Document:

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                                                                   EXHIBIT 10.03

                                NIIT (USA), INC.

                                       AND

                                CLICK2LEARN, INC.

                      CUSTOM SOFTWARE DEVELOPMENT AGREEMENT

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THIS AGREEMENT is made as of the ____ day of ___________, 2002

BETWEEN:

NIIT (USA), Inc., a corporation duly incorporated and validly existing
under the laws of Georgia, USA and having its principal place of business
at 1050 Crown Pointe Parkway, 5th Floor, Atlanta, Georgia  30338
(hereinafter referred to as "NIIT" which expression unless repugnant to
the context whereof shall include its successor, liquidator, administrator
and assignees) through its authorized representative Mr. P. R. Subramanian
ON THE FIRST PART;

AND

Click2learn, Inc., a Delaware corporation duly incorporated and validly existing
under the laws of Delaware, USA and having its principal place of business at
110 -- 110th Avenue NE, Bellevue, WA 98004 (hereinafter referred to as "CLKS"
which expression unless repugnant to the context whereof shall include its
successor, liquidator, administrator and assignees) through its authorised
representative Mr. Sudheer Koneru ON THE OTHER PART.

WHEREAS:

(i)     CLKS is desirous of acquiring a synchronous e-learning software product
        to be developed through NIIT as per the specifications provided in
        Schedule 1, together with all Intellectual Property Rights therein
        (hereinafter referred to as the "Software"); and

(ii)    Subject to the terms of this Agreement NIIT has agreed to develop the
        Software and deliver to CLKS and assign all Intellectual Property Rights
        therein to CLKS.

NOW THEREFORE THE AGREEMENT WITNESSETH AS FOLLOWS:

1.      DEFINITIONS AND INTERPRETATION

1.1     In this Agreement, unless the context otherwise requires, the following
        words have the following meanings:

        "ACCEPTANCE" OR "ACCEPTED"   Means the acceptance of the Software by
                                     CLKS once it has passed the Acceptance
                                     Tests.

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        "ACCEPTANCE TESTS"           Means the tests to which the Software will
                                     be subjected by CLKS pursuant to Clause
                                     4.1.

        "ACCEPTANCE TEST DATE"       Means the date on which NIIT has completed
                                     the development of the Software and has
                                     installed it on the Test Equipment ready
                                     for Acceptance Testing by CLKS.

        "AGREEMENT"                  This Agreement (including any schedules or
                                     annexures to it and any variation to it
                                     agreed to in writing by CLKS and NIIT).

        "BUSINESS DAY"               Means Monday to Saturday not being a
                                     holiday.

        "CHANGE"                     Any variation, addition to or reduction
                                     in the Project Work pursuant to clause
                                       10;

        "CHANGE PROPOSAL"            Means a reply to a Change Request pursuant
                                     to clauses 10.2 and 10.3.

        "CHANGE REQUEST"             Means a request by CLKS to NIIT to consider
                                     a Change pursuant to clause 10.2.

        "COMPLETION DATE"            Means the date on which NIIT shall have
                                     completed the development of the Software
                                     and has passed the Acceptance Test.

        "DEFECT"                     Means any defect or deficiency in the
                                     Software including but not limited to any
                                     software, text, databases, design or
                                     navigation, which prevents or precludes the
                                     Software from operating in accordance with
                                     the Specifications.

        "DOCUMENTATION AND RECORDS"  Means the documentation and records as
                                     described in clauses 5.4 and 5.5.

        "FORCE MAJEURE"              Means circumstances beyond the
                                     reasonable control of a party which
                                     results in that party being unable to
                                     perform an obligation under Agreement
                                     on time, and includes but is not
                                     limited to:

                                     (a)   acts of God, lightning strikes,

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                                           earthquakes, floods, storms,
                                           explosions, fires and any natural
                                           disasters;

                                     (b)   acts of war, acts of public enemies,
                                           terrorism, riots, civil commotion and
                                           sabotage;

                                     (c)   embargoes, export or import
                                           restrictions, and other changes in
                                           applicable laws or regulations

        "IMPLEMENTED" OR             Means that the Software has been
        "IMPLEMENTATION"             developed and installed on the Test
                                     Equipment.

        "INTELLECTUAL PROPERTY       Means any and all properties and rights
        RIGHTS"                      conferred anywhere in the world under
                                     statute, common law and/or equity in
                                     relation to inventions, patents, designs,
                                     trade secrets, confidentiality, trade
                                     marks, trade names (logos and get-up),
                                     circuit layouts, copyright (including moral
                                     rights), and any other proprietary or
                                     protectable right or interest, including
                                     without limitation all rights of
                                     registration, extension, and renewal.

        "DEVELOPMENT FEE"            Means the fee described in clause 6.1.

        "MATERIALS"                  Means (i) software and (ii) written,
                                     graphic, audio, video or like materials
                                     capable of being represented and made
                                     available for downloading.

        "MILESTONE"                  Means completion of a stage of the Project
                                     Work described in clause 7 and Schedule 2.

        "NIIT COMPANIES"             Means any person, entity or company at any
                                     time directly or indirectly, through one or
                                     more intermediaries, controlling,
                                     controlled by, or under common control with
                                     NIIT.

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        "PROJECT TIMETABLE"          Means the timetable for the completion of
                                     the Project Work as set out in Schedule 2,
                                     or as the same may be mutually amended by
                                     CLKS and NIIT and in writing from time to
                                     time.

        "PROJECT WORK"               Means the aggregate of all the work
                                     or services NIIT is obliged to do or
                                     provide under this Agreement and the
                                     Specifications.

        "PROGRAM CODES"              Means and includes all of the
                                     functional specifications, program
                                     specifications, source code, and object
                                     code for the Software in any human
                                     readable or machine readable format,
                                     together with all related documents
                                     necessary to enable a reasonably
                                     skilled programmer to fully maintain,
                                     amend and enhance the Software.

        "SPECIFICATIONS"             Means the Statement of Work document
                                     attached as Schedule 1.

        "TEST EQUIPMENT"             Means the computer equipment used by CLKS
                                     to conduct the Acceptance Tests.

        "THIRD PARTY MATERIAL AND    Means any and all Materials and aspects
        PROPERTIES"                  or portions of the Software or Program
                                     Codes or their operation that are not
                                     original works or inventions of NIIT or
                                     CLKS, together with all Intellectual
                                     Property Rights therein.

1.2     In this Agreement, unless the context otherwise requires:

        (a)    words in the singular include the plural and vice versa and
               words in one gender include any other gender;

        (b)    a reference to:

               (i)    any party includes its successors in title and
                      permitted assigns; and

               (ii)   clauses and schedules are to clauses and schedules of this
                      Agreement and references to sub-clauses and paragraphs are
                      references to sub-clauses and paragraphs of the clause or
                      schedule in which they appear.

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2.      APPOINTMENT OF NIIT

2.1     CLKS appoints NIIT and NIIT accepts the appointment to carry out the
        Project Work upon the terms and conditions of this Agreement.

2.2     As part of the Project Work NIIT agrees to:

        (a)    develop the Software in accordance with the Specifications;

        (b)    acquire in transferable form all rights, title and interest
               in the Third Party Materials and Properties;

        (c)    by the Acceptance Test Date specified in the Project Timetable
               install the Software on the Test Equipment ready to undergo the
               Acceptance Tests;

        (d)    create and deliver to CLKS the Documentation and Records;

        (e)    sell, transfer, assign and convey to CLKS all rights, title and
               interests in and to the Software, including without limitation
               all Third Party Materials and Properties and the Documentation
               and Records.

2.3     NIIT shall not without prior written permission of CLKS, sub-contract
        any part of the Project Work not included in Milestone 1 to any person
        other than a NIIT Company.

2.4     Schedule and Process Adherence

        (i)    NIIT will adhere to its operational process.

        (ii)   The project implementation plan needs to be adhered to by
               NIIT.

2.5     Non-Competition. In consideration of its appointment hereunder and in
        connection with other benefits expected to accrue to it, NIIT hereby
        warrants and agrees (which warranties and agreements shall survive the
        term hereof):

        (i)    that the Software contains and constitutes all of the software,
               products, and works-in-process which NIIT or any of the NIIT
               Companies have been engaged in developing in the field of
               synchronous e-learning or web conferencing tools at any time
               since July 15, 2001 (other than the existing Unix based product
               known as Clicks 2.0 ("Clicks 2.0"));

        (ii)   that neither NIIT nor any of the NIIT Companies shall, at any
               time through the third anniversary of the Acceptance of the
               first Milestone under this Agreement, do any of the following:
               (a) develop any synchronous e-learning or web conferencing
               tools; (b) sell synchronous

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               e-learning or web conferencing tools or e-learning platforms
               (other than Clicks 2.0 and Unix-based upgrades to Clicks 2.0) in
               territories where NIIT or any NIIT Company has an exclusive
               reseller arrangement with CLKS; or (c) operate or assist with the
               operation of any entity that does any of the foregoing;

        (iii)  that during any and all periods in which CLKS has any development
               services contract in effect with NIIT or any of the NIIT
               Companies, neither NIIT nor any of the NIIT Companies will assign
               any personnel assigned to any CLKS development project to any
               other custom development project related to e-learning for six
               (6) months following termination of his or her work on a CLKS
               development project; and

        (iv)   that all NIIT Companies also shall comply with the
               non-competition covenants in this Section 2.5 as if they, as well
               as NIIT, were parties hereto, and accordingly any breach thereof
               by any of the NIIT Companies shall be deemed to be a breach by
               NIIT.

