exv10w20



 





Exhibit 10.20




EMPLOYMENT AGREEMENT




     AGREEMENT, dated as of April 16, 2007 (“Effective Date”) by and between PLATO Learning, Inc.,
a Delaware corporation headquartered in Minneapolis, Minnesota (the “Company”), and Vincent Riera
(“Executive”).



WITNESSETH THAT:




     WHEREAS, the Company wishes to offer Executive employment and Executive wishes to accept
employment from the Company, pursuant to the terms and conditions set forth in this Agreement.



     NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter set
forth, the Company and Executive hereby agree as follows:




	1.	 	Employment. The Company hereby agrees to employ Executive to perform the duties set
forth in Section 3 hereof, and Executive hereby accepts such employment, on the terms and
conditions of this Agreement.
	 
	2.	 	Term. The term of this Agreement (“Term”) shall commence on the Effective Date and
shall end on December 31, 2008, subject to earlier termination pursuant to Section 6. On
December 31, 2008 and on each December 31 thereafter, unless earlier terminated pursuant to
Section 6, the Term will be automatically extended for an additional one (1) year, unless
either party gives written notice not to extend the Term hereof at least forty-five (45) days
prior to the date such extension would be effective. Notwithstanding anything contained
herein to the contrary, in the event of a Change in Control (as such term is defined in
Appendix A), the Term shall be automatically extended until the second anniversary of the
Change in Control.
	 
	3.	 	Duties. Executive will serve as the Company’s Senior Vice President – K-12 Sales,
with the responsibilities and duties customarily associated with that position, and any other
consistent responsibilities and duties assigned or delegated to Executive by the Board of
Directors of the Company (the “Board”) or the Company’s Chief Executive Officer.
	 
	4.	 	Time Commitment. Executive will devote Executive’s time, attention and energies to
the performance of his duties and responsibilities under this Agreement. Executive may not be
associated with, consult, advise, work for, be employed by, contract with, or otherwise devote
any of Executive’s time to the pursuit of any other work or business activities that may
interfere with the performance of such duties and responsibilities. The foregoing shall not
preclude Executive from devoting reasonable time to the supervision of his personal
investments, civic, charitable, educational, religious and similar types of activities,
speaking engagements and membership on other boards of directors, provided such activities do
not interfere in any way with the business of the Company; and provided further that,
Executive cannot serve on the board of directors of more than one publicly-traded company
without the written consent of the Board. The time involved in




 









 






	 	 	such activities shall not be treated as vacation time. Executive shall be entitled to keep
any amounts paid to him in connection with such activities (e.g., director fees and
honoraria).
	 
	5.	 	Compensation and Benefits. The Company will pay the following compensation to
Executive in full consideration for performance of his services hereunder, payable in regular
installments in accordance with the Company’s usual payroll policies and procedures.






	 	(a)	 	Salary and Bonus Compensation. Executive will receive an annual salary
of Three Hundred Thousand ($300,000) with prorated variable compensation through
December 31, 2007 equivalent to Two Hundred Thousand Dollars ($200,000), payable upon
the achievement of agreed upon goals. The Board or the Compensation Committee of the
Board will review Executive’s salary at least annually. Executive’s salary will not be
reduced, and after any increase the term “salary” for purposes of this Agreement shall
refer to Executive’s annual salary as most recently increased.
	 
	 	(b)	 	Stock Options.






	 	(i)	 	On the Effective Date, the Company shall grant Executive an
option under the Company’s 2006 Stock Incentive Plan to purchase 100,000 shares
of the Company’s common stock at an exercise price per share equal to the fair
market value on the date of grant. Such option will vest at the rate of
one-forth of the shares covered by such option on each of the first four
anniversaries of the date of grant and shall be exercisable for a period of
eight years from the date of grant, provided Executive continues to be employed
by the Company.
	 
	 	(ii)	 	On the Effective Date, the Company shall grant Executive either
(1) 18,000 restricted shares of the Company’s common stock; or (2) 12,500
restricted shares of the Company’s common stock plus a $25,000 signing bonus.
Such restricted shares will vest at the rate of one-forth of the shares covered
by such restricted share grant, as applicable, on each of the first four
anniversaries of the date of grant, provided Executive continues to be employed
by the Company.
	 
	 	 	 	Notwithstanding any other provisions as outlined in the Company’s 2006 Stock
Incentive Plan, and unless otherwise specifically prohibited under
applicable laws, or by the rules and regulations of any governing
governmental agencies or national securities exchanges, upon a Change in
Control the initial grant of options to purchase 100,000 shares pursuant to
Section 5(c)(i) will become immediately exercisable, and will remain
exercisable throughout their entire term. Any stock options or restricted shares granted after the Effective Date will be subject to such provisions
relating to change in control as are set forth in the plan under which such
stock options or restricted shares are granted at the time of grant. All




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	 	 	 	options to purchase shares of the Company’s common stock shall be evidenced
by the Company’s standard form of stock option agreement, and all grants of
restricted share of the Company’s common stock shall be evidenced by the
Company’s standard form of restricted stock agreement. All options and
grants or restricted shares shall be subject to the terms and conditions of
the Company’s 2006 Stock Incentive Plan.






