Document:

ex_10-2.htm

PROMISSORY NOTE

 

	 $65,500.00	 Louisville, Kentucky 

 November 10, 2011

 

FOR VALUE RECEIVED, NTS/VIRGINIA DEVELOPMENT COMPANY, a Virginia corporation (the “Borrower”), with an address at 10172 Linn Station Road, Louisville, Kentucky 40223, promises to pay to the order of NTS FINANCIAL PARTNERSHIP, a Kentucky general partnership (the “Lender”), in lawful money of the United States of America in immediately available funds at its offices located at 10172 Linn Station Road, Louisville, Kentucky 40223, or at such other location as the Lender may designate from time to time, the principal sum of SIXTY FIVE THOUSAND FIVE HUNDRED DOLLARS AND NO CENTS ($65,500.00) (the “Loan”), together with interest accruing on the outstanding principal balance from the date hereof, as provided below:

1.           Interest Rate.  The principal balance of the Loan will bear interest at a fixed rate per annum (calculated on the basis of the actual number of days that principal is outstanding over a year of 360 days) equal to five and thirty-four one-hundredths percent (5.34%) per annum (the “Fixed Rate”).

In no event will the rate of interest hereunder exceed the maximum rate allowed by law.

2.           Payment Terms.  Interest shall be due and payable commencing on the first day of each month beginning December 1, 2011 until December 31, 2011 on which date all outstanding principal and accrued interest shall be due and payable in full (the “Maturity Date”).  Payments received will be applied to charges, fees and expenses (including attorneys’ fees), accrued interest and principal in any order the Lender may choose, in its sole discretion.

3.           Late Payments; Default Rate.  If a payment is more than 15 days late, the Borrower shall also pay to the Lender a late charge equal to 5% of the unpaid portion of the payment or $100, whichever is greater (the “Late Charge”).  Such 15 day period shall not be construed in any way to extend the due date of any such payment.  Upon maturity, whether by acceleration, demand or otherwise, and at the option of the Lender upon the occurrence of any Event of Default (as hereinafter defined) and during the continuance thereof, this Note shall bear interest at a rate per annum (calculated on the basis of the actual number of days that principal is outstanding over a year of 360 days) which shall be four percentage points (4%) in excess of the Fixed Rate in effect from time to time but not more than the maximum rate allowed by law (the “Default Rate”).  The Default Rate shall continue to apply whether or not judgment shall be entered on this Note.  Both the Late Charge and the Default Rate are imposed as liquidated damages for the purpose of defraying the Lender’s expenses incident to the handling of delinquent payments, but are in addition to, and not in lieu of, the Lender’s exercise of any rights and remedies hereunder, under the Loan Documents or under applicable law, and any fees and expenses of any agents or attorneys which the Lender may employ.  In addition, the Default Rate reflects the increased credit risk to the Lender of carrying a loan that is in default.  The Borrower agrees that the Late Charge and Default Rate are reasonable forecasts of just compensation for

  

  

  

anticipated and actual harm incurred by the Lender, and that the actual harm incurred by the Lender cannot be estimated with certainty and without difficulty.

4.           Prepayment.  The indebtedness evidenced by this Note may be prepaid in whole or in part at any time without penalty or premium.

5.           Events of Default.  The occurrence of any of the following events will be deemed to be an “Event of Default” under this Note:

(i)           Borrower fails to make any payment when due hereunder, or fails to otherwise comply with any term or provision of this Note, and such failure is not cured within any applicable cure period or fails to comply;

(ii)           The filing by or against Borrower of any proceeding in bankruptcy, receivership, insolvency, reorganization, liquidation, conservatorship or similar proceeding (and, in the case of any such proceeding instituted against any Obligor, such proceeding is not dismissed or stayed within 30 days of the commencement thereof);

(iii)           Any assignment by Borrower for the benefit of creditors, or any levy, garnishment, attachment or similar proceeding is instituted against any property of Borrower;

(iv)           A judgment or judgments are entered against Borrower, Borrower defaults in the payment of any other debts or there is a material adverse change in the financial condition of Borrower, or the Lender in good faith believes the prospects for repayment of this Note have been impaired; and

(v)           Any material statement made to the Lender about Borrower, or about Borrower’s financial condition, or about any collateral securing this Note is false or misleading.

