**Exhibit10.1**

 

**EMPLOYMENT AGREEMENT**

 

This Employment Agreement (the “Agreement”) is entered into as of June26, 2003 (the “Effective Date”) between Click2learn, Inc., a Delawarecorporation with its principal offices located at 110-110th Avenue N.E., Bellevue,Washington 98004-5840  (the “Company”)and SUDHEER KONERU (“Employee”).

 

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

 

1.                                       **Position**

 

During the term of this Agreement, Company will employ Employee andEmployee will serve as an executive officer of the Company with the title ofChief Strategy Officer.

 

2.                                       **Duties**

 

Employee will be responsible for the following:

 

•                  Overallcorporate strategy, with a primary focus on aligning Click2learn withsynergistic software segments and players

•                  Reviewing andhelping to create the company messaging and future vision

•                  Reviewing andstrategizing company’s “go to market” processes

•                  Strategizing andcollaborating on M&A activities and spearheading any resulting discussions

•                  Own 1-3 specificlarge sales opportunities on a quarterly basis

•                  Represent thecompany, as appropriate, in external functions

•                  In concert withthe VP of Business Development, uncover and cultivate business development andpartner relationships

 

Employee will also have such additional duties as are reasonablydetermined by the Company consistent with his position as Chief StrategyOfficer.  Employee will comply with andbe bound by Company’s operating policies, procedures, and practices from timeto time in effect during Employee’s employment.  Employee hereby represents and warrants that he is free to enterinto and fully perform this Agreement and the agreements referred to hereinwithout breach of any agreement or contract to which he is a party or by whichhe is bound.

 

3.                                       **ExclusiveService**

 

Employee will devote his full professional time and efforts exclusivelyto this employment and

 

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apply all his skill and experience to the performance of his duties andadvancing the Company’s interests in accordance with Employee’s experience andskills.  In addition, Employee will notengage in any consulting activity except with the prior written approval ofCompany, or at the direction of Company, and Employee will otherwise do nothingincompatible with the performance of his duties hereunder.

 

4.                                       **Term ofAgreement**

 

This Agreement willcommence on the Effective Date and will continue until the earlier of one yearafter the Effective Date or when terminated pursuant to Section 7 hereof.  The expiration or termination of thisAgreement will not result in the termination of Employee’s employment, butEmployee will become an “at will” employee upon such termination or expiration.

 

5.                                       **Compensationand Benefits**

 

(a)                                  BaseSalary.   The Company agrees to payEmployee base salary of $190,000 per year.  Employee’s salary will be payable as earned in accordance with Company’scustomary payroll practice, which currently is to pay salary on a bi-weeklybasis.

 

(b)                                 AdditionalBenefits.   Employee will beeligible to participate in Company’s employee benefit plans of generalapplication, including without limitation the Company’s 401(k) Plan and thoseplans covering life, health, disability and dental insurance in accordance withthe rules established for individual participation in any such plan andapplicable law.  Employee will receive 4weeks of paid vacation per year (consisting of the week from December 25 throughJanuary 1 plus three additional weeks to be taken in the discretion ofEmployee), and in addition will receive such other benefits, including holidaysand sick leave, as the Company generally provides to its employees holdingsimilar positions as that of Employee.

 

(c)                                  BonusPlan.   Employee shall be eligibleto participate in such executive bonus plans applicable to Employee as may beapproved from time to time by the Compensation Committee of the Board ofDirectors.

 

(d)                                 BusinessExpenses.   The Company willreimburse Employee for all reasonable and necessary expenses incurred byEmployee in connection with the Company’s business, provided that such expensesare deductible to the Company, are in accordance with the Company’s applicablepolicy and are property documented and accounted for in accordance with therequirements of the Internal Revenue Service.

 

6.                                       **ProprietaryRights**

 

Employee hereby agrees that the Employee Invention, Confidentiality,Non-raiding and Noncompetition Agreement (the “Invention Agreement”) previouslysigned by Employee shall 

 

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remain in full force and effect.

 

7.                                       **Termination**

 

(a)                                  Eventsof Termination.   Employee’semployment with the Company shall terminate upon any one of the following:

 

(i)                                     theCompany’s determination made in good faith that it is terminating the Employeefor “cause” as defined under Section 7(b) below (“Termination for Cause”); or

 

(ii)                                  theeffective date of a written notice sent to Employee stating that the Company isterminating his employment, without cause, which notice can be given by theCompany 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)                               theeffective date of a written notice sent to the Company from Employee statingthat Employee is electing to terminate his employment with the Company“Voluntary Termination”).

 

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

 

(i)                                     afailure or refusal to comply in any material respect with the reasonablepolicies, standards or regulations of the Company;

 

(ii)                                  agood faith determination by the Company that Employee’s performance is unsatisfactory after reasonable notice ofthe ways in which performance is unsatisfactory and a reasonable opportunity tocorrect any such deficiencies;

 

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

 

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

 

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

 

(vi)                              Employee’smaterial breach of a term of this Agreement or the Invention Agreement,including, without limitation, Employee’s unauthorized disclosure or theft ofthe Company’s proprietary information;

 

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(vii)                           an unlawful or criminal actwhich would reflect badly on the Company in the Company’s reasonable judgment;or

 

(viii)                        Employee’s death.

