<PAGE>

                                                                   EXHIBIT 10.46

                              PLATO LEARNING, INC.
                         EMPLOYEE STOCK OPTION AGREEMENT

      PLATO Learning, Inc., a Delaware corporation (the "Company"), hereby
grants to ________ (the "Employee") on this ____ day of ________, 200__ (the
"Option Date"), pursuant to the provisions of the PLATO Learning, Inc. 2002
Stock Plan (the "Plan"), a __________ stock option (the "Option") to purchase
from the Company ________ shares of its Common Stock, $.01 par value ("Stock"),
at the price of $________ per share upon and subject to the terms and conditions
set forth below.

      1. Option Subject to Acceptance of Agreement.

      The Option shall become null and void unless the Employee shall accept
this Agreement by executing it in the space provided below and return it to the
Company within 60 days following the Option Date.

      2. Time and Manner of Exercise of Option.

      2.1 Maximum Term of Option. In no event may the Option be exercised, in
whole or in part, after 5:00 p.m., Minneapolis time, on the date, which is eight
(8) years after the Option Date (the "Expiration Date").

      2.2 Exercise of Option. Except as otherwise provided in the Plan, the
Option shall become exercisable with respect to (i) 33-1/3% of the aggregate
number of shares of Stock subject to the Option on ________ (the "First Exercise
Date"); (ii) with respect to 66-2/3% of the aggregate number of shares subject
to the Option on ________ (the "Second Exercise Date"); and (iii) with respect
to 100% of the aggregate number of shares subject to the Option on (the "Third
Exercise Date") (the First Exercise Date, the Second Exercise Date and the Third
Exercise Date each being referred to herein as an "Exercise Date").

      2.3 Method of Exercise. Subject to the limitations set forth in this
Agreement, the Option may be exercised (i) by giving written notice to the
Secretary of the Company or the Secretary's designee, specifying the number of
whole shares to be purchased and accompanied by the payment therefore in full in
cash or, if permitted by the Compensation Committee, (A) in previously owned
whole shares of Stock (for which the Employee has good title, free and clear of
all liens and encumbrances) having a fair market value, determined as of the
date of exercise, equal to the aggregate purchase price payable pursuant to the
Option by reason of such exercise, (B) in cash by a broker-dealer to whom the
Employee has submitted an irrevocable notice of exercise, or (C) a combination
of cash and Stock as described in this Section; and (ii) by executing such
documents as the Company may reasonably request. No shares shall be issued until
the full purchase price and all applicable taxes have been paid.

<PAGE>

      2.4 Termination of Option. In no event may the Option be exercised after
it terminates as set forth in this Section 2.4. The Option shall terminate on
its Expiration Date, or earlier to the extent not exercised pursuant to Section
2.2 and pursuant to Sections 6.8, 6.9, 6.10, 6.11 and 6.12 of the Plan. In the
event that the Employee shall forfeit rights to purchase all or a portion of the
shares to which this Option relates, the Employee shall, within 10 days of the
date of the Company's written request, return this Agreement to the Company for
cancellation.

      3. Additional Terms and Conditions of Option.

      3.1 Withholding Taxes. As a condition precedent to any exercise of the
Option, the Employee shall, upon request by the Company, pay to the Company in
addition to the purchase price of the shares such amount of cash as the Company
may be required, under all applicable federal, state or local laws or
regulations. The employee will recognize ordinary income at the time of exercise
in an amount equal to the excess, if any, of the fair market value of a share of
Common Stock at the time of exercise over the option price, multiplied by the
number of shares as to which the option is exercised. The Employee may elect, by
written notice to the Company, to satisfy part or all of the withholding tax
requirements associated with the exercise by delivering to the Company from
shares of Stock already owned by the Employee, that number of shares having an
aggregate Fair Market Value equal to part or all of the tax payable by the
Employee under this Section 3.1. Any such election shall be in accordance with,
and subject to, applicable tax and securities laws, regulations and rulings.

      3.3 Agreement Subject to Plan. This Agreement is subject to the provisions
of the Plan, and shall be interpreted in accordance therewith, except where
specifically provided otherwise in this Agreement. The Employee hereby
acknowledges receipt of a copy of the Plan.

                                                PLATO LEARNING, INC.

                                                By: ____________________________

Accepted this _________  day of

______________________, 200____

_______________________________

<PAGE>

                 PLATO LEARNING UNITED KINGDOM SHARE OPTION PLAN

                               OPTION CERTIFICATE

1.    THIS IS TO CERTIFY THAT ___________ has been granted an Option to acquire
      the number of Shares in PLATO Learning, Inc. as indicted in Box (1) below
      at the price per Share in Box (2) in accordance with and subject to the
      Rules of the PLATO Learning United Kingdom Share Option Plan ("the UK
      Plan"), which was established under the provisions of the PLATO Learning
      2002 Stock Plan.

<TABLE>
<CAPTION>
      (1)                                                  (3)
Number of Shares                 (2)               Total amount payable              (4)
comprised in the        Option Price per Share    on exercise of Option       Date of Grant of
     Option                     (US $)                in full (US$)                Option
----------------        ----------------------    ---------------------       ----------------
<S>                     <C>                       <C>                         <C>
</TABLE>

      (NOTE: THESE FIGURES MAY BE SUBJECT TO ADJUSTMENT IN THE EVENT OF ANY
      VARIATION IN THE SHARE CAPITAL OF PLATO LEARNING, INC.)

