STOCK OPTION AGREEMENT
                             ----------------------

                          MERLIN SOFTWARE TECHNOLOGIES
                               INTERNATIONAL, INC.

     THIS  is  entered  into  as  of  the 4th day of January, 2001 (the "Date of
Grant")

BETWEEN:

MERLIN  SOFTWARE  TECHNOLOGIES  INTERNATIONAL,  INC.,  a  company  incorporated
pursuant  to  the  laws of the State of Nevada, of 4199 Lougheed Highway, Suites
200  and  201,  Burnaby,  British  Columbia,  Canada

(the  "Company")

AND:

KEVIN  O'REILLY,  of  1212  10th  Avenue,  #101, San Francisco, California 94122

(the  "Optionee")

WHEREAS:

A.          The Board of Directors of the Company (the "Board") has approved and
adopted  the 2000 Stock Option Plan (the "Plan"), pursuant to which the Board is
authorized  to  grant  to  employees and other selected persons stock options to
purchase  common  stock, without par value, of the Company (the "Common Stock");

B.          The  Plan provides for the granting of stock options that either (i)
are  intended  to  qualify  as  "Incentive  Stock Options" within the meaning of
Section  422  of  the Internal Revenue Code of 1986, as amended (the "Code"), or
(ii)  do  not  qualify  under  Section  422  of  the  Code ("Non-Qualified Stock
Options");  and

C.          The  Board  has  authorized  the  grant  to  Optionee  of options to
purchase  a  total  of  120,000  shares  of  Common Stock (the "Options"), which
Options  are  intended  to  be  (select  one):

         [X]   Incentive  Stock  Options

         [ ]   Non-Qualified  Stock  Options;

          NOW  THEREFORE, the Company agrees to offer to the Optionee the option
to  purchase,  upon  the  terms and conditions set forth herein and in the Plan,
120,000  shares  of

<PAGE>

Common  Stock.  Capitalized  terms  not  otherwise defined herein shall have the
meanings  ascribed  thereto  in  the  Plan.

1.     Exercise  Price.  The  exercise  price  of the Options shall be $0.21 per
share  (as  to  20,000 Options which vest as per Section 3(a) of this Agreement)
and  $0.35  per  share  (as to 100,000 Options which vest as per Section 3(a) of
this  Agreement).

2.     Limitation  on  the  Number of Shares.  If the Options granted hereby are
Incentive  Stock  Options,  the  number  of  shares  which  may be acquired upon
exercise  thereof  is  subject to the limitations set forth in Section 5.1(a) of
the  Plan.

3.     Vesting  Schedule.  The  Options  are  exercisable in accordance with the
following  vesting  schedule:

(a)     20,000  of  the  Options may be exercised upon execution of a management
agreement between the Company and the Optionee (the "Management Agreement"); and

(b)     100,000 of the Options may be exercised upon the expiration of 12 months
from  the  date  of  execution  of  the  Management  Agreement.

4.     Options  not Transferable.  The Options may not be transferred, assigned,
pledged or hypothecated in any manner (whether by operation of law or otherwise)
other than by will, by applicable laws of descent and distribution or (except in
the  case  of  an  Incentive  Stock  Option)  pursuant  to  a qualified domestic
relations  order,  and  shall not be subject to execution, attachment or similar
process;  provided, however, that if the Options represent a Non-Qualified Stock
Option,  such  Option  is  transferable  without  payment  of  consideration  to
immediate  family  members  of  the  Optionee  or  to  trusts  or  partnerships
established  exclusively  for  the  benefit  of  the Optionee and the Optionee's
immediate  family members.  Upon any attempt to transfer, pledge, hypothecate or
otherwise  dispose  of  any Option or of any right or privilege conferred by the
Plan contrary to the provisions thereof, or upon the sale, levy or attachment or
similar  process  upon  the  rights  and  privileges conferred by the Plan, such
Option  shall  thereupon  terminate  and  become  null  and  void.

