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                                                                   Exhibit 10.3


                              SKILLSOFT CORPORATION

                  1999 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

1.       PURPOSE.

         The purpose of this 1999 Non-Employee Director Stock Option Plan (the
"Plan") of Skillsoft Corporation (the "Company") is to encourage ownership in
the Company by non-employee directors of the Company whose services are
considered essential to the Company's future progress and to provide them with a
further incentive to remain as directors of the Company.

2.       ADMINISTRATION.

         The Board of Directors shall supervise and administer the Plan. All
questions concerning interpretation of the Plan or any options granted under it
shall be resolved by the Board of Directors and such resolution shall be final
and binding upon all persons having an interest in the Plan. The Board of
Directors may, to the full extent permitted by or consistent with applicable
laws or regulations, delegate any or all of its powers under the Plan to a
committee appointed by the Board of Directors, and if a committee is so
appointed, all references to the Board of Directors in the Plan shall mean and
relate to such committee.

3.       PARTICIPATION IN THE PLAN.

         Directors of the Company who are not employees of the Company or any
subsidiary of the Company ("non-employee directors") shall be eligible to
receive options under the Plan.

4.       STOCK SUBJECT TO THE PLAN.

         (a) The maximum number of shares of the Company's Common Stock, par
value $.001 per share ("Common Stock"), which may be issued under the Plan shall
be [240,000] shares, subject to adjustment as provided in Section 7.

         (b) If any outstanding option under the Plan for any reason expires or
is terminated without having been exercised in full, the shares covered by the
unexercised portion of such option shall again become available for issuance
pursuant to the Plan.



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         (c) All options granted under the Plan shall be non-statutory options
not entitled to special tax treatment under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").

         (d) Shares issued under the Plan may consist in whole or in part of
authorized but unissued shares or treasury shares.

5.       TERMS, CONDITIONS AND FORM OF OPTIONS.

         Each option granted under the Plan shall be evidenced by a written
agreement in such form as the Board of Directors shall from time to time
approve, which agreements shall comply with and be subject to the following
terms and conditions:

         (a) AUTOMATIC OPTION GRANT DATE. Each person who first becomes a
non-employee director after the closing date (the "Closing Date") of the
Company's initial public offering of Common Stock pursuant to an effective
registration statement under the Securities Act of 1933, as amended, shall
automatically be granted an option to purchase 60,000 shares of Common Stock on
the date of his or her initial election to the Board of Directors. Each date of
grant of an option pursuant to this Section 5(a) is hereinafter referred to as
an "Option Grant Date."

         (b) OPTION EXERCISE PRICE. The option exercise price per share for each
option granted under the Plan shall equal (i) the closing price on any national
securities exchange on which the Common Stock is listed, (ii) the closing price
of the Common Stock on the Nasdaq National Market or (iii) the average of the
closing bid and asked prices in the over-the-counter market, whichever is
applicable, as published in THE WALL STREET JOURNAL, on the Option Grant Date.
If no sales of Common Stock were made on the Option Grant Date, the price of the
Common Stock for purposes of clauses (i) and (ii) above shall be the reported
price for the next preceding day on which sales were made.

         (c) TRANSFERABILITY OF OPTIONS. Except as the Board may otherwise
determine or provide in an option granted under the Plan, any option granted
under the Plan to an optionee shall not be transferable by the optionee other
than by will or the laws of descent and distribution, and shall be exercisable
during the optionee's lifetime only by the optionee or the optionee's guardian
or legal representative. References to an optionee, to the extent relevant in
the context, shall include references to authorized transferees.

         (d) VESTING PERIOD.

                  (i) GENERAL. Each option granted under the Plan pursuant to
Section 5(a) above shall become exercisable in four equal annual installments
beginning on the

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first anniversary of the Option Grant Date; provided, however, that the optionee
is serving as a director of the Company on each such anniversary (it being
understood that a director whose term expires at an Annual Meeting of
Stockholders and who does not stand for re-election is deemed to be a director
on (but not following) the date of such Annual Meeting for the purposes of this
Section 5 if he or she continues to serve through the date of such Annual
Meeting).
                  (ii) ACCELERATION UPON A CHANGE IN CONTROL. Notwithstanding
the foregoing, each outstanding option granted under the Plan shall immediately
become exercisable in full upon the occurrence of Change in Control Event (as
defined in Section 8) with respect to the Company.

