F-1

As filed with the U.S. Securities and Exchange Commission on April 4, 2006

Registration No. 333-                   

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form F-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

COREL CORPORATION

(Exact name of Registrant as specified in its charter)

Ontario, Canada	7372	98-0407194
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

1600 Carling Avenue

Ottawa, Ontario

Canada K1Z 8R7

(613) 728-0826

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Christopher DiFrancesco

1600 Carling Avenue

Ottawa, Ontario

Canada K1Z 8R7

(613) 728-0826

(Name, address, including zip code, and telephone number, including area code, of agent for service)

With copies to:

Andrew J. Beck, Esq.
Darren E. Sukonick, Esq.
Joshua B. Goldstein, Esq.
Torys LLP
237 Park Avenue
New York, New York 10017
(212) 880-6000 Bruce K. Dallas, Esq.
Martin A. Wellington, Esq.
Davis Polk & Wardwell
1600 El Camino Real
Menlo Park, California 94025
(650) 752-2000 Gordon Davidson, Esq.
Jeffrey R. Vetter, Esq.
Fenwick & West LLP
801 California Street
Mountain View, California 94041
(650) 988-8500 Craig Wright, Esq.
Osler, Hoskin & Harcourt LLP
Suite 1500, 50 O’Connor Street
Ottawa, Ontario
Canada K1P 6L2
(613) 235-7234

     Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective.

     If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.    o

     If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

     If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

     If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

     If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.    o

CALCULATION OF REGISTRATION FEE

		Proposed Maximum	Proposed Maximum
Title of Each Class of	Amount to be	Offering Price	Aggregate	Amount of
Securities to be Registered	Registered(1)	Per Share(2)	Offering Price(2)	Registration Fee
Common Shares	9,200,000	$20.00	$184,000,000	$19,688

(1)	Includes 1,200,000 common shares that may be purchased by the underwriters to cover over-allotments, if any.
(2)	Estimated solely for the purposes of calculating the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended.

     The Registrant shall amend this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

PROSPECTUS (Subject to Completion)

Issued April 4, 2006

8,000,000 Shares

COMMON SHARES

This is an initial public offering of our common shares in the United States and Canada. We are offering 5,000,000 common shares and the selling shareholders are offering 3,000,000 common shares. We will not receive any of the proceeds from the sale of the shares by the selling shareholders. This is our initial public offering and no public market currently exists for our shares. We anticipate that the initial public offering price will be between $18 and $20 per share.

We have applied to list our common shares for quotation on the Nasdaq National Market under the symbol “CREL” and on the Toronto Stock Exchange under the symbol “CRE.”

Investing in our common shares involves risks. See “Risk Factors” beginning on page 9.

PRICE $                        A SHARE

		Underwriting		Proceeds to
	Price to	Discounts and	Proceeds	Selling
	Public	Commissions	to Corel	Shareholders
Per Share	$	$	$	$
Total	$	$	$	$

We and the selling shareholders have granted the underwriters the right to purchase up to an additional 1,200,000 common shares to cover over-allotments.

The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Morgan Stanley & Co. Incorporated expects to deliver the shares to purchasers on                     , 2006.

MORGAN STANLEY

JPMORGAN

DEUTSCHE BANK SECURITIES

PIPER JAFFRAY

CIBC WORLD MARKETS

CANACCORD ADAMS

                              , 2006

TABLE OF CONTENTS

	Page
Prospectus Summary		1
Risk Factors		9
Special Note Regarding Forward-Looking Statements		20
Use of Proceeds		21
Dividend Policy		22
Capitalization		23
Dilution		25
Selected Consolidated Financial Data		27
Management’s Discussion and Analysis of Financial Condition and Results of Operations		30
Business		54
Management		66
Certain Relationships and Related Party Transactions		77
Principal and Selling Shareholders		80
Description of Share Capital		83
Shares Eligible for Future Sale		88
Material United States Federal Income Tax Considerations		90
Material Canadian Federal Income Tax Considerations for U.S. Holders		93
Underwriters		94
Legal Matters		97
Experts		97
Where You Can Find More Information		97
Enforcement of Judgments Against Foreign Persons		98
Index to Consolidated Financial Statements		F-1
EX-2.1: AGREEMENT AND PLAN OF MERGER
EX-2.2: FORM OF STOCK PURCHASE AGREEMENT
EX-3.1: CERTIFICATE AND ARTICLES OF CONTINUANCE
EX-3.2: ARTICLES OF AMENDMENT
EX-3.3: BY-LAWS
EX-4.1: FORM OF REGISTRATION RIGHTS AGREEMENT
EX-4.2: FORM OF COREL CORPORATION SHARE CERTIFICATE
EX-10.2: EMPLOYMENT AGREEMENT BETWEEN COREL CORPORATION AND DAVID DOBSON
EX-10.3: EMPLOYMENT AGREEMENT
EX-10.4: EMPLOYMENT AGREEMENT
EX-10.5: EMPLOYMENT AGREEMENT
EX-10.6: EMPLOYMENT AGREEMENT BETWEEN COREL CORPORATION AND JACQUELINE MAARTENSE
EX-10.7: 2003 SHARE OPTION AND PHANTOM UNIT PLAN
EX-10.8: 2006 EQUITY INCENTIVE PLAN
EX-10.10: FORM OF OFFICER AND DIRECTOR INDEMNIFICATION AGREEMENT
EX-10.11: LEASE OF OFFICE SPACE
EX-10.12: ADVISORY SERVICES EXPENSE REIMBURSEMENT AGREEMENT
EX-10.13: AGREEMETN AND FULL AND FINAL RELEASE
EX-21.1: SUBSIDIARIES OF COREL CORPORATION
EX-23.1: CONSENT OF PRICEWATERHOUSECOOPERS LLP
EX-23.2: CONSENT OF PRICEWATERHOUSECOOPERS LLP
EX-23.3: CONSENT OF ERNST & YOUNG LLP
EX-99.1: FINANCIAL STATEMENT SCHEDULE I (SCHEDULE OF ALLOWANCE FOR DOUBTFUL ACCOUNTS AND PROVISION FOR RETURNS AND REBATES)
EX-99.2: REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON FINANCIAL STATEMENT SCHEDULE

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. We are offering to sell, and seeking offers to buy, common shares only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of the common shares.

Until                , 2006, 25 days after the commencement of this offering, all dealers that buy, sell or trade our common shares, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

For investors outside the United States. Neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus.

i

PROSPECTUS SUMMARY

You should read the following summary together with the entire prospectus, including the more detailed information in our consolidated financial statements and related notes appearing elsewhere in this prospectus. You should carefully consider among other things the matters discussed in “Risk Factors.”

COREL CORPORATION

Overview

We are a leading global packaged software company with an estimated installed base of 20 million current users in over 75 countries. We provide high quality, affordable and easy-to-use productivity and graphics and digital imaging software. Our products enjoy a favorable market position among value-conscious consumers and small businesses. The legal and functional departments within large companies and governmental organizations are also attracted to the industry-specific features and technical capabilities of our software. Our products are sold through a scalable distribution platform comprised of equipment manufacturers, or OEMs, our website, which we refer to as our e-Store, and our global network of resellers and retail vendors.

Our product portfolio includes well-established, globally recognized brands. Our primary productivity products are WordPerfect Office Suite, first developed in 1982 and marketed by Corel since 1996, and WinZip, a compression utility developed in 1991, that we will acquire concurrently with the closing of this offering. WordPerfect Office Suite is the leading Microsoft-alternative productivity software and includes Microsoft-compatible word processing, spreadsheet and presentation functionality. WinZip is the most widely used aftermarket compression utility, with more than 43 million seats sold to date. Our primary graphics and digital imaging products are CorelDRAW Graphics Suite and Corel Paint Shop Pro. CorelDRAW Graphics Suite is a leading illustration and image editing software suite used by design professionals and small businesses. Corel Paint Shop Pro digital image editing and management applications are used by novice and professional photographers and photo editors.

We benefit from the widespread global adoption of personal computers, or PCs, and digital cameras. As the retail price of PCs and digital cameras continues to decline, consumers are becoming more sensitive to the price of the software they use with these devices. We believe that we offer an industry-leading value proposition of high quality, affordable and easy-to-use software that is well positioned to take advantage of this trend.

Our Competitive Strengths

Our key competitive strengths include the following:

• Industry-leading value proposition. We believe we offer the packaged software industry’s best combination of high quality, feature-rich functionality and affordability. Our products provide features and technical capabilities that are comparable to products offered by Microsoft and Adobe, typically at a price that is significantly lower than these competing products.

• Globally recognized brands. WordPerfect Office Suite, WinZip, CorelDRAW Graphics Suite and Corel Paint Shop Pro are globally recognized brands in the packaged software industry as a result of many years of intensive marketing, advertising and promotion.

• Easy-to-use, high quality products. Our products have been developed and tested over many years and we have received over 500 awards for excellence in software innovation, design and value. Substantial investments have been made to develop our products and they benefit from numerous user-driven upgrades. We are particularly focused on offering products that are easy-to-use and can interoperate with major file formats.

• Scalable global distribution infrastructure. We have established global sales, marketing and distribution channels, including relationships with over 25,000 resellers and over 70 OEMs, a direct sales presence in

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	17 countries and distribution capability in over 75 countries. Our products are available at major retailers worldwide.
•	Flexible sales and distribution strategy. We offer OEMs, such as Dell, Wacom and Hewlett-Packard, and online services companies, such as Google and Yahoo!, creative and customized solutions, joint-marketing initiatives and specialized versions of our software. This flexible approach enables these companies to enhance their product and service offerings and provides them with an additional source of revenues. We provide OEMs and other software distributors with a viable alternative to the products offered by Microsoft and Adobe that can help reduce their dependence on these brands.
•	Established Internet presence through our e-Store. Our e-Store allows visitors to try our software, purchase it and obtain customer support. Sales through our e-Store and customer support representatives have grown rapidly and our e-Store affords us the opportunity to attract customers with minimal sales and marketing costs. Customers with older versions of our software, or limited functionality versions acquired through OEMs, can use our e-Store to upgrade to the most recent versions of our software. Our e-Store also complements our other distribution channels by facilitating our collection of user data through online registration and enables us to provide better online support services.

Our Strategy

Our objective is to profitably grow our installed base of customers and increase sales to our existing users. We plan to achieve this objective through the following strategies:

• Broaden our distribution network to capitalize on the rapid adoption of low cost technologies. We view our relationships with OEMs, other distributors and online services companies as key growth drivers and we are focused on developing new distribution relationships and broadening our existing relationships.

• Increase upgrade conversion rates. We intend to increase upgrade conversion rates through a number of strategic initiatives, including increasing our database of registered users through on-line registration, embedding upgrade information directly in our software and offering products in tiers of functionality.

• Leverage and expand presence in emerging markets. We plan to leverage and expand our presence in emerging markets, such as China, India, Eastern Europe and Latin America, by continuing to localize our products in additional languages, expanding our reseller network and direct sales force and developing additional regionally-focused versions of our e-Store. We believe these markets represent attractive growth opportunities for us because they are characterized by first time users of low cost PCs and digital cameras who have not yet developed loyalty to a particular brand of software.

• Continue to respond to user needs to better serve specific market sectors and increase user loyalty. We will continue to work with our loyal user base to help us develop additional product enhancements, improve our products to better meet the needs of specific market segments and strengthen user loyalty. We have a strong track record of offering high quality products for specific markets such as the legal and education sectors and we plan to target additional markets.

• Continue to deliver high operating margins and positive cash flow. We are committed to delivering high operating margins and positive cash flow by focusing research and development activities on market driven add-on functionality and not speculative projects, employing disciplined cost management practices and maintaining stringent minimum return-on-investment criteria for acquisitions. Our existing administrative, marketing and distribution infrastructure is highly scalable and we believe it will enable us to grow our revenues without experiencing a proportionate increase in fixed costs.

• Leverage existing platform and brands to maximize value from acquisitions. Our disciplined acquisition and integration strategy is focused on acquisitions of companies with proven and complementary products and established user bases that we believe will be accretive to earnings. We seek acquisition candidates that we believe can benefit from our existing global marketing, sales, distribution and general and administrative infrastructure.

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Expected Results for the Three Months Ended February 28, 2006

      We estimate that our combined revenues and income from operations for the three months ended February 28, 2006 were approximately $44.3 million and $5.7 million, respectively, as compared to pro forma combined revenues and income from operations of $43.2 million and $3.4 million, respectively, for the three months ended February 28, 2005. This reflects an increase in revenues of $1.1 million, or 2.5% and an increase in income from operations of $2.3 million, or 67.6%. Our financial results are presented on a combined basis for all periods from and after January 18, 2005, which reflects the period WinZip and we have been under common control. The pro forma amounts presented above for the three months ended February 28, 2005 period also reflect the results of WinZip for the 48-day period from December 1, 2004 through January 17, 2005. Increases in combined revenues resulted from the release of new versions of several of our products in the fourth quarter of fiscal 2005 and the first quarter of fiscal 2006. The increase in income from operations resulted from continued improvements to our cost structure. Estimated cash and cash equivalents and total indebtedness as of February 28, 2006 were $15.2 million and $140.1 million, respectively.

Risk Factors

We are subject to a number of risks and uncertainties that could materially harm our business or inhibit our strategic plans. We face competitive threats from well established software companies that have significantly greater market share and resources than us, new entrants that benefit from industry trends, such as the increasing importance of Internet distribution and open source software, and from online services companies that are increasingly seeking to provide software products at little or no incremental cost to their customers to expand their Internet presence and build consumer loyalty. In addition, our core products have been marketed for many years and the packaged software market in North America and Europe is relatively mature and characterized by modest growth. Accordingly, we must successfully complete acquisitions, penetrate new markets or increase penetration of our installed base to achieve revenue growth. Before investing in our common shares, you should carefully consider the following:

• except for the last two fiscal years, we have experienced declines in our revenues since the mid-1990s, from a high of $334.2 million in fiscal 1996 to our current level of $164.0 million (combined) in fiscal 2005, have experienced net losses in all but two fiscal years from 1996 to 2005, and had a net working capital deficit of $24.3 million (combined) at November 30, 2005;

• we face competition from companies with significant competitive advantages, such as Microsoft, which has in excess of 97% of the North American Market for productivity software, and Adobe, which has in excess of 70% of the global packaged graphics and digital imaging software market;

• as an increasing number of companies with advertising or subscriber-fee business models seek to offer competitive software products over the Internet at little or no cost to consumers, it may become more challenging for us to maintain our historical pricing policies and operating margins;

• the proliferation of open source software and open standards may make us more vulnerable to competition because new market entrants and existing competitors could introduce similar products quickly and cheaply;

• our relationships with Ingram Micro and Dell, which accounted for 4.6% and 13.5% respectively, of our fiscal 2005 revenues, can be terminated at any time;

• the manner in which packaged software is distributed is changing rapidly, which presents challenges to established software companies such as us and presents opportunities for potential competitors;

• our future growth is largely dependant on the execution of our acquisition strategy, which may fail for various reasons including our inability to find suitable acquisition candidates, complete acquisitions on acceptable terms or effectively integrate acquired businesses; and

• the other factors described in the section entitled “Risk Factors” starting on page 9, and other information provided throughout this prospectus.

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Company History

We were incorporated in Canada under the Canada Business Corporations Act in May 1985. In January 1989, we released CorelDRAW, a market-leading full-featured graphics software product. In November 1989, we completed an initial public offering of our common shares. In March 1996, we acquired WordPerfect. In August 2003, we were acquired in a going private transaction by Vector Capital and were continued as a corporation organized under the Business Corporations Act (Ontario). Immediately following our acquisition by Vector Capital we undertook a significant restructuring of our business. As part of this restructuring, we divested our underperforming product lines, discontinued speculative research and development activity, refocused on our core product offerings and implemented company-wide expense reduction measures. In October 2004, we acquired Jasc Software, Inc., a leading provider of digital imaging software. In January 2006 we were continued as a corporation organized under the Canada Business Corporations Act.

Equity Recapitalization

On December 1, 2005, through an amalgamation with a wholly owned subsidiary, we reorganized our share capital. Following the amalgamation, our share capital consists of an unlimited number of preferred shares, issuable in series, and an unlimited number of common shares. All of the outstanding Series A preferred shares, Class A common shares and Class B common shares of the pre-amalgamated corporation were converted into common shares of the post-amalgamated corporation on a one for one basis. In March 2006, we effected a 1.0 for 11.7 reverse split of our common shares. We have reflected the reverse split of the common shares as if it had happened to the Series A preferred shares, Class A common shares and Class B common shares for all share and per share amounts subsequent to August 28, 2003.

Vector Capital

Vector Capital beneficially owned approximately 97.4% of our outstanding common shares as of February 28, 2006 and will retain beneficial ownership of approximately 66.0% of our outstanding common shares immediately following the completion of this offering. All of the common shares beneficially owned by Vector Capital are indirectly held by Corel Holdings L.P., a Cayman Islands limited partnership, through wholly owned indirect subsidiaries existing under the laws of Barbados. The general partner of Corel Holdings L.P. is Vector Capital Partners II International, Ltd., a Cayman Islands corporation. Vector Capital Partners II International, Ltd. is controlled by Alex Slusky, a principal of Vector Capital and a member of our board of directors. Vector Capital is based in San Francisco, California.

Concurrent Transactions

Acquisition of WinZip. Concurrently with the closing of this offering we will acquire all of the outstanding securities of WinZip, a leading provider of compression utility software, from Vector Capital, our controlling shareholder, for total consideration of 4,322,587 common shares. We will repay WinZip’s total outstanding indebtedness, which totalled approximately $19.2 million as of February 28, 2006, with a portion of the net proceeds of this offering. See “Use of Proceeds.”

New credit facility. Concurrently with the closing of this offering, we intend to enter into a new $165.0 million senior secured credit facility with a syndicate of financial institutions, including affiliates of several of the underwriters of this offering. The new credit facility will consist of a $90.0 million term loan with a six-year maturity and a $75.0 million revolving credit facility with a five-year term.

Our principal executive offices are located at 1600 Carling Avenue, Ottawa, Ontario Canada K1Z 8R7 and our telephone number is (613) 728-0826. Our Internet website address is http://www.corel.com. Information accessible on our website is not, and should not be considered, part of this prospectus.

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In this prospectus, the terms “Corel,” “we,” “us” and “our” refer to Corel Corporation and its subsidiaries and WinZip unless the context otherwise requires.

References to “Vector Capital” refer collectively to funds managed by Vector Capital Corporation or related entities and direct and indirect subsidiaries of those funds through which our shares are owned. References to “Jasc” refer to Jasc Software, Inc. References to “WinZip” refer to Cayman Limited Holdco, a holding company for WinZip’s business formed in the Cayman Islands, and its subsidiaries.

Unless otherwise indicated, all of our financial information included in this prospectus as of and for the fiscal year ended November 30, 2005 and as of and for the three months ended February 28, 2006 is presented on a combined basis to include the financial information of WinZip from and after January 18, 2005, which reflects the period during which WinZip and we have been under common control by Vector Capital.

References to “offering” refer to the initial public offering of our common shares in the United States and Canada. All references to “underwriters” refer collectively to the U.S. and Canadian underwriters.

Throughout this prospectus we refer to “packaged software,” which refers to software sold in a format that is ready for use without customization regardless of whether such software is sold in a physical package, pre-installed on a computer or downloaded electronically over the Internet.

As of February 28, 2006, we had units, consisting of stock options coupled with phantom share units, outstanding in respect of up to 1,409,091 common shares that were issued pursuant to our 2003 share option and phantom share unit plan. These units are equivalent to traditional stock options, except that upon exercise we may, but are not obligated to, settle them in cash instead of common shares. Throughout this prospectus we refer to these units as either “units” or “stock options.” For information about the terms of these units, see the section of this prospectus entitled “Management— Share Option and Other Compensation Plans.”

In this prospectus, all references to “$” and “U.S. dollars” are to the lawful currency of the United States, all references to “C$” or “Canadian dollars” are to the lawful currency of Canada. All references to GAAP are to generally accepted accounting principles in the United States.

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THE OFFERING

Common shares offered by Corel Corporation	5,000,000 shares
Common shares offered by the selling shareholders	3,000,000 shares. The selling shareholders are Vector Capital and former shareholders of Jasc, a business we acquired in October 2004. See “Principal and Selling Shareholders.”
Over-allotment option	We and the selling shareholders have granted to the underwriters an option to purchase up to 400,000 and up to 800,000 common shares, respectively, to cover over-allotments, if any.
Common shares to be outstanding following the offering	24,492,427 shares, after giving effect to the issuance of 4,322,587 shares in connection with our acquisition of WinZip and assuming no exercise of the over-allotment option.
Use of Proceeds	We estimate that we will receive net proceeds from this offering of approximately $82.9 million after estimated underwriting discounts and commissions and estimated offering expenses. We will use our net proceeds from this offering, together with borrowings from the term loan portion of our new credit facility, for repayment of approximately $140.1 million of debt, including outstanding indebtedness of WinZip, and for general corporate purposes, which may include acquisitions. We will not receive any of the net proceeds from the sale of common shares by the selling shareholders. See “Use of Proceeds.”
Proposed Nasdaq National Market Symbol	“CREL”
Proposed Toronto Stock Exchange Symbol	“CRE”
Risk Factors	Investing in our common shares involves risks. See “Risk Factors” beginning on page 9.

The number of shares to be outstanding after this offering is based on shares outstanding as of February 28, 2006 and does not reflect:

• up to 1,409,091 common shares issuable upon the exercise of outstanding stock options at a weighted average exercise price of $1.67 per share;

• 2,775,320 additional common shares reserved for issuance under our 2006 equity incentive plan, which will be effective upon completion of this offering; and

• 74,680 common shares issuable upon the exercise of replacement stock options to be granted under our 2006 equity incentive plan to holders of options to purchase shares of WinZip common stock.

Unless we specifically state otherwise, all information in this prospectus:

• assumes an initial public offering price of $19.00 per common share;

• assumes no exercise by the underwriters of their over-allotment option;

• assumes completion of the WinZip acquisition and

• reflects, for all prior periods after August 28, 2003, a 1.0 for 11.7 reverse split of our common shares effected in March 2006.

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SUMMARY CONSOLIDATED FINANCIAL DATA

The summary consolidated financial data for the period from December 1, 2002 through August 28, 2003, the period from August 29, 2003 through November 30, 2003 and the fiscal years ended November 30, 2004 and 2005 and as of November 30, 2005 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The summary consolidated financial data for the period from December 1, 2002 through August 28, 2003 reflects our results of operations prior to the time we were acquired by Vector Capital. That financial data is not directly comparable to the financial data presented for subsequent periods, which was prepared using push-down accounting. The summary consolidated financial data presented as of and for the fiscal year ended November 30, 2005 is presented on a combined basis to include the financial data of WinZip from January 18, 2005 to November 30, 2005, which reflects the period that WinZip and we were under common control by Vector Capital. That financial data is not directly comparable to the financial data presented for prior periods, which do not reflect the financial data of WinZip. In addition, the summary consolidated financial data includes the results of Jasc since October 2004.

The summary consolidated as adjusted balance sheet data as of November 30, 2005 gives effect to this offering, a $7.5 million dividend paid by WinZip to Vector Capital in March 2006, the deemed dividend resulting from the difference between the fair value of 4,322,587 of our common shares to be issued to Vector Capital in connection with our acquisition of WinZip and the carrying amount of WinZip’s net assets, our new credit facility and the use of the net proceeds from this offering and borrowings under the term loan portion of the new credit facility in the manner set forth under “Use of Proceeds.”

				Predecessor
							August 29, 2003			Fiscal Years Ended
				December 1,			Through			November 30,
				2002 Through			November 30,
				August 28, 2003			2003			2004			2005
													(combined)
							(in thousands)
Consolidated Statement of Operations Data:
	Revenues			$	85,386		$	23,806		$	111,692		$	164,044
	Cost of revenues (exclusive of amortization)				17,623			3,822			15,300			19,615
	Amortization of intangible assets				5,661			4,132			16,547			26,139
	Gross margin				62,102			15,852			79,845			118,290
	Operating expenses:
		Sales and marketing			45,465			13,620			38,508			54,056
		Research and development			16,342			4,629			14,550			23,538
		General and administrative			26,408			5,587			14,876			19,851
		Other operating expense			—			—			—			3,125
		Restructuring			—			1,138			3,520			834
	Total operating expenses				88,215			24,974			71,454			101,404
	Income (loss) from operations				(26,113	)		(9,122	)		8,391			16,886
		Loss on debt retirement			—			—			—			3,937
		Interest (income) expense, net			(1,383	)		206			1,224			12,608
		Impairment (gain on disposal) of investments			7,448			—			(729	)		(125	)
		Amortization of deferred financing fees			—			24			407			1,756
		Other non-operating expense (income)			(1,530	)		(635	)		(1,033	)		1,172
	Income (loss) before undernoted				(30,648	)		(8,717	)		8,522			(2,462	)
		Income tax expense (recovery)			(3,895	)		555			7,315			6,291
		Share of loss of equity investments, net of tax			1,142			—			—			—
	Net income (loss)			$	(27,895	)	$	(9,272	)	$	1,207		$	(8,753	)
Cash Flow Data:
			Cash flow provided by (used in) operating activities	$	(10,792	)	$	8,671		$	32,512		$	40,459
			Cash flow (used in) financing activities		(240	)		(47,516	)		(5,329	)		(38,552	)
			Cash flow provided by (used in) investing activities		6,418			43,134			(34,099	)		7,301
Other Financial Data:
	EBITDA(1)			$	(23,151	)	$	(3,428	)	$	29,183		$	39,531
	Adjusted EBITDA(1)				(14,561	)		(2,290	)		32,199			49,033

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		As of November 30, 2005
		Actual			As Adjusted(2)
		(combined, in thousands)
Consolidated Balance Sheet Data:
	Cash and cash equivalents	$	20,746		$	32,675
	Working capital (deficit)		(24,255	)		(12,326	)
	Total assets		120,836			129,682
	Deferred revenue		13,840			13,840
	Total term loans		148,729			90,000
	Promissory note payable		2,242			2,242
	Total shareholders’ (deficit) equity		(85,234	)		(16,130	)

(1)  EBITDA represents net income before interest, income taxes, depreciation and amortization. Adjusted EBITDA represents EBITDA, further adjusted to eliminate items specifically defined in our credit facility. EBITDA and Adjusted EBITDA are not measures of operating income, operating performance or liquidity under GAAP. We have included a presentation of EBITDA because we understand it is used by some investors to determine a company’s historical ability to service indebtedness and it is a starting point for calculating Adjusted EBITDA. We have included a presentation of Adjusted EBITDA because certain covenants in our new credit facility are tied to Adjusted EBITDA. If our Adjusted EBITDA were to decline below certain levels, it could result in, among other things, a default or mandatory prepayment under our new credit facility. The covenants in our new credit facility are described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Indebtedness.” Additionally, management uses EBITDA and Adjusted EBITDA as supplementary non-GAAP measures to assist in its overall evaluation of our liquidity and to determine appropriate levels of indebtedness. Neither EBITDA nor Adjusted EBITDA should be considered in isolation or as a substitute for cash flow from operations (as determined in accordance with GAAP) as an indicator of our operating performance, or of operating income (as determined in accordance with GAAP). EBITDA and Adjusted EBITDA are not necessarily comparable to similarly titled measures used by other companies.

We consider EBITDA and Adjusted EBITDA to be measures of liquidity. Accordingly, they are reconciled to cash flow from operations in the table below.

		Predecessor
					August 29, 2003			Fiscal Years Ended
		December 1, 2002			Through			November 30,
		Through			November 30,
		August 28, 2003			2003			2004			2005
											(combined)
					(in thousands)
Cash flow provided by (used in) operating activities		$	(10,792	)	$	8,671		$	32,512		$	40,459
	Change in operating assets and liabilities		2,030			(12,275	)		1,683			(9,527	)
	Interest expenses		—			225			2,709			12,786
	Interest income		(1,383	)		(19	)		(1,485	)		(178	)
	Income tax expense (recovery)		(3,895	)		555			7,315			6,291
	Stock-based compensation		—			—			(225	)		(1,731	)
	Other non-cash charges		—			—			—			(2,242	)
	Loss on debt retirement		—			—			—			(3,937	)
	Accrued interest		—			—			—			(913	)
	Provision for bad debts		(755	)		(326	)		93			(529	)
	Unrealized foreign exchange gains (losses) on forward contracts		162			(22	)		27			(263	)
	Deferred income taxes		139			(237	)		(5,178	)		(830	)
	Gain (loss) on disposal of fixed assets		(67	)		—			(3	)		20
	(Impairment) gain on disposal of investments		(7,448	)		—			729			125
	Share of loss of equity investments		(1,142	)		—			—			—
	Predecessor legal settlement and tax refund		—			—			(8,994	)		—
EBITDA		$	(23,151	)	$	(3,428	)	$	29,183		$	39,531
	Restructuring		—			1,138			3,520			834
	Stock-based compensation		—			—			225			1,731
	Impairment (gain on disposal) of investments		7,448			—			(729	)		(125	)
	Share of loss of equity investments, net of tax		1,142			—			—			—
	Early contract termination costs		—			—			—			2,242
	Reorganization costs		—			—			—			883
	Loss on debt retirement		—			—			—			3,937
Adjusted EBITDA		$	(14,561	)*	$	(2,290	)	$	32,199		$	49,033

* Amount reflects no adjustment for $7.0 million of expenses associated with our going-private transaction.

(2)  Assumes net proceeds to us from this offering of $82.9 million. A $1.00 increase (decrease) in the assumed initial public offering price of $19.00 per share would increase (decrease) pro forma as adjusted cash and cash equivalents, working capital, total assets and total shareholders’ (deficit) equity by $4.7 million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

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RISK FACTORS

      You should consider the following factors in evaluating whether to purchase common shares in this offering. These factors should be considered in conjunction with the other information included in this prospectus.

Risks Relating to our Business

     The long-term trend in our business reflects declines in our revenues since the mid-1990s and we have experienced net losses during fiscal 2005 and during several years prior to 2004.

      We experienced a net loss of $8.8 million during fiscal 2005. Except for the last two fiscal years, our revenues have declined from a high of $334.2 million in fiscal 1996 to our current level of $164.0 million in fiscal 2005. While our revenues increased by $52.4 million in fiscal 2005 compared to the prior year, this increase is primarily attributable to the inclusion of WinZip’s revenues in fiscal 2005 which is presented on a combined basis and sales of digital imaging products we acquired in our acquisition of Jasc in October 2004. Revenues derived from our existing products and services (excluding products acquired in the Jasc acquisition) declined by $3.5 million in fiscal 2005 compared to fiscal 2004. In addition, WinZip revenues have declined from $24.9 million in fiscal 2004 to $22.7 million in fiscal 2005. We experienced net losses in all but two fiscal years from 1996 to 2005 and a decline in revenues in all but three of the last ten years. Although our financial results have improved since we were acquired by Vector Capital, a significant portion of that improvement resulted from our implementation of cost reduction initiatives, including a significant reduction in our workforce. The effects of these initiatives and whether the improvement in our operating results is sustainable over the long-term has yet to be demonstrated. We expect to incur significant incremental costs as a public company, such as costs of complying with applicable securities laws and higher insurance premiums. In addition, our strategy includes pursuing acquisitions. If we are successful in completing any acquisitions, we may incur substantial additional costs, including increased amortization expense and restructuring and acquisition-related charges. As a result of these and other factors there is a risk that we will not be able to reverse the long term trend in our revenues or improve our operating results in the future.

     Our quarterly operating results may fluctuate depending on the timing and success of product releases, which may result in volatility of our stock price.

      Our products generally have release cycles of between 12 and 24 months and we typically earn the largest portion of revenues for a particular product during the first half of its release cycle. If new versions of our software do not achieve widespread market acceptance, our results of operations will be adversely affected. Because the timing and success of new product and product upgrade releases have a significant impact on our revenues and expenses and release dates do not conform to a fiscal year cycle, it is difficult to discern meaningful trends in our business by comparing our financial results for any two fiscal quarters. Due to the impact of releases of new products and versions, our future operating results and stock price may be subject to significant volatility, particularly on a quarterly basis. Any delays or failures in developing enhancements and marketing our new versions of our products or product upgrades may have a harmful impact on our results of operations.

     Our core products compete with products offered by Microsoft and Adobe, which have dominant market positions and other significant competitive advantages.

      Our WordPerfect Suite, which accounted for approximately 37.3% and 24.0% of our total revenues in fiscal 2004 and 2005, respectively, competes with Microsoft Office which has in excess of 97.0% of the North American market for office suite software. In addition, our graphics and digital imaging products, which accounted for approximately 55.4% and 58.8% of our total revenues in fiscal 2004 and 2005, respectively, compete with similar products offered by Adobe, which, after giving effect to Adobe’s acquisition of Macromedia, has in excess of 70.0% of the global packaged graphics and digital imaging software market in which we compete. It is extremely difficult for us to increase our market share among existing software users because they tend to have high levels of brand loyalty due to the actual or perceived cost, time and effort required to transition existing files and learn how to use new software. The existence of these dominant brands also makes it more difficult for us to attract first-time software buyers because Microsoft and Adobe can offer

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ubiquitous products that enable file sharing with other users of their respective products without compatibility concerns.

      In addition to having dominant market positions, Microsoft and Adobe enjoy a number of other competitive advantages that result from having large scale operations, leading brand identities and significantly greater financial and other resources than us. These advantages include, among others:

• sales and marketing advantages;

• advantages in the recruitment and retention of skilled technical personnel;

• advantages in the establishment and negotiation of profitable strategic, distribution and customer relationships;

• advantages in the development and acquisition of innovative software technology and the acquisition of software companies;

• greater ability to pursue larger scale product development and distribution initiatives on a global basis; and

• operational advantages.

      Microsoft and Adobe also offer broader product lines than we do, including software products outside of the productivity and graphics and digital imaging markets, that provide them with greater opportunities to bundle and cross-sell software products to their large user bases. Because we generally rely on having lower prices than Microsoft and Adobe to attract customers, to the extent Microsoft and/or Adobe were to offer products comparable to ours at a similar price, our revenues would decline and our business would be harmed.

     We face significant competitive threats from Internet companies that may offer competitive software products at little or no cost to consumers to increase their market presence and user base.

      Large online services companies are constantly seeking new ways to drive Internet traffic to their websites and increase their user bases. Because these companies primarily earn revenues through the sale of advertising or the collection of subscription fees, they are often willing to provide free or low cost products and services to their users to increase usage of their core services. For example, in October 2005 Google and Sun MicroSystems announced that they had expanded their relationship to include distribution of Google’s search toolbar with downloads of Sun’s Java Runtime Environment. Sun and Google also implied that, in the future, their relationship may also extend to the distribution of productivity software. Google, Yahoo! and AOL now provide users with free email services, and Google, Shutterfly, AOL and Snapfish, among others, provide free online digital photograph management and editing applications. In addition, it was recently announced that Google has acquired Upstartle, a developer of an online word processing application. These and other online services companies have broad access to our target customer group and if they begin to provide their users with software products with similar features and functionality to our products, we may be unable to maintain our prices and our operating results could be adversely affected.

     Our success depends on our ability to offer products that are highly compatible with products offered by Microsoft and Adobe.

      Software users often share files, making it critical that our products remain compatible with products that have dominant market positions. To make our products compatible with products offered by Microsoft, Adobe and others, we often rely on technical information provided to us through informal cooperative arrangements. We have no contractual right to receive this technical information and if these competitors are unwilling to provide it to us, we may be unable to continue to provide products that are compatible with their products. In the past, we received technical specifications from both Adobe and Macromedia which were competing with each other in the graphics and digital imaging software market. In December 2005, Adobe acquired Macromedia, and it is unclear whether the combined company will cooperate with us in the future to the same extent Adobe and Macromedia have in the past.

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      Microsoft’s Windows Vista operating system, which is intended to replace Microsoft’s current operating system, Microsoft XP, is currently scheduled for release late in 2006. Because it is still in development, we are not yet in a position to complete development of a version of our products that is compatible with Windows Vista. If Windows Vista is rapidly adopted in the market before we are able to release compatible versions of our software, our revenues may decline. Moreover, although we have been able to achieve a high level of compatibility with Microsoft products in the past, it is often impossible for us to achieve the same level of functionality and performance as Microsoft’s products because its products benefit from technology embedded in the Microsoft Windows operating system and other Microsoft software applications, which places us at a competitive disadvantage.

      Since it is often technically impossible for us to develop products that are compatible in all respects with the leading brands, there is also a risk that any non-compatible features will be criticized in the market and damage our reputation. If our products are not sufficiently compatible or are not perceived to be compatible with the leading brands for any reason, we would lose a key element of our value proposition and our revenues and results of operations would be adversely affected.

     With the growth in the Internet as a medium to download and purchase software, we expect to face increasing competition from smaller software providers.

      The increasing popularity of the Internet as a medium to purchase software is enabling smaller software providers to distribute products with minimal upfront costs or resources. In the past, a substantial barrier to entry into the packaged software market for small-scale providers has been the need to manufacture, package and distribute software through a retail or commercial distribution chain. To the extent consumers increasingly purchase software over the Internet, we expect to face increased competition from small software development companies and programmers worldwide. Online software distribution has certain inherent advantages over physically packaged software, such as the reduction or elimination of manufacturing, packaging, shipping and inventory costs. New entrants that have business models focused on Internet distribution may have more favorable cost structures than companies such as ours that employ a multi-channel distribution network, which could give those competitors cost savings, pricing and profitability advantages.

     The manner in which packaged software is distributed is changing rapidly, which presents challenges to established software companies such as us and presents opportunities for potential competitors.

      Traditionally, most consumer software has been sold as a separate stand-alone item through retail vendors. Increasingly, software products are being bundled with hardware or online services and sold directly by the equipment manufacturers and online services companies. Although we have relationships to bundle our productivity software with personal computers and online services, we do not yet have any relationships with digital camera manufacturers to bundle our graphics and digital imaging software with their digital cameras. If we are not successful in forging distribution arrangements with digital camera manufacturers or additional participants in all the markets we serve our competitors may gain a significant competitive advantage.

      We generally receive lower prices for software that is bundled with hardware or services than we receive for physically packaged software. In the case of software bundled with hardware, we generally bundle lower functionality versions of our software and provide the opportunity for users to upgrade to more full-featured versions. Accordingly, even if we are successful in expanding our relationships with OEMs, our revenues may decline to the extent purchasers through these channels do not purchase our software through the retail channel or elect not to purchase our software upgrades.

      The increasing percentage of packaged software distributed by OEMs and over the Internet presents a number of challenges and competitive threats. We currently distribute a substantial portion of our products in retail locations around the world and view our retail distribution network as a competitive strength. To the extent that retail software distribution represents a diminishing percentage of total software sales, the relative benefits of our retail network will decline. A declining percentage of our sales have been derived from our retail distribution channel and we expect this trend to continue. If in the future we need to reduce the size or

11

scope of our retail distribution network, we will likely incur significant restructuring charges which would adversely affect our results of operations.

Open source software and open standards may make us more vulnerable to competition because new market entrants and existing competitors could introduce similar products quickly and cheaply.

      Open source refers to the free sharing of software code used to build applications in the software development community. Individual programmers may modify and create derivative works and distribute them at no cost to the end user. To the extent that open source software is developed that has the same or similar functionality as our products, demand for our software may decline, we may have to reduce the prices we charge for our products and our results of operations may be negatively affected.

      In addition, there is continuing pressure on the software industry to adopt standardized file formats. Microsoft recently announced its intention to publicly release the specifications for one file format to be implemented in its next generation office suite and also to seek approval from an international standards organization to formally endorse Microsoft’s new Office file format as open standard. While we generally support the adoption of open standards, this change may make it easier for other software companies to produce productivity software that is compatible with Microsoft Office. In the past we have been one of a small group of companies that offer productivity software that directly competes with Microsoft Office applications and is also compatible with those applications. If the proposed Microsoft Office open file format, or any other open file format, becomes the industry accepted standard, we could lose a key competitive advantage.

     We rely on relationships with a small number of companies for a significant percentage of our revenues, and if any of these companies terminates its relationship with us, our revenues could decline.

      In 2005, we derived 4.6% and 13.5% of our revenues from our relationships with Ingram Micro and Dell, respectively. To the extent our relationships with either of these companies is interrupted or terminated for any reason, our revenues may decline. In addition, our agreements with these companies only provide a general framework governing our relationships. These agreements do not contain any exclusivity provisions and these companies have no obligation to purchase a minimum quantity of our products, promote our products or continue distributing our products. Each of these companies also distributes the products of our direct competitors. Accordingly, these companies may stop distributing our products, they may feature competitive products more prominently or they may fail to effectively promote the sale of our products to their customers, which would harm our competitive position and operating results.

     The packaged software industry is subject to rapid technological change and if we fail to respond to dynamic market forces, our position within the industry will be harmed.

      The packaged software industry is characterized by rapid technological change. If our competitors are able to develop innovative new features or functionality that we are unable to replicate or if we experience delays in providing competing features or functionality our business may suffer. Moreover, we devote virtually all of our research and development efforts toward enhancing our existing product lines and we do not pursue development of new applications. If our competitors are able to make significant innovative improvements to their products or develop new products with substantially enhanced capabilities, our products may become obsolete or our value proposition may become less attractive.

     Our recent growth through acquisitions may not be representative of future growth.

      Because our products and markets are relatively mature, and since our strategy does not include internal development of new product lines, our prospects for future growth are highly dependent on our ability to complete acquisitions of complementary businesses, products or technologies. Recent increases in our revenues are primarily attributable to the inclusion of WinZip’s revenues in our 2005 results and our acquisition of Jasc in October 2004. Our reliance on acquisitions as a primary means of achieving future growth involves a number of risks and uncertainties, many of which are beyond our control. For example, the purchase price for acquisitions will depend significantly on overall market conditions, the degree of

12

competition from other strategic or financial buyers and the availability of attractive acquisition candidates with complimentary products or services. In addition, we may need debt or equity financing to pay for acquisitions, which may not be available to us on acceptable terms or at all. Our ability to use our common shares as currency to pay for acquisitions will depend on the trading price of our common shares, which may be volatile. If we cannot successfully execute our acquisition strategy our growth will be constrained and the value of our common shares will decline.

      We relied on Vector Capital for advice and consulting services in connection with our acquisitions of Jasc and WinZip. Although we have entered into an advisory services agreement with Vector Capital, it is not obligated to provide these services in the future. If, for any reason, Vector Capital does not continue to provide such services we may not be able to hire consultants with comparable expertise. The loss of Vector Capital’s advisory services would likely increase the relative burden on our management in identifying, analyzing and negotiating acquisitions and could make it more difficult for us to grow our business.

     We may not realize the anticipated benefits of acquisitions, and the integration of WinZip or other acquired companies may disrupt our business and management.

      Realizing the benefits from the WinZip acquisition or any other acquisition will depend in part on the successful integration of the acquired company’s products, operations and personnel with our organization in a timely and efficient manner. It may be difficult for us to adapt WinZip’s products to our pricing and distribution model, since WinZip has historically allowed users to download its application without charge and there are competing compression utility offerings that are available for free. We may incur significant costs integrating an acquired company’s operations, products and personnel. We may also encounter difficulties assimilating acquired companies due to differences in our respective organizational cultures. The integration process is inherently unpredictable and subject to delay and unexpected costs.

      It is also difficult to assess the degree to which we will achieve benefits from an acquisition until long after the acquisition has occurred. For example, we may not derive the amount of revenues we anticipate from the sale of WinZip’s products due to the high level of market penetration of its software. We do not know whether we will be successful in achieving the desired benefits from the WinZip acquisition or any subsequent acquisition.

      Acquisitions involve a number of additional risks and uncertainties, including:

• disruption of our ongoing business and distraction of our management and employees from other opportunities and challenges due to integration issues;

• inability to retain our or the target’s technical and managerial personnel, key customers, distributors, vendors and other business partners;

• incurrence of acquisition-related costs or amortization costs for purchased intangible assets that could impact our operating results;

• potential failure of our due diligence processes to identify significant issues with product quality, design and development, legal and financial contingencies or other liabilities;

• incurrence of significant exit charges if products acquired in business combinations are unsuccessful; and

• potential inability to ensure that internal controls over financial reporting are effective.

      In addition, we may incur or assume a significant amount of additional debt or other obligations in connection with acquisitions, which could deprive us of operational and financial flexibility and increase the risk that our business could not survive a downturn.

     We are subject to risks associated with international operations that may harm our business.

      In fiscal 2005, we derived approximately 36.6% of our total revenues from sales to customers outside of the Americas. Sales in Germany comprised the largest portion of these international sales, representing 10.0%

13

of total revenues in fiscal 2005. Our international operations subject us to a number of risks, challenges and uncertainties, including the following:

• foreign currency fluctuations;

• increased software piracy and uncertainty with respect to the enforcement of intellectual property rights;

• international economic and political conditions;

• labor and employment laws, particularly in Europe, which make it difficult to maintain flexible staffing levels;

• tariffs, quotas and other trade barriers and restrictions;

• difficulties and expenses in localizing our products, particularly in Asian markets;

• difficulties inherent in staffing and managing foreign operations; and

• the burdens of complying with a variety of foreign laws.

      In addition, because increasing the scope of our operations in emerging economies, such as China, India, Eastern Europe and Latin America, is a key element of our growth strategy, we expect that our exposure to the risks and uncertainties described above will increase in the future.

     We may incur losses associated with currency fluctuations and may not effectively hedge our exposure.

      Our operating results are subject to volatility resulting from fluctuations in foreign currency exchange rates. For example, we incur a disproportionate percentage of costs in Canadian dollars as compared to Canadian dollar revenues. As a result, our results will be negatively affected if the Canadian dollar rises relative to the U.S. dollar. Although we attempt to mitigate a portion of these risks through foreign currency hedging, these activities may not effectively offset the adverse financial effect resulting from unfavorable movement in foreign currency exchange rates.

     Our business may be constrained by the intellectual property of others, and we have been and are currently subject to claims of intellectual property infringement, which are costly and time-consuming to defend.

      The software industry is characterized by the existence of a large number of patents, trademarks and copyrights, and by frequent litigation based upon allegations of infringement or other violations of intellectual property rights. We may be constrained by the intellectual property of others. We are currently a defendant in a material lawsuit alleging intellectual property infringement, and we may again in the future have to defend against intellectual property lawsuits. We may not prevail in our current or future intellectual property litigation given the complex technical issues and inherent uncertainties in litigation. We have in the past and expect that we will in the future receive correspondence alleging that our products infringe the intellectual property rights of others. Any claims, regardless of their merit, could be time-consuming and distracting to management, result in costly litigation or settlement, cause product development or release delays or require us to enter into costly royalty or licensing agreements. In addition, some of our agreements with customers and distributors, including OEMs and online services companies, require us to indemnify these parties for third-party intellectual property infringement claims and many of these indemnification obligations are not subject to monetary limits. The existence of these indemnification provisions could increase our cost of litigation and could significantly increase our exposure to losses from an adverse ruling.

     We may be unable to maintain licenses to third-party technology that is integrated into our products.

      We integrate third-party technology into our software products. Although we are not currently reliant on any technology license agreement from a single third party, if we were to lose our rights to technology licensed to us by several third parties, our business could be significantly disrupted, particularly if the technology subject to those agreements was either no longer available to us or no longer offered on commercially

14

reasonable terms. In either case, if we are unable to redesign our software to function without this third-party technology or to obtain or internally develop similar technology, we might be forced to limit the features available in our current or future products.

Our success depends heavily on our ability to adequately protect our intellectual property.

      We depend upon our ability to protect our technology. Our means of protecting our intellectual property may not be adequate to prevent others from misappropriating or otherwise obtaining and using information that we regard as proprietary. Any of our patents, trademarks or other intellectual property rights may be challenged by others or invalidated through administrative process or litigation. We may be unable to obtain effective patent or trademark protection in the future. Policing unauthorized use of our software is difficult and costly, particularly in countries where the laws may not protect our proprietary rights as fully as in the U.S. and Canada. Accordingly, despite our efforts, we may be unable to prevent third parties from infringing upon or misappropriating our intellectual property.

      We have placed source code for our software in escrow, and this source code may, under certain circumstances, be made available to certain of our customers, distributors or OEMs. We also work with translators, localizers and independent software developers and these third parties have access to proprietary information relating to our technology. These arrangements could increase the ease or likelihood of potential misappropriation or other misuse of our intellectual property.

      Further, our software products contain open source software code licensed to us under various open source licenses. We rely in part on third parties to develop our software and may not be able to verify whether the components developed by these third parties contain additional open source code. Open source code may impose limitations on our ability to sell our products because, among other reasons, open source license terms may result in unanticipated obligations regarding our products and the disclosure of underlying derivative source code, and open source software cannot be protected under trade secret law.

     As a global business, we have a relatively complex tax structure and there is a risk that tax authorities will disagree with our tax positions.

      We have tax losses carried forward available to offset future taxable income of approximately $249.0 million as of November 30, 2005. Approximately 90% of our tax losses are in Canada. Under Canadian tax rules, we can only use losses to offset future taxable income from the same business or a business that is similar to the one that incurred the losses. While our Canadian losses are not subject to any annual deduction limitations, the losses do have relatively short time periods until they expire. We may not be able to use all of our Canadian losses before their expiration. As of November 30, 2005, we also had approximately $111.0 million of tax depreciation in Canada that would be available to offset taxable income in future years. We have not been subject to a tax audit or review for several years and while we believe that our tax assets have been appropriately determined, there is a risk that, when we are audited, the tax authorities would not agree with our position. Any adverse determination by a tax authority would effectively increase our future tax obligations, to the extent we earn taxable income.

      Since we conduct operations worldwide through our foreign subsidiaries, we are subject to complex transfer pricing regulations in the countries in which we operate. Transfer pricing regulations generally require that, for tax purposes, transactions between us and our foreign affiliates be priced on a basis that would be comparable to an arm’s length transaction and that contemporaneous documentation be maintained to support the tax allocation. Although uniform transfer pricing standards are emerging in many of the countries in which we operate, there is still a relatively high degree of uncertainty and inherent subjectivity in complying with these rules. To the extent Canadian or any foreign tax authorities disagree with our transfer pricing policies, we could become subject to significant tax liabilities and penalties.

      The taxes we owe for our WinZip business are based in part on maintaining substantial business operations in an overseas jurisdiction, which has favorable tax laws. If tax authorities determined that we did not maintain business operations in this jurisdiction sufficient to remain subject to these tax provisions, our effective tax rate would increase and we could become subject to significant tax liabilities, penalties and interest.

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      In April 2005, WinZip transferred its intellectual property and trademarks to a non-US affiliate in a taxable transaction. We did not recognize any gain on the transfer of the property based on an analysis of the fair market value of the assets transferred that was performed at the time of the transfer, and as a result did not accrue any income tax expense on the transfer. The assessment of fair market value is based on both subjective and objective factors and if applicable tax authorities disagree with the fair market value analysis, we could be subject to significant tax liabilities, penalties and interest.

Our substantial indebtedness could affect our financing options and liquidity.

      Upon closing of this offering, we will have approximately $90.0 million of total debt outstanding and a $75.0 million revolving credit facility. Our indebtedness will be secured by substantially all of our assets and could have important consequences to our business or the holders of our common shares, including:

• limiting our ability to obtain additional financing in the future for working capital, capital expenditures or acquisitions;

• requiring a significant portion of our cash flow from operations to be dedicated to the payment of the principal of and interest on our indebtedness, thereby reducing funds available for other purposes;

• making us more vulnerable to economic downturns and limiting our ability to withstand competitive pressures; and

• making it more difficult to pay dividends on our common shares, if we decide to do so.

      In addition, because all of our debt bears interest at variable rates, we are subject to interest rate risk, particularly because interest rates in recent periods have been relatively low compared to historic averages.

     We are subject to restrictive debt covenants that impose operating and financial restrictions on our operations and could limit our ability to grow our business.

      Covenants in our indebtedness impose significant operating and financial restrictions on us. These restrictions prohibit or limit, among other things, our incurrence of additional indebtedness, acquisitions, asset sales and creation of certain types of liens. These restrictions could limit our ability to obtain future financing, withstand downturns in our business or take advantage of business opportunities. Furthermore, our indebtedness requires us to maintain specified financial ratios and to satisfy specified financial condition tests, and under certain circumstances requires us to make quarterly mandatory prepayments with a portion of our available cash. Our ability to comply with these ratios or tests may be affected by events beyond our control, including prevailing economic, financial and industry conditions. As of November 30, 2005, we were not in compliance with a covenant in our existing credit facility requiring us to maintain a maximum ratio of total debt to Adjusted EBITDA and WinZip was not in compliance with certain technical obligations under its credit facility. In March 2006, we obtained an amendment to the existing credit agreement that adjusted the covenants retroactively such that we were in compliance and to facilitate continued compliance through the closing of this offering, at which time the credit facility will be replaced by a new credit facility. WinZip has obtained a waiver and amendment to the covenants under its credit facility to ensure continued compliance with its technical obligations through the closing of this offering. We have paid to our lenders a fee of $391,000 in exchange for the amendment under our credit facility and WinZip paid a $50,000 fee for the waiver and amendment under its facility. If we are unable to comply with the covenants and ratios in our new credit facility, we may be unable to obtain waivers of non-compliance from the lenders, which would put us in default under the facility, or we may be required to pay substantial fees or penalties to the lenders. Either development could have a material adverse effect on our business.

Risks Related to an Investment in our Common Shares

Our common share price is likely to be volatile.

      There has been no public market for our common shares since August 2003. We cannot predict the extent to which investor interest will lead to the development of an active and liquid trading market in our common shares and it is possible that an active and liquid trading market will not develop or be sustained. The

16

initial public offering price for our common shares will be negotiated among us, the selling shareholders and the underwriters and may not be indicative of the market price of the common shares that will prevail in the trading market. The market price of our common shares may decline below the initial public offering price. Some companies that have had volatile market prices for their securities have had securities class action lawsuits filed against them. If a lawsuit were to be filed against us, regardless of the outcome, it could result in substantial costs and a diversion of management’s attention and resources.

      The price of our common shares may fluctuate in response to a number of events, including:

• our quarterly operating results;

• sales of our common shares by principal shareholders;

• future announcements concerning our or our competitors’ businesses;

• the failure of securities analysts to cover our company and/or changes in financial forecasts and recommendations by securities analysts;

• actions of our competitors;

• general market, economic and political conditions;

• natural disasters, terrorist attacks and acts of war; and

• the other risks described in this section.

     Future sales, or the possibility of future sales, of a substantial amount of common shares may depress the price of the common shares.

      Future sales, or the availability for sale, of substantial amounts of common shares in the public market could adversely affect the prevailing market price of our common shares.

      Upon the closing of this offering, there will be 24,492,427 common shares outstanding (or 25,692,427 common shares if the over-allotment option is exercised in full). All of the common shares sold in this offering will be freely transferable without restriction or further registration under the Securities Act of 1933. The remaining common shares outstanding will be restricted securities within the meaning of Rule 144 under the Securities Act, but will be eligible for resale subject to applicable volume, manner of sale, holding period and other limitations of Rule 144. We, our existing shareholders, directors and management have agreed to a “lock-up,” pursuant to which neither we nor they will sell any shares without the prior consent of Morgan Stanley for 180 days after the date of this prospectus, subject to limited exceptions and a possible extension of up to 34 additional days. Following the expiration of the applicable lock-up period, all of these common shares will be eligible for future sale, subject to the applicable limitations of Rule 144. Taking into account the lock-up agreements, the number of shares that will be available for sale in the U.S. public market under the provisions of Rule 144 will be as follows:

	Number of Shares
	Eligible for Sale in
Days after Date of This Prospectus	U.S. Public Market		Comment
Upon Effectiveness		8,000,000		Shares sold in this offering
180 Days		12,169,840	Lock-up expires; shares eligible for sale under Rule 144
365 Days		4,322,587	Shares acquired by Vector Capital as consideration for the WinZip acquisition; eligible for sale under Rule 144

      In addition, holders of substantially all of our outstanding shares have the right to require us to register the resale of their shares following the expiration of the lock-up period.

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      We are authorized to issue up to 4,262,080 common shares or other securities pursuant to our equity compensation plans and we plan to register on a Form S-8 registration statement the common shares issuable under these plans.

     Vector Capital will have significant control over our business and significant transactions after this offering and you may not have the same corporate governance protections you would have if we were not a controlled company.

      Upon the completion of this offering and our acquisition of WinZip, Vector Capital will own approximately 66.0% of our outstanding common shares. As a result, Vector Capital will have the ability to influence our business, policies and affairs and will have the ability to control the outcome of all elections of directors and any shareholder vote regarding a merger, other extraordinary transaction or any other matters. Messrs. Slusky and Mehta, who are members of our board of directors, are principals of Vector Capital. Vector Capital will have no separate contractual rights to nominate any directors. There is a risk that the interests of Vector Capital and these directors will not be consistent with the interests of other holders of common shares.

      In addition, for so long as Vector Capital or any other entity or group owns more than 50% of the total voting power of our common shares, we will be a “controlled company” within the meaning of the Nasdaq and applicable Canadian securities regulations and, as a result, will qualify for exemptions from certain corporate governance requirements. As a controlled company, we are exempt from several Nasdaq standards, including the requirements:

• that a majority of our board of directors consists of independent directors;

• that our prospective directors be nominated solely by independent directors; and

• that the compensation of our executive officers be determined solely by independent directors.

      After this offering, we intend to rely on these exemptions and as a result, a majority of our board members will not be independent. In addition, while we will have a nominating and governance committee and a compensation committee, these committees will not consist entirely of independent directors. Immediately following this offering our audit committee will only have two independent directors for a transition period as permitted by applicable Nasdaq and SEC rules and by the rules and regulations of the Canadian provincial securities regulatory authorities. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of the Nasdaq corporate governance requirements.

     Vector Capital’s ownership of a majority of our common shares, coupled with provisions contained in our articles of incorporation and Canadian law, reduce the likelihood that you will receive a premium upon a change of control.

      As our controlling shareholder, Vector Capital has the sole ability to transfer control of our company to a third party, making it possible that you will not receive a premium upon a change of control. In addition, even if and when no single shareholder controls us, provisions of our articles of incorporation and Canadian law may delay or impede a change of control transaction. Our authorized preferred shares are available for issuance from time to time at the discretion of our board of directors, without shareholder approval. Our board of directors has the authority, subject to applicable Canadian corporate law, to determine the special rights and restrictions granted to or imposed on any wholly unissued series of preferred shares, and such rights may be superior to those of our common shares. Limitations on the ability to acquire and hold our common shares may be imposed by the Competition Act (Canada). This legislation permits the Commissioner of Competition of Canada to review any acquisition of a significant interest in us and grants the Commissioner jurisdiction to challenge such an acquisition before the Canadian Competition Tribunal if the Commissioner believes that it would, or would be likely to, result in a substantial lessening or prevention of competition in any market in Canada. The Investment Canada Act subjects an acquisition of control of a company by a non-Canadian to government review if the value of our assets as calculated pursuant to the legislation exceeds a threshold amount. A reviewable acquisition may not proceed unless the relevant minister is satisfied that the investment

18

is likely to be a net benefit to Canada. Any of the foregoing could prevent or delay a change of control and may deprive our shareholders of the opportunity to sell their common shares.

As a foreign private issuer, we are subject to different U.S. securities laws and rules than a domestic U.S. issuer, which may limit the information publicly available to our shareholders.

      As a foreign private issuer we are not required to comply with all of the periodic disclosure requirements of the Securities Exchange Act of 1934 and therefore there may be less publicly available information about us than if we were a U.S. domestic issuer. In addition, our officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Securities Exchange Act of 1934 and the rules thereunder. Therefore, our shareholders may not know on a timely basis when our officers, directors and principal shareholders purchase or sell our common shares.

     You may be unable to enforce actions against us, certain of our directors and officers or our independent public accounting firm under U.S. federal securities laws.

      A majority of our directors and officers, as well as our independent public accounting firm, reside principally in Canada. Because all or a substantial portion of our assets and the assets of these persons are located outside the U.S., it may not be possible for you to effect service of process within the U.S. upon us or those persons. Furthermore it may not be possible for you to enforce judgments obtained in U.S. courts based upon the civil liability provisions of the U.S. federal securities laws or other laws of the U.S. against us or those persons. There is doubt as to the enforceability in original actions in Canadian courts of liabilities based upon the U.S. federal securities laws, and as to the enforceability in Canadian courts of judgments of U.S. courts obtained in actions based upon the civil liability provisions of the U.S. federal securities laws. Therefore, it may not be possible to enforce those actions against us, certain of our directors and officers or the expert named in this prospectus.

     U.S. investors in our company could suffer adverse tax consequences if we are characterized as a passive foreign investment company.

      If, for any taxable year, our passive income or our assets that produce passive income exceed levels provided by U.S. law, we may be characterized as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes. This characterization could result in adverse U.S. tax consequences to our shareholders. If we were classified as a PFIC, our U.S. shareholders could be subject to increased U.S. federal income tax liability upon the sale or other disposition of our common shares or upon the receipt of amounts treated as “excess distributions.” U.S. shareholders should consult with their own U.S. tax advisors with respect to the U.S. tax consequences of investing in our common shares as well as the specific application of the “excess distribution” and other rules discussed in this paragraph. For a discussion of how we might be characterized as a PFIC and related tax consequences, please see “United States Federal Income Tax Considerations—Passive Foreign Investment Company Considerations.”

     You will suffer an immediate and substantial dilution in the net tangible book value of the common shares you purchase.

      The initial public offering price of our common shares will be substantially higher than our net tangible book value per share of our outstanding common shares immediately after this offering. Purchasers of common shares in this offering will experience immediate dilution of approximately $22.41 per share in net tangible book value of the common shares. See “Dilution.”

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

      Some of the statements under the captions “Prospectus Summary,” “Risk Factors,” “Dividend Policy,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and elsewhere in this prospectus may include forward-looking statements which reflect our current views with respect to future events and financial performance. Statements which include the words “may,” “estimate,” “continue,” “expect,” “intend,” “plan,” “believe,” “project,” “anticipate” and similar statements of a forward-looking nature or the negatives of those statements identify forward-looking statements.

      Although we believe that the expectations reflected in our forward-looking statements are reasonable, all forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in these statements. We believe that these factors include the following:

• increased competition, including competition from dominant software providers, such as Microsoft and Adobe and companies outside of the software industry;

• the potential proliferation of free or open source software;

• possible changes in the demand for our products and services;

• changes in the manner in which software is distributed;

• technological developments;

• market acceptance of new versions of our software;

• uncertainties resulting from our foreign operations;

• our ability to successfully acquire and integrate software companies and technologies;

• our ability to protect our intellectual property; and

• the other matters described under “Risk Factors.”

      In addition to these factors, actual future performance, outcomes and results may differ materially from those indicated in our forward-looking statements because of other more general factors, including:

• changes in general industry and market conditions and growth rates;

• changes in the relative value of the functional currencies in countries in which we operate;

• changes in our key management; and

• changes in accounting policies or practices adopted voluntarily or as required by GAAP.

      All forward-looking statements appearing in this prospectus speak only as of the date of this prospectus. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

20

USE OF PROCEEDS

      We estimate that we will receive net proceeds of $82.9 million from our sale of the 5,000,000 common shares offered by us in this offering, based upon an assumed initial public offering price of $19.00 per share, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. A $1.00 increase (decrease) in the assumed initial public offering price of $19.00 per share would increase (decrease) the net proceeds to us from this offering by $4.7 million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We will not receive any proceeds from the sale of common shares being offered by the selling shareholders. Concurrently with the closing of this offering we expect to borrow $90.0 million under the term loan portion of our new credit facility. We intend to use the net proceeds of this offering together with these borrowings as follows:

• $140.1 million for repayment of the indebtedness outstanding under our existing credit facilities and all outstanding indebtedness of WinZip;

• $4.8 million of financing fees and expenses associated with our new credit facility; and

• $28.0 million for general corporate purposes, which may include acquisitions.

      If the underwriters exercise their option to purchase additional shares in full, we estimate that the net proceeds to us from the sale of the additional common shares to be sold by us will be $7.1 million, all of which will be used for general corporate purposes.

      We and our subsidiary, Corel US Holdings, LLC, entered into our existing credit facility in February 2005, which consists of a $75.0 million first lien term loan and a $10.0 million revolving line of credit, both maturing in February 2010 and a $55.0 million second lien term loan maturing in August 2010. The first lien term loan and revolving line of credit bear interest at a rate equal to LIBOR plus 4.25% per annum. The second lien term loan bears interest at a rate equal to LIBOR plus 8.0%. The one month LIBOR as of January 1, 2006 was 4.81%. As of November 30, 2005, we had $73.1 million and $55.0 million of outstanding indebtedness under our first lien term loan and second lien term loan, respectively. We used available cash and borrowings under our existing first lien term loan and second lien term loan to fund a dividend payment and return of capital to our shareholders totaling approximately $85.3 million, to pay fees and expenses associated with the credit facility financing and to repay the $56.4 million balance under our prior loan facility.

      We also intend to use a portion of the net proceeds from this offering and borrowings under the term loan portion of the new credit facility to repay existing outstanding indebtedness of WinZip, which we will acquire from Vector Capital concurrently with the closing of this offering. WinZip entered into a credit facility in June 2005 consisting of a $23.0 million term loan and $1.0 million revolving credit facility maturing in June 2008. The credit facility bears interest at the prime rate plus a margin based on WinZip’s performance. As of February 28, 2006, there was $19.2 million outstanding under the WinZip credit facility. Borrowings under the WinZip credit facility were used to repay an outstanding loan in the amount of $15.0 million and to partially fund a $12.0 million cash dividend to Vector Capital in June 2005.

      The purchase price for WinZip was determined by taking into account the respective historical and expected revenue and EBITDA contributions of us and WinZip, as well as an assumed valuation multiple of those contributions. The imputed value of the shares issuable in our acquisition of WinZip is significantly higher than the price paid by Vector Capital to purchase WinZip from an unaffiliated third party in January 2005, reflecting significant improvements in WinZip’s business and strategies implemented at the direction of Vector Capital, as well as incremental benefits attributable to the strategic nature of the currently proposed transaction. For additional information regarding Vector Capital’s acquisition of WinZip, see footnote 8 to our consolidated financial statements. The acquisition was negotiated in the context of a parent-subsidiary relationship and therefore may not reflect economic or other terms that would result from an arm’s length transaction with an unaffiliated third party.

      We will have broad discretion in the application of those proceeds of the offering to be used for general corporate purposes and may use funds for future acquisitions. Other than the acquisition of WinZip described above, we have no current arrangements or commitments to acquire any specific business. In addition, to the extent the net proceeds of this offering are greater or less than the estimated amount, if either the offering does

21

not price at the midpoint of the estimated price range or the size of the offering changes, such difference will increase or decrease the amount of net proceeds available for general corporate purposes. Pending their application, we intend to invest the net proceeds in interest bearing investment grade securities.

DIVIDEND POLICY

      We do not currently anticipate paying dividends on our common shares. Any determination to pay dividends to holders of our common shares in the future will be at the discretion of our board of directors and will depend on many factors, including our financial condition, earnings, legal requirements and other factors as the board of directors deems relevant. In addition, our indebtedness limits our ability to pay dividends and we may in the future become subject to debt instruments or other agreements that further limit our ability to pay dividends.

      In connection with our acquisition by Vector Capital, we distributed $4.1 million to Vector Capital in 2003 and we used $69.8 million to fund the repurchase of our common shares in the going private transaction. In addition, we paid $41.0 million of distributions to our shareholders in fiscal 2004 and $85.3 million of distributions to our shareholders during fiscal 2005. WinZip paid a $12.0 million dividend to Vector Capital in June 2005 and paid a $7.5 million dividend to Vector Capital in March 2006. See “Certain Relationships and Related Party Transactions—Relationship with Vector Capital.” Those payments are not indicative of our future dividend policy.

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CAPITALIZATION

      The following table sets forth our cash and cash equivalents and capitalization as of November 30, 2005 on a combined basis to include WinZip and should be read in conjunction with “Selected Consolidated Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus.

      The pro forma amounts reflect the equity recapitalization effected on December 1, 2005, the issuance of 4,322,587 common shares to Vector Capital as consideration for the acquisition of WinZip (including the deemed dividend resulting from the difference between the fair value of such common shares and the carrying amount of WinZip’s net assets) and the $7.5 million dividend paid to Vector Capital in March 2006. The pro forma as adjusted amounts also reflect:

• the receipt of approximately $82.9 million in estimated net proceeds from this offering, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, and the application of such proceeds as described under “Use of Proceeds;” and

• borrowings of $90.0 million under the term loan portion of our new credit facility and the application of the proceeds from such borrowings as described under “Use of Proceeds.”

			As of November 30, 2005
									Pro Forma
			Actual			Pro Forma			As Adjusted(1)
			(combined, unaudited, in thousands)
Cash and cash equivalents			$	20,746		$	13,246		$	32,675
Debt:
	Existing credit facilities		$	148,729		$	148,729		$	—
	New credit facility:
		Revolving facility
		Term loan facility								90,000
		Total credit facilities		148,729			148,729			90,000
Shareholders’ (deficit) equity:
	Preferred shares, no par value:
		Series A preferred shares(2)		2,600			—			—
		New preferred shares(3)		—			—			—
	Common shares, no par value:
		Class A common shares(4)		(42,229	)		—			—
		Class B common shares(5)		(34,184	)		—			—
		New common shares(6)		—			8,316			91,256
	Common stock, $1 par value:
		WinZip(7)		20			—			—
Additional paid-in capital				7,427			1,947			1,947
Accumulated other comprehensive income				85			85			85
Deficit				(18,953	)		(69,293	)		(77,158	)
	Total shareholders’ (deficit) equity			(85,234	)		(58,945	)		16,130
		Total capitalization	$	84,241		$	103,030		$	138,805

(footnotes on next page)

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(1)	A $1.00 increase (decrease) in the assumed initial public offering price of $19.00 per share would increase (decrease) pro forma as adjusted cash and cash equivalents, new common shares, total shareholders’ (deficit) equity and total capitalization by $4.7 million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.
(2)	3,105 shares authorized, issued and outstanding, actual; no shares authorized, issued and outstanding, pro forma and pro forma as adjusted.
(3)	No shares authorized, issued and outstanding, actual; unlimited shares authorized, no shares issued and outstanding, pro forma and pro forma as adjusted.
(4)	Unlimited shares authorized, 3,740 shares issued and outstanding, actual; no shares authorized, issued and outstanding, pro forma and pro forma as adjusted.
(5)	Unlimited shares authorized, 8,321 shares issued and outstanding, actual; no shares authorized, issued and outstanding, pro forma and pro forma as adjusted.
(6)	No shares authorized, issued and outstanding, actual; unlimited shares authorized, 19,489 shares issued and outstanding, pro forma; unlimited shares authorized, 19,489 shares issued and outstanding, pro forma as adjusted.
(7)	50 shares authorized, 20 shares issued and outstanding, actual and pro forma; no shares authorized, issued and outstanding, pro forma as adjusted.

Shares issued and outstanding exclude:

• up to 1,381,350 common shares issuable upon the exercise of outstanding options with a weighted average exercise price of $1.17 per share as of November 30, 2005;

• options to purchase WinZip common stock and 74,680 common shares issuable upon the exercise of replacement stock options to be granted under our new 2006 equity incentive plan to the holders of these WinZip options; and

• 2,775,320 additional common shares reserved for future awards under our 2006 equity incentive plan, which was adopted in February 2006.

24

DILUTION

      If you invest in our common shares, your interest will be diluted to the extent of the difference between the price per common share paid by you in this offering and the net tangible book value or deficiency per common share after the offering. Net tangible book value (or deficiency) per common share is determined at any date by subtracting our total liabilities from our total assets less our intangible assets and dividing the difference by the number of common shares outstanding at that date.

      Our pro forma net tangible book value as of November 30, 2005 (combined) after giving effect to the equity recapitalization we completed on December 1, 2005 and the issuance of common shares in our acquisition of WinZip and the WinZip dividend, was approximately $(161.7) million, or $(8.30) per common share. After giving effect to this offering, based on an assumed initial public offering price of $19.00 per common share and the completion of the new credit facility, our pro forma as adjusted net tangible book value as of November 30, 2005 would have been approximately $(83.6) million, or $(3.41) per common share. This represents an immediate increase in net tangible book value of $4.89 per common share to our existing shareholders and an immediate dilution of $22.41 per common share to new investors purchasing common shares in this offering.

      The following table illustrates this substantial and immediate dilution to new investors:

Assumed initial public offering price per common share					$	19.00
	Pro forma net tangible book value per share as of November 30, 2005	$	(8.30	)
	Increase per share attributable to new investors in this offering		4.89
	Pro forma as adjusted net tangible book value per share as of November 30, 2005 after giving effect to this offering, the WinZip dividend and the new credit facility					(3.41	)
Dilution in net tangible book value per share to new investors					$	22.41

      A $1.00 increase (decrease) in the assumed initial public offering price of $19.00 per share would increase (decrease) our pro forma as adjusted net tangible book value by $4.7 million, the pro forma as adjusted net tangible book value per share after this offering by $0.19 per share and the dilution in pro forma as adjusted net tangible book value to new investors in this offering by $0.19 per share, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

      The following table sets forth as of November 30, 2005 on the same pro forma as adjusted basis described above:

• the total number of common shares owned by existing shareholders and to be owned by new investors purchasing common shares in this offering;

• the total consideration paid by our existing shareholders (less amounts distributed in respect of such shares) prior to the offering and to be paid by new investors purchasing common shares in this offering; and

• the average price per common share paid by existing shareholders and to be paid by new investors purchasing common shares in this offering:

		Common Shares
		Purchased					Total		Average Price
							Consideration		Per Common
		Number		Percent			Amount		Share
Existing shareholders			16,489,182		67.3	%	$	*	$	*
New investors			8,000,000		32.7			152,000,000		19.00
	Total		24,489,182		100.0	%

*  The amount of distributions to the existing shareholders, in the aggregate, exceeds the total consideration paid for such common shares.

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      A $1.00 increase (decrease) in the assumed initial public offering price of $19.00 per share would increase (decrease) total consideration paid by new investors and total consideration paid by all investors by $4.7 million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

      The foregoing discussion and tables assume no exercise of outstanding stock options and exclude shares sold by the selling shareholders. After this offering, there will be options outstanding to purchase a total of 1,486,760 common shares at a weighted average exercise price of $1.68 per share, including options to be granted under our new 2006 equity incentive plan to holders of WinZip options. To the extent that any of these stock options are exercised, there may be further dilution to new investors. See “Shares Eligible for Future Sale.”

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SELECTED CONSOLIDATED FINANCIAL DATA

      The selected consolidated financial data set forth below for the fiscal years ended November 30, 2001 and 2002 and as of November 30, 2001, 2002, and 2003 have been derived from our audited consolidated financial statements not included in this prospectus. The selected consolidated financial data set forth below for the period from December 1, 2002 through August 28, 2003, the period from August 29, 2003 through November 30, 2003 and the fiscal years ended November 30, 2004 and 2005 and as of November 30, 2004 and 2005, respectively, have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The selected consolidated financial data presented for periods ended and as of dates prior to August 29, 2003 reflect our results of operations and balance sheet prior to the time we were acquired by Vector Capital. That financial data is not directly comparable to the financial data for periods subsequent to our acquisition by Vector Capital, which was prepared using push-down accounting.

      The selected consolidated financial data presented as of and for the fiscal year ended November 30, 2005 is presented on a combined basis to include the financial data of WinZip from January 18, 2005 to November 30, 2005, which reflects the period that WinZip and we were under common control by Vector Capital. In addition, the selected consolidated financial data presented as of and for the fiscal years ended November 30, 2004 and 2005 reflects the financial results of the Jasc business from October 26, 2004. That financial data is not directly comparable to the financial data presented for prior periods, which does not reflect the financial data of WinZip and Jasc.

      Historical results do not necessarily indicate results expected for any future period. The data below is qualified in its entirety by the detailed information included elsewhere in this prospectus and should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and the consolidated financial statements and the accompanying notes included elsewhere in this prospectus.

27

				Predecessor(1)
				Fiscal Year Ended						December 1,			August 29, 2003
				November 30,						2002 Through			Through			Fiscal Years Ended November 30,
										August 28,			November 30,
				2001			2002			2003			2003			2004			2005(2)
																			(combined)
				(in thousands, except per share data)
Consolidated Statement of Operations Data:
	Revenues			$	134,320		$	126,701		$	85,386		$	23,806		$	111,692		$	164,044
	Gross margin				106,045			98,479			62,102			15,852			79,845			118,290
	Total operating expenses				111,990			200,908			88,215			24,974			71,454			101,404
	Income (loss) from operations				(5,945	)		(102,429	)		(26,113	)		(9,122	)		8,391			16,886
	Income tax expense (recovery)				8,350			(6,943	)		(3,895	)		555			7,315			6,291
	Net income (loss)				(11,635	)		(93,238	)		(27,895	)		(9,272	)		1,207			(8,753	)
	Net income (loss) per share:
		Basic
			Class A	$	(.16	)	$	(1.05	)	$	(.30	)	$	(0.87	)	$	0.08		$	(2.40	)
			Class B	$	N/A		$	N/A		$	N/A		$	N/A		$	0.08		$	(2.40	)
			WinZip common	$	N/A		$	N/A		$	N/A		$	N/A		$	N/A		$	136.90
		Fully diluted
			Class A	$	(.16	)	$	(1.05	)	$	(.30	)	$	(0.87	)	$	0.08		$	(2.40	)
			Class B	$	N/A		$	N/A		$	N/A		$	N/A		$	0.08		$	(2.40	)
			WinZip common	$	N/A		$	N/A		$	N/A		$	N/A		$	N/A		$	136.90
		Distributions per share
			Class A	$	—		$	—		$	—		$	0.36		$	0.78			8.87
			Class B	$	—		$	—		$	—		$	—		$	8.22		$	0.26
			Preferred	$	—		$	—		$	—		$	—		$	1.88		$	16.10
			WinZip	$	—		$	—		$	—		$	—		$	—		$	600.00
	Weighted average number of shares used in per share calculations:
		Basic
			Class A		74,325			88,627			91,853			11,677			8,218			3,737
			Class B		N/A			N/A			N/A			N/A			3,497			8,321
			WinZip common		N/A			N/A			N/A			N/A			N/A			20
		Fully diluted
			Class A		74,325			88,627			91,853			11,677			8,218			3,737
			Class B		N/A			N/A			N/A			N/A			3,497			8,321
			WinZip common		N/A			N/A			N/A			N/A			N/A			20
Cash Flow Data:
	Cash flow provided by (used in) operating activities			$	15,144		$	(19,742	)	$	(10,792	)	$	8,671		$	32,512		$	40,459
	Cash flow provided by (used in) financing activities				(9,735	)		97			(240	)		(47,516	)		(5,329	)		(38,552	)
	Cash flow provided by (used in) investing activities				(107,915	)		13,595			6,418			43,143			(34,099	)		7,301
Other Financial Data:
	EBITDA(3)			$	7,642		$	(79,585	)	$	(23,151	)	$	(3,428	)	$	29,183		$	39,531
	Adjusted EBITDA(3)				8,114			(15,542	)		(14,561	)		(2,290	)		32,199			49,033

		Predecessor(1)
		As of November 30,
		2001		2002		2003			2004			2005(2)
												(combined)
		(in thousands)
Consolidated Balance Sheet Data:
	Cash, cash equivalents and short-term investments	$	103,000	$	75,826	$	24,683		$	21,788		$	20,746
	Working capital (deficit)		85,704		63,457		(3,556	)		(19,417	)		(24,255	)
	Total assets		230,174		129,802		101,400			108,788			120,836
	Deferred revenue		10,160		9,754		8,026			10,020			13,840
	Total term loans		—		—		26,895			64,799			148,729
	Promissory note payable		—		—		—			—			2,242
	Total shareholders’ equity (deficit)		167,312		91,005		38,579			1,537			(85,234	)

(1)

The predecessor financial data is not comparable with financial data for periods subsequent to August 28, 2003 due to the application of push-down accounting effective August 29, 2003 and the adoption of SFAS No. 123 R, “Share-based payments (revised 2004)” (“SFAS 123(R)”) relating to the accounting for stock-based compensation effective December 1, 2003. In predecessor periods, stock-based compensation was accounted for in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25).

(2)

Financial data for fiscal 2005 is not comparable to prior periods due to the combination of financial data of WinZip from January 18, 2005 to November 30, 2005, which reflects the period that WinZip and we were under common control by Vector Capital.

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(3)  EBITDA represents net income before interest, income taxes, depreciation and amortization. Adjusted EBITDA represents EBITDA, further adjusted to eliminate items specifically defined in our credit facility agreement. EBITDA and Adjusted EBITDA are not measures of operating income, operating performance or liquidity under GAAP. We have included a presentation of EBITDA because we understand it is used by some investors to determine a company’s historical ability to service indebtedness and it is a starting point for calculating Adjusted EBITDA. We have included a presentation of Adjusted EBITDA because certain covenants in our credit facility are tied to Adjusted EBITDA. If our Adjusted EBITDA were to decline below certain levels, it could result in, among other things, a default or mandatory prepayment under our new credit facility. The covenants in our credit facility are described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Indebtedness.” Additionally, management uses EBITDA and Adjusted EBITDA as supplementary non-GAAP measures to assist in its overall evaluation of our liquidity and to determine appropriate levels of indebtedness. Neither EBITDA nor Adjusted EBITDA should be considered in isolation or as a substitute for cash flow from operations (as determined in accordance with GAAP) as an indicator of our operating performance, or of operating income (as determined in accordance with GAAP). EBITDA and Adjusted EBITDA are not necessarily comparable to similarly titled measures used by other companies.

We consider EBITDA and Adjusted EBITDA to be measures of liquidity. Accordingly, they are reconciled to cash flow from operations in the table below.

		Predecessor
								December 1,			August 29,
		Fiscal Year Ended						2002			2003			Fiscal Years Ended
		November 30,						Through			Through			November 30,
								August 28,			November 30,
		2001			2002			2003			2003			2004			2005
																	(combined)
		(in thousands)
Cash flow provided by (used in) operating activities		$	15,144		$	(19,742	)	$	(10,792	)	$	8,671		$	32,512		$	40,459
	Change in operating assets and liabilities		(3,266	)		3,666			2,030			(12,275	)		1,683			(9,527	)
	Interest expenses		—			—			—			225			2,709			12,786
	Interest income		(5,420	)		(1,790	)		(1,383	)		(19	)		(1,485	)		(178	)
	Income tax expense (recovery)		8,350			(6,943	)		(3,895	)		555			7,315			6,291
	Stock-based compensation		—			—			—			—			(225	)		(1,731	)
	Other non-cash charges		—			—			—			—			—			(2,242	)
	Loss on debt retirement		—			—			—			—			—			(3,937	)
	Goodwill impairment		—			(48,258	)		—			—			—			—
	Writedown of technology		—			(14,595	)		—			—			—			—
	Accrued interest		—			—			—			—			—			(913	)
	Provision for bad debts		(3,197	)		(596	)		(755	)		(326	)		93			(529	)
	Unrealized foreign exchange gains (losses) on forward contracts		—			—			162			(22	)		27			(263	)
	Deferred income taxes		(1,444	)		10,148			139			(237	)		(5,178	)		(830	)
	Gain (loss) on disposal of fixed assets		306			(136	)		(67	)		—			(3	)		20
	Loss on investments		(2,359	)		(149	)		—			—			—			—
	(Impairment) gain on disposal of investments		—			—			(7,448	)		—			729			125
	Share of loss of equity investments		(472	)		(1,190	)		(1,142	)		—			—			—
	Predecessor legal settlement and tax refund		—			—			—			—			(8,994	)		—
EBITDA		$	7,642		$	(79,585	)	$	(23,151	)	$	(3,428	)	$	29,183		$	39,531
	Restructuring		—			—			—			1,138			3,520			834
	Stock-based compensation		—			—			—			—			225			1,731
	Impairment (gain on disposal) of investments		—			—			7,448			—			(729	)		(125	)
	Share of loss of equity investments		472			1,190			1,142			—			—			—
	Early contract termination costs		—			—			—			—			—			2,242
	Reorganization costs		—			—			—			—			—			883
	Loss on debt retirement		—			—			—			—			—			3,937
	Goodwill impairment		—			48,258			—			—			—			—
	Writedown of technology		—			14,595			—			—			—			—
Adjusted EBITDA		$	8,114		$	(15,542	)	$	(14,561	)*	$	(2,290	)	$	32,199		$	49,033

*  Amount reflects no adjustment for $7.0 million of expenses associated with our going-private transaction.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

      The following discussion should be read in conjunction with our consolidated financial statements and the notes to those statements, as well as the historical financial statements of WinZip and Jasc and the pro forma financial statements and other financial information appearing elsewhere in this prospectus. This prospectus contains forward-looking statements that involve risks and uncertainties, as well as pro forma financial statements that reflect estimates and assumptions. Our actual results may differ materially from those indicated in forward-looking statements or reflected in the pro forma financial statements. Factors that could cause our actual results to differ materially from our forward-looking statements are described in “Risk Factors” and elsewhere in this prospectus.

Overview

      We are a leading global packaged software company with an estimated installed base of 20 million current users in over 75 countries. We provide high quality, affordable and easy-to-use productivity and graphics and digital imaging software. Our products enjoy a favorable market position among value-conscious consumers and small businesses. The legal and functional departments within large companies and governmental organizations are also attracted to the industry-specific features and technical capabilities of our software. Our products are sold through a scalable distribution platform comprised of OEMs, our e-Store, and our global network of resellers and retail vendors.

      Our product portfolio includes well-established, globally recognized brands. Our primary productivity products are WordPerfect Office Suite, first developed in 1982 and marketed by Corel since 1996, and WinZip, a compression utility developed in 1991, that we will acquire concurrently with the closing of this offering. WordPerfect Office Suite is the leading Microsoft-alternative productivity software and includes Microsoft-compatible word processing, spreadsheet and presentation functionality. WinZip is the most widely used aftermarket compression utility, with more than 43 million seats sold to date. Our primary graphics and digital imaging products are CorelDRAW Graphics Suite and Corel Paint Shop Pro. CorelDRAW Graphics Suite is a leading illustration and image editing software suite used by design professionals and small businesses. Corel Paint Shop Pro digital image editing and management applications are used by novice and professional photographers and photo editors.

      We were founded in 1985 and completed our initial public offering in 1989. In August 2003, we became a private company as a result of being acquired by Vector Capital and divested certain underperforming product lines, discontinued speculative research and development activities and refocused our business on our core products. At the same time we reviewed all of our business functions and implemented company-wide cost reduction measures. Between August 2003 and May 2004, we reduced our staff from 708 to 480. The staff reduction contributed to reducing our annual operating expenses from $113.2 million in the twelve months ended November 30, 2003 to $71.5 million in fiscal 2004.

      In October 2004, we acquired Jasc, a leading digital imaging packaged software company, for total purchase costs of $38.2 million, consisting of $34.3 million in cash consideration, plus share consideration consisting of and 379,677 of our common shares valued at $2.4 million and other costs of acquisition of $1.4 million. Through the Jasc acquisition we added Corel Paint Shop Pro and Corel Photo Album to our graphics and digital imaging offerings. As a result of synergies realized through the integration of Jasc we eliminated 38 full-time positions and substantially reduced staffing and distribution costs in fiscal 2005. In Jasc’s fiscal year ended December 31, 2003 it had revenues of $32.8 million.

      In February 2006, we agreed to purchase WinZip from Vector Capital, and we expect to complete this acquisition concurrently with the completion of this offering. As consideration for the acquisition we have agreed to issue to Vector Capital 4,322,587 common shares and to repay all of WinZip’s outstanding indebtedness. The acquisition is a transaction between entities under common control and will be accounted for on an “as if” pooling basis as a related party transaction. Accordingly, the fair value of our common shares that will be issued as consideration for the transaction will be recorded as share capital and any difference between this amount and the book value of WinZip’s net assets will be treated as a dividend. Through this

30

acquisition we will add WinZip’s file compression utility to our productivity software offerings. WinZip’s revenues for its 2003, 2004 and 2005 fiscal years were $25.3 million, $24.9 million and $22.7 million, respectively.

      WinZip paid a cash dividend of $7.5 million to Vector Capital in March 2006.

      An important element of our business strategy is to grow revenues through acquisitions of companies or product lines. We intend to focus our acquisition activities on companies or product lines with proven and complementary products and established user bases that we believe can be accretive to our earnings shortly after completion of the acquisition. While we review acquisition opportunities on an ongoing basis, except with respect to WinZip we have no binding obligations with respect to any particular acquisition.

      Our functional currency is the U.S. dollar and our financial statements are prepared in accordance with generally accepted accounting principles in the United States. Our fiscal year ends on November 30 of each year.

Industry and Business Trends

      The markets for productivity and graphics and digital imaging software in which we compete are highly concentrated and we believe Microsoft and Adobe currently hold over 97% and 70% of the market share, respectively. With the rapid declines in the cost of PCs, the cost of the packaged software installed on PCs is becoming a larger component of the total cost of PC ownership. In addition, the rapid growth of digital camera adoption has created a growing market for packaged software to edit and manage digital photographs. Because the prices we charge for our packaged software are generally substantially less than those charged by Microsoft and Adobe for products with similar functionality, we believe we are well positioned to take advantage of the emerging market for lower cost software. However, if any of our more established competitors decide to compete with us based on price in this market, we may be unable to successfully compete with the more widely accepted software applications these competitors sell. Similarly, the markets for low-cost personal computers and digital imaging software are only newly emerging. If these markets do not develop as we expect, our business would be adversely affected.

      We believe there is a significant market opportunity for us in countries where the markets for PCs are newly emerging, both because our software is more attractively priced than that of our larger competitors and because we believe first time users in these markets do not have established brand loyalties. We intend to continue to invest in localizing our products for new markets and in growing our international distribution and marketing capabilities. If demand for PCs in these markets does not continue to grow, or if we are unable to effectively compete in these markets, we may not realize the anticipated benefits of our international strategy.

      The packaged software industry continues to change with new revenue sharing models and types of business relationships. We will seek to continue to develop relationships with industry leading companies to establish new sources of revenues for our existing and future products. If we are unsuccessful in establishing such relationships, our operating results could be materially and adversely affected.

      We expect our operating expenses to increase in the future. For example, in connection with our options outstanding as of November 30, 2005, we expect to incur stock-based compensation expense of approximately $3.3 million during fiscal 2006, and we will incur additional stock-based compensation expense to the extent we grant additional stock options. We also expect to incur additional general and administrative expenses associated with being a public company.

Executive Transition

      In June 2005, Amish Mehta, who had been interim President and Chief Executive Officer since the first quarter of 2004, was replaced by a new Chief Executive Officer, David Dobson. Mr. Dobson became a member of our board of directors in February 2006. Mr. Dobson joined us after spending 19 years with IBM Corporation where his most recent position was Corporate Vice President, Strategy. At IBM he had company-wide responsibility for IBM’s Emerging Business Opportunity program. Mr. Mehta, a partner at Vector Capital, became a member of our board of directors in January 2006. In addition, since our acquisition by Vector Capital, we have made a number of other changes in senior management, including the hiring of a new Chief Financial Officer and a new Executive Vice President of Sales and Marketing, Americas. Jacqueline Maartense resigned her position as our Executive Vice President, Global Marketing in January 2006.

31

Special Note Regarding Comparability of Periods

      The financial statements for fiscal 2005 are not directly comparable to our financial statements for prior periods because they are presented on a combined basis to include the financial results of WinZip from January 18, 2005 to November 30, 2005, which reflects the period under which WinZip and we were under common control by Vector Capital.

      Our financial statements for periods commencing on and after August 29, 2003 are not comparable to our financial statements prior to August 29, 2003 because we established a new basis of accounting as a result of being acquired by Vector Capital. As the Vector Capital acquisition occurred in August 2003, our 2003 results of operations include a predecessor company period from December 1, 2002 through August 28, 2003 and a successor company period from August 29, 2003 through November 30, 2003. We have combined these periods into an annual presentation for 2003 to facilitate comparisons to our results of operations in 2004 and 2005. The combined periods for 2003 are presented only for convenience of annual comparison and are not meant to be a presentation in accordance with generally accepted accounting principles. Unless otherwise indicated, references in this prospectus to our 2003 operating results refer to the combined periods discussed above.

Operations

Revenues

      We derive revenues principally from the sale of our packaged software, and also associated maintenance and support services. Maintenance and services revenues have historically constituted between 9% and 13% of our total revenues. We expect maintenance and services revenues to be approximately 10% of total revenues in the future. We distribute our software through OEMs, the Internet, retailers and resellers around the world. Our products are focused on two primary software markets—the productivity market and the graphics and digital imaging market. Our productivity products are WordPerfect Office Suite, iGrafx FlowCharter, iGrafx Process and, upon completion of the acquisition of WinZip, WinZip compression tools. Our graphics and digital imaging products consist of CorelDraw Graphics Suite, Corel Paint Shop Pro, Corel Photo Album, Corel Painter and Corel DESIGNER. In fiscal 2005, approximately 63.4% of our revenues came from the Americas, 29.7% came from Europe, the Middle East and Africa (EMEA) and 6.9% came from the Asia Pacific region.

