COOPERATION AGREEMENT
This
Cooperation Agreement, dated as of May 17, 2018 (this
“
Agreement
”), is entered
into by and among Insignia Systems, Inc., a Minnesota corporation
(the “
Company
”), Nick Swenson,
an individual resident of Minnesota (“
Swenson
”), Air T, Inc., a
Delaware corporation (“
Air T
”), and Groveland
Capital LLC, a Delaware limited liability company
(“
Groveland
”). Swenson, Air
T, and Groveland are collectively referred to herein as the
“
Shareholder
Group
” and each individually as a “
Member
” of the
Shareholder Group.
WHEREAS, the
Shareholder Group, in the aggregate, is currently the beneficial
owner of 3,813,014 shares (the “
Shares
”) of the common
stock, par value $0.01, of the Company (“
Common Stock
”), which
represents approximately 31.9% of the issued and outstanding Common
Stock as of the date hereof;
WHEREAS, on April
6, 2018, the Shareholder Group delivered a letter to the Company
giving notice (the “
Nomination Notice
”) of
its intent to nominate five (5) directors, including the Air T
Nominees, for election to the Company’s Board of Directors
(the “
Board
”) at the
Company’s 2018 Annual Meeting of Shareholders;
WHEREAS, the Board
has considered the qualifications of each of Suzanne L. Clarridge
and Loren A. Unterseher (the “
Air T Nominees
”) and
conducted such review as it has deemed appropriate, including
materials provided by the Shareholder Group and each Air T Nominee;
and
WHEREAS, the Board
has determined that it is in the best interests of the Company and
its shareholders to appoint the Air T Nominees to the Board, upon
the terms set forth in this Agreement.
NOW, THEREFORE
, in consideration of the
foregoing premises and the respective representations, warranties,
covenants, agreements and conditions hereinafter set forth, and,
intending to be legally bound hereby, the parties hereby agree as
follows:
1.
Representations
and Warranties of the Company
. The
Company represents and warrants as follows:
(a) The
Company has the corporate power and authority to execute, deliver
and carry out the terms and provisions of this Agreement and to
consummate the transactions contemplated hereby.
(b) This
Agreement has been duly and validly authorized, executed and
delivered by the Company, constitutes a valid and binding
obligation and agreement of the Company, and is enforceable against
the Company in accordance with its terms, except as enforcement
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws
affecting the rights of creditors and subject to general equity
principles.
(c) The
execution, delivery and performance of this Agreement by the
Company does not and will not (i) violate or conflict with any
law, rule, regulation, order, judgment or decree applicable to it,
or (ii) result in any breach or violation of or constitute a
default (or an event which with notice or lapse of time or both
could become a default) under or pursuant to, or result in the loss
of a material benefit under, or give any right of termination,
amendment, acceleration or cancellation of, any organizational
document, agreement, contract, commitment, understanding or
arrangement to which the Company is a party or by which it is
bound.
2.
Representations
and Warranties of the Shareholder Group
. Each
Member of the Shareholder Group, severally, and not jointly,
represents and warrants with respect to himself or itself as
follows:
(a) Such
party, if an individual, has the legal capacity to execute, deliver
and carry out the terms and provisions of this Agreement and to
consummate the transactions contemplated hereby. Such party, if an
entity, has the corporate power and authority or the limited
liability company power and authority, as applicable, to execute,
deliver and carry out the terms and provisions of this Agreement
and to consummate the transactions contemplated
hereby.
(b) This
Agreement has been duly and validly authorized, executed, and
delivered by such Member of the Shareholder Group and constitutes a
valid and binding obligation and agreement of such party, and is
enforceable against such party in accordance with its terms, except
as enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or
similar laws affecting the rights of creditors and subject to
general equity principles.
(c) The
execution, delivery and performance of this Agreement by each
Member of the Shareholder Group does not and will not
(i) violate or conflict with any law, rule, regulation, order,
judgment or decree applicable to him or it, or (ii) result in
any breach or violation of or constitute a default (or an event
which with notice or lapse of time or both could become a default)
under or pursuant to, or result in the loss of a material benefit
under, or give any right of termination, amendment, acceleration or
cancellation of, any organizational document, agreement, contract,
commitment, understanding or arrangement to which he or it is a
party or by which he or it is bound.
