Document:

<PAGE>

                                                                    EXHIBIT 10.2

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                            INDEMNIFICATION AGREEMENT

                                      among

                       FINANCIAL SECURITY ASSURANCE INC.,

                                AFS FUNDING CORP.

                                       and

                     CREDIT SUISSE FIRST BOSTON CORPORATION

                          Dated as of November 20, 2000

                 $93,000,000 Class A-1 6.72% Asset Backed Notes
                 $210,000,000 Class A-2 6.69% Asset Backed Notes
                 $102,000,000 Class A-3 6.74% Asset Backed Notes
             $195,000,000 Class A-4 Floating Rate Asset Backed Notes

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<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>

Section 1. Definitions.......................................................1

Section 2. Representations, Warranties and Agreements of Financial
      Security...............................................................3

Section 3. Representations, Warranties and Agreements of the
      Underwriters...........................................................5

Section 4. Indemnification...................................................6

Section 5. Indemnification Procedures........................................6

Section 6. Contribution......................................................7

Section 7. Miscellaneous.....................................................8
</TABLE>

EXHIBIT A -- Opinion of Assistant General Counsel

<PAGE>

                            INDEMNIFICATION AGREEMENT

      INDEMNIFICATION AGREEMENT dated as of November 20, 2000 among FINANCIAL
SECURITY ASSURANCE INC. ("FINANCIAL SECURITY"), AFS FUNDING CORP., (the
"SELLER") and CREDIT SUISSE FIRST BOSTON CORPORATION as the Representative (as
defined below):

      Section 1. DEFINITIONS. For purposes of this Agreement, the following
terms shall have the meanings provided below:

      "AGREEMENT" means this Indemnification Agreement, as amended from time to
time.

      "FEDERAL SECURITIES LAWS" means the Securities Act, the Securities
Exchange Act of 1934, the Trust Indenture Act of 1939, the Investment Company
Act of 1940, the Investment Advisers Act of 1940 and the Public Utility Holding
Company Act of 1935, each as amended from time to time, and the rules and
regulations in effect from time to time under such Acts.

      "FINANCIAL SECURITY AGREEMENTS" means this Agreement, the Stock Pledge
Agreement, the Spread Account Agreement, the Spread Account Agreement Supplement
and the Insurance Agreement.

      "FINANCIAL SECURITY INFORMATION" has the meaning provided in Section 2(g)
hereof.

      "FINANCIAL SECURITY PARTY" means any of Financial Security, its parent,
subsidiaries and affiliates, and any shareholder, director, officer, employee,
agent or "controlling person" (as such term is used in the Securities Act) of
any of the foregoing.

      "INDEMNIFIED PARTY" means any party entitled to any indemnification
pursuant to Section 4 hereof.

      "INDEMNIFYING PARTY" means any party required to provide indemnification
pursuant to Section 4 hereof.

      "INSURANCE AGREEMENT" means the Insurance and Indemnity Agreement, dated
as of November 20, 2000 among Financial Security, the Trust, AmeriCredit
Financial Services, Inc., AFS Funding Corp. and AmeriCredit Corp.

      "LOSSES" means (a) any actual out-of-pocket damages incurred by the party
entitled to indemnification or contribution hereunder, (b) any actual
out-of-pocket costs or expenses incurred by such party, including reasonable
fees or expenses of its counsel and other expenses incurred in connection with
investigating or defending any claim, action or other proceeding which entitle
such party to be indemnified hereunder (subject to the limitations set forth in
Section 5 hereof), to the extent not paid, satisfied or reimbursed from funds
provided by any other Person other than an affiliate of such party (provided
that the foregoing shall not create or imply any obligation to pursue recourse
against any such other Person), plus (c) interest on the amount paid by the
party entitled to indemnification or contribution from the date of such

<PAGE>

payment to the date of payment by the party who is obligated to indemnify or
contribute hereunder at the statutory rate applicable to judgments for breach of
contract.

      "OFFERING DOCUMENT" means the Prospectus and any other material or
documents delivered by the Underwriters to any Person in connection with the
offer or sale of the Securities.

      "PERSON" means any individual, partnership, joint venture, corporation,
trust, unincorporated organization or other organization or entity (whether
governmental or private).

      "POLICY" means the financial guaranty insurance policy delivered by
Financial Security with respect to the Securities.

      "PROSPECTUS" means, collectively, the Prospectus relating to the
Securities dated September 16, 1999 and the Prospectus Supplement dated November
9, 2000 (the "Prospectus Supplement") relating to the Securities.

      "REPRESENTATIVE"  means  Credit  Suisse  First  Boston  Corporation,  as
representative of the Underwriters.

      "SECURITIES" means the Trust's $93,000,000 Class A-1 6.72% Asset Backed
Notes, $210,000,000 Class A-2 6.69% Asset Backed Notes, $102,000,000 Class A-3
6.74% Asset Backed Notes, and $195,000,000 Class A-4 Floating Rate Asset Backed
Notes issued pursuant to the Series 2000-D Indenture.

      "SECURITIES ACT" means the Securities Act of 1933, as amended from time to
time.

      "SELLER PARTY" means any of the Seller, its parent, subsidiaries and
affiliates and any shareholder, director, officer, employee, agent or
"controlling person" (as such term is used in the Securities Act) of any of the
foregoing.

      "SPREAD ACCOUNT AGREEMENT" means the Spread Account Agreement, as amended
and restated, dated as of May 11, 1998, as amended as of October 25, 1999, as
further amended as of May 22, 2000, as further amended as of November 29, 2000,
among Financial Security, AFS Funding Corp., the collateral agent named therein
and the trustees specified therein, as the same may be amended, supplemented or
otherwise modified in accordance with the terms thereof.

      "SPREAD ACCOUNT AGREEMENT SUPPLEMENT" means the Series 2000-D Supplement
to Spread Account Agreement, dated as of November 20, 2000, among Financial
Security, AFS Funding Corp., the collateral agent named therein and the trustees
specified therein.

      "STOCK PLEDGE AGREEMENT" means the Stock Pledge Agreement, dated as of May
1, 1996 among Financial Security, AmeriCredit Financial Services, Inc. and the
collateral agent named therein, as the same may be amended, supplemented or
otherwise modified in accordance with the terms thereof.

      "TRUST" means AmeriCredit Automobile Receivables Trust 2000-D.

                                       2
<PAGE>

      "UNDERWRITERS" means Credit Suisse First Boston Corporation, Banc of
America Securities LLC, Barclays Capital Inc., Chase Securities Inc. and
Deutsche Bank Securities Inc., as underwriters.

      "UNDERWRITER INFORMATION" has the meaning provided in Section 3(c) hereof.

      "UNDERWRITER PARTY" means any of the Underwriters, its respective parent,
subsidiaries and affiliates and any shareholder, director, officer, employee,
agent or "controlling person" (as such item is used in the Securities Act) of
any of the foregoing.

      "UNDERWRITING AGREEMENT" means the Underwriting Agreement, dated as of
November 9, 2000 among the Seller, AmeriCredit Financial Services, Inc. and the
Representative.

      Section 2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF FINANCIAL
SECURITY. Financial Security represents, warrants and agrees as follows:

            (a) ORGANIZATION, ETC. Financial Security is a stock insurance
      company duly organized, validly existing and authorized to transact
      financial guaranty insurance business under the laws of the State of New
      York.

            (b) AUTHORIZATION, ETC. The Policy and the Financial Security
      Agreements have been duly authorized, executed and delivered by Financial
      Security.

            (c) VALIDITY, ETC. The Policy and the Financial Security Agreements
      constitute valid and binding obligations of Financial Security,
      enforceable against Financial Security in accordance with their terms,
      subject, as to the enforcement of remedies, to bankruptcy, insolvency,
      reorganization, rehabilitation, moratorium and other similar laws
      affecting the enforceability of creditors' rights generally applicable in
      the event of the bankruptcy or insolvency of Financial Security and to the
      application of general principles of equity and subject, in the case of
      this Agreement, to principles of public policy limiting the right to
      enforce the indemnification provisions contained herein.

            (d) EXEMPTION FROM REGISTRATION. The Policy is exempt from
      registration under the Securities Act.