5.     Investment Intent.  By accepting the Options, the Optionee represents and
agrees  that  none  of the shares of Common Stock purchased upon exercise of the
Options  will  be  distributed  in  violation  of  applicable federal, state and
provincial  laws  and  regulations.  In  addition, the Company may require, as a
condition  of  exercising the Options, that the Optionee execute an undertaking,
in  such  a  form  as  the  Company shall reasonably specify, that the shares of
Common Stock is being purchased only for investment and without any then-present
intention  to  sell  or  distribute  such  shares  of  Common  Stock.

6.     Termination  of  Employment  and  Options.  Options  which have vested in
accordance  with  Section 3 of this Agreement shall terminate, to the extent not
previously  exercised, upon the occurrence of the first of the following events:

<PAGE>

(a)     Expiration.  Ten  (10)  years;  except,  that the expiration date of any
Incentive Stock Option granted to a greater than ten percent (> 10%) shareholder
of  the  Company  shall not be later than five (5) years from the Date of Grant;

(b)     Termination  for  Cause.  The  date  of  an  Optionee's  termination  of
employment  or  contractual  relationship  with  the  Company  or  any  Related
Corporation  for  cause  (as  determined  in  the  sole  discretion  of the Plan
Administrator);

(c)     Termination  Due to Death or Disability.  The expiration of one (1) year
from  the  date  of  the  death  of  the  Optionee or cessation of an Optionee's
employment  or  contractual  relationship by reason of disability (as defined in
Section  5.1(g)  of  the  Plan).  If  an  Optionee's  employment  or contractual
relationship  is  terminated  by death, any Option held by the Optionee shall be
exercisable  only  by the person or persons to whom such Optionee's rights under
such  Option  shall  pass  by  the Optionee's will or by the laws of descent and
distribution;

(d)     Termination  Due  to Cessation of Service as a Director.  The expiration
of  three  (3)  months  from the date an Optionee, if a director of the Company,
ceases  to  serve  as  a  director  of  the  Company;  or

(e)     Termination  for  Any  Other Reason.  The expiration of three (3) months
from  the  date  of  an  Optionee's  termination  of  employment  or contractual
relationship  with  the  Company  or  any  Related  Corporation  for  any reason
whatsoever  other  than cause, death or Disability (as defined in Section 5.1(g)
of  the  Plan).

Each  unvested  Option  granted pursuant hereto shall terminate immediately upon
termination  of  the  Optionee's employment or contractual relationship with the
Company  for any reason whatsoever, including death or Disability unless vesting
is  accelerated  in  accordance  with  Section  5.1(f)  of  the  Plan.

7.     Common  Stock.  In  the  case  of any stock split, stock dividend or like
change  in  the  nature of shares of Common Stock covered by this Agreement, the
number of shares of Common Stock and the exercise price shall be proportionately
adjusted  as  set  forth  in  Section  5.1(m)  of  the  Plan.

8.     Exercise of Option.  Options shall be exercisable, in full or in part, at
any  time  after vesting, until termination; provided however, that any Optionee
who  is  subject  to the reporting and liability provisions of Section 16 of the
Securities  Exchange  Act  of  1934  with  respect  to the Common Stock shall be
precluded  from  selling  or  transferring  any  Common  Stock or other security
underlying  an  Option during the six (6) months immediately following the grant
of  that Option.  If less than all of the shares of Common Stock included in the
vested  portion  of  any Option are purchased, the remainder may be purchased at
any  subsequent  time prior to the expiration of the Option term.  No portion of
any  Option  for  less  than  fifty (50) shares (as adjusted pursuant to Section
5.1(m)  of  the  Plan) may be exercised; provided, that if the vested portion of
any  Option  is less than fifty (50) shares, it may be exercised with respect to
all  shares  for  which  it is vested.  Only whole shares of Common Stock may be
issued  pursuant to an Option, and to the extent that an Option covers less than
one  (1)  share,  it  is  unexercisable.

