EXHIBIT 10.12
[Letterhead of Replay Networks, Inc.]
Mr. Layne Leslie Britton
3677 Boise Ave.
Los Angeles, CA 90066
Employment Agreement
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Dear Layne:
On behalf of the Board of Directors of Replay Networks, Inc. ("Replay"), I
am pleased to offer you the position of Executive Vice President, Replay
Networks on the terms set forth below.
1. Position. You will be employed by Replay as its Executive Vice
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President Replay Networks effective on June 1, 1999 (the "Commencement Date").
You will have sole overall responsibility for the management of all of Replay's
network service elements, including but not limited to, Replay's core service
business of media business development, editorial, programming, business
affairs, scheduling, affiliate relations and advertising sales, and you will
report directly and only to the Chief Executive Officer. During your term, you
will be present at all Board of Directors meetings. During your term, you will
be expected to devote your full working time and attention to the business of
Replay. Notwithstanding the foregoing, you may (i) serve on the board of
directors of DEN and on other boards of directors of organizations that are not
competitive with Replay, that do not materially interfere with your duties to
Replay and that are approved by Replay, (ii) serve as a consultant to UPN
through December 31, 1999, so long as such activity does not materially
interfere with your duties to Replay, or (iii) own up to 1% of the outstanding
equity securities of any corporation whose stock is listed on a national stock
exchange. You will also be expected to comply with and be bound by Replay's
operating policies, procedures and practices that are from time to time in
effect during the term of your employment.
2. Base Salary. Your initial base monthly salary will be $20,000, or
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a base annual salary of $240,000, payable in accordance with Replay's normal
payroll practices with such payroll deductions and withholdings as are required
by law. Your base salary will be reviewed on an annual basis by the Compensation
Committee of the Board of Directors and increased from time to time, in the
discretion of the Board of Directors, but in any event such compensation shall
not be reduced below $240,000.
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3. Bonus. You will be eligible to receive an annual bonus based on the
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evaluation of your performance by the Board of Directors.
4. Equity Compensation.
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On the Commencement Date, the Compensation Committee of the Board of
Directors shall grant you an option to purchase 560,000 shares of Common Stock
at an exercise price equal to $1.25 per share, which options shall be "incentive
stock options" to the maximum extent permitted under the Internal Revenue Code
of 1986, as amended. These shares will vest ratably on a monthly basis over 48
months commencing with your first day of employment. The option will be
immediately exercisable, subject to repurchase of the unvested shares by Replay
on termination of employment at your original purchase price, which repurchase
option will lapse over the 48 month vesting schedule. You will be permitted to
pay for shares with a full recourse promissory note with interest accruing at
the minimum applicable federal rate and with principal and interest deferred for
five years and payable in a balloon payment on the fifth anniversary of the
grant, subject to acceleration 30 days following termination of employment. You
should consult a tax advisor concerning your income tax consequences before
exercising any of the options. Notwithstanding any other provision of this
Section 4 to the contrary, upon "Involuntary Termination," "Termination without
Cause," or "Termination for Death or Disability," unvested shares shall vest as
provided in Section 8 below, and grant of the option to you shall be subject to
your execution of an option agreement in the form approved by the Company.
5. Other Benefits. You will be entitled to the following additional
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benefits:
(a) You will be eligible for the same vacation, health/dental, vision,
life insurance, 401 (k) and other benefits offered to any other Replay senior
executives of similar rank and status.
(b) Replay will provide you with up to $50,000 reimbursement for your
expenses incurred in connection with your relocation to Northern California
prior to December 31, 1999.
6. At-Will Employment and Termination. Your employment with Replay will
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be at-will and may be terminated by you or by Replay at any time for any reason
as follows:
(a) You may terminate your employment upon written notice to the Board
of Directors at any time for "Good Reason," as defined below (an "Involuntary
Termination");
(b) You may terminate your employment upon written notice to the Board
of Directors at any time in your discretion without Good Reason ("Voluntary
Termination");
(c) Replay at the direction of the Board of Directors may terminate
your employment upon written notice to you at any time for "Cause," as defined
below ("Termination for Cause");
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(d) Replay at the direction of the Board of Directors may terminate
your employment upon written notice to you at any time without a determination
that there is Cause for such termination ("Termination without Cause");
(e) Your employment will automatically terminate upon your death or
your disability as determined by the Board of Directors provided that
"disability" shall mean your complete inability to perform your job
responsibilities for a period of 180 consecutive days or 180 days in the
aggregate in any 12-month period ("Termination for Death or Disability").
7. Definitions. As used in this agreement, the following terms have the
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following meanings:
(a) "Good Reason" means (i) a change in your reporting relationship
such that you no longer report only and directly to the Chief Executive Officer
of Replay or, following a Change in Control, the Chief Executive Officer of the
surviving entity or acquiror; (ii) your no longer being Executive Vice
President, Replay Network or, in the case of a Change in Control, an Executive
Vice President of the surviving entity or acquiror that results from any Change
in Control; (iii) a material reduction in your duties or responsibilities,
provided that your continuing as an Executive Vice President of the surviving
entity or acquiror following a Change of Control, shall not constitute a
material reduction in duties or responsibilities; (iv) any reduction in your
base annual salary or material breach by Replay of any of its obligations
hereunder that remains uncured for a period of 30 days following notice thereof;
(v) relocation of your principal office to a facility more than 50 miles from
Replay's current headquarters; or (vi) failure of any successor to assume this
agreement.
