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Exhibit 4.2  

 
 

REGISTRATION RIGHTS AGREEMENT    
  

    This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of November 15, 2001, by and among Click2learn, Inc., a Delaware corporation (the
"Company"), and each of the purchasers (individually, a "Purchaser" and, collectively, the "Purchasers") listed on the Schedule of Purchasers attached as Exhibit A hereto. 

    WHEREAS,
the Company has agreed to issue and sell to the Purchasers pursuant to a purchase agreement, dated as of November 15, 2001 (the "Purchase Agreement"), by and among the
Company and the Purchasers, (i) up to an aggregate of 2,740,000 shares of its common stock, par value $.01 per share (the "Common Stock" and, such shares, the "Common Shares") and
(ii) warrants (the "Warrants") exercisable into additional shares of Common Stock (the "Warrant Shares"), subject to the terms and conditions set forth in the Purchase Agreement; and 

    WHEREAS,
in order to induce the Purchasers to purchase the Common Shares and Warrants, the Company has agreed to provide the registration rights set forth in this Agreement. 

    NOW,
THEREFORE, in consideration of the foregoing and the respective representations, warranties, mutual covenants and agreements set forth herein, the parties hereto agree as
follows: 

SECTION 1. DEFINITIONS  

    Capitalized terms used but not defined herein shall have the respective meanings set forth in the Purchase Agreement. As used in this Agreement, the following
capitalized terms shall have the following respective meanings: 

    "Business Day" means shall mean any day on which the New York Stock Exchange (the "NYSE") and commercial banks in the city of New York
are open for business. 

    "Effectiveness Deadline" has the meaning set forth in Section 3(a). 

    "Exchange Act" means the Securities Exchange Act of 1934, as amended. 

    "Filing Deadline" has the meaning set forth in Section 3(a). 

    "Holder" has the meaning set forth in Section 2. 

    "Liquidated Damages" has the meaning set forth in Section 4. 

    "Prospectus" means any prospectus included in the Registration Statement at the time the Registration Statement is declared effective,
as amended or supplemented by any prospectus supplement and all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such
Prospectus. 

    "Registration Statement" has the meaning set forth in Section 3(a). 

    "Securities Act" means the Securities Act of 1933, as amended. 

    "Transfer Restricted Shares" means Common Shares, Warrant Shares and any other securities of the Company issued or issuable upon the
exercise or conversion thereof or in exchange therefor or upon any similar event with respect thereto, whether by way of stock split or in connection with a combination of shares, recapitalization,
merger, consolidation, other reorganization or otherwise. As to any particular Transfer Restricted Shares held by any particular person, once issued such securities shall cease to be Transfer
Restricted Shares when (i) a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement, (ii) such securities shall have been distributed by such person to a non-affiliate of such person pursuant to Rule 144
under the Securities Act, (iii) such securities shall have been otherwise transferred, new certificates for such securities not bearing a legend restricting further transfer shall have been
issued to such person and subsequent 

 

disposition of such securities shall not require registration or qualification of such securities under the Securities Act or any similar state statute then in force, or (iv) such securities
shall have ceased to be outstanding. 

SECTION 2. HOLDERS  

    A person or entity is deemed to be a holder of Transfer Restricted Shares (each, a "Holder") whenever such person owns Transfer Restricted Shares. 

SECTION 3. REGISTRATION  

    (a)  Registration. 

    The
Company shall cause to be filed, on or prior to thirty (30) days after the Closing Date (the "Filing Deadline"), a registration statement on Form S-3
under the Securities Act (the "Registration Statement"), relating to the resale of all of the Transfer Restricted Shares, and shall use its best efforts to cause such Registration Statement to become
effective as soon as possible and in any event by the earlier of (i) five (5) days after the Company is notified (orally or in writing, whichever is earlier) by the Securities and
Exchange Commission that the Registration Statement will not be "reviewed" or subject to further review, and (ii) on or prior to ninety (90) days after the Closing Date (the
"Effectiveness Deadline"). 

    The
Company shall use its best efforts to keep any Registration Statement required by this Section 3(a) continuously effective, supplemented, amended and current as required by
and subject to the provisions of Section 5(a) to the extent necessary to ensure that it is available for sales of Transfer Restricted Shares and in conformity with the requirements of this
Agreement, the Securities Act and the policies, rules and regulations of the SEC as announced from time to time until all Transfer Restricted Shares covered by the Registration Statement
(i) have been sold pursuant thereto or (ii) are eligible to be resold pursuant to Rule 144(k), or any successor rule thereto, promulgated under the Securities Act (which shall not
require the Holder of Warrants to utilize a cashless or net exercise) or (iii) cease definitionally to be "Transfer Restricted Shares". 

    (b)  Provision
by Holders of Certain Information in Connection with the Registration Statement. 

    No
Holder of Transfer Restricted Shares may include any of its Transfer Restricted Shares in the Registration Statement unless and until such Holder furnishes to the Company in
writing, within 10 days after receipt of a request therefor, the information specified in Item 507 or 508 of Regulation S-K, as applicable, of the Securities Act for use in
connection with any Registration Statement or Prospectus or preliminary Prospectus included therein. No Holder of Transfer Restricted Shares shall be entitled to Liquidated Damages pursuant to
Section 4 unless and until such Holder shall have provided all such information on the questionnaire attached hereto as Annex A. Each selling Holder agrees to promptly furnish additional
information required to be disclosed in order to make the information previously furnished to the Company by such Holder not materially misleading. 

SECTION 4. LIQUIDATED DAMAGES  

    If (a) the Registration Statement is not filed with the SEC on or prior to the Filing Deadline, (b) the Registration Statement has not been
declared effective by the SEC on or prior to the Effectiveness Deadline, or (c)) the Registration Statement is not available for use by the Selling Security Holder for a period of 15 days for
any reason, (each such event referred to in clauses (a) through (c), a "Registration Default"), then, subject to Section 3(b), the Company hereby agrees to pay to each Holder of Common
Shares affected thereby liquidated damages ("Liquidated Damages") 

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in the amount of a number of shares of Common Stock of equal to 5% of the number of Common Shares purchased by such Holder pursuant to the Purchase Agreement (rounded up to the nearest share, taking
into account all Common Shares purchased by such Holder pursuant to the Purchase Agreement). In addition, for each month following the occurrence of a Registration Default that such Registration
Default continues, on or before the last day of such month, the Company hereby agrees to pay to each Holder of Common Shares affected thereby Liquidated Damages in the amount of a number of shares of
Common Stock equal to 2% of the number of Common Shares purchased by such Holder pursuant to the Purchase Agreement (rounded up to the nearest share, taking into account all Common Shares purchased by
such Holder pursuant to the Purchase Agreement); provided, however, that the Company shall in no event be required to pay Liquidated Damages for more than one Registration Default at any given time.
If the Company does not have a sufficient number of shares of Common Stock authorized and available to pay the Liquidated Damages, the Company shall pay to the Holders that number of shares of Common
Stock authorized and available for issuance (to be distributed pro-rata among the Holders according to their respective purchases pursuant to the Purchase Agreement) and pay to each Holder
an amount in cash equal to the difference between (x) the number of shares of Common Stock due as Liquidated Damages and (y) the number of shares of Common Stock otherwise authorized and
available for issuance multiplied by the original Common Share purchase price of $2.50. If the Company fails to pay any Liquidated Damages pursuant to this Section in full within seven days after the
date payable, the Company will pay interest thereon at a rate of 18% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the Holder, accruing daily from the
date such Liquidated Damages are due until such amounts, plus all such interest thereon, are paid in full. The parties hereto agree that the payment of the foregoing amounts is reasonable in light of
the transactions contemplated by this Agreement. Nothing contained herein shall preclude the Holder from exercising any rights available to it whether in law or equity. 

    All
accrued Liquidated Damages shall be paid to the Holders entitled thereto. All obligations of the Company set forth in the preceding paragraph that are outstanding with respect to
any Transfer Restricted Share at the time such security ceases to be a Transfer Restricted Share shall survive until such time as all such obligations with respect to such security shall have been
satisfied in full. 