1.    The Option will lapse on _________.

2.    The Option is exercisable in whole or in part in accordance with the Rules
      of the UK Plan. It will vest one-third on _________, one-third on
      _________, and one-third on _________.

3.    The Option is not transferable, assignable or chargeable.

4.    All Options that you hold under the UK Plan at any Date of Grant cannot
      have a value of more than (pound)30,000 sterling (value taken at Date of
      Grant using the closing US dollar/pound sterling exchange rate taken from
      the Wall Street Journal on the Date of Grant).

5.    You will not pay income tax when you exercise this Option as long as:

            a.    the Option is exercised at least 3 years from its Date of
                  Grant; and

            b.    the UK Plan remains approved at the date of exercise.

6.    If the conditions in 5 above are not satisfied, you will normally have to
      pay Income Tax under PAYE and National Insurance Contributions on the
      exercise of the Option, unless you leave due to one of the specified
      statutory `good leaver' reasons.

7.    This Agreement is subject to the provisions of the UK Plan and the US 2002
      Stock Plan, and shall be interpreted in accordance therewith, except where
      specifically provided otherwise in this Agreement. The Employee hereby
      acknowledges receipt of copies of the Plans.

      Executed and delivered as a deed by PLATO LEARNING, INC. acting by:

                                                  ______________________________

Accepted this ____ day of _____, 200__.

______________________________________

<PAGE>

                         PLATO LEARNING 2002 STOCK PLAN

                               OPTION CERTIFICATE

1.    THIS IS TO CERTIFY THAT has been granted an Option to acquire the number
      of Shares in PLATO Learning, Inc. as indicted in Box (1) below at the
      price per Share in Box (2) in accordance with and subject to the Rules of
      the PLATO Learning 2002 Stock Plan.

<TABLE>
<CAPTION>
          (1)                        (2)                       (3)                        (4)
                                                       Total amount payable
                                                      on exercise of Option
   Number of Shares         Option Price per Share              in
comprised in the Option             (US $)                  full (US$)          Date of Grant of Option
-----------------------     ----------------------    ---------------------     -----------------------
<S>                         <C>                       <C>                       <C>
</TABLE>

      (NOTE: THESE FIGURES MAY BE SUBJECT TO ADJUSTMENT IN THE EVENT OF ANY
      VARIATION IN THE SHARE CAPITAL OF PLATO LEARNING, INC.)

2.    The Option will lapse on _______.

3.    The Option is exercisable in whole or in part in accordance with the Rules
      of the 2002 Stock Plan. It will vest one-third on _______, one-third on
      _______, and one-third on _______.

4.    The Option is not transferable, assignable or chargeable.

5.    As a condition precedent to any exercise of the Option, you will normally
      have to pay Income Tax under PAYE and National Insurance Contributions on
      the exercise of the Option, unless you leave due to one of the specified
      statutory `good leaver' reasons. Upon request by the Company, you will pay
      to the Company in addition to the purchase price of the shares such amount
      of cash as the Company may be required, under all applicable federal,
      state or local laws or regulations. You may elect, by written notice to
      the Company, to satisfy part or all of the withholding tax requirements
      associated with the exercise by delivering to the Company from shares of
      Stock already owned by you, that number of shares having an aggregate Fair
      Market Value equal to part or all of the tax payable by the Employee under
      this Section 5. Any such election shall be in accordance with, and subject
      to, applicable tax and securities laws, regulations and rulings.

6.    This Agreement is subject to the provisions of the 2002 Stock Plan, and
      shall be interpreted in accordance therewith, except where specifically
      provided otherwise in this Agreement. The Employee hereby acknowledges
      receipt of a copy of the Plan.

      Executed and delivered as a deed by PLATO LEARNING, INC. acting by:

                                                  ______________________________

Accepted this ____ day of _____, 200__.

______________________________________

<PAGE>

                              PLATO LEARNING, INC.
                  NON-EMPLOYEE DIRECTOR STOCK OPTION AGREEMENT

      PLATO Learning, Inc., a Delaware corporation (the "Company"), hereby
grants to _______ (the "Director") on this ____ day of ____, 200__ (the "Option
Date"), pursuant to the provisions of the PLATO Learning, Inc. 2002 Stock Plan
(the "Plan"), a non-qualified stock option (the "Option") to purchase from the
Company shares of its Common Stock, $.01 par value ("Stock"), at the price of
$___ per share upon and subject to the terms and conditions set forth below.

      1. Option Subject to Acceptance of Agreement.

      The Option shall become null and void unless the Director shall accept
this Agreement by executing it in the space provided below and return it to the
Company within 60 days following the Option Date.

      2. Time and Manner of Exercise of Option.

      2.1 Maximum Term of Option. In no event may the Option be exercised, in
whole or in part, after 5:00 p.m., Minneapolis time, on the date, which is eight
(8) years after the Option Date (the "Expiration Date").

      2.2 Exercise of Option. Except as otherwise provided in the Plan, the
Option shall become immediately exercisable with respect to 100% of the shares
subject to the Option.

