<PAGE>
                                                                   Exhibit 10.34


                        SANCTUARY WOODS MULTIMEDIA CORPORATION

                                   1996 STOCK PLAN

      (AMENDED TO REFLECT THE SHARE CONSOLIDATION EFFECTED ON APRIL 15, 1997)


     1.   PURPOSES OF THE PLAN.  The purposes of this Stock Plan are to 
attract and retain the best available personnel for positions of substantial 
responsibility, to provide additional incentive to Employees, Directors and 
Consultants to promote the success of the Company's business.  Options 
granted under the Plan may be Incentive Stock Options or Nonstatutory Stock 
Options, as determined by the Administrator at the time of grant.  Stock 
Purchase Rights may also be granted under the Plan.

     2.   DEFINITIONS.  As used herein, the following definitions shall apply:

          (a)  "ADMINISTRATOR" means the Board or any of its Committees as 
shall be administering the Plan in accordance with Section 4 hereof.

          (b)  "APPLICABLE LAWS" means the requirements relating to the 
administration of stock option plans under U.S. state corporate laws, U.S. 
federal and state securities laws, the Code, any stock exchange or quotation 
system on which the Common Stock is listed or quoted and the applicable laws 
of any other country or jurisdiction where Options or Stock Purchase Rights 
are granted under the Plan.

          (c)  "BOARD" means the Board of Directors of the Company.

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

          (e)  "COMMITTEE"  means a committee of Directors appointed by the 
Board in accordance with Section 4 hereof.

          (f)  "COMMON STOCK" means the Common Stock of the Company.

          (g)  "COMPANY" means Sanctuary Woods Multimedia Corporation, a 
corporation organized under the laws of Delaware.

          (h)  "CONSULTANT" means any person who is engaged by the Company or 
any Parent or Subsidiary to render consulting or advisory services to such 
entity.

          (i)  "DIRECTOR" means a member of the Board of Directors of the 
Company.

          (j)  "EMPLOYEE" means any person, including Officers and Directors, 
employed by the Company or any Parent or Subsidiary of the Company.  A 
Service Provider (defined below) shall not cease to be an Employee in the 
case of (i) any leave of absence approved by the Company or (ii) transfers 
between locations of the Company or between the Company, its Parent, any 
Subsidiary, or any successor.  



<PAGE>

For purposes of Incentive Stock Options, no such leave may exceed ninety 
days, unless reemployment upon expiration of such leave is guaranteed by 
statute or contract.  If reemployment upon expiration of a leave of absence 
approved by the Company is not so guaranteed, on the 181st day of such leave 
any Incentive Stock Option held by the Optionee shall cease to be treated as 
an Incentive Stock Option and shall be treated for tax purposes as a 
Nonstatutory Stock Option.  Neither service as a Director nor payment of a 
director's fee by the Company shall be sufficient to constitute "employment" 
by the Company.

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

          (l)  "FAIR MARKET VALUE" means, as of any date, the value of Common 
Stock determined as follows:

               (i)   If the Common Stock is listed on any established stock 
exchange or a national market system, including without limitation the Nasdaq 
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its 
Fair Market Value shall be the closing sales price for such stock (or the 
closing bid, if no sales were reported) as quoted on such exchange or system 
for the last market trading day prior to the time of determination, as 
reported in THE WALL STREET JOURNAL or such other source as the Administrator 
deems reliable;

               (ii)  If the Common Stock is regularly quoted by a recognized 
securities dealer but selling prices are not reported, its Fair Market Value 
shall be the mean between the high bid and low asked prices for the Common 
Stock on the last market trading day prior to the day of determination; or

               (iii) In the absence of an established market for the 
Common Stock, the Fair Market Value thereof shall be determined in good faith 
by the Administrator.

          (m)  "INCENTIVE STOCK OPTION" means an Option intended to qualify 
as an incentive stock option within the meaning of Section 422 of the Code.

          (n)  "NONSTATUTORY STOCK OPTION" means an Option not intended to 
qualify as an Incentive Stock Option.

          (o)  "OFFICER" means a person who is an officer of the Company 
within the meaning of Section 16 of the Exchange Act and the rules and 
regulations promulgated thereunder.

          (p)  "OPTION" means a stock option granted pursuant to the Plan.

          (q)  "OPTION AGREEMENT" means a written or electronic agreement 
between the Company and an Optionee evidencing the terms and conditions of an 
individual Option grant.  The Option Agreement is subject to the terms and 
conditions of the Plan.

          (r)  "OPTION EXCHANGE PROGRAM" means a program whereby outstanding 
Options are exchanged for Options with a lower exercise price.


                                       -2-

<PAGE>

          (s)  "OPTIONED STOCK" means the Common Stock subject to an Option 
or a Stock Purchase Right.

          (t)  "OPTIONEE" means the holder of an outstanding Option or Stock 
Purchase Right granted under the Plan.

          (u)  "PARENT" means a "parent corporation," whether now or 
hereafter existing, as defined in Section 424(e) of the Code.

          (v)  "PLAN" means this 1996 Stock Option Plan.

          (w)  "RESTRICTED STOCK" means shares of Common Stock acquired 
pursuant to a grant of a Stock Purchase Right under Section 11 below.

          (x)  "SECTION 16(b)" means Section 16(b) of the Securities Exchange 
Act of 1934, as amended.

