x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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20-0498783
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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21700 Oxnard Street, Suite 1600
Woodland Hills, California
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91367
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each
exchange on which registered
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Common Stock, $0.00001 par value per share
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The NASDAQ Stock Market LLC
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Large accelerated filer
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¨
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Accelerated filer
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x
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Non-accelerated filer
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¨ (Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Class
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Outstanding at March 9, 2012
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Common Stock, $0.00001 par value per share
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28,370,996 shares
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Page
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Part I
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Item 1.
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1 | |
Item 1A.
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9 | |
Item 1B.
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23 | |
Item 2.
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23 | |
Item 3.
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23 | |
Item 4.
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Part II
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Item 5.
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24 | |
Item 6.
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26 | |
Item 7.
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29 | |
Item 7A.
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47 | |
Item 8.
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47 | |
Item 9.
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47 | |
Item 9A.
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Item 9B.
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Part III
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Item 10.
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49 | |
Item 11.
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49 | |
Item 12.
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Item 13.
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Item 14.
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Part IV
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Item 15.
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F-1 | |
Signatures
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Exhibit Index
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The Product Challenge: Re-create with online media the ease of purchasing and breadth of customer reach to which SMBs are accustomed with offline media. For owners and operators of SMBs, building an efficient and effective online marketing presence is a significant challenge, especially given the highly fragmented landscape of digital media publishers. While it is possible for an SMB to purchase search and display media online through various self-service advertising platforms, we believe that these online advertising products do not address the fundamental needs and business realities of the SMB advertiser, which include a lack of time and resources, lack of expertise, lack of economic incentive relative to the time required and their typical levels of advertising spend, and lack of transparency into performance.
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The Distribution Challenge: Re-create the ability to sell local online advertising products to SMBs in the manner to which they are accustomed purchasing offline advertising products. Selling advertising to SMBs is difficult, and creating and sustaining a local sales force to address the SMB market requires substantial investment. The SMB market is fragmented, and SMB owners and operators are busy running their businesses and have little time to consider new marketing options. Accordingly, SMBs require a third party to work with them in developing their marketing strategy.
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One Check: The Internet Budget. Through the simplicity of a single Internet advertising budget, the RL Platform allows us to connect SMBs to multiple online publishers. We connect the SMB to a broad range of destinations on the Internet, including:
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major search engines such as Google, Yahoo!, Bing, AOL and Ask.com;
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an extensive network of local search and directory sites such as Superpages, Citysearch, Local.com, MagicYellow and others;
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leading display advertising networks such as Yahoo!/Right Media and the Google display network; and
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leading social media sites, such as Facebook and Twitter.
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Do It for Me: End-to-End Execution. The RL Platform is a proprietary, end-to-end technology platform that enables us to execute an online marketing campaign on behalf of an SMB. The RL Platform is a software-based solution that combines back-end automation and optimization technologies to manage advertising spend across a broad array of online publishers and media outlets. For advertisers interested in search engine marketing, the RL Platform automates the build-up of keyword search criteria for the leading search engines using a library of more than 12 million keywords. The RL Platform matches, sets and optimizes the bids for these keywords based on the SMB’s products and services as well as the SMB’s targeted geographic areas. For advertisers interested in display advertising, the RL Platform places display advertisements on websites selected in accordance with an SMB’s target geographic, demographic and behavioral profiles. For advertisers seeking social media and web presence solutions, the RL Platform integrates with leading social media sites, such as Facebook and Twitter.
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Do It Better Than I Can: Efficient and Optimized Buying. The RL Platform runs a set of proprietary algorithms multiple times a day to evaluate each publisher and each keyword and dynamically shifts spend to continuously optimize and improve the performance of our SMBs’ campaigns. We have run tens of thousands of online marketing campaigns for SMBs, and this scale and experience in purchasing online advertising from publishers allows us to make more efficient and effective purchasing decisions on behalf of our clients.
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Prove It: Calls, not Just Clicks. We employ a proprietary reverse proxy technology that automatically tracks campaign-generated activity, such as phone calls, e-mails and site navigation, without requiring the SMB to alter its website or maintain a separate website. SMBs can log in to the RL Platform to monitor their advertising spend on a daily basis and determine, for example, which online campaign generated which phone call. In addition, the RL Platform allows the SMB to use reverse lookup technology to see who called and provides a recording of each phone call. The ability of our RL Platform to allow SMBs to track accurately offline activity — principally phone calls — is a critical source of differentiation from available self-service online advertising platforms, which currently provide SMBs no data regarding offline activity.
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Internet-Focused and Trained. Our IMCs are 100% focused on selling Internet-based advertising products. This exclusive focus is unlike the sales forces of existing offline media companies that cross-sell online and offline advertising, often with an inherent bias towards their own offline products.
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Locally Based. Our 796 IMCs are located in 55 markets in North America, Australia, the United Kingdom, Germany, and the Netherlands where their clients are based, enabling them to provide the personal connection that is necessary for the IMC to develop and maintain a relationship with our clients. In our experience, our Direct Local clients, a substantial majority of which we calculate spend from $500 to $4,000 per month, require face-to-face interaction that is consistent with the way the SMB has historically purchased offline media.
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Consultative. Our IMCs are trained to consult with, educate and guide SMBs through the opportunities arising from and mechanics of purchasing online advertising.
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Continue Investment in Growing our IMC Sales Force. We intend to continue to increase the size of our IMC sales force.
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Expand Internationally. The local challenge is a global one, and we have found our product and distribution solutions to be well received in our international markets. Generally, our international IMCs are more productive than our domestic IMCs and we therefore intend to accelerate the growth of our international sales force and make other investments in service of those markets.
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Increase IMC Productivity. We intend to continue to invest in our service delivery model to provide our IMCs with additional capacity to manage and acquire more advertisers. For example, we have invested in expanding our existing customer support team to include campaign performance personnel, who have assumed many of the day-to-day campaign management obligations of our IMCs, and are providing account managers to help our more successful Upperclassmen continue to focus on new client acquisition.
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Expand Media Offerings. We have developed a platform that enables us more easily to connect our SMB advertisers to a broader array of online publishers and, in the future, to reach customers through new formats such as mobile and video. Our plan has been, and continues to be, to fulfill, track and optimize an SMB’s entire digital media plan, regardless of media property or format.
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Develop Complementary Products in Adjacent Digital Marketing Segments. Our current products target our clients’ needs to acquire customers through online media buying. We believe that there will be continued movement towards digital platforms in the other segments of an SMB’s marketing activities, such as digital presence, reputation management, lead optimization. To address these and other needs, we plan to continue investing in the internal development or potential acquisition of products and services in these adjacent segments. For example, with the technology acquired through the SMB:LIVE Corporation (“SMB:LIVE”) acquisition in 2010, we have launched ReachCast, our digital presence and reputation management solution, and we continue to focus on expanding our relationship and utility to our clients through product innovation and marketing local commerce solutions.
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ReachSearch. Our ReachSearch product is focused on assuring that our clients’ advertisements appear prominently among the search results when local consumers enter certain keywords on leading local search sites such as Google, Yahoo! and Bing. The RL Platform is directly integrated into the advertising platforms of these and other leading search engines via APIs. In addition, as part of the ReachSearch product, our SMB clients also receive placement in the search results of our extensive network of online publishers and directory sites called the ReachLocal Search Network. This network provides additional qualified local traffic to the SMB and allows the SMB to reach potential customers across a broader range of sites.
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ReachDisplay. Our ReachDisplay product is primarily focused on maximizing the exposure for an SMB that wants to broadcast a message to a specific target online audience. There are various ReachDisplay products that allow an SMB to target different demographic, vertical and behavioral customer segments. For general exposure in a specific geographic area, the ReachDisplay Awareness package provides the SMB with reach across a network of sites. For advertisers wishing to target by vertical or by specific customer behavior, we offer additional display packages. For example, the ReachDisplay Automotive package provides SMBs in the automotive vertical access to audiences visiting automotive sites as well as customers whose previous behavior indicates that they may be in the market to purchase a car. We offer more than 20 different display advertising products across a wide variety of publishing partners, including Yahoo!/Right Media, Google Display Network, Facebook and other display networks and demand-side platforms. Our ReachDisplay product was introduced in 2009 and we continue to add new publishers and options as display advertising on the Internet evolves.
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ReachCast. ReachCast was introduced in 2010 and combines a proprietary technology platform with an expert service team to help SMBs build and optimize their Web presence for the purpose of driving online search discovery, powering reputation management, and managing social media marketing. As part of the ReachCast service, each SMB is partnered with an expert Web Presence Professional, or WPP, who works directly with the business to develop a strategy to meet their specific goals, starting with a consultation and initial setup of ReachCast and presence creation across Google, Facebook, Twitter and local directories. Then in consultation with the business, the WPP regularly creates and publishes custom content, posts to social media sites, engages with fans and followers, and monitors online reputation.
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Remarketing and Retargeting. Our remarketing and search retargeting products allow us to target consumers who have previously visited a specific client’s website, either through a ReachSearch campaign or a ReachDisplay campaign, or who have previously searched for a client’s keywords.. When the potential customer visits any other site within our remarketing network, we can remarket to the target customer on behalf of that SMB. Because many purchases from local merchants involve an extended research process, providing the SMB with the ability to stay in front of a potential customer who has expressed an initial interest can lead to sales that might not have resulted from a single advertising impression. Our remarketing product, which we introduced in 2009, can be purchased on a standalone basis or can be bundled into the ReachSearch and ReachDisplay product lines.
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TotalTrack®, TotalLiveChat™, TotalVideoNow™, TotalBannerNow™. As part of our mission to provide a comprehensive suite of digital marketing solutions to SMBs, we have developed various products to address specific marketing needs, such as lead optimization, online analytics and digital creative solutions.
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Recruitment. We invest heavily in recruiting our sales force and have developed an in-house team of specialized recruiters. Typically, each month we hire 40–60 IMCs worldwide, with the hiring weighted towards the first 10 months of the year. IMC recruits are generally required to have at least three to five years of sales experience, preferably serving the SMB market. We generally seek experience selling online advertising and require that all IMC hires be technically proficient. Although many recruits come from traditional media companies where they have sold to the SMB market, we seek IMCs who understand the transformative power of the Internet and who have seen, first hand, the flow of advertising dollars online.
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Training. Each IMC attends a mandatory one week boot camp training session at our sales headquarters in Plano, Texas or, for international IMCs, a similar boot camp closer to their principal office locations. During the week, IMCs learn our business model and their responsibilities in it, learn the fundamentals of search engine and display marketing and social media and reputation management, and are trained on the RL Platform and our suite of products. Once an IMC returns to his or her specific office, the IMC engages in a standard onboarding process that includes hands-on instruction in prospecting SMB clients, scheduling and tracking appointments, and developing presentations for prospective clients. During the remainder of their first 12 months, Underclassmen are required to participate in ongoing training sessions that include general industry updates, RL Platform updates and presentations from Upperclassmen who provide guidance on how to sell to and serve specific SMB verticals.
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Focus on Performance. In order to track performance and underscore expectations, Underclassmen are provided a roadmap of expected performance milestones and receive constant support and counseling during this period to assist them in meeting the milestones and otherwise building a portfolio of SMB clients. We also use this support system to identify and try to remediate any problems if an IMC’s performance deviates too far from expected revenue contributions.
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Internet Marketing Providers. We compete with large Internet marketing providers such as Google, Yahoo! and Microsoft. These providers typically offer their products and services through disparate, online-only, self-service platforms. We compete with these companies on the basis of our IMC sales force, our product offerings and our publisher-agnostic services to our clients. Although we compete against the self-service offerings of these large providers, we also have business relationships with them and we believe we are an important customer for their locally-targeted search inventory. We also believe that we provide a valuable service to these companies by connecting them to a large number of SMBs, which are generally disinclined to purchase online advertising via self-service platforms.
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Traditional, Offline Media Companies. We compete with traditional yellow page and newspaper companies with large, direct sales forces. While these traditional media companies have made investments to address the migration of advertising expenditures away from their existing print products, we believe that they face the prospect of cannibalizing their existing higher margin products that they own and the challenge of re-training and restructuring their sales forces, most of whom have only sold print products and many of whom still receive the majority of their income from selling those products. We compete with these companies on the basis of the strength and breadth of our technology platform and product offering and our focus exclusively on Internet advertising.
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Other SMB Marketing Providers. We also compete with technology companies providing online marketing platforms focused on the SMB market such as Angie’s List and Yelp, as well as newer market entrants, such as Groupon and LivingSocial, which are actively focused on new forms of online marketing solutions for SMBs and in some cases building significant direct sales forces. We compete with these companies based on our scale, technological platform, breadth of product suite, size and geographic scope of our IMCs and established publisher relationships.
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maintaining the effectiveness of our RL Platform, and adapting our technology to new market opportunities and challenges;
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competition from existing and new competitors;
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reaching and maintaining profitability;
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our limited number of product offerings and risks associated with developing and selling new product offerings;
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continuing to attract new SMB clients, many of whom have not previously advertised online and may not understand the value to their businesses of our products and services;
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successfully entering new markets, domestically and internationally; and
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effectively managing rapid growth in our sales force, personnel and operations.
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Google Can Choose to Change the Terms and Conditions Upon Which it Does Business with Us and our Advertisers. Google can act unilaterally to change the terms and conditions for our purchase of media or the purchase of Google products, and Google has done so in the past. For instance, in May 2011 Google announced that it would require all advertisers purchasing AdWords to adopt and post a privacy policy if they collect any personal information and to follow certain security protocols if they are collecting payment data or other sensitive data. Recently, Google began enforcing that policy by not allowing advertisers to initiate campaigns if they are not in compliance with the policy. This has resulted in a delay for a small number of our advertisers?? campaigns. If the delay starts affecting a material number of our advertisers and we’re unable to help them find a solution, this could adversely affect our business. Future changes by Google to the terms and conditions upon which we purchase media could materially and adversely affect our business.
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Competitive Risk. Google offers its products directly to SMBs through an online self-service option. Google enjoys substantial competitive advantages over us, such as substantially greater financial, technical and other resources. In addition, Google continues to launch products that are targeted directly at SMBs, which Google does not always make available to third parties. While we cannot assess at this time the effect of Google’s offering such products directly to SMBs, the prices charged by Google for direct service are lower than the prices we charge for the same media.
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Technology Risk. Our RL Platform interacts with Google through publicly available application programming interfaces, or APIs. If Google were to discontinue the availability of all or a portion of these APIs to us, we may have to change our technology, incur additional costs or discontinue certain products or services that we currently offer our clients. Any of these changes could adversely affect our ability to provide effective online marketing and reporting solutions to our clients. In addition, Google may decide to alter the amount it charges us for the right to use its APIs, which would decrease our gross margin absent any change in our pricing to our customers.
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Editorial Control. Google closely monitors the experience of end-users, and from time-to-time its editorial personnel request that companies alter their services based on Google’s determination that aspects of such services could adversely affect the end-user experience. For example, each of our media products includes TotalTrack, a tracking service powered by our proprietary reverse proxy technology. If Google were to determine that the tracking URLs utilized by our TotalTrack service adversely affects the end-user’s experience, Google could require us to alter or suspend the way we implement our tracking solutions. Such a change would significantly decrease our ability to optimize our clients’ advertising campaigns and limit our ability to provide the level of campaign performance reporting that we currently provide to our clients.
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Rebate/Incentive Risk. Google retains broad authority with respect to its rebate programs and has, from time to time, canceled rebate programs. For example, effective December 31, 2008, Google terminated a publisher rebate provided as part of its North American Authorized AdWords Reseller program, which was the primary reason that our cost of revenue as a percentage of revenue increased from 52.8% in 2008 to 54.5% in 2010. In the second quarter of 2011, we entered into reseller agreements with Google that, among other things, provide us with certain performance bonuses if certain advertiser targets, including share of retail requirements, are met. Our reseller agreements with Google are subject to broad mutual termination rights and termination of those agreements would negatively affect our cost of revenue.
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Internet Marketing Providers. We compete with large Internet marketing providers such as Google, Yahoo! and Microsoft. These providers typically offer their products and services through disparate, online-only, self-service platforms.
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Traditional, Offline Media Companies. We compete with traditional yellow page, newspaper, television and radio companies that, in many cases, have large, direct sales forces.
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Other SMB Marketing Providers. We also compete with technology companies providing online marketing platforms focused on the SMB market such as Angie’s List and Yelp, as well as new market entrants, such as Groupon and LivingSocial, which are actively focused on new forms of online marketing solutions for SMBs and, in some cases, building significant direct sales forces.
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difficulties or delays in developing a network of clients in one or more international markets;
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legal, political or systemic restrictions on the ability of U.S. companies to market products and services or otherwise do business in foreign countries;
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different regulatory requirements, including regulation of internet services, privacy and data protection, banking and money transmitting, and selling, that may limit or prevent the offering of our products in some jurisdictions;
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international intellectual property laws that may be insufficient to protect our intellectual property or permit us to successfully defend ourselves or our intellectual property in international lawsuits;
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different employee/employer relationships and the existence of workers’ councils and labor unions, which could make it more difficult to terminate underperforming IMCs;
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difficulties in staffing and managing foreign operations;
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greater difficulty in accounts receivable collection;
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currency fluctuations or a weakening U.S. dollar, which can increase costs of international expansion;
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potential adverse tax consequences, including the difficulty of repatriating money;
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lack of infrastructure to adequately conduct electronic commerce transactions; and
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price controls or other restrictions on foreign currency.
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unilateral actions taken by Google or other media providers;
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seasonal variations in advertising budgets and media pricing;
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seasonal variations in IMC hiring; the rate at which SMBs migrate their advertising spending online;
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the timing and stage of product and technology development;
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our ability to develop, introduce and manage consumer-facing products;
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the impact of fluctuations in currency exchange rates, particularly the relative strength of the US Dollar to the currencies in the countries in which we do business and its impact on our consolidated revenues and results of operations;
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the impact of worldwide economic conditions on our revenue and expenses;
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the timing of and our ability to enter new markets and manage expansion in new markets;
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our ability to appropriately set the price of non-media products;
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our ability to accurately forecast revenue and appropriately plan our expenses;
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the attraction and retention of qualified employees and key personnel;
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the effectiveness of our internal controls;
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our ability to effectively manage our growth;
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our ability to successfully manage any future acquisitions of businesses, solutions or technologies;
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interruptions in service and any related impact on our reputation;
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the effects of natural or man-made catastrophic events; and
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changes in government regulation affecting our business.
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enhance our existing solutions;
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develop new solutions and technologies that address the increasingly sophisticated and varied needs of our prospective clients; and
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respond to technological advances and emerging industry practices on a cost-effective and timely basis.
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our operating performance and the operating performance of similar companies;
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the overall performance of the equity markets;
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the number of shares of our common stock publicly owned and available for trading;
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changes in the amounts and frequency of share repurchases;
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threatened or actual litigation;
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changes in laws or regulations relating to our solutions;
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any major change in our board of directors or management;
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publication of research reports about us or our industry or changes in recommendations or withdrawal of research coverage by securities analysts;
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large volumes of sales of our shares of common stock by existing stockholders; and
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general political and economic conditions.
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a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors;
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no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;
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the ability of our board of directors to determine to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;
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the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;
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a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;
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the requirement that a special meeting of stockholders may be called only by the chairman of our board of directors, the Chief Executive Officer, the president (in absence of a Chief Executive Officer) or our board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;
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the requirement for the affirmative vote of holders of at least 66 2/3% of the voting power of all of the then outstanding shares of the voting stock, voting together as a single class, to amend the provisions of our certificate of incorporation relating to the issuance of preferred stock and management of our business or our bylaws, which may inhibit the ability of an acquiror from amending our certificate of incorporation or bylaws to facilitate a hostile acquisition;
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the ability of our board of directors, by majority vote, to amend the bylaws, which may allow our board of directors to take additional actions to prevent a hostile acquisition and inhibit the ability of an acquiror from amending the bylaws to facilitate a hostile acquisition; and
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advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of us.
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2010 | 2011 | |||||||||||||||
High | Low | High | Low | |||||||||||||
First quarter
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$ | — | $ | — | $ | 28.39 | $ | 16.54 | ||||||||
Second quarter
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$ | 16.99 | $ | 11.80 | $ | 26.00 | $ | 15.57 | ||||||||
Third quarter
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$ | 15.25 | $ | 12.25 | $ | 21.73 | $ | 10.49 | ||||||||
Fourth quarter
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$ | 21.14 | $ | 13.43 | $ | 11.10 | $ | 6.08 |
5/20/10
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5/10 | 6/10 | 9/10 | 12/10 | 3/11 | 6/11 | 9/11 | 12/11 | ||||||||||||||||||||||||||||
ReachLocal Inc.
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100.00 | 98.00 | 86.58 | 91.99 | 132.91 | 133.51 | 139.05 | 72.56 | 41.26 | |||||||||||||||||||||||||||
NASDAQ Composite
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100.00 | 91.71 | 86.24 | 97.07 | 108.71 | 114.21 | 114.05 | 99.25 | 107.46 | |||||||||||||||||||||||||||
RDG Internet Composite
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100.00 | 93.18 | 86.98 | 103.36 | 113.65 | 119.27 | 114.95 | 109.33 | 117.15 |
Period
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Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of a Publicly Announced Program | Maximum Value of Shares That May Yet Be Purchased Under a Publicly Announced Program | ||||||||||||
October 2011
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-- | -- | -- | -- | ||||||||||||
November 2011
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304,584 | $ | 8.77 | 304,584 | $ | 17,328,147 | ||||||||||
December 2011
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564,781 | $ | 7.07 | 564,781 | $ | 13,337,355 |
Year Ended December 31,
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2011
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2010
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2009
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2008
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2007
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(in thousands, except per share data)
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Consolidated Statements of Operations: | ||||||||||||||||||||
Revenue
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$ | 375,241 | $ | 291,689 | $ | 203,117 | $ | 146,687 | $ | 68,356 | ||||||||||
Cost of revenue (1)
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190,559 | 159,018 | 112,218 | 77,496 | 39,262 | |||||||||||||||
Operating expenses:
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Selling and marketing (1)
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139,929 | 108,529 | 76,089 | 61,054 | 24,435 | |||||||||||||||
Product and technology (1)
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15,602 | 9,957 | 4,657 | 2,938 | 1,911 | |||||||||||||||
General and administrative (1)
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33,313 | 23,629 | 15,529 | 12,128 | 5,804 | |||||||||||||||
Total operating expenses
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188,844 | 142,115 | 96,275 | 76,120 | 32,150 | |||||||||||||||
Loss from operations
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(4,162 | ) | (9,444 | ) | (5,376 | ) | (6,929 | ) | (3,056 | ) | ||||||||||
Gain on acquisition of ReachLocal Australia
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— | — | 16,223 | — | — | |||||||||||||||
Equity in losses of ReachLocal Australia
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— | — | — | (813 | ) | (250 | ) | |||||||||||||
Other income (expense), net
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928 | 601 | (7 | ) | 889 | 669 |
Year Ended December 31, | ||||||||||||||||||||
2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||
Income (loss) before provision (benefit) for income taxes
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(3,234 | ) | (8,843 | ) | 10,840 | (6,853 | ) | (2,637 | ) | |||||||||||
Provision (benefit) for income taxes
|
735 | (540 | ) | 217 | 145 | 11 | ||||||||||||||
Income (loss) from continuing operations, net of income taxes
|
(3,969 | ) | (8,303 | ) | 10,623 | (6,998 | ) | (2,648 | ) | |||||||||||
Loss from discontinued operations, net of income taxes
|
(6,215 | ) | (2,844 | ) | (601 | ) | — | — | ||||||||||||
Net income (loss)
|
(10,184 | ) | (11,147 | ) | 10,022 | (6,998 | ) | (2,648 | ) | |||||||||||
Undistributed income attributable to preferred stockholders…….
|
— | — | 8,638 | — | — | |||||||||||||||
Net income (loss) available to common stockholders…………
|
$ | (10,184 | ) | $ | (11,147 | ) | $ | 1,384 | $ | (6,998 | ) | $ | (2,648 | ) | ||||||
Pro forma net income (loss) per share (unaudited)(2):
|
||||||||||||||||||||
Net income (loss) per share from continuing operations, basic
|
$ | (0.14 | ) | $ | (0.32 | ) | $ | 0.46 | $ | (0.31 | ) | |||||||||
Net loss per share from discontinued operations, basic
|
(0.21 | ) | (0.11 | ) | (0.03 | ) | — | |||||||||||||
Net income(loss) per share, basic
|
$ | (0.35 | ) | $ | (0.42 | ) | $ | 0.44 | $ | (0.31 | ) | |||||||||
Pro forma net income (loss) per share (unaudited)(2):
|
||||||||||||||||||||
Net income (loss) per share from continuing operations, diluted
|
$ | (0.14 | ) | $ | (0.32 | ) | $ | 0.43 | $ | (0.31 | ) | |||||||||
Net loss per share from discontinued operations, diluted
|
(0.21 | ) | (0.11 | ) | (0.02 | ) | — | |||||||||||||
Net income(loss) per share, diluted
|
$ | (0.35 | ) | $ | (0.42 | ) | $ | 0.41 | $ | (0.31 | ) | |||||||||
Pro forma weighted average shares outstanding used in calculating net income (loss) per share (unaudited)(2):
|
||||||||||||||||||||
Basic
|
28,974 | 26,286 | 22,995 | 22,389 | ||||||||||||||||
Diluted
|
28,974 | 26,286 | 24,613 | 22,389 |
(1)
|
Stock-based compensation, net of capitalization, and depreciation and amortization included in the above line items (in thousands):
|
Year Ended December 31,
|
||||||||||||||||||||
2011
|
2010
|
2009
|
2008
|
2007
|
||||||||||||||||
Stock-based compensation:
|
||||||||||||||||||||
Cost of revenue
|
$ | 200 | $ | 244 | $ | 86 | $ | 34 | $ | 18 | ||||||||||
Selling and marketing
|
1,402 | 1,202 | 566 | 338 | 94 | |||||||||||||||
Product and technology
|
1,387 | 1,104 | 117 | 73 | 16 | |||||||||||||||
General and administrative
|
5,392 | 3,123 | 2,145 | 1,366 | 278 | |||||||||||||||
$ | 8,381 | $ | 5,673 | $ | 2,914 | $ | 1,811 | $ | 406 |
Year Ended December 31,
|
||||||||||||||||||||
2011
|
2010
|
2009
|
2008
|
2007
|
||||||||||||||||
Depreciation and amortization:
|
||||||||||||||||||||
Cost of revenue
|
$ | 645 | $ | 364 | $ | 261 | $ | 186 | $ | 83 | ||||||||||
Selling and marketing
|
1,443 | 1,038 | 889 | 596 | 205 | |||||||||||||||
Product and technology
|
6,764 | 3,822 | 1,741 | 916 | 603 | |||||||||||||||
General and administrative
|
1,422 | 1,078 | 430 | 154 | 49 | |||||||||||||||
$ | 10,274 | $ | 6,302 | $ | 3,321 | $ | 1,852 | $ | 940 |
(2)
|
See Note 2 to our consolidated financial statements for an explanation of the method used to calculate pro forma basic and diluted net income per share of common stock.
