Document:

EXHIBIT 4.2

                                                                       EXHIBIT A
                       REGISTRATION RIGHTS AGREEMENT

     This Registration Rights Agreement (this "Agreement") is made and entered
into as of December 1, 2004, by and among Insignia Systems, Inc., a Minnesota
corporation (the "Company"), and the purchasers signatory hereto (each such
purchaser, a "Purchaser" and collectively, the "Purchasers").

     This Agreement is made pursuant to the Securities Purchase Agreement, dated
as of the date hereof among the Company and the Purchasers (the "Purchase
Agreement").

     The Company and the Purchasers hereby agree as follows:

     1. Definitions. Capitalized terms used and not otherwise defined herein
that are defined in the Purchase Agreement shall have the meanings given such
terms in the Purchase Agreement. As used in this Agreement, the following terms
shall have the following meanings:

          "Advice" shall have the meaning set forth in Section 6(d).

          "Effectiveness Date" means, with respect to the Registration Statement
     required to be filed hereunder, the earlier of (a) the 90th calendar day
     following the date of the Purchase Agreement and (b) the fifth Trading Day
     following the date on which the Company is notified by the Commission that
     the Registration Statement will not be reviewed or is no longer subject to
     further review and comments.

          "Effectiveness Period" shall have the meaning set forth in Section
     2(a).

          "Event" shall have the meaning set forth in Section 2(b).

          "Event Date" shall have the meaning set forth in Section 2(b).

          "Filing Date" means, with respect to the Registration Statement
     required to be filed hereunder, the 30th calendar day following the date of
     the Purchase Agreement.

          "Holder" or "Holders" means the holder or holders, as the case may be,
     from time to time of Registrable Securities.

          "Indemnified Party" shall have the meaning set forth in Section 5(c).

          "Indemnifying Party" shall have the meaning set forth in Section 5(c).

          "Losses" shall have the meaning set forth in Section 5(a).

          "Plan of Distribution" shall have the meaning set forth in Section
     2(a).

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          "Proceeding" means an action, claim, suit, investigation or proceeding
     (including, without limitation, an investigation or partial proceeding,
     such as a deposition), whether commenced or threatened.

          "Prospectus" means the prospectus included in the Registration
     Statement (including, without limitation, a prospectus that includes any
     information previously omitted from a prospectus filed as part of an
     effective registration statement in reliance upon Rule 430A promulgated
     under the Securities Act), as amended or supplemented by any prospectus
     supplement, with respect to the terms of the offering of any portion of the
     Registrable Securities covered by the Registration Statement, and all other
     amendments and supplements to the Prospectus, including post-effective
     amendments, and all material incorporated by reference or deemed to be
     incorporated by reference in such Prospectus.

          "Registrable Securities" means all of the Shares together with any
     shares of Common Stock issued or issuable upon any stock split, dividend or
     other distribution, recapitalization or similar event with respect to the
     foregoing.

          "Registration Statement" means the registration statements required to
     be filed hereunder, including (in each case) the Prospectus, amendments and
     supplements to the registration statement or Prospectus, including pre- and
     post-effective amendments, all exhibits thereto, and all material
     incorporated by reference or deemed to be incorporated by reference in the
     registration statement.

          "Rule 415" means Rule 415 promulgated by the Commission pursuant to
     the Securities Act, as such Rule may be amended from time to time, or any
     similar rule or regulation hereafter adopted by the Commission having
     substantially the same purpose and effect as such Rule.

          "Rule 424" means Rule 424 promulgated by the Commission pursuant to
     the Securities Act, as such Rule may be amended from time to time, or any
     similar rule or regulation hereafter adopted by the Commission having
     substantially the same purpose and effect as such Rule.

          "Selling Shareholder Questionnaire" shall have the meaning set forth
     in Section 3(a).

     2. Registration.

          (a) On or prior to the Filing Date, the Company shall prepare and file
     with the Commission the Registration Statement covering the resale of all
     of the Registrable Securities for an offering to be made on a continuous
     basis pursuant to Rule 415. The Registration Statement required hereunder
     shall be on Form S-3 (except if the Company is not then eligible to
     register for resale the Registrable Securities on Form S-3, in which case
     the Registration shall be on another appropriate form in accordance
     herewith). The Registration Statement required hereunder shall contain
     (except if otherwise directed by the Holders) substantially the "Plan of
     Distribution" attached hereto as Annex A. Subject to the terms of this
     Agreement, the Company shall use its best efforts to cause the Registration
     Statement to be declared effective under the Securities Act as promptly as

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     possible after the filing thereof, but in any event not later than the
     Effectiveness Date, and shall use its best efforts to keep the Registration
     Statement continuously effective under the Securities Act until the date
     when all Registrable Securities covered by the Registration Statement have
     been sold or may be sold without volume restrictions pursuant to Rule
     144(k) as determined by the counsel to the Company pursuant to a written
     opinion letter to such effect, addressed and acceptable to the Company's
     transfer agent and the affected Holders (the "Effectiveness Period").

          (b) If: (i) a Registration Statement is not filed on or prior to the
     Filing Date (if the Company files a Registration Statement without
     affording the Holder the opportunity to review and comment on the same as
     required by Section 3(a), the Company shall not be deemed to have satisfied
     this clause (i)), or (ii) the Company fails to file with the Commission a
     request for acceleration in accordance with Rule 461 promulgated under the
     Securities Act, within five Trading Days of the date that the Company is
     notified (orally or in writing, whichever is earlier) by the Commission
     that a Registration Statement will not be "reviewed," or is not subject to
     further review, or (iii) prior to the date when such Registration Statement
     is first declared effective by the Commission, the Company fails to file a
     pre-effective amendment and otherwise respond in writing to comments made
     by the Commission in respect of such Registration Statement within 10
     calendar days after the receipt of comments by or notice from the
     Commission that such amendment is required in order for a Registration
     Statement to be declared effective, or (iv) a Registration Statement filed
     or required to be filed hereunder is not declared effective by the
     Commission on or before the Effectiveness Date, or (v) after a Registration
     Statement is first declared effective by the Commission, it ceases for any
     reason to remain continuously effective as to all Registrable Securities
     for which it is required to be effective, or the Holders are not permitted
     to utilize the Prospectus therein to resell such Registrable Securities,
     for in any such case 10 consecutive calendar days but no more than an
     aggregate of 15 calendar days during any 12 month period (which need not be
     consecutive Trading Days)(any such failure or breach being referred to as
     an "Event," and for purposes of clause (i) or (iv) the date on which such
     Event occurs, or for purposes of clause (ii) the date on which such five
     Trading Day period is exceeded, or for purposes of clause (iii) the date
     which such 10 calendar day period is exceeded, or for purposes of clause
     (v) the date on which such 10 or 15 calendar day period, as applicable, is
     exceeded being referred to as "Event Date"), then in addition to any other
     rights the Holders may have hereunder or under applicable law, on each such
     Event Date and, on each monthly anniversary of each such Event Date (if the
     applicable Event shall not have been cured by such date) until the
     applicable Event is cured, the Company shall pay to each Holder an amount
     in cash, as partial liquidated damages and not as a penalty, equal to 1% of
     the aggregate purchase price paid by such Holder pursuant to the Purchase
     Agreement for any Registrable Securities then held by such Holder. If the
     Company fails to pay any partial liquidated damages pursuant to this
     Section in full within seven days after the date payable, the Company will
     pay interest thereon at a rate of 18% per annum (or such lesser maximum
     amount that is permitted to be paid by applicable law) to the Holder,
     accruing daily from the date such partial liquidated damages are due until
     such amounts, plus all such interest thereon, are paid in full. The partial
     liquidated damages pursuant to the terms hereof shall apply on a daily
     pro-rata basis for any portion of a month prior to the cure of an Event.