      2.3 Method of Exercise. Subject to the limitations set forth in this
Agreement, the Option may be exercised (i) by giving written notice to the
Secretary of the Company or the Secretary's designee, specifying the number of
whole shares to be purchased and accompanied by the payment therefore in full in
cash or, if permitted by the Compensation Committee, (A) in previously owned
whole shares of Stock (for which the Director has good title, free and clear of
all liens and encumbrances) having a fair market value, determined as of the
date of exercise, equal to the aggregate purchase price payable pursuant to the
Option by reason of such exercise, (B) in cash by a broker-dealer to whom the
Director has submitted an irrevocable notice of exercise, or (C) a combination
of cash and Stock as described in this Section; and (ii) by executing such
documents as the Company may reasonably request. No shares shall be issued until
the full purchase price and all applicable taxes have been paid.

      2.4 Termination of Option. In no event may the Option be exercised after
it terminates as set forth in this Section 2.4. The Option shall terminate on
its Expiration Date, or earlier to the extent not exercised pursuant to Section
2.2 and pursuant to Sections 6.8, 6.9, 6.10, 6.11 and 6.12 of the Plan. In the
event that the Director shall forfeit rights to purchase all or a portion of the
shares to which this Option relates, the Director shall, within 10 days of the
date of the Company's written request, return this Agreement to the Company for
cancellation.

<PAGE>

      3. Additional Terms and Conditions of Option.

      3.1 Withholding Taxes. As a condition precedent to any exercise of the
Option, the Director shall, upon request by the Company, pay to the Company in
addition to the purchase price of the shares such amount of cash as the Company
may be required, under all applicable federal, state or local laws or
regulations. The Director will recognize ordinary income at the time of exercise
in an amount equal to the excess, if any, of the fair market value of a share of
Common Stock at the time of exercise over the option price, multiplied by the
number of shares as to which the option is exercised. The Director may elect, by
written notice to the Company, to satisfy part or all of the withholding tax
requirements associated with the exercise by delivering to the Company from
shares of Stock already owned by the Director, that number of shares having an
aggregate Fair Market Value equal to part or all of the tax payable by the
Director under this Section 3.1. Any such election shall be in accordance with,
and subject to, applicable tax and securities laws, regulations and rulings.

      3.3 Agreement Subject to Plan. This Agreement is subject to the provisions
of the Plan, and shall be interpreted in accordance therewith, except where
specifically provided otherwise in this Agreement. The Director hereby
acknowledges receipt of a copy of the Plan.

                                                PLATO LEARNING, INC.

                                                By: ____________________________

Accepted this _________  day of

_______________________, 200___

_______________________________

<PAGE>

                              PLATO LEARNING, INC.
                         EMPLOYEE STOCK OPTION AGREEMENT

      PLATO Learning, Inc., a Delaware corporation (the "Company"), hereby
grants to _______ (the "Employee") on this 31st day of October, 2001 (the
"Option Date"), pursuant to the provisions of a PLATO Learning, Inc. ______
Stock Incentive Plan (the "Plan"), a non-qualified stock option (the "Option")
to purchase from the Company ________ shares of its Common Stock, $.01 par value
("Stock"), at the price of $___ per share upon and subject to the terms and
conditions set forth below.

      1. Option Subject to Acceptance of Agreement.

      The Option shall become null and void unless the Employee shall accept
this Agreement by executing it in the space provided below and return it to the
Company within 60 days following the Option Date.

      2. Time and Manner of Exercise of Option.

      2.1 Maximum Term of Option. In no event may the Option be exercised, in
whole or in part, after 5:00 p.m., Minneapolis time, on the date, which is 10
years after the Option Date (the "Expiration Date").

      2.2 Exercise of Option. (a) Except as otherwise provided in this Section
2.2, the Option shall become immediately exercisable with respect to 100% of the
aggregate number of shares subject to the Option on October 31, 2001 (the
"Exercise Date").

      (b) If the Employee's employment by the Company terminates by reason of
Disability or death, the Option may thereafter be exercised by the Employee (or
the Employee's executor, administrator or legal representative) for a period of
one year from the date of the Employee's termination of employment or until the
expiration of the term of the Option, whichever period is shorter. For purposes
of this Agreement, "Disability" shall mean the inability of the Employee to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than 12 months, determined by the Compensation Committee in its sole
discretion.

      (c) If the Employee's employment by the Company terminates by reason of
retirement on or after age 62 after a minimum of three years of employment with
the Company, the Option may thereafter be exercised for a period of 90 days from
the date of the Employee's termination of employment or until the expiration of
the term of the Option, whichever period is shorter.

      (d) If the Employee's employment by the Company terminates for any reason
other than Disability or death, the Option may thereafter be exercised for a
period of 90 days from the date of the Employee's termination of employment or
until the expiration of the term of the Option, whichever period is shorter;
provided, however, that if the Employee's employment is terminated for Cause,
the Option shall terminate automatically on the date of

<PAGE>

such termination of employment. For purposes of this Agreement, termination of
employment for "Cause" shall mean a termination of employment resulting from, or
caused by, the Employee's theft or embezzlement from the Company or other act of
dishonesty, the violation of a material term or condition of the Employee's
employment, the conviction of the Employee of a crime involving moral turpitude,
the violation by the Employee of any statutory or common law duty of loyalty to
the Company, or the Employee's engagement in acts or conduct which, in the
opinion of the Board of Directors of the Company (the "Board"), are harmful to
the interests of the Company.