SECTION 5. REGISTRATION PROCEDURES  

    (a)  Registration Statement 

    In
connection with the Registration Statement, the Company shall: 

    i.   use
its best efforts to effect such registration to permit the sale of the Transfer Restricted Shares being sold in accordance with the intended method or methods
of distribution thereof (as indicated in the information furnished to the Company pursuant to Section 3(b)), and pursuant thereto the Company will prepare and file with the SEC the Registration
Statement on Form S-3, which form shall be available for the sale of the Transfer Restricted Shares in accordance with the intended method or methods of distribution thereof within
the time periods and otherwise in accordance with the provisions of this Agreement; 

    ii.  use
its best efforts to keep the Registration Statement continuously effective and provide all requisite financial statements for the period specified in
Section 3 of this Agreement; and upon the occurrence of any event that would cause the Registration Statement or the Prospectus contained therein (A) to contain an untrue statement of a
material fact or omit to state any material fact necessary to make the statement therein not misleading or (B) not to be effective and usable for resale of Transfer Restricted Shares during the
period required by this Agreement, the Company shall file promptly an appropriate amendment or supplement to the Registration Statement curing such defect, and, if the SEC review is required, use its
reasonable best efforts to cause such amendment to be declared effective as soon as practicable; 

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    iii.      prepare and file with the SEC such amendments and post-effective amendments to the applicable Registration Statement as may be
necessary to keep the Registration Statement effective for the applicable period set forth in Section 3, as the case may be; cause the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act, and to comply fully with Rules 424, 430A and 462, as applicable, under the Securities Act in
a timely manner; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by the Registration Statement during the applicable period in accordance
with
the intended method or methods of distribution by the sellers thereof set forth in the Registration Statement or supplement to the Prospectus; 

    iv.  advise
each Holder promptly and, if requested by such Holder, confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to the Registration Statement or any post-effective amendment thereto, when the same has become effective,
(B) of any request by the SEC for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the
issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement under the Securities Act or of the suspension by any state securities commission of the qualification
of the Transfer Restricted Shares for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, and (D) of the existence of any fact or the
happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes in the Registration Statement in order to make the statements therein not misleading, or that requires the making of any
additions to or changes in the Prospectus in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (provided that the Company determines in
its good faith judgment that the disclosure of such fact or happening or event at such time would have a material adverse effect on the business, financial condition, operations or prospects of the
Company or the disclosure otherwise relates to a material business transaction which has not yet been publicly disclosed; however, the Company need not disclose to Holders any information that the
board of directors of the Company determines in its good faith judgment to be non-public, confidential information that pertains to, among other events, a merger, sale, consolidation or
acquisition of the Company); and if at any time the SEC shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Shares under state securities or blue sky laws, the Company shall use its
reasonable best efforts to obtain the withdrawal or lifting of such order at the earliest possible time; 

    v.  subject
to Section 5(a)(ii), if any fact or event contemplated by Section 5(a)(iv)(D) above shall exist or have occurred, prepare a supplement or
post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of Transfer Restricted Shares, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading; 

    vi.  furnish
to each Holder in connection with such sale, if any, before filing with the SEC, copies of the Registration Statement or any Prospectus included therein or
any amendments or supplements to the Registration Statement or Prospectus, which documents will be subject to the review and comment of such Holders in connection with such sale, if any, for a period
of at least five Business Days, and the Company will not file the Registration Statement or Prospectus or any amendment or supplement to the Registration Statement or Prospectus to which such Holder
shall 

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reasonably object within five Business Days after the receipt thereof; a Holder shall be deemed to have reasonably objected to such filing only if the Registration Statement, amendment, Prospectus or
supplement, as applicable, as proposed to be filed, contains an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading or fails
to comply with the applicable requirements of the Securities Act and the Holder provides written notice of such untrue statement of a material fact or omission of any material fact necessary to make
the statements therein not misleading together with such modifications as are required to correct the foregoing; 

    vii. if
requested by any Holder in connection with such exchange or sale, promptly include in the Registration Statement or Prospectus, pursuant to a supplement or
post-effective amendment if necessary, such information as such Holder may reasonably request to have included therein, including, without limitation, the "Plan of Distribution" (in
substantially the form of Annex B attached hereto) of the Transfer Restricted Shares; and make all required filings of such Prospectus supplement or post-effective amendment as soon as
practicable after the Company is notified of the matters to be included in such Prospectus supplement or post-effective amendment; 

    viii.     furnish
to each Holder in connection with such exchange or sale, if any, without charge, at least one copy of the Registration Statement, as
first filed with the SEC, and of each amendment thereto, including all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference); 

    ix.  deliver
to each Holder, without charge, up to ten (10) copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement as
such Holder may request; the Company hereby consents to the use (in accordance with law) of the Prospectus and any amendment or supplement thereto by each Holder in connection with the offering and
the sale of the Transfer Restricted Shares covered by the Prospectus or any amendment or supplement thereto; 

    x.  in
connection with any sale of Transfer Restricted Shares that will result in such securities no longer being Transfer Restricted Shares, cooperate with the Holders
to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Shares to be sold and not bearing any restrictive legends; and instruct its transfer agent pursuant
to transfer agent instructions substantially in the form attached hereto as Annex C to register such Transfer Restricted Shares in such denominations and such names as the selling Holders may request
at least two Business Days prior to such sale of Transfer Restricted Shares; 

    xi.  use
its reasonable best efforts to cause the disposition of the Transfer Restricted Shares covered by the Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof to consummate the disposition of such Transfer Restricted Shares; provided, however, that
the Company shall not be required to register or qualify as a foreign corporation where the Company is not now so qualified or to take any action
that would subject the Company to the service of process in suits or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where the
Company is not now so subject; and 

    xii. provide
promptly to each Holder, upon request, each document filed with the SEC pursuant to the requirements of Section 13 or Section 15(d) of the
Exchange Act. 

    (b) Restrictions
on Holders. 

    Each
Holder agrees by acquisition of a Transfer Restricted Share that, upon receipt of the notice referred to in Section 5(a)(iv)(C) or any notice from the Company of the
existence of any fact of the kind described in Section 5(a)(iv)(D) (in each case, a "Suspension Notice"), such Holder will forthwith discontinue disposition of Transfer Restricted Shares
pursuant to the 

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Registration Statement until (i) such Holder has received copies of the supplemented or amended Prospectus contemplated by Section 5(a)(v), or (ii) such Holder is advised in
writing by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus (in each
case, the "Recommencement Date"); provided, however, that any Suspension Period occurring as a result of notice from the Company of the existence of any fact of the kind described in
Section 5(a)(iv)(D) shall not exceed, for so long as this Agreement is in effect, the shorter of (x) the period ending on the date the information responsible for the Suspension Period
is disclosed to the public and (y) 30 Business Days (provided that no two Suspension Periods shall occur during any period within any 12 consecutive months). Each Holder receiving a Suspension
Notice hereby agrees that it will either (i) destroy any Prospectuses, other than permanent file copies, then in such Holder's possession which have been replaced by the Company with more
recently dated Prospectuses or (ii) deliver to the Company (at the Company's expense) all copies, other than permanent file copies, then in such Holder's possession of the Prospectus covering
such Transfer Restricted Shares that was current at the time of receipt of the Suspension Notice. This Section 5(b) shall not suspend the accrual of any Liquidated Damages available under
Section 4 of this Agreement. 

SECTION 6. REGISTRATION EXPENSES  

    (a) All
expenses incident to the Company's performance of or compliance with this Agreement will be borne by the Company, regardless of whether the Registration
Statement becomes effective, including
without limitation: (i) all registration and filing fees and expenses; (ii) all fees and expenses of compliance with federal securities and state blue sky or securities laws;
(iii) all expenses of printing, messenger and delivery services and telephone; (iv) all fees and disbursements of counsel for the Company; (v) all application and filing fees and
(vi) all reasonable fees and disbursements of independent certified public accountants of the Company (including the expenses of any special audit and comfort letters required by or incident to
such performance). 

    The
Company will, in any event, bear its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting
duties), the expenses of any annual audit and the fees and expenses of any person, including special experts, retained by the Company. 

    (b) In
connection with the Registration Statement the Company will reimburse the Holders of Transfer Restricted Shares who are selling or reselling Common Shares
pursuant to the "Plan of Distribution" contained in the Registration Statement for the reasonable fees and disbursements of not more than one counsel for all of the Holders of an amount up to
$5,000.00. 

