8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): October 2, 2000

COREL CORPORATION
(Exact name of registrant as specified in its charter)

Canada (State of Other Jurisdiction of Incorporation)

 

0-20562	Not Applicable
(Commission File Number)	(I.R.S. Employer Identification Number)

1600 Carling Avenue
Ottawa, Ontario, Canada    KIZ 8R7
(Address of principal executive offices including zip code)

(613) 728-8200
(Registrant's telephone number, including area code)

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Item 5.

On October 2, 2000, the Corporation announced that it has formed a strategic alliance with Microsoft Corporation that will see the two companies expand their relationship to encompass projects related to Microsoft's new .NET initiative.

As part of this expanded relationship, Microsoft has purchased 24 million non-voting convertible preferred shares (the "Series A Shares") at a purchase price of U.S. $5.625 per share or a total purchase price of U.S. $135 million. The companies will also work together to support the development, testing and marketing of new products related to the .NET platform. Joint-marketing initiatives will include participation in product launches and trade show events and representation on mutual Web sites. In addition, both companies have agreed to settle certain legal issues between the Corporation and Microsoft.

The terms of the Series A Shares provide that the Series A Shares are non-voting. Each Series A Share will be convertible into one common share of the Corporation, but the Series A Shares may not be converted to the Corporation's common shares while Microsoft or any of its affiliates or associates is the holder of the Series A Shares. The Series A Shares have a liquidation preference of U.S.$5.625 per share and are entitled to the same dividends as the Corporation's board of directors, in its discretion, may decide to pay on the common shares. Pursuant to the purchase agreement, the Corporation also agreed to provide certain registration rights with respect to the resale of the common shares of the Corporation issued upon any conversion of the Series A Shares.

See attached Exhibits 99.1- Press Release, 99.2 - Purchase Agreement, 99.3 - - Registration Rights Agreement and 99.4 - Technology Support and Settlement Agreement.

Item 7. Financial Statements, Pro Forma Information and Exhibits

EXHIBITS.

(c) Exhibits

99.1 Press Release issued by Corel Corporation on September 19, 2000.

99.2 Purchase Agreement .

99.3 Registration Rights Agreeement.

99.4 Technology Support and Settlement Agreement.

SIGNATURES

Pursuant to the requirement of the Security Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: October 11, 2000

COREL CORPORATION

(Registrant)

By:  /s/John Blaine

John Blaine

Chief Financial Officer, Executive Vice President Finance and Treasurer

(Principal Accounting Officer)

EX-99.1

Exhibit 99.1

For Immediate Release

Corel and Microsoft Announce Strategic Alliance

Alliance to accelerate delivery of applications for Microsoft's .NET Platform

Ottawa, Canada & Redmond, WA - October 2, 2000 - Corel Corporation (NASDAQ: CORL, TSE: COR) and Microsoft Corporation (NASDAQ: MSFT) today announced that they have formed a strategic alliance that will see the two companies expand their relationship to encompass projects related to Microsoft's new .NET initiative.

As part of this expanded relationship, Microsoft has purchased 24 million non-voting convertible preferred shares at a purchase price of U.S.$5.625 per share or a total purchase price of U.S. $135 million. The companies will also work together to support the development, testing and marketing of new products related to the .NET platform. Joint-marketing initiatives will include participation in product launches and trade show events and representation on mutual Web sites. In addition, both companies have agreed to settle certain legal issues between Corel and Microsoft.

"We are pleased to announce this latest development in our relationship with Microsoft, and what we believe to be an important step forward in our strategy for long-term growth," said Corel's interim President and CEO Derek J. Burney.

"Corel has long recognized the potential of the Internet to speed up the delivery of applications and services to our customers worldwide," added Mr. Burney. "Our most recent work has focused on strategies to move our applications, including CorelDRAW and WordPerfect as well as our Linux distribution - Corel LINUX OS, on to the Web. By leveraging Corel's development expertise and popular product line with Microsoft's .NET platform, we believe we have found a great combination to accelerate this process. .NET promises to be a robust platform that we can use to build innovative, easy-to-use and reliable Web applications and services that will benefit our customers."

"Microsoft is very excited to see strong commitment from Corel for the .NET platform. Corel has some of the best-known software on the market and expertise in online-service delivery, graphics and interface design. Coupled with Microsoft's .NET initiative, our companies will be able to cooperate on projects that will benefit customers worldwide," said Yuval Neeman, Vice President, Microsoft's Developer Division.

While neither Microsoft nor any of its affiliates are entitled to convert the preferred shares, they will be saleable to, and convertible by other parties, into an aggregate of 24 million common shares of Corel. Based on the number of shares currently outstanding, the common shares issuable upon conversion of the preferred shares would represent approximately 24.6 per cent of the outstanding Corel common shares after the conversion. The preferred shares do not carry any preferential dividends over the common shares.

A teleconference will be held this evening beginning at 5:30 p.m. (EST)/2:30 p.m.(PST) to discuss this strategic alliance. To participate in the teleconference, interested media/analysts must dial 1-800-273-9672 (North America) or (416) 695-5806 approximately 10 minutes before 5:30 p.m. Media/analysts calling from outside of North America can dial 1-800-3276-6333. An instant replay will be provided for 24 hours commencing one hour after the end of the teleconference. The instant replay number is (416) 695-5800. The passcode is 574606. A replay of the call will also be available at the Corel® Investor Relations Web site (www.corel.com/investor) this evening.

In addition, a news conference/photo op for local media in Ottawa will be held at 11:30 a.m. (EST) on Tuesday October 3, 2000 at Corel's corporate headquarters located at 1600 Carling Avenue. For those who wish to listen in on the proceedings, please call 1-800-273-9672 or 416-695-5806 approximately 10 minutes prior to the start of the event.

Corel Corporation

Corel Corporation is an internationally recognized developer of award-winning business productivity, graphics and operating system solutions on the Windows®, Linux®, UNIX®, Macintosh® and Java™ platforms. Corel also develops market-leading, Web-based solutions including applications, content, e-commerce and online services. For access to these services and more information go to www.corel.comor www.corelcity.com. Corel is headquartered in Ottawa, Canada. Corel's common stock trades on the NASDAQ Stock Market under the symbol CORL and on the Toronto Stock Exchange under the symbol COR.

Microsoft Corporation

Founded in 1975, Microsoft (Nasdaq "MSFT") is the worldwide leader in software, services and Internet technologies for personal and business computing. Microsoft offers a wide range of products and services designed to empower people through great software - any time, any place and on any device.

This press release contains statements that are forward looking as that term is defined by the United States Private Securities Litigation Reform Act of 1995. These statements are based on current expectations that are subject to risks and uncertainties. Actual results will differ due to factors such as shifts in customer demand, product shipment schedules, product mix, competitive products and pricing, technological shifts and other variables. Readers are referred to Corel's most recent reports filed with the Securities and Exchange Commission.

Corel, WordPerfect, CorelDRAW and the Go further logo are trademarks or registered trademarks of Corel Corporation or Corel Corporation Limited. Linux is a registered trademark of Linus Torvalds. .Net is a registered trademark of Microsoft Corporation. All other products, fonts, company names and logos are trademarks or registered trademarks of their respective owners.

Corel Press Contacts: Corel Investor Relations:

Anne Vis (Canada) John Hladkowicz

(613) 728-0826 ext. 5182 (613) 728-0826 ext. 1194

annev@corel.com johnh@corel.com

Louise Hanlon (US)

(613) 728-0826 ext. 5288

louiseh@corel.com

Microsoft PR:

Microsoft Investor Relations:

Tom Pilla Carla Lewis

(425) 936-0756(425) 936-3703

tpilla@microsoft.com Carlalew@microsoft.com

Waggener-Edstrom PR

Rapid Response Team

(503) 443-7000

rrt@wagged.com

EX-99.2

Exhibit 99.2

Purchase Agreement

Purchase Agreement, dated October 2, 2000, among Corel Corporation, a corporation existing under the laws of Canada ("Corel"), Microsoft Corporation, a Washington corporation ("Microsoft"), and Microsoft Licensing, Inc., a Nevada corporation and a wholly owned subsidiary of Microsoft (the "Purchaser").

Recitals

Whereas, Corel has duly authorized the creation and issuance of a series of its preferred shares designated as its Series A Participating Convertible Preferred Shares (the "Preferred Shares"), the rights, privileges, conditions and restrictions of which are set forth in Exhibit A hereto.

Whereas, on the terms stated herein (including the attached schedules and exhibits), Corel desires to issue and sell to the Purchaser, and the Purchaser desires to purchase from Corel, 24,000,000 Preferred Shares.

Whereas, the holders from time to time of the Preferred Shares and/or the common shares (the "Common Shares") of Corel issuable upon conversion of the Preferred Shares will be entitled to the benefits of a Registration Rights Agreement, dated the date hereof (the "Registration Rights Agreement"), among Corel, Microsoft and the Purchaser in the form of Exhibit B hereto.

Whereas, all things necessary to make the Preferred Shares (when issued and delivered hereunder), this Agreement and the Registration Rights Agreement valid and binding obligations of Corel in accordance with their respective terms have been done.

Now, Therefore, the parties hereto agree as follows:

Article I

Authorization And Issuance Of Securities

Section 1.1. Sale and Purchase of the Preferred Shares. Concurrently with the execution and delivery hereof, Corel is issuing and selling to the Purchaser, and the Purchaser is purchasing from Corel, at the Closing referred to in Section 1.2, the Preferred Shares for US$5.625 per share, or an aggregate cash purchase price of US$135,000,000 (the "Purchase Price").

Section 1.2. Closing. The sale and purchase of the Preferred Shares shall take place at the offices of McCarthy Tétrault, located at 40 Elgin Street, Suite 1400, Ottawa, Ontario, Canada (the "Closing"), at 4:00 p.m. on October 2, 2000. At the Closing, Corel will deliver to the Purchaser a certificate for the Preferred Shares registered in the Purchaser's name against payment by the Purchaser to Corel of the Purchase Price by wire transfer of immediately available funds to the following bank account: Royal Bank of Canada, Sort Code CC000300006, Account No. 400 4404.

Article II

Representations and Warranties;

Corel represents and warrants, covenants, and agrees with, the Purchaser and Microsoft that:

Section 2.1. Reports.

(a) Since November 30, 1999 (the "Audit Date"), the only documents that Corel has filed with the U.S. Securities and Exchange Commission (the "SEC") are (i) its Annual Report on Form 10-K405 for the fiscal year ended November 30, 1999, (ii) its Quarterly Reports on Form 10-Q for the fiscal quarters ended February 29, 2000 and May 31, 2000, (iii) its Current Reports on Form 8-K filed on May 23, 2000, June 13, 16, 21, 22, 26, 27 and 30, 2000, August 17, 2000, September 12 and 28, 2000, and (iv) its Current Report on Form 8-A/A, filed on July 20, 2000, in each case in the form (including exhibits, annexes and any amendments thereto) filed with the SEC (collectively, the "SEC Reports"). The SEC Reports, when they were filed with the SEC, conformed in all material respects to the applicable requirements of the U.S. Securities Act of 1933, as amended (the "Securities Act"), or the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act"), as applicable, and in each case the applicable rules and regulations of the SEC thereunder.

(b) Since the Audit Date, the only documents that Corel has filed with the Ontario Securities Commission (the "OSC") or any securities regulatory authority of any other Canadian jurisdiction in which Corel is a reporting issuer or in which Corel has distributed its securities to the public (collectively, the "Canadian Securities Authorities") pursuant to the Securities Act (Ontario) (the "OSA"), the rules, regulations, policies and instruments thereunder, the securities legislation of all other jurisdictions in Canada in which Corel is a reporting issuer and/or the continuous disclosure requirements of all other Canadian jurisdictions in which Corel has distributed its securities to the public (collectively, the "Canadian Disclosure Requirements"), are the prospectus of Corel dated June 23, 2000 (including, the documents incorporated therein by reference), its Annual Information Form for 1999, its Annual Report for 1999, its Management Proxy Circular dated February 2, 2000, the Material Change Reports of Corel dated February 7, 2000, May 16, 2000, June 8, 12, 15, 21, 23 and 28, 2000, August 15, 2000 and September 6 and 28, 2000, and, to the extent not listed above, all quarterly reports of Corel since the Audit Date (the "Canadian Reports" and, collectively with the SEC Reports, the "Reports"). The Canadian Reports, when they were filed with the Canadian Securities Authorities, conformed in all material respects to the applicable requirements of the Canadian Disclosure Requirements.

(c) The Reports did not, as of their respective dates, contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(d) Each of the consolidated balance sheets included in or incorporated by reference into the Reports (including the related notes and schedules) fairly presents the consolidated financial position and shareholders' equity of Corel and its subsidiaries as of its date and each of the consolidated statements of operations and retained earnings (deficit) or cash flows included in or incorporated by reference into the Reports (including any related notes and schedules) fairly presents the results of operations and income, retained earnings or cash flows, as the case may be, of Corel and its subsidiaries for the periods to which they relate (subject, in the case of unaudited statements, to normal year-end audit adjustments that will not be material in amount or effect), in each case in accordance with generally accepted accounting principles in Canada consistently applied during the periods involved, except as may be noted therein.

Section 2.2. Absence of Certain Changes and Undisclosed Liabilities.

(a) Except as disclosed in the Reports and in Corel's press release dated September 27, 2000 announcing results for its fiscal quarter ended August 31, 2000, since the Audit Date (i) there has not been any material adverse change in, or any development reasonably likely to result in a prospective material adverse change in, the business, assets, liabilities, financial condition or results of operations of Corel and its subsidiaries, taken as a whole, and (ii) there has not been any material change in the capital stock or long-term debt of Corel or any of its subsidiaries.

(b) Neither Corel nor any of its subsidiaries has any liabilities or obligations, whether accrued, contingent or otherwise, except for liabilities and obligations (i) in the respective amounts reflected or reserved against in the consolidated balance sheets contained in the Reports or (ii) incurred since May 31, 2000 in the ordinary course of business and which, individually or in the aggregate, have not and could not reasonably be expected to (A) have a material adverse effect on the business, assets, liabilities, financial condition or results of operations of Corel and its subsidiaries, taken as a whole, or (B) impair or otherwise adversely affect the validity or enforceability of, or the ability of Corel to perform its obligations under, this Agreement, the Registration Rights Agreement, the Technology Support and Settlement Agreement, dated October 2, 2000, between Corel and Microsoft (the "Technology Support and Settlement Agreement") or the Preferred Shares (each, a "Material Adverse Effect").

Section 2.3. Due Incorporation; Power and Authority. Each of Corel and each of its subsidiaries (a) is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation, (b) is duly qualified as a foreign corporation or an extra provincial corporation, as the case may be, to transact business and is in good standing in each jurisdiction in which such qualification is required, other than any failures to so qualify or to be in good standing which, individually or in the aggregate, have not had and could not be reasonably expected to have a Material Adverse Effect and (c) has full corporate power and authority to own, lease and operate its properties and to conduct its businesses as currently conducted. Corel has full corporate power and authority to enter into and perform its obligations under each of this Agreement, the Registration Rights Agreement, the Preferred Shares, or the Technology Support and Settlement Agreement (collectively, the "Transaction Documents").

Section 2.4. Capitalization. (a) The authorized capital stock of Corel consists solely of an unlimited number of Common Shares and an unlimited number of its preferred shares, (b) as at October 2, 2000, 73,547,663 Common Shares and none of the preferred shares of Corel are currently issued and outstanding, (c) 9,030,064 Common Shares and none of the preferred shares other than the Preferred Shares are issuable upon the conversion, exercise or exchange of securities of Corel currently issued and outstanding or pursuant to any agreements entered into by Corel or any of its subsidiaries and (d) no shares of any class of the capital stock of Corel were held by Corel in its treasury or by any of its subsidiaries. All the issued and outstanding Common Shares have been duly authorized and are validly issued, fully paid and nonassessable and free of preemptive (or similar) rights. Other than as disclosed in Schedule 2.4, except for the rights issued pursuant to the Shareholder Rights Plan Agreement, dated as of February 11, 1999 and amended and restated as of March 31, 1999 (the "Rights Plan"), there are no securities of Corel or any of its subsidiaries that are convertible into or exercisable or exchangeable for shares of any capital stock of Corel or any of its subsidiaries, and no options, warrants, calls, subscriptions, convertible securities, or other rights, agreements or commitments which obligate Corel or any of its subsidiaries to issue, transfer or sell any shares of capital stock of, or other interests in, Corel or any of its subsidiaries. There are no outstanding obligations of Corel or any of its subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock of Corel or any of its subsidiaries and, except as disclosed in Schedule 2.4 neither Corel nor any of its subsidiaries has any awards or options outstanding under any stock option plans or agreements or any other outstanding stock-related awards. Neither Corel nor any of its subsidiaries has any outstanding bonds, debentures, notes or other obligations or other securities that entitle the holders thereof to vote with the shareholders of Corel or any of its subsidiaries on any matter or which are convertible into or exercisable or exercisable for securities having such a right to vote.

Section 2.5. Due Authorization, Execution and Delivery. Each of this Agreement, the Technology Support and Settlement Agreement and the Registration Rights Agreement has been duly authorized, executed and delivered by Corel and constitutes a valid and legally binding obligation of Corel, enforceable against it in accordance with its terms subject to bankruptcy, insolvency, reorganization, moratorium, and other similar laws of general applicability relating to or affecting creditors' rights or general equity principles. The Preferred Shares have been duly authorized and, upon consummation of the transactions contemplated hereby, will be validly issued, fully paid and non-assessable and no personal liability will attach to the ownership thereof. The Preferred Shares and the issuance thereof to the Purchaser will be free and clear of all preemptive (or similar) rights, taxes and liens, charges, security interests, encumbrances, equities and claims other than those created or suffered to exist by the Purchaser (collectively, "Liens"). The Common Shares issuable upon conversion of the Preferred Shares have been duly authorized and, when issued upon such conversion, will be validly issued, fully paid and non-assessable and free and clear of all preemptive (or similar) rights, taxes and Liens and no personal liability will attach to the ownership thereof. Applications have been made for the listing and posting for trading on the Toronto Stock Exchange ("TSE") and for quotation on the NASDAQ National Market ("NASDAQ") of the Common Shares issuable upon conversion of the Preferred Shares and, upon issuance, such shares will be listed and posted for trading on the TSE and included for quotation on the NASDAQ.

