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                                                                   EXHIBIT 10.42

                      FISCAL 2003 EXECUTIVE INCENTIVE PLAN

PLAN SUMMARY

OBJECTIVES: The Fiscal 2003 Executive Incentive Plan is a reward program that
directly supports the achievement of financial goals and key strategic
operational goals.

ELIGIBILITY: The named employees are eligible for participation in the Plan:
John Murray, John Buske, Robert Kilgarriff, Gregory Melsen, John Super, and
Nancy Hanna.

PERFORMANCE MEASURES: Payment will be based on the level of achievement of the
financial goals and operational goals shown in this table.

<TABLE>
<CAPTION>
<S>                                             <C>                <C>
FINANCIAL GOALS                                     TARGET          WEIGHTING
    1.       Gross Revenue                          $89 M  (1)         35%

    2.       Operating Profit  (2)                $11.61M  (3)         25%
                                                      SUB TOTAL:       60%
</TABLE>

<TABLE>
<CAPTION>
OPERATIONAL GOALS: (4)                                                                       WEIGHTING
<S>                                                                                        <C>
    1.       Achieve cumulative quarterly revenue goals as a percentage of $86 million          10%
             (Q1 = 15% ($12.9M); Q2 = 35% ($30.1M) and Q3 = 65% ($55.9M)). [Each is
             one third of available bonus]
    2.       Deliver the ERP functionality as planned for FY03.                                 10%
    3.       Leverage the NetSchools acquisition by adding at least $5 million to the           10%
             deferred revenue base.
    4.       Close at least one large district or state school improvement initiative           10%
             valued at more than $5 million (excluding hardware).
                                                                           SUB TOTAL:           40%

</TABLE>

Notes:
    (1)  PLATO Learning, Inc.'s revenue must exceed the $86 million assumed in
         the operating plan for executives to be eligible for a payout on the
         revenue goal. Revenues per the fiscal year 2003 operating plan are $86
         million. The Executive Incentive Plan targets revenue of $89 million
         and sets a threshold at 97% of the $89 million ($86.33 million).
    (2)  The operating profit excludes $1.45 million of expected intangible
         amortization and $350,000 of first quarter severance costs.
    (3)  The operating profit target will be adjusted (+/-) for 1) 90% times any
         variance from planned revenue to account for the gross margin impact of
         such variance, and 2) 13% to account for any variance in commission and
         bad debt expenses that are related to a variance from planned revenue.
         The formula for adjusting the operating profit target is: $11.61
         MILLION + [(ACTUAL SALES - $89 MILLION) TIMES 77%].
    (4)  Achievement of the operational goals can generally be substantiated.
         The level of achievement is somewhat subjective in the case of near
         achievement or over achievement of operational goals and so it is to be
         determined by agreement between the CEO and the Board.

                                       1
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FISCAL 2003 EXECUTIVE INCENTIVE PLAN SUMMARY (CONTINUED)

TARGET INCENTIVE:  Each executive's payment will be based on their Annual Base
Salary in effect on 31 October 2003, their Target Incentive and the level of
achievement of the performance measures.  Each executive's Target Incentive is
expressed as a percent of their Annual Base Salary and shown in this table.

<TABLE>
<CAPTION>
----------------------- --------------------------
EXECUTIVE                   TARGET INCENTIVE
----------------------- --------------------------
<S>                     <C>
John Murray                        75%
----------------------- --------------------------
John Buske                         50%
----------------------- --------------------------
Robert Kilgarriff                  40%
----------------------- --------------------------
Gregory Melsen                     40%
----------------------- --------------------------
John Super                         30%
----------------------- --------------------------
Nancy Hanna                        30%
----------------------- --------------------------
</TABLE>

OPPORTUNITY: The plan rewards executives for achievement of goals and also
encourages performance that substantially exceeds goals. This chart shows how
the payment will increase(as a percent of the Target Incentive) as performance
is increased. A threshold or minimum level of performance has been established
for each of the goals. Straight-line interpolation will be used to determine the
payment for any level of achievement falling between the stated levels of
performance.