Upon the occurrence of an Event of Default: (a) in an Event of Default specified in clauses (ii) or (iii) above shall occur, the outstanding principal balance and accrued interest hereunder together with any additional amounts payable hereunder shall be immediately due and payable without demand or notice of any kind; (b) if any other Event of Default shall occur, the outstanding principal balance and accrued interest hereunder together with any additional amounts payable hereunder, at the option of the Lender and without demand or notice of any kind may be accelerated and become immediately due and payable; (c) at the option of the Lender, this Note will bear interest at the Default Rate from the date of the occurrence of the Event of Default; and (d) the Lender may exercise from time to time any of the rights and remedies available to the Lender under applicable law.

6.           Indemnity.  The Borrower agrees to indemnify each of the Lender, each legal entity, if any, who controls, is controlled by or is under common control with the Lender, and each of their respective directors, officers and employees (the “Indemnified Parties”), and to hold each Indemnified Party harmless from and against any and all claims, damages, losses, liabilities and expenses (including all fees and charges of internal or external counsel with whom any Indemnified Party may consult and all expenses of litigation and preparation therefor) which any

  

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Indemnified Party may incur or which may be asserted against any Indemnified Party by any person, entity or governmental authority (including any person or entity claiming derivatively on behalf of the Borrower), in connection with or arising out of or relating to the matters referred to in this Note whether (a) arising from or incurred in connection with any breach of a representation, warranty or covenant by the Borrower, or (b) arising out of or resulting from any suit, action, claim, proceeding or governmental investigation, pending or threatened, whether based on statute, regulation or order, or tort, or contract or otherwise, before any court or governmental authority; provided, however, that the foregoing indemnity agreement shall not apply to any claims, damages, losses, liabilities and expenses solely attributable to an Indemnified Party’s gross negligence or willful misconduct. The indemnity agreement contained in this Section shall survive the termination of this Note, payment of any amounts hereunder and the assignment of any rights hereunder.  The Borrower may participate at its expense in the defense of any such auction or claim.

7.           Miscellaneous. All notices, demands, requests, consents, approvals and other communications required or permitted hereunder (“Notices”) must be in writing (except as may be agreed otherwise above with respect to borrowing requests) and will be effective upon receipt. Notices may be given in any manner to which the parties may separately agree, including electronic mail.  Without limiting the foregoing, first-class mail, facsimile transmission and commercial courier service are hereby agreed to as acceptable methods for giving Notices.  Regardless of the manner in which provided, Notices may be sent to a party’s address as set forth above or to such other address as any party may give to the other for such purpose in accordance with this section.  No delay or omission on the Lender’s part to exercise any right or power arising hereunder will impair any such right or power.  The Lender’s rights and remedies hereunder are cumulative and not exclusive of any other rights or remedies which the Lender may have under other agreements, at law or in equity.  No modification, amendment or waiver of, or consent to any departure by the Borrower from, any provision of this Note will be effective unless made in a writing signed by the Lender, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.  The Borrower agrees to pay on demand, to the extent permitted by law, all costs and expenses incurred by the Lender in the enforcement of its rights in this Note and in any security therefor, including without limitation reasonable fees and expenses of the Lender’s counsel.  If any provision of this Note is found to be invalid, illegal or unenforceable in any respect by a court, all the other provisions of this Note will remain in full force and effect.  The Borrower and all other makers and indorsers of this Note hereby forever waive presentment, protest, notice of dishonor and notice of non-payment.  The Borrower also waives all defenses based on suretyship or impairment of collateral.  If this Notice is executed by more than one Borrower, the obligations of such persons or entities hereunder will be joint and several.  This Note shall bind the Borrower and its heirs, executors, administrators, successors and assigns, and the benefits hereof shall inure to the benefit of the Lender and its successors and assigns; provided, however, that the Borrower may not assign this Note in whole or in part without the Lender’s written consent and the Lender at any time may assign this Note in whole or in part.

This Note has been delivered to and accepted by the Lender and will be deemed to be made in the State where the Lender’s office indicated above is located.  This Note will be interpreted and the rights and liabilities of the Lender and the Borrower determined in

  

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accordance with the laws of the State where the Lender’s office indicated above is located, excluding its conflict of laws rules. The Borrower hereby irrevocably consents to the exclusive jurisdiction of any state or federal court in the county or judicial district where the Lender’s office indicated above is located; provided that nothing contained in this Note will prevent the Lender from bringing any action, enforcing any award or judgment or exercising any rights against the Borrower individually, against any security or against any property of the Borrower within any other county, state or other foreign or domestic jurisdiction.  The Borrower acknowledges and agrees that the venue provided above is the most convenient forum for both the Lender and the Borrower. The Borrower waives any objection to venue and any objection based on a more convenient forum in any action instituted under this Note.

