Exhibit 10.2

February 11, 2009

Ramon Villareal

Dear Ray:

This letter confirms the agreement (this “Agreement”) between you and SumTotal
Systems, Inc., (the “Company”) concerning the terms of your separation and
offers you the separation compensation described below in exchange for a release
of claims and certain obligations.

1. Separation. Your last day of employment with the Company shall be January 6,
2009 the Separation Date. Because this is after December 31, 2008, you are not
entitled to severance under the terms of your offer letter or any other
agreement with the Company.

2. Accrued Salary and Paid Time Off. On the Separation Date, the Company will
pay you all accrued salary, and all accrued and unused vacation earned through
the Separation Date, subject to standard payroll deductions and withholdings.
You are entitled to these payments regardless of whether or not you sign this
Agreement.

3. Management and Executive Bonus Plan. You will be eligible to receive any
earned payout from the fourth quarter of the 2008 Executive and Management Bonus
Plan (“Bonus Plan”) regardless of whether the payout for the fourth quarter of
the Bonus Plan is paid out after the Separation Date.

4. Separation Pay. The Company will provide a separation payment to you in the
amount of $157,500, which is equivalent to six (6) months base salary (the
“Separation Payment”). In addition, the Company will provide you with a
Separation Adjustment equal to $45,000. The Separation Payment and the
Separation Adjustment shall be made in one lump sum, on the next payroll date
after you sign this Agreement and your release has become effective. The
Separation Payment and the Separation Adjustment will be subject to standard
payroll deductions and withholdings, the satisfaction of any outstanding debts
to the Company, and your timely return of all Company Property.

5. Health Insurance. Your group insurance coverage will terminate on January 31,
2009. As of February 1, 2009, to the extent provided by the federal COBRA law,
state insurance laws and the Company’s current group health insurance policies,
you will be eligible to continue your group health insurance benefits and,
provided you make a timely election of COBRA, the Company will reimburse you for
COBRA premiums for the six month period following the Separation Date; provided,
however, that if you accept other employment that provides you with comparable
benefits or somehow otherwise become eligible for coverage with comparable
benefits, the Company’s obligation to continue reimbursing you for your COBRA
benefits shall cease. You agree to notify the Company in writing upon your
acceptance of other full-time employment. You may continue your coverage after
that time at your own expense. Later, you may be able to convert to an
individual policy through the provider of the Company’s health insurance.

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6. Stock Options. The 125,000 stock options (grant numbers: 00005306 and 5307)
which were granted on November 5, 2007 and the 25,000 stock options (grant
numbers 00005418 and 00005419) granted to you on June 6, 2008 will continue to
vest through your Separation Date. The maximum period of time during which the
Stock Options shall remain exercisable, and all other terms and conditions of
the Stock Options, shall be as specified in the relevant Stock Option agreements
and relevant stock plans under which the Stock Options were granted. The term
“Stock Options” shall not include any rights you may have under the Company’s
employee stock purchase plan.

7. Restricted Stock Award. All of your restricted stock awards (grant number
00005308) that are outstanding as of the date of the Separation Date
(“Restricted Stock”) shall become fully vested and free from any contractual
rights of the Company to repurchase or otherwise reacquire the Restricted Stock
as a result of your termination of employment. All shares of Restricted Stock
which have not yet been delivered to you or your designee (whether because
subject to joint escrow instructions or otherwise) shall be promptly delivered
to you or your designee upon the occurrence of a Separation Date.

8. Restricted Stock Units. Upon the Effective Date of this Agreement, you will
vest as to fifty percent (50%) of your restricted stock units. Such vested
restricted stock units shall then be settled through the issuance of shares of
Company common stock to you as soon as reasonably practicable thereafter, but in
no event later than March 15, 2009. The remaining fifty percent (50%) of your
RSU Grant (grant number 00005308) will be immediately forfeited and you shall no
longer have any rights or benefits with respect to those forfeited restricted
stock units after the Separation Date.

9. Other Compensation or Benefits. You acknowledge that, except as expressly
provided in this Agreement, you will not receive any additional compensation,
separation pay or benefits after the Separation Date.

