Exhibit 10.02

 

REACHLOCAL, INC.

 

Separation Agreement

 

And

 

General Release

 

Zorik Gordon (referred to as “Executive”) and ReachLocal, Inc., on behalf of
itself and its successors, subsidiaries, affiliates, and related companies
(referred to collectively as the “Company”), enter into this Separation
Agreement and General Release (the “Agreement”) as of this 3rd day of September
2013 (“Effective Date”).

 

The Executive and the Company agree that Executive’s employment with the Company
terminated effective August 30, 2013 (“Termination Date”). The following sets
forth the terms and conditions surrounding Executive’s termination of employment
and related matters.

 

1.    Termination of Employment. The Parties acknowledge and agree that
Executive has resigned from his position as Chief Executive Officer of the
Company and a member of the Board of Directors of the Company and that Executive
shall cease to be an employee, officer and director of the Company and its
subsidiaries and affiliates, effective as of the Termination Date. As of such
date, Executive shall no longer hold himself out as an employee, officer,
director or representative of the Company. As of the Termination Date, the
employment offer letter dated May 14, 2004, as amended on February 22, 2010
between the Company and Executive (the “Offer Letter”), shall terminate and
shall be of no further force and effect, and neither the Company nor Executive
shall have any further obligations thereto, except to the extent otherwise
expressly provided therein.

 

2.    Consideration. Subject to and conditioned upon Executive’s execution of
this Agreement and continued compliance with the terms and conditions of this
Agreement and the Confidentiality Agreement (as defined below):

 

a.     Severance. During the twelve-month period following the Termination Date
(the “Severance Period”), the Company shall pay Executive an aggregate amount
equal to $400,000, which will be payable in substantially equal installments
over the Severance Period in accordance with the Company’s standard payroll
practices as in effect from time to time, with the first payment being made on
the first payroll date following the date on which this Agreement becomes
effective.

 

b.     Continued Healthcare Coverage. So long as Executive timely elects health
benefits continuation pursuant to Section 4980B of the Code and the regulations
thereunder (“COBRA”), Executive shall be entitled to receive payment by the
Company of Executive’s applicable premiums for such continuation coverage under
COBRA (payable as and when such payments become due) during the period
commencing on the Termination Date and ending on the earliest to occur of (i)
the twelve month anniversary of the Termination Date, (ii) the expiration of
Executive’s eligibility for benefits under COBRA, and (iii) the date on which
Executive and his or her covered dependents, if any, become eligible for health
insurance coverage through another source.

 

c.     Treatment of Stock Options. As of the date hereof, Executive holds the
outstanding stock option grants identified on Exhibit A (collectively, the
“Stock Option Grants”). Each Stock Option Grant will become immediately vested
as of the Termination Date with respect to the number of shares set forth on
Exhibit A attached hereto and shall be exercisable at any time up to the 270th
day following the Termination Date.

 

 
 

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d.     Treatment of Restricted Shares. As of the date hereof, Executive holds
the outstanding time-based vesting restricted shares identified on Exhibit A
(collectively, the “Restricted Shares”). The Restricted Shares will become
immediately vested as of the Termination Date with respect to the number of
shares set forth on Exhibit A attached hereto.

 

e.     Treatment of Performance Vesting Restricted Stock Award. As of the date
hereof, Executive holds an outstanding performance vesting restricted stock
award with respect to 54,475 shares of the Company’s common stock (the
“Performance Vesting Restricted Stock Award”) granted February 14, 2013 pursuant
to that certain Restricted Stock Award Grant Notice and Restricted Stock
Agreement (the “Restricted Stock Agreement”). The Company and Executive agree
and acknowledge that the Performance Vesting Restricted Stock Award shall remain
outstanding and eligible to vest in accordance with Sections (3) and (4) of the
Restricted Stock Agreement as though Executive’s resignation constitutes a
Qualifying Termination under the Restricted Stock Agreement.