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     3. Registration Procedures

     In connection with the Company's registration obligations hereunder, the
Company shall:

          (a) Not less than five Trading Days prior to the filing of the
     Registration Statement or any related Prospectus or any amendment or
     supplement thereto, the Company shall, (i) furnish to the Holders copies of
     all such documents proposed to be filed (including documents incorporated
     or deemed incorporated by reference to the extent requested by such Person)
     which documents will be subject to the review of such Holders, and (ii)
     cause its officers and directors, counsel and independent certified public
     accountants to respond to such inquiries as shall be necessary, in the
     reasonable opinion of respective counsel to conduct a reasonable
     investigation within the meaning of the Securities Act. The Company shall
     not file the Registration Statement or any such Prospectus or any
     amendments or supplements thereto to which the Holders of a majority of the
     Registrable Securities shall reasonably object in good faith, provided that
     the Company is notified of such objection in writing no later than 5
     Trading Days after the Holders have been so furnished copies of such
     documents. Each Holder agrees to furnish to the Company a completed
     Questionnaire in the form attached to this Agreement as Annex B (a "Selling
     Shareholder Questionnaire") not less than two Trading Days prior to the
     Filing Date or by the end of the fourth Trading Day following the date on
     which such Holder receives draft materials in accordance with this Section.

          (b) (i) Prepare and file with the Commission such amendments,
     including post-effective amendments, to the Registration Statement and the
     Prospectus used in connection therewith as may be necessary to keep the
     Registration Statement continuously effective as to the applicable
     Registrable Securities for the Effectiveness Period and prepare and file
     with the Commission such additional Registration Statements in order to
     register for resale under the Securities Act all of the Registrable
     Securities; (ii) cause the related Prospectus to be amended or supplemented
     by any required Prospectus supplement, and as so supplemented or amended to
     be filed pursuant to Rule 424; (iii) respond as promptly as reasonably
     possible to any comments received from the Commission with respect to the
     Registration Statement or any amendment thereto and, as promptly as
     reasonably possible, upon request, provide the Holders true and complete
     copies of all correspondence from and to the Commission relating to the
     Registration Statement; and (iv) comply in all material respects with the
     provisions of the Securities Act and the Exchange Act with respect to the
     disposition of all Registrable Securities covered by the Registration
     Statement during the applicable period in accordance with the intended
     methods of disposition by the Holders thereof set forth in the Registration
     Statement as so amended or in such Prospectus as so supplemented.

          (c) Notify the Holders of Registrable Securities to be sold as
     promptly as reasonably possible and (if requested by any such Person)
     confirm such notice in writing promptly following the day (i)(A) when a
     Prospectus or any Prospectus supplement or post-effective amendment to the
     Registration Statement is proposed to be filed; (B) when the Commission
     notifies the Company whether there will be a "review" of the Registration
     Statement and whenever the Commission comments in writing on the

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     Registration Statement (the Company shall upon request provide true and
     complete copies thereof and all written responses thereto to each of the
     Holders); and (C) with respect to the Registration Statement or any
     post-effective amendment, when the same has become effective; (ii) of any
     request by the Commission or any other Federal or state governmental
     authority during the period of effectiveness of the Registration Statement
     for amendments or supplements to the Registration Statement or Prospectus
     or for additional information; (iii) of the issuance by the Commission or
     any other federal or state governmental authority of any stop order
     suspending the effectiveness of the Registration Statement covering any or
     all of the Registrable Securities or the initiation of any Proceedings for
     that purpose; (iv) of the receipt by the Company of any notification with
     respect to the suspension of the qualification or exemption from
     qualification of any of the Registrable Securities for sale in any
     jurisdiction, or the initiation or threatening of any Proceeding for such
     purpose; and (v) of the occurrence of any event or passage of time that
     makes the financial statements included in the Registration Statement
     ineligible for inclusion therein or any statement made in the Registration
     Statement or Prospectus or any document incorporated or deemed to be
     incorporated therein by reference untrue in any material respect or that
     requires any revisions to the Registration Statement, Prospectus or other
     documents so that, in the case of the Registration Statement or the
     Prospectus, as the case may be, it will not contain any untrue statement of
     a material fact or omit to state any material fact required to be stated
     therein or necessary to make the statements therein, in light of the
     circumstances under which they were made, not misleading.

          (d) Use commercially reasonable efforts to avoid the issuance of, or,
     if issued, obtain the withdrawal of (i) any order suspending the
     effectiveness of the Registration Statement, or (ii) any suspension of the
     qualification (or exemption from qualification) of any of the Registrable
     Securities for sale in any jurisdiction, at the earliest practicable
     moment.

          (e) Furnish to each Holder, without charge, at least one conformed
     copy of the Registration Statement and each amendment thereto, including
     financial statements and schedules, all documents incorporated or deemed to
     be incorporated therein by reference to the extent requested by such
     Person, and all exhibits to the extent requested by such Person (including
     those previously furnished or incorporated by reference) promptly after the
     filing of such documents with the Commission.

          (f) Promptly deliver to each Holder, without charge, as many copies of
     the Prospectus or Prospectuses (including each form of prospectus) and each
     amendment or supplement thereto as such Persons may reasonably request in
     connection with resales by the Holder of Registrable Securities. Subject to
     the terms of this Agreement, the Company hereby consents to the use of such
     Prospectus and each amendment or supplement thereto by each of the selling
     Holders in connection with the offering and sale of the Registrable
     Securities covered by such Prospectus and any amendment or supplement
     thereto, except after the giving on any notice pursuant to Section 3(c).

          (g) Prior to any resale of Registrable Securities by a Holder, use its
     commercially reasonable efforts to register or qualify or cooperate with
     the selling

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     Holders in connection with the registration or qualification (or exemption
     from the Registration or qualification) of such Registrable Securities for
     the resale by the Holder under the securities or Blue Sky laws of such
     jurisdictions within the United States as any Holder reasonably requests in
     writing, to keep the Registration or qualification (or exemption therefrom)
     effective during the Effectiveness Period and to do any and all other acts
     or things reasonably necessary to enable the disposition in such
     jurisdictions of the Registrable Securities covered by the Registration
     Statement; provided, that the Company shall not be required to --------
     qualify generally to do business in any jurisdiction where it is not then
     so qualified, subject the Company to any material tax in any such
     jurisdiction where it is not then so subject or file a general consent to
     service of process in any such jurisdiction.

          (h) If requested by the Holders, cooperate with the Holders to
     facilitate the timely preparation and delivery of certificates representing
     Registrable Securities to be delivered to a transferee pursuant to the
     Registration Statement, which certificates shall be free, to the extent
     permitted by the Purchase Agreement, of all restrictive legends, and to
     enable such Registrable Securities to be in such denominations and
     registered in such names as any such Holders may request.