SECTION 7. INDEMNIFICATION  

    (a) The
Company agrees to indemnify and hold harmless each Holder, its directors, officers and each person, if any, who controls such Holder (within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act) from and against any and all losses, claims, damages, liabilities and judgments (including without limitation
the legal fees and other expenses incurred in connection with investigating or defending any matter, including any action that could give rise to any such losses, claims, liabilities or judgments)
caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, preliminary Prospectus or Prospectus (or any amendment or supplement thereto),
provided by the Company to the Holders or to any prospective purchaser of Common Shares, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or
necessary to make 

–6–

 

the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or judgments are proximately caused by any untrue statement or omission or alleged untrue statement
or omission that is based upon information relating to any of the Holders furnished in writing to the Company by such Holders for use in the Registration Statement. This indemnity shall not limit any
other rights the Holders may have against the Company with respect to any such losses, claims, damages, liabilities or judgments. 

    (b) Each
Holder agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, officers, attorneys, accountants, agents and
representatives, and each person, if any, who controls (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) the Company, to the same extent as the
foregoing indemnity from the Company set forth in Section 7(a) above, but only with reference to information relating to such Holder furnished in writing to the Company by such Holder expressly
for use in the Registration Statement or any amendment or supplement thereto. In no event shall any Holder, its directors or officers, or any person who controls such Holder be liable or responsible
under this Section 7 for any amount in excess of the amount by which the total amount received by such Holder with respect to its sale of Transfer Restricted Shares pursuant to the Registration
Statement exceeds (i) the amount paid by such Holder for such Transfer Restricted Shares, plus (ii) the amount of any damages that such Holder, its directors or officers, or any person
who controls such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. This indemnity shall not limit any other rights the
Company may have against the Holders with respect to any such losses, claims, damages, liabilities or judgments. 

    (c) In
case any action shall be commenced involving any person in respect of which indemnity may be sought pursuant to Section 7(a) or 7(b), such person (the
"Indemnified person") shall promptly notify the person against whom such indemnity may be sought (the "Indemnifying person") in writing, and the Indemnifying person shall assume the defense of such
action, including the employment of counsel reasonably satisfactory to the Indemnified person and shall pay all fees and expenses of such counsel as incurred (except that in the case of any action in
respect of which indemnity may be sought pursuant to both Sections 7(a) and 7(b), a Holder shall not be required to assume the defense of such action pursuant to this Section 7(c), but may
employ separate counsel and participate in the defense thereof, but the fees and expenses of such counsel, except as provided below, shall be at the expense of such Holder). Any Indemnified person
shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified person
unless (i) the employment of such counsel shall have been specifically authorized in writing by the Indemnifying person, (ii) the Indemnifying person shall have failed to assume the
defense of such action or employ counsel reasonably satisfactory to the Indemnified person or (iii) the named parties in any such action (including any impleaded parties) include both the
Indemnifying person and the Indemnified person, and the Indemnified person shall have been advised by such counsel that there may be one or more legal defenses available to it which are different from
or additional to those available to the Indemnifying person (in which case the Indemnifying person shall not have the right to assume the defense of such action on behalf of the Indemnified person).
It is understood that the Indemnifying person shall not, in connection with any one action or separate but substantially similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all Indemnified persons, unless an
Indemnified person determines that a conflict would exist among the Indemnified persons, in which case such Indemnified person may use a separate firm of attorneys and the Indemnifying person will be
liable for all such fees and expenses of such separate firm of attorneys, and that all such fees and expenses shall be reimbursed as they are incurred. Any such separate firm for the indemnified
Holders shall be designated in writing by a majority of the 

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indemnified Holders (unless a conflict exists as more fully described in the immediately preceding sentence), in the case of parties indemnified pursuant to Section 7(a), and any such separate
firm for the Company, its directors, its officers and such control persons shall be designated in writing by the Company, in the case of parties indemnified pursuant to Section 7(b). The
Indemnifying person shall indemnify and hold harmless the Indemnified person from and against any and all losses, claims, damages, liabilities and judgments by reason of any settlement of any action
(i) effected with its written consent or (ii) effected without its written consent if the settlement is entered into more than twenty Business Days after the Indemnifying person shall
have received a request from the Indemnified person for reimbursement for the fees and expenses of counsel (in any case where such fees and expenses are at the expense of the Indemnifying person) and,
prior to the date of such settlement, the Indemnifying person shall have failed to comply with such reimbursement request. No Indemnifying person shall, without the prior written consent of the
Indemnified person, effect any settlement or compromise of, or consent to the entry of judgment with respect to, any pending or threatened action in respect of which the Indemnified person is or could
have been a party and indemnity or contribution may be or could have been sought hereunder by the Indemnified person, unless such settlement, compromise or judgment (i) includes an
unconditional release of the Indemnified person from all liability on claims that are or could have been the subject matter of such action and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the Indemnified person. 

    (d) To
the extent that the indemnification provided for in this Section 7 is unavailable to an Indemnified person in respect of any losses, claims, damages,
liabilities or judgments referred to therein, then each Indemnifying person, in lieu of indemnifying such Indemnified person hereunder, shall contribute to the amount paid or payable by such
Indemnified person as a result of such losses, claims, damages, liabilities or judgments (i) in such proportion as is appropriate to reflect the relative benefits received by the Company, on
the one hand, and the indemnified Holder, on the other hand, from their sale of Transfer Restricted Shares or (ii) if the allocation provided by clause 7(d)(i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 7(d)(i) above but also the relative fault of the
Company, on the one hand, and the indemnified Holder, on the other hand, in connection with the statements or omissions that resulted in such losses, claims, damages, liabilities or judgments, as well
as any other relevant equitable considerations. The relative fault of the Company, on the one hand, and the indemnified Holder, on the other hand, shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, on the one hand,
or by the indemnified Holder, on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or
payable by a party as a result of the losses, claims, damages, liabilities and judgments referred to above shall be deemed to include, subject to the limitations set forth in the second paragraph of
Section 7(a), any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. 

    (e) The
Company and each Holder agree that it would not be just and equitable if contribution pursuant to this Section 7(d) were determined by pro rata
allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an Indemnified person as a result of the losses, claims, damages, liabilities or judgments referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified person in connection with investigating or
defending any matter including any action that could have given rise to such losses, claims, damages, liabilities or 

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judgments. Notwithstanding the provisions of this Section 8, in no event shall a Holder, its directors or officers, or any person who controls such Holder, be required to contribute, in the
aggregate, pursuant to this Section 7 any amount in excess of the amount by which the total received by such Holder with respect to the sale of Transfer Restricted Shares pursuant to the
Registration Statement exceeds the sum of (i) the amount paid by such Holder for such Transfer Restricted Shares, plus (ii) the amount of any damages that such Holder, its directors or
officers, or any person who controls such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The
Holders' obligations to contribute pursuant to this Section 7(d) are several in proportion to the respective principal amount of the Transfer Restricted Shares held by each Holder hereunder and
not joint. This Section 7(d) shall not limit any other rights the Company may have against the Holders, or that the Holders may have against the Company, with respect to any such losses,
claims, damages, liabilities or judgments. 

SECTION 8. RULE 144 AND OTHER INFORMATION  

    The Company hereby agrees with each Holder, for so long as any Transfer Restricted Shares remain outstanding and during any period in which the Company
(i) is not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon request of any Holder of Transfer Restricted Shares, adequate current public information with
respect to the Company within the meaning of paragraph (c)(2) of Rule 144 under the Securities Act in order to permit sales of such Transfer Restricted Shares pursuant to Rule 144
under the Securities Act and (ii) is subject to Section 13 or 15(d) of the Exchange Act, to make all filings required thereby in a timely manner in order to permit sales of such Transfer
Restricted Shares without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 under the Securities Act. 

SECTION 9. MISCELLANEOUS  

    (a)  Remedies.  

    The
Company acknowledges and agrees that any failure by the Company to comply with its obligations under Section 3 may result in material irreparable injury to the Holders for
which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, any Holder may obtain such relief as
may be required to specifically enforce the Company's obligations under Section 3. The Company further agrees to waive the defense
in any action for specific performance that a remedy at law would be adequate. The remedies provided in this Agreement are cumulative and not exclusive of any remedies provided by law or equity. 

    (b)  Notices.  

    All
notices and other communications hereunder shall be in writing and shall be deemed sufficiently given and served for all purposes (i) when personally delivered or given by
machine-confirmed facsimile, (ii) one business day after a writing is delivered to a national overnight courier service or (iii) three business days after a writing is deposited in the
United States mail, first class postage or other charges prepaid and registered, return receipt requested, in each case, addressed as follows (or at such other address for a party as shall be
specified by like notice): (A) in the case of the Company, to Click2learn, Inc., Attention: President, 110-110th Avenue NE, Bellevue, WA, 98004
(425) 455-3071 (Facsimile No.), and (B) in the case of any Holder, at the address set forth on the stock records of the Company. 

    (c)  Amendments and Waivers.  

–9–

 

    No modifications or amendments to, or waivers of, any provision of this Agreement may be made, except pursuant to a document signed by the Company and Holders of two-
thirds of the outstanding Transfer Restricted Shares. 

    (d)  Interpretation.  

    When
a reference is made in this Agreement to Sections, paragraphs, clauses or Exhibits, such reference shall be to a Section, paragraph, clause or Exhibit to this Agreement unless
otherwise indicated. The words "include," "includes," and "including" when used herein shall be deemed in each case to be followed by the words "without limitation." The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. This Agreement has been negotiated by the respective
parties hereto and their attorneys and the language hereof will not be construed for or against either party. The phrases "the date of this Agreement," "the date hereof," and terms of similar import,
unless the context otherwise requires, shall be deemed to refer to November  , 2001. The words "hereof," "herein," "herewith," "hereby" and "hereunder" and words of similar import
shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement. 

    (e)  No Third-Party Beneficiaries.  

    No
person or entity not a party to this Agreement shall be deemed to be a third-party beneficiary hereunder or entitled to any rights hereunder. 

    (f)  Successors and Assigns.  

    Other
than with respect to transferees as to which the Common Shares held by such transferee have ceased to be Transfer Restricted Shares, this Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders. If any transferee of any Holder
shall acquire Transfer Restricted Shares in any manner, whether by operation of law or otherwise, such Transfer Restricted Shares shall be held subject to all of the terms of this Agreement, and by
taking and holding such Transfer Restricted Shares such person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement, including
the restrictions on resale set forth in this Agreement and, if applicable, the Purchase Agreement, and such person shall be entitled to receive the benefits. 

    (g)  Entire Agreement.  

    This
Agreement, the Purchase Agreement, the Warrant and the Schedules and exhibits to each of the foregoing are intended by the parties as a final expression of their agreement and
intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted with respect to the Transfer Restricted Shares. This Agreement supersedes
all prior agreements and understandings between the parties with respect to such subject matter. 

    (h)  Severability.  

    If
any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws, then, if possible, such illegal, invalid or unenforceable provision
will be modified to such extent as is necessary to comply with such present or future laws and such modification shall not affect any other provision hereof; provided that if such provision may not be
so modified such illegality, invalidity or unenforceability will not affect any other provision, but this Agreement will be reformed, construed and enforced as if such invalid, illegal or
unenforceable provision had never been contained herein. 

–10–

 

    (i)  Governing Law.  

    All
questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal
laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the
state and federal courts sitting in the City of New York, Borough of Manhattan. Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in
the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with
respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to
serve process in any manner permitted by law. Each party hereto (including its affiliates, agents, officers, directors and employees) hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence an
action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys fees and other costs
and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. 

    (j)  Counterparts.  

    This
Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to each the other parties, it being understood that all parties need not sign the same counterpart. 

    [Signature
Page Follows] 

–11–

    IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written. 

	 	 	CLICK2LEARN, INC.
	

 	
 	

By:	
 	

/s/ KEVIN OAKES   
 Name: Kevin Oakes

Title: President and Chief Executive Officer
	

 	
 	

ZLP Master Technology Fund, Ltd.
 as a PURCHASER
	

 	
 	

By:	
 	

/s/ STUART J. ZIMMER   
 Name: Stuart J. Zimmer

Title: Director
	

 	
 	

Strong River Investments
 as a PURCHASER
	

 	
 	

By:	
 	

/s/ KENNETH L. HENDERSON   
 Name: Kenneth L. Henderson

Title: Attorney-in-fact
	

 	
 	

/s/ JAMES J. DIDION   
 Name: James J. Didion
	

 	
 	

/s/ WALTER V. STAFFORD   
 Name: Walter V. Stafford
	

 	
 	

Vertical Ventures Investments, LLC
 as a PURCHASER
	

 	
 	

By:	
 	

/s/ JOSHUA SILVERMAN   
 Name: Joshua Silverman

Title: Partner
	

 	
 	

Vertical Ventures, LLC
 as a PURCHASER
	

 	
 	

By:	
 	

/s/ JOSHUA SILVERMAN   
 Name: Joshua Silverman

Title: Partner
	

 	
 	

ComVest Venture Partners
 as a PURCHASER
	

 	
 	

By:	
 	

/s/ ILLEGIBLE   
 Name:

Title:

   EXHIBIT A

SCHEDULE OF PURCHASERS  

	Name, Address and

tax identification number

(if applicable) of Purchaser
 
	 	Number of

Common Shares
	 	Number of

Warrant Shares

	ZLP Master Technology Fund, Ltd

Goldman Sachs (Cayman) Trust, Limited

P.O. Box 896 Harbour Centre, 2nd Floor

North Church Street

George Town, Grand Cayman

Cayman Islands, B.W.I.

C/o Darrren Martin

tax I.D. no. 98-0336731	 	840,000	 	420,000
	

Vertical Venture Investments, LLC

900 Third Avenue, 26th Floor

New York, NY 10022

Attn: Josh Silverman

tax I.D. no. 36-4466216	
 	

330,000	
 	

165,000
	

Vertical Ventures LLC

900 Third Avenue, 26th Floor

New York, NY 10022

Attn: Josh Silverman

tax I.D. no. 94-336-0273	
 	

170,000	
 	

85,000
	

Strong River Investments, Inc.

c/o Cavallo Capital

666 Madison Ave 18th Floor

NY, NY 10021

Attention: Eldad Gal

Fax: 212-651-9010	
 	

800,000	
 	

400,000
	

James J. Didion

P.O. Box 1441

Pebble Beach, California 93953

SS####-##-####

Fax # 831-622-2970	
 	

180,000	
 	

90,000
	

Walter V. Stafford

5921 Harbord Drive

Oakland, CA 94611

SS# ###-##-####	
 	

20,000	
 	

10,000
	

ComVest Venture Partners, L.P.

830 Third Avenue

New York, NY 10023

tax I.D. no. 13-4124841	
 	

400,000	
 	

200,000
	

 	
 	

	
 	

	 	
Total	
 	

2,740,000	
 	

1,370,000

A–1

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REGISTRATION RIGHTS AGREEMENTPrepared by MERRILL CORPORATION

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Exhibit 4.3  

NEITHER
THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE AND
WERE ISSUED IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES. 

	Warrant No. (Number)	 	Issue Date: November   , 2001
	

Warrant to Purchase

(Shares) Shares	
 	

 

 
 

FORM OF
  WARRANT TO PURCHASE COMMON STOCK
  OF
  CLICK2LEARN, INC.    
  

    THIS CERTIFIES that «WarrantHolder» or any subsequent holder hereof (the "Holder"), has
the right to purchase from Click2learn, Inc., a Delaware corporation (the "Company"), up to «Shares» fully paid and
nonassessable shares of the Company's Common Stock, par value $.01 per share (the "Common Stock"), subject to adjustment as provided herein, at a price
equal to the Exercise Price (as defined below), at any time beginning on the date on which this Warrant is issued (the "Issue Date") and
ending at 5:00 p.m., eastern time, on the date that is the seventh (7th) anniversary of the Issue Date (the "Expiration Date"). This Warrant is
issued, and all rights hereunder shall be, subject to all of the conditions, limitations and provisions set forth herein and in the Purchase Agreement, dated as of November 15, 2001, by and
among the Company and the Purchasers named therein (the "Purchase Agreement"). Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Purchase Agreement. 

    1.  Exercise.  

    (a)  Right to Exercise; Exercise Price.  The Holder shall have the right to exercise this Warrant at any
time and from time to time during the period beginning on the Issue Date and ending on the Expiration Date as to all or any part of the shares of Common Stock covered hereby (the
"Warrant Shares"). The "Exercise Price" payable by the Holder in connection with the exercise of this
Warrant shall be equal to $4.00 (subject to adjustment as provided herein). 