      Our products generally have release cycles of between 12 and 24 months and we typically earn the largest portion of revenues for a particular product during the first half of its release cycle. In the past we have experienced declines in product revenues during the second half of product release cycles, with the sharpest declines occurring toward the end of the release cycle. We expect to continue to rely on a relatively small number of major products for a large percentage of our revenues and we therefore expect to continue to experience volatility in quarterly revenues as a result of the timing of major product releases. The fiscal quarter of the most recent release of each of our major products is set forth below:

Product		Version		Release Quarter
Productivity:
	WordPerfect Office Suite		13		Q1 2006
	WinZip		10		Q4 2005
	iGrafx FlowCharter		11		Q1 2006
	iGrafx Process		11		Q1 2006
Graphics and Digital Imaging:
	CorelDRAW Graphics Suite		13		Q1 2006
	Corel DESIGNER Suite		12		Q2 2005
	Corel Painter		9		Q4 2004
	Corel Paint Shop Pro		10		Q4 2005
	Corel Photo Album		6		Q4 2005

      We have typically released new versions of our digital imaging products on an annual basis during the second half of our fiscal year in preparation for the December holiday shopping season. While we expect to do

32

so in fiscal 2006 as well, it should be noted that release dates are subject to a number of uncertainties and variables, many of which are beyond our control. As described under “Risk Factors,” if the release of new versions of our software is delayed or we do not achieve widespread market acceptance, our results of operations will be adversely affected.

Cost of Revenues

      Cost of product revenues primarily consists of:

• salaries, benefits, stock-based compensation and related costs of the manufacturing oversight staff;

• the cost of packaging and distribution of our packaged software products;

• the cost of related customer and technical support functions;

• royalties paid and costs of licensing third party intellectual property;

• credit card fees; and

• allocated facilities, depreciation and amortization and other related overhead.

      Our cost of product revenues varies depending on the format in which our products are delivered. Products delivered in electronic format, such as through OEMs or our e-Store, involve minimal packaging cost, as compared to products delivered in fully packaged format, such as through retail outlets, which involve substantially higher packaging and distribution expense.

      Cost of maintenance and services revenues consists of:

• salaries, benefits, stock-based compensation and related costs of customer and technical support functions,

• allocated facilities, depreciation and amortization and other related overhead.

      Amortization of intangible assets represents the amortization of intellectual property and other intangible assets arising from purchases of other companies as well as the amortization of the technology owned by us that was re-valued when we were acquired by Vector Capital. Amortization of intangible assets is included in the calculation of our gross margin.

Sales and Marketing

      Sales and marketing expenses consist primarily of:

• salaries, commissions, benefits and stock-based compensation related to sales and marketing personnel;

• travel and living expenses;

• marketing, such as co-marketing programs with our resellers and OEMs, trade shows and advertising; and

• allocated facilities, depreciation and amortization and other related overhead.

      While sales commission expense varies as a function of revenues from period-to-period, we expect increases in non-commission sales and marketing expenses as we plan to increase the size of our sales and marketing staff and launch new business initiatives. We also expect increases in sales and marketing expenses to occur at the time of major product or version releases.

33

Research and Development

      Research and development expenses consist primarily of:

• salaries, benefits and stock-based compensation related to research and development personnel;

• allocated facilities, depreciation and amortization and other related overhead; and

• localization and contract development expenses.

      Our research and development investments are primarily focused on maintaining competitive functionality of our software products, responding to customer requirements and expanding the geographic reach of our products. We limit research and development spending to areas that we believe will provide an attractive return on investment and have eliminated spending on speculative or high risk projects. Our research and development costs are expensed as incurred since the cost and time between technical feasibility and release is insignificant. We do not expect research and development expenses to increase except to the extent we add new product offerings through future acquisitions.

General and Administrative

      General and administrative expenses consist primarily of:

• salaries, benefits and stock-based compensation related to general and administrative personnel;

• accounting, legal and other professional fees;

• allocated facilities, depreciation and amortization and other related overhead; and

• insurance costs.

      We expect general and administrative expenses to increase for the foreseeable future as we incur additional expenses related to being a public company, including higher insurance costs, increased professional fees, costs of general corporate governance and internal controls testing and reporting.

Taxes

      We have tax losses carried forward available to offset future taxable income of approximately $249.0 million as of November 30, 2005. Our tax losses carried forward and our pools of various deductions against taxable income existed prior to our acquisition by Vector Capital. To the extent that we use pre-acquisition tax carryforwards to reduce current year taxes otherwise payable, we record deferred income tax expense and credit first goodwill and then intangible assets that were revalued in connection with our acquisition by Vector Capital. Our balance of goodwill resulting from the Vector Capital acquisition was reduced to zero in fiscal 2004, and our remaining balance of other intangible assets from the Vector Capital acquisition was $4.3 million at November 30, 2005. Once the remaining balance of other intangible assets is eliminated, no tax provision will be recognized against Canadian operations as the previously unrecognized losses are applied against current earnings or until it is determined that current valuation allowances are no longer required.

      The settlements of any tax contingencies that existed prior to our acquisition by Vector Capital are treated as pre-acquisition contingences in accordance with SFAS No. 141, “Business Combinations” and are therefore applied against goodwill and then intangibles until such time as these assets have no value, and are thereafter included as a component of our income tax provision.

      Due to the international scope of our business, our income tax expense includes the tax provisions calculated for the various tax jurisdictions in which we operate and foreign withholding tax on certain license income. As a result, income tax expense is affected by the profitability of our operations in all locations, as well as local tax rates.

34

Results of Operations

Year ended November 30, 2005 (combined) as compared to year ended November 30, 2004

      Concurrently with the closing of this offering, we will acquire all of the outstanding securities of WinZip from Vector Capital. The comparative financial information presented below for fiscal 2005 is presented on a combined basis to include the financial information of WinZip from January 18, 2005 to November 30, 2005, which reflects the period that WinZip and we were under common control by Vector Capital. WinZip accounted for the acquisition by Vector Capital by applying push-down accounting. As a result, WinZip reduced the amount of its deferred revenue to represent the fair value of the associated liability that existed at the acquisition date. This resulted in a $66.2 million decrease in the liabilities associated with its deferred revenues. Approximately $19.8 million of the reduction in deferred revenues would have been recognized as revenue in fiscal 2005. Accordingly, the consolidated financial information for fiscal 2005 presented below is not directly comparable to the consolidated financial information presented for fiscal 2004. In addition, the consolidated financial information presented below includes the financial results of the Jasc business since October 2004.

      The following table sets forth certain consolidated statements of operations data in dollars and expressed as a percentage of revenues for the periods indicated, as well as the percentage change on a year-over-year basis.

		Years Ended November 30,
														Percentage
		2004			2005			2004			2005			Change
					(combined)						(combined)
		(dollars in thousands)
Revenues
	Product	$	97,724		$	148,308			87.5	%		90.4	%		51.8	%
	Maintenance and services		13,968			15,736			12.5			9.6			12.7
Total revenues			111,692			164,044			100.0			100.0			46.9
Cost of revenues
	Cost of product(1)		14,215			18,461			14.5			12.4			29.9
	Cost of maintenance and services(1)		1,085			1,154			7.8			7.3			6.4
	Amortization of intangible assets		16,547			26,139			14.8			15.9			58.0
Total cost of revenues			31,847			45,754			28.5			27.9			43.7
Gross margin			79,845			118,290			71.5			72.1			48.1
Operating expenses:
	Sales and marketing		38,508			54,056			34.5			33.0			40.4
	Research and development		14,550			23,538			13.0			14.3			61.8
	General and administrative		14,876			19,851			13.3			12.1			33.4
	Other operating expense		—			3,125			—			1.9			—
	Restructuring		3,520			834			3.2			0.5			(76.3	)
Total operating expenses			71,454			101,404			64.0			61.8			41.9
Income from operations			8,391			16,886			7.5	%		10.3	%		101.2	%
Other expenses (income):
	Loss on debt retirement		—			3,937			*			*			*
	Interest expense, net		1,224			12,608			*			*			*
	Gain on disposal of investments		(729	)		(125	)		*			*			*
	Amortization of deferred financing fees		407			1,756			*			*			*
	Other non-operating (income) expense		(1,033	)		1,172			*			*			*
Income (loss) before income tax expense (recovery)			8,522			(2,462	)		*			*			*
Income tax expense			7,315			6,291			*			*			*
Net income (loss)		$	1,207		$	(8,753	)		*			*			*

(1)  Percentage reflects percentage of related revenues.

* Not Meaningful

Revenues

      Product revenues increased by 51.8% to $148.3 million in fiscal 2005 from $97.7 million in fiscal 2004. Growth in our product revenues was a result of our inclusion of WinZip revenues beginning in January 2005 and our acquisition of Jasc in October 2004, which resulted in $18.9 million and $36.4 million of incremental

35

product revenues for fiscal 2005, respectively. Revenues from our existing products declined $4.7 million on a year-over-year basis as several of our products were in the latter half of their release cycles.

      Maintenance and services revenues increased by 12.7% to $15.7 million in fiscal 2005 from $14.0 million in fiscal 2004. Fiscal 2005 had a $2.1 million increase in maintenance and services revenue from renewals of maintenance contracts, the revenues from which were not previously recognized due to the application of push-down accounting. An additional $497,000 of maintenance and services revenues resulted from the implementation of a maintenance program for our WinZip product in the latter half of fiscal 2005. These increases were partially offset by a $900,000 decline in maintenance revenues due to a number of government customers not renewing their maintenance contracts.

Total Revenues by Product Group

		Years Ended November 30,
												Percentage
		2004		2005		2004			2005			Change
				(combined)					(combined)
		(dollars in thousands)
Productivity		$	49,775	$	67,597		44.6	%		41.2	%		35.8	%
Graphics and digital imaging			61,828		96,447		55.4			58.8			56.0	%
Discontinued products			89		—		—			—			—	%
	Total	$	111,692	$	164,044		100.0	%		100.0	%

      Productivity revenues increased by 35.8% to $67.6 million in fiscal 2005 from $49.8 million in fiscal 2004. The inclusion of WinZip contributed $19.4 million to productivity revenues in fiscal 2005. Partially offsetting this increase, revenues from our core productivity products, WordPerfect, which was in the latter half of its release cycle, and iGrafx together declined by $1.6 million.

      Graphics and digital imaging revenues increased 56.0% to $96.4 million in fiscal 2005 from $61.8 million in fiscal 2004. Revenues from our core graphics & digital imaging products, CorelDRAW Graphics Suite, Corel Painter, and Corel DESIGNER Technical Suite, remained relatively consistent from 2004 to 2005 at $52.8 million. Sales of Corel Paint Shop Pro and Corel Photo Album, which were acquired in the Jasc acquisition in late in fiscal 2004, contributed approximately $40.9 million and $4.5 million to graphics and digital imaging revenues in fiscal 2005 and fiscal 2004, respectively. On a pro forma basis for all of fiscal 2004, including the periods before and after our acquisition of Jasc, revenues for Paint Shop Pro and Photo Album totaled $35.3 million. In addition, there was a $1.8 million decline in other non-core product lines that are no longer supported by additional research and development investments.

Total Revenues by Region

		Years Ended November 30,
												Percentage
		2004		2005		2004			2005			Change
				(combined)					(combined)
		(dollars in thousands)
Americas		$	67,212	$	104,017		60.2	%		63.4	%		54.8	%
EMEA			38,673		48,752		34.6			29.7			26.1	%
Asia Pacific			5,807		11,275		5.2			6.9			94.2	%
	Total	$	111,692	$	164,044		100.0	%		100.0	%

      The addition of Corel Paint Shop Pro and Corel Photo Album to our product line resulted in increased revenues of $21.5 million, $11.5 million and $3.4 million in the Americas, EMEA and Asia Pacific, respectively, in fiscal 2005 compared to fiscal 2004. The inclusion of WinZip in our results increased revenues by $18.5 million, $846,000 and $69,000 in the Americas, EMEA and Asia Pacific, respectively, in fiscal 2005 compared to fiscal 2004.

      Revenues from our existing products and services in the Americas declined overall by $3.2 million in fiscal 2005 over fiscal 2004 as a few of our products were in the second half of their release cycle. This overall decline was net of a $1.0 million increase in Corel Painter revenue due to the release of Corel Painter 9 in the

36

fourth quarter of fiscal 2004 and a $2.1 million increase in WordPerfect maintenance revenue contracts, the revenues from which were not previously recognized due to the application of push-down accounting.

      EMEA revenues for our existing products and services decreased overall by $2.3 million largely due to a decline in the retail sales of CorelDRAW, which was in the second half of its release cycle. This decline was net of a $698,000 increase in Corel DESIGNER 12 revenues and a $587,000 increase in Corel Painter revenues due to the two products being in earlier stage of their release cycles.

      Excluding the addition of Corel Paint Shop Pro and Corel Photo Album, Asia Pacific revenues increased by $1.7 million due to the opening of our office in Japan and renewed focus on the Japanese market.

Cost of Revenues

      Cost of Product Revenues. Cost of product revenues increased 29.9% to $18.5 million in fiscal 2005 from $14.2 million in fiscal 2004. As a percentage of product revenues, cost of product revenues decreased to 12.4% in fiscal 2005 from 14.5% in fiscal 2004. The decrease as a percentage of product revenues was primarily attributable to an increased percentage of sales made via electronic downloads, as opposed to sales of packaged products in physical form. This change in our distribution mix is largely due to the inclusion of WinZip, which primarily distributes product via electronic downloads.

      Cost of Maintenance and Services Revenues. Cost of maintenance and services revenues increased 6.4% to $1.2 million in fiscal 2005 from $1.1 million in fiscal 2004. As a percentage of maintenance and services revenues, cost of maintenance and services revenues decreased to 7.3% in fiscal 2005 from 7.8% in fiscal 2004. This decrease resulted from the increase in maintenance and services revenues with a smaller increase in associated costs, which are primarily fixed costs.

      Amortization of Intangible Assets. Amortization of intangible assets increased 58.0% to $26.1 million in fiscal 2005 from $16.5 million in fiscal 2004 due to $5.8 million and $3.6 million of amortization of technology and other intangible assets associated with Jasc and WinZip, respectively. The asset revaluation amounts from the application of push-down accounting from our acquisition by Vector Capital in 2003 are expected to be fully amortized by the end of the first quarter of fiscal 2006, and therefore amortization of intangible assets is expected to decline in fiscal 2006, excluding the effect of any future acquisitions.

Operating Expenses

      Sales and Marketing. Sales and marketing expenses increased 40.4% to $54.0 million in fiscal 2005 from $38.5 million in fiscal 2004. As a percentage of total revenues, sales and marketing expenses decreased to 33.0% in fiscal 2005 from 34.5% in fiscal 2004. Increases to sales and marketing expenses included $5.6 million and $1.6 million related to the addition of Jasc and the inclusion of WinZip respectively. In addition, salaries and benefits related to the expansion of our sales and marketing organization contributed $6.9 million of this increase, and stock-based expenses contributed over $500,000 of this increase.

      Research and Development. Research and development expenses increased 61.8% to $23.5 million in fiscal 2005 from $14.6 million in fiscal 2004. As a percentage of total revenues, research and development expenses increased to 14.3% in fiscal 2005 from 13.0% in fiscal 2004. The addition of Jasc and the inclusion of WinZip research and development teams accounted for $5.7 million and $2.0 million of the increase, respectively. The increase as a percentage of revenue is a result of the Jasc product line having relatively higher development costs. Development costs for WordPerfect were also brought back in-house late in 2004, and added $956,000 of costs in fiscal 2005.

      General and Administrative. General and administrative expenses increased 33.4% to $19.9 million in fiscal 2005 from $14.9 million in fiscal 2004. As a percentage of total revenues, general and administrative expenses decreased to 12.1% in fiscal 2005 from 13.3% during fiscal 2004. The absolute dollar increase in general and administrative expenses resulted from the addition of Jasc and the inclusion of WinZip operations, which contributed $1.7 million and $2.3 million, respectively. In fiscal 2005 we also incurred over $800,000 in additional stock-based expenses due to our executive hirings and $292,000 of professional fees associated with corporate governance and planning.

37

      Other Operating Expense. Other operating expense in fiscal 2005 includes $2.2 million related to the termination of an obligation for naming rights on a sporting and entertainment venue, and $883,000 of fees associated with corporate and tax planning for WinZip.

      Restructuring. Restructuring consists of severance and related expenses for terminated employees. The majority of the restructuring charges totaling $834,000 in fiscal 2005 relate to the integration of Jasc. There are no future service obligations due from any of our terminated employees, and we do not expect any future restructuring expenses to occur as a result of the Jasc integration.

      The restructuring charges in fiscal 2004 reflect the restructuring of our operations after the acquisition of us by Vector Capital. These amounts include severance for certain senior executives. All amounts associated with this restructuring plan were paid by November 30, 2004. There are no further service obligations due from any of our terminated employees, and we do not expect any future expenses associated with this restructuring.

Non-Operating (Income) Expense

      Loss on Debt Retirement. The $3.9 million loss on retirement of debt in fiscal 2005 consisted of financing fees of $1.9 million, and an early repayment fee of $2.0 million incurred on the termination of the credit facility with Wells Fargo Foothill (WFF). The remaining unamortized portion of the fees, along with the early repayment charge were written-off when the WFF facility was repaid in full in February 2005 and a new debt facility was arranged with Credit Suisse First Boston (CSFB). We expect to incur an additional loss on retirement of debt in fiscal 2006 of approximately $7.9 million as a result of the refinancing of the CSFB facility that will occur concurrently with this offering.

      Interest (Income) Expense, Net. Net interest expense increased to $12.6 million in fiscal 2005 from $1.2 million in fiscal 2004. During fiscal 2005, our borrowings averaged $136.0 million, while in fiscal 2004 our borrowings averaged $31.3 million. These borrowings were used primarily to fund distributions to our shareholders and the acquisition of Jasc. We expect our new credit facility to facilitate a reduction in interest expense in fiscal 2006, assuming no substantial draws on our new revolving credit facility.

      Amortization of Deferred Financing Fees In fiscal 2005, we entered into a new debt facility with CSFB increasing our total debt to $130.0 million. This facility had higher financing fees associated with it and consequently amortization of deferred financing fees increased from $407,000 to $1.8 million in fiscal 2005.

      Other Non-Operating Expense. Other non-operating expense consists primarily of foreign exchange gains and losses and unrealized gains and losses on forward exchange contracts. The expense of $1.2 million in fiscal 2005 compared to a gain of $1.0 million in fiscal 2004 is due the decline of the US dollar compared to the Euro and Japanese Yen.

      Income Tax Expense (Recovery). Income tax expense of $6.3 million for fiscal 2005 consisted of current tax expense of $5.5 million plus deferred tax expense of $830,000, compared to a tax expense of $7.3 million for fiscal 2004 that included current tax expense of $2.1 million plus deferred tax expense of $5.2 million. Our income tax expense for fiscal 2005 is net of the recovery from the settlement of a tax claim in Europe of approximately $500,000 and includes approximately $4.1 million of current taxes on WinZip operations.

      Current taxes in both periods include foreign withholding taxes plus taxes incurred by our foreign subsidiaries. Deferred tax expense in both periods related to the tax benefits realized in Canada from the use of tax carryforwards, existing prior to our acquisition by Vector Capital, in post-acquisition periods, less deferred tax credits relating to WinZip operations in 2005.

      We expect our effective tax rate, without considering deferred taxes, to be between 10% and 20% for the next three to five years.

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Year Ended November 30, 2004 as Compared to Year Ended November 30, 2003.

      We were acquired by Vector Capital on August 28, 2003. We accounted for the acquisition by allocating the purchase price paid by Vector Capital to our net assets (known as “push-down accounting”). Because of the application of push-down accounting, the consolidated financial statements for the periods ended prior to August 29, 2003 (predecessor) are not comparable to the consolidated financial statements for the periods ended after August 28, 2003. In particular, amortization of intangible assets reflected in the financial statements subsequent to August 28, 2003 includes amortization associated with the revaluation of existing technology as of August 28, 2003. In addition, with push-down accounting, we reduced the amount of our deferred revenue to represent the fair value of the associated liability that existed at the date of acquisition. This resulted in a $7.1 million decrease in the liability associated with the right to unspecified upgrades. Approximately 70.5% of this reduction related to WordPerfect Office Suite, approximately 23.6% related to graphics products and the remainder related to other products. Approximately $4.0 million of the reduction in deferred revenue would have been recognized as revenue in fiscal 2004.

      The following table sets forth certain consolidated statements of operations data expressed in dollars and as a percentage of revenues for the periods indicated, as well as the percentage change on a year-over-year basis.

		Year Ended November 30,
														Percentage
		2003			2004			2003			2004			Change
		(dollars in thousands)
Revenues
	Product	$	97,336		$	97,724			89.1	%		87.5	%		0.4	%
	Maintenance and services		11,856			13,968			10.9			12.5			17.8
Total revenues			109,192			111,692			100.0			100.0			2.3
Cost of revenues
	Cost of product(1)		19,994			14,215			20.5			14.5			(28.9	)
	Cost of maintenance and services(1)		1,451			1,085			12.2			7.8			(25.2	)
	Amortization of intangible assets		9,793			16,547			9.0			14.8			69.0
Total cost of revenues			31,238			31,847			28.6			28.5			1.9
	Gross margin		77,954			79,845			71.4			71.5			2.4
Operating expenses:
	Sales and marketing		59,085			38,508			54.1			34.5			(34.8	)
	Research and development		20,971			14,550			19.2			13.0			(30.6	)
	General and administrative		31,995			14,876			29.3			13.3			(53.5	)
	Restructuring		1,138			3,520			1.0			3.2			209.3
Total operating expenses			113,189			71,454			103.6			64.0			(36.9	)%
Income (loss) from operations			(35,235	)		8,391			(32.3	)%		7.5	%		*
	Interest (income) expense, net		(1,177	)		1,224			*			*			*
	Impairment (gain on disposal) of investments		7,448			(729	)		*			*			*
	Amortization of deferred financing fees		24			407			*			*			*
	Other non-operating income		(2,165	)		(1,033	)		*			*			*
Income (loss) before undernoted			(39,365	)		8,522			*			*			*
Income tax expense (recovery)			(3,340	)		7,315			*			*			*
Share of loss of equity investments, net of tax			1,142			—			*			*			*
Net income (loss)		$	(37,167	)	$	1,207			*			*			*

*  Not meaningful.

(1)  Percentage reflects percentage of related revenues.

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     Information presented in the table above and in the discussion below that relates to our 2003 operating results is presented for a combined twelve month period ended November 30, 2003, which includes a predecessor company period from December 1, 2002 through August 28, 2003 and a successor company period from August 29, 2003 through November 30, 2003. The table below sets forth the summation of the pre-acquisition and post-acquisition periods to present operating results for the twelve month period ended November 30, 2003. Unless otherwise indicated, references to our 2003 operating results, refer to the combined twelve month period.

									Pro Forma
			Predecessor						Combined
						August 29, 2003			Twelve Month
			December 1, 2002			Through			Period Ended
			Through August 28,			November 30,			November 30,
			2003			2003			2003
			(in thousands)
Revenues
	Products		$	76,309		$	21,027		$	97,336
	Maintenance and services			9,077			2,779			11,856
Total revenues				85,386			23,806			109,192
Cost of revenues
	Cost of product			16,560			3,434			19,994
	Cost of maintenance and services			1,063			388			1,451
	Amortization of intangible assets			5,661			4,132			9,793
Total cost of revenues				23,284			7,954			31,238
	Gross margin			62,102			15,852			77,954
Operating expenses:
		Sales and marketing		45,465			13,620			59,085
		Research and development		16,342			4,629			20,971
		General and administrative		26,408			5,587			31,995
		Restructuring		—			1,138			1,138
Total operating expenses				88,215			24,974			113,189
Loss from operations				(26,113	)		(9,122	)		(35,235	)
		Interest (income) expense, net		(1,383	)		206			(1,177	)
		Impairment of cost and equity investment		7,448			—			7,448
		Amortization of deferred financing fees		—			24			24
		Other non-operating income		(1,530	)		(635	)		(2,165	)
Loss before undernoted				(30,648	)		(8,717	)		(39,365	)
Income tax (recovery) expense				(3,895	)		555			(3,340	)
Share of loss of equity investments, net of tax				1,142			—			1,142
Net income (loss)			$	(27,895	)	$	(9,272	)	$	(37,167	)

Revenues

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      Product revenues remained essentially constant at $97.7 million in fiscal 2004 compared to $97.3 million in 2003. In fiscal 2004 we experienced increases in revenues attributable to the releases of three major products—CorelDraw Graphics Suite 12, WordPerfect Office Suite 12 and Corel Paint Shop Pro 8, which was acquired from Jasc in the fourth quarter of 2004. As we focused our attention on core products, our product revenue growth was partially offset by a $2.3 million decline in revenues from underperforming product lines that were either sold off or received no further development or marketing funds.

      Maintenance and services revenues increased by 17.8% to $14.0 million in fiscal 2004 from $11.9 million in 2003. The increase in maintenance and services revenues was primarily attributable to increased sales of maintenance contracts to several of our government customers. In addition, as a result of our revaluation of deferred revenue as part of the push-down accounting in connection with our acquisition by Vector Capital, maintenance and services revenues in fiscal 2004 were $4.0 million less than they would have been in the absence of this revaluation.

Total Revenues by Product

		Year Ended November 30,
												Percentage
		2003		2004		2003			2004			Change
		(dollars in thousands)
Productivity		$	49,751	$	49,775		45.6	%		44.6	%		—	%
Graphics and digital imaging			57,007		61,828		52.2			55.4			8.5	%
Discontinued products			2,434		89		2.2			—			(96.3)	%
	Total	$	109,192	$	111,692		100.0	%		100.0	%

      Productivity revenues, consisting of revenues from WordPerfect Office Suite and iGrafx were essentially unchanged between fiscal 2004 and 2003. The effect of push-down accounting in fiscal 2004 discussed above was off-set by an increase in OEM sales of WordPerfect Office Suite 12 and in iGrafx revenues.

      Graphics and Digital Imaging revenues increased 8.5% to $61.8 million in fiscal 2004 from $57.0 million in 2003. Revenues from our core graphics & digital imaging products, CorelDRAW Graphics Suite, Corel Painter, and Corel DESIGNER Technical Suite, grew by $2.5 million in 2004 due to the release of CorelDRAW Graphics Suite 12 in the first quarter of fiscal 2004. Corel Paint Shop Pro and Corel Photo Album, which were acquired in the Jasc acquisition, contributed $4.5 million to revenues in fiscal 2004. These increases were partially offset by a $2.2 million decrease in overall revenues from other graphics and digital imaging products.

      Revenues from discontinued products declined to $89,000 in fiscal 2004 from $2.4 million in 2003. We sold our XML technology in January 2004 and our Smart Graphics product line was discontinued in the first quarter of fiscal 2004.

Total Revenues by Region

		Year Ended November 30,
												Percentage
		2003		2004		2003			2004			Change
		(dollars in thousands)
Americas		$	68,005	$	67,212		62.3	%		60.2	%		(1.2)	%
EMEA			34,716		38,673		31.8			34.6			11.4	%
Asia Pacific			6,471		5,807		5.9			5.2			(10.3)	%
	Total	$	109,192	$	111,692		100.0	%		100.0	%

      Revenues in the Americas remained relatively constant year-over-year. EMEA had a $4.4 million increase in revenues from the release of CorelDRAW Graphics Suite 12 and benefited from the favorable effect of the strengthened euro in the last half of the year. The reduction in Asia Pacific region revenues resulted principally from a $1.2 million decrease in revenues from Corel Painter, which was in the second half of its release cycle in 2004, partially offset by increases in revenues from other graphics products.

41

Cost of Revenues

      Cost of Product Revenues. Cost of product revenues decreased 28.9% to $14.2 million in fiscal 2004 from $20.0 million in 2003. As a percentage of product revenues, cost of product revenues decreased to 14.5% in fiscal 2004 from 20.5% in 2003. Major cost reductions in this area included $4.5 million related to packaging costs and efficiencies in inventory management. We also renegotiated and eliminated various third-party technology contracts resulting in $264,000 in reductions. Headcount reductions in customer and technical support also resulted in cost savings of $1.8 million. The cost reductions were partially offset by $1.0 million of additional product costs resulting from the acquisition of Jasc in November 2004.

      Cost of Maintenance and Services Revenues. Cost of maintenance and services revenues decreased 25.2% to $1.1 million in fiscal 2004 from $1.5 million in 2003. As a percentage of maintenance and services revenues, cost of maintenance and service revenues decreased to 7.8% from 12.2% in 2003. Reductions in customer and technical support staff accounted for all of the cost savings in fiscal 2004.

      Amortization of Intangible Assets. Amortization of intangible assets increased 69.0% to $16.5 million in fiscal 2004 from $9.8 million in 2003. The increase was a result of the revaluation of technology assets in the application of push-down accounting resulting from our acquisition by Vector Capital in August 2003.

Operating Expenses

      Sales and Marketing. Sales and marketing expenses decreased 34.8% to $38.5 million in fiscal 2004 from $59.1 million in 2003. As a percentage of total revenues, sales and marketing expenses decreased to 34.5% in fiscal 2004 from 54.1% in 2003. As a result of the cost reduction measures that were implemented after Vector Capital acquired us, in fiscal 2004 we reduced salary and related expenses by $9.9 million, marketing program expenses by $4.3 million, operating expenses related to consulting and other service contracts by $4.8 million and travel and entertainment expenses by $713,000.

      Research and Development. Research and development expenses decreased 30.6% to $14.6 million in fiscal 2004 from $21.0 million in 2003. As a percentage of total revenues, research and development decreased to 13.0% in fiscal 2004 from 19.2% in 2003 through the implementation of our restructuring plan. In particular, we eliminated approximately $6.4 million of staffing costs associated with discontinued and underperforming products and reduced localization costs.

      General and Administrative. General and administrative expenses decreased 53.5% to $14.9 million in fiscal 2004 from $32.0 million in 2003. As a percentage of total revenues, general and administrative expenses decreased to 13.3% in fiscal 2004 from 29.3% in 2003. In 2003, general and administrative expenses included $7.0 million of expenses related to our acquisition by Vector Capital and $3.7 million in insurance, legal and investor relations expenses attributable to being a public company. In addition to not having those type of expenses in 2004, the decrease in expenses also resulted from the implementation of our restructuring plan and included reductions of $4.7 million in facility costs and $1.4 million in salary and benefit expenses as a result of head count reductions.

      Restructuring. Restructuring expenses of $3.5 million in fiscal 2004 and $1.1 million in 2003 consist of severance and related costs associated with the restructuring we undertook in connection with our acquisition by Vector Capital. The restructuring took place in the fourth quarter of 2003 through the second quarter of fiscal 2004 and resulted in workforce reductions of 124 employees in 2003 and 104 employees in 2004, including 5 senior executives. All amounts associated with this restructuring were paid by November 30, 2004 and we expect no future expenses associated with this restructuring. There are no future service obligations due from our terminated employees.

Non-Operating (Income) Expense

      Interest (Income) Expense, Net. Net interest expense was $1.2 million in fiscal 2004, compared to income of $1.2 million in 2003. The change is attributable to the indebtedness incurred by us in connection with our acquisition by Vector Capital in August 2003 and reduced cash balances due to the use of our excess cash as part of the acquisition.

42

      Impairment (Gain on Disposal) of Investments. We realized a $729,000 gain in fiscal 2004 from the cash disposition of an equity investment. In 2003, a review of our investments indicated they were generating consistent losses. Consequently, we recognized an impairment charge of $7.4 million related to these investments.

      Other Non-Operating Income. The gains of $1.0 million in fiscal 2004 and $2.1 million in 2003 consist primarily of foreign exchange gains which resulted from improved strength of the Canadian dollar, pound sterling and the euro relative to the U.S. dollar as they affected translation of asset values in non-U.S. jurisdictions. In 2004 we also recorded $894,000 of gains on the sales of underperforming product lines, offset by a loss of $705,000 on the disposal of fixed assets and a $291,000 write-off of technology.

      Income Tax Expense (Recovery). Income tax expense of $7.3 million in fiscal 2004 included current tax expense of $2.1 million plus deferred tax expense of $5.2 million compared to a recovery of $3.3 million in 2003 that consisted of a current tax recovery of $3.4 million less deferred tax expense of approximately $99,000. The 2003 recovery related to the settlement of prior year tax audits, less current tax expense for the year.

Liquidity and Capital Resources

      We were acquired by Vector Capital in August 2003 for aggregate consideration paid to our former shareholders of $111.3 million in cash, of which $40.5 million was provided by working capital from our balance sheet, $13.0 million was provided by us under our WFF credit facility, $17.0 million was provided by us through subordinated borrowings from Vector Capital and $40.8 million was paid directly by Vector Capital. As of November 30, 2003 we had negative working capital of $3.6 million and $17.3 million of long term debt. For the two years ended November 30, 2005, we generated an aggregate of $73.0 million of cash flow from operations and received an aggregate of $94.2 million in net proceeds from increases in borrowings under our credit facilities. During this same period we used $32.3 million to fund the acquisition of Jasc and $138.2 million for distributions to our shareholders. At November 30, 2005 we had negative working capital of $24.3 million and $134.0 million of long term debt.

Working Capital

      Current assets at November 30, 2005 were $45.7 million, a decline of $546,000 from the November 30, 2004 year end balance of $46.2 million. The decrease was primarily attributable to the reduction of cash and short term investments from $23.9 million to $21.7 million but was partially offset by the additional current assets associated with WinZip. Current assets were $40.8 million at November 30, 2003. The increase to $46.2 million at the end of 2004 was primarily due to a $6.5 million increase in trade receivables, which included $9.3 million of trade receivables added as a result of the acquisition of Jasc in October 2004.

      Current liabilities at November 30, 2005 were $70.0 million, an increase of $4.3 million from November 30, 2004. The increase primarily resulted from the inclusion of $14.4 million of current liabilities associated with WinZip and the addition of the $1.2 million current portion of a promissory note in connection with the termination of a naming rights agreement. This was partially offset by a $12.0 million reduction in the current portion of the term loans payable from the refinancing of our credit facility in February 2005. Current liabilities increased from $44.3 million at November 30, 2003 to $65.7 million at November 30, 2004, due primarily to a $4.2 million increase in accounts payable and accrued liabilities from the assumption of Jasc obligations and a $19.5 million increase in the current portion of terms loans payable with the amendment of the WFF facility as discussed below.

Long-Term Liabilities

      Our WFF credit facility was increased from $10.0 million to $47.5 million in June 2004. Funds from this refinancing were used to make a distribution of $39.8 million to Vector Capital and repay our $7.0 million subordinated debt. In October 2004 the WFF facility was further increased to $67.5 million to provide additional funds for the purchase of Jasc.

43

      We refinanced our WFF facility during the first quarter of fiscal 2005, entering into a facility with CSFB that resulted in an increase in term loans payable from $56.4 million to $130.0 million. As a result of the refinancing, we incurred $7.4 million of set up fees for the new facility. Net proceeds from borrowings under this facility were used to repay the WFF facility and partially fund a distribution of $85.3 million to our shareholders.

      During fiscal 2005 WinZip negotiated two credit facilities. The first facility was a promissory note for $15.0 million. This note was repaid in June 2005 when WinZip negotiated a new $23.0 million term loan and a $1.0 million revolving line of credit.

      Contemporaneous with this offering, we expect to replace our CSFB facility and the existing WinZip facility with our new credit facility. Based on cash and cash equivalents as of November 30, 2005 and after giving pro forma effect for this offering, our new credit facility and the $7.5 million WinZip dividend, we expect to have approximately $32.7 million of cash and cash equivalents as of the closing of this offering. Actual cash and cash equivalents may vary from this amount with changes in our working capital balance prior to the closing. We expect that upon closing we will have total outstanding debt of $90.0 million and will have the ability to borrow up to $75.0 million under our new revolving credit facility. We expect to continue to fund our operations and service our outstanding debt with cash generated from operations.

Cash Flows

	Years Ended November 30,
	2003			2004			2005
							(combined)
	(in thousands)
Cash flow provided by (used in) operating activities	$	(2,121	)	$	32,512		$	40,459
Cash flow used in financing activities		(47,756	)		(5,329	)		(38,552	)
Cash flow provided by (used in) investing activities		49,552			(34,099	)		7,301

Year ended November 30, 2005 (combined) compared to year ended November 30, 2004.

      Cash flow from operating activities in fiscal 2005 was $40.5 million compared to $32.5 million in fiscal 2004. Fiscal 2004 cash flow included non-operational receipts, in particular a recovery of $6.7 million of taxes and interest from settlement of prior year audits and the receipt of $2.9 million from a legal settlement relating to prior years. Cash flow from operating activities in fiscal 2005 included $14.3 million of cash flow from WinZip operations.

      Cash used in financing activities in fiscal 2005 was $38.6 million compared to $5.3 million in fiscal 2004. This included net cash proceeds from refinancing our debt of $58.2 million in fiscal 2005 and $36.0 million in fiscal 2004. These proceeds were offset by distributions to shareholders of $97.3 million in fiscal 2005 and $41.0 million in fiscal 2004. Net proceeds from refinancing in fiscal 2004 included $17.0 million of repayment of subordinated debt to Vector Capital.

      Cash provided by investing activities in fiscal 2005 was $7.3 million compared to cash used in investing activities of $34.1 million in fiscal 2004. In fiscal 2005, cash was provided by $10.0 million from the redemption of short-term investments, partially offset by $2.0 million used for the purchase of long lived assets. In fiscal 2004, cash used in investing activities consisted primarily of $32.3 million used for the acquisition of Jasc and $4.0 million used for the purchase of short-term investments, partially offset by $2.0 million of proceeds from disposal of assets.

Year ended November 30, 2004 compared to year ended November 30, 2003.

      Cash flow from operations in fiscal 2004 was $32.5 million compared to cash used in operations of $2.1 million in 2003. The increase was a direct result of the implementation of the restructuring plan in connection with our acquisition by Vector Capital that contributed to a $38.4 million improvement to our net income. This restructuring plan resulted in severance and related costs of $1.1 million and $3.5 million in fiscal 2003 and 2004, respectively. We experienced decreases of approximately $19.8 million in payroll and related expense in fiscal 2004 compared to fiscal 2003. Included in fiscal 2004 cash flows are certain non-operational

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receipts including a recovery of $6.7 million of taxes and interest from settlement of prior year audits and the receipt of $2.9 million from a legal settlement relating to prior years. Included in 2003 cash flows is a recovery of $5.5 million of taxes from settlement of prior year audits and $7.0 million of expenses for legal fees, directors and officers insurance, and stock option payouts related to our acquisition by Vector Capital.

      Cash flow used in financing activities was $5.3 million in fiscal 2004 compared to $47.8 million in 2003. In 2003, $69.8 million was used to fund our acquisition by Vector Capital. Financing activities in fiscal 2004 included $36.0 million of net proceeds from refinancing our debt and $41.0 million used for distributions to Vector Capital. Net proceeds of refinancing activities in 2004 included repayment of $17.0 million of outstanding subordinated notes due to Vector Capital in fiscal 2004.

      Cash flow used in investing activities was $34.1 million in fiscal 2004 compared to cash provided by investing activities of $49.6 million in 2003. Cash used in investing activities in fiscal 2004 was primarily $32.3 million, net of cash acquired, used for our acquisition of Jasc. We also used $4.0 million in cash for the purchase of short term investments. Cash flow from investing activities for 2003 included the redemption of $51.0 million of short term investments to fund our acquisition by Vector Capital.

Indebtedness

      Existing Corel Indebtedness. In June 2004, we entered into a credit facility with Wells Fargo Foothill for an aggregate of $47.5 million. Proceeds from this financing were used to fund a distribution of $39.8 million to Vector Capital and repay $7.0 million in subordinated debt. On October 25, 2004 the WFF term loans were amended and increased to an aggregate of $67.5 million less payments made to date. The increased borrowings were used to partially fund our acquisition of Jasc.

      In February 2005 we entered into a credit facility with CSFB consisting of a $75.0 million first lien credit agreement and a $55.0 million second lien credit agreement. Proceeds from this refinancing were used to repay the WFF term loans in full and to partially fund a distribution to our shareholders of $85.3 million.

      The first lien agreement requires us to make fixed quarterly principal repayments of 1.25% of the original principal amount, or $938,000, from June 30, 2005 to December 31, 2009, with the balance of the loan due on February 25, 2010. The second lien agreement does not require fixed prepayments of principal and is due in full on August 16, 2010. The rate of interest on the first lien agreement is either (i) LIBOR plus 4.25%, or (ii) the higher of the Prime Rate and the Federal Funds Effective Rate plus 0.5%, plus 2.25%, in each case, on the borrowing date. The rate of interest on the second lien agreement is either (i) LIBOR plus 8.0% or (ii) the higher of the Prime Rate and the Federal Funds Effective Rate plus 0.5%, plus 6.0%, in each case, on the borrowing date. We are also required to make an annual principal repayment no later than 90 days after year end, based on a specified formula of excess cash flows generated during the preceding fiscal year. In fiscal 2005, this amount was $6.3 million.

      In addition to the above loans, the facility with CSFB also provides us with a $10.0 million revolving credit commitment which is available for operational needs during the term of the credit agreement. The rate of interest on the revolving credit commitment is (i) LIBOR plus 4.25% or (ii) the higher of the Prime Rate and the Federal Funds Effective Rate plus 0.5%, plus 2.25%, in each case, on the borrowing date.

      Under the CSFB facility, we are required to obtain interest rate protection. In August 2005, we purchased a two year interest rate cap at LIBOR plus 6% on $40.0 million through Wells Fargo Foothill, effective August 5, 2005.

      Under the terms of our credit agreement with CSFB, we are subject to restrictive covenants. Our agreement contains customary restrictions, such as restrictions on additional borrowing, distributions and business acquisitions/divestitures. It also contains financial covenants including requiring:

• our total leverage ratio, which is defined as the ratio of total debt to trailing four quarter Adjusted EBITDA to be less than specified amounts over the term of the facility, from 3.75:1.00 to 2.00:1.00;

• our fixed charge coverage ratio, which is defined as the ratio of our trailing four quarter Adjusted EBITDA to fixed charges, to be at least 1.25:1.00; and

• our ratio of Adjusted EBITDA to consolidated interest to be above specified amounts over the term of the facility from 2.50:1.00 to 3.00:1.00.

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      As of November 30, 2005, we were not in compliance with the total leverage ratio covenant. In March 2006, we obtained an amendment to the existing credit agreement which adjusted the covenants retroactively such that we were in compliance and to facilitate continued compliance through the closing of this offering, at which time the credit facility will be replaced by a new credit facility. We paid a total of $391,000 in exchange for the amendment.

      Existing WinZip Indebtedness. As a result of the combination with WinZip, our financial statements reflect a $20.6 million term loan, which we refer to as the WinZip Term Loan, and a $1.0 million undrawn revolving line of credit, which we refer to as the WinZip Revolver, obtained by WinZip in June 2005. This debt is collateralized by Cayman Ltd. HoldCo, WinZip Holdings SGPS, Lda, WinZip Computing, S.L., WinZip Holdings Spain, S.L., WinZip Computing LP and WinZip Computing LLC. Borrowings under the WinZip credit facility were used to repay an outstanding loan in the amount of $15.0 million and to partially fund a $12.0 million cash dividend to Vector Capital in June 2005.

      The WinZip Term Loan requires monthly payments of $479,000 plus interest until the maturity date of June 29, 2008. At that time, the remaining principal balance is due. The WinZip Term Loan bears interest at prime plus a base rate margin, as defined in the WinZip Term Loan Agreement. For the first three months, the base rate margin was equal to 5.5%. Subsequently, the base rate margin is determined by an adjusted leverage ratio. WinZip can prepay the outstanding balance at any time and there are mandatory semi-annual payments, which began December 31, 2005. The semi-annual payment is equal to 75% of WinZip’s Excess Cash Flow, as defined in the WinZip Term Loan Agreement, for each 6-month period. The WinZip Term Loan is collateralized by WinZip’s intangible assets with a net book value of $24.4 million and cash collateral accounts and is subject to certain financial covenants as set forth in the credit agreement. As of November 30, 2005, there was $20.6 million outstanding under the WinZip Term Loan bearing interest at a rate of 12%.

      The WinZip Term Loan restricts distributions or payments to shareholders. It contains financial and other covenants requiring WinZip to maintain, among other requirements, limitations on capital expenditures, a leverage ratio and a minimum EBITDA level, all as defined in the agreement. In February 2006, WinZip entered into an amendment to the WinZip Term Loan and WinZip Revolver to remove the requirement to make a mandatory semi-annual pre-payment on December 31, 2005, to permit WinZip to pay a dividend of up to $7.5 million and to obtain a waiver of certain other events of default. WinZip paid a total of $50,000 to obtain the waiver and amendment.

      The WinZip Revolver expires on June 29, 2008. Interest on the WinZip Revolver accrues at the same rate as the WinZip Term Loan. The WinZip Revolver is collateralized by WinZip’s intangible assets with a net book value of $24.4 million and cash collateral accounts. As of November 30, 2005, there was no outstanding balance on the WinZip Revolver.

      We expect to repay all outstanding balances under the WinZip Term Loan and the WinZip Revolver concurrently with the closing of this offering.

      New Indebtedness. Concurrently with the closing of this offering, we intend to enter into a $165.0 million senior secured credit facility consisting of a $90.0 million term loan with a six-year maturity and a $75.0 million revolving credit facility with a five-year maturity. The term loan and revolving credit facility will bear interest at floating rates tied to either the Alternate Base Rate (which equals the higher of (i) the federal funds rate plus 50 basis points and (ii) the prime rate) or the Adjusted LIBOR.

      The net proceeds from the term loan will be used to repay existing indebtedness of Corel and WinZip and for general corporate purposes. The revolving credit facility, which will be undrawn at closing, will be available for general corporate purposes, including potential permitted acquisitions.

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      Borrowings under our new credit facility will be collateralized by a pledge of all of our assets, including the stock of our subsidiaries, and by guarantees and security from our material subsidiaries. Our new credit facility will contain financial covenants requiring us to maintain:

• a maximum total leverage ratio of 3.00:1.00 for each fiscal quarter until February 29, 2008; 2.75:1.00 for each successive fiscal quarter until February 28, 2009; 2.50:1.00 for each successive fiscal quarter until February 28, 2010; 2.25:1.00 for each successive fiscal quarter until February 28, 2011; and 2.00:1.00 for each successive fiscal quarter until maturity; and

• a fixed charge coverage ratio of 2.50:1.00.

      For the purposes of the new credit facility, our total leverage ratio and fixed charge coverage ratio will be calculated in the same manner as such ratios are calculated under the CSFB facility described above.

      In addition, the new credit facility will contain various customary restrictive covenants that will limit our and our subsidiaries’ ability to, among other things:

• grant or incur liens on our assets;

• incur more indebtedness or make guarantees;

• engage in mergers, consolidations, liquidations or dissolutions;

• sell or transfer our property or assets;

• pay dividends or make distributions to shareholders;

• make investments, capital expenditures, loans, advances or acquisitions;

• engage in transactions with our affiliates; and

• change the nature of our business.

Contractual Obligations and Commitments

      We do not enter into off-balance sheet financing arrangements. We have operating leases for office space and computer equipment. In accordance with U.S. GAAP, neither the lease liabilities nor the underlying assets are carried on the balance sheet as the terms of the leases do not meet the thresholds for capitalization. Payments on these leases were approximately $4.4 million for fiscal 2005, $4.1 million for fiscal 2004 and $6.7 million for 2003.

      We have debt as discussed in the indebtedness section above.

      The following table outlines our contractual commitments over the next five years and thereafter at November 30, 2005:

		Less						More
		than		1-3		3-5		than
		1 Year		Years		Years		5 Years		Total
		(in thousands)
Long-term debt		$	16,934	$	23,426	$	110,611	$	—	$	150,971
Operating leases			2,876		4,396		926		286		8,484
	Total	$	19,810	$	27,822	$	111,537	$	286	$	159,455

      Since becoming a private company we have funded our operations from cash flow from operations. We believe that our current resources are adequate to meet our requirements for working capital and capital expenditures for at least the next twelve months. At some point in the future we may require additional funds for either operating or strategic purposes and may seek to raise the additional funds through public or private debt or equity financings. If we ever need to seek additional financing, there is a risk that additional financing will not be available, or if available, will not be available on reasonable terms.

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Qualitative and Quantitative Disclosure About Market Risk

      Market risk is the risk of a loss that could affect our financial position resulting from adverse changes in the financial markets. Our primary risks relate to increases in interest rates and fluctuations in foreign currency exchange rates.

Interest Rate Risk

      Our exposure to interest rate risk relates primarily to our long term debt, as we have minimal interest-bearing investments. Our interest rate exposure is primarily to increases in the LIBOR or prime lending rate, because our debt has a floating rate of interest. Our annual interest expense would change by $750,000 for each 0.5% change in interest rates, based on debt outstanding as of November 30, 2005.

      In connection with the CSFB facility, we purchased an interest rate cap to August 2007 on $40 million which reduces our interest rate exposure. We expect to enter into a new credit facility to be effective upon the closing of this offering and to repay the existing CSFB facility in full. We will review various options available to us in the coming year to determine if additional interest rate protection under our new facility is advisable to further limit our risk to increases in lending rates.

Foreign Currency Risk

      Most of our business is located in Canada. We incur a disproportionate percentage of costs in Canadian dollars as compared to Canadian dollar denominated revenues. We are therefore exposed to loss if the Canadian dollar appreciates against the U.S. dollar. We try to minimize the effect of changes in U.S./ Canadian dollar exchange rates on our business through the purchase of forward exchange contracts.

      As we also operate internationally, a portion of our business outside North America is conducted in currencies other than the U.S. dollar. Accordingly, the results of our business may also be affected by fluctuations in the U.S. dollar against certain European currencies, in particular the pound sterling and euro. Our exposure to these and other currencies is minimized due to certain hedges naturally occurring in our business as we have decentralized sales, marketing and support operations in which most costs are local currency based.

      We cannot predict the impact of future foreign exchange variations on our business. However changes between the U.S. dollar and other currencies could generate foreign exchange losses that could have a material effect on our business.

Internal Controls Over Financial Reporting

      Management is responsible for establishing and maintaining adequate internal controls over financial reporting and for the timeliness and reliability of the information disclosed. During fiscal 2005, we have been documenting, reviewing and testing the design and effectiveness of our internal controls over financial reporting in order to comply with the requirements of Section 404 of the Sarbanes-Oxley Act (SOX 404). We expect to be compliant when required for our 2007 fiscal year-end. Continuous review and monitoring of our business processes will likely identify other possible changes to our internal controls in the future. If we are unable to comply with SOX 404 our share price may be negatively impacted.

Critical Accounting Policies and Estimates

      The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to product returns, bad debts, inventories, intangible assets, income taxes, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the

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carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

      We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements:

Revenue Recognition

      We recognize revenues in accordance with Statement of Position (“SOP”) 97-2, “Software Revenues Recognition,” issued by the American Institute of Certified Public Accountants, SOP 98-9, “Modification of 97-2, Software Recognition with Respect to Certain Transactions” and Staff Accounting Bulletin (“SAB”) No. 101 “Revenues Recognition in Financial Statements,” issued by the SEC.

      Our application of SOP 97-2 requires judgment, including whether a software arrangement includes multiple elements, and if so, whether vendor-specific objective evidence (VSOE) of fair value exists for those elements. VSOE is based on the associated price when the elements are sold separately. Some customers receive certain elements of our products over a period of time. In certain cases, these elements include post-delivery telephone support and the right to receive unspecified upgrades/enhancements on a when-and-if-available basis. When maintenance is sold separately we recognize revenues ratably over the contractual time period. Changes to the elements in a software arrangement, the ability to identify VSOE for those elements and the fair value of the respective elements could materially affect the amount of earned and unearned revenues.

      We record product revenues from sales of our packaged software and license fees when legal title transfers, which is generally when the product ships or, in some cases, when products are delivered to retailers. We sell some of our products on consignment to resellers and retailers and recognize revenue for these consignment transactions only when the end-user sale has occurred.

      At the time of contract signing, we assess whether the fee associated with the revenues transactions is fixed or determinable based on the payment terms associated with the transaction. We consider the fee to be fixed or determinable if it is due within our normal payment terms, which are generally 30 to 90 days from invoice date.

      We assess the probability of collection based on a number of factors, including past transaction history with the customer and the credit-worthiness of the customer. If it is determined that collection of a fee is not reasonably assured, management defers the fee and recognizes revenues at the time collection becomes reasonably assured, which is generally upon receipt of cash.

Allowance for Product Returns and Rebate Programs

      We allow returns of our packaged software from certain distributors and resellers for various reasons such as the release of new product versions that supersede older versions in channel inventory. Consequently we establish a return provision that is netted against revenues. In computing this provision, we use estimates and judgment based on our experience. These estimates are based on channel inventory levels, current and historical return rates, channel sell in and timing of new version and product introductions. While our past estimates have been materially accurate, actual return rates could vary materially from our estimates. An increase in the return rate could result from changes in consumer demand or other factors. Should this variance occur, revenues could fluctuate significantly. Variances between estimated return rates and actual return rates are adjusted on a monthly basis.

      While we believe our accounting practice for establishing and monitoring product return provision is adequate and appropriate, any adverse activity or unusual circumstances could result in an increase in reserve levels in the period in which such determinations are made and have a significant affect on revenues.

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Accounting for Income Taxes

      We have operations in a number of countries worldwide. Our income tax liability is therefore a consolidation of the tax liabilities we expect to have in various locations. Our tax rate is affected by the profitability of our operations in all locations, tax rates and systems of the countries in which we operate, our tax policies and the impact of certain tax planning strategies which we have implemented.

      To determine our worldwide tax liability we make estimates of possible tax liabilities. Our tax filings, positions and strategies are subject to review under local or international tax audit and the outcomes of such reviews are uncertain. In addition, these audits generally take place years after the period in which the tax provision in question was provided and it may take a substantial amount of time before the final outcome of any audit is known. In prior years we have had to make adjustments to taxes to account for the resolution of certain tax audits. The adjustments have on occasion been significant and have been accounted for as changes in estimates. Future final tax outcomes could also differ materially from the amounts recorded in our financial statements. These differences could have a material effect on our financial position and our net income in the period such determination is made.

      We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. We have had substantial tax losses over the years and only a limited history of profitability, therefore we have recorded a valuation allowance against most tax assets.

      We provide for withholding taxes on the undistributed earnings of our foreign subsidiaries where applicable. The ultimate tax liability related to the undistributed earnings could differ materially from the liabilities recorded in our financial statements. These differences could have a material effect on our income tax liabilities and our net income.

Business Combinations

      We account for acquisitions of businesses and technologies in accordance with SFAS 141, Business Combinations. We allocate the purchase price to tangible assets, intangible assets, and liabilities based on fair values, with the excess of purchase price being allocated to goodwill. In connection with our acquisition by Vector Capital, we applied push-down accounting, under which the purchase price paid by Vector Capital was allocated to our net assets.

      Historically, our acquisitions have resulted in the allocation of purchase price to goodwill and acquired intangible assets and adjustments to our deferred taxes. In order to allocate a purchase price to these intangible assets and goodwill, we make estimates and judgments based on assumptions about the future income producing capabilities of these assets and related future expected cash flows. We also make estimates about the useful life of those acquired intangible assets. Should different conditions prevail, we could record write-downs of goodwill, write-downs of intangible assets, or changes in the estimate of useful life of those intangible assets, which would result in changes to amortization expense. In connection with our acquisition by Vector Capital, we made adjustments to the valuation allowance on deferred tax assets related to tax carryforwards. These adjustments were recorded as credits to goodwill and intangible assets with corresponding increases to deferred tax expense.

      Acquired definite lived intangible assets are initially recorded at fair value based on the present value of these estimated net future income-producing capabilities of the software products acquired. They are amortized over the future income producing period, which we consider to be the useful life, on a straight-line basis.

      In accordance with SFAS 142, we continuously evaluate the remaining useful life of our intangible assets being amortized to determine whether events or circumstances warrant a revision to the estimated remaining amortization period.

Impairment of Goodwill

      In accordance with SFAS 142, goodwill is subject to annual impairment tests or on a more frequent basis if events or conditions indicate that goodwill may be impaired. Goodwill is tested for impairment at the end of each fiscal year. We also test goodwill for impairment more frequently if events or circumstances warrant.

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Corel as a whole is considered one reporting unit. We estimate the value of our reporting unit based on the income approach. If we determine that our carrying value exceeds our fair value, we would conduct the second step of the goodwill impairment test. The second step compares the implied fair value of the goodwill (determined as the excess fair value over the fair value assigned to our other assets and liabilities) to the carrying amount of goodwill. If the carrying amount of goodwill were to exceed the implied fair value of goodwill, an impairment loss would be recognized.

Long-lived Assets

      We amortize our long-lived assets over the estimated useful life of the asset. We evaluate all of our long-lived assets, including intangible assets other than goodwill and fixed assets, periodically for impairment in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-lived Assets (“SFAS 144”). SFAS 144 requires that long-lived assets be evaluated for impairment when events or changes in facts and circumstances indicate that their carrying value may not be recoverable. Events or changes in facts or circumstances can include a strategic change in business direction, decline or discontinuance of a product line, a reduction in our customer base or a restructuring. If one of these events or circumstances indicates that the carrying value of an asset may not be recoverable and our estimated amortization period was not appropriate, we would record an impairment in long lived assets. The amount of impairment would be measured as the difference between the carrying value and the fair value of the impaired asset as calculated using a net realizable value methodology. An impairment would be recorded as an operating expense in the period of the impairment and as a reduction in the carrying value of that asset.

Stock Option Accounting

      In December 2004, the Financial Accounting Standards Board issued SFAS 123(R) (“SFAS 123(R)”). SFAS 123(R) is a revision of SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”), and supersedes Accounting Principles Board Opinion (“APB”) No. 25, “Accounting for Stock Issued to Employees” (“APB 25”). SFAS 123(R) eliminates the alternative to use the intrinsic value method of accounting that was provided in SFAS 123, which generally resulted in no compensation expense recorded in the financial statements related to the issuance of stock options. SFAS 123(R) requires that the cost resulting from all share-based payment transactions be recognized in the financial statements. SFAS 123(R) establishes fair value as the measurement objective in accounting for share-based payment arrangements, and requires all companies to apply a fair-value-based measurement method in accounting for all share-based payment transactions with employees. SFAS 123(R) requires that stock-based compensation expense be recognized over the period from the date of grant to the date when the award is no longer contingent on the employee providing additional service (the “substantive vesting period”).

      We adopted SFAS 123(R) at the beginning of fiscal 2004. Prior to August 29, 2003, we did not account for stock options because they expired or were redeemed in connection with our acquisition by Vector Capital. Since our acquisition by Vector Capital, we have granted to eligible persons units, which consist of a stock option together with a phantom share unit (PSU). Since the right of a holder to receive a cash payment upon the exercise of a PSU is solely within the discretion of a committee appointed by the Board of Directors, there is no obligation to make a cash payment and consequently the PSUs do not constitute a liability. As a result, our stock-based compensation expense comprises expenses recognized in connection with the stock option portion of the units under SFAS 123(R).

      We estimate the fair value of our units for financial accounting purposes using the Black-Scholes model, which requires a number of subjective assumptions, including the expected life of the option, risk-free interest rate, dividend rate, future volatility of the price of our common shares and substantive vesting period. The use of other subjective assumptions would have materially affected the fair value estimate. Since August 2003, there has been no active market for our common shares. Thus, it was not possible to estimate expected volatility of our share price in estimating fair value of units granted. Accordingly, as a substitute for such volatility, we used the historical volatility of the U.S. Dow Jones Software and Computer Services Index, representing the primary industry in which we operate.

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      Based on equity awards outstanding as of November 30, 2005, we had unrecognized stock-based compensation totaling $7.8 million and we expect to record $3.3 million in stock-based compensation in fiscal 2006. We also expect to incur additional stock-based compensation in connection with replacement stock options granted in the WinZip acquisition. To the extent we continue to grant equity awards in the future the amounts of stock-based compensation recorded in future periods may be greater than these expectations. Stock-based compensation expense is reported in our Consolidated Statements of Operations, either as a cost of revenues, or as an operating expense with which the award recipients are associated.

      Up to March 31, 2006, we granted units with exercise prices as follows:

	Number of
	Shares Subject				Average Fair		Total		Compensation		Remaining
	to Units		Weighted Average		Value of Corel’s		Compensation		Expensed as of		Unrecognized
Month	Granted		Exercise Price		Common Shares		Expense		November 30, 2005		Expense
Fiscal 2004		501,806					$	1,202,912	$	530,854	$	672,058
Fiscal 2005
December		191,145	$	1.17	$	7.49	$	1,183,336	$	294,422	$	888,914
January		2,394		1.17		8.08		17,018		3,734		13,284
February		7,005		1.17		7.73		46,952		9,260		37,692
March		5,638		1.17		7.61		36,986		6,772		30,214
April		5,680		1.17		8.31		39,864		6,176		33,688
May		3,249		1.17		9.13		26,441		3,647		22,794
June		509,880		1.17		9.95		4,620,360		971,583		3,648,777
July		4,274		1.17		10.77		27,894		2,757		25,137
August		5,043		1.17		11.59		53,964		3,816		50,148
September		96,161		1.17		12.41		1,106,138		47,271		1,058,867
October		107,286		1.17		13.23		1,315,822		75,115		1,240,707
November		17,640		13.82		14.40		123,255		1,612		121,643
Fiscal 2005		955,395					$	8,598,030	$	1,426,165	$	7,171,865
Fiscal 2006
December		—	$	—	$	—	$	—	$	—	$	—
January		34,149		15.69		15.58		—		—		—
February		15,076		15.93		15.93		—		—		—
March		9,992		17.57		17.57		—		—		—
2006 subtotals		59,217					$	—	$	—	$	—
Total		1,516,418					$	9,800,942	$	1,957,019	$	7,843,923

      In the period between our acquisition by Vector Capital in August 2003 and December 2003, we did not issue any units. No predecessor company stock options were outstanding because they expired or were redeemed in connection with our acquisition by Vector Capital.

      The fair values of the units issued are being recognized as compensation expense over the applicable vesting period of four years on a straight line basis.

      We did not obtain contemporaneous valuations from an unrelated valuation specialist. Instead, a retrospective valuation was performed by management, with input from our shareholders. Contemporaneous valuations were not obtained because we were a private company and units were granted on a frequent basis. Therefore, it was impractical to obtain a valuation at each grant date. We believe that management as a result of their experience and Vector Capital as a private equity firm have relevant experience valuing companies. Where there was more than one class of shares outstanding, the enterprise value was equally allocated to the “as-converted” common shares to arrive at a per share fair value.

      Determining the fair value of our common shares requires making complex and subjective judgments. Management used the income approach to estimate the value of the enterprise. The income approach involves

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applying appropriate discount rates to estimated cash flows that are based on forecasts of revenues and costs. The enterprise value is then allocated to preferred and common shares using the probability-weighted expected return method. Under this method, management considered the specific rights and preferences of each share class, and the likelihood of future outcomes. Management specifically considered the likelihood of completing this offering of our common shares. Had management considered a different allocation method, the allocations between preferred and common shares would have been different.

      In arriving at the fair value of our common shares, we made a number of estimates including an organic revenue growth rate and a marketability discount. We used an organic revenue growth rate that was based upon our financial results available at the valuation date and the expected industry growth rate. In addition, we used a marketability discount of 40% to reflect the fact that our common shares were not trading in a public market. This rate was based upon US and Canadian case law and numerous independent pre-IPO “lack of marketability” studies.

Significant Factors Contributing to the Difference between Fair Value as of the Date of Grant and the Estimated Initial Public Offering Price

      We determined that the deemed fair value of our common shares increased from $1.17 to $14.40 per share over the period from August 29, 2003 to November 30, 2005. The difference between the range of $1.17 to $14.40 per share, and the midpoint of the estimated price range for this offering is attributable to the following factors:

• During the quarter ended November 2003, we divested certain underperforming product lines, discontinued speculative research and development activities, and began to focus on our core products. We implemented cost cutting measures, and reduced our staff by over 200 individuals. These measures reduced our annual operating expenses by approximately $41.7 million;

• During the quarter ended November 2004, we acquired Jasc, a company that generated revenues of $32.8 million in its fiscal year prior to the acquisition. Jasc’s software products were integrated with our products. We began to realize synergies through this acquisition, and eliminated staffing and distribution costs associated with Jasc’s revenues;

• During the quarters ended August 2004 and February 2005, we made capital distributions of $41.0 million and $83.1 million, respectively, which were partially funded by the incurrence of indebtedness and which temporarily decreased the value of our common shares;

• During the quarter ended August 2005, we engaged investment bankers to initiate the process of an initial public offering and began drafting a registration statement; and

• Finally, management anticipates that the completion of this offering will add value to the shares because of their increased liquidity and marketability. However, prior to this event, management believes it is reasonable to expect that our shares will be valued lower than the estimated offering price.

Impact of Recently Issued Accounting Pronouncements

      On June 1, 2005, the Financial Accounting Standards Board issued SFAS 154, “Accounting Changes and Error Corrections,” (“SFAS 154”) which replaces APB 20, “Accounting Changes,” (“APB 20”) and SFAS 3, “Reporting Accounting Changes in Interim Financial Statements.” SFAS 154 applies to all voluntary changes in accounting principles and changes the requirements for accounting for and reporting of a change in accounting principles. SFAS 154 requires retrospective application to prior periods financial statements of a voluntary change in accounting principles unless it is impracticable. APB 20 previously required that most voluntary changes in accounting principles be recognized by including in net income of the period of the change the cumulative effect of changing to the new accounting principle. SFAS 154 carries forward many other provisions of APB 20 without change, including the provisions related to the reporting of a change in accounting estimate, a change in the reporting entity and the correction of an error. We have adopted this standard effective December 1, 2005.

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BUSINESS

Overview

      We are a leading global packaged software company with an estimated installed base of 20 million current users in over 75 countries. We provide high quality, affordable and easy-to-use productivity and graphics and digital imaging software. Our products enjoy a favorable market position among value-conscious consumers and small businesses. The legal and functional departments within large companies and governmental organizations are also attracted to the industry-specific features and technical capabilities of our software. Our products are sold through a scalable distribution platform comprised of equipment manufacturers, our e-Store, and our global network of resellers and retail vendors.

      Our product portfolio includes well-established, globally recognized brands. Our primary productivity products are WordPerfect Office Suite, first developed in 1982 and marketed by us since 1996, and WinZip, a compression utility developed in 1991, that we will acquire concurrently with the closing of this offering. WordPerfect Office Suite is the leading Microsoft-alternative productivity software and includes Microsoft-compatible word processing, spreadsheet and presentation functionality. WinZip is the most widely used after-market compression utility, with more than 43 million seats sold to date. Our primary graphics and digital imaging products are CorelDRAW Graphics Suite and Corel Paint Shop Pro. CorelDRAW Graphics Suite is a leading illustration and image editing software suite used by design professionals and small businesses. Corel Paint Shop Pro digital image editing and management applications are used by novice and professional photographers and photo editors.

      We benefit from the widespread global adoption of personal computers, or PCs, and digital cameras. As the retail price of these PCs and digital cameras continues to decline, consumers are becoming more sensitive to the price of the software they use with these devices. We believe that we offer an industry-leading value proposition of high quality, affordable and easy-to-use software that is well positioned to take advantage of this trend.

Our Industry

      Prior to the mid-1990s, the packaged software industry was characterized by high annual growth rates, rapid technological innovation and a relatively large number of viable software providers within each product category. Over the past decade the industry has matured, growth rates have become more stable and market share within each major product category has become highly concentrated, with one or two companies having a dominant market position. We believe that Microsoft Office has in excess of 97% of the North American market for productivity software and that Adobe, after giving effect to its acquisition of Macromedia, has in excess of 70% of the global packaged graphics and digital imaging software market. Despite this concentration of market share, a number of smaller software companies have been able to offer products that have large user bases within certain sectors of the overall market.

      According to IDC, the worldwide consumer and content application market, which includes productivity and graphics and digital imaging products, was a $17.4 billion market in 2004 and is estimated to grow to $27.5 billion by 2009. The market for office suite software, such as word processing, spreadsheet and presentation applications, was $8.6 billion in 2004 and has a projected compound annual growth rate, or CAGR, of 5.3% from 2004 to 2009 according to a study commissioned by us. We estimate that sales of packaged graphics and digital imaging software in our addressable market were $750 million in 2004. Growth rates of packaged software sales in emerging economies are expected to be higher than for the global packaged software market as a whole resulting from more rapidly increasing PC adoption rates in these markets.

      Trends affecting the packaged software industry today include the following:

Increased Adoption of Low Cost Technology

• Rapid adoption of low cost PCs is causing increased sensitivity to the cost of software. The dramatic decline in the price of computing technology is enabling increased worldwide adoption of PCs. Demand for PCs is particularly strong among consumers and businesses in emerging economies, small

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businesses, students, families in need of second or third PCs, educational institutions and governmental organizations. Gartner projects worldwide PC shipments of 296.5 million units in 2009 as compared to 183.4 million units in 2004, a 10% CAGR. PCs that sell for less than $500, in particular, are expected to be the fastest growing part of the PC market with projected sales of these systems rising from 4.8 million units in 2004 to 71.5 million units in 2009, representing a CAGR of 72% over such period. With the growth of PC adoption, particularly within the sub $500 market, the cost of packaged software is becoming a larger component of the total cost of ownership of PCs. As the price of PCs continues to decline over time, we expect that consumer sensitivity to the price of packaged software will continue to increase.

• Proliferation of digital cameras is driving the increased use of digital imaging software. According to a 2004 IDC report, the projected number of digital images captured worldwide will increase from 108.5 billion in 2004 to 281.0 billion in 2008, a 27% CAGR. IDC also estimates that 36% of worldwide prints made in 2004 were from digital images and that by 2008 71% of worldwide prints will come from digital images. The increased interest in digital photography is driving consumer demand for high quality, affordable software products to edit, organize and share digital photographs. Since camera manufacturers typically lack the capabilities required to develop and support software applications, software that traditionally has been provided with digital cameras has had limited functionality and has not been adequate for the long-term needs of consumers. Most alternative products are either expensive or lack functionality. As a result, digital camera users seek affordable, easy-to-use, feature-rich software to manage, edit and share their digital photographs.

Changing Distribution Channels

• Increased importance of OEMs and online services companies as distributors of packaged software. Traditionally, packaged software was purchased in retail stores by consumers who already owned a PC, a practice referred to as an aftermarket purchase. However, software is now increasingly purchased at the time hardware is purchased and is frequently pre-installed on or included with PCs or digital cameras. By bundling highly functional and easy-to-use software with their products, OEMs and online services companies seek to enhance their value proposition, improve their margins, differentiate their products, increase customer retention and insulate their products from commoditization. These companies seek strategic relationships with software providers that offer high quality, affordable products, have established brands and are willing to customize their software, packaging, marketing programs and customer support to suit the specific business objectives of these companies.

• Increased importance of the Internet as a distribution channel. The Internet is rapidly becoming a method of choice for PC purchasers to upgrade software that was pre-installed on, or included with, their PC at the time of purchase. According to Jupiterresearch, 35% of aftermarket consumer software sales were made on the Internet in 2004. Full-featured Internet stores enable consumers to purchase software, to access information, download trial versions of the software and obtain customer support.

International Growth

• Increased PC and digital camera penetration in emerging economies. The decline in price of PCs and digital cameras combined with the economic growth in emerging economies are driving the demand for low cost packaged software products in countries with increasing PC and digital camera penetration levels. We believe areas with the greatest potential growth in demand include China, India, Eastern Europe and Latin America. Many emerging markets are characterized by first-time users of PCs and digital cameras that typically have not yet developed loyalty to a particular brand of software. We believe that these consumers are more likely to purchase software based on the relative price, quality and ease-of-use rather than brand loyalty because, unlike experienced software users, they do not need to consider the time, cost and effort involved in switching brands.

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Industry Consolidation

• Consolidation opportunities in the packaged software market. While the packaged software market has evolved from multiple major competitors to one or two dominant competitors in major product categories, in many cases smaller market participants still maintain an established and loyal user base. These smaller competitors generally have mature, stable software products comparable in quality to the market leaders, or in some instances, serve specific segments of the overall market with specialized functionality that may not have broad market appeal. These participants often have low brand recognition or limited scale and distribution capabilities. Because of their small market presence, they have not been sought after as acquisition targets by the dominant market participants.

      Packaged software companies that can capitalize on the widespread adoption of low cost technology, changing distribution channels and emerging economy growth opportunities are positioned to succeed. The companies able to do so will also have opportunities to further consolidate the packaged software industry.

Our Competitive Strengths

      Our key competitive strengths include the following:

• Industry-leading value proposition. We believe we offer the packaged software industry’s best combination of high quality, feature-rich functionality and affordability. Our products provide features and technical capabilities that are comparable to products offered by Microsoft and Adobe, typically at a price that is significantly lower than these competing products. In our principal product categories, Corel is among the only recognized alternatives to the dominant brands.

• Globally recognized brands. WordPerfect Office Suite, CorelDRAW Graphics Suite, Corel Paint Shop Pro and WinZip are globally recognized brands in the packaged software industry as a result of many years of intensive marketing, advertising and promotion. Brand recognition is particularly important in the packaged software industry because competing products have relatively similar features and consumers and small businesses, who often make purchase decisions based on brand recognition, comprise a significant portion of the target market.

• Easy-to-use, high quality products. Our products have been developed and tested over many years and we have received over 500 awards for excellence in software innovation, design and value. Substantial investments have been made to develop our products and they benefit from numerous user-driven upgrades. We are particularly focused on offering products that are easy-to-use and that can interoperate with major file formats.

• Scalable global distribution infrastructure. We have established global sales, marketing and distribution channels, including relationships with over 25,000 resellers and over 70 OEMs, a direct sales presence in 17 countries, and distribution capability in over 75 countries. Our products are available at major retailers worldwide. We believe very few packaged software companies of our size have a comparable distribution network.

• Flexible sales and distribution strategy. We offer OEMs, such as Dell, Wacom and Hewlett-Packard, and online services companies, such as Google and Yahoo!, creative and customized solutions, joint-marketing initiatives and specialized versions of our software. This flexible approach enables these companies to enhance their product and service offerings and provides them with an additional source of revenues. We provide OEMs and other software distributors with a viable alternative to the products offered by Microsoft and Adobe that can help reduce their dependence on these dominant brands.

• Established Internet presence through our e-Store. Our e-Store allows visitors to try our software, purchase it and seek customer support. Sales through our e-Store have grown rapidly and our e-Store affords us the opportunity to attract customers with minimal sales and marketing costs. Customers with older versions of our software, or limited functionality versions acquired through OEMs, can use our e-Store to upgrade to the most recent versions of our software. Our e-Store also complements our

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other distribution channels by facilitating our collection of user data through online registration and enables us to provide online support services.

Our Strategy

      Our objective is to profitably grow our installed base of customers and increase sales to our existing users. We plan to achieve this objective through the following strategies:

• Broaden our distribution network to capitalize on the rapid adoption of low cost technologies. We view our relationships with OEMs, other distributors and online services companies as key growth drivers and we are focused on forging new distribution relationships and broadening our existing relationships. To accomplish this goal, we have a flexible “channel friendly” strategy of providing customized solutions tailored to the specific business needs of OEMs, other distributors and online services companies. We offer these parties:

• attractive pricing that help them realize high margins;

• marketing and sales support and incentives;

• customized versions of our software to meet the needs of their customer base; and

• private label packaging and customized promotional materials to complement distributors’ branding strategies.

• Increase upgrade conversion rates. Increasing upgrade conversion rates represents a significant incremental revenue opportunity for us. We intend to increase upgrade conversion rates through a number of strategic initiatives, including:

• increasing our database of registered users through on-line registration for new products to more effectively market product upgrades to them;

• embedding upgrade information directly in our software and employing other types of proactive marketing within our products; and

• offering products in tiers of functionality, such as entry-level, advanced and expert versions, enabling users at varying levels of product knowledge and sophistication to purchase the applications they need and then migrate to the more advanced versions over time.

• Leverage and expand presence in emerging markets. We plan to leverage and expand our presence in emerging markets, such as China, India, Eastern Europe and Latin America, by continuing to localize our products in additional languages, expanding our reseller network and direct sales force and developing additional regionally-focused versions of our e-Store. We believe these markets represent attractive growth opportunities for us because they are characterized by first time users of low cost PCs and digital cameras who have not yet developed loyalty to a particular brand of software. However, expansion of our operations in these emerging markets will involve a number of risks, challenges and uncertainties. See “Risk Factors— We are subject to risks associated with international operations that may harm our business.”

• Continue to respond to user needs to better serve specific market sectors and increase loyalty. We will continue to work with our loyal user base to help us develop additional product innovations, improve our products to better meet the needs of specific market segments and strengthen user loyalty. We have a strong track record of offering high quality products for specific markets such as the legal and education sectors and as we continue to expand we plan to target additional markets.

• Continue to deliver high operating margins and positive cash flow. We are committed to maximizing our operating margins and positive cash flow by keeping research and development activities focused on market driven add-on functionality, utility and geographic reach of our existing product lines and not speculative projects. We employ disciplined cost management policies and maintain stringent minimum return-on-investment criteria for acquisitions. Our existing administrative, mar-

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keting and distribution infrastructure is highly scalable and we believe it will enable us to grow our revenues without experiencing a proportionate increase in fixed costs, thereby allowing us to continue to deliver high operating margins.

•

Leverage existing platform and brands to maximize value from acquisitions. Our disciplined acquisition and integration strategy is focused on acquisitions of companies with proven and complementary products and established user bases that we believe will be accretive to earnings. As part of this strategy, in October 2004 we acquired Jasc to extend our reach in graphics and digital imaging software and we have recently agreed to acquire WinZip to enhance our productivity software offerings. We analyze acquisition candidates and effect acquisition transactions to ensure they meet our strategic and operational objectives. We seek acquisition candidates that we believe can benefit from our existing global marketing, sales, distribution and general and administrative infrastructure.

Products

      We provide high quality, affordable, and easy-to-use productivity and graphics and digital imaging software. The following table identifies our major software products within our two principal product categories:

			Year of						Entry-level
			Initial		Fiscal Quarter of		Current		Suggested
Primary Products By Category			Release		Last Release		Version		Retail Price*
Productivity:
		WordPerfect Office Suite		1982		Q1 2006		13	$	99.00
		WinZip		1991		Q4 2005		10		29.95
		iGrafx FlowCharter		1991		Q1 2006		11		395.00
		iGrafx Process		1991		Q1 2006		11		995.00
Graphics and Digital Imaging:
	Graphics:
		CorelDRAW Graphics Suite		1989		Q1 2006		13		399.00
		Corel DESIGNER Suite		1995		Q2 2005		12		699.00
		Corel Painter		1991		Q4 2004		9		429.00
	Digital Imaging:
		Corel Paint Shop Pro		1991		Q4 2005		10		99.00
		Corel Photo Album		2002		Q4 2005		6		49.00

*  Entry-level suggested retail price reflects our suggested retail price as of the date of this prospectus for the respective products. This table does not reflect the prices for upgrade versions of our software products or products that are bundled with hardware or services and sold through OEMs.

Productivity

      Our productivity products include WordPerfect Office Suite, WinZip and our iGrafx products.

      WordPerfect Office Suite. The Standard Edition of WordPerfect Office Suite includes the WordPerfect, Quattro Pro and Presentations applications. Depending on the version of the suite, WordPerfect MAIL and Paradox are also available. WordPerfect is an easy-to-use word processing application that includes the ability to integrate charts, tables, images and graphics. Quattro Pro is a spreadsheet and database application with 3D chart functionality. Presentations is an application for producing multimedia presentations, overheads and transparencies. WordPerfect MAIL is an e-mail, calendaring and contact management application. Paradox is a database application.

      WordPerfect Office Suite is an innovative, full-featured software suite with a price much lower than Microsoft’s market-leading Microsoft Office. WordPerfect Office Suite is the leading alternative to Microsoft Office. WordPerfect Office Suite, which is compatible with Microsoft Office, allows users to open and save

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documents in multiple versions of the Microsoft Word, Excel and PowerPoint file formats. In addition, our software allows users to publish their documents in HTML and XML file formats. Users may also publish their documents in PDF, a feature not currently included with Microsoft Office. Our Workspace Manager gives users the option to choose Word, Excel or PowerPoint modes and re-arrange the menus and short-cut keys as they would appear and function in the respective Microsoft applications, making it easier for a new user to adopt WordPerfect Office Suite.

      WordPerfect Office Suite is currently available in five languages and is used principally by governments, legal professionals and corporate legal departments, academic institutions, small-to medium-sized businesses and consumers. Within a business setting, the program is particularly useful in departments that produce or edit a high volume of long, heavily formatted documents.

      In addition to the Standard Edition of WordPerfect Office Suite, we offer three enhanced versions for corporate, home and small business users. Along with the Standard Edition applications, the Professional Edition includes Paradox, making the Professional Edition a comparable alternative to Microsoft Office Professional. Our Home Edition includes additional features tailored for home users including a task manager, multi-media tools, home templates, encyclopedia and anti-virus software. Our Small Business Edition includes additional features tailored for our small business users such as a task manager, WordPerfect MAIL, additional business templates, Corel Paint Shop Pro and anti-virus software.

      WinZip. As one of the most frequently downloaded software products available on the Internet with over 150 million downloads to date and an average of over 600,000 downloads per week in 2005, WinZip has developed a strong and highly recognizable brand. The WinZip product line includes three primary products: WinZip, WinZip Companion for Outlook and WinZip Self Extractor. WinZip is a widely used compression utility for the Windows platform, allowing users to temporarily reduce the size of their computer files for more effective transmission and storage. WinZip also includes encryption functionality to provide additional security in protecting sensitive information. WinZip is based on the .zip file format, but supports a number of alternative compression formats as well. WinZip Companion for Outlook extends WinZip’s functionality to Microsoft’s Outlook email application, automating the compression and encryption of email file attachments. WinZip Self Extractor allows users to create archives that can be uncompressed without the need for the WinZip application.

      WinZip has a broad user base that includes consumers, small to medium-sized businesses and large corporations. WinZip is used worldwide, and is currently available in three languages. WinZip’s main competitors include commercial software such as PKZip, Stuffit, and WinRAR, open-source software such as 7-Zip and the basic compression functionality integrated into the Windows operating system. WinZip’s reliability, ease-of-use, functionality and loyal user base has allowed it to effectively compete with these offerings.

      iGrafx FlowCharter and iGrafx Process. Our iGrafx products allow enterprises to analyze, streamline and optimize their business processes. iGrafx’s main products are iGrafx FlowCharter and iGrafx Process. Uses of iGrafx FlowCharter include visually depicting the elements of a business process such as a supply chain solution. Uses of iGrafx Process include identifying, simulating and visually presenting how a business can improve its business processes. iGrafx’s main competitors are IDS-Scheer Aris, Proforma ProVision and Casewise Corporate Modeler. iGrafx products are currently available in six languages.

Graphics and Digital Imaging

Graphics

      Our graphics products include CorelDRAW Graphics Suite, Corel DESIGNER Technical Suite and Corel Painter.

      CorelDRAW Graphics Suite. CorelDRAW Graphics Suite is an industry-leading vector illustration software application and has received over 300 industry awards throughout the 17 years it has been on the market. The software allows users to create, manipulate and publish drawings and images in a variety of media including in print and on the web. Examples of its uses include creating logos, brochures, newsletters, reports,

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advertisements, signs, embroidery designs and technical illustrations. CorelDraw Graphics Suite consists of applications for illustration and page layout, digital imaging and motion graphics creation.

      CorelDRAW Graphics Suite is easy-to-use and is compatible with most industry standard file formats, allowing the import and export of files in the common formats used by our competitors, including Adobe and Microsoft. It is affordably priced compared to its main competitor, Adobe Creative Suite. Other competing products include Adobe Illustrator and Macromedia FreeHand. CorelDRAW Graphics Suite is used principally by graphic designers and sales and marketing personnel and is currently available in 17 languages.

      Corel DESIGNER Technical Suite. Corel DESIGNER Technical Suite offers users a graphics application for creating or updating complex technical illustrations. The suite consists of Corel DESIGNER for design, illustration and page layout, Corel PHOTO-PAINT for digital image editing and Corel TRACE for the conversion of bitmaps to vector images. We also offer Corel DESIGNER Professional which includes a filter for importing 3D computer-aided design diagrams.

      Corel DESIGNER Technical Suite is currently available in three languages and is primarily used by engineering departments and technical publishers, who use the software to create professional-quality graphics that can be easily used in business documents, presentations and web and intranet pages. Examples of its uses include creating product manuals, assembly instructions and product specification diagrams. Corel DESIGNER Technical Suite is also used in the manufacturing, automotive and aerospace industries from the conceptualization stage, through the design specification stage, to the production of technical manuals and marketing material. Corel DESIGNER Technical Suite provides an easy-to-use technical illustration application at an affordable price compared to its main competitors IsoDRAW, Autodesk AutoCAD LT and Deneba Canvas.

      Corel Painter. Corel Painter is a digital painting application that, when used with a pen tablet, simulates natural media, such as watercolors, inks, oil paints, chalks and pastels. Users include commercial artists, professional photographers, fine artists and professional digital artists who wish to create new works of art or enhance existing images. Because it is compatible with Adobe Photoshop, Corel Painter provides additional natural media functionality not otherwise available with Photoshop. Corel Painter’s main competitors are Alias Sketchbook and Adobe Photoshop. Corel Painter is currently available in six languages.

Digital Imaging

      Our digital imaging products include Corel Paint Shop Pro and Corel Photo Album.

      Corel Paint Shop Pro. Corel Paint Shop Pro allows users to create, manipulate and manage digital images with photo editing, digital art and precision graphic design tools. Primary examples of its uses include digitally altering photos by fixing scratches and blemishes, changing colors, digitally removing people, objects and “red-eye” from photos and combining photographs into collages. Corel Paint Shop Pro provides advanced functionality at an affordable price to users of digital cameras ranging from novices to professionals, graphics hobbyists and business users. Adobe Photoshop, a competing product, sells at a higher price and is directed at professional graphic designers. Corel Paint Shop Pro is currently available in seven languages.

      Corel Photo Album. Corel Photo Album allows users to store, organize, share and manage their digital photograph collections. Our software organizes photographs on users’ computers by date, folder, keyword or other desired criteria. Users of Corel Photo Album can organize and publish photo albums, create scrap-books, print and share photographs, create slide shows and create CD and DVD back-ups of digital images. In addition, the software provides basic photograph enhancement capability which seamlessly integrates with Paint Shop Pro for more advanced image editing. Corel Photo Album’s main competitors are Adobe Photoshop Elements, Picasa and Microsoft Digital Image Suite. Corel Photo Album is currently available in seven languages.

Customer Support

      We provide several customer support options to meet the varied needs of our customers. Support options range from 24 hour 7 day a week free support via the Internet to fee-based options through maintenance

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agreements for enterprise customers or on a per incident basis for individual consumers. Our customer service representatives provide technical support, answer questions about product specifications, sell our products and provide replacement media and documentation. We maintain a database of technical support articles on our web site that is updated regularly with useful information and frequently asked questions and answers regarding our products. We maintain an Internet news group to provide users with a mechanism to provide feedback as well as receive technical updates and notes. We also provide up-to-date information about common issues and useful tips on our web site. The majority of our in-house support personnel are located in Ottawa, Canada and Maidenhead, England.

Distribution, Sales and Marketing

Distribution

      We have a global, multi-channel distribution network, including OEMs, the Internet, retailers and resellers, in over 75 countries through which we are able to distribute our software.

      OEMs. We distribute our productivity and graphics and digital imaging software under license agreements with OEMs granting them the right to distribute copies of our software installed on their hardware products. We have relationships with over 70 OEMs, including Dell, Wacom, Hewlett-Packard and Lenovo.

      Internet Distribution. Our e-Store allows consumers to purchase most of our software products directly from us and is our fastest growing distribution channel.

      Retail and Reseller. Our retail and reseller channel encompasses our relationships with over 25,000 resellers, including the following:

• retailers including Office Depot, Best Buy, CompUSA, Staples and Amazon, sell our products to consumers and small businesses;

• software distributors, including Ingram Micro, Tech Data and Navarre, sell our products to their retail customer base;

• large account resellers, including CDW, Software House International, SoftChoice and Softmart USA, sell our software directly to large enterprises and help fulfill orders from our direct sales force; and

• value-added resellers, including independent software vendors, consultants, system integrators and custom application developers, generally service small to medium-sized businesses and provide varying degrees of technical support, implementation services and customization.

      Direct Sales. Our direct sales force facilitates sales through other channels and the establishment of key relationships with OEMs, retail chains and resellers. The direct sales force also directly targets government and large enterprise clients.

      Of overall sales of Corel products (excluding WinZip products) during fiscal 2005, approximately 60% consisted of products targeted to consumers and small businesses, approximately 29% consisted of site licenses geared towards large enterprises and government customers and approximately 11% consisted of sales of site licenses to educational institutions and of academic versions of Corel products.

Sales and Marketing

      Our global sales and marketing organization, which is comprised of approximately 200 employees located in 15 countries, is focused on increasing sales by establishing and maintaining personal contact with our distributors and customers.

      Our sales team is responsible for:

• communicating our value proposition and the benefits of our products;

• designing and implementing incentive programs for our distributors to promote our products;

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• identifying, establishing and developing relationships with OEMs and online services companies;

• ensuring that our distributors are prominently positioning our products and managing inventory levels effectively; and

• recruiting new resellers, retailers and distributors.

      Our marketing team focuses on:

• joint marketing and promotions with online services companies, OEMs and other distributors;

• selective, highly targeted advertising;

• direct mail; and

• public relations.

Research and Development

      We have a research and development team of approximately 190 software professionals, the majority of whom are located at our corporate headquarters in Ottawa. Following the acquisition of us by Vector Capital, we have shifted our focus from the development of new and unproven applications to a disciplined commitment to increasing the functionality, utility and geographic reach of our core software products. We plan to expand our product offerings through the acquisition of proven products and technology and to employ our research and development efforts to improve the utility of those products and technology to our customers. Our research and development expenses for 2003, fiscal 2004 and fiscal 2005 were $21.0 million, $14.6 million and $23.5 million, respectively.

      Our commitment to providing high-quality and useful software has led us to a more user-focused method of development. We rely on our intimate knowledge of the tasks and goals that users wish to accomplish to determine how our products should be changed so that we offer the greatest ease-of-use and functionality to our customers. For example, the latest version of CorelDRAW Graphics Suite includes “dynamic guides,” a feature that provides significant time-savings for our design professional users. Similarly, our most recent version of Corel Paint Shop Pro includes a “smart photo fix” feature that allows the application of the most common photo enhancement tools with a single command.

      User feedback also lets us target the development of derivative products that leverage our existing technologies for use in specific markets. For example, we have developed a version of our CorelDRAW product called Corel DRAWings for the embroidery market. Corel DRAWings integrates with embroidery machines to allow users to easily create and visualize designs and then to automatically transfer the stitch patterns to the desired fabric.

      Finally, we maintain an active research and development effort aimed at customizing versions of our standard applications for businesses with whom we have strategic relationships. For example, working with Dell, we have created a special “Starter Edition” version of our Corel Photo Album product. This version, with more limited functionality, is bundled with computers to provide basic digital imaging capabilities, while creating opportunities to upgrade to more full-featured versions. We are also working with Wacom Technology to support new capabilities that it added to its tablets and pens and with AOL to allow upload of photos from Photo Album to AOL’s “You’ve Got Pictures” service.

Internal Systems

      We use various standard applications to provide a flexible and scalable infrastructure to accommodate growth and information needs. We use in-house development resources to maintain these systems and provide custom integration of applications to meet our reporting and business needs. The primary applications we use include Oracle 9i for financial controls, reporting and human resources, IBM Websphere for our e-Store, Onyx customer relationship management database for customer and prospective customer information and RightNow Technology interactive knowledge base for customer and technical support. We believe these systems are sufficient to accommodate our anticipated growth.

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Outsourced Manufacturing

      ModusLink manufactures the principal materials and components used in the physically packaged versions of our products, including diskettes and CD-ROMs, product manuals and packaging, pursuant to a fixed price agreement. ModusLink prepares items to our specifications at manufacturing sites in the U.S., Netherlands and Taiwan and engages third-party printers for the printing of the packaging and the manuals to be included with our packaged software. We provide ModusLink with all packaging and manual design templates.

Intellectual Property

      Our intellectual property rights are important to our business. We rely on a combination of trademark, patent, copyright, trade secret, and other common law in the U.S., Canada and other jurisdictions, as well as confidentiality procedures and contractual provisions to protect our proprietary technology, processes and other intellectual property. We have obtained registrations for in excess of 70 different trademarks in more than 60 different countries. We have over 45 issued patents in the U.S. and Canada and own over 300 copyright registrations. Our patents expire on various dates between 2010 and 2021. As part of our hiring process, our employees typically execute written agreements containing confidentiality undertakings, intellectual property assignments and non-competition and non-solicitation obligations in our favor.