|
December 31,
|
||||||||||||||||||||
2011
|
2010
|
2009
|
2008
|
2007
|
||||||||||||||||
(in thousands) | ||||||||||||||||||||
Consolidated Balance Sheet Data:
|
||||||||||||||||||||
Cash, cash equivalents and short-term investments
|
$ | 85,169 | $ | 88,114 | $ | 43,416 | $ | 39,127 | $ | 31,912 | ||||||||||
Working capital
|
$ | 17,524 | $ | 27,082 | $ | (6,606 | ) | $ | 15,256 | $ | 22,913 | |||||||||
Total assets
|
$ | 166,437 | $ | 151,399 | $ | 97,761 | $ | 51,124 | $ | 38,881 | ||||||||||
Total liabilities
|
$ | 84,150 | $ | 69,383 | $ | 55,643 | $ | 28,610 | $ | 12,590 | ||||||||||
Total stockholders’ equity
|
$ | 82,287 | $ | 82,016 | $ | 42,118 | $ | 22,514 | $ | 26,291 |
Year Ended December 31,
|
||||||||||||||||||||
2011
|
2010
|
2009
|
2008
|
2007
|
||||||||||||||||
(in thousands) | ||||||||||||||||||||
Other Financial Data:
|
||||||||||||||||||||
Net cash provided by operating activities
|
$ | 18,989 | $ | 17,675 | $ | 14,308 | $ | 12,062 | $ | 7,421 | ||||||||||
Capital Expenditures (unaudited) (3)
|
$ | 12,441 | $ | 8,526 | $ | 4,613 | $ | 5,152 | $ | 2,479 | ||||||||||
Non-GAAP Financial Measures (unaudited):
|
||||||||||||||||||||
Adjusted EBITDA (4)
|
$ | 15,915 | $ | 3,133 | $ | 1,920 | $ | (3,266 | ) | $ | (1,710 | ) | ||||||||
Underclassmen Expense (5)
|
$ | 44,488 | $ | 36,073 | $ | 26,824 | $ | 27,886 | $ | 10,044 |
December 31,
|
||||||||||||||||||||
2011
|
2010
|
2009
|
2008
|
2007
|
||||||||||||||||
Other Operational Data:
|
||||||||||||||||||||
Number of IMCs:
|
||||||||||||||||||||
Upperclassmen
|
372 | 286 | 235 | 80 | 16 | |||||||||||||||
Underclassmen
|
424 | 379 | 280 | 337 | 152 | |||||||||||||||
Total
|
796 | 665 | 515 | 417 | 168 | |||||||||||||||
Active Advertisers (6)
|
19,100 | 16,900 | 14,700 | 11,600 | 7,400 | |||||||||||||||
Active Campaigns (7)
|
27,500 | 22,700 | 18,600 | 13,500 | 8,900 |
(3)
|
Represents purchases of property and equipment and the amount of software development costs capitalized, in aggregate, excluding stock-based compensation and the acquisition of ReachLocal Australia in September 2009 (see Note 4 to our consolidated financial statements), and excluding capital expenditures related to the discontinued operations of Bizzy.
|
(4)
|
See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Measures” for our definition of Adjusted EBITDA, why we present it and for a reconciliation of our Adjusted EBITDA to loss from operations for each of the periods presented.
|
(5)
|
See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Measures” for our definition of Underclassmen Expense.
|
(6)
|
Active Advertisers is a number we calculate to approximate the number of clients directly served through our Direct Local channel as well as clients served through our National Brands, Agencies and Resellers channel. We calculate Active Advertisers by adjusting the number of Active Campaigns to combine clients with more than one Active Campaign as a single Active Advertiser. Clients with more than one location are generally reflected as multiple Active Advertisers. Because this number includes clients served through the National Brands, Agencies and Resellers channel, Active Advertisers includes entities with which we do not have a direct client relationship. Numbers are rounded to the nearest hundred.
|
(7)
|
Active Campaigns is a number we calculate to approximate the number of individual products or services we are managing under contract for Active Advertisers. For example, if we were performing both ReachSearch and ReachDisplay campaigns for a client, we consider that two Active Campaigns. Similarly, if a client purchased ReachSearch campaigns for two different products or purposes, we consider that two Active Campaigns. Numbers are rounded to the nearest hundred.
|
|
•
|
IMC Tenure. As IMCs mature, they, on average, grow their advertiser base or sell additional products to existing advertisers, resulting in greater revenue productivity. In particular, Upperclassmen, those IMCs with more than 12 months of employment, are more productive than Underclassmen. As more and more IMCs mature and become Upperclassmen, as Upperclassmen become a higher percent of total IMCs, and as existing Upperclassmen mature, we expect overall IMC productivity to increase.
|
|
•
|
Macroeconomic and Business Conditions. Macroeconomic conditions directly impact the amount of money SMBs allocate to market their business. Commencing in mid-2008, IMC productivity was significantly impacted by the economic recession as some of our SMB clients were forced to close or temporarily suspend their operations, while others curtailed their marketing expenditures in light of a contraction in consumer spending. At the end of 2009 and throughout 2011, our IMC productivity remained higher than those levels experienced at the end of 2008. However, we believe the economic conditions remain challenging, particularly in North America. This has impacted new advertiser acquisition more than sales to existing advertisers. In addition, our IMCs’ productivity is affected by the amount of competition and online advertising consumption by SMBs. For example, our international IMCs have on average been more productive, which we attribute to lower levels of competition and online advertising consumption by SMBs in those markets.
|
|
•
|
Number of Products. We believe that expanding our comprehensive suite of online marketing and reporting products and services will allow us to generate more revenue from each SMB relationship. Prior to 2009, we primarily offered a single product, ReachSearch. Since then, we launched our ReachDisplay and remarketing products in 2009, our TotalLiveChat and ReachCast products in 2010, and our search retargeting and international ReachCast products in 2011.
|
|
•
|
IMC Capacity. We continually endeavor to enhance the productivity of our IMCs. Our business model therefore contemplates additional investments in technology and support personnel to assist our IMCs in managing and maintaining existing clients in order to increase their capacity to acquire new clients. For example, we have invested in expanding our existing customer support team to include campaign performance personnel, who have assumed many of the day-to-day campaign management obligations of our IMCs, and are providing account managers to help our more successful Upperclassmen continue to focus on new client acquisition.
|
|
•
|
Client Tenure. One of the most time-consuming activities for our IMCs is the process of prospecting, arranging a time to visit and obtaining the first order for our products and services from a new client. A key factor in IMC productivity is therefore the success of our efforts to continue to sell our products and services to existing clients, which requires significantly less of an IMC’s time. We believe that a measure of the success of these efforts is the percentage of our revenue generated by sales to clients with different tenures. For this purpose, on an annual basis, we divide our clients into three groups to measure their revenue contribution:
|
|
•
|
Trial Period Clients. We characterize a client’s initial four months as the “trial period” because that is generally the minimum term for a new client’s first agreement, and we believe that four months is the shortest period in which performance of an advertising campaign can be fully assessed.
|
|
•
|
First-Year Post-Trial Clients. We characterize a client that continues to advertise through us after its four-month trial period and for up to one year after its trial period as a First-Year Post-Trial Client.
|
|
•
|
Long-Term Clients. We characterize clients that continue to advertise through us for more than one year after their trial period as Long-Term Clients.
|
December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Number of IMCs (at period end):
|
||||||||||||
Upperclassmen
|
372 | 286 | 235 | |||||||||
Underclassmen
|
424 | 379 | 280 | |||||||||
Total
|
796 | 665 | 515 | |||||||||
Underclassmen Expense (in thousands) (1)
|
$ | 44,488 | $ | 36,073 | $ | 26,824 | ||||||
Active Advertisers (at period end) (2)
|
19,100 | 16,900 | 14,700 | |||||||||
Active Campaigns (at period end) (3)
|
27,500 | 22,700 | 18,600 |
(1)
|
See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Measures” for our definition of Underclassmen Expense.
|
(2)
|
See Part II, Item 6, “Selected Financial Data” for our definition of Active Advertisers.
|
(3)
|
See Part II, Item 6, “Selected Financial Data” for our definition of Active Campaigns.
|
|
•
|
persuasive evidence of an arrangement exists;
|
|
•
|
services have been performed;
|
|
•
|
the selling price is fixed or determinable; and
|
|
•
|
collectability is reasonably assured.
|
|
•
|
transactions in our common stock;
|
|
•
|
third-party valuations of our common stock;
|
|
•
|
the rights, preferences and privileges of our preferred stock relative to the common stock;
|
|
•
|
our performance and stage of development; and
|
|
•
|
the likelihood of achieving a liquidity event for the shares of common stock underlying these stock options, such as an initial public offering or sale of our company, given prevailing market conditions.
|
Grant Dates
|
Number of Shares
Underlying
Options
|
Exercise Price
Per Share
|
Estimated Fair
Value Per
Underlying
Share as of
Grant Date
|
Intrinsic Value
Per Share at Date
of Grant
|
||||||||||||
February 2011
|
244,650 | $ | 20.98 | $ | 20.98 | $ | — | |||||||||
February 2011
|
700,000 | $ | 22.46 | $ | 20.98 | $ | — | |||||||||
April 2011
|
236,100 | $ | 25.51 | $ | 25.51 | $ | — | |||||||||
June 2011
|
56,045 | $ | 17.32 | $ | 17.32 | $ | — | |||||||||
August 2011
|
229,650 | $ | 16.70 | $ | 16.70 | $ | — | |||||||||
November 2011
|
246,800 | $ | 7.56 | $ | 7.56 | $ | — |
|
•
|
Volatility. As we have a limited trading history for our common stock, the expected stock price volatility for our common stock was estimated by taking the median historic price volatility for industry peers based on daily price observations over a period equivalent to the expected term of the stock option grants. Industry peers consist of several public companies in the technology industry similar in size, stage of life cycle and financial leverage. We did not rely on implied volatilities of traded options in our industry peers’ common stock because the volume of activity was relatively low.
|
|
•
|
Expected term. The expected term was estimated using the simplified method allowed under SEC Staff Accounting Bulletin No. 107, Share-Based Payment. We use this method because we have limited historical data to estimate future terms and we are unable to obtain objective, measurable and comparative historical data of comparable companies.
|
|
•
|
Risk free interest rate. The risk free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of the options for each option group.
|
|
•
|
Dividend yield. We have never declared or paid any cash dividends and do not presently plan to pay cash dividends in the foreseeable future. Consequently, we used an expected dividend yield of zero.
|
Expected dividend yield
|
0 | % | ||
Risk free interest rate
|
1.88 | % | ||
Expected life, in years
|
4.75 | |||
Expected volatility
|
57 | % |
Year Ended December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
(in thousands, except per share data)
|
||||||||||||
Revenue
|
$ | 375,241 | $ | 291,689 | $ | 203,117 | ||||||
Cost of revenue (1)
|
190,559 | 159,018 | 112,218 | |||||||||
Operating expenses:
|
||||||||||||
Selling and marketing (1)
|
139,929 | 108,529 | 76,089 | |||||||||
Product and technology (1)
|
15,602 | 9,957 | 4,657 | |||||||||
General and administrative (1)
|
33,313 | 23,629 | 15,529 | |||||||||
Total operating expenses
|
188,844 | 142,115 | 96,275 | |||||||||
Loss from operations
|
(4,162 | ) | (9,444 | ) | (5,376 | ) | ||||||
Gain on acquisitions of ReachLocal Australia
|
— | — | 16,223 | |||||||||
Other income (expense), net
|
928 | 601 | (7 | ) | ||||||||
Income (loss) before provision (benefit) for income taxes
|
(3,234 | ) | (8,843 | ) | 10,840 | |||||||
Provision (benefit) for income taxes
|
735 | (540 | ) | 217 | ||||||||
Income (loss) from continuing operations, net of income taxes
|
(3,969 | ) | (8,303 | ) | 10,623 | |||||||
Loss from discontinued operations, net of income taxes
|
(6,215 | ) | (2,844 | ) | (601 | ) | ||||||
Net income (loss)
|
(10,184 | ) | (11,147 | ) | 10,022 | |||||||
Undistributed income attributable to preferred stockholders
|
— | — | 8,638 | |||||||||
Net income (loss) available to common stockholders
|
$ | (10,184 | ) | $ | (11,147 | ) | $ | 1,384 | ||||
Net income (loss) available to common stockholders:
|
||||||||||||
Net income (loss) from continuing operations, net of income taxes
|
$ | (3,969 | ) | $ | (8,303 | ) | $ | 1,985 | ||||
Loss from discontinued operations, net of income taxes
|
(6,215 | ) | (2,844 | ) | (601 | ) | ||||||
Net income (loss)
|
$ | (10,184 | ) | $ | (11,147 | ) | $ | 1,384 | ||||
Net income (loss) per share available to common stockholders, basic:
|
||||||||||||
Net income (loss) per share from continuing operations, basic
|
$ | (0.14 | ) | $ | (0.42 | ) | $ | 0.32 | ||||
Net loss per share from discontinued operations, basic
|
(0.21 | ) | (0.14 | ) | (0.10 | ) | ||||||
Net income (loss) per share, basic
|
$ | (0.35 | ) | $ | (0.56 | ) | $ | 0.22 | ||||
Net income (loss) per share available to common stockholders, diluted:
|
||||||||||||
Net income (loss) per share from continuing operations, diluted
|
$ | (0.14 | ) | $ | (0.42 | ) | $ | 0.25 | ||||
Net loss per share from discontinued operations, diluted
|
(0.21 | ) | (0.14 | ) | (0.07 | ) | ||||||
Net income (loss) per share, diluted
|
$ | (0.35 | ) | $ | (0.56 | ) | $ | 0.18 | ||||
Weighted average common shares used in the computation of net income (loss) per share available to common stockholders:
|
||||||||||||
Basic
|
28,974 | 19,867 | 6,283 | |||||||||
Diluted
|
28,974 | 19,867 | 7,901 | |||||||||
The following earnings per share information is presented as if all preferred shares were converted into common stock as of the beginning of the period presented.
|
||||||||||||
Pro-forma net income (loss) per share, as if converted:
|
||||||||||||
Net income (loss) per share from continuing operations, basic
|
$ | (0.14 | ) | $ | (0.32 | ) | $ | 0.46 | ||||
Net loss per share from discontinued operations, basic
|
(0.21 | ) | (0.11 | ) | (0.03 | ) | ||||||
Net income (loss) per share, basic
|
$ | (0.35 | ) | $ | (0.42 | ) | $ | 0.44 |
Year Ended December 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Net income (loss) per share from continuing operations, diluted
|
$ | (0.14 | ) | $ | (0.32 | ) | $ | 0.43 | ||||
Net loss per share from discontinued operations, diluted
|
(0.21 | ) | (0.11 | ) | (0.02 | ) | ||||||
Net income (loss) per share, diluted
|
$ | (0.35 | ) | $ | (0.42 | ) | $ | 0.41 | ||||
Pro-forma weighted average common shares used in computation of net income (loss) per share, as if converted:
|
||||||||||||
Basic
|
28,974 | 26,286 | 22,995 | |||||||||
Diluted
|
28,974 | 26,286 | 24,613 |
(1)
|
Stock-based compensation, net of capitalization, and depreciation and amortization included in the above line-items (in thousands):
|
Year Ended December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Stock-based compensation:
|
||||||||||||
Cost of revenue
|
$ | 200 | $ | 244 | $ | 86 | ||||||
Selling and marketing
|
1,402 | 1,202 | 566 | |||||||||
Product and technology
|
1,387 | 1,104 | 117 | |||||||||
General and administrative
|
5,392 | 3,123 | 2,145 | |||||||||
$ | 8,381 | $ | 5,673 | $ | 2,914 | |||||||
Depreciation and amortization:
|
||||||||||||
Cost of revenue
|
$ | 645 | $ | 364 | $ | 261 | ||||||
Selling and marketing
|
1,443 | 1,038 | 889 | |||||||||
Product and technology
|
6,764 | 3,822 | 1,741 | |||||||||
General and administrative
|
1,422 | 1,078 | 430 | |||||||||
$ | 10,274 | $ | 6,302 | $ | 3,321 |
Year Ended December 31,
|
||||||||||||||||||||
2011
|
2010
|
2009
|
2011-2010
% Change
|
2010-2009
% Change
|
||||||||||||||||
(in thousands)
|
||||||||||||||||||||
Direct Local
|
$ | 291,444 | $ | 217,846 | $ | 141,492 | 33.8 | % | 54.0 | % | ||||||||||
National Brands, Agencies and Resellers
|
83,797 | 73,843 | 61,625 | 13.5 | % | 19.8 | ||||||||||||||
Total revenue
|
$ | 375,241 | $ | 291,689 | $ | 203,117 | 28.6 | % | 43.6 | % | ||||||||||
At period end:
|
||||||||||||||||||||
Number of IMCs:
|
||||||||||||||||||||
Upperclassmen
|
372 | 286 | 235 | 30.1 | % | 21.7 | % | |||||||||||||
Underclassmen
|
424 | 379 | 280 | 11.9 | % | 35.4 | ||||||||||||||
Total
|
796 | 665 | 515 | 19.7 | % | 29.1 | % | |||||||||||||
Active Advertisers (at period end)
|
19,100 | 16,900 | 14,700 | 13.0 | % | 15.0 | % | |||||||||||||
Active Campaigns (at period end)
|
27,500 | 22,700 | 18,600 | 21.1 | % | 22.0 | % |
Year Ended December 31,
|
Year Ended December 31,
|
|||||||||||||||||||||||||||||||
2011
|
2010
|
2009
|
2011-2010
% Change
|
2010-2009
% Change
|
2011
|
2010
|
2009
|
|||||||||||||||||||||||||
(in thousands) | (as a percentage of revenue) | |||||||||||||||||||||||||||||||
Cost of revenue
|
$ | 190,559 | $ | 159,018 | $ | 112,218 | 19.8 | % | 41.7 | % | 50.8 | % | 54.5 | % | 55.2 | % |
Year Ended December 31,
|
Year Ended December 31,
|
|||||||||||||||||||||||||||||||
2011
|
2010
|
2009
|
2011-2010
% Change
|
2010-2009
% Change
|
2011
|
2010
|
2009
|
|||||||||||||||||||||||||
(in thousands) | (as a percentage of revenue) | |||||||||||||||||||||||||||||||
Salaries, benefits and other costs
|
$ | 98,784 | $ | 74,195 | $ | 50,380 | 33.1 | % | 47.3 | % | 26.3 | % | 25.4 | % | 24.8 | % | ||||||||||||||||
Commission expense
|
41,145 | 34,334 | 25,709 | 19.8 | % | 33.6 | % | 11.0 | 11.8 | 12.7 | ||||||||||||||||||||||
Total selling and marketing
|
$ | 139,929 | $ | 108,529 | $ | 76,089 | 28.9 | % | 42.6 | % | 37.3 | % | 37.2 | % | 37.5 | % | ||||||||||||||||
Underclassmen Expense included above, excluding commissions
|
$ | 44,488 | $ | 36,073 | $ | 26,824 | 23.3 | % | 34.5 | % |
Year Ended December 31,
|
Year Ended December 31,
|
|||||||||||||||||||||||||||||||
2011
|
2010
|
2009
|
2011-2010
% Change
|
2010-2009
% Change
|
2011
|
2010
|
2009
|
|||||||||||||||||||||||||
(in thousands)
|
(as a percentage of revenue)
|
|||||||||||||||||||||||||||||||
Product and technology expenses
|
$ | 15,602 | $ | 9,957 | $ | 4,657 | 56.7 | % | 113.8 | % | 4.2 | % | 3.4 | % | 2.3 | % | ||||||||||||||||
Capitalized software development costs from product and technology resources
|
6,776 | 6,884 | 3,276 | (1.6 | )% | 110.1 | % | 1.8 | 2.4 | 1.6 | ||||||||||||||||||||||
Total product and technology costs expensed and capitalized
|
$ | 22,378 | $ | 16,841 | $ | 7,933 | 32.9 | % | 112.3 | % | 6.0 | % | 5.8 | % | 3.9 | % |
Year Ended December 31,
|
Year Ended December 31,
|
|||||||||||||||||||||||||||||||
2011
|
2010
|
2009
|
2011-2010
% Change
|
2010-2009
% Change
|
2011
|
2010
|
2009
|
|||||||||||||||||||||||||
(in thousands)
|
(as a percentage of revenue)
|
|||||||||||||||||||||||||||||||
General and administrative
|
$ | 33,313 | $ | 23,629 | $ | 15,529 | 41.0 | % | 52.2 | % | 8.9 | % | 8.1 | % | 7.6 | % |
Year Ended December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
(in thousands)
|
||||||||||||
Non-GAAP Financial Measures (unaudited):
|
||||||||||||
Adjusted EBITDA (1)
|
$ | 15,915 | $ | 3,133 | $ | 1,920 | ||||||
Underclassmen Expense (2)
|
$ | 44,488 | $ | 36,073 | $ | 26,824 |
(1)
|
Adjusted EBITDA. We define Adjusted EBITDA as net income (loss) from continuing operations before interest, income taxes, depreciation and amortization expenses, excluding, when applicable, stock-based compensation, the effects of accounting for business combinations (including any impairment of acquired intangibles and, in the case of the acquisition of SMB:LIVE, the deferred cash consideration), and amounts included in other non-operating income or expense.
|
(2)
|
Underclassmen Expense. We define Underclassmen Expense as our investment in Underclassmen, which is comprised of the selling and marketing expenses we allocate to Underclassmen during a reporting period. The amount includes the direct salaries and allocated benefits of the Underclassmen (excluding commissions), training and sales organization expenses including depreciation allocated based on relative headcount and marketing expenses allocated based on relative revenue. While we believe that Underclassmen Expense provides useful information regarding our approximated investment in Underclassmen, the methodology we use to arrive at our estimated Underclassmen Expense was developed internally by the company, is not a concept or method recognized by GAAP and other companies may use different methodologies to calculate or approximate measures similar to Underclassmen Expense. Accordingly, our calculation of Underclassmen Expense may not be comparable to similar measures used by other companies.
|
•
|
Adjusted EBITDA does not reflect our cash expenditures for capital equipment or other contractual commitments;
|
|
•
|
Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect capital expenditure requirements for such replacements;
|
•
|
Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
|
|
•
|
Adjusted EBITDA does not consider the potentially dilutive impact of issuing equity-based compensation to our management team and employees;
|
•
|
Adjusted EBITDA does not reflect the potentially significant interest expense or the cash requirements necessary to service interest or principal payments on indebtedness we may incur in the future;
|
|
•
|
Adjusted EBITDA does not reflect income and expense items that relate to our financing and investing activities, any of which could significantly affect our results of operations or be a significant use of cash;
|
•
|
Adjusted EBITDA does not reflect certain tax payments that may represent a reduction in cash available to us; and
|
|
•
|
Other companies, including companies in our industry, calculate Adjusted EBITDA measures differently, which reduces its usefulness as a comparative measure.