          (i) Upon the occurrence of any event contemplated by Section 3(c)(v),
     as promptly as reasonably possible, prepare a supplement or amendment,
     including a post-effective amendment, to the Registration Statement or a
     supplement to the related Prospectus or any document incorporated or deemed
     to be incorporated therein by reference, and file any other required
     document so that, as thereafter delivered, neither the Registration
     Statement nor such Prospectus will contain an untrue statement of a
     material fact or omit to state a material fact required to be stated
     therein or necessary to make the statements therein, in light of the
     circumstances under which they were made, not misleading. If the Company
     notifies the Holders in accordance with clauses (ii) through (v) of Section
     3(c) above to suspend the use of any Prospectus until the requisite changes
     to such Prospectus have been made, then the Holders shall suspend use of
     such Prospectus. The Company will use its best efforts to ensure that the
     use of the Prospectus may be resumed as promptly as is practicable. The
     Company shall be entitled to exercise its right under this Section 3(i) to
     suspend the availability of a Registration Statement and Prospectus,
     subject to the payment of partial liquidated damages pursuant to Section
     2(b), for a period not to exceed 60 days (which need not be consecutive
     days) in any 12 month period.

          (j) Comply with all applicable rules and regulations of the
     Commission.

          (k) The Company may require each selling Holder to furnish to the
     Company a certified statement as to the number of shares of Common Stock
     beneficially owned by such Holder and, if required by the Commission, the
     person thereof that has voting and dispositive control over the Shares.
     During any periods that the Company is unable to meet its obligations
     hereunder with respect to the registration of the Registrable Securities
     solely because any Holder fails to furnish such information within three
     Trading Days of the Company's request, any liquidated damages that are
     accruing at such time as to such Holder only shall be tolled and any Event
     that may otherwise occur solely

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     because of such delay shall be suspended as to such Holder only, until such
     information is delivered to the Company.

          4. Registration Expenses. All fees and expenses incident to the
     performance of or compliance with this Agreement by the Company shall be
     borne by the Company whether or not any Registrable Securities are sold
     pursuant to the Registration Statement. The fees and expenses referred to
     in the foregoing sentence shall include, without limitation, (i) all
     registration and filing fees (including, without limitation, fees and
     expenses (A) with respect to filings required to be made with the Trading
     Market on which the Common Stock is then listed for trading, (B) in
     compliance with applicable state securities or Blue Sky laws) and (C) with
     respect to any filing that may be required to be made by any broker through
     which a Holder intends to make sales of Registrable Securities with NASD
     Regulation, Inc. pursuant to the NASD Rule 2710, so long as the broker is
     receiving no more than a customary brokerage commission in connection with
     such sale, (ii) printing expenses (including, without limitation, expenses
     of printing certificates for Registrable Securities and of printing
     prospectuses if the printing of prospectuses is reasonably requested by the
     holders of a majority of the Registrable Securities included in the
     Registration Statement), (iii) messenger, telephone and delivery expenses,
     (iv) fees and disbursements of counsel for the Company, (v) Securities Act
     liability insurance, if the Company so desires such insurance, and (vi)
     fees and expenses of all other Persons retained by the Company in
     connection with the consummation of the transactions contemplated by this
     Agreement. In addition, the Company shall be responsible for all of its
     internal expenses incurred in connection with the consummation of the
     transactions contemplated by this Agreement (including, without limitation,
     all salaries and expenses of its officers and employees performing legal or
     accounting duties), the expense of any annual audit and the fees and
     expenses incurred in connection with the listing of the Registrable
     Securities on any securities exchange as required hereunder. In no event
     shall the Company be responsible for any broker or similar commissions or,
     except to the extent provided for in the Transaction Documents, any legal
     fees or other costs of the Holders.

          5. Indemnification

               (a) Indemnification by the Company. The Company shall,
          notwithstanding any termination of this Agreement, indemnify and hold
          harmless each Holder, the officers, directors, agents and employees of
          each of them, each Person who controls any such Holder (within the
          meaning of Section 15 of the Securities Act or Section 20 of the
          Exchange Act) and the officers, directors, agents and employees of
          each such controlling Person, to the fullest extent permitted by
          applicable law, from and against any and all losses, claims, damages,
          liabilities, costs (including, without limitation, reasonable
          attorneys' fees) and expenses (collectively, "Losses"), as incurred,
          arising out of or relating to any untrue or alleged untrue statement
          of a material fact contained in the Registration Statement, any
          Prospectus or any form of prospectus or in any amendment or supplement
          thereto or in any preliminary prospectus, or arising out of or
          relating to any omission or alleged omission of a material fact
          required to be stated therein or necessary to make the statements
          therein (in the case of any Prospectus or form of prospectus or
          supplement thereto, in light of the circumstances under which they
          were made) not misleading, except to the extent, but only to the
          extent, that (i) such untrue statements or omissions are based solely
          upon information regarding such Holder furnished in writing

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          to the Company by such Holder expressly for use therein, or to the
          extent that such information relates to such Holder or such Holder's
          proposed method of distribution of Registrable Securities and was
          reviewed and expressly approved in writing by such Holder expressly
          for use in the Registration Statement, such Prospectus or such form of
          Prospectus or in any amendment or supplement thereto (it being
          understood that the Holder has approved Annex A hereto for this
          purpose) or (ii) in the case of an occurrence of an event of the type
          specified in Section 3(c)(ii)-(v), the use by such Holder of an
          outdated or defective Prospectus after the Company has notified such
          Holder in writing that the Prospectus is outdated or defective and
          prior to the receipt by such Holder of the Advice contemplated in
          Section 6(d). The Company shall notify the Holders promptly of the
          institution, threat or assertion of any Proceeding of which the
          Company is aware in connection with the transactions contemplated by
          this Agreement.

               (b) Indemnification by Holders. Each Holder shall, severally and
          not jointly, indemnify and hold harmless the Company, its directors,
          officers, agents and employees, each Person who controls the Company
          (within the meaning of Section 15 of the Securities Act and Section 20
          of the Exchange Act), and the directors, officers, agents or employees
          of such controlling Persons, to the fullest extent permitted by
          applicable law, from and against all Losses, as incurred, to the
          extent arising out of or based solely upon: (x) such Holder's failure
          to comply with the prospectus delivery requirements of the Securities
          Act or (y) any untrue or alleged untrue statement of a material fact
          contained in any Registration Statement, any Prospectus, or any form
          of prospectus, or in any amendment or supplement thereto or in any
          preliminary prospectus, or arising out of or relating to any omission
          or alleged omission of a material fact required to be stated therein
          or necessary to make the statements therein not misleading (i) to the
          extent, but only to the extent, that such untrue statement or omission
          is contained in any information so furnished in writing by such Holder
          to the Company specifically for inclusion in the Registration
          Statement or such Prospectus or (ii) to the extent that (1) such
          untrue statements or omissions are based solely upon information
          regarding such Holder furnished in writing to the Company by such
          Holder expressly for use therein, or to the extent that such
          information relates to such Holder or such Holder's proposed method of
          distribution of Registrable Securities and was reviewed and expressly
          approved in writing by such Holder expressly for use in the
          Registration Statement (it being understood that the Holder has
          approved Annex A hereto for this purpose), such Prospectus or such
          form of Prospectus or in any amendment or supplement thereto or (2) in
          the case of an occurrence of an event of the type specified in Section
          3(c)(ii)-(v), the use by such Holder of an outdated or defective
          Prospectus after the Company has notified such Holder in writing that
          the Prospectus is outdated or defective and prior to the receipt by
          such Holder of the Advice contemplated in Section 6(d). In no event
          shall the liability of any selling Holder hereunder be greater in
          amount than the dollar amount of the net proceeds received by such
          Holder upon the sale of the Registrable Securities giving rise to such
          indemnification obligation.