Section 2.6. Non-Contravention; Authorizations and Approvals. Neither Corel nor any of its subsidiaries is in violation of its articles of incorporation or bylaws (or comparable constituent or governing documents) or is in default (or, with the giving of notice, lapse of time or both, would be in default) under any note, bond, mortgage, indenture, deed of trust, loan or credit agreement, license, franchise, permit, lease, contract or other agreement, instrument, commitment or obligation to which Corel or any of its subsidiaries is a party or by which Corel or any of its subsidiaries or any of their respective properties or assets is bound, or under which Corel or any of its subsidiaries or any of their respective properties or assets is entitled to a benefit, (each, a "Contract") except for any such defaults that, individually or in the aggregate, have not had and could not reasonably be expected to have a Material Adverse Effect. None of (a) the execution and delivery by Corel of this Agreement, the Technology Support and Settlement Agreement or the Registration Rights Agreement, (b) the issuance by Corel of the Preferred Shares or the Common Shares upon conversion of the Preferred Shares or (c) the performance by Corel of its obligations under the Transaction Documents or the consummation of the transactions contemplated thereby will: (i) violate, conflict with or result in a breach of any provisions of the certificate of incorporation or bylaws (or comparable constituent or governing documents) of Corel or any of its subsidiaries, (ii) violate, conflict with, result in a breach of any provision of, constitute a default (or an event which, with notice, lapse of time or both, would constitute a default) under, result in the termination or in a right of termination of, accelerate the performance required by or benefit obtainable under, result in the triggering of any payment or other obligations (including any repurchase or repayment obligations) pursuant to, result in the creation of any Lien upon any of the properties of Corel or any of its subsidiaries under, or result in there being declared void, voidable, subject to withdrawal or without further binding effect, any of the terms, conditions or provisions of any Contract, except for any such violations, conflicts, breaches, defaults, accelerations, terminations or other matters which, individually or in the aggregate, have not had and could not reasonably be expected to have a Material Adverse Effect, (iii) require any consent, approval or authorization of, or declaration, filing or registration with, any Governmental Authority, except for (A) approvals for listing and posting for trading on the TSE and for quotation on the NASDAQ, for which applications have been made, and (B) those consents, approvals, authorizations, declarations, filings or registrations which have been obtained or made or the failure of which to obtain or make, individually or in the aggregate, have not had and could not be reasonably expected to have a Material Adverse Effect, or (iv) violate any Applicable Laws, except for violations which, individually or in the aggregate, have not had and could not reasonably be expected to have a Material Adverse Effect.

"Applicable Law" means all laws, statutes, treaties, rules, codes, ordinances, regulations, certificates, orders and licenses of, and interpretations by, any Governmental Authority and judgments, decrees, injunctions, writs, permits, orders or like governmental action of any Governmental Authority applicable to Corel or any of its subsidiaries or any of their securities, property or operations.

"Governmental Authority" means (a) the government of the United States of America or any state thereof, Canada or any province or territory thereof or any other political subdivision of any of the foregoing, (b) any government or political subdivision of any other jurisdiction in which Corel or any of its subsidiaries conducts all or any part of its business or which asserts jurisdiction over any properties of Corel or any of is subsidiaries, (c) any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any of the foregoing Government Authorities, or (d) the TSE and the NASDAQ.

Section 2.7. No Actions or Proceedings. Except as disclosed in the Reports, there are no legal or governmental actions, suits or proceedings pending or, to the best of Corel's knowledge, after due inquiry, threatened against or affecting Corel, any of its subsidiaries, any of their directors or officers (in their capacities as such) or any of their property, assets or securities which, individually or in the aggregate, has had or could reasonably be expected to have a Material Adverse Effect. To the knowledge of Corel, no Governmental Authority has notified Corel of an intention to conduct any action, suit, proceeding, audit, investigation or other review with respect to Corel or any of its subsidiaries, except for those which, individually or in the aggregate, have not had or could not be reasonably expected to have a Material Adverse Effect.

Section 2.8. Transfers in Canada. The Common Shares issuable upon conversion of the Preferred Shares, when issued, will be freely tradable in the Province of Ontario at any time after the expiry of certain statutory hold periods prescribed by the Canadian Securities Legislation, provided the applicable statutory preconditions to such resales are satisfied, without any prospectus, resale restriction or holding period whatsoever subject to compliance with any undertaking provided by Microsoft and the Purchaser to the TSE and the requirements of applicable Canadian Securities Legislation regarding sales from a control block.

Section 2.9. Compliance with Laws; Permits. Each of Corel and each of its subsidiaries is and has been in compliance with all Applicable Laws and has, and is and has been in compliance with, all Permits required or necessary for the conduct of its business as currently conducted and all such Permits are in full force and effect, except for any failures to be in compliance with Applicable Laws or such Permits, or to have such Permits, which, individually or in the aggregate, have not and could not reasonably be expected to have a Material Adverse Effect. No proceeding is pending or, to the best knowledge of Corel and its subsidiaries, threatened to revoke or limit any such Permit that could reasonably be expected to have a Material Adverse Effect.

"Permits" means all licenses, permits, certificates of need, approvals and authorizations from all Governmental Authorities required by Corel or any of its subsidiaries to lawfully conduct its businesses as presently conducted.

Section 2.10. No Brokers. Neither Corel nor any of its subsidiaries has paid, or is obligated to pay, to any person or entity any brokerage or finder's fees in connection with the transactions contemplated hereby or by any other Transaction Documents.

Article III

Certain Representations, Warranties and Covenants

of the Purchaser and Microsoft

The Purchaser and Microsoft, jointly and severally, represent, warrant and covenant to Corel that:

Section 3.1. Non-Contravention; Authorizations and Approvals. Neither (a) the execution and delivery by Microsoft or the Purchaser of this Agreement, the Technology Support and Settlement Agreement or the Registration Rights Agreement nor (b) the performance by Microsoft or the Purchaser of their respective obligations under the Transaction Documents or the consummation of the transactions contemplated thereby will: (i) violate, conflict with or result in a breach of any provisions of the certificate of incorporation or bylaws (or comparable constituent or governing documents) of Microsoft, the Purchaser or any of their subsidiaries, (ii) violate, conflict with, result in a breach of any provision of, constitute a default (or an event which, with notice, lapse of time or both, would constitute a default) under, result in the termination or in a right of termination of, accelerate the performance required by or benefit obtainable under, result in the triggering of any payment or other obligations (including any repurchase or repayment obligations) pursuant to, result in the creation of any Lien upon any of the properties of Microsoft, the Purchaser or any of their subsidiaries under, or result in there being declared void, voidable, subject to withdrawal or without further binding effect, any of the terms, conditions or provisions of any Contract, except for any such violations, conflicts, breaches, defaults, accelerations, terminations or other matters which, individually or in the aggregate, have not had and could not reasonably be expected to impair or otherwise adversely affect the validity or enforceability of, or the ability of Microsoft or the Purchaser to perform their respective obligations under, this Agreement, the Registration Rights Agreement or the Technology Support and Settlement Agreement (each, a "Microsoft Material Adverse Effect"), (iii) require any consent, approval or authorization of, or declaration, filing or registration with, any Governmental Authority, except for those consents, approvals, authorizations, declarations, filings or registrations which have been obtained or made or the failure of which to obtain or make, individually or in the aggregate, have not had and could not be reasonably expected to have a Microsoft Material Adverse Effect, or (iv) violate any Applicable Laws, except for violations which, individually or in the aggregate, have not had and could not reasonably be expected to have a Microsoft Material Adverse Effect.

Section 3.2. No Registration. The Purchaser and Microsoft, jointly and severally, hereby acknowledge and agree with Corel that the Preferred Shares and the Common Shares issuable upon the conversion thereof have not been registered under the Securities Act or under the OSA or the securities legislation of any other Canadian jurisdictions in which Corel is a reporting issuer or in which it has distributed its securities (collectively, the "Canadian Securities Legislation") and no prospectus has been filed under any such Canadian Securities Legislation and that such shares may not be offered or sold (1) in the United States, except pursuant to an effective registration statement under the Securities Act or an applicable exemption from registration under the Securities Act or (2) in Canada, except (a) pursuant to a prospectus prepared and filed under the Canadian Securities Legislation for which a final receipt has been issued pursuant to applicable Canadian Securities Legislation, (b) pursuant to an exemption from the prospectus requirements of applicable Canadian Securities Legislation, or (c) upon the expiry of the hold periods prescribed by the Canadian Securities Legislation provided applicable preconditions are satisfied and the sale otherwise complies with the provisions of such legislation. Other than in furtherance of their rights under, and in accordance with, the Registration Rights Agreement, neither Microsoft nor the Purchaser will take any action (other than a registered offering under the Registration Rights Agreement) for the purpose of, or that could reasonably be expected to have the effect of, preparing the market in the Province of Ontario, or creating a demand in the Province of Ontario for the Preferred Shares or the Common Shares issuable upon conversion thereof, during the 4 month period following the date of Closing.

Section 3.3. Representations and Warranties. The Purchaser represents and warrants to Corel that (a) it is an "Accredited Investor" (as defined in Rule 501 (a) under the Securities Act), (b) it is acquiring the Preferred Shares and the Common Shares issuable upon the conversion thereof for its own account, for investment and not with a view to any distribution thereof within the meaning of the Securities Act and (c) it did not employ any broker or finder in connection with the transactions contemplated in this Agreement.

Section 3.4. Resales of Preferred Shares and Common Shares. The Purchaser agrees that it will not sell, transfer, assign or otherwise dispose of any of the Preferred Shares or any of the Common Shares issuable upon the conversion thereof other than (a) pursuant to an effective registration statement under the Securities Act or pursuant to an applicable exemption from registration under the Securities Act or (b) in accordance with the Canadian Securities Legislation.

Section 3.5. Legend. The Preferred Shares and the Common Shares issuable upon the conversion thereof shall bear the following legend until such time as the legend no longer applies:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OF ANY PROVINCE OF CANADA, AND MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE UNITED STATES OR CANADA ONLY PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN APPLICABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OR PURSUANT TO A PROSPECTUS OR AN APPLICABLE EXEMPTION FROM REGISTRATION AND PROSPECTUS REQUIREMENTS UNDER CANADIAN SECURITIES LEGISLATION. BY PURCHASING THESE SECURITIES, THE HOLDER AGREES FOR THE BENEFIT OF COREL CORPORATION THAT IT WILL COMPLY WITH THESE RESALE RESTRICTIONS.

Article IV

Certain Covenants of Corel

Section 4.1. Listing on TSE and Quotation on NASDAQ; Transfers in Canada. Corel agrees that it will take all necessary action, including without limitation obtaining the approval of the holders of the Common Shares, to ensure that, upon issuance, the Common Shares issuable upon conversion of the Preferred Shares will be listed and posted for trading on the TSE and included for quotation on the NASDAQ. Further, Corel agrees that it will take all commercially reasonable action, including satisfying the requirements of Canadian Securities Legislation, to ensure that the Common Shares are freely transferable in Canada.

Section 4.2. Provision of Information. Corel agrees that so long as the Purchaser (or any of its affiliates or any of its or their permitted transferees) continues to own any Preferred Shares or Common Shares issued upon the conversion thereof it will (a) make available to the holders of such shares any reports and financial statements furnished to or filed with the SEC or the Canadian Securities Authorities or any securities exchange or quotation market on which any class of securities of Corel is listed or included for quotation and such additional information concerning the business and financial condition of Corel as such holders may from time to time reasonably request (such financial statements to be on a consolidated basis to the extent the accounts of Corel and its subsidiaries are consolidated in reports furnished to the shareholders generally or to the SEC or to the Canadian Securities Authorities) so long as the provision of such information would not adversely affect any significant contemplated unannounced transaction involving Corel, or require public disclosure of such information under Regulation FD promulgated by the SEC under the Exchange Act (assuming such Regulation applied to Corel) or the guidelines for listed companies published by the TSE and NASDAQ, (b) maintain its status as a reporting issuer, and not be in default of any requirement, under the Canadian Securities Legislation and (c) maintain the listing of the Common Shares (or any successor shares) for trading on the TSE and for inclusion for quotation on the NASDAQ.

The term "affiliate" has the meaning assigned to such term in Rule 405 promulgated by the SEC under the Securities Act.

Article V

Indemnification

Section 5.1. Indemnification. Corel agrees to indemnify and hold harmless the Purchaser, its affiliates and their respective directors, officers, employees, agents, representatives and advisers (each an "Indemnified Person") from and against any and all losses, claims, damages, expenses or other liabilities (collectively, "Losses") incurred or suffered by them arising out of or resulting from the breach or inaccuracy of any of the representations and warranties of Corel contained herein or any failure by Corel to perform its obligations under any of the Transaction Documents (other than the Technology Support and Settlement Agreement), and will reimburse each Indemnified Person for any legal and other expenses reasonably incurred by such Indemnified Person in connection with investigating or defending any Losses as such expenses are incurred. The indemnity agreement set forth in this Section 5.1 shall be in addition to any liabilities that Corel may otherwise have.

Section 5.2. Notifications and Other Indemnification Procedures. Promptly after an Indemnified Person becomes aware of any action, claim or proceeding (collectively, an "Action") in respect of which it intends to seek indemnification under Section 5.1, such Indemnified Person shall notify Corel in writing of the commencement thereof, but the omission so to notify Corel will not relieve it from any liability which it may have to the Indemnified Person otherwise than under Section 5.1 or to the extent it is not actually prejudiced as a result of such failure. In case any such Action is brought against any Indemnified Person and it shall notify Corel of the commencement thereof, Corel will be entitled to participate therein and, to the extent that it shall elect within 30 days after receiving any such notification, to assume and control the defense thereof, with counsel reasonably satisfactory to such Indemnified Person (who shall not, except with the consent of the Indemnified Person, not to be unreasonably withheld, be counsel to Corel) and, after notice from Corel to such Indemnified Person of its election so to assume the defense thereof, Corel shall not be liable to such Indemnified Person under Section 5.1 for any legal expenses of counsel subsequently incurred by such Indemnified Person, in connection with the defense thereof other than reasonable costs of investigation. Notwithstanding the foregoing, any Indemnified Person shall cooperate with Corel (including by making counterclaims) and shall have the right to employ separate counsel in any such Action and participate in, but not control, the defense thereof, but the fees and expenses of such counsel shall be at the expense of the Indemnified Person unless the Indemnified Person shall have been advised by counsel that representation of the Indemnified Person by counsel provided by Corel would be inappropriate due to actual or potential conflicting interests between Corel and the Indemnified Person, including situations in which there are one or more legal defenses available to the Indemnified Person that are different from or additional to those available to Corel; provided, however, that Corel shall not, in connection with any one such Action or separate but substantially similar Actions arising out of the same general allegations, be liable for the fees and expenses of more than one separate set of counsel at any time for all Indemnified Persons, except to the extent that local counsel, in addition to their regular counsel, is required in order to effectively defend against such Action. Corel shall not, without the written consent of the Indemnified Person, not to be unreasonably withheld, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened Action in respect of which indemnification may be sought hereunder (whether or not the Indemnified Person is an actual or potential party to such Action) unless such settlement, compromise or judgment (i) includes an unconditional release of all Indemnified Persons from all liability arising out of such Action and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any Indemnified Person.

Article VI

Miscellaneous

Section 6.1. Notices. All notices and other communications hereunder shall have been duly given and shall be effective (a) when delivered, (b) when transmitted via telecopy (or other facsimile device) to the number set out below if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), (c) the day following the day on which the same has been delivered prepaid to a reputable national overnight air courier service or (d) the third Business Day following the day on which the same is sent by certified or registered mail, postage prepaid, in each case to the respective parties at the address set forth below, or at such other address as such party may specify by written notice to the other party hereto:

(a) If to the Purchaser or Microsoft:

Microsoft Corporation,

One Microsoft Way,

Redmond, Washington 98052-6399,

Attention: Deputy General Counsel, Finance and Operations

Facsimile number: (425) 869-1327

with a copy to:

Sullivan & Cromwell,

125 Broad Street,

New York, New York 10004,

Attention: Duncan C. McCurrach

Facsimile number: (212) 558-3588

(b) If to Corel:

Corel Corporation,

1600 Carling Avenue,

Ottawa, Ontario, Canada K1Z 8R7,

Attention: Chief Financial Officer

Facsimile number: (613) 761-9872

with a copy to:

McCarthy Tétrault
40 Elgin Street

Suite 1400
Ottawa, Ontario, Canada K1P 5K6
Attention: Robert D. Chapman

Facsimile number: (613) 596-9386

Section 6.2. Benefit of Agreement; Assignment.

(a) Except as otherwise expressly provided herein, all covenants, agreements and other provisions contained in this Agreement or any of the other Transaction Documents by or on behalf of any of the parties hereto shall bind, inure to the benefit of and be enforceable by their respective successors and permitted assigns (including, without limitation, any subsequent holder of any Preferred Shares or Common Shares issuable upon conversion thereof (each, a "Holder") provided that such Holder shall not be entitled to the benefits, of Articles II and V hereof) whether so expressed or not; provided, however, that Corel may not assign or otherwise transfer any of its rights or obligations without the prior written consent of the other parties hereto and each Holder.

(b) Nothing in this Agreement, express or implied, shall give to any person other than the parties hereto, their successors and permitted assigns, the Indemnified Parties and the Holders any benefit or any legal or equitable right, remedy or claim under this Agreement.

Section 6.3. No Waiver; Remedies Cumulative. No failure or delay on the part of any party hereto or any Holder in exercising any right, power or privilege hereunder or under any other Transaction Document and no course of dealing between Corel and any other party or Holder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder. The rights and remedies provided herein or in the other Transaction Documents are cumulative and not exclusive of any rights or remedies which the parties or Holders would otherwise have. No notice to or demand on Corel in any case shall entitle Corel to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the other parties hereto or the Holders to any other or further action in any circumstances without notice or demand.

Section 6.4. Amendments, Waivers and Consents. Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the parties hereto or, in the case of a waiver, by the party against whom the waiver is to be effective.

Section 6.5. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. It shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto.

Section 6.6. Headings. The headings of the sections and subsections hereof are provided for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement.

Section 6.7. Definitions. The meaning attached to terms defined herein shall apply throughout this Agreement unless the context otherwise requires.

Section 6.8. Survival. All representations, warranties, covenants and indemnities set forth herein shall survive the purchase and sale of the Preferred Shares.

Section 6.9. Governing Law, Submission to Jurisdiction.

(a) This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, excluding any choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State.

(b) If any action, proceeding or litigation shall be brought by any party hereto in order to enforce any right or remedy under this Agreement or the Registration Rights Agreement, each of the parties hereto hereby consents and agrees that it will submit to the jurisdiction of any state or federal court of competent jurisdiction sitting within the area comprising the Southern District of New York on the date of this Agreement. Each of the parties hereto hereby irrevocably waives any objection, including but not limited to any objection to the laying of venue or based on the grounds of forum non conveniens, which it may now or hereafter have to the bringing of any such action, proceeding or litigation in such jurisdiction. Each of the parties hereto further agrees that it shall not bring any action, proceeding or litigation arising out of this Agreement or any other Transaction Document in any court other than any state or federal court of competent jurisdiction sitting within the area comprising the Southern District of New York on the date of this Agreement.

(c) Corel hereby irrevocably designates CT Corporation System, located at 111 8th Avenue, New York, New York 10011, as its designee, appointee and agent to receive, for and on behalf of the Company, service of process in such jurisdiction in any action, proceeding or litigation with respect to this Agreement or the Registration Rights Agreement.

(d) Each of the parties hereto hereby waives any and all rights it may have to a trial by jury in respect of any action, proceeding or litigation directly or indirectly arising out of, under or in connection with, this Agreement or the Registration Rights Agreement.

Section 6.10. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any person or entity or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other persons, entities or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.

Section 6.11. Entirety. This Agreement together with the other Transaction Documents represents the entire agreement of the parties hereto and thereto, and supersedes all prior agreements and understandings, oral or written, if any, relating to the Transaction Documents or the transactions contemplated herein or therein.