|
Year Ended December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
(in thousands)
|
||||||||||||
Loss from operations
|
$ | (4,162 | ) | $ | (9,444 | )) | $ | (5,376 | ) | |||
Add:
|
||||||||||||
Stock-based compensation, net
|
8,381 | 5,673 | 2,914 | |||||||||
Depreciation and amortization
|
10,274 | 6,302 | 3,321 | |||||||||
Acquisition and integration costs
|
1,422 | 602 | 389 | |||||||||
Amortization of step-down in deferred revenue on acquisition of ReachLocal Australia, net of tax
|
— | — | 672 | |||||||||
Adjusted EBITDA
|
$ | 15,915 | $ | 3,133 | $ | 1,920 |
Liquidity and Capital Resources | ||||||||||||
Year Ended December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Consolidated Statements of Cash Flow Data:
|
||||||||||||
(in thousands)
|
||||||||||||
Net cash provided by operating activities, continuing operations
|
$ | 20,861 | $ | 19,805 | $ | 14,718 | ||||||
Net cash used in investing activities, continuing operations
|
$ | (11,708 | ) | $ | (16,924 | ) | $ | (15,882 | ) | |||
Net cash used by discontinued operations
|
$ | (3,012 | ) | $ | (3,533 | ) | $ | (1,390 | ) | |||
Net cash provided by (used in) financing activities
|
$ | (973 | ) | $ | 44,097 | $ | (979 | ) |
Payments Under
Operating Leases
|
||||
Less than 1 year
|
$ | 9,168 | ||
1-3 years
|
16,092 | |||
3-5 years
|
9,358 | |||
More than 5 years
|
8,028 | |||
Total future minimum payments
|
$ | 42,646 |
(a)
|
Evaluation of Disclosure Controls and Procedures
|
(b)
|
Management’s Annual Report on Internal Control Over Financial Reporting
|
(c)
|
Changes in Internal Control Over Financial Reporting
|
Page
|
||
(1)
|
ReachLocal, Inc. Consolidated Financial Statements
|
|
Report of Independent Registered Public Accounting Firm, Grant Thornton LLP
|
F-2
|
|
Consolidated Balance Sheets
|
F-4
|
|
Consolidated Statements of Operations
|
F-5
|
|
Consolidated Statements of Stockholders’ Equity and Comprehensive Income (Loss)
|
F-7
|
|
Consolidated Statements of Cash Flows
|
F-9
|
|
Notes to the Consolidated Financial Statements
|
F-10
|
December 31,
|
||||||||
2011
|
2010
|
|||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 84,525 | $ | 79,906 | ||||
Short-term investments
|
644 | 8,208 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $363 and $373 at December 31, 2011 and 2010, respectively
|
4,240 | 3,295 | ||||||
Other receivables and prepaid expenses
|
9,226 | 3,383 | ||||||
Total current assets
|
98,635 | 94,792 | ||||||
Property and equipment, net
|
9,885 | 6,531 | ||||||
Capitalized software development costs, net
|
10,942 | 8,829 | ||||||
Restricted certificates of deposit
|
1,286 | 801 | ||||||
Intangible assets, net
|
1,957 | 2,963 | ||||||
Other assets
|
1,966 | 1,339 | ||||||
Goodwill
|
41,766 | 34,118 | ||||||
Assets of discontinued operations
|
— | 2,026 | ||||||
Total assets
|
$ | 166,437 | $ | 151,399 | ||||
Liabilities and Stockholders’ Equity
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable
|
$ | 29,831 | $ | 28,482 | ||||
Accrued expenses
|
19,537 | 14,042 | ||||||
Deferred payment obligations
|
1,924 | 530 | ||||||
Deferred revenue and other current liabilities
|
28,823 | 24,656 | ||||||
Liabilities of discontinued operations
|
996 | — | ||||||
Total current liabilities
|
81,111 | 67,710 | ||||||
Deferred rent and other liabilities
|
3,039 | 1,673 | ||||||
Total liabilities
|
84,150 | 69,383 | ||||||
Commitments and contingencies (Note 7)
|
||||||||
Stockholders’ Equity:
|
||||||||
Common stock, $0.00001 par value—140,000 shares authorized; 28,552 and 28,165 shares issued and outstanding at December 31, 2011 and 2010, respectively
|
— | — | ||||||
Receivable from stockholder
|
(87 | ) | (87 | ) | ||||
Additional paid-in capital
|
108,883 | 98,140 | ||||||
Accumulated deficit
|
(26,234 | ) | (16,044 | ) | ||||
Accumulated other comprehensive income (loss)
|
(275 | ) | 7 | |||||
Total stockholders’ equity
|
82,287 | 82,016 | ||||||
Total liabilities and stockholders’ equity
|
$ 166,437`
|
$ | 151,399 |
Year Ended December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Revenue
|
$ | 375,241 | $ | 291,689 | $ | 203,117 | ||||||
Cost of revenue
|
190,559 | 159,018 | 112,218 | |||||||||
Operating expenses:
|
||||||||||||
Selling and marketing
|
139,929 | 108,529 | 76,089 | |||||||||
Product and technology
|
15,602 | 9,957 | 4,657 | |||||||||
General and administrative
|
33,313 | 23,629 | 15,529 | |||||||||
Total operating expenses
|
188,844 | 142,115 | 96,275 | |||||||||
Loss from operations
|
(4,162 | ) | (9,444 | ) | (5,376 | ) | ||||||
Gain on acquisitions of ReachLocal Australia
|
— | — | 16,223 | |||||||||
Other income (expense), net
|
928 | 601 | (7 | ) | ||||||||
Income (loss) before provision (benefit) for income taxes
|
(3,234 | ) | (8,843 | ) | 10,840 | |||||||
Provision (benefit) for income taxes
|
735 | (540 | ) | 217 | ||||||||
Income (loss) from continuing operations, net of income taxes
|
(3,969 | ) | (8,303 | ) | 10,623 | |||||||
Loss from discontinued operations, net of income taxes
|
(6,215 | ) | (2,844 | ) | (601 | ) | ||||||
Net income (loss)
|
(10,184 | ) | (11,147 | ) | 10,022 | |||||||
Undistributed income attributable to preferred stockholders
|
— | — | 8,638 | |||||||||
Net income (loss) available to common stockholders
|
$ | (10,184 | ) | $ | (11,147 | ) | $ | 1,384 | ||||
Net income (loss) available to common stockholders:
|
||||||||||||
Net income (loss) from continuing operations, net of income taxes
|
$ | (3,969 | ) | $ | (8,303 | ) | $ | 1,985 | ||||
Loss from discontinued operations, net of income taxes
|
(6,215 | ) | (2,844 | ) | (601 | ) | ||||||
Net income (loss)
|
$ | (10,184 | ) | $ | (11,147 | ) | $ | 1,384 | ||||
Net income (loss) per share available to common stockholders, basic:
|
||||||||||||
Net income (loss) per share from continuing operations, basic
|
$ | (0.14 | ) | $ | (0.42 | ) | $ | 0.32 | ||||
Net loss per share from discontinued operations, basic
|
(0.21 | ) | (0.14 | ) | (0.10 | ) | ||||||
Net income (loss) per share, basic
|
$ | (0.35 | ) | $ | (0.56 | ) | $ | 0.22 | ||||
Net income (loss) per share available to common stockholders, diluted:
|
||||||||||||
Net income (loss) per share from continuing operations, diluted
|
$ | (0.14 | ) | $ | (0.42 | ) | $ | 0.25 | ||||
Net loss per share from discontinued operations, diluted
|
(0.21 | ) | (0.14 | ) | (0.07 | ) | ||||||
Net income (loss) per share, diluted
|
$ | (0.35 | ) | $ | (0.56 | ) | $ | 0.18 | ||||
Weighted average common shares used in the computation of net income (loss) per share available to common stockholders:
|
||||||||||||
Basic
|
28,974 | 19,867 | 6,283 | |||||||||
Diluted
|
28,974 | 19,867 | 7,901 | |||||||||
The following earnings per share information is presented as if all preferred shares were converted into common stock as of the beginning of the period presented.
|
Year Ended December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Pro-forma net income (loss) per share, as if converted:
|
||||||||||||
Net income (loss) per share from continuing operations, basic
|
$ | (0.14 | ) | $ | (0.32 | ) | $ | 0.46 | ||||
Net loss per share from discontinued operations, basic
|
(0.21 | ) | (0.11 | ) | (0.03 | ) | ||||||
Net income (loss) per share, basic
|
$ | (0.35 | ) | $ | (0.42 | ) | $ | 0.44 | ||||
Net income (loss) per share from continuing operations, diluted
|
$ | (0.14 | ) | $ | (0.32 | ) | $ | 0.43 | ||||
Net loss per share from discontinued operations, diluted
|
(0.21 | ) | (0.11 | ) | (0.02 | ) | ||||||
Net income (loss) per share, diluted
|
$ | (0.35 | ) | $ | (0.42 | ) | $ | 0.41 | ||||
Pro-forma weighted average common shares used in computation of net income (loss) per share, as if converted:
|
||||||||||||
Basic
|
28,974 | 26,286 | 22,995 | |||||||||
Diluted
|
28,974 | 26,286 | 24,613 |
Series A
Convertible
Preferred
Stock
|
Series B-1
Convertible
Preferred
Stock
|
Series B-2
Convertible
Preferred
Stock
|
Series C
Convertible
Preferred
Stock
|
Series D
Convertible
Preferred
Stock
|
Common
Stock
|
Receivable
from
|
Additional
Paid-in
|
Accumulated
|
Accumulated
Other
Comprehensive
Income
|
Total
Stockholders’
|
||||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Stockholder
|
Capital
|
Deficit
|
(Loss)
|
Equity
|
||||||||||||||||||||||||||||||
Balance as of December 31, 2008
|
1,221 | $ | 1 | 3,615 | $ | 1 | 5,272 | $ | 1 | 371 | $ | — | 5,974 | $ | 1 | 6,257 | $ | 1 | $ | (227 | ) | $ | 37,696 | $ | (14,919 | ) | $ | (41 | ) | $ | 22,514 | |||||||||||||||
Exercise of stock options
|
— | — | — | — | — | — | — | — | — | — | 76 | — | — | 54 | — | — | 54 | |||||||||||||||||||||||||||||
Common and restricted stock issued in business combination
|
— | — | — | — | — | — | — | — | — | — | 599 | — | — | 6,244 | — | — | 6,244 | |||||||||||||||||||||||||||||
Stock-based compensation
|
— | — | — | — | — | — | — | — | — | — | — | — | — | 3,253 | — | — | 3,253 | |||||||||||||||||||||||||||||
Receivable from stockholder (1)
|
— | — | — | — | — | — | — | — | — | — | — | — | 128 | — | — | — | 128 | |||||||||||||||||||||||||||||
Foreign currency translation adjustments
|
— | — | — | — | — | — | — | — | — | — | — | — | — | — | — | (97 | ) | (97 | ) | |||||||||||||||||||||||||||
Net income
|
— | — | — | — | — | — | — | — | — | — | — | — | — | — | 10,022 | — | 10,022 | |||||||||||||||||||||||||||||
Comprehensive loss
|
— | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | 9,925 | |||||||||||||||||||||||||||||
Balance as of December 31, 2009
|
1,221 | 1 | 3,615 | 1 | 5,272 | 1 | 371 | — | 5,974 | 1 | 6,932 | 1 | (99 | ) | 47,247 | (4,897 | ) | (138 | ) | 42,118 | ||||||||||||||||||||||||||
Preferred stock conversion
|
(1,221 | ) | (1 | ) | (3,615 | ) | (1 | ) | (5,272 | ) | (1 | ) | (371 | ) | — | (5,974 | ) | (1 | ) | 16,712 | — | — | 4 | — | — | — | ||||||||||||||||||||
Issuance of common stock, net of costs
|
— | — | — | — | — | — | — | — | — | — | 3,941 | — | — | 41,996 | — | — | 41,996 | |||||||||||||||||||||||||||||
Par value adjustment
|
— | — | — | — | — | — | — | — | — | — | (1 | ) | — | 1 | — | — | — | |||||||||||||||||||||||||||||
Exercise of stock options
|
— | — | — | — | — | — | — | — | — | — | 536 | — | — | 1,068 | — | — | 1,068 | |||||||||||||||||||||||||||||
Stock-based compensation
|
— | — | — | — | — | — | — | — | — | — | — | — | — | 7,746 | — | — | 7,746 | |||||||||||||||||||||||||||||
Issuance of common stock in connection with vesting of restricted stock, exercise of warrant and BOD share plan compensation
|
— | — | — | — | — | — | — | — | — | — | 44 | — | — | 78 | — | — | 78 | |||||||||||||||||||||||||||||
Foreign currency translation adjustments
|
— | — | — | — | — | — | — | — | — | — | — | — | 12 | — | — | 145 | 157 | |||||||||||||||||||||||||||||
Net loss
|
— | — | — | — | — | — | — | — | — | — | — | — | — | — | (11,147 | ) | — | (11,147 | ) | |||||||||||||||||||||||||||
Comprehensive loss
|
— | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | (10,990 | ) |
Series A
Convertible
Preferred
Stock
|
Series B-1
Convertible
Preferred
Stock
|
Series B-2
Convertible
Preferred
Stock
|
Series C
Convertible
Preferred
Stock
|
Series D
Convertible
Preferred
Stock
|
Common
Stock
|
Receivable
from
|
Additional
Paid-in
|
Accumulated
|
Accumulated
Other
Comprehensive
Income
|
Total
Stockholders’
|
||||||||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
Stockholder
|
Capital
|
Deficit
|
(Loss)
|
Equity
|
||||||||||||||||||||||||||||||
Balance as of December 31,
2010
|
—
|
— |
—
|
— |
—
|
— |
—
|
—
|
—
|
— |
28,165
|
— | (87 | ) |
98,140
|
(16,044 | ) |
7
|
82,016
|
|||||||||||||||||||||||||||
Exercise of stock options
|
— | — | — | — | — | — | — | — | — | — | 976 | — | — | 5,521 | — | — | 5,521 | |||||||||||||||||||||||||||||
Stock-based compensation
|
— | — | — | — | — | — | — | — | — | — | — | — | — | 9,855 | — | — | 9,855 | |||||||||||||||||||||||||||||
Common and restricted stock issued in business combination
|
— | — | — | — | — | — | — | — | — | — | 266 | — | — | 1,895 | — | — | 1,895 | |||||||||||||||||||||||||||||
Issuance of common stock in connection with vesting of restricted stock, and BOD share plan compensation
|
— | — | — | — | — | — | — | — | — | — | 14 | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Common stock repurchase
|
— | — | — | — | — | — | — | — | — | — | (869 | ) | — | — | (6,468 | ) | — | — | (6,468 | ) | ||||||||||||||||||||||||||
Investment in subsidiary
|
— | — | — | — | — | — | — | — | — | — | — | — | — | (60 | ) | — | — | (60 | ) | |||||||||||||||||||||||||||
Foreign currency translation adjustments
|
— | — | — | — | — | — | — | — | — | — | — | — | — | — | (6 | ) | (282 | ) | (288 | ) | ||||||||||||||||||||||||||
Net loss
|
— | — | — | — | — | — | — | — | — | — | — | — | — | — | (10,184 | ) | — | (10,184 | ) | |||||||||||||||||||||||||||
Comprehensive loss
|
— | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | (10,472 | ) | ||||||||||||||||||||||||||||
Balance as of December 31,
2011
|
— | $ | — | — | $ | — | — | $ | — | — | $ | — | — | $ | — | 28,552 | $ | — | $ | (87 | ) | $ | 108,883 | $ | (26,234 | ) | $ | (275 | ) | $ | 82,287 |
|
(1)
|
Amount reflects the write-off of the receivable from stockholder of $0.2 million net of the assumption of loans of $0.1 million in connection with the acquisition of ReachLocal Australia (Note 12).
|
Year Ended December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Cash flow from operating activities:
|
||||||||||||
Net income (loss) from continuing operations
|
$ | (3,969 | ) | $ | (8,303 | ) | $ | 10,623 | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
||||||||||||
Depreciation and amortization
|
10,274 | 6,302 | 3,321 | |||||||||
Stock-based compensation, net
|
8,381 | 5,673 | 2,914 | |||||||||
Provision for doubtful accounts
|
172 | 252 | 12 | |||||||||
Impairment of intangible assets
|
764 | — | — | |||||||||
Provision for deferred income taxes
|
185 | (702 | ) | — | ||||||||
Interest and foreign currency gain on payment obligations, net
|
25 | (102 | ) | — | ||||||||
Write-off of stockholder loan
|
— | — | 227 | |||||||||
Gain on purchase of ReachLocal Australia
|
— | — | (16,223 | ) | ||||||||
Changes in operating assets and liabilities:
|
||||||||||||
Accounts receivable
|
(1,077 | ) | (171 | ) | 49 | |||||||
Other receivables and prepaid expenses
|
(5,740 | ) | (1,785 | ) | (598 | ) | ||||||
Other assets
|
(673 | ) | (585 | ) | (96 | ) | ||||||
Accounts payable and accrued expenses
|
7,076 | 11,228 | 8,274 | |||||||||
Deferred revenue, rent and other liabilities
|
5,443 | 7,998 | 6,215 | |||||||||
Net cash provided by operating activities, continuing operations
|
20,861 | 19,805 | 14,718 | |||||||||
Net cash used for operating activities, discontinued operations
|
(1,872 | ) | (2,130 | ) | (410 | ) | ||||||
Net cash provided by operating activities
|
18,989 | 17,675 | 14,308 | |||||||||
Cash flow from investing activities:
|
||||||||||||
Additions to property, equipment and software
|
(12,441 | ) | (8,526 | ) | (4,613 | ) | ||||||
Acquisitions, net of acquired cash
|
(6,342 | ) | (8,612 | ) | (3,083 | ) | ||||||
Purchases of restricted certificates of deposit
|
(489 | ) | (204 | ) | (456 | ) | ||||||
Proceeds from maturity of certificates of deposit
|
7,649 | 589 | — | |||||||||
Purchases of short-term investments
|
(85 | ) | (171 | ) | (7,730 | ) | ||||||
Net cash used in investing activities, continuing operations
|
(11,708 | ) | (16,924 | ) | (15,882 | ) | ||||||
Net cash used in investing activities, discontinued operations
|
(1,140 | ) | (1,403 | ) | (980 | ) | ||||||
Net cash used in investing activities
|
(12,848 | ) | (18,327 | ) | (16,862 | ) | ||||||
Cash flow from financing activities:
|
||||||||||||
Proceeds from exercise of stock options
|
5,495 | 1,068 | 54 | |||||||||
Common stock repurchases
|
(6,468 | ) | — | — | ||||||||
Proceeds from initial public offering
|
— | 47,649 | — | |||||||||
Deferred offering costs
|
— | (4,620 | ) | (1,033 | ) | |||||||
Net cash provided by (used in) financing activities
|
(973 | ) | 44,097 | (979 | ) | |||||||
Effect of exchange rate changes on cash
|
(549 | ) | 1,082 | 92 | ||||||||
Net change in cash and cash equivalents
|
4,619 | 44,527 | (3,441 | ) | ||||||||
Cash and cash equivalents—beginning of period
|
79,906 | 35,379 | 38,820 | |||||||||
Cash and cash equivalents—end of period
|
$ | 84,525 | $ | 79,906 | $ | 35,379 | ||||||
Supplemental disclosure of other cash flow information:
|
||||||||||||
Cash paid for interest
|
$ | — | $ | 184 | $ | — | ||||||
Cash paid for income taxes
|
$ | 151 | $ | 214 | $ | 277 | ||||||
Supplemental disclosure of non-cash investing and financing activities:
|
||||||||||||
Capitalized software development costs resulting from stock-based compensation and deferred payment obligations
|
$ | 1,144 | $ | 2,461 | $ | 292 | ||||||
Accrued offering costs
|
$ | — | $ | — | $ | 2,066 | ||||||
Deferred payment obligation
|
$ | 1,850 | $ | 530 | $ | 5,955 |
2011
|
2010
|
2009
|
||||||||||
Allowance for doubtful accounts as of the beginning of the period
|
$ | 373 | $ | 142 | $ | 314 | ||||||
Additions charged to expense
|
172 | 252 | 12 | |||||||||
Write-offs
|
(182 | ) | (21 | ) | (184 | ) | ||||||
Allowance for doubtful accounts as of the end of the period
|
$ | 363 | $ | 373 | $ | 142 |
Computer hardware and software
|
3 years
|
Office equipment
|
5 years
|
Furniture and fixtures
|
7 years
|
Leasehold improvements
|
The lesser of their expected useful lives or the remaining lease term.
|
|
•
|
persuasive evidence of an arrangement exists;
|
|
•
|
services have been performed;
|
|
•
|
the selling price is fixed or determinable; and
|
|
•
|
collectability is reasonably assured.
|
Year Ended December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Weighted average convertible preferred stock
|
— | 6,419 | 16,712 | |||||||||
Deferred stock consideration— SMB:LIVE acquisition
|
106 | 312 | — | |||||||||
Restricted stock—DealOn acquisition and restricted stock subject to repurchase
|
79 | 94 | — | |||||||||
Stock options and warrant
|
1,757 | 2,645 | 1,610 | |||||||||
1,942 | 9,470 | 18,322 |
Year Ended December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Net income (loss) available to common stockholders:
|
||||||||||||
Net income (loss) from continuing operations, net of income taxes
|
$ | (3,969 | ) | $ | (8,303 | ) | $ | 1,985 | ||||
Loss from discontinued operations, net of income taxes
|
(6,215 | ) | (2,844 | ) | (601 | ) | ||||||
Net income (loss)
|
$ | (10,184 | ) | $ | (11,147 | ) | $ | 1,384 | ||||
Diluted shares:
|
||||||||||||
Weighted average number of common shares outstanding
|
28,974 | 19,867 | 6,283 | |||||||||
Add restricted stock subject to repurchase
|
— | — | 196 | |||||||||
Add options and warrants to purchase common shares
|
— | — | 1,422 | |||||||||
Weighted average shares used to compute diluted net income (loss) per share available to common shareholders
|
28,974 | 19,867 | 7,901 | |||||||||
Net income (loss) per share available to common stockholders, basic:
|
||||||||||||
Net income (loss) per share from continuing operations, basic
|
$ | (0.14 | ) | $ | (0.42 | ) | $ | 0.32 | ||||
Net loss per share from discontinued operations, basic
|
(0.21 | ) | (0.14 | ) | (0.10 | ) | ||||||
Net income (loss) per share, basic
|
$ | (0.35 | ) | $ | (0.56 | ) | $ | 0.22 | ||||
Net income (loss) per share available to common stockholders, diluted:
|
||||||||||||
Net income (loss) per share from continuing operations, diluted
|
$ | (0.14 | ) | $ | (0.42 | ) | $ | 0.25 | ||||
Net loss per share from discontinued operations, diluted
|
(0.21 | ) | (0.14 | ) | (0.07 | ) | ||||||
Net income (loss) per share, diluted
|
$ | (0.35 | ) | $ | (0.56 | ) | $ | 0.18 |
Year Ended December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Net income (loss) available to common stockholders:
|
||||||||||||
Income (loss) from continuing operations, net of income taxes
|
$ | (3,969 | ) | $ | (8,303 | ) | $ | 10,623 | ||||
Loss from discontinued operations, net of income taxes
|
(6,215 | ) | (2,844 | ) | (601 | ) | ||||||
Net income (loss)
|
$ | (10,184 | ) | $ | (11,147 | ) | $ | 10,022 | ||||
Basic shares:
|
||||||||||||
Weighted average number of common shares outstanding
|
28,974 | 19,867 | 6,283 | |||||||||
Add conversion of preferred stock
|
— | 6,419 | 16,712 | |||||||||
28,974 | , 26,286 | 22,995 | ||||||||||
Diluted shares:
|
||||||||||||
Weighted average number of common shares outstanding
|
28,974 | 19,867 | 6,283 | |||||||||
Add restricted stock subject to repurchase
|
— | — | 196 | |||||||||
Add options and warrants to purchase common shares
|
— | — | 1,422 | |||||||||
Add conversion of preferred stock
|
6,419 | 16,712 | ||||||||||
Weighted average shares used to compute diluted net income (loss) per share available to common shareholders
|
28,974 | 26,286 | 24,613 | |||||||||
Net income (loss) per share:
|
||||||||||||
Net income (loss) per share from continuing operations, basic
|
$ | (0.14 | ) | $ | (0.32 | ) | $ | 0.46 | ||||
Loss per share from discontinued operations, basic
|
(0.21 | ) | (0.11 | ) | (0.03 | ) | ||||||
Net income (loss) per share, basic
|
$ | (0.35 | ) | $ | (0.42 | ) | $ | 0.44 | ||||
Net income (loss) per share from continuing operations, diluted
|
$ | (0.14 | ) | $ | (0.32 | ) | $ | 0.43 | ||||
Net loss per share from discontinued operations, diluted
|
(0.21 | ) | (0.11 | ) | (0.02 | ) | ||||||
Net income (loss) per share, diluted
|
$ | (0.35 | ) | $ | (0.42 | ) | $ | 0.41 |
|
•
|
Level 1—Quoted prices in active markets for identical assets or liabilities.
|
|
•
|
Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
|
•
|
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The following table summarizes the basis used to measure certain of the Company’s financial assets that are carried at fair value (in thousands):
|
Basis of Fair Value Measurement | ||||||||||||||||
Balance at December 31, 2011
|
Quoted Prices in Active Markets for Identical Items (Level 1)
|
Significant Other Observable Inputs (Level 2)
|
Significant Unobservable Inputs (Level 3)
|
|||||||||||||
Cash and cash equivalents
|
$ | 84,525 | $ | 84,525 | $ | — | $ | — | ||||||||
Restricted certificates of deposit
|
$ | 1,930 | $ | 1,930 | $ | — | $ | — |
Basis of Fair Value Measurement
|
||||||||||||||||
Balance at December 31, 2010
|
Quoted Prices in Active Markets for Identical Items
(Level 1)
|
Significant Other Observable Inputs (Level 2)
|
Significant Unobservable Inputs (Level 3)
|
|||||||||||||
Cash and cash equivalents
|
$ | 79,906 | $ | 79,906 | $ | — | $ | — | ||||||||
Restricted certificates of deposit
|
$ | 9,009 | $ | 9,009 | $ | — | $ | — |
Assets acquired:
|
||||
Cash
|
$ | 2,727 | ||
Property and equipment
|
334 | |||
Other current assets (including accounts receivable)
|
190 | |||
Intangible assets
|
2,300 | |||
Goodwill
|
32,388 | |||
Total assets acquired
|
37,939 | |||
Liabilities assumed:
|
||||
Accounts payable
|
(3,170 | ) | ||
Deferred revenue
|
(615 | ) | ||
Total fair value of assets and liabilities acquired
|
$ | 34,154 |
Year ending December 31,
|
||||
2012
|
$ | 535 |
Deferred
Cash
Consideration
|
Deferred
Stock
Consideration
|
Total
|
||||||||||
Total Deferred Consideration paid in 2011
|
$ | 417 | $ | 2,385 | $ | 2,802 | ||||||
Paid on February 22, 2012
|
575 | 2,356 | 2,931 | |||||||||
Total | $ | 992 | $ | 4,741 | $ | 5,733 |
Assets acquired:
|
||||
Cash
|
$ | 5 | ||
Accounts receivable
|
142 | |||
Property and equipment
|
39 | |||
Other current assets
|
13 | |||
Intangible assets
|
2,300 | |||
Goodwill
|
1,730 | |||
Total assets acquired
|
4,229 | |||
Liabilities assumed:
|
||||
Accounts payable and accrued expenses
|
(732 | ) | ||
Other current liabilities
|
(38 | ) | ||
Deferred tax liability
|
(702 | ) | ||
Total fair value of net assets acquired
|
$ | 2,759 |
Year Ending December 31,
|
||||
2012
|
$ | 767 | ||
2013
|
128 | |||
Total
|
$ | 895 |
Deferred Cash Consideration
|
Deferred Stock Consideration
|
Total
|
||||||||||
February 2012
|
$ | 734 | $ | 243 | $ | 977 | ||||||
August 2012
|
367 | 122 | 489 | |||||||||
February 2013
|
367 | 122 | 489 | |||||||||
Total Deferred Consideration
|
$ | 1,468 | $ | 487 | $ | 1,955 |
Assets acquired:
|
||||
Accounts receivable
|
$ | 41 | ||
Property and equipment
|
3 | |||
Other current assets
|
15 | |||
Intangible assets
|
2,080 | |||
Goodwill
|
7,648 | |||
Total assets acquired
|
9,787 | |||
Liabilities assumed:
|
||||
Accounts payable and accrued expenses
|
(221 | ) | ||
Total fair value of net assets acquired
|
$ | 9,566 |
Year Ending December 31,
|
||||
2012
|
$ | 274 | ||
2013
|
229 | |||
2014
|
24 | |||
Total
|
$ | 527 |
December 31,
|
||||||||
2011
|
2010
|
|||||||
Computer hardware and software
|
$ | 9,388 | $ | 6,873 | ||||
Office equipment
|
1,383 | 1,065 | ||||||
Furniture and fixtures
|
3,741 | 2,632 | ||||||
Leasehold improvements
|
2,865 | 1,265 | ||||||
Assets not placed in service
|
1,292 | 309 | ||||||
18,669 | 12,144 | |||||||
Less: Accumulated depreciation and amortization
|
(8,784 | ) | (5,613 | ) | ||||
$ | 9,885 | $ | 6,531 |
December 31,
|
||||||||
2011
|
2010
|
|||||||
Capitalized software development costs
|
$ | 21,686 | $ | 14,839 | ||||
Accumulated amortization
|
(10,744 | ) | (6,010 | ) | ||||
Capitalized software development costs, net
|
$ | 10,942 | $ | 8,829 |
Year Ended December 31,
|
||||
2012
|
$ | 9,168 | ||
2013
|
9,030 | |||
2014
|
7,062 | |||
2015
|
5,808 | |||
2016
|
3,550 | |||
Thereafter
|
8,028 | |||
$ | 42,646 |
All Options
|
Vested Options
|
Unvested Options
|
||||||||||||||||||||||
Shares
|
Weighted Average Exercise Price
|
Shares
|
Weighted Average Exercise Price
|
Shares
|
Weighted Average Exercise Price
|
|||||||||||||||||||
Outstanding at December 31, 2008
|
4,308 | $ | 7.03 | 1,326 | $ | 2.41 | 2,982 | $ | 9.09 | |||||||||||||||
Granted
|
1,323 | 11.21 | 66 | 10.91 | 1,257 | 11.22 | ||||||||||||||||||
Options vesting
|
— | — | 1,189 | 8.43 | (1,189 | ) | 8.43 | |||||||||||||||||
Exercised
|
(76 | ) | 0.65 | (76 | ) | 0.65 | — | — | ||||||||||||||||
Forfeited
|
(159 | ) | 9.89 | (32 | ) | 10.14 | (127 | ) | 9.83 | |||||||||||||||
Outstanding at December 31, 2009
|
5,396 | 8.04 | 2,473 | 5.55 | 2,923 | 10.19 | ||||||||||||||||||
Granted
|
1,631 | 13.56 | 10 | 13.00 | 1,621 | 13.56 | ||||||||||||||||||
Options vesting
|
— | — | 1,324 | 9.50 | (1,324 | ) | 9.50 | |||||||||||||||||
Exercised
|
(536 | ) | 2.07 | (536 | ) | 2.07 | — | — | ||||||||||||||||
Forfeited
|
(256 | ) | 11.43 | (24 | ) | 10.67 | (232 | ) | 11.51 | |||||||||||||||
Outstanding at December 31, 2010
|
6,235 | 9.88 | 3,247 | 7.58 | 2,988 | 12.45 | ||||||||||||||||||
Granted
|
1,713 | 19.58 | 1 | 20.98 | 1,712 | 19.58 | ||||||||||||||||||
Options vesting
|
— | — | 1,322 | 11.87 | (1,322 | ) | 11.87 | |||||||||||||||||
Exercised
|
(938 | ) | 5.83 | (938 | ) | 5.83 | — | — | ||||||||||||||||
Forfeited
|
(495 | ) | 18.07 | (161 | ) | 10.46 | (334 | ) | 22.88 | |||||||||||||||
Outstanding at December 31, 2011
|
6,515 | $ | 12.63 | 3,471 | $ | 9.72 | 3,044 | $ | 15.96 |
|
•
|
Volatility—As the Company has limited trading history for its common stock, the expected stock price volatility was estimated by taking the median historic price volatility for industry peers based on daily price observations over a period equivalent to the expected term of the stock option grants. Industry peers consist of several public companies in the technology industry similar in size, stage of life cycle and financial leverage. Management did not rely on implied volatilities of traded options in its industry peers’ common stock because the volume of activity was relatively low.
