EMPLOYMENT AGREEMENT

Exhibit 10.2

EMPLOYMENT AGREEMENT

This Employment Agreement (this “Agreement”), by and between Saba Software, Inc., a Delaware corporation (the “Company”), and Bobby Yazdani (“Executive”), is effective as of February 1, 2006 (the “Effective Date”).

R E C I T A L S

A. Executive has been Chief Executive Officer of the Company since September, 2003 and from inception until March, 2002.

B. The Board of Directors of the Company (the “Board of Directors”) recognizes that Executive has made important contributions to the success of the Company.

C. The Company believes that maintaining sound management is essential to protect and enhance the best interests of the Company and its stockholders.

D. The Company desires assurance of the continued association and services of Executive in order to retain Executive’s experience, skills, abilities, background and knowledge, and is willing to engage Executive’s services on the terms and conditions set forth in this Agreement.

E. Executive desires to continue to be in the employ of the Company, and is willing to accept such employment on the terms and conditions set forth in this Agreement.

F. Company and Executive wish to enter into an employment relationship with a written employment agreement intended to supersede all other written and oral representations regarding Executive’s employment with Company.

A G R E E M E N T

NOW, THEREFORE, based on the foregoing recitals and in consideration of the commitments set forth below, Executive and the Company agree as follows:

1.1. Term . The Company hereby employs Executive to render services to the Company in the position of Chief Executive Officer, reporting directly to the Board of Directors of the Company, for the period commencing on the Effective Date and ending on the date Executive’s employment is terminated under this Agreement (the “Term”). The Company and Executive hereby acknowledge that either of them may terminate Executive’s term of Employment for any reason or no reason at all.

1.2. Position . The duties of this position shall include such duties and responsibilities as are reasonably assigned to Executive by the Board of Directors, including but not limited to those customarily performed by chief executive officers of similarly situated

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corporations. Executive agrees to serve in a similar capacity for the benefit of any of the Company’s direct or indirect, wholly-owned or partially-owned subsidiaries or affiliates. Additionally, Executive shall serve in such other capacity or capacities as the Board of Directors of the Company may from time to time prescribe. During his employment by the Company, Executive shall, subject to Section 1.3, devote his full energies, interest, abilities and productive time to the proper and efficient performance of his duties under this Agreement.

1.3. Other Activities . Except upon the prior written consent of the Board of Directors of the Company, Executive will not (i) accept any other employment, or (ii) engage, directly or indirectly, in any other business activity (whether or not pursued for pecuniary advantage) that is or may be in conflict with, or that might place Executive in a conflicting position to that of, the Company. Notwithstanding the foregoing, Executive shall be permitted to engage in occasional professional or charitable activities outside the scope of his employment with the Company so long as such activities (A) do not conflict with the actual or proposed business of the Company or any of its subsidiaries or affiliates, and (B) do not affect the performance of his duties hereunder. In addition, subject to the prior written consent of the Board of Directors of the Company and subject to Executive’s fiduciary duties to the Company, Executive shall be permitted to serve as a director of other corporations provided that their businesses are not competitive with the actual or proposed business of the Company or any of its subsidiaries or affiliates and provided further that Executive’s service as a director of such other corporations does not interfere with his performance of his duties hereunder. Any such prior written consent may be subsequently revoked in the event that the Board of Directors determines, in good faith, that Executive’s position as a director of any such other corporation has developed into a conflict of interest.

1.4. Proprietary Information . Executive recognizes that his employment with the Company will involve contact with information of substantial value to the Company, which is not generally known in the trade, and which gives the Company an advantage over its competitors who do not know or use it. Executive has previously executed and delivered to the Company, a copy of the Company’s standard form of Employee Proprietary Information and Inventions Agreement (the “Employee Proprietary Information and Inventions Agreement”).

2.1. Base Salary . In consideration of the services to be rendered under this Agreement, while employed by the Company, Company shall pay Executive an initial base annual salary of three hundred fifty thousand dollars ($350,000), less standard deductions and withholdings, payable in regular periodic payments in accordance with Company payroll policy. Such salary shall be prorated for any partial month of employment on the basis of a 30-day fiscal month. Such base salary shall be subject to annual review by the Board of Directors.

