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Form 8-K LRAD Corp For: Mar 11

March 14, 2016 1:01 PM EDT

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 


 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

 

 

Date of Report (Date of earliest event reported): March 11, 2016

 

LRAD Corporation

(Exact name of registrant as specified in its charter)

 

          Delaware          

        000-24248       

     87-0361799     

(State or Other Jurisdiction of

Incorporation)

(Commission

File Number)

(I.R.S. Employer

Identification No.)

 

16990 Goldentop Road

San Diego, California 92127 

(Address of Principal Executive Offices)

 


 

858-676-1112

(Registrant’s telephone number, including area code)

 

N/A

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

[ ]

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

   

[X]

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14.a-12)

   

[ ]

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

   

[ ]

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 
 

 

 

Item 1.01

Entry into a Material Definitive Agreement

 

On March 11, 2016, LRAD Corporation (the “Company”) entered into an agreement (the “Investors Agreement”) with Iroquois Master Fund Ltd. and certain of its affiliates (collectively, the “Investors”) to settle a potential proxy contest pertaining to the election of directors to the Company’s Board of Directors (the “Board”) at its 2016 annual meeting of stockholders (the “2016 Annual Meeting”). Pursuant to the Investors Agreement:

 

 

The Board will expand the size of the Board to seven (7) directors and appoint Scott L. Anchin and Daniel H. McCollum to fill the vacancies created by the expansion, and the Board will appoint one of Mr. Anchin or Mr. McCollum to each committee of the Board.

     
 

The Board will nominate Scott L. Anchin, Thomas R. Brown, Laura M. Clague, General John G. Coburn, Daniel H. McCollum and Richard H. Osgood III for election at the 2016 Annual Meeting, will recommend a vote for such nominees and solicit proxies for the election of such nominees at the 2016 Annual Meeting. The Company also agreed to hold the 2016 Annual Meeting no later than July 31, 2016.

     
 

The Board and each committee of the Board will take all action necessary to cause the Board to have no more than six (6) directors from the 2016 Annual Meeting until the expiration of the Standstill Period (as defined below).

     
 

The Investors agreed to irrevocably withdraw their letter to the Company expressing an intention to nominate director candidates (the “Nomination Letter”), and the Company agreed to pay to the Investors their legal and advisory fees in connection with the Nomination Letter, up to a maximum of $130,000.

     
 

The Investors agreed to vote at the 2016 Annual Meeting in favor of the Board nominees and for the other matters recommended by the Board for stockholder approval.

     
 

The Investors agreed to customary standstill restrictions during the period beginning on the date of the Investors Agreement and ending on the earlier of (a) ten (10) business days prior to the deadline for submission of stockholder nominations for the Company’s 2017 annual meeting of stockholders pursuant to the Company’s bylaws (the “2017 Notification Deadline”) and (b) such date, if any, as the Company breaches the Investors Agreement and such breach has not been cured within fifteen (15) days following written notice of such breach (the “Standstill Period”); which period will be extended if the Company notifies the Investors at least fifteen (15) days prior to the 2017 Notification Deadline that the Board intends to nominate and recommend the election of each of Mr. Anchin and Mr. McCollum (or their replacements, as applicable) as nominees at the Company’s 2017 annual meeting of stockholders on the Company’s slate of director candidates through the earlier of (i) ten (10) business days prior to the deadline for submission of stockholder nominations for the Company’s 2018 annual meeting of stockholders pursuant to the Company’s bylaws and (ii) such date, if any, as the Company breaches the Investors Agreement and such breach has not been cured within fifteen (15) days following written notice of such breach.

     
 

If either Mr. Anchin or Mr. McCollum is unable to serve on the Board or resigns from the Board (for any reason other than following a breach of the Investors Agreement by the Investors or their affiliates) during the Standstill Period, the Investors are entitled to designate a replacement nominee to be approved by the Nominating and Corporate Governance Committee and appointed to the Board.

  

 
 

 

 

The foregoing summary of the Investors Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Investors Agreement, which is attached as Exhibit 10.1 hereto and incorporated herein by reference.

 

On March 11, 2016, the Company and Thomas R. Brown, the Company’s President and Chief Executive Officer, entered into a Separation Agreement and General Release (the “Separation Agreement”). Pursuant to the Separation Agreement, Mr. Brown resigned as President and Chief Executive Officer and as a member of the Board of Directors of the Company effective June 30, 2016 (the “Resignation Date”). Mr. Brown will continue to receive his current salary and benefits through the Resignation Date. On the Resignation Date, Mr. Brown will receive a lump sum severance payment in the amount of $566,500, equal to two years of his annual base salary. The Separation Agreement further provides that (a) Mr. Brown will be eligible to receive a bonus under the Company’s annual incentive bonus plan for the Company’s 2016 fiscal year on the date that bonuses under the bonus plan are paid to the Company’s eligible employees, (b) Mr. Brown will be reimbursed for up to 24 months of COBRA coverage premiums and (c) Mr. Brown’s outstanding stock options will be fully vested as of the date that Mr. Brown’s transition and consulting services end and remain exercisable pursuant to the terms thereof until either (i) the twenty-four (24) month anniversary of the Resignation Date, or (ii) the stated expiration date of the applicable option, whichever is earlier in time, at which time all of Mr. Brown’s unexercised options will expire and terminate. The Separation Agreement requires that Mr. Brown provide the Company with certain transition and consulting services for the separation consideration described above and an additional $300 per hour, and that he comply with certain confidentiality, non-disparagement and non-solicitation restrictive covenants. The Separation Agreement also includes a general release by Mr. Brown of claims against the Company.

 

The foregoing summary of the Separation Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Separation Agreement, which is attached as Exhibit 10.2 hereto and incorporated herein by reference.

 

On March 14, 2016, the Company issued a press release announcing the signing of the Settlement Investors Agreement, the appointment of Messrs. Anchin and McCollum to the Board, the Separation Agreement and Mr. Brown’s resignation. A copy of the press release is attached as Exhibit 99.1 hereto and incorporated herein by reference.

 

Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

As described under Item 1.01 above, pursuant to the Investors Agreement, on March 11, 2016, the Board increased the size of the Board from five (5) to seven (7) and appointed Messrs. Anchin and McCollum to the Board. Each of Mr. Anchin and Mr. Mr. McCollum will serve until the 2016 Annual Meeting and until his successor is duly elected and qualified. Pursuant to the Investors Agreement, the Company also agreed to nominate six (6) directors, Scott L. Anchin, Thomas R. Brown, Laura M. Clague, General John G. Coburn, Daniel H. McCollum and Richard H. Osgood III, for election as directors at the 2016 Annual Meeting.

 

On March 11, 2016, Mr. Anchin was appointed to the Audit and Compensation Committees of the Board and Mr. McCollum was appointed to the Nominating and Corporate Governance Committee of the Board.

 

Except for the Investors Agreement, there is no arrangement or understanding between either of Mr. Anchin or Mr. Mr. McCollum and any other person pursuant to which either of Mr. Anchin or Mr. Mr. McCollum was selected to serve as a director of the Company, and there are not any transactions that would be reportable under Item 404(a) of Regulation S-K. Consistent with the Company’s standard compensation arrangements for non-employee directors, each of Mr. Anchin and Mr. Mr. McCollum will receive (a) an annual cash retainer equal to $25,000, which is paid in equal quarterly installments and is prorated for partial year service, (b) an initial grant of an option to purchase 30,000 shares of the Company’s common stock upon his appointment to the Board and (c) an annual grant of an option to purchase 20,000 shares of the Company’s common stock at each annual meeting of stockholders of the Company at which he is re-elected to the Board.

 

 
 

 

  

As described under Item 1.01 above, pursuant to the Separation Agreement, on March 11, 2016, Thomas R. Brown resigned as President and Chief Executive Officer and as a member of the Board of Directors of the Company effective June 30, 2016.

 

The information set forth under Item 1.01 of this Current Report on Form 8-K with respect to the Investors Agreement and the Separation Agreement is hereby incorporated into this Item 5.02 by reference.

 

Item 5.08

Shareholder Director Nominations.

 

On March 11, 2016, the Board established May 17, 2016 as the date of the 2016 Annual Meeting. The Board also established March 23, 2016 as the record date for stockholders entitled to receive notice of, and to vote at, the 2016 Annual Meeting.

 

Because the 2016 Annual Meeting will be held more than 30 calendar days from the date of the Company’s 2015 annual meeting, the Company has established a new deadline for the receipt of stockholder proposals submitted pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for inclusion in the Company’s proxy materials for the 2016 Annual Meeting. In order to be considered timely, such proposals must be received at the Company’s principal executive offices at 16990 Goldentop Road, Suite A, San Diego, California 92127, Attention: Corporate Secretary, no later than the close of business on March 24, 2016, and must also comply with Rule 14a-8 under the Exchange Act regarding the inclusion of stockholder proposals in company-sponsored proxy materials.