Section 6.12. Construction. Each covenant contained herein shall be construed (absent express provision to the contrary) as being independent of each other covenant contained herein, so that compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any other covenant. Where any provision herein refers to action to be taken by any person, or which such person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such person, whether or not expressly specified in such provision. The construction of the Transaction Documents shall not be affected by which party drafted such documents.

Section 6.13. Publicity. Except as required by law or the rules of any stock exchange or governmental or other regulatory authority of competent jurisdiction, no public announcement, circular or written or oral statements in connection with the subject matter of this Agreement shall be made or issued by or on behalf of any party hereto without the prior written approval of the other party hereto (such approval not to be unreasonably withheld or delayed). The parties hereto shall cooperate with respect to the preparation of a mutually agreeable press release to be issued as soon as possible after the execution and delivery of this Agreement regarding the investment by the Purchaser in Corel and other related agreements.

In Witness Whereof, each of the parties hereto has caused a counterpart of this Agreement to be duly executed and delivered as of the date first above written.

Corel Corporation

By: "Derek Burney"

Name: Derek Burney

Title:  Interim President and

Chief Executive Officer

Microsoft Licensing, Inc.

By: "John Connors"

Name: John Connors

Title:  Vice President

Microsoft Corporation

By: "Steven A. Ballmer

Name: Steven A. Ballmer

Title:  President and CEO

SCHEDULE 2.4

1. Warrants Outstanding

Warrants for 3,637,976 common shares of Corel are outstanding as of September 28, 2000, as issued on June 28, 2000 on the closing of a public offering of 7,299,270 common shares of Corel and 3,649,635 warrants for common shares of Corel as described in the prospectus of Corel dated June 23, 2000.

2. Potential Warrants to be Issued

Common shares and warrants which may be issued pursuant to the Share Purchase Agreement dated September 18, 2000 between Corel and Albans Investments Limited and the Escrow Agreement dated September 18, 2000 among Corel, the Purchaser and Epstein, Becker & Green, P.C., are as follows:

(i) up to 11,300,000 common shares of Corel; and

(ii) warrants for up to 3,390,000 common shares of Corel, including warrants for 282,500 common shares which Corel is obligated to issue as of October 2, 2000.

3. Options Outstanding

Pursuant to the Corel Corporation Employee Stock Option Plan and the Corel Corporation Employee Stock Option Plan 2000, options for 5,109,588 common shares are outstanding as of September 28, 2000.

EXHIBIT A

The Articles of the Corporation are amended to create a first series of 24,000,000 participating convertible preferred shares which shall be designated the Series A Participating Convertible Preferred Shares (the "Series A Shares") and shall have attached thereto, in addition to the rights, privileges, conditions and restrictions attaching to the Preferred Shares as a class, the following rights, privileges, conditions and restrictions as set forth below:

1. Rank of Shares Within Class. Each Series A Share shall rank equally and be identical in all respects.

2. Dividends. The holders of full or fractional Series A Shares shall be entitled to receive, when and as declared by the Board of Directors of the Company (the "Board"), but only out of funds or assets of the Company legally available therefor, dividends on each date (each, a "Payment Date") that any dividend or other distribution is payable or made (whether in the form of cash, securities, rights, warrants or other property) on or in respect of the Common Shares (as defined below) other than dividends or other distributions to the extent payable in form of Common Shares (each, a "Participating Dividend") in an amount per whole Series A Share equal to the aggregate amount of the Participating Dividends that would be payable on the Payment Date to a holder of the Reference Package (as defined below) entitled to receive such Participating Dividend. Each such dividend shall be paid to the holders of record of the Series A Shares on the date, not more than 60 days before the Payment Date, fixed by the Board before the Payment Date to determine the holders of the Series A Shares entitled to receive such dividend. Dividends on each full and each fractional Series A Share shall be cumulative from September 29, 2000 (the "Original Issue Date").

"Common Shares" means the common shares in the capital of the Company constituted as of the Original Issue Date and any other shares or securities into which such shares are exchanged, consolidated or reclassified as a result of any merger, consolidation, reclassification or other transaction.

A "holder", with respect to any Preferred Share, means the person or entity in whose name such Preferred Share is registered on the Preferred Share register maintained by the Company or its agent.

"Reference Package" initially means one fully paid and nonassessable Common Share, but is subject to adjustment as provided in Section 6 hereof.

3. Certain Restrictions. So long as any Series A Share is outstanding, no dividends (except to the extent they are payable in the form of Common Shares) shall be declared, paid or set aside for payment, and no other distribution shall be declared, made or set aside for making, on or in respect of any Common Shares or any Junior Shares (as defined below), nor shall any Common Shares, Junior Shares or Parity Shares (as defined below) be redeemed, purchased or otherwise acquired for any consideration (or any consideration be paid to or made available for a sinking fund for the redemption of any such shares), by the Company, directly or indirectly (including without limitation by any of its subsidiaries), unless, in each case, all of the cumulative dividends on all of the outstanding Series A Shares payable prior thereto or contemporaneously therewith shall have been, or shall contemporaneously be, paid in full.

"Junior Shares" means any class or series of shares of the Company (other than the Common Shares) hereafter authorized over which the Series A Shares have preference or priority in the distribution of assets on any liquidation, dissolution or winding up of the Company or other distribution of assets of the Company for the purposes of winding up its affairs.

"Parity Shares" means any class or series of shares of the Company (other than the Series A Shares) that ranks on a parity with the Series A Shares in the distribution of assets on any liquidation, dissolution or winding up of the Company or other distribution of assets of the Company for the purposes of winding up its affairs.

4. Liquidation, Dissolution or Winding Up. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company or other distribution of assets of the Company for the purposes of winding up its affairs (collectively, a "Liquidation"), the holders of full and fractional Series A Shares shall be entitled, before any distribution or payment is made on any date to the holders of the Common Shares or any Junior Shares in connection with such Liquidation, to be paid in full out of the assets of the Company available for distribution to its shareholders an amount per whole Series A Share equal to the greater of (A) US$5.625 and (B) the aggregate amount that would be distributed on such date in connection with such Liquidation to a holder of the Reference Package assuming it was outstanding and that the Series A Shares did not exist, together in each case with all accrued and unpaid dividends to such distribution or payment date, whether or not earned or declared (the "Liquidation Preference"). If such payment shall have been made in full to all holders of Series A Shares, the holders of Series A Shares as such shall have no rights or claims to any remaining assets of the Company. In the event the assets of the Company available for distribution to the holders of Series A Shares in connection with any Liquidation shall be insufficient to pay in full all amounts to which such holders are entitled pursuant to this Section 4 and all liquidation preferences to which all Parity Shares are entitled in connection with such Liquidation, the holders of Series A Shares and such Parity Shares shall be paid pro rata in accordance with their respective aggregate liquidation preferences. For the purposes of this Section 4, the consolidation or merger of, or binding share exchange by, the Company with any other entity shall not be deemed to constitute a Liquidation.

5. Voting Power. The holders of Series A Shares shall have no voting rights except as required by law; provided, however, that the Company

shall not amend its Articles of Incorporation or by-laws in any manner which would alter or change the powers, preferences or special rights of the holders of the Series A Shares so as to affect them adversely without the affirmative vote of the holders of a majority or more of the outstanding Series A Shares, voting separately as a class on the basis of one vote per share and provided further, however, that with respect to any vote to approve an amalgamation or an arrangement that would result in an exchange, reclassification or cancellation of the Series A Shares and the Common Shares on substantially the same basis, which vote is held within six months of the completion of a "Permitted Bid" or "Competing Permitted Bid", each as defined in the Shareholders Rights Plan Agreement described in Section 6(a) below, pursuant to which an offeror has offered to purchase all of the outstanding Series A Shares and all of the outstanding Common Shares at a price for the Series A Shares which is the greater of (i) the offer price for the Common Shares multiplied by the number of Common Shares as then constitutes the Reference Package, and (ii) an amount equal to the Liquidation Preference, the holders of the Series A Shares shall be entitled to vote, on an as converted basis, together with the holders of the Common Shares and of any other series of Preferred Shares but not separately as a class or series.

6. Conversion Rights.

(a) General. Each Series A Share shall be convertible at the option of the holder thereof, at any time, into the Reference Package. Notwithstanding anything herein to the contrary, if the holder of a Series A Share is Microsoft Corporation, a Washington corporation, or any of its Affiliates or Associates (as each such term is defined in the Shareholder Rights Plan Agreement, dated as of February 11, 1999 and as amended and restated as of March 31, 1999, between the Company and Montreal Trust Company of Canada, as Rights Agent), such holder shall have no rights to convert such Series A Share but any transferee holder thereof which is not Microsoft Corporation or one of its Affiliates or Associates shall have such conversion rights from and after such transfer.

(b) Extraordinary Common Stock Event. If the Company shall (i) issue any additional Common Shares as all or part of a dividend or other distribution on or in respect of outstanding Common Shares, (ii) subdivide the outstanding Common Shares into a greater number of Common Shares, or (iii) combine the outstanding Common Shares into a smaller number of Common Shares, then and in each such case the number of Common Shares in the Reference Package shall be changed effective immediately upon the consummation of such event into the number of Common Shares that a holder of the Reference Package immediately prior to such change and consummation would hold immediately after such event as a result thereof.

(c) Changes in the Common Shares. If the Common Shares are exchanged for or changed into other stock or securities, cash and/or any other property as a result of any merger, consolidation, reclassification or other transaction, then and in any such case each Series A Share shall at the same time be similarly exchanged or changed into an amount per whole Series A Share equal to the aggregate amount per whole Series A Share equal to the aggregate amount of stock, securities, cash and/or other property (payable in kind), as the case may be, (the "Substitute Consideration") that a holder of the Reference Package immediately prior to the consummation of such transaction would have received as a result of such transaction if it was entitled to participate therein; provided, however, that if the Substitute Consideration consists in whole or in part of securities of the entity surviving or resulting from such transaction (which may be the Company) entitled to vote generally in the election of directors of such entity then, at the option of each holder of the Series A Shares, such holder may elect, in lieu of the exchange or change provided above, either (i) if the Company is the surviving or resulting entity, to have the Series A Shares remain outstanding and to have the Reference Package changed effective immediately upon the consummation of such transaction into the Substitute Consideration that a holder of the Reference Package immediately prior to such consummation and change would have received as a result of such transaction if it was entitled to participate therein or (ii) if the Company is not the surviving or resulting entity (the "Successor"), to receive in exchange for its Series A Shares the same number of preferred shares of the Successor with terms identical to the terms of the Series A Shares except that the references to (A) the Company shall be to the Successor, (b) the Board shall be to the board of directors of the Successor, (C) the Common Shares shall be to the voting securities of the Successor issued in such transaction and (B) the Reference Package shall be the Substitute Consideration that a holder of the Reference Package immediately prior to the consummation of the transaction would have received as a result of such transaction if it was entitled to participate therein.

(d) Exercise of Conversion Privilege and Procedure for Conversion. To

exercise its conversion privilege, a holder of Series A Shares shall surrender the certificate or certificates representing the shares being converted to the Company at its principal office (which certificate or certificates shall, if required by the Company, be duly endorsed to the Company or in blank or be accompanied by proper instruments of transfer to the Company or in blank), accompanied by a written notice to the Company to the effect that such holder elects so to convert such shares and specifying the name or names (with address or addresses) in which a certificate or certificates or other appropriate instruments evidencing the shares or other property to which such holder is entitled upon such conversion. All accrued and unpaid dividends or other distributions payable on any Series A Shares surrendered for conversion, whether or not earned or declared, shall be paid forthwith upon such conversion. Any dividend payable on Series A Shares surrendered for conversion during the period from the close of business on any record date for the payment of such dividend on such shares to the opening of business on the date of payment of such dividend shall be payable to the holder of record of such shares as of such record date notwithstanding such conversion. As promptly as practicable after the surrender by a holder of Series A Shares of certificates evidencing the Series A Shares being converted at the office referred to above and compliance by such holder with the other conditions specified above, the Company shall issue and shall deliver to the person or persons entitled thereto (as specified in the applicable written notice of conversion) a certificate or certificates evidencing the number of whole Common Shares, other securities and/or property to which such person or persons shall be entitled as provided herein, together (if applicable) with cash in lieu of fractional Common Shares as provided below. Such conversion shall be deemed to have been made as of the close of business on the date of such surrender and compliance and at such time such person or persons shall be treated for all purposes as the record holder or holders (or, in the case of securities or property not in registered form, the owner or owners) of such Common Shares, other securities and/or property on such date and the rights of the converting holder as holder of the converted Series A Shares shall cease.

(e) Cash in Lieu of Fractional Shares. No fractional Common Shares shall be issued upon conversion of Series A Shares. If a number of Series A Shares (evidenced by one or more certificates) shall be surrendered for conversion at one time by the same holder, the number of whole Common Shares issuable upon conversion thereof shall be computed on the basis of the aggregate number of Series A Shares being converted at such time by such holder. Instead of any fractional Common Shares that would otherwise be issuable to a holder upon conversion of Series A Shares, the Company shall pay to such holder a cash adjustment in respect of such fractional share in an amount equal to the same fraction of the Closing Price (as defined below) on the day of conversion.

"Closing Price" of the Common Shares on any day means the last reported per share sale price, regular way, of the Common Shares on such day or, if no sale takes place on such day, the average of the reported closing per share bid and asked prices, regular way, of the Common Shares on such day, in each case on the Nasdaq National Market or, if the Common Shares are not quoted on the Nasdaq National Market on such day, on the principal national securities exchange or quotation system in the United States or Canada on which the Common Shares are listed or admitted to trading or quoted on such day, or, if the Common Shares are not so listed or admitted to trading or quoted on such day, the average of the closing per share bid and asked prices of the Common Shares on such day in the over-the-counter market as reported by a generally acceptable national quotation service or, if not so available in such manner, as furnished by any member firm of The Toronto Stock Exchange selected from time to time by the Board for that purpose on such day or, if not so available in such manner, as otherwise determined as of such day in good faith by the Board (whose good faith determination shall be conclusive and described in a resolution of the Board).

(f) Partial Conversion. In the event some but not all of the Series A Shares represented by a certificate or certificates surrendered by a holder are converted, the Company shall execute and deliver to the holder a new

certificate representing the number of Series A Shares which were not

converted.

(g) Reservation of Common Shares. The Company shall at all times reserve and keep available out of its authorized but unissued Common

Shares, solely for the purpose of effecting the conversion of the Series A Shares, the full number of its Common Shares then deliverable upon conversion of all the then outstanding Series A Shares, and if at any time the number of authorized but unissued Common Shares shall not be sufficient to effect the conversion of all the then outstanding Series A Shares, the Company shall take such corporate

action as may be necessary to increase its authorized but unissued Common Shares to such number of shares as shall be sufficient for such purpose. If any Common Shares required to be reserved for issuance upon conversion of Series A Shares require registration with or approval of any governmental authority before such shares may be issued or freely transferred upon conversion, the Company will in good faith and as expeditiously as is commercially reasonable endeavor to cause such shares to be duly registered or approved, as the case may be; provided, however, that the foregoing shall apply in any jurisdiction only when the Series A Shares shall have become freely transferable under applicable securities laws of such jurisdiction. If the Common Shares are then listed or admitted for trading or quoted on any national securities exchange or quotation system, the Company will, if permitted by the rules of such exchange or quotation system, cause all Common Shares issuable upon conversion of the Series A Shares to be so listed, admitted for trading or quoted, as the case may be.

7. Issuer Tender or Exchange Offers. If the Company, directly or indirectly (including without limitation through any of its subsidiaries), shall consummate a tender or exchange offer (including an issuer bid in Canada) for all or any portion of the Common Shares, it shall contemporaneously therewith consummate a tender or exchange offer (or issuer bid in Canada) for the same portion of the outstanding Series A Shares for consideration per whole Series A Share equal to the product of (A) the consideration paid per Common Share in such tender or exchange offer for the Common Shares and (B) the Reference Package.

8. Notices. The Company shall distribute to the holders of Series A Shares copies of all notices, materials, annual and quarterly reports, proxy statements, information statements and any other documents that it distributes

generally to the holders of Common Shares, at such times and by such method as such documents are distributed to such holders of Common Shares.

9. No Reissuance. No shares of Series A Stock acquired by the Company by reason of purchase, conversion or otherwise shall be reissued and shall be cancelled.

10. Redemption. The Series A Shares shall not be redeemable.

EX-99.3

Exhibit 99.3

Registration Rights Agreement

Registration Rights Agreement (the "Agreement"), dated October 2, 2000, among Microsoft Corporation, a Washington corporation ("Microsoft"), Microsoft Licensing, Inc., a Nevada corporation and a wholly owned subsidiary of Microsoft ("Purchaser"), and Corel Corporation, a corporation existing under the laws of Canada ("Corel").

Reference is made to the Purchase Agreement, dated October 2, 2000 (the "Purchase Agreement"), among Corel, the Purchaser, and Microsoft pursuant to which Corel will issue and sell to the Purchaser, on the terms set forth therein, 24,000,000 of the Series A Participating Convertible Preferred Shares (the "Preferred Shares"), of Corel. Corel agrees with the Purchaser for the benefit of the Holders (as defined herein) from time to time of the Registrable Securities (as defined herein) as follows:

Section 1. Definitions. (a) As used in this Agreement and except as otherwise defined herein, the following defined terms shall have the following meanings:

"Affiliate" of any specified Person means any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with such specified Person. For purposes of this definition, control of a person means the power, direct or indirect, to direct or cause the direction of the management and policies of such person whether by contract or otherwise and shall be construed as such term is construed for purposes of Rule 405 under the Securities Act.

"Applicable Securities" means in relation to a Registration Statement the Registrable Securities identified in the related Demand Notice or Piggy-back Notice.

"Canadian Securities Legislation" means the securities legislation of each of the provinces and territories of Canada, the rules, regulations and instruments promulgated thereunder and the orders, rulings, decisions, policy statements and notices made or issued thereunder.

"Cdn$" means Canadian dollars.

"Commission" means the United States Securities and Exchange Commission.

"Common Shares " means the Common Shares of Corel.

"Demand Notice" means a notice given by a Holder or Holders pursuant to Section 2(a).

"Demand Registration Statement" means a registration statement filed under the Securities Act by Corel pursuant to the provisions of Section 2 hereof, including the Prospectus contained therein, any amendments and supplements to such registration statement, including post-effective amendments, and all exhibits and all material incorporated by reference in such registration statement.

"Effectiveness Period" means, as to a Registration Statement or, if applicable, a final prospectus filed under Canadian Securities Legislation, the period during which such Registration Statement or final prospectus, as the case may be, is effective.

"Effective Time" means the date on which the Commission declares a Registration Statement effective or on which a Registration Statement otherwise becomes effective.

"Electing Holder" means, with respect to a Registration, any Holder that has delivered a Demand Notice or a Piggy-back Notice hereunder or who will sell the Applicable Securities under the Registration Statement relating thereto.

"Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended.

"Holder" means any holder from time to time of Registrable Securities or securities convertible into, or exercisable or exchangeable for, Registrable Securities.

"Intended Offering Notice" shall have the meaning set forth in Section 3(a).