          (y)  "SERVICE PROVIDER" means an Employee, Director or Consultant.

          (z)  "SHARE" means a share of the Common Stock, as adjusted in 
accordance with Section 12 below.

          (aa) "STOCK PURCHASE RIGHT" means a right to purchase Common Stock 
pursuant to Section 11 below.

          (bb) "SUBSIDIARY" means a "subsidiary corporation," whether now or 
hereafter existing, as defined in Section 424(f) of the Code.

     3.   STOCK SUBJECT TO THE PLAN.  Subject to the provisions of Section 12 
of the Plan, the maximum aggregate number of Shares which may be subject to 
option and sold under the Plan is 400,000 Shares.  The Shares may be 
authorized but unissued, or reacquired Common Stock.  

          If an Option or Stock Purchase Right expires or becomes 
unexercisable without having been exercised in full, or is surrendered 
pursuant to an Option Exchange Program, the unpurchased Shares which were 
subject thereto shall become available for future grant or sale under the 
Plan (unless the Plan has terminated).  However, Shares that have actually 
been issued under the Plan, upon exercise of either an Option or Stock 
Purchase Right, shall not be returned to the Plan and shall not become 
available for future distribution under the Plan, except that if Shares of 
Restricted Stock are repurchased by the Company at their original purchase 
price, such Shares shall become available for future grant under the Plan. 


                                       -3-

<PAGE>

     4.   ADMINISTRATION OF THE PLAN.

          (a)  The Plan shall be administered by the Board or a Committee 
appointed by the Board, which Committee shall be constituted to comply with 
Applicable Laws.

          (b)  POWERS OF THE ADMINISTRATOR.  Subject to the provisions of the 
Plan and, in the case of a Committee, the specific duties delegated by the 
Board to such Committee, and subject to the approval of any relevant 
authorities, the Administrator shall have the authority in its discretion:

               (i)    to determine the Fair Market Value;

               (ii)   to select the Service Providers to whom Options and 
Stock Purchase Rights may from time to time be granted hereunder;

               (iii)  to determine the number of Shares to be covered by each 
such award granted hereunder;

               (iv)   to approve forms of agreement for use under the Plan;

               (v)    to determine the terms and conditions of any Option or 
Stock Purchase Right granted hereunder.  Such terms and conditions include, 
but are not limited to, the exercise price, the time or times when Options or 
Stock Purchase Rights may be exercised (which may be based on performance 
criteria), any vesting acceleration or waiver of forfeiture restrictions, and 
any restriction or limitation regarding any Option or Stock Purchase Right or 
the Common Stock relating thereto, based in each case on such factors as the 
Administrator, in its sole discretion, shall determine;

               (vi)   to determine whether and under what circumstances an 
Option may be settled in cash under subsection 9(e) instead of Common Stock;

               (vii)  to reduce the exercise price of any Option to the then 
current Fair Market Value if the Fair Market Value of the Common Stock 
covered by such Option has declined since the date the Option was granted; 

               (viii) to initiate an Option Exchange Program;

               (ix)   to prescribe, amend and rescind rules and regulations 
relating to the Plan, including rules and regulations relating to sub-plans 
established for the purpose of qualifying for preferred tax treatment under 
foreign tax laws;

               (x)    to allow Optionees to satisfy withholding tax 
obligations by electing to have the Company withhold from the Shares to be 
issued upon exercise of an Option or Stock Purchase Right that number of 
Shares having a Fair Market Value equal to the amount required to be 
withheld.  The Fair Market Value of the Shares to be withheld shall be 
determined on the date that the amount of tax to be withheld is to be 
determined.  All elections by Optionees to have Shares withheld for this 
purpose shall 

                                       -4-

<PAGE>

be made in such form and under such conditions as the Administrator may deem 
necessary or advisable; and

               (xi)   to construe and interpret the terms of the Plan and 
awards granted pursuant to the Plan.

          (c)  EFFECT OF ADMINISTRATOR'S DECISION.  All decisions, 
determinations and interpretations of the Administrator shall be final and 
binding on all Optionees.

     5.   ELIGIBILITY.

          (a)  Nonstatutory Stock Options and Stock Purchase Rights may be 
granted to Service Providers.  Incentive Stock Options may be granted only to 
Employees.

          (b)  Each Option shall be designated in the Option Agreement as 
either an Incentive Stock Option or a Nonstatutory Stock Option.  However, 
notwithstanding such designation, to the extent that the aggregate Fair 
Market Value of the Shares with respect to which Incentive Stock Options are 
exercisable for the first time by the Optionee during any calendar year 
(under all plans of the Company and any Parent or Subsidiary) exceeds 
$100,000, such Options shall be treated as Nonstatutory Stock Options.  For 
purposes of this Section 5(b), Incentive Stock Options shall be taken into 
account in the order in which they were granted.  The Fair Market Value of 
the Shares shall be determined as of the time the Option with respect to such 
Shares is granted.

          (c)  Neither the Plan nor any Option or Stock Purchase Right shall 
confer upon any Optionee any right with respect to continuing the Optionee's 
relationship as a Service Provider with the Company, nor shall it interfere 
in any way with his or her right or the Company's right to terminate such 
relationship at any time, with or without cause.

     6.   TERM OF PLAN.  The Plan shall become effective upon its adoption by 
the Board.  It shall continue in effect for a term of ten (10) years unless 
sooner terminated under Section 14 of the Plan.

