Run the iLok Manager to update
 
Updating to version 4.0.0 is not a required update; however, some iLok-protected software may require that you use a version of 2.5.0 or greater. Please download the latest version from the iLok License Manager page of ilok.com.
New in Version 4.0.0:

• iLok Cloud Support - This feature requires publishers to incorporate cloud support and release updated software and licenses
• New sorting for Locations (Cloud, computer, iLoks)
• Publisher License ID field available in the column view and License Details
• New firmware for Second and Third generation iLoks (synchronize to update the firmware)
• Release Date Limit (RDL) supported in licenses
• Fixed crash if you select some View menu options when you are not signed in
• Fixed crash if multiple surrender update deliveries as well as some licenses are selected and activated 

The reboot after updating took 10 minutes at least. It looked like it was doing a full hard drive scan.
 
I don't use the dongle. If an app doesn't support authorizing to my PC, then I don't buy it (learned that lesson with the Slate Digital stuff). That said, I figured I'd plug mine in and see what the firmware update looked like.
 
I had the updated iLok License Manager open when I plugged my iLok2 in. I saw a very brief message flash in the little window under your iLok account name that looked like an update message. Took 1-2 seconds. Unplugged it and put it back in storage.

My reboot didn't do a full scan, so there may have been another factor there.  I left my iLok 2 attached during the upgrade and reboot.  Everything seemed to go just fine (other than having to reboot of course).  EastWest Play, Soundtoys and AIR instruments and effects all seem fine in SONAR afterwards and the new iLok License Manager is only slightly different.  None of the licenses I have support the cloud option, so no idea how exactly that works just yet.  May be a while before that's clear.
 

Updated pretty uneventfully here, with ilock not running at the time.

Same here. In a jiffy. 

It was a little slow rebooting...but other than that,
smooth as silk.

Both machines on which I ran this update, restarted at the speed I would normally see.  One with the iLok in place, the other without it.  Restart was very quick.  

I had a bit of grief installing the license manager. I got stuck on "stopping services" citing insufficient permissions. I was running from an administrator account. next tried "run as administrator" - same issue. Finally I rebooted and it it installed without any issues. No slowness observed restarting after the install completed.
 
I could be that something was still active from using Softube modular earlier?