 

f.     Section 409A. It is intended that all of the benefits and payments
payable under this Agreement satisfy, to the greatest extent possible, the
exemptions from the application of Section 409A of the Internal Revenue Code of
1986, as amended (with state laws of similar effect, “Section 409A”), provided
under Treasury Regulations 1.409A-1(b)(4), 1.409A-1(b)(5), and 1.409A-1(b)(9),
and this Agreement will be construed to the greatest extent possible as
consistent with those provisions. For purposes of Section 409A (including,
without limitation, for purposes of Treasury Regulation Section
1.409A-2(b)(2)(iii)), Executive's right to receive any installment payments
under this Agreement shall be treated as a right to receive a series of separate
payments and, accordingly, each installment payment shall at all times be
considered a separate and distinct payment.

 

3.    Bonus Opportunity. Executive will remain eligible to receive a pro rated
annual bonus with respect to the 2013 fiscal year (the “Bonus”) under the
ReachLocal Incentive Bonus Plan. The amount of the Bonus, if any, will be equal
to the product of (a) the average of the percentages of the target annual bonus
payable to each of the Company’s named executive officers (other than Executive)
under the ReachLocal Incentive Bonus Plan for the 2013 fiscal year that is
actually paid to each such officer, as determined in the sole discretion of the
Compensation Committee (the “Committee”) in accordance with the methodology
previously established by the Committee with respect to the bonuses payable to
such officers under the ReachLocal Incentive Bonus Plan, multiplied by (b)
$500,000, multiplied by (c) the number of days from and including January 1,
2013 through and including the Termination Date divided by 365. Except as set
forth below, payment of the Bonus (to the extent it becomes payable) will be
paid on or after March 2, 2014, but in no event later than March 15, 2014.

 

4.    No Other Compensation Owed. Executive acknowledges and agrees that except
for the payments provided above and accrued but unpaid amounts as of the
Termination Date, no other compensation, payments, wages, salary, bonuses,
commissions, benefits, severance, equity, or remuneration of any kind whatsoever
are owing to Executive as a result of his employment with or termination of
employment from the Company, or under the Offer Letter, the Severance Policy (as
defined below) or the Restricted Stock Agreement.

 

 
 

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5.    Release of Claims. In exchange for the promises contained in this
Agreement and to the extent permitted by law, Executive hereby waives, releases
and forever discharges, and agrees that Executive will not in any manner
institute, prosecute or pursue, any and all complaints, claims, charges,
liabilities, claims for relief, demands, suits, actions or causes of action,
whether in law or in equity, know or unknown (collectively, “Claims”), which
Executive asserts or could assert, at common law, under any express or implied
contract, arising in tort or under any statute, rule, regulation, order or law,
whether federal, state, or local, or on any grounds whatsoever, including
without limitation, claims under the Employment, Confidential Information, and
Invention Assignment Agreement executed on or about June 2, 2004 (the
“Confidentiality Agreement”), Title VII of the Civil Rights Act of 1964, the
California Fair Employment and Housing Act, the California Labor Code, the
California Business and Professions Code, the Americans with Disabilities Act,
the Family and Medical Leave Act of 1993, and the Executive Retirement Income
Security Act of 1974, against the Company and any of its or their current or
former, owners, officials, directors, officers, shareholders, affiliates,
agents, representatives, employees, attorneys, subsidiaries, parents, divisions,
branches, units, successors, predecessors, and assigns (collectively referred to
as “Released Parties”) with respect to any event, matter, claim, damage or
injury arising out of or relating to Executive’s employment relationship with
the Company, the termination of such employment relationship, or the
Confidentiality Agreement arising up to the date and time of signing of this
Agreement by Executive.

 

Notwithstanding the foregoing, the release does not terminate Executive’s rights
(a) set forth in this Agreement, (b) with respect to the Stock Option Grants,
the Restricted Shares or the Performance Vesting Restricted Stock Award, (c)
Executive’s rights to be indemnified by the Company or any of its subsidiaries
under any agreement with the Company or any of its subsidiaries, the Company’s
certificate of incorporation or bylaws, or under applicable law or (d) resulting
from any breaches of this Agreement.

