichever period
is shorter.
(g) Termination by Reason of Disability. If an optionee's employment by
the Company and any Subsidiary or Parent Corporation terminates by reason of
Disability, any Stock Option held by such optionee may thereafter be exercised,
to the extent it was exercisable at the time of termination due to Disability
(or on such accelerated basis as the Committee shall determine at or after
grant), but may not be exercised after three years (or such shorter period as
the Committee shall specify at grant) from the date of such termination of
employment or the expiration of the stated term of the option, whichever period
is the shorter. In the event of termination of employment by reason of
Disability, if an Incentive Stock Option is exercised after the expiration of
the exercise periods that apply for purposes of Section 422A of the Code, the
option will thereafter be treated as a Non-Qualified Stock Option.
(h) Termination by Reason of Retirement. If an optionee's employment by
the Company and any Subsidiary or Parent Corporation terminates by reason of
Retirement, any Stock Option held by such optionee may thereafter be exercised
to the extent it was exercisable at the time of such Retirement, but may not be
exercised after three years (or such shorter period as Committee shall specify
at grant) from the date of such termination of employment or the expiration of
the stated term of the option, whichever period is the shorter. In the event of
termination of employment by reason of Retirement, if an Incentive Stock Option
is exercised after the expiration of the exercise periods that apply for
purposes of Section 422A of the Code, the option will thereafter be treated as a
Non-Qualified Stock Option.
(i) Other Termination. Unless otherwise determined by the Committee, if
an optionee's employment by the Company and any Subsidiary or Parent Corporation
terminates for any reason other than death, Disability or Retirement, the Stock
Option shall thereupon terminate, except that the option may be exercised to the
extent it was exercisable at such termination for the lesser of three
<PAGE>
months or the balance of the option's term if the optionee is involuntarily
terminated without Cause by the Company and any Subsidiary or Parent
Corporation.
(j) Annual Limit on Incentive Stock Options. The aggregate Fair Market
Value (determined as of the time the Option is granted) of the Common Stock with
respect to which an Incentive Stock Option under this Plan or any other plan of
the Company and any Subsidiary or Parent Corporation is exercisable for the
first time by an optionee during any calendar year shall not exceed $100,000.
(k) Automatic Grant to Non-Employee Directors. Each individual who is
serving as a member of the Board and who is not an employee of the Company, any
Parent Corporation or any Subsidiary (a "Non-Employee Director") shall be
automatically awarded, on the date this paragraph is adopted by the Board as a
part of the Plan, a Non-Qualified Stock Option, which shall be fully vested, to
purchase 5,000 shares of the Company's Common Stock at an exercise price equal
to 100% of the Fair Market Value of the Common Stock on such date and which
expires five years after the date of grant. An individual who is first elected
or appointed or who is re-elected as a Non-Employee Director at any time
thereafter shall receive a similar automatic grant, at the time of election or
appointment or re-election to the Board, of a Non-Qualified Stock Option, which
shall be fully vested, to purchase 5,000 shares of the Company's Common Stock at
an exercise price equal to 100% of the Fair Market Value of the Common Stock on
such date and which expires five years after the date of grant.
SECTION 6. Restricted Stock.
(a) Administration. Shares of Restricted Stock may be issued either
alone or in addition to other awards granted under the Plan. The Committee shall
determine the officers and key employees of the Company and Subsidiaries to
whom, and the time or times at which, grants of Restricted Stock will be made,
the number of shares to be awarded, the time or times within which such awards
may be subject to forfeiture, and all other conditions of the awards. The
Committee may also condition the grant of Restricted Stock upon the attainment
of specified performance goals. The provisions of Restricted Stock awards need
not be the same with respect to each recipient.
(b) Awards and Certificates. The prospective recipient of an award of
shares of Restricted Stock shall not have any rights with respect to such award,
unless and until such recipient has executed an agreement evidencing the award
and has delivered a fully executed copy thereof to the Company, and has
otherwise complied with the then applicable terms and conditions.
(i) Each participant shall be issued a stock certificate in
respect of shares of Restricted Stock awarded under the Plan. Such
certificate shall be registered in the name of the participant, and
shall bear an appropriate legend referring to the terms, conditions,
and restrictions applicable to such award, substantially in the
following form:
<PAGE>
"The transferability of this certificate and the shares of
stock represented hereby are subject to the terms and
conditions (including forfeiture) of The Insignia Systems,
Inc. 1990 Stock Plan and an Agreement entered into between the
registered owner and the Company. Copies of such Plan and
Agreement are on file in the offices of the Company."