8.           Waiver of Jury Trial.  The Borrower irrevocably waives any and all right it may have to a trial by jury in any action, proceeding or claim of any nature relating to this Note, any documents executed in connection with this Notice or any transaction contemplated in any of such documents.  The Borrower acknowledges that the foregoing waiver is knowing and voluntary.

The Borrower acknowledges that it has read and understands all of the provisions of this Note, including the waiver of jury trial, and has been advised by counsel as necessary or appropriate.

WITNESS the due execution hereof by an authorized officer of Borrower, with the intent to be legally bound hereby.

 

	 	
NTS/VIRGINIA DEVELOPMENT COMPANY,

a Virginia corporation

 

 

 

By:         /s/ Gregory A. Wells         

Name:   Gregory A. Wells

Title:     Executive Vice President

 

 

4Exhibit 4.1

INSIGNIA SYSTEMS, INC.

2003 INCENTIVE STOCK OPTION PLAN

(Adopted by Board of Directors February 24,
2003)

(Approved by Shareholders on May 20, 2003)

(Amended through February 22, 2011)

 

 

1.        Purpose.
The purpose of this Plan is to provide a means whereby Insignia Systems, Inc. (the “Company”), may be able, by granting
options to purchase stock in the Company, to attract, retain and motivate capable and loyal employees, directors, consultants and
advisors of the Company and its subsidiaries, for the benefit of the Company and its shareholders. Both incentive stock options
which qualify for favorable tax treatment under Section 422 of the Internal Revenue Code (the “Code”), and nonqualified
stock options which do not qualify for favorable tax treatment, may be granted under the Plan.

 

2.        Reservation
of Shares. A total of 3,175,000 shares of the authorized but unissued shares of Common Stock of the Company, par value
$.01 per share, is reserved for issue upon the exercise of options granted under the Plan. If any option expires or terminates
for any reason without having been exercised in full, the unpurchased shares covered thereby shall become available for additional
options which may be issued to persons eligible under the Plan so long as it remains in effect. Shares reserved for issue as provided
herein shall cease to be reserved upon termination of the Plan.

 

3.        Administration.
The Plan shall be administered by the Compensation Committee of the Board of Directors (the “Committee”). The Committee
shall be appointed by the Board of Directors and shall be comprised solely of two or more “non-employee directors”
within the meaning of SEC Rule 16b-3. Each member of the Committee shall also be an “outside director” within the meaning
of Code Section 162(m). The Committee shall have the full power to construe and interpret the Plan and to establish and amend rules
and regulations for its administration. The Committee shall determine which persons shall be granted options hereunder, the number
of shares for which each option shall be granted, the types of options to be granted, and any limitations on the exercise of options
in addition to those imposed by this Plan. The Committee may also waive any restrictions on the exercise of outstanding options
and approve amendments to outstanding options, provided there is no conflict with the terms of the Plan. The Committee shall apply
such criteria as it deems appropriate in determining the persons to whom options are granted and the number of shares to be covered
by each option.

 

4.        Eligibility.
An option may be granted to any employee, director, consultant or advisor of the Company or its subsidiaries, except that no consultant
or advisor shall be granted options in connection with the offer and sale of securities in a capital raising transaction on behalf
of the Company. The maximum number of shares for which any person may be granted options under the Plan in any year is limited
to 100,000 shares.

 

5.        Option Grants
To Outside Directors. Each outside director of the Company shall automatically be granted an option to purchase 10,000
shares of Common Stock on the date first appointed or elected as a director. Each outside director shall also automatically be
granted an option to purchase 5,000 shares of Common Stock on (a) the date of each subsequent annual meeting of the shareholders,
provided the outside director is either reelected or continues to serve as an outside director, or (b) the anniversary of the prior
year’s grant in any year in which there is no meeting of the shareholders. In no event shall a director receive more than
one grant in any fiscal year.