 

This Agreement also does not extend to those rights which as a matter of law
cannot be waived, including, but not limited to, unwaivable rights. If any claim
is not subject to release, to the extent permitted by law, Executive waives any
right or ability to be a class or collective action representative or to
otherwise participate in any putative or certified class, collective or
multi-party action or proceeding based on such a claim in which the Company or
any other releasee identified in this Agreement is a party.

 

6.    Outstanding Claims. Executive represents that Executive has not filed or
otherwise pursued any charges, complaints or claims of any nature which are in
any way pending against the Company or any of the Released Parties with any
local, state or federal government agency or court with respect to any matter
covered by this Agreement, and, to the extent permitted by law, will not do so
in the future. Executive further represents that he is not aware of any such
claims against the Company, including any claims under the Fair Labor Standards
Act or the Family and Medical Leave Act. If any government agency or court
assumes jurisdiction of any charge, complaint, cause of action or claim covered
by this Agreement against the Company or any of the Released Parties, on behalf
of or related to Executive, Executive will withdraw from and/or dismiss the
matter with prejudice, as to any claims Executive might have. Executive agrees
not to participate or cooperate in such matter(s) except as required by law.
Notwithstanding the foregoing or any other provision of this Agreement, this
Agreement is not intended to interfere with Executive's exercise of any
protected, nonwaivable right, including Executive's right to file a charge with
the Equal Employment Opportunity Commission or other government agency.  By
entering into this Agreement, however, Executive acknowledges that the
consideration set forth herein is in full satisfaction of any amounts to which
Executive might be entitled and Executive is forever discharging the Company and
the other Released Parties from any liability to Executive for any acts or
omissions occurring on or before the date of Executive's signing of this
Agreement.

 

7.    Exchange Act Section 16. Executive acknowledges that if Executive makes
any “reportable transactions” under Section 16 of the Exchange Act of 1934, as
amended, Executive shall immediately notify the Company of such transactions.

 

8.    Acknowledgement of Confidentiality Agreement. Executive acknowledges that
Executive (a) previously executed the Employment, Confidential Information, and
Invention Assignment Agreement executed on or about June 2, 2004 and (b) that
during the course of his employment he became acquainted with other employees of
the Company, and became privy to Confidential Information regarding such other
employees including their skills, abilities, contacts, customers, compensation,
and other information which would provide a competitive advantage in recruiting
such employees. Accordingly, Executive acknowledges that he remains subject to
the confidentiality and non-solicit obligations set forth therein. Without
limiting the generality of the foregoing:

 

 
 

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a.     Confidentiality Obligations. Executive agrees to hold in strictest
confidence all Confidential Information. "Confidential Information" means any
Company proprietary information, technical data, trade secrets or know-how,
including, but not limited to, research, product plans, products, services,
customer lists and customer information (including, but not limited to,
customers of the Company on whom I called or with whom I became acquainted
during the term of my employment), prospective customer lists, markets,
software, developments, inventions, processes, formulas, technology, designs,
drawings, engineering, hardware configuration information, marketing, finances,
employee, independent contractor, or vendor information, or other business
information, or compilations of such information, disclosed to me by the Company
either directly or indirectly in writing, orally or by drawings or observation
of parts or equipment. Confidential Information does not include any of the
foregoing items which have become publicly known and made generally available
through no wrongful act or omission of Executive or of others who were under
confidentiality obligations as to the item or items involved or improvements or
new versions thereof; provided, however, that the availability of individual
items of information contained in a compilation through independent means shall
not remove the compilation itself from protected status under this Agreement so
long as the compilation remains confidential.

 

b.     Non-Solicitation Obligations. Executive agrees that for a period of
twelve (12) months immediately following the Termination Date, that Executive
will not, either directly or indirectly, solicit, induce, recruit or encourage
any of the Company’s employees or independent contractors with whom Executive
worked during his employment with the Company to terminate their relationship
with the Company. Executive acknowledges that if he violates this provision, the
duration of such obligations shall be extended by the duration of such
violation.