      In addition to the foregoing, we believe the technological and creative skill of our personnel, product developments and frequent product enhancements are essential to establishing and maintaining a competitive advantage.

      Our products contain content and technology that we license from third parties. We generally enter into written agreements with independent contractors, consultants, strategic partners and third party content and technology providers, and through these written agreements we attempt to obtain and control access to, and distribution of, the intellectual property rights necessary for the continued marketing of our products.

      Despite our efforts to protect our intellectual property, third parties may use, copy or otherwise obtain and market or distribute our intellectual property or technology without our authorization or otherwise develop products with the same functionality as our products. Policing unauthorized use of our products and intellectual property is costly and virtually impossible on a worldwide basis. As a result, there is a risk that our efforts to protect our intellectual property will not be adequate to fully prevent the misappropriation of our intellectual property, particularly in emerging markets.

Competition

      We compete with other software vendors for customers at the retail level and in corporate accounts, and for access to distribution channels. Our two primary competitors are Microsoft and Adobe. We believe that Microsoft Office has in excess of 97% of the North American market for productivity software and that Adobe, after giving effect to its acquisition of Macromedia, has in excess of 70% of the global packaged graphics and digital imaging software market. We are the next largest provider of packaged productivity and graphics and digital imaging software in our target markets. We also compete with a number of smaller companies that target certain sectors of the packaged software market.

      WordPerfect and our graphics and digital imaging products provide features and technical capabilities that are generally comparable to higher-priced products offered by Microsoft and Adobe. We believe we further distinguish ourselves from our competitors by offering products that are easy-to-use and can interoperate with other major file formats.

      We also compete for strategic relationships with OEMs, online services companies and other distributors. We believe we can provide distributors with attractive pricing, channel specific marketing and sales support, incentives and customized versions of our products and packaging. We believe tailored responses to distributors’ needs distinguishes us from our competition and will allow us to broaden our distribution network.

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Executive Transition

      In June 2005, we replaced Amish Mehta, who had been interim President and Chief Executive Officer since the first quarter of fiscal 2004, with a new Chief Executive Officer, David Dobson. Mr. Dobson became a member of our board of directors in February 2006. Mr. Mehta, a partner at Vector Capital, became a member of our board of directors in January 2006. In addition, since our acquisition by Vector Capital, we have made a number of other changes in senior management, including the hiring of a new Chief Financial Officer and a new Executive Vice President of Sales and Marketing, Americas. These changes in senior management have facilitated the restructuring of our operations, including the implementation of cost-reduction measures and a renewed focus on our core products. Jacqueline Maartense resigned her position as our Executive Vice President, Global Marketing, in January 2006.

Employees

      As of the date of our acquisition by Vector Capital, we employed approximately 708 staff. Between August 2003 and May 2004, we reduced our staff by 228 persons, or 32% in connection with our initiatives to focus on our core products and eliminate excess costs. Our employee base grew from 480 to 574 following the integration of Jasc. As of November 30, 2005, we had approximately 580 full-time employees, of which 214 employees were engaged in sales and marketing, 191 were engaged in research and development and the remaining 175 were engaged in general administration, finance and customer support. We have employees in 15 countries, including 482 employees in our North American operations, 83 employees in Europe, the Middle East and Africa and 15 employees in other areas of the world. In addition, with the acquisition of WinZip, we expect to add up to 38 employees.

      We believe that our future success will depend in large part on our ability to attract and retain highly skilled technical, managerial, and sales and marketing personnel. Competition for employees is intense in the software industry. To date, we believe we have been successful in our efforts to recruit qualified employees, but there is a risk that we will not continue to be successful in the future. None of our employees are subject to collective bargaining agreements. Management believes relations with employees are generally good.

Subsidiaries

      Corel Corporation owns 100% of the equity interests in its principal subsidiaries, Corel UK Limited, a corporation organized under the laws of the United Kingdom, Corel GmbH, a corporation organized under the laws of Germany and Corel Inc., a corporation organized under the laws of the State of Delaware.

Properties

      The following chart outlines significant properties that we currently lease for operations. In addition to these, we lease office space in various countries around the world where we perform sales and marketing functions. Management believes that these facilities will be adequate for our immediate needs and that additional space is available if needed to accommodate expansion.

			Area		Expiration
Location	Purpose		(in square feet)		Year
Ottawa, Canada		Corporate Head Office		69,652		2010
Tualitin, Oregon		Sales and Development		10,908		2006
Eden Prairie, Minnesota		Sales and Development		74,224		2008
Maidenhead, England		Sales and Administration		10,549		2015
Mansfield, Connecticut		Sales, Operations and Administration		8,890		2006
Munich, Germany		Sales and Administration		6,657		2007
Munich, Germany		iGrafx Sales and Administration		3,152		2007

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Legal Proceedings

      We currently, and from time to time, are involved in certain legal proceedings, as well as demands, claims and threatened litigation, that arise in the normal course of our business, including assertions that we may be infringing patents or other intellectual property rights of others. We believe that the ultimate amount of liability, if any, for any pending claims of any type (either alone or combined) will not materially affect our financial position or results of operations. We also believe that, if necessary, we would be able to obtain any required licenses or other rights to disputed intellectual property rights on commercially reasonable terms. However, the ultimate outcome of any litigation is uncertain and, regardless of outcome, litigation can have an adverse impact on our business because of defense costs, negative publicity, diversion of management resources and other factors. Our failure to obtain any necessary license or other rights on commercially reasonable terms, or otherwise, or litigation arising out of intellectual property claims could materially adversely affect our business.

      We are currently a defendant in the ongoing patent infringement proceeding described below:

      Electronics For Imaging, Inc., Massachusetts Institute of Technology v. Corel Corporation et al. Plaintiffs filed this patent infringement action on December 28, 2001 against us and 213 other defendants in the U.S. District Court for the Eastern District of Texas, alleging infringement of U.S. patent 4,500,919. The patent expired on May 6, 2002. Plaintiffs allege that the defendants infringed the patent through the use of various color management and correction systems in their products. Plaintiffs seek unspecified damages and attorneys fees. Various motions including motions for summary judgment by both the plaintiffs and defendants, including us, were filed during the discovery phase of the proceeding. In July 2004 the court dismissed each summary judgment motion upon which we and the plaintiffs had joined issue. Following the decision on the summary judgment motions, the plaintiffs dismissed all claims against every remaining defendant except us, Microsoft and Roxio. The plaintiffs then stipulated to non-infringement in respect of us, Microsoft and Roxio and the action was dismissed in November 2004. In December 2004, the plaintiffs filed an appeal of various interlocutory rulings by the trial court including certain of the summary judgment decisions. The remaining defendants, including us, have filed opposition to the appeals. We have cross-appealed on the trial court’s dismissal of our request to have the action dismissed on summary judgment. The appeals and cross appeals have been fully briefed by all parties. Oral argument was heard on December 7, 2005. No decision on the appeal has been rendered to date. We believe we have meritorious defenses to the plaintiffs’ claims and intend to defend the litigation vigorously. However, we cannot assure you as to the ultimate outcome of the litigation.

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MANAGEMENT

Executive Officers and Directors

      The following table sets forth information with respect to our directors and executive officers.

Name	Age		Position
David Dobson(4)		43	Chief Executive Officer, Director
Douglas McCollam		53	Chief Financial Officer, Director
Randy Eisenbach		55	Chief Operating Officer
Amanda Bedborough		37	Executive Vice President, International Operations
Graham Brown		42	Executive Vice President, Product Development
Christopher DiFrancesco		42	Vice President, Legal, General Counsel and Secretary
Patrick Morley		39	Executive Vice President, Sales and Marketing, Americas
Steven Cohen(1)(2)(3)		40	Director
J. Ian Giffen(1)(2)(4)		48	Director
Amish Mehta(3)		32	Director
Alexander Slusky(2)(3)(4)		38	Director

(1)	Independent director
(2)	Member of the audit committee
(3)	Member of the compensation committee
(4)	Member of the nominating and corporate governance committee

     David Dobson has served as our Chief Executive Officer since June 2005 and became a member of our board of directors in February 2006. From February 2004 to June 2005, he served as Corporate Vice President, Strategy at IBM. He previously served in various capacities at IBM in operations, finance, sales, marketing, strategy and general management from 1986 to 2004. Mr. Dobson joined IBM in Toronto in 1986. He has a Bachelor of Electrical Engineering and Management from McMaster University.

      Douglas McCollam has served as our Chief Financial Officer since January 2004 and became a member of our board of directors in October 2004. From July 1996 to January 2004 he served as Executive Vice President and Chief Financial Officer of NORDX/ CDT. He previously served in various capacities at Nortel Networks, including as Vice President Finance and Administration for Nortel CALA from 1993 to 1996. He served as Chief Financial Officer of Motorola Nortel Communications from 1991 to 1993, Group Controller Switching from 1989 to 1991 and Assistant Vice President, Corporate Financial Reporting and Analysis from 1987 to 1989. Mr. McCollam is a Certified Management Accountant and has a Bachelor of Commerce from Concordia University and an M.B.A. from the University of Chicago.

      Randy Eisenbach has served as our Chief Operating Officer since October 2002. From December 2000 to October 2002 he served as President and Chief Operating Officer of Enseo Corporation. Prior to joining Enseo he served in various capacities, including Chief Operating Officer and Executive Vice President, of 3dfx Interactive (formerly known as STB Systems) from 1985 to 2000. He has a Bachelor of Business Administration and an M.B.A. from Texas Tech University.

      Amanda Bedborough has served as our Executive Vice President, International Operations since January 2004. Prior to that Ms. Bedborough served as our Executive Vice President, Europe, the Middle East and Africa from October 2001 to December 2003. From September 1993 to March 2001 she served in a variety of capacities at 3dfx Interactive, including Vice President, Europe, the Middle East and Africa.

      Graham Brown has served as our Executive Vice President, Product Development since April 2002. He joined us in 1991, and previously served in a variety of capacities, including Vice President of Software Development, Business Applications from 1998 to 2000. He has a Bachelor of Engineering Science in Geography and Computer Science from the University of Waterloo.

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      Christopher DiFrancesco has served as our Vice President, Legal, General Counsel and Secretary since December 2003. He previously served as corporate counsel for us from September 2000 to November 2003. From 1998 to 2000 he served as Associate Counsel for the National Hockey League Players’ Association. From 1991 to 1998 he was with the law firm of Gowling Lafleur Henderson in Toronto, Canada. He has a Bachelor of Engineering Science in Mechanical Engineering and a Bachelor of Laws from the University of Western Ontario.

      Patrick Morley has served as our Executive Vice President, Sales and Marketing, Americas since September 2005. He previously served as Chief Executive Officer of Imprivata Corporation from April 2002 to September 2005. Prior to joining Imprivata Corporation he served as Vice President, North America of Macromedia from January 2001 to April 2002. He served as Vice President, Americas of Allaire Corporation from April 1997 to January 2001, prior to its acquisition by Macromedia. He has a B.A. in Mathematics and Computer Science from Providence College.

      Steven Cohen became a member of our board of directors in January 2006. He has served in various capacities at Teknion Corporation since February 2001 and is currently Teknion Corporation’s Senior Vice President, Corporate Development. He is also a Director and Chairman of the compensation committee of Pele Mountain Resources Inc., a junior exploration company listed on the TSX Venture Exchange. He has a Bachelor of Commerce from McGill University and an M.B.A. from Harvard Business School.

      J. Ian Giffen became a member of our board of directors in January 2006. Since 1996, Mr. Giffen has been an advisor to or director of software companies and technology investment funds. From January 1992 to January 1996, Mr. Giffen was Vice President and Chief Financial Officer of Alias Research until its acquisition by Silicon Graphics. Mr. Giffen is currently Chairman of the Board of Directors of 724 Solutions, a director of Sierra Systems, MKS, Descartes Systems and Strategic Vista, and a director or advisor to a number of other private companies. Mr. Giffen has previously served on the board of directors of a number of public and private companies including Macromedia, Financial Models, DPS, Open Text, Delano Technology, Algorithmics, DWL, Changepoint and MGI Software. He is a Chartered Accountant and has a B.A. in Business Administration from the University of Strathclyde in Glasgow, Scotland.

      Amish Mehta became a member of our board of directors in January 2006. He served as our interim President and Chief Executive Officer from November 2003 to June 2005. He has been at Vector Capital since August 2002. He previously served as Chief Executive Officer of CommercialWare from September 1999 to April 2001. Prior to that he worked at General Atlantic Partners from 1997 to 1999 and at McKinsey & Company from 1995 to 1997. He has a B.S. in Chemical Engineering from the University of Pennsylvania, a B.S. in Economics from the Wharton School and an M.B.A. from Harvard Business School.

      Alexander Slusky has been a member of our board of directors since August 2003 and has served as managing partner of Vector Capital since its inception in 1997. Prior to founding Vector Capital, he led the technology equity practice at Ziff Brothers Investments. Prior to joining Ziff Brothers Investments, he was employed at New Enterprise Associates. Mr. Slusky serves as a director on the boards of several private companies. He has a A.B. in Economics from Harvard University, and an M.B.A. from Harvard Business School.

      Executive officers are appointed by the board of directors to serve, subject to the discretion of the board of directors, until their successors are appointed.

Board of Directors

      Our board of directors currently consists of six members. We currently expect that Mr. McCollam will relinquish his board membership in 2006. Except with respect to Mr. McCollam, we expect that the term of office for each of the directors will expire at the time of our next annual shareholders meeting. As a “controlled company”, we are not required to comply (and we do not comply) with the requirement of the Nasdaq National Market to have a majority of our directors satisfy the independence requirements of the Nasdaq National Market.

      There are no family relationships among any of our directors or executive officers.

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Committees of the Board

      Following the closing of this offering, the standing committees of our board of directors will consist of an audit committee, a compensation committee and a nominating and corporate governance committee. As a controlled company we are not required to maintain a compensation committee or a nominating and corporate governance committee under Nasdaq rules nor are we required to maintain those committees under Canadian securities regulations. Although we intend to form a compensation committee and a nominating and corporate governance committee, the memberships of these committees will not comply with the independence requirements of the Nasdaq National Market that would be applicable if we were not a controlled company.

      Audit Committee. It is expected that our audit committee will be comprised of Messrs. Cohen, Giffen and Slusky. Our board of directors has determined that Messrs. Cohen and Giffen currently meet the independence requirements of the Nasdaq National Market, SEC rules and the rules and regulations of the Canadian provincial securities regulatory authorities. Mr. Slusky will be replaced on the audit committee by an independent board member prior to the one year anniversary of this offering.

      The principal duties and responsibilities of our audit committee will be to assist our board of directors in its oversight of:

• the integrity of our financial statements;

• our compliance with legal and regulatory matters;

• our independent registered public accounting firm’s qualifications and independence; and

• the performance of our internal audit function and independent registered public accounting firm.

      Our audit committee will also be responsible for:

• compensating, retaining and overseeing the work of our independent registered public accounting firm;

• establishing procedures for (a) receipt and treatment of complaints on accounting and other related matters and (b) submission of confidential employee concerns regarding questionable accounting or auditing matters; and

• pre-approving any non-audit services by our independent registered public accounting firm.

      The audit committee will have the power to investigate any matter brought to its attention within the scope of its duties. It will also have the authority to retain counsel and advisors to fulfill its responsibilities and duties. The audit committee will also act as a qualified legal compliance committee.

      Compensation Committee. It is expected that our compensation committee will be comprised of Messrs. Cohen, Mehta and Slusky. The principal duties and responsibilities of the compensation committee will be as follows:

• to review and approve goals and objectives relating to the compensation of our chief executive officer and, based upon a performance evaluation, to determine and approve the compensation of the chief executive officer;

• to make recommendations to our board of directors on the compensation of other executive officers and on incentive compensation and equity-based plans; and

• to produce reports on executive compensation to be included in our public filings to the extent required by applicable securities laws or listing requirements.

      Nominating and Corporate Governance Committee. It is expected that our nominating and corporate governance committee will be comprised of Messrs. Dobson, Giffen and Slusky. The principal duties and responsibilities of the nominating and corporate governance committee will be as follows:

• to identify individuals qualified for membership on our board of directors and to select, or recommend for selection, director nominees;

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• to develop and recommend to our board of directors a set of corporate governance principles; and

• to oversee the evaluation of our board of directors and management.

Disclosure Policy

      Our board of directors will adopt and periodically review and update our written corporate disclosure policy. This policy will, among other things:

• articulate legal obligations with respect to confidential corporate information;

• identify spokespersons who are the persons authorized to communicate with third parties such as analysts, media and investors;

• provide guidelines on the disclosure of forward-looking information;

• establish procedures for reviewing disclosure, prohibiting selective disclosure of material information and addressing inadvertent disclosure; and

• establish periods prior to the disclosure of certain financial information and material changes during which trading in our common shares by insiders is prohibited.

Director and Executive Officer Compensation

Compensation of Directors

      Initial cash compensation for our directors who are not also employed by us or our subsidiaries will be $25,000 per director per year. A director who serves as Chair of a committee will receive an additional $15,000 per year. Directors will also be reimbursed for out-of-pocket expenses for attending board and committee meetings.

      We expect that following this offering each new non-employee director that joins our board will receive options to purchase 12,809 common shares at an exercise price equal to the fair market value of those shares on the date of grant. These options vest as to 25% on the first anniversary of the date of grant and as to an additional 25% each year thereafter in quarterly installments. Upon the occurrence of a significant event (such as a change in control), as defined under the 2006 equity incentive plan described below, all options or other equity awards held by members of our board of directors under the plan shall immediately vest.

      See “Certain Relationships and Related Party Transactions” for information regarding additional stock options granted to members of our board of directors.

Compensation Committee Interlocks and Insider Participation

      None of our executive officers serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our board of directors or compensation committee.

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Executive Compensation

      The following table sets forth a summary of compensation earned during the fiscal year ended November 30, 2005 by our Chief Executive Officer, Chief Financial Officer and our three next most highly compensated executive officers (the “Named Executive Officers”).

Summary Compensation Table

		Annual Compensation				Long Term Compensation
Name And						Securities Underlying		All Other
Principal Position		Salary		Bonus		Options Granted		Compensation
Amish Mehta(1)
	Former Chief Executive Officer	$	262,500	$	223,125		—	$	—
David Dobson(2)
	Chief Executive Officer		140,754		203,500		413,971		—
Douglas McCollam
	Chief Financial Officer		203,500		183,150		8,540		—
Randy Eisenbach
	Chief Operating Officer		260,000		97,500		61,910		—
Amanda Bedborough(3)
	Executive Vice President, International Operations		398,805		85,937		44,831		104,772
Jacqueline Maartense(4)
	Executive Vice President, Global Marketing		244,200		61,538		34,157		—

(1)	Mr. Mehta served as our interim Chief Executive Officer from November 2003 to June 2005.
(2)	Mr. Dobson joined us in June 2005. For Mr. Dobson’s annual compensation information see “Management—Employment Agreements.”
(3)	Ms. Bedborough’s salary includes $29,018 of auto allowance payments and other compensation includes $19,532 of retirement plan payments and $85,240 of insurance premiums.
(4)	Ms. Maartense resigned her executive officer position in January 2006.

Option Grants In the Last Fiscal Year

      The following table sets forth information regarding options for the purchase of shares granted during the fiscal year ended November 30, 2005 to the Named Executive Officers.

	Number of		% of Total
	Securities		Options				Value of
	Underlying		Granted to		Exercise Price		Securities
	Options		Employees in		Per Share		Underlying
Name	Granted(1)		Fiscal Year		($/Security)		Options(2)		Expiration Date
Amish Mehta		—		—		—		—		—
David Dobson		413,971		43.3		1.17	$	7,381,103		June 27, 2015
Douglas McCollam		8,540		0.9		1.17		152,268		October 1, 2015
Randy Eisenbach		61,910		6.5		1.17		1,103,855		December 1, 2014
Amanda Bedborough		44,831		4.7		1.17		799,337		December 1, 2014
Jacqueline Maartense(3)		34,157		3.6		1.17		609,019		December 1, 2014

(1)	The options vest as to 25% on the first anniversary of the date of grant and as to an additional 25% each year thereafter in quarterly installments.
(2)	Values based on the difference between the exercise price per share and the midpoint of the public offering price range per share set forth on the cover page of this prospectus.
(3)	Ms. Maartense resigned her position in January 2006; however her options will continue to vest pursuant to the terms of their original vesting schedule in accordance with her transition agreement. See “— Employment and Transition Agreements.”

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Options Held and Fiscal Year-End Option Values

      The following table shows the number of options to purchase common shares held by the Named Executive Officers. The value of unexercised in-the-money options of those persons has been based on an assumed initial public offering price of $19.00 per share.

	Unexercised				Value of Unexercised
	Options at				In-the-Money
	November 30, 2005				Options(1)
Name	Vested		Unvested		Vested		Unvested
Amish Mehta		—		—		—		—
David Dobson		79,379		334,592	$	1,415,328	$	5,965,775
Douglas McCollam		19,845		68,073		353,836		1,213,742
Randy Eisenbach		19,748		54,971		352,107		980,133
Amanda Bedborough		40,169		44,352		716,213		790,796
Jacqueline Maartense(2)		12,809		38,427		228,384		685,153

(1)	Values based on the difference between the exercise price per share and the midpoint of the public offering price range per share set forth on the cover page of this prospectus.
(2)	Ms. Maartense resigned her position in January 2006; however her options will continue to vest pursuant to the terms of their original vesting schedule in accordance with her transition agreement. See “— Employment and Transition Agreements.”

Share Option and Other Compensation Plans

Equity Incentive Plan

      Our equity incentive plan was adopted by our board of directors and approved by our shareholders in February 2006. Our equity incentive plan provides for the grant of options to our employees and employees of our subsidiaries, and restricted shares, share appreciation rights, restricted share units, performance share units, deferred share units, phantom shares and other share-based awards to our employees, consultants and directors, and employees, consultants and directors of our subsidiaries and affiliates. Options granted to our U.S. employees may be incentive stock options or non-qualified options for U.S. Federal income tax purposes

      Share Reserve. A total of 2,850,000 common shares are authorized for issuance under the equity incentive plan. Of these shares, no more than 500,000 may be issued upon exercise of incentive stock options under the plan and no more than 700,000 may be issued as restricted shares. Appropriate adjustments will be made to the number of authorized shares under our equity incentive plan and to the shares subject to outstanding awards in the event of any reorganization, recapitalization, share split, dividend or other change in our capital structure in order to account for the changed circumstances.

      Shares subject to awards under the equity incentive plan that lapse, expire, terminate, or are forfeited or settled in cash, and shares surrendered to us as payment of exercise price, withholdings tax, or as part of an award exchange program, will again become available for grants under the equity incentive plan. Common shares used to satisfy awards under the plan may be authorized and unissued shares, or shares acquired by us on the open market.

      No more than 500,000 common shares may be subject to the total awards granted under this equity incentive plan to any individual participant in a given calendar year.

      Administration of Awards. Our board of directors, or a committee of directors appointed by our board, will administer our equity incentive plan. The board or committee of directors will include the appropriate number of outside directors with the appropriate qualifications in the case of awards intended to satisfy the independence or other requirements of exceptions under U.S. Internal Revenue Code Section 162(m) for performance-based compensation, Rule 16b-3 under the Securities Exchange Act of 1934, or any applicable exchange or quotation system rules. The board or committee has the power and discretionary authority to determine the terms and conditions of the awards, including the individuals who will receive awards, the term of awards, the exercise price, the number of shares subject to each award, the limitations or restrictions on

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vesting and exercisability of awards, the acceleration of vesting or the waiver of forfeiture or other restrictions on awards, the form of consideration payable on exercise, whether awards will be adjusted for dividend equivalents and the timing of grants. The board or committee also has the power to modify, amend or adjust the terms and conditions of outstanding awards, to implement an award exchange program, to create other share-based awards for issuance under the equity incentive plan, to arrange for financing by broker-dealers (including payment by us of commissions), to establish award exercise procedures (including “cashless exercise”) and to establish procedures for payment of withholding tax obligations with cash or shares.

      Stock options. The committee may grant options that are, in the case of U.S. recipients, intended to qualify as incentive stock options for U.S. federal income tax purposes or non-qualified options. The committee will determine the exercise price of options granted under our equity incentive plan, but except as required by law of a foreign jurisdiction or due to a merger or other corporate transaction, the exercise price of an option may not be less than 100% of fair market value of our common shares on the date the option is granted. For incentive stock options granted to any participant who owns at least 10% of the voting power of all classes of our understanding share, the option award must not have a term longer than five years and must have an exercise price that is at least 110% of fair market value of our common shares on the date of grant. No options may be granted for a term longer than 10 years. Options may be exercised as provided in the applicable award agreement. Generally, when a participant is terminated by us for good cause, or a participant voluntarily resigns, outstanding unvested options granted under the equity incentive plan will be forfeited immediately. For other terminations of employment, vested options generally remain exercisable for three months after termination, except they generally remain exercisable for twelve months after death. Specific provisions of a written employment agreement may provide for different treatment. However, an option granted under our equity incentive plan is never exercisable after its term expires.

      Share Appreciation Rights. Share appreciation rights (SARs) may be granted in conjunction with a related option, as tandem SARs, or separately as free-standing SARs. SARs generally allow the participant to receive the appreciation on the fair market value of our common shares between the date of grant and the exercise date, for the number of shares with respect to which the SAR is being exercised. Tandem SARs are generally exercisable based on certain terms and conditions of the underlying options, although the committee may grant tandem SARs with a base price that is higher than the underlying option price. Free-standing SARs are granted with a base price not less than 100% of the fair market value of our common shares on the date of grant and are subject to terms and conditions as determined by the board or the committee. The board or the committee may provide that SARs be payable in cash, in common shares, or a combination of both, and subject to any limitations or other conditions as it deems appropriate. SARs may be payable on a deferred basis only to the extent provided for in the participant’s award agreement.

      Restricted Shares. Restricted share awards are common shares that vest in accordance with restrictions that are determined by the board or the committee. The board or the committee has the discretion to determine the individuals who will receive a restricted share award, the number of shares granted, when the shares will be paid to the participant, whether the participant will have the right to vote the restricted shares or receive dividend amounts, whether the shares will be issued at the beginning or the end of a restricted period and any other terms and conditions with respect to vesting, deferral, payment options and other award characteristics as it deems appropriate. The committee may also provide that the participant may be granted a cash award that is payable upon the vesting of the restricted shares. Generally, unless our board or the committee decides otherwise, upon a participant’s termination of employment for any reason, restricted shares that have not vested are immediately forfeited to us. When a participant terminates employment for disability, death, retirement, early retirement or other special circumstances, the committee may waive the forfeiture requirement and other restrictions on the shares. Specific provisions of a written employment agreement may provide for different treatment.

      Restricted Share Units. Restricted share unit awards may consist of grants of rights to receive common shares or the value of common shares or a combination of both, which may vest in installments or on a deferred basis.

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      Performance Share Units. Performance share units are awards of restricted share units that will result in the delivery of common shares or a payment of the value of common shares to a participant only if performance goals established by the board or the committee are achieved or the awards otherwise vest. The board or the committee will establish, in its discretion, performance goals, which will determine the number of performance share units and the value of common shares, if any, to be paid out to participants. The board or the committee will also set time periods during which the performance goals must be met. The performance goals may be based upon the achievement of corporation-wide, divisional or individual goals, or any other basis as determined by the board or the committee. The board or the committee will determine whether payment for performance share units will be made in cash, common shares or a combination of both. The initial value of performance share units will be established by the committee by the date of grant and will be set at an amount equal to the fair market value of our common shares on the date of grant. The committee may modify the performance goals as necessary to align them with our corporate objectives only if there has been a material change in our business, operations or capital or corporate structure.

      Deferred Share Units. Deferred share unit awards are awards similar to awards of restricted share units except that such awards may not be redeemed for common shares or for the value of common shares until the participant has ceased to hold all offices, employment and directorships with us and our affiliates.

      Other Share-Based Awards. The board or the committee may create other forms of awards in addition to the specific awards described in our equity incentive plan which may be granted alone or in tandem with other awards under the plan. The board or the committee has complete authority to determine the persons to whom and the time or times at which such other share-based awards will be granted, the number of common shares, if any, to be granted, whether the value of the awards will be based on shares or cash, and any other terms and conditions.

      Effect of a Significant Event. In the event of a significant event as defined in our equity incentive plan, and unless otherwise provided in an award agreement or a written employment contract between our company and a plan participant, our board of directors may provide that the successor corporation will assume each award or replace it with a substitute award, or the awards will become exercisable or vested in whole or in part upon written notice, or the awards will be surrendered for a cash payment, or any combination of the foregoing will occur. Upon a significant event, all options granted to members of our board of directors shall immediately vest. If a participant in the equity incentive plan is entitled to receive payments that would qualify as excess “parachute payments” under Section 280G of the U.S. Internal Revenue Code, those payments may be reduced so that the participant is not subject to the excise tax under Section 4999 of the U.S. Internal Revenue Code if such a reduction would result in the participant’s receiving a greater after-tax payment.

      Under the plan, and unless otherwise defined in an award agreement or a written employment agreement between us and a plan participant which governs (and subject to certain exceptions described in the plan), a significant event means:

• a person or group of persons (other than Vector Capital and its affiliates) becomes the beneficial owner of securities constituting 50% or more of voting power;

• 50% of our current board of directors (including any successors approved by 50% of our current board) cease to constitute 50% of the board;

• a merger, consolidation, amalgamation or arrangement (or a similar transaction) involving us occurs, unless after the event, 50% or more of the voting power of the combined company is beneficially owned by stockholders who owned all of our common shares immediately before the event; or

• our shareholders approve a plan of complete liquidation or winding-up of our company, or the sale or disposition of all or substantially all our assets (other than a transfer to an affiliate).

      Transferability. Awards under our equity incentive plan generally are not transferable other than by will or by the laws of descent of distribution or as expressly permitted by the board. Except as noted, only the participant may exercise an award.

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      Section 162(m) Provisions. Awards to any participant whom the committee determines to be a “covered employee” under Section 162(m) of the U.S. Internal Revenue Code may be subject to restrictions, including the establishment of performance goals, as necessary for the award to meet the requirements for performance-based compensation.

      Additional Provisions. Our equity incentive plan will automatically terminate in 2016 unless we elect to terminate it sooner. In addition, our board of directors has the right to amend, suspend or terminate the plan at any time provided that such action does not impair any award previously granted under the plan. We will not be responsible if awards under the equity incentive plan result in penalties to a participant under Section 409A of the U.S. Internal Revenue Code. Amendments to the plan will be submitted for shareholder approval to the extent required by applicable law.

Prior Incentive Plans

      Effective December 1, 2003, we adopted a share option and phantom share unit plan (which we refer to as our prior plan). Our prior plan provided for the grant of units, options and phantom shares to our employees, officers and consultants.

      As of February 28, 2006, there were units with respect to 1,409,091 common shares outstanding under the prior plan and no separate options or phantom shares outstanding. Each unit consists of a stock option that enables the holder to acquire a fixed number of common shares at a stated exercise price and a phantom share unit in respect of the same number of shares as the option, with the same stated exercise price. Upon exercise of the stock option portion of the unit, we will issue common shares to the holder. Upon exercise of the phantom share unit portion of the unit, we may pay the holder an amount of cash equal to the fair market value of the common shares underlying the phantom share unit, less the exercise price, or we may deliver common shares with a fair market value equal to such amount of cash. In addition, in the case of a stock option exercise, we may effect a net settlement, in which we deliver the number of common shares equal in value to the fair market value of the common shares underlying the option, less the exercise price. A holder may not exercise both the stock option component of the unit and the phantom share unit component. When a holder exercises either the stock option component or the phantom share unit component, the other component is no longer exercisable. After this offering, no additional units, options or phantom share units will be granted under our prior plan, but the outstanding units granted under our prior plan will remain outstanding in accordance with their terms.

      Appropriate adjustments will be made under our prior plan to the number of shares subject to outstanding awards in the event of any future reorganization, recapitalization, share split, dividend or other change in our capital structure in order to account for the changed circumstances.

      Units granted under the prior plan generally vest as to 25% on the first anniversary of the date of grant and as to an additional 25% each year after such anniversary in quarterly installments.

Options To Purchase Securities

      The following chart sets forth information as of March 31, 2006 regarding outstanding units granted under our 2003 share option and phantom share unit plan. As of March 31, 2006, there were no outstanding awards under our 2006 equity incentive plan.

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			Common Shares
	Fiscal Year		underlying Units
Category	of grant		Granted			Exercised		Exercise Price
All executive officers
and past executive officers		2004		109,443			—	$	1.17
		2005		664,173			4,270	$	1.17
		2006		—			—		—
				773,616			4,270
All directors and past directors
who are not also executive officers		2004		79,378			—	$	1.17
		2005		51,237			—	$	1.17
		2006		25,618			—	$	15.69
				156,233			—
All other employees
or past employees		2004		312,439			—	$	1.17
		2005		220,977			—	$	1.17
		2005		17,640			—	$	13.82
		2006		33,599			—	$	15.84
				584,655			—
All consultants		2004		546			—	$	1.17
		2005		1,368			—	$	1.17
		2006		—			—		—
				1,914			—
Total				1,516,418	(1)		4,270

(1)  Of the total units granted in respect of 1,516,418 underlying common shares, units in respect of 100,068 underlying common shares were forfeited, terminated or otherwise cancelled prior to March 31, 2006.

Employment and Transition Agreements

      David Dobson. In June 2005, we entered into an employment agreement with David Dobson, our Chief Executive Officer. He currently receives an annual base salary of C$415,000 ($355,613 based on the exchange rate in effect as of the close of business on March 31, 2006) with an annual target bonus of 100% of the base salary based on meeting financial targets set by our board or compensation committee. If we terminate his employment without cause, we are obligated to continue paying his salary for 18 months, pay to him his annual target bonus of 100% of his base salary prorated for the portion of the year prior to the termination date and continue to make contributions in respect of Mr. Dobson to our executive group benefit plan for 18 months. In the event there is a change of control and we terminate Mr. Dobson’s employment for any reason other than for cause or he resigns for any reason within six months of the change of control, his share-based awards become fully exercisable on the earlier of the date of termination or the six—month anniversary of the change of control. We have made loans to Mr. Dobson. See “Certain Relationships and Related Party Transactions—Other Related Party Transactions.”

      Douglas McCollam. In December 2003, we entered into an employment agreement with Douglas McCollam, our Chief Financial Officer and a member of our Board of Directors. He currently receives an annual base salary of C$250,000 ($214,225 based on the exchange rate in effect as of the close of business on March 31, 2006), with an annual target bonus of 100% of the base salary based on meeting financial targets set by our board or compensation committee. If we terminate his employment without cause, we are obligated to pay to him a lump sum of one month of his then current base salary per year of service, up to a maximum of three months.

      Randy Eisenbach. In May 2005, we entered into an employment agreement with Randy Eisenbach, our Chief Operating Officer. He currently receives an annual base salary of $260,000, with an annual target bonus

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of $130,000 based on meeting targets set by our board or compensation committee each year. If we terminate his employment without cause or upon his death or disability while employed by us, we are obligated to pay to him a lump sum of six months of his then current base salary, maintain his benefits and pay his accommodation and travel expenses for six months.

      Amanda Bedborough. In January 2003, we entered into an employment agreement with Amanda Bedborough, our Executive Vice President, International Operations. She currently receives an annual base salary of £140,000, with an annual target bonus of £95,000 ($243,501 and $165,233, respectively, based on the exchange rate in effect as of the close of business on March 31, 2006) based on meeting targets set by our board or compensation committee each year. In addition, she may be eligible for a target bonus at the sole discretion of our board of directors. If we terminate her employment without cause, we are obligated to pay to her up to 18 months of her base salary and maintain her benefits for up to 18 months. In the event there is a change of control and we terminate Ms. Bedborough’s employment during the period beginning one month before and ending six months after the change of control, she is entitled to receive 18 months written notice. In lieu of notice, we may elect to pay her up to 18 months of her base salary and maintain her benefits for up to 18 months.

      Jacqueline Maartense. In January 2006, we entered into a transition agreement with Jacqueline Maartense, our Executive Vice President of Global Marketing. Under the agreement, Ms. Maartense resigned from her executive office effective as of January 2006. Ms. Maartense will continue to be an unsalaried employee of ours through June 8, 2007, and her options will continue to vest in accordance with the term of their original vesting schedule through that date and will be exercisable for 90 days thereafter. Promptly following June 8, 2007, Ms. Maartense will receive a severance payment of C$367,000 ($314,482 based on the exchange rate in effect as of the close of business on March 31, 2006).

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Relationship with Vector Capital

      Equity Ownership. In March 2003, an affiliate of Vector Capital acquired 22,890,000 of our Series A preferred shares, which represented a minority interest. Later that year Vector Capital initiated a transaction to take our company private by offering to purchase all of our outstanding shares for $1.05 per share. In August 2003, our acquisition by Vector Capital was completed. Our shares ceased trading on Nasdaq and the TSX on August 28, 2003 and September 2, 2003, respectively. In connection with this transaction, Vector Capital engaged a third party consulting firm to conduct due diligence and prepare a report. We purchased this report from Vector Capital for $500,000.

      Immediately following the offering, Vector Capital will own 16,157,614 of our common shares, or 66.0% of our common shares outstanding (or 61.7% assuming the over-allotment is exercised in full). In the twelve months ended November 30, 2003, we advanced $69.8 million of our funds, which were used to fund a portion of the purchase price of our acquisition by Vector Capital. In addition, in respect of its equity ownership, we paid distributions of $4.1 million, $41.0 million and $83.1 million during 2003, 2004 and 2005, respectively.

      Loans and Credit Support. In connection with the completion of the going private transaction, Vector Capital loaned us $17.0 million pursuant to two non-interest bearing promissory notes that we repaid in fiscal 2004. In connection with our existing credit facility, affiliates of Vector Capital have granted a security interest in their equity in Corel in favor of Credit Suisse First Boston, as collateral agent pursuant to a pledge agreement.

      Board Representation. Alexander Slusky, Managing Partner of Vector Capital, is currently a member of our board of directors and will serve on our compensation and audit committees. Amish Mehta, a partner at Vector Capital, served as our interim President and Chief Executive Officer from November 2003 to June 2005 and will serve on our board of directors and our compensation committee. As consideration for serving as an executive officer, Mr. Mehta was paid $450,000 and $486,000 for 2004 and 2005, respectively.

      Expense Reimbursements. In connection with certain transaction advisory work performed on our behalf we paid Vector Capital transaction fees and reimbursements for expenses of $750,000, $250,000, $2.4 million and $30,000 in 2003, 2004, 2005 and 2006 (through February 28, 2006), respectively. In addition, in connection with transaction advisory work performed on behalf of WinZip, WinZip paid Vector Capital advisory fees and reimbursements for expenses of $919,000 in fiscal 2005.

      Advisory Services Expense Reimbursement Agreement. Vector Capital may perform financial and strategic advisory and consulting services for us in the future, although they are not obligated to do so. We have entered into an advisory services agreement with Vector Capital pursuant to which they will be reimbursed by us for disbursements and reasonable out-of-pocket expenses incurred in connection with performing any advisory and consulting services at our request.

      These reimbursement payments are expected to be approximately $150,000 per year. Reimbursable expenses in excess of $250,000 in any fiscal year must be approved by the independent members of our audit committee prior to reimbursement. We have agreed to indemnify Vector Capital against any claims associated with the performance of its advisory and consulting services in accordance with the terms of the agreement. The agreement is terminable by us or Vector Capital at any time upon 90 days prior notice.

WinZip Acquisition

      In February 2006, we agreed to acquire all of the outstanding securities of WinZip, a provider of compression utility software, from Vector Capital concurrently with the closing of the offering, to complement our productivity software. The purchase price for the acquisition will be 4,322,587 of our common shares. In addition, we have agreed to repay on closing of the acquisition all of the outstanding bank debt of WinZip, which, as of February 28, 2006, totaled $19.2 million. We will grant options to purchase 74,680 of our common shares under our 2006 equity incentive plan in replacement for outstanding WinZip options. WinZip paid

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dividends totaling $12.0 million to Vector Capital in fiscal 2005 and paid a $7.5 million dividend to Vector Capital in March 2006.

      The purchase price for WinZip was determined, taking into account the respective historical and expected revenue and EBITDA contributions of us and WinZip, as well as an assumed valuation multiple of those contributions. The acquisition was negotiated in the context of entities under common control and therefore may not reflect economic or other terms that would result from an arm’s length transaction with an unaffiliated third party.

      The WinZip acquisition will be effected pursuant to an acquisition agreement between us and Vector Capital. The acquisition agreement contains customary covenants, representations and warranties. Generally, each party’s representations and warranties expire on the first anniversary of the closing date. However, Vector Capital’s representations as to its ownership and transfer of WinZip to us and certain tax matters and our representations as to the valid issuance of common shares in payment for WinZip will survive until the expiration of the applicable statutes of limitations. In addition to customary covenants, Vector Capital has agreed that, on closing, WinZip will have net debt of not more than $16.5 million. For these purposes, net debt will be equal to WinZip’s long-term debt less WinZip’s cash on hand and marketable securities.

      Under the acquisition agreement, we have agreed to indemnify Vector Capital, its directors, managers, officers, employees, representatives, agents, successors and assigns against damages incurred as a result of the breach or inaccuracy of any of our representations, covenants or agreements under the acquisition agreement. Vector Capital has agreed to indemnify us, WinZip, each of our/ WinZip’s affiliates and each of our/ WinZip’s respective directors, managers, officers, employees, representatives, agents, successors and assigns against damages incurred as a result of the breach or inaccuracy of any of Vector Capital’s representations, covenants or agreements under the acquisition agreement.

      Except with respect to Vector Capital’s indemnification obligations relating to its ownership and transfer of WinZip to us and certain tax matters and our indemnification obligations relating to the valid issuance of common shares in payment for WinZip, the indemnification obligations of each party are capped and are subject to a threshold. Except as described above, our indemnification obligations are capped at an amount equal to the dollar value of 93,239 of our common shares, based upon the initial public offering price, or $1,771,541 assuming the midpoint of the estimated price range set forth on the cover of this prospectus. Our indemnification obligations must be satisfied in cash. Vector Capital’s indemnification obligations generally must be satisfied by the return to us of up to 93,239 of our common shares, which represent a portion of the common shares issued to Vector Capital as consideration for the acquisition. Our sole remedy for a breach of the agreement by Vector Capital generally will be to recover all or a portion of these common shares. However, to the extent that Vector Capital is obligated to satisfy a claim in respect of its ownership and transfer of WinZip to us or certain tax matters, any amount of such claim in excess of the value of the indemnification shares held by Vector Capital at such time must be paid in cash. For purposes of this indemnity obligation, the indemnification shares will be valued at the initial public offering price per share, irrespective of the trading price of our common shares at the time any such indemnification payment obligation arises. Vector Capital has agreed not to transfer the indemnification shares for a period of one year from the closing date. To the extent that the threshold applies, neither party is obligated to make any indemnity payment or return of shares, respectively, unless and until the damages of the other exceed the threshold (and then the indemnifying party is liable for all damages, including those below the threshold).

Shareholder and Registration Rights

      Prior to the completion of this offering we will enter into a registration rights agreement with shareholders that will hold 16,492,427 common shares (representing 67.3% of our outstanding common shares immediately following this offering), pursuant to which the holders of a majority of those common shares will have the right to request that we file a registration statement with the SEC and applicable Canadian provincial securities authorities relating to the sale from time to time of those shares in the U.S. and Canada, and, if the holders of a majority of those shares so request, we will undertake an underwritten offering of those shares in the U.S. and Canada. We are not required, however, to effect any registration within 90 days after the effective date of a previous registration in which the holders of common shares were otherwise given the right

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to register the sale of their common shares. The existing shareholders will also have unlimited registration rights relating to the inclusion of their common shares on any registration statement filed by us on a form of registration statement that permits the inclusion of their common shares, subject to a reduction in the number of such common shares we are obligated to include if the lead underwriters participating in such transaction advise us that such reduction is necessary. The registration rights may not be exercised during the Underwriters’ lock-up period or during a period in which we advise the existing shareholders that the prospectus included in any such registration statement cannot be used for a limited period of time.

      We will agree to pay all costs and expenses in connection with each registration described above, except underwriting discounts and commissions applicable to the securities sold by the existing shareholders and to indemnify the existing shareholders against certain liabilities, including liabilities under the Securities Act of 1933 and Canadian provincial securities laws.

Other Related Party Transactions

      In June 2005, we agreed to lend David Dobson, our Chief Executive Officer, C$562,500 for the purposes of purchasing a home in Ontario, Canada. Interest accrued at the Royal Bank of Canada prime rate on C$250,000 of the amount borrowed. In June 2005, we granted units in respect of 413,971 common shares to Mr. Dobson at an exercise price of $1.17 per common share. A portion of these units representing the right to acquire 79,378 common shares vest upon the completion of this offering and the remainder vest over a four year period. Pursuant to the terms of Mr. Dobson’s employment agreement, in April 2006 we repurchased a portion of these units representing the right to acquire 11,348 common shares at a price of $18.83 per unit, or $213,676 in the aggregate. This amount was used to repay that portion of the loan described above that Mr. Dobson was obligated to repay under his employment agreement. Pursuant to the terms of his employment agreement, the remaining balance of such loan was forgiven by us in April 2006. In April 2006 we also agreed to repurchase units from Mr. Dobson representing the right to acquire 11,348 common shares at a price of $18.83 per unit, or $213,676 in the aggregate, such purchase being contingent upon, and to take effect immediately preceding, the completion of this offering. We agreed to repurchase the additional units from Mr. Dobson to help him defray additional expenses he incurred in connection with his relocation to Canada.

      In September 2005, we granted stock options to purchase 12,809 and 29,888 shares at an exercise price of $1.17 per share to Messrs. Cohen and Slusky, respectively. In January 2006, we granted options to purchase 12,809 common shares at an exercise price of $15.69 per share to each of Messrs. Giffen and Mehta.

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PRINCIPAL AND SELLING SHAREHOLDERS

      The following table sets forth information regarding the beneficial ownership of our common shares before and after giving effect to the completion of this offering including the vesting of certain options and the equity recapitalization described elsewhere in this prospectus and shows the number of shares and percentage of outstanding common shares owned by:

• each person who is known by us to own beneficially 5% or more of our common shares;

• each of the other selling shareholders;

• each member of our board of directors;

• each of the Named Executive Officers; and

• all members of our board of directors and our executive officers as a group.

      Beneficial ownership is determined in accordance with SEC rules, which generally attribute beneficial ownership of securities to each person who possesses, either solely or shared with others, the power to vote or dispose of those securities. These rules also treat as outstanding all shares that a person would receive upon exercise of stock options or warrants held by that person that are immediately exercisable or exercisable within 60 days of the determination date, which in the case of the following table is February 28, 2006. Shares issuable pursuant to exercisable stock options are deemed to be outstanding for computing the percentage ownership of the person holding such options, but are not deemed outstanding for computing the percentage ownership of any other person. The percentage of beneficial ownership for the following table is based on 15,169,840 common shares outstanding, as of February 28, 2006 and 24,492,427 common shares outstanding after the completion of this offering, assuming no exercise of the underwriters’ over-allotment option. Immediately prior to the closing of this offering, approximately 2.0% of the common shares will be held by residents of the United States and there will be 11 shareholders of record in the United States. We have only one class of equity securities outstanding and all holders of such class have the same rights, preferences and privileges. Our major shareholders do not have any voting rights that are different from the voting rights of shareholders generally. To our knowledge, except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all common shares shown as beneficially owned by them.

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	Shares
	Beneficially							Shares Beneficially
	Owned Before					Shares to be Sold		Owned After this
	this Offering					in this Offering		Offering
Name and Address of Beneficial Owner(1)	Number		%			Number		Number		%
Five Percent Shareholder:
Vector Capital(2)		19,105,235		98.0	% (11)		2,947,621		16,157,614		66.0	% (14)
Each Other Selling Shareholder:(3)
Robert Voit(4)		379,677		1.9	(12)		52,379		327,298		1.3	% (15)
Executive Officers and Directors:
Alex Slusky(5)		19,122,314		98.1	(13)		2,947,621		16,174,693		66.0	(16)
David Dobson		79,379		*			—		79,379		*
Douglas McCollam(6)		39,689		*			—		39,689		*
Randy Eisenbach(7)		24,018		*			—		24,018		*
Jacqueline Maartense		12,809		*			—		12,809		*
Amanda Bedborough(8)		41,236		*			—		41,236		*
Amish Mehta(9)		—		*			—		—		*
Steven Cohen		—		*			—		—		*
J. Ian Giffen		—		*			—		—		*
All directors and executive officers as a group (12 persons)(10)		270,671		1.4			—		270,671		1.1

* Less than 1%.

(1)	Except as otherwise indicated, the address for each beneficial owner is c/o Corel Corporation, 1600 Carling Avenue, Ottawa, Ontario, Canada K1Z 8R7
(2)	All of these shares are held, directly or indirectly by Corel Holdings, L.P., a Cayman Islands limited partnership, Corel Holdings, L.P. is the registered owner of 7,941,379 of these shares. Vector CC Holdings, SRL, a Barbados entity, is the registered owner of the remaining 6,841,269 of these shares. The sole general partner of Corel Holdings, L.P. is Vector Capital Partners II International Ltd., which is wholly owned by VCPII International, LLC. The managing member of VCPII International LLC is Alexander Slusky. The address for each of Vector CC Holdings, SRL, Vector CC Holdings III, SRL and Corel Holdings, L.P. is c/o Vector Capital, 456 Montgomery Street, 19th Floor, San Francisco, California 94104. In March 2003, pursuant to a purchase agreement by and between Vector Capital and Microsoft Licensing, Inc., a wholly owned subsidiary of Microsoft Corporation, Vector Capital acquired 22,890,000 of our then-existing Series A preferred shares, representing all of our issued and outstanding Series A preferred shares after all of our remaining Series A preferred shares were converted into common shares. Vector Capital subsequently converted 12,500,000 Series A preferred shares into 12,500,000 common shares, retaining 10,390,000 Series A preferred shares. In August 2003, pursuant to a shareholder and court-approved plan of arrangement, Vector Capital’s 12,500,000 common shares were converted into 43,750,000 common shares. Vector Capital acquired an additional 92,997,891 common shares and Vector Capital continued to hold 10,390,000 Series A preferred shares. Immediately after completion of the plan of arrangement in August 2003, Vector Capital held 136,747,891 common shares, which at that time represented all of our issued and outstanding common shares. On June 25, 2004, we created Class B common shares and our then-existing 136,747,891 common shares held by Vector Capital were re-designated as Class A common shares and were amended to be convertible into Class B common shares. On June 25, 2004, 92,997,891 Class A common shares held by Vector Capital were converted to Class B common shares, and Vector Capital continued to hold 43,750,000 Class A shares. In December 2005, all of Vector Capital’s Class A common shares and Class B common shares were converted on a one-for-one basis into a total of 136,747,891 newly created common shares, and all of Vector Capital’s Series A Preferred Shares were converted on a 3.5-for-1.0 basis into a total of 36,365,000 common shares. In March 2006, we effected a 1.0 for 11.7 reverse split of our common shares resulting in Vector Capital holding a total of 14,782,648 of our common shares. Also includes 4,322,587 common shares that will be issued as consideration for the acquisition of WinZip concurrently with the closing of this offering.
(3)	All shares held by other selling shareholders were acquired by such persons in our acquisition of Jasc.
(4)	Robert Voit exercises sole voting control over 379,677 of our common shares pursuant to a Minority Shareholders Agreement dated as of October 25, 2004, which will terminate upon closing of this offering. Robert Voit is the sole beneficial owner of 340,120 of these common shares. The remaining 39,557 common shares represent all of the common shares beneficially owned by Susan Dub, Harold Fagley, Joseph Fromm, Jonathan Ort and Kris Tufto. Mr. Voit disclaims beneficial ownership with respect to all such common shares, except to the extent of his pecuniary interest in them.

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(5)	Includes 17,079 common shares issuable upon the exercise of options that are exercisable within 60 days of February 28, 2006 all of which are vested and 4,322,587 common shares that will be issued as consideration for the acquisition of WinZip concurrently with the closing of this offering. With respect to the remaining 14,782,648 shares, Mr. Slusky, a principal of Vector Capital, has voting and investment power over the common shares owned by Vector Capital and therefore beneficially owns the common shares held by Vector Capital. Mr. Slusky, however, disclaims beneficial ownership of these common shares, except to the extent of his pecuniary interest in them. The address for Mr. Slusky is c/o Vector Capital, 456 Montgomery Street, 19th Floor, San Francisco, California 94104.
(6)	Consists of 39,689 common shares issuable upon the exercise of options that are exercisable within 60 days of February 28, 2006 all of which are vested.
(7)	Includes 19,748 common shares issuable upon the exercise of options that are exercisable within 60 days of February 28, 2006 all of which are vested.
(8)	Consists of 41,236 common shares issuable upon the exercise of options that are exercisable within 60 days of February 28, 2006 all of which are vested.
(9)	Mr. Mehta, a principal of Vector Capital, does not have voting or investment power over the common shares beneficially owned by Vector Capital. The address for Mr. Mehta is c/o Vector Capital, 456 Montgomery Street, 19th Floor, San Francisco, California 94104.

(10)	Includes 266,401 common shares issuable upon the exercise of options that are exercisable within 60 days of February 28, 2006 all of which are vested.
(11)	91.1% on a fully-diluted basis. Our fully-diluted share capital consists of 15,169,840 common shares outstanding, 4,322,587 common shares issuable in the acquisition of WinZip, 1,409,091 common shares subject to outstanding options, and 74,680 common shares issuable upon the exercise of replacement stock options to be granted under our 2006 equity incentive plan to holders of options to purchase shares of WinZip common stock, each as of February 28, 2006.
(12)	1.8% on a fully diluted basis.
(13)	91.2% on a fully diluted basis.
(14)	62.2% on a fully diluted basis.
(15)	1.3% on a fully diluted basis.
(16)	62.3% on a fully diluted basis.

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DESCRIPTION OF SHARE CAPITAL

General

      The following is a summary of the rights of our common shares and preferred shares as set forth in our articles of incorporation and corporate bylaws and certain related sections of the Canada Business Corporations Act, or CBCA. For more detailed information, please see our articles of incorporation and corporate bylaws, which are filed as exhibits to the registration statement of which this prospectus is a part. We were previously existing under the Business Corporations Act (Ontario) and continued under the CBCA in January, 2006.

      On December 1, 2005, through an amalgamation with a wholly owned subsidiary, we reorganized our share capital. Following the amalgamation, our share capital consists of an unlimited number of preferred shares, issuable in series, each without par value and an unlimited number of common shares, each without par value. All of the outstanding Series A preferred shares, Class A common shares and Class B common shares of the pre-amalgamated corporation were converted into common shares of the post-amalgamated corporation. In March 2006, we effected a 1.0 for 11.7 reverse split of our common shares.

      Immediately following the closing of this offering, assuming the offering size set forth on the cover of this prospectus, we expect to have issued and outstanding 24,492,427 common shares and no preferred shares. Immediately following the closing of this offering, we also expect to have outstanding vested and unvested options to purchase a total of 1,486,760 common shares.

Common Shares

      The holders of our common shares are entitled to one vote for each share held at any meeting of shareholders. Subject to the prior rights of the holders of our preferred shares, the holders of our common shares are entitled to receive dividends as and when declared by our board of directors. Subject to the prior payment to the holders of our preferred shares, in the event of our liquidation, dissolution or winding-up or other distribution of our assets among our shareholders, the holders of our common shares are entitled to share pro rata in the distribution of the balance of our assets. There are no preemptive, redemption, purchase or conversion rights attaching to the common shares. Our common shares are issued in fully registered form. As of February 28, 2006 approximately 2.0% of the common shares were held by residents of the United States and there were 11 shareholders of record in the United States.

Preferred Shares

      Our preferred shares may be issued in one or more series. Our board of directors may amend our articles of incorporation to fix the authorized number of preferred shares in, and to determine the designation of the shares of, each series and to create, define and attach rights and restrictions to the shares of each series, subject to the rights and restrictions attached to our preferred shares as a class.

      Our preferred shares are entitled to preference over our common shares with respect to the payment of dividends and the distribution of our assets, whether voluntary or involuntary, or in the event of any other distribution of our assets among our shareholders for the purpose of winding-up our affairs, and each series of preferred shares may also be given those preferences over our common shares and other series of preferred shares.

      Where we do not pay cumulative dividends in full with respect to a series of our preferred shares, the shares of all series of our preferred shares will participate ratably with respect to the accumulated dividends in accordance with the amounts that would be payable on those shares if all the accumulated dividends were paid in full. Where amounts payable are not paid in full on our winding-up, or on the occurrence of any other event as a result of which the holders of the shares of all series of our preferred shares are entitled to a return of capital, the shares of all series of our preferred shares will participate ratably in a return of capital in respect of our preferred shares as a class in accordance with the amounts that would be payable on the return of capital if all amounts so payable were paid in full.

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      We may not create or issue any shares ranking senior to any outstanding series of our preferred shares with respect to the payment of dividends or the distribution of assets in the event of our liquidation, dissolution or winding-up, whether voluntary or involuntary, or in the event of any other distribution of our assets among our shareholders for the purpose of winding-up our affairs, without first receiving the approval of that outstanding series of our preferred shares given by a resolution passed at a meeting by the affirmative vote of not less than two-thirds of the votes cast at that meeting.

      The holders of our preferred shares are not entitled as a class to receive notice of, to attend or to vote at any meetings of our shareholders, except as may be specifically provided pursuant to the rights and restrictions attaching to any series of our preferred shares. The rights and restrictions attached to our preferred shares as a class may be amended with, in addition to any approval that may then be prescribed by applicable law, the approval of the registered holders of the preferred shares given by a resolution passed at a meeting by the affirmative vote of not less than two-thirds of the votes cast at such meeting.

Limitations on Liability and Indemnification of Directors and Officers

      Under the CBCA, we may indemnify a current or former director or officer of the company or another individual who acts or acted at our request as a director or officer, or an individual acting in a similar capacity, of another entity, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with us or another entity.

      However, indemnification is prohibited under the CBCA unless the individual:

• acted honestly and in good faith with a view to our best interests for which the individual acted as director or officer or in a similar capacity at our request;

• in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the individual had reasonable grounds for believing that the individual’s conduct was lawful; and

• was not judged by the court or other competent authority to have committed any fault or omitted to do anything that the individual ought to have done.

      The CBCA provides that we may also advance moneys to a director, officer or other individual for costs, charges and expenses incurred in connection with a proceeding referred to above.

      Our bylaws require us to indemnify, to the fullest extent permitted by the CBCA, each of our current or former directors or officers and each person who acts or acted at our request as a director or officer of a body corporate of which we are or were a shareholder or creditor, and their heirs and legal representatives.

      Our bylaws authorize us to purchase and maintain insurance for the benefit of each of our current or former directors or officers and each person who acts or acted at our request as a director or officer of a body corporate of which we are or were a shareholder or creditor, and their heirs and legal representatives.

      We have entered into indemnity agreements with our directors and officers which provide, among other things, that we will indemnify him or her for expenses reasonably incurred by such individual in respect of a proceeding in which such individual is or may be joined as a party or is or may be liable for or in respect of penalty by reason of such individual being or having been a director or officer; provided that, we shall not indemnify such individual if, among other things, he or she did not act honestly and in good faith with a view to our best interests and, in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the individual had reasonable grounds for believing that his or her conduct was lawful.

      At present, we are not aware of any pending or threatened litigation or proceeding involving any of our directors, officers, employees or agents in which indemnification would be required or permitted.

Other Important Provisions of Our Articles of Incorporation

      The following is a summary of certain other important provisions of our articles of incorporation and certain related sections of the CBCA. Please note that this is only a summary and is not intended to be

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exhaustive. For further information please refer to the full version of our articles of incorporation which are included as an exhibit to the registration statement of which this prospectus is a part.

Stated Objects or Purposes

      Our articles of incorporation do not contain stated objects or purposes and do not place any limitations on the business that we may carry on.

Directors

      Power to vote on matters in which a director is materially interested. The CBCA states that, a director must disclose, in accordance with the provisions of the CBCA, the nature and extent of an interest the director has in a material contract or material transaction, whether made or proposed, with us, if the director is a party to the contract or transaction, is a director or an officer, or an individual acting in a similar capacity, of a party to the contract or transaction or has a material interest in a party to the contract or transaction.

      A director who holds a disclosable interest in respect of any contract or transaction into which we have entered or propose to enter is not entitled to vote on any directors’ resolution to approve that contract or transaction, unless the contract or transaction:

• relates primarily to the director’s remuneration as a director, officer, employee or agent of us or an affiliate;

• is for indemnity or insurance otherwise permitted under the CBCA; or

• is with an affiliate.

      Directors’ power to determine the compensation of directors. The CBCA provides that the remuneration of our directors, if any, may be determined by our directors subject to the articles of incorporation and bylaws or, if our directors so decide, by our shareholders. That remuneration may be in addition to any salary or other remuneration paid to any of our officers or employees who are also directors.

      Retirement or non-retirement of directors under an age limit requirement. Neither our articles of incorporation nor the CBCA impose any mandatory age-related retirement or non-retirement requirement for our directors.

      Number of shares required to be owned by a director. Neither our articles of incorporation nor the CBCA provide that a director is required to hold any of our shares as a qualification for holding his or her office.

Action Necessary to Change the Rights of Holders of Our Shares

      Our shareholders can authorize the alteration of our articles of incorporation to create or vary the special rights or restrictions attached to any of our shares by passing a special resolution. However, a right or special right attached to any class or series of shares may not be prejudiced or interfered with unless the shareholders holding shares of those class or series to which the right or special right is attached consent by a special separate resolution. A special resolution means a resolution passed by: (a) a majority of not less than 2/3 of the votes cast by the applicable class or series of shareholders who vote in person or by proxy at a general meeting, or (b) a resolution consented to in writing by all of the shareholders holding the applicable class or series of shares.

Shareholder Meetings

      We must hold an annual general meeting of our shareholders at least once every calendar year at a time and place determined by our board of directors, provided that the meeting must not be held later than 15 months after the preceding annual general meeting. A meeting of our shareholders may be held anywhere in Canada, or provided the shareholders agree, anywhere outside of Canada.

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      Our directors may, at any time, call a meeting of our shareholders. Shareholders holding not less than five percent of our issued voting shares may also cause our directors to hold a general meeting.

      A notice convening a general meeting, specifying the date, time, and location of the meeting, and, where a meeting is to consider special business, the general nature of the special business, must be given to shareholders not less than 21 days prior to the meeting, although, as a result of applicable securities rules, the time for notice is effectively longer. Under the CBCA, shareholders entitled to notice of a meeting may waive or reduce the period of notice for that meeting, provided applicable securities rules are met. The accidental omission to send notice of any meeting of shareholders to, or the non-receipt of any notice by, any person entitled to notice does not invalidate any proceedings at that meeting.

      A quorum for general meetings is one person present and being, or representing by proxy, shareholders holding in the aggregate not less than 20% of the issued shares entitled to be voted at the meeting. If within half an hour from the time set for a general meeting, a quorum is not present, the meeting, if convened by requisition of shareholders, will be dissolved; but otherwise it will stand adjourned to the same day in the next week at the same time and place without any requirement to give notice of the adjourned to meeting to shareholders. If at the adjourned meeting a quorum is not present within half an hour from the time set for the meeting, the person or persons present and being, or representing by proxy, one or more shareholders entitled to attend and vote at the meeting constitute a quorum.

      Holders of our common shares are entitled to attend general meetings of our shareholders. Except as otherwise provided with respect to any particular series of preferred shares, and except as otherwise required by law, the holders of our preferred shares are not entitled as a class to receive notice of, attend or vote at any meetings of our shareholders. Our directors, our president (if any), our secretary (if any), our assistant secretary (if any), our auditor and any other persons invited by our directors are entitled to attend at any meeting of our shareholders but will not be counted in the quorum or be entitled to vote at the meeting unless he or she is a shareholder or proxyholder entitled to vote at the meeting.

Change of Control

      Our articles of incorporation do not contain any change of control limitations with respect to a merger, acquisition or corporate restructuring that involves us.

Shareholder Ownership Disclosure

      Although applicable securities laws regarding shareholder ownership by certain persons require certain disclosure, our articles of incorporation do not provide for any ownership threshold above which shareholder ownership must be disclosed.

Ownership and Exchange Controls

      Limitations on the ability to acquire and hold our common shares may be imposed by the Competition Act (Canada). This legislation permits the Commissioner of Competition of Canada, or Commissioner, to review any acquisition of a significant interest in us. This legislation grants the Commissioner jurisdiction, for up to three years, to challenge this type of acquisition before the Canadian Competition Tribunal if the Commissioner believes that it would, or would be likely to, substantially reduce or prevent competition in any market in Canada.

      This legislation also requires any person who intends to acquire our common shares to file a notification with the Canadian Competition Bureau if certain financial thresholds are exceeded, and that person would hold more than 20% of our common shares. If a person already owns 20% or more of our common shares, a notification must be filed when the acquisition would bring that person’s holdings to over 50%. Where a notification is required, the legislation prohibits completion of the acquisition until the expiration of a statutory waiting period, unless the Commissioner provides written notice that he or she does not intend to challenge the acquisition.

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      There is no limitation imposed by Canadian law or our articles of incorporation on the right of non-residents to hold or vote our common shares, other than those imposed by the Investment Canada Act, or Investment Act.

      The Investment Act requires any person that is not a “Canadian” as defined in the Investment Act, referred to in this discussion as a “non-Canadian,” who acquires control of an existing Canadian business, where the acquisition of control is not a reviewable transaction, to file a notification with Industry Canada. The Investment Act generally prohibits the implementation of a reviewable transaction by a non-Canadian unless after review the Minister responsible for the Investment Act is satisfied that the investment is likely to be of net benefit to Canada. Under the Investment Act, the acquisition of control of us (either through the acquisition of our common shares or all or substantially all our assets) by a non-Canadian who is a World Trade Organization, or WTO, member country investor, including U.S. investors, would be reviewable only if the value of our assets was equal to or greater than a specified amount. The specified amount for 2006 is C$265 million. The threshold amount is subject to an annual adjustment on the basis of a prescribed formula in the Investment Act to reflect changes in Canadian gross domestic product. For non-WTO member investors, the corresponding threshold is C$5 million.

      The acquisition of a majority of the voting interests of an entity is deemed to be acquisition of control of that entity. The acquisition of less than a majority but one-third or more of the voting shares of a corporation or of an equivalent undivided ownership interest in the voting shares of the corporation is presumed to be acquisition of control of that corporation unless it can be established that, on the acquisition, the corporation is not controlled in fact by the acquiror through the ownership of voting shares. The acquisition of less than one-third of the voting shares of a corporation is deemed not to be acquisition of control of that corporation. Certain transactions in relation to our common shares would be exempt from review from the Investment Act, including:

• acquisition of our common shares by a person in the ordinary course of that person’s business as a trader or dealer in securities;

• acquisition or control of us in connection with the realization of security granted for a loan or other financial assistance and not for any purpose related to the provisions of the Investment Act; and

• acquisition or control of us by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control in fact of us, through the ownership of voting interests, remains unchanged.

      There is no law, governmental decree or regulation in Canada that restricts the export or import of capital, or which would affect the remittance of dividends or other payments by us to non-resident holders of our common shares, other than withholding tax requirements.

Listing

      We have applied to list our common shares for quotation on the Nasdaq National Market under the symbol “CREL” and on the Toronto Stock Exchange under the symbol “CRE.”

Transfer Agent and Registrar

      CIBC Mellon Trust Company, located in Toronto, Ontario and Mellon Financial Services LLC, located in Jersey City, New Jersey are co-transfer agents and registrars for our common shares.

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SHARES ELIGIBLE FOR FUTURE SALE

      Future sales or the availability for sale of substantial amounts of our common shares in the public market could adversely affect prevailing market prices of our common shares and could impair our ability to raise capital through future sales of our securities. Upon completion of this offering, 24,492,427 common shares will be outstanding, of which 8,000,000 will be freely tradable without restriction or further registration under the U.S. Securities Act of 1933, as amended, unless held by our “affiliates,” as that term is defined in Rule 144 under the U.S. Securities Act. Upon completion of this offering, the selling shareholders will own 16,445,355 common shares representing an aggregate 67.1% ownership interest in us after the offering (or 15,645,355 common shares representing a 62.9% aggregate ownership interest in us, assuming the underwriters exercise their over-allotment option in full).

      If permitted under our new credit facility, we may issue common shares from time to time as consideration for future acquisitions, investments or other corporate purposes. In the event any such acquisition, investment or other transaction is significant, the number of common shares that we may issue may in turn be significant. In addition, we may also issue common shares in an acquisition pursuant to a registration statement or grant registration rights covering common shares issued in connection with any other acquisitions and investments.

Benefit Plan Shares

      Following the completion of this offering, we intend to file one or more registration statements under the U.S. Securities Act to register the common shares issuable under our 2003 Share Option and Phantom Unit Plan and our 2006 equity incentive plan. As a result, all common shares acquired in connection with our equity incentive plans will be freely tradable under the U.S. Securities Act, unless they are held by our affiliates, in which case resales could be effected as permitted by Rule 144 or pursuant to a resale registration statement.

Lock-Up Arrangements

      We, our executive officers, directors, certain option holders and the selling shareholders have agreed to a 180-day “lock-up,” subject to certain exceptions, with respect to substantially all of the issued and issuable common shares, including securities that are convertible into such securities and securities that are exchangeable or exercisable for such securities, which we may issue or they may own prior to this offering or purchase in or after this offering, as the case may be. This means that for a period of 180 days, subject to extension in certain circumstances, following the date of the final prospectus, we and such persons may not offer, sell, pledge or otherwise dispose of any of these securities or request or demand that we file a registration statement related to any of these securities without the prior written consent of Morgan Stanley & Co. Incorporated on behalf of the underwriters, subject to important exceptions described under “Underwriters”.

      Notwithstanding anything contained in the lock-up agreements, we may grant new options under our equity incentive plan, issue and sell our common shares upon the exercise of options outstanding at the time of the pricing of this offering and issue and sell common shares in connection with acquisitions, provided that the aggregate fair market value of such shares does not exceed $75.0 million, measured at the time of such acquisition, and the recipients agree to the restrictions in the lock-up agreements.

Shareholder and Registration Rights Agreement

      Certain of our shareholders will have registration rights for their common shares for resale in some circumstances. See “Related Party Transactions—Shareholder and Registration Rights Agreement.”

Rule 144

      In general, under Rule 144, as currently in effect, beginning 90 days after the date of this prospectus, any person, including an affiliate, who has beneficially owned our common shares for a period of at least one year is entitled to sell, within any three-month period, a number of such shares that does not exceed the greater of:

• 1% of the then outstanding common shares; and

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• the average weekly trading volume in the common shares on Nasdaq during the four calendar weeks preceding the date on which the notice of the sale is filed with the Securities and Exchange Commission.

      Sales under Rule 144 are also subject to provisions relating to notice, manner of sale, volume limitations and the availability of current public information about us.

      Taking into account the lock-up agreements, the number of shares that will be available for sale in the U.S. public market under the provisions of Rule 144 will be as follows:

	Number of Shares
	Eligible for Sale in
Days after Date of This Prospectus	U.S. Public Market		Comment
Upon Effectiveness		8,000,000	Shares sold in this offering
180 Days		12,169,840	Lock-up expires; shares eligible for sale under Rule 144
365 Days		4,322,587	Shares acquired by Vector Capital as consideration for the WinZip acquisition; eligible for sale under Rule 144

      Under Rule 144(k), a person who is not deemed to have been one of our affiliates at any time during the 90 days preceding a sale, and who has beneficially owned the shares for at least two years, including the holding period of any prior owner other than an “affiliate,” is entitled to sell the shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144.

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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

      This section summarizes the material United States federal income tax consequences to “U.S. Holders” (as defined below) of the ownership and disposition of our common shares, subject to the limitations in this prospectus. This section assumes that you hold your common shares as capital assets within the meaning of Section 1221 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), for United States federal income tax purposes. Since we are expected to be a “controlled foreign corporation” for United States federal income tax purposes immediately following this offering, this section also assumes that you are not a “United States shareholder” of ours (i.e., a United States person who owns 10 percent or more of the total combined power of all classes of our stock entitled to vote) within the meaning of Section 951(b) of the Code. In addition, this discussion does not address the tax consequences arising under the tax laws of any state, locality or foreign jurisdiction. Furthermore, this section does not purport to be a complete analysis of all of the potential United States federal income tax considerations that may be relevant to particular holders of our common shares in light of their particular circumstances nor does it deal with all United States federal income tax consequences applicable to holders subject to special tax rules, including banks, brokers, dealers in securities or currencies, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings, tax-exempt entities, insurance companies, persons liable for alternative minimum tax, persons that actually or constructively own 10 percent or more of our common shares, persons that hold common shares as part of a straddle or a hedging, constructive sale, synthetic security, conversion or other integrated transaction, pass-through entities (e.g., partnerships), persons whose functional currency is not the United States dollar, expatriates or former long-term residents of the United States, individual retirement accounts or other tax-deferred accounts, real estate investment trusts, or regulated investment companies.

      If any entity that is classified as a partnership for United States federal income tax purposes holds common shares, the tax treatment of its partners will generally depend upon the status of the partner and the activities of the partnership. Partnerships and other entities that are classified as partnerships for United States federal income tax purposes and persons holding common shares through a partnership or other entity classified as a partnership for United States federal income tax purposes are urged to consult their tax advisors.

      This section is based on the Code, existing and proposed Treasury regulations thereunder, published rulings, court decisions and administrative interpretations, all as currently in effect. These laws are subject to change, repeal or revocation possibly on a retroactive basis so as to result in United States federal income tax consequences different from those discussed below.

      For purposes of this discussion, you are a “U.S. Holder” if you are a beneficial owner of common shares and you are for United States federal income tax purposes (i) a citizen or resident of the United States, (ii) a corporation, or other entity taxable as a corporation, created or organized under the laws of the United States or any political subdivision thereof, (iii) an estate whose income is subject to United States federal income tax regardless of its source, or (iv) a trust (a) if a United States court can exercise primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of the trust or (b) that has a valid election in effect under applicable Treasury Regulations to be treated as a United States person.

      This summary does not discuss United States federal income tax consequences to any beneficial owner of common shares that is not a U.S. Holder.

Taxation of Dividends

      Subject to the passive foreign investment company rules discussed below, you must include in your gross income as ordinary income the gross amount of any dividend paid by us out of our current or accumulated earnings and profits (as determined for United States federal income tax purposes), including the amount of any Canadian taxes withheld from this dividend. We do not maintain calculations of our earnings and profits for United States federal income tax purposes. The dividend will not be eligible for the dividends-received deduction generally allowed to United States corporations in respect of dividends received from other United States corporations. Distributions in excess of our current and accumulated earnings and profits (as determined for United States federal income tax purposes), including the amount of any Canadian taxes

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withheld from the distributions, will be treated as a non-taxable return of capital to the extent of your adjusted basis in the common shares and as a capital gain to the extent it exceeds your adjusted basis. If you are a non-corporate U.S. Holder, dividends you receive in taxable years beginning before January 1, 2009, generally will be taxable at a rate of 15 percent, provided certain holding period and other requirements are satisfied. These requirements include (a) that we not be classified as a passive foreign investment company, and (b) that you not treat the dividend as “investment income” for purposes of the investment interest deduction rules. U.S. Holders should consult their own tax advisors regarding the application of these rules.

      If you are entitled to benefits under the Canada-United States Income Tax Convention, dividends you receive with respect to common shares generally will be subject to Canadian withholding tax at the rate of 15 percent. Our dividends generally will be treated as foreign source income for foreign tax credit limitation purposes. Accordingly, any Canadian tax withheld may, subject to certain limitations, be claimed as a foreign tax credit against your United States federal income tax liability or may be claimed as a deduction for United States federal income tax purposes. The rules relating to foreign tax credits are complex and the availability of a foreign tax credit depends on numerous factors. You should consult your own tax advisors concerning the application of the United States foreign tax credit rules to your particular situation.

Taxation of Dispositions

      Subject to the passive foreign investment company rules discussed below, gain or loss you realize on the sale or other disposition of your common shares will generally be capital gain or loss for United States federal income tax purposes, and will be long-term capital gain or loss if you held your common shares for more than one year. The amount of gain or loss will be equal to the difference between the United States dollar value of the amount that you realize and your adjusted tax basis, determined in United States dollars, in your common shares. Your adjusted tax basis in our common shares will generally be the cost to you of such shares. The gain or loss will generally be gain or loss from sources within the United States for foreign tax credit limitation purposes.

Passive Foreign Investment Company Considerations

      If during any taxable year, 75 percent or more of our gross income consists of certain types of “passive” income, or if the average value (or, in the first year in which we are publicly traded, the average tax basis) during a taxable year of our “passive assets” (generally, assets that produce passive income or are held for the production of passive income) is 50 percent or more of the average value of all of our assets, we will be classified as a “passive foreign investment company”, or “PFIC” for such year and for all succeeding years.

      No assurance can be given that we are not a passive foreign investment company or will not be a passive foreign investment company in the future.

      If we are classified as a passive foreign investment company, you may be subject to increased tax liability and an interest charge in respect of gain you realize on the sale or other disposition of your common shares and on the receipt of certain “excess distributions.” Other adverse U.S. tax consequences may also apply. The adverse consequences resulting from our being classified as a PFIC can be mitigated in some cases if you are eligible for and timely make a valid election to treat us as a “qualified electing fund” (a “QEF election”) (in which case you would be required to include in income on a current basis your pro rata share of our ordinary income and net capital gains, but not losses). However, in order for you to be able to make the QEF election, we would have to provide you with certain information. We do not expect to provide the required information.

      As another alternative to the foregoing rules, if we are determined to be a PFIC, you may make a mark-to-market election to include in income each year as ordinary income an amount equal to the increase in value of your common shares for that year or a deduction for any decrease in value (but only to the extent of previous mark-to-market gains, but not less). However, if at any time our common shares cease to qualify as “marketable stock” you will no longer be able to make this election. There is no assurance that our shares will continue to qualify as marketable stock.

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      U.S. Holders should consult their own tax advisors with respect to the passive foreign investment company issue and its potential application to their particular situation.

Information Reporting and Backup Withholding

      If you are a non-corporate U.S. Holder, information reporting requirements on Internal Revenue Service Form 1099 generally will apply to:

• dividend payments or other taxable distributions made to you within the United States, and

• the payment of proceeds to you from the sale of common shares effected at a United States office of a broker.

unless you come within certain categories of exempt recipients.

      Additionally, backup withholding may apply to such payments if you are a non-corporate U.S. Holder that does not come within certain categories of exempt recipients and you:

• fail to provide an accurate taxpayer identification number,

• are notified by the Internal Revenue Service (“IRS”) that you have failed to report all interest and dividends required to be shown on your United States federal income tax returns, or

• in certain circumstances, fail to comply with other applicable requirements of the backup withholding rules.

      A U.S. Holder who does not provide a correct taxpayer identification number may be subject to penalties imposed by the IRS.

      If backup withholding applies to you, 28 percent of the gross amount of any payments to you with respect to our common shares will be withheld and paid over to the IRS. Any amounts withheld from payments to you under the backup withholding rules will be allowed as a credit against your United States federal income tax liability and may entitle you to a refund, provided the required information is furnished to the IRS. You should consult your tax advisor regarding the application of backup withholding in your particular situation, the availability of an exemption from backup withholding and the procedure for obtaining such an exemption, if available.

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MATERIAL CANADIAN FEDERAL INCOME TAX CONSIDERATIONS FOR U.S. HOLDERS

      This section summarizes the material Canadian federal income tax considerations generally applicable to the holding and disposition of common shares by a holder, or a U.S. Holder (a) who, at all relevant times and for the purposes of the Income Tax Act (Canada), or the Tax Act, is not resident in Canada, deals at arm’s length and is not affiliated with us, holds the common shares as capital property and does not use or hold and is not deemed to use or hold, the common shares in the course of carrying on, or otherwise in connection with, a business in Canada, and (b) who, at all relevant times and for the purposes of the Canada-United States Income Tax Convention, or the Treaty, is a resident of the United States, has not held or used (and does not hold or use) common shares in connection with a permanent establishment or fixed base in Canada, and who otherwise qualifies for the full benefits of the Treaty. The common shares will generally be considered to be capital property to a holder unless such shares are held in the course of carrying on a business, or in an adventure or concern in the nature of trade. The summary does not deal with special situations, such as particular circumstances of traders or dealers, limited liability companies, tax-exempt entities, insurers, financial institutions, or others.

      This summary is based on the current provisions of the Tax Act and the regulations thereunder in force at the date hereof, specific proposals to amend the Tax Act or regulations thereunder that have been publicly announced by the Minister of Finance (Canada) prior to the date hereof, or the Proposed Amendments, the current provisions of the Treaty and the current administrative practices of the Canada Revenue Agency published in writing prior to the date hereof. It has been assumed that the Proposed Amendments will be enacted as proposed and that there will be no other relevant change in any governing law, the Treaty or administrative practice, although no assurance can be given in these respects. The summary does not take into account provincial, territorial, U.S. or other foreign income tax considerations, which may differ significantly from those discussed herein.

      This summary is not exhaustive of all possible Canadian federal income tax consequences. It is not intended as legal or tax advice to any particular holder of common shares and should not be so construed. The tax consequences to any particular holder of common shares will vary according to the status of that holder as an individual, trust, corporation or member of a partnership, the jurisdictions in which that holder is subject to taxation and, generally, that holder’s particular circumstances. Each holder should consult the holder’s own tax advisor with respect to the income tax consequences applicable to the holder’s own particular circumstances.

Taxation of Dividends

      Dividends paid or credited on the common shares or deemed to be paid or credited on the common shares by us to a U.S. Holder are subject to Canadian withholding tax. Under the Treaty, the rate of withholding tax on dividends paid or credited to a U.S. Holder that is the beneficial owner of the dividends is generally limited to 15% of the gross dividend.

Disposition of Common Shares

      A U.S. Holder is not subject to tax under the Tax Act in respect of a capital gain realized on the disposition of a common share unless such share is “taxable Canadian property” to the U.S. Holder for purposes of the Tax Act, and even then only if the U.S. Holder is not entitled to relief under the Treaty.

      A common share will be taxable Canadian property to a U.S. Holder if, at any time during the 60-month period ending at the time of disposition, the U.S. Holder or persons with whom the U.S. Holder did not deal at arm’s length (or the U.S. Holder together with such persons) owned 25% or more of our issued shares of any class or series. In the case of a U.S. Holder to whom common shares represent taxable Canadian property, by reason of the Treaty, no tax under the Tax Act will be payable on a capital gain realized on a disposition of such shares unless, at the time of disposition, the value of such shares is derived principally from real property situated in Canada. We believe that the value of our common shares is not derived principally from real property situated in Canada, and that no tax would be payable under the Tax Act on a capital gain realized today by a U.S. Holder on a disposition of common shares.

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UNDERWRITERS

      Under the terms and subject to the conditions contained in an underwriting agreement dated                     , 2006, the underwriters named below, for whom Morgan Stanley & Co. Incorporated J.P. Morgan Securities Inc., Deutsche Bank Securities Inc., Piper Jaffray & Co., CIBC World Markets Corp. and Canaccord Adams Inc. are acting as representatives, have severally agreed to purchase, and we and the selling shareholders have agreed to sell to them the number of common shares indicated below:

		Number of
Name		Shares
Morgan Stanley & Co. Incorporated
J.P. Morgan Securities Inc.
Deutsche Bank Securities Inc.
Piper Jaffray & Co.
CIBC World Markets Corp.
Canaccord Adams Inc.
	Total		8,000,000

      The underwriters are offering the common shares subject to their acceptance of the shares from us and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the common shares offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The obligations of the underwriters under the underwriting agreement may be terminated at their discretion on the basis of their assessment of any material and adverse change in the state of the financial markets and may also be terminated upon the occurrence of certain stated events. Subject to the terms and provisions of the underwriting agreement, the underwriters are obligated to take and pay for all of the common shares offered by this prospectus if any such shares are taken. However, the underwriters are not required to take or pay for the shares covered by the underwriters’ over-allotment option (described below).

      This offering is being made concurrently in the United States and in all of the provinces of Canada. The common shares will be offered in the United States and Canada through the underwriters either directly or through their respective U.S. or Canadian registered broker-dealer affiliates. Subject to applicable law, the underwriters may offer the common shares outside of the United States and Canada.

      The underwriters initially propose to offer part of the common shares directly to the public at the public offering price listed on the cover page of this prospectus and part to securities dealers at a price that represents a concession not in excess of $          a share under the public offering price. The common shares are being offered in the United States in U.S. dollars and in Canada in U.S. dollars (but payable in Canadian dollars), at the same offering price and underwriting discounts and commissions per common share, calculated based on the noon buying rate on the date of this prospectus as quoted by the Federal Reserve Bank of New York. After the initial offering of the common shares, the offering price and other selling terms may from time to time be varied by the representatives of the underwriters.

      We and the selling shareholders have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to an aggregate of 1,200,000 additional common shares (400,000 common shares from us and 800,000 common shares from the selling shareholders) at the public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the common shares offered by this prospectus. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase approximately the same percentage of the additional common shares as the number listed next to the underwriter’s name in the preceding table bears to the total number of common shares listed next to the names of all underwriters in the preceding table.

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      The following table shows the per share and total underwriting discounts and commissions to be paid by us and the selling shareholders assuming no exercise and full exercise of the underwriters’ over-allotment option to purchase 1,200,000 additional shares from us and the selling shareholders.

			Total
		Per	No	Full
		Share	Exercise	Exercise
Public offering price		$	$	$
Underwriting discounts and commissions to be paid by:
	Us	$	$	$
	Selling shareholders	$	$	$
Proceeds before expenses to us		$	$	$
Proceeds before expenses to the selling shareholders		$	$	$

      The estimated offering expenses payable by us, in addition to the underwriting discounts and commissions, are approximately $5.4 million, which includes legal, accounting, printing and translation costs and various other fees associated with registration and listing of the common shares.

      We have applied to list our common shares for quotation on the Nasdaq National Market under the symbol “CREL” and on the Toronto Stock Exchange under the symbol “CRE.”

      We and all of our directors and officers and the holders of all of our outstanding common shares have agreed that, without the prior written consent of Morgan Stanley & Co. Incorporated on behalf of the underwriters, neither we nor they will during the period ending 180 days after the date of the final prospectus:

• offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, or file any registration statement with the SEC relating to the offering of, any common shares or any securities convertible into or exercisable or exchangeable for our common shares; or

• enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the common shares,

whether any such transaction described above is to be settled by delivery of common shares or such other securities, in cash or otherwise. In addition, each selling shareholder has agreed that, without the prior written consent of Morgan Stanley & Co. Incorporated on behalf of the underwriters, it will not, during the period ending 180 days after the date of the final prospectus, make any demand for, or exercise any right with respect to, the registration of any common shares or any security convertible into or exercisable or exchangeable for common shares.

      The 180-day restrictions described in the immediately preceding paragraph do not apply to: (a) the sale of common shares to the underwriters; (b) the issuance by us of common shares upon the exercise of options or the conversion of securities outstanding on the date of the final prospectus and disclosed in the final prospectus; (c) transactions by shareholders relating to common shares or other securities acquired in open market transactions after the completion of this offering; (d) grants by us of options to purchase common shares pursuant to employee or management stock option, incentive or other plans or arrangements described in this prospectus; (e) offers, sales, contracts to sell, the issuance of or the registration of common shares as consideration for one or more acquisitions, provided that (i) each acquirer of such common shares agrees to be subject to a lockup agreement in substantially the same form as agreed to by us and (ii) the aggregate fair market value of common shares issued or agreed to be issued in all such acquisitions (measured as of the close of trading on the trading day immediately preceeding the date of the applicable acquisition agreement) does not exceed $75.0 million; (f) transfers of common shares or any security convertible into common shares as a bona fide gift or gifts; (g) distributions of common shares or any security convertible into common shares to limited partners or shareholders of the selling shareholders; (h) transactions effected in accordance with the equity recapitalization of the company described in this prospectus; (i) tenders of common shares made in

95

response to a bona fide third party take-over bid made to all holders of common shares or similar acquisition transaction; or (j) any transfer to an immediate family member or an entity of which the transferor or an immediate family member of the transferor is the sole beneficiary; provided, that in the case of any transfer or distribution pursuant to clause (f), (g) or (j), each donee, distributee or transferee agrees in writing to be bound by the transfer restrictions described above and no filing by any party under the Exchange Act shall be required or shall be voluntarily made in connection with subsequent sales of common shares or other securities acquired in such transfer or distribution.

      The 180 day restricted period described above will be extended if:

• during the last 17 days of the 180 day restricted period we issue an earnings release or material news or a material event relating to us occurs, or

• prior to the expiration of the 180 day restricted period, we announce that we will release earnings results during the 16 day period beginning on the last day of the 180 day period,

in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18 day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

      In order to facilitate the offering of our common shares, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the common shares. Specifically, the underwriters may sell more shares than they are obligated to purchase under the underwriting agreement. A short sale is covered if the short position is no greater than the number of shares available for purchase by the underwriters under the over-allotment option. The underwriters can close out a covered short sale by exercising the over-allotment option or purchasing shares in the open market. In determining the source of shares to close out a covered short sale, the underwriters will consider, among other things, the open market price of shares compared to the price available under the over-allotment option. The underwriters may also sell shares in excess of the over-allotment option, creating a naked short position. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of our common shares in the open market after pricing that could adversely affect investors who purchase in this offering. As an additional means of facilitating this offering, the underwriters may bid for, and purchase, our common shares in the open market to stabilize the price of the common shares.

      In accordance with policy statements of the provincial securities commissions, the underwriters may not, throughout the period of distribution, bid for or purchase the shares. Exceptions, however, exist where the bid or purchase is not made to create the appearance of active trading in, or rising prices of, the common shares. These exceptions include a bid or purchase permitted under the by-laws and rules of applicable regulatory authorities and the Toronto Stock Exchange relating to market stabilization and passive market making activities and a bid or purchase made for and on behalf of a customer where the order was not solicited during the period of distribution. Subject to the foregoing and applicable laws, in connection with the offering and pursuant to the first exception mentioned above, the underwriters may overallot or effect transactions that stabilize or maintain the market price of the shares at levels other than those which might otherwise prevail on the open market. Any of the foregoing activities may have the effect of preventing or slowing a decline in the market price of the common shares. They may also cause the price of the common shares to be higher than the price that would otherwise exist in the open market in the absence of these transactions. The underwriters may conduct these transactions on the Nasdaq National Market, the Toronto Stock Exchange, in the over the counter market or otherwise. If the underwriters commence any of these transactions, they may discontinue them at any time.

      We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the U.S. Securities Act and applicable securities laws in the provinces of Canada.

      A prospectus in electronic format may be made available on the web sites maintained by one or more of the underwriters. The representatives may agree to allocate a number of shares to underwriters for sale to their online brokerage account holders. The representatives will allocate shares to underwriters that may make

96

Internet distributions on the same basis as other allocations. In addition, shares may be sold by the underwriters to securities dealers who resell to online brokerage account holders.

Pricing of the Offering

      Prior to this offering, there has been no public market for the common shares. The initial public offering price will be determined by negotiations between us and the representatives. Among the factors considered in determining the initial public offering price will be our future prospects and future prospects of our industry in general, our sales, earnings and other financial and operating information in recent periods, and the price-earnings ratios, market prices of securities and financial and operating information of companies engaged in activities similar to ours.

      The estimated public offering price range set forth on the cover page of this preliminary prospectus is subject to change as a result of market conditions and other factors.

Relationships

      Morgan Stanley is the lead arranger and book running manager of our new credit facility. Certain of the underwriters and their affiliates have performed investment banking services for us and our affiliates from time to time for which they received their customary fees and expenses. The underwriters may, from time to time, engage in transactions and perform services for us, our subsidiaries or our affiliates in the ordinary course of their business.

LEGAL MATTERS

      The validity of the issuance of the common shares will be passed upon for us by Torys LLP, Ontario. Certain legal matters relating to this offering will be passed upon for the underwriters by Fenwick & West LLP, California and Osler, Hoskin & Harcourt LLP, Ontario. James C. Baillie, a partner in the Toronto office of Torys LLP, also served as Chairman of our board of directors from August 2000 to August 2003.

EXPERTS

      Our combined consolidated financial statements and financial statement schedule as of November 30, 2005 and our consolidated financial statements as of November 30, 2004 included in this prospectus have been so included in reliance on the report of the Canadian firm of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm given as experts in accounting and auditing.

      The financial statements of WinZip as of January 17, 2005, November 30, 2004 and 2003 included in this prospectus have been so included in reliance on the report of the U.S. firm of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm, as experts in accounting and auditing.

