Exhibit 10.11

 

 

 

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EMPLOYMENT AGREEMENT

 

This Employment Agreement (the “Agreement”) is entered into as of January 1,
2003 (the “Effective Date”) between Click2learn, Inc., a Delaware corporation
with its principal offices located at 110-110th Avenue N.E., Bellevue,
Washington 98004-5840, (the “Company”) and Gary Millrood (“Employee”).

 

In consideration of the promises and the terms and conditions set forth in this
Agreement, the parties agree as follows:

 

1.             Position

 

During the term of this Agreement, Company will employ Employee and Employee
will serve as Senior Vice President, North American Sales.  Employee will be
based out of his home in Portola Valley, California, until moving permanently to
the Seattle-Bellevue, WA area in the summer of 2003.

 

2.             Duties

 

Employee will have such duties as are commensurate with the position of Senior
Vice President, North American Sales at Click2learn, Inc.  Employee will comply
with and be bound by Company’s operating policies, procedures, and practices
from time to time in effect during Employee’s employment.  Employee hereby
represents and warrants that he is free to enter into and fully perform this
Agreement and the agreements referred to herein without breach of any agreement
or contract to which he is a party or by which he is bound.

 

3.             Exclusive Service

 

Employee will devote his full professional time and efforts exclusively to this
employment and apply all his skill and experience to the performance of his
duties and advancing the Company’s interests in accordance with Employee’s
experience and skills.  In addition, Employee will not engage in any consulting
activity or other potentially conflicting activity except with the prior written
approval of Company, or at the direction of Company, and Employee will otherwise
do nothing incompatible with the performance of his duties hereunder.

 

4.             Term of Agreement

 

This Agreement will commence on the Effective Date and will continue until the
earlier of 12 months after the Effective Date or termination of Employees
employment pursuant to Section 7 hereof.  This Agreement will automatically
renew for additional periods of 12 months each unless the parties mutually agree
not to renew this Agreement.  Either party will provide the other party with any
requests for changes to this Agreement for any renewal term at least 60 days
prior to the renewal date unless otherwise agreed.

 

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5.             Compensation and Benefits

 

(a)           Base Salary.  The Company agrees to pay Employee an initial base
salary of $175,000 per year, Employee’s salary will be payable as earned in
accordance with Company’s customary payroll practice, which currently is to pay
salary on a bi-weekly basis.

 

(b)           Additional Benefits.  Employee will be eligible to participate in
Company’s employee benefit plans of general application, including without
limitation the Company’s 401(k) Plan and those plans covering life, health,
disability and dental insurance in accordance with the rules established for
individual participation in any such plan and applicable law.  Employee will
receive such other benefits, including health club membership, vacation,
holidays and sick leave, as the Company generally provides to its employees
holding similar positions as that of Employee.

 

(c)           Commission Plan.  Employee will be eligible to receive commissions
on sales revenue from sales generated by the North American Sales organization
in accordance with mutually agreed upon compensation plans.  Employee’s target
commission at 100% of target revenue is $125,000 per year.  Quotas, commission
rates, payment terms and other details of the commission plans will be set forth
in a written plan signed by the Company’ CEO, CFO and Employee.   Commissions
equal to the first 3 months of the Commission Plan at 100%, or roughly
equivalent to $10,416.66 per month, will be paid in equal installments at the
end of each month during the first quarter of employment.

 

(d)           Business Expenses.  The Company will reimburse Employee for all
reasonable and necessary expenses incurred by Employee in connection with the
Company’s business, provided that such expenses are deductible to the Company,
are in accordance with the Company’s applicable policy and are property
documented and accounted for in accordance with the requirements of the Internal
Revenue Service.

 

(e)           Stock Options.    Effective as of the date of this Agreement
Employee shall be granted, under the Company’s 1998 Equity Incentive  Plan (the
“Plan”),  an option to purchase 100,000 shares of Common Stock at the fair
market value as determined in accordance with the Plan.   Such options shall
become exercisable (“vest”) over four years with 25% of such shares vesting at
the end of one year and 1/36 of the remaining shares vesting on the same day of
each month for the remaining three years.

 

(f)            Relocation Expenses.   The Company will reimburse Employee for
the reasonable and necessary expenses incurred by Employee in moving himself and
his family from the Portola Valley, California area to the Bellevue, Washington
area.  Such expenses include actual move costs.  Reimbursement is dependent upon
Employee’s submission of receipts for applicable moving expenses and all
expenses must be incurred within one year of the Effective Date.  Employee will
reimburse Company 100% of the relocation expenses paid in the event of
Employee’s Voluntary Termination within one year from the Effective Date. 
Employee agrees that Company may deduct any repayment due from Employee’s unpaid
salary, commissions, outstanding expense reports and/or any other form of
compensation or reimbursement due to you, to the extent allowed by law, in
addition to any other form of lawful recovery remedy the Company may have. 