	 	(d)	 	Benefits. Executive shall be entitled to five (5) weeks of vacation
each year, which shall be accrued on a prorated basis of each payroll period in accord
with the Company’s standard policy. Executive shall be eligible to participate in such
group life insurance, major medical, and other employee benefit plans and programs
(collectively “Benefit Plans”) as established by the Company, in accordance with the
applicable terms and conditions of such Benefit Plans (including the requirements of
the Benefit Plans for participation). The benefits under the Benefit Plans available
to Executive shall be no less favorable than those available to other senior executives
of the Company, excluding the Company’s Chief Executive Officer.
	 
	 	(e)	 	Relocations Expenses. The Company will pay or reimburse Executive,
upon submission by Executive of appropriate documentation in accordance with the
Company’s expense reimbursement policy and as stated in offer letter.
	 
	 	(f)	 	Expenses. The Company will reimburse Executive for all reasonable and
necessary expenses incurred by Executive in connection with the performance of his
services hereunder upon submission by Executive of appropriate documentation in
accordance with the Company’s expense reimbursement policy.






	6.	 	Termination.






	 	(a)	 	Death or Disability. This Agreement and Executive’s employment shall
be terminated immediately upon Executive’s death. In the event of Executive’s
Disability, this Agreement and Executive’s employment shall be terminated thirty (30)
days after the Company gives written notice to Executive, unless Executive has returned
to the substantial performance of his duties on a full-time basis. For purposes of
this Agreement, “Disability” means that as a result of physical or mental incapacity
Executive 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.
	 
	 	 	 	Upon termination by reason of Death or Disability, Executive shall be entitled only
to accrued but unpaid salary through the date of termination, together with any
other benefit or payment provided under the Company’s plans, policies or programs in
accordance with their terms (collectively, “Accrued Obligations”).
	 
	 	(b)	 	Cause or Without Good Reason. The Company may terminate this Agreement
and Executive’s employment for Cause (as defined in paragraph (d) of this Section) upon
ten (10) day’s prior written notice to Executive. Executive may





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	 	 	 	terminate the
Agreement and his employment without Good Reason (as defined in paragraph (d) of this
Section) upon thirty (30) days’ prior written notice to the Company.
	 
	 	 	 	Upon termination for Cause or without Good Reason, Executive shall be entitled only
to the Accrued Obligations.
	 
	 	(c)	 	Good Reason; Without Cause. Executive may terminate this Agreement and
his employment for Good Reason upon thirty (30) days’ prior written notice to the
Company. The Company may terminate this Agreement and Executive’s employment without
Cause upon thirty (30) days’ prior written notice to Executive.
	 
	 	 	 	Upon termination for Good Reason or Without Cause, Executive shall be entitled to:






	 	(i)	 	the Accrued Obligations;
	 
	 	(ii)	 	a lump sum severance payment equal to one (1) times Executive’s
annual salary in effect on the termination date (without regard to any
reduction in salary referred to in clause (ii) of the definition of Good
Reason), which shall be paid to Executive within ten (10) business days
following such termination; and
	 
	 	(iii)	 	continuation of health and other welfare benefits (including
life, accident and disability benefits) to Executive and his spouse and
dependents under the Benefit Plans in which they participated on the date of
Executive’s termination, for twelve (12) months following the date of
Executive’s termination on substantially the same terms and conditions
(including contributions by Executive) as in effect immediately prior to
Executive’s termination; provided, that the Company’s obligation to
provide such health or other welfare benefit shall cease with respect to such
benefit at the time Executive becomes eligible to participate in a group plan
of another employer providing comparable benefits in the aggregate.






	 	 	 	To the extent that the health and other welfare benefits referred to in clause (iii)
above cannot be provided after termination of employment under applicable law or the
terms of the Benefit Plans then in effect (and cannot be provided through the
Company’s paying the applicable premium for Executive under COBRA), the Company
shall pay to Executive such amount as is necessary to provide Executive, on an
after-tax basis, with an amount equal to the cost of acquiring, for Executive and
his spouse and dependents, (on a non-group basis) those health and
other welfare benefits that would otherwise be lost to Executive and his spouse and
dependents as a result of Executive’s termination.
	 