                  (iii) RIGHT TO RECEIVE RESTRICTED STOCK. Notwithstanding the
provisions of Section 5(d)(i) above, the Board shall have the authority to grant
options (including options granted pursuant to Section 5(a) above) which are
immediately exercisable subject to the Company=s right to repurchase any
unvested shares of stock acquired by the optionee on exercise of an option in
the event such optionee=s service as a director terminates for any reason.

         (e) TERMINATION. Each option shall terminate, and may no longer be
exercised, on the earlier of (i) the date ten years after the Option Grant Date
of such option or (ii) the first anniversary of the date on which the optionee
ceases to serve as a director of the Company.

         (f) EXERCISE PROCEDURE. An option may be exercised only by written
notice to the Company at its principal office accompanied by (i) payment in cash
or by certified or bank check of the full consideration for the shares as to
which they are exercised, (ii) delivery of outstanding shares of Common Stock
(which have been outstanding for at least six months) having a fair market value
on the last business day preceding the date of exercise equal to the option
exercise price, or (iii) an irrevocable undertaking by a creditworthy broker to
deliver promptly to the Company sufficient funds to pay the exercise price or
delivery of irrevocable instructions to a creditworthy broker to deliver
promptly to the Company cash or a check sufficient to pay the exercise price.

         (g) EXERCISE BY REPRESENTATIVE FOLLOWING DEATH OF DIRECTOR. An
optionee, by written notice to the Company, may designate one or more persons
(and from time to time change such designation), including his or her legal
representative, who, by reason of the optionee's death, shall acquire the right
to exercise all or a portion of the option. If the person or persons so
designated wish to exercise any portion of the



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option, they must do so within the term of the option as provided herein. Any
exercise by a representative shall be subject to the provisions of the Plan.

6.       LIMITATION OF RIGHTS.

         (a) NO RIGHT TO CONTINUE AS A DIRECTOR. Neither the Plan, nor the
granting of an option nor any other action taken pursuant to the Plan, shall
constitute or be evidence of any agreement or understanding, express or implied,
that the Company will retain the optionee as a director for any period of time.

         (b) NO STOCKHOLDERS' RIGHTS FOR OPTIONS. An optionee shall have no
rights as a stockholder with respect to the shares covered by his or her option
until the date of the issuance to him or her of a stock certificate therefor,
and no adjustment will be made for dividends or other rights (except as provided
in Section 7) for which the record date is prior to the date such certificate is
issued.

         (c) COMPLIANCE WITH SECURITIES LAWS. Each option shall be subject to
the requirement that if, at any time, counsel to the Company shall determine
that the listing, registration or qualification of the shares subject to such
option upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental or regulatory body, or the disclosure of
non-public information or the satisfaction of any other condition is necessary
as a condition of, or in connection with, the issuance or purchase of shares
thereunder, such option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval, or satisfaction of
such condition shall have been effected or obtained on conditions acceptable to
the Board of Directors. Nothing herein shall be deemed to require the Company to
apply for or to obtain such listing, registration or qualification, or to
satisfy such condition.

7.       ADJUSTMENT PROVISIONS FOR MERGERS, RECAPITALIZATIONS AND RELATED
TRANSACTIONS.

         If, through or as a result of any merger, consolidation,
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split, or other similar transaction, (i) the outstanding shares of
Common Stock are exchanged for a different number or kind of securities of the
Company or of another entity, or (ii) additional shares or new or different
shares or other securities of the Company or of another entity are distributed
with respect to such shares of Common Stock, the Board of Directors shall make
an appropriate and proportionate adjustment in (x) the maximum number and kind
of shares reserved for issuance under the Plan, (y) the



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number and kind of shares or other securities subject to then outstanding
options under the Plan, and (z) the price for each share subject to any then
outstanding options under the Plan (without changing the aggregate purchase
price for such options), to the end that each option shall be exercisable, for
the same aggregate exercise price, for such securities as such optionholder
would have held immediately following such event if he had exercised such option
immediately prior to such event. No fractional shares will be issued under the
Plan on account of any such adjustments.