10. Expense Reimbursements. You agree that, within ten (10) days of the
Separation Date, you will submit your final documented expense reimbursement
statement reflecting all business expenses you incurred through the Separation
Date, if any, for which you seek reimbursement. The Company will reimburse you
for these expenses pursuant to its regular business practice.

11. Return of Company Property. Within three (3) days of your Separation Date,
you agree to return to the Company all Company documents (and all copies
thereof) and other Company property which you have had in your possession at any
time, including, but not limited to, Company files, notes, drawings, records,
business plans and forecasts, financial information, specifications,
computer-recorded information, tangible property (including, but not limited to,
computers), credit cards, entry cards, identification badges and keys; and, any
materials of any kind which contain or embody any proprietary or confidential
information of the Company (and all reproductions thereof). The only exception
will be that you may retain your laptop computer after you leave the Company.

12. Proprietary Information Obligations. Both during and after your employment
you will refrain from any unauthorized use or disclosure of the Company’s
proprietary or confidential information or materials and you acknowledge your
continuing obligations under your Employee Invention, Confidentiality, Unfair
Competition, and Nonsolicitation Agreement not to use or disclose any
confidential or proprietary information of the Company without prior written
authorization from a duly authorized representative of the Company. A copy of
your Employee Invention, Confidentiality, Unfair Competition, and
Nonsolicitation Agreement is attached hereto as Exhibit A.

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13. Confidentiality. The provisions of this Agreement shall be held in strictest
confidence by you and the Company and shall not be publicized or disclosed in
any manner whatsoever; provided, however, that: (a) you may disclose this
Agreement to your immediate family; (b) the parties may disclose this Agreement
in confidence to their respective attorneys, accountants, auditors, tax
preparers, and financial advisors; (c) the Company may disclose this Agreement
as necessary to fulfill standard or legally required corporate reporting or
disclosure requirements; and (d) the parties may disclose this Agreement insofar
as such disclosure may be necessary to enforce its terms or as otherwise
required by law.

14. Nondisparagement. Both you and the Company agree not to disparage the other
party, and the other party’s officers, directors, employees, shareholders and
agents, in any manner likely to be harmful to them or their business, business
reputation or personal reputation. Nothing herein prevents you and the Company
from responding accurately and fully to any question, inquiry or request for
information when required by legal process, provided, however, that you shall
notify the Company within three business days of any request or demand from you
to provide any such information.

15. Release. In exchange for the Separation Payment and other consideration
under this Agreement to which you would not otherwise be entitled, you hereby
release, acquit and forever discharge the Company, its parent, affiliates and
subsidiaries, and its and their respective officers, directors, agents,
servants, employees, attorneys, shareholders, successors, assigns and
affiliates, of and from any and all claims, liabilities, demands, causes of
action, costs, expenses, attorneys fees, damages, indemnities and obligations of
every kind and nature, in law, equity, or otherwise, known and unknown,
suspected and unsuspected, disclosed and undisclosed, arising out of or in any
way related to agreements, events, acts or conduct at any time prior to and
including the execution date of this Agreement, including but not limited to:
all such claims and demands directly or indirectly arising out of or in any way
connected with your employment with the Company or the termination of that
employment; claims or demands related to salary, bonuses, commissions, stock,
stock options, or any other ownership interests in the Company, vacation pay,
fringe benefits, expense reimbursements, separation pay, or any other form of
compensation; claims pursuant to any federal, state or local law, statute, or
cause of action including, but not limited to, the federal Civil Rights Act of
1964, as amended, including without limitation claims for attorneys’ fees; the
federal Americans with Disabilities Act of 1990; the federal Age Discrimination
in Employment Act of 1967, as amended (“ADEA”); the California Fair Employment
and Housing Act, as amended; tort law; contract law; wrongful discharge;
discrimination; harassment; fraud; defamation; emotional distress; and breach of
the implied covenant of good faith and fair dealing. This Agreement does not
waive rights or claims that may arise after the date the Agreement is executed
by Employee, including but not limited to rights or claims regarding the
enforcement of the terms of this Agreement, and it does not waive rights or
claims that may not, as a matter of law, be waived, such as claims made under
California Labor Code section 2802. In addition, while Employee understands that
this Agreement does not affect his right to file a charge with or participate as
a witness in an investigation or proceeding conducted by the EEOC or any similar
state agency, by accepting the terms provided herein and the consideration
provided to him as a result, he gives up his right to receive any relief
whatsoever, including but not limited to financial benefit or monetary recovery,
from any lawsuit or settlement related to such rights and claims as he now gives
up, whether the lawsuit is filed or the settlement reached by the EEOC, another
agency, or anyone else.

