EXHIBIT 10.1

 

STANDSTILL AGREEMENT

 

This Standstill Agreement, dated as of November 8, 2014 (this “Agreement”), is
entered into by and among Insignia Systems, Inc., a Minnesota corporation (the
“Company”), and Nicholas J. Swenson, an individual resident of Minnesota
(“Swenson”), Air T, Inc., a Delaware corporation (“Air T”), Groveland Capital
LLC, a Delaware limited liability company (“Groveland Capital”), and Groveland
Hedged Credit Fund LLC, a Delaware limited liability company (“Groveland
Fund”).  Swenson, Air T, Groveland Capital, and Groveland Fund are collectively
referred to herein as the “Shareholder Group.”

 

WHEREAS, the Company and the Shareholder Group have determined that the
interests of the Company and its shareholders would be best served by adding
Swenson and the Additional Director (as defined below) to the Company’s Board of
Directors on the terms and conditions 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 Swenson, has the power and
authority 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

 

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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)                                  Such party is the “beneficial owner” of the
number of shares of Common Stock (as defined herein) that such party reports as
held by it in the Schedule 13D filed by the Shareholder Group with the
Securities and Exchange Commission (the “SEC”) on August 18, 2014 (the
“Schedule 13D”).  Except for those Affiliates (as defined herein) and Associates
(as defined herein) of such party with respect to whom a cover page is included
in the Schedule 13D, no other Affiliate or Associate of such party beneficially
owns any shares of Common Stock.  Each member of the Shareholder Group disclaims
beneficial ownership of the shares of Common Stock owned or controlled by the
other members except to the extent of his or its pecuniary interest therein, and
asserts that such member’s entry into this Agreement is a separate agreement of
such member with the Company.

 

(d)                                 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.

 

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)                                 “Board” means the Board of Directors of the
Company.

 

(c)                                  “Common Stock” means the Common Stock of
the Company, $0.01 par value.

 

(d)                                 The “Standstill Period” means as to each
member of the Shareholder Group, the period from the date of this Agreement
until the earlier of:

 

(i)             the date on which Swenson ceases to be a member of the Board,
provided that the Standstill Period shall not end pursuant to this clause
(i) prior to

 

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the earliest to occur of (A) October 1, 2015, (B) that date that is sixty days
prior to the date by which Air T or the Groveland Fund, or their respective
Affiliates, are required to file a notice of an intent to nominate an individual
to the Board for the Company’s 2016 Annual Meeting of Shareholders or (C) the
date on which the Board determines that it will not approve the Additional
Director proposed by Air T, a determination about which shall be made by no
later than December 1, 2014 or, if later, the tenth (10th) business day
following the date on which Air T proposes its candidate to be the Additional
Director; or

 

(ii)          such date, if any, as the Company has materially breached any of
its commitments or obligations set forth in Sections 4(a) through 4(d) of this
Agreement, provided that, if Swenson is a member of the Board at the time of
such material breach and the material breach relates to a failure of the Board
to approve the Additional Director, Swenson must resign his position on the
Board in order to cause the Standstill Period to terminate.

 

4.                                      Election of Swenson as Director; Related
Matters.

 

(a)                                 Within five business days following the
execution and delivery of this Agreement by the parties hereto:

 

(i)                                     In accordance with the Company’s
articles of incorporation and amended and restated bylaws, the Board shall adopt
a resolution increasing the size of the Board by one director, to a total of
seven directors, effective as of the date approved by the Board.

 

(ii)                                  In accordance with the Company’s articles
of incorporation and amended and restated bylaws, the Board shall elect Swenson
as a director of the Company, effective as of the date approved by the Board, to
serve until the Company’s 2015 Annual Meeting of Shareholders and until his
successor shall have been duly elected and qualified, or until his earlier
death, resignation or removal.

 

(iii)                               In accordance with the Company’s articles of
incorporation and amended and restated bylaws, the Board shall agree to maintain
a board of no more than seven directors through the Company’s 2016 Annual
Meeting of Shareholders. The Company agrees to nominate seven directors for
election at the Company’s 2015 Annual Meeting of Shareholders, all of whom will
be nominated to serve a one-year term.  The Company agrees to include Swenson
and the Additional Director as nominees for election at the Company’s 2015
Annual Meeting of Shareholders, as two of the Company’s seven nominees.