 

Additionally, in accordance with the advance notice provisions set forth in the Company’s bylaws, in order for other business to be brought before the 2016 Annual Meeting outside of Rule 14a-8 under the Exchange Act, it must be received at the Company’s principal executive offices no later than the close of business on March 24, 2016, and must also comply with the provisions set forth in the Company’s bylaws and applicable law.

 

Important Additional Information

 

This release may be deemed to be solicitation material in respect to the election of directors to the Board of Directors of the Company. The Company will be filing a proxy statement with the SEC. STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Stockholders will be able to receive the proxy statement and other relevant documents free of charge at the SEC’s website at www.sec.gov, or upon written request to the Secretary of LRAD Corporation at 16990 Goldentop Road, Ste. A, San Diego, California 92127.

 

The Company and its directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the election of directors to the Board of Directors of the Company. Information regarding the interests of participants in the solicitation of proxies in respect of the 2016 Annual Meeting will be included in the Company’s proxy statement to be filed with the SEC.

 

Item 9.01

Financial Statements and Exhibits

 

(d) Exhibits.
   

10.1

Investors Agreement, dated March 11, 2016, by and among LRAD Corporation and the investors listed therein.

   

10.2

Separation Agreement and General Release, dated March 11, 2016, between LRAD Corporation and Thomas R. Brown.

   
99.1 Press Release, dated March 14, 2016, issued by LRAD Corporation

 

 
 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Date: March 14, 2016

 

 

 

LRAD Corporation

 

 

 

 

 

 

By:

/s/ Katherine H. McDermott

 

 

 

Katherine H. McDermott

 

 

 

Chief Financial Officer

 

Exhibit 10.1

 

 

 

INVESTORS AGREEMENT

 

This INVESTORS AGREEMENT is made and entered into as of March 11, 2016 (the “Agreement”) by and among LRAD Corporation, a Delaware corporation (the “Company”), and each of the other parties listed on the signature page hereto (each, an “Investor” and collectively, the “Investors”). The Company and the Investors are referred to herein as the “Parties.”

 

WHEREAS, the Investors beneficially own the number of shares of the Company’s common stock, par value $0.00001 per share (the “Common Stock”) listed on Exhibit A hereto;

 

WHEREAS, on January 14, 2016, Iroquois Master Fund, Ltd. (“Iroquois”), on behalf of the Investors, delivered a letter to the Company expressing an intention to nominate director candidates (the “Nomination Letter”) for election to the Company’s Board of Directors (the “Board”) at the Company’s 2016 annual meeting of stockholders (including any adjournment thereof, the “2016 Annual Meeting”); and

 

WHEREAS, the Company and the Investors have reached an agreement with respect to certain matters related to the 2016 Annual Meeting, including the Nomination Letter, and certain other matters, as provided in this Agreement;

 

NOW, THEREFORE, in consideration of the premises and mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto hereby agree as follows:

 

Section 1. Board of Directors Matters.

 

(a) The Investors and the Company hereby acknowledge and agree that:

 

(i) Immediately after execution of this Agreement, the Board will cause the size of the Board to be increased from five to seven directors and will appoint Scott L. Anchin and Daniel H. McCollum (the “Investor Directors”) to fill such newly created vacancies.

 

(ii) The Nominating and Corporate Governance Committee (or a duly constituted subcommittee thereof) (the “Nominating Committee”) of the Board will recommend for nomination and the Board will nominate the Investor Directors and General John G. Coburn, Thomas R. Brown, Laura M. Clague and Richard H. Osgood III (collectively, the “Continuing Directors” and, together with the Investor Directors, the “2016 Nominees”) for election at the 2016 Annual Meeting and will recommend a vote for the 2016 Nominees and solicit proxies from the Company’s stockholders for the election of the 2016 Nominees at the 2016 Annual Meeting. The Company agrees that it shall hold the 2016 Annual Meeting no later than July 31, 2016.

 

(iii) As a condition to the Investor Directors’ appointment to the Board and nomination as a director of the Company at the 2016 Annual Meeting, the Investors agree to provide to the Company information required to be or customarily disclosed for directors, candidates for directors and their affiliates and representatives in a proxy statement or other filings under applicable law or stock exchange rules or listing standards, information in connection with assessing eligibility, independence and other criteria applicable to directors or satisfying compliance and legal obligations, and such other information as reasonably requested by the Company from time to time with respect to the Investors and the Investor Directors, in form and substance substantially similar to the questionnaires that have been provided to the Company’s current directors.

 

(iv) Immediately following the execution of this Agreement, the Board and all applicable committees of the Board shall take all necessary actions to appoint at least one of the Investor Directors as a member of each committee of the Board. The Company further agrees that at least one of the Investor Directors will be appointed to any new committee of the Board that may be established during the Standstill Period (as defined below) provided that at least one Investor Director is serving on the Board at such time and is qualified to serve on any such newly established committee of the Board.

 

 
 

 

  

(v) To the extent an Investor Director resigns for any reason other than pursuant to Section 4 or is otherwise unable to serve as a director or is removed as a director by the stockholders of the Company, in each case, during the Standstill Period, the Investors shall be entitled to designate, for consideration by the Nominating Committee as a replacement for such Investor Director, an individual who (A) qualifies as “independent” under the Nasdaq corporate governance standards, (B) has relevant business and financial experience, and (C) is qualified to serve as a director under the Delaware General Corporation Law (the “DGCL”). The Nominating Committee, consistent with its fiduciary duties, shall consider such candidate within ten (10) business days after a completed customary director and officer questionnaire has been received by the Nominating Committee, and the Board shall appoint such candidate if approved by the Nominating Committee (whose approval and appointment shall not be unreasonably withheld) within five (5) business days (any such replacement director appointed in accordance with the provisions of this Section 1(a)(iv) shall be referred to as an “Investor Director” for the purposes of this Agreement). In the event the Nominating Committee shall decline to recommend any candidate designated by the Investors, the Investors may propose one or more replacement designees, subject to the above criteria.

 

(vi) During the period commencing with the date of the 2016 Annual Meeting through the expiration or termination of the Standstill Period (as defined below), the Board and all applicable committees of the Board shall take all necessary actions (including with respect to nominations for election at the 2016 Annual Meeting) so that the size of the Board is no more than six (6) directors, unless the Investors consent in writing to enlarging the Board.

 

(b) Upon execution of this Agreement, the Investors hereby irrevocably withdraw the Nomination Letter. Upon execution of this Agreement, the Company will promptly pay to the Investors their out-of-pocket legal and advisory fees in connection with the Nomination Letter and this Agreement, invoices for which have been previously provided to the Company. For the avoidance of doubt, such legal and advisory fees shall not exceed $130,000.

 

Section 2. Voting Agreement.

 

(a) At the 2016 Annual Meeting, the Investors agree to appear in person or by proxy and vote all shares of Common Stock beneficially owned by each Investor and its Affiliates in favor of (i) the election of the 2016 Nominees and (ii) the following other matters recommended for stockholder approval by the Board: (A) ratification of the appointment of the Company’s independent registered public accounting firm and (B) an advisory vote on the compensation of the Company’s named executive officers.

 

(b) At any subsequent annual or special meeting of stockholders of the Company (or adjournments thereof) during the Standstill Period (as defined below), the Investors agree to vote all shares of Common Stock beneficially owned by each Investor and its Affiliates in favor of the election to the Board of those director nominees nominated for election by the Nominating Committee or the Board and against the removal of any directors whose removal is not recommended by the Board.

 

(c) Each Investor agrees to, within ten (10) business days after receipt, execute and deliver to the Company, or cause to be executed and delivered to the Company, the proxy card sent to the Investors by the Company in connection with the 2016 Annual Meeting and any subsequent annual or special meeting of stockholders of the Company (or adjournments thereof) during the Standstill Period (and any other legal proxies delivered to the Investors required to vote any shares held in “street name”) directing that the shares of Common Stock beneficially owned by such Investor, as of the applicable record date, be voted in accordance with Section 2(a) and Section 2(b).

 

 
 

 

  

Section 3. Standstill.