      The consolidated financial statements of Jasc as of December 31, 2002 and 2003 included in this prospectus have been so included in reliance on the report of Ernst & Young LLP, independent registered public accounting firm, given on the authority of said firm, as experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

      We have filed a registration statement on Form F-1 with the SEC regarding this offering. This prospectus, which is part of the registration statement, does not contain all of the information included in the registration statement, and you should refer to the registration statement and its exhibits to read that information. As a result of the effectiveness of the registration statement, we are subject to the informational reporting requirements of the Securities and Exchange Act of 1934, as amended and, under that Act, we will file reports and other information with the SEC. You may read and copy the registration statement, the related exhibits and the reports and other information we file with the SEC at the SEC’s public reference facilities maintained by the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the

97

SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. The SEC also maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file with the SEC. The site’s Internet address is www.sec.gov. We will also be subject to the informational requirements of the securities commissions in all provinces of Canada. You are invited to read and copy any reports, statements or other information, other than confidential filings, that we intend to file with the Canadian provincial securities commissions. These filings are electronically available from the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) (http://www.sedar.com), the Canadian equivalent of the SEC’s electronic document gathering and retrieval system.

ENFORCEMENT OF JUDGMENTS AGAINST FOREIGN PERSONS

      Corel Corporation is existing under the federal laws of Canada. Many of our directors and officers and certain of the experts named elsewhere in this prospectus are residents of Canada. A substantial portion of our assets and the assets of these persons are located outside of the United States. As a result, it may be difficult for shareholders to enforce a U.S. judgment in Canada or other non-U.S. jurisdictions or to succeed in a lawsuit in a non-U.S. jurisdiction based only on violations of U.S. securities laws.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

COREL CORPORATION
Report of Independent Registered Public Accounting Firm	F-2
Combined Consolidated Balance Sheet for Corel Corporation as of November 30, 2005 and Consolidated Balance Sheet as of November 30, 2004	F-3
Combined Consolidated Statement of Operations for Corel Corporation for the year ended November 30, 2005 and Consolidated Statements of Operations for the year ended November 30, 2004 and for the period from December 1, 2002 through August 28, 2003 and for the period from August 29, 2003 through November 30, 2003	F-4
Combined Consolidated Statement of Cash Flows for Corel Corporation for the year ended November 30, 2005 and Consolidated Statements of Cash Flows for the year ended November 30, 2004 and for the period from December 1, 2002 through August 28, 2003 and for the period from August 29, 2003 through November 30, 2003	F-6
Combined Consolidated Statement of Changes in Shareholders’ (Deficit) Equity for Corel Corporation for the year ended November 30, 2005 and Consolidated Statements of Changes in Shareholders’ (Deficit) Equity for the year ended November 30, 2004 and for the period from December 1, 2002 through August 28, 2003 and for the period from August 29, 2003 through November 30, 2003	F-7
Notes to Consolidated Statements	F-8
WINZIP COMPUTING, INC.
Report of Independent Auditors	F-39
Balance Sheets for WinZip Computing, Inc. as of January 17, 2005, November 30, 2004 and 2003	F-40
Statements of Operations for WinZip Computing, Inc. for the period from December 1, 2004 through January 17, 2005 and for the years ended November 30, 2004 and 2003	F-41
Statements of Cash Flows for WinZip Computing, Inc. for the period from December 1, 2004 through January 17, 2005 and for the years ended November 30, 2004 and 2003	F-42
Statements of Changes in Shareholder’s Deficit for WinZip Computing, Inc. for the period from December 1, 2004 through January 17, 2005 and for the years ended November 30, 2004 and 2003	F-43
Notes to Financial Statements	F-44
JASC SOFTWARE, INC.
Report of Independent Registered Public Accounting Firm	F-50
Balance Sheets for Jasc Software, Inc. as of December 31, 2003 and 2002	F-51
Statements of Income for Jasc Software, Inc. for the years ended December 31, 2003 and 2002	F-53
Statements of Changes in Shareholders’ Equity for Jasc Software, Inc. for the years ended December 31, 2003 and 2002	F-54
Statements of Cash Flows for Jasc Software, Inc. for the years ended December 31, 2003 and 2002	F-55
Notes to Financial Statements	F-56
Unaudited Interim Financial Statements for Jasc Software, Inc.
Balance Sheets for Jasc Software, Inc. as of September 30, 2004 and December 31, 2003	F-61
Statements of Operations for Jasc Software, Inc. for the nine months ended September 30, 2004 and 2003	F-62
Statements of Cash Flows for Jasc Software, Inc. for the nine months ended September 30, 2004 and 2003	F-63
Statements of Changes in Shareholders’ Equity for Jasc Software, Inc. for the nine months ended September 30, 2004 and for the year ended December 31, 2003	F-64
Notes to Unaudited Interim Financial Statements	F-65
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
Compilation Report on Pro Forma Combined Condensed Statement of Operations
Corel Corporation Unaudited Pro Forma Combined Condensed Statement of Operations for the year ended November 30, 2005	F-68
Notes to Unaudited Pro Forma Combined Condensed Financial Statements	F-69

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Directors of Corel Corporation:

      We have audited the accompanying combined consolidated balance sheet of Corel Corporation as of November 30, 2005 and the consolidated balance sheet as of November 30, 2004 and the combined consolidated statements of operations, cash flows, and changes in shareholders’ (deficit) equity for the year ended November 30, 2005, and the consolidated statements of operations, cash flows and changes in shareholders’ (deficit) equity for the year ended November 30, 2004, and for the period from December 1, 2002 through August 28, 2003, and for the period from August 29, 2003 through November 30, 2003. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

      We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

      In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as of November 30, 2005 and 2004, and the results of its operations and its cash flows for the years ended November 30, 2005 and 2004, and for the period from December 1, 2002 through August 28, 2003, and for the period from August 29, 2003 through November 30, 2003 in accordance with accounting principles generally accepted in the United States of America.

      As discussed in Note 2 to the consolidated financial statements, effective August 29, 2003, the Company applied push-down accounting to the acquisition of the Company by Vector Capital and effective December 1, 2003, the Company changed its method of computing stock-based compensation by adopting SFAS 123R “Share-based Payments (revised 2004)”.

/s/  PricewaterhouseCoopers LLP

March 7, 2006, (except as to notes 2, 12 and 18 which are as of March 31, 2006)

Ottawa, Canada

F-2

COREL CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands of U.S. dollars)

					As of November 30,
			Note		2005			2004
					(Combined)
Assets
Current assets:
	Cash and cash equivalents				$	20,746		$	11,557
	Restricted cash			2		966			2,158
	Short term investments					—			10,231
	Accounts receivable
		Trade, net		3		19,342			19,034
		Due from related parties		4		667			—
		Other				311			443
	Inventory			5		726			1,338
	Deferred tax assets			11		592			—
	Prepaids and other current assets					2,343			1,478
Total current assets						45,693			46,239
Investments				6		334			393
Capital assets				7		3,532			3,246
Intangible assets				7, 8		52,397			51,875
Goodwill				8, 9		9,850			4,960
Deferred income tax assets				11		284			—
Deferred financing and other long-term assets				2		8,746			2,075
Total assets					$	120,836		$	108,788
Liabilities and shareholders’ (deficit) equity
Current liabilities:
	Accounts payable and accrued liabilities			10	$	30,152		$	25,204
	Due to Parent			4		334			338
	Income taxes payable					10,773			6,890
	Deferred revenue			2		11,755			8,625
	Operating line of credit					—			2,500
	Current portion of promissory note			12		1,170			—
	Current portion of term loans payable			12		15,764			22,099
Total current liabilities						69,948			65,656
Deferred revenue				2		2,085			1,395
Term loans payable				12		132,965			40,200
Promissory note				12		1,072			—
Total liabilities						206,070			107,251
Commitments and contingencies				13
Shareholders’ (deficit) equity
Share capital:
	Class A Common Shares (par value: none; authorized: unlimited; issued and outstanding:
	3,740 and 3,736 shares, respectively; convertible to Class B Common Shares)			2,14		(42,229	)		(9,097	)
	Class B Common Shares (par value: none; authorized: unlimited; issued and outstanding: 8,321 shares)			2,14		(34,184	)		(34,184	)
	Preferred Shares (par value: none; authorized: unlimited; issued and outstanding: 3,105 shares, convertible to Class A Common Shares)			2,14		2,600			52,600
	WinZip Common Shares (par value: $1; authorized: 50; issued and outstanding: 20 and nil, respectively)			14		20			—
Additional paid-in capital				14		7,427			225
Accumulated other comprehensive income				6		85			58
Deficit						(18,953	)		(8,065	)
Total shareholders’ (deficit) equity						(85,234	)		1,537
Total liabilities and shareholders’ (deficit) equity					$	120,836		$	108,788

See Accompanying Notes to the Consolidated Financial Statements

F-3

COREL CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands of U.S. dollars, except per share data)

				Owned by Vector Capital
													Predecessor
				Year Ended						August 29, 2003
				November 30,						to			December 1, 2002
										November 30,			to
		Note		2005			2004			2003			August 28, 2003
				(Combined)
Revenues
	Product			$	148,308		$	97,724		$	21,027		$	76,309
	Maintenance and services				15,736			13,968			2,779			9,077
Total revenues					164,044			111,692			23,806			85,386
Cost of revenues
	Cost of product				18,461			14,215			3,434			16,560
	Cost of maintenance and services				1,154			1,085			388			1,063
	Amortization of intangible assets				26,139			16,547			4,132			5,661
Total cost of revenues					45,754			31,847			7,954			23,284
Gross margin					118,290			79,845			15,852			62,102
Operating expenses
	Sales and marketing				54,056			38,508			13,620			45,465
	Research and development				23,538			14,550			4,629			16,342
	General and administration				19,851			14,876			5,587			26,408
	Other operating expense				3,125			—			—			—
	Restructuring		15		834			3,520			1,138			—
Total operating expenses					101,404			71,454			24,974			88,215
Income (loss) from operations					16,886			8,391			(9,122	)		(26,113	)
Other expenses (income)
	Loss on debt retirement				3,937			—			—			—
	Interest income				(178	)		(1,485	)		(19	)		(1,383	)
	Interest expense				12,786			2,709			225			—
	Impairment (gain on disposal) of investments				(125	)		(729	)		—			7,448
	Amortization of deferred financing fees				1,756			407			24			—
	Other non-operating expense (income)				1,172			(1,033	)		(635	)		(1,530	)
Income (loss) before undernoted					(2,462	)		8,522			(8,717	)		(30,648	)
	Income tax expense (recovery)		11		6,291			7,315			555			(3,895	)
	Share of loss of equity investments				—			—			—			1,142
Net income (loss)				$	(8,753	)	$	1,207		$	(9,272	)	$	(27,895	)
Other comprehensive income
	Unrealized gains on securities		6		99			33			25			249
	Realized gain on sale of securities		6		(72	)		—			—			—
Other comprehensive income					27			33			25			249
Comprehensive income (loss)				$	(8,726	)	$	1,240		$	(9,247	)	$	(27,646	)
Net income (loss) per share:			16
Basic
	Class A			$	(2.40	)	$	0.08		$	(0.87	)	$	(0.30	)
	Class B			$	(2.40	)	$	0.08		$	N/A		$	N/A
	WinZip common			$	136.90		$	N/A		$	N/A		$	N/A
Fully diluted
	Class A			$	(2.40	)	$	0.08		$	(0.87	)	$	(0.30	)
	Class B			$	(2.40	)	$	0.08		$	N/A		$	N/A
	WinZip common			$	136.90		$	N/A		$	N/A		$	N/A
Pro forma (unaudited)			18
	Basic			$	(0.45	)
	Diluted			$	(0.45	)

See Accompanying Notes to the Consolidated Financial Statements

F-4

				Owned by Vector Capital
													Predecessor
				Year Ended						August 29, 2003
				November 30,						to			December 1, 2002
										November 30,			to
		Note		2005			2004			2003			August 28, 2003
				(Combined)
Income (loss) applicable to shareholders:			16
Class A
	Distributed earnings to class			$	21,018		$	22,709		$	3,275		$	—
	Loss allocable to class			$	(29,991	)	$	(22,040	)	$	(13,418	)	$	(27,895	)
Class B
	Distributed earnings to class			$	46,800		$	9,663		$	N/A		$	N/A
	Loss allocable to class			$	(66,781	)	$	(9,378	)	$	N/A		$	N/A
WinZip common
	Distributed earnings to class			$	12,000		$	N/A		$	N/A		$	N/A
	Loss allocable to class			$	(9,262	)	$	N/A		$	N/A		$	N/A
Weighted average number of shares:			16
Shares used in basic per share amounts
	Class A				3,737			8,218			11,677			91,853
	Class B				8,321			3,497			N/A			N/A
	WinZip common				20			N/A			N/A			N/A
Shares used in fully diluted per share amounts
	Class A				3,737			8,218			11,677			91,853
	Class B				8,321			3,497			N/A			N/A
	WinZip common				20			N/A			N/A			N/A
Shares used in pro forma amounts (unaudited)			18
	Basic				19,486
	Diluted				19,486

See Accompanying Notes to the Consolidated Financial Statements

F-5

COREL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands of U.S. dollars)

		Owned by Vector Capital									Predecessor
		Year Ended
		November 30,						August 29, 2003			December 1, 2002
								to			to
		2005			2004			November 30, 2003			August 28, 2003
		(Combined)
Cash flow from operating activities
Net income (loss)		$	(8,753	)	$	1,207		$	(9,272	)	$	(27,895	)
	Depreciation and amortization		1,490			2,483			927			4,361
	Amortization of deferred financing fees		1,756			407			24			—
	Amortization of intangible assets		26,139			16,547			4,132			5,661
	Stock-based compensation		1,731			225			—			—
	Other non-cash charges		2,242			—			—			—
	Accrued interest		913			—			—			—
	Provision for bad debts		529			(93	)		326			755
	Deferred income taxes		830			5,178			237			(139	)
	Unrealized foreign exchange loss (gain) on forward exchange contracts		263			(27	)		22			(162	)
	(Gain) loss on disposal of fixed assets		(20	)		3			—			67
	Loss on early retirement of debt		3,937			—			—			—
	Share of loss on equity method investments, net of tax		—			—			—			1,142
	Impairment (gain on disposal) of investments		(125	)		(729	)		—			7,448
Change in operating assets and liabilities
	Accounts receivable		1,130			(972	)		5,852			(2,364	)
	Due from related parties		(667	)		—			—			—
	Inventory		613			208			(150	)		28
	Prepaids and other current assets		(2,405	)		113			2,613			(1,071	)
	Accounts payable and accrued liabilities		2,961			(3,936	)		(103	)		(457	)
	Taxes payable		3,969			720			427			(27	)
	Due to Parent		378			—			—			—
	Deferred revenue		3,548			2,184			3,636			1,861
Predecessor legal settlement and tax refund			—			8,994			—			—
Cash flow provided by (used in) operating activities			40,459			32,512			8,671			(10,792	)
Cash flow from financing activities
	Restricted cash		1,257			(327	)		37			(309	)
	(Repayment) utilization of operating line of credit		(2,500	)		2,500			(78	)		—
	Proceeds from subordinated debt		—			—			16,973			—
	Repayment of subordinated debt		—			(16,973	)		—			—
	Proceeds from term loan		153,000			67,500			10,000			—
	Repayments of term loan		(68,575	)		(15,123	)		—			—
	Repayment of acquisition loan		(15,000	)		—			—			—
	Payments on deferred purchase price		(750	)		—			—			—
	Financing fees incurred		(8,708	)		(1,954	)		(552	)		—
	Proceeds from issuance of common shares		5			—			—			69
	Repurchase of common shares		—			—			(69,750	)		—
	Paid up capital distribution		(83,146	)		(40,952	)		(4,146	)		—
	Dividends		(14,135	)		—			—			—
Cash flow used in financing activities			(38,552	)		(5,329	)		(47,516	)		(240	)
Cash flow from investing activities
	Proceeds on disposal of assets		20			1,983			—			33
	Proceeds on disposal of investments		125			730			—			—
	Redemption of (purchase of) short-term investments		9,987			(3,994	)		43,134			7,825
	Acquisition of Jasc		(898	)		(32,250	)		—			—
	Purchase of long lived assets		(1,933	)		(568	)		—			(1,440	)
Cash flow provided by (used in) investing activities			7,301			(34,099	)		43,134			6,418
Effect of exchange rate changes on cash and cash equivalents			(19	)		(22	)		(16	)		(38	)
Increase (decrease) in cash and cash equivalents			9,189			(6,938	)		4,273			(4,652	)
Cash and cash equivalents, beginning of period			11,557			18,495			14,222			18,874
Cash and cash equivalents, end of period		$	20,746		$	11,557		$	18,495		$	14,222
Supplemental disclosures:
	Cash paid for interest		11,808			2,709			225			—
	Cash paid (recovered) for income taxes		1,561			(4,500	)		66			(4,278	)
	Share consideration on acquisition of Jasc, increasing goodwill		—			2,445			—			—
	Effects of applying push-down accounting on net assets		—			—			57,338			—

See Accompanying Notes to the Consolidated Financial Statements

F-6

COREL CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ (DEFICIT) EQUITY

(in thousands of U.S. dollars, except per share data)

																Accumulated						Total
	Common						Preferred									Other			Retained			Shareholders’
													Contributed			Comprehensive			Earnings			(Deficit)
	Shares			Amount			Shares			Amount			Surplus			Income			(Deficit)			Equity
Predecessor
Balances at November 30, 2002		91,818		$	274,445			24,000		$	130,679		$	4,990		$	—		$	(319,109	)	$	91,005
Total comprehensive income (loss)		—			—			—			—			—			249			(27,895	)		(27,646	)
Issuance of common shares pursuant to stock options		70			69			—			—			—			—			—			69
Transfer to contributed surplus		—			(182,617	)		—			(82,679	)		265,296			—			—			—
Balance of Microsoft accrual		—			—			—			—			955			—			—			955
Conversion of Series A Preferred to Common		13,610			27,220			(13,610	)		(27,220	)		—			—			—			—
Balances at August 28, 2003		105,498		$	119,117			10,390		$	20,780		$	271,241		$	249		$	(347,004	)	$	64,383
Acquisition by Vector Capital		—			(75,514	)		—			—			(271,241	)		(249	)		347,004			—
Converted to Vector Capital equity		(105,498	)		(43,603	)		(10,390	)		(20,780	)		—			—			—			(64,383	)
Balances at August 29, 2003		—		$	—			—		$	—		$	—		$	—		$	—		$	—

																					Accumulated								Total
	Class A Common						Class B Common					Preferred					WinZip Common				Other		Additional			Retained			Shareholders’
																					Comprehensive		Paid-In			Earnings			(Deficit)
	Shares			Amount			Shares		Amount			Shares		Amount			Shares		Amount		Income		Capital			(Deficit)			Equity
Owned by Vector Capital
Converted from Predecessor equity		19,618		$	43,603			—	$	—			3,105	$	20,780			—	$	—	$	—	$	—		$	—		$	64,383
Repurchase of shares		(7,941	)		(69,750	)		—		—			—		—			—		—		—		—			—			(69,750	)
Comprehensive revaluation of assets		—			19,675			—		—			—		37,664			—		—		—		—			—			57,339
Paid up capital distribution		—			(4,146	)		—		—			—		—			—		—		—		—			—			(4,146	)
Total comprehensive income (loss)		—			—			—		—			—		—			—		—		25		—			(9,272	)		(9,247	)
Balances at November 30, 2003		11,677		$	(10,618	)		—	$	—			3,105	$	58,444			—	$	—	$	25	$	—		$	(9,272	)	$	38,579
Total comprehensive income		—			—			—		—			—		—			—		—		33		—			1,207			1,240
Converted to Class B common shares		(7,941	)		7,901			7,941		(7,901	)		—		—			—		—		—		—			—			—
Paid up capital distribution		—			(6,380	)		—		(28,728	)		—		(5,844	)		—		—		—		—			—			(40,952	)
Issued on Jasc acquisition		—			—			380		2,445			—		—			—		—		—		—			—			2,445
Stock-based compensation		—			—			—		—			—		—			—		—		—		225			—			225
Balances at November 30, 2004		3,736		$	(9,097	)		8,321	$	(34,184	)		3,105	$	52,600			—	$	—	$	58	$	225		$	(8,065	)	$	1,537
WinZip equity as of January 18, 2005		—			—			—		—			—		—			20		20		—		17,480			—			17,500
Total comprehensive income (loss)		—			—			—		—			—		—			—		—		27		—			(8,753	)		(8,726	)
WinZip dividends paid		—			—			—		—			—		—			—		—		—		(12,000	)		—			(12,000	)
Corel dividends paid		—			—			—		—			—		—			—		—		—		—			(2,135	)		(2,135	)
Paid up capital distribution		—			(33,146	)		—		—			—		(50,000	)		—		—		—		—			—			(83,146	)
Units exercised		4			14			—		—			—		—			—		—		—		(9	)		—			5
Stock-based compensation		—			—			—		—			—		—			—		—		—		1,731			—			1,731
Balances at November 30, 2005 (combined)		3,740		$	(42,229	)		8,321	$	(34,184	)		3,105	$	2,600			20	$	20	$	85	$	7,427		$	(18,953	)	$	(85,234	)

See Accompanying Notes to the Consolidated Financial Statements

F-7

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars, unless otherwise stated)

1.      Nature of Operations

      Founded in 1985, Corel Corporation (“Corel” or the “Company”) is a global packaged software company with products for the productivity and graphics and digital imaging markets. At November 30, 2005, the Company’s products include WordPerfect Office Suite, CorelDRAW Graphics Suite and Corel Paint Shop Pro. With the combination of WinZip described below, the Company’s products will also include WinZip’s compression utility software. Corel distributes its products through relationships with equipment manufacturers, through its e-Store and through a global network of resellers and retail vendors.

2.      Summary of Significant Accounting Policies

Basis of presentation

      The consolidated financial statements have been prepared in United States (US) dollars and in accordance with accounting principles generally accepted in the United States (“US GAAP”). Corel was acquired by Vector Capital (“Vector Capital”), a venture capital company based in California, on August 28, 2003. Corel accounted for this transaction by allocating the purchase price paid by Vector Capital to Corel’s net assets (“push-down accounting”). Because of the application of push-down accounting, the consolidated financial statements for the periods ended prior to August 29, 2003 (Predecessor) are not comparable to the consolidated financial statements for the periods ended after August 28, 2003 (owned by Vector Capital).

      The Company has agreed to purchase Cayman Ltd. HoldCo (“WinZip”) from Vector Capital contemporaneously with the completion of a public offering. WinZip is a provider of compression utility software. If completed, this is a transaction between entities under common control. Because of this, and the Company’s agreement to acquire WinZip, the Company has combined its financial statements with WinZip’s effective January 18, 2005 (the date Vector Capital purchased WinZip) to November 30, 2005. On January 18, 2005, push-down accounting was applied by WinZip and consequently WinZip revalued its balance sheet to reflect the fair market value of its assets and liabilities with a corresponding increase to goodwill. The assets and liabilities of WinZip have been reflected at their carrying amounts immediately after the application of push-down accounting (note 8).

      The consolidated financial statements presented herein reflect the combined financial position of the Company and WinZip at November 30, 2005 (combined). The combined financial statements for 2005 reflect the results of operations of WinZip from January 18, 2005 to November 30, 2005. The consolidated financial statements reflect the financial position of the Company at November 30, 2004. In addition, the financial statements include the results of operations, changes in shareholders’ equity (deficit) and cash flows for fiscal 2005 (combined) and 2004 and for the periods August 29, 2003 to November 30, 2003, and December 1, 2002 to August 28, 2003.

      On March 31, 2006, the Company executed a 1.0 for 11.7 reverse split of its share capital. Accordingly, all of the share, per share, and share option data appearing in the consolidated financial statements and notes therein, in the periods owned by Vector Capital, have been adjusted to reflect the impact of the reverse split.

Basis of consolidation

      The consolidated financial statements for fiscal 2005 include the accounts of Corel and its wholly-owned subsidiaries together with WinZip and all of its wholly-owned subsidiaries (as described above). The consolidated financial statements for all other periods include the accounts of Corel and its wholly-owned subsidiaries but exclude WinZip. All material intercompany transactions and balances have been eliminated.

F-8

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

      Corel follows the equity method of accounting for investments in other companies where it holds 20% or more, but less than 50%, of the outstanding voting shares and/or has the ability to exert significant influence. Under the equity method, the Company records its initial investment at cost and records its pro rata share of earnings or losses of equity investments in its results of operations until the net book value of the investment is reduced to $nil.

Business combinations

      Corel accounts for business combinations in accordance with SFAS No. 141, “Business Combinations”, (“SFAS 141”). SFAS 141 generally requires business combinations to be accounted for using the purchase method of accounting, and includes specific criteria for recording intangible assets separate from goodwill. Net assets of the acquired company are recorded at their fair value at the date of acquisition. However, in accordance with SFAS 141, if completed, the Company would account for the acquisition of WinZip on an ‘as-if pooling’ basis from January 18, 2005, the date the Company and WinZip became under common control.

      Results of operations from acquired businesses are included in the financial statements of the Company from the date of acquisition or, in the case of WinZip, from the date WinZip and the Company came under common control.

Estimates and assumptions

      The preparation of these financial statements is in conformity with US GAAP and requires management to make certain estimates and assumptions that affect the reported amounts in the consolidated financial statements, and the disclosures made in the accompanying notes. Examples of estimates include the provisions for sales returns, bad debts, and estimates associated with annual goodwill impairment tests. We also use estimates in determining the remaining economic lives and carrying values of purchased intangible assets, equipment and other long-lived assets. In addition, we use assumptions when employing the Black-Scholes valuation model to estimate the fair value of units granted in applying SFAS No. 123R, “Share-based Payments (revised 2004)” (“SFAS 123(R)”). Despite the Company’s intention to establish accurate estimates and use reasonable assumptions, actual results may differ from these estimates.

Software revenue recognition

      The Company recognizes revenue in accordance with Statement of Position (“SOP”) 97-2, “Software Revenue Recognition,” issued by the American Institute of Certified Public Accountants (“AICPA”), SOP 98-9, “Modification of 97-2, Software Recognition with Respect to Certain Transactions” and Staff Accounting Bulletin (“SAB”) No. 101 and No. 104 “Revenue Recognition in Financial Statements,” issued by the Securities and Exchange Commission (“SEC”).

      The Company records revenue when persuasive evidence of an arrangement exists, there are no significant uncertainties surrounding product acceptance, the fees are fixed or determinable and collection is considered probable.

      The Company’s application of SOP 97-2 requires judgment, including whether a software arrangement includes multiple elements, and if so, whether vendor-specific objective evidence (“VSOE”) of fair value exists for those elements. The Company’s VSOE is based on the associated price when the elements are sold separately. Some customers receive certain elements of the Company’s products over a period of time. Changes to the elements in a software arrangement, the ability to identify VSOE for those elements and the fair value of the respective elements could materially affect the amount of earned and unearned revenue.

      The Company sells maintenance contracts that include the right to unspecified upgrades of software licenses on a when-and-if-available basis and customer support. Sales of maintenance contracts are considered

F-9

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

post contract support and the fees are deferred and recognized as revenue ratably over the term of the maintenance arrangement, which is generally 12 or 24 months. Deferred revenue is not contingent upon any specific delivery of product since upgrades are only provided when-and-if-available.

      The Company recognizes revenues from the sale of our packaged software when legal title transfers, which is generally when the product ships or, in the case of certain agreements, when products are delivered to retailers. The Company sells some of its products on consignment to resellers and retailers and recognizes revenue for these consignment transactions only when the end-user sale has occurred.

      At the time of contract signing, the Company assesses whether the fee associated with the revenue transactions is fixed or determinable based on the payment terms associated with the transaction and considers the fee to be fixed or determinable if it is due within the Company’s normal payment terms, which are generally 30 to 90 days from invoice date.

      The Company assesses collectibility based on a number of factors, including past transaction history with the customer and the credit-worthiness of the customer. If it is determined that collection of a fee is not reasonably assured, management defers the fee and recognizes revenue at the time collection becomes reasonably assured, which is generally upon receipt of cash.

Allowance for product returns and rebate programs

      The Company reduces product revenues from distributors and retailers for estimated returns based on historical returns experience and other factors, such as the volume and price mix of products in the retail channel, return rates for prior releases of the product, trends in retailer inventory and economic trends that might impact customer demand for our products (including the competitive environment and the timing of new releases of our product). The Company also reduces product revenue for the estimated redemption of rebates on certain current product sales. The Company estimates provisions for distributor and retailer sales incentive rebates based on distributors and retailers actual performance against the terms and conditions of rebate programs. The Company estimates and provides for end user rebates based on the terms and conditions of the specific promotional rebate program, actual sales during the promotion, the amount of redemptions received and historical redemption trends by product and by type of promotional program.

Allowance for doubtful accounts

      The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of customers to make required payments. The Company regularly reviews the accounts receivable and management uses its judgment to assess the collectibility of specific accounts. As part of the review, management considers historical bad debts, changes in customer payments and current economic trends. Based on this assessment, an allowance is maintained that represents what is believed to be ultimately uncollectible from such customers.

      In the past, changes in these factors have resulted in adjustments to the allowance for doubtful accounts. These adjustments have been accounted for as changes in estimates, the effect of which have not been significant on the Company’s results of operations and financial condition. As these factors change, the estimates made by management will also change, which will impact the provision for doubtful accounts in the future. Specifically, if the financial condition of customers were to deteriorate, resulting in an impairment of their ability to make payments, an additional provision for doubtful accounts may be required.

Other comprehensive income (loss)

      Other comprehensive income (loss) is the change in equity of a business enterprise from non-shareholder transactions affecting shareholders’ (deficit) equity that are not included in net income (loss) on the statement of operations and are reported as a separate component of shareholders’ (deficit) equity. Other comprehensive income (loss) includes any unrealized gains or losses on available-for-sale securities.

F-10

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Foreign currency translation

      The functional currency of the Company and its subsidiaries is the U.S. dollar. Monetary assets and liabilities denominated in foreign currencies are re-measured to U.S. dollars using the exchange rates at the balance sheet date. Non-monetary assets and liabilities denominated in foreign currencies are re-measured in U.S. dollars using historical exchange rates. Revenues and expenses are re-measured using the actual exchange rates prevailing on the date of the transactions. Gains and losses resulting from re-measurement are recorded in the Company’s Consolidated Statement of Operations as a component of other non-operating expense (income).

      The effects of foreign currency transaction gains or losses are as follows:

	Owned by Vector Capital								Predecessor
	Year Ended
	November 30,					August 29, 2003			December 1, 2002
						to			to
	2005		2004			November 30, 2003			August 28, 2003
	(Combined)
Losses (gains) on foreign currency exchange	$	933	$	(1,212	)	$	(641	)	$	(1,530	)

Cash and cash equivalents

      Cash includes cash equivalents, which are investments that are highly liquid and have terms to maturity of three months or less at the time of acquisition. Cash equivalents typically consist of commercial paper, term deposits and banker’s acceptances issued by major North American banks and corporate debt. Cash and cash equivalents are carried at cost, which approximates their fair value.

Restricted cash

      As of November 30, 2004 and 2005, approximately $1,000 and $500, respectively, represent deposits with financial institutions as compensating balances against certain short-term borrowing arrangements. Should the cash be reclaimed by the Company, the credit arrangements would no longer be available to the Company. An additional $300 and $150, respectively, is held in-trust at a law firm to pay legal fees and expenses of the former Board of Directors, as required by the Vector Capital acquisition agreement. Any unused funds will be returned to Corel in 2009. At November 30, 2004, approximately $840 was held by a property leasing company as a part of its leasing arrangements, all of which was returned to Corel in fiscal 2005. As of November 30, 2005, WinZip’s restricted cash is comprised of a $65 cash deposit for its leased premises, and $250 for the deferred purchase price payable to the previous owner of WinZip. Restricted cash is recorded at cost.

Short-term investments

      Short-term investments are investments that are generally held to maturity and have terms of greater than three months but less than a year at the balance sheet dates presented. Short-term investments typically consist of commercial paper, Government of Canada Treasury Bills and banker’s acceptances. Short-term investments are carried at cost plus accrued interest, which approximates their fair value. Corel also utilizes certain derivative financial instruments to enhance its ability to manage foreign currency exchange rate risk, which exists as part of its ongoing operations.

F-11

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Investments

      Investments are made up of equity securities classified as available-for-sale and equities accounted for under the equity method. Available-for-sale securities do not qualify for accounting under the equity method because Corel’s ownership interest in such investees is less than 20% and the Company does not have the ability to exercise significant influence on the investees. Corel monitors these investments for impairment and reduces the carrying values when declines in their fair value are determined to be other-than-temporary.

      Under SFAS 115 - Accounting for Investment in Debt and Equity Securities (“SFAS 115”), all available-for-sale securities must be recorded at fair value. Any unrealized gains and losses are reported as a separate component of “accumulated other comprehensive income (loss)” within shareholders’ (deficit) equity. Realized gains and losses are included in other non-operating expense (income).

Concentration of credit risk

      Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, short-term investments, forward exchange contracts and accounts receivable.

      Corel’s cash, cash equivalents and short-term investments are denominated predominantly in U.S. dollars. Cash and cash equivalent deposits with major North American financial institutions may exceed federally insured limits. The Company believes that the use of credit quality financial institutions minimizes the financial risk from non-performance.

      The primary objective of Corel with respect to short-term investments is security of principal. Corel manages its investment credit risk through a combination of the (i) selection of securities with an acceptable credit rating; (ii) selection of term to maturity, which in no event exceeds one year in length; and (iii) diversification of debt issuers. Corel has credit evaluation, approval and monitoring processes intended to mitigate potential credit risks related to accounts receivable, but generally requires no collateral. Any significant receivable balances are with high credit quality organizations.

      The following customers comprise the major trade receivables outstanding:

	November 30, 2005					November 30, 2004
	Net		% of			Net		% of
	Receivable		Total			Receivable		Total
	(Combined)
Company A	$	1,703		8.8	%	$	2,943		15.5	%
Company B		1,456		7.5	%		3,911		20.5	%
Company C		147		0.8	%		1,975		10.4	%

Interest rate risk

      Corel’s exposure to interest rate risk relates primarily to its long-term debt, as the Company does not have significant investments earning interest income. The risk is associated with increases in the prime lending rate, as a significant portion of the debt has a floating rate of interest based on prime.

      Given the amount of debt that the Company has, if lending rates were to rise significantly, the resulting interest cost could materially affect the business. In connection with the current debt facility (note 12), in August 2005 the Company purchased an interest rate cap to August 2007 on $40,000 which reduces the Company’s interest rate exposure.

F-12

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Fair value of financial instruments

      The carrying amounts for cash and cash equivalents, restricted cash, short-term investments, accounts receivable, accounts payable and accrued liabilities approximate fair value due to the short maturity of these instruments.

      The Company determines the fair value of its operating line of credit and long-term debt based on market information and a review of prices and terms available at the fiscal year-end for similar obligations.

      The carrying amount of the operating line of credit and long-term debt also approximate fair value because there have been no material changes in the Company’s financial condition since its most recent financing and the operating line of credit and long-term debt bear interest at floating rates.

Forward exchange contracts

      Corel manages its financial exposure to certain foreign exchange fluctuations with the objective of minimizing the impact of foreign currency exchange movements on its operations.

      To meet this objective Corel enters into foreign exchange contracts from time to time for terms of less than twelve months. Contracts are with major Canadian chartered banks, and therefore non-performance by a counter party is considered unlikely. As of November 30, 2005 Corel did not have any U.S. dollar foreign exchange contracts. At November 30, 2004, Corel had U.S. dollar foreign exchange contracts with maturity dates from December 10, 2004 to October 3, 2005 to purchase a total of C$4,000.

      In accordance with the provisions of Statement of Financial Accounting Standards No. 133 “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”), Corel’s forward exchange contracts qualify as derivative instruments. These contracts are not designated as hedging instruments under SFAS 133. These contracts are marked-to-market at the end of each reporting period and resulting gains or losses are recorded in “other non-operating expense (income)” on the Company’s consolidated statement of operations. The Company does not use derivative instruments for trading purposes.

Interest rate caps

      The Company accounts for its interest rate caps as financial instruments when they qualify as such under SFAS 133. If the interest rate caps contain all of the elements of a derivative under SFAS 133, they are recorded at fair value on the balance sheet. Corel does not apply hedge accounting to its derivatives. As a result, all marked to market adjustments to the interest rate caps’ fair value are recognized in earnings in the period of change.

Inventory

      Inventory of product components is valued at the lower of average cost and replacement cost. Finished goods are valued at the lower of average cost and net realizable value.

F-13

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Long-lived assets

      Long-lived assets are recorded at cost. Amortization of licenses commences with the market release of the associated software products and versions. Depreciation and amortization are calculated using the following rates and bases:

Capital assets
	Furniture and fixtures	20-33.3% per year declining balance
	Computer equipment—general	Three years straight line
	Computer equipment— research and development	20-50% per year declining balance
	Leasehold improvements	Straight line over the term of the lease
Intangible assets
	Licenses	Intangible assets are amortized straight line over their useful lives, generally three to seven years
	Acquired technologies	Straight line over the remaining economic life, generally estimated to be three to seven years
	Tradenames	Straight line over estimated life of seven years
	Customer relationships	Straight line over estimated life of four years
	Non-competition agreement	Straight line over two years, the term of the agreement

      The carrying values of long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts of such assets may not be recoverable. The determination of whether any impairments exist includes a comparison of estimated undiscounted future cash flows anticipated to be generated using the remaining life of the asset to the net carrying value of the asset. The amount of any impairment recognized is the difference between the carrying value and the fair value.

Goodwill

      Goodwill represents the excess of purchase price of acquired companies over estimated fair value of the net assets acquired. As required by SFAS No. 142, “Goodwill and Other Intangible Assets”, (“SFAS 142”), the Company does not amortize goodwill, but instead tests goodwill for impairment at least annually and if necessary, would record any impairment in accordance with SFAS 142.

      The provisions of SFAS 142 require that a two-step test be performed to assess goodwill for impairment. First, the fair value of each reporting unit is compared to its carrying value. If the fair value exceeds the carrying value, goodwill is not impaired and no further testing is performed. The second step is performed if the carrying value exceeds the fair value. The implied fair value of the reporting unit’s goodwill must be determined and compared to the carrying value of the goodwill. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, an impairment loss equal to the difference is recorded. Corel has one reporting unit.

Software development costs

      The Company capitalizes internally developed software costs in accordance with SFAS No. 86, “Accounting for the Costs of Software to be Sold, Leased, or Otherwise Marketed” (“SFAS 86”). SFAS 86 requires product development costs to be charged to expense as incurred until technological feasibility is attained. The Company’s internally developed software costs include application and tools development, testing, translation and localization costs incurred in production of software to be licensed to customers. Technological feasibility is attained when the Company’s software has completed system testing and has been determined viable for its intended use. The time between the attainment of technological feasibility and completion of software development is traditionally short, and to date, such costs have not been material.

F-14

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Accordingly, the Company did not capitalize any development costs in fiscal 2005 and 2004 and for the periods August 29, 2003 to November 30, 2003, and December 1, 2002 to August 28, 2003.

      The Company capitalizes software acquired through business combinations and technology purchases only if the related software under development has reached technological feasibility or if there are alternative future uses for the technology. The amortization expense is separately classified and disclosed as a component of cost of revenue.

Deferred financing charges

      Deferred financing charges arise when the Company arranges long-term debt financing and are amortized over the term of the associated debt using the effective interest rate method. In 2004, the Company renegotiated its term loans and in 2005, it entered into new debt facilities. During fiscal 2005 and 2004, the period August 29, 2003 to November 30, 2003, and the period December 1, 2002 to August 28, 2003, amortization expense was $1,756, $407, $24 and $nil, respectively.

Income taxes

      The Company accounts for income taxes under the asset and liability method. Under this method, the Company recognizes deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. The Company records a valuation allowance to reduce its deferred tax assets to an amount for which realization is more likely than not.

      The Company has loss carry forwards and various unclaimed deductions against taxable income resulting from depreciation and amortization that has already been reflected in the financial statements. With the application of push-down accounting, any utilization of these pre-acquisition tax losses or unclaimed deductions is first applied to reduce the goodwill and other intangibles pushed-down from the acquisition. Once these balances are eliminated, the utilization of any remaining losses and other unclaimed deductions are recorded as a reduction in income tax expense.

      The settlement of any contingencies that existed prior to the Vector Capital acquisition are treated as pre-acquisition contingences in accordance with SFAS No. 141, “Business Combinations” and are therefore applied against goodwill and then intangibles arising from the Vector acquisition until such time as these assets have no value, and thereafter included as a component of Corel’s income tax provision.

Investment tax credits

      Investment tax credits, which are earned as a result of qualifying research and development expenditures, are recognized and applied to reduce income tax expense in the year in which the expenditures are made and their realization is reasonably assured.

Stock-based compensation

      Concurrent with the implementation of the Company’s stock option plan on December 1, 2003 (“adoption date”), the Company adopted the provisions of SFAS No. 123R, “Share-based Payments (revised 2004)” (“SFAS 123(R)”). SFAS 123(R) establishes accounting for stock-based awards exchanged for employee services. Accordingly, stock-based compensation cost is measured at grant date, based on the fair value of the award, and is recognized as an expense on a straight-line basis over the employee’s requisite service period with an equal amount recorded as additional paid in capital. The Predecessor Company previously applied Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees”, and related Interpretations and provided the required pro-forma disclosure of SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”). All of the Predecessor Company’s options were

F-15

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

redeemed or annulled in connection with the Company’s acquisition by Vector Capital; therefore, no expense has been recorded for options granted prior to the adoption date.

Advertising costs

      Advertising costs are expensed as incurred but do not include expenses related to coupon programs, which are applied against revenues. The following table sets forth advertising cost for the applicable periods:

	Owned by Vector Capital						Predecessor
	Year Ended
	November 30,
					August 29, 2003 to		December 1, 2002
	2005		2004		November 30, 2003		to August 28, 2003
	(Combined)
Advertising costs	$	20,981	$	13,561	$	4,235	$	13,671

Shipping and handling costs

      Shipping and handling costs associated with product delivery are included in cost of revenues for all periods presented.

Repairs and maintenance costs

      Repairs and maintenance to fixed assets are charged to expense as incurred. Gains and losses resulting from sales or retirements of fixed assets are recorded as incurred, at which time related capitalized costs and accumulated deprecation are removed from the accounts.

Recent accounting pronouncements

      On June 1, 2005, the FASB issued SFAS 154, “Accounting Changes and Error Corrections,” (“SFAS 154”) which replaces APB 20, “Accounting Changes,” (“APB 20”) and SFAS 3, “Reporting Accounting Changes in Interim Financial Statements.” SFAS 154 applies to all voluntary changes in accounting principle and changes the requirements for accounting for and reporting of a change in accounting principle. SFAS 154 requires retrospective application to prior periods financial statements of a voluntary change in accounting principle unless it is impracticable. APB 20 previously required that most voluntary changes in accounting principles be recognized by including in net income of the period of the change the cumulative effect of changing to the new accounting principle. SFAS 154 carries forward many other provisions of APB 20 without change, including the provisions related to the reporting of a change in accounting estimate, a change in the reporting entity and the correction of an error. The Company adopted this standard effective December 1, 2005.

3. Accounts Receivables and Allowance for Doubtful Accounts

      The Company’s trade receivables are recorded in the balance sheet at the outstanding principal amount adjusted for any allowances for doubtful accounts and provisions for rebates and returns.

F-16

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

      The components of trade receivables for the periods presented are as follows:

	November 30, 2005			November 30, 2004
	(Combined)
Gross accounts receivable	$	28,406		$	34,152
Allowance for doubtful accounts		(1,116	)		(1,113	)
Provisions for returns and rebates		(7,948	)		(14,005	)
Trade receivables	$	19,342		$	19,034

4. Related Party Transactions

      The Company made paid-up capital distributions of $4.1 million, $41.0 million and $83.1 million to companies owned by Vector Capital, which currently own approximately 97.5% of the Common Shares of the Company, during the period from August 29, 2003 to November 30, 2003, and fiscal 2004 and 2005, respectively.

      In connection with certain transaction advisory work performed on the Company’s behalf, the Company paid Vector Capital transaction fees and reimbursements for expenses of $750, $250 and $3,275 in 2003, 2004 and 2005, respectively. As of November 30, 2005 and 2004, there were amounts payable to Vector Capital of $334 and $338, respectively.

      In connection with the completion of the Company’s acquisition by Vector Capital in August 2003, Vector Capital loaned Corel $17.0 million pursuant to two non-interest bearing promissory notes, which were repaid in fiscal 2004.

      The Company agreed to purchase WinZip from Vector Capital in February 2006 (note 8).

      The Company made two loans to senior employees during fiscal 2005 for the purpose of relocation. Approximately $466 was loaned to its Chief Executive Officer. The loan generates interest at the Royal Bank of Canada’s prime rate on approximately $207 of the amount. It is expected approximately $207 will be repaid within a year and the remainder has been expensed in fiscal 2005. In addition, approximately $200 was loaned to a senior manager of the Company at 1.5% above the Bank of Canada Prime interest rate and it is expected to be repaid within a year under the terms of the agreement.

5. Inventory

      The components of inventory for the periods presented are as follows:

	November 30, 2005		November 30, 2004
	(Combined)
Product components	$	219	$	383
Finished goods		507		955
Inventory	$	726	$	1,338

6. Investments

      The Company recognizes realized gains and losses on the sale of investments using the specific identification method.

F-17

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

      Any unrealized gains and losses on the available-for-sale securities are included in accumulated other comprehensive income on the balance sheet. The following chart summarizes Corel’s gross unrealized gains and losses on the available-for-sale securities:

		Owned by Vector Capital						Predecessor
		Year Ended
		November 30,				August 29, 2003		December 1, 2002
						to		to
		2005		2004		November 30, 2003		August 28, 2003
		(Combined)
Equity securities:
	Fair value	$	334	$	393	$	353	$	319
	Gross unrealized gains		334		393		353		319
	Unrealized gains included in comprehensive income, net of taxes		99		33		25		249
	Realized gain on sale of securities, net of taxes		72		—		—		—

      The Company also has investments in privately-held businesses that are accounted for under the equity method. In the period ended August 28, 2003, Corel recognized an impairment on cost and equity investments of $7,448 because the investments had experienced recurring losses and this indicated the losses were other-than-temporary.

7. Long-Lived Assets

      The components of long-lived assets for the periods presented are as follows:

		November 30, 2005				November 30, 2004
				Accumulated				Accumulated
		Cost		amortization		Cost		amortization
		(Combined)
Capital Assets
	Furniture and fixtures	$	2,056	$	790	$	1,495	$	507
	Computer equipment—general		3,817		2,613		2,999		1,760
	Computer equipment— research and development		1,446		570		1,294		318
	Leasehold improvements		314		128		149		106
			7,633		4,101		5,937		2,691
	Less: Accumulated amortization		4,101				2,691
	Net book value	$	3,532			$	3,246

F-18

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

			November 30, 2005				November 30, 2004
					Accumulated				Accumulated
			Cost		Amortization		Cost		Amortization
Intangible Assets
			(Combined)
Licenses			$	2,067	$	1,468	$	1,337	$	708
Acquired technologies				80,750		42,288		75,045		20,240
Tradenames				23,502		3,334		1,730		—
Customer relationships				884		270		536		—
Non-competition agreement				150		65		—		—
				107,353		47,425		78,648		20,948
	Less: Accumulated amortization			47,425				20,948
		Cumulative pre-acquisition legal settlement		647				647
		Cumulative utilization of pre-acquisition tax carry forwards		6,884				5,178
	Net book value		$	52,397			$	51,875

      During fiscal 2004, the Company received an insurance payment of $2,895 related to a lawsuit that was commenced prior to the Company’s acquisition by Vector Capital but settled after the acquisition by Vector Capital. At the time of the Company’s acquisition by Vector Capital, the amount of the insurance recovery was not determinable and so no amount was assigned to this potential recovery in the application of push-down accounting. The proceeds from the settlement were received in fiscal 2004 during the allocation period for the related acquisition and were thus applied against goodwill, reducing the balance to nil at the end of fiscal 2004. The excess of $647 was applied against intangible assets recognized in connection with the acquisition.

      During fiscal 2004, the Company utilized pre-acquisition tax carryforwards from the period before the Company was acquired by Vector Capital. At the time of the Company’s acquisition by Vector Capital, it was determined to be more likely than not that the Company would not use these tax carryforwards and accordingly, no amounts were recognized related to the tax carry forwards in the application of push-down accounting. The tax savings relating to the use of those tax carryforwards in fiscal 2004 were applied to reduce goodwill and intangible assets recognized in connection with the acquisition.

      During fiscal 2005, the Company continued to utilize its tax carryforwards from the period before the Company was acquired by Vector Capital. The tax savings relating to the use of those tax carryforwards in fiscal 2005 were applied to reduce intangible assets recognized in connection with the acquisition.

      The following table sets forth Corel’s estimated future amortization charges with respect to intangible assets at November 30, 2005 for the five succeeding fiscal years.

	Estimated
	amortization
	expense
	(Combined)
2006	$	14,946
2007		10,413
2008		9,677
2009		9,002
2010		3,925
2011 and thereafter		4,434
Total	$	52,397

F-19

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

8. Acquisitions

Vector Capital acquisition

      On August 28, 2003, Vector Capital acquired 100% of Corel. Corel accounted for the transaction by applying push-down accounting and consequently revalued its balance sheet to reflect the fair market value of the assets and liabilities of Corel with a corresponding $8,584 increase to goodwill, which is not deductible for tax purposes. The acquired technologies and licenses are being amortized to cost of revenues over their estimated useful lives of three years.

      To determine fair value of acquired technologies, the Company considered three valuation methodologies: cost, income and market. The income approach was relied upon under which fair market value is a function of future revenues expected to be generated by assets, net of all allocable expenses. There was no acquired in process research and development (“IPR&D”) associated with this acquisition.

      The components of the aggregate purchase cost were as follows:

Series A Preferred Shares	$	12,876
Purchase of employee stock option rights		753
Acquisition costs		10,240
New Common Shares		27,899
New Series A Preferred Shares		69,750
Purchase cost	$	121,518

      The following chart summarizes the changes made to the accounts of Corel as a result of the comprehensive revaluation:

	Balance before			Acquisition			Balance after			Second step			Amalgamated
	adjustments			adjustments			adjustments			amalgamation			company
Cash and cash equivalents	$	16,089		$	nil		$	16,089		$	nil		$	16,089
Accounts receivable		21,817			(2,951	)		18,866			nil			18,866
Note receivable		39,775			nil			39,775			(39,775	)		nil
Other current assets		13,241			nil			13,241			nil			13,241
Property, plant and equipment		6,087			nil			6,087			nil			6,087
Acquired technologies		5,139			44,513			49,652			nil			49,652
Licenses		1,286			nil			1,286			nil			1,286
Other current liabilities		(26,973	)		(699	)		(27,672	)		nil			(27,672	)
Long term debt		nil			nil			nil			(29,973	)		(29,973	)
Deferred tax		(667	)		667			nil			nil			nil
Deferred revenue		(11,615	)		7,225			(4,390	)		nil			(4,390	)
Net assets (excluding goodwill)	$	64,179		$	48,755		$	112,934		$	(69,748	)	$	43,186
Purchase cost								121,518
Goodwill on purchase							$	8,584
Utilization of pre-acquisition tax carryforwards								(237	)
Goodwill at November 30, 2003							$	8,347
Pre-acquisition tax refund								(6,099	)
Pre-acquisition legal settlement								(2,895	)
Allocated to intangible assets								647
Goodwill remaining from Vector acquisition							$	nil

F-20

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Jasc acquisition

      On October 25, 2004, Corel completed the acquisition of Jasc Software, Inc. (“Jasc”), a US-based developer of digital image editing technologies. Corel’s consolidated statements of operations reflect the results of operations of Jasc from the date of acquisition. Jasc’s graphics and digital imaging software products were integrated with Corel’s existing line of graphics and digital imaging products. Acquired technologies and other intangible assets acquired in the transaction are being amortized to cost of revenues over their estimated useful lives of five years. There was no IPR&D associated with this acquisition.

      The aggregate purchase cost was approximately $38,150, including 379,677 Class B Common Shares of Corel at a value estimated by management of $2,445. Other costs of acquisition include professional fees and other costs directly related to the acquisition. The components of the aggregate purchase cost were as follows:

Cash	$	34,300
Class B common shares		2,445
Other acquisition costs		1,405
Total purchase cost	$	38,150

      As part of the acquisition agreement, a portion of the purchase cost amounting to $1,000 of cash and 237,297 Class B Common shares have been placed in an escrow account. The amounts in escrow will be released no later than 18 months after the closing date of the acquisition or upon demand for payment by Corel. The escrow account was established as security for Corel against breaches of representations and warranties made by shareholders of Jasc to Corel in the acquisition.

      The purchase cost was preliminarily allocated to identifiable tangible and intangible assets consisting primarily of technology acquired and liabilities assumed based on their estimated fair values as follows. This preliminary allocation was finalized during fiscal 2005 when the Company was able to determine the value of inventory in the channel:

Cash	$	2,050
Accounts receivable		5,727
Inventory		1,233
Prepaid expenses		347
Other assets		14
Capital assets		659
Acquired technologies		27,572
Tradenames		1,730
Customer relationships		536
Liabilities		(6,678	)
Net assets acquired		33,190
Total purchase cost		38,150
Goodwill resulting from Jasc acquisition at November 30, 2004		4,960
Adjustment for channel inventory and acquisition costs		897
Goodwill resulting from Jasc acquisition at November 30, 2005	$	5,857

F-21

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

      To determine fair value of acquired technologies, tradenames and customer relationships, the Company considered three valuation methodologies: cost, income, and market. The income approach was relied upon under which the fair market value is a function of future revenues expected to be generated by assets, net of all allocable expenses. A portion of goodwill associated with the Jasc acquisition is not deductible for tax purposes. The following unaudited pro forma financial information gives effect to the acquisition of Jasc by the Company as if the transaction occurred at the beginning of fiscal 2004:

Revenues		$	142,511
Net loss		$	(3,361	)
Pro-forma loss per share:
	Class A	$	(0.97	)
	Class B	$	(0.97	)

WinZip combination

      In February 2006, the Company agreed to acquire all of the outstanding securities of WinZip, a provider of compression utility software, from Vector Capital, which originally purchased WinZip on January 18, 2005. The Company is acquiring WinZip to complement its productivity software. The Company and WinZip are under common control. Because of this, and the Company’s agreement to acquire WinZip, the Company has combined its financial statements with WinZip’s effective January 18, 2005, in accordance with SFAS 141. The purchase cost for the combination is expected to be 4,322,587 common shares of the Company. In addition, the Company has agreed to repay on closing of the combination all of the outstanding bank debt of WinZip. The Company has also agreed to grant options to purchase 74,680 common shares under its 2006 Equity Incentive Plan in replacement for outstanding WinZip options.

      The acquisition agreement provides for a reciprocal indemnity for breach of covenants, representations and warranties, generally for a one year period. A portion of the purchase cost, amounting to 93,929 Corel common shares issued to Vector Capital, may not be transferred by Vector Capital for a period of one year so that they will be available to satisfy Vector Capital’s indemnification obligations to the Company.

      At the time Vector Capital purchased WinZip, push-down accounting was applied and consequently WinZip revalued its balance sheet to reflect the fair market value of the assets and liabilities of WinZip with a corresponding $3,993 increase to goodwill. The Company has recognized the assets and liabilities transferred at their carrying amounts immediately after the application of push-down accounting. The acquired technologies and other intangible assets are being amortized to cost of revenues over their estimated useful lives of two to seven years. There was no acquired IPR&D associated with this combination.

      The aggregate purchase cost paid by Vector Capital for WinZip was allocated to assets acquired and liabilities assumed based upon their estimated fair market values at the date of combination and is summarized as follows:

Current assets	$	2,497
Capital assets		183
Tradename		21,772
Acquired technologies		5,704
Non-competition agreements		150
Customer relationships		348
Current liabilities		(858	)
Net assets acquired		29,796
Total Vector Capital purchase cost		33,789
Goodwill resulting from WinZip combination	$	3,993

F-22

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

      To determine the fair value of intangible assets, WinZip engaged a valuation firm. The tradename was valued using an income approach, specifically the present value of the operating cash flows generated by the tradename. The acquired technologies were valued using a relief from royalty method. The customer relationships were also valued using an income approach, specifically the present value of the operating cash flows generated by customer relationships. Goodwill is not deductible for tax purposes.

9. Goodwill

      As discussed in note 2, the Company has adopted SFAS 142. As a result, goodwill is not amortized, but is subject to annual impairment tests.

      Changes in the carrying amount of goodwill were as follows:

Balance, August 28, 2003	$	nil
Addition on purchase by Vector Capital (note 8)		8,584
Utilization of pre-acquisition tax carryforwards		(237	)
Balance, November 30, 2003	$	8,347
Pre-acquisition tax refund		(6,099	)
Pre-acquisition legal settlement		(2,248	)
Addition on purchase of Jasc (note 8)		4,960
Balance, November 30, 2004	$	4,960
Adjustment for channel inventory and acquisition costs		897
Addition on WinZip combination (note 8)		3,993
Balance, November 30, 2005 (combined)	$	9,850

      The Company has performed annual impairment tests at each year end presented and there have been no indications that an impairment of goodwill exists.

      During the period from August 29, 2003 to November 30, 2003, the Company utilized pre-acquisition tax carryforwards from the period before the Company was acquired by Vector Capital. At the time of the Company’s acquisition by Vector Capital, it was determined to be more likely than not that the Company would not use these tax carryforwards and accordingly, no amounts were recognized related to these tax carry forwards in the application of push-down accounting. The tax savings relating to the use of those tax carryforwards in 2003 were applied to reduce the goodwill recognized through the application of push-down accounting.

      During fiscal 2004, the Company received a refund of income taxes from the settlement of tax audits related to 1993 to 1997 of $6,099. At the time of the Company’s acquisition by Vector Capital, the amount of any refund was not determinable due to the status of the audit and consequently no amount was assigned to the potential recovery in the initial application of push-down accounting. The proceeds from the settlement were received in fiscal 2004 during the allocation period for the related acquisition and were thus applied to reduce related goodwill.

      During fiscal 2004, the Company received an insurance payment of $2,895 related to a lawsuit that was commenced prior to the Company’s acquisition by Vector Capital but settled after the acquisition by Vector Capital. At the time of the Company’s acquisition by Vector Capital, the amount of the insurance recovery was not determinable and so no amount was assigned to this potential recovery in the initial application of push-down accounting. The proceeds from the settlement were received in fiscal 2004 during the allocation period for the related acquisition and were thus applied against goodwill reducing the balance to nil at the end of fiscal 2004. The excess of $647 was applied against intangible assets recognized in connection with the acquisition.

F-23

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

      During fiscal 2005, the Company accrued for additional inventory returns of Jasc products that were in various channels prior to the acquisition. The adjustment of this pre-acquisition contingency has been recorded as an adjustment to goodwill. Also during fiscal 2005, the Company combined its balance sheet with WinZip’s, and the additional goodwill was a result of WinZip’s application of push-down accounting on January 18, 2005, when it was acquired by Vector Capital.

10. Accounts Payable and Accrued Liabilities

      The components of accounts payable and accrued liabilities for the periods presented are as follows:

	November 30, 2005		November 30, 2004
	(Combined)
Accrued payroll	$	8,936	$	9,417
Accrued interest		1,077		—
Trade accounts payable		4,671		4,852
Other accrued liabilities		15,468		10,935
Accounts payable and accrued liabilities	$	30,152	$	25,204

11. Income Taxes

      Income (loss) from operations before income taxes included income (loss) from foreign operations of $2,273 in fiscal 2005, $2,805 in fiscal 2004, and $(555) in 2003.

      The provision for income taxes consisted of the following:

		Owned by Vector Capital
									Predecessor
		Year Ended
		November 30,					August 29, 2003		December 1, 2002
							to		to
		2005			2004		November 30, 2003		August 28, 2003
		(Combined)
Current:
	Canadian	$	1,090		$	587	$	222	$	(4,320	)
	Foreign		4,371			1,550		96		563
			5,461			2,137		318		(3,757	)
Deferred:
	Canadian		1,706			5,178		237		Nil
	Foreign		(876	)		nil		nil		(138	)
			830			5,178		237		(138	)
Income tax expense (recovery)		$	6,291		$	7,315	$	555	$	(3,895	)

F-24

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

      A reconciliation of income tax at the statutory rate to Corel’s effective tax rate is as follows:

	Owned by Vector Capital
										Predecessor
	Year Ended
	November 30,						August 29, 2003			December 1, 2002
							to			to
	2005			2004			November 30, 2003			August 28, 2003
	(Combined)
Income (loss) before income taxes and share of income (loss) from equity investments	$	(2,462	)	$	8,522		$	(8,717	)	$	(30,648	)
Expected statutory rate		36.0	%		36.0	%		37.0	%		37.0	%
Expected tax expense (recovery)		(886	)		3,068			(3,225	)		(11,340	)
Foreign tax rate differences		214			(55	)		85			254
Change in valuation allowance		5,052			2,493			2,005			8,497
Non-deductible expenses and non-taxable income		1,264			916			1,468			2,826
Settlement of prior year audits		(334	)		nil			nil			(4,756	)
Withholding tax on foreign income		930			828			192			417
Other		51			65			30			207
Reported income tax expense (recovery)	$	6,291		$	7,315		$	555		$	(3,895	)

      Significant deferred tax assets were as follows, as of the dates indicated:

		November 30, 2005			November 30, 2004
		(Combined)
Deferred tax assets:
	Net operating losses carried forward	$	112,655		$	119,239
	Book and tax differences on assets		26,804			22,412
	Other		2,708			1,882
Total deferred tax assets			142,167			143,533
Valuation allowance for tax assets			(141,291	)		(143,533	)
Net deferred tax assets		$	876		$	nil

      As of November 30, 2005, Corel has tax loss carryforwards of approximately $249.0 million, which expire during the years 2006 to 2021. Approximately $18.9 million of these losses are restricted in the amount of the loss that may be claimed each year based on U.S. tax loss limitations. Corel also has investment tax credits of approximately $16.1 million which expire during the years 2006 to 2013.

      The portion of the valuation allowance relating to the above deferred tax assets for which subsequently recognized tax benefits will be allocated to reduce the balance of intangible assets set up in connection with the acquisition of Corel by Vector is approximately $0.4 million at November 30, 2005.

F-25

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

      In April 2005, WinZip transferred its intellectual property and trademarks to a non-US affiliate in a taxable transaction. WinZip did not recognize any gain on the transfer of the property based on the WinZip analysis of the fair value of the assets transferred, and as a result did not provide any income tax on the transfer. The assessment of fair value requires significant judgment, and if US tax authorities concluded that this transfer was completed at a gain to WinZip, the Company could have a significant tax liability.

12. Long Term Debt

Term loans

      In June 2004, Corel negotiated two term loans (“Term Loan A” and “Term Loan B”) with Wells Fargo Foothill in the amount of $25,000 and $22,500 respectively. On October 25, 2004, the loans were amended and increased to $32,500 and $35,000, respectively, less payments made.

      Term Loan A was limited to 65% of the Appraised Enterprise Value, as defined in the Credit Agreement, and was repayable in 20 equal monthly installments of $1,450 beginning November 1, 2004 with a balloon payment for the remaining balance due at the end of the term, and substantially all of the assets of Corel had been pledged as collateral. Interest at the rate of prime plus 4.5% was charged to the daily balance of the loan and paid monthly. In February 2005, Term Loan A was repaid in full.

      Term Loan B was repayable in 32 equal monthly installments of $350, beginning on November 1, 2004 with a balloon payment for the remaining balance due at the end of the term, and substantially all of the assets of Corel had been pledged as collateral. Interest at the rate of prime plus 4.5% was charged to the daily balance of the loan and paid monthly. In February 2005, Term Loan B was repaid in full.

Credit Suisse First Boston term loans and credit facility

      In February 2005, Corel entered into a new credit facility with Credit Suisse First Boston (“CSFB”) consisting of a $75,000 first lien credit agreement and a $55,000 second lien credit agreement. Proceeds from this refinancing were used to repay the Wells Fargo Foothill (“WWF”) term loans and to fund a distribution to our shareholders of $85,300.

      The first lien agreement requires Corel to make fixed quarterly principal repayments of 1.25% of the original principal amount, or $938 from June 30, 2005 to December 31, 2009, with the balance of the loan due on February 25, 2010. The second lien agreement does not require fixed repayments of principal and is due in full on August 16, 2010. The rate of interest on the first and second lien agreements is either (i) LIBOR plus 4.25% and LIBOR plus 8.0%, respectively, or (ii) the higher of the Prime Rate and the Federal Funds Effective Rate plus ¹/2 of 1% plus 2.25%, in each case, on the borrowing date. The rate of interest on the second lien agreement is either (i) LIBOR plus 8.0% or (ii) the higher of the Prime Rate and the Federal Funds Effective Rate plus ¹/2 of 1%, plus 6.0%, in each case, on the borrowing date. Corel is also required to make an annual principal repayment no later than 90 days after year end, based on a specified formula of excess cash flows generated during the preceding fiscal year.

      There is no premium upon early repayment of the First Lien and a 1%-3% premium for early repayment on the Second Lien, depending on when the prepayment is made.

      Vector Capital has granted a security interest in its equity ownership of Corel in favor of CSFB as collateral agent pursuant to a pledge agreement.

      In addition to the above loans, the facility with CSFB also provides the Company with a $10,000 revolving credit commitment which is available for operational needs during the term of the credit agreement. The rate of interest on the revolving credit commitment is (i) LIBOR plus 4.25% or (ii) the higher of the Prime Rate and the Federal Funds Effective Rate plus ¹/2 of 1% plus 2.25%, in each case, on the borrowing date.

F-26

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

      Under the CSFB facility, Corel was required to obtain interest rate protection. In August, 2005, Corel purchased a two year interest rate cap at LIBOR plus 6% on $40,000 through Wells Fargo Foothill, effective August 5, 2005.

      Under the terms of the credit agreement with CSFB, Corel is subject to restrictive covenants. The agreement contains customary restrictions, such as restrictions on additional borrowing, distributions and business acquisitions/divestitures. It also contains financial covenants including requiring:

• a total leverage ratio, which is defined as the ratio of total debt to trailing four quarter consolidated Adjusted EBITDA, as defined in the credit agreement, to be less than specified amounts over the term of the facility, from 3.75:1.00 to 2.00:1.00;

• a fixed charge coverage ratio, which is defined as the ratio of trailing four quarter consolidated Adjusted EBITDA to fixed charges, to be at least 1.25:1.00; and

• a ratio of consolidated Adjusted EBITDA to consolidated interest to be at least 3.00:1.00.

      As of November 30, 2005, Corel was not in compliance with the total leverage ratio covenant on the First Lien. The Company has obtained an amendment to the First Lien which adjusted the covenants retroactively such that the Company was in compliance and adjusted future covenants. The Company paid amendment and arrangement fees of $391.

      The committed debt payments are as follows, based on the interest rates at November 30, 2005:

	First Lien						Second Lien
	Principal		Interest		Total		Principal		Interest		Total
2006	$	10,014	$	5,729	$	15,743	$	—	$	6,760	$	6,760
2007		3,750		5,269		9,019		—		6,760		6,760
2008		3,750		4,943		8,693		—		6,760		6,760
2009		3,750		4,618		8,368		—		6,759		6,759
2010		51,861		736		52,597		55,000		4,505		59,505
Total	$	73,125	$	21,295	$	94,420	$	55,000	$	31,544	$	86,544

Promissory note

      On November 30, 2005, the Company signed a promissory note in regards to the release from its naming rights agreement for a sporting and entertainment venue. Under the terms of the note, the Company agreed to repay C$2,621 to Capital Sports Properties Inc., which was recorded as other operating expense in fiscal 2005. A principal payment of C$821 was made on December 1, 2005, and payments of C$300 will be made on April 1, and June 30, 2006, 2007 and 2008. The Company can prepay the principal balance at any time, without penalties.

WinZip debt

      As a result of Vector Capital’s purchase of WinZip, a 9% secured promissory note for $15,000 (“Acquisition Loan”) was obtained, and subsequently repaid in full at the June 29, 2005 maturity date.

      On June 29, 2005, WinZip obtained a $23,000 term loan (“WinZip Term Loan”) and a $1,000 revolving line of credit (“WinZip Revolver”). This debt is collateralized by Cayman Ltd. HoldCo, WinZip Holdings SGPS, Lda, WinZip Computing, S.L., WinZip Holdings Spain, S.L., WinZip Computing LP and WinZip Computing LLC.

      The WinZip Term Loan requires monthly payments of $479 plus interest, which began July 31, 2005, until the maturity date of June 29, 2008. At that time, the remaining principal balance is due. The WinZip

F-27

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Term Loan bears interest at prime plus a base rate margin, as defined in the credit agreement. For the first three months, the base rate margin was equal to 5.5%. Subsequently, the base rate margin is determined by an adjusted leverage ratio. WinZip can prepay the outstanding balance at any time and there are mandatory semi-annual payments, beginning December 31, 2005. The semi-annual payment is equal to 75% of WinZip’s Excess Cash Flow, as defined in the credit agreement, for each 6-month period. The WinZip Term Loan is collateralized by all of WinZip’s intangible assets with a net book value of $24,415 and cash collateral accounts and is subject to certain financial covenants as set forth in the credit agreement. As of November 30, 2005, there was $20,604 outstanding under the WinZip Term Loan bearing interest at a rate of 12%.

      The WinZip Term Loan restricts distributions or payments to shareholders. It contains financial and other covenants requiring WinZip to maintain, among other requirements, limitations on capital expenditures, a leverage ratio and a minimum EBITDA level, all as defined in the agreement. In February 2006, WinZip entered into an amendment to the WinZip Term Loan and WinZip Revolver that removed the requirement to make the mandatory December 31, 2005 semi-annual payment, permits WinZip to pay a dividend of up to $7,500, and waives events of default. The first mandatory semi-annual payment will be calculated for the period from January 1 through June 30, 2006 and will be due on or before August 15, 2006.

      The aggregate annual debt payments on the WinZip Term Loan are as follows, based on the interest rate at November 30, 2005:

	Term Loan
	Principal		Interest		Total
2006	$	5,750	$	2,186	$	7,936
2007		5,750		1,486		7,236
2008		9,104		543		9,647
Total	$	20,604	$	4,215	$	24,819

      The WinZip Revolver expires on June 29, 2008. Interest on the WinZip Revolver accrues at the same rate as the Term Loan. The WinZip Revolver is collateralized by all of WinZip’s intangible assets with a net book value of $24,415 and cash collateral accounts. As of November 30, 2005, there was no outstanding balance on the WinZip Revolver.

13. Commitments and Contingencies

Operating leases

      The Company rents office space in Canada, Europe and other international locations under various operating leases, which contain different renewal options. The leases begin to expire in 2006.

      At November 30, 2005, the minimum unaccrued commitments under long-term agreements, are as follows:

	Leases
	(Combined)
2006	$	2,876
2007		2,386
2008		2,010
2009		571
2010		355
2011 and thereafter		286
	$	8,484

F-28

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

      The Company recorded lease expenses of $4,400 for fiscal 2005, $4,114 for fiscal 2004, $1,962 for the period August 29, 2003 to November 30, 2003, and $4,688 for the period December 1, 2002 to August 28, 2003.

Customer Indemnification

      The Company has entered into licensing agreements with customers that include intellectual property indemnification clauses. These clauses are typical in the software industry and require the Company to compensate customers for certain liabilities and damages incurred as a result of third party intellectual property claims arising from these transactions. The Company has not made any significant indemnification payment as a result of these clauses and in accordance with FASB Interpretations No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (“FIN 45”), has not accrued any amounts in relation to these indemnification clauses.

Legal Proceedings

      The Company currently, and from time to time, is involved in certain legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business, including assertions that we may be infringing patents or other intellectual property rights of others. The Company believes that the ultimate amount of liability, if any, for any pending claims of any type (either alone or combined) will not materially affect the financial position or results of operations. The Company also believes that, if necessary, it would be able to obtain any required licenses or other rights to disputed intellectual property rights on commercially reasonable terms. However, the ultimate outcome of any litigation is uncertain and, regardless of outcome, litigation can have an adverse impact on the business because of defense costs, negative publicity, diversion of management resources and other factors. The Company’s failure to obtain any necessary license or other rights on commercially reasonable terms, or otherwise, or litigation arising out of intellectual property claims could materially adversely affect the business.

      At November 30, 2005, the Company was a defendant in two ongoing patent infringement proceedings described below:

      Compression Labs, Inc. v. Corel Inc. et al. Plaintiff Compression Labs, Inc. filed this patent infringement action on April 22, 2004 against the Company and twenty-seven other defendants in the U.S. District Court for the Eastern District of Texas, alleging infringement of U.S. patent 4,698,672. Plaintiff alleged that the defendants infringe the patent through various implementations of JPEG compression and decompression. Plaintiff sought unspecified damages and attorneys fees. This litigation was settled in January 2006 and the settlement amount was reported in the 2005 financial statements.

      Electronics For Imaging, Inc., Massachusetts Institute of Technology v. Corel Corporation et al. Plaintiffs filed this patent infringement action on December 28, 2001 against the Company and 213 other defendants in the U.S. District Court for the Eastern District of Texas, alleging infringement of U.S. patent 4,500,919. The patent expired on May 6, 2002. Plaintiffs allege that the defendants infringed the patent through the use of various color management and correction systems in their products. Plaintiffs seek unspecified damages and attorneys fees. Various motions including motions for summary judgment by both the plaintiffs and defendants, including the Company, were filed during the discovery phase of the proceeding. In July 2004, the court dismissed each summary judgment motion upon which the Company and the plaintiffs had joined issue. Following the decision on the summary judgment motions, the plaintiffs dismissed all claims against every remaining defendant except the Company, Microsoft and Roxio. The plaintiffs then stipulated to non-infringement in respect of the Company, Microsoft and Roxio and the action was dismissed in November 2004. In December 2004, the plaintiffs filed an appeal of various interlocutory rulings by the trial court including certain of the summary judgment decisions. The remaining defendants, including the Company, have filed opposition to the appeals. The Company has cross-appealed on the trial court’s dismissal of its

F-29

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

request to have the action dismissed on summary judgment. The appeals and cross appeals have been fully briefed by all parties. Oral argument on the Appeal was held on December 7, 2005. The Company believes it has meritorious defenses to the plaintiffs’ claims and intends to defend the litigation vigorously. However, the ultimate outcome of the litigation is uncertain.

14. Shareholders’ Equity

      On August 28, 2003, Vector Capital purchased the outstanding Common Shares of Corel (note 8). As part of the acquisition, Corel was authorized to issue an unlimited number of Series B Preferred Shares (“Series B”) and an unlimited number of Corel New Common Shares (“Corel New”). Each of the Common Shares that were not previously held by Vector Capital was converted into one fully paid and non-assessable Corel New share and one Series B share. Vector Capital purchased the balance of the Corel New shares for $0.30 per share and the Series B shares for $0.75 per share. The Series B shares were subsequently cancelled. Each Common Share held by Vector Capital was converted into 3.5 Corel New shares. On June 25, 2004, Class B Common Shares (“Class B”) were created, and the Corel New shares were re-designated to Class A Common Shares (“Class A”).

Common shares— Class A

      At November 30, 2004 and 2005, there was an unlimited number of voting Class A common shares authorized. Class A shares are convertible to Class B shares at the option of the shareholder on a one-to-one basis. On June 25, 2004, 7,941,379 Class A shares were converted to Class B shares. As of November 30, 2004, there were 3,735,949 Class A shares outstanding.

      On September 29, 2005, 4,270 Units were exercised at the discretion of the Committee administering the stock option plan resulting in an additional 4,270 Class A shares being issued. As of November 30, 2005, there were 3,740,219 Class A shares outstanding.

Common shares— Class B

      At November 30, 2004 and 2005, there was an unlimited number of voting Class B common shares authorized. On June 25, 2004, 7,941,379 Class A shares were converted to Class B shares. On September 25, 2004, Corel acquired the outstanding shares of Jasc (note 8). As part of this transaction, 379,677 Class B shares were issued to former Jasc shareholders and assigned a value of $2,445. As of November 30, 2004 and 2005, there were 8,321,056 Class B shares outstanding.

Preferred shares

      There are an unlimited number of preferred shares authorized, issuable in series that may be designated by the Company’s board of directors. The board has created one series of preferred shares that are participating, convertible, non-voting, non-redeemable Series “A” Preferred Shares (“Preferred”) and authorized an unlimited number of those shares. They are entitled to participate equally with the Common Shares with respect to the payment of dividends, other than dividends payable in the form of Common Shares. Each Preferred share is convertible into Class A Common Shares. In the event of liquidation, the greater of $0.837 and $16.947 per share at November 30, 2005 and November 30, 2004, respectively, plus all accrued and unpaid dividends, and the amount per share that could be distributed to common shareholders, assuming the conversion of the Preferred shares, would be distributed to the holders of the Preferred shares. If such a payment is made, Preferred shareholders will have no further claim on the Company’s assets.

F-30

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

      As of November 30, 2002, there were 24,000,000 Predecessor Series A Preferred Shares (“Predecessor Preferred”) issued and outstanding with the same rights as the Preferred shares. On March 24, 2003, Vector Capital acquired 22,890,000 of the Predecessor Preferred shares. On August 18, 2003, Vector Capital converted 12,500,000 of those shares into Common Shares. The balance of the Predecessor Preferred shares held by other shareholders were converted to Common Shares. As a result of the acquisition of the Company by Vector Capital, the remaining 10,390,000 shares of the Predecessor Preferred shares held by Vector Capital were exchanged one for one into Preferred shares.

      There were 3,105,320 Preferred shares outstanding at November 30, 2005 and November 30, 2004.

WinZip Common

      The Company’s financial statements are presented on a combined basis with WinZip. WinZip’s equity at November 30, 2005 consisted of 50,000 shares of voting common stock authorized, with a par value of $1.00 of which 20,000 shares were issued and outstanding.

Dividends and paid-up capital reductions

      During fiscal 2005, Corel paid a cash dividend of $2,135 to certain holders of Class B shares and returned paid-up capital of $83,146 to its preferred and common shareholders. Also during fiscal 2005, WinZip paid a cash dividend of $12,000 to its shareholders. In fiscal 2004, Corel returned paid-up capital of $40,952 to its preferred and common shareholders. In the period from August 29, 2003 to November 30, 2003, Corel repurchased common shares for $69,750 as part of Vector’s acquisition of the Company and returned paid-up capital of $4,146.

2003 Share Option and Phantom Share Unit Plan

      On December 1, 2003, the Board of Directors approved the Stock Option and Phantom Share Unit Plan (“2003 Plan”). The 2003 Plan is administered by a Committee (“the Committee”), appointed by the Board of Directors. The Committee has sole and absolute discretion to grant Units, which consist of a stock option (“option”) together with a Phantom Share Unit (“PSU”), to eligible persons. All employees and officers of Corel are eligible persons. Corel has 1,520 Class A Common Shares reserved for issuance under the 2003 Plan as of November 30, 2005.

      Upon exercise of the stock option component, the Company would deliver to the optionee Class A common shares. A PSU allows the holder to receive a payment equal to the fair market value of a Class A Share at the exercise date, less the exercise price of the PSU, under certain conditions. Exercise of the PSU can only occur at the approval of the Committee. Therefore, Corel has determined that the PSU does not constitute a liability and has no value. If the option component is exercised, the PSU component will be terminated and may not be exercised. If the PSU component is exercised, the option component will be terminated and may not be exercised. The exercise price is determined at the date of the grant, and shall be the same for both components of the Unit. Units vest equally over four years on the anniversary of the grant date, and generally expire ten years after the grant date. The stock option components of the Units cannot be exercised prior to an initial public offering (“IPO”), unless authorized by the Committee.

      If any employees cease to be eligible for the 2003 Plan as a result of resignation, they have 30 days after the termination date to exercise any Units that were exercisable on the termination date. If any employees cease to be eligible for the 2003 Plan as a result of termination, they have 90 days after the termination date to exercise any Units that were exercisable on the termination date.

      In fiscal 2005, performance awards in respect of 149,827 Class A common shares were issued to senior executives under the 2003 Plan, which entitles them to receive Units upon attaining identified performance goals. Vesting conditions are based solely on the satisfaction of performance conditions. These awards are

F-31

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

accounted for as equity grants with reversal of recognized compensation cost if the award fails to vest. Included in stock-based compensation expense is $627 for these performance awards.

      The following table shows total stock-based compensation expense included in the consolidated statement of operations:

	Year Ended
	November 30,
	2005		2004
Cost of products	$	15	$	7
Cost of maintenance and services		4		2
Sales and marketing		583		76
Research and development		197		61
General and administration		932		79
Total stock-based compensation expense	$	1,731	$	225

      As of November 30, 2005, $7,844 of total unrecognized compensation costs related to non-vested awards is expected to be recognized over a weighted average period of 2.61 years. There were no capitalized stock-based compensation costs at November 30, 2005 and November 30, 2004.

      Corel estimates the fair value of its Units for financial accounting purposes using the Black-Scholes model, which requires the input of subjective assumptions, including expected life of the option, risk-free interest rate, dividend rate, future volatility of the price of the Company’s common shares and substantive vesting period. Changes in subjective input assumptions can materially affect the fair value estimate. Prior to this offering, there has been no active market for the Company’s common shares. Thus, it was not possible to estimate expected volatility of the Company’s share price in estimating fair value of Units granted. Accordingly, as a substitute for such volatility, the Company used the historical volatility of the U.S. Dow Jones Software and Computer Services Index, representing the primary industry in which the Company operates.

      The fair value of all Units granted during fiscal 2005 and 2004 was estimated as of the date of grant using the following weighted average assumptions:

	Year Ended
	November 30,
	2005			2004
Expected option life (years)		7			7
Volatility		39.18	%		40.90	%
Risk free interest rate		4.36	%		4.71	%
Dividend yield		nil			nil

F-32

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

      All Units were granted with an exercise price of $1.17 up to November 2005. In November 2005, Units were granted with an exercise price of $13.82. Unit activity for fiscal 2005 and 2004 is presented below:

	November 30, 2005							November 30, 2004
						Weighted							Weighted
				Weighted		Average					Weighted		Average
				Average		Grant					Average		Grant
				Exercise		Date Fair					Exercise		Date Fair
	Units			Price		Value		Units			Price		Value
Outstanding at beginning of period		468,381		$	1.17	$	2.58		nil		$	nil	$	nil
Units granted		955,395			1.41		9.60		501,806			1.17		2.69
Units exercised		(4,270	)		1.17		2.23		nil			nil		nil
Units forfeited		(38,156	)		1.17		4.45		(33,425	)		1.17		2.11
Outstanding at end of period		1,381,350		$	1.17				468,381		$	1.17
Exercisable at end of period		nil							nil
Weighted average fair value of outstanding Units	$	6.91						$	2.58
Weighted average remaining life of the outstanding Units		2.61  Years							3.13 Years

2006 Equity Incentive Plan

      A new equity incentive plan was adopted by the Board of Directors in February 2006 (“2006 Equity Incentive Plan”). This plan provides for the grant of options to employees and employees of the Company’s subsidiaries, and restricted shares, share appreciation rights, restricted share units, performance share units, deferred share units, phantom shares and other share-based awards to the Company’s employees, consultants and directors, and employees, consultants and directors of the Company’s subsidiaries and affiliates. Corel will have 4,269,656 common shares, less the number of options granted under the 2003 Plan through the closing of the IPO, authorized for issuance under the 2006 Equity Incentive Plan.

WinZip’s stock option plan

      In October 2005, WinZip established the 2005 Class B Unit Option Plan (“2005 WinZip Plan”). There are 3,000,000 Class B Units of WinZip Computing LLC reserved for issuance under the 2005 WinZip Plan to provide incentive to employees, directors and consultants. As of November 30, 2005, there were no options issued under this plan. Upon the closing of the WinZip acquisition, any options then outstanding under the 2005 WinZip Plan will be replaced with stock options under the 2006 Equity Incentive Plan. On December 1, 2005, options to purchase 855,000 Class B Units were issued under the 2005 WinZip Plan.

Employee pension plans

      Corel maintains a retirement savings plan for its Canadian employees, and also operates various other defined contribution benefit plans for some non-Canadian employees. While the specifics of each plan are different in each country, the Company contributes amounts related to the level of employee contributions. These contributions are subject to maximum limits and vesting provisions, and can be discontinued at the Company’s discretion.

F-33

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

      The pension costs in fiscal 2005, 2004, for the period August 29, 2003 to November 30, 2003, and for the period December 1, 2002 to August 28, 2003, were $781, $272, $68, and $213, respectively. The increase in fiscal 2005 from fiscal 2004 is primarily related to the implementation of the Canadian plan and the inclusion of the WinZip 401(k) plan.

15.  Restructuring Charges

      During the three months ended November 30, 2003, the Company underwent an organizational restructuring that resulted in the termination of 124 employees, resulting in a $1,138 charge to operating results for severance costs. All amounts relating to this charge were paid in the period ended November 30, 2003, and there were no future service requirements from affected employees.

      During fiscal 2004, Corel continued the organizational restructuring that resulted in the termination of an additional 104 employees including 5 senior executives, resulting in a $3,520 charge to operating results for severance costs. All amounts relating to this charge were paid in fiscal 2004 and there were no future service requirements from affected employees.

      In fiscal 2005, Corel integrated Jasc’s operations, and eliminated redundant positions across all functions in both organizations, resulting in an $834 charge to operating results for severance and related costs. As of November 30, 2005, the Company had no material accruals for any further restructuring charges.

16. Earnings (loss) per share

      The Company has used the ‘two class’ method to compute earnings (loss) per share.

      Basic earnings (loss) per share is computed for each class of common shares by adding the distributed earnings and the undistributed earnings (loss) for the period, to the extent the class may share in the earnings (loss), and then dividing the total by the adjusted weighted average number of shares in the class to which the earnings are allocated.

      Diluted earnings (loss) per share is computed for each class of common shares by adding the distributed earnings and the undistributed earnings (loss) for the period, to the extent the class may share in the earnings (loss), and then dividing the total by the adjusted weighted average number of shares in the class to which the earnings are allocated. The weighted average number of shares is adjusted to include potentially dilutive securities outstanding during the period. Such securities are the incremental Class A shares issuable upon the exercise of Units, and the assumed conversion of the preferred shares.

F-34

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

      The following tables set forth the reconciliation of the numerator and denominator used in the computation of basic and diluted net income (loss) per class of common share (in thousands):

		Owned by Vector Capital									Predecessor
		Year Ended						August 29, 2003 to			December 1, 2002
		November 30,						November 30, 2003			to August 28, 2003
		2005			2004
		(Combined)
Net income (loss)		$	(8,753	)	$	1,207		$	(9,272	)	$	(27,895	)
Less: dividends and paid up capital distributions			(97,281	)		(40,952	)		(4,146	)		—
Total loss allocable to shareholders		$	(106,034	)	$	(39,745	)	$	(13,418	)	$	(27,895	)
Class A Common Shares
Numerator
	Distributed earnings to class	$	21,018		$	22,709		$	3,275		$	—
	Loss allocable to class		(29,991	)		(22,040	)		(13,418	)		(27,895	)
	Numerator for basic and diluted earnings (loss) per share		(8,973	)		669			(10,143	)		(27,895	)
Denominator
	Weighted average number of shares		3,737			8,218			11,677			91,853
Class B Common Shares
Numerator
	Distributed earnings to class	$	46,800		$	9,663		$	N/A		$	N/A
	Loss allocable to class		(66,781	)		(9,378	)		N/A			N/A
	Numerator for basic and diluted earnings (loss) per share		(19,981	)		285			N/A			N/A
Denominator
	Weighted average number of shares		8,321			3,497			N/A			N/A
WinZip Common Shares
Numerator
	Distributed earnings to class	$	12,000		$	N/A		$	N/A		$	N/A
	Loss allocable to class		(9,262	)		N/A			N/A			N/A
	Numerator for basic and diluted earnings (loss) per share		2,738			N/A			N/A			N/A
Denominator
	Weighted average number of shares		20			N/A			N/A			N/A

      The impact of the assumed conversion of preferred shares and exercise of Units is anti-dilutive in all periods presented. Potentially dilutive instruments for fiscal 2005 and 2004 represent the weighted average number of common shares subject to Units outstanding of 965 and 432, respectively, and the assumed conversion of preferred shares outstanding of 3,105 for all periods presented, excluding the period from December 1, 2002 to August 28, 2003, which had 24,000 preferred shares outstanding. There were no potentially dilutive instruments for WinZip for the periods presented.

F-35

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

17. Segment Reporting

      The Company has assessed its business in accordance with SFAS No. 131, “Disclosures About Segments of an Enterprise and Related Information” (“SFAS 131”). As of November 30, 2005, the Company has determined that it operates in one business operating and reportable segment, the packaged software segment (see note 2 for significant accounting policies). WinZip operates in one business operating and reportable segment, the packaged software segment. This determination is consistent with the method by which the companies are currently being managed and evaluated. The packaged software segments of the companies have been combined for presentation purposes.

      Corel’s packaged software segment derives its revenues from two product lines, identified by the markets which they serve: productivity and graphics and digital imaging.

      The Company’s Chief Executive Officer is the chief decision maker who evaluates the performance of the segment based on product net revenues and aggregate operating expenses of the packaged software segment.

      The Company’s operations outside Canada and the United States include wholly-owned subsidiaries in Europe, the Asia-Pacific region and Latin America. Operations in Canada and the United States are responsible for the design and development of all the products, as well as product distribution. Net revenues are attributed to each region based on the location of the customer. The majority of the revenues in North America are derived from customers in the United States. Long-lived assets in geographic regions other than Canada are immaterial. As a result, the Company does not disclose such information.

F-36

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

      Revenues by product and region and details regarding major external customers are disclosed in the following table:

			Owned by Vector Capital						Predecessor
			Year Ended						December 1,
			November 30,				August 29, to		2002 to
							November 30,		August 28,
			2005		2004		2003		2003
			(combined)
By product:
	Productivity		$	67,597	$	49,775	$	9,983	$	39,768
	Graphics and Digital Imaging			96,447		61,828		13,180		43,827
	Discontinued Products			—		89		643		1,791
			$	164,044	$	111,692	$	23,806	$	85,386
By geographic region:
	Americas
		Canada	$	7,154	$	8,460	$	2,167	$	5,157
		United States		93,574		56,069		9,246		47,560
		Other		3,289		2,683		963		2,912
	Europe, Middle East, Africa (EMEA)			48,752		38,673		10,069		24,647
	Asia-Pacific			11,275		5,807		1,361		5,110
			$	164,044	$	111,692	$	23,806	$	85,386
By major customer:
	Company A		$	22,213	$	7,088	$	1,911	$	3,997
	Company B			7,548		16,362		3,691		16,059
	All others			134,283		88,242		18,204		65,330
			$	164,044	$	111,692	$	23,806	$	85,386

F-37

COREL CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

18. Subsequent events

      On December 1, 2005, Corel reorganized its share capital by way of amalgamation with a wholly-owned subsidiary. All of the outstanding preferred shares, Class A common shares and Class B common shares of the Company were converted into common shares in accordance with their respective percentage equity interests in Corel prior to the reorganization. In addition, in connection with the combination of WinZip, the common shares of WinZip will be acquired by Corel in consideration for the issuance by Corel to Vector Capital of 4,322,587 common shares of Corel. The combination is a transaction between entities under common control, and will be accounted for as a related party transaction. Accordingly, the fair value of the 4,322,587 Corel common shares that will be issued as consideration for the transaction will be recorded as share capital and any difference between this and the carrying amount of WinZip’s net assets will be treated as a dividend.

      After completion of the equity recapitalization, the authorized share capital of Corel consists of an unlimited number of preferred shares, issuable in series, none of which series have been authorized and an unlimited number of common shares. As of December 1, 2005, there are 15,166,595 common shares and no preferred shares outstanding. The pro forma loss per share appearing on the face of the Statement of Operations reflects the equity recapitalization, the reverse split of Corel’s common shares and the issuance of common shares resulting from the combination of WinZip and is calculated using the treasury method, as shown below:

Numerator
	Net loss	(8,753	)
Denominator
	Weighted average number of Class A converted to Corel common	3,737
	Weighted average number of Class B converted to Corel common	8,321
	Weighted average number of Preferred converted to Corel common	3,105
	Weighted average number of Corel common issued upon combination of WinZip	4,323
		19,486

      In March 2006, WinZip paid a dividend of $7.5 million.

F-38

Report of Independent Auditors

To the Shareholder of

WinZip Computing, Inc.:

      In our opinion, the accompanying balance sheets and the related statements of operations, of cash flows and of shareholder’s deficit present fairly, in all material respects, the financial position of WinZip Computing, Inc. at January 17, 2005 and November 30, 2004 and 2003, and the results of its operations and its cash flows for the period from December 1, 2004 through January 17, 2005 and the years ended November 30, 2004 and 2003 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/  PricewaterhouseCoopers LLP

March 7, 2006

Hartford, Connecticut

F-39

WINZIP COMPUTING, INC.