"NASD Rules" means the Rules of the National Association of Securities Dealers, Inc., as amended from time to time.

"Notice and Questionnaire" means a Notice of Registration Statement and Questionnaire substantially in the form of Exhibit A hereto.

"Person" means an individual, partnership, corporation, trust, limited liability company or unincorporated organization, or other entity or organization, including a government or agency or political subdivision thereof.

"Piggy-back Notice" means a Notice given by a Holder pursuant to Section 3(a) hereof.

"Preferred Shares" shall have the meaning set forth in the Recitals to this Agreement.

"Prospectus" means the prospectus (including, without limitation, any preliminary prospectus, any final prospectus and any prospectus that discloses information previously omitted from a prospectus filed as part of an effective Registration Statement in reliance upon Rule 430A under the Act) included in a Registration Statement, as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any portion of the Applicable Securities covered by a Registration Statement and by all other amendments and supplements to such prospectus, including all material incorporated by reference in such prospectus and all documents filed after the date of such prospectus by Corel under the Exchange Act and incorporated by reference therein.

"Registrable Securities" means (a) the Preferred Shares (but only to the extent necessary or desirable to register the offer and sale of such shares to a broker-dealer or other financial institution who will convert such shares and offer and sell the Common Shares or other securities issuable upon such conversion in a Registration pursuant to this Agreement), the Common Shares or other securities issuable upon conversion of the Preferred Shares, (b) any securities (including Preferred Shares and Common Shares) issued or distributed with respect to, or in exchange for, the Preferred Shares or such Common Shares pursuant to any reclassification, merger, consolidation, reorganization or other transaction ("Other Securities") or upon conversion, exercise or exchange of Other Securities and (c) any securities issued or distributed with respect to, or in exchange for, Other Securities (whether directly or indirectly through a series of transactions) pursuant to any reclassification, merger, consolidation, reorganization or other transaction or upon conversion, exercise or exchange of Other Securities, in each case other than Unrestricted Securities.

"Registration" means a registration under the Securities Act effected pursuant to Section 2 or Section 3 hereof or, if applicable, a qualification for distribution under Canadian Securities Legislation effected pursuant to Section 4 hereof.

"Registration Expenses" means all expenses incident to Corel's performance of or compliance with any Registration of Registrable Securities pursuant to this Agreement, including, without limitation, all registration, filing and National Association of Securities Dealers, Inc. fees, fees of any stock exchange upon which the Registrable Securities are listed, all fees and expenses of complying with securities or blue sky laws, all word processing, duplicating and printing expenses, messenger and delivery expenses, the fees and disbursements of counsel for Corel and of its independent public accountants, including the expenses of any special audits or "comfort" letters required by or incident to such performance and compliance, premiums and other costs of policies of insurance obtained by Corel against liabilities arising out of the public offering of Registrable Securities being registered and any fees and disbursements of underwriters customarily paid by issuers, but excluding fees and disbursements of counsel retained by any Holders, premiums and other costs of policies of insurance obtained by any Holders or their agents or underwriter against liabilities arising out of the public offering of the Registrable Securities being registered, any fees and disbursements of underwriters customarily paid by sellers of securities who are not the issuers of such securities and all transfer taxes, underwriting discounts and commissions, if any, relating to Registrable Securities.

"Registration Statement" means a registration statement filed under the Securities Act by Corel pursuant to the provisions of Section 2 or Section 3 hereof, including the Prospectus contained therein, any amendments and supplements to such registration statement, including post-effective amendments, and all exhibits and all material incorporated by reference in such registration statement.

"Rules and Regulations" means the published rules and regulations of the Commission promulgated under the Securities Act or the Exchange Act, as in effect at any relevant time.

"Securities Act" means the U.S. Securities Act of 1933, as amended.

"Unrestricted Security" means any Registrable Security that (i) has been effectively registered under the Securities Act, (ii) has been transferred in compliance with Rule 144 under the Securities Act (or any successor provision thereto) under circumstances in which such Registrable Securities become freely transferrable under the Securities Act and any legend relating to restrictions on transfer under the Securities Act is removed, (iii) is transferable pursuant to paragraph (k) of Rule 144 (or any successor provision thereto) or (iv) has otherwise been transferred and a new security not subject to transfer restrictions under the Securities Act or Canadian Securities Legislation has been delivered upon such transfer by or on behalf of Corel.

"US$" means United States dollars.

(b) The words "include," "includes" and "including," when used in this Agreement, shall be deemed to be followed by the words "without limitation."

(c) The words "hereof", "herein", and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

The terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa.

Section 2. Demand Registrations. (a) Any Holders shall have the right, on not more than four occasions in the aggregate, to require Corel to register for offer and sale under the Securities Act all or a portion of the Registrable Securities then outstanding subject to the requirements of this Section 2. As promptly as practicable after Corel receives a notice from any such Holder or Holders (a "Demand Notice") demanding that Corel register for offer and sale under the Securities Act Registrable Securities consisting, as to each Registration, of an amount of Registrable Securities held by such Holder or Holders equal to at least the lesser of (i)  25% of the aggregate amount of Registrable Securities then outstanding or issuable and (ii) Registrable Securities having an estimated market value of Cdn$50 million, subject to Section 2(b), Corel shall (i) prepare and, within 60 days after such request, file with the Commission a Demand Registration Statement relating to the offer and sale of the Applicable Securities on any applicable form as the Holder(s) who delivered the Demand Notice may reasonably request (which may include a "shelf" Registration Statement for use in connection with a delayed or continuous offering under Rule 415 promulgated under the Securities Act) and, thereafter, (ii) use reasonable efforts to cause such Demand Registration Statement to be declared effective under the Securities Act as promptly as practicable after the date of filing of such Demand Registration Statement. Subject to Section 2(b), Corel shall use reasonable efforts to keep each Demand Registration Statement continuously effective in order to permit the Prospectus forming a part thereof to be usable by the Electing Holders for resales of Applicable Securities for an Effectiveness Period ending on the earlier of (i) two years from the Effective Time of such Registration Statement and (ii) such time as all of such Applicable Securities have been disposed of by the Electing Holders.

Corel shall have the right to postpone (or, if necessary or advisable, withdraw) the filing, or delay the effectiveness, of a Registration Statement or offers and sales of Applicable Securities registered under a shelf Demand Registration Statement if the board of directors of Corel determines in good faith that such Registration would interfere with any pending financing, acquisition, corporate reorganization or other corporate transaction involving Corel or any of its subsidiaries and furnishes to the Electing Holders a copy of a resolution of the board of directors of Corel certified by the secretary of Corel stating such determination; provided, however, that Corel may postpone a Demand Registration or offers and sales of Applicable Securities under a shelf Demand Registration Statement no more than once in any 12 month period and that any such postponement period shall not exceed 90 days in the aggregate.Corel shall advise the Electing Holders of any such determination as promptly as practicable.

Corel may include in any registration requested pursuant to Section 2(a) hereof other securities for sale for its own account or for the account of another Person, subject to the following sentence. In connection with an underwritten offering, if the managing underwriter or underwriters advise Corel and the Electing Holders in writing that in its or their opinion the number of securities requested to be registered exceeds the number which can be sold in such offering without materially adversely affecting the pricing, timing or likely success of the offering (with respect to any offering, the "Maximum Number"), Corel shall include such Maximum Number in such Registration as follows: (i) first, the Applicable Securities requested to be registered, pro rata among the Electing Holders in proportion to their ownership of such Applicable Securities and (ii) second, any other securities requested to be included in such Registration. For purposes of this agreement, an "underwritten offering" shall be an offering pursuant to which securities are sold to a broker-dealer or other financial institution or group thereof for resale by them to investors.

The Holders requesting any Registration pursuant to Section 2(a) hereof shall have the right to withdraw such request (i) prior to the time the Demand Registration Statement in respect of such Registration has been declared effective, (ii) upon the issuance by a governmental agency or the Commission of a stop order, injunction or other order which interferes with such Registration, (iii) if the conditions to closing specified in the purchase agreement or underwriting agreement entered into in connection with such registration are not satisfied other than as a result of default by the Electing Holders, (iv) such withdrawal is requested by the Holders because of the occurrence of a significant negative change in market conditions or Corel's business, financial condition, results of operations or prospects since the date of the initial Demand Notice, (v) if Corel avails itself of Section 2(b) hereof, or (vi) if the Electing Holders are prevented pursuant to Section 2(c) hereof from selling any of the Applicable Securities requested to be registered; it being understood that such Registration shall be deemed not to have been requested for purposes of Section 2(a) hereof if the Holders requesting such Registration withdraw their request pursuant to (A) clause (i) above if such Holders agree to reimburse Corel for the reasonable out-of-pocket expenses it has incurred prior to such withdrawal in effecting such Registration, (B) clauses (ii), (iii), (iv) or (v) above or (C) clause (vi) above in circumstances where the Electing Holders are prevented from selling 50% or more of the Applicable Securities requested to be included in such Registration. If the Holders withdraw a request pursuant to Section 2(a) but Corel nevertheless determines to complete, within 30 days after such withdrawal, the Registration so requested as to securities other than the Applicable Securities, the Holders shall be entitled to participate in such Registration pursuant to Section 3 hereof, but in such case the Intended Offering Notice shall be required to be given to the Holders at least 10 business days prior to the anticipated filing date of the Registration Statement and the Holders shall be required to give the Piggy-back Notice no later than 5 business days after Corel's delivery of such Intended Offering Notice.

In the event that any Registration pursuant to this Section 2 shall involve, in whole or in part, an underwritten offering, the managing underwriter or underwriters shall be selected by the Holders who delivered the Demand Notice subject to the consent of Corel, which consent shall not be unreasonably withheld or delayed.

Section 3. Piggy-Back Registrations. (a) If at any time Corel intends to file on its behalf or on behalf of any of its securityholders a registration statement under the Securities Act in connection with a public offering of any securities of Corel (other than a registration statement on Form S-8 or Form S-4), then Corel shall give written notice (an "Intended Offering Notice") of such intention to each Holder at least 20 business days prior to the anticipated filing date of such registration statement. Such Intended Offering Notice shall offer to include in such registration statement for offer to the public such number or amount of Registrable Securities as each such Holder may request, subject to the conditions set forth herein, and shall specify, to the extent then known, the number and class of securities proposed to be registered, the proposed date of filing of such registration statement, any proposed means of distribution of such securities, any proposed managing underwriter or underwriters of such securities and a good faith estimate by Corel of the proposed maximum offering price of such securities, as such price is proposed to appear on the facing page of such registration statement. Any Holder desiring to have Registrable Securities included in such registration statement and offered to the public shall so advise Corel in writing (the written notice of any such Holder being a "Piggy-back Notice") not later than 7 business days after Corel's delivery to such Holder of the Intended Offering Notice, setting forth the number of Registrable Securities that such Holder desires to have included in the registration statement and offered to the public. Upon the request of Corel, the Electing Holders shall enter into such underwriting, custody and other agreements as shall be customary in connection with registered secondary offerings or necessary or appropriate in connection with the offering. Each Holder shall be permitted to withdraw all or part of its Applicable Securities from any Registration pursuant to this Section 3 at any time prior to the sale thereof (or, if applicable, the entry into a binding agreement for such sale).

(b) In connection with an underwritten offering, if the managing underwriter or underwriters advise Corel in writing that in its or their opinion the number of securities proposed to be registered exceeds the Maximum Number with respect to such offering, Corel shall include in such Registration such Maximum Number as follows: (i) first, the securities that Corel proposes to sell, (ii) second, if any, securities required to be registered pursuant to the Registration Rights Agreement dated as of September 18, 2000, by and between Corel and Albans Investments Limited, (iii) third, the Applicable Securities requested to be included in such Registration pro rata among the Electing Holders thereof based on the respective amount of Applicable Securities owned by them and (iv) fourth, if any, securities held by other securityholders of Corel who have requested that their securities be included in such Registration Statement and who hold contractual registration rights with respect to such securities.

(c) The rights of the Holders pursuant to Section 2 hereof and this Section 3 are cumulative, and the exercise of rights under one such Section shall not exclude the subsequent exercise of rights under the other such Section (except to the extent expressly provided otherwise herein). Notwithstanding anything herein to the contrary, Corel may abandon and/or withdraw any registration as to which rights under Section 3 may exist at any time and for any reason without liability hereunder. In such event, Corel shall notify each Holder that has delivered a Piggy-back Notice to participate therein. No Registration of Registrable Securities effected pursuant to a request under this Section 3 shall be deemed to be, or shall relieve Corel of its obligation to effect, a Registration upon request under Section 2 hereof. Corel may enter into other registration rights agreements; provided, however, that the rights and benefits of a securityholder with respect to registration of Corel's securities as contained in any such other agreement shall be consistent with, and no more favorable to such securityholder than, the rights and benefits of holders of Registrable Securities as contained in this Agreement.

Section 4. Canadian Registration Rights. Notwithstanding anything to the contrary contained herein, where any sale by a Holder or Holders of Registrable Securities in one or more provinces or territories of Canada would constitute a distribution within the meaning of applicable Canadian Securities Legislation, any such Holder shall have (i) rights similar to those granted in Section 2(a) hereof to cause Corel to prepare and file a prospectus such that the Registrable Securities can be distributed to the public in such Canadian jurisdiction(s) in accordance with applicable Canadian Securities Legislation and (ii) rights similar to those granted in Section 3(a) hereof in respect of any prospectus filed by Corel with the securities regulatory authorities of one or more provinces or territories of Canada in connection with the qualification by prospectus of any of Corel's securities for distribution to the public in any such Canadian jurisdictions; in each case, with any adjustments as may be necessary to achieve, in the case of clause (i), the results intended by Section 2(a) hereof and all related provisions of this Agreement and, in the case of clause (ii), the results intended by Section 3(a) hereof and all related provisions of this Agreement, each in the context of a sale of Registrable Securities in Canada made in compliance with applicable Canadian Securities Legislation; it being understood that Corel shall comply with the provisions of Section 5 hereof, adjusted as necessary in the context of a sale of Registrable Securities in any province or territory of Canada made in compliance with applicable Canadian Securities Legislation.

Section 5. Registration Procedures. In connection with a Registration Statement, the following provisions shall apply:

(a) Each Electing Holder shall in a timely manner (i) deliver to Corel and its counsel a duly completed Notice and Questionaire and (ii) provide Corel and its counsel with such other information as to itself as may be required by law for inclusion in the Registration Statement.

(b) Corel shall furnish to each Electing Holder, prior to the Effective Time, a copy of the Registration Statement initially filed with the Commission, and shall furnish to such Electing Holders copies of each amendment thereto and each amendment or supplement, if any, to the Prospectus included therein.

(c) Corel shall promptly take such action as may be reasonably necessary so that (i) each of the Registration Statement and any amendment thereto and the Prospectus forming part thereof and any amendment or supplement thereto (and each report or other document incorporated therein by reference in each case), when it becomes effective, complies in all material respects with the Securities Act and the Exchange Act and the respective rules and regulations thereunder, (ii) each of the Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) each of the Prospectus forming part of the Registration Statement, and any amendment or supplement to such Prospectus, does not at any time during the period during which Corel is required to keep a Registration Statement continuously effective under Section 2(a) (other than any period during which it is entitled and elects to postpone offers and sales under Section 2(b) (each, a "Postponement Period")) include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(d) Corel shall, promptly upon learning thereof, advise each Electing Holder, and shall confirm such advice in writing if so requested by any such Electing Holder:

(a) when the Registration Statement and any amendment thereto has been filed with the Commission and when the Registration Statement or any post-effective amendment thereto has become effective;

(b) of any request by the Commission for amendments or supplements to the Registration Statement or the Prospectus included therein or for additional information;

(c) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for such purpose;

(d) of the receipt by Corel of any notification with respect to the suspension of the qualification of the securities included in the Registration Statement for sale in any jurisdiction or the initiation of any proceeding for such purpose;

(e) following the effectiveness of any Registration Statement, of the happening of any event or the existence of any state of facts that requires the making of any changes in the Registration Statement or the Prospectus included therein so that, as of such date, such Registration Statement and Prospectus do not contain an untrue statement of a material fact and do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus, in light of the circumstances under which they were made) not misleading (which advice shall be accompanied by an instruction to such Electing Holders to suspend the use of the Prospectus until the requisite changes have been made which instruction such Electing Holders agree to follow); and

(f) if at any time any of the representations and warranties of Corel contemplated by paragraph (l) below cease to be true and correct or will not be true and correct as of the closing date for theoffering.

(e) Corel shall use its reasonable best efforts to prevent the issuance, and if issued to obtain the withdrawal, of any order suspending the effectiveness of the Registration Statement at the earliest possible time.

(f) Corel shall furnish to each Electing Holder, without charge, at least one copy of the Registration Statement and all post-effective amendments thereto, including financial statements and schedules, and, if such Electing Holder so requests in writing, all reports, other documents and exhibits that are filed with or incorporated by reference in the Registration Statement.

(g) Corel shall, during the period during which Corel is required to keep a Registration Statement continuously effective under Section 2(a) or elects to keep effective under Section 3(a), deliver to each Electing Holder and any managing underwriter or agent, without charge, as many copies of the Prospectus (including each preliminary Prospectus) included in the Registration Statement and any amendment or supplement thereto and other documents as they may reasonably request to facilitate the distribution of the Registrable Securities; and Corel consents (except during the continuance of any event described in Section 5(d)(v) hereof) to the use of the Prospectus, with any amendment or supplement thereto, by each of the Electing Holders and any managing underwriter or agent in connection with the offering and sale of the Applicable Securities covered by the Prospectus and any amendment or supplement thereto during such period.

(h) Prior to any offering of Applicable Securities pursuant to the Registration Statement, Corel shall (1) use reasonable efforts to register or qualify or cooperate with the Electing Holders and their respective counsel in connection with the registration or qualification of such Applicable Securities for offer and sale under any applicable securities or "blue sky" laws of such jurisdictions within the United States as any Electing Holder may reasonably request, (2) use reasonable efforts to keep such registrations or qualifications in effect and comply with such laws so as to permit the continuance of offers and sales in such jurisdictions for the period during which Corel is required to keep a Registration Statement continuously effective under Section 2(a) or elects to keep effective under Section 3(a) and (3) take any and all other actions reasonably requested by an Electing Holder which are necessary or advisable to enable the disposition in such jurisdictions of such Applicable Securities; provided, however, that nothing contained in this Section 5(h) shall require Corel to (A) qualify as a foreign corporation or as a dealer in securities in any jurisdiction where it would not otherwise be required to qualify but for this Section 5(h) or (B) take any action which would subject it to general service of process or taxation in any such jurisdiction if it is not then so subject.

(i) Corel shall, if requested by the Electing Holders, use reasonable best efforts to cause all such Applicable Securities to be sold pursuant to the Registration Statement to be listed on any securities exchange or automated quotation service on which securities of Corel are listed or quoted.

(j) Corel shall cooperate with the Electing Holders to facilitate the timely preparation and delivery of certificates representing Applicable Securities to be sold pursuant to the Registration Statement, which certificates shall comply with the requirements of any securities exchange or automated quotation service on which any securities of Corel are listed and quoted, and which certificates shall be free of any restrictive legends and in such permitted denominations and registered in such names as Electing Holders or any managing underwriter or agent may request in connection with the sale of Applicable Securities pursuant to the Registration Statement.