 

(a) Each Investor agrees that, from the date of this Agreement until the expiration of the Standstill Period, neither it nor any of its Affiliates or Associates will, and it will cause each of its Affiliates and Associates not to, directly or indirectly, in any manner, acting alone or in concert with others:

 

(i) submit any stockholder proposal (pursuant to Rule 14a-8 promulgated by the Securities and Exchange Commission (the “SEC”) under the Exchange Act or otherwise) or any notice of nomination or other business for consideration, or nominate any candidate for election to the Board (including by way of Rule 14a-11 of Regulation 14A), other than as expressly permitted by this Agreement;

 

(ii) engage in, directly or indirectly, any “solicitation” (as defined in Rule 14a-1 of Regulation 14A) of proxies (or written consents) or otherwise become a “participant in a solicitation” (as such term is defined in Instruction 3 of Schedule 14A of Regulation 14A under the Exchange Act) in opposition to the recommendation or proposal of the Board, or recommend or request or induce or attempt to induce any other person to take any such actions, or seek to advise, encourage or influence any other person with respect to the voting of the Common Stock or grant a proxy with respect to the voting of the Common Stock or other voting securities to any person other than to the Board or persons appointed as proxies by the Board;

 

(iii) seek to call, or to request the call of, a special meeting of the Company’s stockholders, or make a request for a list of the Company’s stockholders or for any books and records of the Company;

 

(iv) vote for any nominee or nominees for election to the Board, other than those nominated or supported by the Board;

 

(v) except as specifically provided in Section 1 and Section 2 of this Agreement, seek to place a representative or other Affiliate, Associate or nominee on the Board or seek the removal of any member of the Board or a change in the size or composition of the Board;

 

(vi) disclose publicly, or privately in a manner that could reasonably be expected to become public, any intention, plan or arrangement inconsistent with the foregoing;

 

(vii) take any action challenging the validity or enforceability of any provisions of this Section 3(a);

 

(viii) publicly request that the Company amend or waive any provision of this Section 3(a); or

 

(ix) enter into any agreement, arrangement or understanding concerning any of the foregoing (other than this Agreement) or encourage or solicit any person to undertake any of the foregoing activities;

 

provided, however, that nothing in this Section 3(a) or elsewhere in this Agreement shall prohibit (A) any Investor from privately making any statement or expressing or disclosing such Investor’s views in private to the Chief Executive Officer, the Chief Financial Officer or another other officer or director of the Company; or (B) any Investor, Affiliate or Associate from voting in such manner as it deems appropriate on any matter unrelated to the election of directors of the Company and the other matters referenced in Section 2(a).

 

(b) As used in this Agreement:

 

(i) the term “Affiliate” means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified with respect to the specific action at issue hereunder; the term “Associate” means any corporation or organization controlled by the person specified, any trust or other estate in which such person has a substantial beneficial interest or as to which such person serves as a trustee or in a similar fiduciary capacity, and any relative or spouse of such person, or any relative of such spouse, who has the same home as such person, in each case, with respect to the specific action at issue hereunder; the term “control” shall have the meaning set forth in Rule 12b-2 promulgated by the SEC under the Exchange Act; the terms “beneficial owner” and “beneficial ownership” shall have the same 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; and

 

 
 

 

  

(ii) the term “Standstill Period” shall mean the period commencing upon the date of this Agreement, and ending on the earlier of (A) ten (10) business days prior to the deadline for submission of stockholder nominations for the Company’s 2017 annual meeting of stockholders (the “2017 Annual Meeting”) pursuant to the Company’s Restated Bylaws (“2017 Nomination Deadline”) and (B) such date, if any, as the Company has breached in any material respect any of its representations, warranties, commitments or obligations set forth in this Agreement and such breach has not been cured within fifteen (15) days following written notice of such breach; provided, however, that if the Company notifies the Investors in writing at least fifteen (15) business days prior to the 2017 Nomination Deadline of the Company’s intention to nominate and recommend the election of each of the Investor Directors (or their replacements, as applicable) as nominees at the 2017 Annual Meeting on the Company’s slate of director candidates, the Standstill Period shall mean the period commencing on the date of this Agreement and ending on the earlier of (A) ten (10) business days prior to the deadline for submission of stockholder nominations for the Company’s 2018 annual meeting of stockholders pursuant to the Company’s Restated Bylaws and (B) such date, if any, as the Company has breached in any material respect any of its representations, warranties, commitments or obligations set forth in this Agreement and such breach has not been cured within fifteen (15) days following written notice of such breach

 

Section 4. Resignation Letter. As a condition to commencement of a term on the Board (or nomination therefor), each Investor Director shall provide to the Company an irrevocable letter of resignation which shall become effective fifteen (15) days after written notice of a material breach by any Investor of this Agreement is provided to the breaching Investor by the Company (unless such breach is cured within such fifteen (15) day period); provided, that if such alleged breaching Investor disputes such breach, the resignation of such Investor Director shall not become effective until (i) the Investor agrees not to dispute such breach in writing or (ii) a court of competent jurisdiction in a final judgment on the merits (whether or not subject to appeal) has confirmed or determined the existence of such breach.

 

Section 5. Representations and Warranties of the Company. The Company represents and warrants to the Investors that (a) the Company has the corporate power and authority to execute the Agreement and to bind it thereto, (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 generally affecting the rights of creditors and subject to general equity principles and (c) the execution, delivery and performance of this Agreement by the Company does not and will not violate or conflict with (i) 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, or any material agreement, contract, commitment, understanding or arrangement to which the Company is a party or by which it is bound.

 

Section 6. Representations and Warranties of the Investors. Each Investor, on behalf of itself, represents and warrants to the Company that (a) as of the date hereof, such Investor beneficially owns only the number of shares of Common Stock as described opposite its name on Exhibit A and Exhibit A includes all Affiliates of any Investors that own any securities of the Company beneficially or of record, (b) this Agreement has been duly and validly authorized, executed and delivered by such Investor, and constitutes a valid and binding obligation and agreement of such Investor, enforceable against such Investor in accordance with its terms, except as enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar laws generally affecting the rights of creditors and subject to general equity principles, (c) such Investor has the authority to execute the Agreement, and to bind such Investor to the terms hereof and (d) the execution, delivery and performance of this Agreement by such Investor does not and will not violate or conflict with (i) 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 such member is a party or by which it is bound.

 

 
 

 

  

Section 7. Mutual Non-Disparagement.

 

(a) Each Investor agrees that, during the Standstill Period, neither it nor any of its Affiliates or Associates will, and it will cause each of its Affiliates and Associates not to, directly or indirectly, in any capacity or manner, make, express, transmit speak, write, verbalize or otherwise communicate in any way (or cause, further, assist, solicit, encourage, support or participate in any of the foregoing), any remark, comment, message, information, declaration, communication or other statement of any kind, whether verbal, in writing, electronically transferred or otherwise, that might reasonably be construed to be derogatory toward, the Company or any of its directors, officers, Affiliates, subsidiaries, employees, agents or representatives (collectively, the “Company Representatives”), or that reveals, discloses, incorporates, is based upon, discusses, includes or otherwise involves any confidential or proprietary information of the Company or its subsidiaries or Affiliates, or derogatorily to malign, harm, disparage, defame or damage the reputation or good name of the Company, its business or any of the Company Representatives.

 

(b) The Company hereby agrees that, during the Standstill Period, neither it nor any of its Affiliates will, and it will cause each of its Affiliates not to, directly or indirectly, in any capacity or manner, make, express, transmit, speak, write, verbalize or otherwise communicate in any way (or cause, further, assist, solicit, encourage, support or participate in any of the foregoing), any remark, comment, message, information, declaration, communication or other statement of any kind, whether verbal, in writing, electronically transferred or otherwise, that might reasonably be construed to be derogatory toward, any Investor or any of its agents or representatives (collectively, the “Investor Representatives”), or that reveals, discloses, incorporates, is based upon, discusses, includes or otherwise involves any confidential or proprietary information of any Investor or its subsidiaries or Affiliates, or derogatively to malign, harm, disparage, defame or damage the reputation or good name of any Investor or Investor Representative.

 

(c) Notwithstanding the foregoing, nothing in this Section 7 or elsewhere in this Agreement shall prohibit any Party from making any statement or disclosure required under the federal securities laws or other applicable laws; provided , that such Party must provide written notice to the other Parties at least two (2) business days prior to making any such statement or disclosure required under the federal securities laws or other applicable laws that would otherwise be prohibited by the provisions of this Section 7, and reasonably consider any comments of such other Parties.

 

Section 8. Public Announcements. Promptly following the execution of this Agreement, the Company and the Investors shall jointly issue a mutually agreeable press release (the “Mutual Press Release”) announcing the terms of this Agreement, substantially in the form attached hereto as Exhibit B. Prior to the issuance of the Mutual Press Release, neither the Company nor the Investors shall issue any press release or public announcement regarding this Agreement or take any action that would require public disclosure thereof without the prior written consent of the other Party. No Party or any of its Affiliates shall make any public statement (including, without limitation, in any filing required under Regulation 13D under the Exchange Act) concerning the subject matter of this Agreement inconsistent with the Mutual Press Release.

 

 
 

 

  

Section 9. Notice. Any notices, consents, determinations, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (a) upon receipt, when delivered personally; (b) upon receipt, when sent by electronic transmission (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (c) one (1) business day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

 

If to the Company, addressed to:

LRAD Corporation

16990 Goldentop Rd., Ste. A

San Diego, California 92127

Attention: Katherine H. McDermott

Tel: (858) 676-1112

Fax: (858) 676-1080

Email:
[email protected]


with a copy to (for information purposes only):

Durham Jones & Pinegar, P.C.