<TABLE>
<CAPTION>
                       FUNDING SCHEDULE
  ---------------------------------------------------------------
  PERFORMANCE % OF       REVENUE GOAL      OTHER FINANCIAL GOALS
  GOAL ACHIEVEMENT       OPPORTUNITY            OPPORTUNITY
                         % OF TARGET       % OF TARGET INCENTIVE
                          INCENTIVE
  ------------------ --------------------- ----------------------
<S>                  <C>                   <C>
         <90%                  0%                    0%
  ------------------ --------------------- ----------------------
          90%                  0%                   80%
  ------------------ --------------------- ----------------------
          95%                  0%                   90%
  ------------------ --------------------- ----------------------
          96%                  0%                   92%
  ------------------ --------------------- ----------------------
          97%                 94%                   94%
  ------------------ --------------------- ----------------------
          98%                 96%                   96%
  ------------------ --------------------- ----------------------
          99%                 98%                   98%
  ------------------ --------------------- ----------------------
         100%                100%                  100%
  ------------------ --------------------- ----------------------
         101%                115%                  115%
  ------------------ --------------------- ----------------------
         102%                130%                  130%
  ------------------ --------------------- ----------------------
         103%                145%                  145%
  ------------------ --------------------- ----------------------
         105%                175%                  175%
  ------------------ --------------------- ----------------------
    =/>  110%                250%                  250%
  ------------------ --------------------- ----------------------
</TABLE>

MODIFIER: Revenue must meet or exceed the target, or the payment for all
financial goals will be reduced as follows:
1.   If achievement is 99%, then 75% of the payment for financial goals will
     be awarded.
2.   If achievement is 98%, then 50% of the payment for financial goals will
     be awarded.
3.   If achievement is 97% or less, then 25% of the payment for financial goals
     will be awarded.
4.   If net income is less than $4 million, there will be no payment for
     achievement of financial goals.

                                       2<PAGE>

                                                                   EXHIBIT 10.43

                              PLATO LEARNING, INC.
                             BUSINESS ETHICS POLICY

PURPOSE

The purpose of this Business Ethics Policy is to emphasize and affirm PLATO
Learning, Inc.'s commitment to comply with the applicable laws of each
jurisdiction where it conducts business and its expectation that all employees
will be guided by the basic principles of honesty and fairness in their dealings
with customers, suppliers, government officials and regulatory authorities and
to establish guidelines to assist employees in identifying situations involving
possible conflict of interests.

POLICY

The Company's success depends, in part, on a high level of public confidence. To
sustain this confidence, we must observe the highest standards of ethical and
legal behavior. Although customers and standards of ethics may vary in different
business environments, honesty and integrity characterize the Company's business
activities worldwide. As employees of the Company, we are expected to be honest
and alert to ethical and legal responsibilities and to act in good faith. Our
actions must be based upon sound judgment. Employees will not be permitted to
achieve results at the cost of violating laws or through unscrupulous dealings.

I.       ETHICAL AND LEGAL GUIDELINES

         A.       COMPLIANCE WITH LAWS

                  The Company is committed to complying with the applicable laws
                  of the jurisdictions where it transacts business. In some
                  instances, the laws may be ambiguous and difficult to
                  interpret. Management has access to legal counsel and will
                  seek advice as necessary in order to comply with this Policy.
                  Employees are encouraged to consult with their supervisor in
                  situations where the employee is uncertain of the propriety of
                  a given transaction.

         B.       PROHIBITED PAYMENTS AND GIFTS

                  The U.S. Foreign Corrupt Practices Act ("FCPA"), as amended,
                  criminalizes corrupt payments (e.g., bribes) to foreign
                  officials that are made in order to obtain business. The
                  penalties are significant. Corporations may be fined up to
                  $2,000,000. Individual employees may be fined up to $250,000
                  and imprisoned for up to six (6) years. The

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                  Company competes on the basis of quality, service and price.
                  As a result, no payment or gift of any kind shall be made to
                  any person on behalf of the Company to influence any act or
                  decision of any government official, candidate for political
                  office or political party for the purpose of inducing that
                  person, candidate or party to use his, her, or its influence
                  to affect any government act or decision that would assist the
                  Company in obtaining, retaining or directing business. The
                  FCPA applies everywhere in the world where we do business. A
                  violation occurs when a payment is made or promised to be made
                  to a foreign government official while knowing that the
                  payment will be used to unlawfully obtain or maintain business
                  or direct business to anyone else.

                  In addition to the provisions of this Policy, employees
                  working with the U.S. government, state or local governments,
                  or governments of those countries where we operate, have an
                  additional obligation to know, understand and abide by the
                  laws, regulations and ethical standards of those branches of
                  governments that may be more strict than those that apply to
                  our non-government customers and suppliers.

                  If a government agency, whether federal, state or local, has
                  adopted a more stringent policy than the Company's regarding
                  gifts and gratuities, employees and representatives must
                  comply with that more stringent policy.

                  We will not give or encourage anyone else to give inducements
                  of any kind to any government and non-government employee of
                  the U.S. or any other government, or to any suppliers under
                  government or non-government contracts or subcontracts, in
                  order to gain any business advantage or contract.

         C.       FACILITATING GOVERNMENT PAYMENTS

                  Subject to prior review and approval by the President and
                  Chief Executive Officer or his designee, employees may make
                  small payments to government employees for the purpose of
                  facilitating, securing or expediting the performance of a
                  routine, non-discretionary, governmental action, provided that
                  such payments may be made:

                  1.       only in nominal amounts (no individual payment in
                           excess of $250);
                  2.       upon the initiation of the government employee;
                  3.       where the government employee will not otherwise
                           perform the routine, non-discretionary action; and
                  4.       where a normal and fully legitimate transaction might
                           otherwise be impeded. The term "routine,
                           non-discretionary, governmental action" includes,
                           among other things, processing governmental papers
                           (e.g., visas and shipping documents), providing mail
                           or phone services,

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                           loading or unloading cargo, scheduling inspections or
                           obtaining permits, licenses or other official
                           documents to qualify a subsidiary or affiliate to do
                           business. All such payments shall be accurately
                           recorded on the Company records and properly treated
                           for tax purposes.

                  Under no circumstances may a payment be made to induce any
                  action by a government employee that involves a decision to
                  award or continue business with the Company.

                  No facilitating payment may be made to an employee of the
                  United States, United Kingdom or Canadian Governments.

         D.       POLITICAL CONTRIBUTIONS

                  No funds or assets of the Company shall be used, directly or
                  indirectly, for political contributions, even where permitted
                  by applicable local law, without review and the prior written
                  approval of the President and Chief Executive Officer of the
                  Company or his designee. This prohibition applies only to the
                  direct or indirect use of Company funds or assets and should
                  not be construed to prohibit employees from making political
                  contributions or engaging in political activities in their
                  individual capacities, on their own time and at their own
                  expense. Under no circumstances shall employees be reimbursed
                  in any way for personal contributions.

         E.       GIVING OF BUSINESS GIFTS AND MEALS

                  Gifts in the form of cash or cash equivalents (e.g., checks,
                  marketable securities, or gift certificates) may not be given
                  regardless of the amount.

                  The giving of "courtesy" business gifts is permissible, for
                  example:

                  1.       candy, beverages and fruit of nominal value;
                  2.       flowers of nominal value given on traditional
                           occasions; or
                  3.       souvenirs or advertising novelties of nominal value.

                  The Company's relationships with commercial customers may
                  occasionally present circumstances where gifts or favors are
                  exchanged as an accepted business practice or as a matter of
                  courtesy, without inference of unethical conduct.
                  Presentations of a ceremonial nature in keeping with national
                  custom may be permitted as long as what is accepted is not in
                  violation of any law, cannot be construed as a bribe or a
                  payoff and would not embarrass the Company or ourselves if
                  disclosed publicly. Gifts, when made, must be legal and in
                  accordance with the generally accepted business practices of
                  the governing jurisdictions. Review and prior

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                  approval of the President and Chief Executive Officer or his
                  designee is necessary when any gift is to be given with a
                  value in excess of $250.

                  Certain business courtesies, such as payment for a lunch or
                  dinner in connection with a business meeting, are permissible
                  so long as the cost of the lunch or dinner is reasonable in
                  amount and in accordance with generally accepted local
                  practice. It is important to note that many customers/public
                  officials have strict rules around the acceptance of these and
                  other gifts. Business meals involving public officials should
                  never be on a scale that might compromise or give the
                  impression of compromising the integrity of such officials or
                  the Company.

                  In order to administer Company policy and facilitate
                  compliance, no gift shall be paid for directly by sales
                  representatives, sales managers or marketing employees and
                  submitted for reimbursement on an expense report. All gifts
                  are to be paid for by the Company through the normal accounts
                  payable disbursement process.

                  Gifts should be accurately recorded on the Company records and
                  properly treated to tax purposes.