     7.   TERM OF OPTION.  The term of each Option shall be stated in the 
Option Agreement; provided, however, that the term shall be no more than ten 
(10) years from the date of grant thereof.  In the case of an Incentive Stock 
Option granted to an Optionee who, at the time the Option is granted, owns 
stock representing more than ten percent (10%) of the voting power of all 
classes of stock of the Company or any Parent or Subsidiary, the term of the 
Option shall be five (5) years from the date of grant or such shorter term as 
may be provided in the Option Agreement.

     8.   OPTION EXERCISE PRICE AND CONSIDERATION.

          (a)  The per share exercise price for the Shares to be issued upon 
exercise of an Option shall be such price as is determined by the 
Administrator, but shall be subject to the following:

               (i)   In the case of an Incentive Stock Option:


                                       -5-

<PAGE>

                    (A)  granted to an Employee who, at the time of grant of 
such Option, owns stock representing more than ten percent (10%) of the 
voting power of all classes of stock of the Company or any Parent or 
Subsidiary, the exercise price shall be no less than 110% of the Fair Market 
Value per Share on the date of grant.

                    (B)  granted to any other Employee, the per Share 
exercise price shall be no less than 100% of the Fair Market Value per Share 
on the date of grant.

               (ii)  In the case of a Nonstatutory Stock Option:

                    (A)  granted to a Service Provider who, at the time of 
grant of such Option, owns stock representing more than ten percent (10%) of 
the voting power of all classes of stock of the Company or any Parent or 
Subsidiary, the exercise price shall be no less than 110% of the Fair Market 
Value per Share on the date of the grant.

                    (B)  granted to any other Service Provider, the per Share 
exercise price shall be no less than 85% of the Fair Market Value per Share 
on the date of grant.

               (iii) Notwithstanding the foregoing, Options may be granted 
with a per Share exercise price other than as required above pursuant to a 
merger or other corporate transaction.

          (b)  The consideration to be paid for the Shares to be issued upon 
exercise of an Option, including the method of payment, shall be determined 
by the Administrator (and, in the case of an Incentive Stock Option, shall be 
determined at the time of grant).  Such consideration  may consist of (1) 
cash, (2) check, (3) promissory note, (4) other Shares which (x) in the case 
of Shares acquired upon exercise of an Option, have been owned by the 
Optionee for more than six months on the date of surrender, and (y) have a 
Fair Market Value on the date of surrender equal to the aggregate exercise 
price of the Shares as to which such Option shall be exercised, (5) 
consideration received by the Company under a cashless exercise program 
implemented by the Company in connection with the Plan, or (6) any 
combination of the foregoing methods of payment.  In making its determination 
as to the type of consideration to accept, the Administrator shall consider 
if acceptance of such consideration may be reasonably expected to benefit the 
Company.

     9.   EXERCISE OF OPTION.

          (a)  PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option 
granted hereunder shall be exercisable according to the terms hereof at such 
times and under such conditions as determined by the Administrator and set 
forth in the Option Agreement, but in no case at a rate of less than 20% per 
year over five (5) years from the date the Option is granted.  Unless the 
Administrator provides otherwise, vesting of Options granted hereunder shall 
be suspended during any unpaid leave of absence.  An Option may not be 
exercised for a fraction of a Share.

               An Option shall be deemed exercised when the Company receives: 
(i) written or electronic notice of exercise (in accordance with the Option 
Agreement) from the person entitled to 


                                       -6-

<PAGE>

exercise the Option, and (ii) full payment for the Shares with respect to 
which the Option is exercised plus any amount required to be withheld by the 
Company for income or employment tax purposes in connection with such option 
exercise.  Full payment may consist of any consideration and method of 
payment authorized by the Administrator and permitted by the Option Agreement 
and the Plan.  Shares issued upon exercise of an Option shall be issued in 
the name of the Optionee or, if requested by the Optionee, in the name of the 
Optionee and his or her spouse or a trust for his, her or their benefit.  
Until the Shares are issued (as evidenced by the appropriate entry on the 
books of the Company or of a duly authorized transfer agent of the Company), 
no right to vote or receive dividends or any other rights as a shareholder 
shall exist with respect to the Shares, notwithstanding the exercise of the 
Option.  The Company shall issue (or cause to be issued) such Shares promptly 
after the Option is exercised.  No adjustment will be made for a dividend or 
other right for which the record date is prior to the date the Shares are 
issued, except as provided in Section 12 of the Plan.

               Exercise of an Option in any manner shall result in a decrease 
in the number of Shares thereafter available, both for purposes of the Plan 
and for sale under the Option, by the number of Shares as to which the Option 
is exercised.

          (b)  TERMINATION OF RELATIONSHIP AS A SERVICE PROVIDER.  If an 
Optionee ceases to be a Service Provider, such Optionee may exercise his or 
her Option within thirty (30) days after the date of such termination or such 
longer period of time as is specified in the Option Agreement to the extent 
that the Option is vested on the date of termination (but in no event later 
than the expiration of the term of the Option as set forth in the Option 
Agreement).  In the absence of a specified time in the Option Agreement, the 
Option shall remain exercisable for one (1) month following the Optionee's 
termination.  If, on the date of termination, the Optionee is not vested as 
to his or her entire Option, the Shares covered by the unvested portion of 
the Option shall revert to the Plan.  If, after termination, the Optionee 
does not exercise his or her Option within the time specified by the 
Administrator, the Option shall terminate, and the Shares covered by such 
Option shall revert to the Plan.