192 E. 200 N., Third Floor

St. George, UT 84770

Attention: Joshua E. Little, Esq.

Tel: (435) 674-0400

Fax: (435) 628-1610

Email:
[email protected]

If to the Investors, addressed to:

Iroquois Capital Management LLC

641 Lexington Avenue, 26th Floor

New York, New York 10022

Attention: Joshua Silverman

Tel: (212) 974-3070

Fax: (212) 207-3452

Email:
[email protected]


with a copy to (for information purposes only):

Olshan Frome Wolosky LLP 

Park Avenue Tower 

65 East 55th Street 

New York, New York 10022 

Attention: Andrew Freedman, Esq. 

Tel: (212) 451-2250 

Fax: (212) 451-2222 

Email: [email protected] 

 

Section 10. Specific Performance. Each of the Investors, on the one hand, and the Company, on the other hand, acknowledges and agrees that irreparable injury to the other Party hereto may occur in the event any of the provisions of this Agreement are not performed in accordance with their specific terms or are otherwise breached and that such injury would not be adequately compensable in monetary damages. It is accordingly agreed that the Investors or any Investor, on the one hand, and the Company, on the other hand (the “Moving Party”), shall each be entitled to specific enforcement of, and injunctive or other equitable relief to prevent any violation of, the terms hereof, and the other party hereto will not take action, directly or indirectly, in opposition to the Moving Party seeking such relief on the grounds that any other remedy or relief is available.

 

Section 11. Governing Law. This Agreement shall be governed by, and construed in accordance with, the Law of the State of Delaware, without regard to conflict of law principles thereof.

 

Section 12. Exclusive Jurisdiction. Each Party to this Agreement (i) irrevocably and unconditionally submits to the personal jurisdiction of the state courts of the State of Delaware and the federal courts of the United States of America located in the State of Delaware, (ii) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (iii) agrees that any actions or proceedings arising in connection with this Agreement or the transactions contemplated by this Agreement shall be brought, tried and determined only in the Court of Chancery of the State of Delaware (or, only if said Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware), (iv) waives any claim of improper venue or any claim that those courts are an inconvenient forum and (v) agrees that it will not bring any action relating to this Agreement or the transactions contemplated hereunder in any court other than as specified in clause (iii) of this Section 12. The Parties to this Agreement agree that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 10 or in such other manner as may be permitted by applicable Law, shall be valid and sufficient service thereof.

 

Section 13. Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED AND UNDERSTANDS THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 13.

 

 
 

 

  

Section 14. Entire Agreement. This Agreement constitute the full and entire understanding and agreement among the Parties with regard to the subject matter hereof, and supersedes all prior agreements with respect to the subject matter hereof.

 

Section 15. Receipt of Adequate Information; No Reliance; Representation by Counsel. Each Party acknowledges that it has received adequate information to enter into this Agreement, that is has not relied on any promise, representation or warranty, express or implied not contained in this Agreement and that it has been represented by counsel in connection with this Agreement. Accordingly, any rule of law or any legal decision that would provide any party with a defense to the enforcement of the terms of this Agreement against such party shall have no application and is expressly waived. The provisions of the Agreement shall be interpreted in a reasonable manner to effect the intent of the Parties.

 

Section 16. Amendment. This Agreement may be modified, amended or otherwise changed only in a writing signed by all of the Parties.

 

Section 17. Successors and Assigns. This Agreement shall bind the successors and permitted assigns of the Parties, and inure to the benefit of any successor or permitted assign of any of the parties; provided, however, that no party may assign this Agreement without the prior written consent of the other Parties.

 

Section 18. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each Party shall have received a counterpart hereof signed by all of the other Parties. Until and unless each party has received a counterpart hereof signed by the other party hereto, this Agreement shall have no effect and no party shall have any right or obligation hereunder (whether by virtue of any other oral or written agreement or other communication). The exchange of a fully executed Agreement (in counterparts or otherwise) by electronic transmission in .PDF format or by facsimile shall be sufficient to bind the parties to the terms and conditions of this Agreement.

 

Section 19. Attorneys’ Fees. In the event any Party shall fail to perform any of its material obligations under this Agreement and another Party hereto shall bring suit, and establish, in a court of proper jurisdiction under Section 12 (after all appeals) that the actions of such alleged breaching Party giving rise to such breach were undertaken with the actual intent and actual purpose of materially breaching this Agreement, then all reasonable third party out-of-pocket fees and expenses, including, without limitation, reasonable attorneys’ fees and expenses, that may be incurred by the prevailing Party in enforcing this Agreement as relates to such material breach shall be paid by the materially breaching Party; provided that prior to initiating such suit, the claiming Party shall give the other Parties written notice of the claimed breach and ten (10) days from receipt of such notice to cure any claimed breach.

 

[Signature page follows]

 

 
 

 

  

IN WITNESS WHEREOF, the Parties hereto have duly executed and delivered this Agreement as of the date first above written.

 

LRAD CORPORATION

INVESTORS:

 

  IROQUOIS CAPITAL MANAGEMENT L.L.C.  

 

 

 

 

By: /s/ John G. Coburn                                            

By:

/s/ Joshua Silverman 

 

Name: John G. Coburn                                             

Name:

Joshua Silverman

 

Title: Chairman                                                          

Title:

Authorized Signatory

 

       
  IROQUOIS MASTER FUND LTD  
       
  By: /s/ Joshua Silverman  
  Name: Joshua Silverman  
  Title: Authorized Signatory  
       
  /s/ Joshua Silverman   
  JOSHUA SILVERMAN  
       
  /s/ Richard Abbe  
  RICHARD ABBE  
     
  AMERICAN CAPITAL MANAGEMENT, LLC  
       
  By: /s/ Kim Page   
  Name: Kim Page  
  Title: Manager   
       
  TALIA ABBE IRREVOCABLE TRUST  
       
  By: /s/ Richard Abbe   
  Name: Richard Abbe  
  Title: Trustee   
       
  BENNETT ABBE IRREVOCABLE TRUST  
       
  By: /s/ Richard Abbe  
  Name: Richard Abbe  
  Title: Trustee   
       
  SAMANTHA ABBE IRREVOCABLE TRUST  
       
  By: /s/ Richard Abbe  
  Name: Richard Abbe  
  Title: Trustee  
       
  TALIA ABBE IRREVOCABLE TRUST  
       
  By: /s/ Leo Abbe   
  Name: Leo Abbe  
  Title: Trustee   

     

 
 

 

 

EXHIBIT A

 

 

 

Investor

Shares of Common  Stock
Beneficially Owned*

   

Iroquois Capital Management L.L.C.

 

  1,281,337  

Richard Abbe 

139,257 

*

Joshua Silverman 16,644  
American Capital Management 173,242  
Talia Abbe Irrevocable Trust 46,419  
Bennett Abbe Irrevocable Trust 46,419  
Samantha Abbe Irrevocable Trust 46,419  
Merav Abbe Irrevocable Trust 100,742  
     
Total: 1,711,222  

 

 

*

Represents beneficial ownership held through the Samantha Abbe Irrevocable Trust, Talia Abbe Irrevocable Trust and Bennett Abbe Irrevocable Trust

 

 
 

 

 

EXHIBIT B

 

Mutual Press Release

 

  

 

LRAD® CORPORATION ANNOUNCES SETTLEMENT AGREEMENT

WITH IROQUOIS MASTER FUND LTD. AND

SCHEDULES ANNUAL MEETING OF STOCKHOLDERS

 

CEO Tom Brown to Resign from Company

 

SAN DIEGO, CA – March 14, 2016 - LRAD Corporation (NASDAQ: LRAD), the world’s leading provider of acoustic hailing devices and advanced mass notification systems, today announced it has reached an agreement with Iroquois Master Fund Ltd. and certain of its affiliates (collectively “Iroquois”), with regard to the 2016 Annual Meeting of Stockholders. Iroquois had previously nominated two new independent nominees to LRAD’s Board of Directors (the “Board”). In the Investors Agreement, it was agreed that Iroquois’ two nominees, Scott L. Anchin and Daniel H. McCollum, will be appointed to the Board immediately and will be nominated for election at the 2016 Annual Meeting. As part of the agreement, Iroquois will vote all of its shares in favor of the 2016 nominees at the Annual Meeting.

 

“We believe this agreement is in the best interests of the Company and our stockholders,” stated General John G. Coburn, Chairman of the Company’s Board of Directors. “We look forward to working together with our new Board members to increase long term stockholder value.”

 

“We are pleased to have worked constructively with LRAD and commend LRAD’s Board for its thoughtful engagement over the past couple of months,” stated Josh Silverman, co-founder and managing member of Iroquois Capital Management, LLC. “We are excited that we have been able to attract two highly qualified directors of Scott and Dan’s caliber to a company of LRAD’s size. It is clear LRAD has excellent prospects and we believe that this newly composed Board will help maximize the Company’s potential and enhance stockholder value.”