BALANCE SHEETS

(in thousands of US dollars, except share data)

					November 30,
		January 17, 2005			2004			2003
Assets
Current assets
	Cash	$	564		$	828		$	572
	Restricted cash		65			65			65
	Accounts receivable, net of allowance		1,833			1,594			2,145
	Other current assets		35			52			51
Total current assets			2,497			2,539			2,833
Fixed assets, net of accumulated depreciation			192			189			214
Other non-current assets			6			6			8
Total assets		$	2,695		$	2,734		$	3,055
Liabilities and shareholder’s deficit
Current liabilities
	Accounts payable and accrued liabilities	$	588		$	778		$	849
	Deferred revenue, current portion		22,593			22,056			22,630
Total current liabilities			23,181			22,834			23,479
Deferred revenue, net of current portion			43,454			44,596			48,048
Total liabilities			66,635			67,430			71,527
Commitments and contingencies (Note 6)
Shareholder’s deficit
	Share capital, 1,000 common shares authorized, no par value, 100 shares issued and outstanding at January 17, 2005, November 30, 2004 and 2003		1			1			1
	Accumulated deficit		(63,941	)		(64,697	)		(68,473	)
Total shareholder’s deficit			(63,940	)		(64,696	)		(68,472	)
Total liabilities and shareholder’s deficit		$	2,695		$	2,734		$	3,055

The accompanying notes are an integral part of these financial statements.

F-40

WINZIP COMPUTING, INC.

STATEMENTS OF OPERATIONS

(in thousands of US dollars)

					Year Ended
		December 1, 2004			November 30,
		through
		January 17, 2005			2004			2003
Revenues		$	3,260		$	24,928		$	25,259
Cost of revenues			126			499			427
Gross profit			3,134			24,429			24,832
Operating expenses
	Sales and marketing		602			2,304			2,331
	Research and development		1,026			2,841			1,921
	General and administrative		2,191			3,750			4,345
Total operating expenses			3,819			8,895			8,597
Income (loss) from operations			(685	)		15,534			16,235
Other expenses (income)
	Interest income		—			—			(2	)
	Other non-operating (income) expense		—			(11	)		11
Net income (loss)		$	(685	)	$	15,545		$	16,226

The accompanying notes are an integral part of these financial statements.

F-41

WINZIP COMPUTING, INC.

STATEMENTS OF CASH FLOWS

(in thousands of US dollars)

						Year Ended
			December 1, 2004			November 30,
			through
			January 17, 2005			2004			2003
Cash flows from operating activities:
Net income (loss)			$	(685	)	$	15,545		$	16,226
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
		Depreciation and amortization		7			66			71
		Loss on disposal of assets		—			—			11
Changes in operating assets and liabilities:
		Accounts receivable		(239	)		551			(395	)
		Other assets		17			1			53
		Accounts payable and accrued liabilities		(190	)		(73	)		(135	)
		Deferred revenue		(605	)		(4,024	)		(2,624	)
Net cash (used in) provided by operating activities				(1,695	)		12,066			13,207
Cash flows from investing activities:
		Purchases of fixed assets		(10	)		(41	)		(56	)
Net cash used in investing activities				(10	)		(41	)		(56	)
Cash flows from financing activities:
	Release of restricted cash			—			—			65
	Capital contribution			1,450			—			—
	Dividends paid			(9	)		(11,769	)		(13,388	)
Net cash provided by (used in) financing activities				1,441			(11,769	)		(13,323	)
Net (decrease) increase in cash				(264	)		256			(172	)
Cash, beginning of period				828			572			744
Cash, end of period			$	564		$	828		$	572

The accompanying notes are an integral part of these financial statements.

F-42

WINZIP COMPUTING, INC.

STATEMENTS OF SHAREHOLDER’S DEFICIT

(in thousands of US dollars, except share data)

		Common stock
						Accumulated
		Shares		Amount		Deficit			Total
Balances, November 30, 2002			100	$	1	$	(71,311	)	$	(71,310	)
	Net income		—		—		16,226			16,226
	Dividends		—		—		(13,388	)		(13,388	)
Balances, November 30, 2003			100	$	1	$	(68,473	)	$	(68,472	)
	Net income		—		—		15,545			15,545
	Dividends		—		—		(11,769	)		(11,769	)
Balances, November 30, 2004			100	$	1	$	(64,697	)	$	(64,696	)
	Net loss		—		—		(685	)		(685	)
	Dividends		—		—		(9	)		(9	)
	Capital contribution		—		—		1,450			1,450
Balances, January 17, 2005			100	$	1	$	(63,941	)	$	(63,940	)

The accompanying notes are an integral part of these financial statements.

F-43

WINZIP COMPUTING, INC.

NOTES TO FINANCIAL STATEMENTS

(in thousands of US dollars, except share data)

1. Nature of Operations

      WinZip Computing, Inc. (“WinZip” or the “Company”) was incorporated in 1993 in the state of Connecticut as an S Corporation. The Company is the creator of a Windows-based data compression utility WinZip. The Company develops and licenses its product to individuals, businesses and other entities. On January 18, 2005, the Company was acquired by a venture capital investor (Note 8).

2. Summary of Significant Accounting Policies

Basis of presentation

      All amounts included herein are expressed in thousands of US dollars unless otherwise noted.

Use of estimates and assumptions

      The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Examples of estimates include the allowance for doubtful accounts, accruals for services and goods received but not yet invoiced, the period of time during which post contract support is expected to be provided and the useful lives of fixed assets. Actual results may differ from these estimates.

Software revenue recognition

      The Company recognizes revenue for its products and related royalties in accordance with Statement of Position (“SOP”) 97-2, “Software Revenue Recognition”, as amended by SOP 98-9. This SOP states that revenue earned from software arrangements involving multiple elements should be allocated to each element based on the vendor-specific objective evidence (“VSOE”) of the relative fair value of the elements.

      The Company derives its revenue by either licensing its product or receiving royalties from the distribution of its product by foreign resellers. The Company exercises judgment and uses estimates in determining the amount of revenue to be recognized in each accounting period. WinZip recognizes revenue when there is persuasive evidence that an arrangement exists, the Company has delivered the software, the fee is fixed or determinable, and collection of the fee is considered probable.

Product revenue

      The Company’s software is generally licensed under agreements which include a perpetual product license, post contract support (“PCS”) entitling customers to email assistance and software patches, and software upgrades on a when and if available basis. The PCS and software upgrades are contractually provided for a defined period of time, generally 2 years for customers who purchase greater than 200 seat licenses and 6 months for all other customers. All of these elements are distributed as one bundle at a single price and none of the elements have been sold separately, and as a result VSOE for the separate elements does not exist.

      While the customer is contractually entitled to the PCS and software upgrades for only a defined period of time, the Company’s historical practice has been to provide such services to all customers without limitation. In practice, customers have received all upgrades made generally available without charge since the initial introduction of the product. As such, the PCS and software upgrades have been treated as an implicit PCS arrangement for revenue recognition purposes. This practice has been changed effective January 2005, and the Company now offers license-holders PCS for an additional fee. Under this new policy, PCS consists of technical support and the right to unspecified upgrades on a when-and-if-available basis. PCS is now available

F-44

WINZIP COMPUTING, INC.

NOTES TO FINANCIAL STATEMENTS—(Continued)

in one-year terms and must be purchased separately at a standard percentage of the current list price of the software license.

      Through January 17, 2005, since VSOE for separate elements did not exist and the Company’s practice was to provide PCS services beyond the PCS contractual period, the Company recognized its product revenue on a straight-line basis over a six-year period beginning at the time the product was delivered. The six-year period was considered the best estimate of the period over which the PCS was expected to be provided to its customers and the Company considered such factors as the life of computer hardware, the length of time that the Company has followed its practice and the time between product version upgrades.

      Deferred revenue relates primarily to cash received for license and maintenance contracts in advance of service performed and is recognized over a six-year period as described above.

International Royalties

      The Company receives royalty payments under certain license, marketing and distribution agreements with foreign republishers. Under these agreements, the Company provides each foreign republisher the exclusive right to develop and license the local language version of the WinZip product worldwide. The republisher also has the non-exclusive right to license the English language version. The Company provides a master license to its foreign republishers and does not have any other continuing obligation to provide additional products or services to the republisher or its end-user customer. The republishers are solely responsible for localizing the product and providing any PCS.

      The Company recognizes revenue when the republisher sells the WinZip product to the end customer, assuming all other revenue recognition criteria have been met. The Company’s revenue is based on monthly royalty reports, prepared by the republisher, which provide evidence of the product deliveries. The revenue earned is based on fees, which are usually a fixed percentage of the products’ suggested retail selling price.

Concentration of credit risk

      Statement of Financial Accounting Standards (“SFAS”) No. 105, “Disclosure of Information about Financial Instruments with Off-Balance Sheet Risk and Financial Instruments with Concentrations of Credit Risk”, requires disclosures of any significant off-balance sheet and credit risk concentration. As of January 17, 2005, November 30, 2004 and November 30, 2003 the Company had no significant off-balance sheet or credit risk concentrations such as foreign currency exchange contracts or other hedging instruments.

      The Company maintains a relationship with an e-commerce fulfillment company that has a non-exclusive right to resell WinZip products over the Internet. Sales are recorded gross of commissions and chargeback fees which are included in cost of revenues. For the periods ended January 17, 2005, November 30, 2004 and November 30, 2003, approximately $816, $770 and $1,298 of the accounts receivable balance was due from the Company’s e-commerce fulfillment company. For the 48-day period ended January 17, 2005 and fiscal years ended November 30, 2004 and 2003, approximately $1,209, $12,329 and $11,940 of total revenue was through this fulfillment company.

Restricted cash

      WinZip maintained restricted cash of approximately $65 at January 17, 2005, November 30, 2004 and 2003, which represents a cash deposit for the Company’s leased premises. Restricted cash is recorded at cost and included as a separate line item on the balance sheets.

F-45

WINZIP COMPUTING, INC.

NOTES TO FINANCIAL STATEMENTS—(Continued)

Fair value of financial instruments

      The carrying amounts for cash, accounts receivable, accounts payable and accrued liabilities approximate fair value due to the short maturity of these instruments.

Fixed assets

      Fixed assets are recorded at cost, less accumulated depreciation and amortization. Expenditures for repairs and maintenance are charged to expense as incurred while those relating to major improvements are treated as capital additions and depreciated over the remaining useful life of the related asset. For assets sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in income for the period. Depreciation and amortization are calculated using the straight-line method with the following estimated useful lives:

Furniture and fixtures	7 years
Computer equipment	5 years
Automobiles	5 years
Leasehold improvements	the shorter of 3 years (minimum lease term) or the economic life

      The Company evaluates the recoverability of its long-lived assets in accordance with SFAS No. 144, “Accounting for the Impairment of Long-Lived Assets to be Disposed of”. The Company assesses potential impairments to its long-lived assets when there is evidence that events or changes in circumstances have made recovery of the assets’ carrying value unlikely. An impairment loss would be recognized when the sum of the expected future undiscounted net cash flows is less than the carrying amount of the asset. The Company has identified no such impairment losses.

Software development costs

      The Company accounts for internally developed software costs in accordance with SFAS No. 86, “Accounting for the Costs of Software to be Sold, Leased, or Otherwise Marketed” (“SFAS 86”). SFAS 86 requires product development costs to be charged to expense as incurred until technological feasibility is established. The Company’s software development costs include application and tools development, testing, translation, and localization costs incurred in production software to be licensed to customers. Technological feasibility is established at the point in which a working model of the product has been completed and completeness of the working model and its consistency with the product design has been confirmed by testing. The time between the establishment of technological feasibility and general release of the product is traditionally short, and to date, costs incurred during this period have not been material. Accordingly, the Company did not capitalize any development costs in the fiscal periods ended January 17, 2005, November 30, 2004 and November 30, 2003.

Income taxes

      The Company has elected to be treated as an S-Corporation and accordingly, Federal and Connecticut income taxes on the Company’s income are the responsibility of the shareholder and not the Company. Accordingly, no provision for Federal and Connecticut income taxes has been recorded in the accompanying Statements of Operations.

Advertising costs

      Advertising costs are expensed as incurred, and were approximately $191, $1,546 and $1,516 for the fiscal periods ended January 17, 2005, November 30, 2004 and November 30, 2003, respectively.

F-46

WINZIP COMPUTING, INC.

NOTES TO FINANCIAL STATEMENTS—(Continued)

Shipping and handling

      The Company records the amounts it charges its customers for shipping and handling the software products as revenues, and records the related costs as a cost of revenues on the Statement of Operations. Revenues from shipping and handling are not significant.

Stock compensation

      The Company has not participated in any stock compensation plans and no awards have been issued since its inception.

Recent accounting pronouncements

      In November 2002, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (“FIN 45”). FIN 45 requires a company, at the time it issues a guarantee, to recognize an initial liability for the fair value of obligations assumed under the guarantees and warranties. The initial recognition requirements of FIN 45 were effective for guarantees issued or modified after December 31, 2002, and adoption of the disclosure requirements was effective for fiscal years ending after December 31, 2002. As of January 17, 2005 the Company does not have any guarantees of indebtedness.

      In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections”. This Statement replaces APB Opinion No. 20, “Accounting Changes”, and FASB Statement No. 3, “Reporting Accounting Changes in Interim Financial Statements”, and changes the requirements for the accounting for and reporting of a change in accounting principle. This Statement applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. This statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Company does not expect the adoption of this Statement to have a material impact on the financial statements of the Company.

3. Accounts Receivable and Allowance for Doubtful Accounts

      Receivables are net of the allowance for doubtful accounts. The allowance for doubtful accounts is a reserve established through a provision for bad debts charged to expense and represents the Company’s best estimate of probable losses resulting from non-payment of amounts recorded in accounts receivable. The allowance for doubtful accounts is as follows:

			November 30,
	January 17,
	2005		2004		2003
Gross accounts receivable	$	1,840	$	1,601	$	2,145
Less: allowance for doubtful accounts		7		7		—
	$	1,833	$	1,594	$	2,145

F-47

WINZIP COMPUTING, INC.

NOTES TO FINANCIAL STATEMENTS—(Continued)

4. Fixed Assets

				November 30,
		January 17,
		2005		2004		2003
Fixed Assets
	Automobile	$	9	$	9	$	9
	Equipment		382		372		331
	Leasehold improvements		10		10		10
			401		391		350
	Less: accumulated depreciation		209		202		136
	Fixed assets, net	$	192	$	189	$	214

      Depreciation expense for the periods ended January 17, 2005, November 30, 2004 and November 30, 2003 was $7, $66 and $71, respectively.

5. Accounts Payable and Accrued Liabilities

			November 30,
	January 17,
	2005		2004		2003
Trade accounts payable	$	382	$	288	$	286
Accrued payroll		109		74		80
Accrued vacation		97		100		91
Accrued bonus		—		302		306
Accrued consulting fees		—		12		82
Accrued bank fees		—		2		4
	$	588	$	778	$	849

6. Commitments and Contingencies

      WinZip rents office space pursuant to a lease agreement with a term that expires in May 2006. This lease agreement includes a 3-year extension option at a rate based on the then current annual rent adjusted for the percentage of change in the Consumer Price Index for the two years prior. At January 17, 2005, the future minimum lease payments required under the operating lease agreement are as follows:

	Lease
Remainder of fiscal 2005	$	82
Fiscal 2006		49
	$	131

      Lease expense totaled $20, $100 and $87 in the periods ended January 17, 2005, November 30, 2004 and November 30, 2003, respectively.

      From time to time the company is involved in various disputes and litigation matters that arise in the ordinary course of business. As of the time of this report there were no material pending legal proceedings to which the Company is party.

F-48

WINZIP COMPUTING, INC.

NOTES TO FINANCIAL STATEMENTS—(Continued)

7. Employee Benefit Plan

      The Company maintains a 401(k) and profit sharing defined contribution benefit plan that covers all eligible employees who have attained 21 years of age and provided at least three months of service. This plan allows employees to contribute up to 60% of their pre-tax annual salary up to a defined maximum (currently $13). The Company matches a portion of the employee contributions, up to 6% of their annual salary, vesting immediately. Employer contributions, which may be discontinued at the Company’s discretion, amounted to $99, $151 and $146 during the periods ended January 17, 2005, November 30, 2004 and November 30, 2003, respectively.

8. Subsequent Events

Acquisition

      On January 18, 2005, Vector WZ Holdings, Ltd. (“Vector”) acquired all the outstanding common shares of WinZip (“the Acquisition”). The Acquisition will be accounted for as a purchase transaction and the results of the purchase accounting are expected to be pushed down to WinZip. Accordingly, the purchase price will be allocated to the assets acquired and liabilities assumed based on estimates of fair value on or about the acquisition date. The excess of the purchase price over the fair value of the net assets acquired will be allocated to goodwill. The accompanying financial statements do not reflect any impact of the Acquisition.

Promissory note and new debt

      As a result of the Acquisition, on January 18, 2005, the Company obtained a 9% secured promissory note (“Acquisition Loan”) for $15 million. The Acquisition Loan was repayable in full at the maturity date of June 29, 2005, along with any unpaid and accrued interest. Interest of 9% per annum accrued on the unpaid principal amount until it was repaid in full.

      On June 29, 2005, the Company secured a new $23 million term loan (“Term Loan”) and a $1 million revolving line of credit (“Revolver”). The proceeds were used to repay in its entirety the Acquisition Loan.

      The Term Loan requires monthly payments of $479 plus interest beginning July 31, 2005 until the maturity date of June 29, 2008. At that time, the remaining principal balance is due. The Term Loan bears interest at prime plus a base rate margin, as defined in the credit agreement. For the first three months, the base rate margin is equal to 5.5%. Subsequently, the base rate margin will be determined by an adjusted leverage ratio. The Company can prepay the outstanding balance at any time and there are mandatory semi-annual payments, beginning December 31, 2005. The semi-annual payment is equal to 75% of the Excess Cash Flow, as defined in the credit agreement, for each 6-month period. The Term Loan is secured by intellectual property and cash collateral accounts and is subject to certain financial covenants as set forth in the credit agreement.

      The Revolver expires on June 29, 2008. Interest on the Revolver accrues at the same rate as the Term Loan. The Revolver is secured by intellectual property and cash collateral accounts.

F-49

Report of Independent Registered Public Accounting Firm

The Board of Directors

Jasc Software, Inc.

      We have audited the accompanying balance sheets of Jasc Software, Inc. as of December 3l, 2003 and 2002, and the related statements of income, changes in shareholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

      We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

      In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Jasc Software, Inc. as of December 31, 2003 and 2002, and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young, LLP

January 30, 2004

Minneapolis, Minnesota

F-50

JASC SOFTWARE, INC.

BALANCE SHEETS

(in thousands of U.S. dollars)

		December 31,
		2003			2002
Assets
Current assets:
	Cash and cash equivalents	$	868		$	802
	Accounts receivable (less allowances for uncollectible accounts and product returns totaling $2,033 in 2003 and $613 in 2002)		7,935			7,056
	Note receivable		60			—
	Inventories		1,162			460
	Prepaid expenses		1,139			335
Total current assets			11,164			8,653
Property and equipment:
	Equipment and software		3,545			3,218
	Leasehold improvements		236			236
			3,781			3,454
	Less accumulated depreciation and amortization		(3,046	)		(2,582	)
			735			872
Restricted cash			—			30
Deposits			43			55
Other assets, net			52			73
Acquired technology, net			589			663
Total Assets		$	12,583		$	10,346

F-51

		December 31,
		2003		2002
Liabilities and stockholders’ equity
Current liabilities:
	Accounts payable	$	2,360	$	803
	Accrued compensation and withholdings		1,055		619
	Accrued profit sharing		—		257
	Accrued distributor discounts		813		539
	Accrued royalties		575		466
	Accrued rebates		784		514
	Other accrued liabilities		575		832
	Customer deposits		101		226
	Current portion of capital lease obligation		3		—
Total current liabilities			6,266		4,256
Capital lease obligation, less current portion			4		—
Stockholders’ equity:
	Preferred stock, $0.01 par value; authorized shares—5,000,000; issued and outstanding—none		—		—
	Common stock, $0.01 par value; authorized shares—10,000,000; issued and outstanding—4,405,000		44		44
	Additional paid-in capital		1,512		1,512
	Retained earnings		4,757		4,534
Total stockholders’ equity			6,313		6,090
Total liabilities and stockholders’ equity		$	12,583	$	10,346

See accompanying notes.

F-52

JASC SOFTWARE, INC.

STATEMENTS OF INCOME

(in thousands of U.S. dollars)

		Year Ended
		December 31,
		2003			2002
Net sales		$	32,841		$	27,293
Cost of goods sold			6,736			5,077
Gross profit			26,105			22,216
Operating Expenses:
	General and administration		5,079			4,283
	Marketing and selling		10,497			8,204
	Product development		6,797			7,502
	Profit sharing compensation		728			778
			23,101			20,767
Income from operations			3,004			1,449
Interest expense			(1	)		(37	)
Interest Income			12			4
Other (expense) income			(35	)		84
Foreign currency gain			391			350
			367			401
Net income		$	3,371		$	1,850

See accompanying notes.

F-53

JASC SOFTWARE, INC.

STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

(in thousands of U.S. dollars)

	Common Stock
					Additional
	Common		Share		Paid in		Retained
	Shares		Capital		Capital		Earnings			Total
Balance, December 31, 2001		4,405	$	44	$	1,512	$	4,285		$	5,841
Distribution to shareholders		—		—		—		(1,601	)		(1,601	)
Net income		—		—		—		1,850			1,850
Balance, December 31, 2002		4,405		44		1,512		4,534			6,090
Distribution to shareholders		—		—		—		(3,148	)		(3,148	)
Net income		—		—		—		3,371			3,371
Balance, December 31, 2003		4,405	$	44	$	1,512	$	4,757		$	6,313

See accompanying notes.

F-54

JASC SOFTWARE, INC.

STATEMENTS OF CASH FLOWS

(in thousands of U.S. dollars)

			Year Ended
			December 31,
			2003			2002
Net Income			$	3,371		$	1,850
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization			657			888
	Changes in operating assets and liabilities
		Accounts receivable		(939	)		(2,049	)
		Inventories		(701	)		133
		Prepaid expenses		(804	)		(205	)
		Restricted cash		30			30
		Deposits		12			43
		Accounts payable		1,557			145
		Accrued liabilities		574			1,547
		Customer deposits		(125	)		68
Net cash provided by operating activities				3,632			2,450
Investing activities
Purchases of property and equipment				(325	)		(181	)
Acquisition of technology				(90	)		(53	)
Net cash used in investing activities				(415	)		(234	)
Financing activities
Net payments under line of credit				—			(671	)
Distributions to stockholders				(3,148	)		(1,601	)
Payments on obligation under capital lease				(3	)		(188	)
Net cash used in financing activities				(3,151	)		(2,460	)
Net increase (decrease) in cash				66			(244	)
Cash and cash equivalents at beginning of year				802			1,046
Cash and cash equivalents at end of year			$	868		$	802
Supplemental disclosures of cash flow information
Cash paid during the period for interest			$	1		$	37
Property and equipment acquired through capital lease obligation			$	9		$	—

See accompanying notes.

F-55

JASC SOFTWARE, INC.

NOTES TO THE FINANCIAL STATEMENTS

1. Business Activity

      Jasc Software, Inc. (the “Company”) designs, develops, markets and sells general-use digital imaging software throughout the world.

2. Summary of Significant Accounting Policies

Revenue Recognition

      The Company accounts for the licensing of software in accordance with American Institute of Certified Public Accountants Statement of Position 97-2, “Software Revenue Recognition”, as amended. The Company recognizes revenue when (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred or services have been rendered; (iii) the sales price is fixed or determinable; and (iv) collectibility is reasonably assured. The Company recognizes revenue upon shipment of its product in the United States from its distributors to retailers and upon shipment to master representatives, internationally.

      The Company has several retailers in the United States which operate on a consignment basis, where revenue is recognized at the time the retailer sells the Company’s product to the end customer. The Company has two international master representatives with whom it does business on a royalty basis, in which profits are shared and recognized as royalty revenue at the time the master representative sells the Company’s product to the end customer. Royalty revenue of $3,890 and $3,369 is included in net sales for the years ended December 31, 2003 and 2002, respectively.

      The Company offers product right of return terms to certain customers. This right of return is accounted for in accordance with Financial Accounting Standards Board Statement of Financial Accounting Standards (SFAS) No. 48, Revenue Recognition When Right of Return Exists, with returns estimated based on historical activity and reflected as a reduction of revenues.

Shipping and Handling Costs

      The Company classifies costs incurred for shipping in costs of goods sold. Any shipping costs billed to customers are included in revenue.

Cash and Cash Equivalents

      The Company considers all investments with an original term to maturity of 90 days or less when purchased to be cash equivalents. The carrying cost of cash equivalents at December 31, 2003 and 2002 approximates fair value.

Inventories

      Inventories are valued at the lower of cost or market value. Cost is determined on a first-in, first-out basis. Inventories consist of materials and finished goods.

Equipment and Leasehold Improvements

      Equipment and leasehold improvements are recorded at cost and depreciated using the straight-line method over three to seven years. The Company leases equipment under capital leases. Amortization of these leased assets is included in depreciation expense.

F-56

JASC SOFTWARE, INC.

NOTES TO THE FINANCIAL STATEMENTS—(Continued)

Impairment of Long-Lived Assets

      The Company evaluates its long-lived assets for impairment losses when indicators of impairment are present by comparing the undiscounted cash flows to the assets’ carrying amount. An impairment loss is recorded if necessary.

Stock-Based Compensation

      At December 31, 2003 the Company has a stock-based employee compensation plan that is described more fully in Note 8. The Company accounts for this plan under the recognition and measurement principles of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations. No stock-based employee compensation cost is reflected in net income for 2003 and 2002 as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of the grant. The following table illustrates the effect on net income if the Company had applied the fair value recognition provisions of SFAS No 123, Accounting for Stock-Based Compensation, to stock-based employee compensation.

	2003			2002
Net income, as reported	$	3,371		$	1,850
Deduct: total stock-based compensation expense determined under fair-value-based method for all awards		(139	)		(75	)
Pro forma net income	$	3,232		$	1,775

      The fair value of these options was estimated at the date of grant using the minimum fair value option pricing model. The minimum value option pricing model is used by nonpublic companies and excludes stock price volatility of the stock in the calculation of fair value of the option. The following assumptions were used for options granted in 2003: risk free interest rate of 4.06%; dividend yield of 0%; and an expected life of the option of ten years. The fair value of options granted in 2003 and 2002 was $0.66 and $1.26 per share, respectively.

Advertising

      Advertising costs are expensed as incurred and totaled $2,218 and $1,418 in 2003 and 2002, respectively and are included as sales and marketing expenses in the statements of income.

Product Development

      Product development expenditures are charged to operations as incurred, SFAS No. 86, “Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed”, requires capitalization of certain software development costs subsequent to the establishment of technological feasibility and until the product is generally available for sale. Costs incurred by the Company during this phase have been immaterial. Therefore, the Company has not capitalized any software development costs through December 31, 2003.

Other Assets

      Other assets include patent costs that are being amortized over five years. The accumulated amortization as of December 31, 2003, and 2002 was $52 and $31, respectively.

F-57

JASC SOFTWARE, INC.

NOTES TO THE FINANCIAL STATEMENTS—(Continued)

Acquired Technology

      In 2003 and 2002, the Company acquired the technology of certain products. The cost is being amortized on a straight line basis over five years. The accumulated amortization as of December 31, 2003 and 2002, was $312 and $148, respectively.

Income Taxes

      The Company has elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code. Under those provisions, the stockholders of an S corporation are taxed on their proportionate share of the Company’s taxable income. As a result, no provision for federal taxes has been included in the financial statements.

Use of Estimates

      The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Reclassification

      A certain prior year amount has been reclassified to conform to the current year financial statement presentation.

3. Commitments

Royalties

      The Company has entered into various licensing agreements requiring royalty payments ranging from 0.65% to 50% of specified product sales. During 2003 and 2002 the Company recorded royalty expense of $1,772 and $1,390, respectively, which is included in costs of goods sold in the statements of income.

Leases

      The Company leases its office and warehouse space under a noncancelable operating lease agreement. The current operating lease is effective until December 31, 2008. Minimum future lease obligations under this lease, excluding operating costs, are as follows for the years ending December 31:

2004	$	416
2005		424
2006		433
2007		441
2008		450
	$	2,164

      The Company is required to maintain a letter of credit to secure its operating lease. The amount required at December 31, 2003 and 2002, was $30. The Company has a certificate of deposit on hand at a bank for this letter of credit. This amount has been reported as restricted cash in the balance sheet in 2002 and as cash and cash equivalents in 2003 as it becomes unrestricted in January 2004.

      Rent expense for the years ended December 31, 2003 and 2002 was $1,002 and $979, respectively.

F-58

JASC SOFTWARE, INC.

NOTES TO THE FINANCIAL STATEMENTS—(Continued)

4. Financing Agreements

      The Company has a line of credit agreement totaling $30,000 available for borrowings at prime (4.0% at December 31, 2003) through September 15, 2004. Borrowings under the agreement are secured by essentially all assets. The agreement contains certain restrictive covenants. The Company was in compliance with the covenants at December 31, 2003.

5. 401(K) Plan

      The Company has a qualified 401(K) plan covering all employees meeting the eligibility requirement. The Company made matching contributions of $347 and $455 for the years ended December 31, 2003 and 2002, respectively.

6. Profit Sharing Plan

      The Company has a nonqualified profit sharing plan covering all employees meeting eligibility requirements. A fixed percentage of the Company’s operating income is paid out each quarter in the form of taxable distributions. Total expenses under the plan during 2003 and 2002, were $728 and $778, respectively.

7. Significant Concentrations

      One customer accounted for 16% of revenue for the year ended December 31, 2003. Two customers accounted for 11% and 10% of revenue for the year ended December 31, 2002.

8. Stock Options

      The Company has a 1997 Omnibus Stock Plan (the Plan), pursuant to which 1,025,000 shares of common stock are reserved for issuance of incentive or nonqualified stock options to employees, directors, and consultants. The number of shares, exercise price, and option terms are to be determined by a committee designated by the Board of Directors. The options generally vest over five years and expire in ten years.

      Stock option activity is summarized as follows:

				Weighted Average
				Option Price
	Options Outstanding			per Share
Balance at December 31, 2001		476,358		$	3.76
Granted		60,000			3.75
Canceled		(136,566	)		3.75
Balance at December 31, 2002		399,792			3.76
Granted		20,000			3.75
Canceled		(1,652	)		3.75
Balance at December 31, 2003		418,140			3.76

      The options outstanding at December 31, 2003 expire at various dates through 2013 and have a weighted average contractual life remaining of 5.55 years. The exercise price of the outstanding options range from $3.75 to $3.90 per share. The number of options exercisable as of December 31, 2003 and 2002 was 318,381 and 245,441, respectively, at a weighted average exercise price of $3.76 per share.

F-59

JASC SOFTWARE, INC.

INTERIM FINANCIAL STATEMENTS

For nine months ended September 30, 2004

(unaudited)

F-60

JASC SOFTWARE, INC.

BALANCE SHEETS

(in thousands of U.S. dollars, except share and per share data)

		September 30,		December 31,
		2004		2003
		(unaudited)
Assets
Current assets:
	Cash and cash equivalents	$	2,531	$	868
	Net accounts receivable		4,789		7,935
	Note receivable		60		60
	Inventories		1,071		1,162
	Prepaid expenses		1,922		1,139
Total current assets			10,373		11,164
Property and equipment:			677		735
Deposits			—		43
Other assets, net			14		52
Acquired technology, net			501		589
Total Assets		$	11,565	$	12,583
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable		$	2,161	$	2,360
Accrued compensation and withholdings			737		1,055
Other accrued liabilities			2,939		2,747
Customer deposits			196		101
Current portion of capital lease obligation			3		3
Total current liabilities			6,036		6,266
Capital lease obligation, less current portion			2		4
Total Liabilities			6,038		6,270
Commitments and Contingencies
Shareholders’ equity:
Preferred stock, $0.01 par value; authorized shares—5,000,000; issued and outstanding—none			—		—
Common stock, $0.01 par value; authorized shares—10,000,000; issued and outstanding—4,405,000			44		44
Additional paid-in capital			1,512		1,512
Retained earnings			3,971		4,757
Total shareholders’ equity			5,527		6,313
Total liabilities and shareholders’ equity		$	11,565	$	12,583

(See accompanying notes)

F-61

JASC SOFTWARE, INC.

STATEMENTS OF OPERATIONS

(in thousands of U.S. dollars)

		Nine Months
		Ended
		September 30,
		2004			2003
		(unaudited)
Revenues		$	22,705		$	23,794
Cost of goods sold			5,577			4,610
Gross margin			17,128			19,184
Operating expenses
	General and administration		3,660			3,876
	Sales and marketing		7,891			7,580
	Product development		5,490			5,289
Total operating expenses			17,041			16,745
Income from operations			87			2,439
Other expenses (income)
	Interest expense		1			—
	Interest income		(17	)		(10	)
	Other income		(85	)		(11	)
	Foreign exchange		168			(270	)
Total other expense			67			(291	)
Net income		$	20		$	2,730

(See accompanying notes)

F-62

JASC SOFTWARE, INC.

STATEMENTS OF CASH FLOWS

(in thousands of U.S. dollars)

			Nine Months
			Ended
			September 30,
			2004			2003
			(unaudited)
Net Income			$	20		$	2,730
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization			305			492
	Gain on sale of property and equipment			(2	)		—
	Changes in operating assets and liabilities
		Accounts receivable		3,146			(125	)
		Inventories		91			(595	)
		Prepaid expenses		(783	)		(853	)
		Deposits		43			—
		Accounts payable		(199	)		654
		Accrued liabilities		(126	)		—
		Customer deposits		95			86
Cash flows from operations				2,590			2,389
Investing activities
Purchases of property and equipment				(121	)		(207	)
Acquisition of technology				—			(90	)
Proceeds from sale of property and equipment				2			—
Net cash used in investing activities				(119	)		(297	)
Financing activities
Distributions to stockholders				(806	)		(1,683	)
Payments on obligation under capital lease				(2	)		(1	)
Net cash used in financing activities				(808	)		(1,684	)
Net increase in cash				1,663			408
Cash and cash equivalents at beginning of period				868			802
Cash and cash equivalents at end of period			$	2,531		$	1,210

(See accompanying notes)

F-63

JASC SOFTWARE, INC.

STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

(in thousands of U.S. dollars)

	Common Stock
					Additional
	Common		Share		Paid in		Retained
	Shares		Capital		Capital		Earnings			Total
Balance, December 31, 2002		4,405	$	44	$	1,512	$	4,534		$	6,090
Distribution to shareholders		—		—		—		(3,148	)		(3,148	)
Net income		—		—		—		3,371			3,371
Balance, December 31, 2003		4,405	$	44	$	1,512	$	4,757		$	6,313
Distribution to shareholders		—		—		—		(806	)		(806	)
Net income		—		—		—		20			20
Balance, September 30, 2004 (unaudited)		4,405	$	44	$	1,512	$	3,971		$	5,527

(See accompanying notes)

F-64

JASC SOFTWARE, INC.

NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

      All dollar amounts included herein are expressed in thousands of US$ unless otherwise noted. Certain per share information is expressed in units of US$ unless otherwise noted.

      The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”). In management’s opinion, all adjustments necessary for fair presentation are reflected in the financial statements. All adjustments made are normal and recurring in nature. Jasc Software Inc. (“Jasc”) has followed the same accounting policies and methods of application as in the most recent audited financial statements except as stated herein.

Stock-Based Compensation

      The Company has a stock-based employee compensation plan that is accounted for under the recognition and measurement principles of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations. No stock-based employee compensation cost is reflected in net income for nine months ending September 30, 2004 and 2003 as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of the grant. The following table illustrates the effect on net income if the Company had applied the fair value recognition provisions of SFAS No 123, “Accounting for Stock-Based Compensation”, to stock-based employee compensation.

	Nine Months
	Ended Sept 30,
	2004			2003
Net income, as reported	$	20		$	2,730
Deduct: total stock-based compensation expense determined under fair-value-based method for all awards		(101	)		(104	)
Pro forma net income (loss)	$	(81	)	$	2,626

      The fair value of these options was estimated at the date of grant using the minimum fair value option pricing model. The minimum value option pricing model is used by nonpublic companies and excludes stock price volatility of the stock in the calculation of fair value of the option.

Advertising

      Advertising costs are expensed as incurred and totaled $2.8 million and $1.7 million for the nine months ended September 30, 2004 and 2003 respectively and are included as sales and marketing expenses in the statements of income.

F-65

JASC SOFTWARE, INC.

NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS—(Continued)

2. Property and equipment

      The components of property and equipment for the periods presented are as follows:

		September 30,			December 31,
		2004			2003
Cost:
	Equipment and software		3,666			3,545
	Leasehold improvements		236			236
			3,902			3,781
	Less accumulated depreciation		(3,225	)		(3,046	)
Total property and equipment			677			735

3. Contingencies

      At September 30, 2004, the Company was a defendant in a patent infringement proceeding. Compression Labs, Inc. v. Corel Inc. et al. Plaintiff Compression Labs, Inc. filed this patent infringement action on April 22, 2004 against the Company and twenty-seven other defendants in the U.S. District Court for the Eastern District of Texas, alleging infringement of U.S. patent 4,698,672. Plaintiff alleged that the defendants infringe the patent through various implementations of JPEG compression and decompression. Plaintiff sought unspecified damages and attorneys fees. This litigation was settled in January 2006.

4. Significant Concentrations

      One customer accounted for 14% and 10% of revenue for the nine months ended September 30, 2004 and 2003, respectively.

5. Subsequent events

Acquisition

      On October 25, 2004, Corel Corporation (“Corel”) acquired all the outstanding common stock and technology of Jasc and the Company was merged into one of Corel’s wholly owned subsidiaries.

F-66

NOTE: The following compilation report is provided solely in order to comply with applicable requirements of Canadian securities laws. It should be noted that to report in accordance with the U.S. Public Company Accounting Oversight Board Auditing Standards (PCAOBAS) on a compilation of pro forma financial statements an examination greater in scope than that performed under Canadian standards would be required.

COMPILATION REPORT ON PRO FORMA COMBINED CONDENSED

STATEMENT OF OPERATIONS

To the Directors of

Corel Corporation

      We have read the accompanying unaudited pro forma combined condensed statement of operations for the year ended November 30, 2005 of Corel Corporation (the “Company”) and have performed the following procedures.

      1. Compared the figures in the column captioned “Corel Year Ended November 30, 2005 (Combined)” to the audited combined consolidated statement of operations of the Company for the year ended November 30, 2005 and found them to be in agreement.

      2. Compared the figures in the column captioned “WinZip 48-Day Period December 1, 2004 Through January 17, 2005” to the audited financial statements of WinZip Computing, Inc. for the 48 day period ended January 17, 2005 and found them to be in agreement.

      3. Made enquiries of certain officials of the Company who have responsibility for financial and accounting matters about:

      (a) the basis for determination of the pro forma adjustments; and

      (b) whether the pro forma consolidated financial statements comply as to form in all material respects with the regulatory requirements of the various securities commissions and similar regulatory authorities in Canada.

      The officials:

      (a) described to us the basis for determination of the pro forma adjustments; and

      (b) stated that the pro forma consolidated financial statements comply as to form in all material respects with the regulatory requirements of the various securities commissions and similar regulatory authorities in Canada.

      4. Read the notes to the pro forma consolidated financial statements, and found them to be consistent with the basis described to us for determination of the pro forma adjustments.

      5. Recalculated the application of the pro forma adjustments and found the amounts in the column captioned “Pro Forma Year Ended November 30, 2005” to be arithmetically correct.

A pro forma consolidated financial statement is based on management assumptions and adjustments which are inherently subjective. The foregoing procedures are substantially less than either an audit or a review, the objective of which is the expression of assurance with respect to management’s assumptions, the pro forma adjustments, and the application of the adjustments to the historical financial information. Accordingly, we express no such assurance. The foregoing procedures would not necessarily reveal matters of significance to the pro forma consolidated financial statements, and we therefore make no representation about the sufficiency of the procedures for the purposes of a reader of such statements.

(signed) PricewaterhouseCoopers llp

Chartered Accountants

Ottawa, Canada

March 7, 2006

F-67

UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS

      The following unaudited pro forma combined condensed financial statements (“Pro Forma Financial Statements”) and related notes are presented to give effect to:

•   the reorganization of Corel’s share capital (“equity recapitalization”) by way of amalgamation with a wholly-owned subsidiary;

•   the probable combination of WinZip and the issuance of 4,322,587 common shares to Vector Capital as consideration for the acquisition; and

•   the 1.0 for 11.7 reverse split of Corel’s common shares.

      These Pro Forma Financial Statements represent the combined Company’s unaudited pro forma combined condensed statement of operations for the year ended November 30, 2005, assuming the items noted above took place on December 1, 2004.

      This unaudited pro forma combined condensed financial information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have been achieved had the acquisition been consummated as of the date indicated or that may be achieved in the future.

      The unaudited pro forma combined condensed financial information should be read in conjunction with the financial statements and related notes of Corel and WinZip included elsewhere in this Registration Statement.

F-68

COREL CORPORATION

UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS

(in thousands of U.S. dollars, except per share data)

						WinZip
						48-Day
						Period
			Corel Year			December 1,
			Ended			2004						Pro Forma
			November 30,			Through						Year Ended
			2005			January 17,			Pro Forma			November 30,
			(Combined)			2005			Adjustments(1)			2005
Revenues			$	164,044		$	3,260		$	—		$	167,304
Cost of revenues				19,615			126			—			19,741
Amortization of intangible assets				26,139			—			552			26,691
Gross margin				118,290			3,134			(552	)		120,872
Operating expenses
		Sales and marketing		54,056			602			3			54,661
		Research and development		23,538			1,026			3			24,567
		General and administration		19,851			2,191			3			22,045
		Other operating		3,125			—			—			3,125
		Restructuring		834			—			—			834
Total operating expenses				101,404			3,819			9			105,232
Income (loss) from operations				16,886			(685	)		(561	)		15,640
Other income (expenses)
	Loss on debt retirement			3,937			—			—			3,937
	Interest income			(178	)		—			—			(178	)
	Interest expense			12,786			—			—			12,786
	Gain on disposal of investments			(125	)		—			—			(125	)
	Amortization of deferred financing fees			1,756			—			64			1,820
	Other non-operating expense			1,172			—			—			1,172
Loss before taxes				(2,462	)		(685	)		(625	)		(3,772	)
Income tax expense				6,291			—			—			6,291
Net loss			$	(8,753	)	$	(685	)	$	(625	)	$	(10,063	)
Net income (loss) per share(3)
Basic
	Class A		$	(2.40	)								N/A
	Class B		$	(2.40	)								N/A
	WinZip common		$	136.90									N/A
	Corel common			N/A								$	(0.52	)
Fully diluted
	Class A		$	(2.40	)								N/A
	Class B		$	(2.40	)								N/A
	WinZip common		$	136.90									N/A
	Corel common			N/A								$	(0.52	)
Weighted average number of shares (2)(3)
Shares used in basic per share amounts
	Class A			3,737									N/A
	Class B			8,321									N/A
	WinZip common			20									N/A
	Corel common			N/A									19,489
Shares used in fully diluted per share amounts
	Class A			3,737									N/A
	Class B			8,321									N/A
	WinZip common			20									N/A
	Corel common			N/A									19,489

F-69

COREL CORPORATION

NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

      (1)     The combination of WinZip has been treated as if it was completed on December 1, 2004 for the purpose of presenting the pro forma combined statement of operations. Depreciation and amortization has been adjusted for the 48-day period ended January 17, 2005 based on the fair values assigned to capital assets and identifiable intangibles on the application of push-down accounting at January 18, 2005.

      (2)     Corel’s outstanding shares have been adjusted to give effect to the equity recapitalization, the common shares assumed to be issued on the WinZip combination and the reverse split, had these transactions taken place at the beginning of the period presented:

										WinZip			Corel
				Class B			Preferred			common			common
	Class sA			Shares			Shares			Shares			Shares
Actual shares outstanding at November 30, 2005 (combined)		43,800			97,444			10,390			20			N/A
Equity recapitalization, December 1, 2005		(43,800	)		(97,444	)		(10,390	)		—			177,609
Corel shares issued upon combination of WinZip*		—			—			—			(20	)		50,620
Subtotal before reverse split		—			—			—			—			228,229
Reverse split		—			—			—			—			(208,740	)
Pro forma common shares outstanding at November 30, 2005		—			—			—			—			19,489

*  The combination is a transaction between entities under common control, and will be accounted for as a related party transaction. Accordingly, the fair value of the 4,322,587 Corel common shares that will be issued as consideration for the transaction will be recorded as share capital and any difference between this and the carrying amount of WinZip’s net assets will be treated as a dividend.

     (3)     Net income (loss) per share is calculated based on the pro forma weighted average number of common shares outstanding during the period, adjusted to give effect to the equity recapitalization and the common shares assumed to be issued on the WinZip combination, had these transactions taken place at the beginning of the period presented. No diluted calculation was shown because the effects of the potentially dilutive instruments are anti-dilutive.

F-70

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

Item 6. Indemnification of Directors and Officers

      Our restated articles of incorporation and bylaws require us to indemnify, to the fullest extent permitted by the CBCA, each current or former director or officer of the company who acts or acted at our request as a director or officer of a body corporate of which we are or were a shareholder or creditor, and their heirs and legal representatives. We will indemnify him or her for expenses reasonably incurred by such individual in respect of a proceeding in which such individual is or may be joined as a party or is or may be liable for or in respect of penalty by reason of such individual being or having been a director or officer; provided that, we shall not indemnify such individual if, among other things, he or she did not act honestly and in good faith with a view to our best interests and, in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the individual had reasonable grounds for believing that his or her conduct was lawful. This right to indemnification also includes the right to be paid by us the expenses incurred in connection with any such proceeding in advance of its final disposition to the fullest extent authorized by the CBCA.

      Our bylaws authorize us to purchase and maintain insurance for the benefit of each of our current or former directors or officers and each person who acts or acted at our request as a director or officer of a body corporate of which we are or were a shareholder or creditor, and their heirs and legal representatives. We have purchased director and officer liability insurance.

      We intend to enter into indemnity agreements with our directors and officers which provide, among other things, that we will indemnify him or her for expenses reasonably incurred by such individual in respect of a proceeding in which such individual is or may be joined as a party or is or may be liable for or in respect of penalty by reason of such individual being or having been a director or officer; provided that, we shall not indemnify such individual if, among other things, he or she did not act honestly and in good faith with a view to our best interests and, in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the individual had reasonable grounds for believing that his or her conduct was lawful.

Item 7. Recent Sales of Unregistered Securities

      In the three years prior to the filing of this registration statement the following were the only issuances and sales of unregistered securities:

      In October 2004, we issued 379,677 common shares, $2.4 million in the aggregate, to former shareholders of Jasc in connection with our acquisition of Jasc, in reliance on the exemption provided for by section 4(2) of the Securities Act of 1933. In connection with such sale, certain of the shareholders represented to us that they were “accredited investors” as defined in Rule 506 of the Securities Act of 1933, while the remaining shareholders were determined to be sophisticated investors.

      In September 2005, we issued a total of 4,270 common shares to an officer for an exercise price of $5,000 in the aggregate, upon exercise of previously granted stock options.

      In February 2006, we issued 3,245 common shares, $50,000 in the aggregate, to the owners of an unaffiliated service provider, in consideration for services rendered to us, in reliance on the exemption provided for by section 4(2) of the Securities Act of 1933. In connection with such sale, the purchasers represented to us that they were “accredited investors” as defined in Rule 506 of the Securities Act of 1933.

      In February 2006, we agreed to purchase WinZip from Vector Capital. In February 2006, we agreed to issue 4,322,587 common shares to Vector Capital as consideration for the acquisition of WinZip, in reliance on the exemption provided for in section 4(2) of the Securities Act of 1933. Our acquisition of WinZip is intended to be completed concurrently with the closing of this offering. In connection with such sale, Vector Capital represented to us that it was an “accredited investor” as defined in Rule 506 of the Securities Act of 1933.

      We granted units to our officers, directors, employees and consultants in respect of 501,806 and 955,395 and 49,225 common shares in fiscal 2004, 2005 and the first quarter of 2006, respectively. All of

II-1

the 2004 and 2005 units had an exercise price of $1.17, except for 17,640 units granted in November 2005, which had an exercise price of $13.82. The units issued in the first quarter of 2006 had a weighted average exercise price of $15.76.

Item 8. Exhibits and Financial Statement Schedules

      The following exhibits are filed as part of this registration statement:

Exhibit
Number			Exhibit
	1	.1*	Form of Underwriting Agreement by and among Corel Corporation and the Underwriters named therein
	2	.1	Agreement and Plan of Merger dated as of October 8, 2004 by and among Corel Corporation, Corel JS Acquisition, Inc., Corel Holdings Corporation, Jasc Software, Inc. and each Jasc Software, Inc. shareholder
	2	.2	Form of Stock Purchase Agreement by and among Vector CC Holdings IV, SRL, WinZip Computing LLC, Cayman Ltd. Holdco and Corel Corporation
	3	.1	Certificate and Articles of Continuance
	3	.2	Articles of Amendment
	3	.3	By-laws
	4	.1	Form of Registration Rights Agreement by and among Corel Corporation and the stockholders named therein
	4	.2	Form of Corel Corporation Share Certificate
	5	.1*	Opinion of Torys LLP regarding legality
	10	.1*	Form of Credit Agreement by and among Corel Corporation, Corel US Holdings, LLC, Morgan Stanley Senior Funding Inc., J.P. Morgan Securities Inc. and Deutsche Bank Securities Inc. and a syndicate of financial institutions
	10	.2	Employment Agreement between Corel Corporation and David Dobson
	10	.3	Employment Agreement between Corel Corporation and Douglas McCollam
	10	.4	Employment Agreement between Corel Inc. and Randy Eisenbach
	10	.5	Employment Agreement between Corel Corporation and Amanda Bedborough
	10	.6	Employment Agreement between Corel Corporation and Jacqueline Maartense
	10	.7	2003 Share Option and Phantom Unit Plan
	10	.8	2006 Equity Incentive Plan
	10	.9*	Form of Equity Award
	10	.10	Form of Officer and Director Indemnification Agreement
	10	.11	Lease of office space by and between Churchill Office Park Ltd. and Corel Corporation (headquarters office lease)
	10	.12	Advisory Services Expense Reimbursement Agreement
	10	.13	Agreement and Full and Final Release between Corel Corporation and Jacqueline Maartense effective January 20, 2006
	21	.1	Subsidiaries of Corel Corporation
	23	.1	Consent of PricewaterhouseCoopers LLP
	23	.2	Consent of PricewaterhouseCoopers LLP
	23	.3	Consent of Ernst & Young LLP
	23	.4	Consent of Torys LLP (included in opinion referenced in Exhibit 5.1)
	24	.1	Powers of Attorney (see Page II-4)
	99	.1	Financial Statement Schedule I  (Schedule of Allowance for Doubtful Accounts and Provision for Returns and Rebates)
	99	.2	Report Of Independent Registered Public Accounting Firm On Financial Statement Schedule I

*    To be filed by amendment

II-2

Item 9. Undertakings

      The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

      Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities, (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

      The undersigned registrant hereby undertakes that:

      For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of his registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4)or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

      For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-3

SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in City of Ottawa, Canada on April 4, 2006.

COREL CORPORATION

By: /s/ David Dobson

David Dobson

Chief Executive Officer

POWER OF ATTORNEY

      KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Amish Mehta, David Dobson, Douglas McCollam, Randy Eisenbach and Christopher DiFrancesco and each of them, true and lawful attorney-in-fact and agent, acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this registration statement, including post-effective amendments, as well as any related registration statement (or amendment thereto) filed pursuant to Rule 462 promulgated under the Securities and Exchange Act of 1934, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person and hereby ratifies and confirms all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

      This power of attorney may be executed in multiple counterparts, each of which shall be deemed an original, but which taken together shall constitute one instrument.

      Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and on the date indicated:

COREL CORPORATION

Name	Title	Date
/s/ David Dobson David Dobson	Chief Executive Officer (Principal Executive Officer) and Director	April 4, 2006
/s/ Douglas McCollam Douglas McCollam	Chief Financial Officer (Principal Financial Officer and Accounting Officer) and Director	April 4, 2006
/s/ Steven Cohen Steven Cohen	Director	April 4, 2006
/s/ J. Ian Giffen J. Ian Giffen	Director	April 4, 2006

II-4

Name	Title	Date
/s/ Amish Mehta Amish Mehta	Director (Authorized Representative in the United States)	April 4, 2006
/s/ Alexander Slusky Alexander Slusky	Director	April 4, 2006

II-5

Exhibit
Number			Exhibit
	1	.1*	Form of Underwriting Agreement by and among Corel Corporation and the Underwriters named therein
	2	.1	Agreement and Plan of Merger dated as of October 8, 2004 by and among Corel Corporation, Corel JS Acquisition, Inc., Corel Holdings Corporation, Jasc Software, Inc. and each Jasc Software, Inc. shareholder
	2	.2	Form of Stock Purchase Agreement by and among Vector CC Holdings IV, SRL, WinZip Computing LLC, Cayman Ltd. Holdco and Corel Corporation
	3	.1	Certificate and Articles of Continuance
	3	.2	Articles of Amendment
	3	.3	By-laws
	4	.1	Form of Registration Rights Agreement by and among Corel Corporation and the stockholders named therein
	4	.2	Form of Corel Corporation Share Certificate
	5	.1*	Opinion of Torys LLP regarding legality
	10	.1*	Form of Credit Agreement by and among Corel Corporation, Corel US Holdings, LLC, Morgan Stanley Senior Funding Inc., J.P. Morgan Securities Inc. and Deutsche Bank Securities Inc. and a syndicate of financial institutions
	10	.2	Employment Agreement between Corel Corporation and David Dobson
	10	.3	Employment Agreement between Corel Corporation and Douglas McCollam
	10	.4	Employment Agreement between Corel Inc. and Randy Eisenbach
	10	.5	Employment Agreement between Corel Corporation and Amanda Bedborough
	10	.6	Employment Agreement between Corel Corporation and Jacqueline Maartense
	10	.7	2003 Share Option and Phantom Unit Plan
	10	.8	2006 Equity Incentive Plan
	10	.9*	Form of Equity Award
	10	.10	Form of Officer and Director Indemnification Agreement
	10	.11	Lease of office space by and between Churchill Office Park Ltd. and Corel Corporation (headquarters office lease)
	10	.12	Advisory Services Expense Reimbursement Agreement
	10	.13	Agreement and Full and Final Release between Corel Corporation and Jacqueline Maartense effective January 20, 2006
	21	.1	Subsidiaries of Corel Corporation
	23	.1	Consent of PricewaterhouseCoopers LLP
	23	.2	Consent of PricewaterhouseCoopers LLP
	23	.3	Consent of Ernst & Young LLP
	23	.4	Consent of Torys LLP (included in opinion referenced in Exhibit 5.1)
	24	.1	Powers of Attorney (see Page II-4)
	99	.1	Financial Statement Schedule I (Schedule of Allowance for Doubtful Accounts and Provision for Returns and Rebates)
	99	.2	Report Of Independent Registered Public Accounting Firm On Financial Statement Schedule I

*    To be filed by amendment

EX-2.1

                                                                     Exhibit 2.1

                                                               EXECUTION VERSION

                                COREL CORPORATION

                                      -and-

                           COREL JS ACQUISITION, INC.

                                      -and-

                           COREL HOLDINGS CORPORATION

                                      -and-

                               JASC SOFTWARE, INC.

                                      -and-

       PRINCIPAL STOCKHOLDERS (AS THAT TERM IS DEFINED IN THIS AGREEMENT)

                                      -and-

  EACH OTHER JASC STOCKHOLDER (AS THAT TERM IS DEFINED IN THIS AGREEMENT) THAT
                         BECOMES PARTY TO THIS AGREEMENT

                                   ----------

                              AGREEMENT AND PLAN OF
                                     MERGER

                                   ----------

                                 OCTOBER 8, 2004



                                TABLE OF CONTENTS

                                                                           
ARTICLE 1
   INTERPRETATION..........................................................    2
   1.1  Definitions........................................................    2
   1.2  Schedules and Exhibits.............................................   10
   1.3  Headings and Table of Contents.....................................   11
   1.4  Gender and Number..................................................   11
   1.5  Date...............................................................   11
   1.6  Laws...............................................................   12
   1.7  Currency...........................................................   12
   1.8  Generally Accepted Accounting Principles...........................   12
   1.9  Construction of Agreement..........................................   12
   1.10 Invalidity of Provisions...........................................   12
   1.11 Entire Agreement...................................................   12
   1.12 Waiver, Amendment..................................................   13
   1.13 Governing Law......................................................   13

ARTICLE 2
   THE TRANSACTION.........................................................   13
   2.1  The Transaction....................................................   13
   2.2  Closing and the Effective Time.....................................   13
   2.3  Effect of the Merger...............................................   13
   2.4  Articles of Incorporation and Bylaws...............................   14
   2.5  Directors and Officers.............................................   14
   2.6  Effect on Capital Stock............................................   14
        2.6.1  Conversion of Jasc Shares...................................   14
        2.6.2  Conversion of Merger Subsidiary Common Stock................   14
        2.6.3  Fractional Shares...........................................   14
        2.6.4  Dissenters' Rights..........................................   14
   2.7  Surrender of Certificates and Payment of Merger
        Consideration......................................................   15
   2.8  Adjustments........................................................   16
   2.9  Working Capital Adjustment.........................................   16
   2.10 Q3 Net Revenue Adjustment..........................................   17
   2.11 Dispute Process....................................................   18
   2.12 Escrow.............................................................   18
   2.13 Convertible Securities and Option Plan.............................   18
   2.14 Tax Related Payment................................................   19

ARTICLE 3
   REPRESENTATIONS AND WARRANTIES..........................................   20
   3.1  By the Corporation and the Principal Stockholders..................   20
        3.1.1  Formation and Status of the Corporation.....................   20
        3.1.2  Power of the Corporation and Due Authorization..............   20
        3.1.3  Capital of the Corporation..................................   20
        3.1.4  Subsidiaries and Investments................................   21
        3.1.5  No Obligations to Issue Securities..........................   21
        3.1.6  No Contravention by the Corporation.........................   21





                                     -ii-


                                                                           
        3.1.7  Approvals and Consents......................................   21
        3.1.8  Financial Statements........................................   21
        3.1.9  Accounts Receivable.........................................   22
        3.1.10 Inventory Valuation.........................................   22
        3.1.11 Liabilities and Guarantees..................................   22
        3.1.12 Indebtedness................................................   22
        3.1.13 Absence of Unusual Transactions and Events..................   22
        3.1.14 No Dividends, Loans, etc....................................   23
        3.1.15 Insider Interests...........................................   24
        3.1.16 As to Certain Contracts In and Out of the Ordinary
               Course......................................................   24
        3.1.17 Certain Distribution and Master Representative
               Agreements..................................................   25
        3.1.18 No Default Under Agreements.................................   25
        3.1.19 No Owned Real Property......................................   25
        3.1.20 Leased Real Property........................................   26
        3.1.21 Zoning and Other Matters Relating to Real Property..........   26
        3.1.22 Title to Assets.............................................   26
        3.1.23 Environmental Matters.......................................   27
        3.1.24 Tax Matters.................................................   28
        3.1.25 Employment Matters..........................................   29
        3.1.26 Employee Plans..............................................   30
        3.1.27 Labor Relations.............................................   32
        3.1.28 Insurance...................................................   32
        3.1.29 Intellectual Property.......................................   32
        3.1.30 Permits, Registrations and Elections........................   36
        3.1.31 Compliance with Laws........................................   37
        3.1.32 Litigation and Other Proceedings and Warranty
               Claims......................................................   37
        3.1.33 Corporate Records...........................................   37
        3.1.34 Books of Account and Internal Controls......................   37
        3.1.35 Bank Accounts, etc..........................................   38
        3.1.36 Customers and Suppliers.....................................   38
        3.1.37 Conduct of Business.........................................   38
        3.1.38 Disclosure..................................................   38
   3.2  By Principal Stockholders..........................................   39
        3.2.1  Corel Common Shares.........................................   39
        3.2.2  No Foreign Person...........................................   39
        3.2.3  Incorporation and Status of the Principal
               Stockholder.................................................   39
        3.2.4  Power of the Principal Stockholder and Due
               Authorization...............................................   39
        3.2.5  Title to, and Right to Sell, Purchased Shares...............   39
        3.2.6  No Contravention by Principal Stockholders..................   40
        3.2.7  Accredited Investor.........................................   40
   3.3  By Merger Subsidiary and Corel Holdings............................   40
        3.3.1  Incorporation and Status....................................   40
        3.3.2  Corporate Power and Due Authorization.......................   40
        3.3.3  No Contravention............................................   41
        3.3.4  Approvals and Consents......................................   41
   3.4  By Corel...........................................................   41
        3.4.1  Incorporation and Status of Corel...........................   41
        3.4.2  Corporate Power of Corel and Due Authorization..............   41





                                      -iii-


                                                                           
        3.4.3  Capital of Corel............................................   42
        3.4.4  No Obligations to Issue Securities..........................   42
        3.4.5  No Contravention of Corel...................................   42
        3.4.6  Approvals and Consents......................................   42
        3.4.7  Equity Consideration........................................   42
        3.4.8  Corel Financial Statements..................................   42
        3.4.9  Sufficiency of Capital, Access to Capital...................   42
   3.5  No Finder's Fees...................................................   43
   3.6  Survival of Covenants, Representations and Warranties..............   43

ARTICLE 4
   CONDITIONS..............................................................   43
   4.1  Conditions for the Benefit of Corel and the Merger
           Subsidiary......................................................   43
        4.1.1  Accuracy of Representations and Compliance With
                  Covenants................................................   43
        4.1.2  Opinion of Faegre & Benson LLP..............................   44
        4.1.3  Force Majeure...............................................   44
        4.1.4  No Adverse Legislation......................................   44
        4.1.5  No Action to Restrain.......................................   44
        4.1.6  [Reserved]..................................................   44
        4.1.7  Consents and Approvals......................................   44
        4.1.8  Delivery of Other Agreements and Documents..................   45
        4.1.9  Q3 Net Revenue..............................................   45
        4.1.10 Exercise of Dissenters' Rights..............................   45
        4.1.11 Certain Terminations........................................   45

   4.2  Conditions for the Benefit of the Corporation......................   46
        4.2.1  Accuracy of Representations of Merger Subsidiary and
                  Corel and Compliance With Covenants......................   46
        4.2.2  Opinion of Torys LLP........................................   46
        4.2.3  No Action to Restrain.......................................   46
        4.2.4  [Reserved]..................................................   46
        4.2.5  Delivery of Other Agreements................................   46

ARTICLE 5
   ADDITIONAL AGREEMENTS OF THE PARTIES....................................   47
   5.1  Access to Information..............................................   47
   5.2  Conduct of Business Until Time of Closing..........................   47
   5.3  Negative Covenant..................................................   48
   5.4  Merger Subsidiary's Covenant.......................................   48
   5.5  Corporate Action, Releases.........................................   48
   5.6  Obtaining of Consents and Approvals................................   49
   5.7  Additional Insurance...............................................   49
   5.8  Non-Solicitation...................................................   49
   5.9  [Reserved].........................................................   49
   5.10 Tax Matters........................................................   49
   5.11 Certain Payments and Expenses......................................   50
   5.12 Goodwill...........................................................   51
   5.13 Cooperation........................................................   51





                                      -iv-


                                                                           
   5.14 Termination........................................................   51
   5.15 Jasc Stockholder Approval..........................................   52
   5.16 Jasc YE Bonus Program..............................................   52
   5.17 Jasc Founder's Computer and Cell Phone.............................   52
   5.18 Post-Closing Access................................................   52

ARTICLE 6
   INDEMNIFICATION.........................................................   53
   6.1  Indemnification....................................................   53
   6.2  Notice of Claim....................................................   54
   6.3  Procedure for Indemnification......................................   54
        6.3.1 Corel Indemnified Party's Claims.............................   54
        6.3.2 Third Party Claims...........................................   54
   6.4  Additional Rules and Procedures....................................   55
   6.5  Escrow Agreement...................................................   56
   6.6  Limitation of Remedies.............................................   56

ARTICLE 7
   CLOSING.................................................................   57
   7.1  Location and Time of the Closing...................................   57
   7.2  Deliveries at the Closing..........................................   57

ARTICLE 8
   GENERAL MATTERS.........................................................   57
   8.1  Public Notices.....................................................   57
   8.2  Stockholder Representative.........................................   57
   8.3  Expenses...........................................................   57
   8.4  Assignment.........................................................   59
   8.5  Notices............................................................   59
   8.6  Time of Essence....................................................   60
   8.7  Consent to Jurisdiction............................................   60
   8.8  Waiver of Jury Trial...............................................   61
   8.9  No Third-Party Beneficiaries.......................................   61
   8.10 Further Assurances.................................................   61
   8.11 Counterparts.......................................................   61



                        (TORYS LLP NEW YORK TORONTO LOGO)



                          AGREEMENT AND PLAN OF MERGER

          THIS AGREEMENT AND PLAN OF MERGER is made as of the 8th day of
October, 2004,

AMONG:

               COREL CORPORATION, a corporation existing under the laws of the
               Province of Ontario ("COREL")

               - and -

               COREL JS ACQUISITION, INC., a corporation existing under the laws
               of the State of Minnesota (the "MERGER SUBSIDIARY")

               - and-

               COREL HOLDINGS CORPORATION, a corporation existing under the laws
               of the Province of New Brunswick (the "COREL HOLDINGS")

               - and-

               JASC SOFTWARE, INC., a corporation existing under the laws of the
               State of Minnesota (the "CORPORATION")

               -and-

               the PRINCIPAL STOCKHOLDERS (as defined below)

               - and-

               each other JASC STOCKHOLDER (as defined below) that becomes party
               to this Agreement

RECITALS:

A.   The Boards of Directors of the Corporation, Corel and the Merger Subsidiary
     believe it is in the best interests of their respective companies and the
     stockholders of their respective companies that (1) the Corporation sell
     the Specified Assets (as defined below) to a wholly-owned subsidiary of
     Corel (the "ASSET SALE"); and (2) the Corporation and the Merger Subsidiary
     combine into a single company through the statutory merger of the Merger
     Subsidiary with and into the Corporation (the "MERGER") and, in furtherance
     of these actions, have declared the advisability of and approved the
     Transaction.

B.   The Corporation, the Jasc Stockholders, Corel and the Merger Subsidiary
     desire to make certain representations and warranties and other agreements
     in connection with the Transaction.



                                       -2-


          NOW THEREFORE in consideration of the mutual covenants and agreements
contained in this Agreement and other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties to this
Agreement agree as follows:

                                    ARTICLE 1
                                 INTERPRETATION

1.1  DEFINITIONS

          In this Agreement,

     1.1.1 "ACCREDITED INVESTOR" means an accredited investor within the meaning
     of Rule 501 (a) under the Securities Act;

     1.1.2 "ADJUSTED SEPTEMBER 30 WORKING CAPITAL" means the Working Capital as
     of September 30, 2004 (excluding accruals in respect of the Jasc YE Bonus
     Program) adjusted to reflect all expenses and accruals for Stockholder
     Expenses occurring prior to the Closing Date;

     1.1.3 "AFFILIATE" means, with respect to any Person, any other Person that
     directly, or indirectly through one or more intermediaries, controls or is
     controlled by or is under common control with that Person;

     1.1.4 "AGREEMENT" means this agreement and all schedules attached to this
     agreement, in each case as they may be amended or supplemented from time to
     time, and the expressions "hereof," "herein," "to this Agreement,"
     "hereunder," "hereby" and similar expressions refer to this agreement; and
     unless otherwise indicated, references to Articles, sections and Schedules
     are to Articles in, sections in, and Schedules to this agreement;

     1.1.5 "ALBUM SOFTWARE PROGRAM" means the Paint Shop Photo Album 5 Software;

     1.1.6 "ARTICLES OF MERGER" has the meaning given to that term in section
     2.1.2;

     1.1.7 "ASSET SALE" has the meaning given to that term in Recital A;

     1.1.8 "ASSET SALE CASH CONSIDERATION" means $30,870,000, less, (1) any
     Stockholder Expenses not satisfied or accrued by the Corporation prior to
     the Effective Time to the extent not reflected in the calculation of the
     Initial Working Capital Shortfall, (2) the Initial Working Capital
     Shortfall, if any, and (3) the Initial Q3 Net Revenue Shortfall, if any;

     1.1.9 "ASSET SALE CONSIDERATION" means the Asset Sale Cash Consideration
     and the Asset Sale Equity Consideration to be paid or issued, as the case
     may be, by Corel or a subsidiary of Corel to the Corporation as
     consideration pursuant to the Transfer Agreement;

     1.1.10 "ASSET SALE EQUITY CONSIDERATION" means 4,001,581 Corel Common
     Shares;

     1.1.11 "AUDITED FINANCIAL STATEMENTS" means the balance sheet of the
     Corporation as at the Audited Statements Date and the accompanying
     statements of income, changes in stockholders' equity and cash flows for
     the year then ended, including the notes to those financial statements, and
     the report of the auditors of the Corporation on those financial
     statements, all as attached as Schedule 1.1.11;



                                       -3-


     1.1.12 "AUDITED STATEMENTS DATE" means December 31, 2003;

     1.1.13 "BENEFIT PLANS" has the meaning given to that term in section
     1.1.40.3;

     1.1.14 "BUSINESS" means the development and global marketing and
     distribution of digital photography and imaging software business (i)
     carried on by the Corporation prior to the Effective Time; and (ii) carried
     on by the Surviving Corporation, Corel and/or one or more direct or
     indirect subsidiaries of Corel following the Effective Date utilizing
     assets of the Corporation;

     1.1.15 "BUSINESS DAY" means any day, other than Saturday, Sunday or any
     statutory holiday in the State of California, the State of Minnesota and/or
     the Province of Ontario;

     1.1.16 "CHARGE" means any security interest, lien, charge, pledge,
     encumbrance, mortgage, adverse claim or title retention agreement of any
     nature or kind;

     1.1.17 "CLAIM," "COREL INDEMNIFIED PARTY'S CLAIM" and "THIRD PARTY CLAIM"
     have the meanings given to those terms respectively in section 6.2;

     1.1.18 "CLOSING" means the consummation of the Transaction and the other
     transactions contemplated by this Agreement;

     1.1.19 "CLOSING DATE" has the meaning given to that term in section 2.2;

     1.1.20 "CLOSING BALANCE SHEET" means the statement of assets and
     liabilities of the Corporation as at the Closing Date calculated in
     accordance with GAAP, delivered in accordance with section 2.14;

     1.1.21 "CLOSING REQUIRED CONSENTS" means the Required Consents listed under
     that heading on Schedule 3.1.7;

     1.1.22 "CLOSING WORKING CAPITAL AMOUNT" means the Adjusted September 30
     Working Capital as determined based upon the Working Capital Closing
     Balance Sheet;

     1.1.23 "CODE" means the United States Internal Revenue Code of 1986, as
     amended;

     1.1.24 "CONFIDENTIALITY AGREEMENTS" means the Confidentiality Agreement
     between Goldsmith, Agio, Helms & Lynner, LLC and Corel dated April 7, 2004
     and the Mutual Non-Disclosure Agreement among Vector Capital Corporation,
     Corel and the Corporation dated July 30, 2004;

     1.1.25 "CONSENTS" means those consents, authorizations and approvals set
     out in Schedule 3.1.7;

     1.1.26 "CONTRACT" means any commitment, contract, agreement, license,
     lease, guarantee, binding arrangement or other instrument and includes any
     amendments;

     1.1.27 "CONTROL," when used with respect to any Entity, means the
     possession, directly or indirectly, of the power to direct or cause the
     direction of the management and policies of that Entity, whether through
     the ownership, directly or indirectly, of more than 20% of the voting or
     equity securities or other interests of that Entity and/or by contract or
     otherwise; and the terms "controlling" and "controlled" have correlative
     meanings;



                                       -4-


     1.1.28 "CONVERTIBLE SECURITIES" means all shares (excluding shares of
     common stock of the Corporation), options, warrants, rights or other
     securities to acquire shares of common stock of the Corporation;

     1.1.29 "COREL AUDITED FINANCIAL STATEMENTS" means the consolidated balance
     sheet of Corel as at the Corel Audited Statements Date and the accompanying
     consolidated statements of operations and cash flows for the year then
     ended, including the notes to those financial statements, and the report of
     the auditors of the Corporation on those financial statements, all as
     attached as Schedule 1.1.29;

     1.1.30 "COREL AUDITED STATEMENTS DATE" means November 30, 2003;

     1.1.31 "COREL COMMON SHARES" means Class B Common Shares in the capital of
     Corel;

     1.1.32 "COREL INDEMNIFIED PARTIES" has the meaning given to that term in
     section 6.1.1:

     1.1.33 "COREL MINORITY SHAREHOLDERS AGREEMENT" means the shareholders
     agreement to be entered into at the Time of Closing between Corel, its
     shareholders and the Jasc Stockholders in the form attached as Schedule
     1.1.33;

     1.1.34 "COREL UNAUDITED FINANCIAL STATEMENTS" means the consolidated
     balance sheet of the Corporation as at August 31, 2004 and the accompanying
     consolidated statements of operations and cash flows for the nine months
     then ended, all as attached as Schedule 1:1.34;

     1.1.35 "COREL Q3 NET REVENUE PAYMENT" has the meaning given to that term in
     section 2.10.3.2;

     1.1.36 "COREL WORKING CAPITAL PAYMENT" has the meaning given to that term
     in section 2.9.3.2;

     1.1.37 "DUE INQUIRY" means the due inquiry which is reasonably expected of
     a prudent member of the management of the Business;

     1.1.38 "EFFECTIVE TIME" has the meaning given to that term in section 2.2;

     1.1.39 "ELIGIBLE INVENTORY" means the raw materials which are purchased by
     the Corporation no earlier than 90 days prior to the Closing Date, and
     which either are, or are reasonably expected to be, used within 90 days of
     the Closing Date;

     1.1.40 "EMPLOYEE PLANS" means all oral or written plans, arrangements,
     agreements, programs, policies, practices or undertakings with respect to
     some or all of the current or former directors, officers, employees,
     independent contractors or agents of the Corporation which provide for or
     relate to:

          1.1.40.1 bonus, profit sharing or deferred profit sharing, performance
          compensation, deferred or incentive compensation, share compensation,
          share purchase or share option purchase, share appreciation rights,
          phantom stock, vacation or vacation pay, sick pay, employee loans, or
          any other compensation in addition to salary ("INCENTIVE PLANS");



                                      -5-


          1.1.40.2 retirement or retirement savings, including registered or
          unregistered pension plans, pensions, supplemental pensions,
          registered retirement savings plans and retirement compensation
          arrangements ("PENSION PLANS"); or

          1.1.40.3 insured or self-insured benefits for or relating to income
          continuation or other benefits during absence from work (including
          short term disability, long term disability and workers compensation),
          hospitalization, health, welfare, legal costs or expenses, medical or
          dental treatments or expenses, life insurance, accident, death or
          survivor's benefits, supplementary employment insurance, day care,
          tuition or professional commitments or expenses or similar employee
          benefits ("BENEFIT PLANS");

     1.1.41 "ENTITY" means any partnership, limited partnership, company or
     corporation with or without share capital, trust or other entity however
     designated or constituted;

     1.1.42 "ENVIRONMENTAL LAWS" and "ENVIRONMENTAL PERMITS" have the meanings
     given to those terms respectively in section 3.1.23.1;

     1.1.43 "ERISA" means the United States Employee Retirement Income Security
     Act of 1974, as amended;

     1.1.44 "ESCROW AGENT" means Royal Trust Corporation;

     1.1.45 "ESCROW AGREEMENT" means the escrow agreement to be entered into at
     the Time of Closing, between the Merger Subsidiary, Corel, the Escrow
     Agent, the Jasc Stockholders and the Stockholder Representative, in the
     form attached as Schedule 1.1.45;

     1.1.46 "ESCROW FUND" means all cash and property held by the Escrow Agent
     from time to time pursuant to the terms of the Escrow Agreement;

     1.1.47 "GOVERNMENTAL AUTHORITY" means any (1) supranational, multinational,
     federal, provincial, state, regional, municipal, local or other government,
     governmental or public department, central bank, court, tribunal, arbitral
     body, commission, board, bureau, agency, association, institution, or other
     similar authority, (2) any quasi-governmental or private body exercising
     any regulatory, expropriation or taxing authority under, delegated by, or
     for the account of any of the foregoing, (3) any industry self-regulatory
     organization or any stock exchange or (4) any minister, secretary or other
     governmentally appointed individual, in each case whether domestic or
     foreign;

     1.1.48 "HAZARDOUS SUBSTANCE" has the meaning given to that term in section
     3.1.23.1.5;

     1.1.49 "HSR ACT" means the United States Hart-Scott-Rodino Antitrust
     Improvements Act of 1976 and the rules and regulations adopted pursuant to
     that act, as amended;

     1.1.50 "INCENTIVE PLANS" has the meaning given to that term in section
     1.1.40.1;

     1.1.51 "INCLUDES" or "INCLUDING" means includes, without limitation, or
     including, without limitation, as the case may be;

     1.1.52 "INITIAL CLOSING BALANCE SHEET" means the statement of assets and
     liabilities of the Corporation as at the close of business on September 30,
     2004 calculated in accordance with



                                      -6-


     GAAP (excluding accruals in respect of the Jasc YE Bonus Program),
     delivered in accordance with section 2.9.1;

     1.1.53 "INITIAL WORKING CAPITAL SHORTFALL" has the meaning given to that
     term in section 2.9.2;

     1.1.54 "INITIAL Q3 NET REVENUE" means a calculation of the gross sales,
     less reserves, rebates, distributor discounts and miscellaneous for the
     Corporation for the three months ended September 30, 2004, all as
     determined in accordance with GAAP, as historically applied by the
     Corporation, delivered in accordance with section 2.10.1.

     1.1.55 "INITIAL Q3 NET REVENUE SHORTFALL" has the meaning given to that
     term in section 2.10.2;

     1.1.56 "INTELLECTUAL PROPERTY" means trade marks and trade mark
     applications, trade names, certification marks, patents and patent
     applications, copyrights, know-how, formulae, processes, inventions,
     technical expertise, research data, trade secrets, industrial designs and
     other similar property, whether registered or unregistered;

     1.1.57 "JASC COUNSEL" means the firm of Faegre & Benson LLP of Minneapolis,
     Minnesota, or any other counsel as the Corporation may appoint with respect
     to this Agreement and the matters contemplated by this Agreement;

     1.1.58 "JASC SHARES" means shares of stock in the capital of the
     Corporation outstanding immediately prior to the Effective Time;

     1.1.59 "JASC STOCKHOLDER" means a holder of Jasc Shares immediately prior
     to the Effective Time;

     1.1.60 "JASC STOCKHOLDER MEETING" has the meaning given to that term in
     section 5.15.1;

     1.1.61 "JASC STOCKHOLDER SIGNATURE PAGE" means the form of signature page
     attached as Schedule 1.1.61;

     1.1.62 "JASC STOCKHOLDER'S OWNERSHIP PERCENTAGE" means the number of Jasc
     Shares held by a Jasc Stockholder immediately before the Effective Time
     divided by the number of Jasc Shares held by all Jasc Stockholders
     immediately before the Effective Time;

     1.1.63 "JASC YE BONUS PROGRAM" means the calendar year 2004 year-end
     objective bonus payments for employees of Jasc based upon the letter
     agreement delivered to those employees, true and correct copies of which
     have been provided to Merger Subsidiary;

     1.1.64 "KEY SOFTWARE PROGRAMS" means the following groupings of Software
     and each incorporated program: Paint Shop Power Suite - Photo Edition,
     Paint Shop Pro 8, Paint Shop Pro 9, Paint Shop Photo Album 5, Animation
     Shop 3, Paint Shop Photo Studio and WebDraw Version 1;

     1.1.65 "KNOWLEDGE" means, with respect to the subject matter, the actual
     knowledge of the Person after Due Inquiry, and in the case of the knowledge
     of an Entity, means the Knowledge of its senior officers or comparable
     member(s) of management;

     1.1.66 "LAWS" means any law, statute, rule, regulation, by-law, judgment or
     order of general application, or any direction, policy, guideline,
     bulletin, ruling, judgment, order or requirement,



                                       -7-


     including of a Governmental Authority (whether or not having the force of
     law, but if it does not have the force of law being of a nature with which
     a prudent person would comply);

     1.1.67 "LEASED REAL PROPERTY" has the meaning given to that term in section
     3.1.20;

     1.1.68 "LICENSED INTELLECTUAL PROPERTY" means all Intellectual Property of
     a Person other than the Corporation;

     1.1.69 "LICENSED SOFTWARE" means all Software of a Person other than the
     Corporation;

     1.1.70 "LICENSED SOURCE CODE" has the meaning given to that term in section
     3.1.29.8;

     1.1.71 "MATERIAL CONTRACT" means any Contract made in the ordinary course
     of the Business if it requires or may require the provision by the
     Corporation to any Person of goods or services having a fair market value
     in excess of $25,000;

     1.1.72 "MERGER" has the meaning given to that term in the Recitals;

     1.1.73 "MERGER CONSIDERATION" means the Total Adjusted Merger Cash
     Consideration and the Total Merger Equity Consideration to be paid or
     issued, as the case may be, by Corel or a subsidiary of Corel to Jasc
     Stockholders as consideration upon the Merger;

     1.1.74 "MERGER SUBSIDIARY'S COUNSEL" means the firm of Torys LLP of
     Toronto, Ontario, and New York, New York or any other counsel as the Merger
     Subsidiary may appoint with respect to this Agreement and the matters
     contemplated by this Agreement;

     1.1.75 "MINNESOTA LAW" has the meaning given to that term in section 2.1;

     1.1.76 "PENSION PLANS" has the meaning given to that term in section
     1.1.40.2;

     1.1.77 "PER JASC SHARE CASH CONSIDERATION" means the quotient of (i) the
     Total Adjusted Merger Cash Consideration; divided by (ii) the number of
     Jasc Shares;

     1.1.78 "PER JASC SHARE EQUITY CONSIDERATION" means the quotient of (i) the
     Total Merger Equity Consideration; divided by (ii) the number of Jasc
     Shares;

     1.1.79 "PERSON" means any individual, partnership, limited partnership,
     joint venture, syndicate, sole proprietorship, company or corporation with
     or without share capital, unincorporated association, trust, trustee,
     executor, administrator or other legal personal representative, regulatory
     body or agency, government or governmental agency, authority or entity
     however designated or constituted, and any reference to a Person includes
     its successors and assigns;

     1.1.80 "PREMISES" has the meaning given to that term in section 3.1.23;

     1.1.81 "PRINCIPAL STOCKHOLDERS" means Jonathan C. Ort, Robert V. Voit, and
     Kris Tufto;

     1.1.82 "PROCEEDING" means any court, administrative, regulatory or similar
     proceeding (whether civil, quasi-criminal or criminal); arbitration or
     other dispute settlement procedure; investigation or inquiry by any
     governmental, administrative, regulatory or similar body; or any similar
     matter or proceeding including (1) those in process; (2) those pending or
     threatened; and (3) those in respect of which, to the Knowledge of the
     Corporation or the Principal Stockholders, circumstances exist that would
     be reasonably likely to result in a Proceeding;



                                       -8-


     1.1.83 "PROPRIETARY INTELLECTUAL PROPERTY" means all Intellectual Property
     other than Licensed Intellectual Property;

     1.1.84 "PROPRIETARY SOFTWARE" means all Software other than Licensed
     Software;

     1.1.85 "PUBLIC SOFTWARE" means software which creates, or purports to
     create, obligations for the Corporation or grants, or purports to grant, to
     any third party any rights or immunities under the Corporation's
     Intellectual Property or proprietary rights in the Corporation's Software
     or derivative work of that Software and includes any software that requires
     as a condition of use, modification and/or distribution of the software
     that other software incorporated into, derived from or distributed with
     that software be (1) disclosed or distributed in source code form; (2)
     licensed for the purpose of making derivative works; or (3) redistributable
     at no charge.

     1.1.86 "Q3 NET REVENUE" means a calculation of the net revenues of the
     Corporation for the three months ended September 30, 2004, all as
     determined in accordance with GAAP, as historically applied by the
     Corporation, delivered in accordance with section 2.10.3;

     1.1.87 "Q3 NET REVENUE ADJUSTMENT AMOUNT" has the meaning given to that
     term in section 2.10.3.1.

     1.1.88 "REAL PROPERTY LEASES" has the meaning given to that term in section
     3.1.20;

     1.1.89 "RELATED AGREEMENTS" means all Contracts required by this Agreement
     to be executed and delivered at the Closing, including the Escrow
     Agreement, the Corel Minority Shareholders Agreement, the Transfer
     Agreement and the non-competition, non-solicitation and confidentiality
     agreements contemplated by section 4.1.6;

     1.1.90 "REQUIRED CONSENTS" means, collectively, the Consents which are set
     out and identified as "Required Consents" on Schedule 3.1.7 which, for
     greater certainty, includes any Consents required in connection with
     Contracts related to the "material Licensed Software" set out on Schedule
     3.1.29;

     1.1.91 "REQUIRED Q3 NET REVENUE" means $7,500,000;

     1.1.92 "REQUIRED WORKING CAPITAL AMOUNT" means $2,000,000;

     1.1.93 "SECURITIES ACT" means the United States Securities Act of 1933 and
     the rules and regulations adopted pursuant to that act, as amended;

     1.1.94 "SEPTEMBER INCOME STATEMENT" means the statement of income for the
     Corporation prepared in accordance with GAAP consistently applied with the
     Corporation's past practice (excluding accruals in respect of the Jasc YE
     Bonus Program) for the month ended September 30, 2004;

     1.1.95 "SEVERANCE PAYMENT" has the meaning given to that term in section
     5.11.1;

     1.1.96 "SOFTWARE" means all computer software programs, operating systems,
     and applications, firmware or software of any nature related to the
     Business, whether operational, under development or inactive, including all
     object code, source code, development and testing tools and scripts,
     technical manuals, user manuals and other documentation thereof, whether in
     machine-readable



                                       -9-


     form, programming language or any other language or symbols, and whether
     stored, encoded, recorded or written on disk, tape, film, memory device,
     paper or other media of any nature;

     1.1.97 "SPECIFIED ASSETS" has the meaning given to that term in the
     Transfer Agreement;

     1.1.98 "STOCKHOLDER EXPENSES" means the costs, fees, expenses and
     liabilities described in sections 5.11.1, 5.11.2, 5.11.3, 5.11.5 and 5.11.6
     and specifically set out on Schedule 1.1.98;

     1.1.99 "STOCKHOLDER REPRESENTATIVE" means Robert V. Voit;

     1.1.100 "SUBSIDIARY" means, with respect to any Person, any other Entity
     that directly, or indirectly through one or more intermediaries, is
     controlled by that Person;

     1.1.101 "SURVIVING CORPORATION" has the meaning given to that term in
     section 2.1;

     1.1.102 "TAX REASSESSMENT PERIOD" means the period ending on the first date
     on which no assessment, reassessment or other document assessing liability
     for Taxes may be issued to the Corporation or any past or current
     subsidiary of the Corporation in respect of any taxation year or other
     period ended prior to the Closing Date, or within which the Closing Date
     occurs, pursuant to any applicable Tax Laws;

     1.1.103 "TAX RETURNS" will mean any return, report, document, statement or
     form required to be filed with respect to any Taxes (including any
     schedules required to be attached to it), including information returns,
     claims for refund, amended returns and declarations of estimated Tax;

     1.1.104 "TAX RELATED PAYMENT" has the meaning given to that term in section
     2.14.3;

     1.1.105 "TAXES" means all taxes, levies, assessments, reassessments and
     other charges together with all related penalties, interest, costs and
     fines, including income, gross receipts, capital stock, profits, stamp,
     occupation, transfer, value added, excise, franchise, sales, use, property
     (whether real, personal or mixed), employment, unemployment, disability,
     withholding, social security and workers' compensation taxes and estimated
     income and franchise tax payments, due and payable to any domestic or
     foreign government (federal, state, provincial, municipal or otherwise) or
     to any regulatory authority, agency, commission or board of any domestic or
     foreign government, or imposed by any court or any other Governmental
     Authority having jurisdiction in relevant circumstances;

     1.1.106 "THIRD PARTY" has the meaning given to that term in section 6.4.5;

     1.1.107 "THIRD PARTY CLAIM" has the meaning given to that term in section
     6.2;

     1.1.108 "TIME OF CLOSING" means 10:00 a.m., Toronto time, on the Closing
     Date or any other time on the Closing Date as may be agreed upon in writing
     by the Merger Subsidiary and the Stockholder Representative;

     1.1.109 "TOTAL CASH CONSIDERATION" means the aggregate of the Asset Sale
     Cash Consideration and the Total Merger Cash Consideration, the aggregate
     being $34,300,000;

     1.1.110 "TOTAL MERGER CASH CONSIDERATION" means $3,430,000;

     1.1.111 "TOTAL MERGER EQUITY CONSIDERATION" means 444,620 Corel Common
     Shares;



                                      -10-


     1.1.112 "TOTAL ADJUSTED MERGER CASH CONSIDERATION" means the Total Merger
     Cash Consideration, less (1) any Stockholder Expenses not satisfied or
     accrued by the Corporation prior to the Effective Time to the extent not
     reflected in the calculation of the Initial Working Capital Shortfall, (2)
     the Initial Working Capital Shortfall, if any, and (3) the Initial Q3 Net
     Revenue Shortfall, if any, to the extent such amounts in (1), (2) and/or
     (3) were not deducted in calculating the Asset Sale Cash Consideration;

     1.1.113 "TOTAL EQUITY CONSIDERATION" means the aggregate of the Asset Sale
     Equity Consideration and the Total Merger Equity Consideration, the
     aggregate being 4,446,201 Corel Common Shares;

     1.1.114 "TRANSACTION" means the Asset Sale and the Merger;

     1.1.115 "TRANSFER AGREEMENT" means the Transfer Agreement dated the Closing
     Date between the Corporation and a wholly-owned subsidiary of Corel, in the
     form attached as Schedule 1.1.115, pursuant to which the Asset Sale will be
     effected;

     1.1.116 "TRANSACTION CONSIDERATION" means the aggregate of the Merger
     Consideration and the Asset Sale Consideration;

     1.1.117 "UNAUDITED FINANCIAL STATEMENTS" means the balance sheet of the
     Corporation as at the Unaudited Statements Date and the accompanying
     statements of income and cash flows, for the six months then ended, all as
     attached as Schedule 1.1.117;

     1.1.118 "UNAUDITED STATEMENT DATE" means June 30, 2004;

     1.1.119 "WORKING CAPITAL" means the Corporation's cash, cash equivalents,
     accounts receivable and Eligible Inventory, less the Corporation's current
     liabilities, all as determined in accordance with GAAP, as historically
     applied by the Corporation;

     1.1.120 "WORKING CAPITAL ADJUSTMENT AMOUNT" has the meaning given to that
     term in section 2.9.3.1; and

     1.1.121 "WORKING CAPITAL CLOSING BALANCE SHEET" means the statement of
     assets and liabilities of the Corporation as at the close of business on
     September 30, 2004 (excluding accruals in respect of the Jasc YE Bonus
     Program), delivered in accordance with section 2.9.3.