(k) Upon the occurrence of any fact or event contemplated by Section 5(d)(v) hereof, Corel shall promptly prepare a post-effective amendment or supplement to the Registration Statement or the Prospectus, or any document incorporated therein by reference, or file any other required document so that, after such amendment or supplement, such Registration Statement and Prospectus do not contain an untrue statement of a material fact and do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus, in light of the circumstances under which they were made) not misleading; provided, however, that the Company shall not be required to take any such action during a Postponement Period (but it shall promptly thereafter). In the event that Corel notifies the Electing Holders of the occurrence of any event contemplated by Section 5(d)(v) hereof, each Electing Holder agrees, as a condition of the inclusion of any of such Electing Holder's Applicable Securities in the Registration Statement, to suspend the use of the Prospectus until the requisite changes to the Prospectus have been made.

(l) Corel shall enter into such customary agreements (including an underwriting agreement in customary form in the event of an underwritten offering) and take all other reasonable and appropriate action in order to expedite and facilitate the registration and disposition of the Registrable Securities, and in connection therewith, if an underwriting agreement is entered into, cause the same to contain indemnification provisions and procedures substantially identical to those set forth in Section 7 hereof with respect to all parties to be indemnified pursuant to Section 7 hereof. In addition, in such agreements, Corel will make such representations and warranties to the Electing Holder(s) and the underwriters or agents, if any, in form, substance and scope as are customarily made by issuers in primary equity offerings. The Electing Holder(s) shall be party to such agreements and may, at their option, require that any or all of the representations and warranties by, and the other agreements on the part of, Corel to and for the benefit of such underwriters shall also be made to and for the benefit of the Electing Holders and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement be conditions precedent to the obligations of the Electing Holders. No Electing Holder shall be required to make any representations or warranties to or agreements with Corel or the underwriters or agents other than representations, warranties or agreements relating to such Electing Holder, its Registrable Securities and its intended method of distribution or any other representations required by law.

(m) Corel agrees, if requested by the managing underwriter in an underwritten offering, not to effect any public sale or distribution of any securities the same as or similar to the Registrable Securities registered under the Registration Statement relating to such offering, or any securities convertible into or exchangeable or exercisable for such Registrable Securities, during the seven day period prior to, and during the 90-day period beginning on, the effective date of a Registration Statement filed under Section 2 or, if later, the commencement of the public distribution of securities to the extent timely notified in writing by the managing underwriters. The Purchaser agrees, if reasonably requested by the managing underwriter in an underwritten primary offering of equity securities by Corel or securities convertible into or exchangeable for such securities, not to effect a public sale or distribution of Registrable Securities the same as or similar to those being registered in such underwritten offering (except as part of such offering) during the seven day period prior to, and during the 90 day period beginning on, the effective date of the registration statement relating thereto or, if later, the commencement of the public distribution of such securities, to the extent timely notified in writing by such managing underwriter; provided, however, that the foregoing shall not apply to more than one such underwritten offering in any twelve month period.

(n) Corel shall use best efforts to:

(i) (A) make reasonably available for inspection by Electing Holders, any underwriter participating in any disposition pursuant to the Registration Statement, and any attorney, accountant or other agent retained by such Holders or any such underwriter all relevant financial and other records, pertinent corporate documents and properties of Corel and its subsidiaries, and (B) cause Corel's officers, directors and employees to supply all information reasonably requested by such Electing Holders or any such underwriter, attorney, accountant or agent in connection with the Registration Statement, in each case, as is customary for similar due diligence examinations; provided, however, that all records, information and documents that are designated by Corel, in good faith, as confidential shall be kept confidential by such Holders and any such underwriter, attorney, accountant or agent, unless such disclosure is required in connection with a court proceeding after such advance notice to Corel (to the extent practicable in the circumstances) so as to permit Corel to contest the same, or required by law, or such records, information or documents become available to the public generally or through a third party without an accompanying obligation of confidentiality; and provided further that, if the foregoing inspection and information gathering would otherwise disrupt Corel's conduct of its business, such inspection and information gathering shall, to the greatest extent possible, be coordinated on behalf of the Electing Holders and the other parties entitled thereto by one counsel designated by and on behalf of Electing Holders and other parties;

(a) in connection with any underwritten offering, obtain opinions of counsel to Corel (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the underwriters) addressed to the underwriters, covering the matters customarily covered in opinions requested in secondary underwritten offerings of equity securities, to the extent reasonably required by the applicable underwriting agreement;

(b) in connection with any underwritten offering, obtain "cold comfort" letters and updates thereof from the independent public accountants of Corel (and, if necessary, from the independent public accountants of any subsidiary of Corel or of any business acquired by Corel for which financial statements and financial data are, or are required to be, included in the Registration Statement), addressed to each Electing Holder participating in such underwritten offering (if such Electing Holder has provided such letter, representations or documentation, if any, required for such cold comfort letter to be so addressed) and the underwriters, in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with secondary underwritten offerings of equity securities;

(c) in connection with any underwritten offering, deliver such documents and certificates as may be reasonably requested by any Electing Holders participating in such underwritten offering and the underwriters, if any, including, without limitation, certificates to evidence compliance with any conditions contained in the underwriting agreement or other agreements entered into by Corel; and

(d) use its best efforts to comply with all applicable rules and regulations of the Commission and make generally available to its security holders, as soon as reasonably practicable (but not more than fifteen months) after the effective date of the Registration Statement, an earnings statement satisfying the provisions of Section 11(a) of the Securities Act and the rules and regulations promulgated thereunder.

(o) Not later than the effective date of the applicable Registration Statement, Corel shall provide a CUSIP number for all Registrable Securities and provide the applicable transfer agent with printed certificates for the Registrable Securities which are in a form eligible for deposit with The Depository Trust Company.

(p) Corel shall cooperate with each Electing Holder and each underwriter or agent participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the National Association of Securities Dealers, Inc. (the "NASD").

(q) As promptly as practicable after filing with the Commission of any document which is incorporated by reference into the Registration Statement or the Prospectus, Corel shall provide copies of such document to counsel for each Electing Holder and to the managing underwriters and agents, if any.

(r) Corel shall provide and cause to be maintained a transfer agent and registrar for all Registrable Securities covered by such Registration Statement from and after a date not later than the effective date of such Registration Statement.

(s) Corel shall use reasonable best efforts to take all other steps necessary to effect the timely registration, offering and sale of the Applicable Securities covered by the Registration Statements contemplated hereby.

Section 6. Registration Expenses. Corel shall bear the Registration Expenses in connection with the performance of its obligations under Sections 2, 3, 4 and 5 hereof. The Electing Holders shall bear all other expenses relating to any Registration or sale in which such Electing Holders participate, including without limitation the fees and expenses of counsel to such Electing Holders and any applicable underwriting discounts or commissions.

Section 7. Indemnification and Contribution. (a) Upon the Registration of Applicable Securities pursuant to Section 2 or 3 hereof, Corel shall indemnify and hold harmless each Electing Holder and each underwriter, selling agent or other securities professional, if any, which facilitates the disposition of Applicable Securities, and each of their respective officers and directors and each person who controls such Electing Holder, underwriter, selling agent or other securities professional within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each such person being sometimes referred to as an "Indemnified Person") against any losses, claims, damages or liabilities, joint or several, to which such Indemnified Person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Registration Statement under which such Applicable Securities are to be registered under the Securities Act, or any Prospectus contained therein or furnished by Corel to any Indemnified Person, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and Corel hereby agrees to reimburse such Indemnified Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that Corel shall not be liable to any such Indemnified Person in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such Registration Statement or Prospectus, or amendment or supplement, in reliance upon and in conformity with written information furnished to Corel by such Indemnified Person or its agent expressly for use therein; provided further, however, that Corel shall not be liable to the extent that any loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon the use of any Prospectus after such time as Corel has advised the Electing Holder in writing that a post-effective amendment or supplement thereto is required, except such Prospectus as so amended or supplemented.

(b) Each Electing Holder agrees, as a consequence of the inclusion of any of such Holder's Applicable Securities in such Registration Statement, and shall cause each underwriter, selling agent or other securities professional, if any, which facilitates the disposition of Applicable Securities shall agree, as a consequence of facilitating such disposition of Applicable Securities, severally and not jointly, to (i) indemnify and hold harmless Corel, its directors and officers and each person, if any, who controls Corel within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, against any losses, claims, damages or liabilities to which Corel or such other persons may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in such Registration Statement or Prospectus, or any amendment or supplement, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to Corel by such Holder, underwriter, selling agent or other securities professional or its agent expressly for use therein, and (ii) reimburse Corel for any legal or other expenses reasonably incurred by Corel in connection with investigating or defending any such action or claim as such expenses are incurred.

(c) Promptly after receipt by any Person entitled to indemnity (an "Indemnitee") under Section 7(a) or (b) hereof of notice of the commencement of any action or claim, such Indemnitee shall, if a claim in respect thereof is to be made against an Indemnitor (an "Indemnitor") under this Section 7, notify such Indemnitor in writing of the commencement thereof; but the omission so to notify the Indemnitor shall not relieve it from any liability which it may have to any Indemnitee except to the extent of any actual prejudice. In case any such action shall be brought against any Indemnitee and it shall notify an Indemnitor of the commencement thereof, such Indemnitor shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other Indemnitor similarly notified, to assume the defense thereof, with counsel satisfactory to such Indemnitee (which shall not be counsel to the Indemnitor without the consent of the Indemnitee). After notice from the Indemnitor to such Indemnitee of its election so to assume the defense thereof, such Indemnitor shall not be liable to such Indemnitee under this Section 7 for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such Indemnitee, in connection with the defense thereof (other than reasonable costs of investigation) unless the Indemnitee shall have been advised by counsel that representation of the Indemnitee by counsel provided by the Indemnitor would be inappropriate due to actual or potential conflicting interests between the Indemnitee and the Indemnitor, including situations in which there are one or more legal defenses available to the Indemnitee that are different from or additional to those available to Indemnitor; provided, however, that the Indemnitor shall not, in connection with any one such action or separate but substantially similar actions arising out of the same general allegations, be liable for the fees and expenses of more than one separate set of counsel at any time for all Indemnitees, except to the extent that local counsel, in addition to their regular counsel, is required in order to effectively defend against such action. No Indemnitor shall, without the written consent of the Indemnitee, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the Indemnitee is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the Indemnitee from all liability arising out of such action or claim and (ii) does not include a statement as to, or an admission of, fault, culpability or a failure to act, by or on behalf of any Indemnitee. No indemnification shall be available in respect of the settlements of any action or claim effected by an Indemnitee without the prior written consent of the Indemnitor.

(d) If the indemnification provided for in this Section 7 is unavailable to or insufficient to hold harmless an Indemnitee under Section 7(a) or (b) hereof in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each Indemnitor shall contribute to the amount paid or payable by such Indemnitee as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the Indemnitor and the Indemnitee in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative fault of such Indemnitor and Indemnitee shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such Indemnitor or by such Indemnitee, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 7(d) were determined solely by pro rata allocation (even if the Electing Holders or any underwriters, selling agents or other securities professionals or all of them were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 7(d). The amount paid or payable by an Indemnitee as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such Indemnitee in connection with investigating or defending any such action or claim. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The obligations of the Electing Holders and any underwriters, selling agents or other securities professionals in this Section 7(d) to contribute shall be several in proportion to the percentage of principal amount of Applicable Securities registered or underwritten, as the case may be, by them and not joint.

Section 8. Miscellaneous. (a) This Agreement, including this Section 8(a), may be amended, and waivers or consents to departures from the provisions hereof may be given, only by a written instrument duly executed, in the case of an amendment, by Corel and the Holders of a majority in aggregate of Registrable Securities, or in the case of a waiver or consent, by the party against whom the waiver or consent, as the case may be, is to be effective. Each Holder of Registrable Securities outstanding at the time of any such amendment, waiver or consent or thereafter shall be bound by any amendment, waiver or consent effected pursuant to this Section 8(a), whether or not any notice, writing or marking indicating such amendment, waiver or consent appears on the Registrable Securities or is delivered to such Holder.

(b) All notices, requests and other communications to any party hereunder shall be in writing (including facsimile transmission) and shall be effective (a) when delivered, (b) when transmitted via telecopy (or other facsimile device) to the number set out below if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), (c) the day following the day on which the same has been delivered prepaid to a reputable national overnight air courier service or (d) the third Business Day following the day on which the same is sent by certified or registered mail, postage prepaid, in each case to the respective parties at the address set forth below, or at such other address as such party may specify by written notice to the other party hereto:

if to Corel, to:

Corel Corporation

1600 Carling Avenue

Ottawa, Ontario, CANADA

K1Z 8R7
Attention: Chief Financial Officer
Fax: (613) 761-9872

with a copy to:

McCarthy Tétrault

40 Elgin Street

Suite 1400

Ottawa, Ontario, Canada K1P 5K6

Attention: Robert D. Chapman
Fax: (613) 563-9386

if to Purchaser or any Holder, to:

Microsoft Corporation
One Microsoft Way

Redmond, Washington 98052-6399
Attention: Deputy General Counsel, Finance and Operations

Fax: (425) 869-1327

with a copy to:

Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Duncan C. McCurrach

Fax: (212) 558-3588

(c) The parties to this Agreement intend that all Holders of Registrable Securities shall be entitled to receive the benefits of and shall be bound by the terms and provisions of this Agreement. Except as provided herein respecting Holders, the terms and provisions of this Agreement shall not be assignable or transferable and there shall be no third-party beneficiaries hereto. All the terms and provisions of this Agreement shall be binding upon, shall inure to the benefit of and shall be enforecable by the respective legal successors and permitted assigns of the parties hereto and any Holder.

(d) This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

(e) The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

(f) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

(g) The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provisions of this Agreement, or the application thereof to any Person or entity or any circumstance, is invalid or unenforceable, (i) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable the intent of such provision and (ii) the remainder of this Agreement and the application of such provision to other Persons, entities or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.

(h) The respective indemnities, agreements, representations, warranties and other provisions set forth in this Agreement or made pursuant hereto shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Electing Holder, any director, officer or partner of such Electing Holder, any agent or underwriter, any director, officer or partner of such agent or underwriter, or any controlling person of any of the foregoing, and shall survive the transfer and registration of the Applicable Securities of such Holder.

(i)Each Electing Holder shall cooperate with respect to any Registration effected under this Agreement and shall provide such information, documents, and instruments as may be reasonably requested in connection therewith

In Witness Whereof, the parties hereto have caused this Agreement to be executed by their respective authorized officers as of the day and year first above written.

COREL CORPORATION

By: " Derek Burney"
Name: Derek Burney
Title: Interim President and

Chief Executive Officer

MICROSOFT LICENSING, INC.

By: " John Connors"
Name: John Connors
Title: Vice President

MICROSOFT CORPORATION

By: "Steven A. Ballmer "
Name: Steven A. Ballmer
Title: President and CEO

Corel Corporation

Notice of Registration Statement

and

Questionnaire

(Date)

Reference is hereby made to the Registration Rights Agreement (the "Registration Rights Agreement") among Corel Corporation ("Corel"), Microsoft Corporation and Microsoft Licensing, Inc. Corel [has filed] with the United States Securities and Exchange Commission (the "Commission") a registration statement on Form ____ (the "Registration Statement") for the registration and resale under the Securities Act of 1933, as amended (the "Securities Act"), of Corel's [Title of Securities] (the "Securities"). All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.

Each Holder of Registrable Securities is entitled to have the Registrable Securities owned by it included in the Registration Statement. In order to have Registrable Securities included in the Registration Statement, this Notice of Registration Statement and Selling Securityholder Questionnaire ("Notice and Questionnaire") must be completed, executed and delivered to Corel's counsel at the address set forth herein. Holders of Registrable Securities who do not complete, execute and return this Notice and Questionnaire (i) will not be named as selling securityholders in the Registration Statement and (ii) may not use the Prospectus forming a part thereof for resales of Registrable Securities.

Certain legal consequences arise from being named as a selling securityholder in the Registration Statement and related Prospectus. Accordingly, Holders of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling securityholder in the Registration Statement and related Prospectus.

ELECTION

The undersigned Holder (the "Electing Holder") of Registrable Securities hereby elects to include in the Registration Statement the Registrable Securities beneficially owned by it and listed below in Item (3). The undersigned, by signing and returning this Notice and Questionnaire, agrees to be bound with respect to such Registrable Securities by the terms and conditions of this Notice and Questionnaire and the Registration Rights Agreement, including, without limitation, Section 7 of the Registration Rights Agreement, as if the undersigned Electing Holder were an original party thereto.

The Electing Holder hereby provides the following information to Corel and represents and warrants that such information is accurate and complete:

QUESTIONNAIRE

(1) (a) Full Legal Name of Electing Holder:

(b) Full Legal Name of Registered Holder (if not the same as in (a) above) of Registrable Securities Listed in (3) below:

(2) Address for Notices to Electing Holder:

Telephone:

Fax:

Contact Person:

(3) Except as set forth below in this Item (3), the undersigned does not beneficially own any Registrable Securities.

(a) Number and type of Registrable Securities (as defined in the Registration Rights Agreement) beneficially owned:

(b) Number and type of Registrable Securities which the undersigned wishes to be included in the Registration Statement:

(4) Beneficial Ownership of other securities of Corel:

Except as set forth below in this Item (4), the undersigned Electing Holder is not the beneficial or registered owner of any shares or any other securities of Corel, other than the Registrable Securities listed above in Item (3).

State any exceptions here:

(5) Relationships with Corel:

Except as set forth below, neither the Electing Holder nor any of its affiliates, officers, directors or principal equity holders (5% or more) has held any position or office or has had any other material relationship with Corel (or its predecessors or affiliates) during the past three years.

State any exceptions here:

(6) Plan of Distribution:

Except as set forth below, the undersigned Electing Holder intends to distribute the Registrable Securities listed above in Item (3) only as follows (if at all): Such Registrable Securities may be sold from time to time directly by the undersigned Electing Holder or, alternatively, through underwriters, broker-dealers or agents. Such Registrable Securities may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale, or at negotiated prices. Such sales may be effected in transactions (which may involve crosses or block transactions) (i) on any national securities exchange or quotation service on which the Registered Securities may be listed or quoted at the time of sale, (ii) in the over-the-counter market, (iii) in transactions otherwise than on such exchanges or services or in the over-the-counter market, or (iv) through the writing of options. In connection with sales of the Registrable Securities or otherwise, the Electing Holder may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the Registrable Securities in the course of hedging the positions they assume. The Electing Holder may also sell Registrable Securities short and deliver Registrable Securities to close out such short positions, or loan or pledge Registrable Securities to broker-dealers that in turn may sell such securities.

State any exceptions here:

In the event that the Electing Holder transfers all or any portion of the Registrable Securities listed in Item (3) above after the date on which such information is provided to Corel, the Electing Holder agrees to notify the transferee(s) at the time of the transfer of its rights and obligations under this Notice and Questionnaire and the Registration Rights Agreement.