         F.       ACCEPTANCE OF BUSINESS GIFTS

                  We will not be influenced by gifts or favors of any kind from
                  our suppliers or potential suppliers. The Company expects each
                  employee to exercise reasonable judgment and discretion in
                  accepting any gratuity or gift offered to the employee in
                  connection with employment at the Company.

                  Employees or members of his or her immediate family, should
                  not seek or accept any gifts, entertainment, payments, fees,
                  services, valuable privileges, vacations or pleasure trips
                  (without a legitimate business purpose), loans or other favors
                  from any person or entity that has, is likely to have, or is
                  seeking to establish a business relationship (such as
                  customers, competitors, or vendors) with the Company from
                  which it might be inferred that such action was intended to
                  influence or possibly influence the employee in the
                  performance of his or her duties.

                  This does not apply to unsolicited promotional materials of a
                  general advertising nature, such as imprinted pencils, memo
                  pads and calendars as long as what is given is accepted
                  without any express or implied understanding that the
                  recipient is in any way obligated. Gifts of nominal value are
                  permitted, provided they are given as a gesture of
                  professional friendship, and do not involve a Company
                  commitment having to do with the transaction of business. In
                  most cases, such a gift should be donated to charity or, at a
                  minimum, shared within the employee's department or working
                  group.

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                  Where larger gifts are unavoidable because of local custom,
                  they must be reported to the President and Chief Executive
                  Officer or his designee.

                  Gifts in the form of cash or cash equivalents (e.g., checks or
                  marketable securities) shall not be accepted regardless of the
                  amount.

         G.       GOVERNMENT INVESTIGATIONS

                  The Company intends to fully cooperate with any appropriate
                  governmental investigation. A condition of such cooperation,
                  however, is that the Company be adequately represented in such
                  investigations by its own legal counsel. Accordingly, any time
                  an employee obtains knowledge which would reasonably lead one
                  to believe that a government investigation or inquiry is
                  underway, that information should be communicated immediately
                  to the President and Chief Executive Officer or his designee.
                  Routine dealings with the government, such as routine tax
                  audits, are not covered by this Policy.

         H.       PROPER ACCOUNTING AND INTERNAL CONTROL

                  Compliance with generally accepted accounting principles is
                  required at all times. The books of accounts must truly
                  reflect the transactions they record. There shall be no
                  concealment of information from the Company's finance staff or
                  independent auditors. All assets and liabilities of the
                  Company, in particular bank accounts in which Company cash is
                  on deposit, shall be recorded in the accounting records of the
                  Company.

II.      CONFLICT OF INTEREST GUIDELINES

         A.       GENERAL STATEMENT

                  Individual employees of the Company will not engage in, or
                  tolerate in others, any activity or interest which is
                  inconsistent with the best interests of the Company and
                  ethical business conduct. This also means that each employee
                  of the Company will do his or her best to avoid the mere
                  appearance of conflict or wrongdoing.

                  It is impossible to cover every conflict of interest situation
                  and, at times, it may not be easy to distinguish between
                  proper and improper activity. The following, although not
                  considered to be all-inclusive, is intended to serve as a
                  guide to the types of situations or activities that might
                  cause a conflict of interest and which signal the need to ask
                  the advice of the employee's supervisor.

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         B.       FINANCIAL AND BUSINESS RELATIONSHIPS

                  Other than what is required as a matter of employment, no
                  director, officer or employee, or the immediate family
                  members, shall be directly or indirectly employed by, solicit
                  and/or receive commission, payment or benefit from or have any
                  material ownership interest in or any significant relationship
                  with any organization with which the Company does business or
                  provides business, including, for example, competitors,
                  customers, suppliers, agents or consultants, unless disclosed
                  and approved by the President and Chief Executive Officer or
                  his designee.

                  An employee shall not knowingly, directly or indirectly, buy,
                  sell, or lease property rights or interests from or to the
                  Company or near locations of current or probable interest to
                  the Company without prior full and appropriate disclosure to
                  the President and Chief Executive Officer of the Company or
                  his designee.

         C.       INSIDER TRADING

                  Because the Company is a reporting company under the
                  Securities Exchange Act of 1934, the officers and directors of
                  the Company have a number of important responsibilities under
                  the federal securities laws. Further, the Company has a
                  responsibility to take reasonable steps to ensure that the
                  officers, directors and employees of the Company are not
                  engaging in improper insider trading.