 

Scott L. Anchin is a restructuring professional with more than 19 years of leadership experience spanning a variety of industries. Until recently, Mr. Anchin worked for Alvarez & Marsal North America, LLC (“A&M”), a global professional services firm specializing in turnaround and interim management and performance improvement. Mr. Anchin started his career in public accounting with Anchin, Block & Anchin LLP, where he audited financial statements for manufacturing, real estate, retail and consumer products companies. Mr. Anchin has a Bachelor of Science in Accounting from the Wharton School of Business at the University of Pennsylvania and an MBA with a concentration in Management from Columbia Business School. He is also a non-active Certified Public Accountant (CPA).

 

 
 

 

  

Daniel H. McCollum is a Managing Director in the Investment Office of Brown University in Providence, RI, a position he has held since 2013.  The Investment Office of Brown University is responsible for managing the University’s $3+ billion endowment.  From 2008 through 2013, Mr. McCollum was a Managing Director at Narragansett Asset Management, LLC.  Mr. McCollum has a B.A. in Economics from the University of California at Berkeley and an M.B.A. from the Columbia Business School.

 

The Company also announced that Tom Brown, the Company’s President and Chief Executive Officer, is resigning from the Company effective June 30, 2016. The Company’s Board of Directors has initiated a replacement search.

 

Mr. Brown joined the Company as a member of the Board in March 2006 and became President and Chief Executive Officer in August 2006. Brown guided the development and expansion of the Company’s successful LRAD-X product line and established the LRAD brand around the world by building U.S. and international distribution networks, resulting in LRAD systems being utilized in over 70 countries and in more than 200 U.S. cities, counties and states. Brown personally brought in the Company’s largest order to date ($17.6 million) and his efforts resulted in the recent modification of the Company’s current U.S. Navy contract that provides a vehicle for the U.S. Army to purchase LRAD systems and accessories under the modified contract.

 

Mr. Brown increased the Company’s business potential by entering the large and growing mass notification market with a line of advanced life safety systems that have recorded over 70% in annual revenue growth the last two fiscal years. By building a solid financial structure, Brown has grown the Company organically during his tenure, resulting in six consecutive years of profitability and seven consecutive years of positive cash flow.

 

“Under Tom’s leadership, the Company created the acoustic hailing device market and achieved global recognition of its products and the LRAD brand,” stated General Coburn. “The Board thanks Tom for his years of service and many contributions, including the Company’s good financial health and positioning it for further growth and success.”

 

The Company also announced that its annual meeting of stockholders has been scheduled for May 17, 2016 at its corporate offices. Stockholders of record as of March 23, 2016 will be eligible to vote for the proposed slate of directors and other proposals for consideration that will be included in the Company’s proxy statement scheduled for filing with the Securities and Exchange Commission (SEC).

 

About LRAD Corporation

 

Using advanced technology and superior voice intelligibility, LRAD Corporation’s proprietary Long Range Acoustic Devices® and revolutionary ONE VOICE® mass notification systems safely hail and warn, inform and direct, prevent misunderstandings, determine intent, establish large safety zones, resolve uncertain situations, and save lives. LRAD systems are in service in more than 70 countries around the world in diverse applications including mass notification and public address, fixed and mobile defense deployments, homeland, border, critical infrastructure, maritime, oil & gas, and port security, public safety, law enforcement and emergency responder communications, asset protection, and wildlife control and preservation. For more information, please visit www.lradx.com.

 

 
 

 

 

Forward Looking Statements

 

Except for historical information contained herein, the matters discussed are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. You should not place undue reliance on these statements. We base these statements on particular assumptions that we have made in light of our industry experience, the stage of product and market development as well as our perception of historical trends, current market conditions, current economic data, expected future developments and other factors that we believe are appropriate under the circumstances. These statements involve risks and uncertainties that could cause actual results to differ materially from those suggested in the forward-looking statements. These risks and uncertainties are identified and discussed in our filings with the Securities and Exchange Commission. These forward-looking statements are based on information and management’s expectations as of the date hereof. Future results may differ materially from our current expectations. For more information regarding other potential risks and uncertainties, see the “Risk Factors” section of the Company’s Form 10-K for the fiscal year ended September 30, 2015. LRAD Corporation disclaims any intent or obligation to update those forward-looking statements, except as otherwise specifically stated. 

 

Company Contact

 

E. Brian Harvey

Director, Investor Relations and Capital Markets

858.753.8974

[email protected]

Exhibit 10.2

 

SEPARATION AGREEMENT
AND GENERAL RELEASE

 

This Separation Agreement and General Release (“Agreement”) is executed on the dates set forth on the signature page by and between LRAD Corporation (“Company”), whose principal business address is 16990 Goldentop Road, Suite A, San Diego, California 92127, and Thomas R. Brown (“Executive”).

 

WHEREAS, Executive is employed by the Company as President and Chief Executive Officer;

 

WHEREAS, Executive and the Company’s Board of Directors (the “Board”) have determined that it is in the best interest of the Company that Executive resign from his position as President and Chief Executive Officer of the Company, effective as of June 30, 2016 (such date, the “Resignation Date”);

 

WHEREAS, Executive and the Board have determined that it is in the best interest of the Company that from the Resignation Date and during the “Transition Period” (as defined in this Agreement), Executive continue to provide transitional and consulting services to the Company on the terms and subject to the conditions set forth in this Agreement;

 

WHEREAS, the Company has offered to provide Executive with separation pay and other consideration in exchange for the promises, covenants and other consideration to be provided by Executive as set forth herein, in accordance with the terms hereof; and

 

WHEREAS, Executive is willing to accept such consideration to be provided to him in exchange for the promises, covenants and other consideration set forth herein, in accordance with the terms hereof.

 

NOW, THEREFORE, in consideration of the promises, covenants and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.             Resignation; Termination of Employment. Predicated upon the agreements between the Board and Executive as set forth herein, Executive has submitted to the Company his resignation from his position as President and Chief Executive Officer of the Company and as an officer, director and employee of the Company and its subsidiaries and affiliates, whereby he has notified the Company that he will resign from such positions effective as of the Resignation Date. The Company has accepted his resignation effective as of the Resignation Date. Executive will continue to serve as President and Chief Executive Officer of the Company and as a director on the Board through the Resignation Date. Executive will continue to diligently pursue the responsibilities of the President and Chief Executive Officer in substantially the same manner as he has in the past as long as he remains in such position, and shall continue to diligently serve in his capacity as a member of the Board in the same manner as he has in the past. On the Resignation Date, Executive shall execute and deliver any additional written documents reasonably requested by the Company necessary to effectuate his resignation as President and Chief Executive Officer of the Company and as a director on the Board and as an officer, director and employee of each subsidiary of the Company. On the Resignation Date, Executive’s employment with the Company and its subsidiaries and affiliates shall automatically, and without further action, terminate (the “Termination”).

 

 
 

 

  

2.             Payment of Salary and Benefits through the Resignation Date and Unpaid Accrued Vacation and Statutory Payments. From the date hereof through the Resignation Date, the Company will pay Executive his regular salary in accordance with the Company’s regular payroll practices and all benefits to which he is eligible on the date hereof shall continue to accrue on the same terms. All unpaid accrued vacation leave owed to him through the Resignation Date and other benefits to which Executive is statutorily entitled, if any, shall be paid to Executive on the Resignation Date. Executive shall submit any expenses for reimbursement incurred by Executive on or before the Resignation Date no later than 60 days after the Resignation Date. Executive’s participation in the Company’s 401(k) plan, and his eligibility to receive the Company’s standard matching contributions shall continue through the Resignation Date to the extent permitted by the terms of the 401(k) plan and applicable law. Except as expressly provided in this Agreement, Executive’s entitlement, participation in, and accrual of, all other salary, compensation or benefits from the Company will cease as of the Resignation Date, except that Executive will have such rights in such benefits as are required by law and plan documents, including without limitation, Executive’s vested benefits in the Company’s 401(k) plan, in accordance with and to the extent permitted by law and plan documents.

 

3.              Transition and Consulting Services. From the Resignation Date until December 31, 2016 or such earlier date as the Company notifies Executive in writing that such services are no longer needed (the “Separation Date”), Executive will perform such transitional and consulting services as the Company may reasonably request (the “Services”). As compensation for Executive providing the Services, Executive will receive the payments set forth in Section 4 below and three-hundred dollars ($300) per hour. The Services will generally be performed at such locations as are reasonably agreed by Executive and the Company in good faith; provided, that, Executive will perform the Services on the premises of the Company (or its applicable affiliate) when reasonably requested by the Company. The relationship between Executive and the Company from the Resignation Date to the Separation Date (the “Transition Period”) will be that of an independent contractor and consultant. With the prior written approval of the Company, Executive shall be reimbursed for reasonable out-of-pocket expenses incurred by Executive in the performance of the Services, subject to prompt submission of supporting documentation and otherwise in accordance with the Company’s reimbursement policies as in effect from time to time.