2.2. Bonus . Executive will be eligible to receive quarterly bonuses totaling 50% of his base salary annually (such annual amount, the “Target Bonus”), the exact amount of each such bonus to be determined by the Board of Directors based upon Executive achieving certain performance criteria and the Company achieving specific financial goals, in each case to be determined by the Board of Directors. Any such bonus shall be payable quarterly after the end

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of each fiscal quarter, and shall be prorated for partial fiscal quarters. In addition, Executive shall be eligible for such additional bonuses as may be awarded by the Board of Directors in its sole discretion from time to time.

2.3. Stock Option . Subject to approval by the Board of Directors, Executive will be granted a stock option to purchase 90,000 shares of the Company’s Common Stock at the market price in effect the date the Board of Directors approves the grant pursuant to the Company’s standard form of Stock Option Agreement to be entered into by and between Executive and the Company (the “Stock Option Agreement”). The stock option will vest over the course of one year in four equal quarterly installments with the first installment vesting one quarter after the Effective Date of this employment agreement.

2.4. Benefits . Executive shall be entitled to participate in the Company’s group medical, dental, life insurance, 401(k), deferred compensation or other benefit plans and programs on the same terms and conditions as other members of the Company’s senior executive management. Executive shall be provided such perquisites of employment, including paid vacation, and all paid holidays and sick leave as are provided to all other members of the Company’s senior executive management. Executive shall be entitled to reimbursement of all reasonable expenses incurred by Executive in the performance of his duties hereunder, in accordance with the policies and procedures established by the Company from time to time, and as may be amended from time to time.

Company or Executive may terminate Executive’s employment with Company at any time for any reason, including no reason at all, notwithstanding anything to the contrary contained in or arising from any statements, policies, or practices of Company relating to the employment, discipline, or termination of its employees. This at-will employment relationship cannot be changed except in writing signed by a duly authorized officer of the Company other than Executive. This Section 3 shall survive any termination or expiration of this Agreement.

4.1. Termination by Executive . Executive may terminate his employment upon notice to the Company. In the event that Executive elects to terminate his employment other than for Good Reason (as defined below), the Company shall pay Executive all base salary due and owing and all other accrued but unpaid benefits (e.g., accrued vacation) through the last day actually worked and thereafter the Company’s obligations under this Agreement shall terminate.

4.2. Termination by the Company for Cause . In the event that the Company terminates Executive’s employment for Cause, the Company shall pay Executive all base salary due and owing and all other accrued but unpaid benefits (e.g., accrued vacation) through the last day actually worked and thereafter the Company’s obligations under this Agreement shall terminate. For the purposes of this Agreement, termination shall be for “Cause” if (i) Executive refuses or fails to act in accordance with any lawful order or instruction of the

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Board of Directors of the Company, and such refusal or failure to act has not been cured within 30 days of notice of such disobedience, (ii) Executive fails to devote reasonable attention and time during normal business hours to the business affairs of the Company or Executive is reasonably determined by the Board of Directors to have been unfit (other than as a result of an Incapacity), unavailable for service (other than as a result of an Incapacity) or grossly negligent in connection with the performance of his duties on behalf of the Company, which unfitness, unavailability or gross negligence has not been cured within 30 days of notice of the same; (iii) Executive is reasonably determined by the Board of Directors to have committed a material act of dishonesty or willful misconduct or to have acted in bad faith to the material detriment of the Company in connection with the performance of his duties on behalf of the Company; (iv) Executive is convicted of a felony or other crime involving dishonesty, breach of trust, moral turpitude or physical harm to any person, or (v) Executive materially breaches any agreement with the Company which breach has not been cured within 30 days notice of the same. For purposes of this Agreement, the term “without Cause” shall mean termination of Executive’s employment for reasons other than for “Cause.”

4.3. Termination by the Company without Cause or Termination by Executive for Good Reason . In the event that the Company terminates Executive’s employment without Cause or Executive terminates his employment for Good Reason, the Company shall pay Executive all base salary due and owing and all other accrued but unpaid benefits (e.g., accrued vacation) through the last day actually worked, and Executive shall be entitled to receive the severance payments and benefits set forth below in this Section 4.3; provided, however, that such severance and benefits are conditioned on Executive’s execution and non-revocation of a release agreement, the form of which is attached hereto as Exhibit A , and thereafter the Company’s obligations under this Agreement shall terminate. For the purposes of this Agreement, termination shall be for “Good Reason” if (i) there is a material diminution of Executive’s responsibilities with the Company, or a material change in Executive’s reporting responsibilities or title, in each case without Executive’s consent; (ii) there is a reduction by the Company in Executive’s annual base salary then in effect without Executive’s consent; or (iii) Executive’s principal work location is relocated outside of the San Francisco Bay Area without Executive’s consent. Executive agrees that he may be required to travel from time to time as required by the Company’s business and that such travel shall not constitute grounds for Executive to terminate his employment for Good Reason.

