Document:

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                       ASSET AND SHARE PURCHASE AGREEMENT

                                     BETWEEN

                              1308870 ONTARIO INC.

                                     - AND -

                                  SOFTQUADINC.

                                     - AND -

                           SOFTQUAD INTERNATIONAL INC.

                           MADE AS OF NOVEMBER 6, 1998

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                                TABLE OF CONTENTS

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ARTICLE 1         INTERPRETATION...............................................1

         1.01.    Defined Terms................................................1

         1.02.    Knowledge....................................................3

         1.03.    Schedules....................................................3

         1.04.    Currency.....................................................3

         1.05.    Choice of Law and Attorney...................................3

         1.06.    Interpretation Not Affected by Headings or Party Drafting....4

         1.07.    Number and Gender............................................4

         1.08.    Time of Essence..............................................4

ARTICLE 2         PURCHASE AND SALE............................................4

         2.01.    Purchased Assets.............................................4

         2.02.    Unassignable Contracts.......................................8

         2.03.    Excluded Assets..............................................8

         2.04.    Assumed Liabilities..........................................9

         2.05.    Excluded Liabilities and Indemnity...........................9

         2.06.    Purchased Shares............................................10

         2.07.    Purchase Price..............................................11

         2.08.    Payment of Purchase Price...................................11

         2.09.    Allocation of Purchase Price................................11

         2.10.    Section 22 Election Re: Accounts Receivable.................11

         2.11.    Payment of Taxes............................................11

         2.12.    Goods and Services Tax Exemption............................11

ARTICLE 3         REPRESENTATIONS AND WARRANTIES..............................12

         3.01.    Representations and Warranties by the Vendor and SoftQuad...12

                  (1)      Corporate Matters..................................12

                  (2)      No Other Purchase Agreements.......................13

                  (3)      Contractual and Regulatory Approvals...............13

                  (4)      Governmental Licences..............................13

                  (5)      Compliance with Constating Documents, Agreements
                           and Laws...........................................13

                  (6)      Intellectual Property Rights.......................14
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                                TABLE OF CONTENTS

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                  (7)      Financial Records..................................15

                  (8)      Liabilities........................................15

                  (9)      Absence of Certain Change or Events................15

                  (10)     Tax Matters........................................16

                  (11)     Litigation.........................................16

                  (12)     Environmental Matters..............................16

                  (13)     Title to Assets....................................16

                  (14)     Real Properties....................................16

                  (15)     Leased Premises....................................16

                  (16)     Works Orders and Deficiencies......................17

                  (17)     Lease of Personal Property.........................17

                  (18)     Affiliates.........................................18

                  (19)     Partnerships or Joint Ventures.....................18

                  (20)     Restriction on Doing Business......................18

                  (21)     Warranties and Discounts...........................18

                  (22)     Licences, Agency and Distributorship Agreements....19

                  (23)     Outstanding Agreements.............................19

                  (24)     Good Standing of Agreements........................19

                  (25)     Employees..........................................20

                  (26)     Employment Agreements..............................20

                  (27)     Labour Matters and Employment Standards............20

                  (28)     Employee Benefit and Pension Plans.................20

                  (29)     Insurance..........................................21

                  (30)     Non-Arm's Length Matters...........................21

                  (31)     Government Assistance..............................21

                  (32)     Compliance with Laws...............................22

                  (33)     Complete Conveyance................................22

                  (34)     Vendor Residency...................................22

                  (35)     Copies of Documents................................22

                  (36)     Disclosure.........................................22
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                                TABLE OF CONTENTS

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         3.02.    Representations and Warranties by SoftQuad..................22

                  (1)      Corporate Authority and Binding Obligation.........22

                  (2)      Status of UK.......................................22

                  (3)      Authorized and Issued Capital of UK................23

                  (4)      No Other Purchase Agreements.......................23

         3.03.    Representations and Warranties by the Purchaser.............23

                  (1)      Corporate Authority and Binding Obligation.........23

                  (2)      Authorized and Issued Capital of the Purchaser.....23

                  (3)      No Other Purchase Agreements.......................24

                  (4)      Contractual and Regulatory Approvals...............24

                  (5)      Compliance with Constating Documents, Agreements
                           and Laws...........................................24

                  (6)      Investment Canada Act..............................24

ARTICLE 4         SURVIVAL AND LIMITATIONS OF REPRESENTATIONS AND WARRANTIES..25

         4.01.    Survival of Warranties by the Vendor and SoftQuad...........25

         4.02.    Survival of Warranties by Purchaser.........................25

         4.03.    Limitations on Warranty Claims..............................25

ARTICLE 5         COVENANTS...................................................26

         5.01.    Covenant by the Vendor and SoftQuad.........................26

                  (1)      Investigation of Business and Examination of
                           Documents..........................................26

                  (2)      Conduct of Business................................26

                  (3)      Transfer of Purchased Assets and Purchased Shares..27

                  (4)      General Conveyance.................................27

                  (5)      Retail Sales Tax...................................27

                  (6)      Bulk Sales Act Legislation.........................27

                  (7)      Pledge of Shares...................................27

                  (8)      Transfer of Assumed Contracts......................28

                  (9)      Payment to the Purchaser...........................28

                  (10)     Loan to the Purchaser..............................28

                  (11)     Non-Competition Agreement..........................28
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                  (12)     Licence Agreement re SoftQuad......................28

                  (13)     Assignment of Loans to UK..........................28

                  (14)     Assignment of Accounts Receivable..................28

         5.02.    Covenants by the Purchaser..................................28

                  (2)      Employees..........................................29

                  (3)      Post-Closing Access................................30

                  (4)      Use of Names.......................................30

                  (5)      Investment Canada Act..............................30

ARTICLE 6         CONDITIONS..................................................30

         6.01.    Conditions to the Obligations of the Purchaser..............30

                  (1)      Accuracy of Representations and Warranties and
                           Performance of the Covenants.......................30

                  (2)      No Restraining Proceedings.........................31

                  (3)      Consents...........................................31

                  (4)      Estoppel Certificates..............................31

                  (5)      Employee...........................................31

                  (6)      Leases for Premises................................31

                  (7)      North American Distribution........................31

                  (8)      Advance to the Purchaser...........................31

                  (9)      Indemnity and Share Pledge.........................32

                  (10)     Non-Competition Agreement..........................32

                  (11)     Licence Agreement re SoftQuad......................32

                  (12)     Assignment Agreements re Vendor's Trademarks
                           and Software.......................................32

                  (13)     Assignment of Loans to UK Agreement................32

                  (14)     Shareholders' Agreement............................32

                  (15)     Protege Contract...................................32

                  (16)     Payment of Accounts Payable Not Assumed............32

                  (17)     Employee Stock Loans...............................32

                  (18)     Opinion of Vendor Counsel..........................32

         6.02.    Waiver or Termination by Purchaser..........................33
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         6.03.    Conditions to the Obligations of the Vendor.................33

                  (1)      Accuracy of Representations and Warranties and
                           Performance of Covenants...........................33

                  (2)      No Restraining Proceedings.........................33

                  (3)      Consents...........................................34

                  (4)      Shareholders' Agreement............................34

                  (5)      Promissory Note....................................34

                  (6)      Opinion of Purchaser's Counsel.....................34

         6.04.    Waiver or Termination by Vendor.............................34

ARTICLE 7         CLOSING.....................................................34

         7.01.    Closing Arrangements........................................34

         7.02.    Documents to be Delivered...................................34

ARTICLE 8         INDEMNIFICATION AND SET-OFF.................................35

         8.01.    Indemnity by SoftQuad and the Vendor........................35

         8.02.    Indemnity by the Purchaser..................................36

         8.03.    Provisions Relating to Indemnity Claims.....................36

         8.04.    Right to Set -Off...........................................38

ARTICLE 9         GENERAL PROVISIONS..........................................38

         9.01.    Further Assurance...........................................38

         9.02.    Remedies Cumulative.........................................38

         9.03.    Notices.....................................................39

         9.04.    Counterparts................................................40

         9.05.    Expenses of Parties.........................................40

         9.06.    Brokerage and Finder's Fees.................................40

         9.07.    Announcements...............................................41

         9.08.    Assignment..................................................41

         9.09.    Successors and Assigns......................................41

         9.10.    Entire Agreement............................................41

         9.11.    Waiver......................................................41

         9.12.    Amendments..................................................41
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                                    SCHEDULES

Schedule No.               Description
------------               -----------

2.01(a)                    Cash and Bank Balances
2.01(b)                    Accounts Receivable
2.01(c)                    Inventories
2.01(e)                    Machinery, Equipment, Furniture and Furnishings
2.01(f)                    Leased Equipment and Vehicles
2.01(g)                    Computer Equipment
2.01(h)                    Leased Computer Equipment
2.01(i)                    Leased Premises
2.01(k)                    Customer Contracts
2.01(m)                    Technology, Intellectual Property and Software
2.01(o)                    Licence Rights
2.04 (a)                   Assumed Liabilities
2.08                       Not Used
2.09                       Allocation of Purchase Price
3.01(3)                    Vendor's Contractual and Regulatory Approvals
3.01(6)                    Intellectual Property Rights
3.01(11)                   Litigation
3.01(12)                   Environmental Matters
3.01(13)                   Encumbrances to be Discharged
3.01(21)                   Warranties and Discounts
3.01(23)                   Contracts, Leases and Agreements
3.01(25)                   Employees
3.01(27)                   Labour Matters and Employment Standards
3.01(28)                   Employee Pension Plans
3.01(29)                   Insurance Policies
3.01(30)                   Non-Arm's Length Matters
3.01(31)                   Government Assistance
5.01 (10)                  Form of Promissory Note
5.01(11)                   Form of Non-Competition Agreement
5.01(12)                   Form of Trademark Licence Agreement
5.01(13)                   Form of U.K. Loan Assignment
6.01(7)                    Form of Agreement with Alpha Software Corporation
6.01(9)                    Form of Indemnity and Share Pledge Agreement
6.01(12)                   Form of Assignment Agreement re: Vendor's Trademarks
                           and Software Assignment Agreement
6.01(14)                   Form of Shareholders' Agreement
6.01(18)                   Opinion of Vendor's Counsel
6.03(6)                    Opinion of Purchaser's Counsel

                                      -vi-

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                       ASSET AND SHARE PURCHASE AGREEMENT

         THIS AGREEMENT made as of this 6th day of November, 1998.  AMONG:

                  1308870 ONTARIO INC., a corporation incorporated under the
                  laws of the Province of Ontario (the "PURCHASER")

                                     - and -

                  SOFTQUAD INC., a corporation amalgamated under the laws of the
                  Province of Ontario (the "VENDOR").

                                     - and -

                  SOFTQUAD INTERNATIONAL INC., a corporation continued under the
                  laws of the Province of New Brunswick ("SOFTQUAD").

         WHEREAS the Vendor is engaged in the development, marketing, licensing
and sale of certain software products;

         AND WHEREAS the Vendor wishes to sell, and the Purchaser wishes to
purchase, the undertaking and the assets of such business upon the terms and
subject to the conditions hereinafter contained;

         NOW THEREFORE, in consideration of the premises and the mutual
agreements and covenants herein contained, the parties hereto hereby covenant
and agree as follows:

                                   ARTICLE 1
                                 INTERPRETATION

1.01.    Defined Terms
         -------------

         In this Agreement and in the Schedules hereto, unless there is
something in the subject matter or context inconsistent therewith, the following
terms and expressions will, have the following meanings:

(a)      "AFFILIATE" of any person means any corporation which, directly or
         indirectly, is controlled by, controls or is under direct or indirect
         common control with such person;

(b)      "ARM'S LENGTH" has the meaning ascribed to such term under the Income
         Tax Act (Canada);

(c)      "ASSUMED CONTRACTS" means all contracts, agreements, orders,
         commitments and other engagements by or with third parties relating to
         the Business which are included in the Purchased Assets;

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(d)      "ASSUMED LIABILITIES" means the liabilities of the Vendor which are to
         be assumed by the Purchaser pursuant to Section 2.04 hereof,

(e)      "BUSINESS" means the business carried on by the Vendor which primarily
         involves the development, marketing, licensing and sale of certain
         software products;

(f)      "BUSINESS DAY" means any day other than a day which is a Saturday, a
         Sunday or a statutory holiday in the City of Toronto;

(g)      "CLOSING DATE" means November 6, 1998 or such other date as the Vendor
         and Purchaser may agree upon;

(h)      "CLOSING TIME" means 4 p.m. (Toronto time) on the Closing Date or such
         other time on the Closing Date as the parties hereto may agree upon;

(i)      "CONDITION OF THE BUSINESS" means the condition of the assets,
         liabilities, operations, activities, earnings, prospects, affairs or
         financial position of the Business;

(j)      "CONTROL" means, with respect to any corporation, the ownership of more
         than 50% of the voting shares of that corporation, including any shares
         which are voting only upon the occurrence of a contingency where such
         contingency has occurred and is continuing;

(k)      "CUSTOMER CONTRACTS" means any and all agreements entered into between
         the Vendor and one or more third parties relating to the sale or
         provision of goods or services by the Vendor to such third parties in
         connection with the Business, including unfilled orders, commitments
         and other engagements by or with such third parties; including without
         limitation, those listed on Schedule 2.01(k) attached hereto;

(l)      "EFFECTIVE DATE" means September 30, 1998;

(m)      "ENCUMBRANCES" means mortgages, charges, pledges, security interests,
         liens, encumbrances, actions, claims, demands and equities of any
         nature whatsoever or howsoever arising and any rights or privileges
         capable of becoming any of the foregoing;

(n)      "EXCLUDED ASSETS" means those assets of the Business referred to in
         Section 2.03 hereof;

(o)      "EXCLUDED LIABILITIES" means all liabilities of the Vendor relating to
         the Business other than the Assumed Liabilities;

(p)      "LEASED PREMISES" means all premises leased by the Vendor under the
         Leases;

(q)      "LEASES" means the leases and the agreements to lease under which the
         Vendor leases any real property, all of which are listed in Schedule
         2.01(i) attached hereto;

(r)      "LICENCE RIGHTS" means all licence rights granted to the Vendor by
         third parties relating to the Business; including without limitation,
         those listed on Schedule 2. 01 (o) attached hereto;

                                      -2-

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(s)      "PERSON" means and includes any individual, corporation, partnership,
         firm, joint venture, syndicate, association, trust, government,
         governmental agency or board or commission or authority, and any other
         form of entity or organization;

(t)      "PURCHASE PRICE" means the amount calculated, pursuant to Section 2.06
         hereof, which amount is payable by the Purchaser to the Vendor for all
         of the Purchased Assets, as provided herein;

(u)      "PURCHASED ASSETS" means the undertaking and assets of the Business
         which are to be sold by the Vendor to the Purchaser pursuant to Section
         2.01 hereof;

(v)      "PURCHASED SHARES" means 100 Ordinary Shares in the capital of UK,
         being all of the issued and outstanding shares of UK;

(w)      "UK" means SoftQuad UK Limited;

(x)      "UK LOAN" means the amount owed by UK to SoftQuad at the Time of
         Closing; and

(y)      "WARRANTY CLAIM" means a claim made by either the Purchaser or the
         Vendor based on or with respect to the inaccuracy or non-performance or
         non-fulfilment or breach of any representation or warranty made by the
         other party contained in this Agreement or contained in any document or
         certificate given in order to carry out the transactions contemplated
         hereby.

1.02.    Knowledge
         ---------

         Any reference herein to "the knowledge" of the Vendor and/or SoftQuad
will mean the actual knowledge of the Vendor and/or SoftQuad and the knowledge
which they would have had if they had conducted a diligent inquiry into the
relevant subject matter.

1.03.    Schedules
         ---------

         The Schedules attached to this Agreement are incorporated into this
Agreement by reference and are deemed to be part hereof.

1.04.    Currency
         --------

         Unless otherwise indicated, all dollar amounts referred to in this
agreement are in lawful money of Canada.

1.05.    Choice of Law and Attorney
         --------------------------

         This agreement shall be governed by and construed in accordance with
the laws of the Province of Ontario and the laws of Canada applicable therein.
The parties agree that the courts of that Province will have exclusive
jurisdiction to determine all disputes and claims arising between the parties.

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1.06.    Interpretation Not Affected by Headings or Party Drafting
         ---------------------------------------------------------

         The division of this Agreement into articles, sections, paragraphs,
subparagraphs and clauses and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement. The terms "this Agreement", "hereof', "herein", "hereunder" and
similar expressions refer to this Agreement and the Schedules hereto and not to
any particular article, section, paragraph, subparagraph, clause or other
portion hereof and include any agreement or instrument supplementary or
ancillary hereto. Each party hereto acknowledges that it and its legal counsel
have reviewed and participated in settling the terms of this Agreement, and the
parties hereby agree that any rule of construction to the effect that any
ambiguity is to be resolved against the drafting party shall not be applicable
in the interpretation of this Agreement.