	 	(d)	 	Definitions. For the purposes of this Agreement, “Cause” shall mean
Executive’s:




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	 	(i)	 	indictment or plea of guilty or nolo contendere
involving any felony or gross misdemeanor involving dishonesty, fraud, or
breach of trust under any law of the United States or any State thereof;
	 
	 	(ii)	 	willful engagement in any conduct or gross negligence that in
either case materially injures the Company or any of its subsidiaries; or
	 
	 	(iii)	 	willful and substantial nonperformance of assigned duties,
provided that such nonperformance has continued more than ten days after the
Company has given written notice of such nonperformance and of its intention to
terminate Executive’s employment because of such nonperformance.






	 	 	 	For purpose of this Agreement “Good Reason” shall exist if the Company, without
Executive’s written consent:






	 	(i)	 	materially reduces the nature, scope, level or extent of
Executive’s responsibilities;
	 
	 	(ii)	 	reduces Executive’s salary;
	 
	 	(iii)	 	gives written notice to the Executive pursuant to Section 2
not to extend the Term of this Agreement; or
	 
	 	(iv)	 	relocates Executive’s principal business office to a location
which is more than fifty (50) miles from both (A) Executive’s principal
business office immediately prior to such relocation and (B) Executive’s
principal place of residence at the time of such relocation.






	 	(e)	 	Conditions. Executive’s eligibility to receive the payment and
benefits under this Section is conditioned on (i) his compliance with the provisions of
Section 8 of this Agreement and (ii) his execution of a general release and waiver of
all claims against the Company and its directors, officers and subsidiaries, in a
reasonable and customary form prepared by the Company.
	 
	 	(f)	 	Right of Recapture. In the event that (x) within one (1) year after
termination of this Agreement and Executive’s employment for any reason the Company
determines that prior to such termination he engaged in any activity which would have
constituted a basis for termination by the Company for Cause while employed by the
Company or (y) Executive breaches the restrictive covenants of Section 8, then:






	 	(i)	 	the Company shall have no further obligations to pay the lump
sum severance payment or to continue providing Executive and his spouse and
dependents with health and other welfare benefits, as provided in paragraph (c)
above, if such termination was by the Company without Cause or by Executive for
Good Reason;




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	 	(ii)	 	upon written notice to Executive from the Company, Executive
shall pay to the Company within ten (10) business days any lump severance
payment received by Executive pursuant to paragraph (c) above, and
	 
	 	(iii)	 	if Executive has exercised any stock options granted to him by
the Company, Executive shall pay to the Company within ten (10) business days
after written notice from the Company the difference between (A) the aggregate
fair market value on the date (or dates) of exercise of the shares subject to
stock options which were exercised by Executive on or after the date which is
one (1) year prior to Executive’s termination of employment and (B) the
aggregate exercise price of such stock options.






	 	 	 	If Executive disputes the exercise by the Company of any rights under this Section
6(f), Executive shall have the right to submit such dispute to arbitration in
accordance with Section 13(e). Notwithstanding anything contained herein, this
paragraph shall not apply to any breach of the provisions of Section 8(a) unless
there has been substantial damage to the Company. For purposes of this paragraph,
“fair market value” on any date means the per share closing price of the Company’s
common stock on the Nasdaq Stock Market on that date (or, if there was no reported
closing price on that date, on the last preceding date on which the closing price
was reported) or, if the Company is not then listed on the Nasdaq Stock Market, as
determined by the Board in good faith.






	7.	 	Change in Control.






	 	(a)	 	Retention Bonus. In the event that Executive’s employment continues
for two (2) years after a Change in Control (as such term is defined in Appendix A),
Executive shall be entitled to a lump sum cash retention bonus equal to one (1) times
Executive’s annual salary then in effect. Such retention bonus shall be paid to
Executive within ten (10) business days following the second anniversary of the Change
in Control.
	 
	 	(b)	 	Severance Payment and Benefits. In the event that Executive’s
employment is terminated less than two (2) years after a Change in Control by the
Company without Cause or by Executive for Good Reason, Executive shall be entitled to
the same rights, payments and benefits as provided in paragraph (c) of Section 6.
	 
	 	 	 	For purposes of this Section, Good Reason shall also include the Company’s failure
without Executive’s written consent to continue in effect any incentive or bonus
plan, or Benefit Plan, unless Executive is permitted to participate in other
plans providing Executive with substantially equivalent compensation and benefits in
the aggregate (and, with respect to life insurance, major medical and other employee
welfare benefit plans, at a substantially equivalent cost).
	 
	 	 	 	In the event the Company’s Chief Executive Officer position opens up during
Executive’s first year of employment, and the Executive is not chosen to fill that
position, Executive will receive one (1) times his base salary should he elect to





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	 	 	 	terminate his employment within 30 days of the position being filled, provided
Executive has performed his duties satisfactorily.
	 