|
|
•
|
Expected term—The expected term was estimated using the simplified method allowed under Securities and Exchange Commission Staff Accounting Bulletin No. 107, Share-Based Payment. Management uses this method because it has limited historical data to estimate future terms and it is unable to obtain objective, measurable and comparative historical data of comparable companies.
|
|
•
|
Risk free rate—The risk free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of the options for each option group.
|
|
•
|
Dividend yield—The Company has never declared or paid any cash dividends and does not presently plan to pay cash dividends in the foreseeable future. Consequently, management used an expected dividend yield of zero.
|
Year Ended December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Expected dividend yield
|
0 | % | 0 | % | 0 | % | ||||||
Risk-free interest rate
|
1.88 | % | 1.91 | % | 2.16 | % | ||||||
Expected life (in years)
|
4.75 | 4.75 | 4.73 | |||||||||
Expected volatility
|
57 | % | 56 | % | 55 | % | ||||||
Weighted average fair value per share
|
$ | 9.65 | $ | 6.55 | $ | 3.66 |
Options Outstanding
|
Options Vested and Exercisable
|
|||||||||||||||||||
Range of Exercise Prices (in dollars)
|
Number
|
Weighted Average Remaining Contractual Life
(in years)
|
Weighted Average Exercise Price | Number | Weighted Average Exercise Price | |||||||||||||||
$0.00 - $5.00
|
524 | 4.67 | $ | 0.66 | 478 | $ | 0.66 | |||||||||||||
$5.01 - $10.00
|
693 | 5.35 | 9.23 | 442 | 9.23 | |||||||||||||||
$10.01 - $15.00
|
3,786 | 4.44 | 11.41 | 2,507 | 11.41 | |||||||||||||||
$15.01 - $20.00
|
459 | 6.64 | 17.04 | 44 | 17.04 | |||||||||||||||
$20.01 - $25.00
|
833 | 6.13 | 20.98 | — | 20.98 | |||||||||||||||
$25.01 - $30.00
|
220 | 6.33 | 25.51 | — | 25.51 | |||||||||||||||
6,515 | 4.99 | $ | 12.63 | 3,471 | $ | 9.72 |
Restricted
Stock Units
|
Vested
|
Unvested
|
||||||||||
Outstanding at December 31, 2008
|
2,506 | 2,191 | 315 | |||||||||
Vested
|
— | 230 | (230 | ) | ||||||||
Repurchase of restricted stock
|
22 | — | 22 | |||||||||
Outstanding at December 31, 2009
|
2,528 | 2,421 | 107 | |||||||||
Vested
|
— | 114 | (114 | ) | ||||||||
Cancellations
|
(1 | ) | — | (1 | ) | |||||||
Issuance of restricted stock
|
135 | — | 135 | |||||||||
Outstanding at December 31, 2010
|
2,662 | 2,535 | 127 | |||||||||
Vested
|
— | 47 | (47 | ) | ||||||||
Cancellations
|
(43 | ) | — | (43 | ) | |||||||
Issuance of restricted stock
|
94 | 8 | 86 | |||||||||
Outstanding at December 31, 2011
|
2,713 | 2,590 | 123 |
Year Ended December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Stock-based compensation
|
$ | 9,525 | $ | 7,579 | $ | 3,109 | ||||||
Less: Capitalized stock-based compensation
|
1,144 | 1,906 | 195 | |||||||||
Stock-based compensation expense, net
|
$ | 8,381 | $ | 5,673 | $ | 2,914 |
Year Ended December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Stock compensation, net of capitalization
|
||||||||||||
Cost of revenue
|
$ | 200 | $ | 244 | $ | 86 | ||||||
Selling and marketing
|
1,402 | 1,202 | 566 | |||||||||
Product and technology
|
1,387 | 1,104 | 117 | |||||||||
General and administrative
|
5,392 | 3,123 | 2,145 | |||||||||
$ | 8,381 | $ | 5,673 | $ | 2,914 |
Year Ended December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
United States
|
$ | (1,532 | ) | $ | (6,238 | ) | $ | 12,632 | ||||
Foreign
|
(1,702 | ) | (2,605 | ) | (1,792 | ) | ||||||
$ | (3,234 | ) | $ | (8,843 | ) | $ | 10,840 |
Year Ended December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Current:
|
||||||||||||
Federal
|
$ | — | $ | — | $ | — | ||||||
State
|
205 | 64 | 217 | |||||||||
Foreign
|
345 | 96 | — | |||||||||
550 | 160 | 217 | ||||||||||
Deferred:
|
||||||||||||
Federal
|
509 | (1,968 | ) | 759 | ||||||||
State
|
769 | (193 | ) | 118 | ||||||||
Foreign
|
(1,618 | ) | (101 | ) | (2,018 | ) | ||||||
(340 | ) | (2,262 | ) | (1,141 | ) | |||||||
Valuation allowance
|
525 | 1,562 | 1,141 | |||||||||
$ | 735 | $ | (540 | ) | $ | 217 |
Year Ended December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Income tax benefit at the federal statutory rate (34%)
|
$ | (1,100 | ) | $ | (3,007 | ) | $ | 3,686 | ||||
State income tax benefit, net of federal tax benefit
|
643 | (225 | ) | 334 | ||||||||
Foreign income taxes, net
|
(43 | ) | (372 | ) | (809 | ) | ||||||
Non-deductible stock-based compensation
|
345 | 2,169 | 1,019 | |||||||||
Gain on acquisition of ReachLocal Australia
|
— | — | (5,516 | ) | ||||||||
Acquisition of SMB:LIVE
|
— | (702 | ) | — | ||||||||
Change in valuation allowance
|
525 | 1,562 | 1,141 | |||||||||
Other
|
365 | 35 | 362 | |||||||||
$ | 735 | $ | (540 | ) | $ | 217 |
December 31,
|
||||||||
2011
|
2010
|
|||||||
Deferred tax assets:
|
||||||||
Vacation accrual
|
$ | 527 | $ | 700 | ||||
Allowance for doubtful accounts
|
148 | 151 | ||||||
Accrued expenses
|
850 | 1,071 | ||||||
Deferred rent
|
928 | 692 | ||||||
State taxes
|
70 | 22 | ||||||
Intangible assets
|
965 | — | ||||||
Other
|
— | 76 | ||||||
Net operating loss carryforward
|
12,495 | 8,944 | ||||||
Gross deferred tax assets
|
15,983 | 11,656 | ||||||
Less: valuation allowance
|
(10,427 | ) | (7,386 | ) | ||||
Net deferred tax assets
|
5,556 | 4,270 | ||||||
Deferred tax liabilities:
|
||||||||
Intangible assets
|
— | (1,064 | ) | |||||
Capitalized software
|
(2,671 | ) | (1,186 | ) | ||||
Depreciation
|
(3,070 | ) | (2,020 | ) | ||||
Net deferred tax liability
|
$ | (185 | ) | $ | — |
Net operating loss:
|
Balance at
December 31, 2011
(in thousands)
|
Beginning Expiration Year
|
|||||
Federal
|
$ | 20,862 | 2024 | ||||
State
|
15,951 |
Various jurisdictions from 2013 to 2029
|
|||||
Foreign
|
11,841 |
Generally do not expire, but are subject to certain limitations
|
December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Unrecognized tax benefits – beginning balance
|
$ | 2,000 | $ | 2,000 | $ | 2,000 | ||||||
Gross increases – tax positions taken in prior period
|
100 | — | — | |||||||||
Unrecognized tax benefits – ending balance
|
$ | 2,100 | $ | 2,000 | $ | 2,000 |
Year Ended December 31,
|
||||||||||||
2011
|
2010
|
2009
|
||||||||||
Revenue:
|
||||||||||||
North America
|
$ | 289,249 | $ | 241,696 | $ | 189,467 | ||||||
International
|
85,992 | 49,993 | 13,650 | |||||||||
$ | 375,241 | $ | 291,689 | $ | 203,117 | |||||||
Long Lived Assets:
|
||||||||||||
North America
|
$ | 8,159 | $ | 6,800 | ||||||||
International
|
4,757 | 1,649 | ||||||||||
$ | 12,916 | $ | 8,449 |
Dec 31,
2011
|
Sept 30,
2011
|
June 30,
2011
|
Mar 31,
2011
|
Dec 31,
2010
|
Sept 30,
2010
|
June 30,
2010
|
Mar 31,
2010
|
|||||||||||||||||||||||||
Revenue
|
$ | 99,802 | $ | 98,629 | $ | 92,752 | $ | 84,058 | $ | 80,580 | $ | 77,121 | $ | 70,362 | $ | 63,626 | ||||||||||||||||
Cost of revenue
|
$ | 49,196 | $ | 50,265 | $ | 46,598 | $ | 44,500 | $ | 43,560 | $ | 42,172 | $ | 38,447 | $ | 34,839 | ||||||||||||||||
Income (loss) from continuing operations, net of income taxes
|
$ | 308 | $ | (1,329 | ) | $ | (276 | ) | $ | (2,672 | ) | $ | (2,806 | ) | $ | (1,915 | ) | $ | (1,833 | ) | $ | (1,749 | ) | |||||||||
Loss from discontinued operations, net of income taxes
|
$ | (1,495 | ) | $ | (3,272 | ) | $ | (673 | ) | $ | (775 | ) | $ | (822 | ) | $ | (956 | ) | $ | (561 | ) | $ | (505 | ) | ||||||||
Net loss available to common stockholders
|
$ | (1,187 | ) | $ | (4,601 | ) | $ | (949 | ) | $ | (3,447 | ) | $ | (3,628 | ) | $ | (2,871 | ) | $ | (2,394 | ) | $ | (2,254 | ) | ||||||||
Net income (loss) per share from continuing operations, basic
|
$ | 0.01 | $ | (0.05 | ) | $ | (0.01 | ) | $ | (0.09 | ) | $ | (0.10 | ) | $ | (0.07 | ) | $ | (0.07 | ) | $ | (0.07 | ) | |||||||||
Loss per share from discontinued operations, basic
|
(0.05 | ) | (0.11 | ) | (0.02 | ) | (0.03 | ) | (0.03 | ) | (0.03 | ) | (0.02 | ) | (0.02 | ) | ||||||||||||||||
Net loss per share, basic
|
$ | (0.04 | ) | $ | (0.16 | ) | $ | (0.03 | ) | $ | (0.12 | ) | $ | (0.13 | ) | $ | (0.10 | ) | $ | (0.09 | ) | $ | (0.10 | ) | ||||||||
Net income (loss) per share from continuing operations, diluted
|
$ | 0.01 | $ | (0.05 | ) | $ | (0.01 | ) | $ | (0.09 | ) | $ | (0.10 | ) | $ | (0.07 | ) | $ | (0.07 | ) | $ | (0.07 | ) | |||||||||
Loss per share from discontinued operations, diluted
|
(0.05 | ) | (0.11 | ) | (0.02 | ) | (0.03 | ) | (0.03 | ) | (0.03 | ) | (0.02 | ) | (0.02 | ) | ||||||||||||||||
Net loss per share, diluted
|
$ | (0.04 | ) | $ | (0.16 | ) | $ | (0.03 | ) | $ | (0.12 | ) | $ | (0.13 | ) | $ | (0.10 | ) | $ | (0.09 | ) | $ | (0.10 | ) |
Exhibit
No.
|
|
Description of Document
|
3.01
|
|
Amended and Restated Certificate of Incorporation of ReachLocal, Inc., dated May 19, 2010 (incorporated by reference to Exhibit 3.01 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 (File No. 001-34749) filed with the SEC on March 28, 2011)
|
3.02
|
|
Amended and Restated Bylaws of ReachLocal, Inc. (incorporated by reference to Exhibit 3.02 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 (File No. 001-34749) filed with the SEC on March 28, 2011)
|
4.01
|
|
Form of ReachLocal, Inc. Common Stock Certificate (incorporated by reference to Exhibit 4.01 of the Company’s Amendment No. 3 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on April 27, 2010)
|
4.02
|
|
Second Amended and Restated Investors’ Rights Agreement, by and among ReachLocal, Inc., the Investors listed on Exhibit A, Exhibit B, Exhibit C and Exhibit D thereto, and the Founders listed on Exhibit E thereto, dated as of September 17, 2007 and as amended as of July 1, 2008, May 14, 2009, and May 18, 2009 (incorporated by reference to Exhibit 4.02 of the Company’s Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on February 2, 2010)
|
4.03
|
|
Stockholders Agreement, by and between ReachLocal, Inc. and NetUs Pty Limited ACN 117 674 030, dated as of September 11, 2009 (incorporated by reference to Exhibit 4.03 of the Company’s Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on February 2, 2010)
|
10.01*
|
|
Indemnification Agreement entered into by and between ReachLocal, Inc. and Zorik Gordon (incorporated by reference to Exhibit 10.01 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 ((File No. 001-34749) filed with the SEC on March 28, 2011)
|
10.02*
|
|
Indemnification Agreement entered into by and between ReachLocal, Inc. and David Carlick (incorporated by reference to Exhibit 10.02 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 ((File No. 001-34749) filed with the SEC on March 28, 2011)
|
10.03*
|
|
Indemnification Agreement entered into by and between ReachLocal, Inc. and Robert Dykes (incorporated by reference to Exhibit 10.03 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 ((File No. 001-34749) filed with the SEC on March 28, 2011)
|
10.04*
|
|
Indemnification Agreement entered into by and between ReachLocal, Inc. and James Geiger (incorporated by reference to Exhibit 10.04 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 ((File No. 001-34749) filed with the SEC on March 28, 2011)
|
10.05*
|
|
Indemnification Agreement entered into by and between ReachLocal, Inc. and Habib Kairouz (incorporated by reference to Exhibit 10.05 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 ((File No. 001-34749) filed with the SEC on March 28, 2011)
|
10.06*
|
|
Indemnification Agreement entered into by and between ReachLocal, Inc. and Alan Salzman (incorporated by reference to Exhibit 10.06 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 ((File No. 001-34749) filed with the SEC on March 28, 2011)
|
10.07*
|
|
Indemnification Agreement entered into by and between ReachLocal, Inc. and Nathan Hanks (incorporated by reference to Exhibit 10.08 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 ((File No. 001-34749) filed with the SEC on March 28, 2011)
|
10.08*
|
|
Indemnification Agreement entered into by and between ReachLocal, Inc. and Michael Kline (incorporated by reference to Exhibit 10.09 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 ((File No. 001-34749) filed with the SEC on March 28, 2011)
|
10.09*
|
|
Indemnification Agreement entered into by and between ReachLocal, Inc. and Ross G. Landsbaum (incorporated by reference to Exhibit 10.10 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 ((File No. 001-34749) filed with the SEC on March 28, 2011)
|
10.10*
|
Indemnification Agreement entered into by and between ReachLocal, Inc. and Jeffrey L. Hagins (incorporated by reference to Exhibit 10.12 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 ((File No. 001-34749) filed with the SEC on March 28, 2011)
|
|
10.11*
|
|
Offer Letter between ReachLocal, Inc. and Zorik Gordon, dated May 14, 2004 (incorporated by reference to Exhibit 10.10 of the Company’s Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on February 2, 2010)
|
10.12*
|
|
Offer Letter between ReachLocal, Inc. and Michael Kline, dated May 14, 2004 (incorporated by reference to Exhibit 10.11 of the Company’s Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on February 2, 2010)
|
Exhibit
No.
|
Description of Document | |
10.13*
|
|
Offer of Employment by and between ReachLocal, Inc. and Ross G. Landsbaum, dated as of May 30, 2008 (incorporated by reference to Exhibit 10.12 of the Company’s Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on February 2, 2010)
|
10.14*
|
|
Offer of Employment by and between ReachLocal, Inc. and Nathan Hanks, dated as of May 6, 2009 (incorporated by reference to Exhibit 10.14 of the Company’s Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on February 2, 2010)
|
10.15*
|
Offer of Employment by and between ReachLocal, Inc. and Jeffrey L. Hagins, dated August 23, 2010 (incorporated by reference to Exhibit 10.26 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 ((File No. 001-34749) filed with the SEC on March 28, 2011)
|
|
10.16*
|
|
Amendment to Offer Letter between ReachLocal, Inc. and Zorik Gordon, dated February 22, 2010 (incorporated by reference to Exhibit 10.19 of the Company’s Amendment No. 3 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on April 27, 2010)
|
10.17*
|
|
Amendment to Offer Letter between ReachLocal, Inc. and Michael Kline, dated February 22, 2010 (incorporated by reference to Exhibit 10.20 of the Company’s Amendment No. 3 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on April 27, 2010)
|
10.18*
|
|
Amendment to Offer of Employment between ReachLocal, Inc. and Nathan Hanks, dated February 22, 2010 (incorporated by reference to Exhibit 10.21 of the Company’s Amendment No. 3 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on April 27, 2010)
|
10.19*
|
|
Form of Amended and Restated Restricted Stock Purchase Agreement (incorporated by reference to Exhibit 10.15 of the Company’s Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on February 2, 2010)
|
10.20*
|
|
Share Purchase Agreement, by and among ReachLocal, Inc. and the Persons listed on Annex A thereto, dated as of September 11, 2009 (incorporated by reference to Exhibit 10.16 of the Company’s Amendment No. 2 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on February 24, 2010)
|
10.21*
|
|
ReachLocal, Inc. Incentive Bonus Plan, effective as of February 21, 2010 (incorporated by reference to Exhibit 10.17 of the Company’s Amendment No. 3 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on April 27, 2010)
|
10.22*
|
|
ReachLocal, Inc. Director Stock Plan (incorporated by reference to Exhibit 10.18 of the Company’s Amendment No. 3 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on April 27, 2010)
|
10.23*
|
|
2009 Executive Bonus Plan, effective as of January 1, 2009 (incorporated by reference to Exhibit 10.08 of the Company’s Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on February 2, 2010)
|
10.24*
|
|
ReachLocal, Inc. Change in Control and Severance Policy for Senior Management, effective as of February 21, 2010 (incorporated by reference to Exhibit 10.09 of the Company’s Amendment No. 3 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on April 27, 2010)
|
10.25*
|
|
ReachLocal, Inc. 2004 Stock Plan, adopted April 21, 2004, as amended as of April 8, 2005, July 31, 2006 and September 17, 2007 (incorporated by reference to Exhibit 10.04 of the Company’s Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on February 2, 2010)
|
10.26*
|
|
Amended and Restated ReachLocal, Inc. 2008 Stock Incentive Plan (incorporated by reference to Exhibit 10.34 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 (File No. 001-34749) filed with the SEC on March 28, 2011)
|
10.27*
|
|
Form of Restricted Stock Unit Award Agreement
|
10.28*
|
|
Form of Stock Option Agreement
|
10.29*
|
Form of Restricted Stock Award Agreement
|
|
|
||
10.30*
|
|
Form of Stock Option Agreement (Regulation D Early Exercise) (incorporated by reference to Exhibit 10.06 of the Company’s Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on February 2, 2010)
|
10.31*
|
|
Form of Stock Option Agreement (Rule 701) (incorporated by reference to Exhibit 10.07 to the Company’s Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on February 2, 2010)
|
10.32*
|
Form of Non-Employee Director Stock Option Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 (File No. 001-34749) filed with the SEC on August 4, 2011)
|
Exhibit
No.
|
Description of Document
|
|
10.33
|
|
Lease Agreement, dated as of June 2, 2006, between ReachLocal, Inc. and CB Parkway Business Center, Ltd., as amended (incorporated by reference to Exhibit 10.02 of the Company’s Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on February 2, 2010)
|
10.34
|
|
Office Lease, dated as of August 30, 2006, by and between ReachLocal, Inc. and Douglas Emmett 2000, LLC, as amended (incorporated by reference to Exhibit 10.03 of the Company’s Amendment No. 3 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on April 27, 2010)
|
10.35
|
|
Second Amendment to Office Lease, dated as of September 1, 2010, between Douglas Emmett 2000, LLC, as Landlord and ReachLocal, Inc., as Tenant (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 (File No. 001-34749) filed with the Securities and Exchange Commission on November 4, 2010)
|
10.36
|
Third Amendment to Office Lease, dated as of July 22, 2011, between Douglas Emmett 2000, LLC, as Landlord and ReachLocal, Inc., as Tenant (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 (File No. 001-34749) filed with the SEC on November 7, 2011)
|
|
10.37
|
Lease Agreement, dated as of February 2, 2010, among ARI – International Business Park, LLC, ARI- IBP 1, LLC, ARI - IBP 2, LLC, ARI - IBP 3, LLC, ARI - IBP 4, LLC, ARI - IBP 5, LLC, ARI - IBP 6, LLC, ARI - IBP 7, LLC, ARI - IBP 8, LLC, ARI - IBP 9, LLC, ARI - IBP 11, LLC, and ARI - IBP 12, LLC, acting by and through Billingsley Property Services, Inc., as agent for Landlord, and ReachLocal, Inc., as amended
|
|
10.38
|
Google Inc. AdWords Reseller Addendum, dated April 25, 2011, between ReachLocal, Inc. and Google Inc. (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 (File No. 001-34749) filed with the SEC on May 16, 2011)
|
|
10.39
|
Amendment to the Google Inc. AdWords Reseller Addendum, dated November 1, 2011, between ReachLocal, Inc. and Google Inc.
|
|
10.40
|
Google AdWords Reseller Agreement, dated May 9, 2011, between ReachLocal Netherlands B.V. and Google Ireland Limited (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 (File No. 001-34749) filed with the SEC on May 16, 2011)
|
|
21.01
|
|
List of subsidiaries of ReachLocal, Inc.
|
23.01
|
|
Consent of Independent Registered Public Accounting Firm, Grant Thornton LLP
|
24.01
|
|
Power of Attorney (included on signature page to this Annual Report on Form 10-K)
|
31.01
|
|
Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
31.02
|
|
Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.01
|
|
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.02
|
|
Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101.INS**
|
XBRL Instance Document
|
101.SCH**
|
XBRL Taxonomy Extension Schema Document
|
101.CAL**
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF**
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB**
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE**
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
*
|
Indicates management contract or compensatory plan, contract or arrangement.
|
**
|
XBRL (Extensible Business Reporting Language) information is furnished and not filed herewith, is not a part of a registration statement or Prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
|
REACHLOCAL, INC.
|
|||
|
By:
|
/s/ Zorik Gordon
|
|
Name: |
Zorik Gordon
|
||
Title: |
Chief Executive Officer
|
Signature
|
Title
|
Date
|
||
/s/ Zorik Gordon
|
Chief Executive Officer, Director
|
March 15, 2012
|
||
Zorik Gordon | (Principal Executive Officer) | |||
/s/ Ross G. Landsbaum
|
Chief Financial Officer
|
March 15, 2012
|
||
Ross G. Landsbaum | (Principal Financial Officer) | |||
/s/ David Day
|
Senior Vice President, Corporate Controller and Chief
|
March 15, 2012
|
||
David Day | Accounting Officer (Principal Accounting Officer) | |||
/s/ David Carlick
|
Director
|
March 15, 2012
|
||
David Carlick | ||||
/s/ Robert Dykes
|
Director
|
March 15, 2012
|
||
Robert Dykes | ||||
/s/ James Geiger
|
Director
|
March 15, 2012
|
||
James Geiger | ||||
/s/ Habib Kairouz
|
Director
|
March 15, 2012
|
||
Habib Kairouz | ||||
/s/ Alan Salzman
|
Director
|
March 15, 2012
|
||
Alan Salzman |
Exhibit
No.
