Document:

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                                                                   EXHIBIT 10.19

                                 ELOQUENT, INC.

                          2000 NON-QUALIFIED STOCK PLAN

                              ADOPTED JULY 5, 2000
                 AMENDED BY THE BOARD OF DIRECTORS MAY 23, 2002
                 AMENDED BY THE BOARD OF DIRECTORS JULY 16, 2002

1.      PURPOSES.

        (a) ELIGIBLE STOCK AWARD RECIPIENTS. The persons eligible to receive
Stock Awards are the Employees, Directors and Consultants of the Company and its
Affiliates.

        (b) AVAILABLE STOCK AWARDS. The purpose of the Plan is to provide a
means by which eligible recipients of Stock Awards may be given an opportunity
to benefit from increases in value of the Common Stock through the granting of
the following Stock Awards: (i) Nonstatutory Stock Options, (ii) restricted
stock bonuses and (iii) rights to acquire restricted stock.

        (c) GENERAL PURPOSE. The Company, by means of the Plan, seeks to retain
the services of the group of persons eligible to receive Stock Awards, to secure
and retain the services of new members of this group and to provide incentives
for such persons to exert maximum efforts for the success of the Company and its
Affiliates.

2.      DEFINITIONS.

        (a) "AFFILIATE" means any parent corporation or subsidiary corporation
of the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.

        (b) "BOARD" means the Board of Directors of the Company.

        (c) "CODE" means the Internal Revenue Code of 1986, as amended.

        (d) "COMMITTEE" means a committee of one or more members of the Board
appointed by the Board in accordance with subsection 3(c).

        (e) "COMMON STOCK" means the common stock of the Company.

        (f) "COMPANY" means Eloquent, Inc., a Delaware corporation.

        (g) "CONSULTANT" means any person, including an advisor, (i) engaged by
the Company or an Affiliate to render consulting or advisory services and who is
compensated for such services or (ii) who is a member of the Board of Directors
of an Affiliate. However, the term "Consultant" shall not include either
Directors who are not compensated by the Company for their services as Directors
or Directors who are merely paid a director's fee by the Company for their
services as Directors.

                                       1.
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        (h) "CONTINUOUS SERVICE" means that the Participant's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. The Participant's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant
renders such service, provided that there is no interruption or termination of
the Participant's Continuous Service. For example, a change in status from an
Employee of the Company to a Consultant of an Affiliate or a Director will not
constitute an interruption of Continuous Service. The Board or the chief
executive officer of the Company, in that party's sole discretion, may determine
whether Continuous Service shall be considered interrupted in the case of any
leave of absence approved by that party, including sick leave, military leave or
any other personal leave.

        (i) "DIRECTOR" means a member of the Board of Directors of the Company.

        (j) "DISABILITY" means the inability of a person, in the opinion of a
qualified physician acceptable to the Company, to perform the major duties of
that person's position with the Company or an Affiliate because of the sickness
or injury of the person.

        (k) "EMPLOYEE" means any person employed by the Company or an Affiliate.
Mere service as a Director or payment of a director's fee by the Company or an
Affiliate shall not be sufficient to constitute "employment" by the Company or
an Affiliate.

        (l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

        (m) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock determined as follows:

               (i) If the Common Stock is listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,
the Fair Market Value of a share of Common Stock shall be the closing sales
price for such stock (or the closing bid if no sales were reported) as quoted on
such exchange or market (or the exchange or market with the greatest volume of
trading in the Common Stock) on the day of determination as reported in The Wall
Street Journal or such other source as the Board deems reliable.

               (ii) In the absence of such markets for the Common Stock, the
Fair Market Value shall be determined in good faith by the Board and to the
extent that the Company is subject to Section 260.140.50 of Title 10 of the
California Code of Regulations, in a manner consistent with Section 260.14.50 of
Title 10 of the California Code of Regulations.

        (n) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

        (o) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.

        (p) "OFFICER" means a person who possesses the authority of an "officer"
as that term is used in Rule 4460(i)(1)(A) of the Rules of the National
Association of Securities Dealers, Inc.

                                       2.
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For purposes of the Plan, a person in the position of "Vice President" or higher
shall be classified as an "Officer" unless the Board or Committee expressly
finds that such person does not possess the authority of an "officer" as that
term is used in Rule 4460(i)(1)(A) of the Rules of the National Association of
Securities Dealers, Inc.

        (q) "OPTION" means a Nonstatutory Stock Option granted pursuant to the
Plan.

        (r) "OPTION AGREEMENT" means a written agreement between the Company and
an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.

        (s) "OPTIONHOLDER" means a person to whom an Option is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding
Option.

        (t) "PARTICIPANT" means a person to whom a Stock Award is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.

        (u) "PLAN" means this Eloquent, Inc. 2000 Non-Qualified Stock Plan.

        (v) "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.

        (w) "SECURITIES ACT" means the Securities Act of 1933, as amended.

        (x) "STOCK AWARD" means any right granted under the Plan, including an
Option, a stock bonus and a right to acquire restricted stock.

        (y) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.

        (z) "TEN PERCENT STOCKHOLDER" means a person who owns (or is deemed to
own pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any of its Affiliates.

3.      ADMINISTRATION.

        (a) ADMINISTRATION BY BOARD. The Board shall administer the Plan unless
and until the Board delegates administration to a Committee, as provided in
subsection 3(c). Any interpretation of the Plan by the Board and any decision by
the Board under the Plan shall be final and binding on all persons.

        (b) POWERS OF BOARD. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:

               (i) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; what type or combination of types of Stock Award shall be
granted; the provisions of each Stock

                                       3.
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Award granted (which need not be identical), including the time or times when a
person shall be permitted to receive Common Stock pursuant to a Stock Award; and
the number of shares of Common Stock with respect to which a Stock Award shall
be granted to each such person.

               (ii) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.

               (iii) To amend the Plan or a Stock Award as provided in Section
12.

               (iv) Generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.

        (c) DELEGATION TO COMMITTEE. The Board may appoint a Committee
consisting of not less than two (2) members of the Board to administer the Plan
on behalf of the Board, subject to such terms and conditions as the Board may
prescribe. At the discretion of the Board, the Committee may consist solely of
two or more Non-Employee Directors in accordance with Rule 16b-3. Once
appointed, the Committee shall continue to serve until otherwise directed by the
Board. From time to time the Board may increase the size of the Committee and
appoint additional members thereof, remove members (with or without cause), and
appoint new members in substitution therefor, fill vacancies however caused and
remove all members of the Committee, and thereafter directly administer the
Plan. Notwithstanding anything in this Section 3 to the contrary, at any time
the Board or the Committee may delegate to a committee of one or more members of
the Board who are not Non-Employee Directors the authority to grant Options to
all Employees and Consultants who are not then subject to Section 16 of the
Exchange Act.