	 	(c)	 	Reduction of Payment. If, as provided in Appendix B, Executive would
otherwise be subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code, the amounts payable under this Agreement shall be reduced as provided in Appendix
B.
	 
	 	(d)	 	Legal Fees. If any contest or dispute shall arise under this Agreement
involving termination of Executive’s employment with the Company after a Change in
Control or involving the failure or refusal of the Company to perform fully in
accordance with the terms of this Section, the Company shall reimburse Executive for
all reasonable legal fees and related expenses, if any, incurred by Executive in
connection with such contest or dispute if a court of competent jurisdiction or an
arbitration panel substantially upholds Executive’s position.






	8.	 	Restrictive Covenants.






	 	(a)	 	Confidentiality. Executive agrees not to directly or indirectly,
without the Company’s prior written consent:






	 	(i)	 	use or disclose, for the benefit of any person, firm or entity
other than the Company and its subsidiaries, the Confidential Business
Information of the Company or any of its subsidiaries;
	 
	 	(ii)	 	distribute or disseminate in any way to any person, firm or
entity anyone other than the Company and its subsidiaries, any Confidential
Business Information in any form whatsoever;
	 
	 	(iii)	 	copy any Confidential Business Information other than for use
by the Company or any of its subsidiaries;
	 
	 	(iv)	 	remove any Confidential Business Information from the premises
of the Company;
	 
	 	(v)	 	fail to safeguard all confidential documents; and
	 
	 	(vi)	 	copy any confidential documents belonging to any of the
Company’s customers.






	 	 	 	For purposes of this Agreement, “Confidential Business Information” means
information or material that is not generally available to or used by others or the
utility or value of which is not generally known or recognized as a standard
practice, whether or not the underlying details are in the public domain, including
but not limited to its computerized and manual systems, procedures, reports, client
lists, review criteria and methods, financial methods and practices, plans, pricing
and marketing techniques, business methods and procedures and other 




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	 	 	 	valuable and
proprietary information relating to the pricing, marketing, design, manufacture and
formulation of educational software, as well as information regarding the past,
present and prospective clients of the Company or any of its subsidiaries, and their
particular needs and requirements, and their own confidential information.
	 
	 	 	 	Upon termination of employment under this Agreement for any reason, Executive agrees
to return to the Company all policy and procedure manuals, records, notes, data,
memoranda, and reports of any nature (including computerized and electronically
stored information) which are in Executive’s possession and/or control which relate
to (i) the Confidential Business Information of the Company or any of its
subsidiaries, (ii) the business activities or facilities of the Company or its past,
present, or prospective clients.






	 	(b)	 	Non-Compete. During the period of Executive’s employment and for a
period of one (1) year following termination of this Agreement and Executive’s
employment for any reason (the “Restricted Period”), Executive will not directly or
indirectly, on his behalf, or as a partner, officer, director, trustee, member,
employee, or otherwise, within the United States or in any foreign market in which
Executive was engaged in activities on behalf of the Company or any of its
subsidiaries, own, engage in or participate in, in any way, any business that is
similar to or competitive with any actual or planned business activity engaged in or
planned by the Company or any of its subsidiaries at the time the employment under this
Agreement was terminated. However, this Agreement shall not prohibit ownership by
Executive of up to 2% of the shares of stock of any corporation the stock of which is
listed on a national securities exchange or is traded in the over-the-counter market.






	 	(c)	 	Non-Solicitation. During the Restricted Period, Executive will not
directly or indirectly, for the purpose of selling services and/or products provided or
planned by the Company or any of its subsidiaries at the time the employment under this
Agreement was terminated, call upon, solicit or divert any actual customer or
prospective customer of the Company or any of its subsidiaries, unless employed by the
Company to do so. An actual customer, for purposes of this Section, is any customer to
whom the Company or any of its subsidiaries has provided services and/or products
within one year prior to Executive’s termination of employment under this Agreement. A
prospective customer, for purposes of this Section, is any prospective customer to whom
the Company or any of its subsidiaries sought to provide services and/or products
within one year prior to the date of
Executive’s termination of employment under this Agreement when Executive had
knowledge of or was involved in such solicitation.
	 
	 	 	 	Executive further agrees that during the Restricted Period Executive shall not
directly or indirectly induce any person to leave the employ of the Company or any
of its subsidiaries, or solicit any person who is currently or was an employee






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	 	 	 	of
the Company or any of its subsidiaries at any time during the twelve months prior to
Executive’s termination of employment under this Agreement.