            (e) NO CONFLICTS. Neither the execution or delivery by Financial
      Security of the Policy or the Financial Security Agreements, nor the
      performance by Financial Security of its obligations thereunder, will
      conflict with any provision of the certificate of incorporation or the
      bylaws of Financial Security nor result in a breach of, or constitute a
      default under, any material agreement or other instrument to which
      Financial Security is a party or by which any of its property is bound nor
      violate any judgment, order or decree applicable to Financial Security of
      any governmental or regulatory body, administrative agency, court or
      arbitrator having jurisdiction over Financial Security (except that, in
      the published opinion of the Securities and Exchange Commission, the
      indemnification provisions of this Agreement, insofar as they relate to
      indemnification for liabilities arising under the Securities Act, are
      against public policy as expressed in the Securities Act and are therefore
      unenforceable).

                                       3
<PAGE>

            (f) FINANCIAL INFORMATION. The consolidated balance sheets of
      Financial Security as of December 31, 1999 and December 31, 1998 and the
      related consolidated statements of income, changes in shareholder's equity
      and cash flows for the fiscal years then ended, and the interim
      consolidated balance sheet of Financial Security as of September 30, 2000,
      and the related statements of income, changes in shareholder equity and
      cash flows for the interim period then ended, which are incorporated by
      reference in the Prospectus, fairly present in all material respects the
      financial condition of Financial Security as of such dates and for such
      periods in accordance with generally accepted accounting principles
      consistently applied (subject as to interim statements to normal year-end
      adjustments) and since the date of the most current interim consolidated
      balance sheet referred to above there has been no change in the financial
      condition of Financial Security which would materially and adversely
      affect its ability to perform its obligations under the Policy.

            (g) FINANCIAL SECURITY INFORMATION. The information in the
      Prospectus Supplement set forth under the caption "The Insurer" (as
      revised from time to time in accordance with the provisions hereof, the
      "FINANCIAL SECURITY INFORMATION") is limited and does not purport to
      provide the scope of disclosure required to be included in a prospectus
      with respect to a registrant in connection with the offer and sale of
      securities of such registrant registered under the Securities Act. Within
      such limited scope of disclosure, however, as of the date of the
      Prospectus Supplement and as of the date hereof, the Financial Security
      Information does not contain any untrue statement of a material fact, or
      omit to state a material fact necessary to make the statements contained
      therein, in the light of the circumstances under which they were made, not
      misleading.

            (h) ADDITIONAL INFORMATION. Financial Security will furnish to the
      Underwriters or the Seller, upon request of the Underwriters or the
      Seller, as the case may be, copies of Financial Security's most recent
      financial statements (annual or interim, as the case may be) which fairly
      present in all material respects the financial condition of Financial
      Security as of the dates and for the periods indicated, in accordance with
      generally accepted accounting principles consistently applied except as
      noted therein (subject, as to interim statements, to normal year-end
      adjustments). In addition, if the delivery of a Prospectus relating to the
      Securities is required at any time prior to the expiration of nine months
      after the time of issue of the Prospectus in connection with the offering
      or sale of the Securities, the Seller or the Underwriters will notify
      Financial Security of such requirement to deliver a Prospectus and
      Financial Security will promptly provide the Underwriters and the Seller
      with any revisions to the Financial Security Information that are in the
      judgment of Financial Security necessary to prepare an amended Prospectus
      or a supplement to the Prospectus.

            (i) OPINION OF COUNSEL. Financial Security will furnish to the
      Underwriters and the Seller on the closing date for the sale of the
      Securities an opinion of its Assistant General Counsel, to the effect set
      forth in Exhibit A attached hereto, dated such closing date and addressed
      to the Seller and the Underwriters.

            (j) CONSENTS AND REPORTS OF INDEPENDENT ACCOUNTANTS. Financial
      Security will furnish to the Underwriters and the Seller, upon request, as
      comfort from its independent

                                       4
<PAGE>

      accountants in respect of its financial condition, (i) at the expense of
      the Person specified in the Insurance Agreement, a copy of the Prospectus,
      including either a manually signed consent or a manually signed report of
      Financial Security's independent accountants and (ii) the quarterly review
      letter by Financial Security's independent accountants in respect of the
      most recent interim financial statements of Financial Security.

Nothing in this Agreement shall be construed as a representation or warranty by
Financial Security concerning the rating of its insurance financial strength by
Moody's Investors Service, its insurer financial strength by Standard & Poor's
Ratings Services and Standard & Poor's (Australia) Pty. Ltd., its claims-paying
ability by Fitch IBCA, Inc. and Japan Rating and Investment Information, Inc. or
any other rating assigned by a rating agency (collectively, the "RATING
AGENCIES"). The Rating Agencies, in assigning such ratings, take into account
facts and assumptions not described in the Prospectus and the facts and
assumptions which are considered by the Rating Agencies, and the ratings issued
thereby, are subject to change over time.

      Section 3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE UNDERWRITERS.
Each of the Underwriters represents, warrants and agrees as follows:

            (a) COMPLIANCE WITH LAWS. Such Underwriter will comply in all
      material respects with all legal requirements in connection with offers
      and sales of the Securities and make such offers and sales in the manner
      provided in the Prospectus.

            (b) OFFERING DOCUMENT. Such Underwriter will not use, or distribute
      to other broker-dealers for use, any Offering Document in connection with
      the offer and sale of the Securities unless such Offering Document
      includes such information as has been furnished by Financial Security for
      inclusion therein and the information therein concerning Financial
      Security has been approved by Financial Security in writing. Financial
      Security hereby consents to the information in respect of Financial
      Security included in the Prospectus. Each Offering Document will include
      the following statement:

            "The Policy is not covered by the property/casualty insurance
            security fund specified in Article 76 of the New York Insurance
            Law".

      Each Offering Document including financial information with respect to
      Financial Security prepared in accordance with generally accepted
      accounting principles (but excluding any Offering Document in which such
      financial statements are incorporated by reference) will include the
      following statement immediately preceding such financial information:

            "The New York State Insurance Department recognizes only statutory
            accounting practices for determining and reporting the financial
            condition and results of operations of an insurance company, for
            determining its solvency under the New York Insurance Law, and for
            determining whether its financial condition warrants the payment of
            a dividend to its stockholders. No

                                       5
<PAGE>

            consideration is given by the New York State Insurance Department to
            financial statements prepared in accordance with generally accepted
            accounting principles in making such determinations."

            (c) UNDERWRITER INFORMATION. All material provided by the
      Underwriters for inclusion in the Prospectus (as revised from time to
      time, the "UNDERWRITER INFORMATION"), insofar as such information relates
      to the Underwriters, is true and correct in all material respects. In
      respect of the Prospectus Supplement, the Underwriter Information is
      limited to the information set forth (i) on the cover page of the
      Prospectus Supplement in the table containing the price to the public, the
      underwriting discount and the proceeds to the Seller with respect to the
      Securities and (ii) in the paragraphs immediately following the tables
      under the caption "Underwriting".

      Section 4.  INDEMNIFICATION.

            (a) Financial Security agrees, upon the terms and subject to the
      conditions provided herein, to indemnify, defend and hold harmless each
      Seller Party and each Underwriter Party against (i) any and all Losses
      incurred by them with respect to the offer and sale of the Securities and
      resulting from Financial Security's breach of any of its representations,
      warranties or agreements set forth in Section 2 hereof and (ii) any and
      all Losses to which any Seller Party or Underwriter Party may become
      subject, under the Securities Act or otherwise, insofar as such Losses
      arise out of or result from an untrue statement of a material fact
      contained in any Offering Document or the omission to state therein a
      material fact required to be stated therein or necessary to make the
      statements therein not misleading, in each case to the extent, but only to
      the extent, that such untrue statement or omission was made in the
      Financial Security Information included therein in accordance with the
      provisions hereof.

            (b) Each of the Underwriters, agrees, upon the terms and subject to
      the conditions provided herein, to indemnify, defend and hold harmless
      each Financial Security Party and each Seller Party against (i) any and
      all Losses incurred by them with respect to the offer and sale of the
      Securities and resulting from the Underwriters' breach of any of its
      representations, warranties or agreements set forth in Section 3 hereof
      and (ii) any and all Losses to which any Financial Security Party or
      Seller Party may become subject, under the Securities Act or otherwise,
      insofar as such Losses arise out of or result from an untrue statement of
      a material fact contained in any Offering Document or the omission to
      state therein a material fact required to be stated therein or necessary
      to make the statements therein not misleading, in each case to the extent,
      but only to the extent, that such untrue statement or omission was made in
      the Underwriter Information included therein.

            (c) Upon the incurrence of any Losses for which a party is entitled
      to indemnification hereunder, the Indemnifying Party shall reimburse the
      Indemnified Party promptly upon establishment by the Indemnified Party to
      the Indemnifying Party of the Losses incurred.