               (c) Conduct of Indemnification Proceedings. If any Proceeding
          shall be brought or asserted against any Person entitled to indemnity
          hereunder (an "Indemnified Party"), such Indemnified Party shall
          promptly notify the Person from whom indemnity is sought (the
          "Indemnifying Party") in writing, and the Indemnifying Party shall
          have

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          the right to assume the defense thereof, including the employment of
          counsel reasonably satisfactory to the Indemnified Party and the
          payment of all fees and expenses incurred in connection with defense
          thereof; provided, that the failure of any Indemnified Party to give
          such notice shall not relieve the Indemnifying Party of its
          obligations or liabilities pursuant to this Agreement, except (and
          only) to the extent that it shall be finally determined by a court of
          competent jurisdiction (which determination is not subject to appeal
          or further review) that such failure shall have prejudiced the
          Indemnifying Party.

                  An Indemnified Party shall have the right to employ separate
         counsel in any such Proceeding and to participate in the defense
         thereof, but the fees and expenses of such counsel shall be at the
         expense of such Indemnified Party or Parties unless: (1) the
         Indemnifying Party has agreed in writing to pay such fees and expenses;
         (2) the Indemnifying Party shall have failed promptly to assume the
         defense of such Proceeding and to employ counsel reasonably
         satisfactory to such Indemnified Party in any such Proceeding; or (3)
         the named parties to any such Proceeding (including any impleaded
         parties) include both such Indemnified Party and the Indemnifying
         Party, and such Indemnified Party shall reasonably believe that a
         material conflict of interest is likely to exist if the same counsel
         were to represent such Indemnified Party and the Indemnifying Party (in
         which case, if such Indemnified Party notifies the Indemnifying Party
         in writing that it elects to employ separate counsel at the expense of
         the Indemnifying Party, the Indemnifying Party shall not have the right
         to assume the defense thereof and the reasonable fees and expenses of
         one separate counsel shall be at the expense of the Indemnifying
         Party). The Indemnifying Party shall not be liable for any settlement
         of any such Proceeding effected without its written consent, which
         consent shall not be unreasonably withheld. No Indemnifying Party
         shall, without the prior written consent of the Indemnified Party,
         effect any settlement of any pending Proceeding in respect of which any
         Indemnified Party is a party, unless such settlement includes an
         unconditional release of such Indemnified Party from all liability on
         claims that are the subject matter of such Proceeding.

                  Subject to the terms of this Agreement, all reasonable fees
         and expenses of the Indemnified Party (including reasonable fees and
         expenses to the extent incurred in connection with investigating or
         preparing to defend such Proceeding in a manner not inconsistent with
         this Section) shall be paid to the Indemnified Party, as incurred,
         within ten Trading Days of written notice thereof to the Indemnifying
         Party; provided, that the Indemnified Party shall promptly reimburse
         the Indemnifying Party for that portion of such fees and expenses
         applicable to such actions for which such Indemnified Party is not
         entitled to indemnification hereunder, determined based upon the
         relative faults of the parties.

               (d) Contribution. If a claim for indemnification under Section
          5(a) or 5(b) is unavailable to an Indemnified Party (by reason of
          public policy or otherwise), then each Indemnifying Party, in lieu of
          indemnifying such Indemnified Party, shall contribute to the amount
          paid or payable by such Indemnified Party as a result of such Losses,
          in such proportion as is appropriate to reflect the relative fault of
          the Indemnifying Party and Indemnified Party in connection with the
          actions, statements or omissions that resulted in such Losses as well
          as any other relevant equitable considerations. The relative fault of

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          such Indemnifying Party and Indemnified Party shall be determined by
          reference to, among other things, whether any action in question,
          including any untrue or alleged untrue statement of a material fact or
          omission or alleged omission of a material fact, has been taken or
          made by, or relates to information supplied by, such Indemnifying
          Party or Indemnified Party, and the parties' relative intent,
          knowledge, access to information and opportunity to correct or prevent
          such action, statement or omission. The amount paid or payable by a
          party as a result of any Losses shall be deemed to include, subject to
          the limitations set forth in this Agreement, any reasonable attorneys'
          or other reasonable fees or expenses incurred by such party in
          connection with any Proceeding to the extent such party would have
          been indemnified for such fees or expenses if the indemnification
          provided for in this Section was available to such party in accordance
          with its terms.

               The parties hereto agree that it would not be just and equitable
          if contribution pursuant to this Section 5(d) were determined by pro
          rata allocation or by any other method of allocation that does not
          take into account the equitable considerations referred to in the
          immediately preceding paragraph. Notwithstanding the provisions of
          this Section 5(d), no Holder shall be required to contribute, in the
          aggregate, any amount in excess of the amount by which the proceeds
          actually received by such Holder from the sale of the Registrable
          Securities subject to the Proceeding exceeds the amount of any damages
          that such Holder has otherwise been required to pay by reason of such
          untrue or alleged untrue statement or omission or alleged omission,
          except in the case of fraud by such Holder.

               The indemnity and contribution agreements contained in this
          Section are in addition to any liability that the Indemnifying Parties
          may have to the Indemnified Parties.

          6. Miscellaneous

               (a) Remedies. In the event of a breach by the Company or by a
          Holder, of any of their obligations under this Agreement, each Holder
          or the Company, as the case may be, in addition to being entitled to
          exercise all rights granted by law and under this Agreement, including
          recovery of damages, will be entitled to specific performance of its
          rights under this Agreement. The Company and each Holder agree that
          monetary damages would not provide adequate compensation for any
          losses incurred by reason of a breach by it of any of the provisions
          of this Agreement and hereby further agrees that, in the event of any
          action for specific performance in respect of such breach, it shall
          waive the defense that a remedy at law would be adequate.

               (b) No Piggyback on Registrations. Except as set forth on
          Schedule 6(b) attached hereto, neither the Company nor any of its
          security holders (other than the Holders in such capacity pursuant
          hereto) may include securities of the Company in a Registration
          Statement other than the Registrable Securities. No Person has any
          right to cause the Company to effect the registration under the
          Securities Act of any securities of the Company. The Company shall not
          file any other registration statement until after the Effective Date.

                                      10

<PAGE>

               (c) Compliance. Each Holder covenants and agrees that it will
          comply with the prospectus delivery requirements of the Securities Act
          as applicable to it in connection with sales of Registrable Securities
          pursuant to the Registration Statement.

               (d) Discontinued Disposition. Each Holder agrees by its
          acquisition of such Registrable Securities that, upon receipt of a
          notice from the Company of the occurrence of any event of the kind
          described in Section 3(c), such Holder will forthwith discontinue
          disposition of such Registrable Securities under the Registration
          Statement until such Holder's receipt of the copies of the
          supplemented Prospectus and/or amended Registration Statement or until
          it is advised in writing (the "Advice") by the Company that the use of
          the applicable Prospectus may be resumed, and, in either case, has
          received copies of any additional or supplemental filings that are
          incorporated or deemed to be incorporated by reference in such
          Prospectus or Registration Statement. The Company will use its best
          efforts to ensure that the use of the Prospectus may be resumed as
          promptly as it practicable. The Company agrees and acknowledges that
          any periods during which the Holder is required to discontinue the
          disposition of the Registrable Securities hereunder shall be subject
          to the provisions of Section 2(b).

