Document:

ex10-5.htm

Exhibit 10.5

 

	

 

 

March 28, 2016

 

Ross G. Landsbaum

 

Dear Ross,

 

This employment letter will amend and restate the offer letter (this “Letter”) between you and ReachLocal, Inc. (the “Company”), dated May 30, 2008, in its entirety and will provide the terms under which you will continue to serve as the Company’s as Chief Financial Officer from and after the date hereof (the “Effective Date”). 

 

Set forth below are the following important points concerning the terms of your employment:

 

	
1.
	
Compensation.

 

(a)     Base Compensation. Effective as of July 1, 2016, the Company will pay you a base salary at the rate of $400,000 per year (the “Base Salary”), payable in accordance with the Company’s normal payroll procedures. The Base Salary is subject to modification during your employment in accordance with the Company’s practices, policies and procedures.

 

(b)     Bonus Compensation. Commencing with calendar year 2016, during your employment with the Company you will be eligible to receive an annual bonus (an “Annual Bonus”) of up to 100% of your Base Salary pursuant to the Company’s Executive Bonus Plan. Annual Bonuses, if any, will be payable in accordance with the Company’s end-of-year bonus payroll procedures (which have typically resulted in payment of annual bonuses, if any, in February of the subsequent year). You must be employed by the Company on the date annual bonuses are payable to senior management in order to receive any Annual Bonus. However, for 2016, your Annual Bonus will not be less than 100% of your Base Salary, and will be paid to you if you remain continuously employed through December 31, 2016 or, if earlier, through a Change in Control (as defined in the Severance Policy). Your 2016 Annual Bonus will be paid no later than March 15, 2017 but if there occurs a termination of service following a Change in Control, then it will be paid upon any termination of service following such Change in Control (provided earlier than March 15, 2017). Subject to the foregoing, you will also be eligible to participate, to the extent determined by the Company’s Board of Directors or its Compensation Committee, in the Company’s Executive Bonus Plan or any other short- or long-term bonus or incentive plan that the Company may from time to time establish for its senior executives, on a basis consistent with your position. 

 

(c)     Equity Awards. The Company will grant you, on or soon after the Effective Date, a restricted stock unit award covering 40,000 shares of the Company’s common stock (the “RSUs”). The RSUs will be granted pursuant to the Company’s Amended and Restated 2008 Stock Incentive Plan and will be evidenced by an agreement in a form prescribed by the Company. The RSUs will vest with respect to 25% of the total number of RSUs on the one year anniversary of the Effective Date and with respect to 1/16th of the total number of RSUs on each quarterly anniversary of the Effective Date thereafter, subject to your continued employment with the Company through the applicable vesting date. In addition, the RSUs will be subject to the severance and change in control provisions described in Sections 2 and 3 below. 

 

 

 

 

 

Ross Landsbaum

Page 2 of 4

 

 

2.     Severance Arrangements. You are eligible to participate in the Company’s Change in Control and Severance Policy for Senior Management (the “Severance Policy”), a copy of which is attached hereto as Exhibit A, as a Group A Participant (as such term is defined in the Severance Policy). Moreover, in the event you give the Company at least three months’ notice, you may tender your resignation to be effective December 31, 2016 and receive the severance benefits available to you as a Group A Participant under Sections 5(a), 5(b) and 5(c) of the Severance Policy, subject to the terms and conditions set forth in the Severance Policy. Nothing under the is agreement shall limit the benefits under the Severance Policy under Section 2(b)(1) thereof or otherwise.

 

3.     Change in Control. In the event that a Change in Control occurs and you remain continuously employed through at least immediately prior to such Change in Control, then 100% of the shares subject to all of your outstanding and unvested Company equity compensation awards shall become vested and non-forfeitable immediately prior to such Change in Control.

 

4.     Benefits. You will continue to be eligible to participate in all savings and retirement plans, and all group welfare benefit plans (including, if applicable, medical, dental, disability, employee life, group life and accidental death insurance plans and programs) maintained by the Company from time to time which are applicable to the Company’s senior executive officers, subject to the terms and conditions of such plans. Notwithstanding the foregoing, nothing herein is intended, or shall be construed to require the Company to institute or continue any, or any particular, plan or benefits. 

 

5.     Clawback. To the extent required by applicable law or any applicable securities exchange listing standards, any amounts paid or payable under this Letter (including, without limitation, amounts paid prior to the effectiveness of such law or listing standards) will be subject to forfeiture, repayment or recapture as determined by the Company in its discretion.