      (e) If the Employee dies during the one-year period following termination
of employment by reason of Disability or retirement on or after age 62 after a
minimum of three years of employment with the Company or during the 90-day
period following the termination of employment for any other reason other than
termination of employment for Cause, the Option may thereafter be exercised by
the Employee's executor, administrator or legal representative for a period of
one year from the date of such death or until the expiration of the term of the
Option, whichever period is shorter.

      2.3 Method of Exercise. (a) Subject to the limitations set forth in this
Agreement, the Option may be exercised (i) by giving written notice to the
Secretary of the Company specifying the number of whole shares to be purchased
and accompanied by the payment therefore in full in cash or, if permitted by the
Compensation Committee, (A) in previously owned whole shares of Stock (for which
the Employee has good title, free and clear of all liens and encumbrances)
having a fair market value, determined as of the date of exercise, equal to the
aggregate purchase price payable pursuant to the Option by reason of such
exercise, (B) in cash by a broker-dealer to whom the Employee has submitted an
irrevocable notice of exercise, or (C) a combination of cash and (A); and (ii)
by executing such documents as the Company may reasonably request. No shares
shall be issued until the full purchase price has been paid.

      (b) Unless the Compensation Committee otherwise determines, if the
Employee is subject to Section 16 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the following provisions shall apply to the
Employee's election to deliver to the Company previously owned whole shares of
Stock in accordance with Section 2.3 (a), upon exercise of this Option in
payment of all or a portion of the Option price: such election (i) may not take
effect during the six-month period beginning on the date of grant of this Option
(other than in the event of the Employee's death), (ii) must be filed with the
Company during (or in advance of, but take effect during) the 20 business day
period beginning on the third business day following the date of release of the
Company's quarterly or annual summary statements of sales and earnings and (iii)
the exercise of this Option must occur during such 20 business day period. Any
such election may be revoked or changed prior to the exercise of this Option
during the 20 business day period.

      2.4 Termination of Option. (a) In no event may the Option be exercised
after it terminates as set forth in this Section 2.4. The Option shall
terminate, to the extent not exercised pursuant to Section 2.3 or earlier
terminated pursuant to Section 2.2, on its Expiration Date.

<PAGE>

      (b) In the event that the Employee shall forfeit rights to purchase all or
a portion of the shares to which this Option relates, the Employee shall, within
10 days of the date of the Company's written request, return this Agreement to
the Company for cancellation.

      3. Additional Terms and Conditions of Option.

      3.1 Nontransferability of Option. Neither the Option nor any rights under
this Agreement may be transferred by the Employee other than by will or the laws
of descent and distribution, and the Option may be exercised during the
Employee's lifetime only by the Employee or the Employee's guardian or legal
representative. The Option shall not be subject to execution, attachment or
other process, and no person shall be entitled to exercise any rights of the
Employee hereunder or possess any rights hereunder by virtue of any attempted
execution, attachment or other process.

      3.2 Investment Representation. The Employee hereby represents and
covenants that (a) any shares purchased upon exercise of the Option will be
purchased for investment and not with a view to the distribution thereof within
the meaning of the Securities Act of 1933, as amended (the "Securities Act"),
unless such purchase has been registered under the Securities Act or applicable
state securities law; (b) any subsequent sale of any such shares shall be made
either pursuant to an effective registration statement under the Securities Act
and any applicable state securities laws, or pursuant to an exemption from
registration under the Securities Act and such state securities laws; and (c) if
requested by the Company, the Employee shall submit a written statement, in form
satisfactory to counsel for the Company, to the effect that such representation
(x) is true and correct as of the date of purchase of any shares hereunder, or
(y) is true and correct as of the date of any sale of any such shares, as
applicable. As a further condition precedent to any exercise of the Option, the
Employee shall comply with all regulations and requirements of any regulatory
authority having control of or supervision over the issuance of the shares and,
in connection therewith, shall execute any documents which the Board or any
committee authorized by the Board shall in its sole discretion deem necessary or
advisable.

      3.3 Withholding Taxes. (a) As a condition precedent to any exercise of the
Option, the Employee shall, upon request by the Company, pay to the Company in
addition to the purchase price of the shares such amount of cash as the Company
may be required, under all applicable federal, state or local laws or
regulations, to withhold any pay over as income or other withholding taxes (the
"Required Tax Payments") with respect to such exercise of the Option. If the
Employee shall fail to advance the Required Tax Payments after request by the
Company, the Company may, in its discretion, deduct any Required Tax Payments
from any amount then or thereafter payable by the Company to the Employee.

      (b) The Employee may, at his election, subject to approval by the
Compensation Committee, satisfy his obligation to advance the Required Tax
Payments by any of the following means: (i) a cash payment to the Company
pursuant to Section 3.3 (a), (ii) delivery to the Company of previously owned
whole shares of Stock (for which the Employee has good title, free and clear of
all liens and encumbrances) having a fair market value determined as of the date
the obligation to withhold or pay taxes first arises in connection with the
Option (the "Tax Date") equal to the amount necessary to satisfy any such
obligations, (iii) a cash payment by a broker-dealer acceptable to the Company
to whom the

<PAGE>

Employee has submitted an irrevocable notice of exercise, or (iv) any
combination of (i), (ii) and (iii). Any fraction of a share, which would be
required to satisfy such an obligation, shall be disregarded and the Employee
shall pay the remaining amount due in cash.