               (e) Piggy-Back Registrations. If at any time during the
          Effectiveness Period there is not an effective Registration Statement
          covering all of the Registrable Securities and the Company shall
          determine to prepare and file with the Commission a registration
          statement relating to an offering for its own account or the account
          of others under the Securities Act of any of its equity securities,
          other than on Form S-4 or Form S-8 (each as promulgated under the
          Securities Act) or their then equivalents relating to equity
          securities to be issued solely in connection with any acquisition of
          any entity or business or equity securities issuable in connection
          with the stock option or other employee benefit plans, then the
          Company shall send to each Holder a written notice of such
          determination and, if within fifteen days after the date of such
          notice, any such Holder shall so request in writing, the Company shall
          include in such registration statement all or any part of such
          Registrable Securities such Holder requests to be registered, subject
          to customary underwriter cutbacks applicable to all holders of
          registration rights.

               (f) Amendments and Waivers. The provisions of this Agreement,
          including the provisions of this sentence, may not be amended,
          modified or supplemented, and waivers or consents to departures from
          the provisions hereof may not be given, unless the same shall be in
          writing and signed by the Company and each Holder of the then
          outstanding Registrable Securities.

               (g) Notices. Any and all notices or other communications or
          deliveries required or permitted to be provided hereunder shall be
          made in accordance with the provisions of the Purchase Agreement.

               (h) Successors and Assigns. This Agreement shall inure to the
          benefit of and be binding upon the successors and permitted assigns of
          each of the parties and shall inure to the benefit of each Holder.
          Each Holder may assign their respective rights hereunder in the manner
          and to the Persons as permitted under the Purchase Agreement.

                                      11

<PAGE>

               (i) Execution and Counterparts. This Agreement may be executed in
          any number of counterparts, each of which when so executed shall be
          deemed to be an original and, all of which taken together shall
          constitute one and the same Agreement. In the event that any signature
          is delivered by facsimile transmission, such signature shall create a
          valid binding obligation of the party executing (or on whose behalf
          such signature is executed) the same with the same force and effect as
          if such facsimile signature were the original thereof.

               (j) Governing Law. All questions concerning the construction,
          validity, enforcement and interpretation of this Agreement shall be
          determined with the provisions of the Purchase Agreement.

               (k) Cumulative Remedies. The remedies provided herein are
          cumulative and not exclusive of any remedies provided by law.

               (l) Severability. If any term, provision, covenant or restriction
          of this Agreement is held by a court of competent jurisdiction to be
          invalid, illegal, void or unenforceable, the remainder of the terms,
          provisions, covenants and restrictions set forth herein shall remain
          in full force and effect and shall in no way be affected, impaired or
          invalidated, and the parties hereto shall use their commercially
          reasonable efforts to find and employ an alternative means to achieve
          the same or substantially the same result as that contemplated by such
          term, provision, covenant or restriction. It is hereby stipulated and
          declared to be the intention of the parties that they would have
          executed the remaining terms, provisions, covenants and restrictions
          without including any of such that may be hereafter declared invalid,
          illegal, void or unenforceable.

               (m) Headings. The headings in this Agreement are for convenience
          of reference only and shall not limit or otherwise affect the meaning
          hereof.

               (n) Independent Nature of Holders' Obligations and Rights. The
          obligations of each Holder hereunder are several and not joint with
          the obligations of any other Holder hereunder, and no Holder shall be
          responsible in any way for the performance of the obligations of any
          other Holder hereunder. Nothing contained herein or in any other
          agreement or document delivered at any closing, and no action taken by
          any Holder pursuant hereto or thereto, shall be deemed to constitute
          the Holders as a partnership, an association, a joint venture or any
          other kind of entity, or create a presumption that the Holders are in
          any way acting in concert with respect to such obligations or the
          transactions contemplated by this Agreement. Each Holder shall be
          entitled to protect and enforce its rights, including without
          limitation the rights arising out of this Agreement, and it shall not
          be necessary for any other Holder to be joined as an additional party
          in any proceeding for such purpose.

                       *************************

                                      12

<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.

                                     INSIGNIA SYSTEMS, INC.

                                     By:  /s/ Scott Drill
                                        --------------------------------------
                                         Name:  Scott Drill
                                         Title: President and CEO

                  [SIGNATURE PAGE OF HOLDERS FOLLOWS]

<PAGE>

               [PURCHASER'S SIGNATURE PAGE TO ISIG RRA]

Name of Investing Entity:    Bear Stearns Securities Corp. Inc., FBO J. Steven
                               Emerson Roth IRA
                             G. Tyler Runnels or Jasmine Niklas Runnels
                             TTEES The Runnels Family Trust dtd 1-11-2000
                             High Tide, LLC
                             JMG Capital Partners, LP
                             JMG Triton Offshore Fund, Ltd.
                             Bristol Investment Fund, Ltd
                             Potomac Capital Partners, LP
                             Pleiades Investment Partners-R, L.P.
                             Potomac Capital International Ltd.
                             Hammond Holdings, LLC
SIGNATURE OF AUTHORIZED SIGNATORY OF INVESTING ENTITY: _________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________

                      [SIGNATURE PAGES CONTINUE]

                                      14

<PAGE>

                                   ANNEX A

                            Plan of Distribution

     The Selling Stockholders (the "Selling Stockholders") of the common stock
("Common Stock") of Insignia Systems, Inc., a Minnesota corporation (the
"Company") and any of their pledgees, assignees and successors-in-interest may,
from time to time, sell any or all of their shares of Common Stock on any stock
exchange, market or trading facility on which the shares are traded or in
private transactions. These sales may be at fixed or negotiated prices. The
Selling Stockholders may use any one or more of the following methods when
selling shares:

          o    ordinary brokerage transactions and transactions in which the
               broker-dealer solicits purchasers;

          o    block trades in which the broker-dealer will attempt to sell the
               shares as agent but may position and resell a portion of the
               block as principal to facilitate the transaction;

          o    purchases by a broker-dealer as principal and resale by the
               broker-dealer for its account;

          o    an exchange distribution in accordance with the rules of the
               applicable exchange;

          o    privately negotiated transactions;

          o    settlement of short sales entered into after the date of this
               prospectus;

          o    broker-dealers may agree with the Selling Stockholders to sell a
               specified number of such shares at a stipulated price per share;

          o    a combination of any such methods of sale;

          o    through the writing or settlement of options or other hedging
               transactions, whether through an options exchange or otherwise;
               or

          o    any other method permitted pursuant to applicable law.

     The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), if available, rather
than under this prospectus.

     Broker-dealers engaged by the Selling Stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. Each Selling Stockholder does not expect these commissions and
discounts relating to its sales of shares to exceed what is customary in the
types of transactions involved.

                                      15

<PAGE>

     In connection with the sale of our common stock or interests therein, the
Selling Stockholders may enter into hedging transactions with broker-dealers or
other financial institutions, which may in turn engage in short sales of the
common stock in the course of hedging the positions they assume. The Selling
Stockholders may also sell shares of our common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities. The Selling
Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).