          (c)  DEATH OR DISABILITY OF OPTIONEE.  If an Optionee ceases to be 
a Service Provider as a result of the Optionee's Death or Disability, the 
Optionee may exercise his or her Option within such period of time as is 
specified in the Option Agreement to the extent the Option is vested on the 
date of termination (but in no event later than the expiration of the term of 
such Option as set forth in the Option Agreement).  In the absence of a 
specified time in the Option Agreement, the Option shall remain exercisable 
for twelve (12) months following the Optionee's termination.  If such 
disability is not a "disability" as such term is defined in Section 22(e)(3) 
of the Code, in the case of an Incentive Stock Option such Incentive Stock 
Option shall automatically cease to be treated as an Incentive Stock Option 
and shall be treated for tax purposes as a Nonstatutory Stock Option on the 
day three months and one day following such termination.  If, on the date of 
termination, the Optionee is not vested as to his or her entire Option, the 
Shares covered by the unvested portion of the Option shall revert to the 
Plan.  If, after termination, the Option is not exercised within the time 
specified herein, the Option shall terminate, and the Shares covered by such 
Option shall revert to the Plan.  In the event of an Optionee's death while a 
Service Provider or during the exercise period provided in the event of an 
Optionee's Disability or Retirement, the Option may be exercised by the 
Optionee's estate or by a person who acquires the right to exercise the 
Option by bequest or inheritance; the Option may be exercised by the executor 
or 


                                       -7-

<PAGE>

administrator of the Optionee's estate or, if none, by the person(s) entitled 
to exercise the Option under the Optionee's will or the laws of descent or 
distribution. 

          (d)  BUYOUT PROVISIONS.  The Administrator may at any time offer to 
buy out for a payment in cash or Shares, an Option previously granted, based 
on such terms and conditions as the Administrator shall establish and 
communicate to the Optionee at the time that such offer is made.

     10.  NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS.  Options 
and Stock Purchase Rights may not be sold, pledged, assigned, hypothecated, 
transferred, or disposed of in any manner other than by will or by the laws 
of descent or distribution and may be exercised, during the lifetime of the 
Optionee, only by the Optionee. 

     11.  STOCK PURCHASE RIGHTS.

          (a)  RIGHTS TO PURCHASE.  Stock Purchase Rights may be issued 
either alone, in addition to, or in tandem with other awards granted under 
the Plan and/or cash awards made outside of the Plan.  After the 
Administrator determines that it will offer Stock Purchase Rights under the 
Plan, it shall advise the offeree in writing or electronically of the terms, 
conditions and restrictions related to the offer, including the number of 
Shares that such person shall be entitled to purchase, the price to be paid, 
and the time within which such person must accept such offer.  The terms of 
the offer shall comply in all respects with Section 260.140.42 of Title 10 of 
the California Code of Regulations.  The offer shall be accepted by execution 
of a Restricted Stock purchase agreement in the form determined by the 
Administrator. 

          (b)  REPURCHASE OPTION.  Unless the Administrator determines 
otherwise, the Restricted Stock purchase agreement shall grant the Company a 
repurchase option exercisable upon the voluntary or involuntary termination 
of the purchaser's service with the Company for any reason (including death 
or disability).  The purchase price for Shares repurchased pursuant to the 
Restricted Stock purchase agreement shall be the original price paid by the 
purchaser and may be paid by cancellation of any indebtedness of the 
purchaser to the Company.  The repurchase option shall lapse at such rate as 
the Administrator may determine, but in no case at a rate of less than 20% 
per year over five years from the date of purchase.

          (c)  OTHER PROVISIONS.  The Restricted Stock purchase agreement 
shall contain such other terms, provisions and conditions not inconsistent 
with the Plan as may be determined by the Administrator in its sole 
discretion. 

          (d)  RIGHTS AS A SHAREHOLDER.  Once the Stock Purchase Right is 
exercised, the purchaser shall have rights equivalent to those of a 
shareholder and shall be a shareholder when his or her purchase is entered 
upon the records of the duly authorized transfer agent of the Company.  No 
adjustment shall be made for a dividend or other right for which the record 
date is prior to the date the Stock Purchase Right is exercised, except as 
provided in Section 12 of the Plan.


                                       -8-

<PAGE>

     12.  ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR ASSET SALE.

          (a)  CHANGES IN CAPITALIZATION.  Subject to any required action by 
the shareholders of the Company, the number of shares of Common Stock covered 
by each outstanding Option or Stock Purchase Right, and the number of shares 
of Common Stock which have been authorized for issuance under the Plan but as 
to which no Options or Stock Purchase Rights have yet been granted or which 
have been returned to the Plan upon cancellation or expiration of an Option 
or Stock Purchase Right, as well as the price per share of Common Stock 
covered by each such outstanding Option or Stock Purchase Right, shall be 
proportionately adjusted for any increase or decrease in the number of issued 
shares of Common Stock resulting from a stock split, reverse stock split, 
stock dividend, combination or reclassification of the Common Stock, or any 
other increase or decrease in the number of issued shares of Common Stock 
effected without receipt of consideration by the Company.  The conversion of 
any convertible securities of the Company shall not be deemed to have been 
"effected without receipt of consideration."  Such adjustment shall be made 
by the Administrator, whose determination in that respect shall be final, 
binding and conclusive.  Except as expressly provided herein, no issuance by 
the Company of shares of stock of any class, or securities convertible into 
shares of stock of any class, shall affect, and no adjustment by reason 
thereof shall be made with respect to, the number or price of shares of 
Common Stock subject to an Option or Stock Purchase Right.