                                       6
<PAGE>

      Section 5. INDEMNIFICATION PROCEDURES. Except as provided below in Section
6 with respect to contribution, the indemnification provided herein by an
Indemnifying Party shall be the exclusive remedy of any and all Indemnified
Parties for the breach of a representation, warranty or agreement hereunder by
an Indemnifying Party; PROVIDED, HOWEVER, that each Indemnified Party shall be
entitled to pursue any other remedy at law or in equity for any such breach so
long as the damages sought to be recovered shall not exceed the Losses incurred
thereby resulting from such breach. In the event that any action or regulatory
proceeding shall be commenced or claim asserted which may entitle an Indemnified
Party to be indemnified under this Agreement, such party shall give the
Indemnifying Party written or telegraphic notice of such action or claim
reasonably promptly after receipt of written notice thereof. The Indemnifying
Party shall be entitled to participate in and, upon notice to the Indemnified
Party, assume the defense of any such action or claim in reasonable cooperation
with, and with the reasonable cooperation of, the Indemnified Party. The
Indemnified Party will have the right to employ its own counsel in any such
action in addition to the counsel of the Indemnifying Party, but the fees and
expenses of such counsel will be at the expense of such Indemnified Party,
unless (a) the employment of counsel by the Indemnified Party at its expense has
been authorized in writing by the Indemnifying Party, (b) the Indemnifying Party
has not in fact employed counsel satisfactory to Financial Security to assume
the defense of such action within a reasonable time after receiving notice of
the commencement of the action, or (c) the named parties to any such action or
proceeding (including any impleaded parties) include both the Indemnifying Party
and one or more Indemnified Parties, and the Indemnified Parties shall have been
advised by counsel that (A) there may be one or more legal defenses available to
them which are different from or additional to those available to the
Indemnifying Party and (B) the representation of the Indemnifying Party and such
Indemnified Parties by the same counsel would be inappropriate or contrary to
prudent practice (in which case, if such Indemnified Parties notify the
Indemnifying Party in writing that they elect to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense of such action or proceeding on behalf of such
Indemnified Parties, it being understood, however, that the Indemnifying Party
shall not, in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for all Seller Parties, one such firm for all Underwriter Parties and one
such firm for all Financial Security Parties, as the case may be, which firm
shall be designated in writing by the Seller in respect of the Seller Parties,
by the Underwriters in respect of the Underwriter Parties and by Financial
Security in respect of the Financial Security Parties), in each of which cases
the fees and expenses of counsel will be at the expense of the Indemnifying
Party and all such fees and expenses will be reimbursed promptly as they are
incurred. The Indemnifying Party shall not be liable for any settlement of any
such claim or action unless the Indemnifying Party shall have consented thereto
or be in default in its obligations hereunder. Any failure by an Indemnified
Party to comply with the provisions of this Section shall relieve the
Indemnifying Party of liability only if such failure is prejudicial to the
position of the Indemnifying Party and then only to the extent of such
prejudice.

      Section 6. CONTRIBUTION.

                                       7
<PAGE>

            (a) To provide for just and equitable contribution if the
      indemnification provided by any Indemnifying Party is determined to be
      unavailable for any Indemnified Party (other than due to application of
      this Section), each Indemnifying Party shall contribute to the Losses
      arising from any breach of any of its representations, warranties or
      agreements contained in this Agreement on the basis of the relative fault
      of each of the parties as set forth in Section 6(b) below; PROVIDED,
      HOWEVER, that an Indemnifying Party shall in no event be required to
      contribute to all Indemnified Parties an aggregate amount in excess of the
      Losses incurred by such Indemnified Parties resulting from the breach of
      representations, warranties or agreements contained in this Agreement.

            (b) The relative fault of each Indemnifying Party, on the one hand,
      and of each Indemnified Party, on the other, shall be determined by
      reference to, among other things, whether the breach of, or alleged breach
      of, any representations, warranties or agreements contained in this
      Agreement relates to information supplied by, or action within the control
      of, the Indemnifying Party or the Indemnified Party and the parties'
      relative intent, knowledge, access to information and opportunity to
      correct or prevent such breach.

            (c) The parties agree that Financial Security shall be solely
      responsible for the Financial Security Information and the Underwriters
      shall be solely responsible for the Underwriter Information and that the
      balance of each Offering Document shall be the responsibility of the
      Seller.

            (d) Notwithstanding anything in this Section 6 to the contrary, the
      Underwriters shall not be required to contribute an amount in excess of
      the amount by which the total price of the Securities underwritten by the
      Underwriters exceeds the amount of any damages that the Underwriters have
      otherwise been required to pay in respect of such untrue statement or
      omission.

            (e) 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.

            (f) Upon the incurrence of any Losses entitled to contribution
      hereunder, the contributor shall reimburse the party entitled to
      contribution promptly upon establishment by the party entitled to
      contribution to the contributor of the Losses incurred.

      Section 7. MISCELLANEOUS.

            (a) NOTICES. All notices and other communications provided for under
      this Agreement shall be delivered to the address set forth below or to
      such other address as shall be designated by the recipient in a written
      notice to the other party or parties hereto.

<TABLE>
      <S>                            <C>
      If to Financial Security:     Financial Security Assurance Inc.
                                    350 Park Avenue
                                    New York, NY  10022
                                    Attention:  Senior Vice President--Transaction Oversight
                                    Department (with a copy to the attention of the General

</TABLE>

                                       8
<PAGE>

<TABLE>
      <S>                            <C>
                                    Counsel)
                                    Re: AmeriCredit Automobile Receivables Trust 2000-D
                                    Confirmation:  (212) 826-0100
                                    Telecopy Nos.: (212) 339-3518,
                                                   (212) 339-3529

      If to the Seller:             AFS Funding Corp.
                                    639 Isbell Road, Suite 390
                                    Reno, Nevada 89509
                                    Attention:  General Counsel
                                    Confirmation:  (775) 823-3080

      If to the Underwriters:       Credit Suisse First Boston Corporation
                                    Eleven Madison Avenue--4th Floor
                                    New York, New York  10010
                                    Attention:  Gabriella Morizio, Legal and
                                                  Compliance Department
                                    Confirmation:  (212) 325-9646
                                    Telecopy No.:  (212) 325-8170

</TABLE>

            (b) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
      IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

            (c) ASSIGNMENTS. This Agreement may not be assigned by any party
      without the express written consent of each other party. Any assignment
      made in violation of this Agreement shall be null and void.

            (d) AMENDMENTS. Amendments of this Agreement shall be in writing
      signed by each party hereto.

            (e) SURVIVAL, ETC. The indemnity and contribution agreements
      contained in this Agreement shall remain operative and in full force and
      effect, regardless of (i) any investigation made by or on behalf of any
      Indemnifying Party, (ii) the issuance of the Securities or (iii) any
      termination of this Agreement or the Policy. The indemnification provided
      in this Agreement will be in addition to any liability which the parties
      may otherwise have and shall in no way limit any obligations of the Seller
      under the Underwriting Agreement or the Insurance Agreement.

            (f) COUNTERPARTS. This Agreement may be executed in counterparts by
      the parties hereto, and all such counterparts shall constitute one and the
      same instrument.

              [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

                                       9
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Indemnification
Agreement to be duly executed and delivered as of the date first above written.

                                  FINANCIAL SECURITY ASSURANCE INC.

                                  By: /s/ Mark Castiglione
                                      ----------------------------------------
                                      Name:   Mark Castiglione
                                      Title:  Authorized Officer

                                  AFS FUNDING CORP.

                                  By: /s/ Preston A. Miller
                                      --------------------------------
                                      Name: Preston A. Miller
                                      Title: Executive Vice President and
                                             Treasurer

                                  CREDIT SUISSE FIRST BOSTON CORPORATION

                                  By: /s/ John L. McWilliams, IV
                                      --------------------------------
                                      Name: John L. McWilliams, IV
                                      Title: Vice President

                                       10
<PAGE>

                                    EXHIBIT A

                      OPINION OF ASSISTANT GENERAL COUNSEL

      Based upon the foregoing, I am of the opinion that:

      1. Financial Security is a stock insurance company duly organized, validly
existing and authorized to transact financial guaranty insurance business under
the laws of the State of New York.

      2. The Policy and the Financial Security Agreements have been duly
authorized, executed and delivered by Financial Security.