	 	(d)	 	Judicial Modification. If the final judgment of a court of competent
jurisdiction declares that any term or provision of this Section is invalid or
unenforceable, the parties agree that (i) the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope, duration, or
geographic area of the term or provision, to delete specific words or phrases, or to
replace any invalid or unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of the invalid
or unenforceable term or provision, (ii) the parties shall request that the court
exercise that power, and (iii) this Agreement shall be enforceable as so modified after
the expiration of the time within which the judgment or decision may be appealed.






	9.	 	Remedies. In the event Executive breaches or threatens to breach any provision of
Section 8 of this Agreement, the Company shall, in addition to the provisions of Section 6(f)
be entitled to injunctive relief, enjoining or restraining such breach or threatened breach.
Executive acknowledges that the Company’s remedy at law is inadequate and that the Company and
its subsidiaries will suffer irreparable injury if such conduct is not prohibited.
	 
	 	 	Executive further agrees that the covenants contained in Section 8 shall be construed as
separate and independent of other provisions of this Agreement and the existence of any
claim by Executive against the Company or any of its subsidiaries, except for a claim that
Executive was terminated without Cause or terminated his employment for Good Reason, shall
not constitute a defense to the enforcement by the Company of either Section 8 or this
Section.
	 
	10.	 	Property Rights. All discoveries, designs, improvements, ideas, inventions,
intellectual property, creations, and works of art, whether or not patentable or subject to
copyright, relating to the business of the Company or any of its subsidiaries, or its clients,
conceived, developed or made by Executive during employment under this Agreement, either
solely or jointly with others (hereafter “Developments”) shall automatically become the sole
property of the Company. Executive shall immediately disclose to the Company all such
Developments and shall, without additional compensation, execute all assignments, application
or any other documents deemed necessary by the Company to perfect the Company’s rights
therein. These obligations shall continue throughout the Restricted Period under this
Agreement with respect to Developments conceived, developed or made by Executive during the
period of employment under this Agreement.
	 
	 	 	The Company acknowledges and agrees that the provisions of this section shall not apply to
inventions or for which no equipment, supplies, facility or trade secret information of the
Company or its clients were used by Executive and which were developed entirely on
Executive’s own time unless (a) such inventions relate (i) to the business of the Company or
(ii) to the Company’s actual or demonstrably anticipated research or development or (b) such
inventions result from any work performed by Executive for the Company.




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	11.	 	Assignments. Neither party shall have the right or power to assign any rights or
duties under this Agreement without the written consent of the other party, provided, however,
that the Company shall have the right to assign this Agreement without consent pursuant to any
corporate reorganization, merger, or other transaction involving a Change in Control of the
Company or any of its subsidiary companies. Any attempted assignment in breach of this
Section shall be void.
	 
	 	 	If Executive performs services and duties for any subsidiary or other affiliated entity of
the Company, then the provisions of Sections 8 and 9 shall apply to the confidential
information and business activities, property rights, clients, and employees of that
subsidiary or other entity.
	 
	12.	 	Severability. Each section, paragraph, clause, sub-clause and provision
(collectively “Provisions”) of this Agreement shall be severable from each of the others, and
if for any reason any section, paragraph, clause, sub-clause or provision is invalid or
unenforceable, such invalidity or unenforceability shall not prejudice or in any way affect
the validity or enforceability of any other Provision hereof.
	 
	13.	 	Miscellaneous.






	 	(a)	 	This Agreement (including the appendices) contains the entire agreement of the
parties with respect to the employment of Executive and supersedes all prior
agreements, provisions, covenants, arrangements, communications, representations or
warrantees, whether written or oral, by any officer, employee or representative of any
party with respect to the subject matter of this Agreement.
	 
	 	(b)	 	Failure on the part of either party to insist upon strict compliance by the
other with respect to any of the terms, covenants and conditions hereof, shall not be
deemed a subsequent waiver of such term, covenant or condition.
	 
	 	(c)	 	The provisions of any section containing a continuing obligation after
termination shall survive such termination whether with or without Cause and even if
occasioned by the Company’s breach or wrongful termination.
	 
	 	(d)	 	This Agreement may not be modified except in a written amendment signed by the
parties.
	 
	 	(e)	 	Except for action by the Company to enforce the restrictive covenants of
Section 8, any dispute, controversy or difference that may arise between the parties
hereto out of or in relation to or in connection with this Agreement or for the breach
thereof which cannot be settled amicably by the parties within thirty (30) days
shall be finally and exclusively settled by arbitration in Minneapolis, Minnesota,
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association then in effect. The arbitrator shall have discretion to award the
prevailing party reasonable attorney’s fees, subject to Section 7(d). In the event




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	 	 	 	of litigation under this Agreement, the court shall have discretion to award the
prevailing party reasonable attorney’s fees, subject to Section 7(d).
	 