4.      SHARES SUBJECT TO THE PLAN.

        (a) SHARE RESERVE. Subject to the provisions of Section 11 relating to
adjustments upon changes in Common Stock and Section 4(d) below, the Common
Stock that may be issued pursuant to Stock Awards shall not exceed in the
aggregate 2,000,000 shares of Common Stock.

        (b) REVERSION OF SHARES TO THE SHARE RESERVE. If any Stock Award shall
for any reason expire or otherwise terminate, in whole or in part, without
having been exercised in full, the shares of Common Stock not acquired under
such Stock Award shall revert to and again become available for issuance under
the Plan.

        (c) SOURCE OF SHARES. The shares of Common Stock subject to the Plan may
be unissued shares or reacquired shares, bought on the market or otherwise.

        (d) LIMITATION ON NUMBER OF SHARES. Notwithstanding Section 4(a), if at
the time of each grant of a Stock Award under the Plan the Company is subject to
Section 260.140.45 of Title 10 of the California Code of Regulations ("Section
260.140.45"), the total number of securities issuable upon exercise of all
outstanding options and the total number of shares provided for under this Plan
and any other stock bonus or similar plan or agreement of the

                                       4.
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Company shall not exceed 30% of the then outstanding capital stock of the
Company (as measured as set forth in Section 260.140.45), unless stockholder
approval to exceed 30% has been obtained in compliance with Section 260.140.45,
in which case the limit shall be such higher percentage as approved by the
stockholders .

5.      ELIGIBILITY.

        (a) ELIGIBILITY FOR STOCK AWARDS. Stock Awards may be granted to
Employees, Directors and Consultants.

        (b) RESTRICTIONS ON ELIGIBILITY. Notwithstanding the foregoing, the
aggregate number of shares issued pursuant to Stock Awards granted to Officers
and Directors cannot exceed 45% of the number of shares reserved for issuance
under the Plan as determined at the time of each such issuance to an Officer or
Director, except that there shall be excluded from this calculation shares
issued to Officers not previously employed by the Company pursuant to Stock
Awards granted as an inducement essential to such individuals entering into
employment contracts with the Company.

        (c) TEN PERCENT STOCKHOLDERS. So long as the Company is subject to
Section 260.140.41 of Title 10 of the California Code of Regulations:

               (i) A Ten Percent Stockholder shall not be granted a Nonstatutory
Stock Option unless the exercise price of such Option is at least (i) one
hundred ten percent (110%) of the Fair Market Value of the Common Stock on the
date of grant or (ii) such lower percentage of the Fair Market Value of the
Common Stock on the date of grant as is permitted by Section 260.140.41 of Title
10 of the California Code of Regulations at the time of the grant of the Option.

               (ii) A Ten Percent Stockholder shall not be granted a restricted
stock award unless the purchase price of the restricted stock is at least (i)
one hundred percent (100%) of the Fair Market Value of the Common Stock on the
date of grant or (ii) such lower percentage of the Fair Market Value of the
Common Stock on the date of grant as is permitted by Section 260.140.41 of Title
10 of the California Code of Regulations at the time of the grant of the
restricted stock award.

        (d) CONSULTANTS.

               (i) A Consultant shall not be eligible for the grant of a Stock
Award if, at the time of grant, a Form S-8 Registration Statement under the
Securities Act ("Form S-8") is not available to register either the offer or the
sale of the Company's securities to such Consultant because of the nature of the
services that the Consultant is providing to the Company, or because the
Consultant is not a natural person, or as otherwise provided by the rules
governing the use of Form S-8, unless the Company determines both (i) that such
grant (A) shall be registered in another manner under the Securities Act (e.g.,
on a Form S-3 Registration Statement) or (B) does not require registration under
the Securities Act in order to comply with the requirements of the Securities
Act, if applicable, and (ii) that such grant complies with the securities laws
of all other relevant jurisdictions.

                                       5.
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               (ii) Form S-8 generally is available to consultants and advisors
only if (i) they are natural persons; (ii) they provide bona fide services to
the issuer, its parents, its majority-owned subsidiaries or majority-owned
subsidiaries of the issuer's parent; and (iii) the services are not in
connection with the offer or sale of securities in a capital-raising
transaction, and do not directly or indirectly promote or maintain a market for
the issuer's securities.

6.      OPTION PROVISIONS.

        Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:

        (a) TERM. The term of an Option shall not exceed ten (10) years from the
date of grant of the Option.

        (b) EXERCISE PRICE OF A NONSTATUTORY STOCK OPTION. Subject to the
provisions of subsection 5(c) regarding Ten Percent Stockholders, the exercise
price of each Nonstatutory Stock Option shall be not less than 85% of the Fair
Market Value of the Common Stock subject to the Option on the date the Option is
granted. Notwithstanding the foregoing, a Nonstatutory Stock Option may be
granted with an exercise price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution for
another option in a manner satisfying the provisions of Section 424(a) of the
Code.

        (c) CONSIDERATION. The purchase price of Common Stock acquired pursuant
to an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised or (ii) at
the discretion of the Board at the time of the grant of the Option (or
subsequently in the case of a Nonstatutory Stock Option) (1) by delivery to the
Company of other Common Stock, (2) according to a deferred payment or other
similar arrangement with the Optionholder or (3) in any other form of legal
consideration that may be acceptable to the Board; provided, however, that at
any time that the Company is incorporated in Delaware, payment of the Common
Stock's "par value," as defined in the Delaware General Corporation Law, shall
not be made by deferred payment.

        In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.

        (d) TRANSFERABILITY OF A NONSTATUTORY STOCK OPTION. A Nonstatutory Stock
Option shall not be transferable except by will or by the laws of descent and
distribution and, to the extent provided in the Option Agreement, to such
further extent that the Company is subject to Section 260.140.41(d) of Title 10
of the California Code of Regulations at the time of the grant of the Option,
and shall be exercisable during the lifetime of the Optionholder only by the
Optionholder. If the Nonstatutory Stock Option does not provide for
transferability, then the Nonstatutory Stock Option shall not be transferable
except by will or by the laws of descent and distribution and shall be
exercisable during the lifetime of the Optionholder only by the

                                       6.
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Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering
written notice to the Company, in a form satisfactory to the Company, designate
a third party who, in the event of the death of the Optionholder, shall
thereafter be entitled to exercise the Option.