1.07.    Number and Gender
         -----------------

         In this Agreement, unless there is something in the subject matter or
context inconsistent therewith,

         (a)      words in the singular number include the plural and such words
                  shall be construed as if the plural had been used,

         (b)      words in the plural include the singular and such words shall
                  be construed as if the singular had been used, and

         (c)      words importing the use of any gender shall include all
                  genders where the context or party referred to so requires,
                  and the rest of the sentence shall be construed as if the
                  necessary grammatical and terminological changes had been
                  made.

1.08.    Time of Essence
         ---------------

         Time shall be of the essence hereof.

                                    ARTICLE 2
                                PURCHASE AND SALE

2.01.    Purchased Assets
         ----------------

         Subject to Section 2.02 and on the terms and subject to the fulfillment
of the conditions hereof, the Vendor hereby agrees to sell, transfer and assign
to the Purchaser, and the Purchaser hereby agrees to purchase and accept from
the Vendor, the undertaking of the Business as a going concern and all
properties, assets, rights and interests of the Vendor related to the Business
of every kind and description and wheresoever situate (which purchased assets
are referred to herein as the "Purchased Assets"), except for the Excluded
Assets. Without limiting the generality of the foregoing, the Purchased Assets
will include all assets of the Business, other than

                  (i)      Excluded Assets, and

                                      -4-

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                  (ii)     assets which have been disposed of or consumed in the
                           ordinary course of the Business since the Effective
                           Date,

and will include the following assets:

         (a)      CASH AND BANK BALANCES: all cash, bank balances, monies in the
                  possession of banks and other depositories, term or time
                  deposits, guaranteed investment certificates, treasury bills,
                  other securities and other similar cash or cash-equivalent
                  items owned by the Vendor as of the Closing Date, including,
                  without limitation, those amounts set out in Schedule 2.01 (a)
                  attached hereto;

         (b)      ACCOUNTS RECEIVABLE: all accounts receivable relating to the
                  Business as of the Closing Time including without limitation,
                  those referred to in Schedule 2.01(b) which are as at the
                  Effective Date and attached hereto;

         (c)      INVENTORIES: all inventories of or relating to the Business as
                  of the Closing Time, including without limitation, those items
                  referred to in Schedule 2.01(c) and all packaging materials,
                  works in progress and finished applications;

         (d)      PREPAID EXPENSES: all prepaid expenses relating to the
                  Business as of the Closing Time, including without limitation,
                  business taxes, rents, telephone and insurance relating to the
                  Business and all deposits with public utilities, municipal,
                  governmental and other public authorities but excluding income
                  or other taxes which are personal to the Vendor;

         (e)      MACHINERY, EQUIPMENT, FURNITURE AND FURNISHINGS: all
                  machinery, equipment, furniture, furnishings and other
                  miscellaneous items used in or relating to the Business
                  including, without limitation, all those listed in Schedule
                  2.01 (e) attached hereto;

         (f)      LEASED EQUIPMENT AND VEHICLES: all right and interest of the
                  Vendor in and under leases of equipment (other than computer
                  hardware) and vehicles used in or relating to the Business
                  including, without limitation, all leases and other agreements
                  listed in Schedule 2.01(f) attached hereto;

         (g)      COMPUTER EQUIPMENT: all of the Vendor's right, title and
                  interest in all computer hardware used in the Business
                  including, without limitation, that described in Schedule
                  2.01(g) attached hereto;

         (h)      LEASED COMPUTER EQUIPMENT: all the Vendor's right and interest
                  in all computer hardware used in the Business leased by the
                  Vendor from third parties including, without limitation, that
                  described in Schedule 2.01(h) attached hereto;

         (i)      LEASED PREMISES AND LEASEHOLD IMPROVEMENTS: all right and
                  interest of the Vendor in and to the Leased Premises and under
                  the Leases (all of which are described in Schedule 2.01(i)
                  attached hereto) including, without limitation, any prepaid
                  rent and security deposits thereunder and all leasehold
                  improvements owned by the Vendor and forming part of the
                  Leased Premises subject to the terms and conditions of the
                  Leases;

                                      -5-

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         (j)      CUSTOMER LISTS AND INFORMATION: all customer lists, prospect
                  lists, files, data and information relating to customers and
                  prospective customers of the Business as of the Closing Time;

         (k)      CUSTOMER CONTRACTS: all right, title and interest of the
                  Vendor in and to all Customer Contracts, including licensing
                  agreements and distribution agreements, including, without
                  limitation, those listed in Schedule 2.01 (k) attached hereto;

         (l)      BUSINESS RECORDS: copies of all books, records, files and
                  documents relating to the Business, including without
                  limitation, books of account, ledgers, journals, sales and
                  purchase records, lists of suppliers, credit information, cost
                  and pricing information, business reports, plans and
                  projections and all other correspondence, data and
                  information, financial or otherwise, in any format and media
                  whatsoever, related to the Business;

         (m)      GOODWILL, NAME ETC.: the goodwill of the Business, together
                  with the exclusive right of the Purchaser to represent itself
                  as carrying on the Business in continuation of and in
                  succession to the Vendor (and, subject to subsection 5.02(4),
                  rights in and title to the names associated with the Business;
                  including without limitation, those listed in Schedule 2.01(m)
                  attached hereto);

         (n)      TECHNOLOGY, INTELLECTUAL PROPERTY AND SOFTWARE: subject to
                  subsections 5.02(4), the intellectual property which is the
                  subject matter of the trademark licence agreement attached
                  hereto as Schedule 5.01(12), all trade secrets, research data,
                  designs, proprietary know-how, processes, technical
                  information, specifications and materials in whatever form or
                  media recording or evidencing technology or proprietary
                  information used in or relating to the Business, and all
                  rights and interests in and to all inventions, patents,
                  applications for patents, copyrights, trade marks, trade mark
                  registrations, trade mark applications, trade names, brands,
                  styles, logos, industrial designs and any and all other
                  intellectual property used in or relating to the Business, and
                  all computer software, licences, sub-licences used in the
                  Business including, without limitation, all those relating to
                  computer programs, system and application software and rights
                  to all related codes (including source codes), specifications,
                  documentation, revisions, enhancements and modifications
                  thereto, tools, utilities and other supporting materials, in
                  whatever form and media, including, without limitation, the
                  trademarks, copyrights, patents, licenses and agreements
                  listed in Schedule 2.01(m) and the software which is the
                  subject matter of the software agreement attached hereto as
                  Schedule 5.01(12), but not including intellectual property
                  licensed by the Vendor from third parties;

         (o)      LICENCE RIGHTS: all licences (including non-exclusive rights,
                  permits, approvals, consents, registrations, certificates and
                  other authorizations) relating to the Business granted to the

                                      -6-

<PAGE>

                  Vendor by any third party under all contracts and agreements
                  (written or oral), including, without limitation, those listed
                  in Schedule 2.01(o) attached hereto;

         (p)      REGULATORY LICENCES: all licences, registrations and
                  qualifications of the Business required by any governmental or
                  regulatory authority, to the extent transferable;

         (q)      INSURANCE BENEFITS: any benefits payable under all insurance
                  policies relating to the Business or the other Purchased
                  Assets in respect of claims based on occurrences prior to the
                  Closing Time;

         (r)      SUPPLY CONTRACTS: the full benefit of all contracts providing
                  for the supply of goods and services to the Business;

         (s)      WARRANTY RIGHTS AND MAINTENANCE CONTRACTS: the full benefit of
                  all warranties and warranty rights (express and implied)
                  against manufacturers or sellers which apply to any of the
                  Purchased Assets and all maintenance contracts on equipment
                  and the other Purchased Assets;

         (t)      MARKETING MATERIALS: all right, title and interest of the
                  Vendor in and to marketing materials relating to the Business
                  and including, without limitation, trade show booths,
                  marketing agreements, marketing collateral and marketing
                  materials;

         (u)      INCOME TAX REFUNDS: investment tax credits, income tax refunds
                  and other tax credits and refunds receivable by the Vendor for
                  the period to and including the Effective Date;

         (v)      INTERLEAF AGREEMENT: the benefit and obligations of the Vendor
                  contained in and to Sections 1.4, 11.2(b) and (c) the asset
                  purchase agreement between the Vendor and Interleaf, Inc.
                  dated as of September 11, 1998 (the "INTERLEAF AGREEMENT") and
                  a letter agreement between the Vendor and Interleaf, Inc.
                  dated as of September 11, 1998 (the "CO-MARKETING AGREEMENT")
                  and the Purchaser agrees to be bound, in addition to the
                  Vendor, to Sections 11.2(a) and (d) of the Interleaf Agreement
                  and the Co-marketing Agreement; and

         (w)      OTHER AGREEMENTS: all of the Vendor's rights, title and
                  interest to and under all other contracts and agreements
                  (written or oral) relating directly or indirectly to the
                  Business including, without limitation, the benefit of all
                  restrictive agreements and negative covenants which the Vendor
                  may have with its employees to which the Purchaser shall have
                  duties, obligations and liabilities toward under this
                  Agreement or otherwise, other than those contracts and
                  agreements (written or oral) relating to the Excluded Assets;
                  and

such sale, assignment and transfer to be effective as at the close of business
on the Effective Date.

                                      -7-

<PAGE>

2.02.    Unassignable Contracts
         ----------------------

         If any rights, benefits or remedies (hereinafter, in this section,
collectively called the "RIGHTS") under any Assumed Contracts are not assignable
by the Vendor to the Purchaser without the consent of the other party thereto
(hereinafter, in this section, called the "THIRD PARTY") the Vendor hereby
covenants to use its reasonable efforts at the expense of the Purchaser to
obtain such consents prior to the Closing Time and until such consents are
obtained or if any such consent is not obtained, then, unless the Purchaser
exercises its rights under Section 6.02 hereof,

         (a)      the Vendor will hold the Rights for the benefit of the
                  Purchaser,

         (b)      the Vendor will, at the request and expense and under the
                  direction of the Purchaser, in the name of the Vendor or
                  otherwise as the Purchaser shall specify, take all such
                  actions and do all such things as shall, in the opinion of the
                  Purchaser, acting reasonably, be necessary or desirable in
                  order that the obligations of the Vendor under such Assumed
                  Contracts may be performed in a manner such that the Rights
                  shall enure to the benefit of the Purchaser and such that all
                  monies receivable under the Assumed Contracts may be received
                  by the Purchaser,

         (c)      the Vendor will pay over to the Purchaser all such monies
                  collected by the Vendor in respect of such Assumed Contracts,
                  and

         (d)      to the extent permitted by the Third Party and provided, in
                  the Purchaser's opinion, acting reasonably, it would not be
                  prejudicial to the Purchaser's rights to do so, the Purchaser
                  will perform the obligations under such Assumed Contracts on
                  behalf of the Vendor, and will indemnify the Vendor against
                  all liabilities, costs and expenses incurred by the Vendor in
                  performing such obligations under this section from the
                  Closing Time.

2.03.    Excluded Assets
         ---------------

         There shall be specifically excluded from the assets being purchased
and sold hereunder, the following assets, properties, rights and interests of
the Vendor related to the Business (which excluded assets are referred to herein
as the "EXCLUDED ASSETS"):

         (a)      Licences: all extra-provincial, sales, excise or other
                  licences or registrations issued to or held by the Vendor,
                  whether in respect of the Business or otherwise, except as
                  specifically set forth herein;

         (b)      Shares: all shares held by the Vendor in SoftQuad U.S.A. Inc.;
                  and

         (c)      Interleaf Agreement: the rights, interests and obligations of
                  the Vendor under the Interleaf Agreement not specifically
                  sold, transferred or assigned to the Purchaser pursuant to
                  Section 2.01(v) of this Agreement.

                                      -8-

<PAGE>

2.04.    Assumed Liabilities
         -------------------

         In partial satisfaction of the Purchase Price (as defined in Section
2.07 hereof) for the Business and the Purchased Assets, the Purchaser hereby
agrees to assume and become liable for and shall pay, satisfy, assume,
discharge, observe, perform, fulfil and indemnify the Vendor against the
following liabilities of the Vendor in respect of the Business and the Purchased
Assets (which liabilities are referred to herein as the "ASSUMED LIABILITIES");

         (a)      all accounts payable listed in Schedule 2.04 (a);

         (b)      all product liability claims and liabilities for warranty or
                  product return claims relating to any product or service of
                  the Business produced, sold, performed or delivered on or
                  after the Effective Date, except that liabilities for all
                  HoTMetaL 4.0 returns as of the Effective Date shall be assumed
                  by the Purchaser; liabilities for marketing development fund
                  ("NMF") for commitments relating to versions prior to HoTMetaL
                  4.0 shall be assumed by SoftQuad, MDF commitments relating to
                  HoTMetaL 4.0 still open as of the Effective Date shall be
                  assumed, as to 50%, by SoftQuad and, as to 50%, by the
                  Purchaser and the Purchaser shall assume all liabilities,
                  whether MDF or returns, for HoTMetaL 5.0 and future versions;

         (c)      all liabilities for salaries, wages, commissions, bonuses,
                  vacation pay and any other compensation and all liabilities
                  under employee benefit plans relating to the Business arising
                  after the Effective Date and all accrued vacation pay to and
                  including the Effective Date. In addition, the Purchaser will
                  be liable for all severance payments, damages for wrongful
                  dismissal for which an employer is liable in respect of the
                  termination of the employment of the employees of the Business
                  who were employees immediately before the Effective Date;

         (d)      all liabilities for claims for injury, disability, death or
                  worker's compensation arising from or related to the Business
                  arising on or after the Effective Date;

         (e)      all obligations and liabilities of the Vendor accruing on and
                  after the Effective Date under the Assumed Contracts; and

         (f)      all obligations or liabilities of the Vendor in connection
                  with the Business or the Purchased Assets for environmental
                  and health and safety matters, claims or damages arising on or
                  after the Effective Date.

For greater certainty, except as specifically set forth in clause 2.04(b) and
(c) hereof, the Assumed Liabilities shall include all obligations and
liabilities in respect of the Business and the Purchased Assets arising on or
after the Effective Date.

2.05.    Excluded Liabilities and Indemnity
         ----------------------------------

         The Purchaser will not assume and will not be liable for, and the
Vendor will indemnify the Purchaser from and against, all obligations,
commitments and liabilities of and claims of any kind whatsoever against the

                                      -9-

<PAGE>

Vendor (whether absolute, accrued or contingent) relating to the Business and
the Purchased Assets, except for the Assumed Liabilities. Without limiting the
generality of the foregoing, it is agreed that the Purchaser will have no
liability for any of the following obligations or liabilities:

         (a)      all liabilities in respect of the indebtedness of the Vendor
                  to all persons, except to those listed in Schedule 2.04(a).

         (b)      except for those liabilities as of the Effective Date which
                  the Purchaser has agreed to assume in Section 2.04(b), all
                  product liability claims and liabilities for product return
                  claims relating to any product or service of the Business
                  produced, sold, performed or delivered prior to the Effective
                  Date

         (c)      all liabilities for all taxes, duties, levies, assessments and
                  other such charges, including any penalties, interests and
                  fines with respect thereto, payable by the Vendor to any
                  federal, provincial, municipal or other government or
                  governmental agency, authority, board, bureau or commission,
                  domestic or foreign, including, without limitation, any taxes
                  in respect of or measured by the sale, consumption or
                  performance by the Vendor of any product or service prior to
                  the Effective Date and any tax pursuant to the Employer Health
                  Tax Act (Ontario) or any similar legislation in respect of all
                  remuneration payable to all persons employed in the Business
                  prior to the Effective Date;

         (d)      all liabilities for salaries, wages, commissions, bonus and
                  any other compensation and all liabilities under employee
                  benefit plans of the Vendor relating to employment of all
                  persons in the Business prior to and on the Effective Date,
                  but not including those liabilities assumed by the Purchaser
                  under Section 2.04(c) of this Agreement.

         (e)      all liabilities for claims for injury, disability, death or
                  worker's compensation arising from or related to employment in
                  the Business prior to the Effective Date; and

         (f)      all liabilities in connection with any litigation or
                  threatened litigation, including legal costs, settlement costs
                  and other costs incurred in connection therewith, relating to
                  the Business as it was carried on before the Effective Date,
                  including, without limitation, those matters referred to in
                  Schedule 3.01(l 1) attached hereto.