    (b)  Exercise Notice.  In order to exercise this Warrant, the Holder shall send by facsimile
transmission, at any time prior to 7:00 p.m., eastern time, on the Business Day (as defined below) on which the Holder wishes to effect such exercise (the "Exercise
Date"), to the Company a copy of the notice of exercise in the form attached hereto as Exhibit A (the "Exercise Notice")
stating the number of Warrant Shares as to which such exercise applies and the calculation therefor. As used herein, "Business Day" shall mean any day
on which the New York Stock Exchange (the "NYSE") and commercial banks in the city of New York are open for business. The Holder shall thereafter
deliver to the Company the original Exercise Notice, the original Warrant and the Exercise Price for the number of Warrant Shares with respect to which the Warrant is being 

 

exercised. In the case of a dispute as to the calculation of the Exercise Price or the number of Warrant Shares issuable hereunder (including without limitation the calculation of any adjustment to
the Exercise Price pursuant to Section 6 below), the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed and shall submit the disputed calculations to
the Company's independent accountant within two (2) Business Days following the Exercise Date. The Company shall cause such accountant to calculate the Exercise Price and/or the number of
Warrant Shares issuable hereunder and to notify the Company and the Holder of the results in writing no later than two Business Days following the day on which such accountant received the disputed
calculations. Such accountant's calculation shall be deemed conclusive absent manifest error. The fees of any such accountant shall be borne by the party whose calculations were most at variance with
those of such accountant. 

    (c)  Cancellation of Warrant.  This Warrant shall be canceled upon its exercise and, if this Warrant is
exercised in part, the Company shall, at the time that it delivers Warrant Shares to the Holder pursuant to such exercise as provided herein, issue a new warrant, and deliver to the Holder a
certificate representing such new warrant, with terms identical in all respects to this Warrant (except that such
new warrant shall be exercisable into the number of shares of Common Stock with respect to which this Warrant shall remain unexercised); provided, however, that the Holder shall be entitled to
exercise any portion of such new warrant at any time following the time at which this Warrant is exercised, regardless of whether the Company has actually issued such new warrant or delivered to the
Holder a certificate therefor. 

    (d)  Expiration Upon Certain Events.  Commencing on the two-year anniversary of the Issue
Date, in the event that during any period of twenty (20) consecutive Business Days, the closing price of the Common Stock (as reported by Bloomberg L.P. at approximately 4:30 p.m. (New
York time for regular session trading) exceeds an amount equal to product of (i) the Exercise Price (subject to adjustment as provided herein) and (ii) two and one-half
(2.5), the Company may deliver to the Holder, as long as the Expiration Condition (as defined below) has been satisfied, a written notice to such effect (a "Cancellation
Notice") and this Warrant shall expire on the date which is fifteen (15) Trading Days following the Business Day on which such Cancellation Notice is delivered to the
Holder. The term "Expiration Condition" shall mean that either (A) the Registration Statement (as defined in the Registration Rights Agreement
between the Company and the Holder) has been declared effective and is available for the resale of all of the Warrant Shares into which this Warrant is exercisable at all times during the 20 Business
Day period and the notice period or (B) the Warrant Shares may be sold pursuant to Rule 144(k) under the Securities Act of 1933, as amended (the "Securities Act"). 

    2.  Delivery of Warrant Shares Upon Exercise.  Upon receipt of the facsimile transmission of an Exercise
Notice pursuant to paragraph 1 above, the Company shall, (A) in the case of a Cashless Exercise (as defined below), no later than the close of business on the third (3rd) Business Day
following the Exercise Date set forth in such Exercise Notice, (B) in the case of a Cash Exercise (as defined below) no later than the close of business on the later to occur of (i) the
third (3rd) Business Day following the Exercise Date set forth in such Exercise Notice and (ii) such later date on which the Company shall have received payment of the Exercise Price, and
(C) with respect to Warrant Shares which are disputed as described in paragraph 1 (b) above, and required to be delivered by the Company pursuant to the accountant's calculations
described therein, the close of business on the third (3rd) Business Day following the determination made pursuant to paragraph 1(b) (the "Delivery
Date"), issue and deliver or cause to be delivered to the Holder the number of Warrant Shares as shall be determined as provided herein. The Company shall effect delivery of
Warrant Shares to the Holder by, as long as the Company's designated transfer agent for the Common Stock (the "Transfer Agent") participates in the
Depository Trust Company ("DTC") Fast Automated Securities Transfer program ("FAST"), crediting the
account of the Holder or its nominee at DTC (as specified in the applicable 

2

 

Exercise Notice) with the number of Warrant Shares required to be delivered, no later than the close of business on such Delivery Date. In the event that the Transfer Agent is not a participant in
FAST, or if Warrant Shares are not otherwise eligible for delivery through FAST, or if the Holder so specifies in an Exercise Notice or otherwise in writing on or before the Exercise Date, the Company
shall effect delivery of Warrant Shares by delivering to the Holder or its nominee physical certificates representing such Warrant Shares, no later than the close of business on such Delivery Date.
Warrant Shares delivered to the Holder shall not contain any restrictive legend as long as the resale of such Warrant Shares is covered by an effective Registration Statement (as defined in the
Registration Rights Agreement) and such Holder represents in writing to the Company that such Warrant Shares (i) have
been or are being sold pursuant to such registration statement or pursuant to Rule 144 under the Securities Act, or (ii) may be made pursuant to Rule 144(k) under the Securities
Act, or any successor rule or provision. 

    3.  Failure to Deliver Warrant Shares.  

    (a)  Exercise Default.  In the event that, as a result of any action or failure to act on the part of the
Company (including without limitation a failure by the Company to have a sufficient number of shares of Common Stock authorized and reserved for issuance pursuant to exercise of the Warrants), the
Company does not deliver to a Holder certificates representing the number of Warrant Shares specified in the applicable Exercise Notice on or before the Delivery Date therefor and such failure
continues for one (1) Business Day (an "Exercise Default"), the Company shall pay to the Holder payments ("Exercise
Default Payments") in the amount of (i) (N/365) multiplied by (ii) the aggregate Exercise Price for the Warrant
Shares which are the subject of such Exercise Default multiplied by (iii) the lower of eighteen percent (18%) and the maximum rate permitted by
applicable law, where "N" equals the number of days elapsed between the original Delivery Date for such Warrant Shares and the date on which all of such
Warrant Shares are issued and delivered to the Holder. Amounts payable under this subparagraph 3(a) shall be paid to the Holder in immediately available funds on or before the fifth (5th) Business Day
of the calendar month immediately following the calendar month in which such amount has accrued. The Holder shall have the right to either (i) rescind the Exercise Notice at any time following
an Exercise Default or (ii) require delivery of Common Stock. 

    (b)  Buy-in.  Nothing herein shall limit a Holder's right to pursue actual damages for the
Company's failure to issue and deliver Warrant Shares in connection with an exercise on the applicable Delivery Date (including, without limitation, damages relating to any purchase of shares of
Common Stock by the Holder to make delivery on a sale effected in anticipation of receiving Warrant Shares upon exercise, such damages to be in an amount equal to (A) the aggregate amount paid
by the Holder for the shares of Common Stock so purchased (including broker and legal fees and commissions) minus (B) the aggregate amount of net proceeds, if any, received by the Holder from
the sale of the Warrant Shares issued by the Company pursuant to such exercise), and the Holder shall have the right to pursue all remedies available to it at law or in equity (including, without
limitation, a decree of specific performance and/or injunctive relief.) 

    (c)  Reduction of Exercise Price.  In the event that, as a result of any action or failure to act on the
part of the Company (including without limitation a failure by the Company to have a sufficient number of shares of Common Stock authorized and reserved for issuance pursuant to exercise of the
Warrants), a Holder has not received certificates representing the Warrant Shares by the fourth (4th) Business Day following an Exercise Default, the Holder may, upon written notice to the Company,
regain on such Business Day the rights of a Holder of this Warrant, or part thereof, with respect to the Warrant Shares that are the subject of such Exercise Default, and the Exercise Price for such
Warrant Shares shall be reduced by one half of one percent (0.5%) for each day beyond such fourth Business Day in which the Exercise Default continues. In such event, the Holder shall retain all of
the Holder's rights and remedies with respect to the Company's 

3

 

failure to deliver such Warrant Shares (including without limitation the right to receive the cash payments specified in subparagraph 3(a) above). 