 

6.     409A Considerations. To the extent that any payment under this Letter constitutes nonqualified deferred compensation for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), and such payment would otherwise be payable hereunder by reason of a termination of your employment, then, to the extent required by Section 409A, all references to your termination of employment will be construed to mean a Separation of Service (as defined in the Severance Policy) and such amounts will only be paid upon or by reference to your Separation from Service. Notwithstanding the foregoing, no compensation or benefits, including without limitation any severance payments or benefits described in Section 2 shall be paid to you during the six (6)-month period following your Separation from Service if the Company determines that paying such amounts at the time or times indicated in this Letter would be a prohibited distribution under Section 409A. 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 your death), the Company shall pay you a lump-sum amount equal to the cumulative amount that would have otherwise been payable to you during such period, plus interest credited at the applicable federal rate in effect as of the Termination Date (as defined in the Severance Policy) provided for in Section 7872(f)(2)(A) of the Code.

 

 

 

 

 

Ross Landsbaum

Page 3 of 4

 

 

7.     Good Reason and Cause Definitions. Notwithstanding anything to the contrary in the 2008 Stock Incentive Plan, any equity award agreements or any other Company plan, with respect to this Letter and the Severance Policy, the terms “Cause” and “Good Reason” shall have the meanings given to them in the Severance Policy (in the form attached hereto). Notwithstanding the foregoing, the Company may terminate your employment for Cause, only upon providing you with 30 days prior written notice (the “Notice Period”), which notice shall identify the basis for the termination (the “Cause Notice”). Such termination shall become effective immediately upon the conclusion of the Notice Period, provided that you have not cured, by the conclusion of the Notice Period, the action purporting to give rise to Cause (the “Breach”) in the sole discretion of the Company. No Cause Notice shall be required if, in the Company’s sole discretion, the Breach is not of such a nature that it can be cured. You acknowledge that, pursuant to Section 6(b)(i) of the Severance Policy, future grants of equity awards, if any, may not be subject to the same acceleration or other rights as set forth in the Severance Policy or this Letter (meaning, among other things, that the Company may elect to eliminate or modify the definitions of Cause or Good Reason in connection with such future grants).

 

8.     Nature of Employment. Your employment with the Company will be at-will, meaning that your employment is not for a specified period of time and can be terminated by you or the Company at any time, with or without cause and with or without notice.

 

9.     Miscellaneous. You acknowledge and agree that you previously executed, and continue to be bound by the commitments and obligations set forth in, the Company’s Employment, Confidential Information, and Invention Assignment Agreement (the “Non-Disclosure Agreement”) and the Company’s Arbitration Agreement, and you hereby reaffirm the covenants contained in such agreements. 

 

Furthermore, in your work for the Company and its subsidiaries, you will be expected not to use or disclose any confidential information, including trade secrets, of any former employer or other person to whom you have any obligation of confidentiality.  You agree that you will not bring onto the Company premises any unpublished documents or property belonging to any former employer or other person to whom you have an obligation of confidentiality.  

 

You will also adhere to all enforceable post-termination restrictive covenants (such as non-solicit obligations) that you may be subject to as the result of your agreements with any prior employers and you have provided the Company with copies of any such agreements in advance of signing this Letter.

 

 

 

 

 

Ross Landsbaum

Page 4 of 4

 

 

To indicate your acceptance of the terms and conditions set forth in this Letter, please sign and date this Letter in the space provided below and return it to me or Tenlay Naliboff within three (3) business days of this Letter’s date. This Letter may not be modified or amended except by a written agreement, signed by the Company and by you.

 

We look forward to continuing to work with you.

 

	
 
	
Sincerely,

ReachLocal, Inc.

 

 

/s/ Sharon T. Rowlands                                                  
Sharon T. Rowlands, Chief Executive Officer

 

 

I hereby accept my continuation of employment with ReachLocal, Inc. on the terms set forth in this Letter. I acknowledge that the terms described in this Letter, together with the Non-Disclosure Agreement and the Arbitration Agreement, set forth the entire understanding between us and no promises, representations or commitments have been made to me concerning my employment with ReachLocal, Inc. other than those set forth in this Letter.