                  The Company's Section 16 and its Insider Trading Policies
                  provide that no employee of the Company or member of his or
                  her immediate family sharing the same household shall directly
                  or indirectly purchase or sell any securities of the Company
                  while he or she is in possession of material non-public
                  information affecting the Company. Also, employees may not
                  "tip" others about important information regarding the
                  Company, and in general should keep Company information
                  confidential. Failure to comply with the Policies could result
                  in disciplinary action by the Company and severe criminal and
                  civil penalties.

         D.       FAIR COMPETITION

                  The Company will comply with the antitrust laws in the
                  jurisdictions where it transacts business. It is impractical
                  to attempt to summarize all such laws because they are
                  far-reaching and extremely complicated. However, each employee
                  is charged with avoiding the violation of, or the appearance
                  of having violated, these laws. In every transaction in which
                  an employee is involved, he or she must give consideration to
                  the possibility of antitrust implications. If in doubt, the
                  employee should

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                  discuss the matter with his or her supervisor. An employee
                  should not bear the burden and risk of possible civil or
                  criminal antitrust violations.

                  In general, agreements and arrangements which eliminate or
                  substantially lessen competition must be avoided, and
                  agreements with a competitor are particularly suspect. For
                  example, concerted activities with competitors which affect
                  prices (or any component thereof), or which limit marketing
                  areas, products offered, volume of production, sources of
                  supply or customers or channels of distribution are extremely
                  dangerous and usually illegal. There are other sensitive
                  antitrust areas which should raise a "red flag" in the
                  employee's mind. These include: exchanges of price
                  information; exclusive dealing arrangements and conditioning
                  the sale of one product on the purchase of another (tie-ins);
                  reciprocal dealing; group boycotts; discrimination in prices,
                  services or facilities; and other unfair methods of
                  competition.

III.     RESPONSIBILITY FOR COMPLIANCE

         A.       EMPLOYEE COMPLIANCE

                  There is both a Company and an individual obligation to
                  fulfill the intent of this Policy. It is not expected that
                  every employee, manager or officer will be fully versed in the
                  law affecting his or her responsibilities. However, it is
                  expected that every employee will have a working knowledge of
                  permissible activities and will seek guidance from his or her
                  supervisor or higher level manager concerning any matter on
                  which there is a question and upon discovery of events of a
                  questionable, fraudulent or illegal nature.

         B.       MANAGEMENT COMPLIANCE

                  It is the responsibility of all managers to ensure their
                  organization's familiarity and compliance with this Policy,
                  including the prompt reporting of violations and conflicts.

         C.       COMPANY COMPLIANCE

                  The following steps shall be summarized by the President and
                  Chief Executive Officer and reported annually to the
                  Nominating and Corporate Governance Committee of the Board of
                  Directors.

                      1.   Annual Communications - Annual communication will be
                           made to all the Company employees to maintain current
                           familiarity with this Policy. The communication may
                           be in the form of the Policy or in the form of a memo
                           summarizing the Policy, and may be distributed
                           directly to each employee or posted on Company

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                           bulletin boards, as management deems appropriate.
                           Internationally, each country or territory manager
                           shall propose communication procedures to the
                           President and Chief Executive Officer for his
                           approval.

                      2.   Annual Confirmation Letters - Each year, all officers
                           and certain other employees designated by the
                           President and Chief Executive Officer of the Company,
                           shall be required to sign a statement (Exhibit A)
                           that they have read, communicated, and complied with
                           this Business Ethics Policy.

         D.       PENALTIES

                  In addition to penalties which may be imposed by the U.S.
                  government, any violation of applicable laws, recognized
                  ethical business standards, or this Policy will subject an
                  employee to disciplinary action up to and including immediate
                  termination. Disciplinary action will also apply to any
                  manager who directs or approves violations or has knowledge of
                  them and does not take appropriate actions in accordance with
                  this Policy.

IV.      SUMMARY

         This Business Ethics Policy has been adopted to remind employees of
         their ethical and legal responsibilities and to provide guidance for
         complying with these responsibilities. If situations arise in which the
         proper course of action is not clear or whenever employees have a
         question regarding the propriety of a particular course of action or
         the interpretation of this Policy, employees should consult with their
         supervisor or a higher level manager for advice.

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