8. DEFINITION OF "CHANGE IN CONTROL EVENT". A "Change in Control Event" shall
mean:

         (a)      the acquisition by an individual, entity or group (within the
                  meaning of Section 13(d)(3) or 14(d)(2) of the Securities
                  Exchange Act of 1934, as amended (the "Exchange Act")) (a
                  "Person") of beneficial ownership of any capital stock of the
                  Company after the date of adoption of this Plan by the Board
                  of Directors if, after such acquisition, such Person
                  beneficially owns (within the meaning of Rule 13d-3
                  promulgated under the Exchange Act) 30% or more of either (x)
                  the then-outstanding shares of common stock of the Company
                  (the "Outstanding Company Common Stock") or (y) the combined
                  voting power of the then-outstanding securities of the Company
                  entitled to vote generally in the election of directors (the
                  "Outstanding Company Voting Securities"); PROVIDED, HOWEVER,
                  that for purposes of this subsection (i), the following
                  acquisitions shall not constitute a Change in Control Event:
                  (A) any acquisition directly from the Company or an
                  underwriter or agent of the Company (excluding an acquisition
                  pursuant to the exercise, conversion or exchange of any
                  security exercisable for, convertible into or exchangeable for
                  common stock or voting securities of the Company, unless the
                  Person exercising, converting or exchanging such security
                  acquired such security directly from the Company or an
                  underwriter or agent of the Company), (B) any acquisition by
                  any employee benefit plan (or related trust) sponsored or
                  maintained by the Company or any corporation controlled by the
                  Company, or (C) any acquisition by any corporation pursuant to
                  a Business Combination (as defined below) which complies with
                  clauses (x) and (y) of subsection (iii) of this definition; or

         (b)      such time as the Continuing Directors (as defined below) do
                  not constitute a majority of the Board (or, if applicable, the
                  Board of Directors


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                  of a successor corporation to the Company), where the term
                  "Continuing Director" means at any date a member of the Board
                  (x) who was a member of the Board on the date of the initial
                  adoption of this Plan by the Board or (y) who was nominated or
                  elected subsequent to such date by at least a majority of the
                  directors who were Continuing Directors at the time of such
                  nomination or election or whose election to the Board was
                  recommended or endorsed by at least a majority of the
                  directors who were Continuing Directors at the time of such
                  nomination or election; PROVIDED, HOWEVER, that there shall be
                  excluded from this clause (y) any individual whose initial
                  assumption of office occurred as a result of an actual or
                  threatened election contest with respect to the election or
                  removal of directors or other actual or threatened
                  solicitation of proxies or consents, by or on behalf of a
                  person other than the Board; or

         (c)      the consummation of a merger, consolidation, reorganization,
                  recapitalization or statutory share exchange involving the
                  Company or a sale or other disposition of all or substantially
                  all of the assets of the Company (a "Business Combination"),
                  unless, immediately following such Business Combination, each
                  of the following two conditions is satisfied: (x) all or
                  substantially all of the individuals and entities who were the
                  beneficial owners of the Outstanding Company Common Stock and
                  Outstanding Company Voting Securities immediately prior to
                  such Business Combination beneficially own, directly or
                  indirectly, more than 50% of the then-outstanding shares of
                  common stock and the combined voting power of the
                  then-outstanding securities entitled to vote generally in the
                  election of directors, respectively, of the resulting or
                  acquiring corporation in such Business Combination (which
                  shall include, without limitation, a corporation which as a
                  result of such transaction owns the Company or substantially
                  all of the Company's assets either directly or through one or
                  more subsidiaries) (such resulting or acquiring corporation is
                  referred to herein as the "Acquiring Corporation") in
                  substantially the same proportions as their ownership of the
                  Outstanding Company Common Stock and Outstanding Company
                  Voting Securities, respectively, immediately prior to such
                  Business Combination and (y) no Person (excluding the
                  Acquiring Corporation or any employee benefit plan (or related
                  trust) maintained or sponsored by the Company or by the
                  Acquiring Corporation) beneficially owns, directly or
                  indirectly, 30% or more of the then-outstanding shares of
                  common stock of the Acquiring Corporation, or of the combined
                  voting power of the then-outstanding


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                  securities of such corporation entitled to vote generally in
                  the election of directors (except to the extent that such
                  ownership existed prior to the Business Combination).

9.       TERMINATION AND AMENDMENT OF THE PLAN.

         The Board of Directors may suspend or terminate the Plan or amend it in
any respect whatsoever.

10.      NOTICE.

         Any written notice to the Company required by any of the provisions of
the Plan shall be addressed to the Treasurer of the Company and shall become
effective when it is received.

11.      GOVERNING LAW.

         The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the internal laws of the State of Delaware (without regard
to any applicable conflicts of laws or principles).

12.      EFFECTIVE DATE.

         The Plan shall become effective on the date hereof.


                                        Adopted by the Board of Directors on
                                        September 8, 1999

                                        Approved by the stockholders on
                                        October 2, 1999




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