2.06.    Purchased Shares
         ----------------

         On the terms and subject to the fulfilment of the conditions hereof,
SoftQuad covenants and agrees to sell, assign and transfer to the Purchaser and
the Purchaser covenants and agrees to purchase from SoftQuad, the Purchased
Shares for a Purchase Price of $1.00.

                                      -10-

<PAGE>

2.07.    Purchase Price
         --------------

         The aggregate purchase price (the "PURCHASE PRICE") payable by the
Purchaser to the Vendor and SoftQuad for the Purchased Assets and the Purchased
Shares will be the sum of $1,3 89,83 1.

2.08.    Payment of Purchase Price
         -------------------------

The Purchaser shall pay and satisfy the Purchase Price as follows:

         (a)      as to an amount equal to the estimated aggregate book value of
                  the Assumed Liabilities by the assumption of the Assumed
                  Liabilities by the delivery at the Closing Time of a general
                  conveyance, assignment and assumption agreement; and

         (b)      by the issuance to the Vendor by the Purchaser of 140,741
                  common shares in the capital of the Purchaser and the entering
                  into of option agreements with the Vendor made as of the
                  Closing Date for an additional 49,259 common shares in the
                  capital of the Purchaser.

2.09.    Allocation of Purchase Price
         ----------------------------

         The Purchase Price shall be allocated among the Purchased Assets and
Purchased Shares in the manner provided by Schedule 2.09 attached hereto.
SoftQuad and the Purchaser shall file their respective tax returns prepared in
accordance with such allocation.

2.10.    Section 22 Election Re: Accounts Receivable
         -------------------------------------------

         The Vendor and the Purchaser will jointly execute, and each of them
will file promptly following the Closing Date, an election under Section 22 of
the Income Tax Act (Canada) with respect to the accounts receivable of the
Business included in the Purchased Assets. Such election will designate the
portion of the Purchase Price allocated to the accounts receivable pursuant to
Section 2.09 hereof as the consideration paid therefor by the Purchaser.

2.11.    Payment of Taxes
         ----------------

         The Purchaser shall be liable for and shall remit to the appropriate
government authority all applicable federal and provincial sales taxes, goods
and services taxes, excise taxes and all other taxes (other than income taxes of
the Vendor), duties and other like charges properly payable upon and in
connection with the conveyance and transfer of the Purchased Assets to the
Purchaser. The Vendor will do and cause to be done such things as are reasonably
requested to enable the Purchaser to comply with such obligation in an efficient
manner.

2.12.    Goods and Services Tax Exemption
         --------------------------------

         (a)      The Vendor hereby represents and warrants to the Purchaser
                  that:

                                      -11-

<PAGE>

                  (i)      the Vendor is registered for purposes of Part IX of
                           the Excise Tax Act (Canada) (hereinafter, in this
                           section, called the "GST Legislation"); and

                  (ii)     the Purchased Assets comprise all or substantially
                           all of the property used in the Business; and

                  (iii)    the Business is a "commercial activity" for the
                           purposes of the GST Legislation.

         (b)      The Purchaser hereby represents and warrants to the Vendor
                  that the Purchaser is registered for purposes of the GST
                  Legislation.

         (c)      The Vendor and the Purchaser will jointly execute in
                  prescribed form, and the Purchaser will file within the
                  required time, an election under subsection 167(l) of the
                  Excise Tax Act (Canada) that no tax be payable pursuant to the
                  GST Legislation with respect to the purchase and sale of the
                  Purchased Assets hereunder.

                                   ARTICLE 3
                         REPRESENTATIONS AND WARRANTIES

3.01.    Representations and Warranties by the Vendor and SoftQuad
         ---------------------------------------------------------

         The Vendor and SoftQuad hereby jointly represent and warrant to the
Purchaser as follows, and confirm that the Purchaser is relying upon the
accuracy of each of such representations and warranties in connection with the
purchase of the Purchased Assets and the completion of the other related
transactions hereunder:

(1)      Corporate Matters
         -----------------

         The Vendor is a corporation duly amalgamated and validly subsisting
         under the laws of Ontario. The Vendor has all necessary corporate power
         to own its properties and to carry on its business as it is now being
         conducted. The Vendor has good right, full corporate power and absolute
         authority to enter into this Agreement and to sell, assign and transfer
         the Purchased Assets to the Purchaser in the manner contemplated herein
         and to perform all of the Vendor's obligations under this Agreement.
         The Vendor and its shareholders have taken all necessary or desirable
         actions, steps and corporate and other proceedings to approve or
         authorize, validly and effectively, the entering into of, and the
         execution, delivery and performance of, this Agreement and the sale and
         transfer of the Purchased Assets by the Vendor to the Purchaser, except
         in respect of matters to be completed on or before the Closing Date.
         This Agreement is a legal, valid and binding obligation of the Vendor,
         enforceable against it in accordance with its terms subject to (i) bulk
         sales legislation and bankruptcy, insolvency, moratorium,
         reorganization and other laws relating to or affecting the enforcement
         of creditors' rights generally and (ii) the fact that equitable
         remedies, including the remedies of specific performance and
         injunction, may only be granted in the discretion of a court.

                                      -12-

<PAGE>

(2)      No Other Purchase Agreements. No person has any agreement, option,
         understanding or commitment, or any right or privilege (whether by law,
         preemptive or contractual) capable of becoming an agreement, option or
         commitment, for the purchase or other acquisition from the Vendor of
         any of the Purchased Assets, or any rights or interest therein, other
         than in the ordinary course of the Business.

(3)      Contractual and Regulatory Approvals. Except as specified in Schedule
         3.01(3) attached hereto, the Vendor is not under any obligation,
         contractual or otherwise, to request or obtain the consent of any
         person, and no permits, licences, certifications, authorizations or
         approvals of, or notifications to, any federal, provincial, municipal
         or local government or governmental agency, board, commission or
         authority are required,

         (a)      in connection with the execution, delivery or performance by
                  the Vendor of this Agreement or the completion of any of the
                  transactions contemplated herein, or

         (b)      to avoid the loss of any permit, licence, certification or
                  other authorization relating to the Business, or

         (c)      in order that the Purchaser has the authority to carry on the
                  Business in the ordinary course and in the same manner as
                  presently conducted following the closing of the transactions
                  contemplated hereunder to the knowledge of the Vendor.

         To the knowledge of the Vendor and SoftQuad, complete and correct
         copies of any agreements under which the Vendor is obligated to request
         or obtain any such consent have been provided to the Purchaser.

(4)      Governmental Licences
         ---------------------

         (a)      The Vendor holds all necessary licences, registrations and
                  qualifications in each jurisdiction in which

                  (i)      it owns or leases any of the Purchased Assets, or

                  (ii)     the nature or conduct of the business or any part
                           thereof, or the nature of the Purchased Assets or any
                           part thereof, makes such qualification necessary or
                           desirable to enable the Business to be carried on as
                           now conducted or to enable the Purchased Assets to be
                           owned, leased and operated.

(5)      Compliance with Constating Documents, Agreements and Laws. The
         execution, delivery and performance of this Agreement and each of the
         other agreements contemplated or referred to herein by the Vendor, and
         the completion of the transactions contemplated hereby, will not
         constitute or result in a violation, breach or default or cause the
         acceleration of any obligations which are included in the Assumed
         Liabilities, in the aggregate, material to the Business or Condition of
         the Business, under:

                                      -13-

<PAGE>

         (a)      any term or provision of any of the articles, by-laws or other
                  constating documents of the Vendor, or

         (b)      subject to obtaining the contractual consents referred to in
                  Schedule 3.01(3) hereof, the terms of any indenture, agreement
                  (written or oral), instrument or understanding or other
                  obligation or restriction to which the Vendor is a party or by
                  which it is bound including, without limitation, any of the
                  Assumed Contracts, or

         (c)      subject to obtaining the regulatory consents referred to in
                  Schedule 3.01(3) hereof and to the knowledge of the Vendor and
                  SoftQuad, any term or provision of any of the Licence Rights
                  or any order of any court, governmental authority or
                  regulatory body or any law or regulation of any jurisdiction
                  in which the Business is carried on.

(6)      Intellectual Property Rights.
         -----------------------------

         (a)      Schedule 2.01 (m) lists all trademarks, trademark applications
                  and registrations, trade names, styles, logos, copyrights,
                  copyright applications and registrations owned by the Vendor
                  and relating to the Business, to the knowledge of the Vendor
                  and SoftQuad. The Vendor neither owns any registered patents
                  or patent applications registered or unregistered industrial
                  designs or design applications, nor has any rights or licences
                  therefor as used in connection with the Purchased Assets other
                  than as set out in Schedule 3.01(6). There has not been any
                  infringement or (to the knowledge of the Vendor or SoftQuad)
                  alleged infringement by others of any of the copyrights,
                  patents, trade secrets, trademarks, industrial designs, trade
                  names, styles, logos, or any of the technical documentation or
                  other intellectual property included among the Purchased
                  Assets (collectively, the "INTELLECTUAL PROPERTY RIGHTS").
                  Except as set forth on Schedule 3.01(6), the Vendor is not a
                  party to any contract, agreement or licence, whether as
                  licensor, licensee, franchisor, franchisee, dealer,
                  distributor, or otherwise, with respect to any Intellectual
                  Property Rights (other than licences of the Products to
                  customers in the ordinary course of business).

         (b)      To the knowledge of the Vendor and SoftQuad, the Vendor is the
                  owner of and has the right to use all Intellectual Property
                  Rights as are necessary to enable the Vendor to use, and the
                  Purchaser to continue to use after the Closing Date, the
                  Purchased Assets in the manner presently used by the Vendor
                  and that use has not conflicted with, infringed, or otherwise
                  violated any rights of any entity. To the knowledge of the
                  Vendor and SoftQuad, except as set forth on Schedule 3.01(6),
                  no Affiliate or employee of the Vendor or any of the Vendor's
                  affiliates owns or uses any of the Intellectual Property
                  Rights, and except as set forth on Schedule 3.01(6), the
                  Vendor owns the Intellectual Property Rights with unencumbered
                  good and marketable title, free and clear of any and all
                  attachments, liens, claims, charges, options, pledges or other
                  encumbrances and the Vendor has the unrestricted right to sell

                                      -14-

<PAGE>

                  or assign to the Purchaser all such Intellectual Property
                  Rights.

         (c)      To the knowledge of the Vendor, the Intellectual Property
                  Rights are valid, in good standing and will be in full force
                  and effect as of the Closing Date. Except as set forth in
                  Schedule 3.01(6) and 3.01(l 1), there have been no
                  interference or infringement actions or other judicial,
                  arbitration, or other adversary proceedings commenced or (to
                  the knowledge of the Vendor or SoftQuad) threatened naming the
                  Vendor and concerning the Intellectual Property Rights and the
                  Vendor and SoftQuad have no knowledge of any reasonable
                  grounds upon which any proceeding would be instituted which
                  could challenge or affect the rights of the Vendor or
                  Purchaser (after the Closing Time) of any of the Intellectual
                  Property Rights. Each application for a trademark listed on
                  Schedule 2.01(m) hereto is awaiting action by its respective
                  appropriate recording office. Except as set forth on Schedule
                  3.01(6), the manufacture, use, performance or sale of the
                  Products do not violate or infringe on any intellectual
                  property right or other similar proprietary right of any
                  person or entity. Except as set forth on Schedule 3.01(6), the
                  Vendor has the exclusive right to use and the unrestricted
                  right to transfer to the Vendor all of the Vendor's trade
                  secrets used in connection with the Purchased Assets, and none
                  of such trade secrets have been used, divulged, or
                  appropriated for the benefit of any past or present employees
                  of the Vendor, or to the detriment of the Vendor.

         (d)      The conduct of the Business and the use of the Intellectual
                  Property Rights does not infringe, and the Vendor has not
                  received any notice, complaint, threat or claim alleging
                  infringement of, any patent, trade mark, trade name,
                  copyright, industrial design, trade secret or other
                  Intellectual Property Rights or propriety night of any other
                  person, and the conduct of the Business does not include any
                  activity which may constitute passing off.

(7)      Financial Records. All material financial transactions of the Business
         in respect of the Purchased Assets have been recorded in the financial
         books and records of the Vendor in accordance with good business
         practice. No information, records or systems pertaining to the
         operation or administration of the Business are in the possession of,
         recorded, stored, maintained by or otherwise dependent upon any other
         person.

(8)      Liabilities. There are no liabilities (contingent or otherwise) of the
         Vendor of any kind whatsoever in respect of which the Purchaser may
         become liable on or after the consummation of the transactions
         contemplated by this Agreement, except the Assumed Liabilities.

(9)      Absence of Certain Change or Events. Other than the transactions
         completed under the Interleaf Agreement, from December 31, 1997 to
         September 30, 1998, there has not been any material adverse change in
         the Condition of the Business.

                                      -15-

<PAGE>

(10)     Tax Matters. For purposes of this Agreement, the term "GOVERNMENTAL
         CHARGES" means and includes all taxes, customs duties, rates, levies,
         assessments, reassessments and other charges, together with all
         penalties, interest and fines with respect thereto, payable to any
         federal, provincial, municipal, local or other government or
         governmental agency, authority, board, bureau or commission, domestic
         or foreign. The Vendor has paid all Governmental Charges which are due
         and payable by it on or before the Effective Date. There are no
         actions, suits, proceedings, investigations, enquiries or claims now
         pending or made or, to the best of the knowledge of the Vendor and
         SoftQuad, threatened against the Vendor in respect of Governmental
         Charges. The Vendor has withheld from each amount paid or credited to
         any person the amount of Governmental Charges required to be withheld
         therefrom and has remitted such Governmental Charges to the proper tax
         or other receiving authorities within the time required under
         applicable legislation.

(11)     Litigation. Except for the matters referred to in Schedule 3.01 (11)
         attached hereto, there are no actions, suits or proceedings, judicial
         or administrative (whether or not purportedly on behalf of the Vendor)
         pending or, to the best of the knowledge of the Vendor and SoftQuad,
         threatened, by or against or affecting the Vendor which relate to the
         Business, at law or in equity, or before or by any court or any
         federal, provincial, municipal or other governmental department,
         commission, board, bureau, agency or instrumentality, domestic or
         foreign. Except for the matters referred to in Schedule 3.01(11) there
         are no grounds on which any such action, suit or proceeding might be
         commenced with any reasonable likelihood of success to the Vendor's and
         SoftQuad's knowledge.

(12)     Environmental Matters. The Vendor has not received any notice of any
         non-compliance with any Environmental Laws. For the purposes of this
         subparagraph 3.01(12) "Environmental Laws" means all applicable
         federal, provincial, municipal and local laws, regulations and orders
         issued by any governmental or regulatory agency relating to the
         environment, occupational health and safety, product safety, product
         liability and storage and transportation of goods.

(13)     Title to Assets. The Vendor is the owner of and has good and marketable
         title to all of the Purchased Assets free and clear of all Encumbrances
         whatsoever, except for:

                  (i)      the properties and assets disposed of, utilized or
                           consumed since September 30, 1998 in the ordinary
                           course of the Business; and

                  (ii)     the Encumbrances described in Schedule 3.01(13)
                           attached hereto, all of which will be discharged
                           prior to the conveyance of the Purchased Assets to
                           the Purchaser at the Closing Time, except for the
                           Assumed Liabilities.

         No other person owns any assets which are being used in the Business,
         except for the Leased Premises, software leases, licences and personal
         property leased by the Vendor.

(14)     Real Properties.  The Vendor does not own any real properties.
         ---------------

(15)     Leased Premises. Schedule2.01(i) attached hereto describes all leases
         or agreements to lease under which the Vendor leases any real property
         relating to the Business. Complete and correct copies of the Leases

                                      -16-

<PAGE>

         have been provided to the Purchaser. The Vendor is entitled to all
         rights and benefits as lessee under the Leases and the Vendor has not
         sublet, assigned, licensed or otherwise conveyed any rights in the
         Leased Premises or the Leases to any other person. The names of the
         other parties to the Leases, the description of the Leased Premises,
         the term, rent and other amounts payable under the Leases and all
         renewal options available under the Leases are accurately described in
         Schedule 2.01 (i). Other than obligations of the Vendor to Horizon
         Construction and the 1997 operating taxes for the Vancouver premises,
         which premises are more particularly described in Schedule 2.01(i), all
         rental and other payments and other obligations required to be paid and
         performed by the Vendor pursuant to the Leases have been duly paid and
         performed; the Vendor is not in default of any of its obligations under
         the Leases; and, to the best of the knowledge of the Vendor and
         SoftQuad, none of the landlords or other parties to the Leases are in
         default of any of their obligations under the Leases. The Vendor is
         entitled to assign all of its rights and interest under the Leases and
         in and to the Leased Premises to the Purchaser, subject to obtaining
         the consents referred to in Schedule 3.01(3) attached hereto. Subject
         to obtaining such consents, the terms and conditions of the Leases will
         not be affected by, nor will any of the Leases be in default as a
         result of, the completion of the transactions contemplated hereunder.
         The use by the Vendor of the Leased Premises is not in breach of any
         building, zoning or other statute, by-' law, ordinance, regulation,
         covenant, restriction or official plan. The Vendor has adequate rights
         of ingress to and egress from the Leased Premises for the operation of
         the Business in the ordinary course.