1.2  SCHEDULES AND EXHIBITS

     The following are the schedules and exhibit attached to this Agreement:

     Exhibit A         - Articles of Merger
     Exhibit B         - Form of Consent
     Schedule 1.1.10   - Audited Financial Statements
     Schedule 1.1.29     Corel Audited Financial Statements
     Schedule 1.1.33   - Corel Minority Shareholders Agreement
     Schedule 1.1.34     Corel Unaudited Financial Statements
     Schedule 1.1.45   - Escrow Agreement
     Schedule 1.1.61   - Jasc Stockholder Signature Page
     Schedule 1.1.98   - Stockholder Expenses
     Schedule 1.1.115  - Transfer Agreement



                                      -11-


     Schedule 1.1.117  - Unaudited Financial Statements
     Schedule 3.1.3    - Capital of the Corporation
     Schedule 3.1.7    - Approvals and Consents
     Schedule 3.1.11   - Liabilities and Guarantees
     Schedule 3.1.12   - Indebtedness
     Schedule 3.1.14   - Dividends
     Schedule 3.1.15   - Insider Interests
     Schedule 3.1.16   - As to Certain Contracts In and Out of the Ordinary
                         Course
     Schedule 3.1.17.1 - Certain Distribution Agreements
     Schedule 3.1.17.2 - Master Representative Contracts
     Schedule 3.1.20   - Leased Real Property
     Schedule 3.1.22.1 - Title to Assets
     Schedule 3.1.23.6 - Environmental Permits
     Schedule 3.1.25   - Employment Matters
     Schedule 3.1.26     Employee Plans
     Schedule 3.1.28   - Insurance
     Schedule 3.1.29   - Intellectual Property
     Schedule 3.1.30   - Permits, Registrations and Elections
     Schedule 3.1.32   - Litigation and Other Proceedings
     Schedule 3.1.35   - Bank Accounts, etc.
     Schedule 3.1.37   - Conduct of Business
     Schedule 3.3.4    - Approvals and Consents (Merger Subsidiary)
     Schedule 3.4.3    - Capital of Corel
     Schedule 3.4.6    - Approvals and Consents (Corel)
     Schedule 4.1.1    - Bring-down Certificate
     Schedule 4.1.2.1  - Opinion of Faegre & Benson LLP
     Schedule 4.1.2.2    Opinion of Thomsen & Nybeck, P.A.
     Schedule 4.1.6    - Non-Competition, Non-Solicitation and Confidentiality
                         Agreement
     Schedule 4.2.2.1  - Opinion of Torys LLP
     Schedule 4.2.2.2    Opinion of Stewart McKelvey Stirling Scales LLP
     Schedule 5.3      - Negative Covenants
     Schedule 5.10.2   - Merger Consideration Allocation

1.3  HEADINGS AND TABLE OF CONTENTS

          The inclusion of headings and a table of contents in this Agreement is
for convenience of reference only and will not affect the construction or
interpretation of this Agreement.

1.4  GENDER AND NUMBER

          In this Agreement, unless the context otherwise requires, words
importing the singular include the plural and vice versa, words importing gender
include all genders or the neuter, and words importing the neuter include all
genders.

1.5  DATE

          Any date specified for any action that is not a Business Day will be
deemed to mean the first Business Day after that date.



                                      -12-


1.6  LAWS

          Any reference to any federal, state, local or foreign statute or law
will be to that statute or law as amended at the applicable time, and will be
deemed also to refer to all rules and regulations promulgated under that law at
the applicable time.

1.7  CURRENCY

          Except where otherwise expressly provided, all amounts in this
Agreement are stated and will be paid in United States currency.

1.8  GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

          In this Agreement, except to the extent otherwise expressly provided,
references to "GAAP" mean generally accepted accounting principles in the United
States and references to "CANADIAN GAAP" mean generally accepted accounting
principles in Canada.

1.9  CONSTRUCTION OF AGREEMENT

          The parties have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement will be construed as if drafted jointly by
the parties and no presumption or burden of proof will rise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement.

1.10 INVALIDITY OF PROVISIONS

          Each of the provisions contained in this Agreement is distinct and
severable and a declaration of invalidity or unenforceability of any provision
or part of a provision by a court of competent jurisdiction will not affect the
validity or enforceability of any other provision of this Agreement. To the
extent permitted by applicable law, the parties waive any provision of law which
renders any provision of this Agreement invalid or unenforceable in any respect.
The parties will engage in good faith negotiations to replace any provision
which is declared invalid or unenforceable with a valid and enforceable
provision, the economic effect of which comes as close as possible to that of
the invalid or unenforceable provision which it replaces.

1.11 ENTIRE AGREEMENT

          This Agreement, the Related Agreements and the Confidentiality
Agreements constitute the entire agreement among the parties pertaining to the
subject matter of this Agreement. There are no warranties, conditions, or
representations (including any that may be implied by Law) and there are no
agreements in connection with this subject matter except as specifically set out
or referred to in this Agreement, the Related Agreements and/or the
Confidentiality Agreements. No reliance is placed on any warranty,
representation, opinion, advice or assertion of fact made either prior to,
contemporaneous with, or after entering into this Agreement, or any amendment or
supplement to this Agreement, by any party to this Agreement or its directors,
officers, employees or agents, to any other party to this Agreement or its
directors, officers, employees or agents, except to the extent that the same has
been reduced to writing and included as a term of this Agreement, and none of
the parties to this Agreement has been induced to enter into this Agreement or
any amendment or supplement by reason of any such warranty, representation,
opinion, advice or assertion of fact. Accordingly, there will be no liability,
either in tort or in contract, assessed in relation to any such warranty,
representation, opinion, advice or assertion of fact, except to the extent
contemplated above.



                                      -13-


1.12 WAIVER, AMENDMENT

          Except as expressly provided in this Agreement, no amendment or waiver
of this Agreement will be binding unless executed in writing by the party to be
bound by the amendment or waiver provided, however, that with respect to the
Jasc Stockholders, this Agreement may be amended with the consent of the
Stockholder Representative. No waiver of any provision of this Agreement will
constitute a waiver of any other provision nor will any waiver of any provision
of this Agreement constitute a continuing waiver unless otherwise expressly
provided. The failure of any party at any time or times to require performance
of any provision of this Agreement will in no way affect its right at a later
time to enforce that provision or any other provision.

1.13 GOVERNING LAW

          The validity of this Agreement and of any of its terms or provisions,
as well as the rights and duties of the parties under this Agreement, will be
construed pursuant to and in accordance with the laws of the State of Minnesota,
without regard to the conflicts of laws provisions thereof.

                                    ARTICLE 2
                                 THE TRANSACTION

2.1  THE TRANSACTION

     2.1.1 On the Closing Date and immediately prior to the Effective Time (1)
     the Corporation will transfer the Specified Assets to Corel Holdings, and
     (2) Corel Holdings will pay to, or as directed by, the Corporation the
     Asset Sale Consideration, each as contemplated by the Transfer Agreement.

     2.1.2 At the Effective Time and subject to and upon the terms and
     conditions of this Agreement and the Articles of Merger attached to this
     Agreement as Exhibit A (the "ARTICLES OF MERGER") and the applicable
     provisions of the Minnesota Business Corporation Act ("MINNESOTA LAW"), the
     Merger Subsidiary will be merged with and into the Corporation, the
     separate corporate existence of the Merger Subsidiary will cease and the
     Corporation will continue as the surviving corporation under the name "
     Jasc Software, Inc." The Corporation as the surviving corporation after the
     Merger is sometimes referred to as the "SURVIVING CORPORATION."

2.2  CLOSING AND THE EFFECTIVE TIME

          Upon satisfaction (or, to the extent permitted under this Agreement,
waiver) of all conditions to the Transaction (that date being the "CLOSING
DATE"), the parties will first complete the Asset Sale and immediately
thereafter, the Merger Subsidiary and the Corporation will cause to be filed the
Articles of Merger with the Secretary of State of the State of Minnesota and
make all other filings or recordings required by Minnesota Law in connection
with the Merger. Pending completion of the Merger following the Closing, all
closing deliveries will be held in escrow. The Merger will become effective at
the time when the Articles of Merger, specifying 11:59 p.m. on the date of
filing as the effective date of the Merger, is duly filed with the Secretary of
State of the State of Minnesota (the "EFFECTIVE TIME").

2.3  EFFECT OF THE MERGER

          At the Effective Time, the effect of the Merger will be as provided in
this Agreement, the Articles of Merger and the applicable provisions of
Minnesota Law. Without limiting the generality of



                                      -14-


the foregoing, and subject thereto, at the Effective Time, all the property,
rights, privileges, powers and franchises of the Corporation and the Merger
Subsidiary (excluding, for greater certainty, the Specified Assets) will vest in
the Surviving Corporation, and all debts, liabilities and duties of the
Corporation and the Merger Subsidiary will become the debts, liabilities and
duties of the Surviving Corporation.

2.4  ARTICLES OF INCORPORATION AND BYLAWS

     2.4.1 At the Effective Time, the Articles of Incorporation of the
     Corporation will be amended in their entirety to read as the Articles of
     Incorporation of the Merger Subsidiary as in effect immediately prior to
     the Effective Time, and will be the Articles of Incorporation of the
     Surviving Corporation until thereafter amended as provided by Minnesota
     Law, except that as of the Effective Time, Article I of the Articles of
     Incorporation will be amended to read: "The name of the corporation will be
     'Jasc Software, Inc.'"

     2.4.2 The Bylaws of the Merger Subsidiary, as in effect immediately prior
     to the Effective Time, will be the Bylaws of the Surviving Corporation
     until thereafter amended as provided by Minnesota Law, the Articles of
     Incorporation of the Surviving Corporation and those Bylaws.

2.5  DIRECTORS AND OFFICERS

          At the Effective Time, the directors of the Merger Subsidiary
immediately prior to the Effective Time will be the initial directors of the
Surviving Corporation, to hold office until those directors resign, are removed
or their respective successors are duly elected or appointed in accordance with
Minnesota Law and the Articles of Incorporation and Bylaws of the Surviving
Corporation. The officers of the Merger Subsidiary immediately prior to the
Effective Time will be the initial officers of the Surviving Corporation, to
hold office until those officers resign, are removed or their respective
successors are duly elected or appointed in accordance with Minnesota Law and
the Articles of Incorporation and Bylaws of the Surviving Corporation.

2.6  EFFECT ON CAPITAL STOCK

          By virtue of the Merger and without any action on the part of Corel,
the Merger Subsidiary, the Corporation or the Jasc Stockholders:

     2.6.1 CONVERSION OF JASC SHARES. Each Jasc Share will be converted into (i)
     the Per Jasc Share Equity Consideration subject to any fractional share
     interest to be addressed in accordance with section 2.6.3; and (ii) the
     right to receive a cash payment equal to the Per Jasc Share Cash
     Consideration.

     2.6.2 CONVERSION OF MERGER SUBSIDIARY COMMON STOCK. At the Effective Time,
     each share of common stock, $.01 par value, of the Merger Subsidiary will
     be converted automatically into one fully paid and nonassessable share of
     common stock of the Surviving Corporation.

     2.6.3 FRACTIONAL SHARES. No fraction of a Corel Common Share will be issued
     in the Merger. Any fractional share that would otherwise be issued to a
     Jasc Stockholder will be rounded down to the nearest whole number of
     shares.

     2.6.4 DISSENTERS' RIGHTS. Notwithstanding any provisions of this Agreement
     to the contrary, any Jasc Share outstanding immediately prior to the
     Effective Time held by a holder who has demanded and perfected the right,
     if any, to receive fair value for those Jasc Shares ("DISSENTING SHARES")
     in accordance with the provisions of Sections 302A.471 and 302A.473 of
     Minnesota Law



                                      -15-


     and as of the Effective Time has not withdrawn or lost those dissenter's
     rights will not be converted into or represent a right to receive the
     Merger Consideration pursuant to section 2.6.1, but the stockholder will
     only be entitled to those rights as are granted by Minnesota Law. If a
     holder of Jasc Shares who asserts dissenter's rights under Minnesota Law
     withdraws or loses those rights (through failure to perfect or otherwise),
     then, as of the Effective Time or the occurrence of that event, whichever
     last occurs, those shares (the "UNPERFECTED SHARES") will be converted into
     and/or represent, as applicable, only the right to receive the Merger
     Consideration as provided in section 2.6.1, without interest, upon the
     surrender of the certificate or certificates formerly representing those
     Unperfected Shares. The Corporation will give Corel (i) prompt notice of
     any written notice of intent to demand fair value for any Unperfected
     Shares, attempted withdrawals of those demands, the deposit of any shares
     for which payment is demanded, and any other instruments served pursuant to
     Minnesota Law received by the Corporation relating to dissenters' rights
     and (ii) the opportunity to direct all negotiations and proceedings with
     respect to the assertion of dissenters' rights under Minnesota Law. The
     Corporation will not, except with the prior written consent of Corel, given
     in its sole discretion, voluntarily make any payment with respect to any of
     those demands for payment of fair value, offer to settle or settle any of
     those demands or approve any withdrawal of any of those demands.

2.7  SURRENDER OF CERTIFICATES AND PAYMENT OF MERGER CONSIDERATION

     2.7.1 Promptly at the Effective Time, each of the Jasc Stockholders will
     surrender his or her existing share certificates representing Jasc Shares
     ("OLD CERTIFICATES") to Corel.

     2.7.2 Each Jasc Stockholder, upon surrender to Corel of the Old
     Certificates, will receive in exchange for those certificates as soon as
     practicable following the receipt of the certificates by Corel, the Merger
     Consideration to which he, she or it is entitled pursuant to section 2.6.1
     (subject to section 2.12), and the Old Certificates so surrendered will be
     cancelled. Unless and until so surrendered, each Old Certificate will,
     after the Effective Time, represent for all purposes only the right to
     receive upon surrender the Merger Consideration to which the Jasc
     Stockholder is entitled pursuant to section 2.6.1.

     2.7.3 At and following the Effective Time, Jasc Stockholders will cease to
     be, and will have no rights as, stockholders of the Corporation (and/or,
     for greater certainty, the Surviving Corporation), other than as provided
     in this section 2.7.3. After the Effective Time, there will be no further
     registration of transfers of Jasc Shares. If, after the Effective Time, Old
     Certificates are presented to the Surviving Corporation or Corel, they will
     be cancelled and exchanged for the Merger Consideration as provided for,
     and in accordance with the procedures set out in this Article 2.

     2.7.4 No dividends or other distributions on Corel Common Shares will be
     paid to the holder of any unsurrendered Old Certificates until those Old
     Certificates are surrendered as provided in this section 2.7. Upon that
     surrender, where the holder of the Old Certificate receives Corel Common
     Shares in accordance with section 2.6.1, there will be paid, without
     interest, to the Person in whose name the new share certificates
     representing the Corel Common Shares ("NEW CERTIFICATES") into which those
     Jasc Shares were converted are registered, all dividends and other
     distributions paid in respect of those Corel Common Shares on a date
     subsequent to, and in respect of a record date after, the Effective Time.
     Dividends and other distributions paid on Corel Common Shares subject to
     the Escrow Agreement will be dealt with in the manner provided in the
     Escrow Agreement.

     2.7.5 If any Old Certificate has been lost, stolen or destroyed, upon the
     making of an affidavit of that fact by the person claiming that Old
     Certificate to be lost, stolen or destroyed and the granting by that person
     of an indemnity in favour of Corel and the Surviving Corporation against



                                      -16-


     any claim that may be made against Corel or the Surviving Corporation with
     respect to that Old Certificate, Corel will deliver the Merger
     Consideration as provided for in section 2.6.1.

2.8  ADJUSTMENTS

          If, at any time during the period between the date of this Agreement
and the Effective Time, the outstanding Corel Common Shares are changed into a
different number of shares, by reason of any reclassification, recapitalization,
stock split or combination, reverse stock split, consolidation, exchange or
readjustment of shares, stock dividend or similar transaction with a record date
(or where there is no record date, effective date) during that period, the
number of Corel Common Shares that the Jasc Stockholders are entitled to receive
as Merger Consideration as provided for in section 2.6.1 will be appropriately
adjusted.

2.9  WORKING CAPITAL ADJUSTMENT

     2.9.1 At least 3 Business Days prior to the Closing Date, the Corporation
     will have prepared and delivered to Corel the Initial Closing Balance
     Sheet. The Initial Closing Balance Sheet will show a minimum amount of
     Adjusted September 30 Working Capital at least equal to the Required
     Working Capital Amount.

     2.9.2 If the Initial Closing Balance Sheet shows Adjusted September 30
     Working Capital that is less than the Required Working Capital Amount (the
     "INITIAL WORKING CAPITAL SHORTFALL"), then the Asset Sale Cash
     Consideration will be reduced by the amount of the Initial Working Capital
     Shortfall. If the Initial Working Capital Shortfall is greater than the
     Asset Sale Cash Consideration, then the Total Merger Cash Consideration
     will be reduced by that excess amount.

     2.9.3 Within 60 days of the Closing Date, Corel will prepare and deliver to
     the Stockholder Representative a draft Working Capital Closing Balance
     Sheet. The Working Capital Closing Balance Sheet will contain a
     reconciliation that details any differences between this balance sheet and
     the Initial Closing Balance Sheet. Once the Working Capital Closing Balance
     Sheet is settled in accordance with this section 2.9, it will be used to
     calculate the Closing Working Capital Amount. Within 10 Business Days after
     settling the Working Capital Closing Balance Sheet:

          2.9.3.1 if the Closing Working Capital Amount is less than the
          Required Working Capital Amount by more than the Initial Working
          Capital Shortfall (the difference from the Initial Working Capital
          Shortfall being the "WORKING CAPITAL ADJUSTMENT AMOUNT") then the Jasc
          Stockholders will pay to Corel the Working Capital Adjustment Amount.
          Each of the Jasc Stockholders will pay to Corel cash equal to a pro
          rata portion of the Working Capital Adjustment Amount based upon the
          Jasc Stockholder's Ownership Percentage. If the entire Working Capital
          Adjustment Amount is not paid by the Jasc Stockholders within the 10
          Business Day period, the unpaid balance of the Working Capital
          Adjustment Amount will be satisfied from the Escrow Fund and each Jasc
          Stockholder that did not make its required payment during the 10
          Business Day period will (and will be severally, and not jointly,
          liable to) make a cash payment to the Escrow Fund equal to that Jasc
          Stockholder's pro rata share of the Working Capital Adjustment Amount
          (based upon the percentage of the Jasc Stockholder's Ownership
          Percentage); or

          2.9.3.2 if the Closing Working Capital Amount is less than the
          Required Working Capital Amount by less than the Initial Working
          Capital Shortfall (the difference from the Initial Working Capital
          Shortfall being the "COREL WORKING CAPITAL PAYMENT"), then



                                      -17-


          Corel will pay to the Jasc Stockholders cash equal to a pro rata
          portion of the Corel Working Capital Payment based upon the Jasc
          Stockholder's Ownership Percentage.

     2.9.4 If the Stockholder Representative notifies Corel that it agrees with
     the Working Capital Closing Balance Sheet within 21 days after receiving it
     or fails to deliver notice to Corel of its disagreement with the Working
     Capital Closing Balance Sheet within that 21 day period, the Working
     Capital Closing Balance Sheet will be conclusive and binding on Corel and
     each of the Jasc Stockholders and the parties will be deemed to have agreed
     to it, in the first case on the date Corel receives the notice and, in the
     second case, on the 21st day.

     2.9.5 If the Stockholder Representative notifies Corel of a disagreement
     with the Working Capital Closing Balance Sheet within the 21 day period,
     then Corel and the Stockholder Representative will attempt, in good faith,
     to resolve their differences with respect to it within 15 days after
     Corel's receipt of the notice of disagreement. Any disagreement over the
     Working Capital Closing Balance Sheet not resolved by Corel and the
     Stockholder Representative within that 15 day period (or any longer period
     as may be agreed to between the parties) will be settled in accordance with
     section 2.11.

2.10 Q3 NET REVENUE ADJUSTMENT

     2.10.1 At least 3 Business Days prior to the Closing Date, the Corporation
     will have prepared and delivered to Corel a calculation of the Initial Q3
     Net Revenue.

     2.10.2 If the Initial Q3 Net Revenue is less than the Required Q3 Net
     Revenue (the "INITIAL Q3 NET REVENUE SHORTFALL"), then the Asset Sale Cash
     Consideration will be reduced by the amount of the Initial Q3 Net Revenue
     Shortfall. If the Initial Q3 Net Revenue Shortfall is greater than the
     Asset Sale Cash Consideration, then the Total Merger Cash Consideration
     will be reduced by that excess amount.

     2.10.3 Within 60 days of the Closing Date, Corel will prepare and deliver
     to the Stockholder Representative a draft calculation of Q3 Net Revenue.
     The calculation of the Q3 Net Revenue will contain a reconciliation that
     details any differences between this calculation and the calculation of the
     Initial Q3 Net Revenue. Within 10 Business Days after settling the
     calculation of Q3 Net Revenue in accordance with this section 2.10:

          2.10.3.1 if the Q3 Net Revenue is less than the Required Q3 Net
          Revenue by more than the Initial Q3 Net Revenue Shortfall (the
          difference from the Initial Q3 Net Revenue Shortfall being the "Q3 NET
          REVENUE ADJUSTMENT AMOUNT") then the Jasc Stockholders will pay to
          Corel the Q3 Net Revenue Adjustment Amount. Each of the Jasc
          Stockholders will pay to Corel cash equal to a pro rata portion of the
          Q3 Net Revenue Adjustment Amount based upon the Jasc Stockholder's
          Ownership Percentage. If the entire Q3 Net Revenue Adjustment Amount
          is not paid by the Jasc Stockholders within the 10 Business Day
          period, the unpaid balance of the Q3 Net Revenue Adjustment Amount
          will be satisfied from the Escrow Fund and each Jasc Stockholder that
          did not make its required payment during the 10 Business Day Period
          will (and will be severally, and not jointly, liable to) make a cash
          payment to the Escrow Fund equal to that Jasc Stockholder's pro rata
          share of the Q3 Net Revenue Adjustment Amount (based upon the Jasc
          Stockholder's Ownership Percentage); or

          2.10.3.2 if the Q3 Net Revenue is less than the Required Q3 Net
          Revenue by less than the Initial Q3 Net Revenue Shortfall (the
          difference from the Initial Q3 Net Revenue



                                      -18-


          Shortfall being the "COREL Q3 NET REVENUE PAYMENT"), then Corel will
          pay to the Jasc Stockholders cash equal to a pro rata portion of the
          Corel Q3 Net Revenue Payment based upon the Jasc Stockholder's
          Ownership Percentage.

     2.10.4 If the Stockholder Representative notifies Corel that it agrees with
     the calculation of Q3 Net Revenue within 21 days after receiving it or
     fails to deliver notice to Corel of its disagreement with the calculation
     of Q3 Net Revenue within that 21 day period, the calculation of Q3 Net
     Revenue will be conclusive and binding on Corel and each of the Jasc
     Stockholders and the parties will be deemed to have agreed to it, in the
     first case on the date Corel receives the notice and, in the second case,
     on the 21st day.

     2.10.5 If the Stockholder Representative notifies Corel of a disagreement
     with the calculation of Q3 Net Revenue within the 21 day period, then Corel
     and the Stockholder Representative will attempt, in good faith, to resolve
     their differences with respect to it within 15 days after Corel's receipt
     of the notice of disagreement. Any disagreement over the calculation of Q3
     Net Revenue not resolved by Corel and the Stockholder Representative within
     that 15 day period (or any longer period as may be agreed to between the
     parties) will be settled in accordance with section 2.11.

2.11 DISPUTE PROCESS

          Any dispute relating to the Working Capital Closing Balance Sheet, Q3
Net Revenue, Tax Related Payment or Stockholder Expense Adjustment Amount will
be determined by arbitration administered by the American Arbitration
Association under its Commercial Arbitration Rules, expedited procedures, as
amended and effective on the date of this Agreement provided that (1) the
arbitration will be conducted before a single arbitrator agreed to by Corel and
the Stockholder Representative or if the parties are unable to agree on a single
arbitrator after using best efforts to reach agreement, appointed pursuant to
the applicable expedited procedures under the Commercial Arbitration Rules, (2)
any award or determination of an arbitrator will be final and binding on the
parties and there will be no appeal on any ground, (3) an arbitrator will not,
without the written consent of Corel and the Stockholder Representative, retain
any expert, (4) all matters relating to the arbitration will be kept
confidential to the full extent permitted by law, (5) the arbitrator will have
power to award legal fees and costs associated with the arbitration (including
fees of the arbitrator) and to order equitable relief in accordance with this
section 2.11, and (6) no individual will be appointed as an arbitrator unless he
or she agrees in writing to be bound by this arbitration provision.

2.12 ESCROW

          Pursuant to the terms of the Escrow Agreement, Corel will deliver at
the Closing to the Escrow Agent 2,778,876 Corel Shares which comprise a portion
of the Total Equity Consideration and $1.0 million which comprises a portion of
the Total Cash Consideration. The Escrow Agent will hold the Escrow Fund in
escrow in accordance with the terms of the Escrow Agreement.

2.13 CONVERTIBLE SECURITIES AND OPTION PLAN

          Prior to the Effective Time, the Corporation and each holder of
Convertible Securities will enter into an agreement that will provide (i) that
holders of Convertible Securities who are Accredited Investors on the date of
that agreement will, prior to the Closing Date, in respect of each Convertible
Security, either (a) exercise that Convertible Security for Jasc Shares or (b)
receive a cash payment as consideration for the cancellation of that Convertible
Security in an amount equal to the difference between the exercise price of that
Convertible Security and the value of the Transaction Consideration which the
holder would have received had that Convertible Security been exercised
immediately prior to



                                      -19-


the Time of Closing (if the holder fails to elect (a) or (b) at least 3 days
prior to the Closing Date, the holder will be deemed to have elected (b)); and
(ii) that holders of Convertible Securities who are not Accredited Investors on
the date of that agreement will, prior to the Closing Date, for each Convertible
Security held receive a cash payment as consideration for the cancellation of
that Convertible Security in an amount equal to the difference between the
exercise price of that Convertible Security and the value of the Transaction
Consideration which the holder would have received had that Convertible Security
been exercised immediately prior to the Time of Closing. The Corporation will
pay the amounts due to the holders of Convertible Securities or will arrange
with Corel, at least one Business Day prior to the Closing Date, for the payment
of those amounts to be made directly out of the Asset Sale Cash Consideration as
contemplated by section 5.11.

2.14 TAX RELATED PAYMENT

     2.14.1 Upon the later of (i) at least 3 Business Days prior to the Closing
     Date; or (ii) October 15, 2004, the Corporation (or the Stockholder
     Representative, if that later date is following the Closing Date) will
     prepare and deliver to Corel a draft September Income Statement and a draft
     calculation of the Tax Related Payment calculated in accordance with
     section 2.14.3.

     2.14.2 Within 10 Business Days after settling the calculation of the Tax
     Related Payment in accordance with this section 2.14, Corel will pay to the
     Jasc Stockholders cash equal to the Tax Related Payment, pro rata based
     upon the Jasc Stockholder's Ownership Percentage.

     2.14.3 The "TAX RELATED PAYMENT" will be equal to the taxable income of the
     Corporation for the time period commencing on October 1, 2004 and ending at
     the Effective Time, multiplied by 0.43. The taxable income of the
     Corporation for the time period commencing on October 1, 2004 and ending at
     the Effective Time will be the product of (i) taxable income of the
     Corporation from September 1, 2004 to September 30, 2004 divided by 30 and
     (ii) the number of days from and including October 1, 2004, to the
     Effective Time. The Tax Related Payment will be a liability of the
     Corporation on the Effective Date and, for greater certainty, will be
     treated for tax purposes as Merger Consideration. The parties agree that
     (i) the foregoing calculation will be the basis for allocating income
     between the parties, from a Tax perspective, for the period from October 1,
     2004 to the Effective Date; and (ii) in no event will the taxable income
     calculated pursuant to this section 2.14.3 be greater than the taxable
     income reported to the Internal Revenue Service for that same period.

     2.14.4 If Corel notifies the Stockholder Representative that it agrees with
     the calculation of the Tax Related Payment within 21 days after receiving
     it or fails to deliver notice to the Stockholder Representative of its
     disagreement with the calculation of the Tax Related Payment within that 21
     day period, the calculation of the Tax Related Payment will be conclusive
     and binding on Corel and each of the Jasc Stockholders and the parties will
     be deemed to have agreed to it, in the first case on the date the
     Stockholder Representative receives the notice and, in the second case, on
     the 21st day.

     2.14.5 If Corel notifies the Stockholder Representative of a disagreement
     with the calculation of the Tax Related Payment within the 21 day period,
     then Corel and the Stockholder Representative will attempt, in good faith,
     to resolve their differences with respect to it within 15 days after the
     Stockholder Representative's receipt of the notice of disagreement. Any
     disagreement over the calculation of the Tax Related Payment not resolved
     by Corel and the Stockholder Representative within that 15 day period (or
     any longer period as may be agreed to between the parties) will be settled
     in accordance with section 2.11.



                                      -20-


     2.14.6 If it is later determined, in connection with a tax audit or
     otherwise, that the actual tax obligations of the Jasc Stockholders related
     to the period between September 30, 2004 and the Closing Date is greater
     than Tax Related Payment, Corel shall make an additional cash payment to
     each Jasc Stockholder in an amount equal to such additional tax liability.

                                    ARTICLE 3
                         REPRESENTATIONS AND WARRANTIES

3.1  BY THE CORPORATION AND THE PRINCIPAL STOCKHOLDERS

          The Corporation and each of the Principal Stockholders represent and
warrant to the Merger Subsidiary and Corel as follows and acknowledge that the
Merger Subsidiary and Corel are relying upon the following representations and
warranties in connection with the Transaction:

     3.1.1 FORMATION AND STATUS OF THE CORPORATION. The Corporation:

          3.1.1.1 is duly formed and organized and is validly existing, in good
          standing and up-to-date in the filing of all corporate and similar
          returns under the laws of the State of Minnesota;

          3.1.1.2 is duly registered, licensed or qualified, in good standing
          and up-to-date in the filing of all corporate and similar returns,
          under the laws of each jurisdiction in which the nature of the
          Business or the assets owned or leased by it makes that registration,
          licensing or qualification necessary or desirable; and

          3.1.1.3 has provided to the Merger Subsidiary a correct and complete
          copy of the articles of incorporation, by-laws, constating documents
          and other organizational documents of the Corporation, in each case as
          amended to the date of this Agreement, as well as the corporate
          minutes and stock record books.

     3.1.2 POWER OF THE CORPORATION AND DUE AUTHORIZATION. The Corporation has
     the corporate power and capacity to own or lease its assets and to carry on
     the Business as it is presently conducted and to enter into, and to perform
     its obligations under, this Agreement and the Related Agreements to which
     it is a party. Each of this Agreement and each of the Related Agreements to
     which the Corporation is a party has been duly authorized by the
     Corporation. This Agreement has been duly executed and delivered by the
     Corporation and is a valid and binding obligation of the Corporation,
     enforceable in accordance with its terms, subject to the usual exceptions
     as to bankruptcy and the availability of equitable remedies. At the Time of
     Closing, each of the Related Agreements to which the Corporation is a party
     will be duly executed and delivered by the Corporation and will be valid
     and binding obligations of the Corporation, enforceable in accordance with
     their respective terms, subject to the usual exceptions as to bankruptcy
     and the availability of equitable remedies.

     3.1.3 CAPITAL OF THE CORPORATION. Schedule 3.1.3 sets out particulars of
     the authorized and issued securities of the Corporation (including shares,
     options, warrants, other rights to acquire securities or debt instruments),
     the names of the Persons who are the beneficial owners of those securities
     and, if those beneficial owners are not the registered owners of those
     securities, the names of the Persons shown on the securities register of
     the Corporation as the holder of any of those securities, and the number
     and class of securities held by those Persons. All the shares indicated on
     the Schedule as being issued and outstanding constitute all of the
     outstanding shares of



                                      -21-


     capital stock of the Corporation, have been validly issued and are
     outstanding as fully paid and non-assessable shares. Except as set out in
     Schedule 3.1.3, there are no stockholders agreements, pooling agreements,
     voting trusts or other Contracts with respect to the voting of the
     securities of the Corporation. Complete and accurate records with respect
     to the issuance, transfer, redemption and cancellation of all shares of
     capital stock (including a list of all certificates issued at any time
     evidencing outstanding securities of the Corporation, the names of the
     holder or holders of each of those certificates and the type of Person(s)
     comprising that holder or holders) are set out in the Corporation's stock
     record books, copies of which have been provided to the Merger Subsidiary.
     At the Time of Closing, there will not be any outstanding Convertible
     Securities and the former holders of Convertible Securities will have no
     rights against the Corporation or the Surviving Corporation to receive
     cash, securities or other property.

     3.1.4 SUBSIDIARIES AND INVESTMENTS. The Corporation does not have any
     subsidiaries. The Corporation does not own beneficially or of record any
     securities of, or any other interests in, any Entity, nor have any Contract
     to acquire any such securities or other interests.

     3.1.5 NO OBLIGATIONS TO ISSUE SECURITIES. Except as set out in Schedule
     3.1.3, there are no options, warrants, rights of conversion or other rights
     or Contracts pursuant to which the Corporation is, or may become, obligated
     to issue any shares or any securities convertible or exchangeable, directly
     or indirectly, into any shares of the Corporation.

     3.1.6 NO CONTRAVENTION BY THE CORPORATION. Except as set out in Schedule
     3.1.6, none of the entering into of this Agreement or any Related
     Agreement, the consummation of the Transaction or the performance by the
     Corporation of its other obligations under this Agreement and the Related
     Agreements to which it is a party (a) will contravene, breach or result in
     any default under (1) the articles of incorporation, by-laws, constating
     documents or other organizational documents of the Corporation, or (2) any
     license, permit, order, judgment, decree or Law to which the Corporation is
     a party or by which it may be bound or (b) contravenes, breaches or results
     in any default under, or conflicts with or will conflict with, or results
     in or will result in any modification of any of the terms of, or results in
     or will result in the termination of or the creation of any Charge,
     acceleration right or other right pursuant to the terms of, any Contract or
     Permit to which the Corporation is a party or by which it may be bound or
     will in any way affect the continuation, validity or effectiveness of any
     such Contract or Permit.

     3.1.7 APPROVALS AND CONSENTS. Except as set out in Schedule 3.1.7, no
     authorization, consent or approval of, or filing with or notice to, any
     Governmental Authority or other Person is required in connection with (1)
     the execution, delivery or performance of this Agreement by the Corporation
     or the Jasc Stockholders or the consummation of the Transaction or (2) any
     subsequent assignment or transfer by Corel or any of its subsidiaries
     (including the Surviving Corporation) of any part or all or substantially
     all of the Corporation's assets (including the Corporation's Contracts, Key
     Software Programs, Proprietary Intellectual Property or Proprietary
     Software) to Corel and/or one or more direct or indirect subsidiaries of
     Corel. The failure of the Corporation to obtain any or all of the Consents
     which are not Closing Required Consents would not have a material adverse
     impact on the Merger Subsidiary, the Surviving Corporation or the Business.

     3.1.8 FINANCIAL STATEMENTS. The Audited Financial Statements and the
     Unaudited Financial Statements have been prepared and the Initial Closing
     Balance Sheet and the calculation of Initial Q3 Net Revenue will be
     prepared in accordance with GAAP (subject to usual year-end adjustments and
     the absence of notes in the case of the Unaudited Financial Statements)
     consistently applied throughout the periods indicated and fairly,
     completely and accurately present the financial position of the Corporation
     and the results of its operations as of the dates and throughout the
     periods



                                      -22-


     indicated and there has been no material adverse change in the financial
     position of the Corporation from that reflected in the Audited Financial
     Statements. Notwithstanding the foregoing, the absence of any accrual for
     the Jasc YE Bonus Program will not be deemed to be a breach of the
     representations in this section 3.1.8.

     3.1.9 ACCOUNTS RECEIVABLE. The accounts receivable reflected on the balance
     sheet forming part of the Unaudited Financial Statements and all accounts
     receivable arising after the Unaudited Statements Date are bona fide and
     collectible, other than those accounts receivable which are doubtful
     accounts and in respect of which a reasonable allowance, consistent with
     past practice, has been made, and are not subject to any set-off or
     counterclaim.

     3.1.10 INVENTORY VALUATION. The inventory of the Corporation reflected on
     the balance sheet forming part of the Unaudited Financial Statements was,
     and the current inventory of the Corporation is, in usable and saleable
     condition in the ordinary course of the Business and, in the case of
     inventory reflected on that balance sheet, at an amount not less than the
     amounts carried in that balance sheet.

     3.1.11 LIABILITIES AND GUARANTEES. The Corporation does not have any
     outstanding liabilities or obligations, whether accrued, absolute, known or
     unknown, contingent or otherwise (including any liabilities or obligations
     which would arise as a result of the consummation of the Transaction), and
     the Corporation is not a party to or bound by any agreement of guarantee,
     support, indemnification, assumption, or endorsement of, or any other
     similar commitment with respect to the obligations, liabilities (contingent
     or otherwise) or indebtedness of any Person, other than:

          3.1.11.1 those set out in the Unaudited Financial Statements;

          3.1.11.2 current liabilities (determined in accordance with GAAP) in
          respect of trade or business obligations incurred after the Unaudited
          Statements Date in the ordinary course of the Business, consistent
          with past practice, none of which has been or could be materially
          adverse to the nature, results of operations, assets or financial
          condition of, or manner of conducting, the Business; and

          3.1.11.3 those set out in Schedule 3.1.11.

     Except as set out in Schedule 3.1.11, there are no off-balance sheet
     arrangements (as defined in Item 303(a)(4)(ii) of Regulation S-K under the
     Securities Act) which are currently or at any point may be binding on the
     Corporation.

     3.1.12 INDEBTEDNESS. Except as set out in the Audited Financial Statements
     or the Unaudited Financial Statements or in Schedule 3.1.12, the
     Corporation does not have outstanding any bonds, debentures, notes,
     mortgages or other indebtedness which mature more than one year after the
     date of their original creation or issuance and the Corporation has not
     agreed to create or issue any bonds, debentures, notes, mortgages or other
     indebtedness which will mature more than one year after the date of their
     creation or issuance.

     3.1.13 ABSENCE OF UNUSUAL TRANSACTIONS AND EVENTS. Except as set out in
     Schedule 3.1.13, the Corporation has not, since the Unaudited Statement
     Date:

          3.1.13.1 paid or satisfied any obligation or liability, absolute or
          contingent, other than current liabilities or obligations disclosed in
          the Unaudited Financial Statements and



                                      -23-


          current liabilities or obligations incurred since the Unaudited
          Statements Date in the ordinary course of the Business, consistent
          with past practice;

          3.1.13.2 waived or cancelled any rights or claims or made any gift,
          other than donations made in the ordinary course of the Business,
          consistent with past practice;

          3.1.13.3 sold or otherwise disposed of any fixed or capital assets
          having a fair market value, in the case of any single sale or
          disposition, in excess of $25,000 and, in the case of all sales and
          dispositions, in excess of $50,000 in total;

          3.1.13.4 made any capital expenditures, in the case of any single
          capital expenditure, in excess of $25,000 and, in the case of all
          capital expenditures, in excess of $50,000 in total;

          3.1.13.5 made any material change or deviation from past practices in
          the manner of its billings, or the credit terms made available by it,
          to any of its customers or recording and/or treatment by the
          Corporation of customer accounts receivable or reserves for doubtful
          accounts;

          3.1.13.6 made or suffered any change or changes in its financial
          condition, assets, liabilities or the Business which, singly or in the
          aggregate, have materially adversely affected or could materially
          adversely affect its financial condition, assets, liabilities or the
          Business;

          3.1.13.7 suffered or incurred any damage, destruction or loss, whether
          or not covered by insurance, which has materially adversely affected
          or could materially adversely affect its financial condition, assets
          or the Business;

          3.1.13.8 made any increase in the compensation payable or to become
          payable to directors, officers, employees, independent contractors or
          agents, including any improvements to severance or termination pay,
          except as required by Law, other than improvements to Employee Plans
          set out in Schedule 3.1.25;

          3.1.13.9 declared or paid any dividend or made any distribution,
          whether in cash, stock or in specie, in respect of any of its shares
          or purchased, redeemed or otherwise acquired any of its securities or
          made any other payment to the Jasc Stockholders or Persons related to
          them outside the ordinary course of business;

          3.1.13.10 changed any method of accounting or accounting principles;

          3.1.13.11 incurred any Charges with respect to any assets, except
          non-exclusive licenses to the Corporation's Key Software Programs
          granted in the ordinary course of Business; or

          3.1.13.12 authorized or agreed or otherwise become committed to do any
          of the foregoing.

     3.1.14 NO DIVIDENDS, LOANS, ETC.

          3.1.14.1 Except as disclosed on Schedule 3.1.14, subsequent to the
          Unaudited Statements Date, the Corporation has not (1) declared or
          paid any dividend (whether in



                                      -24-


          cash, stock or specie) or made any other distribution of any kind in
          respect of its capital stock, and the Corporation has no obligation
          (contingent or otherwise) to pay any dividends or make any other
          distribution of any kind; or (2) purchased, redeemed or otherwise
          acquired any shares of capital stock or any notes, bonds or other
          securities of any kind and has no obligation (contingent or otherwise)
          to do any of the foregoing.

          3.1.14.2 The Corporation has paid on a timely basis (1) all amounts
          due and payable under its indebtedness, leases and other Contract
          obligations; and (2) all other amounts due and payable to any Persons.

     3.1.15 INSIDER INTERESTS. Except as disclosed on Schedule 3.1.15, no
     present or former stockholder, partner, principal, officer, director,
     employee of the Corporation or Affiliate of the Corporation or, to the
     Corporation's and each Principal Stockholder's Knowledge, any immediate or
     other family member of any such person or any Person in which any such
     person is an officer, director, principal, partner or stockholder (1) is
     presently a party to any transaction or arrangement with the Corporation
     (other than for services as officers, directors or employees of the
     Corporation in the ordinary course of the Business); (2) owns any interest
     in any of the assets or properties of the Corporation; (3) owns any
     interest in, controls or is an employee, officer, director or agent of, or
     consultant to, any other Person which is a competitor, supplier, customer,
     vendor, landlord or tenant of the Corporation; (4) is indebted or liable
     to, owns any interest in, or owns, holds or has guaranteed any obligation
     or debt of the Corporation; or (5) has acquired from or sold or transferred
     to the Corporation any assets or properties owned, leased or used by the
     Corporation. Except as disclosed on Schedule 3.1.15 (1) there is no
     Contract in effect between the Corporation, on the one hand, and any Jasc
     Stockholder or family member of that Jasc Stockholder or any Affiliate of
     any such Jasc Stockholder or family member, on the other hand; and (2) the
     Corporation has no outstanding obligation or liability of any kind
     (contingent, unknown or otherwise) to any such Jasc Stockholder, family
     member or Affiliate.

     3.1.16 AS TO CERTAIN CONTRACTS IN AND OUT OF THE ORDINARY COURSE. Except as
     set out in Schedule 3.1.16 and except as disclosed in any other Schedule
     (and explicitly cross-referenced to Schedule 3.1.16), the Corporation is
     not a party to or bound by any:

          3.1.16.1 Contract which expires or may expire, if the same is renewed
          or extended at the unilateral option of any other Person, more than
          one year after the date of this Agreement;

          3.1.16.2 Contract for the purchase of materials, supplies or services
          which requires payment of more than $25,000, in the case of any single
          Contract, or, in the case of all such Contracts, in excess of $50,000
          in the aggregate;

          3.1.16.3 Contract for the purchase or sale of any equipment or fixed
          or capital assets having a fair market value in excess of $25,000;

          3.1.16.4 management, consulting, agency or similar Contract;

          3.1.16.5 license or royalty agreement relating to Intellectual
          Property;

          3.1.16.6 Contract to make any gift of any of its property, other than
          donations made in the ordinary course of the Business, consistent with
          past practice;



                                      -25-


          3.1.16.7 Contract which materially adversely affects or could
          materially adversely affect the Business or its financial condition or
          any of its assets or is or could be materially burdensome to it;

          3.1.16.8 Material Contract;

          3.1.16.9 lease, agreement in the nature of a lease or agreement to
          lease whether as lessor or lessee, and whether in respect of real
          property or personal property, except for any lease or agreement in
          the nature of a lease relating to personal property where the total
          annual payments under that lease or agreement and under any related
          service or maintenance or similar Contract do not exceed $25,000; or

          3.1.16.10 material Contract which was not made in the ordinary course
          of the Business, consistent with past practice.

     For the purposes of the foregoing, if a particular Contract falls within
     more than one of the categories established by sections 3.1.16.1 through
     3.1.16.10, it need not be set out more than once in Schedule 3.1.16.

     Correct and complete copies of all of the Contracts set out in Schedule
     3.1.16, or, where those Contracts are oral, correct and complete written
     summaries of their terms, have been provided to the Merger Subsidiary.

     3.1.17 CERTAIN DISTRIBUTION AND MASTER REPRESENTATIVE AGREEMENTS.

          3.1.17.1 Schedule 3.1.17.1 sets out those Contracts of the Corporation
          relating to all distribution, reselling and similar arrangements
          involving the Corporation's Key Software Programs. Except as set out
          on Schedule 3.1.17.1, all of those Contracts may be terminated by the
          Corporation on no more than 60 days written notice and without any
          requirement to pay any amounts, deliver any property, grant any rights
          or restrict the activities of the Corporation.

          3.1.17.2 Except as set out in Schedule 3.1.17.2, each of the
          international master representative Contracts set out on Schedule
          3.1.17.1 may be terminated in accordance with its terms or, if
          termination is not addressed by the terms of a Contract, in accordance
          with applicable Laws, without giving rise to any obligations and/or
          liabilities to the Corporation or to Corel or a subsidiary of Corel
          which is assigned the Contract.

     3.1.18 NO DEFAULT UNDER AGREEMENTS. The Corporation is not in default or
     breach of any Contract to which it is a party or by which it may be bound
     (including the Contracts referred to in any Schedule to this Agreement) and
     there exists no state of facts which after notice or the passage of time,
     or both, would constitute such a default or breach, and all of those
     Contracts are now in good standing and the Corporation is entitled to all
     benefits, rights and privileges under them. To the Corporation's and each
     Principal Stockholder's Knowledge, no other party to any of the
     Corporation's Contracts is in default under that Contract. Each of the
     Contracts to which the Corporation is a party or by which it may be bound
     has been entered into in the ordinary course of the Business and is at
     arm's length.

     3.1.19 NO OWNED REAL PROPERTY. The Corporation does not own any real
     property.



                                      -26-


     3.1.20 LEASED REAL PROPERTY. A list and description of all real property
     leased by the Corporation or in which the Corporation has any interest is
     set out in Schedule 3.1.20 (collectively, the "Leased REAL PROPERTY"). All
     of the Leased Real Property is held subject to the written leases that are
     identified on Schedule 3.1.20 (the "REAL PROPERTY LEASES"). Each of the
     Real Property Leases is valid and effective in accordance with their
     respective terms, and there are no existing defaults or events of default,
     or events which with notice or lapse of time or both would constitute
     defaults under the Real Property Leases on the part of the Corporation.
     True and complete copies of all of the Real Property Leases, together with
     any amendments to the Real Property Leases, have been delivered to the
     Merger Subsidiary. To the Corporation's and each Principal Stockholder's
     Knowledge, there has not been any default or claimed or purported or
     alleged default or state of facts which with notice or lapse of time or
     both would constitute a default on the part of any other party in the
     performance of any obligation to be performed or paid by that other party
     under any Real Property Lease. Neither the Corporation nor any of the
     Principal Stockholders has received any written or oral notice to the
     effect that any Real Property Lease will not he renewed at the termination
     of the term of the Real Property Lease or that any Real Property Lease will
     be renewed only at a substantially higher rent.

     3.1.21 ZONING AND OTHER MATTERS RELATING TO REAL PROPERTY. To the
     Corporation's and each Principal Stockholder's Knowledge, the buildings and
     other structures located on the Leased Real Property and the operation and
     maintenance of those buildings and structures, as now operated and
     maintained, comply with all material applicable Laws; none of those
     buildings or other structures encroaches upon any land other than the
     Leased Real Property; and there are no restrictive covenants or other Laws
     which in any way restrict or prohibit the use of those lands, buildings or
     structures for the purposes for which they are presently being used. There
     are no expropriation, pending assessment for public improvements or
     condemnation, taking by eminent domain or similar Proceedings, actual or
     threatened, of which any of the Principal Stockholders or the Corporation
     has received notice, related to the Leased Real Property.

     3.1.22 TITLE TO ASSETS.

          3.1.22.1 The Corporation has good, valid and marketable title to all
          of its properties and assets, real, personal and mixed, tangible and
          intangible, including the properties and assets reflected in the
          balance sheet forming part of the Audited Financial Statements (except
          for assets leased under Contracts identified on Schedule 3.1.22.1, and
          except for accounts receivable collected upon and inventory disposed
          of since the Audited Statements Date in the ordinary course of the
          Business), free and clear of all Charges.

          3.1.22.2 All of the assets and properties owned or leased by the
          Corporation are in good operating condition and repair, normal wear
          and tear excepted, and have been maintained and serviced in accordance
          with the prudent conduct of business, are suitable for the purposes
          for which they presently are being used and constitute all of the
          assets and properties used in the operations of, and necessary to
          operate, the Business as presently conducted. None of the assets or
          properties owned or leased by the Corporation (or uses to which they
          are put) fails to conform in any material respect with any applicable
          Contract or Law. Except with respect to assets leased pursuant to
          valid Contracts identified on Schedule 3.1.22.1, the Corporation owns
          all the properties and assets located at or on the Real Property.

          3.1.22.3 There are no defects in the design or manufacture of any of
          the products sold by the Corporation or on hand to be sold which could
          give rise to any liabilities or



                                      -27-


          obligations which could result in a material adverse effect on the
          Corporation. The Corporation does not have and has never had any
          product recall plans or programs.

     3.1.23 ENVIRONMENTAL MATTERS.

          3.1.23.1 As used in this Agreement:

               3.1.23.1.1 "Environmental Claim" means any written notice to the
               Corporation by a person or entity alleging potential material
               liability of the Corporation (including potential material
               liability for investigatory costs or governmental response costs)
               arising out of, based on, or resulting from (i) the presence, or
               release into the environment, of any Hazardous Substance at the
               Leased Real Property or (ii) circumstances forming the basis of
               any violation, or alleged violation, of any Environmental Law;

               3.1.23.1.2 "Environmental Laws" means all applicable federal,
               state, and local statutes, regulations, laws, or ordinances
               relating to the protection of human health or the environment;

               3.1.23.1.3 "Environmental Permits" means all permits, licenses,
               or authorizations required to operate the Business pursuant to
               any Environmental Law;

               3.1.23.1.4 "Environmental Reports" means those environmental
               reports made available to the Merger Subsidiary; and

               3.1.23.1.5 "Hazardous Substance" means contaminants, hazardous
               wastes, petroleum, and other hazardous materials listed in,
               regulated by, or identified in any Environmental Law, including
               but not limited to asbestos-containing material.

          3.1.23.2 Except as disclosed by the Environmental Reports, the
          operation of the Business is in compliance with all applicable
          Environmental Laws and Environmental Permits and the Corporation has
          not disposed or released any Hazardous Substance at the Leased Real
          Property.

          3.1.23.3 Except as disclosed by the Environmental Reports, there are
          no Environmental Claims pending or, to the Corporation's and each of
          the Principal Stockholder's Knowledge, threatened, with respect to the
          Corporation and/or the Leased Real Estate.

          3.1.23.4 To the Corporation's and each of the Principal Stockholder's
          Knowledge, except as disclosed by the Environmental Reports, no
          Hazardous Substances are present in, on, or under, the Leased Real
          Property in such forms or quantities as would create a material risk
          to employees or invitees or would create any material liability of the
          Corporation under any Environmental Law.

          3.1.23.5 The Corporation has made available to the Purchaser copies of
          all environmental reports in its possession, custody or control with
          respect to the Leased Real Estate and is not aware of any false or
          misleading information in such environmental reports.



                                      -28-


          3.1.23.6 All Environmental Permits obtained by the Corporation in
          connection with the Business (including any applicable expiry dates)
          are listed in Schedule 3.1.23 and are valid and in full force and
          effect.

          3.1.23.7 For greater certainty, the representations and warranties
          contained in sections 3.1.6, 3.1.7 and 3.1.30 apply to Environmental
          Permits.

     3.1.24 TAX MATTERS.

          3.1.24.1 For the purposes of this section 3.1.24, "CORPORATION"
          includes the Corporation and any or all of its current or past
          subsidiaries, whether or not in existence as of the date of this
          Agreement. The Corporation has filed or caused to be filed on a timely
          basis all Tax Returns required to be filed by it and has paid all
          Taxes due and payable with respect to the periods covered by those Tax
          Returns (whether or not reflected on those Tax Returns). All Tax
          Returns filed by or on behalf of the Corporation are true, complete
          and correct in all material respects. No deficiency in Taxes of the
          Corporation for any period has been asserted by any taxing authority
          which remains unpaid at the date of this Agreement. No Tax Return is
          under audit or examination by any taxing authority, and no notice of
          such an audit or examination has been received by the Corporation.
          There is no deficiency, refund litigation, proposed adjustment or
          matter in controversy with respect to any Taxes due and owing by the
          Corporation. Each deficiency resulting from any completed audit or
          examination relating to Taxes by any taxing authority has been timely
          paid. No issues relating to Taxes were raised by the relevant taxing
          authority in any completed audit or examination that could reasonably
          be expected to recur in a later taxable period. The United States
          federal income tax Tax Returns of the Corporation have either been
          examined and settled with the Internal Revenue Service or closed by
          virtue of the expiration of the applicable statute of limitations for
          all years through the taxation year ended December 31, 2000. The
          Corporation has not agreed to the extension of the statute of
          limitations with respect to any Tax Returns or periods. There are no
          assessments relating to the Corporation's Tax Returns pending or
          threatened. The Corporation has delivered to the Merger Subsidiary
          true and complete copies of the federal and state income (or
          franchise) Tax Returns filed by the Corporation for the past three
          years. The Corporation is not, and has never been, the common parent
          or a member of any affiliated group of corporations filing a
          consolidated federal income tax return, and is not a party to any tax
          sharing agreement or other arrangement pursuant to which it could be
          liable for the Taxes of any third-party.

          3.1.24.2 The accruals for Taxes in the Audited Financial Statements
          and Unaudited Financial Statements accurately reflect the total amount
          of all unpaid Taxes, whether or not disputed and whether or not
          presently due and payable, of the Corporation as of the close of the
          period covered by the Audited Financial Statements and the Unaudited
          Financial Statements, respectively. Adequate accruals and reserves
          have been made in the Audited Financial Statements and the Unaudited
          Financial Statements and the books and records of the Corporation for
          the payment of all unpaid Taxes of the Corporation for all periods
          through the respective dates thereof, as at the Closing Date, whether
          or not yet due and payable and whether or not disputed by the
          Corporation, and nothing has occurred subsequent to the dates of the
          Audited Financial Statements and the Unaudited Financial Statements,
          as applicable, or such accruals or reserves in those books and records
          which make those accruals and reserves inadequate.



                                      -29-


          3.1.24.3 The Corporation is not a "United States real property holding
          corporation" within the meaning of Section 897(c)(2) of the Code.

          3.1.24.4 The Corporation is not required to make any adjustment
          pursuant to Section 481 (a) of the Code or any similar provision of
          state, local or foreign Law by reason of a change in accounting method
          initiated by the Corporation.

          3.1.24.5 Except as set forth in Schedule 3.1.24.5, the Corporation has
          elected, pursuant to Section 1362 of the Code, to be treated as an "S
          corporation" for federal income tax purposes continuously since
          inception, as that term is defined in Section 1361 of the Code, and
          has filed similar elections with each state taxing authority requiring
          a separate state election to be treated as an S corporation.

          3.1.24.6 The Corporation's election to be treated as an S corporation
          was valid and timely filed and has never been challenged by the
          Internal Revenue Service or any state taxing authority, has been in
          effect for all taxable years of the Corporation since formation and
          has been at all times and is valid and effective under the Code and in
          all states where the Corporation is subject to Taxes. The Corporation
          is not and could not be subject to any obligation and/or liability in
          respect of its failure or alleged failure to qualify as an "S
          corporation" at any time.

     3.1.25 EMPLOYMENT MATTERS.

          3.1.25.1 Except as set out in Schedule 3.1.25, neither the Corporation
          nor any Subsidiary is a party to or is bound by any:

               3.1.25.1.1 oral or written Contract for the employment or
               retainer of any individual, including, for greater certainty, any
               Contract with directors, officers, employees, independent
               contractors or agents, other than for Contracts of at-will
               employment terminable by the Corporation without cause;

               3.1.25.1.2 oral or written Contract providing for severance,
               termination or similar payments, including on a change of control
               of the Corporation; or

               3.1.25.1.3 Contract with any trade union, council of trade
               unions, employee bargaining agent or affiliated bargaining agent
               (collectively called "LABOR REPRESENTATIVES") and neither the
               Corporation nor any Subsidiary has conducted negotiations with
               respect to any such future Contracts; no labor representatives
               hold bargaining rights with respect to any employees of the
               Corporation; and there are no current or threatened attempts to
               organize or establish any trade union or employee association
               with respect to the Corporation.

          Correct and complete copies of all Contracts set out in Schedule
          3.1.25, or where oral, correct and complete written summaries of their
          terms, have been provided to the Merger Subsidiary.

          3.1.25.2 Schedule 3.1.25 sets out all full-time and part-time
          employees and their respective positions; job categories; location;
          salaries, bonuses and other compensation; and years of service.



                                      -30-


          3.1.25.3 Except as set out in Schedule 3.1.25, (1) all bonuses
          previously granted to employees have been paid in full to those
          employees, and (2) the Corporation does not have, and neither the
          execution of this Agreement nor the consummation of the Transaction
          will result in, any liability for severance pay or similar payment
          requirements to any employee, sales representative, independent
          contractor, consultant, distributor, agent or Affiliate of the
          Corporation. No employee of the Corporation has received any payment
          of any kind for services rendered to or on behalf of the Corporation
          from any Person other than payments made by the Corporation to the
          employee in compliance with all applicable Laws (including Laws
          relating to withholding with respect to wages, salaries and other
          payments to employees) and which payments are fully reflected in the
          books, records and financial statements of the Corporation.

          3.1.25.4 Except as set out in Schedule 3.1.25, all of the employees of
          the Corporation are employed on at-will basis and no notice or
          severance or other termination payments would be required in
          connection with the termination of any of those employees whether in
          connection with the consummation of the Transaction or otherwise.

          3.1.25.5 Except as referred to in Schedule 3.1.25, there is no work
          stoppage or other concerted action, grievance or dispute existing or
          threatened against the Corporation.

          3.1.25.6 Except as set out in Schedule 3.1.25.6, all of the current
          and former employees of the Corporation and/or its subsidiaries
          (including subsidiaries which are no longer in existence) have entered
          into an "Intellectual Property Rights Agreement" and a
          "Confidentiality and Non-Disclosure Statement" with the Corporation in
          substantially the same form of the agreements provided by the
          Corporation to the Merger Subsidiary and which agreements survive the
          termination of the employment relationship with the applicable
          employee.

     3.1.26 EMPLOYEE PLANS. Except as set out in Schedule 3.1.26, the
     Corporation does not maintain or sponsor or contribute to, is not a party
     to, is not bound by, and does not have any actual or contingent liability
     in respect of, any Employee Plan. Correct and complete copies of all
     Employee Plans set out in Schedule 3.1.26 and all related documents, or,
     where oral, correct and complete written summaries of their terms, have
     been provided to the Merger Subsidiary and any. related documents created
     or filed after the date of this Agreement will be provided to the Merger
     Subsidiary. For the purposes of this section 3.1.26, related documents in
     respect of an Employee Plan includes: (1) all documents establishing or
     creating such plan; (2) any funding agreement or amendment to a funding
     agreement; (3) actuarial reports; (4) all funding, investment and financial
     information; (5) all regulatory returns, reports, statements or filings
     made or completed; (6) all employee plan summaries and booklets describing
     or giving particulars of the plan; (7) all material correspondence with all
     regulatory authorities; (8) all material internal memoranda; and (9) all
     material professional opinions. All such related documents are and will be
     true, correct and complete in all material respects and none of the
     actuarial assumptions underlying those documents have changed since the
     respective dates of those documents.

     Except as set out in Schedule 3.1.26:

          3.1.26.1 All Employee Plans comply in all material respects with all
          requirements of ERISA, the Code, and with all other applicable Law,
          and the Corporation has not taken or failed to take any action with
          respect to the Employee Plans which might create any liability on the
          part of the Corporation or the Merger Subsidiary. Each "fiduciary"
          (within the meaning of Section 3(21)(A) of ERISA) as to each Employee
          Plan has



                                      -31-


          complied in all material respects with all requirements of ERISA and
          all other applicable Laws in respect of each such Employee Plan.

          3.1.26.2 The Corporation does not maintain, sponsor or contribute to,
          and has never withdrawn from, maintained, sponsored or contributed to,
          a "defined benefit plan" (within the meaning of Section 3(35) of
          ERISA) or a "multiemployer plan" (within the meaning of Section 3(37)
          of ERISA).

          3.1.26.3 Each Employee Plan intended to be qualified under Section 401
          (a) of the Code has received a favorable determination letter from the
          Internal Revenue Service as to its qualification under Section 401 (a)
          of the Code.

          3.1.26.4 No "prohibited transaction" (within the meaning of Section
          406 of ERISA or Section 4975(c) of the Code) has occurred with respect
          to any Employee Plan.

          3.1.26.5 No provision of any Employee Plan or of any agreement, and no
          act or omission of the Corporation, in any way limits, impairs,
          modifies or otherwise affects the right of the Corporation, the Merger
          Subsidiary or the Surviving Corporation unilaterally to amend or
          terminate any Employee Plan after the Closing, subject to the
          requirements of applicable Law.

          3.1.26.6 No policy, plan, program, arrangement, understanding or
          agreement exists which could result in the payment by the Corporation,
          the Merger Subsidiary or the Surviving Corporation of money or any
          other property or rights, or accelerate or provide any other rights or
          benefits, to any employee of the Corporation that would not have been
          required but for the consummation of the Transaction.

          3.1.26.7 There are no contributions which are or hereafter will be
          required to be made to trusts in connection with any Employee Plan
          that would constitute a "defined contribution plan" (within the
          meaning of Section 3(34) of ERISA).

          3.1.26.8 Other than claims in the ordinary course for benefits with
          respect to the Employee Plans, there are no Proceedings pending with
          respect to any Employee Plan, or any circumstances (including arising
          out of the operation or termination of any Employee Plan) which might
          give rise to any such Proceeding.

          3.1.26.9 All reports, returns and similar documents with respect to
          the Employee Plans required to be filed with any Governmental
          Authority have been so filed on or before their due date or, if not
          currently due, will be filed when due.

          3.1.26.10 The Corporation has no obligation to provide health or other
          welfare benefits to former, retired or terminated employees, except as
          specifically required under Section 4980B of the Code or Section 601
          of ERISA. The Corporation has complied in all material respects with
          the notice and continuation requirements of Section 4980B of the Code
          and Section 601 of ERISA.

          3.1.26.11 The Corporation is not a party to any Contract that would
          result, separately or in the aggregate, in any payment (whether or not
          in connection with any termination of employment or otherwise) of any
          "excess parachute payment" within the meaning of Section 280G of the
          Code.



                                      -32-


     3.1.27 LABOR RELATIONS. Except as set out in Schedule 3.1.27, there have
     been no violations of any Laws with respect to the employment of
     individuals by, or the employment practices or work conditions of, the
     Corporation, or the terms and conditions of employment, wages and hours.
     The Corporation is not engaged in any unfair labor practice or other
     unlawful employment practice and there are no charges of unfair labor
     practices or other employee-related complaints pending or threatened
     against the Corporation before the National Labor Relations Board, the
     Equal Employment Opportunity Commission, the Occupational Safety and Health
     Review Commission, the Department of Labor or any other Governmental
     Authority. There is no strike, picketing, slowdown or work stoppage or
     organizational attempt pending, threatened against or involving the
     Corporation or the Business. No issue with respect to union representation
     is pending or threatened with respect to the employees of the Corporation.
     No union or collective bargaining unit or other labor organization has ever
     been certified or recognized by the Corporation as the representative of
     any of the employees of the Corporation. The Corporation has complied with
     the Workers Adjustment and Retraining Notification Act. No employee of the
     Corporation benefits from a special protection status in respect of his
     termination by his employer. No employee of the Corporation is currently
     performing his severance period of notice and no employment agreement is
     currently suspended or temporarily discontinued due to illness, pregnancy,
     career interruption or any other legal cause of suspension.

     3.1.28 INSURANCE. All physical assets of the Corporation are covered by
     fire and other insurance with responsible insurers against those risks and
     in those amounts as are reasonable for prudent owners of comparable assets.
     Schedule 3.1.28 sets out particulars of all the insurance policies held by
     the Corporation, including the name of the insurer, the risks insured
     against and the amount of coverage. No other insurance is necessary to the
     conduct of the Business or would be considered to be desirable by a prudent
     Person operating a business similar to the Business. The Corporation is not
     in default with respect to any of the provisions contained in any those
     policies of insurance and has not failed to give any notice or pay any
     premium or present any claim under any of those insurance policies. Neither
     the Corporation nor any Principal Stockholder has any reason to believe
     that any of the insurance policies listed in Schedule 3.1.28 will not be
     renewed by the insurer upon the scheduled expiry of the policy or will be
     renewed by the insurer only on the basis that there will be a material
     increase in the premiums payable in respect of the policy. Correct and
     complete copies of all of the insurance policies set out in Schedule 3.1.28
     have been provided to the Merger Subsidiary. The Corporation has not had
     any casualty loss or other occurrence which may give rise to any claim of
     any kind not covered by insurance and neither the Corporation nor any of
     the Principal Stockholders is aware of any occurrence which may give rise
     to any claim of any kind not covered by insurance. No third-party has filed
     any claim against the Corporation for personal injury, property damage or
     other occurrence of a kind for which liability insurance is generally
     available which is not fully insured. All claims against the Corporation
     covered by insurance have been reported to the insurance carrier on a
     timely basis and are listed on Schedule 3.1.28.

     3.1.29 INTELLECTUAL PROPERTY.

          3.1.29.1 Schedule 3.1.29 contains a complete and accurate listing of
          (1) all of the registrations and applications for registration of the
          Proprietary Intellectual Property, the name of the registered owner
          and the beneficial owner of that Proprietary Intellectual Property,
          the names of all persons who have been granted rights in respect of
          that Proprietary Intellectual Property and the outside legal counsel
          assisting with those applications and (2) versions of the Key Software
          Programs currently being used in production by the Corporation, a
          listing of all Licensed Software incorporated in each Key Software
          Program and a listing of all Proprietary Software (including any



                                      -33-


          modifications to, enhancements to and derivative works based upon any
          Licensed Software) incorporated in each Key Software Program. Except
          as specified in Schedule 3.1.29, and except with respect to patent
          applications and registrations, all of the registrations and
          applications for registration of the Proprietary Intellectual Property
          are valid and subsisting, in good standing and are recorded in the
          name of the Corporation. Except as specified in Schedule 3.1.29, all
          of the registrations and applications for registration of patents
          which are part of the Proprietary Intellectual Property are recorded
          in the name of the Corporation and, to the Corporation's and each
          Principal Stockholder's Knowledge, are valid, subsisting and in good
          standing. No application for registration of any Proprietary
          Intellectual Property has been finally rejected and no rights to
          pursue any such application have been prejudiced for the Corporation's
          failure to prosecute that application.

          3.1.29.2 Except as specified in Schedule 3.1.29, no person other than
          the Corporation has any right or interest of any kind or nature in or
          to the Proprietary Intellectual Property, including any right to sell,
          license, lease, transfer, distribute, use or otherwise exploit the
          Proprietary Intellectual Property or any portion of it. The
          Corporation has good, marketable and exclusive title to, and the valid
          and enforceable power and unqualified right to sell, license,
          transfer, distribute, use and otherwise exploit, the Proprietary
          Intellectual Property. Except as disclosed in Schedule 3.1.29, the
          Corporation is not subject to any obligation or arrangement pursuant
          to which a third person has or will have any right, title or interest
          in or to any Intellectual Property which is currently being developed
          or may in the future be developed by or for the Corporation.

          3.1.29.3 No person has any right or interest of any kind or nature in
          or to the Key Software Programs, Proprietary Software or any Software
          which is currently being developed or may in the future be developed
          by or on behalf of the Corporation, including any right to sell,
          license, lease, transfer, distribute, use or otherwise exploit the
          Proprietary Software or any portion thereof other than (1) the
          Corporation, (2) any customer of the Corporation or (3) any licensor
          identified by name on Schedule 3.1.29 and explicitly cross referenced
          to this section 3.1.29.3, which licensor has no right to grant any
          rights to or in the Key Software Programs to any other person. No
          person other than the Corporation has the right to make modifications
          to, enhancements to or derivative works based upon the Key Software
          Programs or upon any Proprietary Software. The Corporation has not
          directly or indirectly granted to any person any rights or interests
          in the source code of the Key Software Programs or any Proprietary
          Software.

          3.1.29.4 With respect to current versions and the version immediately
          prior to the current version of the Key Software Programs and any
          Proprietary Software listed on Schedule 3.1.29.4 (1) the Corporation
          maintains machine-readable, master-reproducible copies, complete
          human-readable source code listings, technical documentation and user
          manuals; (2) in each case, the machine-readable copy substantially
          conforms to the corresponding source code listing; (3) in each case,
          based on the source code and other organized technical documentation,
          it can be maintained, enhanced and modified by reasonably competent
          programmers familiar with the applicable language, hardware and
          operating systems; (4) in each case, the complete source code listings
          are maintained in an electronic repository enabling skilled personnel
          to completely compile, build and assemble the final machine-executable
          version at will without undue manual processes; (5) in each case, it
          has been developed by the Corporation in accordance with practices
          that are standard for the software industry and operates in accordance
          with the user



                                      -34-


          manual therefor without material operating defects; and (6) there are
          employees of the Corporation that have familiarity with that Software.

          3.1.29.5 Except as specified in Schedule 3.1.29, neither the
          Corporation nor any of the Principal Stockholders have received any
          written notice challenging the validity or ownership of the
          Proprietary Intellectual Property, the Key Software Programs or any
          Proprietary Software or the use of any Intellectual Property or any of
          the Software, and to the Corporation's and the Principal Stockholders'
          Knowledge there are no facts upon which such a challenge could be
          made.

          3.1.29.6 Any person who contributed to the conception, reduction to
          practice, invention, creation or development of the Proprietary
          Intellectual Property of the Corporation or the creation or
          development of the Proprietary Software embodied in the Key Software
          Programs or of any other Proprietary Software has irrevocably
          assigned, or is obligated to irrevocably assign, to the Corporation or
          granted sufficient rights to conduct the Business as currently
          conducted in writing all intellectual property rights in that person's
          contribution to that Proprietary Intellectual Property or that
          Proprietary Software. Each person based in Canada that contributed to
          the conception, reduction to practice, invention, creation or
          development of the Proprietary Intellectual Property of the
          Corporation or the creation or development of the Proprietary Software
          of the Corporation embodied in the Key Software Programs or of any
          other Proprietary Software has waived his or her moral rights in any
          copyright works within that Proprietary Intellectual Property or
          Proprietary Software in favor of the Corporation and its successors
          and assigns.

          3.1.29.7 The Corporation has taken or caused to be taken steps so that
          none of the Proprietary Intellectual Property, the value of which to
          the Corporation is contingent upon maintenance of the confidentiality
          thereof, has been disclosed by the Corporation to any person other
          than employees, contractors, customers, representatives and agents of
          the Corporation who are parties to customary confidentiality and
          nondisclosure agreements with the Corporation and which agreements
          survive the termination of the specific relationship with the
          applicable party.

          3.1.29.8 Schedule 3.1.29 contains a complete and accurate listing of
          all material Licensed Software and the name of the applicable
          licensor. Each license or permission referred to in Schedule 3.1.29 is
          in full force and effect, the Corporation has not violated, breached
          or defaulted in, and is not currently violating, breaching or in
          default of its obligations, under the license and, to the Knowledge of
          the Corporation and the Principal Stockholders, no other party to the
          license has violated, breached or defaulted in, or is currently
          violating, breaching or in default of its obligations, under that
          license. For purposes of this section 3.1.29.8, "material Licensed
          Software" refers to all Licensed Software except for Licensed Software
          that (i) could be immediately replaced with comparable (from a
          functionality and royalties perspective) alternative and/or recreated
          without infringing upon the Intellectual Property of a third party,
          and (ii) with respect to the substitution in (i), could be
          incorporated into the affected product(s) in less than 15 person-days
          of development and testing.

          3.1.29.9 Schedule 3.1.29 lists all source code for Licensed Software
          which is utilized in the current versions and/or the version
          immediately prior to the current version of the Key Software Programs
          and any Proprietary Software listed on Schedule 3.1.29.9 which the
          Corporation has the right to modify, enhance, prepare and has prepared
          derivative



                                      -35-


          works based upon (the "LICENSED SOURCE CODE"). Except as set out in
          Schedule 3.1.29, all of the Licensed Source Code is in the possession
          of the Corporation. All intellectual and/or industrial property rights
          in or to modifications, enhancements and derivative works made by or
          for the Corporation and all associated functional or technical
          specifications and technical documentation (the "MODIFICATIONS") are
          owned solely and exclusively by the Corporation. Except as specified
          in Schedule 3.1.29, subject to any rights a customer has in respect of
          the Modifications by virtue of the inclusion of them in the Key
          Software Programs, no person other than the Corporation has any right
          or interest of any kind or nature in or to any Modifications. Subject
          to any written agreements with any customer, the Corporation has not
          entered into any Contract pursuant to which any right, title or
          interest of the Corporation in any Modification is assigned, licensed
          or otherwise granted to any other Person.

          3.1.29.10 The Corporation has not furnished or otherwise disclosed the
          source code, any functional or technical specifications, or any
          technical documentation other than user documentation, for any
          Modifications to any person other than employees, contractors,
          representatives and agents of the Corporation who are parties to
          customary confidentiality and nondisclosure agreements with the
          Corporation (which agreements survive the termination of the specific
          relationship with the applicable party) and is under no duty or
          obligation to do so.

          3.1.29.11 Except as set out in Schedule 3.1.29, there are no source
          code escrow agreements relating to any of the Software.

          3.1.29.12 Except as set out in Schedule 3.1.29, to the Corporation's
          and each of the Principal Stockholder's Knowledge, no person has
          violated, infringed upon or breached, or is currently violating,
          infringing upon or breaching, any of the rights of the Corporation to
          the Proprietary Intellectual Property, to the Key Software Programs or
          to any Proprietary Software, or has asserted the right to take any
          action which might reasonably be considered such a violation,
          infringement or breach or has breached or is breaching any duty or
          obligation owed to the Corporation in respect of the Proprietary
          Intellectual Property, the Key Software Programs or any Proprietary
          Software.

          3.1.29.13 All material amounts, including royalties, due and payable
          by the Corporation with respect to any Intellectual Property or any
          Software have been paid in full or accrued in the Audited Financial
          Statements.

          3.1.29.14 Except as set out in Schedule 3.1.29.14, neither the use of
          the Intellectual Property or the Software nor the conduct of the
          Corporation's Business has violated, infringed or breached or
          currently violates, infringes upon or breaches or has been alleged by
          any Person in writing or verbally to a senior officer of the
          Corporation, to violate, infringe or breach (1) the industrial or
          intellectual property rights of any person (and in the case of
          patents, to the Corporation's and each of the Principal Stockholder's
          Knowledge), (2) any duty or obligation owed to any person or (3) the
          terms of any license granted to the Corporation by any other person.
          The Intellectual Property and the Software are sufficient to carry on
          the Business as currently conducted and as proposed to be conducted,
          without requiring any such infringement. The Corporation has not
          incorporated or used the Intellectual Property of any former employer
          (a "FORMER EMPLOYER") of any employee, consultant, former employee or
          former consultant of the Corporation in the Corporation's Intellectual
          Property or in the operation of the Business. Neither any Principal
          Stockholder nor the Corporation is aware of any claim or any basis



                                      -36-


          for a claim by a Former Employer that the Corporation has incorporated
          into its Intellectual Property any Intellectual Property owned by,
          claimed to be owned by or previously disclosed to that Former
          Employer.

          3.1.29.15 The Corporation has not (1) breached any duty or obligation
          of confidentiality or of non-disclosure or non-use of any confidential
          information owed to, or (2) misappropriated any confidential
          information of, any person, including any person who has licensed
          Licensed Intellectual Property or Licensed Software to the
          Corporation.

          3.1.29.16 Except as set out in Schedule 3.1.29, no Contract which
          relates to any Intellectual Property or any Software requires consents
          or other actions as a result of the consummation of the Transaction or
          any subsequent disposition of all or a portion of the Specified Assets
          and/or the Surviving Corporation's assets to Corel and/or one or more
          direct or indirect subsidiary of Corel in order for the Corporation to
          continue to be entitled to use, operate, sell and license that
          Intellectual Property or Software after the Closing Date without
          material alterations in the Corporation's obligations.

          3.1.29.17 Except as set out in Schedule 3.1.29, there is no
          governmental prohibition or restriction on the use of the Intellectual
          Property or the Software.

          3.1.29.18 Schedule 3.1.29 lists Proceedings (whether in progress or
          threatened) relating to the Intellectual Property and the Software.

          3.1.29.19 Except as set out in the Contract for the Album Software
          Program listed in Schedule 3.1.29, the Corporation has been granted
          all Intellectual Property rights in and to the Album Software Program
          under one or more binding Contracts which are in full force and effect
          and which provide for those rights to be exclusive to the Corporation,
          irrevocable, perpetual and fully transferable by the Corporation. No
          third party has been granted Intellectual Property rights in or to the
          Album Software Program and the licensor of the Intellectual Property
          rights party to the Contract for the Album Software Program is not
          using those Intellectual Property rights in any manner which is
          competitive with the Business.

          3.1.29.20 Except as set out in Schedule 3.1.29 and explicitly
          cross-referenced to this section 3.1.29.20, the Corporation has never
          (1) incorporated Public Software into or combined Public Software with
          the Proprietary Software or the Key Software Programs or a derivative
          work of that Software, (2) distributed Public Software in conjunction
          with the Key Software Programs or (3) used Public Software in the
          development of a derivative work of the Proprietary Software or the
          Key Software Programs. No Key Software Programs or any other
          Proprietary Software is required to be (a) disclosed or distributed in
          source code form; (b) licensed for the purpose of making derivative
          works; and/or (c) redistributable at no charge, as a result of the
          Corporation's use, modification and/or distribution of Public
          Software.

     3.1.30 PERMITS, REGISTRATIONS AND ELECTIONS. The Corporation holds all
     permits, licenses, approvals, consents, authorizations, registrations,
     certificates and franchises, including all Environmental Permits, which it
     requires, or is required to have, to own its properties and assets and to
     carry on the Business as presently conducted by it (collectively, the
     "PERMITS"). All the Permits not otherwise listed in Schedule 3.1.23 are
     listed in Schedule 3.1.30 (including any applicable expiry dates) and are
     in full force and effect; the Corporation is in compliance with all the
     terms and conditions relating to the Permits; and there are no Proceedings
     in progress, pending



                                      -37-


     or threatened which may result in revocation, cancellation, suspension,
     rescission or any adverse modification of any of the Permits nor are there
     any facts upon which those Proceedings could reasonably be based. Neither
     the terms and conditions relating to the Permits nor the Laws pursuant to
     which they were issued require that any consent or approval of, or filing
     with or notice to, any governmental agency or regulatory body or other
     Person be made to assure the continued holding by the Corporation (or any
     transferee contemplated by the Transaction) of the Permits after
     consummation of the Transaction (provided that such Permits were not
     transferred in the Asset Sale).

     3.1.31 COMPLIANCE WITH LAWS. The Corporation is not in default under, nor
     has it failed to comply with or is otherwise in violation of, any Law or
     any order, judgment or decree of any court or other Governmental Authority
     of each jurisdiction in which the Business is carried on. There is no basis
     for assertion of any violation of the foregoing or for any claim for
     compensation or damages or otherwise arising out of any violation of the
     foregoing. None of the Corporation nor any of the Principal Stockholders
     has received any notification of any asserted present or past failure to
     comply with any of the foregoing which has not been satisfactorily
     responded to in the time period required under that notice. The Corporation
     has gathered (for greater certainty, not including information gathered on
     behalf of the Corporation by any Third Party) all information with respect
     to its customers (both past, current and prospective) in accordance with
     all applicable Laws, including those related to privacy and personal
     information. To the actual knowledge of the Corporation (which, for the
     purposes of this section 3.1.31, includes the actual knowledge of those
     individuals who are actively involved in the day-to-day management of the
     Corporation's relationships with master representatives) and each of the
     Principal Stockholders, all information with respect to its customers
     (past, current and prospective) gathered by Third Parties has been gathered
     in accordance with all applicable Laws, including those related to privacy
     and personal information. Each Third Party that gathers information with
     respect to customers (past, current and prospective) of the Corporation is
     party to a Contract with the Corporation pursuant to which that Third Party
     is bound to comply with all applicable Laws.

     3.1.32 LITIGATION AND OTHER PROCEEDINGS AND WARRANTY CLAIMS. Except as set
     out in Schedule 3.1.32, there is no Proceeding against or involving the
     Corporation or any Employee Plan (whether in progress or threatened); no
     event has occurred and, to the Corporation's and each of the Principal
     Stockholder's Knowledge, no facts or circumstances exist, which might give
     rise to any Proceeding; and there is no judgment, decree, injunction, rule,
     award or order of any court, government department, board, commission,
     agency, arbitrator or similar body outstanding against the Corporation.
     There are no warranty, damage or similar claims made or pending against the
     Corporation for or arising from defects in any products, in each case
     provided by the Corporation, for which the Corporation is or is alleged to
     be liable nor, to the Corporation's and each of the Principal Stockholder's
     knowledge, are there any facts upon which that type of claim could
     reasonably be made.

     3.1.33 CORPORATE RECORDS. The corporate records and minute books of the
     Corporation contain complete and accurate minutes of all meetings of
     directors, committees of directors and shareholders held since its date of
     incorporation, and all of those meetings were duly called and held. The
     stock certificate books, registers of stockholders, registers of transfers
     and registers of directors of the Corporation are complete and accurate.

     3.1.34 BOOKS OF ACCOUNT AND INTERNAL CONTROLS.

          3.1.34.1 The books and records of the Corporation fairly present and
          disclose the financial position of the Corporation as at the relevant
          dates, have been maintained in



                                      -38-


          accordance with GAAP and in accordance with good business practices
          and all material financial transactions of the Corporation have been
          accurately recorded in those books and records.

          3.1.34.2 The Corporation maintains proper and adequate internal
          accounting controls which provide assurance that (1) transactions of
          the Corporation are executed with management's authorization; (2)
          transactions are recorded as necessary to permit preparation of the
          Corporation's financial statements; and (3) accounts, notes and other
          receivables and inventory are recorded accurately, and proper and
          adequate procedures are implemented to effect the collection of them
          on a current and timely basis.

     3.1.35 BANK ACCOUNTS, ETC. Schedule 3.1.35 is a correct and complete list
     (including addresses and account numbers) of each bank, trust company or
     similar institution in which the Corporation has an account or safety
     deposit box and the names of all Persons, including any individual or firm
     holding a power of attorney, authorized to draw on those accounts or to
     have access to those accounts and safety deposit boxes.

     3.1.36 CUSTOMERS AND SUPPLIERS. Since the Audited Statements Date, there
     has been no termination or cancellation of, and no modification or change
     in, the business relationship with any distributor, group of distributors,
     customer or group of customers which singly or in total provided more than
     10% of the gross revenues of the Corporation for the fiscal year ended on
     the Audited Statements Date. Except as set out in Schedule 3.1.36, neither
     the Corporation nor the Principal Stockholders have any reason to believe
     that the benefits of any relationship with any of the customers or
     suppliers of the Corporation will not continue after the Closing Date in
     substantially the same manner as prior to the date of this Agreement,
     assuming the consummation of the Transaction.

     3.1.37 CONDUCT OF BUSINESS. The Corporation is not restricted from
     conducting the Business in any manner or location by Contract or court
     decree. Except as set out in Schedule 3.1.37, the Business is conducted
     entirely through the Corporation (and not through any subsidiary,
     Affiliate, partner or any other Person), and the Corporation does not and
     never has conducted any other business other than the Business.

     3.1.38 DISCLOSURE.

          3.1.38.1 The Principal Stockholders, the Corporation and the
          Corporation's management have disclosed to the Merger Subsidiary and
          Corel all facts known to them relating to the Business and assets of
          the Corporation which could reasonably be expected to be material to
          an intending purchaser of the Jasc Shares.

          3.1.38.2 No representation or warranty made under this Agreement
          (including the Schedules) or any certificate or other document
          delivered by the Corporation or any of the Jasc Stockholders or any
          representative of them pursuant to this Agreement, and none of the
          information furnished by the Corporation or any of the Principal
          Stockholders to the Merger Subsidiary and/or Corel, contains any
          untrue statement of a material fact or omits to state a material fact
          necessary to make the statements in this Agreement or therein not
          misleading.



                                      -39-


3.2 BY PRINCIPAL STOCKHOLDERS

          Each of the Principal Stockholders represents and warrants to the
Merger Subsidiary and Corel, severally and not jointly, as follows and
acknowledges that the Merger Subsidiary and Corel are relying upon the following
representations and warranties in connection with the Transaction:

     3.2.1 COREL COMMON SHARES. With respect to the Corel Common Shares, each
     Principal Stockholder:

          3.2.1.1 understands that those shares have not been and will not be
          registered under the Securities Act, and that the issuance of those
          shares is being made in reliance on a private placement exemption;

          3.2.1.2 is acquiring those shares for its own account;

          3.2.1.3 acknowledges those shares are not freely transferable;

          3.2.1.4 has had the opportunity to ask all questions and to obtain all
          other information from the Merger Subsidiary and Corel as it has
          deemed necessary in connection with its decision to acquire those
          shares; and

          3.2.1.5 acknowledges that it is not acquiring those shares as a result
          of any "general solicitation" or "general advertising," as those terms
          are used in Regulation D under the Securities Act.

     3.2.2 NO FOREIGN PERSON. Each Principal Stockholder that is acquiring
     shares forming part of the Total Equity Consideration is not a foreign
     person within the meaning of Section 1445(f)(3) of the Code.

     3.2.3 INCORPORATION AND STATUS OF THE PRINCIPAL STOCKHOLDER. If an Entity,
     the Principal Stockholder is duly formed and validly existing under the
     laws of its jurisdiction of formation.

     3.2.4 POWER OF THE PRINCIPAL STOCKHOLDER AND DUE AUTHORIZATION. If an
     Entity, the Principal Stockholder has all necessary power and capacity to
     enter into, and to perform its obligations under, this Agreement. Each of
     this Agreement and each of the Related Agreements to which the Principal
     Stockholder is a party has been duly authorized by the Principal
     Stockholder. This Agreement has been duly executed and delivered by the
     Principal Stockholder and is a valid and binding obligation of the
     Principal Stockholder, enforceable in accordance with its terms, subject to
     the usual exceptions as to bankruptcy and the availability of equitable
     remedies. At the Time of Closing, each of the Related Agreements to which
     the Principal Stockholder is a party will be duly executed and delivered by
     the Principal Stockholder and will be valid and binding obligations of the
     Principal Stockholder, enforceable in accordance with their respective
     terms, subject to the usual exceptions as to bankruptcy and the
     availability of equitable remedies, provided that (i) no representation as
     to enforceability is made with respect to the agreements described in
     section 4.1.6. and (ii) the enforceability of the indemnification
     provisions contained in Schedule B to the Corel Minority Shareholders'
     Agreement may be limited by applicable federal or state securities laws.

     3.2.5 TITLE TO, AND RIGHT TO SELL, PURCHASED SHARES. Each Principal
     Stockholder is the sole registered and beneficial owner of those Jasc
     Shares set out opposite the Principal Stockholder's name on Schedule 3.1.3
     with good and marketable title to those Jasc Shares, free of all Charges.



                                      -40-


     There are no subscriptions, warrants, options, calls, or other rights or
     Contracts to which the Corporation or any Principal Stockholder is subject
     to or bound which in any way limit or restrict the consummation of the
     Transaction (specifically in respect of that Principal Stockholder's Jasc
     Shares) and there are no shareholders agreements, pooling agreements,
     voting trusts or other Contracts with respect to the voting of the Jasc
     Shares other than as set out in Schedule 3.1.3. At or prior to the Time of
     Closing, those agreements and restrictions will have been complied with or
     terminated (and evidence in form and substance satisfactory to the Merger
     Subsidiary to that effect will have been provided to the Merger
     Subsidiary).

     3.2.6 NO CONTRAVENTION BY PRINCIPAL STOCKHOLDERS. None of the entering into
     of this Agreement or any Related Agreement, the consummation of the
     Transaction or the performance by each Principal Stockholder of that
     Principal Stockholder's other obligations under this Agreement or any
     Related Agreement to which it is a party (a) will contravene, breach or
     result in any default under (1) if the Principal Stockholder is an Entity,
     the certificate of incorporation, by-laws, constating documents or other
     organizational documents of that Principal Stockholder, or (2) any license,
     permit, order, judgment, decree or Law to which the Principal Stockholder
     is a party or by which it may be bound or (b) contravenes, breaches or
     results in any default under, or conflicts with or will conflict with or
     results in or will result in any modification of any of the terms of or
     results in or will result in the termination of or the creation of any
     Charge, acceleration right or other right pursuant to the terms of, any
     Contract to which the Principal Stockholder is a party or by which it may
     be bound or will in any way affect the continuation, validity or
     effectiveness of any such Contract.

     3.2.7 ACCREDITED INVESTOR. Each of the Principal Stockholders is an
     Accredited Investor.

     3.2.8 APPOINTMENT OF STOCKHOLDER REPRESENTATIVE. Each Principal Stockholder
     designates and appoints Robert V. Voit as the Stockholder Representative
     under this Agreement and authorizes the Stockholder Representative to take
     such actions on behalf of such Principal Stockholder under this Agreement,
     including, but not limited to, accepting notices, reviewing information
     provided to the Stockholder Representative and executing the certificate
     required in section 4.1.1 on behalf of each Jasc Stockholder, together with
     all such powers as are reasonably incidental thereto. The Stockholder
     Representative may consult with legal counsel, independent public
     accountants and other experts selected by it and shall not be liable for
     any action taken, or omitted to be taken, by it in good faith in accordance
     with the advice of such counsel, accountants or experts. The Stockholder
     Representative shall not be liable for actions he takes or fails to take in
     the absence of his own gross negligence or willful misconduct.

3.3  BY MERGER SUBSIDIARY AND COREL HOLDINGS

          Each of the Merger Subsidiary and Corel Holdings, severally and not
jointly, represents and warrants to the Corporation and the Jasc Stockholders as
follows and acknowledges that the Corporation and the Jasc Stockholders are
relying upon the following representations and warranties in connection with the
Transaction:

     3.3.1 INCORPORATION AND STATUS. Each of the Merger Subsidiary and Corel
     Holdings is duly incorporated and validly existing under the laws of its
     jurisdiction of incorporation.

     3.3.2 CORPORATE POWER AND DUE AUTHORIZATION. Each of the Merger Subsidiary
     and Corel Holdings has the corporate power and capacity to enter into, and
     to perform its obligations under, this Agreement and the Related Agreements
     to which is party. Each of this Agreement and each of the Related
     Agreements to which it is a party has been duly authorized by each of the
     Merger



                                      -41-


     Subsidiary and Corel Holdings. This Agreement has been duly executed and
     delivered by each of the Merger Subsidiary and Corel Holdings and is a
     valid and binding obligation of each of the Merger Subsidiary and Corel
     Holdings, enforceable in accordance with its terms, subject to the usual
     exceptions as to bankruptcy and the availability of equitable remedies. At
     the Time of Closing each of the Related Agreements to which it is a party
     will be duly executed and delivered by each of the Merger Subsidiary and
     Corel Holdings and will be valid and binding obligations of the Merger
     Subsidiary and Corel Holdings, enforceable in accordance with their
     respective terms, subject to the usual exceptions as to bankruptcy and the
     availability of equitable remedies.

     3.3.3 NO CONTRAVENTION. None of the entering into of this Agreement, any
     Related Agreement to which it is a party, the consummation of the
     Transaction nor the performance by each of the Merger Subsidiary and Corel
     Holdings of its other obligations under this Agreement and the Related
     Agreements to which it is a party (a) will contravene, breach or result in
     any default under (1) the articles of incorporation, by-laws, constating
     documents or other organizational documents of the Merger Subsidiary or
     Corel Holdings, as applicable, or (2) any Contract, license, permit, order,
     judgment, decree or Law to which the Merger Subsidiary is a party or by
     which the Merger Subsidiary or Corel Holdings, as applicable, may be bound,
     or (b) contravenes, breaches or results in any default under, or conflicts
     with or will conflict with, or results in or will result in any
     modification of any of the terms of, or results in or will result in the
     termination of or the creation of any Charge, acceleration right or other
     right pursuant to the terms of, any Contract to which the Merger Subsidiary
     or Corel Holdings, as applicable, is a party or by which it may be bound or
     will in any way affect the continuation, validity or effectiveness of any
     such Contact.

     3.3.4 APPROVALS AND CONSENTS. Except as set out on Schedule 3.3.4, no
     authorization, consent or approval of, or filing with or notice to, any
     Governmental Authority or other Person is required in connection with the
     execution, delivery or performance of this Agreement by the Merger
     Subsidiary and Corel Holdings or the consummation of the Transaction.

3.4  BY COREL

          Corel represents and warrants to the Corporation and the Jasc
Stockholders as follows and acknowledges that the Corporation and the Jasc
Stockholders are relying upon the following representations and warranties in
connection with the Transaction:

     3.4.1 INCORPORATION AND STATUS OF COREL. Corel is duly incorporated and
     validly existing under the laws of the Province of Ontario.