3.      DURATION

        The work on the Software commenced on July 15, 2001 and will continue
        until the Milestones are completed and accepted by CLKS as specified in
        this Agreement.

4.      TESTING AND ACCEPTANCE OF THE SOFTWARE

4.1     CLKS with consultation with NIIT shall finalise the processes and
        methodologies for the Acceptance Tests, based on the criteria set out in
        the Specifications, prior to the Acceptance Test Date.

4.2     CLKS must conduct the Acceptance Tests of the Software once it has been
        installed on the Test Equipment and made ready for testing by NIIT. NIIT
        must provide such support as CLKS may reasonably require to conduct the
        Acceptance Tests.

4.3     Prior to requesting that CLKS conduct the Acceptance Tests, NIIT must
        satisfy itself that the Software is ready to undergo the Acceptance
        Tests.

4.4     CLKS must notify NIIT within ten (10) Business Days after conducting the
        Acceptance Tests that the Software has:

        (a)    passed the relevant Acceptance Tests without Defect; or

        (b)    not passed the Acceptance Tests because of one or more Defects
               and must provide NIIT with a list of Defects.

4.5     Where CLKS provides a notice in accordance with clause 4.4(b), NIIT
        shall immediately and at its own cost remedy the Defects.

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4.6     Where NIIT has corrected the Defects pursuant to the preceding clause,
        CLKS and NIIT must repeat the Acceptance Tests and correction procedures
        until the Defects have been remedied to CLKS 's satisfaction.

4.7     On receipt of the communication described in clause 4.4 (a) the
        Software will be Accepted.

5.      DELIVERY OF THE SOFTWARE; DOCUMENTATION AND RECORDS

5.1     NIIT must develop the Software in accordance with the
        Specifications and Project Timetable.

5.2     The parties acknowledge and agree that the Software must be Accepted by
        the Completion Date stated in the Project Timetable.

5.3     NIIT shall give to CLKS on Implementation of the Software:

        (a)    no less than one backup copy of the Software on a CD in
               machine readable format;

        (b)    the Program Codes in all formats and media;

        (c)    one complete copy of all Documentation and Records; and

        (d)    any Third Party Materials and Properties procured by NIIT
               for CLKS.

5.4     NIIT shall maintain in respect of the Project Work such documents, files
        and other records (including all methodologies, flowcharts, diagrams),
        which in the aggregate contain, in sufficient detail, an explanation of,
        all matters relating to the development and operation of the Software
        and all of its individual components.

5.5     In addition, NIIT shall collect or create and in each case maintain a
        complete and up to date collection of all instructions and user manuals,
        guide books and other related documentation (whether prepared by NIIT or
        third parties) relating to the operation of the Software, including
        without limitation any Third Party Material and Properties procured by
        NIIT for CLKS.

6.      DEVELOPMENT FEE

6.1     The Development Fee payable by CLKS to NIIT for the Project Work and for
        the assignments and transfers called for hereunder is USD 2,104,000 (two
        million one hundred four thousand US Dollars) only.

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7.      PAYMENT

7.1     NIIT must invoice CLKS for payment of that portion of the Development
        Fee payable upon completion of each Milestone as set out in Schedule 2.
        Unless set forth elsewhere in this Agreement, all payments are due on
        net 30-day terms from invoice date. You agree to pay a finance charge of
        1.5% per month on all past due amounts. All prices and payments in this
        Agreement are exclusive of all taxes, and you agree to pay all national,
        state and local sales, use, value-added and other taxes, customs duties
        and similar tariffs and fees based on the Software and services provided
        hereunder, other than taxes imposed on NIIT's net income.

        It is hereby clarified that completion of a Milestone means signoff by
        CLKS that a particular Milestone has been achieved by NIIT. The Invoice
        once raised shall be final and binding on the parties and the amount
        under the invoice once paid shall not be refundable under any
        circumstances.

7.2     Unless herein stated to the contrary all sums payable by CLKS under this
        Agreement are exclusive of all taxes, duties, levies and withholding
        taxes, applicable if any.

8.      OBLIGATIONS OF CLKS

8.1     CLKS shall provide reasonable support as per the Specifications and
        the Project Timetable.

9.1     PROJECT WORK CONTROL

9.1     Each of CLKS and NIIT must appoint from their staff a dedicated person
        to act as the primary point of contact for each party in its dealings
        with the other (each is a "Contact Person").

9.2     The Contact Person of each of the parties will be responsible for
        the following:

        (a)    reviewing, on a weekly basis, the progress of NIIT in
               performing the Project Work;

        (b)    making decisions to further progress the Project Work;

        (c)    considering any Change Requests; and

        (d)    making any other decisions relating to the Project Work
               brought to it by any party.

9.3     Any decisions made by the Contact Persons of each of the parties, which
        will result in a Change must be implemented in accordance with the
        Change control procedure as set out at clause 10.

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10.     CHANGE CONTROL

10.1    In recognition of the potentially continuing and developing nature of
        the Project Work, this clause sets out the process by which a Change may
        be implemented.

10.2    CLKS may request a Change by submitting a Change Request to NIIT. A
        Change Request will be so designated and will describe the Change
        requested in sufficient detail to enable NIIT to prepare a Change
        Proposal as described in sub-clause 10.5.

10.3    NIIT may also suggest or request a Change by submitting a Change
        Proposal.

10.4    NIIT must within five (5) Business Days of receiving a Change Request
        submit a Change Proposal.

10.5    The Change Proposal will set out the following information:

        (a)    a description of the Change;

        (b)    the estimated effect of implementing the Change on the portion of
               the Project Work being performed at that time and on the Project
               Work overall;

        (c)    the further costs, if any, or any saving to CLKS of
               implementing the Change and the terms for payment if
               applicable;

        (d)    a timetable and plan for implementing the Change;

        (e)    any Acceptance Tests CLKS will conduct in relation to the
               work performed under the Change;

        (f)    NIIT 's recommendation for or against implementing the
               Change; and

        (g)    any other matters CLKS has set out in the Change Request.

10.6    CLKS may request further details regarding a Change. These further
        details must be requested by CLKS from NIIT within five (5) Business
        Days of receiving a Change Proposal from NIIT. NIIT will provide the
        details requested within five (5) Business Days of receiving that
        request.

10.7    NIIT may recommend against implementing any Change requested by
        CLKS if it is reasonable so to do.  Each party must give its
        reasons for that rejection or recommendation to the other party at
        the same time as communicating its decision. It is acknowledged and
        agreed that CLKS is the ultimate decision-maker in any Change
        Request and NIIT must comply with any decision made by CLKS in
        respect of a Change.

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10.8    CLKS will notify NIIT within five (5) Business Days of receiving the
        Change Proposal whether it accepts that Change Proposal. If CLKS accepts
        the Change Proposal, it must countersign the Change Proposal and this
        Agreement will be varied in accordance with the Change proposed with
        effect from the date of the countersignature. The Change will be
        implemented as set out in the Change Proposal and the Project Work will
        then include the Change.

10.9    In the event that CLKS issues a Change Request for the Software prior to
        the Software being ready, then the parties acknowledge and agree that,
        having regard to the complexity of and work involved in executing the
        requested Change, it may be necessary for the Completion Date to be
        extended.

10.10   NIIT's calculation of costs for implementing a Change will be on
        the basis of the following:

        (a)    the complexity of the Change; and

        (b)    the Per Man Month Rates required for the Change.

10.11   CLKS is entitled to the benefit of any saving of cost to NIIT, and must
        bear any increase in such cost, as a result of a Change being
        implemented.

11.     WARRANTIES

11.1    NIIT warrants to CLKS that:

        (a)    use or other exercise or exploitation of the Software by
               CLKS or its licensees or customers in any tier:

               (i)    will not infringe the US Intellectual Property Rights of
                      any third party existing as of the date of Acceptance of
                      each Milestone as to that Milestone; and

               (ii)   will not, to its knowledge, infringe the Intellectual
                      Property Rights of any third party existing as of the date
                      of Acceptance of each Milestone as to that Milestone; and

               (iii)  will not breach any obligation of confidentiality or under
                      contract owed by NIIT or any NIIT Company to any third
                      party and existing as of the date of Acceptance of each
                      Milestone as to that Milestone.