      3. The Policy and the Financial Security Agreements constitute valid and
binding obligations of Financial Security, enforceable against Financial
Security in accordance with their terms, subject, as to the enforcement of
remedies, to bankruptcy, insolvency, reorganization, rehabilitation, moratorium
and other similar laws affecting the enforceability of creditors' rights
generally applicable in the event of the bankruptcy or insolvency of Financial
Security and to the application of general principles of equity and subject, in
the case of the Indemnification Agreement, to principles of public policy
limiting the right to enforce the indemnification provisions contained therein
insofar as they relate to indemnification for liabilities arising under
applicable securities laws.

      4. The Policy is exempt from registration under the Securities Act of
1933, as amended (the "ACT").

      5. Neither the execution or delivery by Financial Security of the Policy
or the Financial Security Agreements, nor the performance by Financial Security
of its obligations thereunder, will conflict with any provision of the
certificate of incorporation or the bylaws of Financial Security or violate any
law or regulation, which violation would impair the binding effect or
enforceability of the Policy or any of the Agreements or, to the best of my
knowledge, result in a breach of, or constitute a default under, any agreement
or other instrument to which Financial Security is a party or by which it or any
of its property is bound or, to the best of my knowledge, violate any judgment,
order or decree applicable to Financial Security of any governmental or
regulatory body, administrative agency, court or arbitrator having jurisdiction
over Financial Security (except that in the published opinion of the Securities
and Exchange Commission the indemnification provisions of the Indemnification
Agreement, insofar as they relate to indemnification for liabilities arising
under the Act, are against public policy as expressed in the Act and are
therefore unenforceable).

      In addition, please be advised that I have reviewed the description of
Financial Security under the caption "The Insurer" in the Prospectus (the
"OFFERING DOCUMENT") of the Seller with respect to the Securities. The
information provided in the Offering Document with respect to Financial Security
is limited and does not purport to provide the scope of disclosure required to
be included in a prospectus with respect to a registrant under the Act in
connection with the

                                      A-1
<PAGE>

public offer and sale of securities of such registrant. Within such limited
scope of disclosure, however, there has not come to my attention any information
which would cause me to believe that the description of Financial Security
referred to above, as of the date of the Offering Document or as of the date of
this opinion, contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (except that I express no opinion with respect to any financial
statements or other financial information contained or referred to therein).

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  SECURITIES PURCHASE AGREEMENT         

    SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of December 8, 2000, by and between
CLICK2LEARN.COM, INC., a Delaware corporation (the "Company"), and each of the entities whose names appear on the signature pages hereof. Such
entities are each referred to herein as a "Purchaser" and, collectively, as the "Purchasers". 

    The
Company wishes to sell to each Purchaser, and each Purchaser wishes to buy, on the terms and subject to the conditions set forth in this Agreement, (i) shares (the
"Shares") of the Company's common stock, par value $.01 per share (the "Common Stock"), (ii) a
warrant in the form attached hereto as Exhibit A (collectively, the "Series A Warrants")
and (iii) a warrant in the form attached hereto as Exhibit B (collectively, the "Series B
Warrants"). The Series A Warrants and the Series B Warrants are sometimes collectively referred to herein as the
"Warrants". The Warrants are exercisable into shares of Common Stock (the "Warrant Shares") in
accordance with their terms. The Shares, the Warrants and the Warrant Shares are sometimes collectively referred to herein as the "Securities". 

    The
sale of the Securities by the Company hereunder will be effected in reliance upon the exemption from securities registration afforded by the provisions of Regulation D
("Regulation D") as promulgated by the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Securities Act"). The Company has agreed to effect the registration of the Shares and the Warrant Shares under
the Securities Act pursuant to a Registration Rights Agreement of even date herewith by and between the Company and each Purchaser (the "Registration Rights
Agreement"). 

    The
Company and each Purchaser hereby agree as follows: 

1.  PURCHASE AND SALE OF THE SHARES AND WARRANTS.  

    1.1  Agreement to Purchase and Sell.  Upon the terms and subject to the satisfaction or waiver of the
conditions set forth herein, the Company agrees to sell and each Purchaser agrees to purchase, at a
purchase price equal to the investment amount set forth below such Purchaser's name on the signature pages hereof (the "Purchase Price"), (A) a
number of Shares equal to (x) such Purchaser's Purchase Price divided by (y) $12.175 (subject to adjustment for stock splits, stock
dividends and similar events), (B) a Series A Warrant exercisable into a number of Warrant Shares equal to fifty percent (50%) of the number of the Shares purchased by such Purchaser
hereunder at an exercise price equal to $14.61 (subject to adjustment for stock splits, stock dividends and similar events) and (C) a Series B Warrant exercisable into Warrant Shares at
the exercise price and otherwise in accordance with the terms set forth in Exhibit B hereto. 

    1.2  Certain Definitions.  When used herein, the following terms shall have the respective meanings
indicated: 

    "Closing" means the time at which each of the following has occurred: (i) the Company and each Purchaser execute and deliver
this Agreement and the other Transaction Documents (as defined below), which delivery may be effected by facsimile transmission, and (ii) each Purchaser makes full payment of such Purchaser's
Purchase Price (as defined below) by wire transfer of immediately available funds against physical delivery by the Company of duly executed certificates representing the Shares and Warrants being
purchased by such Purchaser. 

    "Closing Bid Price" means, with respect to the Common Stock, the closing bid price for the Common Stock occurring on a given Trading
Day on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg Financial Markets or, if Bloomberg Financial Markets is not then reporting
such prices, by a comparable reporting service of national reputation selected by the Company and reasonably acceptable to the Purchasers (collectively,
"Bloomberg") or if the foregoing does not apply, the last reported bid price of such 

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security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no bid price is reported for such security by
Bloomberg, the average of the bid prices of all market makers for such security as reported in the "pink sheets" by the National Quotation Bureau, Inc. If the Closing Bid Price cannot be
calculated for such security on any of the foregoing bases, the Closing Bid Price of such security shall be the fair market value as reasonably determined by an independent investment banking firm
selected by the Purchasers, and reasonably acceptable to the Company, with the costs of such appraisal to be borne by the Company. 

    "Closing Date" means the date on which the Closing occurs. 

    "Effective Date" means the date on which the Commission declares the Registration Statement to be effective under the Securities Act. 

    "Equity Securities" has the meaning set forth in paragraph 3.14 hereof. 

    "Market Price" means, as of a particular date, the average Closing Bid Price for the Common Stock during the period of five
(5) consecutive Trading Days immediately preceding (but not including) such date. 

    "Registration Statement" has the meaning set forth in the Registration Rights Agreement. 

    "Trading Day" means any day on which Common Stock is purchased and sold on the principal securities exchange or market on which the
Common Stock is then listed or traded. 

    "Transaction Documents" means (i) this Agreement, (ii) the Registration Rights Agreement, (iii) the Warrants and
(iv) all other agreements, documents or other instruments executed and delivered by or on behalf of the Company at the Closing. 

2.  REPRESENTATIONS, WARRANTIES AND COVENANTS OF EACH PURCHASER.  

    Each Purchaser hereby represents and warrants to the Company and agrees with the Company that, as of the date of this Agreement and as of the Closing Date: 

    2.1  Authorization; Enforceability.  Such Purchaser is duly and validly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or organization with full power and authority to purchase the Securities and to execute and deliver this Agreement. Each
Transaction Document constitutes such Purchaser's valid and legally binding obligation, enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency or
other laws affecting creditors' rights generally and to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity) or public policy. 

    2.2  Accredited Investor; Purchase as Principal.  Such Purchaser is an accredited investor as that term
is defined in Rule 501 of Regulation D, and is acquiring the Securities solely for its own account as a principal and not with a present view to the public resale or distribution of all
or any part thereof, except pursuant to sales that are exempt from the registration requirements of the Securities Act and/or sales registered under the Securities Act; provided, however that in
making such representation, such Purchaser does not agree to hold any Securities for any minimum or specific term and reserves the right to sell, transfer or otherwise dispose of the Securities at any
time in accordance with the provisions of this Agreement and with Federal and state securities laws applicable to such sale, transfer or disposition. 

    2.3  Information.  The Company has provided such Purchaser with information regarding the business,
operations and financial condition of the Company, and has granted to such Purchaser the opportunity to ask questions of and receive answers from representatives of the Company, its officers,
directors, employees and agents concerning the Company and materials relating to the terms and 

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conditions of the purchase and sale of the Securities. Neither such information nor any other investigation conducted by such Purchaser or any of its representatives shall modify, amend or otherwise
affect such Purchaser's right to rely on the Company's representations and warranties contained in this Agreement. 

    2.4  Limitations on Disposition.  Such Purchaser acknowledges that, except as provided in the
Registration Rights Agreement, the Securities have not been and are not being registered under the Securities Act and may not be transferred or resold without registration under the Securities Act or
unless pursuant to an exemption therefrom. 

    2.5  Legend.  Such Purchaser understands that the certificates representing the Securities may bear at
issuance a restrictive legend in substantially the following form: 

"The
securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or the securities laws of any state, and may not be
offered or sold unless a registration statement under the Securities Act and applicable state securities laws shall
have become effective with regard thereto, or an exemption from registration under such laws is available in connection with such offer or sale." 

    Notwithstanding
the foregoing, it is agreed that, as long as (A) the resale or transfer (including without limitation a pledge) of such Securities is registered pursuant to an
effective registration statement and such Purchaser represents in writing to the Company that such Securities have been or are being sold pursuant to such registration statement, (B) such
Securities have been publicly sold pursuant to Rule 144 under the Securities Act, or any successor provision ("Rule 144"), and such
Purchaser has delivered to the Company customary Rule 144 broker's and seller's representation letters, or (C) such Securities can be publicly sold pursuant to paragraph (k) of
Rule 144 (or any successor provision), such Securities shall be issued without any legend or other restrictive language and, with respect to Securities upon which such legend is stamped, the
Company shall issue new certificates without such legend to the holder thereof promptly upon request. 

    2.6  No Conflict.  The execution, delivery and performance by such Purchaser of this Agreement and the
other Transaction Documents to which it is a party (A) have been approved by all necessary action (corporate or other) on the part of such Purchaser and (B) will not result in
(i) any material violation of any provisions of its charter, bylaws or any other governing document in effect on the date hereof, (ii) any material violation of any instrument or
contract to which it is a party or by which it is bound, or (iii) the creation of any material lien, charge or encumbrance upon any of its assets. 

3.  REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.  

    The Company hereby represents and warrants to each Purchaser and agrees with such Purchaser that, as of the date of this Agreement and as of the Closing Date: 

    3.1  Organization, Good Standing and Qualification.  Except as set forth on  Schedule 3.1, each of the Company and its subsidiaries is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has all requisite corporate power and authority to carry on its business as now conducted. Each of the Company and its subsidiaries is duly
qualified to transact business and is in good standing in each jurisdiction in which the failure so to qualify would have a material adverse effect on the consolidated business or financial condition
of the Company and its subsidiaries taken as a whole. For purposes of this Agreement, the term "subsidiary" or "subsidiaries" shall mean any entity or entities in which the Company beneficially owns
20% or more of the voting equity thereof. 

    3.2  Authorization; Consents.  The Company has the requisite corporate power and authority to enter into
and perform its obligations under the Transaction Documents, to issue and sell Shares and Warrants to each Purchaser in accordance with the terms hereof and to issue and deliver Warrant 

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Shares in accordance with the terms of the Warrants. All corporate action on the part of the Company by its officers, directors and stockholders necessary for the authorization, execution and delivery
of, and the performance by the Company of its obligations under, the Transaction Documents has been taken, and no further consent or authorization of the Company, its Board of Directors, its
stockholders, any governmental agency or organization (other than such approval as may be required under the Securities Act and applicable state securities laws in respect of the Registration Rights
Agreement), or any other person or entity is required (pursuant to any rule of the Nasdaq National Market, or otherwise, other than pursuant to such market's continued listing criteria governing
issuances of common stock below the current market price thereof). 

    3.3  Enforcement.  Each of the Transaction Documents constitutes a valid and legally binding obligation
of the Company, enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency or other laws affecting creditors' rights generally and to
general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity) or public policy. 

    3.4  Disclosure Documents; Agreements; Financial Statements; Other Information.  The Company has filed
with the Commission: (i) the Company's Annual Report on Form 10-K for the year ended December 31, 1999, (ii) Quarterly Reports on Form 10-Q
for the quarters ended March 31, 2000, June 30, 2000 and September 30, 2000, (iii) all Current Reports on Form 8-K, if any, and any other reports,
required to be filed with the Commission since December 31, 1999 and prior to the date hereof and (iv) the Company's definitive Proxy Statement for its 2000 Annual Meeting of
Stockholders (collectively, the "Disclosure Documents"). The Company is not aware of any event occurring on or prior to the Closing Date (other than the
transactions effected hereby) that would require the filing of, or with respect to which the Company intends to file, a Form 8-K after such date. Each Disclosure Document, as of the
date of the filing thereof with the Commission, conformed in all material respects to the requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (the
"Exchange Act") and, as of the date of such filing, such Disclosure Document did not contain an untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. All material agreements required to
be filed as exhibits to the Disclosure Documents have been filed or incorporated by reference as required by the applicable provisions of the Exchange Act. Neither the Company nor any of its
subsidiaries is in breach of any agreement to which it is a party or by which it is bound where such breach could have a material adverse effect on (i) the consolidated business, operations,
properties, financial condition, prospects or results of operations of the Company and its
subsidiaries taken as a whole, (ii) the transactions contemplated hereby or by the other Transaction Documents, (iii) the Securities or (iv) the ability of the Company to perform
its obligations under this Agreement or the other Transaction Documents (collectively, a "Material Adverse Effect"). Except as set forth in the
Disclosure Documents, the Company has no liabilities, contingent or otherwise, other than liabilities incurred in the ordinary course of business which, under generally accepted accounting principles,
are not required to be reflected in such financial statements (including the footnotes to such financial statements) and which, individually or in the aggregate, are not material to the consolidated
business or financial condition of the Company and its subsidiaries taken as a whole. As of their respective dates, the financial statements of the Company included in the Disclosure Documents have
been prepared in accordance with generally accepted accounting principles consistently applied at the times and during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end adjustments). The information described in paragraph 2.3 (i) to the extent such information is in writing, does not contain an untrue
statement of material fact or 

4

omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, (ii) does not
contain any material, non-public information and (iii) would not, to the extent disclosed to such Purchaser, require the Company to comply with Regulation FD under the Exchange Act. 

    3.5  Capitalization.  The capitalization of the Company, including its authorized capital stock, the
number of shares issued and outstanding, the number of shares issuable and reserved for issuance pursuant to the Company's stock option plans, the number of shares issuable and reserved for issuance
pursuant to securities (other than the Warrants) exercisable for, or convertible into or exchangeable for any shares of Common Stock and the number of shares initially to be reserved for issuance upon
exercise of the Warrants is set forth on Schedule 3.5 hereto. All of such outstanding shares of capital stock have been, or upon issuance will
be, validly issued, fully paid and non-assessable. Except as set forth on Schedule 3.5, no shares of the capital stock of the Company
are subject to preemptive rights or any other similar rights of the stockholders of the Company or any liens or encumbrances created by or through the Company. Except as disclosed on  Schedule 3.5,
there are no outstanding options, warrants (other than the Warrants), scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into or exercisable or exchangeable for, any shares of capital stock of the Company or any of its subsidiaries, or arrangements by
which the Company or any of its subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its subsidiaries. 

    3.6  Valid Issuance.  The Shares are duly authorized and, when issued, sold and delivered in accordance
with the terms hereof, (i) will be duly and validly issued, fully paid and nonassessable, free and clear of any taxes, liens, claims, preemptive or similar rights or encumbrances imposed by or
through the Company (collectively, "Encumbrances") and (ii) based in part upon the representations of each Purchaser in this Agreement, will be
issued, sold and delivered in compliance with all applicable Federal and state securities laws. The Warrants are duly authorized and, when issued, sold and delivered in accordance with the terms
hereof, (i) will be duly and validly issued, fully paid and nonassessable, free and clear of any Encumbrances and (ii) based in part upon the representations of each Purchaser in this
Agreement, will be issued, sold and delivered in compliance with all applicable Federal and state securities laws. The Warrant Shares are duly authorized and, upon the issuance thereof in accordance
with the terms of the Warrants, will be duly and validly issued, fully paid and nonassessable, free and clear of any Encumbrances. The Company's Board of Directors (i) has unanimously
determined that the issuance and sale of the Shares and Warrants hereunder, and the consummation of the transactions contemplated hereby and by the other Transaction Documents (including without
limitation the issuance of Warrant Shares upon exercise of the Warrants), are in the best interests of the Company and (ii) has unanimously approved the execution and delivery of and
performance of its obligations under the Transaction Documents, the issuance of the Shares and the Warrants hereunder, and the issuance of Warrant Shares upon exercise of the Warrants. 

    3.7  No Conflict with Other Instruments.  Neither the Company nor any of its subsidiaries is in violation
of any provisions of its charter, bylaws or any other governing document as amended and in effect on and as of the date hereof or in default (and no event has occurred which, with notice or lapse of
time or both, would constitute a default) under any provision of any instrument or contract to which it is a party or by which it is bound, or of any provision of any Federal, state or foreign
judgment, writ, decree, order, statute, rule or governmental regulation applicable to the Company, which violation or default could reasonably be expected to have a Material Adverse Effect. The
(i) execution, delivery and performance of this Agreement and the other Transaction Documents and (ii) except as set forth in  Schedule 3.7, consummation of the transactions contemplated
hereby and thereby (including without limitation, the issuance of the Shares and the
Warrants and the reservation for issuance and issuance of the Warrant Shares) will not, in any such case, result in any such violation or be in conflict with or constitute, with or without the passage
of time and giving of notice, either a default under any such 

5

provision, instrument or contract or an event which results in the creation of any lien, charge or encumbrance upon any assets of the Company or of any of its subsidiaries or the triggering of any
preemptive or anti-dilution rights or rights of first refusal or first offer, or any similar rights (whether pursuant to a "poison pill" provision or otherwise), on the part of holders of
the Company's securities. 

    3.8  Financial Condition; Taxes; Litigation.  

    3.8.1  Except
as set forth on Schedule 3.8.1, the Company's financial condition is, in all material respects, as
described in the Disclosure Documents, except for changes in the ordinary course of business and normal year-end adjustments that are not, in the aggregate, materially adverse to the
consolidated business or financial condition of the Company and its subsidiaries taken as a whole. Except as otherwise described in the Disclosure Documents or in Schedule 3.8.1, or disclosed
in writing by the Company to such Purchaser prior to the Closing Date, there has been no material adverse change to the Company's business, operations, properties, financial condition, prospects or
results of operations since the date of the Company's most recent audited financial statements contained in the Disclosure Documents. 

    3.8.2  Except
as set forth on Schedule 3.8.2, the Company has filed all tax returns required to be filed by it
and paid all taxes which are due, except for taxes which it reasonably disputes or which could not have a Material Adverse Effect. 

    3.8.3  Neither
the Company nor any of its subsidiaries is the subject of any pending or, to the Company's knowledge, threatened inquiry, investigation or administrative
or legal proceeding by the Internal Revenue Service, the taxing authorities of any state or local jurisdiction, the Commission or any state securities commission or other governmental or regulatory
entity which could have a Material Adverse Effect. 

    3.8.4  Except
as described in the Disclosure Documents or in Schedule 3.8.4, there is no claim, litigation or
administrative proceeding pending, or, to the Company's knowledge, threatened or contemplated, against the Company or any of its subsidiaries, or against any officer, director or employee of the
Company or any such subsidiary in connection with such person's employment therewith that, individually or in the aggregate, could have a Material Adverse Effect. Neither the Company nor any of its
subsidiaries is a party to or subject to the provisions of, any order, writ, injunction, judgment or decree of any court or government agency or instrumentality which could have a Material Adverse
Effect. 

    3.9  Reporting Company; Form S-3.  The Company is subject to the reporting
requirements of the Exchange Act, has a class of securities registered under Section 12 of the Exchange Act, and has filed all reports required thereby. The Company is eligible to register for
resale, in a secondary sale by such Purchaser, shares of its Common Stock on a registration statement on Form S-3 under the Securities Act. To the Company's knowledge, there exist
no facts or circumstances (including without limitation any required approvals or waivers of any circumstances that may delay or prevent the obtaining of accountant's consents) that would prohibit or
delay the preparation and filing of a registration statement on Form S-3 with respect to the Registrable Securities (as defined in the Registration Rights Agreement). 

    3.10  Acknowledgement of Dilution.  The Company acknowledges that the issuance of Warrant Shares in
accordance with the provisions of the Warrants (including without limitation provisions that may, under certain circumstances, affect the exercise price and other terms of the Warrants) may result in
dilution of the outstanding shares of Common Stock, which dilution may be substantial under certain market conditions, and that its obligation to issue Warrant Shares in accordance with such
provisions is unconditional and absolute regardless of the effect of any such dilution. 

    3.11  Intellectual Property.  Except as set forth on  Schedule 3.11, the Company and its subsidiaries each has the right to use adequate trademarks,
trade names and other rights to inventions,
know-how, 

6

patents, copyrights, confidential information and other intellectual property rights necessary to conduct the business now operated by it, and is not aware of any infringement by a third party with
respect to such rights or of any infringement by it or conflict with asserted rights of others that, in any such case, if determined adversely to the Company or any of its subsidiaries, could
individually or in the aggregate have a Material Adverse Effect. 

    3.12  Registration Rights; Rights of Participation.  Except as described on  Schedule 3.12 hereto, (A) the Company has not granted or agreed to
grant to any person or entity any rights (including
"piggy-back" registration rights) to have any securities of the Company registered with the Commission or any other governmental authority and (B) no person or entity, including,
but not limited to, current or former stockholders of the Company, underwriters, brokers, agents or other third parties, has any right of first refusal, preemptive right, right of participation,
anti-dilutive right or any similar right to participate in, or to receive securities of the Company or other consideration as a result of, the transactions contemplated by this Agreement
or the other Transaction Documents which has not been waived or will not be waived or otherwise satisfied as of the Closing Date. 

    3.13  Listing on Nasdaq.  The Common Stock is listed on the Nasdaq National Market, and trading in the
Common Stock on such market has not been suspended. The Company is, to its knowledge, in full compliance with the continued listing criteria of the Nasdaq National Market, and does not reasonably
anticipate that the Common Stock will lose its listing on the Nasdaq National Market, whether by reason of the transactions contemplated by this Agreement or the other Transaction Documents, or
otherwise and is not aware of any inquiry by or received any notice from the Nasdaq National Market regarding any failure or alleged failure by the Company to comply with such criteria. The Company
has made, or will in a timely fashion make, such filings regarding the transactions contemplated by this Agreement as and when required by the rules and regulations of the Nasdaq National Market or
the National Association of Securities Dealers, Inc. 

    3.14  Solicitation; Other Issuances of Securities.  Neither the Company nor any of its subsidiaries or
affiliates, nor any person acting on its or their behalf, (i) has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection
with the offer or sale of the Securities, (ii) has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under any circumstances that
would require registration of the Securities under the Securities Act or (iii) has issued any shares of Common Stock or shares of any series of preferred stock or other securities or
instruments convertible into, exchangeable for or otherwise entitling the holder thereof to acquire shares of Common Stock (collectively, "Equity
Securities") which would be integrated with the sale of the Securities to such Purchaser or the issuance of the Warrant Shares for purposes of the Securities Act or of any
applicable stockholder approval provisions, including, without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company
are listed or designated. In order to prevent the possible integration of the offer and sale of the Securities with any offering effected subsequent to the Closing Date, neither the Company nor any of
its subsidiaries or affiliates will offer or sell any Equity Securities during the six (6) month period following the Closing Date; provided,
however, that such limitation shall not apply to any securities that are offered or sold (i) pursuant to an employee benefit plan or program duly adopted by the Company,
(ii) pursuant to stock options or warrants outstanding on the date hereof, (iii) pursuant to any firm-commitment underwritten public offering, (iv) upon exercise of
the Warrants, (v) upon conversion or exercise of any securities convertible into or exchangeable or exercisable for shares of Common Stock issued to a financial institution in connection with
(x) a commercial loan originated by such financial institution or (y) an equipment lease transaction, or (vi) in connection with a strategic investment or acquisition, which, in
the case of a transaction described in (v) or (vi) above, is not effected for the primary purpose of raising equity capital. 

7

    3.15  Fees.  Except as described on Schedule 3.15
hereto, the Company is not obligated to pay any compensation or other fee, cost or related expenditure to any underwriter, broker, agent or other representative or entity in connection with the
transactions contemplated hereby. The Company will indemnify and hold harmless each Purchaser from and against any claim by any person or entity alleging that such Purchaser is obligated to pay any
such compensation, fee, cost or related expenditure in connection with the transactions contemplated hereby. 

    3.16  Regulatory Permits.  Each of the Company and its subsidiaries possesses all certificates,
authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct its business, except where the failure to so possess such certificates,
authorizations or permits could not have a Material Adverse Effect, and neither the Company nor any such subsidiary has received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit which revocation or modification could have a Material Adverse Effect. 

    3.17  Key Employees.  Schedule 3.17 hereto sets
forth the name and position of each director and executive officer of the Company (each, a "Key Employee"). Each Key Employee is currently serving in
the capacity indicated on such schedule on a full-time basis. The Company has no knowledge of any fact or circumstance (including without limitation (i) the terms of any agreement
to which such person is a party or any litigation in which such person is or may become involved and (ii) any illness or medical condition that could reasonably be expected to result in the
disability or incapacity of such person) that would limit or prevent any such person from serving in such capacity on a full-time basis in the foreseeable future, or of any intention on
the part of any such person to limit or terminate his or her employment with the Company. Except as described on Schedule 3.17, no Key Employee
has borrowed money pursuant to a currently outstanding loan that is secured by Common Stock or any right or option to receive Common Stock. 

    3.18  Environment.  Except as disclosed in the Disclosure Documents (i) there is no environmental
liability, nor factors likely to give rise to any environmental liability, affecting any of the properties of the Company or any of its subsidiaries that, individually or in the aggregate, would have
a Material Adverse Effect and (ii) neither the Company nor any of its subsidiaries has violated any environmental law applicable to it now or previously in effect, other than such violations or
infringements that, individually or in the aggregate, have not had and will not have a Material Adverse Effect. 

4.  COVENANTS OF THE COMPANY.

    4.1  Corporate Existence.  The Company shall, so long as any Purchaser or any affiliate of any Purchaser
beneficially owns any Securities, maintain its corporate existence in good standing under the jurisdiction of its incorporation and shall pay all taxes owed by it when due except for taxes which the
Company reasonably disputes. 

    4.2  Provision of Information.  The Company shall, so long as any Purchaser or any affiliate of any
Purchaser beneficially owns any Securities, provide any such Purchaser with copies of all materials sent to stockholders, in each such case at the same time that it mails such materials to its
stockholders. 

    4.3  Form D; Blue-Sky Qualification.  To the extent that the Company is relying on
Regulation D under the Securities Act in selling the Securities to each Purchaser hereunder, the Company agrees to file a Form D with respect to the Securities as required under
Regulation D and to provide a copy thereof to
each Purchaser promptly after such filing. The Company shall take such action as is necessary to qualify the Shares and Warrants for sale under applicable state or "blue-sky" laws or
obtain an exemption therefrom, and shall provide evidence of any such action to each Purchaser at such Purchaser's request. 

8

    4.4  Reporting Status.  As long as any Purchaser or any affiliate of any Purchaser beneficially owns any
Securities and until the date on which all outstanding Securities may be sold to the public pursuant to Rule 144(k) (or any successor rule or regulation), (i) the Company shall file with
the Commission, in full compliance with the applicable provisions of the Exchange Act, all reports required to be filed pursuant to the Exchange Act and (ii) the Company shall not terminate its
status as an issuer required by the Exchange Act to file reports thereunder even if the Exchange Act or the rules or regulations thereunder would permit such termination. The Company agrees to issue a
press release describing the transactions contemplated by this Agreement and the other Transaction Documents and at the same time to file with the Commission a Form 8-K in the form
required by the Exchange Act describing fully and accurately all of the material terms of the transactions contemplated by this Agreement, the Series A Warrant, the Series B Warrant and
the Registration Rights Agreement, in each case on or before the third (3rd) Business Day following the Closing Date. 

    4.5  Reservation of Common Stock.  The Company shall at all times following the Closing have authorized
and reserved for issuance, free from any preemptive rights, solely for the purpose of effecting exercise of the Warrants, the maximum number of Warrant Shares issuable pursuant to the Warrants taken
as a whole (without regard to any restriction or limitation on such exercise) (the "Reserved Amount"), such number to be adjusted in the event of a
stock split, stock dividend or similar event. The Reserved Amount as of the Closing Date shall be allocated to each Purchaser in the same ratio as the number of Shares purchased by such Purchaser
hereunder bears to the aggregate number of Shares purchased by all of the Purchasers hereunder (the ratio applicable to a Purchaser being referred to herein as such Purchaser's
"Allocable Portion"); and any increase to the Reserved Amount as a result of a stock split, stock dividend or similar event shall be allocated to each
Purchaser in the same proportion as the number of Warrant Shares issuable to such Purchaser upon exercise of the Warrants held by such Purchaser at the time of such increase bears to the aggregate
number of Warrant Shares issuable to all of the Purchasers upon exercise of the Warrants held by such Purchasers at the time of such increase (in each such case without regard to any restriction or
limitation on such exercise). The Company shall not reduce the number of shares reserved for issuance hereunder without the written consent of the holders of two-thirds of the Shares and
Warrant Shares then outstanding (assuming for such purpose that the Warrants have been exercised into the maximum number of Warrant Shares issuable pursuant to the Warrants taken as a whole (without
regard to any restriction or limitation on such exercise)). 

    4.6  Use of Proceeds.  The Company shall use the proceeds from the sale of the Shares and Warrants for
general corporate purposes only, in the ordinary course of its business and consistent with past practice and, without limiting the generality of the foregoing, shall not use such proceeds to make a
loan to any employee, officer, director or stockholder of the Company, to repay any loan or other obligation of the Company to any such person or to repurchase or pay a dividend on shares of Common
Stock or other securities of the Company, other than any such payment explicitly required or permitted by the terms of this Agreement or the other Transaction Documents. 

    4.7  Quotation on Nasdaq.  The Company shall (i) prior to the Closing, take such action as may be
necessary to include all of the Shares to be issued by the Company under this Agreement and the maximum number of Warrant Shares issuable pursuant to the Warrants taken as a whole (without regard to
any restriction or limitation on such exercise) on the Nasdaq National Market, and (ii) use its reasonable commercial efforts to maintain the designation and quotation, or listing, of the
Common Stock on the Nasdaq National Market or the New York Stock Exchange for a minimum of five (5) years following the Closing Date. 

    4.8  Use of Purchaser Name.  Except as may be required by applicable law, the Company shall not use,
directly or indirectly, any Purchaser's name or the name of any of its affiliates in any advertisement, announcement, press release or other similar communication unless it has received the 

9

prior written consent of such Purchaser for the specific use contemplated (which consent will not be unreasonably withheld) or as otherwise required by applicable law or regulation. 

    4.9  Right of First Offer.  Prior to any offer or sale by the Company of any Equity Securities during the
period beginning on the Closing Date and ending on the twelve (12) month anniversary of the Closing Date, the Company must first deliver to each Purchaser written notice describing the proposed
issuance, including the terms and conditions thereof, and provide each Purchaser with an option during the five (5) Trading Day period following delivery of such notice to purchase all or any
part of such Purchaser's Allocable Portion (as defined below) of the Equity Securities being offered on the same terms as contemplated by such issuance (the "Right of First
Offer"). In the event that a Purchaser either does not give notice within such five Trading Day period that it intends to exercise the foregoing option or informs the Company
in writing that it does not intend to participate in all or any part of such issuance, the Company may offer to a third party the option to purchase up to, in the aggregate, the amount of Equity
Securities which were declined by such Purchaser, on the same terms as were offered to such Purchaser. For purposes hereof, a Purchaser's "Allocable
Portion" of Equity Securities as of a particular date shall be determined by dividing the number of Shares purchased by such Purchaser hereunder by the aggregate number of
Shares purchased by all of the Purchasers hereunder, and multiplying the resulting quotient by the aggregate amount of Equity Securities being issued. The Right of First Offer will not apply to the
issuance of Equity Securities (i) pursuant to an employee benefit plan or program duly adopted by the Company, (ii) pursuant to any options or warrant outstanding on the date hereof,
(iii) pursuant to any firm-commitment underwritten public offerings, (iv) upon exercise of the Warrants, (v) upon conversion or exercise of any securities convertible
into or exchangeable or exercisable for shares of Common Stock issued to a financial institution in connection with (x) a commercial loan originated by such financial institution or
(y) an equipment lease transaction, or (vi) in connection with a strategic investment or acquisition, which, in the case of a transaction described in (v) or (vi) above is
not effected for the primary purpose of raising equity capital. 

    4.11  Management Restrictions.  During the period beginning on the Closing Date and ending on the later
of (i) April 1, 2001 and (ii) the date on which the Registration Statement (as defined in the Registration Rights Agreement) has been declared effective by the Commission (the
"Management Restriction Period"), no Key Employee may sell, transfer or otherwise dispose of any Common Stock held or beneficially owned by such individual, whether through the writing or purchase of
options, futures or derivative instruments, or otherwise; provided, however, that the foregoing limitation shall not apply to (A) any sale,
transfer or other disposition of Common Stock at a price per share that is greater than the Market Price in effect on the date of such sale, transfer or disposition, or (B) any sale, transfer
or other disposition by a Key Employee of a number of shares of Common Stock that does not exceed, singly or in the aggregate with any other sales, transfers or other dispositions made by such Key
Employee during the Management Restriction Period, ten thousand (10,000) shares of Common Stock, as long as, prior to any sale, transfer or other disposition permitted by clause (A) or (B), the
Registration Statement (as defined in the Registration Rights Agreement) has been declared effective by the Commission. 

5.  CONDITIONS TO CLOSING.

    5.1  Conditions to Purchaser's Obligations at Closing.  Each Purchaser's obligations at the Closing,
including without limitation its obligation to purchase the Shares and Warrants being purchased by such 

10

Purchaser, are conditioned upon the satisfaction by the Company (or waiver by such Purchaser) of each of the following events as of the Closing Date: 

	5.1.1	 	the representations and warranties of the Company set forth in this Agreement shall be true and correct in all material respects as of such date as if made on such date;
	 

5.1.2	 
 	 

the Company shall have complied with or performed in all material respects all of the agreements, obligations and conditions set forth in this Agreement that are required to be complied with or performed by the Company on or before the
Closing;
	 

5.1.3	 
 	 

the Closing Date shall occur on a date that is not later than December 12, 2000;
	 

5.1.4	 
 	 

the Company shall have delivered to such Purchaser a certificate, signed by an officer of the Company, certifying that the conditions specified in this paragraph 5.1 have been fulfilled as of the Closing, it being understood that such Purchaser
may rely on such certificate as though it were a representation and warranty of the Company made herein;
	 

5.1.5	 
 	 

the Company shall have delivered to such Purchaser an opinion of counsel for the Company, dated as of such date, in substantially the form set forth on Exhibit 5.1.5 hereto;
	 

5.1.6	 
 	 

the Company shall have delivered to such Purchaser duly executed certificates representing the Shares and Warrants being purchased by such Purchaser;
	 

5.1.7	 
 	 

the Company shall have executed and delivered the Registration Rights Agreement;
	 

5.1.8	 
 	 

the Common Stock (including the Shares and the Warrant Shares) shall be listed for trading on the Nasdaq National Market and no suspension of trading in the Common Stock on such market shall have occurred and be continuing as of the Closing Date;
and
	 

5.1.9	 
 	 

the Company shall have authorized and reserved for issuance the number of shares of Common Stock required to be reserved under paragraph 4.5 hereof, and shall have provided such Purchaser with reasonable evidence thereof.

    5.2  Conditions to Company's Obligations at the Closing.  The Company's obligations at the Closing are
conditioned upon the satisfaction (or waiver by the Company) of each of the following events as of the Closing Date: 

	5.2.1	 	the representations and warranties of each Purchaser shall be true and correct in all material respects as of such date as if made on such date; and
	 

5.2.2	 
 	 

each Purchaser shall have complied with or performed in all material respects all of the agreements, obligations and conditions set forth in this Agreement that are required to be complied with or performed by such Purchaser on or before the
Closing.

6.  MISCELLANEOUS.

    6.1  Survival.  The representations and warranties made by the parties herein shall survive the Closing
for a period of one (1) year notwithstanding any due diligence investigation made by or on behalf of the party seeking to rely thereon. In the event that any provision of this Agreement becomes
or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision; provided that in such case the
parties shall negotiate in good faith to replace such provision with a new provision which is not illegal, unenforceable or void, as long as such new provision does not materially change the economic
benefits of this Agreement to the parties. 

11

    6.2  Successors and Assigns.  The terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and permitted assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or
their respective successors and permitted assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. Each Purchaser
may assign its rights and obligations hereunder in connection with any private sale or transfer of Securities, as long as, as a condition precedent to such transfer, the transferee executes an
acknowledgment agreeing to be bound by the applicable provisions of this Agreement, in which case the term "Purchaser" shall be deemed to refer to such transferee as though such transferee were an
original signatory hereto. The Company may not assign it rights or obligations under this Agreement except as may be specifically provided by this Agreement or the other Transaction Documents. 

    6.3  No Reliance.  Each party acknowledges that (i) it has such knowledge in business and
financial matters as to be fully capable of evaluating this Agreement, the other Transaction Documents and the
transactions contemplated hereby and thereby, (ii) it is not relying on any advice or representation of any other party in connection with entering into this Agreement, the other Transaction
Documents or such transactions (other than the representations made in this Agreement or the other Transaction Documents), (iii) it has not received from any such other party any assurance or
guarantee as to the merits (whether legal, regulatory, tax, financial or otherwise) of entering into this Agreement or the other Transaction Documents or the performance of its obligations hereunder
and thereunder, and (iv) it has consulted with its own legal, regulatory, tax, business, investment, financial and accounting advisors to the extent that it has deemed necessary, and has
entered into this Agreement and the other Transaction Documents based on its own independent judgment and on the advice of its advisors as it has deemed necessary, and not on any view (whether written
or oral) expressed by any such other party. 

    6.4  Injunctive Relief.  The Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to each Purchaser and that the remedy or remedies at law for any such breach will be inadequate and agrees, in the event of any such breach, in addition to all other available
remedies, to an injunction restraining any breach and requiring immediate and specific performance of such obligations without the necessity of showing economic loss. 

    6.5  Governing Law; Jurisdiction.  This Agreement shall be governed by and construed under the laws of
the State of Delaware without regard to the conflict of laws provisions thereof. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts
sitting in the County of New Castle, Delaware, for the adjudication of any dispute hereunder or under any Transaction Document or in connection herewith or therewith or with any transaction
contemplated hereby or thereby or discussed herein or therein, 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 brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party 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 (certified or registered mail, return receipt
requested) 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. 

    6.6  Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be
deemed an original, and all of which together shall constitute one and the same instrument. 

    6.7  Headings; Drafting.  The headings used in this Agreement are used for convenience only and are not
to be considered in construing or interpreting this Agreement. The parties shall be deemed to 

12

have participated jointly in the drafting of this Agreement and the other Transaction Documents, and no provision hereof or thereof shall be construed against any party as the drafter thereof. 

    6.8  Notices.  Any notice, demand or request required or permitted to be given by any party to any other
party pursuant to the terms of this Agreement 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 6:00 p.m., pacific 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 to the parties as follows: 

If to the Company:

click21earn.com, inc.

110 110th Avenue NE

Bellevue, WA 98008

Attn: General Counsel

Tel: 425-637-5829

Fax: 425-637-1540 

with a copy to:

Scott
Gelband, Esq.

Perkins Coie LLP

505 Fifth Avenue South, Suite 620

Seattle, WA 98104

Tel: 206-583-8888

Fax: 206-583-8500 

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

    6.9  Expenses.  The Company and each Purchaser each shall pay all costs and expenses that it incurs in
connection with the negotiation, execution, delivery and performance of this Agreement; provided, however, that the Company shall reimburse Marshall
Capital Management, Inc. ("MCM") at the Closing for all out-of-pocket expenses (including without limitation reasonable legal fees and expenses) incurred by it in
connection its due diligence investigation of the Company and the negotiation, preparation, execution, delivery and performance of this Agreement and the other Transaction Documents in an amount not
to exceed thirty thousand dollars ($30,000), such amount to be debited from the Purchase Price payable by MCM at the Closing. 

    6.10  Entire Agreement; Amendments; Waiver.  This Agreement and the other Transaction Documents
constitute the entire agreement between the parties with regard to the subject matter hereof and thereof, superseding all prior agreements or understandings, whether written or oral, between or among
the parties. Except as expressly provided herein, neither this Agreement nor any term hereof may be amended except pursuant to a written instrument executed by the Company and each Purchaser. 

13

    IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first-above written. 

	CLICK2LEARN.COM, INC.	 
	 

By:	 
 	 

/s/ Kevin Oakes	 

 
	 	 	
	 
	 	 	Name: Kevin Oakes

Title: President and CEO	 
	 

MARSHALL CAPITAL MANAGEMENT, INC.	 

 
	 

By:	 
 	 

/s/ Allan Weine	 

 
	 	 	
	 
	 	 	Allan Weine

President	 

Investment
Amount:  $5,000,004.65 

14

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