EX-10.28






Exhibit 10.28




Executive Annual Cash Incentive Plan




Fiscal Year 2008 Plan Summary




Plan Name: PLATO Learning FY 2008 Executive Annual Cash Incentive Plan (“the Plan”).



Plan Objectives: The Plan is designed to support the achievement of financial and key strategic
goals. The Plan encourages three specific behaviors by PLATO executives:




	 	a.	 	Increase the focus on financial results.






	 	b.	 	Reinforce pay and performance philosophy.






	 	c.	 	Hold executives accountable for their financial plan.





Plan Structure: Eligible employees will be provided an opportunity to earn a cash incentive,
expressed as a percent of salary, based on the achievement of pre-determined financial goals.



Eligibility and Incentive Targets: Employees listed in the table below are eligible to participate
in the Plan. Each Participant’s targeted cash incentive opportunity is expressed as a percentage
of the employee’s annual base salary in effect on October 31, 2008.



	 	 	 	 	 
	Executive Job Title	 	Incentive Target
	President & CEO
	 	 	60	%
	Chief Financial Officer
	 	 	32	%
	Chief Technology Officer
	 	 	40	%
	Sr. Vice President, Operations
	 	 	28	%
	Vice President, Product Management
	 	 	28	%
	Sr. Vice President, Sales and Services
	 	 	54	%
	Vice President, Human Resources
	 	 	24	%
	Vice President, Marketing Communications
	 	 	24	%
	 
	 	 	 	 






The Company reserves the right to determine whether an executive will actually participate in the
Plan. Eligible employees will receive a notification letter indicating they are eligible to
participate in the Plan.



Effective Date: The plan will be effective for the fiscal year beginning November 1, 2007.



Performance Measures: Payment will be based upon achievement of specific financial objectives and
subject to adjustment for a discretionary payout modifier, which allows the incentive to be
increased or decreased up to 20%.





	 	•	 	50% Free Cash Flow (FCF)
Cash Incentive Goal:






	 	•	 	50% Total Orders
——  —





One half of the cash incentive is based on the achievement of the pre-established quarterly
and annual FCF goals, weighted across the quarterly and annual periods as shown in the first table
below. For purposes of this Plan, Free Cash Flow is defined as the Company’s cash flow from
operations less internal product development less capital expenditures all as reflected in the
Company’s Consolidated Statement of Cash Flows prepared in accordance with GAAP. The other half of
the cash incentive is based on the achievement of total orders goals as indicated in the second
table below. The entire bonus earned under this Plan, if any, will be paid in a single payment in
December 2008.



(Dollars in Thousands):



Free Cash Flow (50%)




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	% of Target
	Qtr 1	 	Qtr 2	 	Qtr3	 	Qtr 4	 	Fiscal Year	 	Incentive Earned (1)
	Weight	 	Weight	 	Weight	 	Weight	 	Weight	 	 	 	 
	25%	 	25%	 	15%	 	15%	 	20%	 	 	 	 
	$X
	 	$	X	 	 	$	X	 	 	$	X	 	 	$	X	 	 	 	50	%
	$X
	 	$	X	 	 	$	X	 	 	$	X	 	 	$	X	 	 	 	100	%
	$X
	 	$	X	 	 	$	X	 	 	$	X	 	 	$	X	 	 	 	200	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(1)Straight-line interpolation will be applied to award payouts
between the 50% and 200% achievement thresholds.

	 







Total Orders (50%)




	 	 	 	 	 
	Achievement of 2008 Orders	 	% of Target Incentive Earned
	$X MM
	 	 	50	%
	$X MM
	 	 	100	%
	$X MM
	 	 	200	%
	 
	 	 	 	 






	 	 	 
	Payout Modifier:

	 	Discretionary
	 

	 	 






The incentive payment based on achievement of the financial goals above may be increased or
decreased up to 20% based on the Compensation Committee’s assessment of performance relative to
progress towards the Company’s long-term strategy.



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General Provisions:


The obligations of the Company as set forth in this document shall be subject to modification
in such manner and to such extent as the CEO and the Board of Directors deems necessary by
agreement, or as may be necessary to comply with any law, regulation or governmental order
pertaining to compensation



The Plan shall be cancelled in the event of termination of Participant’s employment with the
company. To remain eligible for the incentive payment under the Plan, a Participant must be
continuously employed by the Company from date of hire or November 1, 2007, whichever is later,
through October 31, 2008, except for the following circumstances:




	(1)	 	Death or Disability. If a Participant dies or becomes disabled before October 31,
2008, his/her cash payment amount will be prorated to include only the full fiscal periods for
which the Participant was an active PLATO employee. For the purposes of this Plan
“Disability” means that as a result of physical or mental incapacity the Participant is unable
for a period of 120 consecutive days during any consecutive 180-day period to perform his
duties hereunder on a full-time basis. In the case of death, the payment amount will be
given to the Participant’s estate according to current law and established guidelines and
practices.






	(2)	 	Paid or Unpaid Leave of Absence. If a Participant is on a paid or unpaid leave of
absence anytime between November 1, 2007 and October 31, 2008 his/her cash payment amount will
be prorated to exclude the time he/she was on such leave.






	(3)	 	Voluntary or Involuntary Termination without Cause. In the event a Participant’s
employment with the Company is terminated after November 1, 2007 and before the Plan end date
(October 31, 2008) his/her cash payment amount will be prorated to include only the
achievements for the full fiscal periods for which the Participant was an active PLATO
employee.






	(4)	 	Involuntary Termination with Cause. In the event a Participant’s employment with the
Company is terminated after November 1, 2007 and before the Plan end date (October 31, 2008)
the Participant will not be eligible for any payment under the terms of this plan.






	(5)	 	Participation for New Hire or Promotion. The Compensation Committee of the Board of
Directors may decide, in its sole discretion, those individuals who are hired or promoted
within the first six months of a performance period, will be eligible for a prorated award
within the confines of the Plan.






	(6)	 	Change in Control. If at any time during fiscal year 2008 there is a Change in
Control event and the new company does not continue the Plan, the incentive payment will be
pro-rated through the end of the most recent fiscal period prior to the effective date of the
Change in Control.






	(7)	 	Plan Administration. The plan will be administered by Plato Learning, which reserves
the right to, at any time, amend, interpret, or terminate the Plan, in whole or in part.






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