By signing below, the Electing Holder consents to the disclosure of the information contained herein in its answers to Items (1) through (6) above and the inclusion of such information in the Registration Statement and related Prospectus. The Electing Holder understands that such information will be relied upon by Corel in connection with the preparation of the Registration Statement and related Prospectus.

In accordance with the Electing Holder's obligation under Section 5(a) of the Registration Rights Agreement to provide such information as may be required by law for inclusion in the Registration Statement, the Electing Holder agrees to promptly notify Corel of any inaccuracies or changes in the information provided herein which may occur subsequent to the date hereof at any time while the Registration Statement remains in effect. All notices hereunder and pursuant to the Registration Rights Agreement shall be made in writing, by hand-delivery, first-class mail, or air courier guaranteeing overnight delivery as follows:

(i) To Corel:

Corel Corporation

1600 Carling Avenue

Ottawa, Ontario, CANADA

K1Z 8R7
Attention: Chief Financial Officer
Fax: (613) 761-9872

(ii) With a copy to:

McCarthy Tétrault

40 Elgin Street

Suite 1400

Ottawa, Ontario, Canada K1P 5K6

Attention: Robert D. Chapman
Fax: (613) 563-9386

Once this Notice and Questionnaire is executed by the Electing Holder and received by Corel's counsel, the terms of this Notice and Questionnaire, and the representations and warranties contained herein, shall be binding on, shall inure to the benefit of and shall be enforceable by the respective successors, heirs, personal representatives, and assigns of Corel and the Electing Holder (with respect to the Registrable Securities beneficially owned by such Electing Holder and listed in Item (3) above. This Agreement shall be governed in all respects by the laws of the State of New York.

IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.

Dated:

Electing Holder

By: _____________________________

Name:

Title:

PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON OR BEFORE [DEADLINE FOR RESPONSE] TO COREL'S COUNSEL AT:

EX-99.4

Exhibit 99.4

TECHNOLOGY SUPPORT AND SETTLEMENT AGREEMENT

This Technology Support and Settlement Agreement ("Agreement"), dated October 2, 2000 ("Effective Date") is entered into by and between Corel Corporation ("Corel") with offices at 1600 Carling Avenue, Ottawa, Ontario, Canada, K1Z 8R7 and Microsoft Corporation ("Microsoft") with offices at One Microsoft Way, Redmond, WA 98052. Corel and Microsoft shall each be referred to herein as a "Party" and collectively as the "Parties."

Recitals

A. The Parties have worked together for many years on mutually beneficial development, marketing and distribution initiatives;

B. The Parties wish to broaden and deepen their relationship to cover a new set of initiatives related to Microsoft's new .NET Framework and .NET Services description (defined below);

C. In connection with the expansion of the relationship between the Parties, Microsoft will make a major investment in Corel, which is described in a separate Purchase Agreement of even date herewith (the "Purchase Agreement");

D. To further encourage a productive and mutually beneficial relationship, the Parties also wish to settle and release certain claims that they have against one another and their Affiliates; and

E. The Parties intend to operate in good faith pursuant to the terms and conditions described in this Agreement with the goal of bringing to market many new products and services that will benefit consumers.

Agreement

Now Therefore, in consideration of the mutual promises and covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereto agree to the following:

1. Definitions

In addition to the terms defined elsewhere in this Agreement, the following terms, when used herein, shall have the following meanings:

A. "Affiliate" has the meaning assigned to such term in Rule 405 promulgated by the SEC under the Securities Act; provided that the term "Affiliate" shall not apply to any entity that either Party does not have the legal and/or contractual right to bind to this Agreement.

B. "Building Block Services" shall have the meaning given such term in Section 2.2 of this Agreement.

C. "Change in Control" means (i) any acquisition of Voting Shares of Corel by any person or group (as defined for purposes of Section 13(d)(3) of the Exchange Act) in a transaction or series of related transactions if immediately thereafter such person or group beneficially owns (as defined in Rule 13d-3 promulgated by the SEC under the Exchange Act) Voting Shares of Corel that are entitled to cast more than 50% of all the votes entitled to be cast generally by all the holders of such Voting Shares in the election of directors of Corel; (ii) any merger, consolidation, reorganization or other transaction involving Corel unless immediately after the consummation of such transaction the holders of Voting Shares of Corel immediately prior to such consummation beneficially own more Voting Shares of the person surviving or resulting from such transaction (which may be Corel) that are entitled to cast more than 50% of all the votes entitled to be cast generally by all the holders of such Voting Shares in the election of directors of such surviving or resulting person; (iii) the sale or disposition of all or substantially all of Corel's assets; and (iv) liquidation, winding up or dissolution of Corel.

D. "Confidential Information" means nonpublic information that a Party to this Agreement designates as being confidential to the Party that receives such information or which, under the circumstances surrounding disclosure ought to be treated as confidential by the receiving Party. "Confidential Information" includes, without limitation, any trade secrets relating to either Party's products, product plans, designs, costs, prices and names, finances, marketing plans, business opportunities, personnel, research development or know-how, and the terms, conditions and existence of this Agreement. Confidential Information shall not include any information, however designated, that: (i) is or subsequently becomes publicly available without receiving Party's breach of any obligation owed disclosing Party; (ii) became known to receiving Party prior to disclosing Party's disclosure of such information to receiving Party pursuant to the terms of this Agreement; (iii) became known to receiving Party from a source other than disclosing Party other than by the breach of an obligation of confidentiality owed to disclosing Party; or (iv) is independently developed by receiving Party.

E. "Corel Claims" shall have the meaning given such term in Section 5 of this Agreement.

F. "Covenanted Products" shall have the meaning given such term in Section 4 of this Agreement.

G. "Excluded Products" shall have the meaning given such term in Section 2.2 of this Agreement.

H. "Linux Platform" means the version(s) of the Linux operating system designated by Microsoft as a target for development at or after the time it delivers the Option Notice.

I. "Loss" and "Losses" shall have the meaning given such terms in Section 12.1 of this Agreement.

J. "Major Upgrade" means any upgrade or new version of a product (not including bug fixes or service pack releases) that includes significant feature enhancements or performance improvements over an older version of a product. For purposes of this Section, the Parties agree that the forthcoming operating system releases from Microsoft code-named "Whistler" and "Blackcomb" would qualify as "Major Upgrades" to Windows 2000.

K. "Material Support" means integrating support for a significant number of software services included in the .NET Framework and/or exposed via programming interfaces in the .NET Framework. Corel may integrate such support by making programming calls from its Products to the .NET Framework and by redistributing with its Products those portions of the .NET Framework that are (i) included in VS.NET and are (ii) redistributable according to the terms of the end user license agreement for VS.NET, such as the Common Language Runtime and selected class libraries.

L. ".NET Framework" means the Microsoft Common Language Runtime (also known as the .NET runtime), a hierarchical set of unified class libraries, and a substantially updated version of Active Server Pages called ASP+. The Common Language Runtime manages the execution of code that has been compiled into the Microsoft Intermediate Language (MSIL) and provides services such as memory management, cross-language integration, exception handling, code access security, and automatic lifetime control of objects.

M. ".NET Services" means web services that support the XML format defined by the W3C, the Simple Object Access Protocol (or "SOAP") also defined by the W3C, the Web Services Description Language ("WSDL"), the Microsoft business orchestration language known as "XLANG," the SOAP discovery standard (known as "DISCO"), and Universal Description, Discovery and Integration (or "UDDI"), including any updates to such specifications and technologies.

N. "Option Notice" shall have the meaning given such term in Section 3.1 of this Agreement.

O. "Party" and "Parties" shall have the meaning given such terms in the first paragraph of this Agreement.

P. "Person" means any individual, corporation, partnership, limited liability company, joint venture, trust, unincorporated organization or government or any agency or political subdivision thereof.

Q. "Port" means to make the engineering, coding and documentation changes that are necessary for a computer program to execute on a different operating system platform with as little performance and feature degradation as is reasonably possible given the characteristics of the platform to which the program is re-targeted.

R. "Port Deliverables" means all the software and associated documentation (including test and build code) that Corel develops in connection with the Port Project.

S. "Port Project" means the software development and testing project described in Section 3.1 of this Agreement.

T. "Product(s)" means all current and future Corel products and services.

U. "Product Tours" shall have the meaning given such term in Section 7.2 of the Agreement.

V. "Purchase Agreement" shall have the meaning given such term in Recital C of this Agreement.

W. "Resources" means employees, contractors, finances and promotional and marketing efforts.

X. "Ship Date" means the date that is the later of (a) six (6) months after the date that Microsoft first makes a commercial (i.e., non-beta) version of VS.NET available in the retail channel, or (b) twelve (12) months after the date that Corel receives copies of the first beta version of VS.NET pursuant to Section 2.1 of this Agreement.

Y. "VBA Agreement" means the agreement between the Parties, dated as of October 12, 1998, in which Corel obtained the right, among other things, to distribute Microsoft VBA technology with its Products.

Z. "Voting Shares" means any shares or other securities issued by a Person that entitle the holder thereof to vote generally (and not only upon the happening of a contingency) in the election of directors of such Person.

AA. "VSA" shall have the meaning given such term in Section 2.4 of this Agreement.

BB. "VS.NET" shall have the meaning given such term in Section 2.1 of this Agreement.

CC. "Windows Platform" means Microsoft Windows 2000, Microsoft Windows ME and the upgrades, new versions and successors to such products that Microsoft commercially releases during the term of this Agreement.

2. Support for .NET Framework and .NET Services.

2.1 Delivery of Beta Versions of .NET Framework to Corel. Microsoft agrees to deliver at least twenty (20) copies of the first beta version of its Visual Studio.NET developer tool product ("VS.NET") to Corel no later than the date upon which Microsoft provides such version of VS.NET to other third party software developers. Microsoft further agrees to deliver the same number of copies of any subsequent upgrades to such beta version of VS.NET that Microsoft releases to any third party customers of Microsoft during the period prior to the commercial release of such product. Corel agrees to abide by the terms of the standard end user license agreements that shall accompany such beta releases.

2.2 Commitment to Support .NET Framework and .NET Services in Corel Products. Corel agrees that at least one version of each Major Upgrade of each Corel Product that Corel releases after the Ship Date shall include Material Support for the .NET Framework, except for WordPerfect and Products for which Corel chooses to make no new commercial release whatsoever after the Ship Date (together, the "Excluded Products"). Corel further agrees that during the term of this Agreement it shall release an updated version of each of its Products, except for the Excluded Products, which shall include Material Support for updated versions of the .NET Framework no later than six (6) months after the date that Microsoft releases a developer tool or operating system product that includes a Major Upgrade of the .NET Framework.

Corel agrees that at least one version of the first Major Upgrade of WordPerfect that it commercially releases after the Ship Date shall include support for many of the software services included in the .NET Framework. Corel further agrees that it shall support many of the software services included in updated versions of the .NET Framework no later than six (6) months after the date that Microsoft releases a developer tool or operating system product that includes a Major Upgrade of the .NET Framework.

Corel agrees (a) to make its Product services fully consumable as .NET Services, (b) to make any business processes that it publishes consumable using the Web Services Description Language, and (c) to register Corel's services at any one of the UDDI service registries accessible via www.uddi.org.

Corel understands that Microsoft has developed and will continue to develop certain .NET Services that provide basic infrastructure technologies for web-based products and services, such as authentication, calendaring, and directory and search services (the "Building Block Services"). Corel agrees to conduct a reasonable investigation into the advisability of incorporating support for these Building Block Services in its Products. Microsoft agrees to work with Corel to identify opportunities for Corel to support the Building Block Services in its Products.

2.3 Commitment to Allocate Appropriate Resources to Support Development and Testing of Corel Products on .NET Framework and Windows Platform. Corel agrees that it shall allocate Resources to support the development, testing, and marketing of the versions of Products that target the .NET Framework and/or Windows Platform, as described in this Section, that are at least as great as the Resources that Corel allocates to the versions of Products that do not include Material Support for the .NET Framework and/or Windows Platform.

2.4 Commitment to Investigate and Consider Opportunity to Participate in VSA Licensing Plan. Microsoft may elect, in its sole discretion, to create and offer a new developer tool product derived from VS.NET technologies, tentatively called "Visual Studio for Applications" ("VSA"), which is intended to provide the ability to customize and extend middle-tier components of distributed applications based upon the .NET Frameworks. Corel agrees to review any proposed licensing arrangement for VSA in good faith in connection with its server-side development plans in order to comply with the other terms of this Section.

2.5 Clarification Regarding Intent. Nothing in this Section shall preclude Corel from releasing versions of Products that do not include any support for the .NET Framework and/or the Windows Platform.

3. Option for Linux Port.

3.1 Grant of Option to Port. Corel hereby grants Microsoft an option for Corel to Port some portion or all of the .NET Framework from the Windows Platform to the Linux Platform (the "Port Project"). This option shall be exercisable for a period of three (3) years from the Effective Date. If Microsoft elects to exercise the option, it shall do so by sending a written notice (the "Option Notice") to Corel at the address listed below in Section 15.1.

3.2 Conditional License to .NET Framework. In the event that Microsoft, in its sole discretion, elects to exercise the option described in Section 3.1, Microsoft shall promptly deliver to Corel one or more copies of the portion of the .NET Framework that Microsoft wishes Corel to Port to the Linux Platform in source code form. Upon delivery, Microsoft shall be deemed to have granted Corel a non-transferable, non-assignable, personal and limited license to copy, modify and use the portion of the .NET Framework delivered by Microsoft at Corel's principal place of business in Ottawa, Canada for the sole purpose of conducting and completing the Port Project and for no other purpose whatsoever.

3.3 Commitment to Allocate Resources and to Meet Project Goals and Deadlines. Upon receipt of the Option Notice, Corel agrees to work with Microsoft in good faith on the Port Project. Corel agrees to assign the equivalent of at least twenty (20) full-time developers and at least ten (10) full-time testers to the Port Project who are reasonably experienced and skilled in projects similar to the Port Project and to keep them assigned to the Port Project during the full duration of such project. Corel shall ensure that such developers and testers shall make themselves reasonably available to Microsoft employees for consultation from time to time during the Port Project. Corel agrees to adhere to any reasonable programming rules and conventions that Microsoft may require for the Port Project. Corel also agrees to provide weekly written status reports on the Port Project to Microsoft, which shall include one or more copies of the latest builds (in source and object code form), bug status reports, and a project status overview.

Corel shall deliver milestone releases of the Port Deliverables to Microsoft in source code form at regular intervals during the Port Project and no less often than as follows:

Date Deliverable to Microsoft

(a) Sixty (60) days after receipt of Option Notice: Project plan and specifications

(b) To be determined by the Parties: Alpha Port

(c) To be determined by the Parties: First Beta Port

(d) To be determined by the Parties: Second Beta Port

(e) Twelve (12) months after receipt of Option Notice: Final Port Deliverables.

3.4 Acceptance Criteria. Corel agrees to make commercially reasonable efforts to promptly resolve any and all programming errors, incompatibilities and other problems in the Port Deliverables reasonably identified by Microsoft as part of its review and testing process throughout the Port Project. The Port Project will be completed after Corel delivers the final Port Deliverables to Microsoft and Microsoft delivers a written acceptance notice to Corel, which shall not be unreasonably withheld.

3.5 No Additional Payments Except as Mutually Agreed. The parties understand and agree that the consideration that Corel has received as part of this Agreement and the Purchase Agreement have fully compensated Corel for the costs and expenses associated with the Port Project and that Microsoft shall not have an obligation to pay Corel any amount of money whatsoever for the costs and expenses associated with such project. Notwithstanding the foregoing, Microsoft agrees to pay reasonable costs and fees to the extent that Microsoft requests and Corel provides development and/or test resources over and above those described in Section 3.3, provided that Microsoft has first approved any such costs and expenses in writing.

3.6 Port Deliverables Owned by Microsoft. The Port Deliverables have been specially ordered and commissioned by Microsoft. Corel agrees that the Port Deliverables are a "work made for hire" for copyright purposes, with all copyrights in the Port Deliverables owned by Microsoft.  To the extent that the Port Deliverables do not qualify as a work made for hire under applicable law, and to the extent that the Port Deliverables include material subject to copyright, patent, trade secret, or other proprietary right protection, Corel hereby assigns to Microsoft all right, title and interest in and to the Port Deliverables; including but not limited to, all rights in and to any inventions and designs embodied in the Port Deliverables or developed during the course of Corel's creation of the Port Deliverables.

3.7 Conditional License of Port Deliverables to Corel. Upon Microsoft's final acceptance of the Port Deliverables pursuant to Section 3.4 of this Agreement, Microsoft shall be deemed to have granted Corel a non-exclusive, perpetual, worldwide, personal, non-transferable, non-assignable license to (a) internally copy and use the Port Deliverables in source and object code form, and (b) license and distribute the Port Deliverables in object code form only as part of Products at any time after the first date that Microsoft commercially releases a product that includes the Port Deliverables, provided that Corel pays any applicable royalties or fees to Microsoft as described in Section 3.8. This license does not permit Corel to distribute the Port Deliverables on a standalone basis.

3.8 Royalties and Accounting. Microsoft may elect, in its sole discretion, to charge a royalty or other fee to Persons who wish to distribute copies of the Port Deliverables and/or derivative works thereof for the Linux Platform. Microsoft agrees that it will not charge Corel more than any other Person for such rights. Corel is obligated to request information about any applicable royalties and/or fees prior to the time that it distributes any Products that include copies of the Port Deliverables and/or derivative works thereof. Corel agrees to provide Microsoft with a full and complete accounting for all applicable royalties and/or fees on not less than a quarterly basis. Corel shall comply with the provisions governing taxes set forth in the VBA Agreement in connection with its obligations under this Section. Corel also agrees that Microsoft may request an independent accounting of royalties and/or fees paid by pursuant to this Section and the rules governing an audit set forth in the VBA Agreement on ten (10) days' advance written notice to Corel.

4. Covenant Not to Sue.

Subject to the terms and conditions of this Section 4, Microsoft covenants to Corel that neither Microsoft nor any of its Affiliates shall sue Corel based on any claim that current or past versions of Corel Office Professional or Corel WordPerfect Suite (and successor Corel WordPerfect office productivity products) (collectively, the "Covenanted Products") infringe Microsoft's U.S. Patents 5,510,980; 5,272,628; 5,287,514; and 5,437,036. This covenant is personal to Corel and may not be assigned or otherwise transferred (including without limitation by operation of law) without the prior written consent of Microsoft, and any attempted assignment or other transfer without such consent shall be void and of no force and effect. All obligations of Microsoft and all rights of Corel under this covenant shall continue until the last of the patents described above expires, provided that all obligations of Microsoft and rights of Corel under this covenant shall automatically terminate with retroactive effect upon the occurrence of any of the following: (i) any attempted assignment or other transfer of this covenant without Microsoft's prior written approval, (ii) a Change in Control; (iii) the commencement of any legal proceeding by Corel or any of its Affiliates against Microsoft or any of its Affiliates alleging patent infringement, antitrust violations or anti-competitive conduct; (iv) breach by Corel of any material term of this Agreement; and (v) any sale, assignment or transfer, directly or indirectly, of the businesses and/or assets related to the production and sale of any of the Covenanted Products. The foregoing covenant does not constitute a patent license to Corel, and except as explicitly set forth above, Microsoft does not, directly or by implication, estoppel or otherwise, grant any other patent covenants or patent rights under this Agreement. Further, the foregoing covenant does not constitute a license under, or assignment of any interest in, any copyright or other intellectual property of Microsoft.