        (b)    CLKS shall be the owner of all Intellectual Property Rights in or
               applicable to the Software or its operation, free and clear of
               any liens, claims, or encumbrances; provided however, that until
               Milestone 2 is attained, the Software may include some open
               source code which NIIT has disclosed to CLKS;

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        (c)    NIIT is capable of validly assigning and transferring to CLKS all
               the Intellectual Property Rights in or applicable to the Software
               or its operation, including without limitation any Third Party
               Materials and Properties and the Documentation and Records;
               provided however, that until Milestone 2 is attained, the
               Software may include some open source code which NIIT has
               disclosed to CLKS;

        (d)    By entering into this Agreement and complying with any of its
               obligations under this Agreement NIIT is not and will not be in
               breach of any agreement or undertaking with any other person
               (whether written or otherwise); and

        (e)    No additional authorisation, consent, approval, filing or
               registration with any court or government department, commission,
               agency or instrumentality is or will be necessary or required for
               NIIT to enter into and give effect to this Agreement;

        (f)    Any consultants or independent contractors used by NIIT in
               the development of the Software have executed written
               agreements requiring them to assign all Intellectual
               Property Rights in the Software to NIIT and to maintain the
               confidentiality thereof to the same extent as NIIT, and no
               such consultant or independent contractor has any claim
               against NIIT related to the Software or the development
               thereof.

11.2    CLKS warrants to NIIT that:

        (a)    By entering into this Agreement and complying with any of its
               obligations under this Agreement CLKS is not and will not be in
               breach of any agreement or undertaking with any other person
               (whether written or otherwise); and

        (b)    No additional authorisation, consent, approval, filing or
               registration with any court or government department, commission,
               agency or instrumentality is or will be necessary or required for
               CLKS to enter into and give effect to this Agreement.

11.3    EXCEPT FOR THE WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT, THE
        SOFTWARE IS PROVIDED "AS IS" AND EACH OF CLKS AND NIIT EXPRESSLY
        DISCLAIMS ANY IMPLIED WARRANTIES AND CONDITIONS, INCLUDING ANY IMPLIED
        WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, TITLE
        OR NON-INFRINGEMENT, AS WELL AS ANY WARRANTIES THAT THE SOFTWARE WILL BE
        FREE OF INTERRUPTIONS OR ERRORS.

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12.     COPYRIGHT, PATENT, TRADE MARKS AND OTHER INTELLECTUAL PROPERTY
        RIGHTS

12.1    NIIT hereby irrevocably sells, assigns, transfers and conveys to CLKS
        all right, title and interest in and to the Software, inclusive of all
        Intellectual Property Rights in or applicable to the Software or its
        operation. NIIT acknowledges and agrees that all of the copyright,
        patents and other Intellectual Property Rights in or applicable to the
        Software or its operation are and shall remain the sole property of
        CLKS. Except as explicitly authorized pursuant to clause 13 below, NIIT
        must not itself or through any affiliate, agent or third party, copy,
        sell, lease, licence, sub-license or otherwise deal with the Software
        for any purpose.

12.2    NIIT must, on being requested by CLKS, provide evidence of its having
        obtained all permissions, authorisations, licences and consents in
        relation to the performance by it of the Project Work and the assignment
        and transfer of the Software.

13.     LICENSE FOR INTERNAL USE

13.1    CLKS hereby grants to NIIT a non-exclusive, royalty-free, world-wide
        license to operate the Software, and to permit NIIT Companies to operate
        the Software, solely (i) in the direct performance of the Project Work
        for CLKS under this Agreement and (ii) otherwise for NIIT's or the NIIT
        Companies' own Internal Use (as defined below).

13.2    The term of the license under this clause 13 shall be perpetual,
        provided, however, that if NIIT or any NIIT Company at any time
        following the date of this Agreement:

        (i)    violates its confidentiality obligations under clause 14; or

        (ii)   exploits or exercises any Intellectual Property Right in or
               applicable to the Software or its operation outside the scope of
               this license as explicitly stated in this clause 13,

        or attempts to do so, or assists others to do so (other than third
        parties licensed by CLKS, within the scope of such licenses), then,
        without limitation on other rights and remedies of CLKS, the license
        under this clause 13 shall thereupon immediately and automatically be
        deemed to be terminated without notice or opportunity to cure, and
        whether or not CLKS or any other person or entity so notifies NIIT or
        any of the NIIT Companies.

        13.3 "Internal Use" means and is limited to installation of the server
        portion of the licensed Software on one or more servers owned or leased
        by NIIT or an NIIT Company and permitting access to and use of the
        licensed Software in executable object code form

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        as so installed only by (i) employees or consultants of NIIT or an NIIT
        Company in connection with NIIT's or an NIIT Company's internal training
        or operations or (ii) employees or consultants of NIIT or an NIIT
        Company or its customers in connection with custom software development
        services being provided by NIIT or such NIIT Company to such customers;
        provided, however, that "Internal Use" does not include (among other
        things): (a) making improvements or modifications to the licensed
        Software other than those made on behalf of CLKS as part of the Project
        Work pursuant to this Agreement; (b) incorporating any portion of the
        licensed Software into a customer deliverable or software product
        offered by NIIT or an NIIT Company; or (c) sale, licensing, or leasing
        or providing subscription-based access to the licensed Software except
        as may be permitted pursuant to a Reseller Agreement with CLKS.

14.     CONFIDENTIALITY

14.1    NIIT warrants and agrees that it (i) will, during and at all times after
        the term of this Agreement, protect and preserve the confidentiality of
        the Software; (ii) shall not use any of the Software for any purpose
        except as explicitly authorized pursuant to clause 13 above; and (iii)
        has not disclosed and shall not disclose any of the source codes for the
        Software to any third party other than the NIIT Companies that have,
        prior to the signing of this Agreement, already had access thereto, to
        the extent of such prior access, or to consultants or independent
        contractors providing services in connection with the development of the
        Software who have signed confidentiality agreements with respect to the
        Software at least as protective of CLKS's rights as this Agreement. NIIT
        warrants that all NIIT Companies have also complied and shall also
        comply with this confidentiality provision as if they, as well as NIIT,
        were parties hereto, and accordingly any breach thereof by any of the
        NIIT Companies shall be deemed to be a breach by NIIT as well. This
        confidentiality provision will no longer apply to those portions of the
        Software, if any, that are hereafter disclosed to the public without
        restriction by or under the authority of CLKS.

15.     INDEMNITY & LIMITATIONS

15.1    NIIT shall indemnify CLKS against all liabilities, costs and expenses
        (including costs of defense and reasonable attorneys' fees), and save
        harmless and defend CLKS at NIIT's own expense, from and against any and
        all claims of infringement of Intellectual Property Rights, breach of
        NIIT's warranties in this Agreement or from the provision of any of the
        goods, properties and services under this Agreement (including any
        claims by consultants or independent contractors providing services
        related to the Software).

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15.2    CLKS will promptly give notice to NIIT of any claim specified in clause
        15.1 that is made against CLKS. NIIT will have the right to defend or
        settle (or both) any such claims at its own discretion, provided that no
        settlement that would impair or condition any right or interest of CLKS
        or impugn its reputation shall be made without CLKS's prior written
        consent in its discretion. CLKS will (at the request and expense of
        NIIT) give to NIIT such assistance as NIIT may reasonably require (other
        than payment of money) in settling or opposing any such claims.

15.3    If any threat, claim or demand is made against CLKS or its customers or
        licensees in any tier in relation to the infringement of Intellectual
        Property Rights as a result of the Software or its operation, CLKS may
        request NIIT (at NIIT 's expense) to:

        (a)    procure for CLKS and such customers and licensees the right to
               continue using the Software or the infringing part of it in
               accordance with the Agreement;

        (b)    modify or amend the Software or the infringing part so that
               it becomes non-infringing; or

        (c)    replace the Software or the infringing part by other software or
               other materials of similar functionality.

15.4    NIIT's liability under this provision shall in no event exceed the total
        of all portions of the Development Fee received by NIIT.

15.5    CLKS's only remedies for those matters described in clause 15.1 above
        shall be the indemnity set out in this clause 15, the equitable relief
        as set out in clause 24.4 and termination as set out in clause 18.

15.6    CLKS shall indemnify NIIT and the NIIT Companies against all
        liabilities, costs and expenses (including costs of defense and
        reasonable attorneys' fees) and save harmless, and defend NIIT and the
        NIIT Companies at CLKS's own expense, from and against any and all
        claims arising out of or related to (i) new material added to or
        combined with the Software by any party other than NIIT or the NIIT
        Companies or (ii) changes made to the Software by any party other than
        NIIT or the NIIT Companies; provided that such claim would not have
        arisen but for such new material or changes.

15.7    NIIT will promptly give notice to CLKS of any claim specified in clause
        15.6 that is made against NIIT or any NIIT Company. CLKS will have the
        right to defend or settle (or both) any such claims at its own
        discretion, provided that no settlement that would impair or condition
        any right or interest of NIIT or the NIIT Companies or impugn its or
        their reputation shall be made without NIIT's prior written consent in
        its discretion. NIIT will (at the request and expense of CLKS) give to
        CLKS

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        and cause the NIIT Companies to give to CLKS such assistance as CLKS may
        reasonably require (other than payment of money) in settling or opposing
        any such claims.

15.8    CLKS's liability under this provision shall in no event exceed the total
        of all portions of the Development Fee received by NIIT.