 

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The period within which
an option granted to an outside director must be exercised shall be the earlier of (a) ten years from the date of grant, or (b)
90 days after the director ceases to be a director for any reason. Options granted to outside directors shall be immediately exercisable
in full when granted.

 

6.        Exercise
Price. The per share exercise price for each option shall be determined by the Committee at the time of grant, provided
that the per share exercise price for any incentive stock option, and any option granted to an outside director, shall be not less
than the fair market value of the Common Stock on the date the option is granted. In making such determination, the Committee shall
rely on market quotations, if available, but if not available, upon independent appraisals of the stock or such other information
deemed appropriate by the Committee.

 

7.        Changes in
Present Stock. In the event of a recapitalization, merger, consolidation, reorganization, stock dividend, stock split or
other change in capitalization affecting the Company’s present capital stock, appropriate adjustment may be made by the Committee
in the number and kind of shares and the option price of shares which are or may become subject to options granted or to be granted
hereunder.

 

8.        Exercise
of Option. Receipt by the Company of a written notice from an optionee, specifying the number of shares to be purchased,
and accompanied by payment of the purchase price for such shares, shall constitute exercise of the option as to such shares. The
date of receipt by the Company of such written notice shall be the date of exercise of the option. The Company may accept payment
from a broker and, upon receipt of written instructions from the optionee, deliver the purchased shares to the broker.

 

9.        Option Agreement
Provisions. Each option granted under the Plan shall be evidenced by a Stock Option Agreement executed by the Company and
the optionee, and shall be subject to the following terms and conditions, and such other terms and conditions as may be prescribed
by the Committee:

 

	 	(a)    	Payment.  The full purchase price of the shares acquired upon
    exercise of an option shall be paid in cash, certified or cashier’s check, or in the form of Common Stock of the Company
    with a market value equal to the option exercise price and free and clear of all liens and encumbrances.
	 	 	The Committee in its sole discretion may also permit the “cashless exercise” of an option.  In the event of a cashless exercise, the optionee shall surrender the option to the Company, and the Company shall issue the optionee the number of shares determined as follows:
	 	 	X = 	Y (A-B) /A where:
	 	 	X = 	the number of shares to be issued to the optionee.
	 	 	Y = 	the number of shares with respect to which the option is being exercised.

 

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	 	         	A = 	 the closing sale price of the Common Stock on the date of exercise, or in the absence thereof, the fair market value on the date of exercise.
	 	 	B = 	the option exercise price.

 

	 	(b)    	Exercise Period.  The period within which an option must be
    exercised shall be fixed by the Committee, and shall not exceed ten years from the date of grant for an incentive stock option. 
    The Committee may provide that an option will vest and become exercisable upon the completion of specified periods of employment,
    or the attainment of specified performance goals.  To the extent exercisable, an option may be exercised in whole or
    in part.  Outstanding unvested options shall become immediately exercisable in full in the event the Company is acquired
    by merger, purchase of all or substantially all of the Company’s assets, or purchase of a majority of the outstanding
    stock by a single party or a group acting in concert.
	 	(c)	Rights of Optionee Before Exercise.  The holder of an
    option shall not have the rights of a shareholder with respect to the shares covered by his or her option until such shares
    have been issued to him or her upon exercise of the option.
	 	(d)	No Rights to Continued Employment.  Nothing in the Plan
    or in any Stock Option Agreement entered into pursuant hereto shall be construed to confer upon any optionee any right to
    continue in the employ of his or her employer or interfere in any way with the right of his or her employer to terminate his
    or her employment at any time.
	 	(e)	Death of Optionee.  Upon the death of an optionee, the
    option, or any portion thereof, may be exercised to the extent the optionee was entitled to do so at the time of the optionee’s
    death, by his or her executor or administrator or other person entitled by law to the optionee’s rights under the option,
    at any time within one year subsequent to the date of death.  The option shall automatically expire one year after the
    optionee’s death to the extent not exercised.
	 	(f)	Disability of Optionee.  If an optionee is an employee
    of the Company or its subsidiaries, and if the optionee’s employment is terminated due to his or her disability, the
    optionee may, within one year of such termination, exercise any unexercised portion of the option to the extent he or she
    was entitled to do so at the time of such termination.  The option shall automatically expire one year after such termination
    to the extent not exercised.
	 	(g)	Other Termination of Employment.  If an optionee is
    an employee of the Company or its subsidiaries, and if the optionee’s employment is terminated other than by death,
    disability, or conduct which is contrary to the best interests of his or her employer, the optionee may, within 90 days of
    such termination, exercise any unexercised portion of the option to the extent he or she was entitled to do so at the time
    of such termination.  The option shall automatically expire 90 days after such termination to the extent not exercised. 
    If the optionee’s employment is terminated by his or her employer for conduct which is contrary to the best interests
    of his or her employer, or if the optionee violates any written nondisclosure agreement with his or her employer, as determined
    in either case by the optionee’s employer in its sole discretion, the unexercised portion of the optionee’s option
    shall automatically expire at that time.  Inter-company transfers and approved leaves of absence for up to 90 days shall
    not be considered termination of employment.