          (b)  DISSOLUTION OR LIQUIDATION.  In the event of the proposed 
dissolution or liquidation of the Company, the Administrator shall notify 
each Optionee as soon as practicable prior to the effective date of such 
proposed transaction.  The Administrator in its discretion may provide for an 
Optionee to have the right to exercise his or her Option until fifteen (15) 
days prior to such transaction as to all of the Optioned Stock covered 
thereby, including Shares as to which the Option would not otherwise be 
exercisable.  In addition, the Administrator may provide that any Company 
repurchase option applicable to any Shares purchased upon exercise of an 
Option or Stock Purchase Right shall lapse as to all such Shares, provided 
the proposed dissolution or liquidation takes place at the time and in the 
manner contemplated.  To the extent it has not been previously exercised, an 
Option or Stock Purchase Right will terminate immediately prior to the 
consummation of such proposed action.

          (c)  MERGER OR ASSET SALE.  In the event of a merger of the Company 
with or into another corporation, or the sale of substantially all of the 
assets of the Company, each outstanding Option and Stock Purchase Right shall 
be assumed or an equivalent option or right substituted by the successor 
corporation or a Parent or Subsidiary of the successor corporation.  In the 
event that the successor corporation refuses to assume or substitute for the 
Option or Stock Purchase Right, the Optionee shall fully vest in and have the 
right to exercise the Option or Stock Purchase Right as to all of the 
Optioned Stock, including Shares as to which it would not otherwise be vested 
or exercisable.  If an Option or Stock Purchase Right becomes fully vested 
and exercisable in lieu of assumption or substitution in the event of a 
merger or sale of assets, the Administrator shall notify the Optionee in 
writing or electronically that the Option or Stock Purchase Right shall be 
fully exercisable for a period of fifteen (15) days from the date of such 
notice, and the Option or Stock Purchase Right shall terminate upon the 
expiration of such period.  For the purposes of this paragraph, the Option or 
Stock Purchase Right shall be considered assumed if, following the merger or 
sale of assets, the option or right confers the right to 


                                       -9-

<PAGE>

purchase or receive, for each Share of Optioned Stock subject to the Option 
or Stock Purchase Right immediately prior to the merger or sale of assets, 
the consideration (whether stock, cash, or other securities or property) 
received in the merger or sale of assets by holders of Common Stock for each 
Share held on the effective date of the transaction (and if holders were 
offered a choice of consideration, the type of consideration chosen by the 
holders of a majority of the outstanding Shares); provided, however, that if 
such consideration received in the merger or sale of assets is not solely 
common stock of the successor corporation or its Parent, the Administrator 
may, with the consent of the successor corporation, provide for the 
consideration to be received upon the exercise of the Option or Stock 
Purchase Right, for each Share of Optioned Stock subject to the Option or 
Stock Purchase Right, to be solely common stock of the successor corporation 
or its Parent equal in fair market value to the per share consideration 
received by holders of Common Stock in the merger or sale of assets.

     13.  TIME OF GRANTING OPTIONS AND STOCK PURCHASE RIGHTS.  The date of 
grant of an Option or Stock Purchase Right shall, for all purposes, be the 
date on which the Administrator makes the determination granting such Option 
or Stock Purchase Right, or such other date as is determined by the 
Administrator. Notice of the determination shall be given to each Employee or 
Consultant to whom an Option or Stock Purchase Right is so granted within a 
reasonable time after the date of such grant.

     14.  AMENDMENT AND TERMINATION OF THE PLAN.

          (a)  AMENDMENT AND TERMINATION.  The Board may at any time amend, 
alter, suspend or terminate the Plan.  

          (b)  SHAREHOLDER APPROVAL.  The Board shall obtain shareholder 
approval of any Plan amendment to the extent necessary and desirable to 
comply with Applicable Laws. 

          (c)  EFFECT OF AMENDMENT OR TERMINATION.  No amendment, alteration, 
suspension or termination of the Plan shall impair the rights of any 
Optionee, unless mutually agreed otherwise between the Optionee and the 
Administrator, which agreement must be in writing and signed by the Optionee 
and the Company. Termination of the Plan shall not affect the Administrator's 
ability to exercise the powers granted to it hereunder with respect to 
Options granted under the Plan prior to the date of such termination.

     15.  CONDITIONS UPON ISSUANCE OF SHARES.  

          (a)  LEGAL COMPLIANCE.  Shares shall not be issued pursuant to the 
exercise of an Option  or Stock Purchase Right unless the exercise of such 
Option or Stock Purchase Right and the issuance and delivery of such Shares 
shall comply with Applicable Laws and shall be further subject to the 
approval of counsel for the Company with respect to such compliance.