 

4.              Payments and Benefits. In full satisfaction of the Company’s obligations to Executive in respect of Executive’s Termination, and in consideration of Executive’s execution of this Agreement and the release contained herein, and Executive’s other continuing obligations under this Agreement and as additional consideration for Executive providing the Services, the Company will provide to Executive the payments and benefits set forth in this Section 4. Except as provided in this Agreement, Executive will be entitled to no compensation or benefits from the Company or its affiliates with respect to Executive’s Termination, the Services, or Executive’s other continuing obligations under this Agreement.

 

4.1.     Executive’s Participation in Bonus Plan. Notwithstanding anything to the contrary in the Company’s 2016 incentive bonus plan, as approved by the Compensation Committee of the Board on October 16, 2015 (the “Bonus Plan”), Executive is entitled to participate fully in the Bonus Plan, and any amount owed to Executive under the Bonus Plan will be paid to Executive in accordance with the terms of the Bonus Plan; provided that such participation will be based on Executive’s annual base salary immediately prior to the Resignation Date.

 

4.2.     Health Insurance Benefits. Executive and Executive’s dependents may continue to participate in the Company’s group health plans through the Resignation Date in accordance with their terms and conditions. During the Transition Period, Executive will continue to participate in the Company’s group health plan as permitted by the terms of the group health plan and applicable law. If Executive is not entitled to participate in the Company’s group health plan following the Resignation Date, and if Executive properly and timely elects to continue health coverage, Executive will be eligible to continue medical benefits coverage for himself and his dependents pursuant to the federal Consolidated Omnibus Budget Reconciliation Act and any applicable state COBRA-like statute that provides mandated eligibility for group health continuation coverage (collectively, “COBRA”) until the date that is twenty-four (24) months following the Resignation Date, and the Company will pay or reimburse Executive’s health insurance premiums under COBRA during such period of time; provided, that, (i) to the extent such continuation would adversely affect the tax status of the plan pursuant to which the coverage is provided or result in taxability of benefits or penalties (including without limitation, pursuant to Section 2716 of the Public Health Service Act, the Patient Protection and Affordable Care Act, or Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) or (ii) if the Company is otherwise unable to continue to provide such continuation pursuant to its group health plan, then, in each case, this provision shall terminate and an amount equal to each remaining Company premium payment shall thereafter be paid to Executive, as taxable income, in substantially equal monthly installments over such twenty-four (24) month period (or remaining portion thereof). Notwithstanding anything to the contrary in this Section 4.2, if Executive becomes employed with another employer during such period and is eligible for comparable healthcare coverage under another employer-provided plan (as determined in the good faith discretion of the Company), the Company shall not be obligated to continue to provide the payment or reimbursement pursuant to this Section 4.2.

 

 
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4.3.     Additional Consideration. The Company will pay to Executive, in a lump sum payment, payable on the Resignation Date, an amount equal to $566,500 (which is equal to two (2) years’ salary at the rate Executive was being paid at the Resignation Date) less applicable tax withholding and other deductions.

 

4.4.     Stock Options. On the Separation Date, the vesting and exercisability of all of Executive’s outstanding options to purchase the Company’s common stock issued pursuant to any equity incentive plan of the Company will be accelerated such that the options will be fully vested as of the Separation Date, and shall remain exercisable pursuant to the terms thereof until either (i) the twenty-four (24) month anniversary of the Separation Date, or (ii) the stated expiration date of the applicable option, whichever is earlier in time, at which time all of Executive’s unexercised options will expire and terminate. Notwithstanding the foregoing, this Section 4.5 shall not apply to stock awards issued under or held in any plan sponsored by the Company that is intended to be qualified under Section 401(a) of the Code.

 

5.             Independent Contractor. The Company and Executive acknowledge and agree that Executive’s status during the Transition Period will be that of an independent contractor only and not an employee, agent, partner, or joint venturer of or with the Company or its affiliates. Executive acknowledges that Executive is and will be solely responsible for the payment of all federal, state, local, and foreign taxes that are required by applicable laws or regulations to be paid with respect to all compensation and benefits payable or provided for the Services hereunder.

 

6.             Release of All Claims by Executive.

 

6.1.     In consideration of the payments and benefits provided to Executive under this Agreement, which Executive acknowledges he is not otherwise entitled to receive, Executive hereby generally and completely releases the Company and its current and former directors, officers, employees, stockholders, partners, agents, attorneys, predecessors, successors, parent and subsidiary entities, insurers, affiliates and assigns (collectively, the “Released Parties”) from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct or omissions occurring prior to or on the Effective Date (collectively, the “Released Claims”). The Released Claims include, but are not limited to: (a) all claims arising out of or in any way related to Executive’s employment with the Company, or the termination of that employment; (b) all claims related to Executive’s compensation or benefits from the Company including salary, bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe benefits, stock, stock options or any other ownership interests in the Company; (c) all claims for breach of contract, wrongful termination and breach of the implied covenant of good faith and fair dealing; (d) all tort claims, including claims for fraud, defamation, emotional distress and discharge in violation of public policy; and (e) all federal, state and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990, the federal Age Discrimination in Employment Act of 1967 (as amended) (the “ADEA”), the California Labor Code, and the California Fair Employment and Housing Act (as amended). Notwithstanding the foregoing, the following are not included in the Released Claims (the “Excluded Claims”): (i) any rights or claims for indemnification Executive may have pursuant to any written indemnification agreement with the Company to which Executive is a party, the charter, bylaws or operating agreements of the Company, or under applicable law; (ii) any rights that are not waivable as a matter of law; or (iii) any claims arising from the Company’s breach of this Agreement. In addition, nothing in this Release prevents Executive from filing, cooperating with, or participating in any proceeding before the Equal Employment Opportunity Commission, the Department of Labor, or the California Department of Fair Employment and Housing, except that Executive hereby waives his right to any monetary benefits in connection with any such claim, charge or proceeding. Executive hereby represents and warrants that, other than the Excluded Claims, Executive is not aware of any claims he has or might have against any of the Released Parties that are not included in the Released Claims.

 

 
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6.2.     Executive acknowledges that he is knowingly and voluntarily waiving and releasing any rights he may have under the ADEA (“ADEA Waiver”). Executive also acknowledges that the consideration given for the ADEA Waiver is in addition to anything of value to which he was already entitled. Executive is advised by this writing, as required by the ADEA, that: (a) his waiver and release do not apply to any claims that may arise after he signs this Agreement; (b) Executive should consult with an attorney prior to executing this release; (c) Executive has 21 days within which to consider this release (although Executive may choose to voluntarily execute this release earlier); (d) Executive has 7 days following the execution of this release to revoke this Agreement (in a written revocation directed to the Chairman of the Board); and (e) this Agreement will not be effective until the eighth day after Executive signs this Agreement, provided Executive has not earlier revoked this Agreement (the “Effective Date”). Executive will not be entitled to receive any of the benefits specified by this Agreement unless and until this Agreement becomes effective.

 

6.3.     In granting the release herein, which includes claims that may be unknown to Executive at present, Executive acknowledges that he has read and understands Section 1542 of the California Civil Code: “A general release does not extend to claims that the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.” Executive hereby expressly waives and relinquishes all rights and benefits under that section and any law or legal principle of similar effect in any jurisdiction with respect to the releases granted herein, including but not limited to the release of unknown and unsuspected claims granted in this Agreement.

 

7.             Publicity; SEC Filing. The Company shall provide Executive with the opportunity to review and provide reasonable comments on any Form 8-K or press release issued by the Company reporting Executive’s separation from the Company. The parties acknowledge and agree that this Agreement will be publicly filed with the SEC.

 

8.             Covenant Not to Disclose Confidential or Proprietary Information.

 

8.1.     Executive acknowledges that the Company’s business is highly competitive and that the Company’s books, records and documents, technical information concerning its products, finances, marketing, business planning, customers and business associates all comprise confidential business information and trade secrets of the Company (collectively, “Confidential Information”) which are valuable, special and unique assets of the Company and which the Company uses in its business to obtain a competitive advantage over the Company’s competitors that do not know or use this information. Executive further acknowledges having had access to such Confidential Information and that protection of the Confidential Information against unauthorized disclosure and use is of critical importance to the Company in maintaining its competitive position. Accordingly, Executive hereby agrees that, in further consideration for the additional consideration described above, Executive will not, at any time, make any unauthorized disclosure of any Confidential Information or make any use thereof, except for the benefit and on behalf of the Company and only with written authorization of the Company.

 

 
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8.2.     All written materials, records and other documents, in any format or medium, that were made by, or came into the possession of, Executive during the period of his employment by the Company which contain or disclose Confidential Information are and remain the property of the Company. Executive agrees to return to the Company the same, and all copies, derivatives and extracts thereof as of the Resignation Date, or destroy such documents at Executive’s option if discovered after the Resignation Date.