(d) The
Shareholder Group is the “
beneficial owner
” of
3,813,014 shares of Common Stock (as defined herein). No Member of
the Shareholder Group owns any Synthetic Equity Interests (as
defined below) or any Short Interests (as defined below) in the
Company.
For
purposes of this Agreement, (a) the term “
Short Interests
” means
any agreement, arrangement, understanding or relationship,
including any repurchase or similar so-called “stock
borrowing” agreement or arrangement, engaged in, directly or
indirectly, by such person, the purpose or effect of which is to
mitigate loss to, reduce the economic risk (of ownership or
otherwise) of shares of any class or series of the Company’s
equity securities by, manage the risk of share price changes for,
or increase or decrease the voting power of, such person with
respect to the shares of any class or series of the Company’s
equity securities, or which provides, directly or indirectly, the
opportunity to profit from any decrease in the price or value of
the shares of any class or series of the Company’s equity
securities; and (b) the term “
Synthetic Equity
Interests
” means any derivative, swap or other
transaction or series of transactions engaged in, directly or
indirectly, by such person, the purpose or effect of which is to
give such person economic risk similar to ownership of equity
securities of any class or series of the Company, including due to
the fact that the value of such derivative, swap or other
transactions are determined by reference to the price, value or
volatility of any shares of any class or series of the
Company’s equity securities, or which derivative, swap or
other transactions provide, directly or indirectly, the opportunity
to profit from any increase in the price or value of shares of any
class or series of the Company’s equity securities, without
regard to whether (i) the derivative, swap or other
transactions convey any voting rights in such equity securities to
such person; (ii) the derivative, swap or other transactions
are required to be, or are capable of being, settled through
delivery of such equity securities; or (iii) such person may
have entered into other transactions that hedge or mitigate the
economic effect of such derivative, swap or other
transactions.
3.
Definitions
. For
purposes of this Agreement:
(a) The
terms “
Affiliate
” and
“
Associate
” have the
respective meanings set forth in Rule 12b-2 promulgated by the SEC
under the Securities Exchange Act of 1934, as amended (the
“
Exchange
Act
”); the terms “
beneficial owner
” and
“
beneficial
ownership
” shall have the respective meanings as set
forth in Rule 13d-3 promulgated by the SEC under the Exchange Act;
and the terms “
person
” or
“
persons
” shall mean any
individual, corporation (including not-for-profit), general or
limited partnership, limited liability company, joint venture,
estate, trust, association, organization or other entity of any
kind or nature.
(b) The
“
Standstill
Period
” means the period beginning on the date of this
Agreement and ending on the date that is sixty (60) days prior to
the expiration of the applicable notice period specified in the
Company’s Bylaws related to nominations of directors at the
2020 Annual Meeting of Shareholders of the Company.
4.
Appointment
of Directors; Related Matters
(a) The
Company hereby agrees that, effective as of the date hereof, the
Company shall (i) increase the size of the Board to six (6)
members, (ii) cause and accept the resignation of F. Peter Zaballos
from the Board, and (iii) appoint each Air T Nominee to the Board.
Following such appointments, the Board will consist of the two Air
T Nominees, Jacob J. Berning (who will serve as Board Chair),
Kristine A. Glancy, Rachael B. Vegas and Steven R. Zenz. The
Shareholder Group hereby irrevocably withdraws the Nomination
Notice with immediate effect, subject to the Company’s
compliance with this
Section 4(a)
and
Section 4(b)
.
(b) Subject
to this Agreement remaining in full force and effect and the
Shareholder Group continuing to beneficially own in the aggregate
at least 10% of the then-outstanding Common Stock (the
“
Minimum Ownership
Threshold
”):
(i) The
Company hereby agrees to include the Air T Nominees in its slate of
nominees for election as directors of the Company at the
Company’s 2018 and 2019 Annual Meetings of Shareholders (the
“
Covered
Meetings
”). With respect to the Covered Meetings,
the Company will solicit
proxies for each of the Air T Nominees in substantially the same
manner as it has in prior years with respect to the Board’s
nominees, will recommend to shareholders that they vote in favor of
each of the Air T Nominees, and will cause all proxies received by
the Company in favor of the Air T Nominees to be voted in favor of
their election to the Board.