(b) "Cause" means (i) willful misconduct in the performance of your
duties to Replay that has resulted or is likely to result in substantial and
material damage to Replay; (ii) commission of any act of fraud with respect to
Replay; (iii) conviction of a felony or a crime involving moral turpitude
causing material harm to the business and affairs of Replay; (iv) your willful
and repeated failure to follow the directions of the Chief Executive Officer of
Replay or, following a Change in Control, the Chief Executive Officer of the
surviving entity or acquiror; or (v) your material breach of this Agreement or
your Employee Confidentiality and Assignment of Inventions Agreement. No act or
failure to act by you shall be considered "willful" if done or omitted by you in
good faith with reasonable belief that your action or omission was in the best
interests of Replay.
(c) "Change in Control" means (i) any person or entity becoming the
beneficial owner, directly or indirectly, of securities of Replay representing
fifty (50%) percent of the total voting power of all its then outstanding voting
securities, (ii) a merger or consolidation of Replay in which its voting
securities immediately prior to the merger or consolidation do not represent, or
are not converted into securities that represent, a majority of the voting power
of all voting securities of the surviving entity immediately after the merger or
consolidation, (iii) a sale of substantially all of the assets of Replay or a
liquidation or dissolution of Replay, or (iv) individuals who, as of the
Commencement Date, constitute the Board of Directors (the "Incumbent Board")
cease for any reason to constitute at least a majority of such Board; provided
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that any individual who becomes a director of Replay subsequent to the
Commencement Date, whose election, or nomination for election by Replay
stockholders, was approved by the vote of at least a majority of the directors
then in office shall be deemed a member of the Incumbent Board.
8. Separation and Change in Control Benefits. Upon termination of your
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employment with Replay for any reason, you will receive payment of all salary,
bonus and unpaid vacation accrued to the date of your termination of employment.
In addition, you will be entitled to receive the severance benefits as set forth
below.
(a) In the event of your Voluntary Termination or Termination for
Cause, you will be entitled to any accrued but unpaid salary and bonus, but you
will not be entitled to any additional cash severance benefits or additional
vesting of shares.
(b) In the event of your Involuntary Termination or Termination
without Cause, and, subject to your execution of a mutual release of claims
agreement ("Release Agreement") provided to you by the Company and your
resignation from all positions you hold with the Company, you will be entitled
to a lump sum severance payment equal to any accrued but unpaid salary and bonus
and an amount equal to six months of your then current annual base salary and
50% of your prior year's bonus payable within five days after the effective date
of your execution of the Release Agreement and nine (9) months of accelerated
vesting of your unvested shares; provided, however, that if such Involuntary
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Termination or Termination without Cause occurs within one year following a
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Change in Control, the accelerated vesting shall be as set forth in Section 8(d)
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below. All payments hereunder shall be less applicable deductions and
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withholdings. Replay shall reimburse you for all COBRA premiums paid by you for
a period of six months.
(c) In the event of your Termination for Death or Disability, the
vesting of your unvested shares of restricted stock and the vesting of your
shares shall be immediately accelerated by two years.
(d) Notwithstanding anything in this agreement to the contrary, the
vesting of all your options or shares will be immediately accelerated upon your
Involuntary Termination or Termination without Cause within one year following a
Change in Control by the greater of twelve (12) months of vesting or fifty (50%)
percent of the shares that remain unvested at the time of such Change in
Control.
(e) If, due to the benefits provided under this letter agreement, you
are subject to any excise tax due to characterization of any mount payable
hereunder as excess parachute payments pursuant to Sections 280G and 4999 of the
Internal Revenue Code, Replay will pay the excise taxes otherwise payable by you
under Section 4999 (but not any income or excise taxes on such payment of taxes
by Replay on your behalf) with respect to any amounts payable to you under this
Agreement, up to a maximum of $1,000,000. Notwithstanding the foregoing, you
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will in good faith discuss with the Company whether it is appropriate to request
stockholders of the Company to approve payments to you upon a Change of Control
in order to
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minimize or eliminate any such excise taxes, provided that you shall not be
required to agree with the Company to request such stockholder approval.
(f) No payments due you hereunder shall be subject to mitigation or
offset.
9. Confidential Information and Invention Assignment Agreement. Upon your
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commencement of employment with Replay, you will be required to sign its
standard form of Employee Confidentiality and Assignment of Inventions
Agreement.
10. Dispute Resolution. The parties agree that any dispute regarding the
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interpretation or enforcement of this agreement shall be decided by
confidential, final and binding arbitration conducted by Judicial Arbitration
and Mediation Services ("JAMS") under the then existing JAMS roles rather than
by litigation in court, trial by jury, administrative proceeding or in any other
forum.
If a legal action or other proceeding is brought for enforcement of
this agreement because of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions of this agreement,
the successful or prevailing party shall be entitled to recover reasonable
attorney's fees and costs incurred, both before and after judgment, in addition
to any other relief to which they may be entitled.
11. Miscellaneous.
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(a) Successors. This agreement is binding on and may be enforced by
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Replay and its successors and assigns and is binding on and may be enforced by
you and your heirs and legal representatives. Any successor to Replay or
substantially all of its business (whether by purchase, merger, consolidation or
otherwise) will in advance assume in writing and be bound by all of Replay's
obligations under this agreement.
(b) Entire Agreement. This agreement represents the entire agreement
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between us concerning the subject matter of your employment by Replay.
(c) Governing Law. This agreement will be governed by the laws of the
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State of California without reference to conflict of laws provisions.
Layne, we are very pleased to extend this offer of employment to you and
look forward to your joining Replay as its Executive Vice President, Replay
Networks. Please indicate your acceptance of the terms of this agreement by
signing in the place indicated below.
Very truly yours, Accepted July 29, 1999:
REPLAY NETWORKS, INC.
By:/s/ Anthony Wood /s/ Layne Leslie Britton
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Anthony Wood Layne Leslie Britton
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