 

9.             Intellectual Property Ownership. Executive has no rights to any of the Company’s concepts, inventions, processes, methodologies or trademarks, nor does Executive have any rights to any materials that have been copyrighted by the Company. The Company owns all rights to its patents, inventions, trademarks, service marks, trade names and other trade indicia. The Company owns all copyright rights to its materials, including materials prepared by Executive. Any inventions, concepts, processes, methodologies, trademarks, works or other material subject to copyright, that were developed by Executive in part or in whole in connection with Executive’s duties and responsibilities with or for the Company, shall belong entirely to the Company, and Executive shall cooperate fully with the Company to perfect its ownership and title thereto, at Company’s sole expense and cost.

 

10.           Non-Solicitation and Non-Disparagement.

 

10.1.     Executive agrees that in further consideration of the payments and benefits provided under this Agreement, during his employment with the Company and for a period of two (2) years following the Resignation Date, Executive shall not, on his own behalf or on behalf of any other person, partnership, entity, association or corporation, directly or indirectly hire or seek to hire any employee of the Company or in any other manner attempt directly or indirectly to influence, induce or encourage any employee of the Company to leave the employment of the Company, nor shall Executive use or disclose to any person, partnership, entity, association or corporation any information concerning the names, addresses or personal telephone numbers of any employee of the Company.

 

10.2.     Executive agrees, at all times, to speak well of the Company and not make any disparaging or denigrating statements or comments about the Company or its operations, products, services, members, managers, officers, employees, agents or representatives. The Company agrees that, following the Resignation Date, it shall advise its directors and executive officers not to disparage Executive, either orally or in writing, at any time; provided that they may confer in confidence with the Company’s and their legal representatives and make truthful statements as required by law.

 

11.           Reasonableness of Covenants and Remedies for Breach of Covenants.

 

11.1.     Executive acknowledges and agrees that the restrictions and agreements in the covenants contained in Sections 8, 9 and 10 above are reasonable and necessary to protect the Company’s goodwill and legitimate business interests, that compliance with the terms of these covenants shall not cause Executive any undue hardship, and that any violation of the said covenants will cause substantial and irreparable harm to the Company that will not be quantifiable and for which no adequate remedy will exist at law. Company acknowledges and agrees that the restrictions and agreements in the covenants contained in Section 10 above are reasonable and necessary to protect Executive’s reputation legitimate business and personal interests, that compliance with the terms of these covenants shall not cause Company any undue hardship, and that any violation of the said covenants will cause substantial and irreparable harm to Executive that will not be quantifiable and for which no adequate remedy will exist at law.

 

 
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11.2.     Executive agrees that, in the event he breaches or threatens to breach any of the covenants or agreements contained in Section 8, 9 and 10, the Company shall have the right to seek and obtain, and a court of competent jurisdiction may issue, a temporary restraining order, a preliminary or permanent injunction, or other order granting equitable relief (with any requirements for posting of a bond being hereby expressly waived), restraining or enjoining him from engaging in conduct or actions in violation of any such covenants. In addition, the Company shall be entitled to any and all other remedies available to it at law or in equity, and no action by the Company in pursuing a given remedy shall constitute an election to forego other remedies. Company agrees that, in the event that it breaches or threatens to breach any of the covenants or agreements contained in Section 10, Executive shall have the right to seek and obtain, and a court of competent jurisdiction may issue, a temporary restraining order, a preliminary or permanent injunction, or other order granting equitable relief (with any requirements for posting of a bond being hereby expressly waived), restraining or enjoining Company from engaging in conduct or actions in violation of any such covenants. In addition, Executive shall be entitled to any and all other remedies available to him at law or in equity, and no action by Executive in pursuing a given remedy shall constitute an election to forego other remedies.

 

12.           Return of Company Property. Executive covenants and agrees that he has or will return to the Company on or before the Resignation Date, all property of any kind or character that he received from the Company during the course of and relating to his employment, including, without limitation, all credit cards, telephone cards, cell phones, computers, personnel records (except personnel records previously provided by the Company to Executive and that specifically relate to Executive), handbooks or manuals, instructional or training books or materials, records, samples, financial information, business plans, marketing plans, computers or other electronic equipment, customer lists or records of customer usage, pricing lists, vendor lists or any other similar information that Executive had or has in his possession, custody or control.

 

13.            No Admission of Liability or Wrongdoing. This Agreement shall not be construed as an admission by the Company that it has acted wrongfully with respect to Executive, or that Executive has acted wrongfully toward the Company.

 

14.            Executive’s Right to Review Agreement with Counsel; Attorneys’ Fees. Executive fully understands that he has the right to discuss all aspects of this Agreement with a private attorney; that he has availed himself of that right to the extent he desires to do so; that he fully understands all of the provisions of this Agreement; and that he is entering into this Agreement voluntarily. Company shall reimburse the legal fees of Executive actually incurred in connection with this Agreement up to a maximum amount of $5,000, payable within 30 days of Executive’s submission of supporting documentation with respect thereto, but in no event later than December 31, 2016.

 

15.           Acknowledgement. Executive acknowledges that this Agreement is written in a manner that he understands, and that he, in fact, understands the terms, conditions and effect of this Agreement; that he does not waive rights or claims that may arise after the date this Agreement is executed; and that the rights and claims released and waived by him herein are in exchange for additional consideration in addition to anything of value to which Executive already is entitled.

 

 
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16.           Section 409A of the Code.

 

16.1.     This Agreement is intended to be exempt from, or, to the extent that such requirements are applicable, comply with, the requirements of Section 409A and shall be interpreted and administered in accordance with that intent. If any provision of this Agreement would otherwise conflict with or frustrate this intent, that provision will be interpreted and deemed amended so as to avoid the conflict. Further, for purposes of the limitations on nonqualified deferred compensation under Section 409A, each payment of compensation under this Agreement shall be treated as a separate payment of compensation for purposes of applying the deferral election rules under Section 409A and the exclusion from Section 409A for certain short-term deferral amounts. Anything to the contrary herein notwithstanding, in the event that any such benefit or payment is deemed to result in the imposition of taxes and/or penalties under Section 409A, the Company and Executive agree to renegotiate in good faith any such benefit or payment so that either (i) Section 409A will not apply or (ii) such benefit or payment does not result in the imposition of taxes and/or penalties under Section 409A, provided, however, that any resulting renegotiated terms shall provide to Executive, to the extent reasonably practicable, the after-tax economic equivalent based on what otherwise would have been provided to Executive pursuant to the terms of this Agreement. Notwithstanding anything herein to the contrary, Executive acknowledges and agrees that in the event that any tax is imposed under Section 409A in respect of any compensation or benefits payable to Executive, whether under or in connection with this Agreement or otherwise, then (i) the payment of such tax shall be solely Executive’s responsibility, and (ii) neither the Company, its affiliates nor any of their respective past or present directors, officers, employees or agents shall have any liability for any such tax.

 

16.2.     Notwithstanding anything to the contrary in this Agreement, no compensation or benefits, including without limitation any payments or benefits payable under Section 4 of this Agreement, shall be paid to Executive during the six (6)-month period following Executive’s “separation from service” from the Company (within the meaning of Section 409A) (a “Separation from Service”) to the extent that the Company determines that paying such amounts at the time or times indicated in this Agreement would result in a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code. If the payment of any such amounts is delayed as a result of the previous sentence, then on the first business day following the end of such six (6)-month period (or such earlier date upon which such amount can be paid under Section 409A of the Code without resulting in a prohibited distribution, including as a result of Executive’s death), the Company shall pay Executive a lump-sum amount equal to the cumulative amount that would have otherwise been payable to Executive during such six (6)-month period.

 

16.3.     All reimbursements and in-kind benefits provided under this Agreement shall be made or provided in accordance with the requirements of Section 409A, including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during the period of time specified in this Agreement, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, (iii) the reimbursement of an eligible expense will be made no later than the last calendar day of the calendar year following the year in which the expense is incurred, and (iv) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

 

17.           Golden Parachute Excise Tax Best Results. If any payments or benefits provided for in this Agreement (a) constitute “parachute payments” within the meaning of the Code Section 280G and (b) would be subject to the excise tax imposed by Section 4999 of the Code, then such benefits shall either be: (i) delivered in full, or (ii) delivered as to such lesser extent which would result in no portion of such severance benefits being subject to excise tax under Section 4999 of the Code, whichever of the foregoing amounts, taking into account the applicable federal, state and local income and employment taxes and the excise tax imposed by Section 4999, results in the receipt by Executive, on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code. Unless the Company and Executive otherwise agree in writing, any determination required under this Section will be made in writing by Squar Milner LLP, the Company’s independent public accounts (the “Accountants”), whose determination will be conclusive and binding upon Executive and the Company for all purposes. For purposes of making the calculations required by this Section, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section. Any reduction in payments and/or benefits required by this Section shall occur in the following order: (1) reduction of cash payments; and (2) reduction of other benefits paid to Executive. In the event that acceleration of vesting of equity awards is to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of grant for Executive’s equity awards. If two or more equity awards are granted on the same date, each award will be reduced on a pro-rata basis. In no event will Executive exercise discretion in the order of any reduction in payments contemplated by this Section.