(16)     Works Orders and Deficiencies. There are no outstanding work orders,
         non-compliance orders, deficiency notices or other such notices
         relative to the Leased Premises, the other Purchased Assets or the
         Business which have been issued by any regulatory authority, police or
         fire department, sanitation, labour, health or other governmental
         authorities or agencies. There are no matters under discussion with any
         such department or authority relating to work orders, non-compliance
         orders, deficiency notices or other such notices. No amounts are owing
         by the Vendor in respect of the Leased Premises to any governmental
         authority or public utility, other than current accounts which are not
         in arrears.

(17)     Lease of Personal Property. Schedule 2.01(f) attached hereto describes
         all leases of equipment and vehicles used in or relating to the
         Business. Complete and correct copies of those leases have been
         provided to the Purchaser. The Vendor is entitled to all rights and
         benefits as lessee under those leases, and the Vendor has not sublet,
         assigned, licensed or otherwise conveyed any rights in those licenses
         or in the property leased thereunder to any other person. Other than as
         disclosed in the Assumed Liabilities, all payments and other
         obligations required to be paid and performed by the Vendor under those
         leases have been duly paid and performed; the Vendor is not in default
         of any its obligations under those leases; and, to the best of the
         knowledge of the Vendor and SoftQuad, none of the lessors or any other
         parties to those leases are in default of any of their obligations
         under those leases. The Vendor is entitled to assign all of its right
         and interest under those leases and in and to the property leased
         thereunder to the Purchaser, subject to obtaining the consents referred
         to in Schedule 3.01(3) attached hereto. Subject to obtaining such

                                      -17-

<PAGE>

         consents, the terms and conditions of those leases will not be affected
         by, nor will any of those leases be in default as a result of, the
         completion of the transaction contemplated hereunder.

(18)     Affiliates. Other than pursuant to informal distribution arrangements
         with Alpha Software Corporation and an agreement between SoftQuad and
         Prot6g6 Software Holdings Ltd., no part of the Business and none of the
         Purchased Assets are owned or operated by any Affiliate of the Vendor.

(19)     Partnerships or Joint Ventures. The Vendor is not, in relation to any
         part of the Business, a partner or participant in any partnership,
         joint venture, profit-sharing arrangement or other association of any
         kind and is not party to any agreement under which the Vendor agrees to
         carry on any part of the Business in such manner or by which the Vendor
         agrees to share any revenue or profit of the Business with any other
         person.

(20)     Restriction on Doing Business. To the knowledge of the Vendor and
         SoftQuad, the Vendor, is not a party to or bound by any agreement in
         relation to the Business which would restrict or limit its right to
         carry on any activity or to solicit business from any person or in any
         geographical area or otherwise to conduct the Business as the Vendor
         may determine. The Vendor is not subject to any judgement, order or
         requirement of any court or governmental authority in relation to the
         Business which is not of general application to persons carrying on a
         business similar to the Business. To the knowledge of the Vendor and
         SoftQuad, there are no facts or circumstances in relation to the
         Business which could materially adversely affect the ability of the
         Purchaser to continue to operate the Business as presently conducted
         following the completion of the transactions contemplated by this
         Agreement.

(21)     Warranties and Discounts. Except as described in Schedule 3.01(21)
         attached hereto, to the knowledge of the Vendor,

                  (i)      the Vendor has not given any guarantee or warranty in
                           respect of any of the products sold or the services
                           provided as part of the Business, except warranties
                           made in the ordinary course of the Business and in
                           the form of the standard written warranty, a copy of
                           which has been provided to the Purchaser, and except
                           for warranties implied by law;

                  (ii)     during each of the 3 fiscal years of the Vendor ended
                           immediately preceding the date hereof, no claims have
                           been made against the Vendor for breach of warranty
                           or contract requirement or negligence or for a price
                           adjustment or other concession in respect of any
                           defect in or failure to perform or deliver any
                           products, services or work in connection with the
                           Business which had, in any such year, an aggregate
                           cost exceeding $1,000;

                  (iii)    other than as listed in the Assumed Liabilities,
                           there are no maintenance obligations in favour of the
                           customers or users of products of the Business except
                           obligations incurred in the ordinary course of the
                           Business; and

                                      -18-

<PAGE>

                  (iv)     no product liability or other tort claims have been
                           made or, to threatened in writing against the Vendor,
                           relating to products sold or services performed by
                           the Business in the past two (2) years.

(22)     Licences, Agency and Distributorship Agreements. Schedule 2.01(o)
         attached hereto lists all agreements to which the Vendor is a party or
         by which it is bound under which the right to manufacture, use or
         market any product, service, technology, information, data, computer
         hardware or software or other property used in or produced or sold by
         the Business has been granted, licensed or otherwise provided to the
         Vendor or by the Vendor to any other person, or under which the Vendor
         has been appointed or any person has been appointed by the Vendor as an
         agent, distributor or licensee for any of the foregoing. Complete and
         correct copies of all of the agreements relating to the License Rights
         have been provided to the Purchaser. The Vendor is entitled to assign
         all of its interest in the License Rights to the Purchaser, subject to
         obtaining the consents required under material contracts with the
         Vendor and referred to in Schedule 3.01(3) attached hereto. None of the
         agreements relating to the License Rights grant to any person any
         authority to incur any liability or obligation or to enter into any
         agreement on behalf of the Vendor.

(23)     Outstanding Agreements. The Vendor is not a party to or bound by any
         material outstanding or executory agreement, contract or commitment,
         whether written or oral, relating to the Business, except for

         (a)      any contract, lease or agreement described or referred to in
                  this Agreement or in the Schedules hereto, and

         (b)      the contracts, leases and agreements described in Schedule
                  3.01(23) attached hereto.

         To the knowledge of the Vendor and SoftQuad, complete and correct
         copies of each of the contracts, leases and agreements described in
         Schedule 3.01(23) have been provided to the Purchaser.

(24)     Good Standing of Agreements. Other than with respect to the Assumed
         Liabilities, the Vendor is not in default or breach of any of its
         obligations under any one or more contracts, agreements (written or
         oral), commitments, indentures or other instruments to which it is a
         party or by which it is bound relating to the Business, and to the
         knowledge of the Vendor and SoftQuad, there exists no state of facts
         which, after notice or lapse of time or both, would constitute such a
         default or breach. All such contracts, agreements, commitments,
         indentures and other instruments are now in good standing and in full
         force and effect without amendment thereto, the Vendor is entitled to
         all benefits thereunder and, to the knowledge of the Vendor and
         SoftQuad, the other parties to such contracts, agreements, commitments,
         indentures and other instruments are not in default or breach of any of
         their obligations thereunder. To the knowledge of the Vendor and
         SoftQuad, there are no contracts, agreements, commitments, indentures
         or other instruments relating to the Business under which the Vendor's
         rights or the performance of its obligations are dependent upon or

                                      -19-

<PAGE>

         supported by the guarantee of or any security provided by any other
         person.

(25)     Employees. Schedule 3.01(25) attached hereto sets forth the name and
         department name of each employee and independent contractor of the
         Business. Schedule 3.01(25) also sets forth the names of all employees
         and independent contractors of the Business who are now on disability,
         maternity or other authorized leave or who are receiving workers'
         compensation or short-term or long-term disability benefits.

(26)     Employment Agreements. Except for those employees set out in Schedule
         3.01(25),the Vendor is not a party to any written or oral employment,
         service or consulting agreement relating to any one or more persons
         working in the Business, except for oral employment agreements which
         are of indefinite term and without any special arrangements or
         commitments with respect to the continuation of employment or payment
         of any particular amount upon termination of employment. Other than
         those employees set out in Schedule 3.01(25), there are no employees of
         the Business who cannot be dismissed upon such period of notice as is
         required by law in respect of a contract of hire for an indefinite
         term.

(27)     Labour Matters and Employment Standards.
         ---------------------------------------

         (a)      The Vendor is not subject to any agreement with any labour
                  union or employee association and has not made any commitment
                  to or conducted negotiations with any' labour union or
                  employee association with respect to any future agreement and,
                  to the best of the knowledge of the Vendor and SoftQuad, there
                  is no current attempt to organize, certify or establish any
                  labour union or employee association, in relation to any of
                  the employees of the Business.

         (b)      Except as disclosed in Schedule 3.01(27), the Vendor has
                  complied with all applicable laws, rules, regulations and
                  orders relating to employment in the Business, including those
                  relating to wages, hours, collective bargaining, occupational
                  health and safety, employment standards, pay equity and
                  workers' compensation in respect of former employees of the
                  Vendor. There are no outstanding charges or complaints against
                  the Vendor relating to unfair labour practices or
                  discrimination or under any legislation relating to former
                  employees. The Vendor has paid in full all amounts owing under
                  the Workplace Safety and Insurance Act (Ontario) and under
                  comparable provincial legislation in the province of British
                  Columbia, if any, and the workers' compensation claims
                  experience of the Vendor would not permit a penalty
                  reassessment under such legislation.

(28)     Employee Benefit and Pension Plans.
         ----------------------------------

         (a)      Except as listed in Schedule 3.01(28) attached hereto, the
                  Vendor does not have, and is not subject to any present or
                  future obligation or liability under, any pension plan,
                  deferred compensation plan, retirement income plan, other than
                  the Canada Pension Plan. Complete and correct copies of all
                  documentation establishing or relating to the stock option or

                                      -20-

<PAGE>

                  stock purchase plan, profit sharing plan, bonus plan or
                  policy, employee group insurance plan, hospitalization plan,
                  disability plan or other employee benefit plan, program,
                  policy or plan (collectively the "BENEFIT PLANS") or written
                  summaries of the terms thereof have been provided to the
                  Purchaser.

         (b)      There are no pending claims by any former employee covered
                  under the Benefit Plans except as set out in Schedule 3.01(11)
                  which allege a breach of fiduciary duties or violation of
                  governing law or which may result in liability to the employer
                  and, to the best of the knowledge of the Vendor and SoftQuad,
                  there is no basis for such a claim.

(29)     Insurance. Schedule 3.01(29) attached hereto contains a true and
         complete list of all insurance policies maintained by the Vendor or
         under which the Vendor is covered in respect of the properties, assets,
         operations and personnel of the Business as of the date hereof.
         Complete and correct copies of all such insurance policies have been
         provided to the Purchaser. Such insurance policies are in full force
         and effect and the Vendor is not in default with respect to the payment
         of any premium or compliance with any of the provisions contained in
         any such insurance policy. To the best of the knowledge of the Vendor
         and SoftQuad, there are no circumstances under which the Vendor would
         be required to or, in order to maintain its coverage, should give any
         notice to the insurers under any such insurance policies which has not
         been given. The Vendor has not received notice from any of the insurers
         regarding cancellation of such insurance policies. The Vendor has not
         failed to give any notice of or to present any claim under any such
         insurance policy in due and timely fashion. The Vendor has not received
         notice from any of the insurers denying any claims.

(30)     Non-Arm's Length Matters. Except as disclosed in Schedule 3.01(30),
         with respect to the Business, the Vendor is not a party to or bound by
         any agreement with, is not indebted to, and no amount is owing to the
         Vendor by, any of the Affiliates of the Vendor or any officers, former
         officers, former directors, shareholders, former shareholders,
         employees (except for oral employment agreements with employees) or
         former employees of the Vendor or to any person not dealing at arm's
         length with any of the foregoing.

(31)     Government Assistance. Schedule 3.01(31) attached hereto describes all
         agreements, loans, other funding arrangements and assistance programs
         (collectively called "GOVERNMENT ASSISTANCE PROGRAMS") which have been
         provided to the Business from any federal, provincial, municipal or
         other government or governmental agency, board, commission or
         authority, domestic or foreign (collectively called "GOVERNMENT
         AGENCIES"). Complete and correct copies of all documents relating to
         the Government Assistance Programs have been delivered to the
         Purchaser. The Vendor has performed all of its obligations under the
         Government Assistance Programs, and no basis exists for any Government
         Agencies to seek payment or repayment of any amount or benefit provided
         under any of the Government Assistance Programs.

                                      -21-

<PAGE>

(32)     Compliance with Laws. In relation to the Business, the Vendor is not in
         violation of any federal, provincial or other law, regulation or order
         of any government or governmental or regulatory authority, domestic or
         foreign.

(33)     Complete Conveyance. The Purchased Assets include all rights,
         properties, interests, assets (both tangible and intangible) and
         agreements necessary to enable the Purchaser to carry on the Business
         in the same manner and to the same extent as it has been carried on by
         the Vendor prior to the date hereof

(34)     Vendor Residency. The Vendor is not a non-resident of Canada within the
         meaning of the Income Tax Act (Canada).

(35)     Copies of Documents. Complete and correct copies (including all
         amendments) of all leases, material contracts and other documents
         referred to in this Agreement or any Schedule hereto or required to be
         disclosed hereby have been delivered to the Purchaser.

(36)     Disclosure. No representation or warranty contained in this Section
         3.01, and no statement contained in any Schedule, certificate, list,
         summary or other disclosure document provided or to be provided to the
         Purchaser pursuant hereto, or in connection with the transactions
         contemplated hereby, contains or will contain any untrue statement of a
         material fact, or omits or will omit to state any material fact which
         is necessary in order to make the statements contained therein not
         misleading.

3.02.    Representations and Warranties by SoftQuad. SoftQuad hereby represents
         and warrants to the Purchaser as follows, and confirms that the
         Purchaser is relying upon the accuracy of each of such representations
         and warranties in connection with the purchase of the Purchased Shares
         and the completion of the other related transactions hereunder:

(1)      Corporate Authority and Binding Obligation. SoftQuad is a corporation
         duly incorporated and validly subsisting under the laws of New
         Brunswick. SoftQuad has good right, fall corporate power and absolute
         authority to enter into this Agreement and to sell, assign and transfer
         the Purchased shares to the Purchaser in the manner contemplated herein
         and to perform all of SoftQuad's obligations under this Agreement.
         SoftQuad and its shareholders and board of directors have taken all
         necessary or desirable actions, steps and corporate and other
         proceedings to approve or authorize, validly and effectively, the
         entering into of, and the execution, delivery and performance of, this
         Agreement and the sale and transfer of the Purchased Shares to the
         Purchaser. This Agreement is a legal, valid and binding obligation of
         SoftQuad, enforceable against it in accordance with its terms subject
         to (i) bulk sales legislation and bankruptcy, insolvency, moratorium,
         reorganization and other laws relating to or affecting the enforcement
         of creditors' rights generally and (ii) the fact that equitable
         remedies, including the remedies of specific performance and
         injunction, may only be granted in the discretion of a court.

(2)      Status of UK. UK is a corporation duly incorporated and validly
         subsisting under the laws of its jurisdiction of incorporation. UK has
         all necessary corporate power to own its properties and to carry on its
         business as it is now being conducted. UK has no subsidiaries.

                                      -22-

<PAGE>

(3)      Authorized and Issued Capital of UK. The authorized capital of UK
         consists of 1,000 ordinary shares, of which 100 ordinary shares have
         been duly issued and are outstanding as fully paid and non-assessable
         shares, all of which are owned by SoftQuad.

(4)      No Other Purchase Agreements. No person has any agreement, option,
         understanding or commitment, or any right or privilege (whether by law,
         preemptive or contractual) capable of becoming an agreement, option or
         commitment, including convertible securities, warrants or convertible
         obligations of any nature, for:

         (a)      the purchase, subscription, allotment or issuance of, or
                  conversion into, any of the unissued shares in the capital of
                  UK or any securities of UK;

         (b)      the purchase from SoftQuad of any of the Purchased Shares, or
                  any rights or interest therein; and

         (c)      the purchase or other acquisition from UK of any of its
                  undertaking, property, assets, other than in the ordinary
                  course of business.