 

(iv)                              In accordance with the Company’s articles of
incorporation and amended and restated bylaws and subject to Swenson meeting any
applicable SEC and Nasdaq requirements for membership on the applicable
committee, the Board shall adopt a resolution appointing Swenson to serve as a
member of the Company’s Nominating and Corporate Governance Committee and
Compensation Committee, effective as of the date approved by the Board.

 

(v)                                 In accordance with the Company’s articles of
incorporation and amended and restated bylaws, the Board shall adopt a
resolution and charter

 

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establishing a committee of up to four individuals to be designated as the
“Capital Allocation Committee,” initially appointing Swenson, Steven R. Zenz,
David L. Boehnen, and one other individual selected by Swenson (subject to
approval by the Board, which shall not be unreasonably withheld), to serve as
members of the Capital Allocation Committee; such actions by the Board shall be
effected by no later than November 15, 2014 or, if later, the tenth (10th)
business day following the date on which Swenson proposes his candidate to serve
on the Capital Allocation Committee.  The charter of the Capital Allocation
Committee is attached hereto as Exhibit A.

 

(A)                               The Capital Allocation Committee will be
charged with reviewing and recommending “for” or “against” all internal and
external capital investments, acquisitions, securities purchases or sales,
mergers and general investments in excess of $1,000,000 (an “Investment”).  The
Capital Allocation Committee also will act as a clearinghouse for the evaluation
of possible uses of excess capital.

 

(B)                               Procedurally, all proposals for Investments in
excess of $1,000,000 will be presented to the Capital Allocation Committee for a
recommendation “for” or “against” the proposal (for the avoidance of doubt, the
Capital Allocation Committee may itself originate Investment proposals for
consideration by the Board).

 

(C)                               The Board may elect by a majority vote to take
any action contrary to any recommendation of the Capital Allocation Committee
with respect to an Investment or otherwise.

 

(D)                               The Company shall bear the reasonable costs
and expenses incurred by the Capital Allocation Committee in performing its
duties.

 

(b)                                 Promptly after execution of this Agreement,
Swenson shall propose for election to the Board, an individual who qualifies as
an “independent director” as that term is defined under the Nasdaq Stock Market
rules, which proposed candidate shall be subject to the recommendation of the
Company’s Nominating and Corporate Governance Committee and election by the
Board (the “Additional Director”).

 

(i)                                     Prior to the election of the Additional
Director, in accordance with the Company’s articles of incorporation and amended
and restated bylaws, the Board shall adopt a resolution amending the bylaws to
permit the increase of the size of the Board to a total of eight directors and a
resolution increasing the size of the Board by one director, to a total of eight
directors, in each case, effective as of the date approved by the Board.

 

(ii)                                  Any such election of the Additional
Director shall be effective as of the date approved by the Board, and the
Additional Director will serve as director until the Company’s 2015 Annual
Meeting of Shareholders and until his successor shall have been duly elected and
qualified, or until his earlier death, resignation or removal.

 

(iii)                               The Company agrees to include Swenson and
the Additional Director as nominees for election at the Company’s 2015 Annual
Meeting of

 

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Shareholders, as two of the Company’s seven nominees.

 

(c)                                  The Board shall nominate seven of the eight
members of the Board (including Swenson and the Additional Director) for
election as directors at the 2015 Annual Meeting of Shareholders.

 

(d)                                 Prior to nominating directors to stand for
election at the 2015 Annual Meeting of Shareholders, in accordance with the
Company’s articles of incorporation and amended and restated bylaws, the Board
shall adopt a resolution decreasing the size of the Board by one director, to a
total of seven directors, effective upon election of the directors at the 2015
Annual Meeting of Shareholders.

 

(e)                                  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.

 

(f)                                   The members of the Shareholder Group shall
cause all shares of Common Stock beneficially owned by them and their Affiliates
to be present for quorum purposes and to be voted, and shall cause all shares of
Common Stock held by their respective Associates to be present for quorum
purposes and to be voted (i) in favor of all directors nominated by the Board
for election at the Company’s 2015 Annual Meeting of Shareholders; and (ii) with
respect to the advisory vote to approve executive compensation, the advisory
vote of the frequency of future advisory votes to approve executive
compensation, ratification of independent auditors.