     3.4.2 CORPORATE POWER OF COREL AND DUE AUTHORIZATION. Corel has the
     corporate power and capacity to enter into, and to perform its obligations
     under, this Agreement. Each of this Agreement and each of the Related
     Agreements to which it is a party has been duly authorized by Corel. This
     Agreement has been duly executed and delivered by Corel and is a valid and
     binding obligation of Corel, enforceable in accordance with its terms,
     subject to the usual exceptions as to bankruptcy and the availability of
     equitable remedies. At the Time of Closing, each of the Related Agreements
     to which it is a party will be duly executed and delivered by Corel and
     will be valid and binding obligations of Corel, enforceable in accordance
     with their respective terms, subject to the usual exceptions as to
     bankruptcy and the availability of equitable remedies provided that no
     representation as to enforceability is made with respect to the agreements
     described in section 4.1.6.



                                      -42-


     3.4.3 CAPITAL OF COREL. Schedule 3.4.3 sets out particulars of the
     authorized and issued securities of Corel (including shares, options,
     warrants, other rights to acquire securities and debt instruments).

     3.4.4 NO OBLIGATIONS TO ISSUE SECURITIES. Except as set out in Schedule
     3.4.4, there are no agreements, options, warrants, rights of conversion or
     other rights or Contracts pursuant to which Corel is, or may become,
     obligated to issue any shares or any securities convertible or
     exchangeable, directly or indirectly, into any shares of Corel, other than
     pursuant to the terms of Corel's existing Series A Participating
     Convertible Preferred Shares, Class A Common Shares and Corel's Share
     Option and Phantom Share Unit Plan dated December 1, 2003. The issuance of
     the Corel Common Shares under this Agreement does not give rise to any
     preemptive rights or an adjustment of the conversion price of any
     outstanding securities of Corel.

     3.4.5 NO CONTRAVENTION OF COREL. None of the entering into of this
     Agreement, any Related Agreement to which it is a party, the consummation
     of the Transaction nor the performance by Corel of its obligations under
     this Agreement (including the issuance by Corel of the Total Equity
     Consideration) and the Related Agreements to which it is a party (a) will
     contravene, breach or result in any default under (1) the restated articles
     of incorporation, by-laws, constating documents or other organizational
     documents of Corel, or (2) any Contract, license, permit, order, judgment,
     decree or Law to which the Corel is a party or by which Corel may be bound,
     or (b) contravenes, breaches or results in any default under, or conflicts
     with or will conflict with, or results in or will result in any
     modification of any of the terms of, or results in or will result in the
     termination of or the creation of any Charge, acceleration right or other
     right pursuant to the terms of, any Contract to which Corel is party or by
     which it may be bound or will in any way affect the continuation, validity
     or effectiveness of any such Contract, except to the extent that the
     contravention, breach or default would not result in a material adverse
     effect to Corel.

     3.4.6 APPROVALS AND CONSENTS. Except as set out on Schedule 3.4.6, no
     authorization, consent or approval of, or filing with or notice to, any
     Governmental Authority or other Person is required in connection with the
     execution, delivery or performance of this Agreement by Corel.

     3.4.7 EQUITY CONSIDERATION. All the Corel Common Shares comprising the
     Total Equity Consideration, when issued and delivered in accordance with
     this Agreement, will be duly and validly issued and will be outstanding as
     fully paid and non-assessable shares.

     3.4.8 COREL FINANCIAL STATEMENTS. The Corel Audited Financial Statements
     and the Corel Unaudited Financial Statements (copies of which have been
     provided by Corel to the Corporation and the Jasc Stockholders) have been
     prepared in accordance with Canadian GAAP (subject to usual year-end
     adjustments in the case of the Corel Unaudited Financial Statements)
     consistently applied throughout the periods indicated and fairly,
     completely and accurately present the consolidated financial position of
     Corel and the results of its consolidated operations as of the dates and
     throughout the periods indicated and there has been no material adverse
     change in the consolidated financial position of Corel from that reflected
     in the Corel Audited Financial Statements.

     3.4.9 SUFFICIENCY OF CAPITAL, ACCESS TO CAPITAL. As of the Closing Date,
     Corel will have sufficient capital or credit arrangements in place to pay
     the Asset Sale Cash Consideration and the Total Adjusted Merger Cash
     Consideration on the Closing.



                                      -43-


3.5  NO FINDER'S FEES

          Each of the Principal Stockholders and the Corporation represents and
warrants to the Merger Subsidiary that neither the Corporation nor any Principal
Stockholder has taken, and each agree that it will not take, any action that
would cause the Corporation, the Merger Subsidiary or the Surviving Corporation
to become liable to any claim or demand for a brokerage commission, finder's fee
or other similar payment, except for commissions and fees due to Goldsmith Agio
Helms, which will be paid by the Jasc Stockholders pursuant to section 5.11.6.

3.6  SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES

          To the extent that they have not been fully performed at or prior to
the Time of Closing, the covenants, representations and warranties contained in
this Agreement and in all certificates and documents delivered pursuant to or
contemplated by this Agreement will survive the Closing and will continue as set
out below:

     3.6.1 all representations and warranties, except those set out in sections
     3.1.1.1, 3.1.1.3, 3.1.2, 3.1.3, 3.1.5, 3.1.6(a), 3.1.24, 3.2.3, 3.2.4 and
     3.2.5, and sections 1.3, 1.4 and 1.5 of the Jasc Stockholder Signature Page
     will terminate at the expiration of 18 months following the Closing;

     3.6.2 the representations and warranties set out in sections 3.1.1.1,
     3.1.1.3, 3.1.2, 3.1.3, 3.1.5, 3.1.6(a), 3.2.3, 3.2.4 and 3.2.5, and
     sections 1.3, 1.4 and 1.5 of the Jasc Stockholder Signature Page will
     survive the Closing indefinitely;

     3.6.3 the representations and warranties set out in section 3.1.24 will,
     subject to section 3.6.4, terminate at the expiration of the Tax
     Reassessment Period;

     3.6.4 there will be no termination of the representations and warranties
     set out in section 3.1.24 to the extent that any misrepresentation has been
     made or fraud has been committed in filing a return or in supplying
     information for the purposes of any legislation imposing Taxes on the
     Corporation; and

     3.6.5 no claim for breach of representation or warranty will be valid
     unless the party against whom that claim is made has been given notice of
     the claim before the date on which the applicable representation or
     warranty will have terminated in accordance with the foregoing.

                                    ARTICLE 4
                                   CONDITIONS

4.1  CONDITIONS FOR THE BENEFIT OF COREL AND THE MERGER SUBSIDIARY

          The obligations of the Merger Subsidiary and Corel to consummate and
effect the Transaction and the transactions contemplated by this Agreement are
subject to the satisfaction of, or compliance with, at (except with respect to
section 4.1.8.9 which must be satisfied prior to the Effective Time) or prior to
the Effective Time, each of the following conditions (each of which is
acknowledged to be for the exclusive benefit of the Merger Subsidiary and
Corel):

     4.1.1 ACCURACY OF REPRESENTATIONS AND COMPLIANCE WITH COVENANTS. The
     representations and warranties of the Jasc Stockholders and of the
     Corporation made in or pursuant to this Agreement will be true and correct
     in all material respects (except for any representations and



                                      -44-


     warranties which are qualified by materiality in Article 3, which
     representations and warranties will be strictly true and correct) at the
     Time of Closing with the same force and effect as if made at and as of the
     Time of Closing; the covenants contained in this Agreement to be performed
     by the Jasc Stockholders or the Corporation at or prior to the Time of
     Closing will have been performed in all material respects; neither the Jasc
     Stockholders nor the Corporation will be in breach of any agreement on its
     part contained in this Agreement; and the Merger Subsidiary and Corel will
     have received a certificate confirming the foregoing, signed for and on
     behalf of each Jasc Stockholder and the Corporation (and, in the case of
     the Corporation or of a Jasc Stockholder which is an Entity, by senior
     officers or directors or other persons acceptable to the Merger
     Subsidiary), in the form attached as Schedule 4.1.1.

     4.1.2 OPINION OF FAEGRE & BENSON LLP. The Merger Subsidiary and Corel will
     have received an opinion of Faegre & Benson LLP in the form and substance
     as attached as Schedule 4.1.2.1. In addition, the Merger Subsidiary and
     Corel will have received an opinion of Thomsen & Nybeck, P.A. addressing
     the matters set out in Schedule 4.1.2.2 in respect of the Robert V. Voit
     GRAT.

     4.1.3 FORCE MAJEURE. No fire, war, strike, riot, labor dispute, technical
     failure, or an act of God will have occurred (1) that restrains or
     prohibits the Corporation for a period of at least five (5) Business Days
     from carrying on in any material respect the Business as the Business is
     being carried on at the date of this Agreement; or (2) has or would
     reasonably be expected to have a material adverse effect on the Business,
     assets, financial condition, results of operations or prospects of the
     Corporation and/or the Business or which would materially and adversely
     affect the consummation of the Transaction.

     4.1.4 NO ADVERSE LEGISLATION. No Laws will have been enacted that restrain
     or prohibit the Corporation from carrying on the Business as the Business
     is being carried on at the date of this Agreement.

     4.1.5 NO ACTION TO RESTRAIN. No Proceeding will be pending by any Person
     (other than Corel or Merger Subsidiary or an Affiliate of Corel or a person
     acting on the behalf of or at the request of any Affiliate of Corel) to
     restrain or prohibit:

          4.1.5.1 the consummation of the Transaction as contemplated by this
          Agreement; or

          4.1.5.2 the Corporation from carrying on the Business as the Business
          is being carried on at the date of this Agreement.

     4.1.6 [RESERVED].

     4.1.7 CONSENTS AND APPROVALS. The following consents, authorizations and
     approvals will have been delivered to the Merger Subsidiary. In the case of
     Required Consents, the form and substance of the consents, authorizations
     and approvals will be substantially similar to the form of consent attached
     as Exhibit B:

          4.1.7.1 [Reserved];

          4.1.7.2 approval of the Transaction by the affirmative vote of the
          holders of the requisite majority of the outstanding Jasc Shares in
          accordance with Minnesota Law; and

          4.1.7.3 all Closing Required Consents.



                                      -45-


     4.1.8 DELIVERY OF OTHER AGREEMENTS AND DOCUMENTS. The following agreements
     and documents, duly executed by the Corporation, each of the Principal
     Stockholders and each of the other Jasc Stockholders, as applicable, will
     have been delivered to the Merger Subsidiary, with respect to subsections
     4.1.8.1 and 4.1.8.9 in the forms attached to this Agreement and with
     respect to subsection 4.1.8.2, substantially in the form attached to this
     Agreement with such changes as may be reasonably agreed to by the
     Stockholder Representative and the Merger Subsidiary:

          4.1.8.1 the Corel Minority Shareholders Agreement;

          4.1.8.2 the Escrow Agreement;

          4.1.8.3 [Reserved]

          4.1.8.4 [Reserved];

          4.1.8.5 each of the Jasc Stockholders (including any holder of
          Convertible Securities that exercises those securities and acquires
          Jasc Shares as contemplated by section 2.13) will have delivered a
          Jasc Stockholder Signature Page;

          4.1.8.6 [Reserved];

          4.1.8.7 evidence that as contemplated by section 5.11, the Stockholder
          Expenses have been fully satisfied prior to the Closing Date; or
          irrevocable directions have been provided to Corel directing Corel to
          fully satisfy the Stockholder Expenses not satisfied prior to the
          Closing Date directly out of the Asset Cash Consideration;

          4.1.8.8 [Reserved]; and

          4.1.8.9 the Transfer Agreement.

     4.1.9 Q3 NET REVENUE. The Corporation will have Initial Q3 Net Revenue of
     at least $7,000,000.

     4.1.10 EXERCISE OF DISSENTERS' RIGHTS. Jasc Stockholders holding less than
     two percent (2%) of the issued and outstanding Jasc Shares will have
     exercised appraisal or dissenters' rights in accordance with the provisions
     of Minnesota Law.

     4.1.11 CERTAIN TERMINATIONS. The Corporation will accrue for all Severance
     Payments made to each of Jonathan C. Ort and Craig Letourneau in connection
     with that Person's termination of employment, as of September 30, 2004.

          If any of the conditions contained in this section 4.1 are not
fulfilled or performed at (except with respect to section 4.1.8.9 which must be
satisfied prior to the Effective Time and except as a direct result of actions
taken or not taken by Jasc at the specific direction of Corel pursuant to
section 5.1) or prior to the Effective Time to the satisfaction of the Merger
Subsidiary and Corel (acting reasonably), the Merger Subsidiary and Corel may,
by notice to the Stockholder Representative, terminate this Agreement and the
obligations of the Corporation, the Principal Stockholders, the Merger
Subsidiary and Corel under this Agreement other than the obligations contained
in sections 3.5, 8.1 and 8.3. Any condition may be waived in whole or in part by
the Merger Subsidiary and/or Corel without prejudice to any claims it may have
for breach of covenant, representation or warranty.



                                      -46-


4.2  CONDITIONS FOR THE BENEFIT OF THE CORPORATION

          The obligation of the Corporation to consummate and effect the
Transaction and the transactions contemplated by this Agreement is subject to
the satisfaction of, or compliance with, at (except with respect to section
4.2.5.3 which must be satisfied prior to the Effective Time) or prior to the
Effective Time, each of the following conditions (each of which is acknowledged
to be for the exclusive benefit of the Corporation):

     4.2.1 ACCURACY OF REPRESENTATIONS OF MERGER SUBSIDIARY AND COREL AND
     COMPLIANCE WITH COVENANTS. The representations and warranties of the Merger
     Subsidiary and Corel made in or pursuant to this Agreement will be true and
     correct in all material respects at the Time of Closing (except for any
     representations and warranties which are qualified by materiality in
     Article 3, which representations and warranties will be strictly true and
     correct) with the same force and effect as if made at and as of the Time of
     Closing; the covenants contained in this Agreement to be performed by the
     Merger Subsidiary and Corel at or prior to the Time of Closing will have
     been performed in all material respects; neither the Merger Subsidiary nor
     Corel will be in breach of any agreement on its part contained in this
     Agreement; and the Corporation and the Stockholder Representative will have
     received a certificate confirming the foregoing, signed for and on behalf
     of the Merger Subsidiary and Corel by senior officers or directors of the
     Merger Subsidiary and Corel or other persons acceptable to the Stockholder
     Representative, in form and substance satisfactory to the Stockholder
     Representative and Jasc Counsel.

     4.2.2 OPINION OF TORYS LLP. The Corporation and Jasc Stockholders will have
     received an opinion of Torys LLP in the form and substance as attached as
     Schedule 4.2.2.1 and an opinion of Stewart McKelvey Stirling Scales LLP in
     the form and substance as attached as Schedule 4.2.2.2.

     4.2.3 NO ACTION TO RESTRAIN. No Proceeding will be pending by any Person to
     restrain or prohibit the Transaction.

     4.2.4 [RESERVED]

     4.2.5 DELIVERY OF OTHER AGREEMENTS. The following agreements, duly executed
     by Corel and/or the Merger Subsidiary, as applicable, will have been
     delivered to each of the Jasc Stockholders who is a party to the applicable
     agreement, with respect to subsections 4.2.5.1 and 4.2.5.3 in the forms
     attached to this Agreement and with respect to subsection 4.2.5.2
     substantially in the form attached to this Agreement with such changes as
     may be reasonably agreed to by the Stockholder Representative and the
     Merger Subsidiary:

          4.2.5.1 the Corel Minority Shareholders Agreement;

          4.2.5.2 the Escrow Agreement; and

          4.2.5.3 the Transfer Agreement.

          If any of the conditions contained in this section 4.2 are not
fulfilled or performed at (except with respect to section 4.2.5.3 which must be
satisfied prior to the Effective Time) or prior to the Effective Time to the
satisfaction of the Corporation (acting reasonably), the Corporation may, by
notice to the Merger Subsidiary and Corel terminate this Agreement and the
obligations of the Corporation, the Jasc Stockholders, the Merger Subsidiary and
Corel under this Agreement other than the obligations contained in sections 3.5,
8.1 and 8.3. Any condition may be waived in whole or in part by the



                                      -47-


Corporation without prejudice to any claims it may have for breach of covenant,
representation or warranty.

                                    ARTICLE 5
                      ADDITIONAL AGREEMENTS OF THE PARTIES

5.1  ACCESS TO INFORMATION

          The Corporation will give, and the Principal Stockholders will cause
the Corporation to give, until the Time of Closing, to the Merger Subsidiary,
Corel and their respective accountants, legal advisers and representatives
during normal business hours full access to their premises, all their assets,
books, accounts, tax returns, contracts, commitments and records and to their
personnel and to furnish them with all such information relating to the Business
(collectively, the "JASC FACILITIES AND INFORMATION") and their affairs and
assets as the Merger Subsidiary and/or Corel may reasonably request. In
addition, the Corporation will give, and the Principal Stockholders will cause
the Corporation to give, until the Time of Closing, to the Merger Subsidiary,
Corel and their representatives reasonable access to the Jasc Facilities and
Information to conduct ongoing integration and transaction planning which
includes the initiation of customer surveys of existing Jasc customers;
provided, however, that the Merger Subsidiary, Corel and their representatives
shall have no right to legally bind the Corporation and, provided further, that
the Stockholder Representative shall be provided with information about the
integration and transaction planning that is being conducted and shall have the
right to cause the delay or termination of such planning activities if he
reasonably believes that it is necessary to do so in order to allow the
Corporation to carry on the Business as the Business is being carried on at the
date of this Agreement. No investigation made by the Merger Subsidiary, Corel or
their respective representatives will affect the Merger Subsidiary's and/or
Corel's right to rely on any representation or warranty made by the Jasc
Stockholders or the Corporation in this Agreement or in any document
contemplated by this Agreement or derogate from the Jasc Stockholders'
acknowledgement of that reliance in sections 3.1 and 3.2 and the Jasc
Stockholder Signature Page, as applicable.

5.2  CONDUCT OF BUSINESS UNTIL TIME OF CLOSING

          Except as expressly provided in this Agreement or except with the
prior written consent of the Merger Subsidiary, prior to the Time of Closing the
Corporation will, and the Principal Stockholders will cause the Corporation to:

     5.2.1 operate the Business only in the ordinary course, consistent with
     past practice and, to the extent consistent with that operation, use best
     efforts to preserve its business organization, including the services of
     its officers and employees, and its business relationships with customers,
     suppliers and others having business dealings with it;

     5.2.2 maintain all its assets, whether owned or leased, in good condition
     and repair and, subject to section 5.7, maintain insurance upon all its
     assets comparable in amount, scope and coverage to that in effect on the
     date of this Agreement;

     5.2.3 satisfy or accrue all salary obligations to employees of the
     Corporation, as incurred up until and including the Closing Date;

     5.2.4 maintain its books, records and accounts in the ordinary course on a
     basis consistent with past practice (including the recording and/or
     treatment by the Corporation of accounts receivable and payable); and



                                      -48-


     5.2.5 do or refrain from doing all acts and things in order to ensure that
     the representations and warranties in section 3.1 remain true and correct
     in all material respects at the Time of Closing (except for any
     representations and warranties which are qualified by materiality in
     section 3, which representations and warranties are to be strictly true and
     correct) as if those representations and warranties were made at and as of
     that date and to satisfy or cause to be satisfied the conditions in section
     4.1 which are within its control.

5.3  NEGATIVE COVENANT

          Except as expressly provided in this Agreement or listed in Schedule
5.3 or except with the prior written consent of the Merger Subsidiary, prior to
the Time of Closing the Corporation will not, and the Principal Stockholders
will ensure that the Corporation will not:

     5.3.1 amend its certificate of incorporation, by-laws, constating documents
     or other organizational documents;

     5.3.2 merge or consolidate with, or acquire all or substantially all the
     shares or assets of, any Person;

     5.3.3 transfer, lease, license, sell or otherwise dispose of any of its
     assets, other than inventory and non-exclusive licenses to the Key Software
     Programs in the ordinary course of the Business, consistent with past
     practice;

     5.3.4 do any act or thing of the kind described in section 3.1.13 or enter
     into any Contract of the kind described in sections 3.1.16 or 3.1.25; or

     5.3.5 without limiting the generality of this section 5.3, change the
     Corporation's pricing policies, announce new products, hire or terminate
     key employees, terminate master representatives, enter into, renew or
     terminate significant Contracts or alter any employee compensation or
     benefits (including any profit sharing or equity participation plans) or
     other terms and conditions of employment.

5.4  MERGER SUBSIDIARY'S COVENANT

          Except as expressly provided in this Agreement or except with the
prior written consent of the Corporation, prior to the Time of Closing each of
the Merger Subsidiary and Corel will do or refrain from doing all acts and
things in order to ensure that the representations and warranties in sections
3.2 and 3.4 remain true and correct in all material respects at the Time of
Closing (except for any representations and warranties which are qualified by
materiality in section 3, which representations and warranties are to be true
and correct) as if those representations and warranties were made at and as of
that date and to satisfy or cause to be satisfied the conditions in section 4.2
which are within each entity's respective control.

5.5  CORPORATE ACTION, RELEASES

          At or prior to the Time of Closing, the Principal Stockholders will
cause all necessary corporate action to be taken for the purpose of approving
the Transaction and the transactions contemplated by this Agreement. If
requested by the Merger Subsidiary, the Principal Stockholders will cause
nominees of the Merger Subsidiary to be elected or appointed directors of the
Corporation to fill any vacancies.



                                      -49-


5.6  OBTAINING OF CONSENTS AND APPROVALS

          The Principal Stockholders will, and will cause the Corporation to,
use best efforts to deliver, at or prior to the Time of Closing, the Required
Consents.

5.7  ADDITIONAL INSURANCE

          The Principal Stockholders will, at the request and expense of the
Merger Subsidiary, cause the Corporation to place promptly any additional
insurance on its insurable assets and/or to place any additional public
liability or other insurance as the Merger Subsidiary may request.

5.8  NON-SOLICITATION

          Neither the Corporation (including its directors, officers, employees
and agents) nor any Jasc Stockholder will initiate, encourage, cooperate with,
provide non-public information to or participate in any discussions with any
third party (other than its professional advisors) regarding the Transaction or
any other proposed financing of the Corporation or sale of the Corporation's
securities or assets, and the Corporation and each Jasc Stockholder will
immediately terminate any such discussions currently in progress. If, prior to
the earlier of the Time of Closing and termination of this Agreement, the
Corporation or a Jasc Stockholder receives an inquiry concerning a proposed
transaction that could be inconsistent with the Transaction, then the
Corporation or that Jasc Stockholder will immediately notify the Merger
Subsidiary of that event and provide the Merger Subsidiary with a copy of that
proposal (if in writing) or a summary of that inquiry (if oral).

5.9  [RESERVED]

5.10 TAX MATTERS

     5.10.1 The Merger Subsidiary and the Jasc Stockholders will make an
     election under Section 338(h)(10) of the Code (and any comparable election
     under state or local Tax Law), with respect to the Transaction. The Merger
     Subsidiary and the Jasc Stockholders will cooperate fully with each other
     in the making of that election. In particular, and not by way of
     limitation, in order to effect that election, promptly upon the request of
     the Merger Subsidiary, each of the Jasc Stockholders will execute with the
     Merger Subsidiary necessary copies of Internal Revenue Service Form 8023
     and all attachments required to be filed with that form pursuant to
     applicable Treasury regulations.

     5.10.2 The Transaction Consideration and the liabilities of the Corporation
     assumed by the Merger Subsidiary under this Agreement will be allocated to
     the assets of the Corporation substantially as set out in Schedule 5.10.2.
     The parties agree that the Schedule 5.10.2 attached to this Agreement on
     the date of this Agreement is in draft form (the "DRAFT SCHEDULE 5.10.2")
     and that the final Schedule 5.10.2 (the "FINAL SCHEDULE 5.10.2") will be
     delivered by the Merger Subsidiary to the Stockholder Representative at
     least 2 Business Days prior to the Closing Date. The Final Schedule 5.10.2
     will (i) contain the identical line items as the Draft Schedule 5.10.2 (and
     will not contain any additional items), and (ii) reflect amounts allocated
     to "Property, plant and equipment" and "Non-compete" that will not be more
     than 3 times the value allocated to those items in the Draft Schedule
     5.10.2. The parties agree that this allocation is intended to comply with
     the allocation method required by Section 338 of the Code. The parties will
     cooperate to comply with all substantive and procedural requirements of
     Section 338 of the Code and any applicable regulations, and the allocation
     will be adjusted if, and to the extent, necessary to comply with the
     requirements of Section 338 of the Code. Neither the Merger Subsidiary nor
     any of the Jasc



                                      -50-


     Stockholders will take, nor permit any Affiliated person to take, for
     federal, state or local income Tax purposes, any position inconsistent with
     (i) the allocation set out in Schedule 5.10.2, or, if applicable, that
     adjusted allocation; and/or (ii) the description of the Transaction as set
     out in section 2.1.

     5.10.3 The Principal Stockholders will prepare, or cause to be prepared,
     and file, or cause to be filed, on a timely basis all Tax Returns with
     respect to the Corporation for taxable periods ending on or prior to the
     Closing Date (a "PRE-CLOSING TAX PERIOD") including any short period return
     for the Corporation ending at the end of the day on the Closing Date. The
     Principal Stockholders shall provide Corel copies of the Tax Returns at
     least 30 days prior to the due date for filing the specific Tax Return, and
     Corel shall have the right to comment on any of those Tax Returns.

     5.10.4 Subject to the process set out in section 6.3, each of Corel on the
     one hand, and the Jasc Stockholders on the other hand (each a "RECIPIENT"),
     shall notify the other party in writing within 20 days of receipt by the
     Recipient of written notice of any pending or threatened audit, notice of
     deficiency, proposed adjustment, assessment, examination or other
     administration or Proceeding or other claim which could affect the
     liability for Taxes of the other party (a "TAX CLAIM"). The Jasc
     Stockholders agree that they will not settle any Proceeding in respect of a
     Tax Claim in a manner which could potentially materially affect, Corel, the
     Corporation or the Surviving Corporation for any taxable period that ends
     after the Closing Date without the prior consent of Corel. Corel agrees
     that it will not settle or allow to be settled any Proceeding in respect of
     a Tax Claim in a manner which could reasonably be expected to have a
     material affect on the Jasc Stockholders for any taxable period that ends
     before the Closing Date without the prior written consent of the
     Stockholder Representative, which consent will not be unreasonably
     withheld. In the case of any taxable period that includes (but does not end
     on) the Closing Date (a "STRADDLE PERIOD"), the Jasc Stockholders will be
     entitled to participate at their expense in any Tax Claim relating in any
     part to Taxes attributable to the portion of that Straddle Period deemed to
     end on or before the Closing Date, and with the written consent of Corel,
     at the Jasc Stockholders' sole expense, may assume the control of the
     entire Tax Claim.

5.11 CERTAIN PAYMENTS AND EXPENSES

     5.11.1 Prior to the Effective Time, and except as set forth in section
     5.16, the Jasc Stockholders will, or will cause the Corporation to, satisfy
     any liability for severance pay, penalty, bonus (pro rata or otherwise) or
     similar payment requirements to any employee, sales representative,
     independent contractor, consultant, distributor, agent or Affiliate of the
     Corporation (each, a "SEVERANCE PAYMENT") that were either (1) incurred
     prior to the Time of Closing or (2) required to be satisfied in connection
     with the consummation of the Transaction as a result of a change of control
     or otherwise, including any amounts due to holders of Convertible
     Securities pursuant to section 2.13 or amounts contemplated by section
     4.1.11. Following the Closing Date, by way of pro rata cash payment
     calculated based upon the Jasc Stockholder's Ownership Percentage, the Jasc
     Stockholders will satisfy Severance Payments that are required by Contract
     or Law to be satisfied as a result of the consummation of the Merger (and
     the resulting change of control) and/or the Asset Sale. All of the
     foregoing expenses shall include all associated payroll Taxes.

     5.11.2 Prior to the Effective Time, the Jasc Stockholders will, or will
     cause the Corporation to, satisfy all costs and expenses incurred by the
     Corporation in connection with the consummation of the Merger, including
     any costs in connection with the obtaining of the Consents referred to in
     section 5.6.



                                      -51-


     5.11.3 Prior to the Effective Time, the Jasc Stockholders will, or will
     cause the Corporation to, satisfy 50% of any filing fees payable in
     connection with any filings made under the HSR Act.

     5.11.4 If the costs and fees specified in sections 5.11.1, 5.11.2 and/or
     5.11.3 are not satisfied prior to the Effective Time or taken into account
     in the calculation of the Asset Sale Cash Consideration and/or the Total
     Adjusted Merger Cash Consideration, those costs and fees will be reflected
     on the Working Capital Closing Balance Sheet as current liabilities.

     5.11.5 The Jasc Stockholders will satisfy all fees, expenses and other
     required payments relating to the exercise of dissenter's rights by Jasc
     Stockholders under Minnesota Law.

     5.11.6 The Jasc Stockholders will satisfy all fees and expenses of
     investment bankers (including, for greater certainty, commissions and fees
     due to Goldsmith Agio Helms as referenced in section 3.5) of the Jasc
     Stockholders and/or the Corporation incurred in connection with negotiation
     and settlement of this Agreement and the consummation of the Transaction.

     5.11.7 Satisfaction of the payments set out in this section 5.11 will not
     constitute a breach of any covenant in section 5.3 of this Agreement.

5.12 GOODWILL

          Each Principal Stockholder and the Corporation covenants and agrees
that the Principal Stockholder and the Corporation will not take or omit to take
any action which could directly or indirectly impair the goodwill of the
Corporation or the Business or the business reputation or good name of the
Corporation.

5.13 COOPERATION

          The parties will cooperate fully in good faith with each other and
their respective legal advisers, accountants and other representatives in
connection with any steps required to be taken as part of their respective
obligations under this Agreement.

5.14 TERMINATION

          This Agreement may be terminated and the Transaction may be abandoned
at any time prior to the Closing (notwithstanding any approval of this Agreement
by the Jasc Stockholders) by:

     5.14.1 mutual written agreement of Corel and the Corporation;

     5.14.2 either Corel or the Corporation, by written notice to the other, if
     the Transaction has not been consummated by October 31, 2004 or any later
     date as Corel and the Corporation may mutually agree (provided that the
     right to terminate this Agreement under this section 5.14.2 will not be
     available to any party whose failure to fulfill any of its obligations
     under this Agreement has been the cause of or resulted in the failure to
     consummate the Transaction by such date). For greater certainly, (i) the
     condition set out in section 4.1.7.3 does not constitute an "obligation"
     for the purposes of this section; and (ii) without limitation, the
     Corporation may not terminate pursuant to this section 5.14.2 in the event
     that section 5.6 has been breached;

     5.14.3 either Corel or the Corporation, by written notice to the other, if
     the stockholder approval referred to in section 4.1.7.2 is not obtained by
     reason of the failure to obtain the requisite vote



                                      -52-


     upon a vote at a duly held meeting of Jasc Stockholders or at any
     adjournment of that meeting or by written consent in lieu of a meeting; or

     5.14.4 either Corel or the Corporation, by written notice to the other, if
     there will be any applicable Law that makes the consummation of the
     Transaction illegal or otherwise prohibited or if any order of a
     Governmental Authority of competent jurisdiction restrains or prohibits the
     consummation of the Transaction, and that order becomes final and
     non-appealable.

     Sections 3.5, 8.1 and 8.3 of this Agreement will survive the termination of
this Agreement pursuant to this section 5.14.

5.15 JASC STOCKHOLDER APPROVAL

     5.15.1 The Corporation will promptly after the date of this Agreement take
     all actions necessary to call a meeting of the Jasc Stockholders (including
     the delivery to Jasc Stockholders of all material required by Minnesota
     Law) to be held as promptly as practicable for the purpose of voting upon
     this Agreement and the Transaction (the "JASC STOCKHOLDERS MEETING") or
     obtain the unanimous written consent of all Jasc Stockholders approving
     this Agreement and the Transaction. The Corporation will, through its board
     of directors, unanimously recommend to the Jasc Stockholders approval of
     this Agreement and the Transaction.

     5.15.2 Each of the Principal Stockholders hereby agrees to vote that
     Principal Stockholder's Jasc Shares in favor of this Agreement and the
     Transaction at the Jasc Stockholders Meeting or in the written consent. If
     requested by the Stockholder Representative, each Principal Stockholder
     agrees to grant the Stockholder Representative a proxy to vote that
     Principal Stockholder's Jasc Shares in favor of this Agreement and the
     Transaction.

5.16 JASC YE BONUS PROGRAM

          Notwithstanding anything to the contrary in this Agreement, the Jasc
Stockholders will not be liable for any amounts associated with the Jasc YE
Bonus Program, including to the extent those amounts should have been accrued on
the Initial Closing Balance Sheet or the Working Capital Closing Balance Sheet.
Corel agrees that any liability the Corporation has to make payments in
accordance with the Jasc YE Bonus Program will be solely the responsibility and
liability of the Merger Subsidiary or Corel following the Closing and the Corel
Indemnified Parties will have no right to indemnification for any losses,
damages or deficiencies from their obligation to make any payments that become
due.

5.17 JASC FOUNDER'S COMPUTER AND CELL PHONE

          At the Closing, the Corporation will sell to Robert V. Voit the
computer and cell phone of the Corporation used by Mr. Voit for a total purchase
price of $1, which items will become the personal property of Mr. Voit.

5.18 POST-CLOSING ACCESS

          Following the Closing Date, Corel will provide each Jasc Stockholder
and their accounting advisors with reasonable access to the books and records of
the Corporation and appropriate accounting and finance personnel of Corel, the
Merger Subsidiary and/or the Surviving Corporation (during standard business
hours and upon reasonable advance written notice from the Jasc Stockholder) in
connection with the filing of the Jasc Stockholder's "Sub S" tax return for the
2004 fiscal year or the audit



                                      -53-


of those tax returns for any prior year, and for purposes of taking actions
required by this Agreement, such as the actions specified in sections 2.9, 2.10,
2.14 and 5.10.3.

                                    ARTICLE 6
                                 INDEMNIFICATION

6.1  INDEMNIFICATION

     6.1.1 Indemnification by the Principal Stockholders

          Each of the Principal Stockholders, jointly and severally, hereby
agrees to defend, indemnify and hold harmless the Merger Subsidiary, Corel and
the Surviving Corporation (collectively, the "COREL INDEMNIFIED PARTIES") for
and from:

          6.1.1.1 any loss, damages or deficiencies suffered by a Corel
          Indemnified Party as a result of any breach of a representation and
          warranty contained in section 3.1 or a covenant on the part of any
          Principal Stockholder or on the part of the Corporation contained in
          this Agreement or in any certificate or document delivered pursuant to
          or contemplated by this Agreement; and

          6.1.1.2 all claims, demands, costs and expenses, including legal fees
          and applicable Taxes, in respect of the foregoing.

     6.1.2 Indemnification by the Jasc Stockholders

          Each of the Jasc Stockholders, severally and not jointly, hereby
agrees to defend, indemnify and hold harmless the Corel Indemnified Parties for
and from:

          6.1.2.1 any loss, damages or deficiencies suffered by a Corel
          Indemnified Party as a result of any breach of a representation and
          warranty given by that Jasc Stockholder in section 3.2 or a covenant
          on the part of that Jasc Stockholder in this Agreement or in any
          certificate or document delivered pursuant to or contemplated by this
          Agreement (including, for greater certainty, the Jasc Stockholder
          Signature Page; and

          6.1.2.2 all claims, demands, costs and expenses, including legal fees
          and applicable Taxes, in respect of the foregoing.

     6.1.3 Exceptions

          Notwithstanding the foregoing, no Principal Stockholder or any other
Jasc Stockholder will have any obligation to defend, indemnify or hold harmless
the Corel Indemnified Parties for or from any loss, damages or deficiencies
suffered by a Corel Indemnified Party:

          6.1.3.1 that relates to matters for which the Principal Stockholders
          and the other Jasc Stockholders are entitled to be indemnified by
          Corel and the Merger Subsidiary as set out in section 6.1.4 below; and

          6.1.3.2 to the extent that loss, damage or deficiency has been
          included in the Closing Working Capital Amount such that the Closing
          Balance Sheet or the related working papers specifically identifies
          that particular accrual or adjustment as relating to the particular
          loss, damage or deficiency.



                                      -54-


     6.1.4 Indemnification by Merger Subsidiary and Corel

          Each of Corel and the Merger Subsidiary, jointly and severally, hereby
agree to defend, indemnify and hold harmless the Principal Stockholders and Jasc
Stockholders for and from any loss or damages suffered by the Principal
Stockholders and/or Jasc Stockholders as a result of a violation of applicable
Laws (including Laws related to privacy and sweepstakes) caused by the
solicitation for, distribution of or collection of the Surveys (as defined in
the letter agreement executed by Corel dated September 20, 2004) on the same
terms as set out in that letter.

6.2  NOTICE OF CLAIM

          A Corel Indemnified Party will promptly give notice to the Stockholder
Representative of any claim for indemnification pursuant to section 6.1 (a
"CLAIM", which term will include more than one Claim), provided that any delay
or failure to so advise the Stockholder Representative will not relieve the
applicable Jasc Stockholders from any liability except to the extent that the
defense of that Claim is prejudiced by that delay or failure. That notice will
specify whether the Claim arises as a result of a claim by a Person against the
Corporation (a "THIRD PARTY CLAIM") or whether the Claim does not so arise (a
"COREL INDEMNIFIED PARTY'S CLAIM"), and will also specify with reasonable
particularity (to the extent that the information is available):

     6.2.1 the factual basis for the Claim; and

     6.2.2 the amount of the Claim, or, if an amount is not then determinable,
     an approximate and reasonable estimate of the likely amount of the Claim.

6.3  PROCEDURE FOR INDEMNIFICATION

     6.3.1 COREL INDEMNIFIED PARTY'S CLAIMS. With respect to Corel Indemnified
     Party's Claims, following receipt of notice from the Corel Indemnified
     Party of a Claim, the Stockholder Representative will have 30 days to make
     any investigation of the Claim as the Stockholder Representative considers
     necessary or desirable. For the purpose of that investigation, the Corel
     Indemnified Party will make available to the Stockholder Representative and
     its authorized representatives the information relied upon by the Corel
     Indemnified Party to substantiate the Claim. If the Corel Indemnified Party
     and the Stockholder Representative agree at or prior to the expiration of
     that 30 day period (or any mutually agreed upon extension of that period)
     to the validity and amount of the Claim, the applicable Jasc Stockholder(s)
     will immediately pay to the Corel Indemnified Party the full agreed upon
     amount of the Claim.

     If the Corel Indemnified Party and the Stockholder Representative do not
     agree within that period (or any mutually agreed upon extension of that
     period), the Corel Indemnified Party and the Jasc Stockholders agree that
     the Corel Indemnified Party will be entitled to bring an action in a court
     of law to recover the full amount of the Claim and any costs incidental to
     the action.

     6.3.2 THIRD PARTY CLAIMS.

          6.3.2.1 With respect to any Third Party Claim, the applicable Jasc
          Stockholder(s) will have the right, at their own expense, to
          participate in or assume control of the negotiation, settlement or
          defense of the Third Party Claim and, in that event, the Jasc
          Stockholder(s) will reimburse the Corel Indemnified Party for all the
          Corel Indemnified Party's out-of-pocket expenses as a result of that
          participation or assumption. If the Jasc Stockholder(s) elect to
          assume that control, the Corel Indemnified Party will cooperate with
          the Jasc



                                      -55-


          Stockholders, will have the right to participate in the negotiation,
          settlement or defense of the Third Party Claim at its own expense and
          will have the right to disagree on reasonable grounds with the
          selection and retention of counsel, in which case counsel satisfactory
          to the Jasc Stockholders and the Corel Indemnified Party will be
          retained by the Jasc Stockholders.

          6.3.2.2 If the applicable Jasc Stockholders, having elected to assume
          control as contemplated in section 6.3.2.1 then fail to defend the
          Third Party Claim within a reasonable time, the Corel Indemnified
          Party will be entitled to assume control and the applicable Jasc
          Stockholders will be bound by the results obtained by the Corel
          Indemnified Party with respect to the Third Party Claim.

6.4  ADDITIONAL RULES AND PROCEDURES

          The obligation of the Jasc Stockholders to indemnify the Corel
Indemnified Parties in respect of Claims will also be subject to the following:

     6.4.1 Any Claim arising as a result of a breach of a representation or
     warranty contained in sections 3.1 or 3.2 will be made not later than the
     date on which, pursuant to section 3.6, that representation or warranty
     terminated.

     6.4.2 The Jasc Stockholders' obligation to indemnify the Corel Indemnified
     Parties will only apply if the Claims (including the latest Claim made but
     excluding Claims set out in section 6.4.4), in total, exceed $250,000 net
     of insurance proceeds and tax benefits, at which time the full amount of
     all of those Claims will be indemnifiable under this Agreement.

     6.4.3 The total amount payable by the Jasc Stockholders (either through the
     Escrow Fund or directly) in respect of Claims under this Article will not
     exceed $6.0 million.

     6.4.4 Notwithstanding section 6.4.3, there will be no limit on the amounts
     payable under this Article with respect to any Claim (1) based on the gross
     negligence or fraud of a Jasc Stockholder or the Corporation or (2) arising
     from a breach of a representation and warranty contained in one or more of
     sections 3.1.1.1, 3.1.1.3, 3.1.2, 3.1.3, 3.1.5, 3.1.6(a), 3.1.24, 3.2.3,
     3.2.4 and 3.2.5 and Sections 1.3, 1.4 and 1.5 of the Jasc Stockholder
     Signature Page, and or a breach of a covenant contained in sections 5.11 or
     8.3. For greater certainty, amounts payable in connection with any Claim
     which, pursuant to this section 6.4.4, is not subject to any limit, will
     not be aggregated with any other Claims that are subject to the limits set
     out in section 6.4.3.

     6.4.5 In the event that any Third Party Claim is of a nature that the Corel
     Indemnified Party is required by applicable Law to make a payment to any
     Person (a "THIRD PARTY") with respect to the Third Party Claim before the
     completion of settlement negotiations or related Proceedings, the Corel
     Indemnified Party may make that payment and the applicable Jasc
     Stockholder(s) will, promptly after demand by the Corel Indemnified Party,
     reimburse the Corel Indemnified Party for any such payment. If the amount
     of any liability of the Corel Indemnified Party under the Third Party Claim
     in respect of which that payment was made, as finally determined, is less
     than the amount which was paid by the applicable Jasc Stockholder(s) to the
     Corel Indemnified Party, the Corel Indemnified Party will, promptly after
     receipt of the difference from the Third Party, pay the amount of that
     difference to the applicable Jasc Stockholder(s).

     6.4.6 Except in the circumstance contemplated by sections 6.4.5 and 6.3.2.2
     and whether or not the applicable Jasc Stockholder(s) assume control of the
     negotiation, settlement or defense of any



                                      -56-


     Third Party Claim, the Corel Indemnified Party will not negotiate, settle,
     compromise or pay any Third Party Claim except with the prior written
     consent of the Stockholder Representative (which consent will not be
     unreasonably withheld), unless that settlement includes an unconditional
     release of the Corel Indemnified Party and the applicable Jasc
     Stockholder(s).

     6.4.7 The Corel Indemnified Party will not permit any right of appeal in
     respect of any Third Party Claim to terminate without giving the
     Stockholder Representative notice of the Third Party Claim and an
     opportunity to contest the Third Party Claim.

     6.4.8 The Corel Indemnified Party and the Jasc Stockholders will cooperate
     fully with each other with respect to Third Party Claims, will keep each
     other fully advised with respect to those claims (including supplying
     copies of all relevant documentation promptly as it becomes available) and
     will keep informed about and be prepared to discuss the Third Party Claim
     with the other and with counsel at all reasonable times.

     6.4.9 Notwithstanding section 6.3.2, the Jasc Stockholders will not settle
     any Third Party Claim or conduct any related Proceeding in a manner which
     would, in the opinion of the Corel Indemnified Party, acting reasonably,
     have a material adverse impact on the Merger Subsidiary, Corel, the
     Surviving Corporation or the Business.

     6.4.10 Any payment by any Jasc Stockholder under this Agreement will be
     treated for tax purposes as an adjustment to the Transaction Consideration.

6.5  ESCROW AGREEMENT

          Claims will be satisfied first out of, and to the extent of, the
Escrow Fund (if then still in existence) in accordance with the terms of the
Escrow Agreement and thereafter by recourse directly to the applicable Jasc
Stockholders. For greater certainty, payments to a Corel Indemnified Party from
the Escrow Fund will be comprised of both cash and Corel Common Shares,
allocated pro rata based upon the ratio of cash to Corel Common Shares in the
Escrow Fund at the time of that payment. The Escrow Agreement will provide for
the payment, on the date which is 18 months after the Closing Date, to each Jasc
Stockholder of an amount equal to the remaining balance of that Jasc
Stockholder's portion of the Escrow Fund, if any, less amounts in respect of
which a Corel Indemnified Party has asserted Claims as provided in and subject
to the terms and conditions of this Agreement and the Escrow Agreement. The
Escrow Agreement will further provide that the portion of the Escrow Fund which
is comprised of Corel Common Shares will be valued at $5.0 million for the
duration of the term of the Escrow Fund (and that value will be proportionately
reduced to the extent that Claims are satisfied by the payment from the Escrow
Fund of Corel Common Shares) for the purpose of satisfying Claims.

6.6  LIMITATION OF REMEDIES

          A Corel Indemnified Party's sole and exclusive remedy with respect to
any and all Claims relating to the subject matter of this Agreement (including
Claims for breaches of representations, warranties, covenants, and agreements
contained in this Agreement) will be pursuant to the indemnification provisions
set out in this Article 6. In furtherance of the foregoing, each Corel
Indemnified Party hereby waives, to the fullest extent permitted under
applicable Law, any and all rights, claims, and causes of action of that Corel
Indemnified Party against the Corporation and the Jasc Stockholders as a matter
of equity or under or based upon any Law or arising under or based upon common
law or otherwise, except to the extent specifically provided in this Article 6.



                                      -57-


                                    ARTICLE 7
                                     CLOSING

7.1  LOCATION AND TIME OF THE CLOSING

          The Closing will take place at the Time of Closing on the Closing Date
at the offices of Merger Subsidiary's Counsel in New York.

7.2  DELIVERIES AT THE CLOSING

          At the Closing, immediately following the consummation of the Asset
Sale as contemplated by section 2.1.1 and subject to section 2.12, each Jasc
Stockholder will deliver the share certificates representing that Jasc
Stockholder's Jasc Shares and all other documents as are required or
contemplated to be delivered by the Jasc Stockholders pursuant to this
Agreement, and Corel and the Merger Subsidiary will pay the Total Adjusted
Merger Cash Consideration, will deliver share certificates representing the
Total Merger Equity Consideration and will deliver all other documents required
or contemplated to be delivered by Corel and/or the Merger Subsidiary pursuant
to this Agreement.

                                    ARTICLE 8
                                 GENERAL MATTERS

8.1  PUBLIC NOTICES

          No press release or other announcement concerning the Transaction will
be made by the Jasc Stockholders, the Corporation, the Merger Subsidiary or
Corel without, in the case of those to be made by the Jasc Stockholders or the
Corporation, the prior written consent of Corel, and in the case of those to be
made by the Merger Subsidiary or Corel, without the prior written consent of the
Stockholder Representative (which consent, in either case, will not be
unreasonably withheld). The Principal Stockholders will assist the Merger
Subsidiary and/or Corel in informing the personnel and management of the
Corporation of the change in the ownership of the Corporation; provided always
that those communications will be made only by or with the prior approval of the
Merger Subsidiary and/or Corel.

8.2  STOCKHOLDER REPRESENTATIVE

          Unless this Agreement explicitly provides to the contrary, each of the
Jasc Stockholders agree that the Stockholder Representative is authorized on
behalf of that Jasc Stockholder to do all acts under this Agreement on behalf of
that Jasc Stockholder which the Jasc Stockholder could do itself, including
accepting notices, granting consents, approvals or waivers, entering into
amendments and executing and delivering all documents specified to be executed
and delivered by "the Jasc Stockholders" (as opposed to by "each Jasc
Stockholder" or "each of the Jasc Stockholders"). In furtherance of the
foregoing authority, each of the Jasc Stockholders hereby appoints the
Stockholder Representative as the Jasc Stockholders true and lawful attorney
with full power and authority in the Jasc Stockholder's place and stead to act
in the capacity set out above in this section.

8.3  EXPENSES

     8.3.1 The Jasc Stockholders, on the one hand (and as further specified in
     section 5.11), and Corel and the Merger Subsidiary, on the other hand, will
     be responsible for the expenses (including fees and expenses of legal
     advisers, accountants, brokers, investment bankers (including, for greater
     certainty, commissions and fees due to Goldsmith Agio Helms as referenced
     in section 3.5)



                                      -58-


     and other professional advisers) incurred by them, respectively, (and, in
     the case of the Jasc Stockholders, including those expenses incurred by or
     on behalf of the Corporation) in connection with the negotiation and
     settlement of this Agreement and the consummation of the Transaction
     (provided, however, that the Jasc Stockholders may cause the Corporation,
     prior to the Time of Closing, to satisfy any of those expenses (but not
     including those set out in sections 5.11.5 or 5.11.6) incurred by them or
     by or on behalf of the Corporation).

     8.3.2 Notwithstanding section 8.3.1 and as further specified in section
     5.11, any filing fees payable in connection with any filings made under the
     HSR Act will be shared equally between the Jasc Stockholders (or the
     Corporation if the Jasc Stockholders cause the Corporation to satisfy those
     fees prior to the Time of Closing), on the one hand, and Corel and the
     Merger Subsidiary, on the other hand.

     8.3.3 Notwithstanding section 8.3.1, if the Closing does not occur, the
     Jasc Stockholders will, or will cause the Corporation to, reimburse Corel
     and the Merger Subsidiary for their reasonable and documented out-of-pocket
     expenses related to investigating and consummating the Transaction
     (including the negotiating and drafting of this Agreement), including the
     fees and expenses of professional advisors (but excluding investment
     banking fees), up to a maximum of $250,000; provided that Corel and the
     Merger Subsidiary will only be entitled to those reimbursed expenses if the
     Corporation and/or the Jasc Stockholders have, prior to July 7, 2005,
     entered into a written agreement with respect to an alternate transaction
     that would result in a change of control of the Corporation, in which
     event, the reimbursement will be due and payable upon entering into that
     written agreement to the alternate transaction.

     8.3.4 If, following the Closing Date, Corel and/or the Jasc Stockholders
     receive notice that a Stockholder Expense was not satisfied in full prior
     to the Effective Time pursuant to section 5.11, the party receiving that
     notice shall inform the other party of the deficiency within 3 Business
     Days of receipt. Within 5 Business Days of delivery of the notice, to the
     extent not otherwise addressed in section 5.11, the Jasc Stockholders will
     pay to Corel the amount by which the applicable Stockholder Expense was not
     satisfied prior to the Effective Time (the "STOCKHOLDER EXPENSE ADJUSTMENT
     AMOUNT"). Each of the Jasc Stockholders will pay to Corel cash equal to a
     pro rata portion of the Stockholder Expense Adjustment Amount based upon
     the Jasc Stockholder's Ownership Percentage. If the entire Stockholder
     Expense Adjustment Amount is not paid by the Jasc Stockholders within the 5
     Business Day period, the unpaid balance of the Stockholder Expense
     Adjustment Amount will be satisfied by a cash payment from the Escrow Fund
     and each Jasc Stockholder that did not make its required payment during the
     5 Business Day period will make a cash payment to the Escrow Fund equal to
     that Jasc Stockholder's pro rata share of the Stockholder Expense
     Adjustment Amount (based upon the Jasc Stockholder's Ownership Percentage),
     all in accordance with the terms of the Escrow Agreement. Notwithstanding
     the foregoing, the Jasc Stockholders will have no obligation to satisfy any
     Stockholder Expense Adjustment Amount to the extent that Stockholder
     Expense Adjustment Amount has been included in the Closing Working Capital
     Amount such that the Closing Balance Sheet or the related working papers
     specifically identifies that particular accrual as relating to the
     particular Stockholder Expense Adjustment Amount. Any dispute under this
     section 8.3.4 shall be handled in accordance with the dispute resolution
     procedures described in section 2.11.



                                      -59-


8.4  ASSIGNMENT

          Except as provided in this section, no party may assign its rights or
benefits under this Agreement. The Merger Subsidiary may, at any time prior to
the Time of Closing:

     8.4.1 assign all (but not less than all) of its rights and benefits under
     this Agreement to any Affiliate of the Merger Subsidiary who delivers to
     the Jasc Stockholders an instrument in writing executed by the assignee
     confirming that it is bound by and will perform all of the obligations of
     the Merger Subsidiary under this Agreement as if it were an original
     signatory; and

     8.4.2 assign, and each of Corel and/or Holdings may assign, all or a
     portion of its rights and benefits under this Agreement by way of security
     to any Person who provides financing to the Merger Subsidiary or its
     Affiliates;

provided that no assignment contemplated above will relieve the Merger
Subsidiary, Corel or Holdings, as the case may be, of its obligations under this
Agreement. In the event of an assignment contemplated above pursuant to section
8.4.1, any reference in this Agreement to "Merger Subsidiary" will be deemed to
include the assignee.

          After the Closing, each of Corel and/or the Surviving Corporation may
assign its rights and benefits under this Agreement to any Person who purchases
all or substantially all of the shares of the Merger Subsidiary or all or
substantially all of the assets of the Surviving Corporation.

          The provisions of this Agreement will be binding upon and inure to the
benefit of the parties to this Agreement and their respective heirs,
representatives, successors and assigns.

8.5  NOTICES

          Any notice or other communication required or permitted to be given
under this Agreement will be in writing and will be given by prepaid mail, by
facsimile, e-mail or other means of electronic communication or by hand-delivery
as provided below. Any such notice or other communication, if mailed by prepaid
mail at any time other than during a general discontinuance of postal service
due to strike, lockout or otherwise, will be deemed to have been received on the
fourth Business Day after its post marked date, or if sent by facsimile, e-mail
or other means of electronic communication, will be deemed to have been received
on the earlier of the Business Day following the sending or the acknowledgement
of receipt by the recipient, or if delivered by hand will be deemed to have been
received at the time it is delivered to the applicable address noted below
either to the individual designated below or to an individual at that address
having apparent authority to accept deliveries on behalf of the addressee.
Notice of change of address will also be governed by this section. In the event
of a general discontinuance of postal service due to strike, lock-out or
otherwise, notices or other communications will be delivered by hand or sent by
facsimile, e-mail or other means of electronic communication and will be deemed
to have been received in accordance with this section. Notices and other
communications will be addressed as follows:

     (a)  if to the Corporation or the Jasc Stockholders:

          c/o the Stockholder Representative, Robert V. Voit
          18422 Bearpath Trail
          Eden Prairie, Minnesota 55347



                                      -60-


          Attention:         Robert V. Voit
          E-mail:            bobvoit@yahoo.com

          with a copy to the Jasc Counsel at:

          Faegre & Benson LLP
          2200 Wells Fargo Center
          90 South Seventh Street
          Minneapolis, Minnesota 55402

          Attention:         Kris Sharpe
          Telecopier number: (612) 766-1600
          E-mail:            ksharpe@faegre.com

     (b)  if to the Merger Subsidiary or Corel at:

          Corel Corporation (if in respect of the Merger Subsidiary, "c/o Corel
          Corporation")

          1600 CarlingAve.
          Ottawa, Ontario K1Z 8R7
          Canada

          Attention:         Chris DiFrancesco, Vice President, Legal & General
                             Counsel
          Telecopier Number: (613)725-2691
          E-mail:            christopher.difrancesco@corel.com

          with a copy to the Merger Subsidiary's Counsel at:

          Torys LLP
          237 Park Avenue
          New York, New York 10017

          Attention:         Darren Sukonick
          Telecopier number: (212)682-0200
          E-mail:            dsukonick@torys.com

          The failure to send or deliver a copy of a notice to the Merger
Subsidiary's Counsel or Jasc Counsel, as the case may be, will not invalidate
any notice given under this section.

8.6  TIME OF ESSENCE

          Time is of the essence of this Agreement.

8.7  CONSENT TO JURISDICTION

          The parties hereby consent to the non-exclusive jurisdiction of the
United States Court for the Southern District of New York in connection with any
civil action concerning any controversy, dispute or claim arising out of or
relating to this Agreement or any Related Agreement, or the breach of



                                      -61-


this Agreement or any Related Agreement unless that court would not have subject
matter jurisdiction thereof, in which event the parties hereby consent to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, County
of New York, and each party further agrees that the service of process or of any
other papers upon them or any of them by registered or certified mail at their
respective addresses set out in section 8.5 will be deemed good, proper and
effective service upon them.

8.8  WAIVER OF JURY TRIAL

          EACH OF THE PARTIES WAIVES TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION BASED ON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
VERBAL OR WRITTEN STATEMENT OR ACTION OF ANY PARTY, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR
OTHERWISE. EACH OF THE PARTIES HEREBY AGREES THAT ANY SUCH CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION WILL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE
PARTIES MAY FILE A COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS
EVIDENCE OF THE CONSENT OF THE PARTIES TO THE WAIVER OF THEIR RIGHT TO TRIAL BY
JURY.

8.9  NO THIRD-PARTY BENEFICIARIES

          This Agreement will be binding upon and inure solely to the benefit of
the parties and their permitted assigns and nothing in this Agreement, whether
express or implied, is intended to or will confer upon any other Person any
legal or equitable right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.

8.10 FURTHER ASSURANCES

          Each of the parties will promptly do, make, execute, deliver, or cause
to be done, made, executed or delivered, all further acts, documents and things
as the other party to this Agreement may reasonably require from time to time
for the purpose of giving effect to this Agreement and will use reasonable
efforts and take all steps as may be reasonably within its power to implement to
their full extent the provisions of this Agreement.

8.11 COUNTERPARTS

          This Agreement may be signed in counterparts and each counterpart will
constitute an original document and those counterparts, taken together, will
constitute one and the same instrument. Counterparts may be delivered by
facsimile, e-mail or other means of electronic communication.



          IN WITNESS WHEREOF the parties to this Agreement have executed this
Agreement as of the date first written above.

                                        JASC SOFTWARE, INC.


                                        By: /s/ Robert V. Voit
                                            ------------------------------------
                                        Name: Robert V. Voit
                                        Title: Chairman


                                        COREL JS ACQUISITION, INC.


                                        By: /s/ Christopher Nicholson
                                            ------------------------------------
                                        Name: Christopher Nicholson
                                        Title: Authorized Signatory


                                        COREL CORPORATION


                                        By: /s/ Christopher Nicholson
                                            ------------------------------------
                                        Name: Christopher Nicholson
                                        Title: Authorized Signatory


                                        COREL HOLDINGS CORPORATION


                                        By: /s/ Christopher Nicholson
                                            ------------------------------------
                                        Name: Christopher Nicholson
                                        Title: Authorized Signatory


WITNESS                                 ROBERT V. VOIT


/s/ JENNIFER KEELER                     /s/ ROBERT V. VOIT
- -------------------------------------   ----------------------------------------
BY: JENNIFER KEELER

              [Signature page to the Agreement and Plan of Merger]



WITNESS                                 JONATHAN C. ORT


/s/ JENNIFER KEELER                     /s/ JONATHAN C. ORT
- -------------------------------------   ----------------------------------------
BY: JENNIFER KEELER


WITNESS                                 KRIS TUFTO


/s/ JENNIFER KEELER                     /s/ KRIS TUFTO
- -------------------------------------   ----------------------------------------
BY: JENNIFER KEELER

              [Signature page to the Agreement and Plan of Merger]



                         JASC STOCKHOLDER SIGNATURE PAGE

          This signature page is executed pursuant to the Agreement and Plan of
Merger among Corel Corporation, Corel JS Acquisition, Inc., Jasc Software, Inc.
and the Principal Stockholders dated as of October 25, 2004 (the "AGREEMENT").
All capitalized terms used in this signature page have the meanings given to
them in the Agreement. The undersigned Jasc Stockholder represents and warrants
to the Merger Subsidiary and Corel as follows and acknowledges that the Merger
Subsidiary and Corel are relying upon the following representations and
warranties in connection with the Transaction:

1.1 COREL COMMON SHARES. With respect to the Corel Common Stock, the Jasc
Stockholder:

     1.1.1 understands that those shares have not been and will not be
registered under the Securities Act, and that the issuance of those shares is
being made in reliance on a private placement exemption;

     1.1.2 is acquiring those shares for its own account;

     1.1.3 acknowledges those shares are not freely transferable;

     1.1.4 has had the opportunity to ask all questions and to obtain all other
information from the Merger Subsidiary and Corel as it has deemed necessary in
connection with its decision to acquire those shares; and

     1.1.5 acknowledges that it is not acquiring those shares as a result of any
"general solicitation" or "general advertising," as those terms are used in
Regulation D under the Securities Act.

1.2 NO FOREIGN PERSON. The Jasc Stockholder that is acquiring shares forming
part of the Total Equity Consideration is not a foreign person within the
meaning of Section 1445(f)(3) of the Code.

1.3 INCORPORATION AND STATUS OF THE JASC STOCKHOLDER. If an Entity, the Jasc
Stockholder is duly formed and validly existing under the laws of its
jurisdiction of formation.

1.4 POWER OF THE JASC STOCKHOLDER AND DUE AUTHORIZATION. If an Entity, the Jasc
Stockholder has all necessary power and capacity to enter into, and to perform
its obligations under, this Agreement. Each of this Agreement and each of the
Related Agreements to which the Jasc Stockholder is a party has been duly
authorized by the Jasc Stockholder. This Agreement has been duly executed and
delivered by the Jasc Stockholder and is a valid and binding obligation of the
Jasc Stockholder, enforceable in accordance with its terms, subject to the usual
exceptions as to bankruptcy and the availability of equitable remedies. At the
Time of Closing, each of the Related Agreements to which the Jasc Stockholder is
a party will be duly executed and delivered by the Jasc Stockholder and will be
valid and binding obligations of the Jasc Stockholder, enforceable in accordance
with their respective terms, subject to the usual exceptions as to bankruptcy
and the availability of equitable remedies, provided that (i) no representation
as to enforceability is made with respect to the agreements described in section
4.1.6 of the Agreement, and (ii) the enforceability of the indemnification
provisions contained in Schedule B to the Corel Minority Shareholders' Agreement
may be limited by applicable federal or state securities laws.

1.5 TITLE TO, AND RIGHT TO SELL, PURCHASED SHARES. The Jasc Stockholder is the
sole registered and beneficial owner of those Jasc Shares set out opposite the
Jasc Stockholder's name on Schedule 3.1.3 with good and marketable title to
those Jasc Shares, free of all Charges. There are no subscriptions, warrants,



options, calls, or other rights or Contracts to which the Corporation or any
Jasc Stockholder is subject to or bound which in any way limit or restrict the
consummation of the Transaction (specifically in respect of that Jasc
Stockholder's Jasc Shares) and there are no shareholders agreements, pooling
agreements, voting trusts or other Contracts with respect to the voting of the
Jasc Shares other than as set out in Schedule 3.1.3. At or prior to the Time of
Closing, those agreements and restrictions will have been complied with or
terminated (and evidence in form and substance satisfactory to the Merger
Subsidiary to that effect will have been provided to the Merger Subsidiary).

1.6 NO CONTRAVENTION BY JASC STOCKHOLDERS. None of the entering into of this
Agreement or any Related Agreement, the consummation of the Transaction or the
performance by the Jasc Stockholder of that Jasc Stockholder's other obligations
under this Agreement or any Related Agreement to which it is a party (a) will
contravene, breach or result in any default under (1) if the Jasc Stockholder is
an Entity, the certificate of incorporation, by-laws, constating documents or
other organizational documents of that Jasc Stockholder, (2) any license,
permit, order, judgment, decree or Law to which the Jasc Stockholder is a party
or by which it may be bound or (b) contravenes, breaches or results in any
default under, or conflicts with or will conflict with or results in or will
result in any modification of any of the terms of or results in or will result
in the termination of or the creation of any Charge, acceleration right or other
right pursuant to the terms of any Contract to which the Jasc Stockholder is a
party or by which it may be bound or will in any way affect the continuation,
validity or effectiveness of any such Contract.

1.7 APPOINTMENT OF STOCKHOLDER REPRESENTATIVE. Each Jasc Stockholder designates
and appoints Robert V. Voit as the Stockholder Representative under this
Agreement and authorizes the Stockholder Representative to take such actions on
behalf of such Jasc Stockholder under this Agreement, including, but not limited
to, accepting notices, reviewing information provided to the Stockholder
Representative and executing the certificate required in section 4.1.1 on behalf
of each Jasc Stockholder, together with all such powers as are reasonably
incidental thereto. The Stockholder Representative may consult with legal
counsel, independent public accountants and other experts selected by it and
shall not be liable for any action taken, or omitted to be taken, by it in good
faith in accordance with the advice of such counsel, accountants or experts. The
Stockholder Representative shall not be liable for actions he takes or fails to
take in the absence of his own gross negligence or willful misconduct.

1.8 The undersigned Jasc Stockholder acknowledges that:

     1.8.1 the Jasc Stockholder has received a copy of the Agreement and each of
the Related Agreements to which it is or will be a party (the "TRANSACTION
AGREEMENTS");

     1.8.2 the Jasc Stockholder has had sufficient time to review and consider
the Transaction Agreements and the transactions contemplated by the Transaction
Agreements thoroughly;

     1.8.3 the Jasc Stockholder has read and understands the terms of the
Transaction Agreements and the Jasc Stockholder 's obligations under the
Transaction Agreements;

     1.8.4 the Jasc Stockholder has been given an opportunity to obtain
independent legal advice, or other advice as the Jasc Stockholder may desire,
concerning the interpretation and effect of the Transaction Agreements and the
transactions contemplated by the Transaction Agreements, and by signing this
Jasc Stockholder Signature Page the Jasc Stockholder has either obtained advice
or voluntarily waived the Jasc Stockholder's opportunity to receive that advice;

     1.8.5 the Agreement is entered into voluntarily by the Jasc Stockholder;
and



     1.8.6 the Jasc Stockholder is a "Jasc Stockholder" for all purposes of the
Agreement and is bound by and subject to all rights and obligations of Jasc
Stockholders under the Agreement.


/s/ Jennifer Keeler                    /s/ Laura J. Voit
- ------------------------------------   -----------------------------------------
Signature of Witness                   Signature of Jasc Stockholder or
                                       Authorized Signatory

Jennifer Keeler                        Laura J. Voit
Name of Witness                        Name of Jasc Stockholder
(please print or type)                 (please print or type)

7905 Fuller Road, Eden Prairie,
MN 55344                               -----------------------------------------
Address of Witness                     Name and Title of Authorized Signatory
(please print or type)                 (if the Jasc Stockholder is not an
                                       individual)



     1.8.6 the Jasc Stockholder is a "Jasc Stockholder" for all purposes of the
Agreement and is bound by and subject to all rights and obligations of Jasc
Stockholders under the Agreement.


/s/ Jennifer Keeler                    /s/ Robert V. Voit GRANTOR
- ------------------------------------   -----------------------------------------
Signature of Witness                   Signature of Jasc Stockholder or
                                       Authorized Signatory

Jennifer Keeler                        Robert V. Voit GRAT
Name of Witness                        Name of Jasc Stockholder
(please print or type)                 (please print or type)

7905 Fuller Rd, Eden Prairie,
MN 55344                               GRANTOR
Address of Witness                     Name and Title of Authorized Signatory
(please print or type)                 (if the Jasc Stockholder is not an
                                       individual)



     1.8.6 the Jasc Stockholder is a "Jasc Stockholder" for all purposes of the
Agreement and is bound by and subject to all rights and obligations of Jasc
Stockholders under the Agreement.


/s/ Jennifer Keeler                    /s/ Joseph J Fromn
- ------------------------------------   -----------------------------------------
Signature of Witness                   Signature of Jasc Stockholder or
                                       Authorized Signatory

Jennifer Keeler                        Joseph J Fromn
Name of Witness                        Name of Jasc Stockholder
(please print or type)                 (please print or type)

7905 Fuller Rd, Eden Prairie,
MN 55344                               -----------------------------------------
Address of Witness                     Name and Title of Authorized Signatory
(please print or type)                 (if the Jasc Stockholder is not an
                                       individual)



     1.8.6 the Jasc Stockholder is a "Jasc Stockholder" for all purposes of the
Agreement and is bound by and subject to all rights and obligations of Jasc
Stockholders under the Agreement.


/s/ Jennifer Keeler                    /s/ Susan K. Dub
- ------------------------------------   -----------------------------------------
Signature of Witness                   Signature of Jasc Stockholder or
                                       Authorized Signatory

Jennifer Keeler                        Susan K. Dub
Name of Witness                        Name of Jasc Stockholder
(please print or type)                 (please print or type)

7905 Fuller Rd, Eden Prairie,
MN 55344                               -----------------------------------------
Address of Witness                     Name and Title of Authorized Signatory
(please print or type)                 (if the Jasc Stockholder is not an
                                       individual)



     1.8.6 the Jasc Stockholder is a "Jasc Stockholder" for all purposes of the
Agreement and is bound by and subject to all rights and obligations of Jasc
Stockholders under the Agreement.


/s/ Jennifer Keeler                    /s/ Harold A. Fagley
- ------------------------------------   -----------------------------------------
Signature of Witness                   Signature of Jasc Stockholder or
                                       Authorized Signatory

Jennifer Keeler                        HAROLD A. FAGLEY
Name of Witness                        Name of Jasc Stockholder
(please print or type)                 (please print or type)

7905 Fuller Rd, Eden Prairie,
MN 55344                               -----------------------------------------
Address of Witness                     Name and Title of Authorized Signatory
(please print or type)                 (if the Jasc Stockholder is not an
                                       individual)



                                                                       EXHIBIT A

See Tab 8



                                                                       EXHIBIT B



                               September __, 2004

[NAME]
[ADDRESS]
[CITY, STATE, ZIP]

     Re: Consent to Jasc/Corel Transaction

Ladies and Gentlemen:

We are writing to give notice, and to the extent it is required to obtain your
consent, in connection with the [agreement title] (the "Agreement) between you
and Jasc Software, Inc. ("Jasc").

THE TRANSACTIONS - Jasc and Corel Corporation ("Corel") are proposing to enter
into a transaction that provides for (1) the transfer of certain of Jasc's
assets to Corel or a wholly owned subsidiary of Corel and (2) the merger of a
wholly owned subsidiary of Corel into Jasc, which will result in Jasc becoming a
wholly owned subsidiary of Corel. Following the merger, Corel may desire to
transfer the Agreement to another one of its wholly owned subsidiaries (a "Corel
Transfer") and/or assign all or a portion of its rights and benefits under the
Agreement as security to any person who provides financing to Corel or its
subsidiaries.

On completion of the transaction and subject to receiving any necessary consent,
either Corel or a wholly owned subsidiary of Corel (the "Resulting
Counterparty") will be entitled to receive all the benefits and be obligated to
pay amounts payable and discharge all other obligations and liabilities under
the Agreement. You will be entitled to enforce the Agreement directly against
the Resulting Counterparty, in respect of its obligations and liabilities under
the Agreement, as if that entity had executed and delivered the Agreement
instead of Jasc (as it existed prior to the merger).

YOUR CONSENT- To the extent that the Agreement (1) entitles you to terminate;
(2) requires you to receive notice of the transactions; and/or (3) requires your
prior written consent to the transactions, we request that you:

          -    acknowledge receiving notice of the transactions;

          -    waive any rights to terminate the Agreement upon a change of
               control and/or a Corel Transfer; and

          -    consent to the transactions (including a Corel Transfer and/or
               grant of security interests).

PLEASE INDICATE YOUR CONSENT, AND YOUR ACKNOWLEDGEMENT THAT THE AGREEMENT WILL
CONTINUE IN FULL FORCE AND EFFECT FOLLOWING THE TRANSACTIONS DESCRIBED ABOVE, BY
SIGNING BELOW ON THE ENCLOSED COPY OF THIS LETTER AND RETURNING THE SAME TO THE
UNDERSIGNED BY FAXING IT TO JENNIFER KEELER, CORPORATE COUNSEL AT JASC AT FAX
NUMBER (952) 937-1664 NO LATER THAN _____________, SEPTEMBER ______, 2004.

Jasc has always valued its business relationship with you. Corel, in becoming
Jasc's new owner, wishes to continue this important relationship in the future.
Thank you for your help with this matter. If you have any questions, please call
the undersigned at (952) 294-[2355].

                                        Very truly yours,


                                        [Kris Tufto]



                                        [President and Chief Executive Officer]

Corel, and any wholly owned subsidiary of Corel that may be a party to the
Agreement, agrees to continue to be bound by the Agreement.

Date: September __, 2004                [COREL CORPORATION]

                                        [Name]
                                        [Title]

The undersigned hereby consents to the transactions described above.

Date: September __, 2004                [__________________________]


                                        By
                                           -------------------------------------
                                        Name
                                             -----------------------------------
                                        Its
                                            ------------------------------------



                                                                 SCHEDULE 1.1.11



FINANCIAL STATEMENTS

Jasc Software, Inc.
Years Ended December 31, 2003 and 2002



                               Jasc Software, Inc.

                              Financial Statements

                     Years Ended December 31, 2003 and 2002

                                    CONTENTS

                                                                            
Report of Independent Auditors..............................................   1

Financial Statements

Balance Sheets..............................................................   2
Statements of Income........................................................   4
Statement of Changes in Stockholders' Equity................................   5
Statements of Cash Flows....................................................   6
Notes to Financial Statements...............................................   7





(ERNST & YOUNG LOGO)   - ERNST & YOUNG LLP                 - Phone:(612)343-1000
                         220 South Sixth Street, Ste 1400    www.ey.com
                         Minneapolis, MN 55402-4509

                         Report of Independent Auditors

The Board of Directors
Jasc Software, Inc.

We have audited the accompanying balance sheets of Jasc Software, Inc. as of
December 31, 2003 and 2002, and the related statements of income, changes in
stockholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Jasc Software, Inc. as of
December 31, 2003 and 2002, and the results of its operations and its cash flows
for the years then ended, in conformity with accounting principles generally
accepted in the United States.


                                                           /s/ Ernst & Young LLP

January 30, 2004

                    A Member Practice of Ernst & Young Global


                                                                               1



                               Jasc Software, Inc.

                                 Balance Sheets



                                                                   DECEMBER 31
                                                            -------------------------
                                                                2003          2002
                                                            -----------   -----------
                                                                    
ASSETS
Current assets:
   Cash and cash equivalents                                $   867,667   $   802,375
   Accounts receivable (less allowances for uncollectible
      accounts and product returns totaling $2,033,000 in
      2003 and $613,000 in 2002)                              7,935,331     7,055,901
   Note receivable                                               60,000            --
   Inventories                                                1,161,846       460,392
   Prepaid expenses                                           1,139,067       335,234
                                                            -----------   -----------
Total current assets                                         11,163,911     8,653,902
Property and equipment:
   Equipment and software                                     3,545,408     3,218,391
   Leasehold improvements                                       236,019       236,019
                                                            -----------   -----------
                                                              3,781,427     3,454,410
   Less accumulated depreciation and amortization            (3,046,287)   (2,581,881)
                                                            -----------   -----------
                                                                735,140       872,529
Restricted cash                                                      --        30,000
Deposits                                                         43,324        55,113
Other assets, net                                                52,150        73,009
Acquired technology, net                                        588,547       663,042
                                                            -----------   -----------
Total assets                                                $12,583,072   $10,347,595
                                                            ===========   ===========



2





                                                         DECEMBER 31
                                                  -------------------------
                                                      2003          2002
                                                  -----------   -----------
                                                          
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                               $ 2,359,889   $   802,949
   Accrued compensation and withholdings            1,054,531       619,390
   Accrued profit sharing                                  --       257,159
   Accrued distributor discounts                      812,759       538,892
   Accrued royalties                                  574,608       466,082
   Accrued rebates                                    784,039       514,451
   Other accrued liabilities                          576,804       832,426
   Customer deposits                                  100,666       225,895
   Current portion of capital lease obligation          2,500            --
                                                  -----------   -----------
Total current liabilities                           6,265,796     4,257,244

Capital lease obligation, less current portion          4,146            --
Stockholders' equity:
   Preferred stock, $0.01 par value:
      Authorized shares - 5,000,000
      Issued and outstanding - none                        --            --
   Common stock, $0.01 par value:
      Authorized shares - 10,000,000
      Issued and outstanding shares - 4,405,000        44,050        44,050
   Additional paid-in capital                       1,511,700     1,511,700
   Retained earnings                                4,757,380     4,534,601
                                                  -----------   -----------
Total stockholders' equity                          6,313,130     6,090,351
                                                  -----------   -----------
Total liabilities and stockholders' equity        $12,583,072   $10,347,595
                                                  ===========   ===========


See accompanying notes.


                                                                               3



                               Jasc Software, Inc.

                              Statements of Income



                                   YEAR ENDED DECEMBER 31
                                 -------------------------
                                     2003          2002
                                 -----------   -----------
                                         
Net sales                        $32,841,317   $27,292,756
Cost of goods sold                 6,736,000     5,076,938
                                 -----------   -----------
Gross profit                      26,105,317    22,215,818
Operating expenses:
   General and administrative      5,078,809     4,282,741
   Marketing and selling          10,497,309     8,203,931
   Product development             6,797,173     7,501,652
   Profit sharing compensation       727,584       777,525
                                 -----------   -----------
                                  23,100,875    20,765,849
                                 -----------   -----------
Income from operations             3,004,442     1,449,969
Interest expense                        (755)      (36,716)
Interest income                       12,240         3,514
Other (expense) income               (34,804)       84,329
Foreign currency gain                389,623       350,218
                                 -----------   -----------
                                     366,304       401,345
                                 -----------   -----------
Net income                       $ 3,370,746   $ 1,851,314
                                 ===========   ===========


See accompanying notes.


                                                                               4



                               Jasc Software, Inc.

                  Statement of Changes in Stockholders' Equity



                                   COMMON STOCK      ADDITIONAL
                               -------------------     PAID-IN      RETAINED
                                 SHARES    AMOUNTS     CAPITAL      EARNINGS       TOTAL
                               ---------   -------   ----------   -----------   -----------
                                                                 
Balance, December 31, 2001     4,405,000   $44,050   $1,511,700   $ 4,284,778   $ 5,840,528
Distribution to stockholders          --        --           --    (1,601,491)   (1,601,491)
Net income                            --        --           --     1,851,314     1,851,314
                               ---------   -------   ----------   -----------   -----------
Balance, December 31, 2002     4,405,000    44,050    1,511,700     4,534,601     6,090,351
Distribution to stockholders          --        --           --    (3,147,967)   (3,147,967)
Net income                            --        --           --     3,370,746     3,370,746
                               ---------   -------   ----------   -----------   -----------
Balance, December 31, 2003     4,405,000   $44,050   $1,511,700   $ 4,757,380   $ 6,313,130
                               =========   =======   ==========   ===========   ===========


See accompanying notes.


                                                                               5



                               Jasc Software, Inc.

                            Statements of Cash Flows



                                                      YEAR ENDED DECEMBER 31
                                                    -------------------------
                                                        2003          2002
                                                    -----------   -----------
                                                            
OPERATING ACTIVITIES
Net income                                          $ 3,370,746   $ 1,851,314
Adjustments to reconcile net income to net cash
   provided by operating activities:
   Depreciation and amortization                        655,443       888,125
   Loss (gain) on sale of property and equipment            351          (388)
   Changes in operating assets and liabilities:
      Accounts receivable                              (939,430)   (2,049,782)
      Inventories                                      (701,454)      133,058
      Prepaid expenses                                 (803,833)     (204,602)
      Restricted cash                                    30,000        30,000
      Deposits                                           11,789        43,099
      Accounts payable                                1,556,940       145,378
      Accrued liabilities                               574,341     1,547,278
      Customer deposits                                (125,229)       68,350
                                                    -----------   -----------
Net cash provided by operating activities             3,629,664     2,451,830

INVESTING ACTIVITIES
Purchases of property and equipment                    (324,631)     (181,192)
Acquisition of technology                               (90,000)      (52,821)
Proceeds from sale of property and equipment                100            --
                                                    -----------   -----------
Net cash used in investing activities                  (414,531)     (234,013)

FINANCING ACTIVITIES
Net payments under line of credit                            --      (670,702)
Distributions to stockholders                        (3,147,967)   (1,601,491)
Payments on obligation under capital lease               (1,874)     (189,243)
                                                    -----------   -----------
Net cash used in financing activities                (3,149,841)   (2,461,436)
                                                    -----------   -----------
Net increase (decrease) in cash                          65,292      (243,619)
Cash and cash equivalents at beginning of year          802,375     1,045,994
                                                    -----------   -----------
Cash and cash equivalents at end of year            $   867,667   $   802,375
                                                    ===========   ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for interest              $       755   $    36,716
                                                    ===========   ===========
Property and equipment acquired through capital
   lease obligation                                 $     8,520   $        --
                                                    ===========   ===========


See accompanying notes.


                                                                               6



                               Jasc Software, Inc.

                          Notes to Financial Statements

                                December 31, 2003

1.   BUSINESS ACTIVITY

Jasc Software, Inc. (the Company) designs, develops, markets, and sells
general-use computer software throughout the world.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION

The Company accounts for the licensing of software in accordance with American
Institute of Certified Public Accountants Statement of Position 97-2, Software
Revenue Recognition, as amended. The Company recognizes revenue when (i)
persuasive evidence of an arrangement exists; (ii) delivery has occurred or
services have been rendered; (iii) the sales prices is fixed or determinable;
and (iv) collectibility is reasonably assured. The Company recognizes revenue
upon shipment of its product in the United States from its distributors to
retailers and upon shipment to master representatives, internationally.

The Company has several retailers in the United States which operate on a
consignment basis, where revenue is recognized at the time the retailer sells
the Company's product to the end customer. The Company has two international
master representatives with whom it does business on a royalty basis, in which
profits are shared and recognized as royalty revenue at the time the master
representative sells the Company's product to the end customer. Royalty revenue
of $3,890,368 and $3,368,593 is included in net sales in 2003 and 2002,
respectively.

The Company offers product right of return terms to certain customers. This
right of return is accounted for in accordance with Financial Accounting
Standards Board Statement of Financial Accounting Standards (SFAS) No. 48,
Revenue Recognition When Right of Return Exists, with returns estimated based on
historical activity and reflected as a reduction of revenues.

SHIPPING AND HANDLING COSTS

The Company classifies costs incurred for shipping in costs of goods sold. Any
shipping costs billed to customers are included in revenue.


                                                                               7



                               Jasc Software, Inc.

                    Notes to Financial Statements (continued)

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

CASH AND CASH EQUIVALENTS

The Company considers all investments with an original maturity of 90 days or
less when purchased to be cash equivalents. The carrying cost of cash
equivalents at December 31, 2003 and 2002, approximates fair value.

INVENTORIES

Inventories are valued at the lower of cost or market. Cost is determined on a
first-in, first-out basis. Inventories consist of materials and finished goods.

EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Equipment and leasehold improvements are recorded at cost and depreciated using
the straight-line method over three to seven years. The Company leases equipment
under capital leases. Amortization of these leased assets is included in
depreciation expense.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company evaluates its long-lived assets for impairment losses when
indicators of impairment are present by comparing the undiscounted cash flows to
the assets' carrying amount. An impairment loss is recorded if necessary.

STOCK-BASED COMPENSATION

At December 31, 2003, the Company has A stock-based employee compensation plan
which is described more fully in Note 8. The Company accounts for this plan
under the recognition and measurement principles of Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations. No stock-based employee compensation cost is reflected in net
income for 2003 and 2002, as all options granted under those plans had an
exercise price equal to the market value of the underlying common stock on the
date of grant. The following table illustrates the effect on net income if the
Company had applied the fair value recognition provisions of


                                                                               8



                               Jasc Software, Inc.

                    Notes to Financial Statements (continued)

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

SFAS No. 123, Accounting for Stock-Based Compensation, to stock-based employee
compensation.



                                                     2003         2002
                                                  ----------   ----------
                                                         
Net income, as reported                           $3,370,746   $1,851,314
Deduct: total stock-based employee compensation
   expense determined under fair-value-based
   method for all awards                            (139,188)     (74,623)
                                                  ----------   ----------
Pro forma net income                              $3,231,558   $1,776,691
                                                  ==========   ==========


The fair value of these options was estimated at the date of grant using the
minimum value option pricing model. The minimum value option pricing model is
used by nonpublic companies and excludes stock price volatility of the stock in
the calculation of fair value of the option. The following assumptions were used
for options granted in 2003: risk-free interest rate of 4.06%; dividend yield of
0%; and an expected life of the option of ten years. The fair value of options
granted in 2003 and 2002 was $0.66 and $1.26 per share, respectively.

ADVERTISING

Advertising costs are expensed as incurred and totaled $2,217,687 and $1,418,174
in 2003 and 2002, respectively, and are included as marketing and selling
expense in the statements of income.

PRODUCT DEVELOPMENT

Product development expenditures are charged to operations as incurred. SFAS No.
86, Accounting for the Costs of Computer Software to Be Sold, Leased, or
Otherwise Marketed, requires capitalization of certain software development
costs subsequent to the establishment of technological feasibility and until the
product is generally available for sale. Costs incurred by the Company during
this phase have been immaterial. Therefore, the Company has not capitalized any
software development costs through December 31, 2003.


                                                                               9



                               Jasc Software, Inc.

                    Notes to Financial Statements (continued)

2.   SUMMARY of SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

OTHER ASSETS

Other assets include patent costs that are being amortized over five years. The
accumulated amortization as of December 31, 2003 and 2002, was $52,150 and
$31,290, respectively.

ACQUIRED TECHNOLOGY

In 2003 and 2002, the Company acquired the technology of certain products. The
cost is being amortized over five years. The accumulated amortization as of
December 31, 2003 and 2002, was $312,277 and $147,782, respectively.

INCOME TAXES

The Company has elected to be taxed under the provisions of Subchapter S of the
Internal Revenue Code. Under those provisions, the stockholders of an S
corporation are taxed on their proportionate share of the Company's taxable
income. As a result, no provision for federal taxes has been included in the
financial statements.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

RECLASSIFICATION

A certain prior year amount has been reclassified to conform to the current year
financial statement presentation.


                                                                              10



                               Jasc Software, Inc.

                    Notes to Financial Statements (continued)

3.   COMMITMENTS

ROYALTIES

The Company has entered into various licensing agreements requiring royalty
payments ranging from 0.65% to 50% of specified product sales. During 2003 and
2002, the Company recorded royalty expense of $1,771,700 and $1,389,814,
respectively, which is included in costs of goods sold in the statements of
income.

LEASES

The Company leases its office and warehouse space under a noncancelable
operating lease agreement. The current operating lease is effective until
December 31, 2008. Minimum future lease obligations under this lease, excluding
operating costs, are as follows for the years ending December 31:

    
2004   $  415,654
2005      423,819
2006      432,726
2007      440,891
2008      449,797
       ----------
       $2,162,887
       ==========



The Company is required to maintain a letter of credit to secure its operating
lease. The amount required at December 31, 2003 and 2002, was $30,000. The
Company has a certificate of deposit on hand at a bank for this letter of
credit. This amount has been reported as restricted cash in the balance sheet in
2002 and as cash and cash equivalents in 2003 as it becomes unrestricted in
January 2004.

Rent expense for the years ended December 31, 2003 and 2002, was $1,002,198 and
$979,648, respectively.

4.   FINANCING AGREEMENTS

The Company has a line of credit agreement totaling $3,000,000 available for
borrowings at prime (4.00% at December 31, 2003) through September 15, 2004.
Borrowings under the agreement are secured by essentially all assets. The
agreement contains certain restrictive covenants. The Company was in compliance
with the covenants at December 31, 2003.


                                                                              11



                               Jasc Software, Inc.

                    Notes to Financial Statements (continued)

5.401 (K) PIAN

The Company has a qualified 401(k) plan covering all employees meeting the
eligibility requirements. The Company made matching contributions of $346,874
and $455,158 for the years ended December 31, 2003 and 2002, respectively.

6.   PROFIT SHARING PLAN

The Company has a nonqualified profit sharing plan covering all employees
meeting eligibility requirements. A fixed percentage of the Company's operating
income is paid out each quarter in the form of taxable distributions. Total
expenses under the plan during 2003 and 2002 were $727,584 and $777,525,
respectively.

7.   SIGNIFICANT CONCENTRATIONS

One customer accounted for 16% of revenue for the year ended December 31, 2003.
Two customers accounted for 11% and 10% of revenue for the year ended December
31, 2002.

8.   STOCK OPTIONS

The Company has a 1997 Omnibus Stock Plan (the Plan), pursuant to which
1,025,000 shares of common stock are reserved for issuance of incentive or
nonqualified stock options to employees, directors, and consultants. The number
of shares, exercise price, and option term are to be determined by a committee
designated by the Board of Directors. The options generally vest over five years
and expire in ten years.

Stock option activity is summarized as follows:



                                              WEIGHTED
                                               AVERAGE
                                OPTIONS     OPTION PRICE
                              OUTSTANDING     PER SHARE
                              -----------   ------------
                                      
Balance at December 31, 2001    476,358         $3.76
Granted                          60,000          3.75
Canceled                       (136,566)         3.75
                               --------
Balance at December 31, 2002    399,792          3.76
Granted                          20,000          3.75
Canceled                         (1,652)         3.75
                               --------
Balance at December 31, 2003    418,140          3.76
                               ========



                                                                              12



                               Jasc Software, Inc.

                    Notes to Financial Statements (continued)

8.   STOCK OPTIONS (CONTINUED)

The options outstanding at December 31, 2003 expire at various dates through
2013 and have a weighted average contractual life remaining of 5.55 years. The
exercise price of the outstanding options range from $3.75 to $3.90 per share.
The number of options exercisable as of December 31, 2003 and 2002, was 318,381
and 245,441, respectively, at a weighted average exercise price of $3.76 per
share.


                                                                              13



                                                                 SCHEDULE 1.1.29



COREL CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 2003

AUDITOR'S REPORT

We have audited the consolidated balance sheet of Corel Corporation as at
November 30, 2003 and the related consolidated statements of operations,
shareholders' equity and cash flows for the period from December 1, 2002 through
August 28, 2003, and for the period from August 29, 2003 through November 30,
2003. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at November 30,
2003, and the results of its operations and its cash flows for the period from
December 1, 2002 through August 28, 2003, and for the period from August 29,
2003 through November 30, 2003, in accordance with generally accepted accounting
principles in Canada.


PricewaterhouseCoopers LLP                                        Ottawa, Canada
Chartered Accountants                                           January 27, 2004



CONSOLIDATED BALANCE SHEETS
(in thousands of US$)



                                                 Audited      Unaudited      Audited
                                              NOVEMBER 30,    AUGUST 29,   NOVEMBER 30,
                                                  2003           2003          2002
                                                Successor     Successor    Predecessor
                                              ------------   -----------   -----------
                                                                  
ASSETS
Current assets:
   Cash and cash equivalents                   $  18,495      $  14,222     $  18,874
   Restricted cash                                 1,830          1,867         1,558
   Short-term investments                          5,993          8,972        56,952
   Accounts receivable
      Trade                                       12,583         18,075        19,958
      Other                                          104            791           250
   Inventory                                         313            163           191
   Prepaid expenses                                1,244          3,857         2,786
                                               ---------      ---------     ---------
Total current assets                              40,562         47,947       100,569
Investments                                                                     8,590
Capital assets                                     4,899          5,536         7,944
Intangible assets                                 46,515         50,937        13,824
Goodwill                                           8,480          8,480
Deferred financing charge                            528            552
                                               ---------      ---------     ---------
Total assets                                   $ 100,984      $ 113,452     $ 130,927
                                               =========      =========     =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable and accrued liabilities    $  21,383      $  21,661     $  22,552
   Operating line of credit                                       3,000
   Current portion of term loan payable            2,619          1,904
   Income taxes payable                            6,085          5,658         5,685
   Deferred revenue                                6,822          3,600         8,875
                                               ---------      ---------     ---------
Total current liabilities                         36,909         35,823        37,112
Deferred revenue                                   1,204            790           879
Term loan payable                                  7,303          8,096
Future income tax liability                                                       806
Subordinated debt                                 16,973         16,973
                                               ---------      ---------     ---------
Total liabilities                                 62,389         61,682        38,797
                                               =========      =========     =========
Commitments and contingencies

SHAREHOLDERS' EQUITY
Share capital                                  $  66,001      $  70,147     $ 405,124
Contributed surplus
   Predecessor                                   271,241        271,241         4,990
   Successor                                      49,676         49,676
Retained earnings
   Predecessor deficit                          (339,294)      (339,294)     (317,984)
   Successor deficit                              (9,029)
                                               ---------      ---------     ---------
Total shareholders' equity                        38,595         51,770        92,130
                                               ---------      ---------     ---------
Total liabilities and shareholders' equity     $ 100,984      $ 113,452     $ 130,927
                                               =========      =========     =========


         (See accompanying Notes to Consolidated Financial Statements.)