15.9    NIIT's and the NIIT Companies' only remedies for those matters described
        in clause 15.6 shall be the indemnity set out in this clause 15.

16.     LIMITATION OF LIABILITY

16.1    Except as provided under its indemnities in this Agreement, or with
        respect to breaches of its obligations of confidentiality or
        non-competition, NIIT shall not be liable for any consequential or
        indirect loss incurred by CLKS or its affiliates due to any omission or
        commission of NIIT, and CLKS shall not be liable for any consequential
        or indirect loss incurred by NIIT or any NIIT Company due to any
        omission or commission of CLKS.

17.     FORCE MAJEURE

17.1    Neither party will be liable for any delay or failure to perform its
        obligations pursuant to this agreement if such delay is due to Force
        Majeure.

17.2    If a delay or failure of a party to perform its obligations is caused or
        anticipated due to Force Majeure, the performance of that party's
        obligations will be suspended.

17.3    If a delay or failure by NIIT to perform its obligations due to Force
        Majeure exceeds 60 days, CLKS may immediately terminate the agreement by
        giving notice in writing to NIIT. If CLKS exercises its rights under
        this clause, CLKS shall pay to NIIT a reasonable amount for the Project
        Work (design, development, customisation, Implementation) completed by
        NIIT up until the date of termination of this agreement.

        However, the payments under clause 17.3 by CLKS to NIIT shall be subject
        to NIIT assigning and transferring all right, title and interest in and
        to the Software and providing the Program Codes & Documents and Records
        to CLKS.

18.     TERMINATION

        18.1   [Intentionally deleted.]

18.2    CLKS may terminate this Agreement by giving written notice to NIIT (such
        termination to be effective immediately) if NIIT is in material breach
        of its obligations under this Agreement and such material breach is not
        remedied within thirty (30) Business Days after such written notice. If
        CLKS exercises its rights under this clause CLKS shall pay to NIIT a
        reasonable

                                       17
<PAGE>

        amount for the Project Work (design, development, customisation,
        Implementation) completed by NIIT up until the date of termination of
        this Agreement.

18.3    NIIT may terminate this Agreement by giving written notice to CLKS (such
        termination to be effective immediately) if CLKS is in material breach
        of its obligations under this Agreement and such material breach is not
        remedied within thirty (30) Business Days after such written notice.

18.4    All obligations regarding confidentiality, non-competition and
        non-solicitation, and all warranties and indemnities made by NIIT or by
        CLKS hereunder shall survive any termination of this Agreement. The
        license granted to NIIT under clause 13 shall survive termination of
        this Agreement, except as otherwise provided in clause 13.

19.     WAIVER

        Failure or neglect by either party to enforce at any time any of the
        provisions hereof will not be construed as nor deemed to be a waiver of
        either party's rights under this Agreement nor in any way affect the
        validity of the whole or any part of this Agreement nor prejudice either
        party's rights to take subsequent action.

20.     HEADINGS

        The table of contents and headings are for convenience only and will not
        affect the interpretation of this Agreement.

21.     INVALIDITY

        To the extent that any provision of this Agreement is found by any court
        or competent authority to be invalid, unlawful or unenforceable in any
        jurisdiction, that provision will be deemed not to be a part of this
        Agreement, it will not affect the enforceability of the remainder of
        this Agreement nor will it affect the validity, lawfulness or
        enforceability of that provision in any other jurisdiction.

22.     NOTICES

22.1    Any notice to a party under this Agreement will be in writing signed by
        or on behalf of the party giving it and will, unless delivered to a
        party personally, be left at, or sent by prepaid post or facsimile to
        the address or facsimile number of the party as set out below or as
        otherwise notified in writing from time to time.

                                       18
<PAGE>

        If to NIIT:

        NIIT (USA), Inc.
        1050 Crown Pointe Parkway
        5th Floor
        Atlanta, GA 30338-7703
        Facsimile: 770-551-9229
        Attention: P. R. Subramanian

        If to CLKS:

        Click2learn, Inc.
        110-110th Avenue NE
        Bellevue, WA  98004
        Facsimile: 425-637-1540
        Attention:  General Counsel

22.2    A notice will be deemed to have been served:

        (a)    at the time of delivery if delivered personally;

        (b)    upon receipt if posted; or

        (c)    two (2) hours after transmission if served by facsimile upon
               production of the transmission report or telex on a Business Day
               prior to 3:00 p.m. (recipient's time zone) or in any other case
               at 10:00 a.m. on the Business Day (recipient's time zone) after
               the date of despatch.

        If the deemed time of service is not during normal business hours in the
        country of receipt, the notice will be deemed served at or, in the case
        of facsimiles or telex, two (2) hours after the opening of business on
        the next Business Day of that country.

22.3    A party will not attempt to prevent or delay the service on it of a
        notice connected with this Agreement.

23.     GOVERNING LAW AND JURISDICTION

23.1    This Agreement shall be governed by the laws of the State of Georgia,
        USA and any dispute, controversy, proceedings or claim of whatever
        nature arising out of or in any way relating to this Agreement or its
        formation shall be governed by and construed accordingly.

24.     ARBITRATION

        24.1 Except as otherwise provided herein, all disputes, difference or
        disagreement arising out of, in connection with or in relation to this
        Agreement if not settled amicably shall be finally decided by
        arbitration to be held in accordance with the provisions of

                                       19
<PAGE>

        the Commercial Arbitration Rules of the American Arbitration Association
        (the "Rules").

24.2    The venue of arbitration shall be Atlanta and the language of
        arbitration shall be English.

24.3    The arbitration shall take place before a single arbitrator to be
        appointed by mutual consent of the Parties hereto or in accordance with
        the Rules. The award shall be rendered in the English Language, shall be
        final and binding on Parties, and may be entered into judgment and
        enforced in any court of competent jurisdiction.

24.4    NIIT acknowledges and agrees that any breach of its confidentiality or
        non-competition covenants during or after the term of this Agreement
        will be likely to cause irreparable injury to CLKS. Accordingly, in the
        event of such breach or any impending such breach, CLKS shall be
        entitled to obtain injunctive and other equitable relief from any court
        of competent jurisdiction in addition to, and not in lieu of, the right
        to seek through arbitration damages and any other right or remedy
        afforded to CLKS by law or otherwise.

25.     MISCELLANEOUS PROVISIONS

25.1    NO AGENCY: CLKS and NIIT are executing this Agreement on a
        principal-to-principal basis. Nothing herein contained will constitute
        any party as an agent, legal representative, partner, subsidiary, joint
        venture or employee of the other party. No party will have the right or
        power to, and will not bind or obligate in any way, manner or thing
        whatsoever, the other parties nor represent in writing to the contrary.

25.2    ENTIRE AGREEMENT: This Agreement constitutes the entire Agreement
        between the Parties with respect to its subject matter and will prevail
        over any other agreement relating to the subject matter hereof. The
        Parties declare that they rely upon no representations, conditions, or
        warranties on the part of the other Parties except as herein contained.

25.3    NON ASSIGNABILITY: Except as stated herein, the rights and obligations
        incumbent upon NIIT pursuant to the provisions hereof will not be ceded
        or assigned in any circumstances to any third party other than an NIIT
        Company without prior written approval of CLKS.

25.4    EXPENSES: Save as expressly otherwise provided herein, each of the
        Parties will bear its own legal, accountancy and other costs, charges
        and expenses connected with the negotiation, preparation and
        implementation of this Agreement or any other agreement incidental to or
        referred to in this Agreement.

                                       20
<PAGE>

25.5    AMENDMENT: This Agreement may not be amended or modified except by
        an instrument in writing signed by, or on behalf of, all the
        Parties.

25.6    COUNTERPARTS: This Agreement may be executed in any number of
        counterparts and by the several Parties hereto on separate counterparts,
        each of which when so executed, will be an original, but all the
        counterparts will together constitute one and the same instrument.

25.7    FURTHER ASSURANCES: Each party must do everything necessary or
        reasonably required by a party to give full effect to the purposes, and
        transactions contemplated by, this agreement. Without limiting the
        generality of the foregoing, NIIT agrees to render, and to cause the
        NIIT Companies and its and their personnel to render, all assistance
        reasonably requested by CLKS during and after the term of this Agreement
        to evidence and to perfect the assignment and transfer of the Software
        to CLKS and CLKS's title thereto, and the registration of or application
        for any Intellectual Property Rights in or applicable to the Software or
        its operation.

25.8    NON-SOLICITATION: CLKS agrees that it will not, for a period of one (1)
        year following the completion of any services provided by NIIT
        hereunder, directly or indirectly solicit any NIIT or any NIIT Company
        employees to leave his or her employment with any of them. NIIT warrants
        and agrees that neither it nor any NIIT Company will, for a period of
        one (1) year following the completion of any services provided by NIIT
        hereunder, directly or indirectly solicit any CLKS employees to leave
        his or her employment.

25.9    EXPORT CONTROLS: CLKS agrees not to directly or indirectly export or
        re-export the Software except as authorized by the laws and regulations
        of the United States and any other applicable jurisdiction. CLKS will
        not permit the Software to be accessed and used at any location or by
        any person that would violate such laws and regulations.