 

 
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18.           General Provisions.

 

18.1.     Entire Agreement and Modification. Executive has carefully read and fully understands all of the terms of this Agreement. Executive and Company agree that this Agreement sets forth the entire agreement between Executive and the Company regarding the subject matter referenced herein and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter, including without limitation the employment letter between Executive and the Company dated August 23, 2006. Executive acknowledges that he has not relied upon any representations or statements, written or oral, not set forth in this Agreement. This Agreement cannot be modified except in writing and signed by both parties.

 

18.2.     Severability. If a court of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, then the invalidity or unenforceability of that provision shall not affect the validity or enforceability of any other provision of this Agreement, and all other provisions shall remain in full force and effect.

 

18.3.     Applicable Law, Jurisdiction and Venue. This Agreement is entered into under, and shall be governed for all purposes by, the laws of the State of California. Any action to enforce any right hereunder, to obtain a declaration of any right or obligation hereunder, or to recover for any breach hereof shall be brought in San Diego, California. Executive hereby expressly consents to the jurisdiction and venue of the foregoing courts for such purposes.

 

18.4.     Assignment. This Agreement will be binding upon and will inure to the benefit of the parties and their respective successors and assigns. Executive may not assign any right or obligation hereunder without the Company’s prior written consent. The Company may assign its rights and obligations hereunder to any successor in interest.

 

18.5.     Execution/Counterparts. This Agreement may be executed in any number of counterparts, which counterparts, when so executed and delivered, shall be deemed to be an original, and all counterparts, taken together, shall constitute one and the same instrument. This Agreement may be executed by facsimile or email copy and such facsimile or email copy of an original signature shall be given the same force and effect of an original signature.

 

 
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18.6.     Headings. The paragraph headings have been inserted for purposes of convenience and shall not be used for interpretive purposes.

 

18.7.     Attorneys’ Fees. If any party to this Agreement brings an action or proceeding to enforce its rights hereunder, the prevailing party shall be entitled to recover its costs and expenses, including reasonable attorneys’ fees, if any, incurred in connection with such action.

 

[Signature Page Follows] 

 

 
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IN WITNESS WHEREOF, the parties have executed this Separation Agreement and General Release on the dates set forth below.

 

Executive 

LRAD Corporation

 

 

 

 

 

 

 

 

 

Signature: /s/ Thomas R. Brown            

By:

/s/ John G. Coburn 

 

 Thomas R. Brown

Name:

John G. Coburn

 

 

Its:

Chairman of the Board

 

       
Date: March 11, 2016  Date: March 11, 2016  

    

 

 

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Exhibit 99.1

  

 

 

LRAD® CORPORATION ANNOUNCES SETTLEMENT AGREEMENT

WITH IROQUOIS MASTER FUND LTD. AND

SCHEDULES ANNUAL MEETING OF STOCKHOLDERS

 

CEO Tom Brown to Resign from Company

 

SAN DIEGO, CA – March 14, 2016 - LRAD Corporation (NASDAQ: LRAD), the world’s leading provider of acoustic hailing devices and advanced mass notification systems, today announced it has reached an agreement with Iroquois Master Fund Ltd. and certain of its affiliates (collectively “Iroquois”), with regard to the 2016 Annual Meeting of Stockholders. Iroquois had previously nominated two new independent nominees to LRAD’s Board of Directors (the “Board”). In the Investors Agreement, it was agreed that Iroquois’ two nominees, Scott L. Anchin and Daniel H. McCollum, will be appointed to the Board immediately and will be nominated for election at the 2016 Annual Meeting. As part of the agreement, Iroquois will vote all of its shares in favor of the 2016 nominees at the Annual Meeting.

 

“We believe this agreement is in the best interests of the Company and our stockholders,” stated General John G. Coburn, Chairman of the Company’s Board of Directors. “We look forward to working together with our new Board members to increase long term stockholder value.”

 

“We are pleased to have worked constructively with LRAD and commend LRAD’s Board for its thoughtful engagement over the past couple of months,” stated Josh Silverman, co-founder and managing member of Iroquois Capital Management, LLC. “We are excited that we have been able to attract two highly qualified directors of Scott and Dan’s caliber to a company of LRAD’s size. It is clear LRAD has excellent prospects and we believe that this newly composed Board will help maximize the Company’s potential and enhance stockholder value.”

 

Scott L. Anchin is a restructuring professional with more than 19 years of leadership experience spanning a variety of industries. Until recently, Mr. Anchin worked for Alvarez & Marsal North America, LLC (“A&M”), a global professional services firm specializing in turnaround and interim management and performance improvement. Mr. Anchin started his career in public accounting with Anchin, Block & Anchin LLP, where he audited financial statements for manufacturing, real estate, retail and consumer products companies. Mr. Anchin has a Bachelor of Science in Accounting from the Wharton School of Business at the University of Pennsylvania and an MBA with a concentration in Management from Columbia Business School. He is also a non-active Certified Public Accountant (CPA).

 

Daniel H. McCollum is a Managing Director in the Investment Office of Brown University in Providence, RI, a position he has held since 2013.  The Investment Office of Brown University is responsible for managing the University’s $3+ billion endowment.  From 2008 through 2013, Mr. McCollum was a Managing Director at Narragansett Asset Management, LLC.  Mr. McCollum has a B.A. in Economics from the University of California at Berkeley and an M.B.A. from the Columbia Business School.

 

 
 

 

 

The Company also announced that Tom Brown, the Company’s President and Chief Executive Officer, is resigning from the Company effective June 30, 2016. The Company’s Board of Directors has initiated a replacement search.

 

Mr. Brown joined the Company as a member of the Board in March 2006 and became President and Chief Executive Officer in August 2006. Brown guided the development and expansion of the Company’s successful LRAD-X product line and established the LRAD brand around the world by building U.S. and international distribution networks, resulting in LRAD systems being utilized in over 70 countries and in more than 200 U.S. cities, counties and states. Brown personally brought in the Company’s largest order to date ($17.6 million) and his efforts resulted in the recent modification of the Company’s current U.S. Navy contract that provides a vehicle for the U.S. Army to purchase LRAD systems and accessories under the modified contract.

 

Mr. Brown increased the Company’s business potential by entering the large and growing mass notification market with a line of advanced life safety systems that have recorded over 70% in annual revenue growth the last two fiscal years. By building a solid financial structure, Brown has grown the Company organically during his tenure, resulting in six consecutive years of profitability and seven consecutive years of positive cash flow.

 

“Under Tom’s leadership, the Company created the acoustic hailing device market and achieved global recognition of its products and the LRAD brand,” stated General Coburn. “The Board thanks Tom for his years of service and many contributions, including the Company’s good financial health and positioning it for further growth and success.”

 

The Company also announced that its annual meeting of stockholders has been scheduled for May 17, 2016 at its corporate offices. Stockholders of record as of March 23, 2016 will be eligible to vote for the proposed slate of directors and other proposals for consideration that will be included in the Company’s proxy statement scheduled for filing with the Securities and Exchange Commission (SEC).

 

About LRAD Corporation

 

Using advanced technology and superior voice intelligibility, LRAD Corporation’s proprietary Long Range Acoustic Devices® and revolutionary ONE VOICE® mass notification systems safely hail and warn, inform and direct, prevent misunderstandings, determine intent, establish large safety zones, resolve uncertain situations, and save lives. LRAD systems are in service in more than 70 countries around the world in diverse applications including mass notification and public address, fixed and mobile defense deployments, homeland, border, critical infrastructure, maritime, oil & gas, and port security, public safety, law enforcement and emergency responder communications, asset protection, and wildlife control and preservation. For more information, please visit www.lradx.com.

 

 
 

 

 

Forward Looking Statements  

 

Except for historical information contained herein, the matters discussed are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. You should not place undue reliance on these statements. We base these statements on particular assumptions that we have made in light of our industry experience, the stage of product and market development as well as our perception of historical trends, current market conditions, current economic data, expected future developments and other factors that we believe are appropriate under the circumstances. These statements involve risks and uncertainties that could cause actual results to differ materially from those suggested in the forward-looking statements. These risks and uncertainties are identified and discussed in our filings with the Securities and Exchange Commission. These forward-looking statements are based on information and management’s expectations as of the date hereof. Future results may differ materially from our current expectations. For more information regarding other potential risks and uncertainties, see the “Risk Factors” section of the Company’s Form 10-K for the fiscal year ended September 30, 2015. LRAD Corporation disclaims any intent or obligation to update those forward-looking statements, except as otherwise specifically stated.

 

 

Company Contact 

E. Brian Harvey

Director, Investor Relations and Capital Markets

858.753.8974

[email protected]



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