5. Compromise and Release of Claims.

Corel and its Affiliates and predecessors in interest (to the extent that Corel has a legal and/or contractual right to bind such entities), in return for good and valuable consideration, the sufficiency of which is hereby acknowledged, hereby release and discharge Microsoft and its Affiliates, and the present or former officers, directors, employees, representatives, agents, trustees or other legal representatives, successors and assigns of each of them, of and from any and all claims, counterclaims, actions, causes of actions, suits, rights, debts, obligations, damages, liabilities, and demands that each of them ever had or has, in law or in equity, known or unknown, from the beginning of the world through to the Effective Date of this Agreement (the "Corel Claims"). Corel represents, warrants, and acknowledges that it has not relied on any representations of Microsoft in entering into this Section 5 or in releasing and compromising the Corel Claims. Corel and Microsoft further agree that this Release and the Covenant Not To Sue set forth in Section 4 hereof, as well as the other terms of this Agreement, are a compromise of the Corel Claims within the meaning of Federal Rule of Evidence 408, and shall constitute full satisfaction of the Corel Claims.

6. VBA License Renewal.

Simultaneously with the execution of this Agreement, the Parties agree to execute an amendment to the VBA Agreement in the form attached hereto as Exhibit B.

7. Support of Windows Media Technologies

7.1 Support for Windows Media. Corel understands and agrees that Microsoft wishes to ensure that users of Products for the Windows Platform have the ability to use Windows Media formatted content from such Products, where applicable, to take advantage of the latest integrated multimedia technologies in the Windows Platform. To this end, in the event that Corel includes support for the playback of downloadable or streaming compressed audio or video content in any Products for the Windows Platform, Corel shall, on a non-exclusive basis, support the Windows Media Format and Windows Media Technologies on a basis that is at least as favorable as support that Corel provides for other technologies offering similar capabilities to the Windows Media Technologies. To the extent that Corel creates compressed audio or video content (e.g., other than .avi or .wav files or similar files with uncompressed formats) and includes the same in Products for the Windows Platform, Corel shall include such content in Windows Media Formats to the extent that it provides such content in any other compressed format.

7.2 Demonstrations and Marketing. Corel understands and agrees that Microsoft wishes to establish awareness of its latest compression technologies as a means to educate customers about the potential benefits of software products that include such technologies. To this end, Corel agrees to use reasonable efforts to create product demonstrations and/or guided tours (together, "Product Tours") for each Product for the Windows Platform using HTML web pages in conjunction with the Windows Media Technologies Screen Capture/Playback codec (as further described at http://www.microsoft.com/Windows/windowsmedia/en/business/enterprises.asp or such other location as Microsoft may determine from time to time) as well as any additional Windows Media audio or video compression technologies, as determined by Corel. Corel shall (a) include Product Tours in its next major release of each of its Products for the Windows Platform, (b) prominently promote the availability of such Product Tours before or after the Product installation process via a "read me", installer, or other reasonable method of Corel's choosing, and (c) prominently promote Product Tours on Corel's web sites for each such Product.

7.3 Microsoft Assistance and Cooperation. Microsoft agrees to provide reasonable training and support resources to Corel by phone or at Microsoft's Redmond, Washington facilities to enable Corel to achieve each of the above.

8. Windows Logo

Corel agrees that all Products for the Windows Platform that it releases on or after January 1, 2001 shall qualify for the Microsoft Windows Logo. Simultaneously with the execution of this Agreement, the Parties agree to execute a Microsoft Windows Logo agreement in the form attached hereto as Exhibit C.

9. Additional Co-Marketing Terms

The Parties agree to issue one or more joint press releases announcing elements of this Agreement. The Parties shall mutually agree on the timing and contents of such press release(s). After the Effective Date, the Parties agree to work together in good faith to design a more comprehensive co-marketing plan, which may include participation in launch and trade show events and mutual web site links.

10. Confidentiality.

Each Party shall refrain from disclosing any Confidential Information of the other Party to third parties for five (5) years following the date that the disclosing Party first discloses such Confidential Information to the receiving Party and in perpetuity with regards to any Confidential Information of the disclosing Party contained in computer source code disclosed to the receiving Party pursuant to the terms of this Agreement. Each Party further agrees that the terms and conditions of this Agreement and all discussions relating to this Agreement shall be treated as Confidential Information, except to the extent that certain terms and conditions may be disclosed as part of a press release of the parties that is jointly approved pursuant to Section 9 and except as otherwise required by law. In addition, each Party shall take reasonable security precautions, at least as great as the precautions it takes to protect its own Confidential Information, but no less than reasonable care, to keep confidential the Confidential Information of the disclosing Party. Both Parties shall refrain from disclosing, reproducing, summarizing and/or distributing the Confidential Information of the other Party except to employees, contractors and agents of the receiving Party who have a need to know such Confidential Information in pursuance of the receiving Party's business relationship with the Disclosing Party, and only as otherwise provided hereunder, provided that the disclosing Party has executed appropriate written agreements with its employees, consultants and agents sufficient to enable it to comply with all the provisions of this Agreement.

11. Representations and Warranties

11.1 Corel. Corel hereby makes the following representations and warranties to Microsoft, which representations and warranties are continuous in nature and shall be deemed to have been given upon the Effective Date and at each stage of performance hereunder:

11.1.1 Organization, Good Standing, and Authority. Corel is a corporation duly organized, validly existing and in good standing under the laws of Canada and the Province of Ontario and has all requisite power and authority to enter into this Agreement, to bind its Affiliates to the portions of the Agreement that relate to such Affiliates, and to consummate the transactions contemplated herein.

11.1.2 Ownership and Non-Infringement. The Port Deliverables (a) will be either originally created by Corel or Corel will have obtained all necessary rights in the Port Deliverables to transfer full ownership as described in Section 3.6 of this Agreement, and (b) the Port Deliverables shall not infringe any copyright or trade secret right held by any third party, except to the extent that the portion of the .NET Frameworks delivered by Microsoft to Corel pursuant to Section 3 of this Agreement and included in the Port Deliverables are the source of such infringement. This Section 11.1.2 shall have no force or effect in the event that Microsoft does not exercise the option described in Section 3.1 of this Agreement.

11.1.3 Claims. Corel and its Affiliates represent and warrant that they are the sole and lawful owners of all right, title and interest in and to every Corel Claim and that they have not assigned or transferred, or purported to assign or transfer to any Person any Corel Claims released herein.

11.2 Microsoft. Microsoft hereby makes the following representations and warranties to Corel, which representations and warranties are continuous in nature and shall be deemed to have been given upon the Effective Date and at each stage of performance hereunder:

11.2.1 Organization, Good Standing, and Authority. Microsoft is a corporation duly organized, validly existing and in good standing under the laws of the State of Washington and has all requisite power and authority to enter into this Agreement, to bind its Affiliates to the portions of the Agreement that relate to such Affiliates, and to consummate the transactions contemplated herein.

11.2.2 Ownership and Non-Infringement. The portion of the .NET Frameworks licensed to Corel pursuant to Section 3.2 of this Agreement, if any, (a) will be either originally created by Microsoft or Microsoft will have obtained all necessary rights in such portion of the .NET Frameworks to license the same to Corel as described in Section 3.2 of this Agreement, and (b) such portion of the .NET Frameworks shall not infringe any copyright or trade secret right held by any third party. This Section 11.2.2 shall have no force or effect in the event that Microsoft does not exercise the option described in Section 3.1 of this Agreement.

12. Defense and Indemnity

12.1 General Obligation to Defend and Indemnify. Corel shall indemnify, defend and hold harmless Microsoft from and against any demand, obligation, liability, claim, loss, judgment, damage, cost, expense, tax, lawsuit, arbitration or other legal action, including interest, penalties and reasonable legal fees and expenses incurred in connection with any of the foregoing (collectively, a "Loss" or "Losses"), suffered by Microsoft that arises out of or relates to any breach of the representations or warranties of, or of any of the covenants or agreements made by Corel contained in this Agreement. Microsoft shall indemnify, defend and hold harmless Corel from and against any Losses suffered by Corel that arise out of or relate to any breach of the representations or warranties of, or of any of the covenants or agreements made by Microsoft contained in this Agreement.

12.2 Obligation to Give Notice and Cooperate. The Party with the right to defense and indemnity pursuant to Section 12.1 ("Indemnitee") shall provide the other Party ("Indemnitor") with reasonably prompt notice in writing of any Loss and permit the Indemnitor, through counsel mutually acceptable to both Parties, to answer and defend such claim or action. The Indemnitee also shall provide Indemnitor information, assistance and authority, at Indemnitor's expense, to help Indemnitor to defend such claim or action. Indemnitor will not be responsible for any settlement made by Indemnitee without Indemnitor's written permission, which permission will not be unreasonably withheld.

12.3 Failure to Defend. If Indemnitor shall, within a reasonable time after receiving the notice described in Section 12.2, fail to defend any claim or action, Indemnitee shall have the right, but not the obligation, and without waiving any of its rights hereunder, to undertake defense of, and, in its sole discretion, to compromise or settle such claim or action on behalf, for the account, and at the risk and expense, of Indemnitor and shall be entitled to collect the amount of any settlement or judgment or decree and all costs and expenses in connection therewith.

12.4 Right to Employ Separate Counsel. Indemnitee shall have the right to employ separate counsel and participate in the defense of any claim or action. Indemnitor shall promptly reimburse Indemnitee upon demand for any Loss suffered by it at any time after the date hereof, based upon the judgment of any court or administrative body of competent jurisdiction or pursuant to a bona fide compromise or settlement of claims, demands, or actions, in respect to any Loss related to any claim or action under this Section 12.

12.5 Settlement. Indemnitor agrees that it may not settle any claim or action under this Section 12 on behalf of Indemnitee without first obtaining Indemnitee's written permission, which shall not be unreasonably withheld. In the event Indemnitee and Indemnitor mutually agree to settle a claim or action, Indemnitor agrees not to publicize the settlement without first obtaining Indemnitee's written permission, which shall not be unreasonably withheld.

13. Term and Termination.

13.1 Term. Unless terminated earlier as provided below, the term of this Agreement shall be for five (5) years from the Effective Date.

13.2 Termination for Cause. Microsoft may terminate this Agreement immediately at any time if Corel (i) attempts to assign this Agreement in breach of its provisions, or (ii) commits any other breach of a material obligation hereunder which it fails to cure within 30 days of written notice or which is by its nature incurable.

13.3 Effect of Expiration and Termination. Upon expiration of this Agreement, Sections 1, 3.5, 3.6, 3.7, 4, 5, 10, 11, 12, 13, 14, and 15 shall survive. In the event of termination of this Agreement, Sections 1, 3.6, 5, 10, 11, 12, 13, 14, and 15 shall survive. In addition, in the event of a termination for cause pursuant to Section 13.2, Microsoft may elect in its sole discretion to immediately terminate one or more of the agreements attached to this Agreement as exhibits notwithstanding any statement to the contrary in such agreements. Microsoft shall exercise such termination rights by delivering a written notice to Corel.

14. Limitation of Liability and Disclaimer.

14.1 Limitation of Liabilities. MICROSOFT SHALL NOT BE LIABLE FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, ECONOMIC OR PUNITIVE DAMAGES WHATSOEVER (INCLUDING BUT NOT LIMITED TO DAMAGES FOR LOSS OF BUSINESS OR PERSONAL PROFITS, BUSINESS INTERRUPTION, LOSS OF BUSINESS OR PERSONAL OR CONFIDENTIAL INFORMATION, OR ANY OTHER PECUNIARY LOSS, DAMAGES FOR LOSS OF PRIVACY, OR FOR FAILURE TO MEET ANY DUTY, INCLUDING ANY DUTY OF GOOD FAITH, OR TO EXERCISE COMMERCIALLY REASONABLE CARE OR FOR NEGLIGENCE) ARISING OUT OF OR IN ANY WAY RELATED TO THE USE OF OR INABILITY TO USE THE .NET FRAMEWORK, EVEN IF MICROSOFT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

14.2 Disclaimer of Warranties. The .NET FRAMEWORK is provided "AS IS" without warranty of any kind. TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY AND ALL EXPRESS AND IMPLIED WARRANTIES OF ANY KIND WHATSOEVER, INCLUDING BUT NOT LIMITED TO THOSE OF MERCHANTABILITY, OF FITNESS FOR A PARTICULAR PURPOSE, OF TITLE AND NON-INFRINGEMENT, OF ACCURACY OR COMPLETENESS OF RESPONSES, OF RESULTS, OF REASONABLE CARE OR WORKMANLIKE EFFORT, OF LACK OF NEGLIGENCE, AND/OR OF A LACK OF VIRUSES, ALL WITH REGARD TO THE .NET FRAMEWORK, IS EXPRESSLY EXCLUDED. MICROSOFT MAKES NO WARRANTY THAT THE .NET FRAMEWORK WILL OPERATE PROPERLY AS INTEGRATED IN THE COMPANY'S PRODUCT (S) OR ON ANY CUSTOMER SYSTEM (S).

15. General.

15.1 Notices.  All notices and requests in connection with this Agreement shall be deemed given as of the day they are received either by messenger, delivery service, or in the United States of America mails, postage prepaid, certified or registered, return receipt requested, and addressed as follows:

To Corel: To Microsoft:

1600 Carling Avenue Microsoft Corporation

Ottawa, Ontario One Microsoft Way

Canada, K1Z 8R7 Redmond, WA 98052-6399

Attention: President Attention: V.P., Developer Tools

Phone: 613-728-0826 Phone: 425-882-8080

Fax: ________________ Fax: 425-936-7329

Copy to: Law & Corporate Affairs

Attn: General Counsel, U.S.

Fax: (425) 936-7409

or to such other address as a Party may designate pursuant to this notice provision.

15.2 No Agency or Joint Venture.  Nothing in this Agreement shall be construed as creating an employer-employee relationship, a partnership, or a joint venture between the Parties.

15.3 Export. The Parties agree to comply with all applicable international and national laws that apply to (i) any Confidential Information, or (ii) any product (or any part thereof), process or service that is the direct product of the Confidential Information, including the U.S. Export Administration Regulations, as well as end-user, end-use and destination restrictions issued by U.S. and other governments. For additional information on exporting Microsoft products, see http://www.microsoft.com/exporting/.

15.4 U.S. Government Restricted Rights. All software licensed hereunder is subject to RESTRICTED RIGHTS. If the licensee is a U.S. Government agency, use, duplication or disclosure by the Government is subject to restriction as set forth in subparagraph (c)(1)(ii) of the rights in Technical Data and Computer Software clause at DFAR 252.227-7013, or as set forth in the particular department or agency regulations or rules which provide Microsoft protection equivalent to or greater than the above-cited clause.

15.5 Governing Law and Venue.   This Agreement shall be construed and controlled by the laws of the State of New York, and the Parties further consent to exclusive jurisdiction and venue in the federal courts sitting in King County, Washington, unless no federal subject matter jurisdiction exists, in which case the Parties consent to the exclusive jurisdiction and venue in the Superior of King County, Washington. Corel waives all defenses of lack of personal jurisdiction and forum non conveniens. Process may be served on either Party in the manner authorized by applicable law or court rule. Process may be served on either Party by U.S. Mail, postage prepaid, certified or registered, return receipt requested, or by such other method as is authorized by the Washington Long Arm Statute.

15.6 Attorneys' Fees. If either Party employs attorneys to enforce any rights arising out of or relating to this Agreement, the prevailing Party shall be entitled to recover reasonable attorneys' fees.

15.7 Assignment and Change in Control.  This Agreement shall be binding upon and inure to the benefit of each Party's respective successors and lawful assigns; provided, however, that neither Party may assign this Agreement in whole or in part without the prior written approval of the other Party. For purposes of this Section, the term "assignment" includes a Change in Control. Any attempted assignment in violation of this Section shall be void.

15.8 Construction.  If for any reason a court of competent jurisdiction finds any provision of this Agreement, or portion thereof, to be unenforceable, that provision of the Agreement will be enforced to the maximum extent permissible so as to affect the intent of the Parties, and the remainder of this Agreement will continue in full force and effect. Failure by either Party to enforce any provision of this Agreement will not be deemed a waiver of future enforcement of that or any other provision. This Agreement has been negotiated by the Parties and their respective counsel and will be interpreted fairly in accordance with its terms and without any strict construction in favor of or against either Party.

15.9 Entire Agreement.  This Agreement, including its exhibits, constitutes the entire agreement between the Parties with respect to the subject matter hereof and merges all prior and contemporaneous communications. It shall not be modified except by a written agreement dated subsequent to the date of this Agreement and signed on behalf of Corel and Microsoft by their respective duly authorized representatives.

15.10 Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and such counterparts together shall constitute one instrument.

15.11 Headings. The headings used in this Agreement are for the convenience of the Parties only and shall not be considered in interpreting or applying the provisions of this Agreement.

15.12 Effectiveness. Notwithstanding any statement to the contrary in this Agreement, this Agreement shall not become effective unless and until the Purchase Agreement is duly executed and delivered by the Parties to each other.

15.13 Force Majeure. Neither Party shall be liable hereunder by reason of any failure or delay in performance of its obligations hereunder (except confidentiality obligations) on account of riots, insurrection, fires, flood, storm, explosions, acts of God, war, earthquakes or any other cause which is beyond the reasonable control of such Party.

IN WITNESS WHEREOF, the Parties have executed this Agreement by their duly authorized representatives. The individual signing on behalf of each of the Parties below hereby represents and warrants that he or she has full authority to sign this Agreement and bind his/her respective company to the terms and conditions of this Agreement.

THE PARTIES:

MICROSOFT CORPORATION COREL CORPORATION

"Steven A. Ballmer" "Derek Burney"

Signature Signature

Steven A. Ballmer Derek Burney

Name (Print) Name (Print)

President and CEO Interim President and Chief Executive Officer

Title Title

October 2, 2000 October 2, 2000

Date Date

COREL AFFILIATES:

The individual signing on behalf of each of the Corel Affiliates below hereby represents and warrants that he or she has full authority to sign this Agreement and bind his/her respective company to the terms and conditions of this Agreement that are relevant to the respective Corel Affiliates, including but not limited to the terms and conditions of Sections 5, 11, 12 and 15.5 of this Agreement.

COREL CORPORATION COREL, INC., a Delaware corporation

LIMITED, an Irish corporation

"Anthony O'Dowd " "Derek Burney"

Signature Signature

Anthony O'Dowd Derek Burney

Name (Print) Name (Print)

"General Manager President

Title Title

October 2, 2000 October 2, 2000

Date Date

COREL CORPORATION

(USA), a Delaware corporation

"Derek Burney"_________________

Signature

Derek Burney

Name (Print)

President

Title

October 2, 2000

Date

EXHIBITS:

A. Form of Amendment to VBA Agreement

B. Form of Windows Logo Agreement

EXHIBIT A

VBA AMENDMENT

AMENDMENT NO. 2 TO LICENSE, DISTRIBUTION AND MARKETING AGREEMENT

THIS AMENDMENT NO. 2 TO LICENSE, DISTRIBUTION AND MARKETING AGREEMENT (the "Amendment") is made and entered into as of this ____ day of October, 2000 (the "Amendment Effective Date"), by and between Corel Corporation ("Company"), a Canadian corporation, and Microsoft Corporation ("Microsoft"), a Washington corporation.