      (c) Unless the Compensation Committee otherwise determines, if the
Employee is subject to Section 16 of the Exchange Act, the following provisions
shall apply to the Employee's election to deliver to the Company previously
owned whole shares of Stock in accordance with Section 3.3 (b), upon exercise of
this Option in payment of all or a portion of the Employee's tax liability; such
election (A) may not take effect during the six-month period beginning on this
Option Date (other than in the event of the Employee's death), (B) must be filed
with the Company during (or in advance of, but take effect during) the 30
business day period beginning on the third business day following the date of
release of the Company's quarterly or annual summary statements of sales and
earnings and (C) the exercise of this Option must occur during such 30 business
day period. Any such election may be revoked or changed prior to the exercise of
this Option during the 30 business day period.

      3.4 Adjustment. In the event of any stock dividend, stock split,
combination or exchange of shares of Stock, merger, consolidation, spin-off,
recapitalization or other distribution (other than normal cash dividends) of the
Company assets to stockholders, or any other change affecting Stock or share
price, the number and class of shares under the Option and the purchase price
per share shall be appropriately adjusted by the Committee without a change in
the aggregate purchase price, other than a change in the aggregate purchase
price resulting from rounding. The decision of the Compensation Committee
regarding the amount and timing of any adjustment pursuant to this Section 3.4
shall be conclusive.

      3.5 Compliance with Applicable Law. The Option is subject to the condition
that if the listing of the shares covered by the Option on any securities
exchange, the registration or qualification of such shares under any federal or
state law or the consent or approval of any regulatory body shall be required as
a condition of, or in connection with, the granting of the Option or the
purchase or delivery of shares hereunder, the Option may not be exercised, in
whole or in part, unless and until such listing, registration, qualification,
consent or approval shall have been effected or obtained. The Company agrees to
make every reasonable effort to effect or obtain any such listing, registration,
qualification, consent or approval.

      3.6 Delivery of Certificates. Upon the exercise of the Option, in whole or
in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares purchased against full payment
therefore. The Company shall pay all original issue or transfer taxes and all
fees and expenses incident to such delivery, except as otherwise provided in
Section 3.3.

      3.7 Option Confers No Rights as Shareholder. The Employee shall not be
entitled to any privileges of ownership with respect to shares subject to the
Option unless and until purchased and delivered upon the exercise of the Option,
in whole or in part, and the Employee becomes a shareholder of record with
respect to such delivered shares; and the Employee shall not be considered a
shareholder of the Company with respect to any such shares not so purchased and
delivered.

<PAGE>

      3.8 Option Confers No Rights to Continued Employment. In no event shall
the granting of the Option or its acceptance by the Employee give or be deemed
to give the Employee any right to continued employment by the Company.

      3.9 Decisions of Compensation Committee. The Compensation Committee shall
have the right to resolve all questions, which may arise in connection with the
Option or its exercise. Any interpretation, determination or other action made
or taken by the Compensation Committee regarding the Plan or this Agreement
shall be final, binding and conclusive.

      3.10 Company to Reserve Shares. The Company shall at all times prior to
the expiration or termination of the Option reserve and keep available, either
in its treasury or out of its authorized but unissued shares of Stock, the full
number of shares subject to the Option from time to time.

      3.11 Agreement Subject to Plan. This Agreement is subject to the
provisions of the Plan, and shall be interpreted in accordance therewith, except
where specifically provided otherwise in this Agreement. The Employee hereby
acknowledges receipt of a copy of the Plan.

      4. Miscellaneous Provisions.

      4.1 Designation as Non-Qualified Stock Option. The Option is hereby
designated as a "non-qualified stock option"; this Agreement shall be
interpreted and treated consistently with such designation.

      4.2 Meaning of Certain Terms. As used herein, employment by the Company
shall include employment by a corporation, which is a "subsidiary corporation"
of the Company; as such term is defined in section 424 of the Code. References
in this Agreement to sections of the Code shall be deemed to refer to any
successor section of the Code or any successor internal revenue law.

      4.3 Successors. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and any person or persons,
who shall, upon the death of the Employee, acquire any rights in accordance with
this Agreement or the Plan.

      4.4 Notices. All notices, requests or other communications provided for in
this Agreement shall be made in writing either (a) by actual delivery to the
party entitled thereto, or (b) by mailing in the United States mail to the last
known address of the party entitled thereto, via certified or registered mail,
return receipt requested. The notice shall be deemed to be received in case of
delivery, on the date of its actual receipt by the party entitled thereto, and
in case of mailing, five days following the date of such mailing.

      4.5 Governing Law. This Agreement shall be governed by, and interpreted in
accordance with, the internal laws of the State of Minnesota.

<PAGE>

      4.6 Counterparts. This Agreement may be executed in two counterparts each
of which shall be deemed an original and both of which together shall constitute
one and the same instrument.

                                              PLATO LEARNING, INC.