	 	(f)	 	The headings in this Agreement are inserted for convenience and identification
only and are not intended to describe, interpret, define or limit the scope, extent, or
intent of this Agreement or any provision hereof. Each party has cooperated in the
preparation of this Agreement. As a result, this Agreement shall not be construed
against any party on the basis that the party was the draftsperson.
	 
	 	(g)	 	All forms of compensation referred to in this Agreement are subject to
reduction to reflect withholding for applicable income, payroll and other taxes.






	14.	 	Governing Law. It is the intention of the parties hereto that all questions with
respect to the construction, formation, and performance of this Agreement and the rights and
liabilities of the parties hereto shall be determined in accordance with the laws of the State
of Minnesota. The parties hereto submit to the jurisdiction and venue of the courts of
Hennepin County, Minnesota in respect to any dispute arising out of this Agreement.
	 
	15.	 	Insurance. For the period from the date hereof through at least the fifth
anniversary of Executive’s termination of employment from the Company, the Company agrees to
maintain Executive as an insured party on all directors’ and officers’ insurance maintained by
the Company for the benefit of its directors and officers on at least the same basis as all
other covered individuals.
	 
	16.	 	Notices. Any notice required pursuant to this Agreement will be in writing and will
be deemed given upon the earlier of (i) delivery thereof, if by hand, (ii) five (5) business
days after mailing if sent by mail (registered or certified mail, postage prepaid, return
receipt requested), (iii) the next business day after deposit if sent by a recognized
overnight delivery service, or (iv) upon transmission if sent by facsimile transmission or by
electronic mail, with return notification (provided that any notice sent by facsimile or
electronic mail shall also promptly be sent by one of the means described in clauses (i)
through (iii) of this Section. All notices will be addressed as follows or to such other
address as a party may identify in a written notice to the other party:





	 	 	 	 	 	 	 
	 

	 	to the Company:
	 	PLATO Learning, Inc.
	 	 
	 

	 	 	 	Attn: Chief Executive Officer	 	 
	 

	 	 	 	10801 Nesbitt Avenue South	 	 
	 

	 	 	 	Bloomington, MN 55437-3109	 	 
	 
	 	 	 	 	 	 
	 

	 	to Executive:
	 	Mr. Vincent Riera	 	 
	 

	 	 	 	3 John Street	 	 
	 

	 	 	 	Ladera Ranch, California 92694	 	 







	 	 	Each party named above may change its address and that of its representative for notice by
the giving of notice thereof in the manner hereinabove provided.




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	17.	 	Counterparts. This Agreement may be executed in one or more counterparts, all of
which together shall constitute but one Agreement.





     IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement in the State of
Minnesota effective as of the day and year first above written.



	 	 	 	 	 	 
	 	 	PLATO Learning, Inc.	 
	 
	 	 	 	 	 
	 

	 	By:	 	 	 
	 

Vincent Riera

	 	Name:  
	 

	 	 
	 

	 	Title:
	 

	 	 
	 

	 	 	 

	 	 







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APPENDIX A





     “Change in Control” means the occurrence of any one of the following events:




     (i) individuals who, on April 16, 2007, constitute the Board (the “Incumbent
Directors”) cease for any reason to constitute at least a majority of the Board, provided
that any person becoming a director subsequent to April 16, 2007 whose election or
nomination for election was approved by a vote of at least a majority of the Incumbent
Directors then on the Board (either by a specific vote or by approval of the proxy statement
of the Company in which such person is named as a nominee for director, without written
objection to such nomination) shall be an Incumbent Director; provided,
however, that no individual initially elected or nominated as a director of the
Company as a result of an actual or threatened election contest with respect to directors or
as a result of any other actual or threatened solicitation of proxies by or on behalf of any
person other than the Board shall be deemed to be an Incumbent Director;




     (ii) any “person” (as such term is defined in the Securities Exchange Act of 1934 (the
“Exchange Act”) and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or
becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 50% or more of the combined voting
power of the Company’s then outstanding securities eligible to vote for the election of the
Board (“Company Voting Securities”); provided, however, that the event
described in this paragraph (ii) shall not be deemed to be a Change in Control by virtue of
any of the following acquisitions: (A) by the Company or any subsidiary, (B) by any
employee benefit plan (or related trust) sponsored or maintained by the Company or any
subsidiary, (C) by any underwriter temporarily holding securities pursuant to an offering of
such securities, (D) pursuant to a Non-Qualifying Transaction, as defined in paragraph
(iii), or (E) by any person of Voting Securities from the Company, if a majority of the
Incumbent Board approves in advance the acquisition of beneficial ownership of 50% or more
of Company Voting Securities by such person;