25.10   RELATED ENTITIES: Although signed by CLKS, this Agreement is for the
        benefit of itself and any parent corporation, subsidiaries and other
        corporations under common control with CLKS. CLKS agrees that it shall
        take all necessary steps to ensure that such other entities comply with
        the terms of this Agreement and that any breach of this Agreement by any
        such entities shall be considered a breach by CLKS. Although signed by
        NIIT, this Agreement is for the benefit of itself and the NIIT
        Companies. NIIT agrees that it shall take all necessary steps to ensure
        that all NIIT Companies comply with the terms of this Agreement and that
        any breach of this Agreement by any such entities shall be considered a
        breach by NIIT.

                                       21
<PAGE>

25.11   WARRANTY OF AUTHORITY: The signatories hereto personally warrant that
        they have the right and authority to enter into this Agreement, grant
        the rights granted hereunder and to bind the party on behalf of which he
        or she has signed this Agreement.

In witness whereof the authorised representative of each of the parties has put
their hands on this document on this ___ day of _______________, 2002.

--------------------------------------    --------------------------------------
FOR NIIT (USA), INC.                      FOR CLICK2LEARN, INC.
--------------------------------------    --------------------------------------

Name:_________________________________    Name:_________________________________

Designation:__________________________    Designation:__________________________
----------------------------------------- --------------------------------------

                                       22<PAGE>
                                                                   EXHIBIT 10.04

                                CLICK2LEARN, INC.

                           1998 EQUITY INCENTIVE PLAN

           Adopted by the Board of Directors on December 29, 1997

 Reflecting Changes in Share Numbers from 3 for 4 Reverse Stock Split effective
  June 8, 1998 and as Amended on May 25, 1999, May 25, 2000, May 30, 2001 and
                                January 29, 2002

        1. PURPOSE. The purpose of this Plan is to provide incentives to
attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, and any of its Parent
and Subsidiaries, by offering them an opportunity to participate in the
Company's future performance through awards of Options, Restricted Stock and
Stock Bonuses. Capitalized terms not defined in the text are defined in Section
23.

        2. SHARES SUBJECT TO THE PLAN.

            2.1 Number of Shares Available. Subject to Sections 2.2 and 18, the
total number of Shares reserved and available for grant and issuance pursuant to
this Plan will be 6,00,000 Shares. Subject to Sections 2.2 and 18, Shares that:
(a) are subject to issuance upon exercise of an Option but cease to be subject
to such Option for any reason other than exercise of such Option; (b) are
subject to an Award granted hereunder but are forfeited or are repurchased by
the Company at the original issue price; or (c) are subject to an Award that
otherwise terminates without Shares being issued, will again be available for
grant and issuance in connection with future Awards under this Plan. Any
authorized shares not issued or subject to outstanding grants under the
Company's 1995 Combined Incentive and Nonqualified Stock Option Plan (the "Prior
Plan") on the Effective Date (as defined below) and any shares that are issuable
upon exercise of options granted pursuant to the Prior Plan that expire or
become unexercisable for any reason without having been exercised in full, will
no longer be available for grant and issuance under the Prior Plan, but will be
available for grant and issuance under this Plan. In addition, any shares issued
under the Prior Plan which are repurchased or forfeited will be available for
grant and issuance under this Plan. At all times the Company shall reserve and
keep available a sufficient number of Shares as shall be required to satisfy the
requirements of all outstanding Options granted under this Plan and all other
outstanding but unvested Awards granted under this Plan.

            2.2 Adjustment of Shares. In the event that the number of
outstanding shares is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration,
then (a) the number of Shares reserved for issuance under this Plan, (b) the
Exercise Prices of and number of Shares subject to outstanding Options, and (c)
the number of Shares subject to other outstanding Awards will be proportionately
adjusted, subject to any required action by the Board or the stockholders of the
Company and compliance with applicable securities laws; provided, however, that
fractions of a Share will not be issued but will either be replaced by a cash
payment equal to the Fair Market Value of such fraction of a Share or will be
rounded up to the nearest whole Share, as determined by the Committee.

        3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be granted only
to employees (including officers and directors who are also employees) of the
Company or of a Parent or Subsidiary of the Company. All other Awards may be
granted to employees, officers, directors, consultants, independent contractors
and advisors of the Company or any Parent or Subsidiary of the Company; provided
such consultants, contractors and advisors render bona fide services not in
connection with the offer and sale of securities in a capital-raising
transaction. No person will be eligible to receive more than 375,000 Shares in
any calendar year under this Plan pursuant to the grant of Awards hereunder,
other than new employees of the Company or of a Parent or Subsidiary of the
Company (including new employees who are also officers and directors of the
Company or any Parent or Subsidiary

                                      -1-
<PAGE>

of the Company), who are eligible to receive up to a maximum of 750,000 Shares
in the calendar year in which they commence their employment. A person may be
granted more than one Award under this Plan.

        4. ADMINISTRATION.

            4.1 Committee Authority. This Plan will be administered by the
Committee or by the Board acting as the Committee. Subject to the general
purposes, terms and conditions of this Plan, and to the direction of the Board,
the Committee will have full power to implement and carry out this Plan. Without
limitation, the Committee will have the authority to:

        (a) construe and interpret this Plan, any Award Agreement and any other
            agreement or document executed pursuant to this Plan;

        (b) prescribe, amend and rescind rules and regulations relating to this
            Plan or any Award;

        (c) select persons to receive Awards;

        (d) determine the form and terms of Awards;

        (e) determine the number of Shares or other consideration subject to
            Awards;

        (f) determine whether Awards will be granted singly, in combination
            with, in tandem with, in replacement of, or as alternatives to,
            other Awards under this Plan or any other incentive or compensation
            plan of the Company or any Parent or Subsidiary of the Company;

        (g) grant waivers of Plan or Award conditions;

        (h) determine the vesting, exercisability and payment of Awards;

        (i) correct any defect, supply any omission or reconcile any
            inconsistency in this Plan, any Award or any Award Agreement;

        (j) determine whether an Award has been earned; and

        (k) make all other determinations necessary or advisable for the
            administration of this Plan.

            4.2 Committee Discretion. Any determination made by the Committee
with respect to any Award will be made in its sole discretion at the time of
grant of the Award or, unless in contravention of any express term of this Plan
or Award, at any later time, and such determination will be final and binding on
the Company and on all persons having an interest in any Award under this Plan.
The Committee may delegate to one or more officers of the Company the authority
to grant an Award under this Plan to Participants who are not Insiders of the
Company.

        5. OPTIONS. The Committee may grant Options to eligible persons and will
determine whether such Options will be Incentive Stock Options within the
meaning of the Code ("ISOs") or Nonqualified Stock Options ("NQSOs"), the number
of Shares subject to the Option, the Exercise Price of the Option, the period
during which the Option may be exercised, and all other terms and conditions of
the Option, subject to the following:

            5.1 Form of Option Grant. Each Option granted under this Plan will
be evidenced by an Award Agreement which will expressly identify the Option as
an ISO or an NQSO ("STOCK OPTION AGREEMENT"), and will be in such form and
contain such provisions (which need not be the same for each Participant) as the
Committee may from time to time approve, and which will comply with and be
subject to the terms and conditions of this Plan.

                                      -2-
<PAGE>

            5.2 Date of Grant. The date of grant of an Option will be the date
on which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee. The Stock Option Agreement and a copy of
this Plan will be delivered to the Participant within a reasonable time after
the granting of the Option.

            5.3 Exercise Period and Exercisability. Options may be exercisable
within the times or upon the events determined by the Committee as set forth in
the Stock Option Agreement governing such Option; provided, however, that no
Option will be exercisable after the expiration of ten (10) years from the date
the Option is granted; and provided further that no ISO granted to a person who
directly or by attribution owns more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of any Parent or
Subsidiary of the Company ("TEN PERCENT STOCKHOLDER") will be exercisable after
the expiration of five (5) years from the date the ISO is granted. The Committee
also may provide for Options to become exercisable at one time or from time to
time, periodically or otherwise, in such number of Shares or percentage of
Shares as the Committee determines. Unless otherwise determined by the
Committee, the Award Agreement for any Option granted to a full time employee
that becomes exercisable over time shall provide that if, subsequent to the
grant date of an Option, such employee's work schedule is reduced such that the
employee is working less than full time but has not been Terminated, then the
number of Shares or percentage of Shares that become exercisable at the times
specified in the Award Agreement shall be reduced in proportion to the reduction
in the employee's work schedule.

            5.4 Exercise Price. The Exercise Price of an Option will be
determined by the Committee when the Option is granted and may be not less than
85% of the Fair Market Value of the Shares on the date of grant; provided that:
(i) the Exercise Price of an ISO will be not less than 100% of the Fair Market
Value of the Shares on the date of grant; and (ii) the Exercise Price of any ISO
granted to a Ten Percent Stockholder will not be less than 110% of the Fair
Market Value of the Shares on the date of grant. Payment for the Shares
purchased may be made in accordance with Section 8 of this Plan.