                                              By: ______________________________

Accepted this _________ day of

______________________, 200______

_________________________________

<PAGE>

                              PLATO LEARNING, INC.
                    EMPLOYEE INCENTIVE STOCK OPTION AGREEMENT

      PLATO Learning, Inc., a Delaware corporation (the "Company"), hereby
grants to _________________ (the "Employee") on this _____ day of __________,
_____ (the "Option Date"), pursuant to the provisions of the PLATO Learning,
Inc. Stock Incentive Plan (the "Plan"), an option (the "Option") to purchase
from the Company _________ shares of its Common Stock, $.01 par value ("Stock"),
at the price of $_______ per share upon and subject to the terms and conditions
set forth below.

      The Option is intended to be and shall for all purposes be treated as an
incentive stock option under Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code").

      1. Option Subject to Acceptance of Agreement.

      The Option shall become null and void unless the Employee shall accept
this Agreement by executing it in the space provided below and return it to the
Company within 30 days following the Option Date.

      2. Time and Manner of Exercise of Option.

      2.1 Maximum Term of Option. In no event may the Option be exercised, in
whole or in part, after 5:00 p.m., Chicago time, on the date which is 10 years
after the Option Date (the "Expiration Date").

      2.2 Exercise of Option. (a) Except as otherwise provided in this Section
2.2, the Option shall become exercisable with respect to 33-1/3% of the
aggregate number of shares of Stock subject to the Option on ______________ (the
"First Exercise Date"), with respect to 66-2/3% of the aggregate number of
shares subject to the Option on _____________ (the "Second Exercise Date"), and
with respect to 100% of the aggregate number of shares subject to the Option on
________________ (the "Third Exercise Date") (the First Exercise Date, the
Second Exercise Date and the Third Exercise Date each being referred to herein
as an "Exercise Date").

      (b) If the Employee's employment by the Company terminates by reason of
Disability or death, the Option shall become fully exercisable and may
thereafter be exercised by the Employee (or the Employee's executor,
administrator or legal representative) for a period of one year from the date of
the Employee's termination of employment or until the expiration of the term of
the Option, whichever period is shorter. For purposes of this Agreement,
"Disability" shall mean the inability of the Employee to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less that 12 months,
determined by the Compensation Committee in its sole discretion.

<PAGE>

      (c) If the Employee's employment by the Company terminates by reason of
retirement on or after age 62 after a minimum of three years of employment with
the Company, the Option shall become fully exercisable and may thereafter be
exercised for a period of 90 days from the date of the Employee's termination of
employment or until the expiration of the term of the Option, whichever period
is shorter.

      (d) If the Employee's employment by the Company terminates for any reason
other than Disability or death, the Option shall be exercisable only to the
extent that it was exercisable on the date of the Employee's termination of
employment, and may thereafter be exercised for a period of 90 days from the
date of the Employee's termination of employment or until the expiration of the
term of the Option, whichever period is shorter; provided, however, that if the
Employee's employment is terminated for Cause, the Option shall terminate
automatically on the date of such termination of employment. For purposes of
this Agreement, termination of employment for "Cause" shall mean a termination
of employment resulting from, or caused by, the Employee's theft or embezzlement
from the Company or other act of dishonesty, the violation of a material term or
condition of the Employee's employment, the conviction of the Employee of a
crime involving moral turpitude, the violation by the Employee of any statutory
or common law duty of loyalty to the Company, or the Employee's engagement in
acts or conduct which, in the opinion of the Board of Directors of the Company
(the "Board"), are harmful to the interests of the Company.

      (e) If the Employee dies during the one-year period following termination
of employment by reason of Disability or retirement on or after age 62 after a
minimum of three years of employment with the Company or during the 90-day
period following the termination of employment for any other reason other than
termination of employment for Cause, the Option shall be exercisable only to the
extent that it was exercisable on the date of such death and may thereafter be
exercised by the Employee's executor, administrator or legal representative for
a period of one year from the date of such death or until the expiration of the
term of the Option, whichever period is shorter.

      2.3 Method of Exercise. (a) Subject to the limitations set forth in this
Agreement, the Option may be exercised (i) by giving written notice to the
Secretary of the Company specifying the number of whole shares to be purchased
and accompanied by the payment therefor in full in cash or, if permitted by the
Compensation Committee, (A) in previously owned whole shares of Stock (for which
the Employee has good title, free and clear of all liens and encumbrances)
having a fair market value, determined as of the date of exercise, equal to the
aggregate purchase price payable pursuant to the Option by reason of such
exercise, (B) by authorizing the Company to retain whole shares which would
otherwise be issuable upon exercise of the Option having a fair market value,
determined as of the date of exercise, equal to the aggregate purchase price
payable pursuant to the Option by reason of such exercise, (C) in cash by a
broker-dealer to whom the Employee has submitted an irrevocable notice of
exercise, or (D) a combination of cash, (A) and (B), and (ii) by executing such
documents as the Company may reasonably request. No shares shall be issued until
the full purchase price has been paid.