3.03.    Representations and Warranties by the Purchaser. The Purchaser hereby
         represents and warrants to the Vendor and SoftQuad as follows, and
         confirms that the Vendor and SoftQuad are relying upon the accuracy of
         each of such representations and warranties i connection with the sale
         of the Purchased Assets and the completion of the other transactions
         hereunder:

(1)      Corporate Authority and Binding Obligation. The Purchaser is a
         corporation duly incorporated and validly subsisting under the laws of
         its jurisdiction of incorporation. The Purchaser has all necessary
         corporate power to own its properties and to carry on its business as
         it is now being conducted. The Purchaser has good right, full corporate
         power and absolute authority to enter into this Agreement and to
         purchase the Purchased Assets from the Vendor and the Purchased Shares
         from SoftQuad in the manner contemplated herein and to perform all of
         the Purchaser's obligations under this Agreement. The Purchaser and its
         shareholders and board of directors have taken all necessary or
         desirable actions, steps and corporate and other proceedings to approve
         or authorize, validly and effectively, the entering into of, and the
         execution, delivery and performance of, this Agreement and the purchase
         Of the Purchased Assets from the Vendor and the purchase of the
         Purchased Shares from SoftQuad. This Agreement is a legal, valid and
         binding obligation of the Purchaser. enforceable against it in
         accordance with its terms subject to (i) bankruptcy, insolvency,
         moratorium, reorganization and other laws relating to or affecting the
         enforcement of creditors' rights generally and (ii) the fact that
         equitable remedies, including the remedies of specific performance and
         injunction, may only be granted in the discretion of a court.

(2)      Authorized and Issued Capital of the Purchaser. The authorized capital
         of the Purchaser consists of an unlimited number of common shares, of
         which I common shares have been duly issued and are outstanding as
         fully paid and non-assessable shares. After giving effect to the
         transactions contemplated in this Agreement, the common shares to be

                                      -23-

<PAGE>

         issued to the Vendor pursuant to clause 2.07(b) hereof shall represent
         19.0% of the issued and outstanding common shares of the Purchaser.

(3)      No Other Purchase Agreements. Other than pursuant to the Shareholders
         Agreement attached as Schedule 6.01(14), no person has any agreement,
         option, understanding or commitment, or any right or privilege (whether
         by law, preemptive or contractual) capable of becoming an agreement,
         option or commitment, includin2 convertible securities, warrants or
         convertible obligations of any nature, for:

         (a)      the purchase, subscription, allotment or issuance of, or
                  conversion into, any of the unissued shares in the capital of
                  the Purchaser or any securities of the Purchaser; and

         (b)      the purchase or other acquisition from the Purchaser of any of
                  its undertaking, property, assets, other than in the ordinary
                  course of business.

(4)      Contractual and Regulatory Approvals. The Purchaser is not under any
         obligation, contractual or otherwise to request or obtain the consent
         of any person, and no permits, licences, certifications, authorizations
         or approvals of, or notifications to, any federal, provincial,
         municipal or local government or governmental agency, board, commission
         or authority are required to be obtained by the Purchaser in connection
         with the execution, delivery or performance by the Purchaser of this
         Agreement or the completion of any of the' transactions contemplated
         herein.

(5)      Compliance with Constating Documents, Agreements and Laws. The
         execution, delivery and performance of this Agreement and each of the
         other agreements contemplated or referred to herein by the Purchaser,
         and the completion of the transactions contemplated hereby, will not
         constitute or result in a violation or breach of or default under:

         (a)      any term or provision of any of the articles, by-laws or other
                  constating documents of the Purchaser;

         (b)      the terms of any indenture, agreement (written or oral),
                  instrument or understanding or other obligation or restriction
                  to which the Purchaser is a party or by which it is bound, or

         (c)      any term or provision of any licences, registrations or
                  qualification of the Purchaser or any order of any court,
                  governmental authority or regulatory body or any applicable
                  law or regulation of any jurisdiction.

(6)      Investment Canada Act. The Purchaser is a "non-Canadian" for purposes
         of and within the meaning of the Investment Canada Act.

                                      -24-

<PAGE>

                                   ARTICLE 4
                           SURVIVAL AND LIMITATIONS OF
                         REPRESENTATIONS AND WARRANTIES

4.01.    Survival of Warranties by the Vendor and SoftQuad
         -------------------------------------------------

         The representations and warranties made by the Vendor and SoftQuad and
contained in this Agreement, or contained in any document or certificate given
in order to carry out the transactions contemplated hereby, will survive the
closing of the purchase of the Purchased Assets and the Purchased Shares
provided for herein and, notwithstanding such closing or any investigation made
by or on behalf of the Purchaser or any other person or any knowledge of the
Purchaser or any other person, shall continue in full force and effect for the
benefit of the Purchaser provided that no Warranty Claim may be made or brought
by the Purchaser after the date which is two years following the Closing Date.
After the expiration of such period of time, the Vendor and SoftQuad will be
released from all obligations and liabilities in respect of the representations
and warranties made by the Vendor and contained in this Agreement or in any
document or certificate given in order to carry out the transactions
contemplated hereby.

4.02.    Survival of Warranties by Purchaser
         -----------------------------------

         The representations and warranties made by the Purchaser and contained
in this Agreement or contained in any document or certificate given in order to
carry out the transactions contemplated hereby will survive the closing of the
purchase and sale of the Purchased Assets and the Purchased Shares provided for
herein and, notwithstanding such closing or any investigation made by or on
behalf of the Vendor or any other person or any knowledge of the Vendor or any
other person, shall continue in full force and effect for the benefit of the
Vendor.

4.03.    Limitations on Warranty Claims
         ------------------------------

(1)      The Purchaser shall not be entitled to make a Warranty Claim if the
         Purchaser has been advised in writing or otherwise has actual knowledge
         prior to the Closing Time of the inaccuracy, non-performance,
         non-fulfilment or breach which is the basis for such Warranty Claim and
         the Purchaser completes the transactions hereunder notwithstanding such
         inaccuracy, nonperformance, non-fulfilment or breach.

(2)      The amount of any damages which may be claimed by the Purchaser
         pursuant to a Warranty Claim shall be calculated to be the cost or loss
         to the Purchaser after giving effect to any insurance proceeds
         available to the Purchaser in relation to the matter which is the
         subject of the Warranty Claim.

(3)      The Purchaser shall not be entitled to make any Warranty Claim until
         the aggregate amount of all damages, losses, liabilities and expenses
         incurred by the Purchaser as a result of all misrepresentations and
         breaches of warranties contained in this Agreement or contained in any
         document or certificate given in order to carry out the transactions
         contemplated hereby, after taking into account clause (b) of this
         section, is equal to $25,000.

                                      -25-

<PAGE>

(4)      Notwithstanding any other provisions of this Agreement or of any
         agreement, certificate or other document made in order to carry out the
         transactions contemplated hereby, the maximum aggregate liability of
         the Vendor and SoftQuad together in respect of all Warranty Claims by
         the Purchaser will be limited to a maximum as set out in the form of
         indemnity agreement attached hereto as Schedule 6.01(9).

                                   ARTICLE 5
                                   COVENANTS

5.01.    Covenant by the Vendor and SoftQuad
         -----------------------------------

         The Vendor covenants to the Purchaser that it will do or cause to be
done the following:

(1)      Investigation of Business and Examination of Documents
         ------------------------------------------------------

         The Vendor will provide access to and will permit the Purchaser,
         through its representatives, to make such investigation of, the
         operations, properties, assets and records of the Business and of its
         financial and legal condition as the Purchaser deems necessary or
         advisable to familiarize itself with such operations, properties,
         assets, records and other matters. Without limiting the generality of
         the foregoing, the Vendor will permit the Purchaser and its
         representatives to have access to the premises used in connection with
         the Business, and will produce for inspection and provide copies to the
         Purchaser of:

         (a)      all agreements and other documents referred to in Sections
                  2.01 and 3.01 hereof or in any of the Schedules attached
                  hereto and all other contracts, leases, licences, title
                  documents, title opinions, insurance policies, pension plans,
                  information relating, to employees of the Business, customer
                  lists, information relating to customers and suppliers of the
                  Business, documents relating to legal or administrative
                  proceedings and all other documents of or in the possession of
                  the Vendor relating to the Business;

         (b)      all books, records, accounts, tax returns and financial
                  statements of the Business; and

         (c)      all other information which, in the reasonable opinion of the
                  Purchaser's representatives, is required in order to make an
                  examination of the Business.

         Subject to Section 4.03 hereof, such investigations and inspections
         shall not mitigate or affect the representations and warranties of the
         Vendor and SoftQuad hereunder, which shall continue in full force and
         effect.

(2)      Conduct of Business. Except as contemplated by this agreement or with
         the prior written consent of the Purchaser, from and including the date
         of this Agreement to and including the Closing Date, the Vendor and
         SoftQuad will:

                                      -26-

<PAGE>

         (a)      operate the Business and the business of UK only in the
                  ordinary course thereof, consistent with past practices.

         (b)      not create, incur or assume any Encumbrance upon any of the
                  Purchased Assets or assets of UK;

         (c)      not dispose of any of the Purchased Assets or assets of UK
                  except in the ordinary course of the Business; and

         (d)      not terminate or waive any right of substantial value of the
                  Business or to the business of UK.

(3)      Transfer of Purchased Assets and Purchased Shares. At or before the
         Closing Time, the Vendor and SoftQuad will cause all necessary steps
         and corporate proceedings to be taken in order to permit the Purchased
         Assets and Purchased Shares to be duly and regularly transferred to the
         Purchaser.

(4)      General Conveyance. At the Closing Time, the Vendor will deliver to the
         Purchaser good and marketable title to and exclusive possession of the
         Purchased Assets. At the Closing Time, the Vendor will execute and
         deliver to the Purchaser one or more forms of general conveyance or
         bills of sales in respect of the assignment, conveyance, transfer and
         delivery of the Purchased Assets to the Purchaser in form acceptable to
         the Purchaser.

(5)      Retail Sales Tax. At or before the Closing Time, the Vendor will
         deliver to the Purchaser a duplicate copy of a certificate issued
         pursuant to Section 6 of the Retail Sales Tax Act (Ontario) and will
         deliver evidence satisfactory to the Purchaser that all taxes required
         to be paid by the Vendor under similar legislation in the Province of
         British Columbia have been paid.

(6)      Bulk Sales Act Legislation. The Purchaser hereby waives compliance by
         the Vendor with the provisions of the Bulk Sales Act (Ontario) and
         similar legislation in the Province of British Columbia. The Vendor
         will provide the Purchaser with a statement of the Vendor's creditors
         in accordance with section 4 of the Bulk Sales Act (Ontario). The
         Vendor will indemnify the Purchaser in a form satisfactory to the
         Purchaser's solicitors, acting reasonably, with respect to all costs,
         expenses, damages and losses which the Purchaser may incur or suffer as
         a result of the Vendor's non-compliance with the Bulk Sales Act
         (Ontario) and similar legislation in the Province of British Columbia,
         except to the extent that such damages arise from the Purchaser's
         failure to pay and satisfy any of the Assumed Liabilities.

(7)      Pledge of Shares. If the Vendor fails to comply with the provisions of
         the Bulk Sales Act (Ontario) and similar legislation in the Province of
         British Columbia, as security for the obligations of the Vendor
         pursuant to the Bulk Sales Act (Ontario) and such similar legislation,
         at or before the Closing Time, the Vendor will pledge in favour of the
         Purchaser the Common Shares issued to the Vendor pursuant to section
         2.08(b) hereof in the form attached as Schedule 6.01(9).

                                      -27-

<PAGE>

(8)      Transfer of Assumed Contracts. Subject to Section 2.02, at the Closing
         Time, the Vendor will deliver to the Purchaser

         (a)      an assignment of the Assumed Contracts in form acceptable to
                  the Purchaser, and

         (b)      consents to the assignment of all of the Assumed Contracts
                  under which consent may be required and which the Vendor has
                  been able to obtain.

(9)      Payment to the Purchaser. SoftQuad shall make cash payments to the
         Purchaser in the amount of any payroll refund received from Interleaf,
         Inc. for the period from September 11 to September 15, 1998 inclusive
         in respect of the Interleaf Agreement.

(10)     Loan to the Purchaser. SoftQuad shall provide the Purchaser with the
         sum of U.S. $100,000, less the amount of any payroll costs incurred by
         SoftQuad to meet the September 30, 1998 and October 30, 1998 payroll of
         the Vendor (the "Advance"), as a three year, non-interest bearing loan
         to be repaid by the Purchaser pursuant to the terms of a promissory
         note to be made by the Purchaser in favour of SoftQuad on the Closing
         Date, a copy of the form of such promissory note is attached hereto as
         Schedule 5.01(10). SoftQuad's advance in the amount of U.S.$ 100,000
         less the Advance shall be made on or before the Closing Date.

(11)     Non-Competition Agreement. At the Closing Time, the Vendor and SoftQuad
         will execute and deliver to the Purchaser a non-competition agreement
         in the form of the draft agreement attached hereto as Schedule 5.01(l
         1).

(12)     Licence Agreement re SoftQuad. Name. On or before the Closing Date, the
         Vendor and/or SoftQuad shall execute and deliver a trademark licence
         agreement with the Purchaser granting the Purchaser a licence to use of
         any and all "SoftQuad" trademarks which also contain the words
         "Softquad", "Q and design" in the form of the licence agreement
         attached hereto as Schedule 5.01(12).

(13)     Assignment of Loans to UK. At the Closing Time, SoftQuad will execute
         and deliver to the Purchaser an assignment agreement assigning,
         transferring and setting over to the Purchaser the loans outstanding by
         UK to SoftQuad for the aggregate consideration of $380,374 in the form
         of the assignment agreement attached hereto as Schedule 5.01(13).

(14)     Assignment of Accounts Receivable. At the Closing Time, the Vendor and
         SoftQuad shall cause Alpha Software Corporation to execute and deliver
         an assignment in favour of the Purchaser of all of Alpha Software
         Corporation's accounts receivable owing from Ingram Micro Inc. derived
         from the sale of HoTMetaL software.

5.02.    Covenants by the Purchaser.
         --------------------------

         The Purchaser covenants to the Vendor and SoftQuad that it will do or
cause to be done the following:

                                      -28-

<PAGE>

(1)      Confidentiality. Prior to the Closing Time and, if the transaction
         contemplated hereby is not completed, at all times after the Closing
         Time, the Purchaser will keep confidential all information obtained by
         it relating to the Business and UK, except such information which

         (a)      prior to the date hereof was already in the possession of the
                  Purchaser, as demonstrated by written records;

         (b)      is generally available to the public, other than as a result
                  of a disclosure by the Purchaser,

         (c)      is made available to the Purchaser on a non-confidential basis
                  from a source other than the Vendor or its representatives; or

         (d)      is required to be disclosed by law, applicable regulatory
                  authorities or stock exchanges.

         The Purchaser further agrees that such information will be disclosed
         only to those of its employees and representatives of its advisors who
         need to know such information for the purposes of evaluating and
         implementing the transaction contemplated hereby. Notwithstanding the
         foregoing provisions of &s subclause, the obligation to maintain the
         confidentiality of such information will not apply to the extent that
         disclosure of such information is required in connection with
         governmental or other applicable filings relating to the transactions
         hereunder, provided that, in such case, unless the Vendor otherwise
         agrees, the Purchaser will, if possible, request confidentiality in
         respect of such governmental or other filings. If the transactions
         contemplated hereby are not consummated for any reason, the Purchaser
         will return forthwith, without retaining any copies thereof, all
         information and documents obtained from the Vendor.

(2)      Employees
         ---------

         (a)      At or before the Closing Time, the Purchaser will offer
                  employment to all employees of the Business at rates of
                  compensation, with employee benefits and on terms not less
                  favourable on a cumulative basis than those provided to and on
                  which such employees were employed by the Vendor on the date
                  hereof.

         (b)      The Vendor will remain responsible and liable for all amounts
                  which have accrued to all employees of the Business prior to
                  the Effective Date including all liability of the Vendor under
                  the employee stock purchase/option plan, except for accrued
                  vacation pay, including, without limitation, all salary,
                  wages, commissions, bonus and employee benefits (other than
                  benefits under the employee stock purchase/option plan). In
                  addition, the Purchaser will be liable for all severance
                  payments, damages for wrongful dismissal for which an employer
                  is liable at law in respect of the termination of the
                  employment of the employees of the Business who do not accept
                  an offer of employment by the Purchaser.