During the Standstill Period,
the Company’s Board will take no action to remove any of the
Air T Nominees from the Board pursuant to Section 302A.223,
Subdivision 2, of the Minnesota Statutes. The Company will hold its
2018 Annual Meeting not earlier than July 20, 2018 with a record
date not earlier than May 21, 2018.
(ii)
The parties acknowledge that Mr. Zenz has
indicated his intention not to stand for reelection to the Board at
the Company’s 2019 Annual Meeting of Shareholders. The
Company agrees that the Board will not include Mr. Zenz in its
slate of nominees for election as directors of the Company at the
2019 Annual Meeting and will not thereafter appoint him to the
Board at any time during the Standstill Period.
(iii) The
Board will set the size of the Board at five (5) members effective
as of immediately after the 2019 Annual Meeting and will not take
any action to set the size of the Board above five (5) members
effective at any time from and after the 2019 Annual Meeting and
before the 2020 Annual Meeting; provided, however, that the Board
may set the size of the Board at six (6) members and appoint an
additional member to the Board during such period but only if the
appointment of such additional director is either (x) mutually
acceptable to the Board and to the Shareholder Group or (y)
approved by all of the continuing members of the Board (that is,
all then-current members of the Board other than Mr. Zenz). In no
event will the Board take any action to set the size of the Board
above six (6) members effective at any time before the 2020 Annual
Meeting.
(c) As
a condition to the Company’s appointment of each Air T
Nominee to the Board and his or her subsequent nomination for
election as a director of the Company at the Covered Meetings, each
Air T Nominee shall (i) provide to the Company such information as
is required to be or is customarily disclosed for directors,
candidates for directors and their affiliates and representatives,
in proxy statements or other filings under applicable law or stock
exchange rules or listing standards or is otherwise necessary for
inclusion of such Air T Nominee in the Board’s slate of
nominees, to the extent that the Company solicits the same
information from all of its directors in accordance with past
practices, (ii) consent to serve as a director of the Company
if elected, and (iii) agree to be bound by all policies, codes
and guidelines applicable to all directors of the Company,
including the Code of Business Conduct and Ethics, and to preserve
the confidentiality of the Company’s business and
information, including discussions or matters considered in
meetings of the Board or Board committees, to the same extent that
the Company requires all of its directors to make any such
agreement in accordance with past practices. At all times prior to
the 2020 Annual Meeting, all committees of the Board shall include
at least one of the Air T Nominees. The Air T Nominees shall
receive the same compensation as members of the Board as all other
non-employee directors of the Company.
(d) If,
during the Standstill Period, either Air T Nominee no longer serves
as a director of the Company, and so long as the Shareholder Group
meets the Minimum Ownership Threshold, the Shareholder Group shall
be entitled to name a substitute nominee, who, provided such
substitute nominee (i) meets the conditions set forth in
Section 4(c)
,
(ii) meets the director-independence standards of the Nasdaq Stock
Market (“
Nasdaq
”), (iii) is not an
Affiliate or Associate of any Member of the Shareholder Group, (iv)
is not a former member of the Board, and (v) is reasonably
acceptable to the Board following review of the substitute
nominee’s qualifications for director, shall be nominated, in
the case of the annual meeting, or appointed, in the case of a
mid-term vacancy, by the Board. Any such substitute nominee,
following appointment, shall be deemed an Air T Nominee for all
purposes hereunder.
(e) Notwithstanding
the foregoing, each Air T Nominee shall tender his or her
resignation from the Board and any committee of the Board on which
he or she then sits (it being understood that it shall be in the
Board’s sole discretion whether to accept or reject such
resignation) if at any time during the Standstill Period the
Shareholder Group ceases collectively to beneficially own, in the
aggregate, at least the Minimum Ownership Threshold. Following the
occurrence of the foregoing, the Company shall have no further
obligations under this
Section 4
.
(f) At
all times while any Air T Nominee is serving as a member of the
Board no Member of the Shareholder Group shall pay any compensation
(within the meaning of Nasdaq Rule 5250(b)(3)) to such Air T
Nominee for his or her service as a member of the
Board.