      (b) Unless the Compensation Committee otherwise determines, if the
Employee is subject to Section 16 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the following provisions shall apply to the
Employee's election to authorize the

<PAGE>

Company to retain whole shares purchasable upon exercise of the Option in
payment of all or a portion of the option price: such election (i) may not take
effect during the six-month period beginning on the date of grant of the Option
(other than in the event of the Employee's death), (ii) must be filed with the
Vice President, Human Resources in advance of, but take effect during (or must
be filed with the Vice President, Human Resources in advance of, but take effect
during) the 30 business day period beginning on the third business day following
the date of release of the Company's quarterly or annual summary statements of
sales and earnings and (iii) the exercise of the Option must occur during such
30 business day period. Any such election may be revoked or changed prior to the
exercise of the Option during the 30 business day period.

      2.4 Termination of Option. (a) In no event may the Option be exercised
after it terminates as set forth in this Section 2.4. The Option shall
terminate, to the extent not exercised pursuant to Section 2.3 or earlier
terminated pursuant to Section 2.2, on its Expiration Date.

      (b) In the event that the Employee shall forfeit rights to purchase all or
a portion of the shares to which this Option relates, the Employee shall, within
10 days of the date of the Company's written request, return this Agreement to
the Company for cancellation. If the Employee continues to have vested rights
hereunder, the Company shall, within 10 days of the Employee's delivery of this
Agreement to the Company for cancellation, issue to the Employee a substitute
option agreement applicable to the Employee's vested rights hereunder, which
agreement shall be substantially similar to this Agreement in form and
substance.

      3. Additional Terms and Conditions of Option.

      3.1 Nontransferability of Option. Neither the Option nor any rights under
this Agreement may be transferred by the Employee other than by will or the laws
of descent and distribution, and the Option may be exercised during the
Employee's lifetime only by the Employee or the Employee's guardian or legal
representative. The Option shall not be subject to execution, attachment or
other process, and no person shall be entitled to exercise any rights of the
Employee hereunder or possess any rights hereunder by virtue of any attempted
execution, attachment or other process.

      3.2 Investment Representation. The Employee hereby represents and
covenants that (a) any shares purchased upon exercise of the Option will be
purchased for investment and not with a view to the distribution thereof within
the meaning of the Securities Act of 1933, as amended (the "Securities Act"),
unless such purchase has been registered under the Securities Act or applicable
state securities law; (b) any subsequent sale of any such shares shall be made
either pursuant to an effective registration statement under the Securities Act
and any applicable state securities laws, or pursuant to an exemption from
registration under the Securities Act and such state securities laws; and (c) if
requested by the Company, the Employee shall submit a written statement, in form
satisfactory to counsel for the Company, to the effect that such representation
(x) is true and correct as of the date of purchase of any shares hereunder, or
(y) is true and correct as of the date of any sale of any such shares, as
applicable. As a further condition precedent to any exercise of the Option, the
Employee shall comply with all regulations and requirements of any regulatory
authority having control of or supervision over the issuance of the shares and,
in connection therewith, shall execute any

<PAGE>

documents which the Board or any committee authorized by the Board shall in its
sole discretion deem necessary or advisable.

      3.3 Withholding Taxes. (a) As a condition precedent to any exercise of the
Option, the Employee shall, upon request by the Company, pay to the Company in
addition to the purchase price of the shares such amount of cash as the Company
may be required, under all applicable federal, state or local laws or
regulations, to withhold any pay over as income or other withholding taxes (the
"Required Tax Payments") with respect to such exercise of the Option. If the
Employee shall fail to advance the Required Tax Payments after request by the
Company, the Company may, in its discretion, deduct any Required Tax Payments
from any amount then or thereafter payable by the Company to the Employee.

      (b) The Employee may, at his election, subject to approval by the
Compensation Committee, satisfy his obligation to advance the Required Tax
Payments by any of the following means: (i) a cash payment to the Company
pursuant to Section 3.3 (a), (ii) delivery to the Company of previously owned
whole shares of Stock (for which the Employee has good title, free and clear of
all liens and encumbrances) having a fair market value determined as of the date
the obligation to withhold or pay taxes first arises in connection with the
Option (the "Tax Date") equal to the amount necessary to satisfy any such
obligations, (iii) authorizing the Company to withhold from the shares otherwise
issuable to the Employee pursuant to the Option a number of whole shares having
a fair market value determined as of the Tax Date equal to the amount necessary
to satisfy any such obligations, (iv) a cash payment by a broker-dealer
acceptable to the Company to whom the Employee has submitted an irrevocable
notice of exercise, or (v) any combination of (i), (ii) and (iii). Shares to be
delivered or withheld may have an aggregate fair market value in excess of the
minimum amount to the Required Tax Payments, but not in excess of the amount
determined by applying the Employee's maximum marginal tax rate. Any fraction of
a share which would be required to satisfy such an obligation shall be
disregarded and the remaining amount due shall be paid in cash by the Employee.