        (e) VESTING GENERALLY. The total number of shares of Common Stock
subject to an Option may, but need not, vest and therefore become exercisable in
periodic installments that may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board may
deem appropriate. The vesting provisions of individual Options may vary. The
provisions of this subsection 6(e) are subject to any Option provisions
governing the minimum number of shares of Common Stock as to which an Option may
be exercised.

        (f) MINIMUM VESTING. Notwithstanding the foregoing Section 6(e), to the
extent that the Company is subject to the following restrictions on vesting
under Section 260.140.41(f) of Title 10 of the California Code of Regulations at
the time of the grant of the Option, then:

               (i) Options granted to an Employee who is not an Officer,
Director or Consultant shall provide for vesting of the total number of shares
of Common Stock at a rate of at least twenty percent (20%) per year over five
(5) years from the date the Option was granted, subject to reasonable conditions
such as continued employment; and

               (ii) Options granted to Officers, Directors or Consultants may be
made fully exercisable, subject to reasonable conditions such as continued
employment, at any time or during any period established by the Company.

        (g) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionholder's
Continuous Service terminates other than upon the Optionholder's death or
Disability, the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise such Option as of the date of
termination) but only within such period of time ending on the earlier of (i)
the date three months following the termination of the Optionholder's Continuous
Service (or such longer or shorter period specified in the Option Agreement,
which period, for so long as the Company is subject to Section 260.140.41(g) of
Title 10 of the California Code of Regulations, shall not be less than thirty
(30) days unless such termination is for cause), or (ii) the expiration of the
term of the Option as set forth in the Option Agreement. If, after termination,
the Optionholder does not exercise his or her Option within the time specified
in the Option Agreement, the Option shall terminate.

        (h) EXTENSION OF TERMINATION DATE. An Optionholder's Option Agreement
may also provide that if the exercise of the Option following the termination of
the Optionholder's Continuous Service (other than upon the Optionholder's death
or Disability) would be prohibited at any time solely because the issuance of
shares of Common Stock would violate the registration requirements under the
Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of the term of the Option set forth in subsection 6(a), or (ii) the
expiration of a period of three months after the termination of the
Optionholder's Continuous Service during which the exercise of the Option would
not be in violation of such registration requirements.

                                       7.
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        (i) DISABILITY OF OPTIONHOLDER. In the event that an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination), but only
within such period of time ending on the earlier of (i) the date 12 months
following such termination (or such longer or shorter period specified in the
Option Agreement, which period, for so long as the Company is subject to Section
260.140.41(g) of Title 10 of the California Code of Regulations, shall not be
less than six (6) months) or (ii) the expiration of the term of the Option as
set forth in the Option Agreement. If, after termination, the Optionholder does
not exercise his or her Option within the time specified herein, the Option
shall terminate.

        (j) DEATH OF OPTIONHOLDER. In the event (i) an Optionholder's Continuous
Service terminates as a result of the Optionholder's death or (ii) the
Optionholder dies within the period (if any) specified in the Option Agreement
after the termination of the Optionholder's Continuous Service for a reason
other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholder's estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
Option upon the Optionholder's death pursuant to subsection 6(d), but only
within the period ending on the earlier of (1) the date 18 months following the
date of death (or such longer or shorter period specified in the Option
Agreement, which period, for so long as the Company is subject to Section
260.140.41(g) of Title 10 of the California Code of Regulations, shall not be
less than six (6) months) or (2) the expiration of the term of such Option as
set forth in the Option Agreement. If, after death, the Option is not exercised
within the time specified herein, the Option shall terminate.

        (k) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder's
Continuous Service terminates to exercise the Option as to any part or all of
the shares of Common Stock subject to the Option prior to the full vesting of
the Option. Any unvested shares of Common Stock so purchased may be subject to a
repurchase option in favor of the Company or to any other restriction the Board
determines to be appropriate.

        (l) RE-LOAD OPTIONS.

               (i) Without in any way limiting the authority of the Board to
make or not to make grants of Options hereunder, the Board shall have the
authority (but not an obligation) to include as part of any Option Agreement a
provision entitling the Optionholder to a further Option (a "Re-Load Option") in
the event the Optionholder exercises the Option evidenced by the Option
Agreement, in whole or in part, by surrendering other shares of Common Stock in
accordance with this Plan and the terms and conditions of the Option Agreement.

               (ii) Any such Re-Load Option shall (1) provide for a number of
shares of Common Stock equal to the number of shares of Common Stock surrendered
as part or all of the exercise price of such Option; (2) have an expiration date
which is the same as the expiration date of the Option the exercise of which
gave rise to such Re-Load Option; and (3) have an exercise price which is equal
to 100% of the Fair Market Value of the Common Stock subject to the Re-Load
Option on the date of exercise of the original Option. Notwithstanding the

                                       8.
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foregoing, a Re-Load Option shall be subject to the same exercise price and term
provisions heretofore described for Options under the Plan.

               (iii) There shall be no Re-Load Options on a Re-Load Option. Any
such Re-Load Option shall be subject to the availability of sufficient shares of
Common Stock under subsection 4(a) and shall be subject to such other terms and
conditions as the Board may determine which are not inconsistent with the
express provisions of the Plan regarding the terms of Options.

7.      PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.

        (a) RESTRICTED STOCK BONUS AWARDS. Each restricted stock bonus agreement
shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate. The terms and conditions of restricted stock bonus
agreements may change from time to time, and the terms and conditions of
separate restricted stock bonus agreements need not be identical, but each
restricted stock bonus agreement shall include (through incorporation of
provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions:

               (i) CONSIDERATION. A restricted stock bonus award may be awarded
in consideration for past services actually rendered to the Company or an
Affiliate for its benefit.

               (ii) VESTING. Subject to the "Repurchase Limitation" in Section
10(g), shares of Common Stock awarded under the restricted stock bonus agreement
may, but need not, be subject to a share repurchase option in favor of the
Company in accordance with a vesting schedule to be determined by the Board.

               (iii) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. Subject to
the "Repurchase Limitation" in Section 10(g), in the event a Participant's
Continuous Service terminates, the Company may reacquire any or all of the
shares of Common Stock held by the Participant which have not vested as of the
date of termination under the terms of the restricted stock bonus agreement.

               (iv) TRANSFERABILITY. Rights to acquire shares of Common Stock
under the stock bonus agreement shall not be transferable except by will or by
the laws of descent and distribution and shall be exercisable during the
lifetime of the Participant only by the Participant.

        (b) RESTRICTED STOCK PURCHASE AWARDS. Each restricted stock purchase
agreement shall be in such form and shall contain such terms and conditions as
the Board shall deem appropriate. The terms and conditions of the restricted
stock purchase agreements may change from time to time, and the terms and
conditions of separate restricted stock purchase agreements need not be
identical, but each restricted stock purchase agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions:

               (i) PURCHASE PRICE. The purchase price under each restricted
stock purchase agreement shall be such amount as the Board shall determine and
designate in such restricted stock purchase agreement. Subject to the provisions
of Section 5(c) regarding Ten Percent

                                       9.
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Stockholders, the purchase price shall not be less than eighty-five percent
(85%) of the Common Stock's Fair Market Value on the date such award is made or
at the time the purchase is consummated.

               (ii) CONSIDERATION. The purchase price of Common Stock acquired
pursuant to the stock purchase agreement shall be paid either: (i) in cash at
the time of purchase; (ii) at the discretion of the Board, according to a
deferred payment or other similar arrangement with the Participant; or (iii) in
any other form of legal consideration that may be acceptable to the Board in its
discretion; provided, however, that at any time that the Company is incorporated
in Delaware, then payment of the Common Stock's "par value," as defined in the
Delaware General Corporation Law, shall not be made by deferred payment.

               (iii) VESTING. Subject to the "Repurchase Limitation" in Section
10(g), shares of Common Stock acquired under the restricted stock purchase
agreement may, but need not, be subject to a share repurchase option in favor of
the Company in accordance with a vesting schedule to be determined by the Board.

               (iv) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. Subject to
the "Repurchase Limitation" in Section 10(g), in the event a Participant's
Continuous Service terminates, the Company may repurchase or otherwise reacquire
any or all of the shares of Common Stock held by the Participant which have not
vested as of the date of termination under the terms of the restricted stock
purchase agreement.

               (v) TRANSFERABILITY. Rights to acquire shares of Common Stock
under the restricted stock purchase agreement shall not be transferable except
by will or by the laws of descent and distribution and shall be exercisable
during the lifetime of the Participant only by the Participant.

8.      COVENANTS OF THE COMPANY.

        (a) AVAILABILITY OF SHARES. During the terms of the Stock Awards, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Stock Awards.

        (b) SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from
each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Stock Awards and to issue and sell shares
of Common Stock upon exercise of the Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any
such Stock Award. If, after reasonable efforts, the Company is unable to obtain
from any such regulatory commission or agency the authority which counsel for
the Company deems necessary for the lawful issuance and sale of Common Stock
under the Plan, the Company shall be relieved from any liability for failure to
issue and sell Common Stock upon exercise of such Stock Awards unless and until
such authority is obtained.

9.      USE OF PROCEEDS FROM STOCK.

                                      10.
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         Proceeds from the sale of Common Stock pursuant to Stock Awards shall
constitute general funds of the Company.

10.     MISCELLANEOUS.

        (a) ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall have the
power to accelerate the time at which a Stock Award may first be exercised or
the time during which a Stock Award or any part thereof will vest in accordance
with the Plan, notwithstanding the provisions in the Stock Award stating the
time at which it may first be exercised or the time during which it will vest.

        (b) STOCKHOLDER RIGHTS. No Participant shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares of
Common Stock subject to such Stock Award unless and until such Participant has
satisfied all requirements for exercise of the Stock Award pursuant to its
terms.

        (c) NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or any
instrument executed or Stock Award granted pursuant thereto shall confer upon
any Participant any right to continue to serve the Company or an Affiliate in
the capacity in effect at the time the Stock Award was granted or shall affect
the right of the Company or an Affiliate to terminate (i) the employment of an
Employee with or without notice and with or without cause, (ii) the service of a
Consultant pursuant to the terms of such Consultant's agreement with the Company
or an Affiliate or (iii) the service of a Director pursuant to the Bylaws of the
Company or an Affiliate, and any applicable provisions of the corporate law of
the state in which the Company or the Affiliate is incorporated, as the case may
be.

        (d) INVESTMENT ASSURANCES. The Company may require a Participant, as a
condition of exercising or acquiring Common Stock under any Stock Award, (i) to
give written assurances satisfactory to the Company as to the Participant's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (ii) to
give written assurances satisfactory to the Company stating that the Participant
is acquiring Common Stock subject to the Stock Award for the Participant's own
account and not with any present intention of selling or otherwise distributing
the Common Stock. The foregoing requirements, and any assurances given pursuant
to such requirements, shall be inoperative if (1) the issuance of the shares of
Common Stock upon the exercise or acquisition of Common Stock under the Stock
Award has been registered under a then currently effective registration
statement under the Securities Act or (2) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the Common Stock.

                                      11.
<PAGE>

        (e) WITHHOLDING OBLIGATIONS. To the extent provided by the terms of a
Stock Award Agreement, the Participant may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of Common
Stock under a Stock Award by any of the following means (in addition to the
Company's right to withhold from any compensation paid to the Participant by the
Company) or by a combination of such means: (i) tendering a cash payment; (ii)
authorizing the Company to withhold shares of Common Stock from the shares of
Common Stock otherwise issuable to the Participant as a result of the exercise
or acquisition of Common Stock under the Stock Award; or (iii) delivering to the
Company owned and unencumbered shares of Common Stock. Notwithstanding the
foregoing, the Company shall not be authorized to withhold shares of Common
Stock at rates in excess of minimum statutory withholding rates for federal and
state tax purposes, including payroll taxes.

        (f) INFORMATION OBLIGATION. To the extent that the Company is subject to
Section 260.140.46 of Title 10 of the California Code of Regulations, the
Company shall deliver financial statements to Participants at least annually.
This Section 10(f) shall not apply to key Employees whose duties in connection
with the Company assure them access to equivalent information.

        (g) REPURCHASE LIMITATION. The terms of any repurchase option shall be
specified in the Stock Award, and the repurchase price may be either the Fair
Market Value of the shares of Common Stock on the date of termination of
Continuous Service or the lower of (i) the Fair Market Value of the shares of
Common Stock on the date of repurchase or (ii) their original purchase price. To
the extent that the Company is subject to Section 260.140.41 and Section
260.140.42 of Title 10 of the California Code of Regulations at the time a Stock
Award is made, any repurchase option contained in a Stock Award granted to a
person who is not an Officer, Director or Consultant shall be upon the terms
described below:

               (i) FAIR MARKET VALUE. If the repurchase option gives the Company
the right to repurchase the shares of Common Stock upon termination of
Continuous Service at not less than the Fair Market Value of the shares of
Common Stock to be purchased on the date of termination of Continuous Service,
then (i) the right to repurchase shall be exercised for cash or cancellation of
purchase money indebtedness for the shares of Common Stock within ninety (90)
days of termination of Continuous Service (or in the case of shares of Common
Stock issued upon exercise of Stock Awards after such date of termination,
within ninety (90) days after the date of the exercise) or such longer period as
may be agreed to by the Company and the Participant (for example, for purposes
of satisfying the requirements of Section 1202(c)(3) of the Code regarding
"qualified small business stock") and (ii) the right terminates when the shares
of Common Stock become publicly traded.

               (ii) ORIGINAL PURCHASE PRICE. If the repurchase option gives the
Company the right to repurchase the shares of Common Stock upon termination of
Continuous Service at the lower of (i) the Fair Market Value of the shares of
Common Stock on the date of repurchase or (ii) their original purchase price,
then (x) the right to repurchase at the original purchase price shall lapse at
the rate of at least twenty percent (20%) of the shares of Common Stock per year
over five (5) years from the date the Stock Award is granted (without respect to
the date the Stock Award was exercised or became exercisable) and (y) the right
to repurchase shall be exercised for cash or cancellation of purchase money
indebtedness for the shares of Common

                                      12.
<PAGE>

Stock within ninety (90) days of termination of Continuous Service (or in the
case of shares of Common Stock issued upon exercise of Options after such date
of termination, within ninety (90) days after the date of the exercise) or such
longer period as may be agreed to by the Company and the Participant (for
example, for purposes of satisfying the requirements of Section 1202(c)(3) of
the Code regarding "qualified small business stock").

11.     ADJUSTMENTS UPON CHANGES IN STOCK.

        (a) CAPITALIZATION ADJUSTMENTS. If any change is made in the Common
Stock subject to the Plan, or subject to any Stock Award, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the class(es) and maximum number of securities subject to the Plan
pursuant to subsection 4(a), and the outstanding Stock Awards will be
appropriately adjusted in the class(es) and number of securities and price per
share of Common Stock subject to such outstanding Stock Awards. The Board shall
make such adjustments, and its determination shall be final, binding and
conclusive. (The conversion of any convertible securities of the Company shall
not be treated as a transaction "without receipt of consideration" by the
Company.)

        (b) CHANGE IN CONTROL. In the event of (i) a dissolution, liquidation or
sale of substantially all of the assets of the Company, (ii) a merger or
consolidation in which the Company is not the surviving corporation or (iii) a
reverse merger in which the Company is the surviving corporation but the shares
of Common Stock outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of securities,
cash or otherwise, then, to the extent permitted by applicable law: (i) any
surviving corporation shall assume any Stock Awards outstanding under the Plan
or shall substitute similar stock awards (including an award to acquire the same
consideration paid to the stockholders in the transaction described in this
subsection 11(b)) for those outstanding under the Plan, or (ii) such Stock
Awards shall continue in full force and effect. In the event any surviving
corporation refuses to assume or continue such Stock Awards, or to substitute
similar stock awards for those outstanding under the Plan, then with respect to
Stock Awards held by Participants whose Continuous Service has not terminated,
the time during which such Stock Awards may be exercised shall be accelerated,
and the Stock Awards terminated if not exercised prior to such event.

12.     AMENDMENT OF THE PLAN AND STOCK AWARDS.

        (a) AMENDMENT OF PLAN. The Board at any time, and from time to time, may
amend the Plan.

        (b) STOCKHOLDER APPROVAL. The Board may, in its sole discretion, submit
any amendment to the Plan for stockholder approval, including, but not limited
to, amendments to the Plan intended to satisfy the requirements of Section 422
of the Code, Rule 16b-3, or any Nasdaq or securities exchange listing
requirements.

                                      13.
<PAGE>

        (c) CONTEMPLATED AMENDMENTS. It is expressly contemplated that the Board
may amend the Plan in any respect the Board deems necessary or advisable to
provide eligible Employees with the maximum benefits provided or to be provided
under the provisions of the Code and the regulations promulgated thereunder
and/or to bring the Plan and/or Options into compliance therewith.

        (d) NO IMPAIRMENT OF RIGHTS. Rights under any Stock Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the Participant and (ii) the Participant
consents in writing.

        (e) AMENDMENT OF STOCK AWARDS. The Board at any time, and from time to
time, may amend the terms of any one or more Stock Awards; provided, however,
that the rights under any Stock Award shall not be impaired by any such
amendment unless (i) the Company requests the consent of the Participant and
(ii) the Participant consents in writing.

13.     TERMINATION OR SUSPENSION OF THE PLAN.

        (a) PLAN TERM. The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on the day before the tenth
(10th) anniversary of the date the Plan is adopted by the Board. No Stock Awards
may be granted under the Plan while the Plan is suspended or after it is
terminated.

        (b) NO IMPAIRMENT OF RIGHTS. Suspension or termination of the Plan shall
not impair rights and obligations under any Stock Award granted while the Plan
is in effect except with the written consent of the Participant.

14.     EFFECTIVE DATE OF PLAN.

        The Plan shall become effective on the date on which it is adopted by
the Board.

15.     CHOICE OF LAW.

        The law of the State of Delaware shall govern all questions concerning
the construction, validity and interpretation of this Plan, without regard to
such state's conflict of laws rules.

                                      14.<PAGE>
                                                                    Exhibit 4.03

THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), NOR UNDER
ANY APPLICABLE STATE SECURITIES LAWS. NEITHER THIS WARRANT NOR THE SECURITIES
ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS COVERED BY AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, THE SALE IS MADE
PURSUANT TO RULE 144 UNDER THE ACT, IF AVAILABLE, OR AN OPINION IS OBTAINED FROM
COUNSEL TO THE HOLDER, REASONABLY SATISFACTORY TO COUNSEL TO KNOWLEDGE KIDS
ENTERPRISES, INC., THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER THE
ACT AND ALL APPLICABLE STATE SECURITIES LAWS.

                    WARRANT TO PURCHASE CLASS B COMMON STOCK

                                       OF

                        KNOWLEDGE KIDS ENTERPRISES, INC.

                                                                   July 21, 1998

      This certifies that FROGPOND, LLC, a California limited liability company,
or any subsequent holder or designee (the "Holder"), for value received, is
entitled, subject to the adjustments and to the other terms set forth below, to
purchase from KNOWLEDGE KIDS ENTERPRISES, INC., a Delaware corporation (the
"Company"), having a place of business at 1250 45th Street, Suite 150,
Emeryville, California 94608, at any time from the date hereof until 5:00 P.M.
(California time) on July 20, 2003 (the "Expiration Date"), at which time this
Warrant shall expire and become void, One Million Eight Hundred Thousand
(1,800,000) shares (the "Warrant Shares") of the Company's Class B Common Stock,
par value $0.0001 per share (the "Class B Common Stock"), at an exercise price
(the "Exercise Price") of $5.00 per share, for any one or more exercises of this
Warrant.

      This Warrant Certificate is subject to the following terms and conditions:

      1.    Exercise; Issuance of Certificates; Payment for Shares. This Warrant
is exercisable at the option of the Holder at any time from the date hereof
until 5:00 P.M. (California time) on the Expiration Date for all or a portion of
the Warrant Shares that may be purchased hereunder. This Warrant shall be
exercised upon surrender to the Company at its principal office indicated above
(or such other location as the Company may advise Holder in writing) of this
Warrant properly endorsed with a completed and executed Subscription Agreement
in the form attached hereto as Exhibit A, and upon payment of the aggregate
Exercise Price for the number of Warrant Shares for which this Warrant is being
exercised. At the option of Holder, the aggregate Exercise Price may be paid in
any one or a combination of the following forms: (a) in cash or by cashier's
check, or (b) by the surrender to the Company of shares of Class B Common Stock,
free and clear of all encumbrances, having a Fair Value equal to the amount of
the Exercise Price being paid in the manner provided by this clause (b). The
Company

                                       1
<PAGE>
agrees that any Warrant Shares purchased under this Warrant shall be deemed to
be issued to Holder as the record owner of such shares as of the close of
business on the date on which this Warrant shall have been surrendered and
payment made for such Warrant Shares. Certificates for the Warrant Shares so
purchased, together with any other securities or property to which Holder is
entitled upon such exercise, shall be delivered to Holder (at the address of
such Holder as shown on the books of the Company) by the Company or its transfer
agent at the Company's expense within a reasonable time after the rights
represented by this Warrant have been exercised. Each stock certificate so
delivered shall be in such denominations of Class B Common Stock as may be
requested by Holder and shall be registered in the name of Holder or, subject to
the provisions of Section 4 and 6, such other name as shall be designated by
Holder. If, upon exercise of this Warrant, fewer than all of the Warrant Shares
subject to this Warrant are purchased prior to the Expiration Date of this
Warrant, one or more new warrants substantially in the form of, and on the terms
in, this Warrant will be issued for the remaining number of Warrant Shares not
purchased upon such exercise. For purposes of clause (b) above, the Fair Value
of the shares of Class B Common Stock (or the shares of Class A Common Stock, if
only Class A Common Stock is issuable as provided in Section 13 hereof) as of a
given date shall mean: (i) the average closing price of the shares of such class
of Common Stock on the principal exchange (or NASDAQ NMS) on which such class of
Common Stock is then trading (or if such class is not traded on an exchange but
the other class is, then the average closing price of the shares of the other
class), if any (or as reported on any composite index which includes such
principal exchange), on the ten most recent trading days immediately prior to
such date; or (ii) if neither class of Common Stock is traded on an exchange (or
NASDAQ NMS) but either class is quoted on NASDAQ Small Cap or a successor
quotation system, the average mean between the closing bid and asked prices for
shares of such class of Common Stock (or if such class is not quoted on NASDAQ
Small Cap or a successor quotation system but the other class is, then the
average mean between the closing bid and asked prices for shares of such other
class) on the ten most recent trading days immediately prior to such date as
reported by NASDAQ Small Cap or such successor quotation system; or (iii) if
neither class of Common Stock is publicly traded on an exchange (or NASDAQ NMS)
or quoted on NASDAQ Small Cap or a successor quotation system, the Fair Value
shall mean, at the option of the Company, either (x) the value attributed to
shares of either class of Common Stock pursuant to the most recent transaction
within the last 12 months involving shares of either class of Common Stock
between the Company and an unrelated third party prior to the given date, or (y)
the appraised value of shares of such class of Common Stock as of the given
date, as determined by a third party independent appraiser or investment bank
selected by the Company in the Company's sole discretion. For purposes of the
foregoing, in no event shall the Fair Value of a share of Class B Common Stock
be less than the Fair Value of a share of Class A Common Stock. In lieu of
exercising this Warrant as provided above, Holder may from time to time at
Holder's option convert this Warrant, in whole or in part, into a number of
shares of Class B Common Stock determined by dividing (A) the aggregate Fair
Value of such shares otherwise issuable upon exercise of this Warrant minus the
aggregate Exercise Price of such shares by (B) the Fair Value of one such share.

      2.    Shares to be Fully Paid; Reservation of Shares. The Company
covenants and agrees that all Warrant Shares that may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issuance thereof. The Company

                                       2
<PAGE>
covenants that it will reserve and keep available a sufficient number of shares
of its authorized but unissued Class B Common Stock for issuance upon exercise
or conversion of this Warrant. The Company will take all such reasonable action
as may be necessary to assure that such Warrant Shares may be issued as provided
herein without violation of any applicable law or regulation.

      3.    Adjustment of Exercise Price and Number of Warrant Shares. The
Exercise Price and the number of Warrant Shares shall be subject to adjustment
from time to time upon the occurrence of certain events described in this
Section 3. For purposes of this of this Warrant, the term Common Stock shall
mean the Company's Class A Common Stock and/or Class B Common Stock.

            3.1   Subdivision or Combination of Common Stock and Stock Dividend.
In the event that, after the date of this Warrant, the Company subdivides its
outstanding shares of Common Stock into a greater number of shares or declares a
dividend upon its Common Stock payable solely in shares of Common Stock, the
Exercise Price in effect immediately prior to such subdivision or declaration
shall automatically be proportionately reduced and the number of Warrant Shares
shall automatically be proportionately increased. Conversely, in case the
outstanding shares of Common Stock of the Company shall be combined into a
smaller number of shares, the Exercise Price in effect immediately prior to such
combination shall be proportionately increased, and the number of Warrant Shares
shall be proportionately reduced.

            3.2   Notice of Adjustment. Promptly after any adjustment of the
Exercise Price or any increase or decrease in the number of Warrant Shares, the
Company shall give written notice thereof, by first class mail, postage prepaid,
addressed to the registered holder of this Warrant at the address of such holder
as shown on the books of the Company. The notice shall be signed by the
Company's chief financial officer and shall state the effective date of the
adjustment and the Exercise Price resulting from such adjustment and the
increase or decrease, if any, in the number of Warrant Shares, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.

            3.3   Other Notices. If at any time:

                  (a)   the Company shall declare any cash dividend upon its
Common Stock;

                  (b)   the Company shall declare any dividend upon its Common
Stock payable in stock (other than a dividend payable solely in shares of Common
Stock) or make any special dividend or other distribution to the holders of its
Common Stock;

                  (c)   the Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or other
rights;

                  (d)   there shall be any capital reorganization or
reclassification of the capital stock of the Company; or consolidation or merger
of the Company with, or sale of all or substantially all of its assets to,
another corporation;

                                       3
<PAGE>
                  (e)   there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or

                  (f)   there shall be an initial public offering of Company
securities;

then, in any one or more of said cases, the Company shall give to the registered
holder of this Warrant, by the means specified in Section 8 herein, (i) at least
ten (10) days' prior written notice of the date on which the books of the
Company shall close or a record shall be taken for such dividend, distribution
or subscription rights or for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, and (ii) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation,
winding-up or public offering, at least ten (10) days' prior written notice of
the date when the same shall take place. Any notice given in accordance with the
foregoing clause (i) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on or after which the holders of
Common Stock shall be entitled thereto. Any notice given in accordance with the
foregoing clause (ii) shall also specify the date on or after which the holders
of Common Stock shall be entitled to exchange their Common Stock for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, winding-up, conversion or
public offering, as the case may be. If the Holder of the Warrant does not
exercise or convert this Warrant prior to the occurrence of an event described
above, except as provided in Sections 3.1 and 3.4, the Holder shall not be
entitled to receive the benefits accruing to existing holders of Common Stock in
such event.

            3.4   Changes in Common Stock. In case at any time following the
date of this Warrant, the Company shall be a party to any transaction
(including, without limitation, a merger, consolidation, or sale of all or
substantially all of the Company's assets or recapitalization of Common Stock)
in which the previously outstanding Common Stock shall be changed into,
converted or exchanged for other securities of the Company or common stock or
other securities of another corporation or interests in a non-corporate entity
or other property (including cash) or any combination of any of the foregoing
(each such transaction being herein called a "Transaction" and the date of
consummation of a Transaction being herein called a "Consummation Date"), then,
as a condition of the consummation of such Transaction, lawful and adequate
provisions shall be made so that the Holder, upon the exercise or conversion
hereof at any time on or after the Consummation Date of such Transaction, shall
be entitled to receive, and this Warrant shall thereafter represent the right to
receive, in lieu of the Class B Common Stock issuable upon such exercise or
conversion prior to such Consummation Date, the highest amount of securities or
other property to which the Holder would actually have been entitled as a
stockholder if the Holder had exercised this Warrant immediately prior to the
consummation of such Transaction. The provisions of this Section 3.4 shall
similarly apply to successive Transactions.

      4.    Issue Tax. The issuance of certificates for Warrant Shares upon the
exercise or conversion of the Warrant shall be made without charge to Holder for
any issue tax in respect thereof; provided, however, that the Company shall not
be required to pay any tax that may be

                                       4
<PAGE>
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the then Holder of the Warrant being
exercised or converted.

      5.    No Voting or Dividend Rights; Limitation of Liability. Nothing
contained in this Warrant shall be construed as conferring upon the Holder
hereof the right to vote or to consent or to receive notice as a stockholder in
respect of meetings of stockholders for the election of directors of the Company
or any other matters or any rights whatsoever as a stockholder of the Company,
until, and only to the extent that, this Warrant shall have been exercised or
converted. Except for the adjustment to the Exercise Price pursuant to Section
3.1 in the event of a dividend on the Common Stock payable in shares of Common
Stock, no dividends or interest shall be payable or accrued in respect of this
Warrant or the Warrant Shares purchasable hereunder until, and only to the
extent that, this Warrant shall have been exercised or converted. No provisions
hereof, in the absence of affirmative action by the Holder to purchase Warrant
Shares, and no mere enumeration herein of the rights or privileges of the Holder
hereof, shall give rise to any liability of such Holder for the Exercise Price
or as a stockholder of the Company whether such liability is asserted by the
Company or by its creditors.

      6.    Investment Representations; Restrictions on Transferability of
Securities.

            6.5   Investment Representations. By accepting this Warrant
Certificate, Holder (or any entity for which it is acting as nominee) represents
that it is acquiring this Warrant (and will be acquiring any Warrant Shares
purchased upon exercise or conversion of this Warrant) for its own account, not
as nominee or agent, for investment and not with a view to, or for resale in
connection with, any distribution or public offering thereof within the meaning
of the Securities Act of 1933, as amended (the "Act").

            6.6   Restrictions on Transferability. This Warrant and the Warrant
Shares have not been registered under the Act and shall not be transferable in
the absence of registration under the Act, or an exemption therefrom under said
Act.

            6.7   Restrictive Legend. Each certificate representing the Warrant
Shares or any other securities issued in respect of the Warrant Shares shall be
stamped or otherwise imprinted with legends in substantially the following form
(in addition to any legend required under applicable state securities laws):

      THE SHARES OF STOCK EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), NOR UNDER ANY
      APPLICABLE STATE SECURITIES LAWS. THESE SHARES MAY NOT BE SOLD,
      TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS COVERED
      BY AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE
      STATE SECURITIES LAWS, THE SALE IS MADE PURSUANT TO RULE 144 UNDER THE
      ACT, IF AVAILABLE, OR AN OPINION IS OBTAINED FROM COUNSEL TO THE HOLDER,
      REASONABLY SATISFACTORY TO COUNSEL TO KNOWLEDGE KIDS ENTERPRISES, INC.,
      THAT AN

                                       5
<PAGE>
      EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER THE ACT AND ALL APPLICABLE
      STATE SECURITIES LAWS.

      THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
      RESTRICTIONS ON TRANSFER SET FORTH IN A STOCKHOLDERS AGREEMENT, DATED AS
      OF SEPTEMBER 24, 1997, AS AMENDED. A COPY OF SUCH AGREEMENT MAY BE
      OBTAINED FROM THE COMPANY UPON REQUEST.

      7.    Modification and Waiver. This Warrant and any provision hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.

      8.    Notices. Any notice, request or other document required or permitted
to be given or delivered to the Holder hereof or the Company shall be delivered
or shall be sent by certified or registered mail, postage prepaid, to the Holder
at its address as shown on the books of the Company or if to the Company at the
address indicated therefor in the first paragraph of this Warrant. If the
Holder's address is outside of the United States, Holder shall first be given
notice by telecopy, in addition to being provided with notice as set forth in
the preceding sentence.

      9.    Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company's assets. All of the obligations of the
Company relating to the Common Stock issuable upon the exercise or conversion of
this Warrant shall survive the exercise or conversion and termination of this
Warrant. All of the covenants and agreements of the Company shall inure to the
benefit of the successors and assigns of the holder hereof.

      10.   Descriptive Headings and Governing Law. The descriptive headings of
the several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of Delaware.

      11.   Lost Warrants or Stock Certificates. The Company represents and
warrants to the Holder that upon receipt of an affidavit reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant or
any stock certificate deliverable upon the exercise or conversion hereof and, in
the case of any such loss, theft or destruction, upon receipt of an indemnity
agreement and, if requested, bond reasonably satisfactory to the Company, or in
the case of any such mutilation, upon surrender and cancellation of this Warrant
or such stock certificate, the Company at its expense will make and deliver a
new Warrant or stock certificate, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant or stock certificate.

      12.   Fractional Shares. The Company shall not be required to issue
fractional shares upon exercise or conversion of this Warrant. The Company may,
in lieu of issuing any fractional share, pay the Holder entitled to such
fraction a sum in cash equal to the fair market value of any such fractional
interest as it shall appear on the public market, or if there is no public
market for such shares, then as shall be reasonably determined by the Company.

                                       6
<PAGE>
      13.   Stockholders Agreement. This Warrant and the Warrant Shares are
subject to the terms and conditions of that certain Stockholders Agreement,
dated as of September 24, 1997 (as amended, the "Stockholders Agreement"), by
and among the Company, Knowledge Kids, L.L.C. ("Kids") and certain stockholders
of the Company. Initially capitalized terms used in this Section 13 that are not
otherwise defined in this Section 13 shall have the meanings as defined in the
Stockholders Agreement. Anything contained in this Warrant to the contrary
notwithstanding, in the event of any sale or transfer of this Warrant to any
person or persons, other than pursuant to a Qualified Transfer or to Kids (or
any other Kids Entities designated by Kids), thereafter no shares of Class B
Common Stock shall be issued upon exercise or conversion of this Warrant. In
lieu thereof, upon exercise or conversion of this Warrant there shall be issued
that number of shares of Class A Common Stock equal to the number of shares of
Class A Common Stock that would have been received if shares of Class B Common
Stock were issued upon such exercise or conversion and simultaneously converted
into shares of Class A Common Stock in accordance with the terms of the
Company's Amended and Restated Certificate of Incorporation. Subject to the
terms of the Stockholders Agreement and Section 6 hereof, the Company will
cooperate, and do all acts and things reasonably necessary and appropriate, to
effect and facilitate the distribution of this Warrant to the members of
FrogPond, LLC.

      IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officer effective as of July 21, 1998.

                                          KNOWLEDGE KIDS ENTERPRISES, INC.

                                          By:  /s/ Stanley E. Maron
                                               ---------------------------------
                                               Stanley E. Maron,
                                               Vice President

                                       7
<PAGE>
                                   EXHIBIT A

                        KNOWLEDGE KIDS ENTERPRISES, INC.
                          CLASS B COMMON STOCK WARRANT

                         FORM OF SUBSCRIPTION AGREEMENT

                          (To be signed and delivered
                    upon exercise or conversion of Warrant)

KNOWLEDGE KIDS ENTERPRISES, INC.
1250 45th Street, Suite 150
Emeryville, California 94608

Attention:  President

      The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the [purchase/conversion] right represented by such Warrant
for, and to acquire thereunder, _________________________ shares of [Class B
Common Stock/Class A Common Stock], par value $0.0001 per share (the "Stock"),
of KNOWLEDGE KIDS ENTERPRISES, INC. (the "Company"), and subject to the
following paragraph, herewith makes payment of Dollars ($       ) therefor in
the form of:

________________________________________________________________________________

The undersigned requests that the certificates for such shares be issued in the
name of, and delivered to, ______________________________, whose address is
______________________________.

      If the exercise or conversion of this Warrant is not covered by a
registration statement effective under the Securities Act of 1933, as amended
(the "Act"), the undersigned represents that:

            (i)   the undersigned is acquiring such Stock for investment for
his, her or its own account, not as nominee or agent, and not with a view to the
distribution thereof and the undersigned has not signed or otherwise arranged
for the selling, granting any participation in, or otherwise distributing the
same;

            (ii)  the undersigned has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of the
undersigned's investment in the Stock;

            (iii) the undersigned has received all of the information the
undersigned has

                                      A-1
<PAGE>
requested from the Company and considers necessary or appropriate for deciding
whether to purchase the shares of Stock;

            (iv)   the undersigned has the ability to bear the economic risks of
his, her or its prospective investment;

            (v)    the undersigned is able, without materially impairing its
financial condition, to hold the shares of Stock for an indefinite period of
time and to suffer complete loss on his, her or its investment;

            (vi)   the undersigned understands and agrees that (A) he may be
unable to readily liquidate his, her or its investment in the shares of Stock
and that the shares must be held indefinitely unless a subsequent disposition
thereof is registered or qualified under the Act and applicable state securities
or Blue Sky laws or is exempt from such registration or qualification, and that
the Company is not required to register the same or to take any action or make
such an exemption available except to the extent provided in the within Warrant
or other applicable agreement to which the Company and the undersigned are
parties, and (B) the exemption from registration under the Act afforded by Rule
144 promulgated by the Securities and Exchange Commission ("Rule 144") depends
upon the satisfaction of various conditions by the undersigned and the Company
and that, if applicable, Rule 144 affords the basis for sales under certain
circumstances in limited amounts, and that if such exemption is utilized by the
undersigned, such conditions must be fully complied with by the undersigned and
the Company, as required by Rule 144;

            (vii)  the undersigned either (A) is familiar with the definition of
and the undersigned is an "accredited investor" within the meaning of such term
under Rule 501 of Regulation D promulgated under the Act, or (B) is providing
representations and warranties reasonably satisfactory to the Company and its
counsel, to the effect that the sale and issuance of Stock upon exercise or
conversion of such Warrant may be made without registration under the Act or any
applicable state securities and Blue Sky laws; and

            (viii) the address set forth below is the true and correct address
of the undersigned's residence.

                                             ___________________________________
                                             (Name)

                                             ___________________________________
                                             (Address)

                                             ___________________________________

                                             ___________________________________

                                             ___________________________________

                                             ___________________________________
                                             (Social Security Number)

                                      A-2
<PAGE>
         If said number of shares shall not be all the shares exchangeable or
purchasable under the within Warrant, a new Warrant is to be issued in the name
of the undersigned for the balance remaining of the shares purchasable
thereunder.

DATED: _________________________

                                         _______________________________________
                                         (Name of holder must conform in all
                                         respects to name of holder as specified
                                         on the face of the Warrant or with the
                                         name of the assignee appearing on the
                                         assignment form attached hereto.)

                                         _______________________________________
                                                      (signature)

                                         _______________________________________
                                                      (print name)

                                         _______________________________________
                                                      (print title)

                                      A-3

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