(g) The
Company’s Board shall cause to be included as a proposal to
be voted on by shareholders at the 2018 Annual Meeting the vote
required under Section 302A.671, Subdivision 3, of the Minnesota
Statutes (the “
Minnesota Voting
Statute
”) in order to grant full voting rights to the
shares of Common Stock beneficially owned by the Shareholder Group
and its Affiliates, as set forth in the Information Statement,
dated January 19, 2018, as amended, provided by the Shareholder
Group and its Affiliates to the Company, and all additional shares
acquired by the Shareholder Group and its Affiliates up to an
aggregate of 33-one/third% of the outstanding Common Stock (the
“
One Share/One Vote
Proposal
”). The Company’s Board will not
recommend to shareholders that they vote against the One Share/One
Vote Proposal but shall remain fully neutral on the proposal, and
the Company will not take any action to make any solicitation in
opposition to the One Share/One Vote Proposal. The Company will
provide a copy in advance to the Shareholder Group of any proxy
statement or other proxy solicitation material disseminated by the
Company relating to the 2018 Annual Meeting and/or the One
Share/One Vote Proposal. In connection with the 2018 Annual
Meeting, the Company will obtain and provide copies to the
Shareholder Group of its list of record holders and list of
non-objecting beneficial holders as of the record date for the
meeting. The Company agrees to reasonably cooperate with the
Shareholder Group relating to any voting procedures implemented by
the Company at the 2018 Annual Meeting to facilitate voting under
the Minnesota Voting Statute so that the Shareholder Group may
solicit proxies in favor of the One Share/One Vote
Proposal.
(h) During
the Standstill Period, the Company shall cause its Chief Executive
Officer and its Chairman of the Board to hold at least one
90-minute meeting per fiscal quarter with one or more directors
and/or executive officers of Air T, as Air T shall reasonably
designate in advance, to discuss such information regarding the
Company and its business, operations, strategies, and prospects as
the Shareholder Group shall reasonably request. Unless otherwise
agreed, such meetings shall be held at the offices of Air T in
Minneapolis, Minnesota, via conference call, or both. In connection
therewith, each member of the Shareholder Group and each individual
participating in such meetings on behalf of Air T shall execute a
customary confidentiality agreement with the Company, in form and
substance reasonably acceptable to the Company and the Shareholder
Group, which agreement shall survive the termination of the
Standstill Period and of this Agreement.
5.
Covenants
.
(a) Each
of the Members of the Shareholder Group agrees that, during the
Standstill Period, he or it will not, and he or it will cause each
of such person’s Affiliates, Associates or agents or other
persons acting on his or its behalf not to, and will cause his or
its respective Affiliates and Associates not to:
(i) submit,
or otherwise induce or encourage any other person to submit, any
shareholder proposal (pursuant to Rule 14a-8 promulgated by the SEC
under the Exchange Act or otherwise) or any notice of nomination or
other business for consideration, and will not nominate any
candidate for election to the Board or publicly oppose the
directors nominated by the Board;
(ii) form,
join in or in any other way participate in a “partnership,
limited partnership, syndicate or other group” within the
meaning of Section 13(d)(3) of the Exchange Act with respect
to the Common Stock or deposit any shares of Common Stock in a
voting trust or similar arrangement or subject any shares of Common
Stock to any voting agreement or pooling arrangement, other than
solely with other Members of the Shareholder Group or one or more
Affiliates or Associates of a Member of the Shareholder Group with
respect to the Common Stock currently owned as set forth in
Section 2(e)
of this Agreement or to the extent such a group may be deemed to
result with the Company or any of its Affiliates or Associates as a
result of this Agreement;
(iii) solicit
proxies or written consents of shareholders, or otherwise conduct
any nonbinding referendum with respect to Common Stock, or make, or
in any way participate in, any “solicitation” of any
“proxy” within the meaning of Rule 14a-1 promulgated by
the SEC under the Exchange Act (but without regard to the exclusion
set forth in Rule 14a-1(l)(2)(iv)) to vote, or advise, encourage or
influence any person with respect to voting, any shares of Common
Stock with respect to any matter, or become a
“participant” in any contested
“solicitation” for the election of directors with
respect to the Company (as such terms are defined or used under the
Exchange Act), other than a “solicitation” or acting as