      (c) Unless the Compensation Committee otherwise determines, if the
Employee is subject to Section 16 of the Exchange Act, the following provisions
shall apply to the Employee's election to deliver to the Company whole shares of
Stock or to authorize the Company to retain whole shares purchasable upon
exercise of the Option in payment of all or a portion of the Employee's tax
liability in connection with such exercise:

      (1) The Employee may deliver to the Company previously owned whole shares
of Stock in accordance with Section 3.3 (b), if such delivery is in connection
with the delivery of shares in payment of the exercise price of the Option;

      (2) The Employee may authorize the Company to retain whole shares
purchasable upon exercise of the Option in accordance with Section 3.3 (b);
provided, that the following provisions shall apply to such election:

      Such election (A) may not take effect during the six-month period
beginning on the Option Date (other than in the event of the Employee's death),
(B) must be filed with the Vice President, Human Resources during (or must be
filed with the Vice President, Human Resources in advance of, but take effect
during) the 30 business day period beginning on the

<PAGE>

third business day following the date of release of the Company's quarterly or
annual summary statements of sales and earnings and (C) the exercise of the
Option must occur during such 30 business day period. Any such election may be
revoked or changed prior to the exercise of the Option during the 30 business
day period.

      3.4 Adjustment. In the event of any stock dividend, stock split,
combination or exchange of shares of Stock, merger, consolidation, spin-off,
recapitalization or other distribution (other than normal cash dividends) of the
Company assets to stockholders, or any other change affecting Stock or share
price, the number and class of shares under the Option and the purchase price
per share shall be appropriately adjusted by the Committee without a change in
the aggregate purchase price, other than a change in the aggregate purchase
price resulting from rounding. the decision of the Compensation Committee
regarding the amount and timing of any adjustment pursuant to this Section 3.4
shall be conclusive.

      3.5 Compliance with Applicable Law. The Option is subject to the condition
that if the listing of the shares covered by the Option on any securities
exchange, the registration or qualification of such shares under any federal or
state law or the consent or approval of any regulatory body shall be required as
a condition of, or in connection with, the granting of the Option or the
purchase or delivery of shares hereunder, the Option may not be exercised, in
whole or in part, unless and until such listing, registration, qualification,
consent or approval shall have been effected or obtained. The Company agrees to
make every reasonable effort to effect or obtain any such listing, registration,
qualification, consent or approval.

      3.6 Delivery of Certificates. Upon the exercise of the Option, in whole or
in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares purchased against full payment
therefor. The Company shall pay all original issue or transfer taxes and all
fees and expenses incident to such delivery, except as otherwise provided in
Section 3.3.

      3.7 Option Confers No Rights as Shareholder. The Employee shall not be
entitled to any privileges of ownership with respect to shares subject to the
Option unless and until purchased and delivered upon the exercise of the Option,
in whole or in part, and the Employee becomes a shareholder of record with
respect to such delivered shares; and the Employee shall not be considered a
shareholder of the Company with respect to any such shares not so purchased and
delivered.

      3.8 Option Confers No Rights to Continued Employment. In no event shall
the granting of the Option or its acceptance by the Employee give or be deemed
to give the Employee any right to continued employment by the Company.

      3.9 Decisions of Compensation Committee. The Compensation Committee shall
have the right to resolve all questions which may arise in connection with the
Option or its exercise. Any interpretation, determination or other action made
or taken by the Compensation Committee regarding the Plan or this Agreement
shall be final, binding and conclusive.

      3.10 Company to Reserve Shares. The Company shall at all times prior to
the expiration or termination of the Option reserve and keep available, either
in its treasury or out

<PAGE>

of its authorized but unissued shares of Stock, the full number of shares
subject to the Option from time to time.

      3.11 Agreement Subject to Plan. This Agreement is subject to the
provisions of the Plan, and shall be interpreted in accordance therewith, except
where specifically provided otherwise in this Agreement. The Employee hereby
acknowledges receipt of a copy of the Plan.

      3.12 Agreement Subject to Stockholder Approval. This Agreement and the
grant of the Option made hereunder are expressly subject to the approval of the
Plan by the stockholders of the Company at a meeting of stockholders or any
adjournment thereof. If the Plan in not so approved at such a meeting, this
Agreement and all rights hereunder shall be null and void and of no force or
effect.

      4. Miscellaneous Provisions.

      4.1 Designation as Qualified Stock Option. The Option is hereby designated
as an "incentive stock option" within the meaning of Section 422 of the Code;
this Agreement shall be interpreted and treated consistently with such
designation.

      4.2 Meaning of Certain Terms. As used herein, employment by the Company
shall include employment by a corporation which is a "subsidiary corporation" of
the Company, as such term is defined in section 424 of the Code. References in
this Agreement to sections of the Code shall be deemed to refer to any successor
section of the Code or any successor internal revenue law.

      4.3 Successors. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Employee, acquire any rights in accordance with
this Agreement or the Plan.

      4.4 Notices. All notices, requests or other communications provided for in
this Agreement shall be made in writing either (a) by actual delivery to the
party entitled thereto, or (b) by mailing in the United States mail to the last
known address of the party entitled thereto, via certified or registered mail,
return receipt requested. The notice shall be deemed to be received in case of
delivery, on the date of its actual receipt by the party entitled thereto, and
in case of mailing, five days following the date of such mailing.

      4.5 Governing Law. This Agreement shall be governed by, and interpreted in
accordance with, the internal laws of the State of Illinois.

      4.6 Counterparts. This Agreement may be executed in two counterparts each
of which shall be deemed an original and both of which together shall constitute
one and the same instrument.

<PAGE>

                                           PLATO LEARNING, INC.

                                           By: _________________________________

Accepted this _________ day of

______________________, ___________

___________________________________
             Employee