 

c.     Executive acknowledges that during the course of his employment, he has
been provided access to trade secret information regarding customers and
prospective customers of the Company, including customer lists and other
information containing identities and contact information for current and
prospective customers. Executive agree that he will not use such trade secrets
to either directly or indirectly solicit, induce, or encourage any of the
Company’s customers or prospective customers to terminate or otherwise modify,
to the detriment of the Company, its relationship with the Company.

 

9.    Return of Property. Executive affirms that Executive will return all of
the Company’s property, documents, and/or any confidential or proprietary
information in Executive’s possession or control, including, without limitation,
all computers, telephones, pagers memoranda, books, papers, letters, formulae,
computer data, disks, manuals, price information, order forms, employee lists,
potential employee lists, client lists, customer pricing, contract terms,
supplier lists, and other data (and all copies thereof or therefrom) in any way
relating to the Company’s business and affairs, provided, however, that
Executive shall be entitled to keep, and shall not be required to return to the
Company, Executive’s Company-provided laptop, desktop and any associated
hardware. The Company agrees and acknowledges that during the twelve-month
period following the Termination Date, the Company shall forward to Executive’s
designated personal email account all personal emails of Executive.

 

10.  Non-Disparagement Covenant. Executive will not disparage or denigrate the
Company, its officers, directors and employees, or its products and services of
the Company. In particular, Executive agrees that Executive will not provide
information, issue statements, or take any action, directly or indirectly, that
would cause the Company, its business strategies and operations, and any of the
Company’s officers, directors, employees, shareholders, or affiliates, any
embarrassment or humiliation or otherwise cause or contribute to the Company
being held in disrepute.

 

 
 

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11.  Remedies. In recognition of the fact that irreparable injury will result to
the Company in the event of a breach by Executive of Paragraphs 6, 7, 8, 9 or 10
of this Agreement that monetary damages for such breach would not be readily
calculable, and that the Company would not have an adequate remedy at law,
Executive acknowledges, consents and agrees that in the event of such breach, or
the threat thereof, the Company shall be entitled, in addition to any other
legal remedies and damages available, to specific performance thereof and to
temporary and permanent injunctive relief (without the necessity of posting a
bond) to restrain the violation or threatened violation of such obligations by
Executive. Should Executive ever breach any provision or obligation under this
Agreement, Executive explicitly agrees to pay all damages (including, but not
limited to, litigation and/or defense costs, expenses, and reasonable attorneys’
fees) incurred by the Company as a result of the breach. Nothing in this
Paragraph shall, or is intended to, limit or restrict any other rights or
remedies the Company may have by virtue of this Agreement or otherwise.

 

11.  No Admission of Liability. By entering into this Agreement, the Company and
all Released Parties do not admit any liability whatsoever to Executive or to
any other person arising out of any claims heretofore or hereafter asserted by
Executive.

 

12.  Agreement to Cooperate With the Company. Executive agrees to assist the
Company in any formal or informal legal matters in which Executive is named as a
party or has knowledge relevant to the matter. Executive acknowledges and agrees
that such assistance may include, but will not be limited to, providing
background information regarding any matter on which Executive previously
worked, aiding in the drafting of declarations, executing declarations or
similar documents, testifying or otherwise appearing at investigation
interviews, depositions, arbitrations or court hearings and preparing for the
above-described or similar activities. Executive understands that Executive will
receive no additional pay for Executive’s assistance beyond that provided in
this Agreement.

 

13.  Tax Withholding. The Company may withhold from any amounts payable under
this Agreement such federal, state, local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.

 

14.  Severability. In the event any one or more of the provisions contained in
this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect the other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein. If, moreover, any one or more of the provisions
contained in this Agreement shall for any reason be held to be excessively broad
as to duration, geographical scope, activity, duration, or subject, it shall be
construed by limiting and reducing it to the extent necessary to be valid and
enforceable under the applicable law as it shall then appear while giving
effect, to the greatest degree possible, to the original intent of such
provision.