|
|
Description of Document
|
3.01
|
|
Amended and Restated Certificate of Incorporation of ReachLocal, Inc., dated May 19, 2010 (incorporated by reference to Exhibit 3.01 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 (File No. 001-34749) filed with the SEC on March 28, 2011)
|
3.02
|
|
Amended and Restated Bylaws of ReachLocal, Inc. (incorporated by reference to Exhibit 3.02 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 (File No. 001-34749) filed with the SEC on March 28, 2011)
|
4.01
|
|
Form of ReachLocal, Inc. Common Stock Certificate (incorporated by reference to Exhibit 4.01 of the Company’s Amendment No. 3 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on April 27, 2010)
|
4.02
|
|
Second Amended and Restated Investors’ Rights Agreement, by and among ReachLocal, Inc., the Investors listed on Exhibit A, Exhibit B, Exhibit C and Exhibit D thereto, and the Founders listed on Exhibit E thereto, dated as of September 17, 2007 and as amended as of July 1, 2008, May 14, 2009, and May 18, 2009 (incorporated by reference to Exhibit 4.02 of the Company’s Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on February 2, 2010)
|
4.03
|
|
Stockholders Agreement, by and between ReachLocal, Inc. and NetUs Pty Limited ACN 117 674 030, dated as of September 11, 2009 (incorporated by reference to Exhibit 4.03 of the Company’s Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on February 2, 2010)
|
10.01*
|
|
Indemnification Agreement entered into by and between ReachLocal, Inc. and Zorik Gordon (incorporated by reference to Exhibit 10.01 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 ((File No. 001-34749) filed with the SEC on March 28, 2011)
|
10.02*
|
|
Indemnification Agreement entered into by and between ReachLocal, Inc. and David Carlick (incorporated by reference to Exhibit 10.02 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 ((File No. 001-34749) filed with the SEC on March 28, 2011)
|
10.03*
|
|
Indemnification Agreement entered into by and between ReachLocal, Inc. and Robert Dykes (incorporated by reference to Exhibit 10.03 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 ((File No. 001-34749) filed with the SEC on March 28, 2011)
|
10.04*
|
|
Indemnification Agreement entered into by and between ReachLocal, Inc. and James Geiger (incorporated by reference to Exhibit 10.04 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 ((File No. 001-34749) filed with the SEC on March 28, 2011)
|
10.05*
|
|
Indemnification Agreement entered into by and between ReachLocal, Inc. and Habib Kairouz (incorporated by reference to Exhibit 10.05 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 ((File No. 001-34749) filed with the SEC on March 28, 2011)
|
10.06*
|
|
Indemnification Agreement entered into by and between ReachLocal, Inc. and Alan Salzman (incorporated by reference to Exhibit 10.06 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 ((File No. 001-34749) filed with the SEC on March 28, 2011)
|
10.07*
|
|
Indemnification Agreement entered into by and between ReachLocal, Inc. and Nathan Hanks (incorporated by reference to Exhibit 10.08 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 ((File No. 001-34749) filed with the SEC on March 28, 2011)
|
10.08*
|
|
Indemnification Agreement entered into by and between ReachLocal, Inc. and Michael Kline (incorporated by reference to Exhibit 10.09 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 ((File No. 001-34749) filed with the SEC on March 28, 2011)
|
10.09*
|
|
Indemnification Agreement entered into by and between ReachLocal, Inc. and Ross G. Landsbaum (incorporated by reference to Exhibit 10.10 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 ((File No. 001-34749) filed with the SEC on March 28, 2011)
|
10.10*
|
Indemnification Agreement entered into by and between ReachLocal, Inc. and Jeffrey L. Hagins (incorporated by reference to Exhibit 10.12 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 ((File No. 001-34749) filed with the SEC on March 28, 2011)
|
|
10.11*
|
|
Offer Letter between ReachLocal, Inc. and Zorik Gordon, dated May 14, 2004 (incorporated by reference to Exhibit 10.10 of the Company’s Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on February 2, 2010)
|
10.12*
|
|
Offer Letter between ReachLocal, Inc. and Michael Kline, dated May 14, 2004 (incorporated by reference to Exhibit 10.11 of the Company’s Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on February 2, 2010)
|
Exhibit
No.
|
Description of Document | |
10.13*
|
|
Offer of Employment by and between ReachLocal, Inc. and Ross G. Landsbaum, dated as of May 30, 2008 (incorporated by reference to Exhibit 10.12 of the Company’s Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on February 2, 2010)
|
10.14*
|
|
Offer of Employment by and between ReachLocal, Inc. and Nathan Hanks, dated as of May 6, 2009 (incorporated by reference to Exhibit 10.14 of the Company’s Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on February 2, 2010)
|
10.15*
|
Offer of Employment by and between ReachLocal, Inc. and Jeffrey L. Hagins, dated August 23, 2010 (incorporated by reference to Exhibit 10.26 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 ((File No. 001-34749) filed with the SEC on March 28, 2011)
|
|
10.16*
|
|
Amendment to Offer Letter between ReachLocal, Inc. and Zorik Gordon, dated February 22, 2010 (incorporated by reference to Exhibit 10.19 of the Company’s Amendment No. 3 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on April 27, 2010)
|
10.17*
|
|
Amendment to Offer Letter between ReachLocal, Inc. and Michael Kline, dated February 22, 2010 (incorporated by reference to Exhibit 10.20 of the Company’s Amendment No. 3 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on April 27, 2010)
|
10.18*
|
|
Amendment to Offer of Employment between ReachLocal, Inc. and Nathan Hanks, dated February 22, 2010 (incorporated by reference to Exhibit 10.21 of the Company’s Amendment No. 3 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on April 27, 2010)
|
10.19*
|
|
Form of Amended and Restated Restricted Stock Purchase Agreement (incorporated by reference to Exhibit 10.15 of the Company’s Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on February 2, 2010)
|
10.20*
|
|
Share Purchase Agreement, by and among ReachLocal, Inc. and the Persons listed on Annex A thereto, dated as of September 11, 2009 (incorporated by reference to Exhibit 10.16 of the Company’s Amendment No. 2 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on February 24, 2010)
|
10.21*
|
|
ReachLocal, Inc. Incentive Bonus Plan, effective as of February 21, 2010 (incorporated by reference to Exhibit 10.17 of the Company’s Amendment No. 3 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on April 27, 2010)
|
10.22*
|
|
ReachLocal, Inc. Director Stock Plan (incorporated by reference to Exhibit 10.18 of the Company’s Amendment No. 3 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on April 27, 2010)
|
10.23*
|
|
2009 Executive Bonus Plan, effective as of January 1, 2009 (incorporated by reference to Exhibit 10.08 of the Company’s Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on February 2, 2010)
|
10.24*
|
|
ReachLocal, Inc. Change in Control and Severance Policy for Senior Management, effective as of February 21, 2010 (incorporated by reference to Exhibit 10.09 of the Company’s Amendment No. 3 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on April 27, 2010)
|
10.25*
|
|
ReachLocal, Inc. 2004 Stock Plan, adopted April 21, 2004, as amended as of April 8, 2005, July 31, 2006 and September 17, 2007 (incorporated by reference to Exhibit 10.04 of the Company’s Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on February 2, 2010)
|
10.26*
|
|
Amended and Restated ReachLocal, Inc. 2008 Stock Incentive Plan (incorporated by reference to Exhibit 10.34 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 (File No. 001-34749) filed with the SEC on March 28, 2011)
|
10.27*
|
|
Form of Restricted Stock Unit Award Agreement
|
10.28*
|
|
Form of Stock Option Agreement
|
10.29*
|
Form of Restricted Stock Award Agreement
|
|
|
||
10.30*
|
|
Form of Stock Option Agreement (Regulation D Early Exercise) (incorporated by reference to Exhibit 10.06 of the Company’s Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on February 2, 2010)
|
10.31*
|
|
Form of Stock Option Agreement (Rule 701) (incorporated by reference to Exhibit 10.07 to the Company’s Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on February 2, 2010)
|
10.32*
|
Form of Non-Employee Director Stock Option Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 (File No. 001-34749) filed with the SEC on August 4, 2011)
|
Exhibit
No.
|
Description of Document
|
|
10.33
|
|
Lease Agreement, dated as of June 2, 2006, between ReachLocal, Inc. and CB Parkway Business Center, Ltd., as amended (incorporated by reference to Exhibit 10.02 of the Company’s Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on February 2, 2010)
|
10.34
|
|
Office Lease, dated as of August 30, 2006, by and between ReachLocal, Inc. and Douglas Emmett 2000, LLC, as amended (incorporated by reference to Exhibit 10.03 of the Company’s Amendment No. 3 to the Registration Statement on Form S-1 (File No. 333-163905) filed with the SEC on April 27, 2010)
|
10.35
|
|
Second Amendment to Office Lease, dated as of September 1, 2010, between Douglas Emmett 2000, LLC, as Landlord and ReachLocal, Inc., as Tenant (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 (File No. 001-34749) filed with the Securities and Exchange Commission on November 4, 2010)
|
10.36
|
Third Amendment to Office Lease, dated as of July 22, 2011, between Douglas Emmett 2000, LLC, as Landlord and ReachLocal, Inc., as Tenant (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 (File No. 001-34749) filed with the SEC on November 7, 2011)
|
|
10.37
|
Lease Agreement, dated as of February 2, 2010, among ARI – International Business Park, LLC, ARI- IBP 1, LLC, ARI - IBP 2, LLC, ARI - IBP 3, LLC, ARI - IBP 4, LLC, ARI - IBP 5, LLC, ARI - IBP 6, LLC, ARI - IBP 7, LLC, ARI - IBP 8, LLC, ARI - IBP 9, LLC, ARI - IBP 11, LLC, and ARI - IBP 12, LLC, acting by and through Billingsley Property Services, Inc., as agent for Landlord, and ReachLocal, Inc., as amended
|
|
10.38
|
Google Inc. AdWords Reseller Addendum, dated April 25, 2011, between ReachLocal, Inc. and Google Inc. (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 (File No. 001-34749) filed with the SEC on May 16, 2011)
|
|
10.39
|
Amendment to the Google Inc. AdWords Reseller Addendum, dated November 1, 2011, between ReachLocal, Inc. and Google Inc.
|
|
10.40
|
Google AdWords Reseller Agreement, dated May 9, 2011, between ReachLocal Netherlands B.V. and Google Ireland Limited (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 (File No. 001-34749) filed with the SEC on May 16, 2011)
|
|
21.01
|
|
List of subsidiaries of ReachLocal, Inc.
|
23.01
|
|
Consent of Independent Registered Public Accounting Firm, Grant Thornton LLP
|
24.01
|
|
Power of Attorney (included on signature page to this Annual Report on Form 10-K)
|
31.01
|
|
Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
31.02
|
|
Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
32.01
|
|
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.02
|
|
Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101.INS**
|
XBRL Instance Document
|
101.SCH**
|
XBRL Taxonomy Extension Schema Document
|
101.CAL**
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF**
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB**
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE**
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
*
|
Indicates management contract or compensatory plan, contract or arrangement.
|
**
|
XBRL (Extensible Business Reporting Language) information is furnished and not filed herewith, is not a part of a registration statement or Prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
|
Holder:
|
__________________________
|
Grant Date:
|
__________________________
|
Total Number of RSUs:
|
_____________
|
Vesting Commencement Date:
|
_____________
|
Vesting Schedule:
|
____________________________________________________
____________________________________________________
____________________________________________________
____________________________________________________
|
Termination:
|
Subject to Section 2.3(b) of the Agreement, if Holder ceases to be an Employee, Consultant or Director prior to the applicable vesting date, all RSUs that have not become vested on or prior to the date of such termination of services will thereupon be automatically forfeited by Holder without payment of any consideration therefor.
|
REACHLOCAL, INC.:Holder:
|
HOLDER:
|
|||
By:
|
By:
|
|||
Print Name:
|
Print Name:
|
|||
Title:
|
|
|||
Address:
|
Address:
|
Optionee:
|
|
Grant Date:
|
|
Vesting Commencement Date:
|
|
Exercise Price per Share:
|
$
|
Total Exercise Price:
|
$
|
Total Number of Shares Subject to the Option:
|
shares
|
Expiration Date:
|
Vesting Schedule:
|
REACHLOCAL, INC.
|
OPTIONEE
|
|||
By:
|
By:
|
|||
Print Name:
|
Print Name:
|
|||
Title:
|
||||
Address:
|
Address:
|
Holder:
|
_________________________________________
|
Grant Date:
|
_________________________________________
|
Vesting Commencement Date:
|
_________________________________________
|
Total Number of Shares of Restricted Stock:
|
______________________ Shares
|
Vesting Schedule:
|
______________________________________________________________
______________________________________________________________
______________________________________________________________
______________________________________________________________
|
Termination:
|
If Holder ceases to be an Employee, Consultant or Director prior to the applicable vesting date, all shares of Common Stock underlying this Award that have not become vested on or prior to the date of such termination of services will thereupon be automatically forfeited by Holder without payment of any consideration therefor.
|
REACHLOCAL, INC.:Holder:
|
HOLDER:
|
|||
By:
|
By:
|
|||
Print Name:
|
Print Name:
|
|||
Title:
|
|
|||
Address:
|
Address:
|
|||
Dated: _______________, _____
|
|
Signature of Spouse
|
Lease Date
|
iii
|
Tenant
|
iii
|
Tenant’s Address
|
iii
|
Tenant’s Contact
|
iii
|
Landlord
|
iii
|
Landlord’s Address
|
iii
|
Landlord’s Contact
|
iii
|
Premises
|
iii
|
Term
|
iii
|
Basic Rental
|
iii
|
Security Deposit
|
iii
|
Rent
|
iii
|
Permitted Use
|
iii
|
Tenant’s Proportionate Share
|
iii
|
Construction Allowance
|
iv
|
Comparable Buildings
|
iv
|
Lease Agreement
|
|
Definitions and Basic Provisions
|
1
|
Lease Grant
|
1
|
Term
|
1
|
Rent
|
1
|
Security Deposit
|
2
|
Landlord’s Obligations
|
2
|
Improvements; Alterations; Repairs; Maintenance
|
4
|
Use
|
5
|
Assignment and Subletting
|
5
|
Insurance; Waivers; Subrogation; Indemnity
|
6
|
Subordination; Attornment; Notice to Landlord’s Mortgagee
|
7
|
Rules and Regulations
|
8
|
Condemnation
|
8
|
Fire or Other Casualty
|
8
|
Events of Default
|
9
|
Remedies
|
10
|
Payment; Non-Waiver
|
11
|
Landlord’s Lien
|
11
|
Surrender of Premises
|
11
|
Holding Over
|
12
|
Certain Rights Reserved by Landlord
|
12
|
Substitution Space
|
12
|
Miscellaneous
|
13
|
Exhibits
|
|
Exhibit A
|
Outline of the Premises
|
Exhibit A-1
|
Legal Description of the Land
|
Exhibit B
|
Building Rules and Regulations
|
Exhibit C
|
Operating Expenses
|
Exhibit D
|
Tenant Finish Work: Allowance
|
Exhibit D-1
|
Shell Construction
|
Exhibit E
|
Renewal Option
|
Exhibit F
|
Parking
|
Exhibit G
|
Janitorial Specifications
|
Exhibit H
|
Signage Criteria
|
ADA
|
4
|
Affiliate
|
6
|
Annual Electrical Cost Statement
|
1
|
Annual Operating Statement
|
Exh. C
|
Basic Cost
|
Exh. C
|
Basic Lease Information
|
1
|
BOMA
|
iii
|
Building
|
iii
|
Building Systems
|
3
|
Casualty
|
8
|
Collateral
|
11
|
Commencement Date
|
iii, 1
|
Comparable Buildings
|
iv
|
Construction Hard Costs
|
Exh. D
|
Construction Allowance
|
iv, Exh. D
|
Controllable Expenses
|
Exh. C
|
Damage Notice
|
8
|
Electrical Costs
|
1
|
Event of Default
|
9
|
Excess
|
Exh. C
|
Expansion / Right of First Refusal
|
Exh. I
|
Expense Stop
|
Exh. C
|
Hard Construction Costs
|
Exh. D
|
Initial Liability Insurance Amount
|
6
|
Land
|
iii
|
Landlord
|
iii, 1
|
Landlord’s Mortgagee
|
7
|
Lease
|
iv, 1
|
Loss
|
7
|
Mortgage
|
7
|
Parking Area
|
Exh. F
|
Permitted Transfer
|
6
|
Premises
|
iii
|
Primary Lease
|
7
|
Project
|
iii
|
Rentable Square Feet
|
iii
|
Rentable Square Foot
|
iii
|
Security Deposit
|
iii, 2
|
Shell Construction
|
Exh. D
|
Substantial Completion
|
Exh. D, Exh. D-1
|
Substantially Completed
|
Exh. D
|
Substitution Effective Date
|
13
|
Substitution Notice
|
12
|
Substitution Space
|
12
|
Taking
|
8
|
Taxes
|
2, Exh. C
|
Tenant
|
iii, 1
|
Total Construction Costs
|
Exh. D
|
Total Rentable Square Feet
|
iii
|
Total Rentable Square Foot
|
iii
|
Transfer
|
5
|
UCC
|
11
|
Variable Basic Cost
|
Exh. C
|
Work
|
Exh. D
|
Working Drawings
|
Exh. D
|
Lease Date: | February 2, 2010 | ||
Tenant: | REACHLOCAL, INCORPORATED, a Delaware corporation | ||
Tenant’s Address: |
6504 International Parkway
Suite 1200
Plano, Texas 75093
|
||
Contact: | Nathan Hanks Telephone: ________________ | ||
With a copy to: | |||
ReachLocal, Incorporated
21700 Oxnard Street, Suite 1600
Woodland Hills, CA 91367
Attn: Adam F. Wergeles, General Counsel
|
|||
Landlord: | ARI – INTERNATIONAL BUSINESS PARK, LLC, ARI- IBP 1, LLC, ARI - IBP 2, LLC, ARI - IBP 3, LLC, ARI - IBP 4, LLC, ARI - IBP 5, LLC, ARI - IBP 6, LLC, ARI - IBP 7, LLC, ARI - IBP 8, LLC, ARI - IBP 9, LLC, ARI - IBP 11, LLC, and ARI - IBP 12, LLC, each a Delaware limited liability company, acting by and through Billingsley Property Services, Inc. | ||
Landlord’s Address: | 4100 International Parkway
Suite 1100
Carrollton, Texas 75007
|
||
Contact: | Saurabh Mody Telephone: (972) 820-2211 | ||
Premises: | Suite No. 1200 in the office building (the “Building”) located or to be located on the land described as International Business Park, Phase I, Collin County, Texas, and whose street address is 6504 International Parkway, Plano, Texas 75093, as particularly described in Exhibit A-1 (the “Land”). The Building and Land together comprise the “Project”. The Premises are outlined on the plan attached to the Lease as Exhibit A and shall contain approximately 7,294 square feet of rentable area (“Total Rentable Square Feet” or singularly “Total Rentable Square Foot”). The Building contains approximately 106,334 of total square feet of rentable area (“Total Rentable Square Feet” or singularly “Total Rentable Square Foot”). |
Term: | Upon substantial completion of the Initial Improvements described in Exhibit D herein (the “Commencement Date”), and ending at 5:00 p.m. on January 31, 2014, subject to extension as provided in the Lease. Occupancy and use of the space subject to Paragraph 3 of this Lease. |
Basic Rental: | Dates | Annual Rate per
Rentable Square Foot
|
Basic Monthly Rental | ||
Commencement
Date – 12/31/11
|
$17.50 | $10,637.08 | |||
1/1/12 – 12/31/12 | $18.00 | $10,941.00 | |||
1/1/13 – 12/31/13 | $18.50 | $11.244.92 | |||
1/1/14 – 1/31/14 | $19.00 | $11,548.83 | |||
Basic Rental shall be conditionally abated during the time period commencing on the Commencement Date and ending on December 31, 2010. Commencing on January 1, 2011, Tenant shall make Basic Rental payments as otherwise provided herein. Notwithstanding such abatement of Basic Rental, (a) all other sums due under this Lease, including Tenant’s share of Electrical Costs and Excess (if any), shall be payable as provided in this Lease, and (b) any increases in Basic Rental set forth in this Lease shall occur on the dates scheduled therefor.
The abatement of Basic Rental provided for herein is conditioned upon Tenant's full and timely performance of all of its obligations under this Lease. If at any time during the Term a monetary Event of Default by Tenant occurs which results in the termination of Tenant's right of possession of the Premises or the termination of the Lease, then the abatement of Basic Rental provided for herein shall immediately become void, and Tenant shall promptly pay to Landlord, in addition to all other amounts due to Landlord under this Lease, the full amount of all Basic Rental herein abated.