 

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6.             Proprietary Rights and Insider Trading

 

Employee hereby agrees that concurrently with the execution of this Agreement,
Employee will execute Click2learn’s standard form of Employee Invention,
Confidentiality, Non-raiding and Noncompetition Agreement (the “Invention
Agreement”).  Employee agrees that, as an executive officer of the Company
within the meaning of Section 16 of the Securities Act of 1933, as amended, he
will comply in all respects with the Company’s Insider Trading Policies and
Procedures for Section 16 Individuals and all applicable laws and regulations
relating to ownership of and trading in the Company’s securities and use and
disclosure of material non-public information.

 

7.             Termination

 

(a)           Events of Termination.    Employee’s employment with the Company
shall terminate upon any one of the following:

 

(i)            the determination of the CEO made in good faith to terminate the
Employee for “cause” as defined under Section 7(b) below (“Termination for
Cause”); or

 

(ii)           the effective date of a written notice sent to Employee stating
that the Company is terminating his employment, without cause, which notice can
be given by the Company at any time after the Effective Date at the Company’s
sole discretion, for any reason or for no reason (“Termination Without Cause”);
or

 

(iii)          the effective date of a written notice sent to the Company from
Employee stating that Employee is electing to terminate his employment with the
Company (“Voluntary Termination”).

 

(b)           “Cause” Defined. For purposes of this Agreement, “cause” for
Employee’s termination will exist at any time after the happening of one or more
of the following events:

 

(i)            a failure or refusal to comply in any material respect with the
reasonable policies, standards or regulations of the Company;

 

(ii)           a good faith determination by the Company’s  CEO that Employee’s
performance is unsatisfactory after reasonable notice of the ways in which
performance is unsatisfactory and a reasonable opportunity to correct any such
deficiencies;

 

(iii)          a failure or refusal in any material respect to perform his
duties determined by the Company in accordance with this Agreement or the
customary duties of Employee’s employment (except for any failure due to ill
health or disability);

 

(iv)          unprofessional, unethical or fraudulent conduct or conduct that
materially discredits the Company or is materially detrimental to the
reputation, character or standing of the Company;

 

(v)           dishonest conduct or a deliberate attempt to do an injury to the
Company;

 

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(vi)          Employee’s material breach of a term of this Agreement, the
Company’s Insider Trading Policy and Procedures or the Invention Agreement,
including, without limitation, Employee’s unauthorized disclosure or theft of
the Company’s proprietary information;

 

(vii)         an unlawful or criminal act which would reflect badly on the
Company in the Company’s reasonable judgment which shall include any violation
of applicable laws and regulations relating to ownership of and trading in the
Company’s securities and use and disclosure of material non-public information;
or

 

(viii)        Employee’s death.

 

(c)           Change of Control Severance Plan.  Employee shall be entitled to
participate in the change of control severance plan adopted by the Company’s
Compensation Committee for executives generally; provided, however, that if this
Agreement would provide Employee greater benefits than any such change of
control severance plan in the event of Employee’s Termination Without Cause,
then Employee shall be provided with the benefits of this Agreement.

 

8.             Effect of Termination

 

(a)           Termination for Cause or Voluntary Termination.   In the event of
any termination of Employee’s employment pursuant to Sections 7(a)(i) or
7(a)(iii), the Company shall pay Employee the compensation and benefits
otherwise payable to Employee under Section 5 through the date of termination
(including commission payments earned through the date of termination). 
Employee’s rights under the Company’s benefit plans of general application shall
be determined under the provisions of those plans.

 

(b)           Termination Without Cause.   In the event of any termination of
Employee’s employment pursuant to Section 7(a)(ii) or Section 7(a)(iii) during
the Term of this Agreement:

 

(i)            the Company shall pay Employee the compensation and benefits
otherwise payable to Employee under Section 5 through the date of termination
(including commission payments earned through the date of termination);

 

(ii)           provided that Employee has signed a mutually acceptable form of
Separation Agreement and General Release, for a period ending 3 months following
the date of termination, the Company shall continue to pay Employee his base
salary under Section 5(a) above at Employee’s then current salary, less
applicable withholding taxes, payable on the Company’s normal payroll dates
during that period; provided, however, that at any time during such period the
Company may elect to pay such base salary, less applicable withholding taxes, or
the then unpaid portion thereof, in a single lump sum payment;

 

(iii)          Employee’s rights under the Company’s benefit plans of general
application shall be determined under the provisions of those plans.