            5.5 Method of Exercise. Options may be exercised only by delivery to
the Company of a written stock option exercise agreement (the "EXERCISE
AGREEMENT") in a form approved by the Committee (which need not be the same for
each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares purchased under such Exercise Agreement, if
any, and such representations and agreements regarding Participant's investment
intent and access to information and other matters, if any, as may be required
or desirable by the Company to comply with applicable securities laws, together
with payment in full of the Exercise Price for the number of Shares being
purchased.

            5.6 Termination. Notwithstanding the exercise periods set forth in
the Stock Option Agreement, exercise of an Option will always be subject to the
following:

        (a) If the Participant is Terminated for any reason except death or
            Disability, then the Participant may exercise such Participant's
            Options only to the extent that such Options would have been
            exercisable upon the Termination Date no later than three (3) months
            after the Termination Date (or such shorter or longer time period
            not exceeding five (5) years as may be determined by the Committee,
            with any exercise beyond three (3) months after the Termination Date
            deemed to be an NQSO), but in any event, no later than the
            expiration date of the Options.

        (b) If the Participant is Terminated because of Participant's death or
            Disability (or the Participant dies within three (3) months after a
            Termination other than because of Participant's death or
            disability), then Participant's Options may be exercised only to the
            extent that such Options would have been exercisable by Participant
            on the Termination Date and must be exercised by Participant (or
            Participant's legal representative or authorized assignee) no later
            than twelve (12) months after the Termination Date (or such shorter
            or longer time period not exceeding five (5) years as may be
            determined by the Committee, with any such

                                      -3-
<PAGE>

            exercise beyond (a) three (3) months after the Termination Date when
            the Termination is for any reason other than the Participant's death
            or Disability, or (b) twelve (12) months after the Termination Date
            when the Termination is for Participant's death or Disability,
            deemed to be an NQSO), but in any event no later than the expiration
            date of the Options.

        (c) Notwithstanding the provisions in paragraph 5.6(a) above, if a
            Participant is terminated for Cause, neither the Participant, the
            Participant's estate nor such other person who may then hold the
            Option shall be entitled to exercise any Option with respect to any
            Shares whatsoever, after termination of service, whether or not
            after termination of service the Participant may receive payment
            from the Company or Subsidiary for vacation pay, for services
            rendered prior to termination, for services rendered for the day on
            which termination occurs, for salary in lieu of notice, or for any
            other benefits. In making such determination, the Board shall give
            the Participant an opportunity to present to the Board evidence on
            his or her behalf. For the purpose of this paragraph, termination of
            service shall be deemed to occur on the date when the Company
            dispatches notice or advice to the Participant that his or her
            service is terminated.

            5.7 Limitations on Exercise. The Committee may specify a reasonable
minimum number of Shares that may be purchased on any exercise of an Option,
provided that such minimum number will not prevent Participant from exercising
the Option for the full number of Shares for which it is then exercisable.

            5.8 Limitations on ISOs. The aggregate Fair Market Value (determined
as of the date of grant) of Shares with respect to which ISOs are exercisable
for the first time by a Participant during any calendar year (under this Plan or
under any other incentive stock option plan of the Company, Parent or Subsidiary
of the Company) will not exceed $100,000. If the Fair Market Value of Shares on
the date of grant with respect to which ISOs are exercisable for the first time
by a Participant during any calendar year exceeds $100,000, then the Options for
the first $100,000 worth of Shares to become exercisable in such calendar year
will be ISOs and the Options for the amount in excess of $100,000 that become
exercisable in that calendar year will be NQSOs. In the event that the Code or
the regulations promulgated thereunder are amended after the Effective Date of
this Plan to provide for a different limit on the Fair Market Value of Shares
permitted to be subject to ISOs, such different limit will be automatically
incorporated herein and will apply to any Options granted after the effective
date of such amendment.

            5.9 Modification, Extension or Renewal. The Committee may modify,
extend or renew outstanding Options and authorize the grant of new Options in
substitution therefor, provided that any such action may not, without the
written consent of a Participant, impair any of such Participant's rights under
any Option previously granted. Any outstanding ISO that is modified, extended,
renewed or otherwise altered will be treated in accordance with Section 424(h)
of the Code. The Committee may reduce the Exercise Price of outstanding Options
without the consent of Participants affected by a written notice to them;
provided, however, that the Exercise Price may not be reduced below the minimum
Exercise Price that would be permitted under Section 5.4 of this Plan for
Options granted on the date the action is taken to reduce the Exercise Price.

            5.10 No Disqualification. Notwithstanding any other provision in
this Plan, no term of this Plan relating to an ISO will be interpreted, amended
or altered, nor will any discretion or authority granted under this Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.

        6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the Company
to sell to an eligible person Shares that are subject to restrictions. The
Committee will determine to whom an offer will be made, the number of Shares the
person may purchase, the price to be paid (the "PURCHASE PRICE"), the
restrictions to which the Shares will be subject, and all other terms and
conditions of the Restricted Stock Award, subject to the following:

                                      -4-
<PAGE>

            6.1 Form of Restricted Stock Award. All purchases under a Restricted
Stock Award made pursuant to this Plan will be evidenced by an Award Agreement
("RESTRICTED STOCK PURCHASE AGREEMENT") that will be in such form (which need
not be the same for each Participant) as the Committee will from time to time
approve, and will comply with and be subject to the terms and conditions of this
Plan. The offer of Restricted Stock will be accepted by the Participant's
execution and delivery of the Restricted Stock Purchase Agreement and full
payment for the Shares to the Company within thirty (30) days from the date the
Restricted Stock Purchase Agreement is delivered to the person. If such person
does not execute and deliver the Restricted Stock Purchase Agreement along with
full payment for the Shares to the Company within thirty (30) days, then the
offer will terminate, unless otherwise determined by the Committee.

            6.2 Purchase Price. The Purchase Price of Shares sold pursuant to a
Restricted Stock Award will be determined by the Committee on the date the
Restricted Stock Award is granted, except in the case of a sale to a Ten Percent
Stockholder, in which case the Purchase Price will be 100% of the Fair Market
Value. Payment of the Purchase Price may be made in accordance with Section 8 of
this Plan.

            6.3 Terms of Restricted Stock Awards. Restricted Stock Awards shall
be subject to such restrictions as the Committee may impose. These restrictions
may be based upon completion of a specified number of years of service with the
Company or upon completion of the performance goals as set out in advance in the
Participant's individual Restricted Stock Purchase Agreement. Restricted Stock
Awards may vary from Participant to Participant and between groups of
Participants. Prior to the grant of a Restricted Stock Award, the Committee
shall: (a) determine the nature, length and starting date of any Performance
Period for the Restricted Stock Award; (b) select from among the Performance
Factors to be used to measure performance goals, if any; and (c) determine the
number of Shares that may be awarded to the Participant. Prior to the payment of
any Restricted Stock Award, the Committee shall determine the extent to which
such Restricted Stock Award has been earned. Performance Periods may overlap and
Participants may participate simultaneously with respect to Restricted Stock
Awards that are subject to different Performance Periods and having different
performance goals and other criteria.

            6.4 Termination During Performance Period. If a Participant is
Terminated during a Performance Period for any reason, then such Participant
will be entitled to payment (whether in Shares, cash or otherwise) with respect
to the Restricted Stock Award only to the extent earned as of the date of
Termination in accordance with the Restricted Stock Purchase Agreement, unless
the Committee will determine otherwise.

        7. STOCK BONUSES.

            7.1 Awards of Stock Bonuses. A Stock Bonus is an award of Shares
(which may consist of Restricted Stock) for services rendered to the Company or
any Parent or Subsidiary of the Company. A Stock Bonus may be awarded for past
services already rendered to the Company, or any Parent or Subsidiary of the
Company pursuant to an Award Agreement (the "STOCK BONUS AGREEMENT") that will
be in such form (which need not be the same for each Participant) as the
Committee will from time to time approve, and will comply with and be subject to
the terms and conditions of this Plan. A Stock Bonus may be awarded upon
satisfaction of such performance goals as are set out in advance in the
Participant's individual Award Agreement (the "PERFORMANCE STOCK BONUS
AGREEMENT") that will be in such form (which need not be the same for each
Participant) as the Committee will from time to time approve, and will comply
with and be subject to the terms and conditions of this Plan. Stock Bonuses may
vary from Participant to Participant and between groups of Participants, and may
be based upon the achievement of the Company, Parent or Subsidiary and/or
individual performance factors or upon such other criteria as the Committee may
determine.

            7.2 Terms of Stock Bonuses. The Committee will determine the number
of Shares to be awarded to the Participant. If the Stock Bonus is being earned
upon the satisfaction of performance goals pursuant to a Performance Stock Bonus
Agreement, then the Committee will: (a) determine the nature, length and
starting date of any Performance Period for each Stock Bonus; (b) select from
among the Performance Factors to be used to measure the performance, if any; and
(c) determine the number of Shares that may be awarded to the Participant. Prior
to the payment of any Stock Bonus, the Committee shall determine the extent to
which such Stock Bonuses

                                      -5-
<PAGE>

have been earned. Performance Periods may overlap and Participants may
participate simultaneously with respect to Stock Bonuses that are subject to
different Performance Periods and different performance goals and other
criteria. The number of Shares may be fixed or may vary in accordance with such
performance goals and criteria as may be determined by the Committee. The
Committee may adjust the performance goals applicable to the Stock Bonuses to
take into account changes in law and accounting or tax rules and to make such
adjustments as the Committee deems necessary or appropriate to reflect the
impact of extraordinary or unusual items, events or circumstances to avoid
windfalls or hardships.