(ii) The Committee shall require that the stock certificates
evidencing such shares be held in custody by the Company until the
restrictions thereon shall have lapsed, and that, as a condition of any
Restricted Stock award, the participant shall have delivered a stock
power, endorsed in blank, relating to the Stock covered by such award.
(c) Restrictions and Conditions. The shares of Restricted Stock awarded
pursuant to the Plan shall be subject to the following restrictions and
conditions:
(i) Subject to the provisions of this Plan and the award
agreement, during a period set by the Committee commencing with the
date of such award (the "Restriction Period"), the participant shall
not be permitted to sell, transfer, pledge or assign shares of
Restricted Stock awarded under the Plan. Within these limits, the
Committee may provide for the lapse of such restrictions in
installments where deemed appropriate.
(ii) Except as provided in paragraph (c)(i) of this Section 6,
the participant shall have, with respect to the shares of Restricted
Stock, all of the rights of a shareholder of the Company, including the
right to vote the shares and the right to receive any cash dividends.
The Committee, in its sole discretion, may permit or require the
payment of cash dividends to be deferred and, if the Committee so
determines, reinvested in additional shares of Restricted Stock (to the
extent shares are available under Section 3 and subject to paragraph
(f) of Section 10). Certificates for shares of unrestricted Stock shall
be delivered to the grantee promptly after, and only after, the period
of forfeiture shall have expired without forfeiture in respect of such
shares of Restricted Stock.
(iii) Subject to the provisions of the award agreement and
paragraph (c)(iv) of this Section 6, upon termination of employment for
any reason during the Restriction Period, all shares still subject to
restriction shall be forfeited by the participant.
(iv) In the event of special hardship circumstances of a
participant whose employment is terminated (other than for Cause),
including death, Disability or Retirement, or in the event of an
unforeseeable emergency of a participant still in service, the
Committee may, in its sole discretion, when it finds that a waiver
would be in the best interest of the Company, waive in whole or in part
any or all remaining restrictions with respect to such participant's
shares of Restricted Stock.
<PAGE>
SECTION 7. Transfer, Leave of Absence, etc.
For purposes of the Plan, the following events shall not be deemed a
termination of employment:
(a) a transfer of an employee from the Company to a Parent Corporation
or Subsidiary, or from a Parent Corporation or Subsidiary to the Company, or
from one Subsidiary to another;
(b) a leave of absence, approved in writing by the Committee, for
military service or sickness, or for any other purpose approved by the Company
if the period of such leave does not exceed ninety (90) days (or such longer
period as the Committee may approve, in its sole discretion); and
(c) a leave of absence in excess of ninety (90) days, approved in
writing by the Committee, but only if the employee's right to reemployment is
guaranteed either by a statute or by contract, and provided that, in the case of
any leave of absence, the employee returns to work within 30 days after the end
of such leave.
SECTION 8. Amendments and Termination.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made (i) which would impair the rights
of an optionee or participant under a Stock Option, Restricted Stock or other
Stock-based award theretofore granted, without the optionee's or participant's
consent, or (ii) which without the approval of the stockholders of the Company
would cause the Plan to no longer comply with Rule 16b-3 under the Securities
Exchange Act of 1934, Section 422A of the Code or any other regulatory
requirements.
The Committee may amend the terms of any award or option theretofore
granted, prospectively or retroactively, but, subject to Section 3 above, no
such amendment shall impair the rights of any holder without his consent.
Without limiting the generality of the foregoing, the Committee (or if there is
no Committee, then the Board) shall have the authority to accelerate the vesting
of any or all outstanding options or awards in the event of any actual or
threatened change in control of the Company. The Committee may also substitute
new Stock Options for previously granted options, including previously granted
options having higher option prices.
SECTION 9. Unfunded Status of Plan.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing contained herein shall give any
such participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan
<PAGE>
to deliver Stock or payments in lieu of or with respect to awards hereunder,
provided, however, that the existence of such trusts or other arrangements is
consistent with the unfunded status of the Plan.
SECTION 10. General Provisions.
(a) The Committee may require each person purchasing shares pursuant to
a Stock Option under the Plan to represent to and agree with the Company in
writing that the optionee is acquiring the shares without a view to distribution
thereof. The certificates for such shares may include any legend which the
Committee deems appropriate to reflect any restrictions on transfer.
All certificates for shares of Stock delivered under the Plan pursuant
to any Restricted Stock or other Stock-based awards shall be subject to such
stock-transfer orders and other restrictions as the Committee may deem advisable
under the rules, regulations, and other requirements of the Securities and
Exchange Commission, any stock exchange upon which the Stock is then listed, and
any applicable Federal or state securities laws, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
(b) Subject to paragraph (d) below, recipients of Restricted Stock and
other Stock-based awards under the Plan (other than Stock Options) are not
required to make any payment or provide consideration other than the rendering
of services.
