Exhibit
10.1


 


EMPLOYMENT AGREEMENT


 


This Employment Agreement (the “Agreement”) is entered into as of June
26, 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 SUDHEER KONERU (“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 an executive officer of the Company with the title of
Chief Strategy Officer.


 


2.                                       Duties


 


Employee will be responsible for the following:


 


•                  Overall
corporate strategy, with a primary focus on aligning Click2learn with
synergistic software segments and players


•                  Reviewing and
helping to create the company messaging and future vision


•                  Reviewing and
strategizing company’s “go to market” processes


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


•                  Own 1-3 specific
large sales opportunities on a quarterly basis


•                  Represent the
company, as appropriate, in external functions


•                  In concert with
the VP of Business Development, uncover and cultivate business development and
partner relationships


 


Employee will also have such additional duties as are reasonably
determined by the Company consistent with his position as Chief Strategy
Officer.  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


 


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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 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 one year
after the Effective Date or when terminated pursuant to Section 7 hereof.  The expiration or termination of this
Agreement will not result in the termination of Employee’s employment, but
Employee will become an “at will” employee upon such termination or expiration.


 


5.                                       Compensation
and Benefits


 


(a)                                  Base
Salary.   The Company agrees to pay
Employee base salary of $190,000 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 4
weeks of paid vacation per year (consisting of the week from December 25 through
January 1 plus three additional weeks to be taken in the discretion of
Employee), and in addition will receive such other benefits, including holidays
and sick leave, as the Company generally provides to its employees holding
similar positions as that of Employee.


 


(c)                                  Bonus
Plan.   Employee shall be eligible
to participate in such executive bonus plans applicable to Employee as may be
approved from time to time by the Compensation Committee of the Board of
Directors.


 


(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.


 


6.                                       Proprietary
Rights


 


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


 


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remain in full force and effect.


 


7.                                       Termination


 


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


 


(i)                                     the
Company’s determination made in good faith that it is terminating 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 
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;


 


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


 


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


 


(viii)                        Employee’s death.


 


8.                                       Effect of
Termination


 


(a)                                  Termination
for Cause or Voluntary Termination.  
In the event of any termination of this Agreement 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.  Employee’s rights under
the Company’s benefit plans of general application shall be determined under
the provisions of those plans; provided, however, that in the event of
Voluntary Termination, the Company shall pay the cost of maintaining Employee’s
health care benefits pursuant to COBRA for a period one year or until Employee
has found alternative employment, which ever is earlier.


 


(b)                                 Termination
Without Cause.   In the event of any
termination of this Agreement pursuant to Section 7(a)(ii) during the period
ending one year after the Effective Date:


 


(i)                                     the
Company shall pay Employee the compensation and benefits otherwise payable to
Employee under Section 5 through the date of termination (including a pro rata
portion of any bonus compensation that may become payable for the calendar
quarter that includes the date of termination, which bonus compensation shall
be paid following the end of such calendar quarter);


 


(ii)                                  for
a period ending on the later of one year after the Effective Date or six 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;


 


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


 


(iv)                              Employee’s
rights under the Company’s benefit plans of general application shall be
determined under the provisions of those plans; provided, however, that in the
event of Voluntary Termination, the Company shall pay the cost of maintaining
Employee’s health care benefits pursuant to COBRA for a period one year or
until Employee has found alternative employment, which ever is earlier.


 


(c)                                  Notice
From Employee.   Employee shall
promptly notify the Company when employee finds employment that would terminate
the Company’s obligation to pay COBRA 


 


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


 


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 employment dispute 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.


 


(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 


 


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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 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 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 telecopier, 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 telecopier, 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

  
	
  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)                                     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 of Washington, 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 located on the date of termination shall apply.


 


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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 Oakes

  	
   

  	
  /s/ Sudheer Koneru

  	
   

  
	
   

  	
   

  	
  Sudheer Koneru

  
	
  Name

  	
  Kevin Oakes

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  CEO

  	
   

  	
   

  
							



 


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