 

(g)                                  In the event that the Board determines that
it will not approve Swenson or the Additional Director proposed by Air T, the
Company shall extend the deadline for the submission by Air T or the Groveland
Fund of a notice of an intent to nominate one or more individuals to the Board
for the Company’s 2015 Annual Meeting of Shareholders to December 27, 2014.

 

5.                                      Standstill.

 

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 or agents or other persons acting on his or its behalf not to, and
will use commercially reasonable efforts to cause his or its respective
Associates not to:

 

(a)                                 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 oppose the directors nominated by the
Board;

 

(b)                                 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

 

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members of the Shareholder Group or one or more Affiliates of a member of the
Shareholder Group with respect to the Common Stock currently owned as set forth
in Section 2(c) of this Agreement or to the extent such a group may be deemed to
result with the Company or any of its Affiliates as a result of this Agreement;

 

(c)                                  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 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 (including Swenson and the Additional Director) at
the 2015 Annual Meeting of Shareholders and each subsequent annual meeting of
shareholders with respect to which the Board has nominated Swenson and the
Additional Director;

 

(d)                                 seek, in any capacity other than as a member
of the Board, to call, or to request the call of, a special meeting of the
shareholders of the Company, 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) or otherwise acting alone, or in concert with
others, seek to control or influence the governance or policies of the Company;

 

(e)                                  effect or seek to effect, in any capacity
other than as a member of the Board (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;

 

(f)                                   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 Section 4(f) or 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;

 

(g)                                  enter into any arrangements, understandings
or agreements (whether written or oral) with, or advise, finance, assist or
encourage, any other person that engages, or offers or proposes to engage, in
any of the foregoing; or

 

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(h)                                 take or cause or induce others to take any
action inconsistent with any of the foregoing.

 

It is understood and agreed that this Agreement shall not be deemed to prohibit
Swenson from engaging in any lawful act in his capacity as a director of the
Company.

 

6.                                      Code of Business Conduct and Ethics.
Swenson has reviewed the Company’s Code of Business Conduct and Ethics and
agrees to abide by the provisions thereof during his service as a director of
the Company.  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.

 

7.                                      Questionnaires.  Swenson has accurately
completed the form of questionnaire provided by the Company for its use in
connection with his appointment to serve as a director of the Company.

 

8.                                      Compensation.  Swenson shall be
compensated for his service as a director and shall be reimbursed for his
expenses on the same basis as all other non-employee directors of the Company
are compensated and shall be eligible to be granted equity-based compensation on
the same basis as all other non-employee directors of the Company.

 

9.                                      Indemnification and Insurance.  Swenson
is entitled to the same rights of indemnification as the other directors of the
Company as such rights may exist from time to time.  The Company shall, promptly
after his election, take such action, if any, as may be necessary to add Swenson
to the Company’s directors’ and officers’ liability insurance policy as an
Insured Person.

 

10.                               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 B (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.

 

11.                               Non-Disparagement.  During the Standstill
Period, neither the Company nor any of the members of the Shareholder Group
shall directly or indirectly make or issue or cause to be made or issued any
disclosure, announcement, or statement (including without limitation the filing
of any document or report with the SEC or any other governmental agency unless
required by law or any disclosure to any journalist, member of the media, or
securities analyst) concerning the other party or, with respect to the Company,
any of its past, present or future directors, officers, employees or other
affiliates, which disparages such other party or any of such other party’s
respective past, present, or future directors, officers, employees or other
affiliates; 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.

 

12.                               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

 

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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.

 

13.                               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 17 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.

 

14.                               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.

 

15.                               Counterparts. This Agreement may be executed
in two or more counterparts which together shall constitute a single agreement.

 

16.                               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.

 

17.                               Notices. All notices, consents, requests,
instructions, approvals and other communications provided for herein and all
legal process in regard hereto shall be in writing and shall be deemed validly
given, made or served, if (a) given by telecopy, when such telecopy is
transmitted to the telecopy number set forth below, or to such other telecopy
number 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, and the
appropriate

 

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confirmation is received or (b) if given by any other means, when actually
received during normal business hours 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:

 

if to the Company:

 

Insignia Systems, Inc.
8799 Brooklyn Boulevard

Minneapolis, Minnesota 55445
Email: glen.dall@insigniasystems.com

Attention: Chief Executive Officer

 

with a copy to:

 

