Executive Employment Agreement (2002)Full Document 

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SCIENTIFIC LEARNING CORPORATION

EXECUTIVE EMPLOYMENT AGREEMENT
for
ROBERT C. BOWEN

     This Employment Agreement (“Agreement”) is entered into as of the 31st day of May, 2002, by and between Robert C. Bowen (“Executive”) and Scientific Learning Corporation, a Delaware corporation (the “Company”).

     WHEREAS, the Company desires to employ Executive to provide personal services to the Company, and wishes to provide Executive with certain compensation and benefits in return for his services; and

     WHEREAS, Executive wishes to be employed by the Company and provide personal services to the Company in return for certain compensation and benefits;

     NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, it is hereby agreed by and between the parties hereto as follows:

     1.    EMPLOYMENT BY THE COMPANY.


       1.1   Subject to terms set forth herein, the Company agrees to employ Executive in the position of Chief Executive Officer (“CEO”), and Executive hereby accepts such employment effective as of Executive’s commencement of performance (the “Employment Date”), anticipated to be June 4, 2002. Subject to the provisions of paragraph 3, the Company agrees that it will recommend to its Board that Executive be elected as Chairman of the Board. During the term of his employment with the Company, Executive will devote his best efforts and substantially all of his business time and attention (except for vacation periods as set forth herein and reasonable periods of illness or other incapacities permitted by the Company’s general employment policies) to the business of the Company. Other than your status as an at-will employee, as described in paragraph 6, the terms of this Agreement may be modified or amended only by a writing signed and approved by the Company’s Board of Directors (the “Board”) and Executive.

       1.2   Executive shall serve in an executive capacity and shall perform such duties as are customarily associated with his then current title, consistent with the Bylaws of the Company and as required by the Board.

       1.3   The employment relationship between the parties shall also be governed by the general employment policies and practices of the Company, including those relating to protection of confidential information and assignment of inventions, except that when the terms of this Agreement differ from or are in conflict with the Company’s general employment policies or practices, this Agreement shall control.

1.




     2.    COMPENSATION.


       2.1 Salary. Executive shall receive for services to be rendered hereunder an annualized base salary of $275,000, payable on a twice-monthly basis, subject to payroll withholding and deductions.

       2.2    Bonus.

       (a)   For each of the calendar years 2002 and 2003, Executive will be eligible for a Bonus, as a percentage of Executive’s then-current base salary, earned and allocated as follows:

       (i)   25% of base salary for meeting certain minimum goals for that year established by the Board in writing, in its sole discretion (the “Business Plan”);

       (ii)    25% of base salary for exceeding the Business Plan by an amount defined by the Compensation Committee of the Board;

       (iii)   up to 50% of base salary, to be determined solely at the discretion of the Board, with no minimum guaranteed.

  For the year 2002, Executive’s earned Bonus based on the above allocation will be prorated based on the number of weeks worked in the year.

       (b)   For each of the calendar years 2004 and thereafter, Executive will be eligible for a Bonus, as a percentage of Executive’s then-current base salary, earned and allocated as follows:

       (i)    50% of base salary for meeting the Business Plan;

       (ii)    25% of base salary for exceeding the Business Plan by an amount defined by the Compensation Committee of the Board;

       (iii)   up to 25% of base salary, to be determined solely at the discretion of the Board, with no minimum guaranteed.

       (c)   Active Employment as CEO. In order to earn the Bonus, Executive must remain the active CEO through the end of the Bonus year. Executive will not earn any Bonus if his employment as active CEO terminates for any reason before the end of the Bonus year. Except for the year 2002, no prorated Bonus can be earned. Any earned Bonus will be due and payable upon calculation and approval by the Board, within 90 days after the end of the calendar year.

       2.3   Standard Company Benefits.Executive shall be entitled to all rights and benefits for which he is eligible under the terms and conditions of the standard Company benefits and compensation practices which may be in effect from time to time and provided by the Company to its employees generally.

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  2.4   Equity Compensation.

       (a)   Vested Stock Option Grant.Subject to the approval of the Board the Company shall grant a nonqualified stock option to Executive to purchase 100,000 shares of the common stock of the Company, subject to the terms and conditions of the Company’s 1999 Equity Incentive Plan, as amended (the “1999 Plan”) and the corresponding Stock Option Agreement issued to Executive (the “Vested Option”). The per share exercise price of the Vested Option shall be equal to the greater of (i) $1.25 or (ii) the Fair Market Value of one share of the Company’s common stock (as determined under the Stock Plan) on the date of grant. The Vested Option is not intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”). One hundred percent (100%) of the shares subject to the Vested Option shall be vested and exercisable on the Employment Date.

       (b)Unvested Stock Option Grant.Subject to the approval of the Board, and contingent upon approval by the stockholders of the Company of the amendment to the 1999 Plan, the Company shall grant a nonqualified stock option to Executive to purchase 500,000 shares of the common stock of the Company, subject to the terms and conditions of the 1999 Plan and the corresponding Stock Option Agreement issued to Executive (the “Unvested Option”). The per share exercise price of the Unvested Option shall be equal to the greater of (i) $1.25 or (ii) the Fair Market Value of one share of the Company’s common stock (as determined under the Stock Plan) on the date of grant. The Unvested Option is not intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Code. Twenty-five percent (25%) of the shares subject to the Unvested Option shall vest on the first anniversary of the Employment Date and the remaining shares subject to the Unvested Option shall vest in thirty-six (36) equal monthly installments thereafter.

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