                                      -29-

<PAGE>

(3)      Post-Closing Access
         -------------------

         After the Closing Date, upon reasonable notice, the Purchaser shall
         give to the representatives, employees, counsel and accountants of the
         Vendor, access, during normal business hours, to the Business Records
         which relate to periods prior to the Closing Date and will permit such
         persons to examine and copy such records, at the Vendor's expense, to
         the extent reasonably requested by the Vendor in connection with the
         preparation of tax and financial reporting matters, audits, legal
         proceedings, governmental investigations and other business purposes.
         However, the Purchaser shall not be obliged to take any action pursuant
         to this subsection that would unreasonably disrupt the normal course of
         its business, violate the terms of any contract to which it is a party
         or to which the Purchaser or any of its assets is subject or to grant
         access to any of its proprietary, confidential or classified
         information.

(4)      Use of Names. On or before 2 years after the Closing Date, the
         Purchaser shall chance the name of the Business and shall discontinue
         all use of any and all trademarks of the Vendor which also contain the
         word "SoftQuad", unless the Vendor has assigned such trademarks to the
         Purchaser in accordance with the Licence Agreement attached hereto as
         Schedule 5.01(12).

(5)      Investment Canada Act. The Purchaser shall comply with the provisions
         of the Investment Canada Act in respect of its acquisition of the
         Purchased Assets.

                                   ARTICLE 6
                                   CONDITIONS

6.01.    Conditions to the Obligations of the Purchaser.
         ----------------------------------------------

         Notwithstanding anything herein contained, the obligation of the
Purchaser to complete the transactions provided for herein will be subject to
the fulfilment of the following conditions at or prior to the Closing Time, and
the Vendor and SoftQuad jointly and severally covenant to use their best efforts
to ensure that such conditions are fulfilled.

(1)      Accuracy of Representations and Warranties and Performance of the
         Covenants. The representations and warranties of the Vendor and
         SoftQuad contained in this Agreement or in any documents delivered in
         order to carry out the transactions contemplated hereby shall be true
         and accurate on the date hereof and at the Closing Time with the same
         force and effect as though such representations and warranties had been
         made as of the Closing Time (regardless of the date as of which the
         information in this Agreement or in any Schedule or other document made
         pursuant hereto is given), except as such representations and
         warranties may be affected by the occurrence of events or transactions
         expressly contemplated and permitted hereby. In addition, the Vendor
         and SoftQuad shall have complied with all covenants and agreements
         herein agreed to be performed or caused to be performed by them at or
         prior to the Closing Time. In addition, the Vendor and SoftQuad shall
         have delivered to the Purchaser a certificate confirming that the facts
         with respect to each of such representations and warranties by the
         Vendor and SoftQuad are as set out herein at the Closing Time and that
         the Vendor and SoftQuad have performed all covenants required to be
         performed by it or them hereunder.

                                      -30-

<PAGE>

(2)      No Restraining Proceedings. No order, decision or ruling of any court,
         tribunal or regulatory authority having jurisdiction shall have been
         made, and no action or proceeding shall be pending or threatened which,
         in the opinion of counsel to the Purchaser, is likely to result in an
         order, decision or ruling.

         (a)      to disallow, enjoin, prohibit or impose any limitations or
                  conditions on the purchase and sale of the Business or the
                  Purchased Assets contemplated hereby or the right of the
                  Purchaser to own the Business or the Purchased Assets; or (b)
                  to impose any limitations or conditions which may have a
                  material adverse affect on the Condition of the Business.

(3)      Consents. All consents, permits, licences, certifications,
         authorizations or approvals required to be obtained or notifications
         required to be sent in order to carry out the transactions contemplated
         hereby in compliance with all laws and agreements binding upon the
         parties hereto shall have been obtained or sent as the case may be,
         including the consents and other matters referred to in Schedules
         3.01(3) and 3.02(5) attached hereto.

(4)      Estoppel Certificates. Prior to the Closing Time, the Purchaser shall
         have received from the landlord of each of the Leased Premises executed
         copies of estoppel certificates in a form acceptable to the Purchaser.

(5)      Employee. Prior to the Closing Time, the employees of the Business
         listed in Schedule 3.01(25) shall have accepted the Purchaser's offer
         of employment referred to in subsection 5.02(2) hereof.

(6)      Leases for Premises. Prior to the Closing Time, SoftQuad and the
         Purchaser shall have negotiated the assignment of the net office lease
         between SoftQuad, as tenant, and Greenwin Construction Company Limited,
         Ye Landhold Inc., Chestertnere Investments Limited, Metropolitan Life
         Insurance Company, Yeoman Investment Limited and Swindon Investments
         Limited, as "landlord", as amended or supplemented, in respect of
         certain Toronto offices at 20 Eglinton Avenue West, Toronto, Ontario,
         to the Purchaser with such "landlord"'s consent. Prior to the Closing
         Time, SoftQuad and the Purchaser shall have negotiated the assignment
         of the office premises at 108 and 110 - 10070 King George Highway,
         Surrey, British Columbia to the Purchaser with such "landlord's"
         consent.

(7)      North American Distribution. Alpha Software Corporation shall have
         entered into an agreement with the Purchaser substantially in the form
         of the draft agreement attached hereto as Schedule 6.01(7).

(8)      Advance to the Purchaser. SoftQuad shall have advanced the loan
         described in subsection 5.01(10) hereof, subject to the terms of a
         promissory note to be made by the Purchaser in favour of SoftQuad on
         the Closing Date.

                                      -31-

<PAGE>

(9)      Indemnity and Share Pledge. The Vendor shall have delivered the
         indemnity and share pledge to the Purchaser described in subsection
         4.03(4) and 5.01(6) and (7) substantially in the form of indemnity and
         share pledge attached hereto as Schedule 6.01(9).

(10)     Non-Competition Agreement. The Vendor and SoftQuad shall have delivered
         to the Purchaser a non-competition agreement substantially in the form
         of the draft agreement attached hereto as Schedule 5.01(11).

(11)     Licence Agreement re SoftQuad. The Vendor and/or SoftQuad shall have
         delivered a trademark licence agreement to the Purchaser substantially
         in the form of the licence agreement attached hereto as Schedule
         5.01(12).

(12)     Assignment Agreements re Vendor's Trademarks and Software. The Vendor
         shall have delivered an assignment agreement to the Purchaser assigning
         all of the Vendor's right, title and interest in and to certain
         trademarks to the Purchaser, in the form of the trademark assignment
         agreement attached hereto as Schedule 6.01(12) and all of the Vendor's
         right, title and interest in and to certain software to the Purchaser
         in the form of software assignment agreement attached hereto as
         Schedule 6.01(12).

(13)     Assignment of Loans to UK Agreement. SoftQuad shall have delivered to
         the Purchaser an assignment agreement substantially in the form of the
         assignment agreement attached hereto as Schedule 6.01(13).

(14)     Shareholders' Agreement. At the Closing Time, SoftQuad shall have
         entered into a shareholders' Agreement in the form of the agreement
         attached as Schedule 6.01(14) hereto;

(15)     Protege Contract. Subject to obtaining the consent of Protege Software
         Holdings Ltd., SoftQuad hereby assigns the Protege Software Holdings
         Ltd. agreement with SoftQuad dated December 20, 1995, and as amended on
         December 20, 1996 and August 7, 1997 to the Purchaser.

(16)     Payment of Accounts Payable Not Assumed. The Vendor shall have provided
         evidence to the satisfaction of the Purchaser, acting reasonably, that
         the Vendor has paid all of the accounts payable other than the Assumed
         Liabilities on or before closing. Failing which, SoftQuad shall execute
         and deliver to the Purchaser the pledge agreement in substantially the
         form of agreement attached hereto as Schedule 6.01(9) hereto.

(17)     Employee Stock Loans. The Vendor shall have provided evidence to the
         satisfaction of the Purchaser, acting reasonably, that the Vendor has
         extended the Employee loans incurred in correction with the employee
         stock purchase/option plan to those employees of the Vendor to whom the
         Purchaser has offered employment pursuant to section 5.02(a).

(18)     Opinion of Vendor Counsel. At the Closing Time, the Purchaser shall
         have received an opinion of legal counsel for the Vendor substantially
         in the form of the draft opinion attached hereto as Schedule 6.01(18),
         which opinion may rely on certificates of one or more senior officers

                                      -32-

<PAGE>

         of the Vendor as to factual matters and refer to opinions of local
         counsel.

6.02.    Waiver or Termination by Purchaser.
         ----------------------------------

         The conditions contained in Section 6.01 hereof are inserted for the
exclusive benefit of the Purchaser and may be waived in whole or in part by the
Purchaser at any time. The Vendor and SoftQuad acknowledge that the waiver by
the Purchaser of any condition or any part of any condition shall constitute a
waiver only of such condition or such part of such condition, as the case may
be, and shall not constitute a waiver of any covenant, agreement, representation
or warranty made by the Vendor or SoftQuad herein that corresponds or is related
to such condition or such part. of such condition, as the case may be. If any of
file conditions contained in Section 6.01 hereof are not fulfilled or complied
with as herein provided, the Purchaser may, at or prior to the Closing Time at
its option, rescind this Agreement by notice in writing to the Vendor and
SoftQuad and in such event the Purchaser shall be released from all obligations
hereunder and, unless the condition or conditions which have not been fulfilled
are reasonably capable of being fulfilled or caused to be fulfilled by the
Vendor and SoftQuad, then the Vendor and SoftQuad shall also be released from
all obligations hereunder.

6.03.    Conditions to the Obligations of the Vendor
         -------------------------------------------

         Notwithstanding anything herein contained, the obligations of the
Vendor and SoftQuad to complete the transactions provided for herein will be
subject to the fulfilment of the following conditions at or prior to the Closing
Time, and the Purchaser will use its best efforts to ensure that such conditions
are fulfilled.

(1)      Accuracy of Representations and Warranties and Performance of
         Covenants. The representations and warranties of the Purchaser
         contained in this Agreement or in any documents delivered in order to
         carry out the transactions contemplated hereby will be true and
         accurate on the date hereof and at the Closing Time with the same force
         and effect as though such representations and warranties had been made
         as of the Closing Time (regardless of the date as of which the
         information in this Agreement or any such Schedule or other document
         made pursuant hereto is given). In addition, the Purchaser shall have
         complied with all covenants and agreements herein agreed to be
         performed or caused to be performed by it at or prior to the Closing
         Time. In addition, the Purchaser shall have delivered to the Vendor and
         SoftQuad a certificate confirming that the facts with respect to each
         of the representations and warranties of the Purchaser are as set out
         herein at the Closing Time and that the Purchaser has performed each of
         the covenants required to be performed by it hereunder.

(2)      No Restraining Proceedings. No order, decision or ruling of any court,
         tribunal or regulatory authority having jurisdiction shall have been
         made, and no action or proceeding shall be pending or threatened which,
         in the opinion of counsel to the Vendor, is likely to result in an
         order, decision or ruling, to disallow, enjoin or prohibit the purchase
         and sale of the Purchased Assets contemplated hereby.

                                      -33-

<PAGE>

(3)      Consents. All consents required to be obtained in order to carry out
         the transactions contemplated hereby in compliance with all laws and
         agreements binding upon the parties hereto shall have been obtained,
         including the consents referred to in Schedules 3.01(3), 3.02(6) and
         3.03(4) attached hereto.

(4)      Shareholders' Agreement. At the Closing Time, Vendor shall have entered
         into a shareholders' Agreement in the form of the agreement attached as
         Schedule 6.01(14) hereto;

(5)      Promissory Note. The Purchaser shall have entered into the promissory
         note evidencing the loan from SoftQuad as set forth in Section
         5.01(10).

(6)      Opinion of Purchaser's Counsel. At the Closing Time, the Vendor shall
         have received an opinion of legal counsel for the Purchaser
         substantially in the form of the draft opinion attached hereto as
         Schedule 6.03(6), which opinion may rely on certificates of one or more
         senior officers of the Purchaser as to factual matters.

6.04.    Waiver or Termination by Vendor
         -------------------------------

         The conditions contained in Section 6.03 hereof are inserted for the
exclusive benefit of the Vendor and may be waived in whole or in part by the
Vendor and SoftQuad at any time. The Purchaser acknowledges that the waiver by
the Vendor and SoftQuad of any condition or any part of any condition shall
constitute a waiver only of such condition or such part of such condition, as
the case may be, and shall not constitute a waiver of any covenant, agreement,
representation or warranty made by the Purchaser herein that corresponds or is
related to such condition or such part of such condition, as the case may be. If
any of the conditions contained in Section 6.03 hereof are not fulfilled or
complied with as herein provided, the Vendor or SoftQuad may, at or prior to the
Closing Time at its option, rescind this Agreement by notice in writing to the
Purchaser and in such event the Vendor and SoftQuad shall be released from all
obligations hereunder and, unless the condition or conditions which have not
been fulfilled are reasonably capable of being fulfilled or caused to be
fulfilled by the Purchaser, then the Purchaser shall also be released from all
obligations hereunder.

                                   ARTICLE 7
                                    CLOSING

7.01.    Closing Arrangements
         --------------------

         Subject to the terms and conditions hereof, the transactions
contemplated herein shall be closed at the Closing Time at the offices of Blaney
McMurtry Stapells Friedman, 20 Queen Street West, Toronto, Ontario or at such
other place or places as may be mutually agreed upon by the Vendor and the
Purchaser.

7.02.    Documents to be Delivered
         -------------------------

         At or before the Closing Time, the Vendor and SoftQuad shall execute,
or cause to be executed, and shall deliver, or cause to be delivered, to the
Purchaser all documents, instruments and things which are to be delivered by the

                                      -34-

<PAGE>

Vendor and SoftQuad pursuant to the provisions of this Agreement and the
Purchaser shall execute, or cause to be executed, and shall deliver, or cause to
be delivered, to the Vendor and SoftQuad all cheques or bank drafts and all
documents, instruments and things which the Purchaser is to deliver or to cause
to be delivered pursuant to the provisions of this Agreement.

                                   ARTICLE 8
                           INDEMNIFICATION AND SET-OFF

8.01.    Indemnity by SoftQuad and the Vendor
         ------------------------------------

(1)      SoftQuad and the Vendor hereby agree to jointly and severally indemnify
         and save the Purchaser harmless from and against any claims, demands,
         actions, causes of action, damage, loss, deficiency, cost, liability
         and expense ("Claims") which may be made or brought against the
         Purchaser or which the Purchaser may suffer or incur as a result of, in
         respect of or arising out of:

         (a)      any non-performance or non-fulfilment of any covenant or
                  agreement on the part of the Vendor and SoftQuad contained in
                  this Agreement or in any document given in order to carry out
                  the transactions contemplated hereby;

         (b)      any misrepresentation, inaccuracy, incorrectness or breach of
                  any representation or warranty made by the Vendor and SoftQuad
                  contained in this Agreement or contained in any document or
                  certificate given in order to carry out the transactions
                  contemplated hereby;

         (c)      Claims brought by shareholders of SoftQuad in connection with
                  this Agreement and the transactions contemplated hereby;

         (d)      Claims arising out of actions of the Vendor prior to the
                  Effective Date;

         (e)      Claims brought by third parties with respect to Vendor's
                  intellectual property rights to any of the Vendor's software
                  assets; and

         (f)      all costs and expenses including, without limitation, legal
                  fees on a solicitor and client basis, incidental to or in
                  respect of the foregoing;

(2)      The obligations of indemnification by the Vendor pursuant to this
         Section 8.01 will be subject to:

         (a)      the limitations referred to in Section 4.01 hereof with
                  respect to the survival of the representations and warranties
                  by the Vendor;

         (b)      the limitations referred to in Section 4.03 hereof; and

         (c)      the provisions of Section 8.03 hereof.

                                      -35-

<PAGE>

8.02.    Indemnity by the Purchaser
         --------------------------

(1)      The Purchaser hereby agrees to indemnify and save SoftQuad and the
         Vendor harmless from and against any Claims which may be made or
         brought against SoftQuad or the Vendor which SoftQuad or the Vendor may
         suffer or incur as a result of, in respect of or arising out of:

         (a)      any nonperformance or non-fulfilment of any covenant or
                  agreement on the part of the Purchaser contained in this
                  Agreement or in any document given in order to carry out the
                  transactions contemplated hereby;

         (b)      any misrepresentation, inaccuracy, incorrectness or breach of
                  any representation or warranty made by the Purchaser contained
                  in this Agreement or contained in any document or certificate
                  given in order to carry out the transactions contemplated
                  hereby;

         (c)      liabilities which the Purchaser assumes pursuant to this
                  Agreement and the transactions contemplated hereby;

         (d)      Claims pursuant to this transaction by employees of the Vendor
                  who accept the Purchaser's offer of employment;

         (e)      Claims in respect of the obligation to repay certain loans to
                  SoftQuad; and

         (f)      all costs and expenses including, without limitation, legal
                  fees on a solicitor and client basis, incidental to or in
                  respect of the foregoing.

8.03.    Provisions Relating to Indemnity Claims
         ---------------------------------------

         The following provisions will apply to any claim (the "INDEMNITY
CLAIM") by a party seeking indemnification under this Article 8 (the
"INDEMNIFIED PARTY").

(1)      Promptly after becoming aware of any matter that may give rise to an
         Indemnity Claim, the indemnified party will provide to the party
         against whom a claim for indemnification is sought (the "INDEMNIFYING
         PARTY") written notice of the Indemnity Claim specifying (to the extent
         that information is available) the factual basis for the Indemnity
         Claim and the amount of the Indemnity Claim or, if an amount is not
         then determinable, an estimate of the amount of the Indemnity Claim, if
         an estimate is feasible in the circumstances.

(2)      If an Indemnity Claim relates to an alleged liability to any other
         person (hereinafter, in this section, called a "THIRD PARTY
         LIABILITY"), including without limitation any governmental or
         regulatory body or any taxing authority, which is of a nature such that
         the indemnified party is required by applicable law to make a payment
         to a third party before the relevant procedure for challenging the
         existence or quantum of the alleged liability can be implemented or
         completed, then the indemnified party may, notwithstanding the
         provisions of subsections (3) and (4) of this section, make such
         payment and forthwith demand reimbursement for such payment from the
         indemnifying party in accordance with this Agreement; provided that, if

                                      -36-

<PAGE>

         the alleged liability to the third party as finally determined upon
         completion of settlement negotiations or related legal proceedings is
         less than the amount which is paid by the indemnifying party in respect
         of the related Indemnity Claim, then the indemnified party shall
         forthwith following the final determination pay to the indemnifying
         party the amount by which the amount of the liability as finally
         determined is less than the amount which is so paid by the indemnifying
         party.

(3)      The indemnified party shall not negotiate, settle, compromise or pay
         (except in the case of payment of a judgment) any Third Party Liability
         as to which it proposes to assert an Indemnity Claim, except with the
         prior consent of the indemnifying party (which consent shall not be
         unreasonably withheld or delayed), unless there is a reasonable
         possibility that such Third Party Liability may materially and
         adversely affect the Condition of the Business or the indemnified
         party, in which case the indemnified party shall have the right, after
         notifying the indemnifying party, to negotiate, settle, compromise or
         pay such Third Party Liability without prejudice to its rights of
         indemnification hereunder.

(4)      With respect to any Third Party Liability, provided the indemnifying
         party first admits the indemnified party's right to indemnification for
         the amount of such Third Party Liability which may at any time be
         determined or settled, then in any legal, administrative or other
         proceedings in connection with the matters forming the basis of the
         Third Party Liability, the following procedures will apply:

         (a)      except as contemplated by clause (c) of this subsection, the
                  indemnifying party will have the right to assume carriage of
                  the compromise or settlement of the Third Party Liability and
                  the conduct of any related legal, administrative or other
                  proceedings, but the indemnified party shall have the right
                  and shall be given the opportunity to participate in the
                  defence of the Third Party Liability, to consult with The
                  indemnifying party in the settlement of the Third Party
                  Liability and the conduct of related legal, administrative and
                  other proceedings (including consultation with counsel) and to
                  disagree on reasonable grounds with the selection and
                  retention of counsel, in which case counsel satisfactory to
                  the indemnifying party and the indemnified party shall be
                  retained by the indemnifying party;

         (b)      The indemnifying party will co-operate with the indemnified
                  party in relation to the Third Party Liability, will keep it
                  fully advised with respect thereto, will provide it with
                  copies of all relevant documentation as it becomes available,
                  will provide it with access to all records and files relating
                  to the defence of the Third Party Liability and will meet with
                  representatives of the indemnified party at all reasonable
                  times to discuss the Third Party Liability; and

         (c)      notwithstanding clauses (a) and (b) of this subsection, the
                  indemnifying party will not settle the Third Party Liability
                  or conduct any legal, administrative or other proceedings in
                  any manner which could, in the reasonable opinion of the
                  indemnified party, have a material adverse affect on the
                  Condition of the Business or the indemnified party, except
                  with the prior written consent of the indemnified party.

                                      -37-

<PAGE>

(5)      If, with respect to any Third Party Liability, the indemnifying party
         does not admit the indemnified party's right to indemnification or
         declines to assume carriage of the settlement or of any legal,
         administrative or other proceedings relating to the Third Party
         Liability, then the following provisions will apply:

         (a)      the indemnified party, at its discretion, may assume carriage
                  of the settlement or of any legal, administrative or other
                  proceedings relating to the Third Party Liability and may
                  defend or settle the Third Party Liability on such terms as
                  the indemnified party, acting in good faith, considers
                  advisable; and

         (b)      any cost, loss, damage or expense incur-red or suffered by the
                  indemnified party in the settlement of such Third Party
                  Liability or the conduct of any legal, administrative or other
                  proceedings shall be added to the amount of the Indemnity
                  Claim.

8.04.    Right to Set-Off.
         -----------------

         The Purchaser, the Vendor and SoftQuad shall have the right to satisfy
any amount from time to time owing by it to any of the others by way of set-off
against any amount from time to time owing by such other to it, including any
amount owing pursuant to Article 8 hereof.

                                   ARTICLE 9
                               GENERAL PROVISIONS

9.01.    Further Assurance.
         -----------------

         Each of the Vendor, SoftQuad and the Purchaser hereby covenants and
agrees that at any time and from time to time after the Closing Date it will,
upon the request of another, do, execute, acknowledge and deliver or cause to be
done, executed, acknowledged and delivered all such further acts, deeds,
assignments, transfers, conveyances and assurances as may be required for the
better carrying out and performance of all the terms of this Agreement.

9.02.    Remedies Cumulative
         -------------------

         The rights and remedies of the parties under this Agreement are
cumulative and in addition to and not in substitution for any rights or remedies
provided by law. Any single or partial exercise by any party hereto of any right
or remedy for default of breach of any term, covenant or condition of this
Agreement does not waive, alter, affect or prejudice any other right or remedy
to which such party may be lawfully entitled for the same default or breach.

                                      -38-

<PAGE>

9.03.    Notices.
         -------

         Any notice, designation, communication, request, demand or other
document, required or permitted to be given or sent or delivered hereunder to
any party hereto shall be sufficiently given or sent or delivered if it is:

         (a)      delivered personally to an officer or director of such party;
                  or

         (b)      sent to the party entitled to receive it by registered mail,
                  postage prepaid, mailed in Canada; or

         (c)      sent by telecopy machine.

Notices shall be sent to the following addresses or telecopy numbers:

                           in the case of the Vendor:

                           SOFTQUAD INC.
                           c/o 168 Middlesex Turnpike
                           Burlington, MA
                           01803

                           Attention:                Selwyn Rabin
                           Telecopier No.:           (781) 273-5611

                           in the case of SoftQuad:

                           SOFTQUAD INTERNATIONAL INC.
                           c/o 168 Middlesex Turnpike
                           Burlington, MA
                           01803

                           Attention:                Selwyn Rabin
                           Telecopier No.:           (781) 273-5611

                           in the case of the Purchaser:

                           1308870 Ontario Inc.
                           20 Eglinton Avenue West,
                           13th Floor
                           Toronto, Ontario
                           M4R 1K8

                           Attention:                Roberto Drassinower
                           Telecopier No.:           (416) 544-0300

                                      -39-

<PAGE>

or to such other address or telecopies number as the party entitled to or
receiving such notice, designation, communication, request, demand or other
document shall, by a notice given in accordance with this section, have
communicated to the party given or sending or delivering such notice,
designation, communication, request, demand or other document.

Any notice, designation, communication, request, demand or other document given
or sent or delivered as aforesaid shall:

                  (i)      if delivered as aforesaid, be deemed to have been
                           given, sent, delivered and received on the date of
                           delivery;

                  (ii)     if sent by mail as aforesaid, be deemed to have been
                           given, sent, delivered and received (but not actually
                           received) on the fourth Business Day following the
                           date of mailing, unless at any time between the date
                           of mailing and the fourth Business Day thereafter
                           there is a discontinuance or interruption of regular
                           postal service, whether due to strike or lockout or
                           work slowdown, affecting postal service at the point
                           of dispatch or delivery or any intermediate point, in
                           which case the same shall be deemed to have been
                           given, sent, delivered and received in the ordinary
                           course of the mails, allowing for such discontinuance
                           or interruption of regular postal service; and

                  (iii)    if sent by telecopy machine, be deemed to have been
                           given, sent, delivered and received on the Business
                           Day the sender receives the telecopy answer back from
                           the recipient confirming receipt by the recipient.

9.04.    Counterparts
         ------------

         This Agreement may be executed in several counterparts, each of which
so executed shall be deemed to be an original, and such counterparts together
shall constitute but one and the same instrument and, further, this Agreement
may be executed by facsimile signatures.

9.05.    Expenses of Parties
         -------------------

         Each of the parties hereto shall bear all expenses incurred by it in
connection with this Agreement including, without limitation, the charges of
their respective counsel, accountants, financial advisors and finders.

9.06.    Brokerage and Finder's Fees
         ---------------------------

         SoftQuad agrees to indemnify the Purchaser and hold it harmless in
respect of any claim for brokerage or other commissions relative to this
Agreement or the transactions contemplated hereby which is caused by actions of
the SoftQuad, the Vendor or any of its Affiliates. The Purchaser will indemnify
the Vendor and SoftQuad and hold them harmless in respect of any claim for
brokerage or other commissions relative to this Agreement or to the transactions
contemplated hereby which is caused by actions of the Purchaser or any of its
Affiliates.

                                      -40-

<PAGE>

9.07.    Announcements
         -------------

         No announcement with respect to this Agreement will be made by any
party hereto without the prior approval of the other parties. The foregoing will
not apply to any announcement by any party required in order to comply with laws
pertaining to timely disclosure, provided that such party consults with the
other party before making any such announcement.

9.08.    Assignment
         ----------

         This rights of each party hereunder shall not be assignable without the
written consent of the other party.

9.09.    Successors and Assigns
         ----------------------

         This Agreement shall be binding upon and enure to the benefit of the
parties hereto and their respective successors and permitted assigns. Nothing
herein, express or implied, is intended to confer upon any person, other than
the parties hereto and their respective successors and assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.

9.10.    Entire Agreement
         ----------------

         This Agreement and the Schedules referred to herein constitute the
entire agreement between the parties hereto and supersede all prior agreements,
representations, warranties, statements, promises, information, arrangements and
understandings, whether oral or written, express or implied, with respect to the
subject matter hereof None of the parties hereto shall be bound or charged with
any oral or written agreements, representations, warranties, statements,
promises, information, arrangements or understandings not specifically set forth
in this Agreement or in the Schedules, documents and instruments to be delivered
on or before the Closing Date pursuant to this Agreement. The parties hereto
further acknowledge and agree that, in entering into this Agreement and in
delivering the Schedules, documents and instruments to be delivered on or before
the Closing Date, they have not in any way relied, and will not in any way rely,
upon any oral or written agreements, representations, warranties, statements,
promises, information, arrangements or understandings, express or implied, not
specifically set forth in this Agreement or in such Schedules, docuirf6nts or
instruments.

9.11.    Waiver
         ------

         Any party hereto which is entitled to the benefits of this Agreement
may, and has the right to, waive any term or condition hereof at any time on or
prior to the Closing Time; provided, however, that such waiver shall be
evidenced by written instrument duly executed on behalf of such party.

9.12.    Amendments
         ----------

         No modification or amendment to this Agreement may be made unless
agreed to by the parties hereto in writing.

                                      -41-

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have duly executed this
agreement under seal as of the day and year first above written.

                             1308870 ONTARIO INC.

                             by:                                          c/s
                                      -----------------------------------
                                      Name:
                                      Title

                                      Name:
                                      Title

                            SOFTQUAD INC.

                             by:                                          c/s
                                      -----------------------------------
                                      Name:
                                      Title

                                      Name:
                                      Title

                             SOFTQUAD INTERNATIONAL INC.

                             by:                                          c/s
                                      -----------------------------------
                                      Name:
                                      Title

                                      Name:
                                      Title

                                      -42-<PAGE>

SOFTQUAD CANADA ACQUISITION AGREEMENT entered into this ____ day of December,
1999.

BETWEEN:

                           SOFTQUAD SOFTWARE LTD. (a Delaware corporation)

                           (hereinafter called "Softquad USA")
                                                               OF THE FIRST PART

                                     - and -

                           SOFTQUAD SOFTWARE INC. (an Ontario Corporation)

                           (hereinafter called "Softquad Canada")
                                                              OF THE SECOND PART

                                      -and-

                           SOFTQUAD ACQUISITION CORP. (an Ontario Corporation)

                           (hereinafter called "SAC")
                                                               OF THE THIRD PART

                                    RECITALS

WHEREAS:

1.       The Board of Directors of Softquad Canada wish to encourage Softquad
         USA directly or indirectly (through its wholly owned subsidiary SAC) to
         enter into a share purchase agreement or to make a take-over bid to the
         shareholders of Softquad Canada by offering to purchase all of the
         outstanding common shares of Softquad Canada and assume any obligations
         pursuant to any option agreements to assist in creating an enhanced
         liquidity for shareholders of Softquad Canada.

2.       Immediately prior to such offer by SAC and/or Softquad USA the capital
         structure of Softquad Canada will be restructured such that the issued
         and outstanding common shares of Softquad Canada shall be as set out on
         Schedule "A" and the outstanding options to purchase Softquad Canada
         common shares shall be as set out in Schedule "B";

<PAGE>

                                      -2-

3.       The Board of Directors of Softquad Canada have determined that it will
         recommend acceptance of the SAC and/or Softquad USA offer to the
         shareholders of Softquad Canada.

4.       SAC and/or Softquad USA is willing to make an offer subject to the
         terms and conditions of this Agreement.

NOW THEREFORE IN CONSIDERATION of the mutual covenants hereinafter set out, the
parties hereby agree as follows:

                                    ARTICLE 1
                              THE QUALIFYING OFFER

1.1      QUALIFYING OFFER

         (a)      Subject to the terms and conditions of this Agreement, SAC
                  and/or Softquad USA agrees to mail on or before March 1, 2000
                  or such earlier date as the documentation is available to the
                  holders of Common Shares of Softquad Canada an offer to:

                  (i)      purchase all of the outstanding Common Shares of
                           Softquad Canada, on the following basis: either

                           (A)      the exchange of one (1) Softquad USA Share
                                    for each issued and outstanding Softquad
                                    Canada common share representing
                                    consideration of $1.3574 per Softquad Canada
                                    common shares (on a fully diluted basis); or

                           (B)      one (1) SAC Exchangeable Share which may be
                                    converted into one (1) Softquad USA common
                                    share; and

                  (ii)     to assume the obligations of Softquad Canada under
                           existing option agreements by agreeing to issue (1)
                           Softquad USA common share upon exercise of each
                           Softquad Canada optionholders right to purchase (1)
                           Softquad Canada common shares for the same
                           consideration as set out in the respective option
                           agreements.

                  To effect the terms of the Qualifying Offer, upon acceptance:

                  (i)      SAC will modify its capital structure to add a class
                           of shares called Exchangeable Shares on such terms
                           and conditions as are mutually agreed upon by the
                           parties hereto;

<PAGE>

                                      -3-

                  (ii)     Softquad USA will modify its capital structure to add
                           a class of special preferred shares on such terms and
                           conditions as are mutually agreed upon by the parties
                           hereto;

                  (iii)    The parties shall execute a Support Agreement on such
                           terms and conditions as are mutually agreed upon by
                           the parties hereto;

                  (iv)     The parties shall execute a Voting and Exchange and
                           Trust Agreement on such terms and conditions as are
                           mutually agreed upon by the parties hereto; and

                  (v)      Softquad USA and/or SAC shall undertake to file a
                           registration statement in the U.S. under U.S.
                           Securities Act of 1933 (the "Registration Statement")
                           to qualify the Softquad USA common shares which may
                           be issued to Softquad Canada shareholders and/or
                           optionholders pursuant to share purchase agreement
                           and/or takeover bid and to take all reasonable steps
                           to make the Registration Statement effective in the
                           U.S. and to keep that Registration Statement for the
                           earlier of:

                                    (A) at least 4 years from the closing of the
                                    acquisition of the Softquad Canada common
                                    shares/options; and

                                    (B) the date on which all of the SAC
                                    Exchangeable Shares have been into Softquad
                                    USA common shares is complete.

                  SAC and/or Softquad USA expressly reserves the right to modify
                  the terms of the Offer except that, without the prior written
                  consent of Softquad Canada, SAC and/or Softquad USA shall not
                  reduce the Qualifying Offer price; change the form of
                  consideration payable under the Qualifying Offer; or add to,
                  amend or change any of the offer terms in any manner adverse
                  to the holders of common shares/options;

         (b)      The Qualifying Offer shall expire 21 calendar days after it is
                  commenced (or, if such date is not a business day on the next
                  following business day) ("Expiry Date"), provided that the
                  Qualifying Offer may be extended, at the sole discretion of
                  SAC and/or Softquad USA, if the conditions set forth in the
                  Qualifying Offer are not satisfied on the Expiry Date. Subject
                  to the satisfaction or waiver of the conditions set forth in
                  the Qualifying Offer, SAC and/or Softquad USA shall within the
                  time period required by law take up and pay for all common
                  shares validly tendered (and not properly withdraw) pursuant
                  to the Qualifying Offer. SAC and/or Softquad USA shall use its
                  reasonable commercial efforts to consummate the Qualifying
                  Offer, subject only to the terms and conditions hereof.

<PAGE>

                                      -4-

1.2      SOFTQUAD CANADA APPROVAL OF THE QUALIFYING OFFER

         Softquad Canada represents that its Board of Directors, upon
         consultation with its advisors, has determined unanimously that the
         Board of Directors will recommend that Softquad Canada Shareholders
         accept the Qualifying Offer.

1.3      POST OFFER COVENANTS

         If SAC and/or Softquad USA takes up and pays for common shares pursuant
         to the Qualifying Offer, SAC, Softquad USA and Softquad Canada agree to
         use all reasonable commercial efforts to enable SAC and/or Softquad USA
         to acquire the balance of the common shares as soon as practicable
         after completion of the Qualifying Offer by way of compulsory
         acquisition, arrangement, amalgamation or other type of acquisition
         transaction carried out for a consideration at least of equal value of
         the consideration paid in the Qualifying Offer.

                                   ARTICLE II
                          COVENANTS OF SOFTQUAD CANADA

2.1      ORDINARY COURSE OF BUSINESS

         Softquad Canada covenants and agrees that:

         (a)      Softquad Canada shall conduct its business only, and not take
                  any action except in, the usual, ordinary and regular course
                  of business and consistent with past practice;

         (b)      Softquad Canada shall not directly or indirectly do or permit
                  to occur any of the following:

                           (A)      issue, sell or agree to issue or sell any
                                    additional shares of, or any options,
                                    warrants, calls, conversion privileges or
                                    rights of any kind to acquire any shares of,
                                    any capital stock of Softquad Canada (other
                                    than pursuant to the exercise of existing
                                    options);

                           (B)      except with the usual, ordinary and regular
                                    course of business (consistent with past
                                    practice) sell, pledge lease, dispose of,
                                    encumber or agree to sell, pledge, lease
                                    dispose of or encumber any assets of
                                    Softquad Canada.

<PAGE>

                                      -5-

                           (C)      amend or propose to amend its articles or
                                    by-laws;

                           (D)      split, combine or re-classify any
                                    outstanding common shares, or declare, set
                                    aside or pay any dividend or other
                                    distribution payable in cash, stock,
                                    property or otherwise with respect to the
                                    Common Shares;

                           (E)      redeem, purchase or offer to purchase any
                                    Common Shares or other securities of
                                    Softquad Canada;

                           (F)      reorganize, amalgamate or merge Softquad
                                    Canada with any other person, corporation,
                                    partnership or other business organization
                                    whatsoever;

                           (G)      acquire or agree to acquire (by merger,
                                    amalgamation, acquisition of stock or assets
                                    or otherwise) any person, corporation,
                                    partnership, joint venture or other business
                                    organization or division or acquire or agree
                                    to acquire any material assets;

                           (H)      except in the usual, ordinary and regular
                                    course of business and consistent with past
                                    practice, satisfy any material claims or
                                    liabilities except such as have been
                                    reserved against in Softquad Canada's
                                    financial statements delivered to Softquad
                                    USA, relinquish any material contractual
                                    rights or enter into any interest rate,
                                    currency or commodity swaps, hedges or other
                                    similar financial instruments; or

                           (I)      incur or commit to incur any indebtedness
                                    for borrowed money or issue any debt
                                    securities except for the borrowing of
                                    working capital in the ordinary course of
                                    business and consistent with past practice.

         (c)      Softquad Canada shall cooperate with Softquad USA in
                  structuring the acquisition by Softquad USA of Softquad Canada
                  in a tax efficient manner provided that no such cooperation
                  shall be required where such structuring shall have any
                  adverse effect on Softquad Canada.

                                   ARTICLE III
                REPRESENTATIONS AND WARRANTIES OF SOFTQUAD CANADA

3.1      REPRESENTATIONS

         Softquad Canada hereby represents to Softquad USA and SAC that the
         information as it relates to Softquad Canada as has been provided to
         SAC and/or Softquad USA in due diligence disclosures are accurate and

<PAGE>

                                      -6-

         Softquad Canada hereby warrants the accuracy of the representations
         contained therein (and acknowledge that SAC and Softquad USA are
         relying upon those representations and warranties in connection with
         entering into this Agreement).

3.2      INVESTIGATION

         Any investigation by Softquad USA and SAC and its advisors shall not
         mitigate, diminish or affect the representations and warranties of
         Softquad Canada provided pursuant to this Agreement. Where the
         provisions of this Agreement, or any other transaction document, refer
         to disclosure in writing, such disclosure shall be made expressly in
         response to the applicable provision and shall be signed by a senior
         officer of Softquad Canada.

                                   ARTICLE IV
             REPRESENTATIONS AND WARRANTIES OF SOFTQUAD USA AND SAC

4.1      REPRESENTATIONS

         Softquad USA and SAC hereby represent and warrant to Softquad Canada
         that the information as it relates to Softquad USA and SAC as provided
         by Softquad USA and SAC as part of the due diligence disclosures are
         accurate and Softquad USA and SAC hereby warrant the accuracy of the
         representations contained therein (and acknowledges that Softquad
         Canada is relying upon such representations and warranties in
         connection with the entering into of this Agreement).

                                    ARTICLE V
                                MUTUAL COVENANTS

5.1      FURTHER ASSURANCES

         Subject to the terms and conditions herein, Softquad USA, SAC and
         Softquad Canada agree to use their respective commercially reasonable
         efforts to take, or cause to be taken, all action and to do, or cause
         to be done, all things necessary, proper or advisable under applicable
         laws and regulations, to consummate the transactions contemplated by
         this Agreement and the Offer. Softquad Canada, Softquad USA and SAC
         will use their commercially reasonable efforts: (i) to obtain all
         necessary waivers, consents and approvals from other parties to
         material loan agreements, leases, and other contracts or agreements
         (including in particular but without limitation, the agreement of any
         persons as may be required pursuant to any agreement, arrangement or
         understanding relating to Softquad Canada's operations); (ii) to obtain
         all necessary consents, approvals and authorizations as are required to
         be obtained under any federal, provincial or foreign law or regulations
         with respect to this Agreement or the Qualifying Offer; (iii) to lift

<PAGE>

                                      -7-

         or rescind any injunction or restraining order or other order adversely
         affecting the ability of the parties to consummate the transactions
         contemplated hereby or by the Qualifying Offer; and (iv) to fulfil all
         conditions and satisfy all provisions of this Agreement and the
         Qualifying Offer.

                                    ARTICLE VI
                                   TERMINATION

6.1      TERMINATION

         This Agreement may be terminated:

         (a)      by mutual written consent of Softquad USA, SAC and Softquad
                  Canada;

         (b)      by Softquad Canada if by March 1, 2000, if SAC and/or Softquad
                  USA has not made the Qualifying Offer;

         (c)      by Softquad Canada if by April 30, 2000 if SAC and/or Softquad
                  USA has not purchased 90% of the common shares issued and
                  outstanding pursuant to the Qualifying Offer;

         (d)      by either SAC or Softquad Canada, if the conditions of the
                  Qualifying Offer have not been satisfied or waived on the
                  Expiry Date.

         In the event of the termination of this Agreement as provided in this
         Section 6.1, this Agreement shall forthwith become void and there shall
         be no liability on the part of SAC, Softquad USA and/or Softquad
         Canada.

                                   ARTICLE VI
                                  MISCELLANEOUS

6.1      ENTIRE AGREEMENT

         This Agreement and the documents referred to herein constitute the
         entire agreement between the parties with respect to the subject matter
         hereof and supersede all prior agreements, arrangements or
         understandings with respect thereto.

<PAGE>

                                      -8-

6.2      COUNTERPARTS

         This Agreement may be executed in any number of counterparts and each
         such counterpart shall be deemed to be an original instrument but all
         such counterparts together shall constitute but one Agreement.

6.3      SEVERABILITY

         If any term, provision, covenant or restriction of this Agreement is
         held by a court of competent jurisdiction to be invalid, void or
         unenforceable, the remainder of the terms, provisions, covenants and
         restrictions of this Agreement shall remain in full force and effect
         and shall in no way be affected, impaired, or invalidated and the
         parties shall negotiate in good faith to modify the Agreement to
         preserve each party's anticipated benefits under the Agreement.

6.4      CHOICE OF LAW

         This Agreement shall be governed by, construed and in accordance with
         the laws of the Province of Ontario.

6.5      REMEDIES

         The parties hereto agree that irreparable damage would occur in the
         event that any of the provisions of this Agreement were not performed
         in accordance with their specific terms or were otherwise breached. It
         is accordingly agreed that the parties shall be entitled to an
         injunction or injunctions to remedy or prevent non-compliance or
         breaches with the terms of this Agreement and to enforce specifically
         the terms and provisions hereof in any court of the Province of Ontario
         having jurisdiction; provided that such remedies shall be in addition
         to, and not in substitution for, any other remedy to which the parties
         may be entitled at law or in equity.

         IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed on their behalf by their officers thereunto duly authorized as of the
date first above written.

                                       SOFTQUAD SOFTWARE LTD.
                                       (a Delaware corporation)

                                       PER:
                                           -------------------------------------
                                                President

<PAGE>

                                      -9-

                                       SOFTQUAD SOFTWARE INC.
                                       (an Ontario corporation)

                                       PER:
                                           -------------------------------------
                                                President

                                       SOFTQUAD ACQUISITION CORP.
                                       (an Ontario corporation)

                                       PER:
                                           -------------------------------------
                                                President

<PAGE>

                                      -10-

                                  SCHEDULE "A"

                  COMMON SHAREHOLDERS OF SOFTQUAD SOFTWARE INC.
<TABLE>
<CAPTION>
                               NAME                              ADDRESS                # OF SHARES
                                                                                        POST SPLIT
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
<S>       <C>                                             <C>                                    <C>
1.        James Clark                                     Offshore                               3,220,285
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
2.        Drassinower                                     Ontario                                  142,860
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
3.        Peter Sharpe                                    BC                                       142,860
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
4.        Bruce Sharpe                                    BC                                       142,860
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
5.        Jon Sachs                                       Ontario                                  142,860
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
6.        Lauren Wood                                     BC                                       142,860
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
7.        Pinetree Capital  Corp. - Sheldon               Ontario                                2,670,560
          Inwenash
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
8.        Beacon M Intern'l                               Offshore                               1,011,895
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
9.        1225322 Ontario Inc.(1)/Newkidco                Canadian                                 351,850
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
10.       Protege Software                                UK                                       215,385
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
11.       Howard Goldstein(1)                             Texas                                     50,000
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
12.       Albert Amato(1)                                 Ontario                                   50,000
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
13.       Barry Gomel(1)                                  Texas                                     50,000
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
14.       Allan Guttman(1)                                Ontario                                  100,000
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
15.       Steve Hammersmith(1)                            Florida                                   50,000
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
16.       Sandy Jacobs(1)                                 Texas                                     50,000
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
17.       Clive Kinross(1)                                Ontario                                   12,500
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
18.       Greg Lernor(1)                                  Texas                                     50,000
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
19.       Lipston Group SA(1)                             BVI                                      100,000
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
20.       MPI Group Inc.(1)                               Ontario                                   50,000
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
21.       Barry Pike(1)                                   Ontario                                   50,000
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
22.       Andrew Prenick(1)                               Ontario                                   12,500
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
23.       Craig Rimer(1)                                  Ontario                                   25,000
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
24.       David Sachs(1)                                  Texas                                    150,000
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
25.       Selfridge LP(1)                                 Ontario                                   50,000
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
26.       Bob Simon(1)                                    Ontario                                  100,000
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
27.       Vincent Vasquez(1)                              Texas                                     75,000
                                                                                  ------            ------
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
          TOTAL:                                                                                 9,209,275
--------- ----------------------------------------------- ---------------------- --------------------------
--------- ----------------------------------------------- ---------------------- --------------------------
</TABLE>

Notes:
(1)  Shares may be registered in the name of KBL  Technology  Fund Inc. The list
     sets out the beneficial owners.

<PAGE>

                                      -11-

                                  SCHEDULE "B"

                    OPTION HOLDERS OF SOFTQUAD SOFTWARE INC.
<TABLE>
<CAPTION>
---------------------------------- -------------------- --------------------- ---------------------- --------------------
              NAME                  NUMBER OF OPTIONS        RELEASE 1              RELEASE 2             RELEASE 3
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
<S>                                              <C>                   <C>                    <C>                  <C>
Haydar, Janice                                   5,000                 1,667                  1,666                1,666
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Marshall, Denise                                 3,000                 1,000                  1,000                1,000
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Jackson, Shelly                                  7,000                 2,334                  2,333                2,333
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Lautri, James                                    5,000                 1,667                  1,666                1,666
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Adamson-Sharpe, Kim                              7,500                 2,500                  2,500                2,500
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Dicks, Dwayne                                    7,000                 2,334                  2,333                2,333
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Hay-Roe, Jeff                                    6,500                 2,167                  2,166                2,166
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Walk, Karl                                       6,500                 2,167                  2,166                2,166
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Smith, Addam                                     6,500                 2,167                  2,166                2,166
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Kellas-Dicks, Mechthild                          6,000                 2,000                  2,000                2,000
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Salnikov, Iouri                                  6,500                 2,167                  2,166                2,166
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Ignacio, Maria Racella                           5,000                 1,667                  1,666                1,666
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Chang, Bobby                                     2,500                   834                    833                  833
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Wang, Hongzhi                                    6,500                 2,167                  2,166                2,166
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Boyd, Rodney                                     7,000                 2,334                  2,333                2,333
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Harrison, Wendy                                  7,500                 2,500                  2,500                2,500
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Buarnell, Michael                                7,000                 2,334                  2,333                2,333
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Sioson, Roehl                                    3,500                 1,167                  1,166                1,166
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Raghib, Qusay                                    2,500                   834                    833                  833
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Roman, Mirella                                   2,500                   834                    833                  833
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
McGauley, Michael                                2,500                   834                    833                  833
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Wehrley, Robert                                  7,500                 2,500                  2,500                2,500
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Spence, Peter                                    7,500                 2,500                  2,500                2,500
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Cotton, Bertha                                   2,500                   834                    833                  833
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Turnball, John                                   7,000                 2,334                  2,333                2,333
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Germann, Ryan                                    7,500                 2,500                  2,500                2,500
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Condotta, Jodene                                 5,000                 1,667                  1,666                1,666
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Shuster, Jordannah                               7,500                 2,500                  2,500                2,500
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Lee, Frank                                       2,500                   834                    833                  833
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Murphy, Shaun                                    2,500                   834                    833                  833
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Harding, Pamela                                  3,500                 1,167                  1,166                1,166
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Thompson, Doreen                                 2,500                   834                    833                  833
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Tim Bray                                        25,000                 8,334                  8,333                8,333
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Sianez, Tracie                                   7,500                 2,500                  2,500                2,500
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Castle, Sandi                                   10,000                 3,334                  3,333                3,333
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Handyside, Alistair                             30,000                10,000                 10,000               10,000
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Bain, Simon                                      7,500                 2,500                  2,500                2,500
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Swithenby, Tony                                  7,500                 2,500                  2,500                2,500
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Drassinower, Roberto                           550,010               183,337                183,336              183,336
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Wood, Lauren                                    50,000                16,667                 16,666               16,666
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Sharpe, Bruce                                  333,330               111,110                111,110              111,110
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Sharpe, Peter                                  333,330               111,110                111,110              111,110
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
Sachs, Jonathan                                333,330               111,110                111,110              111,110
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
SUBTOTAL:                                    1,856,000
---------------------------------- -------------------- --------------------- ---------------------- --------------------
---------------------------------- -------------------- --------------------- ---------------------- --------------------
</TABLE>

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