EX-10.39






VERSION A (CEO and CFO)



PLATO LEARNING, INC.

EMPLOYEE STOCK OPTION AGREEMENT




PLATO Learning, Inc., a Delaware corporation (the “Company”), hereby grants to (the
“Employee”) on this 7th day of December, 2005 (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 $7.60 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) 25% of the aggregate number of shares of Stock subject to
the Option on December 7, 2006 (the “First Exercise Date”); (ii) with respect to 50% of the
aggregate number of shares subject to the Option on December 7, 2007 (the “Second Exercise Date”);
(iii) with respect to 75% of the aggregate number of shares subject to the Option on December 7,
2008 (the “Third Exercise Date”); and (iv) with respect to 100% of the aggregate number of shares
subject to the Option on December 7, 2009 (the “Fourth Exercise Date”) (the First Exercise Date,
the Second Exercise Date, the Third Exercise Date, and the Fourth 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.



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.



2.5 Change in Control. Notwithstanding any other provisions as outlined in the Plan,
and unless otherwise specifically prohibited under applicable laws, or by the rules and regulations
of any governing governmental agencies or national securities exchanges, upon a Change in Control
any and all outstanding Options will become immediately exercisable, and will remain exercisable
throughout their entire term.



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 to withhold, 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.



3.2 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:

Michael A. Morache

President and Chief Executive Officer




Accepted this      day of



     , 200



     



1



VERSION B (other key employee)



PLATO LEARNING, INC.

EMPLOYEE STOCK OPTION AGREEMENT




PLATO Learning, Inc., a Delaware corporation (the “Company”), hereby grants to (the
“Employee”) on this 7th day of December, 2005 (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 $7.60 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) 25% of the aggregate number of shares of Stock subject to
the Option on December 7, 2006 (the “First Exercise Date”); (ii) with respect to 50% of the
aggregate number of shares subject to the Option on December 7, 2007 (the “Second Exercise Date”);
(iii) with respect to 75% of the aggregate number of shares subject to the Option on December 7,
2008 (the “Third Exercise Date”); and (iv) with respect to 100% of the aggregate number of shares
subject to the Option on December 7, 2009 (the “Fourth Exercise Date”) (the First Exercise Date,
the Second Exercise Date, the Third Exercise Date, and the Fourth 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.



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 to withhold, 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.



3.2 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:

Michael A. Morache

President and Chief Executive Officer




Accepted this      day of



     , 200



     




2