<PAGE>

          Each exercise of the Options shall be by means of delivery of a notice
of  election to exercise (which may be in the form attached hereto as Exhibit A)
to  the  Secretary  of the Company at its principal executive office, specifying
the  number of shares of Common Stock to be purchased and accompanied by payment
in cash by certified check or cashier's check in the amount of the full exercise
price  for  the Common Stock to be purchased.  In addition to payment in cash by
certified  check  or cashier's check, an Optionee or transferee of an Option may
pay for all or any portion of the aggregate exercise price by complying with one
or  more  of  the  following  alternatives:

(a)     by  delivering  to  the  Company  free  trading  shares  of Common Stock
previously  held  by the Optionee or by the Company withholding shares of Common
Stock  otherwise deliverable pursuant to exercise of the Option, which shares of
Common  Stock received or withheld shall have a fair market value at the date of
exercise  (as  determined  by  the  Plan  Administrator)  equal to the aggregate
purchase  price  to  be  paid  by  the  Optionee  upon  such  exercise;  or

(b)     by  complying  with  any  other  payment  mechanism approved by the Plan
Administrator  at  the  time  of  exercise.

It  is  a condition precedent to the issuance of shares of Common Stock that the
Optionee  execute  and  deliver  to the Company a Stock Transfer Agreement, in a
form  acceptable  to  the  Company, to the extent required pursuant to the terms
thereof.

9.     Holding  period  for Incentive Stock Options.  In order to obtain the tax
treatment  provided  for Incentive Stock Options by Section 422 of the Code, the
shares  of  Common  Stock  received  upon exercising any Incentive Stock Options
received  pursuant to this Agreement must be sold, if at all, after a date which
is later of two (2) years from the date of this Agreement is entered into or one
(1)  year  from  the  date  upon  which the Options are exercised.  The Optionee
agrees  to  report sales of shares of Common Stock prior to the above determined
date  to  the  Company within one (1) business day after such sale is concluded.
The  Optionee  also  agrees to pay to the Company, within five (5) business days
after  such  sale  is concluded, the amount necessary for the Company to satisfy
its  withholding  requirement  required  by  the Code in the manner specified in
Section  5.1(l)  of  the  Plan.  Nothing  in  this  Section  9  is intended as a
representation  that  Common  Stock  may  be  sold  without  registration  under
provincial,  state and federal securities laws or an exemption therefrom or that
such  registration  or  exemption  will  be  available  at  any  specified time.

10.     Subject to 2000 Stock Option Plan.  The terms of the Options are subject
to the provisions of the Plan, as the same may from time to time be amended, and
any inconsistencies between this Agreement and the Plan, as the same may be from
time to time amended, shall be governed by the provisions of the Plan, a copy of
which  has been delivered to the Optionee, and which is available for inspection
at  the  principal  offices  of  the  Company.

11.     Professional  Advice.  The  acceptance  of  the  Options and the sale of
shares  of  Common  Stock  issued  pursuant  to the exercise of Options may have
consequences  under  federal, state and provincial tax and securities laws which
may  vary  depending  upon  the  individual  circumstances  of  the  Optionee.
Accordingly,  the  Optionee  acknowledges  that  he  or  she has been advised to

<PAGE>

consult  his  or  her  personal  legal  and  tax advisor in connection with this
Agreement  and  his  or  her  dealings with respect to Options for the shares of
Common  Stock.  Without  limiting  other  matters to be considered, the Optionee
should  consider whether upon the exercise of Options, the Optionee will file an
election  with  the  Internal  Revenue  Service pursuant to Section 83(b) of the
Code.

12.     No  Employment  Relationship.  Whether  or  not  any  Options  are to be
granted  under  this Plan shall be exclusively within the discretion of the Plan
Administrator,  and  nothing contained in this Plan shall be construed as giving
any  person  any  right  to participate under this Plan.  The grant of an Option
shall in no way constitute any form of agreement or understanding binding on the
Company  or  any  Related  Company,  express or implied, that the Company or any
Related Company will employ or contract with an Optionee for any length of time,
nor  shall  it  interfere  in any way with the Company's or, where applicable, a
Related  Company's  right  to terminate Optionee's employment at any time, which
right  is  hereby  reserved.

13.     Entire  Agreement.  This  Agreement  is  the  only agreement between the
Optionee and the Company with respect to the Options, and this Agreement and the
Plan  supersede  all  prior  and contemporaneous oral and written statements and
representations  and  contain  the  entire  agreement  between  the parties with
respect  to  the  Options.

14.     Notices.  Any notice required or permitted to be made or given hereunder
shall  be mailed or delivered personally to the addresses set forth below, or as
changed  from  time  to  time  by  written  notice  to  the  other:

The  Company:

Merlin  Software  Technologies  International,  Inc.
4199  Lougheed  Highway
Suites  200  and  201
Burnaby,  British  Columbia
Canada
Attention:  President

With  a  copy  to:

Clark,  Wilson
Barristers  and  Solicitors
Suite  800  -  885  West  Georgia  Street
Vancouver,  British  Columbia  V6C  3H1
Attention:  Virgil  Z.  Hlus

The  Optionee:

Kevin  O'Reilly
1212  10th  Avenue,  #101
San  Francisco,  CA  94122

MERLIN  SOFTWARE  TECHNOLOGIES  INTERNATIONAL,  INC.

Per: /s/ Trevor McConnell
     Authorized  Signatory

THERE  MAY  NOT  BE  PRESENTLY  AVAILABLE  EXEMPTIONS  FROM  THE  REGISTRATION
REQUIREMENTS OF APPLICABLE FEDERAL, STATE AND PROVINCIAL SECURITIES LAWS FOR THE

<PAGE>

ISSUANCE  OF SHARES OF STOCK UPON EXERCISE OF THESE OPTIONS.  ACCORDINGLY, THESE
OPTIONS  CANNOT  BE EXERCISED UNLESS THESE OPTIONS AND THE SHARES OF STOCK TO BE
ISSUED  UPON  EXERCISE OF THESE OPTIONS ARE REGISTERED OR AN EXEMPTION FROM SUCH
REGISTRATION  REQUIREMENTS  IS  AVAILABLE.

THE  SHARES  OF  COMMON STOCK ISSUED PURSUANT TO THE EXERCISE OF OPTIONS WILL BE
"RESTRICTED  SECURITIES" AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT OF 1933
AND WILL BEAR A LEGEND RESTRICTING RESALE UNLESS THEY ARE REGISTERED UNDER STATE
AND FEDERAL SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.  THE
COMPANY  IS  NOT  OBLIGATED TO REGISTER THE SHARES OF STOCK OR TO MAKE AVAILABLE
ANY  EXEMPTION  FROM  REGISTRATION.

THE  SHARES  OF  COMMON STOCK ISSUED PURSUANT TO THE EXERCISE OF OPTIONS WILL BE
SUBJECT  TO  AN  INDEFINITE HOLD PERIOD FOR OPTIONEES RESIDENT IN CANADA AND MAY
ONLY BE RESOLD BY OPTIONEES RESIDENT IN CANADA PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION  AND  PROSPECTUS REQUIREMENTS OF ANY APPLICABLE CANADIAN SECURITIES
LEGISLATION.

<PAGE>

                                    EXHIBIT A
                                    ---------

                         NOTICE OF ELECTION TO EXERCISE
                         ------------------------------

          This  Notice  of  Election  to Exercise shall constitute proper notice
pursuant to Section 5(h) of the Merlin Software Technologies International, Inc.
2000  Stock  Option Plan (the "Plan") and Section 8 of that certain Stock Option
Agreement  (the  "Agreement")  dated as of the 4th day of January, 2001, between
Merlin  Software  Technologies  International,  Inc.  (the  "Company")  and  the
undersigned.

          The  undersigned  hereby  elects  to  exercise  Optionee's  option  to
purchase  shares  of  the common stock of the Company at a price of US$_________
per  share,  for  aggregate  consideration of $, on the terms and conditions set
forth  in the Agreement and the Plan.  Such aggregate consideration, in the form
specified  in  Section  8  of  the  Agreement,  accompanies  this  notice.

          The  undersigned  has  executed  this  Notice  this  day  of  ,  .



     Signature


     Name  (typed  or  printed)