Faegre Baker Daniels LLP
2200 Wells Fargo Center
90 South Seventh Street
Minneapolis, MN 55402-3901
Email: Morgan.Burns@FaegreBD.com

Facsimile: 612-766-1600
Attention: W. Morgan Burns

 

if to the Shareholder Group or any member thereof:

 

Nicholas J. Swenson

3033 Excelsior Boulevard, Suite 560

Minneapolis, Minnesota 55416

Email: nickswenson@grovelandcapital.com

 

with a copy to:

 

Foley & Lardner LLP

777 East Wisconsin Avenue

Milwaukee, Wisconsin 53202

Attention: Peter D. Fetzer

Email: pfetzer@foley.com

Facsimile: (414) 297-4900

 

18.                               Reimbursement of Expenses.  The Company agrees
to reimburse the Shareholder Group for their out-of-pocket expenses incurred in
connection with the Schedule 13D and the Shareholder Group’s negotiation and
preparation of this Agreement, in an amount equal to $10,000.  Such amount shall
be payable by the Company to Air T within five (5) business days following the
date of this Agreement.

 

19.                               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.

 

[signature page follows]

 

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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/ Glen P. Dall

 

 

Glen P. Dall

 

 

President and Chief Executive Officer

 

 

 

 

 

AIR T, INC.

 

 

 

 

 

By:

/s/ Nicholas J. Swenson

 

 

Nicholas J. Swenson

 

 

Chief Executive Officer

 

 

 

GROVELAND CAPITAL, LLC

 

 

 

 

 

By:

/s/ Nicholas J. Swenson

 

 

Nicholas J. Swenson, Managing Member

 

 

 

 

 

GROVELAND HEDGED CREDIT FUND, LLC

 

 

 

By:

Groveland Capital, LLC, its general partner

 

 

 

 

 

 

 

 

By:

/s/ Nicholas J. Swenson

 

 

 

Nicholas J. Swenson, Managing Member

 

 

 

 

 

/s/ Nicholas J. Swenson

 

NICHOLAS J. SWENSON

 

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Exhibit A

 

CAPITAL ALLOCATION COMMITTEE CHARTER

 

Adopted November 8, 2014

 

A.                                    Organization

 

1.              This charter governs the operations of the Capital Allocation
Committee (the “Committee”) of the board of directors (the “Board”) of
Insignia, Inc. (the “Company”). The Committee shall review and reassess the
Charter at least annually and obtain the approval of the Board for any changes.

 

2.              The Committee shall be appointed by the Board and shall be
composed of up to four individuals.

 

3.              Committee members shall serve until their successors shall be
duly elected or their prior resignation, removal, or death.

 

4.              A Committee chair shall be designated by the Board or, if it
does not do so, a chair shall be elected by a majority vote of the Committee.

 

5.              The chair shall be responsible for reporting to the Board
activities and recommendations of the Committee.

 

6.              The Committee shall have the authority to engage advisors, as it
deems reasonably appropriate, to advise the Committee and to set the terms,
including approval of fees and expenses, of all such engagements, and to
terminate any such engagements.  The Company shall provide for the appropriate
funding, as determined by the Committee in accordance with this Charter, for
paying fees to such advisors engaged by the Committee.

 

B.                                    Mission and Purpose

 

1.              The Capital Allocation Committee shall review and recommend to
the Board “for” or “against” all internal and external capital investments,
acquisitions, securities purchases or sales, mergers and general investments in
excess of $1,000,000 (each, an “Investment”).

 

C.                                    Structure and Meetings

 

1.                                      The Committee shall meet as often as it
determines.

 

2.                                      The Committee shall keep minutes and
other relevant documentation of all meetings held.

 

3.              The chair of the Committee will preside at each meeting and, in
consultation with the other members of the Committee, will set the agenda of
items to be addressed at each meeting.  The chair of the Committee shall ensure
that the agenda for each meeting is circulated to each Committee member in
advance of the meeting.

 

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4.              Any Investment recommended by the Committee may be disapproved
by the Board in its sole discretion and the Board may in its sole discretion
determine to proceed with any Investment recommended against by the Committee.

 

D.                                    Responsibilities

 

The Committee shall:

 

1.                                      Review and recommend to the Board “for”
or “against” all Investments.

 

2.                                      Evaluate possible uses of excess capital
and report to the Board on such evaluation.

 

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Exhibit B

 

Press Release

 

[See attached.]

 

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