 

ACCEPTED, ACKNOWLEDGED AND AGREED TO this 28th day of March, 2016:

 

 

Ross G. Landsbaum                              
Ross G. Landsbaum

 

 

 

 

 

Exhibit A

Change in Control and Severance Policyex10-29.htm

Exhibit 10.30 

 

ThIRD AMENDMENT TO
LOAN AND SECURITY AGREEMENT 

 

THIS THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT (the “Amendment”) is made and dated as of December 17, 2015, and is entered into by and between REACHLOCAL, INC., a Delaware corporation, and each of its Domestic Subsidiaries (other than any FSHCO) and each of its Eligible Foreign Subsidiaries party to the Agreement (hereinafter collectively referred to as “Borrower”), the several banks and other financial institutions or entities from time to time parties to this Agreement (collectively, referred to as “Lender”), and HERCULES TECHNOLOGY GROWTH CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent for itself and the Lender (in such capacity, “Agent”).

 

RECITALS

 

A.     Borrower, Agent and Lender previously entered into that certain Loan and Security Agreement dated April 30, 2015, as amended pursuant to that certain First Amendment to Loan and Security Agreement dated as of August 3, 2015 and that certain Second Amendment to Loan and Security Agreement dated as of November 9, 2015 (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the “Agreement”); 

 

B.     Borrower acknowledges that it is currently required to maintain Unrestricted Cash of $17,500,000 pursuant to Section 7.15(a) of the Agreement;

 

C.     Borrower requests that the covenants contained in Section 7.15(a) and paragraph 2 of Schedule 7.15(b) of the Agreement be amended as provided herein; and

 

D.     Agent and Lender are willing to waive such covenants as provided herein.

 

AGREEMENT

 

NOW, THEREFORE, Borrower, Agent and Lender agree as follows:

 

1.     Unless otherwise defined herein, all capitalized terms shall have the meaning provided in the Agreement. The recitals set forth above are hereby incorporated by reference.

 

2.     As of the Effective Date (defined in Section 8, below), Section 7.15(a) of the Agreement is amended and restated in its entirety as follows:

 

(a)     Borrower’s Unrestricted Cash shall be not less than $12,500,000 at any time, provided however, that if Borrower makes the EBITDA Election, the Unrestricted Cash Balance shall be not less than $15,000,000 at any time after making the EBITDA Election unless Adjusted EBITDA (excluding all Cash and non-Cash restructuring charges or expenses) is positive for three consecutive calendar quarters, at which time, the Unrestricted Cash Balance shall adjust back to $12,500,000. 

 

 

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3.     As of the Effective Date (defined in Section 8, below), paragraph 2 of Schedule 7.15(b) is amended and restated in its entirety as follows:

 

2.     Subsequent Revenue/Adjusted EBITDA. Revenue and Adjusted EBITDA for each 12 month period beginning January 2016 throughout the Term Loan Maturity Date shall be at least 90% and 80%, respectively, of the trailing three month amounts for Revenue and Adjusted EBITDA provided in the Operating Budget, tested on a monthly basis as of the last day of the month. Notwithstanding the foregoing, (i) should Borrower with Agent’s consent exit any country where Revenue attributable to such market is in excess of 2% of Revenue in the Operating Budget, the Operating Budget shall be amended to reflect the exit, and (ii) for the first six months of 2016, the threshold for Adjusted EBITDA shall be 70% in lieu of 80%.

 

4.     This Amendment shall not be deemed to constitute an amendment to the Agreement except as expressly provided in Sections 8 and 9 hereof, and all other terms and conditions of the Agreement shall remain in full force and effect. 

 

	 	
5.
	
Borrower hereby represents and warrants to Agent and Lender as follows:

 

(a)     Borrower has all requisite power and authority to execute this Amendment and any other agreements or instruments required hereunder and to perform all of its obligations hereunder, and this Amendment and all such other agreements and instruments have been duly executed and delivered by Borrower and constitute the legal, valid and binding obligation of Borrower, enforceable in accordance with its terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally.

 

(b)     Other than the Subsidiaries listed on Schedule 1 of the Agreement, Borrower has no other Subsidiaries.

 

(c)     The execution, delivery and performance by Borrower of this Amendment and any other agreements or instruments required hereunder have been duly authorized by all necessary corporate action and do not (i) require any authorization, consent or approval by any governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, (ii) violate any material provision of any law, rule or regulation or of any order, writ, injunction or decree presently in effect, having applicability to Borrower, or the certificate of incorporation or by-laws of Borrower, or (iii) result in a breach of or constitute a default under any indenture or loan or the Agreement or any other agreement, lease or instrument to which Borrower is a party or by which it or its properties may be bound or affected.