     (iii) the consummation of a merger, consolidation, statutory share exchange or similar
form of corporate transaction involving the Company or any of its subsidiaries that requires
the approval of the Company’s stockholders, whether for such transaction or the issuance of
securities in the transaction (a “Business Combination”), unless immediately following such
Business Combination: (A) more than 60% of the total voting power of (x) the corporation
resulting from such Business Combination (the “Surviving Corporation”), or (y) if
applicable, the ultimate parent corporation that directly or indirectly has beneficial
ownership of 100% of the voting securities eligible to elect directors of the Surviving
Corporation (the “Parent Corporation”), is represented by Company Voting Securities that
were outstanding immediately prior to such Business Combination (or, if applicable, is
represented by shares into which such Company Voting Securities were converted pursuant to
such Business Combination), and such voting power among the holders thereof is in
substantially the same proportion as the voting power of such Company Voting Securities
among the holders thereof immediately prior



A-1 









 






to the Business Combination, (B) no person (other than any employee benefit plan (or
related trust) sponsored or maintained by the Surviving Corporation or the Parent
Corporation), is or becomes the beneficial owner, directly or indirectly, of 50% or more of
the total voting power of the outstanding voting securities eligible to elect directors of
the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation)
and (C) at least a majority of the members of the board of directors of the Parent
Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the
consummation of the Business Combination were Incumbent Directors at the time of the Board’s
approval of the execution of the initial agreement providing for such Business Combination
(any Business Combination which satisfies all of the criteria specified in (A), (B) and (C)
above shall be deemed to be a “Non-Qualifying Transaction”);




     (iv) the stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company or the consummation of a sale of all or substantially all of the
Company’s assets; or




     (v) the occurrence of any other event that the Board determines by a duly approved
resolution constitutes a Change in Control.


Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any
person acquires beneficial ownership of more than 50% of Company Voting Securities as a result of
the acquisition of Company Voting Securities by the Company which reduces the number of Company
Voting Securities outstanding; provided, that if after such acquisition by the
Company such person becomes the beneficial owner of additional Company Voting Securities that
increases the percentage of outstanding Company Voting Securities beneficially owned by such
person, a Change in Control of the Company shall then occur.





A-2 









 








APPENDIX B




Cut-back to Safe Harbor Cap on Payments




          (a) Notwithstanding anything in this Agreement to the contrary, in the event it shall be
determined that any payment, award, benefit or distribution (or any acceleration of any payment,
award, benefit or distribution) by the Company (or any of its affiliated entities) or any entity
which effectuates a Change in Control (or any of its affiliated entities) to or for the benefit of
Executive, whether pursuant to the terms of this Agreement or otherwise (the “Payments”), would be
subject to the excise tax (the “Excise Tax”) imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended (the “Code”), then the amounts payable to Executive under this Agreement shall
be reduced (reducing first the payments under Section 7(a) and (b), unless an alternative method of
reduction is elected by Executive) to the maximum amounts will result in no portion of the Payments
being subject to such excise tax (the “Safe Harbor Cap”). For purposes of reducing the Payments to
the Safe Harbor Cap, only amounts payable to Executive under this Agreement (and no other Payments)
shall be reduced, unless consented to by Executive.




          (b) All determinations required to be made under this Appendix B shall be made by the public
accounting firm that is retained by the Company as of the date immediately prior to the Change in
Control (the “Accounting Firm”) which shall provide detailed supporting calculations both to the
Company and Executive within ten (10) business days of the receipt of notice from the Company or
Executive that there has been a Payment, or such earlier time as is requested by the Company.
Notwithstanding the foregoing, in the event (i) the Board shall determine prior to the Change in
Control that the Accounting Firm is precluded from performing such services under applicable
auditor independence rules or (ii) the Audit Committee of the Board determines that it does not
want the Accounting Firm to perform such services because of auditor independence concerns or (iii)
the Accounting Firm is serving as accountant or auditor for the person(s) effecting the Change in
Control, the Board shall appoint another nationally recognized public accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses (including, but not limited to, the costs of
retaining experts) of the Accounting Firm shall be borne solely by the Company and the Company
shall enter into any agreement requested by the Accounting Firm in connection with the performance
of the services hereunder.




          If the Accounting Firm determines that payments shall be reduced to the Safe Harbor Cap, it
shall furnish Executive with a written opinion to that effect, and to the effect that Executive is
not required to report any Excise Tax on Executive’s federal income tax return. If the Accounting
Firm determines that no Excise Tax would otherwise be payable by Executive, it shall furnish
Executive with a written opinion to such effect, and to the effect that Executive is not required
to report any Excise Tax on Executive’s federal income tax return. The determination by the
Accounting Firm shall be binding upon the Company and Executive (except as provided in paragraph
(c) below).