     The Selling Stockholders and any broker-dealers or agents that are involved
in selling the shares may be deemed to be "underwriters" within the meaning of
the Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Each Selling Stockholder has informed the
Company that it does not have any agreement or understanding, directly or
indirectly, with any person to distribute the Common Stock.

     The Company is required to pay certain fees and expenses incurred by the
Company incident to the registration of the shares. The Company has agreed to
indemnify the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.

     Because Selling Stockholders may be deemed to be "underwriters" within the
meaning of the Securities Act, they will be subject to the prospectus delivery
requirements of the Securities Act. In addition, any securities covered by this
prospectus which qualify for sale pursuant to Rule 144 under the Securities Act
may be sold under Rule 144 rather than under this prospectus. Each Selling
Stockholder has advised us that they have not entered into any agreements,
understandings or arrangements with any underwriter or broker-dealer regarding
the sale of the resale shares. There is no underwriter or coordinating broker
acting in connection with the proposed sale of the resale shares by the Selling
Stockholders.

     We agreed to keep this prospectus effective until the earlier of (i) the
date on which the shares may be resold by the Selling Stockholders without
registration and without regard to any volume limitations by reason of Rule
144(k) under the Securities Act or any other rule of similar effect or (ii) all
of the shares have been sold pursuant to the prospectus or Rule 144 under the
Securities Act or any other rule of similar effect. The resale shares will be
sold only through registered or licensed brokers or dealers if required under
applicable state securities laws. In addition, in certain states, the resale
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.

     Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the resale shares may not simultaneously engage
in market making activities with respect to our common stock for a period of two
business days prior to the commencement

                                      16

<PAGE>

of the distribution. In addition, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases and
sales of shares of our common stock by the Selling Stockholders or any other
person. We will make copies of this prospectus available to the Selling
Stockholders and have informed them of the need to deliver a copy of this
prospectus to each purchaser at or prior to the time of the sale.

                                      17

<PAGE>

                                                                         ANNEX B

                          IINSIGNIA SYSTEMS, INC.

             SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE

     The undersigned beneficial owner of common stock, par value $0.01 per share
(the "Common Stock"), of Insignia Systems, Inc., a Minnesota corporation (the
"Company"), (the "Registrable Securities") understands that the Company has
filed or intends to file with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (the "Registration
Statement") for the registration and resale under Rule 415 of the Securities Act
of 1933, as amended (the "Securities Act"), of the Registrable Securities, in
accordance with the terms of the Registration Rights Agreement, dated as of
December 1, 2004 (the "Registration Rights Agreement"), among the Company and
the Purchasers named therein. A copy of the Registration Rights Agreement is
available from the Company upon request at the address set forth below. All
capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Registration Rights Agreement.

     Certain legal consequences arise from being named as a selling
securityholder in the Registration Statement and the related prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Registration
Statement and the related prospectus.

                                 NOTICE

     The undersigned beneficial owner (the "Selling Securityholder") of
Registrable Securities hereby elects to include the Registrable Securities owned
by it and listed below in Item 3 (unless otherwise specified under such Item 3)
in the Registration Statement.

                                      18

<PAGE>

The undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:

                           QUESTIONNAIRE

1.       NAME.

         (a)      Full Legal Name of Selling Securityholder

                  --------------------------------------------------------------

         (b)      Full Legal Name of Registered Holder (if not the same as (a)
                  above) through which Registrable Securities Listed in Item 3
                  below are held:

                  --------------------------------------------------------------

         (c)      Full Legal Name of Natural Control Person (which means a
                  natural person who directly you indirectly alone or with
                  others has power to vote or dispose of the securities covered
                  by the questionnaire):

                  --------------------------------------------------------------

2.  ADDRESS FOR NOTICES TO SELLING SECURITYHOLDER:

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Telephone:
          ----------------------------------------------------------------------
Fax:
    ----------------------------------------------------------------------------
Contact Person:
               -----------------------------------------------------------------

3.  BENEFICIAL OWNERSHIP OF REGISTRABLE SECURITIES:

         (a) Type and Number of Registrable Securities beneficially owned:

             -------------------------------------------------------------------
             -------------------------------------------------------------------
             -------------------------------------------------------------------

                                      19

<PAGE>

4.  BROKER-DEALER STATUS:

         (a) Are you a broker-dealer?

                                            Yes      No

          Note:  If yes, the Commission's staff has indicated that you should be
                 identified as an underwriter in the Registration Statement.

         (b) Are you an affiliate of a broker-dealer?

                                            Yes      No

         (c)  If you are an affiliate of a broker-dealer, do you certify that
              you bought the Registrable Securities in the ordinary course of
              business, and at the time of the purchase of the Registrable
              Securities to be resold, you had no agreements or understandings,
              directly or indirectly, with any person to distribute the
              Registrable Securities?

                                            Yes      No

          Note:  If no, the Commission's staff has indicated that you should be
                 identified as an underwriter in the Registration Statement.

5. BENEFICIAL OWNERSHIP OF OTHER SECURITIES OF THE COMPANY OWNED BY THE SELLING
    SECURITYHOLDER.

          EXCEPT AS SET FORTH BELOW IN THIS ITEM 5, THE UNDERSIGNED IS NOT THE
          BENEFICIAL OR REGISTERED OWNER OF ANY SECURITIES OF THE COMPANY OTHER
          THAN THE REGISTRABLE SECURITIES LISTED ABOVE IN ITEM 3.

         (a)  Type and Amount of Other Securities beneficially owned by the
              Selling Securityholder:

              ------------------------------------------------------------------
              ------------------------------------------------------------------

                                      20

<PAGE>

6.  RELATIONSHIPS WITH THE COMPANY:

         EXCEPT AS SET FORTH BELOW, NEITHER THE UNDERSIGNED NOR ANY OF ITS
         AFFILIATES, OFFICERS, DIRECTORS OR PRINCIPAL EQUITY HOLDERS (OWNERS OF
         5% OF MORE OF THE EQUITY SECURITIES OF THE UNDERSIGNED) HAS HELD ANY
         POSITION OR OFFICE OR HAS HAD ANY OTHER MATERIAL RELATIONSHIP WITH THE
         COMPANY (OR ITS PREDECESSORS OR AFFILIATES) DURING THE PAST THREE
         YEARS.

         State any exceptions here:

         -----------------------------------------------------------------------
         -----------------------------------------------------------------------

         The undersigned agrees to promptly notify the Company of any
inaccuracies or changes in the information provided herein that may occur
subsequent to the date hereof at any time while the Registration Statement
remains effective.

         By signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to Items 1 through 6 and the
inclusion of such information in the Registration Statement and the related
prospectus. The undersigned understands that such information will be relied
upon by the Company in connection with the preparation or amendment of the
Registration Statement and the related prospectus.

         IN WITNESS WHEREOF the undersigned, by authority duly given, has caused
this Notice and Questionnaire to be executed and delivered either in person or
by its duly authorized agent.

Dated:                               Beneficial Owner:
       ----------------------------                   --------------------------

                                     By:
                                        ----------------------------------------
                                        Name:
                                        Title:

PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND
RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

                                      21EXHIBIT 4.3

                                                                       EXHIBIT C

                                ESCROW AGREEMENT

     THIS ESCROW AGREEMENT (this "Agreement") is made as of December 1, 2004, by
and among Insignia Systems, Inc., a Minnesota corporation (the "Company"), the
purchasers signatory hereto (each a "Purchaser" and together the "Purchasers"),
and Feldman Weinstein LLP, with an address at 420 Lexington Avenue, New York,
New York 10170-0002 (the "Escrow Agent"). CAPITALIZED TERMS USED BUT NOT DEFINED
HEREIN SHALL HAVE THE MEANINGS SET FORTH IN THE SECURITIES PURCHASE AGREEMENT
REFERRED TO IN THE FIRST RECITAL.