 

(d)     No Event of Default exists under the Agreement, and all of Borrower’s representations and warranties contained in the Agreement are correct in all material respects on and as of the date hereof as though made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date.

 

6.     The execution of this Amendment and all other agreements and instruments related hereto shall not be deemed to be a waiver of any Event of Default under the Agreement, if any, or a waiver of any breach or default under any of the other Loan Documents, whether or not known to Agent or Lender and whether or not existing on the date of this Amendment.

 

 

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7.     Borrower hereby reaffirms its agreement under the Agreement, to pay or reimburse Agent and Lender for all costs and expenses incurred by Agent and Lender in connection with the Loan Documents, including without limitation all reasonable fees and disbursements of legal counsel. Without limiting the generality of the foregoing, Borrower specifically agrees to pay all reasonable fees and disbursements of counsel to Agent and Lender for the services performed by such counsel in connection with the preparation of this Amendment and the documents and instruments incidental hereto. Payment of such amount shall be made by wire transfer in same day funds to Agent. Borrower hereby agrees that Lender may, at any time or from time to time in its sole discretion and without further authorization by Borrower, apply the proceeds of any loan, for the purpose of paying any such unpaid fees, disbursements, costs and expenses.

 

8.     This Agreement shall become effective on payment of the amounts specified in Section 7 hereof (the “Effective Date”). 

 

9.     Borrower, for itself and on behalf of its Subsidiaries, respective legal representatives and successors and assigns, hereby releases Agent, Lenders and all of their Affiliates, shareholders, partners, predecessors, employees, officers, directors, attorneys, parent corporations, subsidiaries, agents, participants, assignees, servicers and receivers (collectively, the “Released Parties”), except for claims, disputes, differences, liabilities and obligations arising under this Amendment, the Agreement and the other Loan Documents after the date hereof, from any and all known and unknown claims, disputes, differences, liabilities and obligations of any and every nature whatsoever that Borrower, Guarantor or any of them may have or claim, as of the date hereof or as of any prior date, against any one or more of the Released Parties arising from, based upon or related to the Loan Documents, or any other agreement, understanding, action or inaction whatsoever with regard to the Loan Documents or any transaction or matter related thereto, including, without limitation, the origination and servicing the Term Loan and the enforcement or attempted enforcement of any rights or remedies for default or asserted default under the Loan Documents (collectively, the “Released Claims”).

 

10.     Borrower further acknowledges and agrees that the Released Claims include, among other things, all claims arising out of or with respect to any and all transactions relating to the Loan Documents based on any fact, act, inaction, or other occurrence or nonoccurrence on or prior to the date hereof, including, without limitation, any breach of fiduciary duty or duty of fair dealing, breach of confidence, breach of loan commitment, undue influence, duress, economic coercion, conflict of interest, negligence, bad faith, malpractice, violation of the Racketeer Influenced and Corrupt Organizations Act, violation of any other statute, ordinance or regulation, intentional or negligent infliction of mental or emotional distress, tortious interference with contractual relations or prospective business advantage, tortious interference with corporate governance, breach of contract, bad practices, unfair competition, libel, slander, conspiracy or any claim for wrongfully accelerating the Term Loan or attempting to foreclose on, or obtain a receiver for, any collateral for the Term Loan and all statutory claims and causes of action of every nature.

 

 

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11.     In connection with the release contained in Sections 9 through 15 (the “Release”), Borrower acknowledges that it is aware that it may hereafter discover facts in addition to or different from those that it now knows or believes to be true with respect to the Released Claims, but that it is Borrower’s intention hereby fully, finally and forever to settle and release all claims, disputes, differences, liabilities and obligations, known or unknown, suspected or unsuspected, that now exist, may exist or heretofore have existed by Borrower, its Subsidiaries, respective legal representatives and successors and assigns against any one or more of the Released Parties. In furtherance of that intention, the Release contained in this Amendment shall be and remain in effect as a full and complete release notwithstanding the discovery of the existence of any such additional or different facts.

 

12.     The Release contained in this Amendment shall be effective and irrevocable upon the execution of this Amendment by Agent, Lender and Borrower and shall be deemed affirmed and restated upon, and effective as of, the Effective Date without any further documentation.

 

13.     BORROWER AGREES AND ACKNOWLEDGES THAT THE RELEASED CLAIMS ARE NOT LIMITED TO MATTERS THAT ARE KNOWN OR DISCLOSED TO BORROWER AND THAT THE RELEASED CLAIMS INCLUDE ALL CLAIMS, DISPUTES, DIFFERENCES, LIABILITIES AND OBLIGATIONS THAT BORROWER, ITS SUBSIDIARIES, RESPECTIVE LEGAL REPRESENTATIVES AND SUCCESSORS AND ASSIGNS DO NOT KNOW OR SUSPECT TO EXIST AS OF THE DATE HEREOF. BORROWER UNDERSTANDS THAT IT IS GIVING UP ALL RIGHTS AND CLAIMS AGAINST AGENT AND LENDER AND THE OTHER RELEASED PARTIES, KNOWN OR UNKNOWN, THAT ARE IN ANY WAY RELATED TO THE COLLATERAL OR THE LOAN. 

 

14.     THE PARTIES SPECIFICALLY ALLOCATE THE RISK OF ANY MISTAKE IN ENTERING INTO THE RELEASE TO THE PARTY OR PARTIES CLAIMING TO HAVE BEEN MISTAKEN.

 

15.     Borrower acknowledges having read and understood and hereby waives the benefits of Section 1542 of the California Civil Code, which provides as follows (and hereby waives the benefits of any similar law of the state that may be applicable):

 

“A general release does not extend to claims which 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.”

 

16.     This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original and all of which counterparts, taken together, shall constitute one and the same instrument. The provisions of Section 11 of the Agreement shall be deemed incorporated herein by reference, mutatis mutandis.

 

(signatures provided on the next page)

 

 

4

 

 

IN WITNESS WHEREOF, Borrower, Subsidiary, Agent and Lender have duly executed and delivered this Third Amendment to Loan and Security Agreement as of the date and year first above written.

 

BORROWER:

 

ReachLocal, Inc. 

 

	 	Signature:	/s/ Ross G. Landsbaum     
	 	Print Name: 	Ross G. Landsbaum
	 	
Title:
	
Chief Financial Officer

 

Bizzy, Inc.

 

	
 
	
 Signature:
	
 /s/ Ross G. Landsbaum     

	
 
	
 Print Name:
	
 Ross G. Landsbaum

	
 
	
 Title:
	
 Chief Financial Officer

 

Kickserv, Inc.

 

	 	
Signature:
	
/s/ Ross G. Landsbaum     

	 	Title:	Chief Financial Officer
	 	Print Name:	Ross G. Landsbaum

 

ReachLocal DP, Inc.

    

	 	Signature: 	/s/ Ross G. Landsbaum     
	 	Print Name: 	Ross G. Landsbaum
	 	
Title:
	
Chief Financial Officer

 

ReachLocal Canada, Inc.

 

	 	Signature:	/s/ Ross G. Landsbaum     
	 	Print Name:	Ross G. Landsbaum
	 	
Title:
	
Chief Financial Officer

 

ReachLocal International, Inc.

 

	 	Signature:	/s/ Ross G. Landsbaum     
	 	Print Name:	Ross G. Landsbaum
	 	
Title:
	
Chief Financial Officer

 

DealOn, LLC

 

	 	Signature: 	/s/ Ross G. Landsbaum     
	 	Print Name:	Ross G. Landsbaum
	 	
Title:
	
Chief Financial Officer

 

 

5

 

 

IN WITNESS WHEREOF, Borrower, Subsidiary, Agent and Lender have duly executed and delivered this Third Amendment to Loan and Security Agreement as of the date and year first above written.

 

 

ReachLocal International GP LLC

 

	 	Signature:	/s/ Ross G. Landsbaum     
	 	Print Name: 	Ross G. Landsbaum
	 	
Title:
	
Chief Financial Officer

 

 

6

 

 

IN WITNESS WHEREOF, Borrower, Subsidiary, Agent and Lender have duly executed and delivered this Third Amendment to Loan and Security Agreement as of the date and year first above written.

 

Accepted in Palo Alto, California:
                                   

 

	
 
	
LENDER:
	
 

	
 
	
 
	
 

	
 
	
HERCULES TECHNOLOGY GROWTH CAPITAL, INC.  

	
 
	
 
	
 

	
 
	
Signature: 
	
/s/ Ben Bang               

	 	Print Name:	Ben Bang
	 	Title: 	Associate General Counsel
	 	 	 
	 	 	 
	 	 	 
	 	AGENT:	 
	 	 	 
	 	HERCULES TECHNOLOGY GROWTH CAPITAL, INC.
	 	 	 
	 	Signature: 	/s/ Ben Bang               
	 	Print Name: 	Ben Bang
	 	Title: 	Associate General Counsel

 

 

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