 

8.                                       **Effect ofTermination**

 

(a)                                  Terminationfor Cause or Voluntary Termination.  In the event of any termination of this Agreement pursuant to Sections7(a)(i) or 7(a)(iii), the Company shall pay Employee the compensation andbenefits otherwise payable to Employee under Section 5 through the date oftermination.  Employee’s rights underthe Company’s benefit plans of general application shall be determined underthe provisions of those plans; provided, however, that in the event ofVoluntary Termination, the Company shall pay the cost of maintaining Employee’shealth care benefits pursuant to COBRA for a period one year or until Employeehas found alternative employment, which ever is earlier.

 

(b)                                 TerminationWithout Cause.   In the event of anytermination of this Agreement pursuant to Section 7(a)(ii) during the periodending one year after the Effective Date:

 

(i)                                     theCompany shall pay Employee the compensation and benefits otherwise payable toEmployee under Section 5 through the date of termination (including a pro rataportion of any bonus compensation that may become payable for the calendarquarter that includes the date of termination, which bonus compensation shallbe paid following the end of such calendar quarter);

 

(ii)                                  fora period ending on the later of one year after the Effective Date or six monthsfollowing the date of termination, the Company shall continue to pay Employeehis base salary under Section 5(a) above at Employee’s then current salary,less applicable withholding taxes, payable on the Company’s normal payrolldates during that period;

 

(iii)                               all of Employee’sunvested stock options shall immediately accelerate and become fully vested andexercisable as of the date of Termination without cause; and

 

(iv)                              Employee’srights under the Company’s benefit plans of general application shall bedetermined under the provisions of those plans; provided, however, that in theevent of Voluntary Termination, the Company shall pay the cost of maintainingEmployee’s health care benefits pursuant to COBRA for a period one year oruntil Employee has found alternative employment, which ever is earlier.

 

(c)                                  NoticeFrom Employee.   Employee shallpromptly notify the Company when employee finds employment that would terminatethe Company’s obligation to pay COBRA 

 

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costs pursuant to 8(a) or8(b)(4).

 

9.                                       **Miscellaneous**

 

(a)                                  Arbitration.   Employee and the Company shall submit tomandatory binding arbitration in Seattle, Washington any controversy or claimarising 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 beprohibited, limited or in any other way restricted from, seeking or obtainingequitable relief from a court having jurisdiction over the parties.  Such arbitration shall be conducted inaccordance with the employment dispute arbitration rules of the AmericanArbitration Association in effect at that time, and judgment upon thedetermination or award rendered by the arbitrator may be entered in any courthaving jurisdiction thereof.

 

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

 

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

 

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

 

(e)                                  Assignment.   This Agreement and all rights hereunder arepersonal to Employee and may not be transferred or assigned by Employee at anytime.  The Company may assign itsrights, together with its obligations hereunder, to any parent, subsidiary,affiliate or successor, or in connection with the sale, transfer, or otherdisposition of all or substantially all of its business 

 

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and assets, provided,however, that any such assignee assumes the Company’s obligationshereunder.

 

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

 

(g)                                 EntireAgreement.   This Agreement and theInvention Agreement constitute the entire and only agreement between theparties relating to employment of Employee with the Company, and this Agreementand the Invention 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 writingexecuted by both parties hereto.

 

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

 
| If to the Company:                             | 110-110th Avenue N.E., Suite 700   |
|------------------------------------------------|------------------------------------|
|                                           | Bellevue, WA 98004-5840            |
| Telecopier:                                    | 206-637-1540                       |
| Attention:                                     | Chairman of the Board of Directors |
|                                           |                               |
| If to Employee:                                | Sudheer Koneru                     |
| (at the address on the records of the Company) |

 

(j)                                     BindingNature.   This Agreement shall bebinding upon, and inure to the benefit of, the successors and personalrepresentatives of the respective parties hereto.

 

(k)                                  GoverningLaw.   This Agreement and the rightsand obligations of the parties hereto shall be construed in accordance with thelaws of the State of Washington, without giving effect to the principles ofconflict of laws; provided, however, that if Employee is relocated to anotherjurisdiction then the laws of such jurisdiction shall apply, and in the eventof any claim made following termination, the laws of the jurisdiction whereEmployee was located on the date of termination shall apply.

 

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IN WITNESS WHEREOFthe Company and Employee have executed this Agreement as of the date firstabove written.

 
| “COMPANY” | “EMPLOYEE” |
|---------------------|----------------------|
|                |                 |
| CLICK2LEARN, INC.   |                 |
|                |                 |
|                |                 |
| By:                 | /s/ Kevin Oakes      |   | /s/ Sudheer Koneru |   |
|                |                 | Sudheer Koneru |
| Name                | Kevin Oakes          |   |   |
|                |                 |   |
| Title:              | CEO                  |   |   |
|                     |                      |  |  |  |  |  |

 

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