    (d)  Holder of Record.  Each Holder shall, for all purposes, be deemed to have become the holder of
record of Warrant Shares on the Exercise Date of this Warrant, irrespective of the date of delivery of such Warrant Shares. Nothing in this Warrant shall be construed as conferring upon the Holder
hereof any rights as a stockholder of the Company prior to the Exercise Date. 

    4.  Payment of the Exercise Price.  The Holder may pay the Exercise Price in either of the following
forms or, at the election of Holder, a combination thereof: 

    (a)  Cash Exercise:  by delivery of immediately available funds. 

    (b)  Cashless Exercise:  by surrender of this Warrant to the Company together with a notice of cashless
exercise, in which event the Company shall issue to the Holder the number of Warrant Shares determined as follows: 

	 	 	X	 	=	 	Y × (A-B)/A
	

where:	
 	

X	
 	

=	
 	

the number of Warrant Shares to be issued to the Holder;
	

 	
 	

Y	
 	

=	
 	

the number of Warrant Shares with respect to which this Warrant is being exercised;
	

 	
 	

A	
 	

=	
 	

the average of the closing prices of the Common Stock for the five (5) Trading Days immediately prior to (but not including) the Exercise Date; and
	

 	
 	

B	
 	

=	
 	

the Exercise Price;

provided, however, that the Holder may exercise this Warrant pursuant to a Cashless Exercise only if, on the Exercise Date, the resale of Warrant Shares
is not covered by an effective Registration Statement (as defined in the Registration Rights Agreement) that is available to the Holder on such date. 

    For
purposes of Rule 144 under the Securities Act, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise transaction shall be deemed
to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have been commenced, on the Issue Date. 

    5.  Anti-Dilution Adjustments, Distributions, Other Events.  The Exercise Price and the
number of Warrant Shares issuable hereunder shall be subject to adjustment from time to time as provided in this Section 5. In the event that any adjustment of the Exercise Price or number of
Warrant Shares as required herein results in a fraction of a cent or fraction of a share, as applicable, such exercise Price or number of Warrant Shares shall be rounded upon or down to the nearest
cent or share, as applicable. 

    (a)  Adjustment of Exercise Price and Number of Shares upon Issuance of Common Stock during the Issue
Period.  Except as otherwise provided in Section 5(d), in the event that, at any time during the one year period following the Issue Date (the
"Issue Period"), the Company issues, sells or agrees to sell, or in accordance with Section 5(c) hereof is deemed to have issued or sold
(i) any shares of Common Stock for no consideration (other than a stock split or stock dividend) or for a consideration per share less than $4.00 (such price, as adjusted for stock splits,
stock dividends and similar events, being referred to herein as the "Issue Price" and any such issuance or sale being referred to herein as a
"Below-Issue Price Issuance") and (ii) the aggregate gross purchase price in all such Below-Issue Price Issuance raised by the Company is equal
to or exceeds $2,500,000 (a "Ratchet Event"), then effective immediately upon such Ratchet Event, the the Exercise Price will be adjusted to a price
equal to the Effective Price (as defined below). The "Effective Price" of additional shares of Common Stock shall 

4

 

mean the quotient determined by dividing the total number of additional shares of Common Stock issued or sold in all such Below-Issue Price Issuances (or under
Section 5(c)(i)-(iv) deemed to have been issued or sold) into the aggregate consideration, calculated as set forth in Section 5(c)(v) hereof, raised by the Company in all
such Below-Issue Price Issuances. 

    (b)  Adjustment of Exercise Price and Number of Shares upon Issuance of Common Stock.  Except as
otherwise provided in Section 5(a) and Section 5(d) hereof, if and whenever after the initial issuance of this Warrant, the Company issues or sells, or in accordance with
Section 5(c) hereof is deemed to have issued or sold, any shares of Common Stock for no consideration (other than a stock split or stock dividend) or for a consideration per share less than
Exercise Price (as then in effect) (a "Dilutive
Issuance"), then effective immediately upon such Dilutive Issuance, the Exercise Price will be adjusted in accordance with the following formula: 

	E'	 	=	 	(E)(O+P/E
 (CSDO)

	where:	 	E'	 	=	 	the adjusted Exercise Price;
	

 	
 	

E	
 	

=	
 	

the then current Exercise Price;
	

 	
 	

O	
 	

=	
 	

the number of shares of Common Stock outstanding immediately prior to the Dilutive Issuance;
	

 	
 	

P	
 	

=	
 	

the aggregate consideration, calculated as set forth in Section 5(c) hereof, received by the Company upon such Dilutive Issuance; and
	

 	
 	

CSDO	
 	

=	
 	

the total number of shares of Common Stock Deemed Outstanding (as herein defined) immediately after the Dilutive Issuance.

    (c)  Effect on Exercise Price of Certain Events.  For purposes of determining the adjusted Exercise Price
under Section 5(a) and Section 5(b) hereof, the following will apply: 

    (i)  Issuance of Rights, Options or Convertible Securities.  Subject to
Section 5(c)(ii) below, if, after the date hereof, the Company in any manner issues or grants any warrants, rights or options, whether or not immediately exercisable, to subscribe for or
to purchase Common Stock or other securities exercisable, convertible into or exchangeable for Common Stock ("Convertible Securities") (such warrants,
rights and options to purchase Common Stock or Convertible Securities are hereinafter referred to as "Options"), and the price per share for which
Common Stock is purchasable or issuable upon the exercise of such Options is less than the Exercise Price (as then in effect) on the date of issuance of such Option or
direct stock grant ("Below Market Options"), then the maximum total number of shares of Common Stock issuable upon the exercise of all such Below Market
Options (assuming full exercise, conversion or exchange of Convertible Securities, if applicable) will, as of the date of the issuance or grant of such Below Market Options, be deemed to be
outstanding and to have been issued and sold by the Company for such price per share. For purposes of the preceding sentence, the price per share for which Common Stock is issuable upon the exercise
of such Below Market Options is determined by dividing (i) the total amount, if any, received or receivable by the Company as consideration for the issuance or sale of all such Below Market
Options, plus the minimum aggregate amount of additional consideration, if any, payable to the Company upon the exercise of all such below Market Options, plus, in the case of Convertible Securities
issuable upon the exercise of such Below Market Options, the minimum aggregate amount of additional consideration payable upon the exercise, conversion or exchange thereof at the time such Convertible
Securities first become exercisable, convertible or exchangeable, by (ii) the maximum total number of shares of 

5

 

Common Stock issuable upon the exercise of all such Below Market options (assuming full conversion of Convertible Securities, if applicable). No further adjustment to the Exercise Price will be made
upon the exercise of such Below Market Options or upon the exercise, conversion or exchange of Convertible Securities issuable upon exercise of such Below Market Options. 

    (ii)  Issuance of Convertible Securities.  

    (A) If
the Company in any manner issues, sells or agrees to sell any Convertible Securities, whether or not immediately convertible (other than where the same are
issuable upon the exercise of Options) and the price per share for which Common Stock is issuable upon such exercise, conversion or exchange (as determined pursuant to Section 5(c)(ii)(B) if
applicable) is less than the Exercise Price (as then in effect) on the date of issuance of such Convertible Security, then the maximum total number of shares of Common Stock issuable upon the
exercise, conversion or exchange of all such Convertible Securities will, as of the date of the issuance of such Convertible Securities, be deemed to be outstanding and to have been issued and sold by
the Company for such price per share. For the purposes of the preceding sentence, the price per share for which Common Stock is issuable upon such exercise, conversion or exchange is determined by
dividing (i) the total amount, if any, received or receivable by the Company as consideration for the issuance or sale of all such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the exercise, conversion or exchange thereof at the time such Convertible Securities first become exercisable, convertible or
exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the exercise, conversion or exchange of all such Convertible Securities. No further adjustment to the
Exercise Price will be made upon the actual issuances of such Common Stock upon exercise, conversion or exchange of such Convertible Securities. 

    (B) If
the Company in any manner issues, sells or agrees to sell any Convertible Securities with a fluctuating or re-setting conversion or exercise price or
exchange ratio (a "Variable Rate Convertible Security"), then the price per share for which Common Stock is issuable upon such exercise, conversion or
exchange for purposes of the calculation contemplated by Section 5(c)(ii)(A) shall be deemed to be
the lowest price per share which would be applicable assuming that all holding period and other conditions to any discounts contained in such Convertible Security have been satisfied. 