(c) Nothing contained in this Plan shall prevent the Board of Directors
from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases. The adoption
of the Plan shall not confer upon any employee of the Company or any Subsidiary
any right to continued employment with the Company or a Subsidiary, as the case
may be, nor shall it interfere in any way with the right of the Company or a
Subsidiary to terminate the employment of any of its employees at any time.
(d) Each participant shall, no later than the date as of which any part
of the value of an award first becomes includible as compensation in the gross
income of the participant for Federal income tax purposes, pay to the Company,
or make arrangements satisfactory to the Committee regarding payment of, any
Federal, state, or local taxes of any kind required by law to be withheld with
respect to the award. The obligations of the Company under the Plan shall be
conditional on such payment or arrangements and the Company and Subsidiaries
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the participant. With respect to
any award under the Plan, if the terms of such award so permit, a participant
may elect by written notice to the Company to satisfy part or all of the
withholding tax requirements associated with the award by (i) authorizing the
Company to retain from the number of shares of Stock that would otherwise be
deliverable to the participant, or (ii) delivering to the Company from shares of
Stock already owned by the participant, that number of shares having an
aggregate Fair Market Value equal to part or all of the tax payable by the
participant under this
<PAGE>
Section 10(d). Any such election shall be in accordance with, and subject to,
applicable tax and securities laws, regulations and rulings.
(e) At the time of grant, the Committee may provide in connection with
any grant made under this Plan that the shares of Stock received as a result of
such grant shall be subject to a repurchase right in favor of the Company,
pursuant to which the participant shall be required to offer to the Company upon
termination of employment for any reason any shares that the participant
acquired under the Plan, with the price being the then Fair Market Value of the
Stock or, in the case of a termination for Cause, an amount equal to the cash
consideration paid for the Stock, subject to such other terms and conditions as
the Committee may specify at the time of grant. The Committee may, at the time
of the grant of an award under the Plan, provide the Company with the right to
repurchase, or require the forfeiture of, shares of Stock acquired pursuant to
the Plan by any participant who, at any time within one year after termination
of employment with the Company, directly or indirectly competes with, or is
employed by a competitor of, the Company.
(f) The reinvestment of dividends in additional Restricted Stock at the
time of any dividend payment shall only be permissible if the Committee (or the
Company's chief financial officer) certifies in writing that under Section 3
sufficient shares are available for such reinvestment (taking into account then
outstanding Stock Options and other Plan awards).
SECTION 11. Effective Date of Plan.
The Plan shall be effective on the date it is approved by a vote of the
holders of a majority of the Stock present and entitled to vote at a meeting of
the Company's shareholders.
Exhibit 5.1
June 8, 1999
Insignia Systems, Inc.
5025 Cheshire Lane
Plymouth, MN 55446
Re: OPINION OF COUNSEL AS TO LEGALITY OF 250,000 SHARES OF COMMON
STOCK TO BE REGISTERED UNDER THE SECURITIES ACT OF 1933
Ladies and Gentlemen:
This opinion is furnished in connection with the registration under the
Securities Act of 1933 on Form S-8 of 250,000 shares of Common Stock, $.01 par
value, of Insignia Systems, Inc. (the "Company") offered to officers,
consultants and other key employees of the Company pursuant to the Insignia
Systems, Inc. 1990 Stock Plan (the "Plan"). These shares are in addition to the
1,520,000 shares offered pursuant to the Plan and registered on previous
Registration Statements on Form S-8 (File Nos. 33-47003, 33-92376, 333-43781and
333-59709).
As counsel for the Company, we advise you that it is our opinion, based
on our familiarity with the affairs of the Company and upon our examination of
pertinent documents, that the 250,000 shares of Common Stock to be offered by
the Company under the Plan, will, when paid for and issued, be validly issued
and lawfully outstanding, fully paid and nonassessable shares of Common Stock of
the Company.
The undersigned hereby consents to the filing of this opinion with the
Securities and Exchange Commission as an Exhibit to the Registration Statement
with respect to said shares of Common Stock under the Securities Act of 1933.
Very truly yours,
LINDQUIST & VENNUM P.L.L.P.
/s/ Lindquist & Vennum P.L.L.P.
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement Form
S-8 pertaining to the Insignia Systems, Inc. 1990 Stock Plan, as amended, of our
report dated February 5, 1999, with respect to the financial statements and
schedule of Insignia Systems, Inc. included in its Annual Report on Form 10-K
for the year ended December 31, 1998, filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Minneapolis, Minnesota
June 3, 1999