a “participant” in support of all of the nominees of
the Board at any Annual Meeting of Shareholders of the Company,
except that the Shareholder Group and its Affiliates may solicit
proxies in favor of the One Share/One Vote Proposal at the 2018
Annual Meeting and may provide shareholders the ability to vote on
any other matter presented to shareholders at the meeting on the
proxy card of the Shareholder Group and its Affiliates, as required
pursuant to applicable law and consistent with
Sections 4(b)
and
5(b)
;
(iv) call,
seek to call, or to request the call of, any meeting of the
shareholders of the Company, including by written consent, or seek
to make, or make, a shareholder proposal at any meeting of the
shareholders of the Company or make a request for a list of the
Company’s shareholders (or otherwise induce or encourage any
other person to initiate such proposal or request), except with
respect to a special meeting of shareholders in connection with or
related to a tender offer effectuated in accordance with
Section 6
for
purposes of allowing shareholders to vote upon the approval of
voting rights under the Minnesota Voting Statute with respect to
any shares acquired pursuant to such tender offer;
(v)
except pursuant to
Section
6
, effect or seek to effect (including, without limitation,
by entering into any discussions, negotiations, agreements or
understandings with any third person), offer or propose (whether
publicly or otherwise) to effect, or cause or participate in, or in
any way assist or facilitate any other person to effect or seek,
offer or propose (whether publicly or otherwise) to effect or
participate in (i) any acquisition of any material assets or
businesses, of the Company or any of its subsidiaries,
(ii) any tender offer or exchange offer, merger, acquisition
or other business combination involving the Company or any of its
subsidiaries, or (iii) any recapitalization, restructuring,
liquidation, dissolution or other extraordinary transaction with
respect to the Company or any of its subsidiaries (each, an
“
Extraordinary
Transaction
”);
(vi)
publicly disclose, or cause or facilitate the public disclosure
(including without limitation the filing of any document or report
with the SEC or any other governmental agency or any disclosure to
any journalist, member of the media or securities analyst) of any
intent, purpose, plan or proposal to obtain any waiver, or consent
under, or any amendment of, any of the provisions of this
Section 5
, or
otherwise seek (in any manner that would require public disclosure
by any of the Members of the Shareholder Group or their Affiliates
or Associates) to obtain any waiver, consent under, or any
amendment of, any provision of this Agreement;
(vii) (A) make
any public disclosure, announcement or statement regarding any
intent, purpose, plan or proposal with respect to the Board, the
Company, its management, policies or affairs or any of its
securities or assets or this Agreement that is inconsistent with
the provisions of this Agreement; (B) make, or issue or cause
to be made or issued, or in any way encourage any other person to
make or issue or cause to be made or issued, any such public
disclosure, announcement or statement in support of any
solicitation described in paragraph
(iii)
of this
Section 5(a)
(other than
solicitations by the Company), or (C) take any action that
could require the Company to make any public disclosure relating to
such intent, purpose, plan, proposal or condition, or any other
matter set forth in this Agreement;
(viii)
except pursuant to
Section
6
, acquire, offer or propose to acquire, or agree to
acquire, on the market or through a private transaction, directly
or indirectly, whether by purchase, tender or exchange offer,
through the acquisition of control of another person, by joining a
partnership, limited partnership, syndicate or other group
(including any group of persons that would be treated as a single
“person” under Section 13(d) of the Exchange Act),
through swap or hedging transactions or otherwise, any securities
of the Company or any rights decoupled from the underlying
securities of the Company, provided that nothing in this Agreement
shall prohibit the Shareholder Group and its Affiliates from
acquiring shares of Common Stock up to an aggregate ownership of
33-one/third% of the outstanding shares of the Common Stock;
or
(ix)
enter into any written agreement with any person (other than
professional advisers to one or more Members of the Shareholder
Group) with respect to any of the foregoing; finance, assist,
encourage or seek to persuade any person to take any action or make
any public statement with respect to any of the foregoing; or
otherwise take or cause any action or make any public statement
inconsistent with any of the foregoing.
(b) Each
Member of the Shareholder Group shall cause all shares of Common
Stock beneficially owned by them and their Affiliates and
Associates to be (i) present for quorum purposes at each Covered
Meeting held during the Standstill Period, and at any adjournments
or postponements thereof, and (ii) voted at all such meetings,
(x) in favor of all directors nominated by the Board for
election consistent with
Section 4(b)
, and (y) (with
respect to the 2018 Annual Meeting only) in favor of the proposals
relating to the approval of the Company’s 2018 Equity
Incentive Plan, the approval of the Company’s 2018 Employee
Stock Purchase Plan, the approval (by non-binding vote) of the
Company’s executive compensation, and the ratification of the
appointment of Baker Tilly Virchow Krause, LLP as the
Company’s independent registered public accounting firm for
the year ending December 31, 2018; provided, however, that if
Institutional Shareholder Services recommends that shareholders
vote against any proposals described in clause (y) above, then the
Shareholder Group may vote in accordance with such recommendation
on those proposals.
(c) The
Members of the Shareholder Group who filed the Schedule 13D shall
promptly file an amendment to the Schedule 13D reporting the entry
into this agreement, amending applicable items to conform to its
obligations hereunder and appending or incorporating by reference
this Agreement as an exhibit thereto. Such Members of the
Shareholder Group shall provide to the Company a reasonable
opportunity to review and comment on such amendment in advance of
filing, and shall consider in good faith the reasonable comments of
the Company.
(d)
The
Company shall not take any action to avoid or seek to avoid the
observance or performance of any of the terms required to be
observed or performed by the Company under this Agreement, but
shall at all times in good faith take all actions that are
necessary to carry out and perform all of the provisions of this
Agreement.
6.
Tender
Offer
.
Notwithstanding the provisions of
Section 5
, the Shareholder
Group may commence an open offer under Minnesota, United States and
all other applicable securities, corporate and other laws to
purchase all outstanding shares of Common Stock of the Company not
then beneficially owned by the Shareholder Group, which offer shall
be (i) for cash or stock at a premium to the then-current
market price of the Common Stock, (ii) conducted in accordance
with the tender offer provisions of the United States securities
laws (including, without limitation, Section 14(d) of the
Exchange Act) and (iii) conditioned upon the tender and
purchase of not less than a majority of all outstanding shares of
Common Stock of the Company held by all shareholders who are not
Affiliates or Associates of the Shareholder Group as of the date
the offer is commenced. Any determination by the Board whether to
recommend that shareholders accept or reject any such offer shall
be made by the Board in its sole discretion.
7.
Material
Non-Public Information
. The
Members of the Shareholder Group acknowledge that they are aware
that the United States securities law prohibit any person who has
material non-public information about a company from purchasing or
selling such securities of such company, or from communicating such
information to any other person under circumstances in which it is
reasonably foreseeable that such person is likely to purchase or
sell such securities.
8.
Voting
Procedures
. The
Members of the Shareholder Group shall comply with all lawful
voting procedures established by the Company to enable the Company
to comply with the provisions of the Minnesota Voting Statute. The
Company and Air T shall agree upon the procedures to be followed in
presenting the One Share/One Vote Proposal to shareholders, which
shall include procedures that allow shareholders to vote at the
meeting by proxy (provided that shares held beneficially or of
record by Members of the Shareholder Group shall be voted at the
meeting by ballot). The Company shall appoint an outside,
independent inspector of elections to oversee the voting at the
2018 Annual Meeting.
9.
Press
Release and Other Public Disclosures
.
Promptly following the execution and delivery of this Agreement,
the Company and the Shareholder Group shall issue a joint press
release attached hereto as
Exhibit A
(the
“
Press
Release
”). None of the parties hereto will make any
public statements that are inconsistent with, or otherwise contrary
to, the statements in the Press Release. The Company and the
Shareholder Group shall not, and shall cause their respective
Affiliates and Associates and representatives not to,
(i) prior to the issuance of the Press Release, issue any
press release or public announcement regarding this Agreement
without the prior written consent of the other parties hereto, and
(ii) during the Standstill Period, make any public statement,
disclosure or announcement with respect to this Agreement that is
inconsistent with the Press Release, except as required by
applicable law or regulation, pursuant to the rules or listing
standards of any stock exchange or with the prior written consent
of the other party.
10.
Non-Disparagement
.
During the Standstill Period, none of the parties hereto (nor any
of their respective subsidiaries, Affiliates, Associates,
successors, assigns, officers, key employees or directors) shall
directly or indirectly make or issue or cause to be made or issued
any public disclosure, announcement, or statement (including
without limitation (i) the filing of any document or report
with the SEC or any other governmental agency unless required by
law or (ii) any disclosure to any journalist, member of the
media, or securities analyst) concerning any other party or, with
respect to the Company, any of its past, present or future
directors, officers, employees, other affiliates, agents,
attorneys, or representatives, which disparages such other party or
any of such other party’s respective past, present, or future
directors, officers, employees or other affiliates, or any of their
respective practices, procedures, business operations, products or
services, in any manner; provided, for the benefit of clarification
and the avoidance of doubt, that this provision shall not in any
way prohibit members of the Shareholder Group from communicating
directly with the Company and its management and Board in a
non-public manner to communicate their concerns or raise issues
related to the Company, its performance, the performance of
management or any other matters related to the Company; provided
further, that the restrictions in this
Section 10
shall not
(i) apply in any compelled testimony or production of
information, whether by legal process, subpoena or as part of a
response to a request for information from any governmental
authority with jurisdiction over the party from whom information is
sought, in each case, to the extent required, (ii) prohibit
any person from reporting possible violations of federal law or
regulation to any governmental authority pursuant to
Section 21F of the Exchange Act or Rule 21F promulgated
thereunder, or (iii) impose any liability on any person for
non-public statements that express factual matters or such
person’s opinion in good faith.
11.
Specific
Performance
. Each
party hereto acknowledges and agrees, on behalf of itself and its
Affiliates, that irreparable harm would occur in the event any of
the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is
accordingly agreed that the parties will be entitled to specific
relief hereunder, including, without limitation, an injunction or
injunctions to prevent and enjoin breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions
hereof in any state or federal court in the State of Minnesota, in
addition to any other remedy to which they may be entitled at law
or in equity. Any requirements for the securing or posting of any
bond with such remedy are hereby waived.
12.
Jurisdiction
. Each
party hereto agrees, on behalf of itself and its Affiliates, that
any actions, suits or proceedings arising out of or relating to
this Agreement or the transactions contemplated hereby will be
brought solely and exclusively in any state or federal court in the
State of Minnesota (and the parties agree not to commence any
action, suit or proceeding relating thereto except in such courts),
and further agrees that service of any process, summons, notice or
document by U.S. registered mail to the respective addresses set
forth in
Section 16
of this
Agreement will be effective service of process for any such action,
suit or proceeding brought against any party in any such court.
Each party, on behalf of itself and its Affiliates, irrevocably and
unconditionally waives any objection to the laying of venue of any
action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby, in the state or federal courts in
the State of Minnesota, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such
court that any such action, suit or proceeding brought in any such
court has been brought in an improper or inconvenient
forum.
13.
Applicable
Law
. This
agreement shall be governed in all respects, including validity,
interpretation and effect, by the laws of the State of Minnesota
applicable to contracts executed and to be performed wholly within
such state, without giving effect to the choice of law principles
of such state.
14.
Counterparts
. This
Agreement may be executed in two or more counterparts which
together shall constitute a single agreement.
15.
Entire
Agreement; Amendment and Waiver; Successors and
Assigns
. This
Agreement contains the entire understanding of the parties hereto
with respect to, and supersedes all prior agreements relating to,
its subject matter. There are no restrictions, agreements,
promises, representations, warranties, covenants or undertakings
between the parties other than those expressly set forth herein.
This Agreement may be amended only by a written instrument duly
executed by the parties hereto or their respective successors or
assigns. No failure on the part of any party to exercise, and no
delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial
exercise of such right, power or remedy by such party preclude any
other or further exercise thereof or the exercise of any other
right, power or remedy. All remedies hereunder are cumulative and
are not exclusive of any other remedies provided by law. The terms
and conditions of this Agreement shall be binding upon, inure to
the benefit of, and be enforceable by the parties hereto and their
respective successors, heirs, executors, legal representatives, and
assigns.
16.