                              W I T N E S S E T H:

     WHEREAS, the Purchasers will be purchasing from the Company, severally and
not jointly with the other Purchasers, in the aggregate, up to $2,490,000, in
the aggregate, of the Common Stock on the Closing Date as set forth in the
Securities Purchase Agreement (the "Purchase Agreement") dated the date hereof
between the Purchasers and the Company, which securities will be issued under
the terms contained herein and in the Purchase Agreement; and

     WHEREAS, it is intended that the purchase of the securities be consummated
in accordance with the requirements set forth in Regulation D promulgated under
the Securities Act of 1933, as amended; and

     WHEREAS, the Company and the Purchasers have requested that the Escrow
Agent hold the Subscription Amounts in escrow until the Escrow Agent has
received the Release Notice in the form attached hereto from the Company and
each Purchaser;

     NOW, THEREFORE, in consideration of the covenants and mutual promises
contained herein and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged and intending to be legally
bound hereby, the parties agree as follows:

                                   ARTICLE 1

                               TERMS OF THE ESCROW

     1.1. The parties hereby agree to establish an escrow account with the
Escrow Agent whereby the Escrow Agent shall hold the funds for the purchase of
up to $2,490,000, in the aggregate, of Common Stock as contemplated by the
Purchase Agreement.

     1.2. Upon the Escrow Agent's receipt of the aggregate Subscription Amounts
for the Closing into its master escrow account, together with executed
counterparts of this Agreement, the Purchase Agreement and the Registration
Rights Agreement, it shall telephonically advise the Company, or the Company's
designated attorney or agent, of the amount of funds it has received into its
master escrow account.

                                       1
<PAGE>

     1.3. Wire transfers to the Escrow Agent shall be made as follows:

                  STERLING NATIONAL BANK
                  622 3RD AVENUE
                  NEW YORK, NY 10017
                  Account Name:  Feldman Weinstein LLP
                  ABA ROUTING NO: 026007773
                  ACCT NO: 0814180101
                  Remark:  ISIG/[FUND NAME]

     1.4 The Company, promptly following being advised by the Escrow Agent that
the Escrow Agent has received the Subscription Amounts for the Closing along
with facsimile copies of counterpart signature pages of the Purchase Agreement,
Registration Rights Agreement and this Agreement from each Purchaser, shall
deliver to the Escrow Agent the certificates representing the certificates
evidencing the Securities to be issued to each Purchaser at the Closing together
with:

          (a) the Company's executed counterpart of the Purchase Agreement;

          (b) the Company's executed counterpart of the Registration Rights
     Agreement;

          (c) the executed opinion of Company Counsel, in the form of Exhibit B
     to the Purchase Agreement; and

          (d) the Company's original executed counterpart of this Escrow
     Agreement.

     1.5 In the event that the foregoing items are not in the Escrow Agent's
possession within five (5) Trading Days of the Escrow Agent notifying the
Company that the Escrow Agent has custody of the Subscription Amount for the
Closing, then each Purchaser shall have the right to demand the return of their
portion of the Subscription Amount.

     1.6 Once the Escrow Agent receives a Release Notice in the form attached
hereto as Exhibit X (the "Release Notice") executed by the Company and each
Purchaser, it shall (a) wire 95% of the aggregate Subscription Amounts to the
Company's account listed in Section 1.7 below, net of $20,000 to the Feldman
Weinstein LLP, and (b) wire the remaining 5% of the aggregate Subscription
Amounts per the written instructions of TR Winston & Company, Inc.

     1.7 Wire transfers to the Company shall be made pursuant to written
instructions from the Company provided to the Escrow Agent on the date of the
Purchase Agreement.

     1.8 Once the funds (as set forth above) have been sent per the Company's
instructions, the Escrow Agent shall then arrange to have the Shares, the
Purchase Agreement, the Registration Rights Agreement, the Escrow Agreement and
the opinion of counsel delivered to the appropriate parties.

                                       2
<PAGE>

                                   ARTICLE II

                                  MISCELLANEOUS

     2.1 No waiver or any breach of any covenant or provision herein contained
shall be deemed a waiver of any preceding or succeeding breach thereof, or of
any other covenant or provision herein contained. No extension of time for
performance of any obligation or act shall be deemed an extension of the time
for performance of any other obligation or act.

     2.2 All notices or other communications required or permitted hereunder
shall be in writing, and shall be sent as set forth in the Purchase Agreement.

     2.3 This Escrow Agreement shall be binding upon and shall inure to the
benefit of the permitted successors and permitted assigns of the parties hereto.

     2.4 This Escrow Agreement is the final expression of, and contains the
entire agreement between, the parties with respect to the subject matter hereof
and supersedes all prior understandings with respect thereto. This Escrow
Agreement may not be modified, changed, supplemented or terminated, nor may any
obligations hereunder be waived, except by written instrument signed by the
parties to be charged or by its agent duly authorized in writing or as otherwise
expressly permitted herein.

     2.5 Whenever required by the context of this Escrow Agreement, the singular
shall include the plural and masculine shall include the feminine. This Escrow
Agreement shall not be construed as if it had been prepared by one of the
parties, but rather as if all parties had prepared the same. Unless otherwise
indicated, all references to Articles are to this Escrow Agreement.

     2.6 The parties hereto expressly agree that this Escrow Agreement shall be
governed by, interpreted under and construed and enforced in accordance with the
laws of the State of New York. Any action to enforce, arising out of, or
relating in any way to, any provisions of this Escrow Agreement shall only be
brought in a state or Federal court sitting in New York City.

     2.7 The Escrow Agent's duties hereunder may be altered, amended, modified
or revoked only by a writing signed by the Company, each Purchaser and the
Escrow Agent.

     2.8 The Escrow Agent shall be obligated only for the performance of such
duties as are specifically set forth herein and may rely and shall be protected
in relying or refraining from acting on any instrument reasonably believed by
the Escrow Agent to be genuine and to have been signed or presented by the
proper party or parties. The Escrow Agent shall not be personally liable for any
act the Escrow Agent may do or omit to do hereunder as the Escrow Agent while
acting in good faith and in the absence of gross negligence, fraud and willful
misconduct, and any act done or omitted by the Escrow Agent pursuant to the
advice of the Escrow Agent's attorneys-at-law shall be conclusive evidence of
such good faith, in the absence of gross negligence, fraud and willful
misconduct.

     2.9 The Escrow Agent is hereby expressly authorized to disregard any and
all warnings given by any of the parties hereto or by any other person or
corporation, excepting only

                                       3
<PAGE>

orders or process of courts of law and is hereby expressly authorized to comply
with and obey orders, judgments or decrees of any court. In case the Escrow
Agent obeys or complies with any such order, judgment or decree, the Escrow
Agent shall not be liable to any of the parties hereto or to any other person,
firm or corporation by reason of such decree being subsequently reversed,
modified, annulled, set aside, vacated or found to have been entered without
jurisdiction.