            7.3 Form of Payment. The earned portion of a Stock Bonus may be paid
currently or on a deferred basis with such interest or dividend equivalent, if
any, as the Committee may determine. Payment may be made in the form of cash or
whole Shares or a combination thereof, either in a lump sum payment or in
installments, all as the Committee will determine.

        8. PAYMENT FOR SHARE PURCHASES.

            8.1 Payment. Payment for Shares purchased pursuant to this Plan may
be made in cash (by check) or, where expressly approved for the Participant by
the Committee and where permitted by law:

        (a) by cancellation of indebtedness of the Company to the Participant;

        (b) by surrender of shares that either: (1) have been owned by
            Participant for more than six (6) months and have been paid for
            within the meaning of SEC Rule 144 (and, if such shares were
            purchased from the Company by use of a promissory note, such note
            has been fully paid with respect to such shares); or (2) were
            obtained by Participant in the public market;

        (c) by tender of a full recourse promissory note having such terms as
            may be approved by the Committee and bearing interest at a rate
            sufficient to avoid imputation of income under Sections 483 and 1274
            of the Code; provided, however, that Participants who are not
            employees or directors of the Company will not be entitled to
            purchase Shares with a promissory note unless the note is adequately
            secured by collateral other than the Shares;

        (d) by waiver of compensation due or accrued to the Participant for
            services rendered;

        (e) with respect only to purchases upon exercise of an Option, and
            provided that a public market for the Company's stock exists:

            (1) through a "same day sale" commitment from the Participant and a
                broker-dealer that is a member of the National Association of
                Securities Dealers (an "NASD DEALER") whereby the Participant
                irrevocably elects to exercise the Option and to sell a portion
                of the Shares so purchased to pay for the Exercise Price, and
                whereby the NASD Dealer irrevocably commits upon receipt of such
                Shares to forward the Exercise Price directly to the Company; or

            (2) through a "margin" commitment from the Participant and a NASD
                Dealer whereby the Participant irrevocably elects to exercise
                the Option and to pledge the Shares so purchased to the NASD
                Dealer in a margin account as security for a loan from the NASD
                Dealer in the amount of the Exercise Price, and whereby the NASD
                Dealer irrevocably commits upon receipt of such Shares to
                forward the Exercise Price directly to the Company; or

        (f) by any combination of the foregoing.

                                      -6-
<PAGE>

            8.2 Loan Guarantees. The Committee may help the Participant pay for
Shares purchased under this Plan by authorizing a guarantee by the Company of a
third-party loan to the Participant.

        9. WITHHOLDING TAXES.

            9.1 Withholding Generally. Whenever Shares are to be issued in
satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under this Plan, payments
in satisfaction of Awards are to be made in cash, such payment will be net of an
amount sufficient to satisfy federal, state, and local withholding tax
requirements.

            9.2 Stock Withholding. When, under applicable tax laws, a
Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax withholding and the Participant is obligated to
pay the Company the amount required to be withheld, the Committee may in its
sole discretion allow the Participant to satisfy the minimum withholding tax
obligation by electing to have the Company withhold from the Shares to be issued
that number of Shares having a Fair Market Value equal to the minimum amount
required to be withheld, determined on the date that the amount of tax to be
withheld is to be determined. All elections by a Participant to have Shares
withheld for this purpose will be made in accordance with the requirements
established by the Committee and be in writing in a form acceptable to the
Committee

        10. PRIVILEGES OF STOCK OWNERSHIP.

            10.1 Voting and Dividends. No Participant will have any of the
rights of a stockholder with respect to any Shares until the Shares are issued
to the Participant. After Shares are issued to the Participant, the Participant
will be a stockholder and have all the rights of a stockholder with respect to
such Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; provided, that if such
Shares are Restricted Stock, then any new, additional or different securities
the Participant may become entitled to receive with respect to such Shares by
virtue of a stock dividend, stock split or any other change in the corporate or
capital structure of the Company will be subject to the same restrictions as the
Restricted Stock; provided, further, that the Participant will have no right to
retain such stock dividends or stock distributions with respect to Shares that
are repurchased at the Participant's Purchase Price or Exercise Price pursuant
to Section 12.

            10.2 Financial Statements. The Company will, upon the request of a
Participant, provide the financial statements included in its most recent Form
10-K or 10-Q to Participant prior to such Participant's purchase of Shares under
this Plan, and will, upon the request of a Participant, provide such Participant
with the most recent annual report of the Company during the period such
Participant has Awards outstanding; provided, however, the Company will not be
required to provide such financial statements to Participants whose services in
connection with the Company assure them access to equivalent information.

        11. TRANSFERABILITY. Awards granted under this Plan, and any interest
therein, will not be transferable or assignable by Participant, and may not be
made subject to execution, attachment or similar process, otherwise than by will
or by the laws of descent and distribution or as determined by the Committee and
set forth in the Award Agreement with respect to Awards that are not ISOs.
During the lifetime of the Participant an Award will be exercisable only by the
Participant, and any elections with respect to an Award may be made only by the
Participant unless otherwise determined by the Committee and set forth in the
Award Agreement with respect to Awards that are not ISOs.

        12. RESTRICTIONS ON SHARES. At the discretion of the Committee, the
Company may reserve to itself and/or its assignee(s) in the Award Agreement a
right to repurchase a portion of or all Unvested Shares held by a Participant
following such Participant's Termination at any time within ninety (90) days
after the later of Participant's Termination Date and the date Participant
purchases Shares under this Plan, for cash and/or cancellation of purchase money
indebtedness, at the Participant's Exercise Price or Purchase Price, as the case
may be.

                                      -7-
<PAGE>

        13. CERTIFICATES. All certificates for Shares or other securities
delivered under this Plan will be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem necessary or advisable,
including restrictions under any applicable federal, state or foreign securities
law, or any rules, regulations and other requirements of the SEC or any stock
exchange or automated quotation system upon which the Shares may be listed or
quoted.

        14. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares, together with stock powers or other
instruments of transfer approved by the Committee, appropriately endorsed in
blank, with the Company or an agent designated by the Company to hold in escrow
until such restrictions have lapsed or terminated, and the Committee may cause a
legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; provided, however, that the Committee may
require or accept other or additional forms of collateral to secure the payment
of such obligation and, in any event, the Company will have full recourse
against the Participant under the promissory note notwithstanding any pledge of
the Participant's Shares or other collateral. In connection with any pledge of
the Shares, Participant will be required to execute and deliver a written pledge
agreement in such form as the Committee will from time to time approve. The
Shares purchased with the promissory note may be released from the pledge on a
pro rata basis as the promissory note is paid.

        15. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or
from time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and cancellation
of any or all outstanding Awards. The Committee may at any time buy from a
Participant an Award previously granted with payment in cash, Shares (including
Restricted Stock) or other consideration, based on such terms and conditions as
the Committee and the Participant may agree.

        16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not be
effective unless such Award is in compliance with all applicable federal and
state securities laws, rules and regulations of any governmental body, and the
requirements of any stock exchange or automated quotation system upon which the
Shares may then be listed or quoted, as they are in effect on the date of grant
of the Award and also on the date of exercise or other issuance. Notwithstanding
any other provision in this Plan, the Company will have no obligation to issue
or deliver certificates for Shares under this Plan prior to: (a) obtaining any
approvals from governmental agencies that the Company determines are necessary
or advisable; and/or (b) completion of any registration or other qualification
of such Shares under any state or federal law or ruling of any governmental body
that the Company determines to be necessary or advisable. The Company will be
under no obligation to register the Shares with the SEC or to effect compliance
with the registration, qualification or listing requirements of any state
securities laws, stock exchange or automated quotation system, and the Company
will have no liability for any inability or failure to do so.

        17. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted
under this Plan will confer or be deemed to confer on any Participant any right
to continue in the employ of, or to continue any other relationship with, the
Company or any Parent or Subsidiary of the Company or limit in any way the right
of the Company or any Parent or Subsidiary of the Company to terminate
Participant's employment or other relationship at any time, with or without
cause.