|
|||
Security Deposit: | $10.637.08 due upon execution of the Lease as referenced in Section 5 of the Lease. | ||
Rent: | Basic Rental, Tenant’s share of Electrical Costs, Excess (if any), and all other sums that Tenant may owe to Landlord under the Lease. | ||
Permitted Use: | General office use. | ||
Tenant’s
Proportionate Share:
|
6.8595% (which is the percentage obtained by dividing the Rentable Square Feet by the Total Rentable Square Feet. | ||
Construction Allowance: | Turnkey per Exhibit D |
Comparable Buildings: | As used herein or in the Lease, the term “Comparable Buildings” shall mean those low-rise garden style, multi-tenant, commercial office buildings completed on or after January 1, 1997, which are comparable to the Building in size, design, quality, use, and tenant mix, and which are located in the same market area (i.e., Plano area North of Frankford, East of I-35E, West of Preston Road and South of State Hwy. 121). | ||
LANDLORD:
|
|||
ARI – INTERNATIONAL BUSINESS PARK, LLC, ARI- IBP 1, LLC, ARI - IBP 2, LLC, ARI - IBP 3, LLC, ARI - IBP 4, LLC, ARI - IBP 5, LLC, ARI - IBP 6, LLC, ARI - IBP 7, LLC, ARI - IBP 8, LLC, ARI - IBP 9, LLC,ARI - IBP 11, LLC, ARI - IBP 12, LLC, each a Delaware limited liability company | |||
By:
|
Billingsley Property Services, Inc.,
a Texas corporation
as Agent
|
By: | /s/ Joel M. Overton, Jr. | |||
Name: Joel M. Overton, Jr. | ||||
Title: Senior Vice President |
TENANT: | |||
REACHLOCAL, INCORPORATED,
a Delaware corporation
|
|||
By: | /s/ Ross G. Landsbaum | ||
Name: Ross G. Landsbaum | |||
Title: CFO |
THIS LEASE AGREEMENT (this “Lease”) is entered into as of February 2, 2010 between ARI – INTERNATIONAL BUSINESS PARK, LLC, ARI- IBP 1, LLC, ARI - IBP 2, LLC, ARI - IBP 3, LLC, ARI - IBP 4, LLC, ARI - IBP 5, LLC, ARI - IBP 6, LLC, ARI - IBP 7, LLC, ARI - IBP 8, LLC, ARI - IBP 9, LLC, ARI - IBP 11, LLC, and ARI - IBP 12, LLC, each a Delaware limited liability company ("Landlord") acting by and through Billingsley Property Services, Inc., as agent for Landlord, and REACHLOCAL, INCORPORATED, a Delaware corporation (“Tenant”). | ||
DEFINITIONS AND BASIC PROVISIONS | 1. The definitions and basic provisions set forth in the Basic Lease Information (the "Basic Lease Information") executed by Landlord and Tenant contemporaneously herewith are incorporated herein by reference for all purposes. To the extent of any conflict between the Basic Lease Information and any provision contained in this Lease, this Lease shall control. | |
LEASE GRANT
|
2. Subject to the terms of this Lease, Landlord leases to Tenant, and Tenant leases from Landlord, the Premises. | |
TERM | 3. The Term shall commence upon substantial completion of Initial Improvements described in Exhibit D herein (the "Commencement Date"), and end at 5:00 p.m. on January 31, 2014, subject to renewal as provided in Exhibit E. Landlord shall deliver possession of the Premises to Tenant upon execution hereof. By occupying the Premises, Tenant shall be deemed to have accepted the Premises in their condition as of the date of such occupancy, subject to Landlord’s repair of latent defects and Landlord's completion of any related punch-list items. Tenant shall execute and deliver to Landlord, within ten (10) days after Landlord has requested same, a letter confirming (1) the Commencement Date, (2) that Tenant has accepted the Premises, and (3) that Landlord has performed all of its obligations with respect to the Premises. Notwithstanding anything contained herein to the contrary, if Landlord does not tender possession of the Premises with substantial completion of the Initial Improvements having occurred on or prior to the date that is seventy (70) business days from the date this Lease is fully executed by both Landlord and Tenant (which date shall be extended day-for-day in the event of (1) a Tenant Delay Day, or (2) delays caused by one or more of the events described in Section 23(c) hereof), then Tenant shall be entitled to receive an abatement of two (2) day’s Basic Rental for each day thereafter until such time as Landlord tenders possession of Premises to Tenant in such condition. | |
RENT | 4. (a) Payment. Tenant shall timely pay to Landlord the Rent without deduction or set off (except as otherwise expressly provided herein), at Landlord's Address (or such other address as Landlord may from time to time designate in writing to Tenant). Basic Rental, adjusted as herein provided, shall be payable monthly in advance. The first full monthly installment of Basic Rental shall be payable contemporaneously with the execution of this Lease; thereafter, monthly installments of Basic Rental shall be due on the first day of each succeeding calendar month during the Term. Basic Rental for any partial month at the beginning or end of the Term shall be prorated based upon the number of days within the Term during the partial month multiplied by 1/365 of the then current annual Basic Rental and shall be due on or before the fifth business day immediately preceding the Commencement Date, or first day of the last calendar month of the Term, as applicable. |
(b) Electrical Costs. Tenant shall pay to Landlord an amount equal to the product of (1) the cost of all electricity used by the Project (“Electrical Costs”), multiplied by (2) Tenant’s Proportionate Share. Such amount shall be payable monthly based on Landlord’s reasonable estimate of the amount due for each month, and shall be due on the Commencement Date and on the first day of each calendar month thereafter | ||
(c) Annual Electrical Cost Statement. By April 1 of each calendar year, or as soon thereafter as practicable, Landlord shall furnish to Tenant a statement of Landlord's actual Electrical Costs (the "Annual Electrical Cost Statement") for the previous year adjusted as provided in Section 4.(d), which shall include a reconciliation of the actual amount Tenant owes for its share of Electrical Costs against the estimated amount collected from Tenant. If such reconciliation shows that Tenant paid more than owed, then Landlord shall reimburse Tenant by check or cash for such excess within thirty (30) days after delivery of the Annual Electrical Cost Statement; conversely, if Tenant paid less than it owed, then Tenant shall pay Landlord such deficiency within thirty (30) days after delivery of the Annual Electrical Cost Statement. | ||
(d) Adjustments to Electrical Costs. With respect to any calendar year or partial calendar year in which the Building is not occupied to the extent of 95% of the rentable area thereof, the Electrical Costs for such period shall, for the purposes hereof, be increased to the amount which would have been incurred had the Building been occupied to the extent of 95% of the rentable area thereof. | ||
(e) Delinquent Payment. If any payment required by Tenant under this Lease is not paid when due, Landlord may charge Tenant a fee equal to 5% of the delinquent payment to reimburse Landlord for its cost and inconvenience incurred as a consequence of Tenant's delinquency. | ||
(f) Taxes. Tenant shall be liable for all taxes levied or assessed against personal property, furniture, or fixtures placed by Tenant in the Premises. If any taxes for which Tenant is liable are levied or assessed against Landlord or Landlord's property and Landlord elects to pay the same, or if the assessed value of Landlord's property is increased by inclusion of such personal property, furniture or fixtures and Landlord elects to pay the taxes based on such increase, then Tenant shall pay to Landlord, within ten (10) business days after Tenant receives written demand, that part of such taxes for which Tenant is primarily liable. |
(g) Excess. Tenant shall pay the Excess in the Basic Cost over the Expense Stop as such terms are defined in Exhibit C. | ||
SECURITY
DEPOSIT
|
5. Contemporaneously with the execution of this Lease, Tenant shall pay to Landlord, in immediately available funds, the Security Deposit, which shall be held by Landlord without liability for interest and as security for performance by Tenant of its obligations under this Lease. The Security Deposit is not an advance payment of Rent or a measure or limit of Landlord's damages upon an Event of Default (defined below). Landlord may, from time to time upon notice to Tenant and without prejudice to any other remedy, use all or a part of the Security Deposit to perform any obligation which Tenant was obligated, but failed to perform hereunder. Following any such application of the Security Deposit, Tenant shall pay to Landlord on demand the amount so applied in order to restore the Security Deposit to its original amount. Within a reasonable time after the expiration of the Term, as may have been extended, provided Tenant has performed all of its obligations hereunder, Landlord shall return to Tenant the balance of the Security Deposit not applied to satisfy Tenant's obligations. If Landlord transfers its interest in the Premises, then Landlord may assign the Security Deposit to the transferee and Landlord thereafter shall have no further liability for the return of the Security Deposit. | |
LANDLORD’S
OBLIGATIONS
|
6. (a) Services; Maintenance. Landlord shall furnish to Tenant (1) water (hot and cold) at those points of supply provided for general use of tenants of the Building; (2) heated and refrigerated air conditioning from 7 a.m. to 7 p.m. Monday through Friday and 8 a.m. to 1 p.m. on Saturday (except for holidays) sufficient to maintain temperatures during these hours in the range of from 70 degrees Fahrenheit to 78 degrees Fahrenheit; (3) janitorial service to the Premises on weekdays other than holidays (Landlord reserves the right to bill Tenant separately for extra janitorial service required for any special improvements installed by or at the request of Tenant) and such window washing as may from time to time in Landlord's judgement be reasonably required, such janitorial services to be generally in accordance with those services described on Exhibit G; (4) non-exclusive elevator for ingress and egress to the floors on which the Premises are located; (5) replacement of Building-standard light bulbs and fluorescent tubes,; and (6) electrical current (subject to Tenant’s obligation to pay its share of Electrical Costs as provided herein). If Tenant desires heat and air conditioning at any time other than times herein designated, such services shall be supplied to Tenant upon reasonable advance notice and Tenant shall pay to Landlord $40.00 per hour (minimum two hours) for each additional hour (prorated and rounded up to the nearest quarter hour) such services are provided, such amount being payable within ten (10) days of receipt of an invoice therefor. Landlord's obligation to furnish services under this Section shall be subject to the rules, regulations and other conditions or requirements of the supplier of such services and any applicable governmental entity or agency. |
(b) Maintenance. Landlord shall maintain all Shell Construction items, Building Systems (defined below), and Building common areas including all parking areas and landscaping, in good order and condition as customary for Comparable Buildings. “Building Systems” shall include all electrical, plumbing, and air conditioning systems within the Building which were included in the Shell Construction. Notwithstanding the foregoing, “Building Systems” shall not include any improvements below the ceiling within the Premises (except in Shell Building core areas) including but not limited to appliances, fixtures and supplemental air systems, and other items not customary for office tenants in Comparable Buildings. | ||
(c) Excess Electrical Use. Landlord shall use reasonable efforts to furnish electrical current for computers, electronic data processing equipment, special lighting, or other equipment that requires more than 120 volts, or other equipment whose electrical energy consumption exceeds normal office usage, through any existing feeders and risers serving the Building and the Premises. Tenant shall not install any electrical equipment requiring special wiring or requiring voltage in excess of 120 volts or otherwise exceeding Building capacity unless approved in advance by Landlord. The use of electricity in the Premises shall not exceed the capacity of existing feeders and risers to or wiring in the Premises. Any risers or wiring required to meet Tenant's excess electrical requirements shall, upon Tenant's request, be installed by Landlord (unless otherwise agreed by Landlord) at Tenant's expense, if, in Landlord's sole and absolute judgment, the same are necessary and shall not cause permanent damage or injury to the Building or the Premises, cause or create a dangerous or hazardous condition, entail excessive or unreasonable alterations, repairs, or expenses, or interfere with or disturb other tenants of the Building. If Tenant uses machines or equipment (other than general office machines, excluding computers and electronic data processing equipment) in the Premises which affect the temperature otherwise maintained by the air conditioning system or otherwise overload any utility, Landlord may install supplemental air conditioning units or other supplemental equipment in the Premises, and the cost thereof, including the cost of installation, operation, use, and maintenance, shall be paid by Tenant to Landlord within ten (10) days after Landlord has delivered to Tenant an invoice therefor. At the time of Tenant’s submission of plans and specifications for Landlord’s approval pursuant to Section 7 herein or Exhibit D to this Lease, Landlord and Tenant shall cooperate in good faith to identify any fixtures, equipment and/or appliances to be installed or placed in the Premises which fixtures, equipment or appliances would exceed the normal and customary electrical use and consumption of typical office tenants in Comparable Buildings, would affect the temperature otherwise maintained by the air conditioning system, or would require electric capacity in excess of any planned or existing feeders, risers, or wiring to the Premises. | ||
(d) Restoration of Services; Abatement. Landlord shall use reasonable efforts to restore any service that becomes unavailable; however, such unavailability shall not render Landlord liable for any damages caused thereby, be a constructive eviction of Tenant, constitute a breach of any implied warranty, or, except as provided in the next sentence, entitle Tenant to any abatement of Tenant's obligations hereunder. However, if Tenant is prevented from making reasonable use of all or a portion of the Premises for more than thirty (30) consecutive days because of the unavailability of any such service, Tenant shall, as its exclusive remedy therefor, be entitled to abatement of Rent, or the pro rata portion thereof equivalent to the portion of the Premises rendered unusable to the entire Premises, for each consecutive day (after such thirty (30) day period) that Tenant is so prevented from making reasonable use of the Premises or the applicable portion thereof. |
(e) Access. Subject to any Building rules and regulations, necessary repairs and maintenance, and any events beyond Landlord’s reasonable control which would prevent access, Tenant shall have access to the Premises twenty-four (24) hours a day, seven (7) days a week. The Building shall include twenty-four (24) hour access by security card which cards shall be provided to Tenant upon payment of a $10 refundable deposit per card. | ||
(f) Security. Landlord shall provide to Tenant all security functions and services currently provided to the Building including, but not limited to, card key access into the Building and security personnel on-site within International Business Park. | ||
IMPROVEMENTS;
ALTERATIONS;
REPAIRS;
MAINTENANCE
|
7. (a) Improvements; Alterations. No improvements or alterations in or upon the Premises, including not by limitation paint, wall coverings, floor coverings, light fixtures, window treatments, signs, advertising, or promotional lettering or other media, shall be installed or made by Tenant except in accordance with plans and specifications which have been previously submitted to and approved in writing by Landlord, which approval shall not be unreasonably withheld or delayed except that Landlord may withhold approval of any improvements or alterations which it determines, in its sole opinion, will materially and adversely affect any structural or aesthetic (only to the extent visible from outside the Premises or common areas) aspect of the Building or Building Systems. All improvements and alterations (whether temporary or permanent in character) made in or upon the Premises, either by Landlord or Tenant, shall (i) comply with all applicable laws, ordinances, rules and regulations, and (ii) be Landlord's property at the end of the Term and shall remain on the Premises without compensation to Tenant unless prior to installation, Tenant provides Landlord with written notice of all items which may be removed by Tenant and Landlord consents to such removal in advance. Such consent shall not be unreasonably withheld provided Landlord may condition such consent as it deems reasonably necessary including not by limitation requiring Tenant to replace any items upon removal with similar items comparable to any such items in the Building or, if not applicable, then Comparable Buildings. Approval by Landlord of any of Tenant's drawings and plans and specifications prepared in connection with any improvements in the Premises shall not constitute a representation or warranty of Landlord as to the adequacy or sufficiency of such drawings, plans and specifications, or the improvements to which they relate, for any use, purpose, or condition, but such approval shall merely be the consent of Landlord as required hereunder. Landlord warrants and agrees that it shall complete the Building Shell Construction in compliance with all then applicable governmental laws, rules and regulations, including not by limitation the Texas Accessibility Standards (TAS) Article 9102, Texas Civil Statutes, The Administrative Rules of the Texas Department of Licensing and Regulation. Thereafter, notwithstanding anything in this Lease to the contrary, Tenant shall be responsible for all costs incurred to cause the Premises to comply with any such laws, rules or regulations, including not by limitation the retrofit requirements of TAS, as may be amended. |
(b) Tenant Repairs; Maintenance. Except for those janitorial services to be provided by Landlord as expressly provided in this Lease, Tenant shall maintain its personal property and all improvements or alterations to the Premises other than those items included in Shell Construction (which shall be maintained by Landlord) in a clean, safe, operable, attractive condition, and shall not permit or allow to remain any waste or damage to any portion of the Premises. Tenant shall repair or replace, subject to Landlord's direction and supervision, any damage to the Project caused by Tenant or Tenant's agents, contractors, or invitees. If Tenant fails to make such repairs or replacements within fifteen (15) days after the occurrence of such damage, then Landlord, upon written notice to Tenant, may make the same at Tenant's expense, which shall be payable to Landlord within thirty (30) days after Landlord has delivered to Tenant an invoice therefor. | ||
(c) Performance of Work. All work described in this Section 7 shall be performed only by Landlord or by contractors and subcontractors approved in writing by Landlord. Tenant shall cause all contractors and subcontractors to procure and maintain insurance coverage against such risks, in such amounts, and with such companies as Landlord may reasonably require. All such work shall be performed in accordance with all legal requirements and in a good and workmanlike manner so as not to damage the Premises, the structure of the Building, or plumbing, electrical lines, or other utility transmission facilities or Building mechanical systems. All such work which may affect the Building’s electrical, mechanical, plumbing or other systems must be approved by the Building's engineer of record. | ||
(d) Mechanic's Liens. Tenant shall not permit any mechanic's liens to be filed against the Project for any work performed, materials furnished, or obligation incurred by or at the request of Tenant. If such a lien is filed, then Tenant shall, within thirty (30) days after Landlord has delivered notice of the filing to Tenant, either pay the amount of the lien or diligently contest such lien and deliver to Landlord a bond or other security reasonably satisfactory to Landlord. If Tenant fails to timely take either such action, then Landlord may pay the lien claim without inquiry as to the validity thereof, and any amounts so paid, including expenses and interest, shall be paid by Tenant to Landlord within ten (10) days after Landlord has delivered to Tenant an invoice therefor. |
USE | 8. Tenant shall occupy and use the Premises only for the Permitted Use and shall comply with all laws, orders, rules, and regulations relating to the use, condition, and occupancy of the Premises. The Premises shall not be used for any use which (i) is disreputable, (ii) creates extraordinary fire hazards, (iii) results in an increased rate of insurance on the Building or its contents, or (iv) the storage of any hazardous materials or substances. If, because of Tenant's acts, the rate of insurance on the Building or its contents increases, Tenant shall pay to Landlord the amount of such increase on demand, and acceptance of such payment shall not constitute a waiver of any of Landlord's other rights. Tenant shall conduct its business and control its agents, employees, and invitees in such a manner as not to create any nuisance or interfere with other tenants or Landlord in its management of the Project. Notwithstanding anything in this Lease to the contrary, as between Landlord and Tenant, (a) from and after the date of this Lease, Tenant shall bear the risk of complying with Title III of the Americans With Disabilities Act of 1990, any state laws governing handicapped access or architectural barriers, and all rules, regulations, and guidelines promulgated under such laws, as amended from time to time (the "Disabilities Acts") in the Premises, and (b) Landlord shall bear the risk of complying with the Disabilities Acts in the common areas of the Building (other than compliance that is necessitated by the use of the Premises for other than the Permitted Use or as a result of any alterations or additions, including any initial tenant improvement work, made by or on behalf of a Tenant Party (which risk and responsibility shall be borne by Tenant). | |
ASSIGNMENT
AND SUBLETTING
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9. (a) Transfers; Consent. Other than permitted transfers as described below, Tenant shall not, without the prior written consent of Landlord, which consent shall not be unreasonably withheld, delayed or conditioned, 1) advertise that any portion of the Premises is available for lease, (2) assign, transfer, or encumber this Lease or any estate or interest herein whether directly or by operation of law, (3) if Tenant is an entity other than a corporation whose stock is publicly traded, permit the transfer of an ownership interest in Tenant so as to result in a change in the current control of Tenant, (4) sublet any portion of the Premises, (5) grant any license, concession, or other right of occupancy of any portion of the Premises, or (6) permit the use of the Premises by any parties other than Tenant (any of the events listed in Sections 9.(a)(2) through 9.(a)(6) being a "Transfer"). If Tenant requests Landlord's consent to a Transfer, then Tenant shall provide Landlord with a written description of all terms and conditions of the proposed Transfer, copies of the proposed documentation, and the following information about the proposed transferee: name and address; reasonably satisfactory information about its business and business history; its proposed use of the Premises; and general references sufficient to enable Landlord to determine the proposed transferee's reputation and character. Landlord shall respond in writing to Tenant’s request for a Transfer within ten (10) business days of receipt of written request therefor. Tenant shall reimburse Landlord for its attorneys' fees (not to exceed $1,000 per request) and other expenses incurred in connection with considering any request for its consent to a Transfer. Landlord shall not unreasonably withhold, delay or condition its consent except that Landlord may withhold or condition its consent if it reasonably determines that the proposed transferee or its use (including not by limitation the number of employees, hours of operation, parking requirements, electrical or other Building system requirements, conflicts or competition with existing tenants) is unacceptable, would burden the Building, or are incompatible with the Building or its occupants. If Tenant requested Landlord's consent to a transfer and Landlord denies such request, then Tenant shall have the right to terminate the Lease by giving Landlord thirty (30) days written notice of intent to terminate and paying to Landlord at the time of such notice all the Rent due to Landlord under the Lease for the remainder of the Term. If Landlord consents to a proposed Transfer, then the proposed transferee shall deliver to Landlord a written agreement whereby it expressly assumes the Tenant's obligations hereunder; however, any transferee of less than all of the space in the Premises shall be liable only for obligations under this Lease that are properly allocable to the space subject to the Transfer, and only to the extent of the rent it has agreed to pay Tenant therefor. Landlord's consent to a Transfer shall not release Tenant from performing its obligations under this Lease, but rather Tenant and its transferee shall be jointly and severally liable therefor. Landlord's consent to any Transfer shall not waive Landlord's rights as to any subsequent Transfers. If an Event of Default occurs while the Premises or any part thereof are subject to a Transfer, then Landlord, in addition to its other remedies, may collect directly from such transferee all rents becoming due to Tenant and apply such rents against Rent. Tenant authorizes its transferees to make payments of rent directly to Landlord upon Tenant’s receipt of notice from Landlord to do so; however, Landlord shall not be obligated to accept separate Rent payments from any transferees and may require that all Rent be paid directly by Tenant. |
(i) Permitted Transfers. Tenant shall be permitted to periodically sublet portions of the Premises or to assign its rights to any parent or wholly-owned subsidiary entity, any organization resulting from a merger or a consolidation with the Tenant, or any organization succeeding to the business assets of the Tenant, provided the Premises continue to be used solely for the Permitted Use, the business and parking requirements of the subtenant or assignee are substantially the same as Tenant and the net worth of the subtenant or assignee is at equal to or greater than Tenant's at the time of Lease execution. Tenant shall promptly notify Landlord in writing within fifteen (15) days after such assignment or subletting. | ||
(b) Additional Compensation. Tenant shall pay to Landlord, immediately upon receipt thereof, fifty percent (50%) of the all compensation received by Tenant for a Transfer that exceeds the Rent allocable to the portion of the Premises covered thereby. Tenant shall hold such amounts in trust for Landlord and pay them to Landlord within ten (10) days after receipt. | ||
(c) Cancellation. Landlord may, within twenty (20) days after submission of Tenant’s written request for Landlord’s consent to a Transfer (excluding Permitted Transfers), cancel this Lease (or, as to a subletting or assignment, cancel as to the portion of the Premises proposed to be sublet or assigned) as of the date the proposed Transfer was to be effective. If Landlord cancels this Lease as to any portion of the Premises, then this Lease shall cease for such portion of the Premises and Tenant shall pay to Landlord all Rent accrued through the cancellation date relating to the portion of the Premises covered by the proposed Transfer. Thereafter, Landlord may lease such portion of the Premises to the prospective transferee (or to any other person) without liability to Tenant. In such event, prior to the effective date of such termination, and subject to Landlord’s direction and supervision, Tenant shall be solely responsible for the cost and construction of a wall demising the remaining Premises from the portion of the Premises as to which the Lease is terminated. | ||
INSURANCE;
WAIVERS;
SUBROGATION;
INDEMNITY
|
10. (a) Insurance. Tenant shall at its expense procure and maintain throughout the Term the following insurance policies: (1) commercial general liability insurance in amounts of not less than a combined single limit of $3,000,000 (the “Initial Liability Insurance Amount") or such other amounts as Landlord may from time to time reasonably require, insuring Tenant, Landlord, Landlord's agents, and their respective affiliates against all liability for injury to or death of a person or persons or damage to property arising from the use and occupancy of the Premises, and (2) insurance covering the full value of Tenant's property and improvements, and other property (including property of others), in the Premises. Tenant's insurance shall provide primary coverage to Landlord when any policy issued to Landlord provides duplicate or similar coverage, and in such circumstance Landlord's policy will be excess over Tenant's policy. Tenant shall furnish certificates of such insurance and such other evidence satisfactory to Landlord of the maintenance of all insurance coverage required hereunder, and Tenant shall obtain a written obligation on the part of each insurance company to notify Landlord at least thirty (30) days before cancellation or a material change of any such insurance. All such insurance policies shall be in form, and be issued by companies, reasonably satisfactory to Landlord. The term "affiliate" shall mean any person or entity which, directly or indirectly, controls, is controlled by, or is under common control with the party in question. |
(b) Waiver of Claims; No Subrogation. LANDLORD SHALL NOT BE LIABLE TO TENANT OR THOSE CLAIMING BY, THROUGH, OR UNDER TENANT FOR ANY INJURY TO OR DEATH OF ANY PERSON OR PERSONS OR THE DAMAGE TO OR THEFT, DESTRUCTION, LOSS, OR LOSS OF USE OF ANY PROPERTY OR INCONVENIENCE (A “LOSS “) CAUSED BY CASUALTY, THEFT, FIRE, THIRD PARTIES, OR ANY OTHER MATTER (INCLUDING LOSSES ARISING THROUGH REPAIR OR ALTERATION OF ANY PART OF THE BUILDING, OR FAILURE TO MAKE REPAIRS, OR FROM ANY OTHER CAUSE), REGARDLESS OF WHETHER THE NEGLIGENCEOF ANY PARTY CAUSED SUCH LOSS IN WHOLE OR IN PART. LANDLORD AND TENANT EACH WAIVES ANY CLAIM IT MIGHT HAVE AGAINST THE OTHER FOR ANY DAMAGE TO OR THEFT, DESTRUCTION, LOSS OR LOSS OF USE OF ANY PROPERTY, TO THE EXTENT THE SAME IS INSURED AGAINST UNDER ANY INSURANCE POLICY THAT COVERS THE BUILDING, THE PREMISES, LANDLORD’S OR TENANT’S FIXTURES, PERSONAL PROPERTY, LEASEHOLD IMPROVEMENTS, OR BUSINESS, OR, IN THE CASE OF TENANT’S WAIVER, IS REQUIRED TO BE INSURED AGAINST UNDER THE TERMS HEREOF, REGARDLESS OF WHETHER THE NEGLIGENCE OR FAULT OF THE OTHER PARTY CAUSED SUCH LOSS. EACH PARTY SHALL CAUSE ITS INSURANCE CARRIER TO ENDORSE ALL APPLICABLE POLICIES WAIVING THE CARRIER’S RIGHTS OF RECOVERY UNDER SUBROGATION OR OTHERWISE AGAINST THE OTHER PARTY. | ||
(c) Indemnity. Subject to Section 11(b), Tenant shall defend, indemnify, and hold harmless Landlord and its agents from and against all claims, demands, liabilities, causes of action, suits, judgments, and expenses (including attorneys’ fees) for any Loss arising from any occurrence on the Premises or from Tenant’s failure to perform its obligations under this Lease (other than a Loss arising from the sole or gross negligence of Landlord or its agents), even though caused or alleged to be caused by the joint, comparative, or concurrent negligence or fault of Landlord or its agents, and even though any such claim, cause of action, or suit is based upon or alleged to be based upon the strict liability of Landlord or its agents. This indemnity provision is intended to indemnify Landlord and its agents against the consequences of their own negligence or fault as provided above when Landlord or its agents are jointly, comparatively, or concurrently negligent with Tenant. This indemnity provision shall survive termination or expiration of this Lease. | ||
SUBORDINATION;
ATTORNMENT;
NOTICE TO
LANDLORD'S
MORTGAGEE
|
11. (a) Subordination. This Lease shall be subordinate to any deed of trust, mortgage, or other security instrument (a "Mortgage"), or any ground lease, master lease, or primary lease (a "Primary Lease"), that now or hereafter covers all or any part of the Premises (the mortgagee under any Mortgage or the lessor under any Primary Lease is referred to herein as "Landlord's Mortgagee"). Landlord shall use reasonable efforts to obtain from Landlord’s Mortgagee, both existing and future, and deliver to Tenant a non-disturbance agreement for the benefit of Tenant in a form reasonably acceptable to Landlord, Landlord’s Mortgagee, and Tenant. | |
(b) Attornment. Tenant shall attorn to any party succeeding to Landlord's interest in the Premises, whether by purchase, foreclosure, deed in lieu of foreclosure, power of sale, termination of lease, or otherwise, upon such party's request, and shall execute such agreements confirming such attornment as such party may reasonably request. |
(c) Notice to Landlord's Mortgagee. Tenant shall not seek to enforce any remedy it may have for any default on the part of the Landlord without first giving written notice by certified mail, return receipt requested, specifying the default in reasonable detail, to any Landlord's Mortgagee whose address has been given to Tenant, and affording such Landlord's Mortgagee a period to perform Landlord's obligations hereunder, which period shall equal the cure period applicable to Landlord hereunder. | ||
RULES AND
REGULATIONS
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12. Tenant shall comply with the rules and regulations of the Building which are attached hereto as Exhibit B. Landlord may, from time to time, change such rules and regulations for the safety, care, or cleanliness of the Building and related facilities, provided that such changes are applicable to all tenants of the Building and will not unreasonably interfere with Tenant's use of the Premises; Landlord will provide Tenant written notice of such changes. Tenant shall be responsible for the compliance with such rules and regulations by its employees, agents, and invitees. | |
CONDEMNATION | 13. (a) Taking - Landlord's and Tenant's Rights. If any part of the Project (including parking) is taken by right of eminent domain for a period exceeding ninety (90) days or conveyed in lieu thereof (a "Taking"), and such Taking prevents Tenant from conducting its business from the Premises in a manner reasonably comparable to that conducted immediately before such Taking, then Landlord may, at its sole expense, relocate Tenant to similar office space within any Comparable Building owned or under the control of Landlord. Landlord shall notify Tenant of its intention to do so within thirty (30) days after the Taking. Rent shall be abated on a reasonable basis as to that portion of the Premises rendered untenantable by the Taking until relocation. Such relocation may be for a portion of the remaining Term or the entire Term. Landlord shall complete any such relocation within 180 days after Landlord has notified Tenant of its intention to relocate Tenant. If Landlord does not elect to relocate Tenant following such Taking, then Tenant may terminate this Lease as of the date of such Taking by giving written notice to Landlord within sixty (60) days after the Taking, and Rent shall be apportioned as of the date of such Taking. If Landlord does not relocate Tenant and Tenant does not terminate this Lease, then Rent shall be abated on a reasonable basis as to that portion of the Premises rendered untenantable by the Taking. Upon the occurrence of a Taking, Rent shall be adjusted on a reasonable basis from the first day of the Taking until such termination. | |
(b) Taking - Landlord's Rights. If any material portion, but less than all, of the Project or related parking becomes subject to a Taking, or if Landlord is required to pay any of the proceeds received for a Taking to Landlord's Mortgagee, then this Lease, at the option of Landlord, exercised by written notice to Tenant within thirty (30) days after such Taking, shall terminate and Rent shall be apportioned as of the date of such Taking. Upon the occurrence of a Taking, Rent shall be adjusted on a reasonable basis from the first day of the Taking until such termination. |
(c) Award. If any Taking occurs, all proceeds shall belong to and be paid to Landlord, and Tenant shall not be entitled to any portion thereof except that Tenant shall have all rights permitted under the laws of the State of Texas to appear, claim and prove in proceedings relative to such taking (i) the value of any fixtures, furnishings, and other personal property which are taken but which under the terms of this Lease Tenant is permitted to remove at the end of the Term, (ii) the unamortized cost (such costs having been amortized on a straight-line basis over the Term excluding any renewal terms) of Tenant’s leasehold improvements which are taken that Tenant is not permitted to remove at the end of the Term and which were installed solely at Tenant’s expense (i.e., not made or paid for by Landlord from the Construction Allowance or otherwise), and (iii) relocation and moving expenses, but not the value of Tenant’s leasehold estate created by this Lease and only so long as such claims in no way diminish the award Landlord is entitled to from the condemning authority as provided hereunder. | ||
FIRE OR OTHER
CASUALTY
|
14. (a) Repair Estimate. If the Premises or the Building are damaged by fire or other casualty (a "Casualty"), Landlord shall, within sixty (60) days after such Casualty, deliver to Tenant a good faith estimate (the "Damage Notice") of the time needed to repair or replace the damage caused by such Casualty. | |