16. ADEA Waiver. You acknowledge that you are knowingly and voluntarily waiving
and releasing any rights you may have under the ADEA, as amended. You also
acknowledge that the consideration given for the waiver and release in the
preceding paragraph hereof is in addition to anything of value to which you were
already entitled. You further acknowledge that you have been advised by this

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writing, as required by the ADEA, that: (a) you have carefully read and fully
understand the provisions of this Agreement; (b) you are, through this
Agreement, releasing the Company from any and all claims you may have against
it, its parent, subsidiaries, predecessors, successors, affiliates and related
entities; (c) you have knowingly and voluntarily agreed to all of the terms set
forth in the agreement; (d) you knowingly and voluntarily intend to be legally
bound by the Agreement; (e) your waiver and release do not apply to any rights
or claims that may arise after the Effective Date of this Agreement; (f) you
have been advised hereby are advised that you have the right to consult with an
attorney prior to executing this Agreement; (g) you have forty-five (45) days to
consider this Agreement (although you may choose to voluntarily execute this
Agreement earlier); (h) you have seven (7) days following the execution of this
Agreement to revoke the Agreement; and (i) this Agreement shall not be effective
until the date upon which the revocation period has expired, which shall be the
eighth day after this Agreement is executed by you, provided that the Company
has also executed this Agreement by that date (“Effective Date”).

17. Section 1542 Waiver. YOU UNDERSTAND THAT THIS AGREEMENT INCLUDES A RELEASE
OF ALL KNOWN AND UNKNOWN CLAIMS. You acknowledge that you have read and
understand Section 1542 of the California Civil Code which reads as follows: “A
general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.” You
hereby expressly waive and relinquish all rights and benefits under that section
and any law of any jurisdiction of similar effect with respect to your release
of any claims you may have against the Company.

18. Miscellaneous. This Agreement, including Exhibit A and Exhibit B,
constitutes the complete, final and exclusive embodiment of the entire agreement
between you and the Company with regard to this subject matter. It is entered
into without reliance on any promise or representation, written or oral, other
than those expressly contained herein, and it supersedes any other such
agreements, promises, warranties or representations. This Agreement may not be
modified or amended except in a writing signed by both you and a duly authorized
officer of the Company. This Agreement shall bind the heirs, personal
representatives, successors and assigns of both you and the Company, and inure
to the benefit of both you and the Company, their heirs, successors and assigns.
If any provision of this Agreement is determined to be invalid or unenforceable,
in whole or in part, this determination will not affect any other provision of
this Agreement and the provision in question shall be modified by the court so
as to be rendered enforceable. This Agreement shall be deemed to have been
entered into and shall be construed and enforced in accordance with the laws of
the State of California as applied to contracts made and to be performed
entirely within California.

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If this Agreement is acceptable to you, please sign below and return the
original to me by no later than forty-five calendar days after receipt of this
letter. If you do not return the signed Agreement to me by April 1, 2009, this
offer will be automatically withdrawn.

 

Sincerely, SUMTOTAL SYSTEMS, INC. By:   /s/ Pamela E. Drew   Pamela E. Drew  
Vice President, Global Human Resources & Talent Management

Exhibit A - Employee Invention, Confidentiality, Unfair Competition, and
Nonsolicitation Agreement

Exhibit B – Decisional Unit Information

I HAVE CAREFULLY REVIEWED AND CONSIDERED THE TERMS OF THIS AGREEMENT; I FULLY
UNDERSTAND ALL OF ITS TERMS AND VOLUNTARILY AGREE TO EACH OF THEM; AND AM
LEGALLY BOUND BY THIS AGREEMENT.

 

Dated: 2/15/09    

Ramon Villareal

Employee’s Name (Printed)

      /s/ Ramon Villareal     Signature