    (iii)  Change in Option Price or Conversion Rate.  If there is a change at any time in (i) the
amount of additional consideration payable to the Company upon the exercise of any Options; (ii) the amount of additional consideration, if any, payable to the Company upon the exercise,
conversion or exchange of any Convertible Securities, or (iii) the rate at which any Convertible Securities are convertible into or exchangeable for Common Stock (other than under or by reason
of provisions designed to protect against dilution), the Exercise Price in effect at such time shall be adjusted to the Exercise Price which would have been in effect had such Options or Convertible
Securities still outstanding provided for such changed additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold. 

    (iv)  Treatment of Expired Options and Unexercised Convertible Securities.  If, in any case, the total
number of shares of Common Stock issuable upon exercise of any Options or upon exercise, conversion or exchange of any Convertible Securities is not, in fact, issued and the rights to exercise such
Option or to exercise, convert or exchange such Convertible Securities shall have expired or terminated, the Exercise Price then in effect will be readjusted to the Exercise Price which would have
been in effect at the time of such expiration or termination 

6

 

had such Options or Convertible Securities, to the extent outstanding immediately prior to such expiration or termination (other than in respect of the actual number of shares of Common Stock issued
upon exercise or conversion thereof), never been issued. 

    (v)  Calculation of Consideration Received.  If any Common Stock, Options or Convertible Securities are
issued, granted or sold for cash, the consideration received therefor for purposes of this Warrant will be the amount received by the Company therefor, before deduction of reasonable commissions,
underwriting discounts or allowances or other reasonable expenses paid or incurred by the Company in connection with such issuance, grant or sale. In case any Common Stock, Options or Convertible
Securities are issued or sold for a consideration part or all of which shall be other than cash, the amount of the consideration other than cash received by the Company will be the fair market value
of such consideration except where such consideration consists of freely-tradable securities, in which case the amount of consideration received by the Company will be the Market Price thereof as of
the date of receipt. The fair market value of any consideration other than cash or securities will be determined in the good faith reasonable business judgment of the Board of Directors. 

    (d)  Exceptions to Adjustment of Exercise Price.  No adjustment to the Exercise Price or the number of
Warrant Shares issuable pursuant to this Warrant will be made under paragraph 5(a) or Section 5(b) above as a result of the issuance of any securities of the Company issued pursuant to
(i) the grant or exercise of any stock or options which may hereafter be granted or exercised under any employee, consultant or director benefit plan of the Company now existing or implemented
in the future, so long
as the issuance of such stock or options is approved by a majority of the non-employee members of the Company's Board of Directors or a majority of the members of a committee of
non-employee directors established for such purpose, (ii) any options, warrant, convertible securities or rights or agreements to purchase securities of the Company (not including
equity lines of credit) outstanding on the date hereof; (iii) any underwritten public offerings of equity securities securities (other than equity lines of credit and similar transactions);
(iv) any equity securities issued for consideration other than cash pursuant to a merger, consolidation, acquisition or similar business combination; (v) shares of Common Stock issued in
connection with any stock split, stock dividend or recapitalization by the Company; (vi) shares of Common Stock issued upon exercise of the Warrants; (vii) any equity securities issued
pursuant to any equipment leasing arrangement or debt financing from a bank or similar financial institution whose primary business is lending money and not investing in securities; or
(viii) any equity securities (other than equity lines of credit) issued in connection with strategic transactions involving the Company and other entities, including (A) joint ventures,
manufacturing, marketing or distribution arrangements, (B) technology transfer or development arrangements; provided, that the primary purpose of such transaction is not the raising of capital;
or (ix) an agreement to issue securities which does not close. 

    (e)  Subdivision or Combination of Common Stock.  If the Company, at any time after the initial issuance
of this Warrant, subdivides (by any stock split, stock dividend, recapitalization, reorganization, reclassification or otherwise) its shares of Common Stock into a greater number of shares, then after
the date of record for effecting such subdivision, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company, at any time after the initial
issuance of this Warrant, combines (by reverse stock split, recapitalization, reorganization, reclassification or otherwise) its shares of Common Stock into a smaller number of shares, then, after the
date of record for effecting such combination, the Exercise Price in effect immediately prior to such combination will be proportionally increased. In the event of any adjustment to the Exercise Price
arising from an event specified in this subparagraph (e), the number of shares of Common Stock into which this Warrant is exercisable will be proportionately increased or reduced, as the case may be. 

7

 

    (f)  Distributions.  If the Company or any of its subsidiaries shall at any time distribute to holders of
Common Stock (or to a holder, other than the Company, of the common stock of any such subsidiary) cash, evidences of indebtedness or other securities or assets (other than cash dividends or
distributions payable out of earned surplus or net profits for the current or the immediately preceding year) including any dividend or distribution in shares of capital stock of a subsidiary of the
Company (collectively, a "Distribution") then, in any such case, the Holder of this Warrant shall be entitled to receive, at the same time as such
assets are received by a holder of such stock, an amount and type of such Distribution as though such Holder were a holder on the record date therefor of a number of shares of Common Stock into which
this Warrant is exercisable as of such record date (such number of shares to be determined at the Exercise Price then in effect and without regard to any limitation on exercise of this Warrant that
may exist pursuant to the terms hereof or otherwise). 

    (g)  Notice of Consolidation or Merger.  In the event of a merger, consolidation, business combination,
tender offer, exchange of shares, recapitalization, reorganization, redemption or other similar event, as
a result of which shares of Common Stock of the Company shall be changed into the same or a different number of shares of the same or another class or classes of stock or securities or other assets of
the Company or another entity or there is a sale of all or substantially all the Company's assets (a "Corporate Change"), then (i) this Warrant
shall be exercisable into such class and type of securities or other assets as the Holder would have received had the Holder exercised this Warrant immediately prior to such Corporate Change and,
(ii) at the Holder's request, any successor to the Company or surviving entity in such Corporate Change shall issue to the Holder a new warrant consistent with the foregoing provisions and
evidencing the Holder's right to purchase the same number of shares issuable upon exercise of this Warrant for the aggregate Exercise Price upon exercise thereof; provided, however, that Company may
not effect any Corporate Change unless (i) it (or, in the case of a tender offer, the offering party) first shall have given twenty (20) days' notice to the Holder hereof of any
Corporate Change and makes a public announcement of such event before or at the same time that it gives such notice (it being understood that the filing by the Company of a Form 8-K
for the purpose of disclosing the anticipated consummation of the Corporate Change shall constitute such a notice for purposes of this provision) and (ii) it requires the resulting successor or
acquiring entity (if not the Company) to assume by written instrument the obligations of the Company hereunder and under the Purchase Agreement and the Registration Rights Agreement. 

    (h)  Adjustments, Additional Shares, Securities or Assets.  In the event that at any time, as a result of
an adjustment made pursuant to this Section 5, the Holder of this Warrant shall, upon exercise of this Warrant, become entitled to receive securities or assets (other than Common Stock) then,
wherever appropriate, all references herein to shares of Common Stock shall be deemed to refer to and include such shares and/or other securities or assets; and thereafter the number of such shares
and/or other securities or assets shall be subject to adjustment from time to time in a manner and upon terms as nearly equivalent as practicable to the provisions of this Section 5. 

    (i)  Limitation on Exercise.  

    (x) Notwithstanding
anything to the contrary contained herein, the number of shares of Common Stock that may be acquired by the Holder upon any exercise of this Warrant
(or otherwise in respect hereof) shall be limited to the extent necessary to insure that, following such exercise (or other issuance), the total number of shares of Common Stock then beneficially
owned by such Holder and its Affiliates (as defined in Rule 501(b) of Regulation D under the Securities Act) under Section 13(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), does not exceed 4.999% of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of 

8

 

Common Stock issuable upon such exercise). For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. Each delivery of an Exercise Notice hereunder will constitute a representation by the Holder that it has evaluated the limitation set forth in this paragraph and determined
that issuance of the full number of Warrant Shares requested in such Exercise Notice is permitted under this paragraph. By written notice to the Company, the Holder may waive the provisions of this
Section but (i) any such waiver or increase will not be effective until the 61st day after such notice is delivered
to the Company, and (ii) any such waiver will apply only to the Holder and not to any other holder of Warrants. 