(b) Landlord's and Tenant's Rights. If a material portion of the Premises or the Building is damaged by Casualty such that Tenant is prevented from conducting its business in the Premises in a manner reasonably comparable to that conducted immediately before such Casualty and Landlord estimates that the damage caused thereby cannot be repaired within one hundred eighty (180) days after the date of casualty, then Landlord may, at its sole expense, relocate Tenant to similar office space within any Comparable Building owned or under the control of Landlord. Landlord shall notify Tenant of its intention to do so in the Damage Notice. Rent for the portion of the Premises rendered untenantable by the damage shall be abated on a reasonable basis from the date of damage until relocation. Such relocation may be for a portion of the remaining Term or the entire Term. Landlord shall complete any such relocation within one hundred eighty (180) days after Landlord has delivered the Damage Notice to Tenant. If Landlord does not elect to relocate Tenant following such Casualty, then Tenant may terminate this Lease by delivering written notice to Landlord of its election to terminate within thirty (30) days after the Damage Notice has been delivered to Tenant. If Landlord does not relocate Tenant and Tenant does not terminate this Lease, then (subject to Landlord's rights under Section 14.(c)) Landlord shall repair the Building or the Premises, as the case may be, as provided below. Upon the occurrence of a Casualty, Rent for the portion of the Premises rendered untenantable by the damage shall be abated on a reasonable basis from the date of damage until the completion of the repair or until such termination. |
(c) Landlord's Rights. If a Casualty damages a material portion of the Building, and Landlord makes a good faith determination that restoring the Premises would be uneconomical, or if Landlord is required to pay any insurance proceeds arising out of the Casualty to Landlord's Mortgagee, then Landlord may terminate this Lease by giving written notice of its election to terminate within thirty (30) days after the Damage Notice has been delivered to Tenant, and Rent hereunder shall be abated as of the date of the Casualty. | ||
(d) Repair Obligation. If neither party elects to terminate this Lease following a Casualty, then Landlord shall, within a reasonable time after such Casualty, commence to repair the Building and the Premises and shall proceed with reasonable diligence to restore the Building and Premises to substantially the same condition as they existed immediately before such Casualty; however, Landlord shall not be required to repair or replace any part of the furniture, equipment, fixtures, and other improvements which may have been placed by, or at the request of, Tenant or other occupants in the Building or the Premises, and Landlord's obligation to repair or restore the Building or Premises shall be limited to the extent of the insurance proceeds actually received by Landlord for the Casualty in question. | ||
EVENTS OF
DEFAULT
|
15. Events of Default. Each of the following occurrences shall constitute an “Event of Default" by Tenant: | |
(a) Tenant's failure to pay Rent, or any other sums due from Tenant to Landlord under the Lease (or any other lease executed by Tenant for space in the Building), within five (5) days after written notice of such failure; | ||
(b) Tenant's failure to perform, comply with, or observe any other agreement or obligation of Tenant under this Lease (or any other lease executed by Tenant for space in the Building) within thirty (30) days after written notice of such failure, or such longer period as may be reasonably necessary in order to cure such default (not to exceed 60 days), provided that Tenant has commenced such cure within the initial 30 day period and thereafter is diligently pursuing such cure to completion; | ||
(c) The filing of a petition by or against Tenant (the term "Tenant" shall include, for the purpose of this Section 15.(c), any guarantor of the Tenant's obligations hereunder) (i) in any bankruptcy or other insolvency proceeding; (ii) seeking any relief under any state or federal debtor relief law; (iii) for the appointment of a liquidator or receiver for all or substantially all of Tenant's property or for Tenant's interest in this Lease; or (iv) for the reorganization or modification of Tenant's capital structure; and provided that in the case of any of the foregoing which is filed against Tenant, the same is not dismissed within ninety (90) days after it is filed; | ||
(d) The admission by Tenant that it cannot meet its obligations as they become due or the making by Tenant of an assignment for the benefit of its creditors; and |
(e) Tenant vacates all or a substantial portion of the Premises or fails to continuously operate its business at the Premises for the Permitted use set forth herein for seven (7) or more days without prior notification to Landlord. | ||
REMEDIES | 16. (a) Landlord’s Remedies. Upon any Event of Default by Tenant, Landlord may, subject to any judicial process and notice to the extent required by Title 4, Chapter 24 of the Texas Property Code, as may be amended, in addition to all other rights and remedies afforded Landlord hereunder or by law or equity, take any of the following actions: | |
(i) Terminate this Lease by giving Tenant written notice thereof, in which event, Tenant shall pay to Landlord the sum of (1) all Rent accrued hereunder through the date of termination, (2) all amounts due under Section 15.(a), and (3) an amount equal to (A) the total Rent that Tenant would have been required to pay for the remainder of the Term discounted to present value at a per annum rate equal to the "Prime Rate" as published on the date this Lease is terminated by The Wall Street Journal, Southwest Edition, in its listing of "Money Rates", minus (B) the then present fair rental value of the Premises for such period, similarly discounted; or | ||
(ii) Terminate Tenant's right to possession of the Premises without terminating this Lease by giving written notice thereof to Tenant, in which event Tenant shall pay to Landlord (1) all Rent and other amounts accrued hereunder to the date of termination of possession, (2) all amounts due from time to time under Section 15.(a), and (3) all Rent and other sums required hereunder to be paid by Tenant during the remainder of the Term, diminished by any net sums thereafter received by Landlord through reletting the Premises during such period. Landlord shall use reasonable efforts to relet the Premises on such terms and conditions as Landlord in its sole discretion may determine (including a term different from the Term, rental concessions, and alterations to, and improvement of , the Premises); however, Landlord shall not be obligated to relet the Premises before leasing other portions of the Building. Landlord shall not be liable for, nor shall Tenant's obligations hereunder be diminished because of, Landlord's failure to relet the Premises or to collect rent due for such reletting. Tenant shall not be entitled to the excess of any consideration obtained by reletting over the Rent due hereunder. Re-entry by Landlord in the Premises shall not affect Tenant's obligations hereunder for the unexpired Term; rather, Landlord may, from time to time, bring action against Tenant to collect amounts due by Tenant, without the necessity of Landlord's waiting until the expiration of the Term. Unless Landlord delivers written notice to Tenant expressly stating that it has elected to terminate this Lease, all actions taken by Landlord to exclude or dispossess Tenant of the Premises shall be deemed to be taken under this Section 16.(a)(ii). If Landlord elects to proceed under this Section 16.(a)(ii), it may at any time elect to terminate this Lease under Section 16.(a)(i). |
(iii) Notwithstanding anything to the contrary herein, Tenant shall not be deemed to have waived any requirements of Landlord to mitigate damages upon an Event of Default as required by law. | ||
(b) Tenant’s Remedies. | ||
(i) Notice and Cure. If Landlord should fail to perform or observe any covenant, term, provision or condition of this Lease and such default should continue beyond a period of ten (10) days as to a monetary default or thirty (30) days (or such longer period as is reasonably necessary to remedy such default, provided Landlord shall diligently pursue such remedy until such default is cured) as to a non-monetary default, after in each instance written notice thereof is given by Tenant to Landlord and Landlord’s Mortgagee, then, in any such event Tenant shall have the right (but no obligation) to cure the default, and Landlord shall reimburse Tenant for all reasonable sums expended in so curing said default. Tenant specifically agrees that Landlord’s Mortgagee may enter the Premises upon reasonable notice to Tenant to cure any such default and that the cure of any default by Landlord’s Mortgagee shall be deemed a cure by Landlord under this Lease. | ||
(ii) Set-off. If Tenant obtains a judgment against Landlord or any assignee for any default by Landlord under this Lease and (i) Tenant provided Landlord’s Mortgagee notice and opportunity to cure as described in Section 16(b)(i) above, (ii) said judgment is final and all rights of appeal have been exercised or have expired, and (iii) such judgment remains unsatisfied upon thirty (30) days written notice thereof to Landlord’s Mortgagee, Tenant may set off such judgment against Rent. | ||
PAYMENT;
NON-WAIVER
|
17. (a) Payment. Upon any Event of Default by Tenant, Tenant shall pay to Landlord all costs incurred by Landlord (including court costs and reasonable attorney's fees and expenses) in (1) obtaining possession of the Premises, (2) removing and storing Tenant's or any other occupant's property, (3) repairing, restoring, altering, remodeling, or otherwise putting the Premises into condition acceptable to a new tenant, (4) if Tenant is dispossessed of the Premises and this Lease is not terminated, reletting all or any part of the Premises (including brokerage commissions, cost of tenant finish work, and other costs incidental to such reletting), (5) performing Tenant's obligations which Tenant failed to perform, and (6) enforcing, or advising Landlord of, its rights, remedies, and recourses arising out of the Event of Default. | |
(b) No Waiver. Acceptance or payment of Rent following any Event of Default shall not waive any rights regarding such Event of Default. No waiver by any party of any violation or breach of any of the terms contained herein shall waive any rights regarding any future violation of such term or violation of any other term. |
LANDLORD'S
LIEN
|
18. In addition to the statutory landlord's lien, Tenant grants to Landlord, to secure performance of Tenant's obligations hereunder, a security interest in all equipment fixtures, furniture, improvements, and other personal property of Tenant now or hereafter situated on the Premises, and all proceeds therefrom (the "Collateral"), and the Collateral shall not be removed from the Premises without the consent of Landlord until all obligations of Tenant have been fully performed. Upon the occurrence of an Event of Default, Landlord may, in addition to all other remedies, without notice or demand except as provided below, exercise the rights afforded a secured party under the Uniform Commercial Code of the State in which the Building is located (the "UCC"). In connection with any public or private sale under the UCC, Landlord shall give Tenant five (5)days' prior written notice of the time and place of any public sale of the Collateral or of the time after which any private sale or other intended disposition thereof is to be made, which is agreed to be a reasonable notice of such sale or other disposition. Tenant grants to Landlord a power of attorney to execute and file any financing statement or other instrument necessary to perfect Landlord's security interest under this Section 18, which power is coupled with an interest and shall be irrevocable during the Term. Landlord may also file a copy of this Lease as a financing statement to perfect its security interest in the Collateral. Notwithstanding the foregoing, Landlord shall subordinate its landlord’s lien, upon such terms as are reasonably acceptable to Landlord, to any bona fide third party financing obtained by Tenant. | |
SURRENDER OF
PREMISES
|
19. No act by Landlord shall be deemed an acceptance of a surrender of the Premises, and no agreement to accept a surrender of the Premises shall be valid unless the same is made in writing and signed by Landlord. At the expiration or termination of this Lease, subject to Landlord’s obligation to maintain the Building, Tenant shall deliver to Landlord the Premises with all improvements located thereon in good repair and condition, reasonable wear and tear (and condemnation and fire or other casualty damage not caused by Tenant, as to which Sections 13 and 14 shall control) excepted, and shall deliver to Landlord all keys and/or access cards to the Premises. Provided that Tenant has performed all of its obligations hereunder, Tenant may remove all unattached trade fixtures, furniture, and personal property placed in the Premises by Tenant (but Tenant shall not remove any such item which was paid for, in whole or in part, by Landlord). Additionally, Tenant may remove such additional items as Landlord may have agreed. Tenant shall repair all damage caused by removal of any items. All items not so removed shall be deemed to have been abandoned by Tenant and may be appropriated, sold, stored, destroyed, or otherwise disposed of by Landlord without notice to Tenant and without any obligation to account for such items. Tenant upon surrender of the Premises shall be required to remove any above-ceiling telecommunication wiring installed for Tenant’s use in the Premises at Tenant’s expense. The provisions of this Section 19 shall survive the end of the Term. | |
HOLDING OVER | 20. If Tenant fails to vacate the Premises at the end of the Term, then Tenant shall be a tenant at will and, in addition to all other damages and remedies to which Landlord may be entitled for such holding over, Tenant shall pay, in addition to the other Rent, a daily Basic Rental equal to the greater of (a) 150% of the daily Basic Rental payable during the last month of the Term, or (b) the then prevailing market rental rate for leases then being entered into for similar space in Comparable Buildings. |
CERTAIN RIGHTS
RESERVED BY
LANDLORD
|
21. Provided that the exercise of such rights does not unreasonably interfere with Tenant's occupancy of the Premises, and upon reasonable advance notice provided by Landlord to Tenant (except in case of emergency), Landlord shall have the following rights: | |
(a) to decorate and to make inspections, repairs, alterations, additions, changes, or improvements, whether structural or otherwise, in and about the Building, or any part thereof; for such purposes, to enter upon the Premises and, during the continuance of any such work, to temporarily close doors, entryways, public space, and corridors in the Building; to interrupt or temporarily suspend Building services and facilities (Landlord shall use reasonable efforts to complete any work requiring the suspension of Building services and facilities during off-business hours when reasonably and commercially practicable to do so); and to change the arrangement and location of entrances or passageways, doors, and doorways, corridors, elevators, stairs, restrooms, or other public parts of the Building; | ||
(b) to take such reasonable measures as Landlord deems advisable for the security of the Building and its occupants, including without limitation searching all items entering or leaving the Building; evacuating the Building for cause, suspected cause, or for drill purposes; temporarily denying access to the Building; and closing the Building after normal business hours and on Saturdays, Sundays, and holidays, subject, however, to Tenant's right to enter when the Building is closed after normal business hours under such reasonable regulations as Landlord may prescribe from time to time which may include by way of example, but not of limitation, that persons entering or leaving the Building, whether or not during normal business hours, identify themselves to a security officer by registration or otherwise and that such persons establish their right to enter or leave the Building; | ||
(c) to change the name by which the Building is designated; and | ||
(d) upon reasonable advance notice, to enter the Premises during Tenant’s regular business hours (or at any time when accompanied by a representative of Tenant) to show the Premises to prospective purchasers, lenders, or prospective tenants. | ||
SUBSTITUTION
SPACE
|
22. (a) From time to time during the Term, Landlord may substitute for the Premises other comparable space that has an area at least equal but not greater than 105% of that of the Premises and is located in the Building or in any Comparable Buildings owned or managed by Landlord or an affiliate of Landlord (the "Substitution Space"); |
(b) If Landlord exercises such right by giving Tenant notice thereof ("Substitution Notice") at least 60 days before the effective date of such substitution, then (1) the description of the Premises shall be replaced by the description of the Substitution Space; and (2) all of the terms and conditions of this Lease shall apply to the Substitution Space. The effective date of such substitution (the "Substitution Effective Date") shall be the date specified in the Substitution Notice or, if Landlord is required to perform tenant finish work to the Substitution Space under Section 22.(c), then the date on which Landlord substantially completes such tenant finish work. If Landlord is delayed in performing the tenant finish work by Tenant's actions (either by Tenant's change in plans and specifications for such work or otherwise), then the Substitution Effective Date shall not be extended and Tenant shall pay Rent for the Substitution Space beginning on the date specified in the Substitution Notice; | ||
(c) Tenant may either (i) accept possession of the Substitution Space in its "as is" condition as of the Substitution Effective Date or (ii) require Landlord to alter the Substitution Space in the same manner as the Premises were altered or were to be altered or (iii) Tenant may deliver written notice to Landlord of Tenant's election to terminate this Lease (“Tenant’s Termination Notice”) within ten (10) days after Landlord delivers notice to Tenant of the exercise of Landlord’s relocation right, in which case this Lease shall terminate on the fortieth (40th) day (the “Accelerated Termination Date”) after the date Tenant’s Termination Notice is delivered to Landlord. Time is of the essence with respect to Landlord’s and Tenant’s obligations under this Section. After the Accelerated Termination Date, Tenant shall no longer have any rights (including the right of possession) in the Premises, and Landlord and Tenant shall be released of all further obligations, covenants and agreements accruing under the Lease with respect to the Premises after the Accelerated Termination Date. Notwithstanding the foregoing, in no event shall Landlord or Tenant be released from any of its obligations, covenants and agreements relating to the Premises which accrue under the Lease prior to the Accelerated Termination Date including, without limitation, Tenant’s obligation to pay Rent with respect to the Premises for the period prior to the Accelerated Termination Date in accordance with the provisions of this Lease (including, without limitation, the obligation to pay Basic Rental, Excess, Tenant’s Proportionate Share of Electrical Costs and all additional rental due under the Lease with respect to such period), and Landlord’s obligation to refund to Tenant any overpayment of Rent (including Basic Rental, Excess, Tenant’s Proportionate Share of Electrical Costs and all additional rental due under the Lease) with respect to the Premises. | ||
Tenant shall deliver to Landlord written notice of its election within ten (10) days after the Substitution Notice has been delivered to Tenant. If Tenant fails to timely deliver notice of its election or if an Event of Default then exists, then Tenant shall be deemed to have elected to accept possession of the Substitution Space in its "as is" condition. If Tenant timely elects to require Landlord to alter the Substitution Space, then (1) notwithstanding Section 22.(b), if the then unexpired balance of the Term is less than three years, then the Term shall be extended so that it continues for three years from the Substitution Effective Date, and (2) Tenant shall continue to occupy the Premises (upon all of the terms of this Lease) until the Substitution Effective Date; |
(d) Tenant shall move from the Premises into the Substitution Space and shall surrender possession of the Premises as provided in Section 19 by the Substitution Effective Date. If Tenant occupies the Premises after the Substitution Effective Date, then Tenant's occupancy of the Premises shall be a tenancy at will (and, without limiting all other rights and remedies available to Landlord, including instituting a forcible detainer suit), Tenant shall pay Basic Rental for the Premises as provided in Section 20 and all other Rent due therefor until such occupancy ends; such amounts shall be in addition to the Rent due for the Substitution Space; and | ||
(e) If Landlord exercises its substitution right, then Landlord shall reimburse Tenant for Tenant's reasonable out-of-pocket expenses for moving Tenant's furniture, equipment, supplies and telephone equipment from the Premises to the Substitution Space and for reprinting Tenant's stationery of the same quality and quantity of Tenant's stationery supply on hand immediately prior to Landlord's notice to Tenant of the exercise of this relocation right. If the Substitution Space contains more square footage than the Premises, and if the Premises were carpeted, Landlord shall supply and install an equal amount of carpeting of the same or equivalent quality and color. | ||
MISCELLANEOUS | 23. (a) Landlord Transfer. Landlord may transfer, in whole or in part, the Project and any of its rights under this Lease. If Landlord assigns its rights under this Lease and such assignee assumes Landlord’s obligations hereunder, then Landlord shall thereby be released from any further obligations hereunder. | |
(b) Landlord's Liability. The liability of Landlord to Tenant for any default by Landlord under the terms of this Lease shall be limited to Tenant's actual direct, but not consequential, damages therefor and shall be recoverable from the interest of Landlord in the Project (including any rents, profits, or other proceeds therefrom), and Landlord shall not be personally liable for any deficiency. This section shall not be deemed to limit or deny any remedies which Tenant may have in the event of default by Landlord hereunder which do not involve the personal liability of Landlord. | ||
(c) Force Majeure. Other than for Tenant's monetary obligations under this Lease and obligations which can be cured by the payment of money (e.g., maintaining insurance), whenever a period of time is herein prescribed for action to be taken by either party hereto, such party shall not be liable or responsible for, and there shall be excluded from the computation for any such period of time, any delays due to strikes, riots, acts of God, shortages of labor or materials, war, governmental laws, regulations, or restrictions, or any other causes of any kind whatsoever which are beyond the control of such party. |
(d) Brokerage. Landlord and Tenant each warrant to the other that it has not dealt with any broker or agent in connection with the negotiation or execution of this Lease, other than Billingsley Property Services, Inc. and Studley, Inc. whose commissions shall be paid by Landlord. Tenant and Landlord shall each indemnify the other against all costs, expenses, attorneys' fees, and other liability for commissions or other compensation claimed by any broker or agent claiming the same by, through, or under the indemnifying party. | ||
(e) Estoppel Certificates. From time to time, either Landlord or Tenant shall furnish, within ten (10) business days after request therefor, a signed certificate confirming and containing such factual certifications and representations as to this Lease as the requesting party may reasonably request. | ||
(f) Notices. All notices and other communications given pursuant to this Lease shall be in writing and shall be (1) mailed by first class, United States Mail, postage prepaid, certified, with return receipt requested, and addressed to the parties hereto at the address specified in the Basic Lease Information, (2) hand delivered to the intended address, or (3) sent by prepaid telegram, cable, facsimile transmission, or telex followed by a confirmatory letter. Notice sent by certified mail, postage prepaid, shall be effective three business days after being deposited in the United States Mail; all other notices shall be effective upon delivery to the address of the addressee. The parties hereto may change their addresses by giving notice thereof to the other in conformity with this provision. | ||
(g) Separability. If any clause or provision of this Lease is illegal, invalid, or unenforceable under present or future laws, then the remainder of this Lease shall not be affected thereby and in lieu of such clause or provision, there shall be added as a part of this Lease a clause or provision as similar in terms to such illegal, invalid, or unenforceable clause or provision as may be possible and be legal, valid, and enforceable. | ||
(h) Amendments; and Binding Effect. This Lease may not be amended except by instrument in writing signed by Landlord and Tenant. No provision of this Lease shall be deemed to have been waived by Landlord or Tenant unless such waiver is in writing signed by Landlord or Tenant, and no custom or practice which may evolve between the parties in the administration of the terms hereof shall waive or diminish the right of Landlord or Tenant to insist upon the performance by Landlord or Tenant in strict accordance with the terms hereof. The terms and conditions contained in this Lease shall inure to the benefit of and be binding upon the parties hereto, and upon their respective successors in interest and legal representatives, except as otherwise herein expressly provided. This Lease is for the sole benefit of Landlord and Tenant, and, other than Landlord's Mortgagee, no third party shall be deemed a third party beneficiary hereof. |
(i) Quiet Enjoyment. Provided Tenant has performed all of the terms and conditions of this Lease to be performed by Tenant, Tenant shall peaceably and quietly hold and enjoy the Premises for the Term, without hindrance from Landlord or any party claiming by, through, or under Landlord, subject to the terms and conditions of this Lease. | ||
(j) Joint and Several Liability. If there is more than one Tenant, then the obligations hereunder imposed upon Tenant shall be joint and several. If there is a guarantor of Tenant's obligations hereunder, then the obligations hereunder imposed upon Tenant shall be the joint and several obligations of Tenant and such guarantor, and Landlord need not first proceed against Tenant before proceeding against such guarantor nor shall any such guarantor be released from its guaranty for any reason whatsoever. | ||
(k) Captions. The captions contained in this Lease are for convenience of reference only, and do not limit or enlarge the terms and conditions of this Lease. | ||
(l) No Merger. There shall be no merger of the leasehold estate hereby created with the fee estate in the Premises or any part thereof if the same person acquires or holds, directly or indirectly, this Lease or any interest in this Lease and the fee estate in the leasehold Premises or any interest in such fee estate. | ||
(m) No Offer. The submission of this Lease to Tenant shall not be construed as an offer, nor shall Tenant have any rights under this Lease unless Landlord executes a copy of this Lease and delivers it to Tenant. | ||
(n) Exhibits. The following exhibits hereto are incorporated herein by this reference: | ||
Exhibit A - Outline of Premises
Exhibit A-1 - Legal Description of the Land
Exhibit B - Building Rules and Regulations
Exhibit C - Operating Expenses
Exhibit D - Tenant Finish Work: Allowance
Exhibit D-1 - Shell Construction
Exhibit E - Renewal Option
Exhibit F - Parking
Exhibit G - Janitorial Specifications
Exhibit H - Signage Criteria
|
||
(o) Entire Agreement. This Lease constitutes the entire agreement between Landlord and Tenant regarding the subject matter hereof and supersedes all oral statements and prior writings relating thereto. Except for those set forth in this Lease, no representations, warranties, or agreements have been made by Landlord or Tenant to the other with respect to this Lease or the obligations of Landlord or Tenant in connection therewith. |
(p) Past Due Rent. Tenant shall pay interest on all past-due rent from the date due until paid at the maximum lawful rate. In no event, however, shall the charges permitted under this Section 23.(p) or elsewhere in this Lease, to the extent they are considered to be interest under applicable Law, exceed the maximum lawful rate of interest. | ||
(q) Representations and Warranties. Landlord and Tenant each represent and warrant that the person executing this Lease on its behalf is acting in his or her capacity as an officer or partner, as applicable, with due authorization and authority to bind Landlord or Tenant, as applicable, to this Lease. Landlord represents and warrants that it has good title to the Project so to fully and properly lease the Premises to Tenant as provided herein. Landlord represents and warrants that the Project conforms in all material respects to all applicable laws, ordinances, rules and regulations generally applicable to commercial office buildings in Plano, Texas, as of the date hereof. Further, Landlord represents and warrants that, to Landlord’s knowledge, the Project contains no hazardous substances as currently defined under applicable law, except those used in the operation of the Building and which are being used in compliance with applicable law. Other than any express warranties contained herein, neither Landlord nor Tenant make any implied warranties of any kind or nature, and the parties hereby waive any claims upon any such implied warranties. |
LANDLORD:
|
|||
ARI – INTERNATIONAL BUSINESS PARK, LLC, ARI- IBP 1, LLC, ARI - IBP 2, LLC, ARI - IBP 3, LLC, ARI - IBP 4, LLC, ARI - IBP 5, LLC, ARI - IBP 6, LLC, ARI - IBP 7, LLC, ARI - IBP 8, LLC, ARI - IBP 9, LLC,ARI - IBP 11, LLC, ARI - IBP 12, LLC, each a Delaware limited liability company
|
|||
By:
|
Billingsley Property Services, Inc.,
a Texas corporation
as Agent
|
By: | /s/ Joel M. Overton, Jr. | |||
Name: Joel M. Overton, Jr. | ||||
Title: Senior Vice President |
TENANT: | |||
REACHLOCAL, INCORPORATED,
a Texas corporation
|
|||
By: | /s/ Ross G. Landsbaum | ||
Name: Ross G. Landsbaum | |||
Title: CFO |
|
4.
|
With respect to any calendar year or partial calendar year in which the Building is not occupied to the extent of 95% of the rentable area thereof, the Variable Basic Costs (defined below) for such period shall, for the purposes hereof, be increased to the amount which would have been incurred had the Building been occupied to the extent of 95% of the rentable area thereof. As used herein, “Variable Basic Costs” means any Basic Cost that is variable in correlation with the level of occupancy of the Building.
|
Structural System
|
Steel columns, beams & joists
|
First Floor Construction
|
4" slab on grade over 2' select fill; 3,000 psi
|
Second Floor Construction
|
3" concrete on metal deck over bar joists
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Roof Construction
|
3-ply built up asphalt, over R-19 insulation on metal deck over bar joists
|
Design Loads (Corridors)
|
100 lb/sf live load
|
Design Loads (Office Areas and Mezzanine)
|
50 lb/sf live load + 20 lb/sf partitions
|
Typical Structural Bay
|
30'x30'
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Building Exterior
|
8" thick concrete tilt-wall panels; 5/8" drywall taped;
|
3-5/8" studs & R-13 batt insulation | |
Windows
|
10'x10' typical openings, vision glass from 30" AFF to 10' AFF/spandrel above
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Window Frames
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4-1/2" deep frames, flush front glazed, Kynar finished
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Window Coverings
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1" Horizontal Blinds
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Curtain Wall
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8" deep frames, front glazed, Kynar finished
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Glass
|
1" insulating glass, evergreen, w/16% reflective stainless steel coating
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Floor-to-Floor Height
|
15'
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Ceiling Height
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10'
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Elevator Size & Capacity
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Hydraulic, 5'8"x 8'5", 5,000 lb. capacity
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Exit Stair Floors
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Carpet
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Exit Stair Walls & Ceilings
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Painted Drywall
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Ceiling System
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Beveled tegular edge grid stacked on floor, USG Eclipse tile, white, stacked
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Lobby Floor
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Stone Tile
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Lobby Walls & Ceiling
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Painted Drywall, panelized with reveals
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Lobby Stair
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Painted Steel, with maple and cherry veneer screen panels
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Lobby Stair Carpet
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Carpet Runner
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Corridor
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Floor Carpet
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Corridor Walls
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Vinyl Wall Covering & Cove Base @ corridor side only
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Corridor Ceiling
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2x4 Lay-in, including light fixtures, HVAC & life safety devices
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Toilet Rooms/Fixtures (Mens-North)
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2; each with 2 toilets (1 HC), 2 urinals, 2 lavatories
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Toilet Rooms/Fixtures (Mens-South)
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2; each with 2 toilets (1 HC), 2 urinals, 2 lavatories
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Toilet Rooms/Fixtures (Womens-North)
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2; each with 4 toilets (1 HC), 3 lavatories
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Toilet Rooms/Fixtures (Womens-South)
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2; each with 5 toilets (1 HC), 3 lavatories
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Toilet Room Floors
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Stone Tile
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Toilet Room Walls
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Ceramic Tile on wet walls; Vinyl Wall Covering elsewhere
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Toilet Room Countertops
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Granite at lavatories, Plastic Laminate elsewhere
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Toilet Partitions
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Plastic Laminate
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Janitor’s Closets
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4
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Drinking Fountains
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8 (4 HC)
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HVAC
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3; 130 ton Packaged Rooftop Units supplying Variable Air Volume |
Distribution
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Medium pressure ductwork in place
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Terminal Units
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Provided at common areas only
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Control System
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Stand-Alone Electrical
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Diffusers
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Provided at common areas only
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Sprinklers
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Fully Sprinklered Throughout, w/heads turned up
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Head Spacing
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Complies with NFPA 13
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Fire Alarm System
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Intelligent Addressable w/capacity for tenant connections at each floor
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Alarm Devices
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Visual/Audible Strobes in all common areas
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Electrical Service
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TU Pad Mount transformer, 277/480 Volt 3-phase, 2000A
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Electrical Design (Total)
|
14 Watts/sf
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Electrical Design (Lighting & Power)
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8 Watts/sf
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Panels Provided (High Voltage)
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1 @ 277/480 Volt energized panel for each building quadrant
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Panels Provided (Low Voltage)
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1 @ 120 Volt energized panel for each building quadrant
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Panel Sizes Provided
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High Voltage 400A, Low Voltage 225 A fed by a 45KVA transformer (each panel)
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Building Standard Lighting
|
3-Lamp 18-Cell Parabolic Fluorescent, stacked on floor for lay-in ceiling
|
(initial lamps included) | |
Fixture Ratio
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1 Fixture / 100 rsf
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Accent Lighting at Lobby
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Compact Fluorescent Downlights
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Parking Area Lighting
|
Metal Halide pole-mount, with Architectural enclosures
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Entry Plaza Lighting
|
Metal Halide Bollards, at both main entrances
|
|
A.