Recitals

A. Company and Microsoft are parties to that certain Microsoft License, Distribution and Marketing Agreement executed on October 12, 1998, as amended by Addendum No. 1 executed on July 14, 2000 (the "Agreement") pursuant to which Microsoft agreed to license certain products to Company.

B. The Agreement by its terms will terminate on October 12, 2001 and the parties wish to extend the term of the Agreement as set forth herein.

Therefore, in consideration of the covenants and conditions hereinafter set forth, Company and Microsoft agree to amend the Agreement as follows:

Agreement

1. Definitions

Capitalized terms used herein and not otherwise defined shall have the meaning given in the Agreement.

2. Amendments to Agreement

Extension of Term. Notwithstanding Section 8.1 of the Agreement to the contrary, the term of the Agreement shall end October 12, 2004, unless terminated earlier pursuant to Section 8.2 of the Agreement. Upon expiration of this amended term, the Agreement shall automatically renew for one additional three (3) year term, unless either party has given the other notice that it does not intend to renew the Agreement. Such notice shall be delivered to the other party at least ninety (90) days prior to October 12, 2004.

3. Conditions to Effectiveness

Notwithstanding anything contained herein to the contrary, this Amendment shall not become effective until all parties shall have each executed and delivered counterparts of this Amendment to each other each.

4. No Further Amendment

Except as expressly modified by this Amendment, the Agreement shall remain unmodified and in full force and effect and the parties hereby ratify their respective obligations thereunder.

5. Miscellaneous

5.1 Entire Agreement. This Amendment shall constitute the entire agreement among the parties with respect to the subject matter hereof and merges all prior and contemporaneous communications.

5.2 Severability. If any provision of this Amendment shall be held by a court of competent jurisdiction to be illegal, invalid or unenforceable, the remaining provisions shall remain in full force and effect.

5.3 Governing Law. This Amendment shall be construed and controlled by the laws of the State of Washington, excluding its conflict of laws rules.

5.4 Successors and Assigns. The provisions hereof shall inure to the benefit of, and be binding upon, the successors and assigns of the parties hereto; provided, however, that neither party may assign this Amendment, in whole or in part, without the prior written approval of the other party.

5.5 Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be original, and all of which taken together shall constitute one and the same Amendment. Delivery of an executed counterpart of a signature page to this Amendment by facsimile transmission shall be effective as delivery of an originally executed counterpart of this Amendment.

In Witness Whereof, the parties have caused this Amendment to be executed by their duly authorized representatives as of the Amendment Effective Date shown above.

MICROSOFT CORPORATION cOREL Corporation

By (signature) By (signature)

Name (print) Name (print)

Title Title

Date Date

EXHIBIT B

CERTIFIED FOR MICROSOFT ® WINDOWS ® LOGO LICENSE AGREEMENT

(For Software Only)

This Logo License Agreement ("Logo Agreement") is made and entered into by and between Microsoft Corporation, ("Microsoft"), and the company listed at the top of this Logo Agreement ("Company").

1. DEFINITIONS

(a) "Application Specification" shall mean the Windows compatibility specification located at: http://msdn.microsoft.com/certification.

(b) "Effective Date" shall mean the date the last signatory to the Logo Agreement signs the Logo Agreement and shall be the date upon which the Logo Agreement takes effect.

(c) "Logo" shall mean the Certified for Microsoft Windows logo(s) depicted in the attached Exhibit A, or such additional or replacement logos as Microsoft may provide from time to time under this Logo Agreement. The specific Logo for which Product is licensed shall be listed at the top of this Logo Agreement. (*A legend for each version of the Logo is provided at the bottom of Exhibit A).

(d) "Operating Systems" shall mean the Windows 95, Windows 98, Windows NT Workstation, Windows 2000 Professional; Windows 2000 Server, Windows 2000 Advanced Server, and Windows 2000 Datacenter Server computer operating systems developed by Microsoft.

(e) "Product" shall mean solely the Company product and version listed at the top of this Logo Agreement that meets the Application Specification for Windows 2000, and has passed compliance testing through a Microsoft designated logo compliance testing center.

2. LICENSE GRANT & RESTRICTIONS

(a) Subject to and expressly conditioned upon compliance with the terms and conditions of this Logo Agreement, Microsoft hereby grants to Company a worldwide, nonexclusive, nontransferable, royalty-free, personal right to use the Logo solely in conjunction with Product, in the manner described in the guidelines set forth in the attached Exhibit A, and as may be prescribed by Microsoft from time to time. Company may not use the Logo on any other products, or on any previous or subsequent version of the Product until such product has passed testing and been licensed pursuant to a separate logo agreement from Microsoft. All rights not expressly granted herein are reserved by Microsoft.

(b) Company's license for a particular Product shall be limited to the language versions in the language category for which Product passed testing, as defined on the Certified for Windows web site located at http://msdn.microsoft.com/certification.

(c) The license grant in Section 2(a) is personal to Company, and Company shall not assign, transfer or sublicense this Logo Agreement (or any right granted herein) in any manner without the prior written consent of Microsoft.

(d) Company's Product shall be licensed solely for the Logo listed at the top of this Logo Agreement. This Logo Agreement does not replace any existing logo agreement between Company and Microsoft under which Product may be licensed.

(e) Under no circumstances will anything in this Logo Agreement be construed as granting, by implication, estoppel or otherwise, a license to any Microsoft technology or proprietary right other than the permitted use of the Logo pursuant to Section 2(a).

3. OWNERSHIP, IDENTIFICATION & USE

(a) Company acknowledges Microsoft's sole ownership of the Logo and the "Microsoft" and "Windows" trademarks, and all associated goodwill. Company agrees and acknowledges that Microsoft retains all right, title, and interest in and to the Logo. Except as expressly granted in this Logo Agreement, Company shall have no rights in the Logo.

(b) Company represents and warrants that it will use the Logo solely as provided in this Logo Agreement, and will not use the Logo in any manner that will diminish or otherwise damage Microsoft's goodwill in the Logo. Company agrees not to adopt, use, or register any corporate name, trade name, trademark, domain name, service mark or certification mark, or other designation similar to, or containing in whole or in part, the Logo. Company agrees that all use of the Logo by Company will inure to the benefit of Microsoft. Company may not use the Logo in any way as an endorsement or sponsorship of Product by Microsoft.

(c) Company shall promptly notify Microsoft of any suspected infringement of or challenge to the Logo or any of its constituent elements. Microsoft shall have the sole right to, and in its sole discretion may commence, prosecute, or defend, and control any action concerning the Logo.

4. QUALITY CONTROL

(a) Company represents and warrants that Product meets the Application Specification, has passed testing through a Microsoft designated logo compliance testing center, and agrees to maintain the quality of Product at a level that is at least commensurate with the quality of products distributed by Company before the Effective Date ("Quality Standards"). Company shall use the Logo solely in connection with Product that meets the Quality Standards, and represents and warrants that it will not use the Logo on products that do not meet the Quality Standards.

(b) Results regarding Product's compliance with the Application Specification are set forth in the "Certified for Microsoft Windows Logo - Certification Results" document attached hereto as Exhibit B. Company acknowledges that the authorized logo compliance testing center shall clearly display on testing center's Web Site, the applicable Certification Results document regarding the Product.

(c) Company shall cooperate fully with Microsoft to facilitate periodic review of Company's use of the Logo and of Company's compliance with the Quality Standards. Company shall fully correct and remedy any deficiencies in its use of the Logo and conformance to the Quality Standards upon reasonable notice from Microsoft.

(d) Company represents and warrants that it will comply with all applicable laws, rules, and regulations, and will not violate or infringe any right of any third party in relation to promotion, sale, or use of Product with the Logo.

5. INDEMNIFICATION FROM COMPANY

Company agrees to indemnify and defend Microsoft from and against any and all claims, damages, costs, and expenses (including reasonable attorneys' fees) and pay the amount of any adverse final judgment (or settlement to which both parties consent) arising out of or related to the Product in any manner, including but not limited to, user claims regarding Product's incompatibility with the Operating Systems; provided Company is notified promptly in writing of any claim, Company has sole control over its defense or settlement, and Microsoft provides reasonable assistance in the defense of the same.

6. INDEMNIFICATION FROM MICROSOFT

(a) Microsoft agrees to indemnify and defend Company from and against any and all claims, damages, costs, and expenses (including reasonable attorney's fees), and pay the amount of any adverse final judgment (or settlement to which both parties consent) resulting from, third party claim(s) (hereinafter "Indemnified Claims") that the Logo infringes any trademark rights of such third party; provided Microsoft is notified promptly in writing of the Indemnified Claim and has sole control over its defense or settlement, and Company provides reasonable assistance in the defense of the same.

(b) In the event Microsoft receives information concerning an intellectual property infringement claim (including an Indemnified Claim) related to the Logo, Microsoft may at its expense, without obligation to do so: (i) procure for Company the right to continue to distribute the alleged infringing Logo, (ii) replace or modify the Logo to make it non-infringing, in which case, Company shall thereupon cease distribution of the alleged infringing Logo, or (iii) instruct Company to cease use of the Logo without providing a replacement.

(c) Microsoft shall have no liability for any intellectual property infringement claim (including an Indemnified Claim) based on Company's manufacture, distribution, or use of the Logo after Microsoft's notice that Company should cease use of such Logo, or begin use of a substitute Logo due to such a claim. For all claims described in this Section 6(c), Company agrees to indemnify and defend Microsoft from and against all damages, costs and expenses, including reasonable attorneys' fees.

(d) MICROSOFT MAKES NO WARRANTIES EITHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE WITH RESPECT TO THE LOGO, INCLUDING ANY WARRANTY OF NON-INFRINGEMENT, IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

7. LIMITATION OF LIABILITY

EXCEPT AS PART OF A THIRD PARTY DAMAGE CLAIM FOR WHICH ONE OF THE PARTIES IS OBLIGATED TO INDEMNIFY THE OTHER, NEITHER PARTY SHALL BE LIABLE FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, PUNITIVE OR SPECIAL DAMAGES (INCLUDING LOSS OF BUSINESS PROFITS) ARISING FROM OR RELATED TO COMPANY'S MARKETING, DISTRIBUTION OR ANY USE OF THE LOGO, REGARDLESS OF WHETHER SUCH LIABILITY IS BASED ON BREACH OF CONTRACT, TORT, STRICT LIABILITY, BREACH OF WARRANTIES, INFRINGEMENT OF INTELLECTUAL PROPERTY, FAILURE OF ESSENTIAL PURPOSE OR OTHERWISE, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT SHALL MICROSOFT BE LIABLE FOR ANY DAMAGES FOR COMPANY'S USE OF THE LOGO IN VIOLATION OF THE TERMS AND CONDITIONS OF THIS LOGO AGREEMENT.

8. TERM AND TERMINATION

(a) The term of this Logo Agreement shall be for a period of two (2) years from the Effective Date. Provided however, that Microsoft shall have the right to terminate this Logo Agreement with or without cause upon thirty (30) days prior written notice.

(b) From and after termination or expiration of this Logo Agreement, Company shall cease and desist from all use of the Logo. However, unless the Logo Agreement is terminated for breach, Company may distribute then-existing units of Product and advertising materials containing the Logo for a period of ninety (90) days from the termination date, provided use of the Logo in connection with such inventory is in compliance with the terms and conditions of this Logo Agreement.

9. NOTICES

All notices in connection with this Logo Agreement shall be addressed as stated below (or to such other address as the party to receive the notice so designates by written notice to the other) and shall be deemed given on the day they are: (i) deposited in the U.S.A. mails, postage prepaid, certified or registered, return receipt requested; or (ii) sent by air express courier, charges prepaid. The parties agree to fax a copy of any such notices to the fax numbers identified below on the same day as given per (i) and (ii) above.

MICROSOFT: Microsoft Corporation

One Microsoft Way

Redmond, WA 98052-6399

USA

Attention: Certified for Windows

Software Logo Department

Fax: (425) 936-7329

With Copy To: Law & Corporate Affairs, Trademarks

Fax: (425) 936-4112

COMPANY: Information listed at the top of this Agreement.

10. MISCELLANEOUS

(a) Entire Agreement. Microsoft's providing this Logo Agreement to Company does not constitute an offer by Microsoft. Upon execution by both Microsoft and Company, this Logo Agreement, including all Exhibits, contains the entire agreement of the parties with respect to the subject matter hereof, and shall supersede and merge all prior and contemporaneous communications. It shall not be amended except by a written agreement subsequent to the Effective Date and signed on behalf of the parties by their respective authorized representatives.

(b) Governing Law. This Logo Agreement shall be construed and controlled by the laws of the State of Washington, and Company consents to the jurisdiction and venue in the federal courts sitting in King County, Washington, unless no federal subject matter jurisdiction exists, in which case Company consents to the jurisdiction and venue in the Superior Court of King County, Washington. Company waives all defenses of lack of personal jurisdiction and forum non conveniens. Process may be served on either party in the manner set forth in Section 9 for the delivery of notices or by such other method as is authorized by applicable law or court rule.

(c) Attorneys' Fees. If either party employs attorneys to enforce any rights arising out of or related to this Logo Agreement, the prevailing party shall be entitled to recover its reasonable attorneys' fees, costs, and other expenses.

(d) Equitable Relief. Company acknowledges that a breach by it of this Logo Agreement may cause Microsoft irreparable damage that cannot be remedied in monetary damages in an action at law, and may also constitute infringement of the Logo. In the event of any breach that could cause irreparable harm to Microsoft, or cause some impairment or dilution of its reputation or Logo, Microsoft shall be entitled to an immediate injunction, in addition to any other legal or equitable remedies.

(e) No Waiver. No waiver of any breach of any provision of this Logo Agreement shall constitute a waiver of any prior, concurrent or subsequent breach of the same or any other provision hereof, and no waiver shall be effective unless made in writing and signed by an authorized representative of the waiving party.

(f) Severability. If any provision of this Logo Agreement (or any other agreements incorporated herein) shall be held by a court of competent jurisdiction to be illegal, invalid or unenforceable, the remaining provisions shall remain in full force and effect.

(g) Relationship. Neither this Logo Agreement, nor any terms and conditions contained herein, shall be construed as creating a partnership, joint venture or agency relationship or as granting a franchise.

(h) Headings. Section headings are used in this Logo Agreement for convenience of reference only and shall not affect the meaning of any provision of this Logo Agreement.

(i) Survival. The provisions of Sections 3(a), 3(b), 8(b), 9, 10(b), as well as Section 5 with respect to Product distributed during the term of this Logo Agreement and 6 for claims based on use of the Logo permitted herein, shall survive expiration or termination of this Logo Agreement.

(j) Exhibits. This Logo Agreement includes Exhibit A, which is hereby incorporated by reference.

IN WITNESS WHEREOF, the parties have executed this Agreement by their duly authorized representatives. The individual signing on behalf of Company below hereby represents and warrants that he or she has full authority to sign this Agreement and bind Company to perform all duties and obligations contemplated by this Agreement.

MICROSOFT CORPORATION COMPANY________________________________

Signature Signature

Name (Print) Name (Print)

Title Title

Date Date

EXHIBIT A

Certified for Windows Logo License Agreement

Guidelines for Using the Certified for Microsoft® Windows® Logo

***The logos shown above are the only logos available under this program. Company may not create their own combination of operating systems to be listed at the bottom of the Logo.***

Microsoft has established the following set of guidelines to assist you in proper use of the Certified for Microsoft Windows logo(s) ("Logo"). Microsoft reserves the right to change the Logo and/or these guidelines at any time at its discretion. You must comply with the guidelines as amended from time to time.

+ You must sign the Certified for Microsoft Windows Logo License Agreement ("Logo Agreement") before using the Logo.

+ The Logo may only be used on packaging, collateral materials, documentation, and advertising, including Web advertising, for licensed Product, and not in any manner that may imply that non-licensed products have passed the applicable Windows compatibility testing.

+ Your company name, logo, or product name must appear on any products or related materials where the Logo is used. The Logo must be smaller and less prominent than your Product name, trademark, logo, or trade name.

+ The Logo may not be used in any manner that expresses or might imply Microsoft's affiliation, sponsorship, endorsement, or approval other than as contemplated by the Logo Agreement.

+ You may not use the Logo in a manner that might suggest co-branding or otherwise create potential confusion as to the source of the Product or ownership of the Logo. You may not display the Logo in any manner that suggests that your Product is a Microsoft product, or in any manner that suggests that "Microsoft" or "Windows" are a part of your Product name.

+ The Logo may not be included in any non-Microsoft trade name, business name, product or service name, logo, trade dress, design, slogan, or other trademark.

+ Microsoft will provide you with artwork of the Logo. You may not alter this artwork in any way. None of the words may be abbreviated, translated or transliterated, as in non-English documentation. Microsoft may however, provide the Logo in versions where the words "Certified for" may be translated for the local market, as available. Contact the Windows Logo Department for availability of localized versions of the Logo. You may not substitute your own translation of the Logo.

+ The Logo may not be combined with any other symbols including, words, logos, icons, graphics, photos, slogans, numbers, or other design elements.

+ The Logo (including by not limited to Microsoft's logos, logotypes, trade dress, and other elements of product packaging and web sites) may not be imitated in any of your materials.

+ The Logo, or any element thereof, may not be used as a design feature in any materials.

+ The Logo must stand alone. A minimum amount of empty space must be left between the Logo and any other object such as type, photography, borders, edges, etc. The required amount of empty space around the Logo must be 1/8" wide.

+ Position of the logo from a roll edge should be no less than 1/8".

+ Minimum print size for the Logo is 7/8" wide. Minimum online size for the logo is 85 pixels wide.

+ The Logo must include the ® symbol as shown in this exhibit.

+ The Logo shall be attributed to Microsoft Corporation in all materials where it is used, with the attribution clause: "Microsoft, Windows, and the Windows Logo are registered trademarks of Microsoft Corporation in the United States and/or other countries."

Four color applications

The color version is the preferred way of reproducing the Logo. The Flag consists of a black frame with corresponding tails and four colored panes with corresponding tails. The color version can be reproduced only as described here. The pane colors must appear in the positions described and the tails must appear in the colors of the corresponding left-hand panes. The accompanying words print in black. The four-color version must always appear on a white background. The designated colors are as follows:

Pane Color Pantone Four-color process RGB (8-bit) Hex#

Upper left Red PMS 172 M65%+Y85% 255-51-0 FF3300

Upper right Green PMS 360 C55%+Y80% 102-204-51 66CC33

Lower left Blue PMS 279 C70%+M30% 0-153-255 0099FF

Lower right Yellow PMS 123 M20%+Y100% 255-204-0 FFCC00

Frame Black K100% 0-0-0 000000

Black and white applications: Black and white reproductions of the Logo may be positive or reversed.

For Questions regarding the Logo: contact winlogo@microsoft.com