Notices
. All
notices, requests, instructions or other documents to be given
hereunder by any party to the other parties shall be in writing and
shall be deemed duly given (i) upon delivery, when delivered
personally, (ii) one (1) business day after being sent by
overnight courier or when sent by electronic mail or facsimile
transmission (with a confirming copy sent by overnight courier),
and (iii) three (3) business days after being sent by
registered or certified mail, postage prepaid at the address
specified in this Section, or at such other address as is provided
by a party to this Agreement to the other party pursuant to notice
given in accordance with the provisions of this
Section:
Insignia
Systems, Inc.
8799 Brooklyn Boulevard
Minneapolis,
Minnesota 55445
Email:
kristine.glancy@insigniasystems.com
Attention: Chief Executive Officer
with a
copy to:
Faegre
Baker Daniels LLP
90
South Seventh Street, Suite 2200
Minneapolis, Minnesota
55402
Attention: Michael A.
Stanchfield
Email:
mike.stanchfield@faegrebd.com
Facsimile: 612-766-1600
if to
the Shareholder Group or any Member thereof:
Air T,
Inc.
5000 West 36
th
Street, Suite
130
Minneapolis, Minnesota 55416
Attention: Nick
Swenson
Email:
nswenson@airt.net
with a
copy to:
Thompson Hine
LLP
3900 Key Center
127 Public Square
Cleveland, Ohio
44114
Attention: Derek D.
Bork
Email:
derek.bork@thompsonhine.com
Facsimile: 216-566-5800
17.
No
Third-Party Beneficiaries
.
Nothing in this Agreement is intended to confer on any person other
than the parties hereto or their respective successors and assigns,
any rights, remedies, obligations or liabilities under or by reason
of this Agreement.
18.
Interpretation
and Construction
. When
a reference is made in this Agreement to a Section, such reference
shall be to a Section of this Agreement, unless otherwise
indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement. Whenever the words
“include,” “includes” and
“including” are used in this Agreement, they shall be
deemed to be followed by the words “without
limitation.” The words “hereof, “herein”
and “hereunder” and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not
to any particular provision of this Agreement, unless the context
clearly otherwise requires. The word “will” shall be
construed to have the same meaning as the word “shall.”
The words “dates hereof” will refer to the date of this
Agreement. The word “or” is not exclusive. The
definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms. Any agreement,
instrument, law, rule, regulation or statute defined or referred to
herein means, unless otherwise indicated, such agreement,
instrument, law, rule, regulation or statute as from time to time
amended, modified or supplemented. Each of the parties hereto
acknowledges that it has been represented by counsel of its choice
throughout all negotiations that have preceded the execution and
delivery of this Agreement, and that it has executed and delivered
the same with the advice of such counsel. Each party cooperated and
participated in the drafting and preparation of this Agreement and
the documents referred to herein, and any and all drafts relating
thereto exchanged among the parties shall be deemed the work
product of all of the parties and may not be construed against any
party by reason of its drafting or preparation. Accordingly, any
rule of law or any legal decision that would require interpretation
of any ambiguities in this Agreement against any party that drafted
or prepared it is of no application and is hereby expressly waived
by each of the parties hereto, and any controversy over
interpretations of this Agreement shall be decided without regard
to events of drafting or preparation.
19.
Termination
and Effect of Termination
. This
Agreement shall remain in full force and effect for the Standstill
Period. No termination shall relieve any party hereto from
liability for any breach of this Agreement prior to such
termination.
20.
Expenses
.
Each of the Company and the Shareholder Group shall be responsible
for its own fees and expenses incurred in connection with the
negotiation and execution of this Agreement; provided that the
Company shall reimburse the Shareholder Group for the legal, proxy
advisory and other fees and expenses incurred in connection with
the Nomination Notice and the negotiation and execution of this
Agreement in the amount of $50,000 in the aggregate. The
Company shall pay the Shareholder Group such $50,000 promptly after
the date hereof.
[signature
page follows]
IN
WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized signatories of the parties as of
the date first written above.
INSIGNIA
SYSTEMS, INC.
By:
|
/s/ Kristine Glancy
|
|
Kristine Glancy
|
|
Chief Executive Officer
|
AIR
T, INC.
By:
|
/s/ Nick Swenson
|
|
Nick Swenson
|
|
Chief Executive Officer
|
GROVELAND
CAPITAL, LLC
By:
|
/s/ Nick Swenson
|
|
Nick Swenson
|
|
Managing Member
|
EXHIBIT A
Press
Release
[See Attached]