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Exhibit 10.03    
  

CLICK2LEARN, INC.

1998 DIRECTORS STOCK OPTION PLAN

  As Adopted by the Board of Directors on December 29, 1997

And Amended and Restated on April 18, 2000

And Further Amended on May 30, 2001 

        1.    Purpose.  This 1998 Directors Stock Option Plan (this "Plan")
is established to provide equity incentives for certain nonemployee members of the Board of Directors of Click2learn, Inc., formerly Asymetrix Learning Systems, Inc. (the  "Company"),
who are described in Section 6.1 below, by granting such persons (or, if any such person is a representative of an entity that is a
shareholder of the Company and such person so requests, to such entity) are options to purchase shares of stock of the Company. 

        2.    Adoption and Stockholder Approval.  After this Plan is adopted by the Board of Directors of the Company (the  "Board"), this
Plan will become effective on the time and date (the "Effective Date") on which the
registration statement filed by the Company with the Securities and Exchange Commission ("SEC") under the Securities Act of 1933, as amended (the  "Securities
Act"), to register the initial public offering of the Company's Common Stock is declared effective by the SEC. This Plan shall be approved
by the stockholders of the Company, consistent with applicable laws, within twelve (12) months after the date this Plan is adopted by the Board. 

        3.    Types of Options and Shares.  Options granted under this Plan shall be non-qualified stock options
("NQSOs").  The shares of stock that may be purchased upon exercise of Options granted under this Plan (the  "Shares") are shares of
the Common Stock of the Company. 

        4.    Number of Shares.  The maximum number of Shares that may be issued pursuant to Options granted under this Plan
(the "Maximum Number") is 487,500 Shares, subject to adjustment as provided in this Plan. If any Option is terminated for any reason without being
exercised in whole or in part, the Shares thereby released from such Option shall be available for purchase under other Options subsequently granted under this Plan. At all times during the term of
this Plan, the Company shall reserve and keep
available such number of Shares as shall be required to satisfy the requirements of outstanding Options granted under this Plan; provided, however that if the aggregate number of Shares subject to
outstanding Options granted under this Plan plus the aggregate number of Shares previously issued by the Company pursuant to the exercise of Options granted under this Plan equals or exceeds the
Maximum Number, then notwithstanding anything herein to the contrary, no further Options may be granted under this Plan until the Maximum Number is increased or the aggregate number of Shares subject
to outstanding Options granted under this Plan plus the aggregate number of Shares previously issued by the Company pursuant to the exercise of Options granted under this Plan is less than the Maximum
Number. 

        5.    Administration.  This Plan shall be administered by the Board or by a committee of not less than two members
of the Board appointed to administer this Plan (the "Committee"). As used in this Plan, references to the Committee shall mean either such Committee or
the Board if no Committee has been established. The interpretation by the Committee of any of the provisions of this Plan or any Option granted under this Plan shall be final and binding upon the
Company and all persons having an interest in any Option or any Shares purchased pursuant to an Option. 

        6.    Eligibility and Award Formula. 

        6.1    Eligibility.  Options shall be granted only to directors of the Company who are not employees of the Company
or any Parent, Subsidiary or Affiliate of the Company, as those terms are defined in Section 18 below or, if any such director is a representative of an entity that is a shareholder of the
Company and such director so requests, to such entity (each such person 

 

referred to as an "Optionee" provided that if an option is granted to an entity rather than an individual director, "Optionee" shall mean either such
entity or such individual director as is appropriate in the context). 

        6.2    Initial Grant.  Each Optionee who on or after the Effective Date is or becomes a member of the Board will
automatically be granted an Option for 15,000 Shares (an "Initial Grant") on the later of the Effective Date and the date such Optionee first becomes a
member of the Board. 

        6.3    Succeeding Grants.  On each annual anniversary of an Optionee's Initial Grant, provided the Optionee is a
member of the Board on such anniversary date and has served continuously as a member of the Board since the date of such Optionee's Initial Grant, the Optionee will automatically be granted an Option
for 15,000 Shares (a "Succeeding Grant"). 

        7.    Terms and Conditions of Options.  Subject to the following and to Section 6 above: 

        7.1    Form of Option Grant.  Each Option granted under this Plan shall be evidenced by a written Stock Option Grant
("Grant") in such form (which need not be the same for each Optionee) as the Committee shall from time to time approve, which Grant shall comply with
and be subject to the terms and conditions of this Plan. 