          (b)  INVESTMENT REPRESENTATIONS.  As a condition to the exercise of 
an Option or Stock Purchase Right, the Administrator may require the person 
exercising such Option or Stock Purchase Right to represent and warrant at 
the time of any such exercise that the Shares are being purchased only 


                                       -10-

<PAGE>

for investment and without any present intention to sell or distribute such 
Shares if, in the opinion of counsel for the Company, such a representation 
is required.

     16.  INABILITY TO OBTAIN AUTHORITY.  The inability of the Company to 
obtain authority from any regulatory body having jurisdiction, which 
authority is deemed by the Company's counsel to be necessary to the lawful 
issuance and sale of any Shares hereunder, shall relieve the Company of any 
liability in respect of the failure to issue or sell such Shares as to which 
such requisite authority shall not have been obtained.

     17.  RESERVATION OF SHARES.  The Company, during the term of this Plan, 
shall at all times reserve and keep available such number of Shares as shall 
be sufficient to satisfy the requirements of the Plan.

     18.  SHAREHOLDER APPROVAL.  The Plan shall be subject to approval by the 
shareholders of the Company within twelve (12) months after the date the Plan 
is adopted.  Such shareholder approval shall be obtained in the degree and 
manner required under Applicable Laws.

     19.  INFORMATION TO OPTIONEES AND PURCHASERS.  The Company shall provide 
to each Optionee or holder of Stock Purchase Rights and to each individual 
who acquires Shares pursuant to the Plan, not less frequently than annually 
during the period such Optionee or purchaser or holder of Stock Purchase 
Rights has one or more Options or Stock Purchase Rights outstanding, and, in 
the case of an individual who acquires Shares pursuant to the Plan, during 
the period such individual owns such Shares, copies of annual financial 
statements.  The Company shall not be required to provide such statements to 
key employees whose duties in connection with the Company assure their access 
to equivalent information.


                                       -11

<PAGE>

                                  1996 STOCK PLAN

                              STOCK OPTION AGREEMENT


     Unless otherwise defined herein, the terms defined in the Plan shall 
have the same defined meanings in this Option Agreement.

I. NOTICE OF STOCK OPTION GRANT





     The undersigned Optionee has been granted an Option to purchase Common 
Stock of the Company, subject to the terms and conditions of the Plan and 
this Option Agreement, as follows:

     Date of Grant                      

     Vesting Commencement Date          

     Exercise Price per Share                $0.09

     Total Number of Shares Granted          

     Total Exercise Price                    $

     Type of Option:                         X    Incentive Stock Option

                                             ___  Nonstatutory Stock Option

     Term/Expiration Date:              


     VESTING SCHEDULE:

     This Option shall be exercisable, in whole or in part, according to the 
following vesting schedule:


                                       -1-

<PAGE>

     TERMINATION PERIOD:

     This Option shall be exercisable for [___________] months after Optionee 
ceases to be a Service Provider.  Upon Optionee's death or disability, this 
Option may be exercised for such longer period as provided in the Plan.  In 
no event may Optionee exercise this Option after the Term/Expiration Date as 
provided above.

II.  AGREEMENT

     1.   GRANT OF OPTION.  The Plan Administrator of the Company hereby 
grants to the Optionee named in the Notice of Grant (the "Optionee"), an 
option (the "Option") to purchase the number of Shares set forth in the 
Notice of Grant, at the exercise price per Share set forth in the Notice of 
Grant (the "Exercise Price"), and subject to the terms and conditions of the 
Plan, which is incorporated herein by reference.  Subject to Section 14(c) of 
the Plan, in the event of a conflict between the terms and conditions of the 
Plan and this Option Agreement, the terms and conditions of the Plan shall 
prevail.

          If designated in the Notice of Grant as an Incentive Stock Option 
("ISO"), this Option is intended to qualify as an Incentive Stock Option as 
defined in Section 422 of the Code.  Nevertheless, to the extent that it 
exceeds the $100,000 rule of Code Section 422(d), this Option shall be 
treated as a Nonstatutory Stock Option ("NSO").

     2.   EXERCISE OF OPTION.  

          a.   RIGHT TO EXERCISE.  This Option shall be exercisable during 
its term in accordance with the Vesting Schedule set out in the Notice of 
Grant and with the applicable provisions of the Plan and this Option 
Agreement.

          b.   METHOD OF EXERCISE.  This Option shall be exercisable by 
delivery of an exercise notice in the form attached as Exhibit A (the 
"Exercise Notice") which shall state the election to exercise the Option, the 
number of Shares with respect to which the Option is being exercised, and 
such other representations and agreements as may be required by the Company. 
The Exercise Notice shall be accompanied by payment of the aggregate Exercise 
Price as to all Exercised Shares and the amount of any amount required to be 
withheld by the Company for income or employment tax purposes.  This Option 
shall be deemed to be exercised upon receipt by the Company of such fully 
executed Exercise Notice accompanied by the aggregate Exercise Price and the 
amount of any required withholding.

          No Shares shall be issued pursuant to the exercise of an Option 
unless such issuance and such exercise complies with Applicable laws.  
Assuming such compliance, for income tax purposes the Shares shall be 
considered transferred to the Optionee on the date on which the Option is 
exercised with respect to such Shares.

     3.   OPTIONEE'S REPRESENTATIONS.  In the event the Shares have not been 
registered under the Securities Act of 1933, as amended, at the time this 
Option is exercised, the Optionee shall, if required 


                                       -2-

<PAGE>

by the Company, concurrently with the exercise of all or any portion of this 
Option, deliver to the Company his or her Investment Representation Statement 
in the form attached hereto as Exhibit B, and shall read the applicable rules 
of the Commissioner of Corporations attached to such Investment 
Representation Statement.