 

15.  Executive Acknowledgements. Executive hereby affirms and acknowledges that
Executive has read the foregoing Agreement, has had sufficient time and
opportunity to review or discuss it with the counsel of Executive's choice, and
fully understands and appreciates the meaning of each of its terms, and that it
is a voluntary, full and final compromise, release and settlement of all claims,
known or unknown, with respect to the claims identified and referred to herein.

 

16.  Entire Agreement. This Agreement, together with the Confidentiality
Agreement, constitutes the complete understanding between Executive and the
Company and supersedes any and all prior agreements (including the Offer Letter,
to the extent the terms thereof are inconsistent with this Agreement), promises,
representations, or inducements, no matter its or their form, concerning its
subject matter. No promises or agreements made subsequent to the execution of
this Agreement by Executive and the Company shall be binding unless reduced to
writing and signed by authorized representatives of Executive and the Company.

 

 
 

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17.   Choice of Law/Venue. This Agreement shall be governed by California law.
If a dispute arises under this Agreement Executive and the Company both
irrevocably consent to the exclusive jurisdiction and venue of the state and
federal courts located within Los Angeles County, California for resolution of
any matters arising hereunder; and the prevailing party in any court
proceeding shall be entitled to recover its reasonable attorneys’ fees, expenses
and costs.

 

 

PLEASE READ THIS AGREEMENT AND CAREFULLY CONSIDER ALL OF ITS PROVISIONS BEFORE
SIGNING IT. EXECUTIVE SHOULD CONSULT AN ATTORNEY OF HIS CHOICE ABOUT THIS
AGREEMENT BEFORE HE SIGNS THE AGREEMENT. THIS AGREEMENT CONTAINS A RELEASE OF
ALL KNOWN AND UNKNOWN CLAIMS, INCLUDING THOSE UNDER FEDERAL, STATE AND LOCAL
LAWS PROHIBITING DISCRIMINATION IN EMPLOYMENT, TO THE EXTENT PERMITTED BY LAW.

 

IN ACCORDANCE WITH THE OLDER WORKERS BENEFIT PROTECTION ACT OF 1990, EXECUTIVE
IS HEREBY ADVISED AS FOLLOWS:

 

(A)     EXECUTIVE HAS THE RIGHT TO CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS
AGREEMENT;

 

(B)     EXECUTIVE HAS TWENTY-ONE (21) DAYS TO CONSIDER THIS AGREEMENT BEFORE
SIGNING IT; AND

 

(C)     EXECUTIVE HAS SEVEN (7) DAYS AFTER SIGNING THIS AGREEMENT TO REVOKE THIS
AGREEMENT, AND THIS RELEASE WILL BECOME EFFECTIVE UPON THE EXPIRATION OF THAT
REVOCATION PERIOD.

 

EXECUTIVE FREELY AND KNOWINGLY, AND AFTER DUE CONSIDERATION, ENTERS INTO THIS
AGREEMENT INTENDING TO WAIVE, SETTLE AND RELEASE ALL CLAIMS EXECUTIVE HAS OR
MIGHT HAVE AGAINST RELEASEES.

 

 

 

 

 

 Dated: September 3, 2013  /s/ Zorik
Gordon                                                   Zorik Gordon           
        Dated: September 4, 2013 ReachLocal, Inc.           By  /s/ David Scott
Carlick                                   David Scott Carlick       Interim CEO
 

           

 
 

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Exhibit A

 

Stock Option Grants

 

 

Grant Date

Number of Shares Vested as of Prior to Termination

Number of Shares to Accelerate in Connection with Termination

Total Exercisable as of Termination Date

September 19, 2008

420,000 

0

420,000

May 20, 2010

162,500 

37,500

200,000

February 17, 2012

38,999 

26,000

64,999

June 25, 2012

40,229 

34,483

74,712

February 14, 2013

0 

17,497

17,497

 

 

Restricted Shares

 

 

Grant Date

Number of Shares to Accelerate in Connection with Termination

February 17, 2012

3,250