        7.2    Vesting.  The date an Optionee receives an Initial Grant or a Succeeding Grant is referred to in this Plan as
the "Start Date" for such Option. 

        (a)    Initial Grants.  Each Initial Grant will vest as to two and seventy-seven one-hundredths percent
(2.77%) of the Shares on the last day of each month following the Start Date for such Initial Grant, so long as the Optionee continuously remains a director or a consultant of the Company. 

        (b)    Succeeding Grants.  Each Succeeding Grant will vest as to two and seventy-seven one-hundredths
percent (2.77%) of the Shares on the last day of each month following the Start Date for such Succeeding Grant, so long as the Optionee continuously remains a director or a consultant of the Company. 

        7.3    Exercise Price.  The exercise price of an Option shall be the Fair Market Value (as defined in
Section 18.4) of the Shares, at the time that the Option is granted. 

        7.4    Termination of Option.  Except as provided below in this Section, each Option shall expire ten
(10) years after its Start Date (the "Expiration Date"). The Option shall cease to vest when the Optionee ceases to be a member of the Board or,
as determined by the Board in the Initial Grant or the Succeeding Grant, a consultant of the Company. The date on which the Optionee ceases to be a member of the Board or a consultant of the Company
shall be referred to as the "Termination Date". An Option may be exercised after the Termination Date only as set forth below: 

        (a)    Termination Generally.  If the Optionee ceases to be a member of the Board or a consultant of the Company for
any reason except death of the Optionee or disability of the Optionee (whether temporary or permanent, partial or total, as determined by the Committee), then each Option then held by such Optionee,
to the extent (and only to the extent) that it would have been exercisable by the Optionee on the Termination Date, may be exercised by the Optionee no later than seven (7) months after the
Termination Date, but in no event later than the Expiration Date. 

        (b)    Death or Disability.  If the Optionee ceases to be a member of the Board or a consultant of the Company
because of the death of the Optionee or the disability of the Optionee (whether temporary or permanent, partial or total, as determined by the Committee), then each Option then held by such
Optionee to the extent (and only to the extent) that it would have been exercisable by the Optionee on the Termination Date, may be exercised by the Optionee (or the Optionee's legal representative)
no later than twelve (12) months after the Termination Date, but in no event later than the Expiration Date. 

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        8.    Exercise of Options. 

        8.1    Exercise Period.  Subject to the provisions of Section 8.5 below, Options shall be exercisable as they
vest. 

        8.2    Notice.  Options may be exercised only by delivery to the Company of an exercise agreement in a form approved
by the Committee stating the number of Shares being purchased, the restrictions imposed on the Shares and such representations and agreements regarding the Optionee's investment intent and access to
information as may be required 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. 

        8.3    Payment.  Payment for the Shares purchased upon exercise of an Option may be made (a) in cash or by
check; (b) by surrender of shares of Common Stock of the Company that have been owned by the Optionee for more than six (6) months (and which 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 were obtained by the Optionee in the open
public market, having a Fair Market Value equal to the exercise price of the Option; (c) by waiver of compensation due or accrued to the Optionee for services rendered; (d) provided that
a public market for the Company's stock exists, through a "same day sale" commitment from the Optionee and a broker-dealer that is a member of the National Association of Securities Dealers (an
"NASD Dealer") whereby the Optionee 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; (e) provided that a public market for the Company's
stock exists, through a "margin" commitment from the Optionee and an NASD Dealer whereby the Optionee 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. 

        8.4    Withholding Taxes.  Prior to issuance of the Shares upon exercise of an Option, the Optionee shall pay or
make adequate provision for any federal or state withholding obligations of the Company, if applicable. 

        8.5    Limitations on Exercise.  Notwithstanding the exercise periods set forth in the Grant, exercise of an Option
shall always be subject to the following limitations: 

        (a)    An
Option shall not be exercisable unless such exercise is in compliance with the Securities Act and all applicable state securities laws, as they are in effect on the
date of exercise. 

        (b)    The
Committee may specify a reasonable minimum number of Shares that may be purchased upon any exercise of an Option, provided that such minimum number will not prevent
the Optionee from exercising the full number of Shares as to which the Option is then exercisable. 