     4.   METHOD OF PAYMENT.  Payment of the aggregate Exercise Price shall 
be by any of the following, or a combination thereof, at the election of the 
Optionee:

          a.   cash or check;      

          b.   consideration received by the Company under a formal cashless 
exercise program adopted by the Company in connection with the Plan; or 

          c.   surrender of other Shares which, (i) in the case of Shares 
acquired upon exercise of an option, have been owned by the Optionee for more 
than six (6) months on the date of surrender, and (ii) have a Fair Market 
Value on the date of surrender equal to the aggregate Exercise Price of the 
Exercised Shares.

     5.   RESTRICTIONS ON EXERCISE.  This Option may not be exercised until 
such time as the Plan has been approved by the shareholders of the Company, 
or if the issuance of such Shares upon such exercise or the method of payment 
of consideration for such shares would constitute a violation of any 
Applicable Law.  

     6.   NON-TRANSFERABILITY OF OPTION.  This Option may not be transferred 
in any manner otherwise than by will or by the laws of descent or 
distribution and may be exercised during the lifetime of Optionee only by 
Optionee.  The terms of the Plan and this Option Agreement shall be binding 
upon the executors, administrators, heirs, successors and assigns of the 
Optionee.

     7.   TERM OF OPTION.  This Option may be exercised only within the term 
set out in the Notice of Grant, and may be exercised during such term only in 
accordance with the Plan and the terms of this Option.

     8.   TAX CONSEQUENCES.  Set forth below is a brief summary as of the 
date of this Option of some of the United States federal tax consequences of 
exercise of this Option and disposition of the Shares.  THIS SUMMARY IS 
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO 
CHANGE.  THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS 
OPTION OR DISPOSING OF THE SHARES.

          a.   EXERCISE OF ISO.  If this Option qualifies as an ISO, there 
will be no ordinary federal income tax liability upon the exercise of the 
Option, although the excess, if any, of the Fair Market Value of the Shares 
on the date of exercise over the Exercise Price will be treated as an 
adjustment to the alternative minimum tax for federal tax purposes and may 
subject the Optionee to the alternative minimum tax in the year of exercise.


                                       -3-

<PAGE>

          b.   EXERCISE OF ISO FOLLOWING DISABILITY.  If the Optionee ceases 
to be an Employee as a result of a disability that is not a total and 
permanent disability as defined in Section 22(e)(3) of the Code, to the 
extent permitted on the date of termination, the Optionee must exercise an 
ISO within three months of such termination for the ISO to remain qualified 
as an ISO.  

          c.   EXERCISE OF NONSTATUTORY STOCK OPTION.  There may be an 
ordinary federal income tax liability upon the exercise of a Nonstatutory 
Stock Option. The Optionee will be treated as having received compensation 
income (taxable at ordinary income tax rates) equal to the excess, if any, of 
the Fair Market Value of the Shares on the date of exercise over the Exercise 
Price.  If Optionee is an Employee or a former Employee, the Company will be 
required to withhold from Optionee's compensation or collect from Optionee 
and pay to the applicable taxing authorities an amount in cash equal to a 
percentage of this compensation income at the time of exercise, and may 
refuse to honor the exercise and refuse to deliver Shares if such withholding 
amounts are not delivered by the Optionee at the time of exercise.

          d.   DISPOSITION OF SHARES.  In the case of an NSO, if Shares are 
held for at least one year, any gain realized on disposition of the Shares 
will be treated as long-term capital gain for federal income tax purposes.  
In the case of an ISO, if Shares transferred pursuant to the Option are held 
for at least one year after exercise and at least two years after the Date of 
Grant, any gain realized on disposition of the Shares will also be treated as 
long-term capital gain for federal income tax purposes.  If Shares purchased 
under an ISO are disposed of within one year after exercise or two years 
after the Date of Grant, any gain realized on such disposition will be 
treated as compensation income (taxable at ordinary income rates) to the 
extent of the difference between the Exercise Price and the lesser of (1) the 
Fair Market Value of the Shares on the date of exercise, or (2) the sale 
price of the Shares.  Any additional gain will be taxed as capital gain, 
short-term or long-term depending on the period that the ISO Shares were held.

          e.   NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES.  If the 
Option granted to Optionee herein is an ISO, and if Optionee sells or 
otherwise disposes of any of the Shares acquired pursuant to the ISO on or 
before the later of (1) the date two years after the Date of Grant, or (2) 
the date one year after the date of exercise, the Optionee shall immediately 
notify the Company in writing of such disposition.  Optionee agrees that 
Optionee may be subject to income tax withholding by the Company on the 
compensation income recognized by the Optionee and agrees to pay the Company 
(as a condition to its permitting the transfer of Optionee's shares) the 
amount of income or employment tax required to be withheld by the Company 
immediately upon such disqualifying disposition.

     9.   ENTIRE AGREEMENT; GOVERNING LAW.  The Plan is incorporated herein 
by reference.  The Plan and this Option Agreement constitute the entire 
agreement of the parties with respect to the subject matter hereof and 
supersede in their entirety all prior undertakings and agreements of the 
Company and Optionee with respect to the subject matter hereof, and may not 
be modified adversely to the Optionee's interest except by means of a writing 
signed by the Company and Optionee.  This agreement is governed by the 
internal substantive laws but not the choice of law rules of California.