B-1 









 








          (c) If it is established pursuant to a final determination of a court or the Internal Revenue
Service (the “IRS”) proceeding which has been finally and conclusively resolved, that Payments have
been made to, or provided for the benefit of, Executive by the Company, which are in excess of the
limitations provided in this Appendix B (hereinafter referred to as an “Excess Payment”), Executive
shall repay the Excess Payment to the Company on demand, together with interest on the Excess
Payment at the applicable federal rate (as defined in Section 1274(d) of the Code) from the date of
Executive’s receipt of such Excess Payment until the date of such repayment. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of the determination, it is
possible that Payments which will not have been made by the Company should have been made (an
“Underpayment”), consistent with the calculations required to be made under this Appendix B. In
the event that it is determined (i) by the Accounting Firm, the Company (which shall include the
position taken by the Company, or together with its consolidated group, on its federal income tax
return) or the IRS or (ii) pursuant to a determination by a court, that an Underpayment has
occurred, the Company shall pay an amount equal to such Underpayment to Executive within ten (10)
days of such determination together with interest on such amount at the applicable federal rate
from the date such amount would have been paid to Executive until the date of payment. Executive
shall cooperate, to the extent Executive’s expenses are reimbursed by the Company, with any
reasonable requests by the Company in connection with any contests or disputes with the Internal
Revenue Service in connection with the Excise Tax or the determination of the Excess Payment.
Notwithstanding the foregoing, in the event that amounts payable under this Agreement were reduced
pursuant to paragraph (a) of this Appendix B and the value of its stock options is subsequently
redetermined by the Accounting Firm (as defined below) within the context of Treasury Regulation
§1.280G-1 Q/A 33 that reduces the value of the Payments attributable to such options, the Company
shall promptly pay to Executive any amounts payable under this Agreement that were not previously
paid solely as a result of paragraph (a) up to the Safe Harbor Cap.




 









 








AMENDMENT OF

EMPLOYMENT AGREEMENT




          This Amendment of Employment Agreement (the “Amendment”) is made and entered into this                     
day of                      2007, by and between Vincent Riera (the “Executive”) and PLATO Learning,
Inc., a Delaware corporation (the “Company”) (collectively, the “Parties”).




          WHEREAS, the Parties entered into an Employment Agreement dated April 16, 2007 (the
“Agreement”); and




          WHEREAS, the Parties now consider it desirable to amend the terms and conditions of the
Agreement by this Amendment to reflect the requirements of Internal Revenue Code Section 409A and
to clarify the rights of the Parties;




          NOW THEREFORE, in accordance with Section 13(d) of the Agreement and in consideration of the
mutual promises herein made, the sufficiency of which are expressly acknowledged, the Parties agree
as follows:




     1. The following shall be substituted for the first full sentence of Section 6(c) of the
Agreement:




	 	 	“Executive may terminate this Agreement and his employment for Good
Reason by providing written notice to the Company within (90) days
after the initial existence of the condition; provided however, that
the Company shall have a period of thirty (30) days during which it
may remedy the condition.”





     2. The following new Section 18 is hereby added to the Agreement:




	 	 	“18. Section 409A of the Code.






	 	(a)	 	This Agreement is intended to
comply and shall be administered in a manner that is
intended to comply with Section 409A of the Internal
Revenue Code of 1986, as amended (the ‘Code’) and the
interpretative guidance thereunder, including the
exceptions for short-term deferrals, separation pay
arrangements, reimbursements, and in-kind
distributions. The Agreement shall be construed and
interpreted in accordance with such intent. In
addition, each payment shall be considered a separate
payment for purposes of Section 409A of the Code.




 









 












	 	(b)	 	Notwithstanding any provision
to the contrary, to the extent the Executive is
considered a specified employee under Section 409A of
the Code and would be entitled to a payment during the
six month period beginning on the Executive’s date of
termination that is not otherwise excluded under
Section 409A of the Code under the exceptions for
short-term deferrals, separation pay arrangements,
reimbursements, in-kind distributions, or an otherwise
applicable exemption, the payment will not be made to
the Executive until the earlier of the six month
anniversary of the Executive’s date of termination or
the Executive’s death.”





     3. The following phrase, “, unless an alternative method of reduction is elected by Executive”
shall be deleted from the first sentence of Section (a) of Appendix B of the Agreement.



     4. The following sentence shall be added to the end of Section (c) of Appendix B of the
Agreement:




	 	 	“Payments to the Executive will be made by the end of the
Executive’s taxable year next following the year in which the
Executive remits the related taxes, in accordance with Code Section
409A and Treas. Reg. §1.409A-3(i)(1)(v) (or any similar or successor
provisions).”





*      *      *




 









 








     IN
WITNESS WHEREOF, the parties have executed this Amendment on this ___ day of
                     2007.



	 	 	 	 	 	 	 
	PLATO Learning, Inc.	 	VINCENT RIERA	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Its: