Document:

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                            INDEMNIFICATION AGREEMENT

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         AGREEMENT, effective as of March 7, 2000, between SoftQuad Software,
Ltd., a Delaware corporation (the "Company"), and _____________ ("Indemnitee").

         WHEREAS, Indemnitee is a director (or officer) of the Company;

         WHEREAS, both the Company and Indemnitee recognize the increased risk
of litigation and other claims being asserted against directors and officers of
public companies at a time when it has become increasingly difficult to obtain
adequate insurance coverage at reasonable costs;

         WHEREAS, in recognition of Indemnitees need for substantial protection
against personal liability in order to enhance Indemnitees continued service to
the Company in an effective manner, the Company wishes to advancing of expenses
to Indemnitee to the full extent forth in this Agreement, and, to the extent
insurance is er the Company's directors' and officers' liability ertificate of
Incorporation, By-Laws, composition of the

         NOW, THEREFORE, in consideration of the premises and of Indemnitee's
service to the Company, directly or indirectly, including to its subsidiaries or
affiliates and intending to be legally bound hereby, the parties hereto agree as
follows:

1.       In the event Indemnitee was, is, or becomes a party to or a witness or
         other participant in, or is threatened to be made a party to or a
         witness or other participant in, any threatened, pending or completed
         action, suit or proceeding, or any inquiry or investigation, whether
         conducted by the Company or any other party, that Indemnitee in good
         faith believes might lead to any such action, suit or proceeding,
         whether civil, criminal, administrative, investigative or otherwise (a
         "Claim") by reason of (or arising in part out of) the fact that
         Indemnitee is or was a director, officer, employee, agent or fiduciary
         of the Company, or is or was serving at the request of the Company as a
         director, officer, employee, trustee, agent or fiduciary of another
         corporation, partnership, joint venture, trust, employee benefit plan
         or other enterprise, or by reason of anything done or not done by
         Indemnitee in any such capacity (an "Indemnifiable Event"), the Company
         shall indemnify Indemnitee to the full extent permitted by law (the
         determination of which shall be made by the Reviewing Party referred to
         below) as soon as practicable but in any event no later than thirty
         days after written demand is presented to the Company, against any and
         all expenses (including attorneys' fees and all other costs, expenses,
         and obligations paid or incurred in connection with investigating,
         preparing for and defending or participating in the defense of
         (including on appeal) any Claim relating to any Indemnifiable Event)
         (collectively "Expenses"), judgments, fines, penalties and amounts paid
         in settlement (including all interest, assessments and other charges

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         paid or payable in connection with or in respect of such judgments,
         fines, penalties or amounts paid in settlement) of such Claim and, if
         so requested by Indemnitee, the Company shall advance (within two
         business days of such request) any and all such Expenses to Indemnitee;
         provided, however, that (i) the foregoing obligation of the Company
         shall not apply to a Claim that was commenced by the Indemnitee without
         the prior approval of the Board of Directors of the Company unless the
         Claim was commenced after a Change in Control (as defined in Section 5
         herein); (ii) the foregoing obligation of the Company shall be subject
         to the condition that an appropriate person or body (the "Reviewing
         Party") shall not have determined (in a written opinion in any case in
         which the special, independent counsel referred to in Section 4 hereof
         is involved) that Indemnitee would not be permitted to be indemnified
         for such Expenses under applicable law; and (iii) if, when and to the
         extent that the Reviewing Party determines that Indemnitee would not be
         permitted to be indemnified for such Expenses under applicable law, the
         Company shall be entitled to be reimbursed by Indemnitee (who hereby
         agrees to reimburse the Company) for all such amounts theretofore paid
         (unless has commenced legal proceedings in a court of competent
         jurisdiction to secure a determination that Indemnitee should be
         indemnified under applicable law, in which event Indemnitee shall not
         be required to so reimburse the Company until a final judicial
         determination requiring such reimbursement is made with respect thereto
         as to in which all rights of appeal therefrom have been exhausted or
         lapsed) and the Company shall not be obligated to indemnify or advance
         any additional amounts to Indemnitee under this Agreement (unless there
         has been a determination by a court of competent jurisdiction that the
         Indemnitee would be permitted to be so indemnified or entitled to such
         expense advances under applicable law).

2.       If there has not been a Change in Control of the Company (as
         hereinafter defined), the Reviewing Party shall be (1) quorum of the
         Board of Directors consisting of directors who are not parties to the
         action, suit or proceeding acting by majority vote, or, (2) if such a
         quorum is not obtainable, or, even if obtainable, a quorum of
         disinterested directors so directs, independent legal counsel by the
         use of a written opinion or (3) the stockholders. If there has been a
         Change in Control of the Company, the Reviewing Party shall be the
         special, independent counsel referred to in Section 4 hereof.

3.       If Indemnitee has not been indemnified by the expiration of the
         foregoing thirty-day period or received expense advances or if the
         Reviewing Party determines that Indemnitee would not be permitted to be
         indemnified or be entitled to receive expense advances within two days
         of the request therefor in whole or in part under applicable law,
         Indemnitee shall have the right to commence litigation seeking from the
         court a finding that Indemnitee is entitled to indemnification and
         expense advances or enforcement of Indemnitee's entitlement to
         indemnification and expense advances or challenging any detemination by
         the Reviewing Party or any aspect thereof that Indemnitee is not
         entitled to be indemnified or receive expense advances and the burden
         of proving that indemnification or advancement of expenses is not
         appropriate shall be on the Company; any detem-iination by the
         Reviewing Party in favor of Indemnitee shall be conclusive and binding
         on the Company, unless facts supplied by Indemnitee which form the
         basis for the determination are subsequently determined to have been
         materially incorrect at the time supplied. Indemnitee agrees to bring
         any such litigation in any court in the States of Delaware having

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         subject matter jurisdiction thereof and in which venue is proper, and
         the Company hereby consents to service of process and to appear in any
         such proceeding.

4.       The Company agrees that if there is a Change in Control of the Company
         (as hereinafter defined), then with respect to all matters thereafter
         arising concerning the rights of Indemnitee to indemnity payments and
         expense advances under this Agreement or any other agreement or By-laws
         now or hereafter in effect relating to Claims for Indemnifiable Events,
         the Company shall seek legal advice only from special, independent
         counsel selected by Indemnitee who a majority of the disinterested
         Directors approves (which approval shall not be unreasonably withheld),
         and who has not otherwise performed services for the Company or
         Indemnitee. Such counsel, among other things, shall detemiine whether
         and to what extent Indemnitee is permitted to be indemnified or is
         entitled to expense advances under applicable law and shall render its
         written opinion to the Company and Indemnitee to such effect. The
         Company agrees to pay the reasonable fees of the special, independent
         counsel referred to above and to fully indemnify such counsel against
         any and all expenses (including attorney's fees), claims, liabilities
         and damages arising out of or relating to this Agreement or its
         engagement pursuant hereto except for willful misconduct or gross
         negligence.

5.       For purposes of this Agreement, (a) "Change in Control of the Company"
         shall be deemed to have occurred if (i) any "person" (as such term is
         used in Sections 13(d)(3) and 14(d) of the Securities Exchange Act of
         1934, as amended), other than a trustee or other fiduciary holding
         securities under an employee benefit plan of the Company, is or becomes
         the beneficial owner (as defined in Rule 13d-3 under said Act),
         directly or indirectly, of securities of the Company representing 20%
         or more of the combined voting power of the Company's then outstanding
         securities, or (ii) during any period of two consecutive years,
         individuals who at the beginning of such period constitute the Board of
         Directors of the Company and any new director whose election by the
         Board of Directors or nomination for election by the Company's
         stockholders was approved by a vote of at least two-thirds (2/3) of the
         directors then still in office who either were directors at the
         beginning of the period or whose election or nomination for election
         was previously so approved, cease for any reason to constitute a
         majority thereof, or (iii) the stockholders of the Company approve a
         merger or consolidation of the Company with any other corporation,
         other than a merger or consolidation which would result in the voting
         securities of the Company outstanding immediately prior thereto
         continuing to represent (either by remaining outstanding or by being
         converted into voting securities of the surviving entity) at least 80%
         of the combined voting power of the voting securities of the Company of
         such surviving entity outstanding- immediately after such merger or
         consolidation, or if the stockholders of the Company approve a plan of
         complete liquidation of the Company or an agreement for the sale or
         disposition by the Company of all or substantially all the Company's
         assets.

6.       To the extent Indemnitee is successful in such proceeding, the Company
         shall indemnify Indemnitee against any and all expenses (including
         attorney's fees) which are incurred by the Indemnitee in connection
         with any claim asserted or action brought by Indemnitee for (i)
         indemnification or advance payment of Expenses by the Company under
         this Agreement or any other agreement or Company By-laws now or
         hereafter in effect relating to Claims for Indemnifiable Events and/or

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         (ii) recovery under any directors' and officers' liability insurance
         policies maintained by the Company, regardless of whether Indemnitee
         ultimately is determined to be entitled to such indemnification,
         advance payment of Expenses or insurance recovery, as the case may be.

7.       If Indemnitee is entitled under any provision of this Agreement to
         indemnification by the Company for some or a portion of the Expenses,
         judgments, fines, penalties and amounts paid in settlement of any Claim
         but not, however, for all of the total amount thereof, the Company
         shall nevertheless indemnify Indemnitee for the portion thereof to
         which Indemnitee is entitled. Notwithstanding any other provision of
         this Agreement, to the extent that Indemnitee has been successful on
         the merits or otherwise in the defense of any Claim relating in whole
         or in part to any Indemnifiable Event or in defense of any issue or
         matter therein, including dismissal without prejudice, Indemnitee shall
         be indemnified against all Expenses incurred in connection therewith.

8.       For purposes of this Agreement, the termination of any Claim by
         judgment, order, settlement (whether with or without court approval) or
         conviction, or upon a plea of nolo contenders, or its equivalent, shall
         not create a presumption that Indemnitee did not meet any particular
         standard of conduct or have any particular belief or that a court has
         determined that Indemnitee is not entitled to indemnification or
         expense advance or that indemnification or expense advance is not
         permitted by applicable law.

9.       The Company hereby agrees that, so long as Indemnitee shall continue to
         serve in a capacity referred to in Section 1 hereof, and thereafter so
         long as lndemnitee shall be subject to any possible claim or
         threatened, pending or completed action, suit or proceeding, whether
         civil, criminal, administrative or investigative, by reason of the fact
         that Indemnitee served in any capacity referred to in Section 1 hereof,
         the Company shall maintain in effect for the benefit of Indemnitee any
         Directors' and Officers' Liability Insurance presently in force and
         effect, providing, in all respects, coverage at least comparable to
         that presently provided; provided, however, if, in the business
         judgment of the then Board, either (a) the premium cost for such
         insurance is substantially disproportionate to the amount of coverage,
         or (b) the coverage provided by such insurance is so limited by
         exclusions that there is insufficient benefit from such insurance, then
         and in that event the Company shall not be required to maintain such
         insurance but shall and hereby agrees to the full extent permitted by
         law to hold harmless and indemnify Indemnitee to the fullest extent of
         the coverage which would otherwise have been provided for the benefit
         of Indemnitee.

10.      (a)      In the event of any changes after the date of this Agreement
                  in any applicable law, statute, or rule which expands the
                  right of the Company to indemnify a person serving in a
                  capacity referred to in Section I hereof, such change shall be
                  within the purview of Indemnitee's rights, and the Company's
                  obligations, under this Agreement. In the event of any changes
                  in any applicable law, statute, or rule which narrow the right
                  of the Company to indemnify a person serving in a capacity
                  referred to in Section 1 hereof, such changes, to the extent
                  not other-wise required by such law, statute or rule to be
                  applied to this Agreement, shall have no effect on this
                  Agreement or the parties' rights and obligations hereunder.

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         (b)      The indemnification provided by this Agreement shall not be
                  deemed exclusive of any rights to which Indemnitee may be
                  entitled under the Company's Certificate of Incorporation, its
                  By-laws, any agreement, any vote of stockholders or
                  disinterested directors, laws and regulations in effect now or
                  in the future, or otherwise, both as to action in Indemnitee's
                  official capacity and as to action in another capacity while
                  holding such office.

11.      If the indemnification provided in Section 1 is unavailable and may not
         be paid to Indemnitee because such indemnification is not permitted by
         law, then in respect of any threatened, pending or completed action,
         suit or proceeding in which the Company is jointly liable with
         Indemnitee (or would be if joined in such action, suit or proceeding),
         the Company shall contribute to the full extent permitted by law, to
         the amount of expenses, judgments, fines (including excise taxes and
         penalties) and amounts paid in settlement actually and reasonably
         incurred and paid or payable by Indemnitee in such proportion as is
         appropriate to reflect (i) the relative benefits received by the
         Company on the one hand and Indemnitee on the other hand from the
         transaction from which such action, suit or proceeding arose, and (ii)
         the relative fault of the Company on the one hand and of Indemnitee on
         the other in connection with the events which resulted in such
         expenses, judgments, fines or settlement amounts, as well as any other
         relevant equitable considerations. The relative fault of the Company on
         the one hand and of Indemnitee on the other shall be determined by
         reference to among other things, the parties' relative intent,
         knowledge, access to information and opportunity to correct or prevent
         the circumstances resulting in such expenses, judgments, fines or
         settlement amounts. The Company agrees that it would not be just and
         equitable if contribution pursuant to this paragraph were determined by
         pro rata allocation or any other method of allocation which does not
         take account of the foregoing equitable considerations.

12.      All obligations of the Company contained herein shall continue during
         the period Indemnitee serves in a capacity referred to in Section I
         hereof of the Company and shall continue thereafter so long as
         Indemnitee shall be subject to any possible Claim relating to an
         Indemnifiable Event.

13.      (a)      Promptly after receipt by Indemnitee of notice of the
                  commencement of any Claim relating to an Indemnfiable Event or
                  proceeding in which Indemnitee is made or is threatened to be
                  made a party or a witness, Indemnitee shall notify the Company
                  of the conunencement of such Claim; but the omission so to
                  notify the Company shall not relieve the Company from any
                  obligation it may have to indemnify or advance expenses to
                  Indemnitee otherwise than under this Agreement.

         (b)      Indemnitee shall not settle any claim or action in any manner
                  which would impose on the Company any penalty, constraint, or
                  obligation to hold harmless or indemnify Indemnitee pursuant
                  to this Agreement without the Company's prior written consent,
                  which consent shall not be unreasonably withheld.

14.      If any Claim relating to an Indemnifiable Event, commenced against
         Indemnitee is also commenced against the Company, the Company shall be
         entitled to participate therein at its own expense, and, except as

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         otherwise provided hereinbelow, to the extent that it may wish, the
         Company shall be entitled to assume the defense thereof. After notice
         from the Company to Indemnitee of its election to assume the defense of
         any Claim, the Company shall not be obligated to Indemnitee under this
         Agreement for any legal or other expenses subsequently incurred by
         Indemnitee in connection with the defense thereof other than reasonable
         costs of investigation, travel, and lodging expenses arising out of
         Indemnitee's participation `in such Claim. Indemnitee shall have the
         right to employ Indemnitee's own counsel in such Claim, but the fees
         and expenses of such counsel incurred after notice from the Company to
         Indemnitee of its assumption of the defense thereof shall be at the
         expense of Indemnitee unless (i) otherwise authorized by the Company,
         (ii) Indemnitee shall have reasonably concluded, and so notified the
         Company, that there may be a conflict of interest between the Company
         and Indemnitee in the conduct of the defense of such Clain-4 or (iii)
         the Company shall not in fact have employed counsel to assume the
         defense of such Claim, in which cases the fees and expenses of
         Indemnitee's counsel shall be at the expense of the Company. The
         Company shall not be entitled to assume the defense of any Claim
         brought by or on behalf of the Company or its stockholders or as to
         which Indemnitee shall have made the conclusion set forth in (ii) of
         this Section 14.

15.      No supplement, modification or amendment of this Agreement shall be
         binding unless executed in writing by both of the parties hereto. No
         waiver of any of the provisions of this Agreement shall be deemed or
         shall constitute a waiver of any other provisions hereof (whether or
         not similar) nor shall such waiver constitute a continuing waiver.

16.      In the event of payment under this Agreement, the Company shall be
         subrogated to the extent of such payment to all of the rights of
         recovery of Indemnitee, who shall execute all papers required and shall
         do everything that may be necessary to secure such rights, including
         the execution of such documents necessary to enable the Company
         effectively to bring suit to enforce such rights.

17.      The Company shall not be liable under this Agreement to make any
         payment in connection with any claim made against Indemnitee to the
         extent Indemnitee has otherwise actually received payment (under any
         insurance policy, By-law or other-wise) of the amounts otherwise
         indemnifiable hereunder.

18.      This Agreement shall be binding upon and inure to the benefit of and be
         enforceable by the parties hereto and their respective successors,
         assigns, including any direct or indirect successor by purchase,
         merger, consolidation or otherwise to all or substantially all of the
         business and/or assets of the Company, spouses, heirs, executors, and
         personal and legal representatives. This Agreement shall continue in
         effect regardless of whether Indemnitee continues to serve as an
         officer or director of the Company or of any other enterprise at the
         Company's request.

19.      The provisions of this Agreement shall be severable in the event that
         any of the provisions hereof (including any provision within a single
         section, paragraph or sentence) are held by a court of competent
         jurisdiction to be invalid, void or otherwise unenforceable, and the
         remaining provisions shall remain enforceable to the full extent
         permitted by law.

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20.      This Agreement shall be governed by and construed in accordance with
         the laws of the State of Delaware applicable to contracts made and to
         be performed in such state, but excluding any conflicts-of-law rule or
         principle which might refer such governance, construction or
         enforcement to the laws of another state or country.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.

SOFTQUAD SOFTWARE, LTD.

By:
         ______________________________________________________________
         Roberto Drassinower, President

INDEMNITEE

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                             SOFTQUAD SOFTWARE LTD.

                             2000 STOCK OPTION PLAN

                                  INTRODUCTION

                  SoftQuad Software Ltd., a Delaware corporation (the
"Corporation"), hereby establishes an incentive compensation plan to be known as
the "SOFTQUAD SOFTWARE LTD. 2000 STOCK OPTION PLAN" (the "Plan"), as set forth
in this document. The Plan permits the grant of Non-Qualified Stock Options and
Incentive Stock Options.

                  The Plan shall become effective on February 25, 2000. However,
it shall be rendered null and void and have no effect, and any and all Options
granted hereunder shall be canceled, if the Plan is not approved by a majority
vote of the Corporation's stockholders within twelve (12) months of the date the
Plan is adopted by the Corporation's Board of Directors.

                  The purpose of the Plan is to promote the success and enhance
the value of the Corporation by linking the personal interests of Optionees to
those of the Corporation's stockholders by providing Optionees with an incentive
for outstanding performance. The Plan is further intended to assist the
Corporation in its ability to motivate, and retain the services of, Optionees
upon whose judgment, interest and special effort the successful conduct of its
and its subsidiaries' operations is largely dependent.

                                   ARTICLE I
                                   DEFINITIONS

                  For purposes of the Plan, the following terms shall be defined
as follows unless the context clearly indicates otherwise:

         (a)      "Award Agreement" shall mean the written agreement, executed
                  by an appropriate officer of the Corporation, pursuant to
                  which an Option is granted.

         (b)      "Board of Directors" shall mean the Board of Directors of the
                  Corporation.

         (c)      "Code" shall mean the Internal Revenue Code of 1986, as
                  amended, and the rules and regulations thereunder.

         (d)      "Committee" shall mean the Board of Directors or any committee
                  of two or more persons designated by the Board of Directors to
                  perform the functions of the Committee hereunder.

         (e)      "Common Stock" shall mean the common stock $0.001 par value of
                  the Corporation as authorized from time to time.

         (f)      "Consultant" shall mean an individual who provides bona-fide
                  consulting services to the Corporation or any Parent or
                  Subsidiary.

         (g)      "Corporation" shall mean SoftQuad Software Ltd., a Delaware
                  corporation.

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         (h)      "Disability" shall have the same meaning as the term
                  "permanent and total disability" under Section 22(e)(3) of the
                  Code.

         (i)      "Employee" shall mean a common law employee of the Corporation
                  or of any Parent or Subsidiary.

         (j)      "Exchange Act" shall mean the Securities Exchange Act of 1934,
                  as amended, and the rules and regulations thereunder.

         (k)      "Fair Market Value" of the Corporation's Common Stock on a
                  Trading Day shall mean the last reported sale price for Common
                  Stock or, in case no such reported sale takes place on such
                  Trading Day, the average of the closing bid and asked prices
                  for the Common Stock for such Trading Day, in either case on
                  the principal national securities exchange on which the Common
                  Stock is listed or admitted to trading, or if the Common Stock
                  is not listed or admitted to trading on any national
                  securities exchange, but is traded in the over-the-counter
                  market, the closing sale price of the Common Stock or, if no
                  sale is publicly reported, the average of the closing bid and
                  asked quotations for the Common Stock, as reported by the
                  National Association of Securities Dealers Automated Quotation
                  System ("NASDAQ") or any comparable system or, if the Common
                  Stock is not listed on NASDAQ or a comparable system, the
                  closing sale price of the Common Stock or, if no sale is
                  publicly reported, the average of the closing bid and asked
                  prices, as furnished by two members of the National
                  Association of Securities Dealers, Inc. who make a market in
                  the Common Stock selected from time to time by the Corporation
                  for that purpose provided that, if the Committee determines
                  that "Fair Market Value" as determined in accordance with the
                  foregoing is not reflective of the fair value of the Common
                  Stock the Committee may, in its discretion fix "Fair Market
                  Value" based on its good faith determination of same. In
                  addition, for purposes of this definition, a "Trading Day"
                  shall mean, if the Common Stock is listed on any national
                  securities exchange, a business day during which such exchange
                  was open for trading and at least one trade of Common Stock
                  was effected on such exchange on such business day, or, if the
                  Common Stock is not listed on any national securities exchange
                  but is traded in the over-the-counter market, a business day
                  during which the over-the-counter market was open for trading
                  and at least one "eligible dealer" quoted both a bid and asked
                  price for the Common Stock. An "eligible dealer" for any day
                  shall include any broker-dealer who quoted both a bid and
                  asked price for such day, but shall not include any
                  broker-dealer who quoted only a bid or only an asked price for
                  such day. In the event the Corporation's Common Stock is not
                  publicly traded, the Fair Market Value of such Common Stock
                  shall be determined by the Committee in good faith.

         (l)      "Incentive Stock Option" shall mean a stock option satisfying
                  the requirements for tax-favored treatment under Section 422
                  of the Code.

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         (m)      "Non-Qualified Option" shall mean a stock option which does
                  not satisfy the requirements for, or which is not intended to
                  be eligible for, tax-favored treatment under Section 422 of
                  the Code.

         (n)      "Option" shall mean an Incentive Stock Option or a
                  Non-Qualified Stock Option granted pursuant to the provisions
                  of Section VI hereof.

         (o)      "Optionee" shall mean an individual who is granted an Option
                  under the terms of the Plan.

         (p)      "Outside Directors" shall mean members of the Board of
                  Directors of the Corporation who are "outside directors"
                  within the meaning of Section 162(m) of the Code.

         (q)      "Parent" shall mean a parent corporation of the Corporation
                  within the meaning of Section 424(e) of the Code.

         (r)      "Securities Act" shall mean the Securities Act of 1933, as
                  amended, and the rules and regulations thereunder.

         (s)      "Subsidiary" shall mean a subsidiary corporation of the
                  Corporation within the meaning of Section 424(f) of the Code.

                                   ARTICLE II
                                 ADMINISTRATION

                  Unless otherwise determined by the Board of Directors, the
Plan shall be administered by the Committee, which shall be composed of two or
more Non-Employee Directors, as defined in Rule 16b-3(b)(3) promulgated under
the Exchange Act (to the extent Section 16 of the Exchange Act is applicable to
Options granted hereunder) and who also qualify as "Outside Directors" (but only
with respect to the period during which compensation attributable to Options
granted hereunder is subject to the deduction limitation of Section 162(m) of
the Code). Subject to the provisions of the Plan, the Committee may establish
from time to time such regulations, provisions, proceedings and conditions of
awards which, in its sole opinion, may be advisable in the administration of the
Plan. A majority of the Committee shall constitute a quorum, and, subject to the
provisions of Section V of the Plan, the acts of a majority of the members
present at any meeting at which a quorum is present, or acts approved in writing
by all of the members of the Committee, shall be the acts of the Committee as a
whole. If for any reason the Committee does not meet the requirements of Rule
16b-3 or Section 162(m) of the Code, such noncompliance shall not affect the
validity of the awards, grants, interpretations or other actions of the
Committee

                                  ARTICLE III
                                SHARES AVAILABLE

                  Subject to the adjustments provided in Section VII of the
Plan, the aggregate number of shares which may be issued under the Plan shall
not exceed 4,899,500 shares. Shares of Common Stock underlying awards of
securities (derivative or not) shall be counted against the limitation set forth

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                                       4

in the immediately preceding sentence and may be reused to the extent that the
related Option to any individual is settled in cash, expires, is terminated
unexercised, or is forfeited. Common Stock granted to satisfy Options under the
Plan may be authorized and unissued shares of the Common Stock, issued shares of
such Common Stock held in the Corporation's treasury or shares of Common Stock
acquired on the open market. No fractional shares of Common Stock may be issued
under the Plan.

                                   ARTICLE IV
                                   ELIGIBILITY

                  Officers and Employees of the Corporation or of any Parent or
Subsidiary and Consultants and directors of the Corporation or of any Parent or
Subsidiary who are not Employees, shall be eligible to participate in the Plan.

                                   ARTICLE V
                             AUTHORITY OF COMMITTEE

                  The Plan shall be administered by, or under the direction of,
the Committee, which shall administer the Plan so as to comply at all times with
Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder, to the extent such compliance is required, and with Section 162(m)
of the Code, to the extent that the Corporation is subject to the deduction
limitation thereunder, and shall otherwise have plenary authority to interpret
the Plan and to make all determinations specified in or permitted by the Plan or
deemed necessary or desirable for its administration or for the conduct of the
Committee's business. All interpretations and determinations of the Committee
may be made on an individual or group basis and shall be final, conclusive and
binding on all interested parties. Subject to the express provisions of the
Plan, the Committee shall have authority, in its discretion, to determine the
persons to whom Options shall be granted, the times when such Options shall be
granted, the number of Options, the exercise price of each Option, the period(s)
during which an Option shall be exercisable (whether in whole or in part), the
restrictions to be applicable to Options and the other terms and provisions
thereof (which need not be identical). In addition, the authority of the
Committee shall include, without limitation, the following:

                  Procedures for Exercise of Option. The establishment of
procedures for an Optionee (i) to exercise an Option by payment of cash, (ii) to
have withheld from the total number of shares of Common Stock to be acquired
upon the exercise of an Option that number of shares having a Fair Market Value,
which, together with such cash as shall be paid in respect of fractional shares,
shall equal the Option exercise price of the total number of shares of Common
Stock to be acquired, (iii) to exercise all or a portion of an Option by
delivering that number of shares of Common Stock already owned by him having a
Fair Market Value which shall equal the Option exercise price for the portion
exercised and, in cases where an Option is not exercised in its entirety, and
subject to the requirements of the Code, to permit the Optionee to deliver the
shares of Common Stock thus acquired by him in payment of shares of Common Stock
to be received pursuant to the exercise of additional portions of such Option,
and (iv) to engage in any form of "cashless" exercise. The Committee may, in its
sole discretion, require that an exercise described under any one or more or the
methods described under clauses (ii), (iii) or (iv) of the immediately preceding
sentence (to the extent such exercise is, or is deemed to constitute, an

<PAGE>
                                       5

exercise effected by the tendering of Common Stock) be consummated with Common
Stock (i) held by the Optionee for at least six (6) months or (ii) acquired by
the Optionee other than under the Plan or a similar program.

                  Withholding. The establishment of a procedure whereby a number
of shares of Common Stock may be withheld from the total number of shares of
Common Stock to be issued upon exercise of an Option or for the tender of shares
of Common Stock owned by any Optionee to meet any obligation of withholding for
taxes incurred by the Optionee upon such exercise. Such withholding shall not
exceed any minimum withholding rates required by applicable law. The Committee
may, in its sole discretion, require that if any such withholding is effected by
the tendering of Common Stock, such withholding shall be consummated with Common
Stock (i) held by the Optionee for at least six (6) months and/or (ii) acquired
by the Optionee other than under the Plan or a similar program.

                                   ARTICLE VI
                                  STOCK OPTIONS

                  The Committee shall have the authority, in its discretion, to
grant Incentive Stock Options or to grant Non-Qualified Stock Options or to
grant both types of Options. Notwithstanding anything contained herein to the
contrary, an Incentive Stock Option may be granted only to Employees of the
Corporation or of any Parent or Subsidiary now existing or hereafter formed or
acquired, and not to any director or Consultant who is not also such an
Employee. Subject to the adjustment provided in Section VII of the Plan, the
maximum number of shares of Common Stock with respect to which Options may be
granted during any calendar year to any Optionee shall not exceed the maximum
amount permitted by applicable law or regulation for grants to employees. The
terms and conditions of the Options shall be determined from time to time by the
Committee; provided, however, that the Options granted under the Plan shall be
subject to the following limitations:

         (a)      Exercise Price. The Committee shall establish the exercise
                  price at the time any Option is granted at such amount as the
                  Committee shall determine; provided, however, that the
                  exercise price for each share of Common Stock purchasable
                  under any Option which is intended to satisfy the
                  performance-based compensation exemption to the deduction
                  limitation under Section 162(m) of the Code or any Incentive
                  Stock Option granted hereunder shall be such amount as the
                  Committee shall, in its best judgment, determine to be not
                  less than one hundred percent (100%) of the Fair Market Value
                  per share of Common Stock at the date the Option is granted;
                  and provided, further, that in the case of an Incentive Stock
                  Option granted to a person who, at the time such Incentive
                  Stock Option is granted, owns shares of stock of the
                  Corporation or of any Parent or Subsidiary which possess more
                  than ten percent (10%) of the total combined voting power of
                  all classes of shares of stock of the Corporation or of any
                  Parent or Subsidiary, the exercise price for each share of
                  Common Stock shall be such amount as the Committee, in its
                  best judgment, shall determine to be not less than one hundred
                  ten percent (110%) of the Fair Market Value per share of
                  Common Stock at the date the Option is granted. The exercise

<PAGE>
                                       6

                  price will be subject to adjustment in accordance with the
                  provisions of Section VII of the Plan.

         (b)      Payment of Exercise Price. The exercise price per share of
                  Common Stock with respect to each Option shall be payable at
                  the time the Option is exercised. Such price shall be payable
                  in cash or pursuant to any of the other methods set forth in
                  Sections V(a) or (b) hereof, as permitted by the Committee
                  from time to time. Shares of Common Stock delivered to the
                  Corporation in payment of the exercise price shall be valued
                  at the Fair Market Value of the Common Stock on the date
                  preceding the date of the exercise of the Option.

         (c)      Exercisability of Options. Except as provided in Section VI(e)
                  hereof, each Option shall be exercisable in whole or in
                  installments, and at such time(s), and subject to the
                  fulfillment of any conditions on, and to any limitations on,
                  exercisability as may be determined by the Committee at the
                  time of the grant of such Options or thereafter. The right to
                  purchase shares of Common Stock shall be cumulative so that
                  when the right to purchase any shares of Common Stock has
                  accrued such shares of Common Stock or any part thereof may be
                  purchased at any time thereafter until the expiration or
                  termination of the Option.

         (d)      Expiration of Options. No Option by its terms shall be
                  exercisable after the expiration of ten (10) years from the
                  date of grant of the Option; provided, however, in the case of
                  an Incentive Stock Option granted to a person who, at the time
                  such Option is granted, owns shares of stock of the
                  Corporation or of any Parent or Subsidiary possessing more
                  than ten percent (10%) of the total combined voting power of
                  all classes of shares of stock of the Corporation or of any
                  Parent or Subsidiary, such Option shall not be exercisable
                  after the expiration of five (5) years from the date such
                  Option is granted.

         (e)      Exercise Upon Optionee's Termination of Employment or Service.
                  Unless otherwise determined by the Committee at the time of
                  grant or, if the Optionee's rights are not reduced thereafter,
                  upon the termination of the employment or services of an
                  Optionee by the Corporation or by any Parent or Subsidiary for
                  any reason, any Stock Option granted to such Optionee shall
                  remain exercisable (but solely to the extent exercisable on
                  the termination date) for ninety (90) days (one (1) year in
                  the case of termination due to death or Disability) after the
                  date of such termination of employment or service. For
                  purposes of determining whether any Optionee has incurred a
                  termination of employment or service, an Optionee who is both
                  an Employee (or a Consultant) and a director of the
                  Corporation and/or any Parent or Subsidiary shall be
                  considered to have incurred a termination of employment or
                  service only upon his termination of service both as an
                  Employee (or as a Consultant) and as a director.

         (f)      Maximum Amount of Incentive Stock Options. Except as otherwise
                  required by applicable law, each Option under which Incentive
                  Stock Options are granted shall provide that to the extent the
                  sum of (i) the Fair Market Value of the shares of Common Stock
                  (determined as of the time of the grant of the Option) subject
                  to such Incentive Stock Option plus (ii) the fair market

<PAGE>
                                       7

                  values (determined as of the date(s) of grant of the
                  option(s)) of all other shares of Common Stock subject to
                  incentive stock options granted to an Optionee by the
                  Corporation or any Parent or Subsidiary, which are exercisable
                  for the first time by any person during any calendar year,
                  exceed(s) U.S. One Hundred Thousand Dollars (U.S.$100,000),
                  such excess shares of Common Stock shall not be deemed to be
                  purchasable pursuant to Incentive Stock Options, but shall be
                  deemed to be purchasable pursuant to Non-Qualified Options
                  (with such Non-Qualified Options being the last-issued of the
                  subject Options). The terms of the immediately preceding
                  sentence shall be applied by taking all options, whether or
                  not granted under the Plan, into account in the order in which
                  they are granted.

         (g)      Reload Options. (i) Concurrently with the award of an Option
                  (for these purposes, the "Primary Option") to an Optionee, the
                  Committee may, in its sole discretion, authorize the award of
                  an additional Option or Options (hereinafter referred to as
                  "Reload Options") to such Optionee providing for the purchase
                  of shares of Common Stock in an amount equal to the sum of:

                  (A)      the number of shares of Common Stock, if any, used to
                           pay the exercise price of the Primary Option; and

                  (B)      to the extent authorized by the Committee, the number
                           of shares of Common Stock used to satisfy any tax
                           withholding requirement related to the exercise of
                           the Primary Option.

         For purposes of this subsection (g), upon its exercise a Reload Option
         shall be treated as a Primary Option.

                  (i)      The grant of a Reload Option will become effective
                           upon the exercise of the Primary Option. At the
                           discretion of the Committee, a Reload Option may be
                           an Incentive Stock Option.

                  (ii)     To the extent that the exercise of any Option will
                           result in the award of a Reload Option, the Award
                           Agreement under which such Option is granted must
                           provide that the exercise of such Primary Option will
                           result in the award of a related Reload Option, which
                           will be evidenced under a separate Award Agreement.
                           The terms of such Award Agreement shall include,
                           among other items, provisions providing that (A) the
                           exercise price per share of Common Stock available
                           for purchase under the Reload Option shall, unless
                           otherwise determined by the Committee, be no less
                           than one hundred (100%) of the Fair Market Value of
                           such Common Stock on the date the Reload Option is
                           granted and (B) the term of the Reload Option shall
                           not extend beyond the remaining term of the Primary
                           Option.

                  (iii)    Notwithstanding the above, no Reload Option will be
                           granted pursuant to the exercise of a Primary Option
                           if such exercise occurs after the termination of the

<PAGE>
                                       8

                           Optionee's employment or service with the Corporation
                           and each Parent or Subsidiary.

                                  ARTICLE VII
                         ADJUSTMENT OF SHARES; MERGER OR
                     CONSOLIDATION, ETC. OF THE CORPORATION

         (a)      Recapitalization, Etc. In the event there is any change in the
                  outstanding Common Stock of the Corporation by reason of any
                  reorganization, recapitalization, stock split, reverse stock
                  split, stock dividend, combination of shares or otherwise,
                  there shall be substituted for or added to each share of
                  Common Stock theretofore appropriated or thereafter subject,
                  or which may become subject, to any Option, the number and
                  kind of shares of stock or other securities into which each
                  outstanding share of Common Stock shall be so changed or for
                  which each such share shall be exchanged, or to which each
                  such share shall be entitled, as the case may be, and the per
                  share price thereof also shall be appropriately adjusted.
                  Notwithstanding the foregoing, (i) each such adjustment with
                  respect to an Incentive Stock Option shall comply with the
                  rules of Section 424(a) of the Code and (ii) in no event shall
                  any adjustment be made which would render any Incentive Stock
                  Option granted hereunder to be other than an incentive stock
                  option for purposes of Section 422 of the Code.

         (b)      Merger, Consolidation or Change in Control of Corporation.
                  Upon (i) the merger or consolidation of the Corporation with
                  or into another entity (pursuant to which the stockholders of
                  the Corporation immediately prior to such merger or
                  consolidation will not, as of the date of such merger or
                  consolidation, own a beneficial interest in shares of voting
                  securities of the entity surviving such merger or
                  consolidation having at least a majority of the combined
                  voting power of such corporation's then outstanding
                  securities) if, unless otherwise provided in the subject Award
                  Agreement, the agreement of merger or consolidation does not
                  provide for (1) the continuance of the Options granted
                  hereunder or (2) the substitution of new options for Options
                  granted hereunder, or for the assumption of such Options by
                  the surviving entity, (ii) the dissolution, liquidation, or
                  sale or other disposition of all or substantially all the
                  assets of the Corporation to a person unrelated to the
                  Corporation or to a direct or indirect owner of a majority of
                  the voting power of the Corporation's then outstanding voting
                  securities (such sale or other disposition of assets being
                  referred to as an "Asset Sale") or (iii) the Change in Control
                  of the Corporation, then the holder of any such Option
                  theretofore granted and still outstanding (and not otherwise
                  expired) shall have the right immediately prior to the
                  effective date of such merger, consolidation, dissolution,
                  liquidation, Asset Sale or Change in Control of the
                  Corporation to exercise such Option(s) in whole or in part
                  without regard to any installment provision that may have been
                  made part of the terms and conditions of such Option(s);
                  provided that, unless otherwise provided in the subject Award
                  Agreement, all conditions precedent to the exercise of such
                  Option(s), other than the passage of time, have occurred. The
                  Corporation, to the extent practicable, shall give advance
                  notice to affected Optionees of such merger, consolidation,
                  dissolution, liquidation, Asset Sale or Change in Control of

<PAGE>
                                       9

                  the Corporation. Unless otherwise provided in the subject
                  Award Agreement or merger, consolidation or Asset Sale
                  agreement, all such Options which are not so exercised shall
                  be forfeited as of the effective time of such merger,
                  consolidation, dissolution, liquidation or Asset Sale (but not
                  in the case of a Change in Control of the Corporation). In the
                  event the Corporation becomes a subsidiary of another
                  corporation or entity (the "New Parent Corporation") with
                  respect to which the stockholders of the Corporation (as
                  determined immediately before such transaction) own,
                  immediately after such transaction, a beneficial interest in
                  shares of voting securities of the New Parent Corporation
                  having at least a majority of the combined voting power of
                  such New Parent Corporation's then outstanding securities,
                  there shall be substituted for Options granted hereunder,
                  options to purchase common stock of the New Parent
                  Corporation. The substitution described in the immediately
                  preceding sentence shall be effected in a manner such that any
                  option granted by the New Parent Corporation to replace an
                  Incentive Stock Option granted hereunder shall satisfy the
                  requirements of Section 422 of the Code.

         (c)      Definition of Change in Control of the Corporation. As used
                  herein, a "Change in Control of the Corporation" shall be
                  deemed to have occurred if any person (including any
                  individual, firm, partnership or other entity) together with
                  all Affiliates and Associates (as defined under Rule 12b-2 of
                  the General Rules and Regulations promulgated under the
                  Exchange Act) of such person (but excluding (i) a trustee or
                  other fiduciary holding securities under an employee benefit
                  plan of the Corporation or any Subsidiary of the Corporation,
                  (ii) a corporation owned, directly or indirectly, by the
                  stockholders of the Corporation in substantially the same
                  proportions as their ownership of the Corporation, (iii) the
                  Corporation or any Subsidiary of the Corporation or (iv) a
                  person who is a ten percent (10%) or greater stockholder of
                  the Corporation or an Affiliate or Associate of a ten percent
                  (10%) stockholder of the Corporation on the date of
                  stockholder approval of the Plan is or becomes the Beneficial
                  Owner (as defined in Rule 13d-3 promulgated under the Exchange
                  Act), directly or indirectly, of securities of the Corporation
                  representing fifty percent (50%) or more of the combined
                  voting power of the Corporation's then outstanding securities.

                                  ARTICLE VIII
                            MISCELLANEOUS PROVISIONS

         (a)      Administrative Procedures. The Committee may establish any
                  procedures determined by it to be appropriate in discharging
                  its responsibilities under the Plan. All actions and decisions
                  of the Committee shall be final.

         (b)      Assignment or Transfer. No grant or award of any Option or any
                  rights or interests therein shall be assignable or
                  transferable by an Optionee except by will or the laws of
                  descent and distribution. During the lifetime of an Optionee,
                  Options granted hereunder shall be exercisable only by the
                  Optionee. Notwithstanding the foregoing, the Committee may
                  permit an Optionee to transfer a Non-Qualified Option subject

<PAGE>
                                       10

                  to such terms and conditions as it deems appropriate from time
                  to time.

         (c)      Investment Representation. With respect to shares of Common
                  Stock received pursuant to the exercise of an Option, the
                  Committee may require, as a condition of receiving such
                  securities, that the Optionee furnish to the Corporation such
                  written representations and information as the Committee deems
                  appropriate to permit the Corporation, in light of the
                  existence or nonexistence of an effective registration
                  statement under the Securities Act, to deliver such securities
                  in compliance with the provisions of the Securities Act.

         (d)      Withholding Taxes. In the case of the issuance or distribution
                  of Common Stock or other securities hereunder upon the
                  exercise of any Option, the Corporation, as a condition of
                  such issuance or distribution, may require the payment
                  (through withholding from the Optionee's salary, reduction of
                  the number of shares of Common Stock or other securities to be
                  issued, or otherwise) of any federal, state, local or foreign
                  taxes required to be withheld. Each Optionee may satisfy the
                  withholding obligations by paying to the Corporation (or the
                  appropriate Parent or Subsidiary) a cash amount equal to the
                  amount required to be withheld or, subject to the Committee's
                  consent thereto, by tendering to the Corporation (or to the
                  appropriate Parent or Subsidiary) a number of shares of Common
                  Stock having a value equivalent to such cash amount, or by use
                  of any available procedure approved by the Committee as
                  described under Section V(c) hereof.

         (e)      Costs and Expenses. The costs and expenses of administering
                  the Plan shall be borne by the Corporation and shall not be
                  charged against any award nor to any individual receiving an
                  Option.

         (f)      Funding of Plan. The Plan shall be unfunded. The Corporation
                  shall not be required to segregate any of its assets to assure
                  the payment of any Option under the Plan. Neither the
                  Optionees nor any other persons shall have any interest in any
                  fund or in any specific asset or assets of the Corporation or
                  any other entity by reason of any Option, except to the extent
                  expressly provided hereunder.

         (g)      Other Incentive Plans. The adoption of the Plan does not
                  preclude the adoption by appropriate means of any other
                  incentive plan for employees.

         (h)      Plurals and Gender. Where appearing in the Plan, the masculine
                  gender shall include the feminine and neuter genders, and the
                  singular shall include the plural, and vice versa, unless the
                  context clearly indicates a different meaning.

         (i)      Headings. The headings and sub-headings in the Plan are
                  inserted for the convenience of reference only and are to be
                  ignored in any construction of the provisions hereof.

         (j)      Severability. In case any provision of the Plan shall be held
                  illegal or void, such illegality or invalidity shall not
                  affect the remaining provisions of the Plan, but shall be

<PAGE>
                                       11

                  fully severable, and the Plan shall be construed and enforced
                  as if said illegal or invalid provisions had never been
                  inserted herein.

         (k)      Liability and Indemnification.

                  (i)      Neither the Corporation nor any Parent or Subsidiary
                           shall be responsible in any way for any action or
                           omission of the Committee, or any other fiduciaries
                           in the performance of their duties and obligations as
                           set forth in the Plan. Furthermore, neither the
                           Corporation nor any Parent or Subsidiary shall be
                           responsible for any act or omission of any of their
                           agents, or with respect to reliance upon advice of
                           their counsel, provided that the Corporation and/or
                           the appropriate Parent or Subsidiary relied in good
                           faith upon the action of such agent or the advice of
                           such counsel.

                  (ii)     Neither the Corporation, any Parent or Subsidiary,
                           the Committee, nor any agents, employees, officers,
                           directors or stockholders of any of them, nor any
                           other person shall have any liability or
                           responsibility with respect to the Plan, except as
                           expressly provided herein.

         (l)      Incapacity. If the Committee shall receive evidence
                  satisfactory to it that a person entitled to exercise any
                  Option is, at the time when such Option becomes exercisable, a
                  minor, or is physically or mentally incompetent to receive
                  such Option and to give a valid release thereof, and that
                  another person or an institution is then maintaining or has
                  custody of such person and that no guardian, committee or
                  other representative of the estate of such person shall have
                  been duly appointed, the Committee may permit such Option to
                  be exercised by such other person or institution, including a
                  custodian under a Uniform Gifts to Minors Act or corresponding
                  legislation (who shall be an adult, a guardian of the minor or
                  a trust company), and the release by such other person or
                  institution shall be a valid and complete discharge for the
                  exercise of such Option.

         (m)      Cooperation of Parties. All parties to the Plan and any person
                  claiming any interest hereunder agree to perform any and all
                  acts and execute any and all documents and papers which are
                  necessary or desirable for carrying out the Plan or any of its
                  provisions.

         (n)      Governing Law. All questions pertaining to the validity,
                  construction and administration of the Plan shall be
                  determined in accordance with the laws of the State of
                  Delaware, without regard to its principles of conflicts of
                  law.

         (o)      Non-guarantee of Employment, Directorship or Consultancy.
                  Nothing contained in the Plan shall be construed as a contract
                  of employment (or as a consulting contract) between the
                  Corporation (or any Parent or Subsidiary), and any Optionee,
                  or to confer upon any Optionee the right to be continued in
                  the employment of, or service with, the Corporation (or any
                  Parent or Subsidiary), or as a limitation on the right of the
                  Corporation or any Parent or Subsidiary to discharge any of

<PAGE>
                                       12

                  its Employees, Consultants or directors, at any time, with or
                  without cause.

         (p)      Notices. Each notice relating to the Plan shall be in writing
                  and delivered in person, by recognized overnight courier or by
                  certified mail to the proper address. Except as otherwise
                  provided in any Award Agreement with respect to the exercise
                  thereunder, all notices to the Corporation or the Committee
                  shall be addressed to it at 161 Eglinton Avenue East, Suite
                  400 Toronto, Ontario M4P 1J5 Attn: Chief Executive Officer or
                  to such other address as may be designated for such purpose by
                  the Corporation from time to time by notice given in the
                  manner herein provided. All notices to Optionees,
                  beneficiaries or other persons acting for or on behalf of such
                  persons shall be addressed to such person at the last address
                  for such person maintained in the Committee's records.

         (q)      Written Agreements. Each Option shall be evidenced by a signed
                  written agreement between the Corporation and the Optionee
                  containing the terms and conditions of the award.

         (r)      Limitation. No Incentive Stock Options may be granted
                  hereunder more than ten (10) years after the date of
                  effectiveness of the Plan.

                                   ARTICLE IX
                        AMENDMENT OR TERMINATION OF PLAN

The Board of Directors of the Corporation shall have the right to amend, suspend
or terminate the Plan at any time, provided that, to the extent required by
applicable law, rule or regulation, no amendment shall be made unless such
amendment is made by or with the approval of the stockholders of the Corporation
in accordance with applicable law. Except as otherwise provided herein, no
amendment, suspension or termination of the Plan or Award Agreement shall
adversely affect or impair the rights of any Optionee without his consent.

<PAGE>
                                       13

                             SOFTQUAD SOFTWARE LTD.
                             2000 STOCK OPTION PLAN

                                 ---------------

                        EFFECTIVE AS OF FEBRUARY 25, 2000

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