 

 

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9.             Miscellaneous

 

(a)           Arbitration.  Employee and the Company shall submit to mandatory
binding arbitration in Seattle, Washington  any controversy or claim arising out
of, or relating to, this Agreement or any breach hereof, provided, however, that
Employee and the Company retain their right to and shall not be prohibited,
limited or in any other way restricted from, seeking or obtaining equitable
relief from a court having jurisdiction over the parties.  Such arbitration
shall be conducted in accordance with the commercial arbitration rules of the
American Arbitration Association in effect at that time, and judgment upon the
determination or award rendered by the arbitrator may be entered in any court
having jurisdiction thereof.  The parties shall mutually agree on the arbitrator
to decide any such controversy or claim and if the parties cannot agree on the
selection of an arbitrator then they shall each select an arbitrator and those
two arbitrators shall agree on a third arbitrator who will decide any such
controversy or claim.

 

(b)           Severability.  If any provision of this Agreement shall be found
by any arbitrator or court of competent jurisdiction to be invalid or
unenforceable, then the parties hereby waive such provision to the extent that
it is found to be invalid or unenforceable and to the extent that to do so would
not deprive one of the parties of the substantial benefit of its bargain.  Such
provision shall, to the extent allowable by law and the preceding sentence, be
modified by such arbitrator or court so that it becomes enforceable and, as
modified, shall be enforced as any other provision hereof, all the other
provisions continuing in full force and effect.

 

(c)           Remedies.  The Company and Employee acknowledge that the service
to be provided by Employee is of special, unique, unusual, extraordinary and
intellectual character, which gives it peculiar value the loss of which cannot
be reasonably or adequately compensated in damages in an action at law. 
Accordingly, Employee hereby consents and agrees that for any breach or
violation by Employee of any of the provisions of this Agreement including,
without limitation, Section 3, a restraining order an/or injunction may be
issued against Employee, in addition to any other rights and remedies the
Company may have, at law or equity, including without limitation the recovery of
money damages.

 

(d)           No Waiver.  The failure by either party at any time to require
performance or compliance by the other of any of its obligations or agreements
shall in no way affect the right to require such performance or compliance at
any time thereafter.  The waiver by either party of a breach of any provision
hereof shall not be taken or held to be a waiver of any preceding or succeeding
beach of such provision or as a waiver of the provision itself.  No waiver of
any kind shall be effective or binding, unless it is in writing and is signed by
the party against whom such waiver is sought to be enforced.

 

(e)           Assignment.  This Agreement and all rights hereunder are personal
to Employee and may not be transferred or assigned by Employee at any time.  The
Company may assign its rights, together with its obligations hereunder, to any
parent, subsidiary, affiliate or successor, or in connection with the sale,
transfer, or other disposition of all or substantially all of its business and
assets, provided, however, that any such assignee assumes the Company’s
obligations hereunder.

 

(f)            Withholding.  All sums payable to Employee hereunder shall be
reduced by all federal, state, local and other withholding and similar taxes and
payments required by applicable law.

 

(g)           Entire Agreement.  This Agreement, the offer letter from the
Company dated November 26, 2002 and the Invention Agreement constitute the
entire and only agreement between the parties relating to employment of Employee
with the Company, and this Agreement and the Invention

 

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Agreement supersede and cancel any and all previous contracts, arrangements or
understandings with respect thereto.

 

(h)           Amendment.     This Agreement may be amended, modified,
superseded, canceled, renewed or extended only by an agreement in writing
executed by both parties hereto.

 

(i)            Notices.       All notices and other communications required or
permitted under this Agreement shall be in writing and hand delivered, sent by
fax, sent by certified first class mail, postage prepaid, or sent by nationally
recognized express courier service.  Such notices and other communications shall
be effective upon receipt if hand delivered or sent by fax, five days after
mailing if sent by U.S. mail, and one day after dispatch if sent by express
courier, to the following addresses, or such other addresses as any party shall
notify the other parties:

 

If to the Company:

 

110-110th Avenue N.E., Suite 700

 

 

Bellevue, WA 98004-5840

Fax:

 

425-637-1508

Attention:

 

President and CEO

If to Employee:

 

At the address on the records of the Company

 

(j)            Binding Nature.  This Agreement shall be binding upon, and inure
to the benefit of, the successors and personal representatives of the respective
parties hereto.

 

(k)           Governing Law.  This Agreement and the rights and obligations of
the parties hereto shall be construed in accordance with the laws of the state
in which Employee is based, without giving effect to the principles of conflict
of laws; provided, however, that if Employee is relocated to another
jurisdiction then the laws of such jurisdiction shall apply, and in the event of
any claim made following termination, the laws of the jurisdiction where
Employee was based on the date of termination shall apply.

 

IN WITNESS WHEREOF the Company and Employee have executed this Agreement as of
the date first above written.

 

 

“COMPANY”

“EMPLOYEE”

 

 

CLICK2LEARN, INC.

 

 

 

 

 

By:

/s/ Kevin M. Oakes

 

/s/ Gary Millrood

 

 

Gary Millrood

Name

Kevin M. Oakes

 

 

 

 

Title:

Chief Executive Officer

 

 

 

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