    (y) Notwithstanding
anything to the contrary contained herein, the number of shares of Common Stock that may be acquired by the Holder upon any exercise of this Warrant
(or otherwise in respect hereof) shall be limited to the extent necessary to insure that, following such exercise (or other issuance), the total number of shares of Common Stock then beneficially
owned by such Holder and its Affiliates under Section 13(d) of the Exchange Act, does not exceed 9.999% of the total number of issued and outstanding shares of Common Stock (including for such
purpose the shares of Common Stock issuable upon such exercise). For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder. Each delivery of an Exercise Notice hereunder will constitute a representation by the Holder that it has evaluated the limitation set forth in this paragraph
and determined that issuance of the full number of Warrant Shares requested in such Exercise Notice is permitted under this paragraph. By written notice to the Company, the Holder may waive the
provisions of this Section but (i) any such waiver or increase will not be effective until the 61st day after such notice is delivered to the Company, and (ii) any such waiver will apply
only to the Holder and not to any other holder of Warrants. 

    6.  Fractional Interests.  No fractional shares or scrip representing fractional shares shall be issuable
upon the exercise of this Warrant, but on exercise of this Warrant, the Holder hereof may purchase only a whole number of shares of Common Stock. If, on exercise of this Warrant, the Holder hereof
would be entitled to a fractional share of Common Stock or a right to acquire a fractional share of Common Stock, such fractional share shall be disregarded and the number of shares of Common Stock
issuable upon exercise shall be rounded up or down to the nearest whole number of shares of Common Stock. 

    7.  Transfer of this Warrant.  The Holder may sell, transfer, assign, pledge or otherwise dispose of this
Warrant, in whole or in part, as long as such sale or other disposition is made pursuant to an effective registration statement or an exemption to the registration requirements of the Securities Act,
and applicable state laws. Upon such transfer or other disposition, the Holder shall deliver a written notice to Company, substantially in the form of the Transfer Notice attached hereto as
Exhibit B (the "Transfer Notice"), indicating the person or persons to whom this Warrant shall be transferred and, if less than all of this
Warrant is transferred or this Warrant is transferred in parts, the number of Warrant Shares to be covered by the part of this Warrant to be transferred to each such person. Within three
(3) Business Days of receiving a Transfer Notice and the original of this Warrant, the Company shall deliver to each transferee designated by the Holder a Warrant or Warrants of like tenor and
terms for the appropriate number of Warrant Shares. 

    8.  Benefits of this Warrant.  Nothing in this Warrant shall be construed to confer upon any person other
than the Holder of this Warrant any legal or equitable right, remedy or claim under this Warrant and this Warrant shall be for the sole and exclusive benefit of the Holder of this Warrant. 

    9.  Loss, theft, destruction or mutilation of Warrant.  Upon receipt by the Company of evidence of the
loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) 

9

 

of indemnity or security reasonably satisfactory to the Company, and upon surrender of this Warrant, if mutilated, the Company shall execute and deliver a new Warrant of like tenor and date. 

    10.  Notice or Demands.  Except as otherwise provided herein, any notice, demand or request required or
permitted to be given pursuant to the terms of this Warrant shall be in writing and shall be deemed given (i) when delivered personally or by verifiable facsimile transmission (with an original
to follow) on or before 5:00 p.m., eastern time, on a Business Day or, if such day is not a Business Day, on the next succeeding Business Day, (ii) on the next Business Day after timely
delivery to a nationally-recognized overnight courier and (iii) on the Business Day actually received if deposited in the U.S. mail (certified or registered mail, return receipt requested,
postage prepaid), addressed as follows: 

    If
to the Company: 

Click2learn, Inc.

110 110th Avenue NE

Bellevue, WA 98008

Attn: General Counsel

Tel: 425-637-5829

Fax: 425-637-1540 

    with
a copy to: 

Scott
L. Gelband, Esq.

Perkins Coie LLP

1201 Third Avenue, Suite 4800

Seattle, WA 98104

Tel: 206-583-8888

Fax: 206-583-8500 

and
if to the Holder, to such address as shall be designated by the Holder in writing to the Company. 

    11.  Applicable Law.  All questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party
agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Warrants (whether brought against a party hereto or its respective
affiliates,
directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan. Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or
with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Warrant), and hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper. Each party hereto hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto (including its affiliates, agents, officers, directors and employees)
hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Warrant or the transactions
contemplated hereby. If either party shall commence an action or proceeding to enforce any provisions of this Warrant, then the prevailing party in such action or proceeding shall be reimbursed by the
other party for its attorneys fees and other 

10

 

costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. 

    12.  Successors and Assigns.  This Warrant shall be binding on and inure to the benefit of the parties
hereto and their respective successors and assigns. Subject to the preceding sentence, nothing in this Warrant shall be construed to give to any entity or person other than the Company and the Holder
any legal or equitable right, remedy or cause of action under this Warrant. This Warrant may be amended only in writing signed by the Company and the Holder and their successors and assigns. 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK] 

11

 

    IN WITNESS WHEREOF, the undersigned has executed this Warrant as of
the                            day of November, 2001. 

	 	 	CLICK2LEARN, INC.
	

 	
 	

By:	
 	

	

 	
 	

Name:

Title:

Warrant No. (Number)

12

  

 
 

EXHIBIT A to WARRANT
  
    EXERCISE NOTICE    
  

    The undersigned Holder hereby exercises the right to purchase                of the shares of Common Stock
("Warrant Shares") of CLICK2LEARN, INC. Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in
the warrant issued to the Holder by the Company on November   , 2001. Unless otherwise specified in writing to the Company, the undersigned represents to the Company that the
shares of Common Stock covered by this notice have been or will be sold pursuant to the terms of an effective registration statement, or pursuant to an exemption from the registration requirements of
the Securities Act of 1933, as amended. 

	1.
	Form
of Exercise Price. The Holder intends that payment of the Exercise Price shall be made as: 

                       
a Cash Exercise with respect to                              Warrant Shares; and/or 

                       
a Cashless Exercise with respect to Warrant Shares. 

	2.
	Payment
of Exercise Price. In the event that the Holder has elected a Cash Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the Holder shall
pay the sum of $               to the Company in accordance with the terms of the Warrant, which sum represents the aggregate Exercise Price for the number of shares
of Common Stock to which this Exercise Notice relates.

	3.
	Delivery
of Warrant Shares. The Company shall deliver to the Holder                              Warrant Shares
in accordance with the terms of the Warrant.

	4.
	The
undersigned agrees with and represents to the Company that it is an "accredited investor" as such term is defined in Rule 501 of Regulation D under the Securities
Act of 1933, as amended (the "Securities Act,") and that the Warrant Shares are acquired for the account of the undersigned for investment and not with a view to, or for sale in connection with, any
distribution or public offering within the meaning of the Securities Act.

	5.
	By
its delivery of this Form of Election To Purchase, the Holder represents and warrants to the Company that in giving effect to the exercise evidenced hereby the Holder will not
beneficially own in excess of the number of shares of Common Stock (determined in accordance with Section 13(d) of the Securities Exchange Act of 1934) permitted to be owned under
Section 5(h) of this Warrant to which this notice relates. 

	Date:	 	
	 	 
	

 	
 	

 Name of Registered Holder	
 	

 

	By:	 	 	 
	 	
 Name:

Title:

	 	 

A–1

  

 
 

EXHIBIT B to WARRANT
  
    TRANSFER NOTICE    
  

FOR
VALUE RECEIVED, the undersigned Holder of the attached Warrant hereby sells, assigns and transfers unto the person or persons named below the right to purchase
               shares of the Common Stock of CLICK2LEARN, INC. evidenced by the attached Warrant. 

	Date:	 	
	 	 
	

 	
 	

 Name of Registered Holder	
 	

 

	By:	 	 	 
	 	
 Name:

Title:	 	 
	

Transferee Name and Address:	
 	

 
	

	
 	

 
	

	
 	

 
	

	
 	

 

B–1

QuickLinks

FORM OF WARRANT TO PURCHASE COMMON STOCK OF CLICK2LEARN, INC.

EXHIBIT A to WARRANT EXERCISE NOTICE

EXHIBIT B to WARRANT TRANSFER NOTICE

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