        9.    Nontransferability of Options.  During the lifetime of the Optionee, an Option shall be exercisable only by
the Optionee or by the Optionee's guardian or legal representative, unless otherwise determined by the Committee. No Option may be sold, pledged, assigned, hypothecated, transferred or disposed of in
any manner other than by will or by the laws of descent and distribution, unless otherwise determined by the Committee. 

        10.    Privileges of Stock Ownership.  No Optionee shall have any of the rights of a stockholder with respect to any
Shares subject to an Option until the Option has been validly exercised. No adjustment shall be made for dividends or distributions or other rights for which the record date is 

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prior to the date of exercise, except as provided in this Plan. The Company shall provide to each Optionee a copy of the annual financial statements of the Company at such time after the close of
each fiscal year of the Company as they are released by the Company to its stockholders. 

        11.    Adjustment of Option Shares.  In the event that the number of outstanding shares of Common Stock of the
Company is changed by a stock dividend, stock split, reverse stock split, combination, reclassification or similar change in the capital structure of the Company without consideration, the number of
Shares available under this Plan and the number of Shares subject to outstanding Options and the exercise price per share of such outstanding Options shall be proportionately adjusted, subject to any
required action by the Board or stockholders of the Company and compliance with applicable securities laws; provided, however, that no fractional shares shall be issued upon exercise of any Option and
any resulting fractions of a Share shall be rounded up to the nearest whole Share. 

        12.    No Right or Obligation to Continue as Director.  Nothing in this Plan or any Option granted under this Plan
shall confer on any Optionee any right or obligation to continue as a director of the Company. 

        13.    Compliance With Laws.  The grant of Options and the issuance of Shares upon exercise of any Options shall be
subject to and conditioned upon compliance with all applicable requirements of law, including without limitation compliance with the Securities Act, compliance with all other applicable state
securities laws and compliance with the requirements of any stock exchange or national market system on which the Shares may be listed. The Company shall be under no obligation to register the Shares
with the SEC or to effect compliance with the registration or qualification requirement of any state securities laws, stock exchange or national market system. 

        14.    Acceleration of Options on Certain Corporate Transactions.  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 Company or their relative stock holdings and the
Options granted under this Plan are assumed, converted or replaced by the successor corporation, which assumption, conversion or replacement will be binding on all Optionees), (c) a merger in
which the Company is the surviving corporation but after which the stockholders of the Company (other than any stockholder which merges (or which owns or controls another corporation which merges)
with the Company in such merger) cease to own their shares or other equity interests 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, the vesting of all options granted pursuant to this Plan will accelerate
and the options will become exercisable in full prior to the consummation of such event at such times and on such conditions as the Committee determines, and must be exercised, if at all, within six
months of the consummation of said event. Any options not exercised within such six-month period shall expire. 

        15.    Amendment or Termination of Plan.  The Board may at any time terminate or amend this Plan or any outstanding
option, provided that the Board may not terminate or amend the terms of any outstanding option without the consent of the Optionee. In any case, no amendment of this Plan may adversely affect any then
outstanding Options or any unexercised portions thereof without the written consent of the Optionee. 

        16.    Term of Plan.  Options may be granted pursuant to this Plan from time to time within a period of ten
(10) years from the Effective Date. 

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        17.    Certain Definitions.  As used in this Plan, the following terms shall have the following meanings: 

        17.1    "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. 

        17.2    "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. 

        17.3    "Affiliate" means any corporation that directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, another corporation, where "control" (including the terms "controlled by" and "under common control with") means the possession, direct or indirect, of
the power to cause the direction of the management and policies of the corporation, whether through the ownership of voting securities, by contract or otherwise. 

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

        (d)    in
the case of an Option granted 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 

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

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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,and May 30, 2001 

        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 6,000,000 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 

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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
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; provided, however, that any single Award of more than 20,000
shares to any individual shall require the approval of the entire Board;

	(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 

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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. 

        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 

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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 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 

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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: 

        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 

5

 

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 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; 

6

 

	(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. 

        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. 

7

 

        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. 

        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. 

8

 

        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 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 

9

 

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 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. 

10

 

        "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 closing
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; 

11

 

	(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. 

        "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

QuickLinks

Exhibit 10.04

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