        18. CORPORATE TRANSACTIONS.

            18.1 Assumption or Replacement of Awards by Successor. In the event
of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly-owned subsidiary, a reincorporation of
the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the stockholders of the

                                      -8-
<PAGE>

Company or their relative stock holdings and the Awards granted under this Plan
are assumed, converted or replaced by the successor corporation, which
assumption will be binding on all Participants), (c) a merger in which the
Company is the surviving corporation but after which the stockholders of the
Company immediately prior to such merger (other than any stockholder that
merges, or which owns or controls another corporation that merges, with the
Company in such merger) cease to own their shares or other equity interest in
the Company, (d) the sale of substantially all of the assets of the Company, or
(e) the acquisition, sale, or transfer of more than 50% of the outstanding
shares of the Company by tender offer or similar transaction, any or all
outstanding Awards may be assumed, converted or replaced by the successor
corporation (if any), which assumption, conversion or replacement will be
binding on all Participants. In the alternative, the successor corporation may
substitute equivalent Awards or provide substantially similar consideration to
Participants as was provided to stockholders (after taking into account the
existing provisions of the Awards). The successor corporation may also issue, in
place of outstanding Shares of the Company held by the Participant,
substantially similar shares or other property subject to repurchase
restrictions no less favorable to the Participant. In the event such successor
corporation (if any) refuses to assume or substitute Awards, as provided above,
pursuant to a transaction described in this Subsection 18.1, such Awards will
accelerate in full immediately prior to such transaction.

            18.2 Other Treatment of Awards. Subject to any greater rights
granted to Participants under the foregoing provisions of this Section 18, in
the event of the occurrence of any transaction described in Section 18.1, any
outstanding Awards will be treated as provided in the applicable agreement or
plan of merger, consolidation, dissolution, liquidation, or sale of assets.

            18.3 Assumption of Awards by the Company. The Company, from time to
time, also may substitute or assume outstanding awards granted by another
company, whether in connection with an acquisition of such other company or
otherwise, by either; (a) granting an Award under this Plan in substitution of
such other company's award; or (b) assuming such award as if it had been granted
under this Plan if the terms of such assumed award could be applied to an Award
granted under this Plan. Such substitution or assumption will be permissible if
the holder of the substituted or assumed award would have been eligible to be
granted an Award under this Plan if the other company had applied the rules of
this Plan to such grant. In the event the Company assumes an award granted by
another company, the terms and conditions of such award will remain unchanged
(except that the exercise price and the number and nature of Shares issuable
upon exercise of any such option will be adjusted appropriately pursuant to
Section 424(a) of the Code). In the event the Company elects to grant a new
Option rather than assuming an existing option, such new Option may be granted
with a similarly adjusted Exercise Price.

        19. ADOPTION AND STOCKHOLDER APPROVAL. This Plan will become effective
on the date on which the registration statement filed by the Company with the
SEC under the Securities Act registering the initial public offering of the
Company's Common Stock is declared effective by the SEC (the "EFFECTIVE DATE").
This Plan shall be approved by the stockholders of the Company (excluding Shares
issued pursuant to this Plan), consistent with applicable laws, within twelve
(12) months before or after the date this Plan is adopted by the Board. Upon the
Effective Date, the Committee may grant Awards pursuant to this Plan; provided,
however, that: (a) no Option may be exercised prior to initial stockholder
approval of this Plan; (b) no Option granted pursuant to an increase in the
number of Shares subject to this Plan approved by the Board will be exercised
prior to the time such increase has been approved by the stockholders of the
Company; and (c) in the event that stockholder approval of such increase is not
obtained within the time period provided herein, all Awards granted pursuant to
such increase will be canceled, any Shares issued pursuant to any Award granted
pursuant to such increase will be canceled, and any purchase of Shares pursuant
to such increase will be rescinded.

        20. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided
herein, this Plan will terminate ten (10) years from the date this Plan is
adopted by the Board or, if earlier, the date of stockholder approval. This Plan
and all agreements thereunder shall be governed by and construed in accordance
with the laws of the State of Washington.

        21. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
terminate or amend this Plan in any respect, including without limitation
amendment of any form of Award Agreement or

                                      -9-
<PAGE>

instrument to be executed pursuant to this Plan; provided, however, that the
Board will not, without the approval of the stockholders of the Company, amend
this Plan in any manner that requires such stockholder approval.

        22. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by the
Board, the submission of this Plan to the stockholders of the Company for
approval, nor any provision of this Plan will be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options and bonuses otherwise than under this Plan, and such
arrangements may be either generally applicable or applicable only in specific
cases.

        23. DEFINITIONS. As used in this Plan, the following terms will have the
following meanings:

            "AWARD" means any award under this Plan, including any Option,
Restricted Stock or Stock Bonus.

            "AWARD AGREEMENT" means, with respect to each Award, the signed
written agreement between the Company and the Participant setting forth the
terms and conditions of the Award.

            "BOARD" means the Board of Directors of the Company.

            "CAUSE" means the commission of an act of theft, embezzlement,
fraud, dishonesty, intoxication at work, disclosure of confidential information
or a breach of fiduciary duty to the Company or a Parent or Subsidiary of the
Company.

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

            "COMMITTEE" means the Compensation Committee of the Board.

            "COMPANY" means Click2learn, Inc. or any successor corporation.

            "DISABILITY" means a disability, whether temporary or permanent,
partial or total, within the meaning of Section 22(e)(3) of the Code, as
determined by the Committee.

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

            "EXERCISE PRICE" means the price at which a holder of an Option may
purchase the Shares issuable upon exercise of the Option.

            "FAIR MARKET VALUE" means, as of any date, the value of a share of
the Company's Common Stock determined as follows:

        (a) if such Common Stock is then quoted on the Nasdaq National Market,
            its closing price on the Nasdaq National Market on the date of
            determination as reported in The Wall Street Journal;

        (b) if such Common Stock is publicly traded and is then listed on a
            national securities exchange, its closing price on the date of
            determination on the principal national securities exchange on which
            the Common Stock is listed or admitted to trading as reported in The
            Wall Street Journal;

        (c) if such Common Stock is publicly traded but is not quoted on the
            Nasdaq National Market nor listed or admitted to trading on a
            national securities exchange, the average of the clos

                                      -10-
<PAGE>

            ing bid and asked prices on the date of determination as reported in
            The Wall Street Journal;

        (d) in the case of an Award made on the Effective Date, the price per
            share at which shares of the Company's Common Stock are initially
            offered for sale to the public by the Company's underwriters in the
            initial public offering of the Company's Common Stock pursuant to a
            registration statement filed with the SEC under the Securities Act;
            or

        (d) if none of the foregoing is applicable, by the Committee in good
            faith.

            "INSIDER" means an officer or director of the Company or any other
person whose transactions in the Company's Common Stock are subject to Section
16 of the Exchange Act.

            "OPTION" means an award of an option to purchase Shares pursuant to
Section 5.

            "PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if each of such
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.

            "PARTICIPANT" means a person who receives an Award under this Plan.

            "PERFORMANCE FACTORS" means the factors selected by the Committee
from among the following measures to determine whether the performance goals
established by the Committee and applicable to Awards have been satisfied:

            (a) Net revenue and/or net revenue growth;

            (b) Earnings before income taxes and amortization and/or earnings
                before income taxes and amortization growth;

            (c) Operating income and/or operating income growth;

            (d) Net income and/or net income growth;

            (e) Earnings per share and/or earnings per share growth;

            (f) Total shareholder return and/or total shareholder return growth;

            (g) Return on equity;

            (h) Operating cash flow return on income;

            (i) Adjusted operating cash flow return on income;

            (j) Economic value added; and

            (k) Individual confidential business objectives.

            "PERFORMANCE PERIOD" means the period of service determined by the
Committee, not to exceed five years, during which years of service or
performance is to be measured for Restricted Stock Awards or Stock Bonuses.

                                      -11-
<PAGE>

            "PLAN" means this click2learn.com, inc. 1998 Equity Incentive Plan,
as amended from time to time.

            "RESTRICTED STOCK AWARD" means an award of Shares pursuant to
Section 6.

            "SEC" means the Securities and Exchange Commission.

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

            "SHARES" means shares of the Company's Common Stock reserved for
issuance under this Plan, as adjusted pursuant to Sections 2 and 18, and any
successor security.

            "STOCK BONUS" means an award of Shares, or cash in lieu of Shares,
pursuant to Section 7.

            "SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

            "TERMINATION" or "TERMINATED" means, for purposes of this Plan with
respect to a Participant, that the Participant has for any reason ceased to
provide services as an employee, officer, director, consultant, independent
contractor, or advisor to the Company or a Parent or Subsidiary of the Company.
An employee will not be deemed to have ceased to provide services in the case of
(i) sick leave, (ii) military leave, or (iii) any other leave of absence
approved by the Committee, provided, that such leave is for a period of not more
than 90 days, unless reemployment upon the expiration of such leave is
guaranteed by contract or statute or unless provided otherwise pursuant to
formal policy adopted from time to time by the Company and issued and
promulgated to employees in writing. In the case of any employee on an approved
leave of absence, the Committee may make such provisions respecting suspension
of vesting of the Award while on leave from the employ of the Company or a
Subsidiary as it may deem appropriate, except that in no event may an Option be
exercised after the expiration of the term set forth in the Option agreement.
The Committee will have sole discretion to determine whether a Participant has
ceased to provide services and the effective date on which the Participant
ceased to provide services (the "TERMINATION DATE").

            "UNVESTED SHARES" means "Unvested Shares" as defined in the Award
Agreement.

            "VESTED SHARES" means "Vested Shares" as defined in the Award
Agreement.

                                      -12-

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