 

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	 	(h)    	Non-transferability of Option.  No option
    shall be transferable by the optionee other than by will or by the laws of descent and distribution, and each option shall
    be exercisable during the optionee’s lifetime only by the optionee.  No option may be attached or subject to levy
    by an optionee’s creditors.
	 	(i)	Date of Grant.  The date on which the Committee approves
    the granting of an option shall be considered the date on which such option is granted.

 

10.       Additional
Provisions for Incentive Stock Options.

 

	 	(a)	Dollar Limit.  Each option granted to an employee shall constitute
    an incentive stock option, provided that no more than $100,000 of such options (based upon the fair market value of the underlying
    shares as of the date of grant) can first become exercisable for any employee in any calendar year.  To the extent an
    option grant exceeds the $100,000 limitation, it shall constitute a non-qualified stock option.  Each Stock Option Agreement
    with an employee shall specify the extent to which it is an incentive and/or non-qualified stock option.  For purposes
    of applying the $100,000 limitation, options granted under this Plan and all other incentive stock option plans of the Company
    and any parent or subsidiary corporation shall be included.
	 	(b)	Ten Percent Shareholders.  No incentive stock option
    shall be granted to any employee who at the time directly or indirectly owns more than 10 percent of the combined voting power
    of all classes of stock of the Company or of a parent or subsidiary corporation, unless the exercise price is not less than
    110 percent of the fair market value of such stock on the date of grant, and unless the option is not exercisable more than
    five years after the date of grant.

 

11.       Restrictions
on Transfer. During any period in which the offering of the shares under the Plan is not registered under federal and state
securities laws, an optionee shall agree in his or her option agreement that he or she is acquiring shares under the Plan for investment
purposes, and not for resale, and that the shares cannot be resold or otherwise transferred except pursuant to registration or
unless, in the opinion of counsel for the Company, registration is not required.

 

Any restrictions upon shares
acquired upon exercise of an option pursuant to the Plan and the Stock Option Agreement shall be binding upon the optionee, and
his or her heirs, executors, and administrators. Any stock certificate issued under the Plan which is subject to restrictions shall
be endorsed so as to refer to the restrictions on transfer imposed by the Plan, and by applicable securities laws.

 

 

 

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12.       Withholding
of Taxes. The Company shall make such provisions and take such steps as it may deem necessary or appropriate for the withholding
of any taxes that the Company is required by any law or regulation to withhold in connection with any option including, but not
limited to, withholding a portion of the shares issuable on exercise of an option, or requiring the optionee to pay to the Company,
in cash, an amount sufficient to cover the Company’s withholding obligations.

 

13.       Duration of
Plan. The Plan shall terminate ten years after the date of its adoption by the Board of Directors, unless sooner terminated
by issuance of all shares reserved for issuance hereunder, or by the Board of Directors pursuant to Section 13. No option shall
be granted under the Plan after such termination date.

 

14.       Termination
or Amendment of the Plan. The Board of Directors may at any time terminate the Plan, or make such modifications to the
Plan as it shall deem advisable. No termination or amendment of the Plan may, without the consent of the optionee to whom any option
shall previously have been granted, adversely affect the rights of such optionee under such option.

 

15.       Shareholder
Approval. The Board of Directors shall submit the Plan to the shareholders for their approval within 12 months of the date
of its adoption by the Board. Options granted prior to such approval are contingent on receipt of such approval, and shall automatically
lapse if such approval is not granted. The Board shall also submit any amendments to the shareholders for approval if required
by applicable law or regulation.

 

16.       Interpretation.
The Plan shall be interpreted in accordance with Minnesota law.

 

 

 

 

 

 

 

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