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Nightly Services
|
|
i.
|
All surface areas, desks, file cabinets, counter tops, book shelves, credenzas, computer screens and other equipment will be dusted. Desk tops will be wiped down but no papers will be moved.
|
|
ii.
|
All glass top desks, glass doors, partitions, light switches and walls will be spot cleaned to remove smudges and fingerprints.
|
|
iii.
|
All carpeted areas will be vacuumed. All hard surface floors will be swept with a dust mop then damp mopped.
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iv.
|
All trash receptacles and ash urns (exterior) will be emptied and cleaned. Liners will be changed whenever necessary. Trash/recycle will be taken to the designated areas for trash removal.
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v.
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All stairwells will be vacuumed and swept as well as dusted.
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vi.
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The elevator will be vacuumed and fingerprints removed from wall surfaces.
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vii.
|
All kitchen countertops, tables and cupboard doors in break rooms will be cleaned and disinfected. Hand prints and smudges will be removed from the exterior of the refrigerator as well as any other appliances. Sinks and other chrome areas will be cleaned and polished.
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viii.
|
All fixtures and appliances in the restrooms will be cleaned and sanitized. All chrome and mirrors will be cleaned and polished.
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ix.
|
All commodes and urinals will be cleaned with a germicidal disinfectant. The use of an emulsion bowl cleaner will be used whenever necessary.
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|
x.
|
Restroom floors will be cleaned using a germicidal disinfectant.
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B.
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Weekly Services
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|
i.
|
All pictures and door frames will be dusted.
|
|
ii.
|
Partitions and walls in the restrooms will be completely wiped down with a germicidal disinfectant, unless needed more frequently (in which event, any costs associated with such additional service shall be at Tenant's sole cost and expense).
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iii.
|
All VCT floors will be buffed and carpets will be spot cleaned where needed.
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C.
|
Monthly Services |
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i.
|
All mini-blinds and A/C vents will be dusted. |
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ii.
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Sanitize all telephones. |
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iii.
|
Clean entire interior glass partitions and doors. |
|
iv.
|
All VCT floors will be waxed (more often as necessary) and baseboards polished.
|
|
D.
|
Annual/Biannual Services |
|
i.
|
The interior of all exterior windows will be cleaned at least once per year, and the exterior of all exterior windows will be cleaned at least twice per year.
|
|
Billingsley Development Corporation
|
|
4100 International Parkway
|
|
Suite 1100
|
|
Carrollton, Texas 75007
|
|
Submittal to Landlord: Tenant submittals shall include an elevation of the monument sign, drawn to a minimum scale of 1/4" = 1'-0". Drawing shall indicate the type, color and thickness of materials, finish and mounting. Tenant’s sign contractor shall first visit the site to verify existing conditions prior to preparation of submittal.
|
|
Signage Design: At single-tenant buildings, signs shall be ten inch (10") high metal letters with black baked-on gloss finish, in Universe 67 font. At multi-tenant buildings, signs shall be 6" high metal letters with black baked-on gloss finish, in Universe 67 font. All letters shall be upper case. Logos in addition to signage must be approved in advance by the Landlord.
|
|
Submittal to Landlord: Tenant submittals shall include an elevation of the affected building facade and proposed sign, drawn to a minimum scale of 1/4" = 1'-0". Drawings must include a cross-section showing electrical connections and proposed methods of attachment to building. Drawing shall indicate the type, color, thickness and type of materials, finish used on return and type of illumination. Tenant’s sign contractor shall visit the site to verify existing conditions prior to preparation of shop drawings and to obtain information needed to prepare these submittals.
|
|
Signage Design: Any letter style (block or script) may be used, subject to approval of the Landlord. Upper and lower case letters are permitted. Landlord will have final review over height increases for script letters. Proposed logos in addition to signage must be approved by the Landlord. Logos must be in proportion to the height of parapet and lettering and in same color as signage. Box type signs are not permitted.
|
|
1
|
Building directory (lobby)
|
2
|
Tenant suite number identification
|
3
|
Stair identification
|
4
|
Restroom identification
|
5
|
Mechanical spaces
|
6
|
Emergency egress directions
|
|
Interior Signage Design and Construction:
|
|
Tenant Identification Signage: Tenant Identification signs may be of any letter style or design, provided they are sized and located according to the following requirements.
|
|
Submittal to Landlord: Submittals for Tenant Identification shall include a dimensioned elevation of the sign and the affected surrounding architectural elements (doors, glass etc.) drawn to a minimum 1/4" = 1'-0" scale. Drawing shall indicate the type, color and thickness of sign materials and the proposed mounting method. Tenant shall submit a sample of all sign materials in the finishes and colors specified on the drawings. All such signs shall be mounted on glass doors or glass sidelights. Sign submittals shall include samples of the glass if other than clear glass. Tenant’s sign contractor shall visit the site to verify existing conditions prior to preparation of shop drawings.
|
|
Signage Size: No Tenant Identification sign may exceed twenty-four inches (24”) high maximum, forty-eight inches (48”) wide maximum and four (4) square feet in area, as defined by a rectangle surrounding a regularly shaped sign, or as defined in the case of an irregularly shaped sign by a rectilinear perimeter of not more than eight (8) straight lines enclosing the extreme limits of any figure or character.
|
|
|
Signage Placement: Tenant Identification signage is restricted to the following two locations:
|
1
|
Glass on tenant door (all tenant doors are to be glass)
|
2
|
Glass on tenant entry sidelight (all tenant entries are to include glass sidelight – space permitting.
|
|
1.
|
Defined Terms. The capitalized terms used herein and not otherwise defined herein shall have the same meaning as ascribed thereto in the Lease.
|
|
2.
|
Expansion Premises. Commencing on September 1, 2010 (the “Expansion Date”), the Premises shall be automatically expanded to include approximately ten thousand eight hundred twenty (10,820) square feet of rentable area known as Suite 1000 of the Building, as shown on Exhibit A attached hereto and made a part hereof (the “Expansion Premises”). As of the Expansion Date, the total square feet of rentable area in the Premises shall be approximately eighteen thousand one hundred fourteen (18,114) square feet.
|
FIRST AMENDMENT TO LEASE AGREEMENT | Page 1 |
|
3.
|
Lease Term for the Expansion Premises. The lease term for the Expansion Premises shall commence upon the Expansion Date and shall expire as to the Expansion Premises on the date upon which the Lease expires as to the Original Premises (January 31, 2014).
|
|
4.
|
Condition of the Expansion Premises. Tenant has made a complete examination and inspection of the Expansion Premises and accepts the same in its current condition, as-is, without recourse to Landlord, and Landlord shall have no obligation to complete any improvements to the Expansion Premises, or pay any allowances or costs applicable thereto, except for those items specifically listed on Exhibit B attached hereto and made a part hereof. ADDITIONALLY, LANDLORD MAKES NO WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE LEASEHOLD IMPROVEMENTS IN THE EXPANSION PREMISES. ALL IMPLIED WARRANTIES WITH RESPECT THERETO, INCLUDING BUT NOT LIMITED TO THOSE OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ARE EXPRESSLY NEGATED AND WAIVED.
|
|
5.
|
Basic Rent. Commencing on the Expansion Date, the Basic Rental for the entire Premises shall be the following amounts for the following periods of time:
|
Dates
|
Annual Rate per Rentable Square Feet
|
Basic Monthly Rental
|
Commencement Date - 12/31/11
|
$17.50
|
$26,416.25
|
1/1/12 - 12/31/12
|
$18.00
|
$27,171.00
|
1/1/13 - 12/31/13
|
$18.50
|
$27,925.75
|
1/1/14 - 1/31/14
|
$19.00
|
$28,680.50
|
|
6.
|
Tenant’s Proportionate Share. As of the Expansion Date, the definition of “Tenant’s Proportionate Share” in the Basic Lease Information of the Lease shall be amended to replace the reference to “6.8595%” with “17.0350%”.
|
FIRST AMENDMENT TO LEASE AGREEMENT | Page 2 |
|
7.
|
Furniture. Landlord hereby conveys to Tenant, and Tenant hereby accepts from Landlord, the furniture in the Premises belonging to Landlord and more particularly described on Exhibit C attached hereto and made a part hereof (the "Furniture") for a purchase price of One and No/100 Dollar ($1.00).
|
|
8.
|
Brokerage Commissions. Except for the commission payable to Peloton Real Estate Partners and Studley, Inc. (collectively, the "Brokers"), which commission is governed by separate agreement by and between Landlord and each Broker, Tenant hereby warrants and represents that it has not dealt with any other brokers or intermediaries entitled to any compensation in connection with this First Amendment. Except for Brokers, Landlord hereby warrants and represents to Tenant that it has not dealt with any brokers or intermediaries entitled to any compensation in connection with this First Amendment. Each party hereby indemnifies the other party against any and all liabilities, costs and expenses resulting from a breach by the indemnifying party of the foregoing representation. The obligations set forth in this Paragraph 8 shall survive any termination of the Lease.
|
|
9.
|
Conflict. In the event any of the terms of the Lease conflict with the terms of this First Amendment, the terms of this First Amendment shall control. Except as amended hereby, all terms and conditions of the Lease shall remain in full force and effect, and Landlord and Tenant hereby ratify and confirm the Lease as amended hereby. The Lease, as amended herein, constitutes the entire agreement between the parties hereto and no further modification of the Lease shall be binding unless evidenced by an agreement in writing signed by Landlord and Tenant.
|
|
10.
|
Counterparts. This First Amendment may be executed in any number of identical counterparts each of which shall be deemed to be an original and all, when taken together, shall constitute one and the same instrument.
|
FIRST AMENDMENT TO LEASE AGREEMENT | Page 3 |
LANDLORD:
|
|||
ARI-INTERNATIONAL BUSINESS PARK, LLC, ARI-IBP 1, LLC, ARI-IBP 2, LLC, ARI-IBP 3, LLC, ARI-IBP 4, LLC, ARI-IBP 5, LLC, ARI-IBP 6, LLC, ARI-IBP-7, LLC, ARI-IBP 8, LLC, ARI-IBP 9, LLC, ARI-IBP 11, LLC, ARI-IBP 12, LLC,
|
|||
each a Delaware limited liability company
|
|||
|
By:
|
Billingsley Property Services, Inc., | |
a Texas corporation,
|
|||
as Agent
|
|
By:
|
/s/ Joel M. Overton, Jr. | |
Name: | Joel M. Overton, Jr. | ||
Title: | Senior Vice President |
TENANT:
|
|||
REACHLOCAL, INCORPORATED,
|
|||
a Delaware corporation
|
|||
|
By:
|
/s/ Ross G. Landsbaum | |
Name: | Ross G. Landsbaum | ||
Title: | CFO |
SIGNATURE PAGE TO FIRST AMENDMENT | Page 4 |
EXHIBIT A, The Expansion Premises (Solo Page)
|
q
|
10,820 rsf of renovated office interior construction
|
q
|
Modify existing HVAC system.
|
q
|
Existing tenants in adjacent spaces (beside and below). Normal working hours 7 AM to 7 PM (M-F) except for noisy work which must be performed after hours. Overtime weekday and weekends as required to meet schedule, but are not anticipated.
|
q
|
All permits by GC
|
q
|
Asbestos survey and Energy compliance for permit by Tenant
|
q
|
Substantial completion September 1,2010.
|
q
|
Keying by A-1 Locksmiths under GC contract
|
q
|
HVAC Test and Balance and Testing under GC Contract
|
|
q
|
Demo and modify all existing interior walls and millwork and remove to accommodate new construction room F. See attached as built for demo walls.
|
|
q
|
Remove built in reception desk at room A.
|
|
q
|
Demo telephone carrels room D.
|
|
q
|
Demo 2 front conference rooms and movable panel wall room C.
|
|
q
|
Demo west wall millwork in room B
|
|
q
|
Remove 2 doors into kitchen from room E.
|
|
q
|
Demo east wall covering at window wall.
|
q
|
New Drywall Interior Partition – 10’-0” height, 2 1/2“x22 ga stl studs @ 24” o.c. w/ 5/8” gypsum board each side as shown on plan.
|
q
|
Add wall patch at existing window between room A & B.
|
q
|
Patch and Repair existing ceiling due to demolition and new construction room F and C.
|
q
|
New construction at Room F to include new IT room with 4x8 backboard.
|
EXHIBIT B, Landlord’s Work
|
Page B-1 |
q
|
New Herculite door and sidelight with Transom at front entry.
|
q
|
By Tenant.
|
q
|
All new walls are light texture and standard eggshell finish paint. Color TBD.
|
q
|
Install new carpet to match existing at affected areas. Room F to receive carpet to match existing in room C. Allowance not to exceed $20.00 sy installed. Color and style to be determined.
|
|
q
|
Relocate electric screen and switch from east wall to west wall.
|
q
|
Existing to remain, ensure doors and drawers are all operational in current condition.
|
q
|
Modify/Replace/Repair as needed due to new construction.
|
q
|
Modify and add building fire sprinkler drops to accommodate the lease plan.
|
q
|
Remove any unnecessary smoke detectors in suite
|
EXHIBIT B, Landlord’s Work
|
Page B-2 |
q
|
All Appliances by Tenant.
|
|
q
|
Modify existing HVAC system. Relocate T stats as needed due to new construction.
|
|
q
|
HVAC requirements TBD for IT room.
|
q
|
Provide and install new fluorescent light fixtures as needed due to new office construction at Room F.
|
q
|
Place all light fixture control for lights within new demised space on switches within the space.
|
q
|
New Server/Data: electrical needs TBD.
|
q
|
Approx 80 cubicle carrels, Approx 12 connections wall connections for systems furniture. Whips and cubicles provided by Tenant, connection to floor/column/wall connections and furniture by GC.
|
q
|
Approx 12 each column/wall connections for data runs to server room from systems furniture
|
q
|
Smoke detectors furnished and installed per building code requirements. Access control devices connected to building fire alarm system per building code requirements.
|
EXHIBIT B, Landlord’s Work
|
Page B-3 |
1)
|
Data and communications wiring, terminating devices, equipment, labor and installation is by others.
|
2)
|
Architectural and Engineered plans, associated plan reviews, ADA reviews, asbestos reviews are not included in this scope.
|
3)
|
Appliances in addition to Owner provided in As-is condition to be provided by Tenant.
|
4)
|
Specifications for doors and hardware:
|
EXHIBIT B, Landlord’s Work
|
Page B-4 |
EXHIBIT C, Furniture
|
Page C-1 |
SECOND AMENDMENT TO LEASE AGREEMENT
|
Page 1 |
Dates
|
Rentable Square Feet in the Premises
|
Annual Rate per Rentable Square Foot
|
Basic Monthly Rental
|
Second Expansion Date through December 31, 2011
|
34,398
|
$17.50
|
$50,163.75
|
January 1, 2012 through December 31, 2012
|
34,398
|
$18.00
|
$51,597.00
|
January 1, 2013 through December 31, 2013
|
34,398
|
$18.50
|
$53,030.25
|
January 1, 2014 through January 31, 2014
|
34,398
|
$19.00
|
$54,463.50
|
SECOND AMENDMENT TO LEASE AGREEMENT
|
Page 2 |
If the population density in the Second Expansion Premises is (each a “Density Band”):
|
then the then-applicable Annual Rate per Rentable Square Foot in the Second Expansion Premises shall be increased by:
|
which is an increase to the then-current Basic Monthly Rental due of:
|
greater than Building-Standard Density but less than five persons for each 1,000 square feet of rentable area
|
$0.30
|
$407.10
|
equal to or greater than five persons for each 1,000 square feet of rentable area, but less than six persons for each 1,000 square feet of rentable area
|
$0.60
|
$814.20
|
equal to or greater than six persons for each 1,000 square feet of rentable area, but less than or equal to seven persons for each 1,000 square feet of rentable area
|
$1.90
|
$2,578.30
|
SECOND AMENDMENT TO LEASE AGREEMENT
|
Page 3 |
SECOND AMENDMENT TO LEASE AGREEMENT
|
Page 4 |
SECOND AMENDMENT TO LEASE AGREEMENT
|
Page 5 |
LANDLORD:
ARI-INTERNATIONAL BUSINESS PARK, LLC, ARI-IBP 1, LLC, ARI-IBP 2, LLC, ARI-IBP 3, LLC, ARI-IBP 4, LLC, ARI-IBP 5, LLC, ARI-IBP 6, LLC, ARI-IBP-7, LLC, ARI-IBP 8, LLC, ARI-IBP 9, LLC, ARI-IBP 11, LLC, ARI-IBP 12, LLC,
each a Delaware limited liability company
|
||||
By:
|
Billingsley Property Services, Inc.,
a Texas corporation,
as Agent
|
|||
By: | /s/ Kenneth D. Mabry | |||
Name: | Kenneth D. Mabry | |||
Title: | Sr. Vice President |
TENANT:
REACHLOCAL, INC.,
a Delaware corporation
|
||||
By: | /s/ Ross G. Landsbaum | |||
Name: | Ross G. Landsbaum | |||
Title: | CFO |
SIGNATURE PAGE TO SECOND AMENDMENT
|
Page 6 |
EXHIBIT A, The Expansion Premises (Solo Page)
|
EXHIBIT B | Page B-1 |
EXHIBIT B | Page B-2 |
EXHIBIT B | Page B-3 |
EXHIBIT B | Page B-4 |
THIRD AMENDMENT TO LEASE AGREEMENT
|
Page 1 |
THIRD AMENDMENT TO LEASE AGREEMENT
|
Page 2 |
Dates
|
Rentable Square Feet in the Premises
|
Annual Rate per Rentable Square Foot
|
Basic Monthly Rental
|
Third Expansion Date through December 31, 2011
|
43,305
|
$18.11
|
$65,366.13
|
January 1, 2012 through December 31, 2012
|
43,305
|
$18.51
|
$66,799.38
|
January 1, 2013 through December 31, 2013
|
43,305
|
$19.01
|
$68,603.75
|
January 1, 2014 through January 31, 2014
|
43,305
|
$19.51
|
$70,408.13
|
If the population density in the Second Expansion Premises or Third Expansion Premises is (each a "Density Band"):
|
then the then-applicable Annual Rate per Rentable Square Foot shall be increased by for the:
|
which is an increase to the then-current Basic Monthly Rental due of for the:
|
||
Second Expansion Premises
|
Third Expansion Premises
|
Second Expansion Premises
|
Third Expansion Premises
|
|
greater than Building-Standard Density but less than five persons for each 1,000 square feet of rentable area
|
$0.30
|
$0.30
|
$407.10
|
$222.68
|
equal to or greater than five persons for each 1,000 square feet of rentable area, but less than six persons for each 1,000 square feet of rentable area
|
$0.60
|
$0.60
|
$814.20
|
$445.35
|
equal to or greater than six persons for each 1,000 square feet of rentable area, but less than or equal to seven persons for each 1,000 square feet of rentable area
|
$1.90
|
$1.90
|
$2,578.30
|
$1,410.28
|
THIRD AMENDMENT TO LEASE AGREEMENT
|
Page 3 |
THIRD AMENDMENT TO LEASE AGREEMENT
|
Page 4 |
THIRD AMENDMENT TO LEASE AGREEMENT
|
Page 5 |
LANDLORD:
ARI-INTERNATIONAL BUSINESS PARK, LLC, ARI-IBP 1, LLC, ARI-IBP 2, LLC, ARI-IBP 3, LLC, ARI-IBP 4, LLC, ARI-IBP 5, LLC, ARI-IBP 6, LLC, ARI-IBP-7, LLC, ARI-IBP 8, LLC, ARI-IBP 9, LLC, ARI-IBP 11, LLC, ARI-IBP 12, LLC,
each a Delaware limited liability company
|
||||
By:
|
Billingsley Property Services, Inc.,
a Texas corporation,
as Agent
|
|||
By: | /s/ Kenneth D. Mabry | |||
Name: | Kenneth D. Mabry | |||
Title: | Sr. Vice President |
TENANT:
REACHLOCAL, INC.,
a Delaware corporation
|
||||
By: | /s/ Ross G. Landsbaum | |||
Name: | Ross G. Landsbaum | |||
Title: | CFO |
SIGNATURE PAGE TO THIRD AMENDMENT
|
Page 6 |
EXHIBIT A, THE THIRD EXPANSION PREMISES | Page A-1 |
1.
|
New Program Name: “Google AdWords Premier SMB Partner”.
|
1.1.
|
Section 3 of the Addendum is hereby deleted in its entirety and replaced with the following:
|
1.2.
|
Section 6 of the Addendum is hereby deleted in its entirety and replaced with the following:
|
1.3.
|
Section 7(e) of the Addendum is hereby deleted and replaced with the following:
|
1.4.
|
Section 2 of Exhibit A of the Addendum is hereby deleted in its entirety and replaced with the following:
|
2.
|
Miscellaneous. This Amendment may be executed in multiple counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument. No agreement hereafter made shall be effected to change, modify, or discharge this Amendment, in whole or in part, unless such agreement is in writing and signed by or on behalf of the party against whom the enforcement of the change, modification, or discharge is sought. This Amendment shall be binding on the parties hereto and their respective personal and legal representatives, successors, and permitted assigns. Each person whose signature appears below represents and warrants that he or she has the authority to bind the entity on whose behalf he or she has executed this Amendment. Except as expressly modified herein, the terms of the Addendum remain in full force and effect.
|
Subsidiary
|
|
Jurisdiction
|
Bizzy, Inc.
|
|
Delaware
|
DealOn, LLC
|
|
Delaware
|
ReachLocal Australia Pty Ltd.
|
|
Australia
|
ReachLocal Canada Inc.
|
|
Delaware
|
ReachLocal DP, Inc.
|
|
Delaware
|
ReachLocal Europe B.V.
|
The Netherlands
|
|
ReachLocal GmbH
|
|
Germany
|
ReachLocal International, Inc.
|
|
Delaware
|
ReachLocal International GP LLC
|
Delaware
|
|
ReachLocal Japan K.K.
|
Japan
|
|
ReachLocal Japan Services G.K.
|
Japan
|
|
ReachLocal Netherlands B.V.
|
The Netherlands
|
|
ReachLocal Services Private Limited
|
|
India
|
ReachLocal UK, Ltd.
|
|
England
|
RL International Investment C.V.
|
The Netherlands
|
/s/ Zorik Gordon
|
|
Zorik Gordon
|
|
Chief Executive Officer
|
|
Date: March 15, 2012
|
/s/ Ross G. Landsbaum
|
|
Ross G. Landsbaum
|
|
Chief Financial Officer
|
|
Date: March 15, 2012
|
/s/ Zorik Gordon
|
|
Zorik Gordon
|
|
Chief Executive Officer
|
|
(Principal Executive Officer)
|
|
Date: March 15, 2012
|
/s/ Ross G. Landsbaum
|
|
Ross G. Landsbaum
|
|
Chief Financial Officer
|
|
(Principal Financial Officer)
|
|
Date: March 15, 2012
|
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