     2.10 The Escrow Agent shall not be liable in any respect on account of the
identity, authorization or rights of the parties executing or delivering or
purporting to execute or deliver the Purchase Agreement or any documents or
papers deposited or called for thereunder in the absence of gross negligence,
fraud and willful misconduct.

     2.11 The Escrow Agent shall be entitled to employ such legal counsel and
other experts as the Escrow Agent may deem necessary properly to advise the
Escrow Agent in connection with the Escrow Agent's duties hereunder, may rely
upon the advice of such counsel, and may pay such counsel reasonable
compensation; provided that the costs of such compensation SHALL BE BORNE BY THE
ESCROW AGENT. THE ESCROW AGENT HAS ACTED AS LEGAL COUNSEL FOR BRISTOL INVESTMENT
FUND, LTD. ("BRISTOL"), AND MAY CONTINUE TO ACT AS LEGAL COUNSEL FOR BRISTOL
FROM TIME TO TIME, NOTWITHSTANDING ITS DUTIES AS THE ESCROW AGENT HEREUNDER. THE
COMPANY AND THE OTHER PURCHASERS CONSENT TO THE ESCROW AGENT IN SUCH CAPACITY AS
LEGAL COUNSEL FOR BRISTOL AND WAIVES ANY CLAIM THAT SUCH REPRESENTATION
REPRESENTS A CONFLICT OF INTEREST ON THE PART OF THE ESCROW AGENT. THE COMPANY
AND THE PURCHASERS UNDERSTAND THAT BRISTOL AND THE ESCROW AGENT ARE RELYING
EXPLICITLY ON THE FOREGOING PROVISION IN ENTERING INTO THIS ESCROW AGREEMENT.

     2.12 The Escrow Agent's responsibilities as escrow agent hereunder shall
terminate if the Escrow Agent shall resign by giving written notice to the
Company and the Purchasers. In the event of any such resignation, the Purchasers
and the Company shall appoint a successor Escrow Agent and the Escrow Agent
shall deliver to such successor Escrow Agent any escrow funds and other
documents held by the Escrow Agent.

     2.13 If the Escrow Agent reasonably requires other or further instruments
in connection with this Escrow Agreement or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.

     2.14 It is understood and agreed that should any dispute arise with respect
to the delivery and/or ownership or right of possession of the documents or the
escrow funds held by the Escrow Agent hereunder, the Escrow Agent is authorized
and directed in the Escrow Agent's sole discretion (1) to retain in the Escrow
Agent's possession without liability to anyone all or any part of said documents
or the escrow funds until such disputes shall have been settled either by mutual
written agreement of the parties concerned by a final order, decree or judgment
or a court of competent jurisdiction after the time for appeal has expired and
no appeal has been perfected, but the Escrow Agent shall be under no duty
whatsoever to institute or defend any such proceedings or (2) to deliver the
escrow funds and any other property and documents held by the Escrow Agent
hereunder to a state or Federal court having competent subject matter
jurisdiction and located in the City of New York in accordance with the
applicable procedure therefore

                                       4
<PAGE>

     2.15 The Company and each Purchaser agree jointly and severally to
indemnify and hold harmless the Escrow Agent and its partners, employees, agents
and representatives from any and all claims, liabilities, costs or expenses in
any way arising from or relating to the duties or performance of the Escrow
Agent hereunder or the transactions contemplated hereby or by the Purchase
Agreement other than any such claim, liability, cost or expense to the extent
the same shall have been determined by final, unappealable judgment of a court
of competent jurisdiction to have resulted from the gross negligence, fraud or
willful misconduct of the Escrow Agent.

                            ************************

                                       5
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement
as of date first written above.

INSIGNIA SYSTEMS, INC.

By:  /s/ Scott Drill
     -----------------------------------
     Name:   Scott Drill
     Title:  President and CEO

With a copy to (which shall not constitute notice):

ESCROW AGENT:

FELDMAN WEINSTEIN LLP

By:  /s/ Robert Charron
     -----------------------------------
     Name:   Robert Charron
     Title:  Partner

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                     SIGNATURE PAGES FOR PURCHASERS FOLLOW]

<PAGE>

                  [SIGNATURE PAGE OF PURCHASERS TO ISIG ESCROW]

<TABLE>
<S>                              <C>
Name of Investing Entity:        Bear Stearns Securities Corp. Inc., FBO J. Steven Emerson Roth IRA
                                 G. Tyler Runnels or Jasmine Niklas Runnels
                                 TTEES The Runnels Family Trust dtd 1-11-2000
                                 High Tide, LLC
                                 JMG Capital Partners, LP
                                 JMG Triton Offshore Fund, Ltd.
                                 Bristol Investment Fund, Ltd
                                 Potomac Capital Partners, LP
                                 Pleiades Investment Partners-R, L.P.
                                 Potomac Capital International Ltd.
                                 Hammond Holdings, LLC
SIGNATURE OF AUTHORIZED SIGNATORY OF INVESTING ENTITY: _________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________
</TABLE>

                     [SIGNATURE PAGE OF PURCHASERS FOLLOWS]

<PAGE>

                                                                    Exhibit X to
                                                                Escrow Agreement
                                 RELEASE NOTICE

     The UNDERSIGNED, pursuant to the Escrow Agreement, dated as of December 1,
2004, among Insignia Systems, Inc., the Purchasers signatory thereto and Feldman
Weinstein LLP, as Escrow Agent (the "Escrow Agreement"; capitalized terms used
herein and not defined shall have the meaning ascribed to such terms in the
Escrow Agreement), hereby notify the Escrow Agent that each of the conditions
precedent to the purchase and sale of the Shares set forth in the Securities
Purchase Agreement have been satisfied. The Company and the undersigned
Purchaser hereby confirm that all of their respective representations and
warranties contained in the Purchase Agreement remain true and correct and
authorize the release by the Escrow Agent of the funds and documents to be
released at the Closing as described in the Escrow Agreement. This Release
Notice shall not be effective until executed by the Company and the Purchaser.

     This Release Notice may be signed in one or more counterparts, each of
which shall be deemed an original.

     IN WITNESS WHEREOF, the undersigned have caused this Release Notice to be
duly executed and delivered as of this 1st day of December, 2004.

INSIGNIA SYSTEMS, INC.

By:  /s/ Scott Drill
     -----------------------------------
     Name:   Scott Drill
     Title:  President and CEO

                     [SIGNATURE PAGE OF PURCHASERS FOLLOWS]

<PAGE>

                 [SIGNATURE PAGE OF PURCHASERS TO ISIG RELEASE]

<TABLE>
<S>                              <C>
Name of Investing Entity:        Bear Stearns Securities Corp. Inc., FBO J. Steven Emerson Roth IRA
                                 G. Tyler Runnels or Jasmine Niklas Runnels
                                 TTEES The Runnels Family Trust dtd 1-11-2000
                                 High Tide, LLC
                                 JMG Capital Partners, LP
                                 JMG Triton Offshore Fund, Ltd.
                                 Bristol Investment Fund, Ltd
                                 Potomac Capital Partners, LP
                                 Pleiades Investment Partners-R, L.P.
                                 Potomac Capital International Ltd.
                                 Hammond Holdings, LLC
SIGNATURE OF AUTHORIZED SIGNATORY OF INVESTING ENTITY: __________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________
</TABLE>

                     [SIGNATURE PAGE OF PURCHASERS FOLLOWS]

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