                                       -4-

<PAGE>

     10.  NO GUARANTEE OF CONTINUED SERVICE.  OPTIONEE ACKNOWLEDGES AND 
AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS 
EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY 
(NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING 
SHARES HEREUNDER).  OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS 
AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE 
SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED 
ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR 
AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE 
COMPANY'S RIGHT TO TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT 
ANY TIME, WITH OR WITHOUT CAUSE.

     Optionee acknowledges receipt of a copy of the Plan and represents that 
he or she is familiar with the terms and provisions thereof, and hereby 
accepts this Option subject to all of the terms and provisions thereof.  
Optionee has reviewed the Plan and this Option in their entirety, has had an 
opportunity to obtain the advice of counsel prior to executing this Option 
and fully understands all provisions of the Option Agreement and 1996 Stock 
Plan. Optionee hereby agrees to accept as binding, conclusive and final all 
decisions or interpretations of the Administrator upon any questions arising 
under the Plan or this Option.  Optionee further agrees to notify the Company 
upon any change in the residence address indicated below.

OPTIONEE:                               SANCTUARY WOODS MULTIMEDIA
                                        CORPORATION


___________________________________     _______________________________________
Signature                               By

                                        ______________________________________
                                        Title
     


                                       -5-

<PAGE>

                                    EXHIBIT A

                                 1996 STOCK PLAN

                                 EXERCISE NOTICE

Sanctuary Woods Multimedia Corporation
1825 South Grant Street
San Mateo, CA  94402

Attention:  Chief Executive Officer

     1.   EXERCISE OF OPTION.  Effective as of today, ___________, 19__, the 
undersigned ("Optionee") hereby elects to exercise Optionee's option to 
purchase _________ shares of the Common Stock (the "Shares") of Sanctuary 
Woods Multimedia Corporation (the "Company") under and pursuant to the 1996 
Stock Option Plan (the "Plan") and the Stock Option Agreement dated ________, 
19__ (the "Option Agreement").

     2.   DELIVERY OF PAYMENT.  Purchaser herewith delivers to the Company 
the full purchase price of the Shares, as set forth in the Option Agreement, 
and the amount of any income or employment taxes required to be withheld by 
the Company with respect to such exercise.

     3.   REPRESENTATIONS OF OPTIONEE.  Optionee acknowledges that Optionee 
has received, read and understood the Plan and the Option Agreement and 
agrees to abide by and be bound by their terms and conditions. 

     4.   RIGHTS AS SHAREHOLDER.  Until the issuance of the Shares (as 
evidenced by the appropriate entry on the books of the Company or of a duly 
authorized transfer agent of the Company), no right to vote or receive 
dividends or any other rights as a shareholder shall exist with respect to 
the Optioned Stock, notwithstanding the exercise of the Option.  The Shares 
shall be issued to the Optionee as soon as practicable after the Option is 
exercised.  No adjustment shall be made for a dividend or other right for 
which the record date is prior to the date of issuance except as provided in  
Section 11  of the Plan.

     5.   TAX CONSULTATION.  Optionee understands that Optionee may suffer 
adverse tax consequences as a result of Optionee's purchase or disposition of 
the Shares.  Optionee represents that Optionee has consulted with any tax 
consultants Optionee deems advisable in connection with the purchase or 
disposition of the Shares and that Optionee is not relying on the Company for 
any tax advice.

     6.   SUCCESSORS AND ASSIGNS.  The Company may assign any of its rights 
under this Agreement to single or multiple assignees, and this Agreement 
shall inure to the benefit of the successors and assigns of the Company.  
Subject to the restrictions on transfer herein set forth, this 


                                       -1-

<PAGE>

Agreement shall be binding upon Optionee and his or her heirs, executors, 
administrators, successors and assigns.

     7.   INTERPRETATION.  Any dispute regarding the interpretation of this 
Agreement shall be submitted by Optionee or by the Company forthwith to the 
Administrator which shall review such dispute at its next regular meeting.  
The resolution of such a dispute by the Administrator shall be final and 
binding on all parties.

     8.   GOVERNING LAW; SEVERABILITY.  This Agreement is governed by the 
internal substantive laws, but not the choice of law rules, of California.



                                       -2-

<PAGE>

     9.   ENTIRE AGREEMENT.  The Plan and Option Agreement are incorporated 
herein by reference.  This Agreement, the Plan, the Option Agreement and the 
Investment Representation Statement constitute the entire agreement of the 
parties with respect to the subject matter hereof and supersede in their 
entirety all prior undertakings and agreements of the Company and Optionee 
with respect to the subject matter hereof, and may not be modified adversely 
to the Optionee's interest except by means of a writing signed by the Company 
and Optionee.

Submitted by:                           Accepted by:

OPTIONEE:                               SANCTUARY WOODS MULTIMEDIA
                                        CORPORATION

_______________________________         __________________________________
Signature                               By

                                        __________________________________
                                        Its

ADDRESS:                                ADDRESS:

                                        1250 45th Street, Suite 350
                                        Emeryville, CA 94608-2924

                                        __________________________________
                                        Date Received



                                       -3-