4.3.1. Target Bonus and Base Salary . On the date of the termination of Executive’s employment, the Company shall pay to Executive, or to Executive’s beneficiaries or estate as appropriate, in a single lump-sum payment, subject to standard deductions and withholdings, Executive’s Target Bonus, as if the applicable performance criteria and Company financial goals had been achieved completely, pro rated based on the number of days actually elapsed through the date of termination in the year in which such termination occurs. In addition, the Company shall pay to Executive, or to Executive’s beneficiaries or estate, as appropriate, the sum of (i) an amount equal to that number of months of Executive’s then current base salary equal to the sum of six (6) months plus one month for every twelve month period, including nonconsecutive months, Executive has been employed by the Company prior to the date of termination (which sum shall not exceed twelve (12) months) (collectively, the “Severance Months”), and (ii) an amount equal to the product of (x) the quotient of the

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number of Severance Months divided by 12, and (y) the Target Bonus amount (the “Bonus Severance Amount”), less all applicable standard deductions and withholdings. Such amounts payable in the preceding sentence shall be payable either as a lump-sum or in the form of salary continuation (with amounts attributable to the Target Bonus prorated monthly), whichever the Company shall determine in its sole discretion.

4.3.2. Acceleration of Vesting of Stock Option . On the date of termination of Executive’s employment, 100% of the shares subject to any stock option then held by Executive, including without limitation, the option described in Section 2.3, shall vest and become immediately exercisable.

4.3.3. Group Medical Coverage . The Company shall, following the Executive’s timely election, provide the Executive with continued coverage for one year after termination of Executive’s employment under the Company’s group health insurance plans in effect upon termination of Executive’s employment without Cause or for Good Reason in accordance with the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”), at no cost to Executive. If COBRA or similar benefits are not available by law during any portion of the remainder of such one year period, then the Company shall pay Executive each month during which COBRA or similar benefits are not available by law an amount equal to the premium paid by Executive for the last month during which such COBRA or similar benefits were available.

4.4. Termination for Incapacity . In the event that Executive suffers an Incapacity during Executive’s employment, the Company may elect to terminate Executive’s employment pursuant to this Section 4.4. In such event, the Company shall pay Executive, or to Executive’s beneficiaries or estate if applicable, all base salary due and owing and all other accrued but unpaid benefits (e.g., accrued vacation) through the date on which an Incapacity is determined to exist (the “Determination Date”), less applicable standard deductions and withholdings. In addition, within ten days of such termination of Executive’s employment, the Company shall pay to Executive, or to Executive’s beneficiaries or estate if applicable, in a single lump-sum payment, subject to applicable standard deductions and withholdings, an amount equal to the Target Bonus, pro rated based on the number of days through the Determination Date in the year in which such termination occurs, less amounts of the Target Bonus previously paid to Executive for the year in which such termination occurs. In addition, the Company shall pay to Executive, or to Executive’s beneficiaries or estate, as appropriate, the sum of (i) an amount equal to that number of months of Executive’s then current base salary equal to the Severance Months and, (ii) the Bonus Severance Amount, less all applicable standard deductions and withholdings and any disability payment otherwise payable by or pursuant to plans provided by the Company and actually paid to Executive. Such amounts payable in the preceding sentence shall be payable either as a lump-sum or in the form of salary continuation (with amounts attributable to the Bonus Severance Amount prorated monthly), whichever the Company shall determine in its sole discretion. Thereafter the Company’s obligations under this Agreement shall terminate; provided, however, that nothing contained in this Agreement shall limit Executive’s rights to payments or other benefits under any long-term disability plans of the Company in which Executive participates, if any. For the purposes of this Agreement, Executive shall be deemed to have suffered an “Incapacity” if Executive shall, due to illness or mental or physical incapacity, be unable to perform the duties and responsibilities required to be performed by him on behalf of the Company for a period of at least 180 days.

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4.5. Termination upon Death . In the event that Executive dies during Executive’s employment, Executive’s employment shall be deemed to have terminated upon the date of death. In such event, the Company shall pay Executive’s estate all base salary due and owing and all other accrued but unpaid benefits (e.g., accrued vacation) through the date of death. In addition, within ten days of such termination of Executive’s employment, the Company shall pay to Executive’s estate, in a si