Consolidated Statements OF OPERATIONS
(in thousands of US$)



                                              FOR THE PERIODS
                                      ------------------------------
                                      AUGUST 29, 2003    DECEMBER 1,
                                          THROUGH       2002 THROUGH    YEAR ENDED
                                        NOVEMBER 30,     AUGUST 28,      NOVEMBER
                                            2003            2003         30, 2002
                                         Successor       Predecessor   Predecessor
                                      ---------------   ------------   -----------
                                                              
Sales                                     $23,806         $ 85,386      $ 126,701
Cost of sales                               2,644           12,222         14,543
                                          -------         --------      ---------
Gross profit                               21,162           73,164        112,158
Expenses:
   Sales                                    8,622           27,699         38,802
   Marketing                                4,078           14,270         27,227
   Research and development                 3,642           12,669         23,583
   General and administration               7,995           28,463         41,906
   Depreciation and amortization            4,833            9,391         20,216
   Restructuring charge                     1,138
   Impairment of goodwill                                                  49,896
   Write-down of technology                                                17,781
   Gain on foreign exchange                  (641)          (1,330)        (1,797)
                                          -------         --------      ---------
                                           29,667           91,162        217,614
                                          -------         --------      ---------
Loss from operations                       (8,505)         (17,998)      (105,456)
Loss on investments                                            (48)          (149)
Write-down of investments                                   (7,400)
Interest income (expense)                    (206)           1,383          1,790
                                          -------         --------      ---------
Loss before the undernoted                 (8,711)         (24,063)      (103,815)
Income tax (recovery) expense                 318           (3,895)        (8,581)
Share of loss on equity investments                          1,142          1,190
                                          -------         --------      ---------
Net loss                                  $(9,029)        $(21,310)     $ (96,424)
                                          =======         ========      =========


         (See accompanying Notes to Consolidated Financial Statements.)



CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in thousands of US$ except share data)



                                                  NUMBER OF SHARES (000S)                                                 TOTAL
                                                  -----------------------                   CONTRIBUTED               SHAREHOLDERS'
                                                     COMMON   PREFERRED     SHARE CAPITAL     SURPLUS      DEFICIT        EQUITY
                                                    -------   ---------     -------------   -----------   ---------   -------------
                                                                                                    
PREDECESSOR EQUITY
Balance at November 30, 2001                         80,709     24,000          388,193          4,990     (221,560)     171,623
Issuance of common shares pursuant to stock
   options                                               37                          97                                       97
Issuance of common shares for acquisition of
   SoftQuad                                          11,072                      16,834                                   16,834
Net loss                                                                                                    (96,424)     (96,424)
                                                    -------     ------        ---------       --------    ---------     --------
Balance at November 30, 2002                         91,818     24,000        $ 405,124       $  4,990    $(317,984)    $ 92,130
                                                    -------     ------        ---------       --------    ---------     --------
Issuance of common shares pursuant to stock
   options                                               70                          69                                       69
Transfer to contributed surplus                                                (265,296)       265,296
Balance of Microsoft accrual                                                                       955                       955
Conversion of Series A Preferred                     13,610    (13,610)
Net loss                                                                                                    (21,310)     (21,310)
                                                    -------     ------        ---------       --------    ---------     --------
Opening balance at August 28, 2003                  105,498     10,390          139,897        271,241     (339,294)      71,844
                                                    -------     ------        ---------       --------    ---------     --------
Shares converted to 3.5 Corel New Common Shares     (12,500)                    (49,367)                                 (49,367)
Shares converted 1 for 1 to New Series 'A" Pfd
   shares                                                      (10,390)         (20,780)                                 (20,780)
Shares cancelled on capital reorganization          (92,998)                    (69,750)                                 (69,750)
                                                    -------     ------        ---------       --------    ---------     --------
Closing balance at August 28, 2003                                                             271,241     (339,294)     (68,053)
                                                                                              --------    ---------     --------
Balance at November 30, 2003                                                                   271,241     (339,294)     (68,053)
                                                                                              --------    ---------     --------

SUCCESSOR EQUITY
Shares converted from Predecessor equity             43,750     10,390           70,147                                   70,147
Comprehensive revaluation of assets                                                             49,676                    49,676
                                                    -------     ------        ---------       --------                  --------
Balance at August 28, 2003                           43,750     10,390           70,147         49,676                   119,823
                                                    -------     ------        ---------       --------                  --------
Acquisition costs                                                                (4,146)                                  (4,146)
Net loss                                                                                                     (9,029)      (9,029)
                                                    -------     ------        ---------       --------    ---------     --------
Balance at November 30, 2003                         43,750     10,390        $  66,001       $ 49,676    $  (9,029)    $106,648
                                                    -------     ------        ---------       --------    ---------     --------


         (See accompanying Notes to Consolidated Financial Statements.)



CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of US$)



                                                                  FOR THE PERIODS
                                                          ------------------------------
                                                          AUGUST 29, 2003    DECEMBER 1,
                                                              THROUGH       2002 THROUGH    YEAR ENDED
                                                            NOVEMBER 30,     AUGUST 28,      NOVEMBER
                                                                2003            2003         30, 2002
                                                             Successor       Predecessor   Predecessor
                                                          ---------------   ------------   -----------
                                                                                  
Operating activities:
   Net loss                                                  $ (9,029)        $(21,310)     $(96,424)
   Items which do not involve cash or cash equivalents:
      Depreciation                                                661            3,321         6,359
      Amortization                                              4,422            6,919        16,027
      Bad debt expense                                            327              755           596
      Impairment of goodwill                                                                  49,896
      Write down of assets                                                                    17,781
      Future income taxes                                                         (139)      (10,148)
      Loss on investments                                                           48           149
      Write down of long term investments                                        7,400
      Loss on capital assets                                                        67           136
      Share of loss of equity investments                                        1,142         1,190
Changes in operating assets and liabilities:
      Restricted cash                                              37             (309)        1,473
      Accounts receivable                                       5,852           (2,364)         (221)
      Inventory                                                  (150)              28           608
      Prepaid expenses                                          2,613           (1,071)         (998)
      Accounts payable and accrued liabilities                   (278)            (457)       (6,696)
      Income taxes payable                                        427              (27)          936
      Deferred revenue                                          3,636            1,861          (406)
                                                             --------         --------      --------
Net cash provided by (used in) operating activities             8,518           (4,136)      (19,742)
                                                             --------         --------      --------
Financing activities:
   Issuance of common shares                                                        69            97
   Repayments of operating line of credit                      (3,078)
   Acquisition costs                                           (4,146)
   Acquisition by Vector                                                       (47,158)
                                                             --------         --------      --------
Net cash provided by (used in) financing activities            (7,224)         (47,089)           97
                                                             --------         --------      --------
Investing activities:
   Purchase of investments                                                                       (43)
   Redemption of short-term investments                         2,979           47,980        21,185
   Purchase of capital assets                                                   (1,440)       (3,236)
   Proceeds on disposal of assets                                                   33
   Acquisition of SoftQuad Software, Ltd.                                                     (3,631)
   Acquisition of Micrografx, Inc.,                                                             (680)
                                                             --------         --------      --------
Net cash provided by investing activities                       2,979           46,573        13,595
                                                             --------         --------      --------
Increase (decrease) in cash and cash equivalents                4,273           (4,652)       (6,050)
Cash and cash equivalents at beginning of period               14,222           18,874        24,924
                                                             --------         --------      --------
Cash and cash equivalents at end of period                   $ 18,495         $ 14,222      $ 18,874
                                                             ========         ========      ========


         (See accompanying Notes to Consolidated Financial Statements.)




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

All dollar amounts included herein are expressed in thousands of US$ unless
otherwise noted Certain per share information is expressed in units of US$
unless otherwise noted.

The consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in Canada ("Canadian GAAP"). The
Company was acquired by Vector Capital ("Vector"), a venture capital company
based out of California, on August 28, 2003. The Company accounted for the
acquisition by allocating the purchase price paid by Vector to the Company's net
assets (push-down accounting). Because of the application of push-down
accounting, the consolidated financial statements for the periods ended prior to
August 29, 2003 (Predecessor) are not comparable to the consolidated financial
statements for the periods ended after August 28, 2003 (Successor) (Note 11).
Certain comparative figures in the consolidated financial statements have been
reclassified to conform to the current year presentation.

NATURE OF OPERATIONS

Founded in 1985, Corel Corporation is a technology company specializing in
content creation tools and business process management. Corel products are
available for users of most PCs, including International Business Machines
Corporation and IBM-compatible PCs.

BASIS OF CONSOLIDATION

The consolidated financial statements include the accounts of Corel and its
wholly-owned subsidiaries ("Corel"). All material intercompany transactions and
balances have been eliminated. Corel follows the equity method of accounting for
investments in other companies where it holds 20% or more of the outstanding
voting shares and has the ability to exert significant influence. Under the
equity method, Corel records its initial investment at cost and records its pro
rata share of earnings or losses of equity investments in its results of
operations.

DIFFERENTIAL REPORTING

The Successor Company, with the unanimous consent of its shareholders, has
elected to prepare its financial statements in accordance with Canadian
generally accepted accounting principles, using the differential reporting
options available to non-publicly accountable enterprises described below from
the date of acquisition:

(a)  Income taxes

The Company has elected to apply the differential reporting measurement option
allowed for income taxes to account for income taxes using the taxes payable
method.

(b)  Goodwill

The Company has elected to apply the differential reporting measurement option
allowed for goodwill and other intangible assets to elect to test goodwill for
impairment only when an event or circumstance occurs that indicates that the
fair value of a reporting unit may be less than its carrying amount. Goodwill
represents the excess of the purchase price of acquired companies over the
estimated fair value of the tangible and intangible net assets acquired and is
not amortized.

ESTIMATES AND ASSUMPTIONS

Preparing financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenue and
expenses, and the disclosure of contingent assets and liabilities. Examples of
estimates include the provisions for sales returns and bad debts, the length of
product cycles and related capital asset lives. Actual results may differ from
these estimates.

SOFTWARE REVENUE RECOGNITION

Corel recognizes revenue from packaged software and licence fees when the
software is delivered, when there is persuasive evidence that an arrangement
exists, when the fee is fixed and determinable, and when collection is probable.
Sales to distributors are subject to agreements allowing various rights of
return and price protection. Corel establishes provisions for estimated future
returns, exchanges and price protection. When telephone support is included for
a limited time (post contract support or "PCS", generally for 90 days) together
with the licence fee, the entire licence fee is recognized upon delivery of the
product and the insignificant costs to provide the support are accrued. When
support is provided together with an annual licensing fee, the entire fee is
deferred and recognized ratably over the term of the licence agreement since
Corel does not have vendor-specific objective evidence of fair



market value of this PCS. Revenue from professional services and other services
are recognized as the services are delivered.

RESEARCH AND DEVELOPMENT COSTS

Research costs are expensed as incurred. Development costs related to software
products developed for sale are expensed as incurred unless they meet the
criteria for deferral under generally accepted accounting principles.

CASH AND CASH EQUIVALENTS

Cash includes cash equivalents, which are investments that are highly liquid and
have terms to maturity of three months or less at the time of acquisition.

Cash equivalents typically consist of commercial paper, term deposits and
banker's acceptances issued by major North American banks, and corporate debt.
Cash and cash equivalents are carried at cost, which approximates their fair
value.

SHORT-TERM INVESTMENTS

Short-term investments are investments that are generally held to maturity and
have terms greater than three months at the time of acquisition. Short-term
investments typically consist of commercial paper, Government of Canada Treasury
Bills and banker's acceptances. Short-term investments are carried at cost plus
accrued interest, which approximates their fair value.

RESTRICTED CASH

Corel maintains restricted cash in investments with major financial institutions
as security against certain financial obligations.

FINANCIAL INSTRUMENTS

Corel utilizes certain derivative financial instruments to enhance its ability
to manage foreign currency exchange rate risk, which exists as part of its
ongoing operations. Gains and losses are recognized when realized.

INVENTORY

Inventory of product components is valued at the lower of average cost and
replacement cost. Finished goods are valued at the lower of average cost and net
realizable value.

LONG LIVED ASSETS

Capital assets are recorded at cost. Amortization of licences commences with the
market release of each new software product and version. Depreciation and
amortization are calculated using the following rates and bases:

                                  
Capital assets

Furniture and equipment              20 - 33.3% declining balance

Computer equipment                   33.3% straight line

Research and development equipment   20 - 50% declining balance

Leasehold improvements               Straight line over the term of the lease

Intangible assets

Technology                           Intangible assets are amortized over their
                                     useful life, generally 3 years, unless the
                                     life is determined to be indefinite, in
                                     which case no amortization is taken.

Licences, purchased software,        The greater of: a) the ratio that current
deferred royalties                   gross revenues bear to the total of current
                                     gross revenues and anticipated future gross
                                     revenues or, b) the straight line method
                                     over the remaining economic life, generally
                                     estimated to be three to five years



Corel regularly reviews the carrying value of its long lived assets. If the
carrying value of its long lived assets exceeds the amount recoverable, a
write-down is charged to the consolidated statement of operations to reflect the
fair value of the assets.



FOREIGN CURRENCY

The functional currency of Corel and its subsidiaries, which are accounted for
as integrated foreign operations, is the US dollar. Monetary assets and
liabilities denominated in foreign currencies are remeasured at the closing
period-end rates of exchange. The gains or losses resulting from the
remeasurement of these amounts have been reflected in earnings in the respective
periods. Non-monetary items and any related amortization of such items are
measured at the rates of exchange in effect when the assets were acquired or
obligations incurred. All other income and expense items have been remeasured at
the average rates prevailing during the respective periods.

INVESTMENT TAX CREDITS

Investments tax credits, which are earned as a result of qualifying research and
development expenditures, are recognized and applied to reduce research and
development expense in the year in which the expenditures are made and their
realization is reasonably assured.

FISCAL 2002 - INCOME TAXES

Corel accounted for income taxes under the asset and liability method. Under
this method, future tax assets and liabilities are recognized for the estimated
tax recoverable or payable, which would arise if assets were recovered and
liabilities settled at the financial statement carrying amounts. Future tax
assets and liabilities are measured using substantively enacted tax rates
expected to apply to taxable income in the years in which temporary differences
are expected to be recovered or settled. Changes to these balances are
recognized in income in the period in which they occur.

2.   INVENTORY



                        AS AT NOVEMBER 30
                     -----------------------
                        2003         2002
                     Successor   Predecessor
                     ---------   -----------
                           
Product components      $226         $118
Finished goods            87           73
                        ----         ----
                        $313         $191
                        ====         ====


3.   INVESTMENTS



                                  AS AT NOVEMBER 30
                               -----------------------
                                  2003         2002
                               Successor   Predecessor
                               ---------   -----------
                                     
Equity investments
   Hemera Technologies, Inc.       $          $8,116
   LinuxForce, Inc.                              192
                                              ------
                                               8,308
Investments recorded at
   cost, including GraphOn
   Corporation                                   282
                                  ---         ------
                                   $          $8,590
                                  ===         ======


HEMERA TECHNOLOGIES, INC.

On July 17, 2000, Corel purchased a 23% interest in Hemera Technologies, Inc.
("Hemera"), a privately held company. As consideration for these shares, Corel
transferred its GraphicCorp division and related assets to Hemera. As of the
effective date of the transaction, the fair value of the GraphicCorp division
and its related assets was estimated at $9.7 million and the shares were valued
at this amount. No gain or loss was recognized on the transfer. During fiscal
2001, Hemera received additional financing, which resulted in Corel's interest
in Hemera being diluted to 21%. Corel's share of Hemera's operating results have
been incorporated into the statement of operations. Due to the continued losses
experienced by Hemera, the Company wrote of the balance of the investment in the
third quarter of fiscal 2003.



LINUXFORCE, INC.

In December 1999, Corel purchased, and currently maintains, a 33% interest in
LinuxForce, Inc., a privately held company, for cash. Corel's share of
LinuxForce, Inc.'s operating results was nominal in fiscal 2003 and 2002. Due to
LinuxForce's continued losses and limited resources of funding, the Company
wrote off the balance of the investment in the third quarter of fiscal 2003.

INVESTMENTS RECORDED AT COST

Corel owns 1,193,824 shares of common stock of GraphOn Corporation ("GraphOn").
Corel has accounted for the cost of this investment under the first-in,
first-out method. GraphOn's most recent audited financial statements included a
"going-concern note" which raises substantial doubt on the company's ability to
continue as a going concern without further funding. GraphOn's cash reserves
have continued to deteriorate over the subsequent two quarters. Accordingly, the
Company wrote off its investment in GraphOn in fiscal 2003.

4.   LONG LIVED ASSETS



                                           NOVEMBER 30, 2003        NOVEMBER 30, 2002
                                               Successor               Predecessor
                                        ----------------------   -----------------------
                                                   ACCUMULATED               ACCUMULATED
                                          COST    AMORTIZATION     COST     AMORTIZATION
                                        -------   ------------   --------   ------------
                                                                
Capital assets
   Furniture and equipment              $13,764      $11,860     $ 13,888     $ 11,623
   Computer equipment                    33,726       32,034       84,205       80,217
   Research and development equipment    12,389       11,168       12,389       10,896
   Leasehold improvements                 1,965        1,883        2,340        2,142
                                        -------      -------     --------     --------
                                         61,844       56,945      112,822      104,878
Less: Accumulated amortization           56,945                   104,878
                                        -------                  --------
Net book value                          $ 4,899                  $  7,944
                                        =======                  ========

Intangible assets
   Licences and purchased software       11,138       10,137       27,121       25,188
   Technology                            49,652        4,138       31,625       19,734
                                        -------      -------     --------     --------
                                         60,790       14,275       58,746       44,922
Less: Accumulated amortization           14,275                    44,922
                                        -------                  --------
Net book value                          $46,515                  $ 13,824
                                        =======                  ========


FISCAL 2002 TECHNOLOGY WRITE-DOWN

In fiscal 2002, circumstances suggested the possible impairment of technology.
An independent valuation of the majority of Corel's intangible assets indicated
an impairment in value existed. The independent valuator relied primarily on the
income approach, under which fair market value is a function of the future
revenue expected to be generated by an asset, net of all allocable expenses. The
income approach focuses on the income-producing capability of the developed
software and the core technology, and best represents the present value of the
future economic benefits expected to be derived. Corel prepared a valuation on
the intangible assets not covered in the independent valuator's report. This
valuation resulted in a total write off of $17.8 million, which included a
write-off of technology acquired from SoftQuad Software, Ltd. ("Softquad") of
$11.0 million and technology acquired from Micrografx, Inc. ("Micrografx") of
$6.7 million. The technology write-offs were non cash charges to income.

5.   FISCAL 2002 IMPAIRMENT OF GOODWILL

In fiscal 2002, circumstances suggested that Corel's goodwill was impaired and
that its carrying amount may not be recoverable. Following a review, Corel
determined that the impairment loss to be recognized was the full carrying
amount. The total non cash charge was $49.9 million consisting of $36.3 million
associated with the acquisition of Micrografx and $13.6 million associated with
SoftQuad.



6.   SOFTQUAD ACQUISITION

On March 15, 2002, Corel completed the acquisition of all of the issued and
outstanding stock of SoftQuad, a Canadian-based developer of XML-enabling
technologies and commerce solutions for e-Business. Corel's consolidated
statements of operations reflect the results of operations of SoftQuad from the
date of acquisition.

The aggregate purchase price paid was approximately $18.1 million, including
11,071,833 common shares of Corel at a value of $16.9 million. The components of
the aggregate purchase price were as follows (in thousands)

                          
Common shares                $16,897
Other costs of acquisition     1,226
                             -------
Total purchase price         $18,123
                             =======



Other costs of acquisition include professional fees and other costs directly
related to the acquisition.

The purchase price has been allocated to identifiable tangible and intangible
assets acquired and liabilities assumed based on their estimated fair values as
follows:

                      
Cash                     $   771
Other current assets         839
Core technology            4,456
Developed software        10,858
Property and equipment       161
Future tax liabilities    (5,957)
Bridge loan from Corel    (2,150)
Other liabilities         (4,488)
                         -------
Net assets acquired        4,490
Total purchase price      18,123
                         -------
Goodwill                 $13,633
                         =======



The estimates of fair value were determined by Corel's management based on
information furnished by the management of SoftQuad and an independent valuation
of developed software and in-process research and development projects.

To determine the fair market value of the core technology and the developed
software, Corel considered the three traditional valuation approaches: the cost
approach, the market approach and the income approach.

The independent valuator relied primarily on the income approach, under which
fair market value is a function of the future revenue expected to be generated
by an asset, net of all allocable expenses. The income approach focuses on the
income-producing capability of the developed software and the core technology,
in arriving at the present value of the future economic benefits expected to be
derived.

UNAUDITED PRO FORMA PREDECESSOR FINANCIAL INFORMATION

The following unaudited pro forma financial information gives effect to the
acquisition of SoftQuad made by Corel as if the transactions occurred at the
beginning of each of the fiscal year ending November 30, 2002. The pro forma
financial information below excludes the non-recurring charges related to the
goodwill impairment and technology write-down.



                             YEAR ENDED
                            NOVEMBER 30,
                                2002
                             Predecessor
                            ------------
                         
Sales                        $ 128,342
Cost of sales                   14,559
                             ---------
Gross profit                   113,783
Expenses                       155,470
                             ---------
Operating loss                 (41,687)
Interest and other income      (65,786)
                             ---------
Net loss                     $(107,473)
                             =========




7.   COMMITMENTS AND CONTINGENCIES

Corel rents office premises and sponsors various sporting events and venues. At
November 30, 2003, the minimum unaccrued commitments under long-term agreements,
are as follows:



                      LEASES   SPONSORSHIP    TOTAL
                      ------   -----------   -------
                                    
2004                  $3,351     $ 1,090     $ 4,441
2005                   1,745       1,123       2,868
2006                   1,014       1,157       2,171
2007                     542       1,191       1,733
2008                      96       1,227       1,323
2009 and thereafter      431      12,839      13,270
                      ------     -------     -------
                      $7,179     $18,627     $25,806
                      ======     =======     =======


Corel is a party to a number of additional claims arising in the ordinary course
of business relating to employment, intellectual property and other matters.
Based on its review of the individual matters, Corel believes that such claims,
individually, will not have a material adverse effect on its business, financial
position or results of operations but, in the aggregate, may have a material
adverse effect on its business, financial position or results of operations.
Such possible effect cannot be reasonably estimated at this time.

8.   LONG TERM DEBT

TERM LOAN AND LINE OF CREDIT

The Company has a secured term loan with Wells Fargo Foothill for $10.0 million.
It is repayable in 42 equal monthly installments of $238 USD beginning January
1, 2004 and is secured by the assets of the Company. Interest of the greater of
i) 6.0% or ii) prime plus 3.5% is charged to the daily balance of the loan and
paid monthly. The principal payments due in fiscal 2004 are $2,619.

Associated with the term loan is a revolving line of credit secured by certain
accounts receivable. Wells Fargo Foothill will advance up to $7.5 million
subject to the borrowing base availability to the Company. The line of credit
expires on August 25, 2006. Any funds advanced on the line of credit are repaid
with collections from the related receivables. Interest of the greater of i)
6.0% or ii) prime plus 2.5% is charged to the outstanding daily balance. There
is also a letter of credit fee of 2.5% of the undrawn balance charged directly
to the line on a monthly basis. As of November 30, 2003 there were no funds
advanced on the line of credit.

SUBORDINATED DEBT

The Company has a note payable to a related party in the amount of $10.0 million
that is subordinated in favour of the debt to Wells Fargo Foothill. The note
payable matures August 25, 2006, is non-interest bearing and is secured by a
general security agreement.

The Company has a demand note payable to a related party in the amount of $6,973
million that is subordinated in favour of the debt to Wells Fargo Foothill.
Additional advances may be requested by the Company under this agreement and may
be fulfilled at the discretion of the lender. The demand note payable is
non-interest bearing and is secured by a general security agreement.

9.   FINANCIAL INSTRUMENTS

CONCENTRATION OF CREDIT RISK

The primary objective of Corel with respect to short-term investments is
security of principal. Corel manages its investment credit risk through a
combination of the (i) selection of securities with an acceptable credit rating;
(ii) selection of term to maturity, which in no event exceeds one year in
length; and (iii) diversification of debt issuers.

Included in cash, cash equivalents and short-term investments as of November 30,
2003 and November 30, 2002 were corporate debt amounts of $8.0 million and $10.0
million, respectively. These amounts were repaid, in full, at maturity in
December 2003 and December 2002, respectively. All of Corel's short-term
investments as at November 30, 2003 had maturity dates of less than two months
from year end. Corel's cash, cash equivalents and short-term



investments are denominated predominantly in US dollars.

Concentration of credit risk, with respect to accounts receivable, is limited
due to the diversity of Corel's channel arrangements. Corel has credit
evaluation, approval and monitoring processes intended to mitigate potential
credit risks. Ingram Micro Inc. accounted for $2.8 million (22.2%) and $8.7
million (43.1%) of accounts receivable at November 30, 2003 and November 30,
2002, respectively.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts for cash and cash equivalents, restricted cash, short-term
investments, accounts receivable, accounts payable and accrued liabilities
approximate fair value due to the short maturity of these instruments, unless
otherwise noted.

FOREIGN EXCHANGE FORWARD CONTRACTS

Corel manages its financial exposure to certain foreign exchange fluctuations
with the objective of minimizing the impact of foreign currency exchange
movements on its operations.

To meet this objective Corel enters into foreign exchange forward contracts from
time to time for terms of less than twelve months. Contracts are with major
Canadian chartered banks, and therefore non-performance by a counterparty is
considered unlikely. As at November 30, 2003, Corel had US dollar foreign
exchange forward contracts with maturity dates from January 9, 2004 to November
26, 2004 to purchase a total of CDN $13.6 million (estimated fair value CDN
$14.1 million). As at November 30, 2002, Corel had US dollar foreign exchange
forward contracts with maturity dates from December 23, 2002 to August 8, 2003
to purchase a total of CDN $9.7 million (estimated fair value CDN $9.8 million).

10.  SHARE CAPITAL

COMMON SHARES - PREDECESSOR

There were an unlimited number of common shares ("Predecessor Common Shares")
authorized at November 30, 2002.

On October 30, 2001, Corel completed the acquisition of Micrografx, Inc. The
aggregate purchase price paid, including acquisition costs of $1.5 million, was
approximately $33.8 million consisting of 6,894,250 Predecessor Common Shares
valued at $16.0 million and participation rights valued at $16.3 million, which
were settled for cash in October 2002

On March 15, 2002, Corel completed the acquisition of SoftQuad. The aggregate
purchase price paid was approximately $18.1 million, consisting of 11,071,833
Predecessor Common Shares valued at $16.9 million and the remaining amount
consisting of $1.2 million in acquisition costs.

Holders of stock options for Predecessor Common Shares were given the option to
elect to receive the amount above the exercise price up to $1.05 ($1.4820 CAD)
per share. All stock options not exercised or exchanged, expired on August 30,
2003.

COMMON SHARES - SUCCESSOR

On August 28, 2003 Vector purchased the outstanding Predecessor Common Shares of
the Company. As part of the Arrangement the Company was authorized to issue an
unlimited number of Series B Shares and an unlimited number of Corel New Common
Shares. Each of the Predecessor Common Shares that were not held by Vector were
converted into one fully paid and non-assessable Corel New Common Share and one
Corel Series B share. Vector purchased and subsequently canceled the balance of
the Corel New Common Shares for $0.30 per share and the Corel Series B Shares
for $0.75 per share. The Predecessor Common Shares held by Vector were converted
into 3.5 Corel New Common Shares resulting in 43,750,000 Corel New Common Shares
issued and outstanding.

PREFERRED SHARES - PREDECESSOR

There were an unlimited number of participating, convertible, non-voting,
non-redeemable Series "A" preferred shares ("Series "A" preferred shares')
authorized at November 30, 2002. The dividend rights were the same as for common
shares, other than dividends or other distributions to the extent payable in the
form of common shares. Dividends on each full and each fractional Series "A"
preferred shares were cumulative.



In the event of liquidation of Corel, the greater of the $5.625 per share
purchase price plus all accrued and unpaid dividends, and the amount per share
that could be distributed to common shareholders, assuming the conversion of the
Series "A" preferred shares, would be distributed to the holders of the
preferred shares. If such payment is made, Series A preferred shareholders will
have no further claim on assets. On March 24, 2003 Vector acquired 22,890,000 of
the Series "A" preferred shares. On August 18, 2003, Vector converted 12,500,000
shares into Predecessor Common Shares.

PREFERRED SHARES - SUCCESSOR

As a result of the acquisition by Vector, the balance of the Series A Preferred
Shares held by Vector (10,390,000 shares) were converted one for one into New
Series A preferred shares with the same rights and obligations as the
Predecessor Series 'A' Preferred shares..

11.  VECTOR ACQUISITION

On August 28, 2003 Vector, including Vector cc Acquisition, Inc. ("Vector cc
Acquisition") acquired Corel (see note 10). The Company accounted for the
transaction as a business combination by applying push down accounting and
consequently revalued its balance sheet to reflect the fair market value of the
assets and liabilities of the Company with a corresponding $8.5 million increase
to goodwill. Subsequent to the acquisition, Corel Corporation amalgamated with
Vector cc Acquisition. The following charts summarizes the changes made to the
accounts of the Company as a result of the comprehensive revaluation.



                                  BALANCE BEFORE   ACQUISITION   BALANCE AFTER    VECTOR CC   AMALGAMATED
                                    ADJUSTMENTS    ADJUSTMENTS    ADJUSTMENTS    ACQUISTION     COMPANY
                                  --------------   -----------   ------------    ----------   -----------
                                                                               
Cash and cash equivalents            $ 16,089        $             $ 16,089       $            $ 16,089
Accounts receivable                    21,817         (2,951)        18,866                      18,866
Note receivable                        39,775                        39,775        (39,775)
Other current assets                   12,992                        12,992                      12,992
Long lived assets                      13,420         43,605         57,025                      57,025
Other current liabilities             (26,973)          (346)       (27,319)                    (27,319)
Long term debt                                                                     (29,973)     (29,973)
Future Tax                               (667)           667
Deferred Revenue                      (11,615)         7,225         (4,390)                     (4,390)
                                     --------        -------       --------       --------     --------
Net Assets (excluding Goodwill)        64,838         48,200        113,038        (69,748)      43,290
Purchase Price                                                      121,518
                                                                   --------                    --------
Goodwill                                                           $  8,480                    $  8,480
                                                                   ========                    ========


PURCHASE PRICE

                                        
Series 'A' preferred shares                $ 12,876
Purchase of employee stock option rights        753
Acquisition costs                            10,242
Corel New Common Shares                      27,899
New Series A preferred shares                69,748
                                           --------
Net purchase price                         $121,518
                                           ========



12.  RESTRUCTURING CHARGE

During the three months ended November 30, 2003 the company underwent an
organizational rationalization that resulted in the termination of 126
employees. All material amounts relating to this $1,138 charge were paid in the
quarter and there were no future service requirements from affected employees.



13.  INCOME TAXES

Income tax expense (recovery) consists of the following:



                                                           Successor
                                  Predecessor    -----------------------------
                                3 MONTHS ENDED   9 MONTHS ENDED    YEAR ENDED
                                 NOVEMBER 30,      AUGUST 28,     NOVEMBER 30,
                                     2003             2003            2002
                                --------------   --------------   ------------
                                                         
Current:
Canadian                             $222           $(4,320)        $    662
Foreign                                96               563              905
                                     ----           -------         --------
                                      318            (3,757)           1,567
                                     ----           -------         --------
Future:
Canadian                                                              (5,181)
Foreign                                                (138)          (4,967)
                                                    -------         --------
                                                       (138)         (10,148)
                                     ----           -------         --------
Income tax expense (recovery)        $318           $(3,895)        $ (8,581)
                                     ====           =======         ========


The reported income tax provision differs from the amount computed by applying
the Canadian statutory rate to income before taxes for the following reasons:



                                                                            Successor
                                                   Predecessor    -----------------------------
                                                 3 MONTHS ENDED   9 MONTHS ENDED    YEAR ENDED
                                                  NOVEMBER 30,      AUGUST 28,     NOVEMBER 30,
                                                      2003             2003            2002
                                                 --------------   --------------   ------------
                                                                          
Income (loss) before income taxes and share
   of loss of equity Investments:                   $(8,711)         $(24,075)      $(103,815)
                                                    -------          --------       ---------
Expected statutory rate                                37.0%             37.0%           39.0%
                                                    -------          --------       ---------
Expected tax expense (recovery)                      (3,223)           (8,908)        (40,488)
Foreign tax rate differences                             85               254            (278)
Losses not recognized for tax purposes                1,850             6,318          14,290
Non-deductible expenses and non-taxable income        1,468             2,826          17,078
Prior years losses                                      (84)             (253)
Reassessment of prior years                                            (4,756)
Withholding tax on foreign income                       192               417             500
Other                                                    30               207             317
                                                    -------          --------       ---------
Reported income tax expense (recovery)              $   318          $ (3,895)      $  (8,581)
                                                    =======          ========       =========


As at November 30, 2003, Corel has tax loss carryforwards of approximately
$240.0 million, which expire during the years 2006 to 2020. Approximately $13.0
million of these losses acquired with the purchase of Micrografx are restricted
in the amount of the loss that may be claimed each year based on U.S. tax loss
limitations. Corel also has investment tax credits of approximately $7.0 million
which expire during the years 2008 to 2013.



                                                                 SCHEDULE 1.1.33

See Tab 10



                                                                 SCHEDULE 1.1.34



COREL CORPORATION
CONSOLIDATED BALANCE SHEETS
AS OF AUGUST 31, 2004 AND NOVEMBER 30, 2003
(IN '000'S)



                                             AUGUST 31, 2004   NOVEMBER 30, 2003
                                             ---------------   -----------------
                                                         
ASSETS
CURRENT ASSETS
Cash and cash equivalents                         18,312             18,495
Restricted cash                                    2,076              1,830
Short term investments                             9,945              5,993
Accounts Receivable
   Trade                                          12,563             12,583
   Other                                             277                104
Inventory                                            156                313
Prepaids                                           1,254              1,244
                                                 -------            -------
Total Current Assets                              44,583             40,562
                                                 -------            -------
LONG-LIVED ASSETS
Capital assets                                     3,389              4,899
Intangible assets                                 32,280             46,515
Goodwill                                           8,834              8,480
Deferred financing charge                          1,482                528
                                                 -------            -------
TOTAL ASSETS                                      90,568            100,984
                                                 =======            =======
LIABILITIES
CURRENT
Accounts payable and accrued liabilities          18,018             21,383
Current portion of loans payable                  15,960              2,619
Income taxes payable                               5,985              6,085
Deferred Revenue                                   6,941              6,822
                                                 -------            -------
Total Current Liabilities                         46,904             36,909
                                                 -------            -------
LONG-TERM LIABILITIES
Long-term portion of loans payable                30,600              7,303
Subordinated debt                                                    16,973
Deferred revenue                                   1,646              1,204
                                                 -------            -------
Total Liabilities                                 79,150             62,389
                                                 -------            -------
OWNER'S EQUITY
Share Capital
   Class A common shares                           8,763             45,221
   Class B common shares                           1,527
   Preferred Shares                               14,936             20,780
Contributed surplus                              320,917            320,917
Retained earnings
   Predecessor                                  (339,294)          (339,294)
   Successor                                       4,569             (9,029)
                                                 -------            -------
Total Shareholders' equity                        11,418             38,595
                                                 -------            -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY        90,568            100,984
                                                ========           ========




COREL CORPORATION
OPERATING INCOME STATEMENT
(IN THOUSANDS OF US DOLLARS)



                                            SUCCESSOR        PREDECESSOR
                                         9 MONTHS ENDING   9 MONTHS ENDING
                                         AUGUST 31, 2004   AUGUST 31, 2003
                                         ---------------   ---------------
                                                     
REVENUE                                       80,136            85,386
COST OF SALES                                  6,842            12,222
                                             -------           -------
GROSS MARGIN                                  73,294            73,164
                                             -------           -------
OPERATING EXPENSES
   Sales and Marketing                        27,552            41,969
   Research and Development                    7,567            12,669
   General and Administration                 15,630            28,463
   Restructuring                               3,250
                                             -------           -------
   TOTAL OPERATING EXPENSES                   53,999            83,101
                                             -------           -------
   NET EBITDA                                 19,295            -9,937

OTHER NON CASH, NON OPERATING EXPENSES
  Recovery on legal proceedings                2,895
  Depreciation and Amortization              -13,765            -9,391
  Other non-operating gains (losses)             203               -48
  Write-down of investments                                     -7,400
  Interest Expense                            -1,311
  Interest Income                                807             1,383
  Foreign Exchange                               -38             1,330
                                             -------           -------
NET INCOME BEFORE UNDEMOTED                    8,086           -24,063
Income Taxes                                  -5,512            -3,895
Share loss on equity investments                                 1,142
                                             -------           -------
NET INCOME                                    13,598           -21,310
                                             =======           =======


NOTE

The consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in Canada ("Canadian GAAP"). The
Company was acquired by Vector Capital ("Vector"), a venture capital company
based out of California, on August 28, 2003. The Company accounted for the
acquisition by allocating the purchase price paid by Vector to the Company's net
assets (push-down accounting). Because of the application of push-down
accounting, the consolidated financial statements for the periods ended prior to
August 29, 2003 (Predecessor) are not comparable to the consolidated financial
statements for the periods ended after August 28, 2003 (Successor)



COREL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIODS ENDING AUGUST 31, 2004 AND 2003
(IN '000'S)



                                                            SUCCESSOR        PREDECESSOR
                                                         9 MONTHS ENDING   9 MONTHS ENDING
                                                         AUGUST 31, 2004   AUGUST 31, 2003
                                                         ---------------   ---------------
                                                                     
Net income/loss                                               13,598           -21,310
   Depreciation and amortization                              14,314            10,240
   Allowance for bad debts                                       (18)              755
   Future income taxes                                                            -139
   Loss on investments                                                              48
   Write down of long term investments                                           7,400
   Loss (gain) on fixed assets                                  (453)               67
   Share of loss of equity investments                                           1,142

Operating Assets
   Restricted Cash                                              (246)             -309
   Accounts Receivable                                           134            -2,364
   Inventory                                                     156                28
   Prepaids                                                      (10)           -1,071
   Accounts Payable and Accrued Liabilities                   (3,199)             -457
   Taxes payable                                                (100)              -27
   Deferred Revenue                                              751             1,861
                                                             -------           -------
Cash flow from operations                                     24,927            -4,136
                                                             -------           -------

Financing
   Repayment of term loan                                    (11,300)
   Issuance of common shares                                                        69
   Term loan financing                                        47,500
   Repayment of subordinated debt                            (16,973)
   Paid up capital reduction                                 (40,774)
   Purchase by Vector                                           (355)          -47,158
   Financing fees incurred                                    (1,101)
   Utilization (repayment) of operating line of credit           438
                                                             -------           -------
Cash flow from Financing activities                          (22,565)          -47,089
                                                             -------           -------
Investing
   Proceeds on disposal of fixed asset                         1,851                33
   Redemption (purchase) of short term investments            (3,952)           47,980
   Purchase long lived assets                                   (444)           -1,440
                                                             -------           -------
Cash flow from Investing activities                           (2,545)           46,573
                                                             -------           -------
Increase (Decrease) in cash                                     (183)           -4,652
Opening Cash                                                  18,495            18,874
                                                             -------           -------
Closing Cash                                                  18,312            14,222
                                                             =======           =======




                                                                 SCHEDULE 1.1.45

See Tab 5



                                                                 SCHEDULE 1.1.61



                         JASC STOCKHOLDER SIGNATURE PAGE

          This signature page is executed pursuant to the Agreement and Plan of
Merger among Corel Corporation, Corel JS Acquisition, Inc., Jasc Software, Inc.
and the Principal Stockholders dated as of_____________, 2004 (the "AGREEMENT").
All capitalized terms used in this signature page have the meanings given to
them in the Agreement. The undersigned Jasc Stockholder represents and warrants
to the Merger Subsidiary and Corel as follows and acknowledges that the Merger
Subsidiary and Corel are relying upon the following representations and
warranties in connection with the Transaction:

1.1 COREL COMMON SHARES. With respect to the Corel Common Stock, the Jasc
Stockholder:

     1.1.1 understands that those shares have not been and will not be
registered under the Securities Act, and that the issuance of those shares is
being made in reliance on a private placement exemption;

     1.1.2 is acquiring those shares for its own account;

     1.1.3 acknowledges those shares are not freely transferable;

     1.1.4 has had the opportunity to ask all questions and to obtain all other
information from the Merger Subsidiary and Corel as it has deemed necessary in
connection with its decision to acquire those shares; and

     1.1.5 acknowledges that it is not acquiring those shares as a result of any
"general solicitation" or "general advertising," as those terms are used in
Regulation D under the Securities Act.

1.2 NO FOREIGN PERSON. The Jasc Stockholder that is acquiring shares forming
part of the Total Equity Consideration is not a foreign person within the
meaning of Section 1445(f)(3) of the Code.

1.3 INCORPORATION AND STATUS OF THE JASC STOCKHOLDER. If an Entity, the Jasc
Stockholder is duly formed and validly existing under the laws of its
jurisdiction of formation.

1.4 POWER OF THE JASC STOCKHOLDER AND DUE AUTHORIZATION. If an Entity, the Jasc
Stockholder has all necessary power and capacity to enter into, and to perform
its obligations under, this Agreement. Each of this Agreement and each of the
Related Agreements to which the Jasc Stockholder is a party has been duly
authorized by the Jasc Stockholder. This Agreement has been duly executed and
delivered by the Jasc Stockholder and is a valid and binding obligation of the
Jasc Stockholder, enforceable in accordance with its terms, subject to the usual
exceptions as to bankruptcy and the availability of equitable remedies. At the
Time of Closing, each of the Related Agreements to which the Jasc Stockholder is
a party will be duly executed and delivered by the Jasc Stockholder and will be
valid and binding obligations of the Jasc Stockholder, enforceable in accordance
with their respective terms, subject to the usual exceptions as to bankruptcy
and the availability of equitable remedies, provided that (i) no representation
as to enforceability is made with respect to the agreements described in section
4.1.6 of the Agreement, and (ii) the enforceability of the indemnification
provisions contained in Schedule B to the Corel Minority Shareholders' Agreement
may be limited by applicable federal or state securities laws.

1.5 TITLE TO, AND RIGHT TO SELL, PURCHASED SHARES. The Jasc Stockholder is the
sole registered and beneficial owner of those Jasc Shares set out opposite the
Jasc Stockholder's name on Schedule 3.1.3 with good and marketable title to
those Jasc Shares, free of all Charges. There are no subscriptions, warrants,
options, calls, or other rights or Contracts to which the Corporation or any
Jasc Stockholder is subject to or bound which in any way limit or restrict the
consummation of the Transaction (specifically in respect



of that Jasc Stockholder's Jasc Shares) and there are no shareholders
agreements, pooling agreements, voting trusts or other Contracts with respect to
the voting of the Jasc Shares other than as set out in Schedule 3.1.3. At or
prior to the Time of Closing, those agreements and restrictions will have been
complied with or terminated (and evidence in form and substance satisfactory to
the Merger Subsidiary to that effect will have been provided to the Merger
Subsidiary).

1.6 NO CONTRAVENTION BY JASC STOCKHOLDERS. None of the entering into of this
Agreement or any Related Agreement, the consummation of the Transaction or the
performance by the Jasc Stockholder of that Jasc Stockholder's other obligations
under this Agreement or any Related Agreement to which it is a party (a) will
contravene, breach or result in any default under (1) if the Jasc Stockholder is
an Entity, the certificate of incorporation, by-laws, constating documents or
other organizational documents of that Jasc Stockholder, (2) any license,
permit, order, judgment, decree or Law to which the Jasc Stockholder is a party
or by which it may be bound or (b) contravenes, breaches or results in any
default under, or conflicts with or will conflict with or results in or will
result in any modification of any of the terms of or results in or will result
in the termination of or the creation of any Charge, acceleration right or other
right pursuant to the terms of any Contract to which the Jasc Stockholder is a
party or by which it may be bound or will in any way affect the continuation,
validity or effectiveness of any such Contract.

1.7 APPOINTMENT OF STOCKHOLDER REPRESENTATIVE. Each Jasc Stockholder designates
and appoints Robert V. Voit as the Stockholder Representative under this
Agreement and authorizes the Stockholder Representative to take such actions on
behalf of such Jasc Stockholder under this Agreement, including, but not limited
to, accepting notices, reviewing information provided to the Stockholder
Representative and executing the certificate required in section 4.1.1 on behalf
of each Jasc Stockholder, together with all such powers as are reasonably
incidental thereto. The Stockholder Representative may consult with legal
counsel, independent public accountants and other experts selected by it and
shall not be liable for any action taken, or omitted to be taken, by it in good
faith in accordance with the advice of such counsel, accountants or experts. The
Stockholder Representative shall not be liable for actions he takes or fails to
take in the absence of his own gross negligence or willful misconduct.

1.8 The undersigned Jasc Stockholder acknowledges that:

     1.8.1 the Jasc Stockholder has received a copy of the Agreement and each of
the Related Agreements to which it is or will be a party (the "TRANSACTION
AGREEMENTS");

     1.8.2 the Jasc Stockholder has had sufficient time to review and consider
the Transaction Agreements and the transactions contemplated by the Transaction
Agreements thoroughly;

     1.8.3 the Jasc Stockholder has read and understands the terms of the
Transaction Agreements and the Jasc Stockholder's obligations under the
Transaction Agreements;

     1.8.4 the Jasc Stockholder has been given an opportunity to obtain
independent legal advice, or other advice as the Jasc Stockholder may desire,
concerning the interpretation and effect of the Transaction Agreements and the
transactions contemplated by the Transaction Agreements, and by signing this
Jasc Stockholder Signature Page the Jasc Stockholder has either obtained advice
or voluntarily waived the Jasc Stockholder's opportunity to receive that advice;

     1.8.5 the Agreement is entered into voluntarily by the Jasc Stockholder;
and

     1.8.6 the Jasc Stockholder is a "Jasc Stockholder" for all purposes of the
Agreement and is bound by and subject to all rights and obligations of Jasc
Stockholders under the Agreement.




- --------------------------------------   ---------------------------------------
Signature of Witness                     Signature of Jasc Stockholder or
                                         Authorized Signatory

- --------------------------------------   ---------------------------------------
Name of Witness (please print or         Name of Jasc Stockholder (please print
type)                                    or type)

- --------------------------------------   ---------------------------------------
Address of Witness (please print or      Name and Title of Authorized Signatory
type)                                    (if the Jasc Stockholder is not an
                                         individual)



                                                                 SCHEDULE 1.1.98

                              STOCKHOLDER EXPENSES

- -    HSR - $22,500

- -    Change in control, net of Kris Tufto loan repayment - $1,515,000, plus
     associated payroll taxes of $25,782.50

- -    Faegre & Benson LLP-$175,000

- -    Eide Bailley - $39,000

- -    Merchant & Gould - $4,635

- -    Hensley, Kim & Edgington, LLC - $ 1,590

- -    Severance Costs (including paid time-off) - Craig Letourneau: $89,723.08;
     Jon Ort: $96,369.23 (plus associated payroll taxes of $3,135.59)

- -    Goldsmith Agio Helms - $853,033.01 (includes $177,345.35 paid as of
     September 30, 2004)

- -    Estimated associated payroll taxes in connection with the Corporation's
     cash out of all unexercised outstanding options under the Jasc Software,
     Inc. 1997 Omnibus Stock Plan - $42,542.76

- -    Estimated associated payroll taxes in connection with the exercise of
     outstanding options expected to be exercised under the Jasc Software, Inc.
     1997 Omnibus Stock Plan - $2,912.84

NOTE: The above costs are based on estimates as of the date of signing the
Agreement. Expenses of Faegre & Benson, Eide Bailey, Goldsmith Agio Helms and
the IP Lawyers and miscellaneous expenses associated with the Transaction will
not be known with certainty until the Closing Date.



                                                                SCHEDULE 1.1.115

See Tab 9



                                                                SCHEDULE 1.1.117



Jasc Software Inc
Detailed Bal Sheet



                                                                        GAAP      Final 9/30/2004
                                                       30/09/2004   Adjustments    Balance Sheet
                                                       ----------   -----------   ---------------
                                                                         
ASSETS
Current assets:
   Cash and cash equivalents                            2,531,337                     2.531,337
   12000 AR-TRADE                                       5,786,721                     5,786,721
   12003 A/R RECONCILING ITEMS                            284,276                       284,276
   12048 ALLOWANCE FOR DOUBTFUL A/R                       -81 312                       -81 312
   12049 ALLOWANCE FOR SALES RETURNS                   -1,406,601                    -1,406,601
   12051 ACCRUED ROYALTY REPORTS                          206,000                       206,000
                                                       ----------                    ----------
   Accounts receivable                                  4,789,084                     4,789,084
                                                       ----------                    ----------
   12060 NOTES RECEIVABLE                                 215,000     -215,000                0
   12010 A/R EMPLOYEE RECEIVABLES                          60,000                        60,000
                                                       ----------                    ----------
   Other receivable                                       275,000                        60,000
                                                       ----------                    ----------
   13000 INVENTORY                                      1,447,219                     1,447,219
   13007 CONSIGNED INVENTORY                               35,314                        35,314
   13010 INVENTORY OBSOLESCENCE RESERV                   -412,000                      -412,000
                                                       ----------                    ----------
   Inventories                                          1,070,533                     1,070,533
                                                       ----------                    ----------
   14002 PREPAID INSURANCE                                 34,600                        34,600
   14003 PREPAID ADVERTISING                              249,531                       249,531
   14004 PREPAID POSTAGE                                   29,483                        29,483
   14005 PREPAID MAINTENANCE                               45,054                        45,054
   14006 PREPAID TRAVEL                                         0                             0
   14007 PREPAID LOCALIZATION                             998,766                       998,766
   14008 PREPAID DEVELOPMENT                              339,934                       339,934
   14009 PREPAID LICENSE FEES                             224,652                       224,652
                                                       ----------                    ----------
   Prepaid expenses                                     1,922,020                     1,922,020
                                                       ----------                    ----------
Total current assets                                   10,587,974                    10,372,974
                                                       ----------                    ----------
Property & equipment
   15001 COMPUTER EQUIPMENT                             1,937,035                     1,937,035
   15003 OFFICE EQUIPMENT                                 177,359                       177,359
   15005 OFFICE FURNITURE                                 457,413                       457,413
   15007 SOFTWARE                                       1,094,567                     1,094,567
                                                       ----------                    ----------
   Equipment and software                               3,666,374                     3,666,374
                                                       ----------                    ----------
   15011 LEASEHOLD IMPROVEMENTS                           236,019                       236,019
                                                       ----------                    ----------
   Total fixed assets                                   3,902,393                     3,902,393
                                                       ----------                    ----------
   15999 ACCUMULATED DEPRECIATION                      -3,225,452                    -3,225,452
                                                       ----------                    ----------
   Net fixed assets                                       676,941                       676,941
                                                       ----------                    ----------
Other assets:
   16001 DEPOSITS                                          13,773                        13,773
   16005 LONG TERM NOTE RECEIVABLE                        260,000       -260,000              0
                                                       ----------                    ----------
   Other Assets                                           273,773                        13,773
                                                       ----------                    ----------
   17001 ACQUIRED TECHNOLOGIES                            899,324                       899,324
   17002 ACCUMULATED AMORTIZATION                        -446,523                      -446,523
   17010 PATENT ACQUISITION COSTS                         115,798                       115,798
   17011 ACC. AMORT. PATENT COSTS                         -67,794                       -67,794
                                                       ----------                    ----------
   Intangible assets, net of accumulated amortizatio      500,805                       500,805
                                                       ----------                    ----------
   19100 INVESTMENT IN SUBSIDIARY                               1                             1
   19001 INCORPORATION COSTS                                  140                           140
   19002 INC COSTS ACCUMULATED AMORTZTI                      -140                          -140
                                                       ----------                    ----------
Total assets                                           12,039,494                    11,564,494
                                                       ==========                    ==========




Jasc Software Inc
Detailed Bal Sheet



                                                                        GAAP      Final 9/30/2004
                                                       30/09/2004   Adjustments    Balance Sheet
                                                       ----------   -----------   ---------------
                                                                         
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
   21000 ACCOUNTS PAYABLE                               1,924,265                     1,924,265
   21005 UNBILLED RECEIVERS                               236,099                       236,099
                                                       ----------                    ----------
   Accounts payable                                     2,160,364                     2,160,364
                                                       ----------                    ----------
   22010 ACCRUED DISTRIBUTION EXPENSES                    699,005                       699,005
   22050 ACCRUED REBATES                                  434,688                       434,688
   22011 ACCRUED ROYALTIES                                279,424                       279,424
   23000 ACCRUED PAYROLL                                        1                             1
   23001 ACCRUED VACATION                                 622,469                       622,469
   23002 ACCRUED BONUSES                                   55,471                        55,471
   23003 ACCRUED COMMISSIONS                               91,029                        91,029
   23025 ACCRUED PROFIT SHARING                           -63,392                       -63,392
   23030 FLEX SPENDING                                     31,128                        31,128
                                                       ----------                    ----------
   Accrued employee expenses                              736,706                       736,706
                                                       ----------                    ----------
   22000 ACCRUED EXPENSES                                 948,972                       948,972
   24001 SALES TAX PAYABLE - MN                             3,062                         3,062
   24002 SALES TAX PAYABLE - CA                             2,567                         2,567
   24003 SALES TAX PAYABLE - OH                             2,472                         2,472
   24010 GST PAYABLE/RECEIVABLE                            61,287                        61,287
   28001 USE TAX PAYABLE                                    7,793                         7,793
                                                       ----------                    ----------
   Other accrued expenses                               1,026,153                     1,026,153
                                                       ----------                    ----------
   Current maturities of long-term debt
   25500 CURRENT LEASE OBLIGATION                           2,725                         2,725
                                                       ----------                    ----------
   Current maturities of lease payments                     2,725                         2,725
                                                       ----------                    ----------
   29000 CUSTOMER DEPOSITS                                 88,659                        88,659
   29050 DEFERRED REVENUE - I.P.                          107,013                       107,013
   29051 DEFERRED REVENUE - OTHER                         475,000     -475,000                0
                                                       ----------                    ----------
   Deferred Revenue                                       670,672                       195,672
                                                       ----------                    ----------
Total current liabilities                               6,009,737                     5,534,737
                                                       ----------                    ----------
   28000 LONG TERM LEASE OBLIGATION                         2,073                         2,073
                                                       ----------                    ----------
Long-term debt                                              2,073                         2,073
                                                       ----------                    ----------
Shareholders' equity
   31000 COMMON STOCK                                      44,052                        44,052
   32000 APIC                                           1,512,448                     1,512,448
   38000 RETAINED EARNINGS                              4,757,379                     4,757,379
   28010 INTERNATIONAL TAX WITHHOLDING                   -206,316                      -206,316
   38020 SHAREHOLDER DISTRIBUTIONS                       -600,027                      -600,027
                                                       ----------                    ----------
   Shareholder distributions                             -806,343                      -806,343
                                                       ----------                    ----------
   NET INCOME YTD                                         520,148                       520,148
                                                       ----------                    ----------
   Retained earnings                                    4,471,184                     4,471,184
                                                       ----------                    ----------
Total Shareholders' equity                              6,027,684                     6,027,684
                                                       ----------                    ----------
Total liabilities and shareholders' equity             12,039,494                    11,564,494
                                                       ==========                    ==========




Jasc Software, Inc.
September 2004 Income Statement



                                                SEP-04
                                              ---------
                                           
Net sales                                     3,570,317
Cost of sales                                 1,174,991
                                              ---------
   Gross profit                               2,395,326

Operating expenses:
   Research and development                     482,230
   Sales and marketing                          921,083
   General and administrative                   329,765
   Profit sharing/stock based compensation      138,245
                                              ---------
   Operating expenses before bonus            1,871,323
                                              ---------
Operating income                                524,004
                                              ---------
Other income (expense):
   Interest expense                                 (48)
   Interest income                                4,554
   Other income (expense)                        27,943
   State tax filings                                 --
                                              ---------
   Total other income and expense                32,449
                                              ---------
Net income before taxes                         556,452
                                              ---------
Income tax accrual
Net income (loss)                               556,452
                                              =========




                                                                  SCHEDULE 3.1.3

                           CAPITAL OF THE CORPORATION

Authorized: 10,000,000 shares of common stock and 5,000,000 shares of preferred
stock.

                             COMMON STOCK OWNERSHIP



Beneficial Owner           No. of Shares of Common Stock
- ----------------           -----------------------------
                        
Jonathan Craig Ort                     400,000
Laura Jeanne Voit                      400,000
Robert V. Voit GRAT                    400,000
Robert Vincent Voit                  3,200,000
Kris Tufto                               5,000
Joseph Fromm                               200
                                     ---------
TOTAL SHARES OUTSTANDING             4,405,200


                          COMMON STOCK OPTIONS SUMMARY



EXECUTIVES                                     Total Options Outstanding
- ----------                                     -------------------------
                                            
Kris Tufto                                              195,000
Susan Dub                                                40,000
Jon Ort                                                  40,000
Craig Letourneau                                         40,000
Karen Drost                                              20,000
Harold Fagley                                            20,000
                                                        -------
SUBTOTAL                                                355,000




OUTSIDE DIRECTORS                              Total Options Outstanding
- -----------------                              -------------------------
                                            
Robert Kill                                              16,000
                                                         ------
SUBTOTAL                                                 16,000




OTHER EMPLOYEES                                Total Options Outstanding
- ---------------                                -------------------------
                                            
Anderson, Kelly                                             674
Dolan, Andrew                                             1,000
Edwards, ElShaddai                                          718
Gunderson, Suzann                                           474
Huberty, Tom                                              6,000
McGaughey, Pat                                            1,392
Mork, Jim                                                 6,000
Netzke, Kathy                                               384
Ransom, Mark                                              6,000
Shotts, Russ                                              6,000
Weise, Cheryl (Mary Weise is the successor)*                498
Winkel Cliff                                              6,000
                                                        -------
SUBTOTAL                                                 35,140
                                                        406,140


*    Cheryl Weise is the record holder. Cheryl died in September 2004. Mary
     Weise is the heir to her estate and now the beneficial owner of the options



     Certain of the Vendors and holders of options to purchase shares of the
Corporation are parties to Shareholder Agreements or Optionholder Agreements
that prohibit the transfer of shares of the Corporation in a manner that would
cause the Company's S corporation status to terminate. These agreements will
terminate prior to the Time of Closing.



                                                                  SCHEDULE 3.1.7

                             APPROVALS AND CONSENTS

- -    The filing of a certificate of merger with the State of Minnesota is
     required to consummate the Merger

- -    Each contract listed in these Schedules that is denoted with a "(Y)" may
     require the approval or consent of the other party to such contract in
     connection with the consummation of the Transactions or any subsequent
     transfers to direct or indirect subsidiaries of Corel.

- -    Revolving Credit Agreement, dated as of November 23, 1998, between the
     Corporation and Bremer Bank, N.A. (formerly known as Firstar Bank, N.A.,
     which was formerly known as Firstar Bank of Minnesota, N.A.)

     -    Amendment and Waiver No. 1 to Revolving Credit Agreement, dated as of
          May 19, 1999

     -    Amendment No. 2 to Revolving Credit Agreement, dated as of September
          22, 1999

     -    Amendment No. 3 to Revolving Credit Agreement, dated as of January 14,
          2000

     -    Amendment No. 4 to Revolving Credit Agreement, dated as of April 19,
          2000

     -    Amendment No. 5 to Revolving Credit Agreement, dated as of June 13,
          2000

     -    Amendment No. 6 to Revolving Credit Agreement, dated as of October 5,
          2000

     -    Amendment No. 7 to Revolving Credit Agreement, dated as of December
          20, 2000

     -    Amendment No. 8 to Revolving Credit Agreement, dated as of June 12,
          2001

     -    Amendment No. 9 to Revolving Credit Agreement, dated as of August 10,
          2001

     -    Amendment No. 10 to Revolving Credit Agreement, dated as of June 12,
          2002

     -    Amendment No. 11 to Revolving Credit Agreement, dated as of June 13,
          2003

     -    Amendment No. 12 to Revolving Credit Agreement, dated as of September
          12, 2003

     -    Amendment No. 13 to Revolving Credit Agreement, dated as of September
          15, 2004

Closing Required Consents

1.   Customer Agreement, dated June 4, 2004, between MessageLabs, Inc. and the
     Corporation

2.   UnityMail Enterprise License Agreement, dated May 25, 2001, between the
     Corporation and MessageMedia, Inc.

3.   Two Unlimited Copy License Agreements, undated, between the Corporation and
     Access Softek, Inc.

4.   Annual Distribution License Agreement, undated, between the Corporation and
     AccuSoft Corporation

5.   Quicktime 5 Software Distribution Agreement, dated December 7, 2001,
     between the Corporation and Apple Computer, Inc., as amended August 2003

6.   Software License Agreement, dated October 28, 2003, between the Corporation
     and Bibble Labs, Inc.

7.   Embedded Software Agreement, dated May 11, 1999, between Bengt Computer
     Graphics LLC and the Corporation, including Customer Support Schedule, as
     amended January 24, 2002

8.   License Agreement for Software Development Kit, dated November 17, 1999,
     between the Corporation and Digimarc Corporation



9.   Software Development and License Agreement, dated April 13, 2004, between
     ECI Technology Solutions and the Corporation, as addended April 13, 2004

10.  Software License and Distribution Agreement, effective December 31, 1998,
     between Enroute, Inc. and Sierra Imaging, Inc., as amended August 16, 2001,
     as sublicensed to the Corporation pursuant to a Letter Agreement, dated
     December 3, 2001, among the Corporation, Enroute, Inc. and Sierra Imaging,
     Inc.

11.  Software Distribution Agreement, dated September 23, 2003, between the
     Corporation and Avery Dennison Office Products (PS Album); Promotional
     Agreement, dated January 7, 2003, between the Corporation and Avery
     Dennison Office Products (PSP 8); Promotional Agreement, dated January 28,
     2003, between the Corporation and Avery Dennison Office Products (PS
     Album); Promotional Agreement, dated May 17, 2004, between the Corporation
     and Avery Dennison Office Products Company

12.  License Agreement, dated June 26, 1999, between the Corporation and
     Microgetics Corporation

13.  Distribution Agreement, dated June 9, 1998, between the Corporation and
     Ingram Micro

14.  Navarre Corporation CPD Consignment Agreement, dated April 30, 2001,
     between the Corporation and Navarre Corporation

15.  Direct Sales Agreement, dated January 17, 2003, between the Corporation and
     Software Spectrum, Inc.

16.  Software Distribution Agreement, dated June 19, 1998, between Tech Data
     Product Management, Inc. and the Corporation

17.  Digital Imaging Software License Agreement, dated January 31, 2004, between
     Dell Products L.P. and the Corporation

18.  Source Code License Agreement, dated as of December 14, 2001, among
     Conexant Systems, Inc., Sierra Imaging, Inc. and the Corporation

19.  Kodak Digital Science Reference SDK for the FlashPix Format License
     Agreement, undated, between the Corporation and Kodak Corporation

20.  Online Services Agreement, dated November 12, 2003, between the Corporation
     and MyPublisher, Inc., as amended October 7, 2004

21.  Software License Agreement, dated March 18, 2004, between the Corporation
     and LC Technology International, Inc. for PhotoRecovery

22.  End-User License Agreement, dated March 31, 2004, between the Corporation
     and InstallShield Software Corporation

23.  Computer Software Distribution Agreement dated January 21, 1999 between the
     Corporation and Navarre

24.  License Agreement, undated, between the Corporation and BCGSoft Ltd. (BCG
     Pro) [click through license]

25.  License Agreement, undated, between the Corporation and BCGSoft Ltd. (BCG -
     not Pro) [click through license]

26.  The Corporation will obtain a signed copy of a letter agreement with
     Shutterfly, Inc. dated October 2004 regarding inclusion of Shutterfly code
     in the Corporation's products.



                                                                 SCHEDULE 3.1.11

                           LIABILITIES AND GUARANTEES

- -    Revolving Credit Agreement, dated as of November 23, 1998, between the
     Corporation and Bremer Bank, N.A. (formerly known as Firstar Bank, N.A.,
     which was formerly known as Firstar Bank of Minnesota, N.A.)

     -    Amendment and Waiver No. 1 to Revolving Credit Agreement, dated as of
          May 19, 1999

     -    Amendment No. 2 to Revolving Credit Agreement, dated as of September
          22, 1999

     -    Amendment No. 3 to Revolving Credit Agreement, dated as of January 14,
          2000

     -    Amendment No. 4 to Revolving Credit Agreement, dated as of April 19,
          2000

     -    Amendment No. 5 to Revolving Credit Agreement, dated as of June 13,
          2000

     -    Amendment No. 6 to Revolving Credit Agreement, dated as of October 5,
          2000

     -    Amendment No. 7 to Revolving Credit Agreement, dated as of December
          20, 2000

     -    Amendment No. 8 to Revolving Credit Agreement, dated as of June 12,
          2001

     -    Amendment No. 9 to Revolving Credit Agreement, dated as of August 10,
          2001

     -    Amendment No. 10 to Revolving Credit Agreement, dated as of June 12,
          2002

     -    Amendment No. 11 to Revolving Credit Agreement, dated as of June 13,
          2003

     -    Amendment No. 12 to Revolving Credit Agreement, dated as of September
          12, 2003

     -    Amendment No. 13 to Revolving Credit Agreement, dated as of September
          15, 2004

- -    Revolving Note issued by the Corporation to Firstar Bank, N.A. (formerly
     known as Firstar Bank of Minnesota, N.A.) on November 23, 1998

- -    Revolving Note issued by the Corporation to Firstar Bank, N.A. on September
     22, 1999

- -    Revolving Note issued by the Corporation to Firstar Bank, N.A. on June 13,
     2000

- -    The Corporation has made contributions to a grantor trust to fund its
     obligations under the Deferred Compensation Plan for Directors. These
     amounts are not included on the Corporation's balance sheet.

- -    The Corporation has contingent obligations related to the Jasc YE Bonus
     Program.



                                                                 SCHEDULE 3.1.12

                                  INDEBTEDNESS

- -    Revolving Credit Agreement, dated as of November 23, 1998, between the
     Corporation and Bremer Bank, N.A. (formerly known as Firstar Bank, N.A.,
     which was formerly known as Firstar Bank of Minnesota, N.A.)

     -    Amendment and Waiver No. 1 to Revolving Credit Agreement, dated as of
          May 19, 1999

     -    Amendment No. 2 to Revolving Credit Agreement, dated as of September
          22, 1999

     -    Amendment No. 3 to Revolving Credit Agreement, dated as of January 14,
          2000

     -    Amendment No. 4 to Revolving Credit Agreement, dated as of April 19,
          2000

     -    Amendment No. 5 to Revolving Credit Agreement, dated as of June 13,
          2000

     -    Amendment No. 6 to Revolving Credit Agreement, dated as of October 5,
          2000

     -    Amendment No. 7 to Revolving Credit Agreement, dated as of December
          20, 2000

     -    Amendment No. 8 to Revolving Credit Agreement, dated as of June 12,
          2001

     -    Amendment No. 9 to Revolving Credit Agreement, dated as of August 10,
          2001

     -    Amendment No. 10 to Revolving Credit Agreement, dated as of June 12,
          2002

     -    Amendment No. 11 to Revolving Credit Agreement, dated as of June 13,
          2003

     -    Amendment No. 12 to Revolving Credit Agreement, dated as of September
          12, 2003

     -    Amendment No. 13 to Revolving Credit Agreement, dated as of September
          15, 2004

- -    Revolving Note issued by the Corporation to Firstar Bank, N.A. (formerly
     known as Firstar Bank of Minnesota, N.A.) on November 23, 1998

- -    Revolving Note issued by the Corporation to Firstar Bank, N.A. on September
     22, 1999

- -    Revolving Note issued by the Corporation to Firstar Bank, N.A. on June 13,
     2000



                                                                 SCHEDULE 3.1.14

                                    DIVIDENDS

- -    The Corporation's Board of Directors has approved a distribution of the
     Asset Consideration to Jasc Stockholders payable immediately upon receipt
     by the Corporation of the Asset Sale Consideration.



                                                                 SCHEDULE 3.1.15

                                INSIDER INTERESTS

- -    Promissory Note of Kris Tufto, the Corporation's President, dated June 16,
     2003 in the aggregate principal amount of $60,000. The Corporation has
     demanded repayment of the Note upon payment of the amount due to Mr. Tufto
     under his Change-in-Control Agreement. The amount due under the Note will
     be offset against the amount payable under the Change-in-Control Agreement.

- -    Joel Ronning, who served as a member of the Corporation's Board of
     Directors from August 12, 1998 to September 24, 2001, is the Chief
     Executive Officer of Digital River, Inc. The Corporation is a party to a
     distribution agreement with Digital River, Inc.

- -    See Schedule 3.1.6.

- -    The Corporation leases a Cadillac Escalade (automobile) that is used
     primarily by the Corporation's President, including for personal use.

- -    Robert Voit's sister and brother are employees of the Corporation.

- -    Kris Tufto's cousin, Allison Pankratz, is an employee of the Corporation.



                                                                 SCHEDULE 3.1.16

            AS TO CERTAIN CONTRACTS IN AND OUT OF THE ORDINARY COURSE

Schedule 3.1.16.1

- -    Jasc Software, Inc. Retail Service Contract - Best Buy, dated April 14,
     2004, between the Corporation and National Retail Services Inc.

Schedule 3.1.16.2

- -    Software Development Agreement, dated February 9, 2004, between the
     Corporation and Ambient Design, Ltd.

- -    Letter Agreement with Bowne Terms, undated, between Bowne Global Solutions
     II, Inc. and the Corporation, including all ancillary statements of work

- -    Online Services Agreement, dated November 12, 2003, between the Corporation
     and MyPublisher, Inc., as amended October 7, 2004 (Y)

- -    Book Publishing Agreement, dated July 25, 2003, between the Corporation and
     David Huss

- -    Book Publishing Agreement, dated September 15, 2003, between the
     Corporation and Michelle Shefveland

- -    Retainer Agreement, dated September 8, 2003, between the Corporation and
     Michelle Shefveland of CottageArts.net

- -    Agreement, dated September 4, 2002, between Global Fulfillment Services,
     Inc. and the Corporation (Y)

- -    Promotional Agreement, dated January 31, 2003, between the Corporation and
     Imation Corp.

- -    HP Newsletter Registration Marketing Agreement, dated July 25, 2003,
     between Hewlett-Packard Europe BV and the Corporation (Y)

- -    Promotional Agreement, dated July 15, 2003, between the Corporation and
     McGraw-Hill/Osborne Media (Y)

- -    Security Services Agreement, dated December 1, 1999, between Harmon
     Security Services, Inc., and the Corporation (Y)

- -    Customer Agreement, dated June 4, 2004, between MessageLabs, Inc. and the
     Corporation (Y)

- -    Internet Services Agreement, dated April 4, 2002, between US Internet Corp.
     and the Corporation (Y)

- -    Contract Agreements, dated March 2, 2003, May 7, 2003 and October 23, 2003,
     between DWJ Television, Inc. and the Corporation (Y)

- -    Services Agreement, dated February 1, 2001, between the Corporation and
     Bell Telephone Incorporated

- -    Agreement, dated July 12, 2004, between the Corporation and Olson & Co.

- -    Agreement, dated August 19, 2003, between the Corporation and Third Wire

- -    Agreement, dated July 1, 2004, between the Corporation and Wiley
     Publishing, Inc.

- -    Manifest Mailing System Agreement, dated March 12, 2003, between the U.S.
     Postal Service and the Corporation

Schedule 3.1.16.3



Schedule 3.1.16.4

- -    End User License Agreement, dated March 31, 2004, between the Corporation
     and InstallShield Software Corporation (Y)

- -    International Master Representative Agreement, dated as of January 1, 2004,
     between the Corporation and Questar

- -    International Master Representative Agreement, dated as of January 1, 2004,
     between the Corporation and BerniSoft

- -    International Master Representative Agreement, dated as of January 1, 2004,
     between the Corporation and Flaming Pear

- -    International Master Representative Agreement, dated as of January 1, 2004,
     between the Corporation and Connect Distribution sp. z.o.o.

- -    International Master Representative Agreement, dated as of January 1, 2004,
     between the Corporation and CompuTrolley.com

- -    International Master Representative Agreement, dated as of January 1, 2004,
     between the Corporation and ProSoft

- -    International Master Representative Agreement, dated as of January 1, 2004,
     between the Corporation and Avanquest France

- -    Distribution Agreement, dated December 1, 2003, between the Corporation and
     Gem Distribution Ltd.

- -    International Master Representative Agreement, dated as of January 1, 2004,
     between the Corporation and Communique Software [2003 agreement expired,
     but the 2004 agreement is unsigned]

- -    International Master Representative Agreement between the Corporation and
     BroCo software BV [unsigned]

- -    International Master Representative Agreement between the Corporation and
     Xpress Soft [unsigned]

- -    International Master Representative Agreement, dated as of December 27,
     2002, between the Corporation and H.C. Top Systems B.V. [2003 agreement
     (signed December 27, 2002) expired, but the 2004 agreement is unsigned]

- -    International Master Representative Agreement between the Corporation and
     Sector Zero, Productos informaticos SA [unsigned]

- -    International Master Representative Agreement between the Corporation and
     Daou Data Systems Corp. [unsigned]

- -    International Master Representative Agreement between the Corporation and
     Qast Systems Solutions Inc. [unsigned]

- -    International Master Representative Agreement between the Corporation and
     The Bird Group [unsigned]

- -    International Master Representative Agreement between the Corporation and
     Version, S.A. de CV [unsigned]

- -    International Representative/Repubisher Agreement, executed as of November
     15, 2000, between the Corporation and Global Soft Distribution, Limited
     [2000 agreement expired, but the 2004 agreement is unsigned]

- -    License and Distribution Agreement, dated as of September 15, 2003, between
     the Corporation and CottageArts.net, LLC (Y)



- -    Letter Agreement, dated September 15, 2003, between the Corporation and
     Michelle Shefveland

- -    Programming Services Agreement, dated April 20, 1999, between the
     Corporation and BAL

- -    Programming Services Agreement, dated February 2, 2000, between the
     Corporation and BAL, as amended February 21, 2000, May 20, 2000, April 1,
     2001, January 16, 2002, March 21, 2003, April 15, 2004

- -    Representative Agreement, dated June 1, 2004, between the Corporation and
     CMI Sales, Inc.

- -    Direct Sales Agreement, dated January 17, 2003, between the Corporation and
     Software Spectrum, Inc. (Y)

- -    Memorandum of Understanding, executed October 9, 2002, between the
     Corporation and Siemens AG

- -    Memorandum of Understanding, executed March 11, 2003, between the
     Corporation and Siemens AG

- -    Letter Agreement, dated January 17, 2003, between the Corporation and Sound
     Vision Inc.

- -    Jasc Authorized Direct Retail Agreement, dated August 22, 2002, between the
     Corporation and B&H Photo and Video

- -    Market Development Funds Agreement, dated June 1, 2004, between the
     Corporation and Amazon.com LLC (Y)

- -    Distribution and Licensing Agreement, dated October 24, 2002, between the
     Corporation and Activision Value Publishing, Inc., as amended October 24,
     2003

- -    International Supplier Agreement, dated July 9, 2002, between the
     Corporation and Softek International, Inc.

- -    Distribution and Marketing Agreement, dated April 1, 2001, between the
     Corporation and the Douglas Stewart Company (Y)

- -    Agreement, dated July 1, 2001, between the Corporation and The McLendon
     Group, Inc.

- -    Agreement, dated June 1, 2002, between the Corporation and Lienau
     Associates

- -    Agreement, dated December 4, 2003, between the Corporation and Levin
     Consulting and Agreement, dated October 7, 2003, between the Corporation
     and Levin Consulting

- -    Independent Contractor Agreement, dated January 13, 2004, between the
     Corporation and Test & Automation Consulting, LLC

- -    Independent Contractor Agreement, dated April 1, 2004, between the
     Corporation and SWAT Solutions

- -    Temporary Agency Agreement, dated June 21, 2004, between the Corporation
     and The Creative Group and Temporary Agency Agreement, dated September 29,
     2004, between the Corporation and The Creative Group

- -    Temporary Agency Agreement, dated August 31, 2004, between the Corporation
     and The Creative Group (Barb Prindle)

- -    Temporary Agency Agreement, dated August 31, 2004, between the Corporation
     and The Creative Group (Will Lotzow)

- -    Temporary Agency Agreement, dated August 2, 2004, between the Corporation
     and Mary Weise

- -    Independent Contractor Agreement, dated June 1, 2004, between the
     Corporation and Mary Weise, Independent Contractor Agreement, dated August
     2, 2004, between the Corporation and Mary Weise and Independent Contractor
     Agreement, dated September 1, 2004, between the Corporation and Mary Weise



- -    Temporary Agency Agreement, dated September 8, 2003, between the
     Corporation and Michelle Shefveland

- -    Master Consulting Agreement, dated _________, between the Corporation and
     BenchmarkQA, Inc.

- -    Master Consulting Agreement, dated November 20, 2000, between the
     Corporation and BenchmarkQA, Inc.

- -    Master Consulting Agreement, dated December 18, 2003, between the
     Corporation and BenchmarkQA, Inc.

- -    Independent Contractor Agreement, dated July 15, 2004, between the
     Corporation and Josh Thue

- -    Temporary Agency Agreement, dated August 13, 2004, between the Corporation
     and Ajilon Finance

- -    Temporary Agency Agreement, dated June 20, 2004, between the Corporation
     and Westaff (USA) Inc.; Temporary Agency Agreement, dated June 27, 2004,
     between the Corporation and Westaff; Temporary Agency Agreement, dated July
     14, 2004, between the Corporation and Westaff (USA), Inc.; Temporary Agency
     Agreement, dated August 12, 2004, between the Corporation and Westaff
     (USA), Inc.; Temporary Agency Agreement, dated August 30, 2004, between the
     Corporation and Westaff; and Temporary Agency Agreement, dated September
     14, 2004, between the Corporation and Westaff

- -    Temporary Agency Agreement, dated August 10, 2004, between the Corporation
     and Abby Blu

- -    Temporary Agency Agreement, dated June 30, 2004, between the Corporation
     and Remedy Intelligent Staffing, Inc.

- -    Temporary Agency Agreement, dated June 2, 2004, between the Corporation and
     Spherion, Temporary Agency Agreement, undated, between the Corporation and
     Spherion and Temporary Agency Agreement, dated August 27, 2004, between the
     Corporation and Spherion

- -    Temporary Agency Agreement, dated July 8, 2004, between the Corporation and
     TeamExcel Minneapolis

- -    Independent Contractor Agreement, dated August 25, 2004, between the
     Corporation and Jeanmarie Kabala

- -    Temporary Agency Agreement, dated August 19, 2004, between the Corporation
     and Masterson Personnel and Temporary Agency Agreement, dated September 14,
     2004, between the Corporation and Masterson Personnel

- -    Temporary Agency Agreement, dated September 1, 2004, between the
     Corporation and Superior Services

- -    Green Card Sponsorship Agreement, dated April 10, 2001, between the
     Corporation and Pei-Lin Yap

- -    Green Card Sponsorship Agreement, dated April 25, 2001, between the
     Corporation and Satyasai Sanagavarapu

- -    Green Card Sponsorship Agreement, dated May 2, 2001, between the
     Corporation and Savita Mahabaleshwas

- -    Consulting Agreement, dated September 17, 2003, between the Corporation and
     Test & Automation Consulting, LLC

- -    Reseller Agreement, dated May 1, 2004, between the Corporation and Digital
     Workshop



- -    Independent Contractor Agreement, dated February 28, 2002, between the
     Corporation and Diane Walker and Independent Contractor Agreement, dated
     September 16, 2002, between the Corporation and Diane Walker

- -    Independent Contractor Agreement, dated October 1, 2003, between the
     Corporation and Ambient Design, Ltd.; Independent Contractor Agreement,
     dated November 5, 2003, between the Corporation and Ambient Design, Ltd.;
     Independent Contractor Agreement, dated December 22, 2003, between the
     Corporation and Ambient Design, Ltd.

- -    Letter Agreement, dated July 23, 2004, between the Corporation and Jim
     Fugelstad

- -    Software Distribution Agreement, dated October 20, 1991, between the
     Corporation and Micrographics

- -    Master Consulting Services Agreement, effective April 15, 2003, between the
     Corporation and Gartner, Inc. (Y)

- -    US Master Client Agreement, effective April 1, 1998, between Gartner Group
     and the Corporation (Y)

- -    Translation Agreement, effective January 17, 2003, between the Corporation
     and Alpha CRC Ltd.

- -    Independent Contractor Agreement, dated November 8, 2002, between the
     Corporation and Push Studio, Inc.

- -    Independent Contractor Agreement, dated May 14, 2004, between the
     Corporation and Posi Photography Inc.

- -    Retail Package Design Proposal Agreement, dated April 6, 2004, between
     MicroArts, LLC and the Corporation, including addendum

- -    Retail Package Design Proposal Agreement, dated May 5, 2004, between
     MicroArts, LLC and the Corporation, including addendum

- -    Software Development and License Agreement, dated April 13, 2004, between
     ECI Technology Solutions and the Corporation, as addended April 13, 2004
     (Y)

- -    Independent Contractor Agreement, dated August 3, 2004, between the
     Corporation and Arvid Axelsson and Independent Contractor Agreement, dated
     September 7, 2004, between the Corporation and Arvid Axelsson

- -    Letter Agreement, undated, between the Corporation and Ofoto, Inc.

- -    Temporary Agency Agreement, dated October 6, 2004, between the Corporation
     and the Bloomington, Minnesota branch of Accountemps, a division of Robert
     Half International Inc.

See Schedule 3.1.17.1

Schedule 3.1.16.5

- -    Independent Contractor Agreement, dated June 18, 2003, between the
     Corporation and Solution Design Group

- -    Independent Contractor Agreement, dated February 24, 2003, between the
     Corporation and Solution Design Group

- -    The Corporation has entered into EULAs with parties for its software.

- -    Electronic Software Distribution Agreement, dated February 18,1998, between
     the Corporation and Digital River, Inc. (Y)

     -    Summary of Relationship Agreement, undated, between the Corporation
          and Digital River regarding prepayment of royalties under the
          Electronic Software Distribution Agreement



     -    Addendum, dated September 8, 1998, to Electronic Software Distribution
          Agreement, dated February 18, 1998, between the Corporation and
          Digital River

     -    Reseller Amendment to Electronic Software Distribution Agreement,
          dated February 18, 1998, between the Corporation and Digital River

     -    Vendor Agreement (International Agreement), dated December 18, 2002,
          between the Corporation and Digital River (Y)

     -    Vendor Agreement, dated September 2, 2003, between the Corporation and
          Digital River, as amended and further amended August 24, 2004 (Y)

- -    The VIGRA Artistic License, undated

- -    Master Software Testing Agreement for Microsoft Compliance Programs at
     VeriTest, a Service of Lionbridge Technologies, dated May 16, 2000, between
     the Corporation and VeriTest, as addended

- -    Master Software Testing Agreement for Microsoft Logo Programs at VeriTest,
     inc., dated May 21,1998, between the Corporation and VeriTest, inc.

- -    International World Wide Web Consortium Participation Agreement, dated
     January 26, 2000, among Massachusetts Institute of Technology, Institut
     Rocquencourt, Keio University and the Corporation (Y)

- -    PERFORCE End User License Agreement, last executed December 31, 2001,
     between the Corporation and Perforce Software, Inc. (Y)

- -    Agreement, dated February 8, 2002, between the Corporation and Ambient
     Design Limited

- -    Programming Services Agreement, dated October 31, 2002, between the
     Corporation and Ambient Design Limited

- -    Professional Consulting Services Agreement, dated May 19, 2004, between the
     Corporation and Ambient Consulting, LLC

- -    Software Development Agreement, dated February 9, 2004, between the
     Corporation and Ambient Design, Ltd.

- -    Evaluation Agreement, dated March 25, 2003, between the Corporation and
     Sonic Solutions and Evaluation Agreement, dated December 3, 2003, between
     the Corporation and Sonic Solutions

- -    Embedded Software Agreement, dated May 11, 1999, between the Corporation
     and Bengt Computer Graphics LLC, as amended January 24, 2002

- -    License Agreement, undated, between BeOpen.com and the Corporation

- -    Software License Agreement, dated October 28, 2003, between the Corporation
     and Bibble Labs, Inc. (Y)

- -    Quicktime 5 Software Distribution Agreement, dated December 7, 2001,
     between the Corporation and Apple Computer, Inc., as amended August 2003
     (Y)

- -    Beta License Agreement, undated, between the Corporation and AccuSoft
     Corporation

- -    Netscape Client Software (Browser Suite) End User License Agreement,
     undated, between the Corporation and Netscape Communications Corporation

- -    Netscape Browser Redistribution Program License Agreement, undated, between
     the Corporation and Netscape Communications Corporation

- -    License Agreement, dated June 26, 1999, between the Corporation and
     Microgetics Corporation (Y)

- -    Agreement, dated July 15, 1991, between the Corporation and Micrographics
     Corporation

- -    Macromedia Player License Agreement, undated, between the Corporation and
     Macromedia (Y)



- -    Macromedia Shockwave and Flash Player License Agreement, undated, between
     Macromedia, Inc. and the Corporation (Y)

- -    Annual Distribution License Agreement, undated, between the Corporation and
     AccuSoft Corporation (Y)

- -    JPL Image Release, undated, between the Corporation and California
     Institute of Technology

- -    Kodak Digital Science Reference SDK for the FlashPix Format License
     Agreement, undated, between the Corporation and Kodak Corporation (Y)

- -    Manufacturing Distribution Agreement, dated August 17, 1998, between the
     Corporation and IXLA Ltd., as amended November 1, 2001 (Y)

- -    Limited Use License Agreement, dated June 10, 2004, between the Corporation
     and ISYS - Intelligent System Solutions Corporation

- -    Intel Pentium 4 Processor Platform Enabling Program, dated December 3,
     2002, between the Corporation and Intel Americas Inc (Y)

- -    Software License Agreement, dated April 10, 2000, between the Corporation
     and IMSI (Y)

- -    Xerces-C XML Parser - Apache Software License, version 1.1, undated

- -    Software Development and License Agreement, dated November 8, 2002, between
     the Corporation and Enterprise Corporation International, as amended April
     13, 2004

- -    License Agreement for Software Development Kit, dated November 17, 1999,
     between the Corporation and Digimarc Corporation (Y)

- -    Macromedia Player Licensing Agreement, undated, between Macromedia, Inc.
     and the Corporation (Y)

- -    Bengt Computer Graphics LLC Embedded Software Agreement, dated May 11,
     1999, between Bengt Computer Graphics LLC and the Corporation, including
     Customer Support Schedule, as amended January 24, 2002 (Y)

- -    Software License Agreement, dated March 18, 2004, between LC Technology
     International, Inc. and the Corporation (Y)

- -    Software License and Reproduction Agreement, dated August 25, 2003, between
     the Corporation and Intuit Corporation (Y)

- -    Courseware Licensing Agreement, dated January 7, 2004, between Quessing
     Courseware Corp. and the Corporation, as amended April 7, 2004 (Y)

- -    Distribution Agreement, dated November 14, 2003, between Corbis and the
     Corporation (Y)

- -    Software Distribution Agreement, dated June 19, 1998, between Tech Data
     Product Management, Inc. and the Corporation; Tech Data Electronic Commerce
     User Agreement and License, undated, between Tech Data Corporation and the
     Corporation (Y)

- -    Volume Software License Agreement (Corporation form)

- -    Contractual License Program: Agreement to License (Corporation form)

- -    Investment Protection Agreement (Corporation Form)

- -    Software User License Agreement (Academic) (Corporation Form)

- -    2003 Staples Software Merchandising Terms and Conditions, dated December
     29, 2002, between Staples, The Office Superstore, Inc. and the Corporation

- -    Digital Imaging Software License Agreement, dated January 31, 2004, between
     Dell Products L.P. and the Corporation (Y)

- -    License Agreement, dated October 5, 2004, between the Corporation and Dell
     Products, L.P. (Y)



- -    Microgistix/Jasc Software, Inc. Bundled Software License & Distribution
     Agreement, dated March 12, 2003, between Microgistix Operations, Inc. and
     the Corporation, as addended March 24, 2003, December 4, 2003, June 4, 2004
     and June 15, 2004 (Y)

- -    Permission Agreements, dated August 29, 2000, February 16, 2001 and April
     6, 2001, between Premier Press, Inc. (Prima Communications, Inc.) and the
     Corporation, as amended October 14, 2002 and further amended June 30,2004
     (with attached license agreement)

- -    Quick View Plus Software OEM Agreement, dated September 16, 1998, between
     IntraNet Solutions Chicago, Inc. (aka Inso Chicago Corporation) and the
     Corporation, as amended March 30, __________ (Y)

- -    Co-Marketing Agreement, dated May 7, 2001, between the Corporation and
     Alien Skin, LLC (Y)

- -    Digital Image License Agreement, dated February 9, 2004, between Hemera
     Technologies Inc. and the Corporation (Y)

- -    License to Incorporated Copyrighted Works, May 3, 2001, between the
     Corporation and Muska & Lipman Publishing dated (Y)

- -    Certified for Microsoft Windows Logo License Agreement, undated, between
     Microsoft Corporation and the Corporation (Y), Certified for Microsoft
     Windows Logo License Agreement, dated June 5, 2000, between Microsoft
     Corporation and the Corporation (Y), Certified for Microsoft Windows Logo
     License Agreement, dated August 25, 2000, between Microsoft Corporation and
     the Corporation (Y) and Certified for Microsoft Windows Logo License
     Agreement, dated March 23, 2001, between Microsoft Corporation and the
     Corporation (Y)

- -    Designed for Microsoft Windows Logo License Agreement, undated, between
     Microsoft Corporation and the Corporation (Y), Designed for Microsoft
     Windows Logo License Agreement, dated July 30, 1999, between Microsoft
     Corporation and the Corporation (Y), Designed for Microsoft Windows Logo
     License Agreement, dated December 22, 1999, between Microsoft Corporation
     and the Corporation (Y) and Designed for Microsoft Windows Logo License
     Agreement, dated May 16, 2000, between Microsoft Corporation and the
     Corporation (including Permission to Release Logo Testing Information to
     Microsoft Corporation dated May 16, 2000 (Y)

- -    Internet Photo Sharing Agreement, dated March 29, 2001, between the
     Corporation and BrightCube, Inc. (Y)

- -    Order Agreement, effective November 3, 2003, between eCapital Advisors and
     the Corporation

- -    Order Agreement, effective February 28, 2003, between Cognos Corporation
     and the Corporation (Y)

- -    Private Label Marketing Agreement, dated December 8, 1999, between the
     Corporation and PhotoLoft.com, Inc. (Y)

- -    QVC Mail-in Product Submittal, dated April 10, 2003, between the
     Corporation and QVC [click through license]

- -    Redistributable Code-Microsoft Merge Modules License Agreement, undated,
     between the Corporation and Microsoft Corporation [click through license]
     (Y)

- -    License Agreements, undated, between the Corporation and Python Software
     Foundation [click through licenses] (Y)

- -    Unlimited Copy License Agreement, undated, between the Corporation and
     Access Softek, Inc. (Y)



- -    Publishing Agreement, dated June 7, 1995, between the Corporation and
     Access Softek, Inc. and Publishing Agreement, dated June 8, 1995, between
     the Corporation and Access Softek, Inc.

- -    License Agreement, undated, between the Corporation and Microsoft
     Corporation (MSXML) [click through license] (Y)

- -    License Agreement, undated, between the Corporation and Microsoft
     Corporation (MFC) [click through license] (Y)

- -    License Agreement, undated, between the Corporation and Microsoft
     Corporation (MDAC) [click through license] (Y)

- -    License Agreement, undated, between the Corporation and Microsoft
     Corporation (Internet Explorer) [click through license] (Y)

- -    License Agreement, undated, between the Corporation and Adobe Corporation
     (Reader 5.1) [click through license] (Y)

- -    License Agreement, undated, between the Corporation and Xceed Software,
     Inc. [click through license] (Y - must provide notice of transfer within 30
     days)

- -    License Agreement, undated, between the Corporation and BCGSoft Ltd. (BCG
     Pro) [click through license] (Y)

- -    License Agreement, undated, between the Corporation and BCGSoft Ltd. (BCG -
     not Pro) [click through license] (Y)

- -    TIFF-LZW/GIF-LZW Software Patent License Agreement, dated March 8, 1995,
     between the Corporation and Unisys Corporation (Y)

- -    Software License and Distribution Agreement, effective December 31, 1998,
     between Enroute, Inc. and Sierra Imaging, Inc., as amended August 16, 2001,
     as sublicensed to the Corporation pursuant to a Letter Agreement, dated
     December 3, 2001, among the Corporation, Enroute, Inc. and Sierra Imaging,
     Inc. (Y)

- -    Agreement for Purchase of Software Source Code, dated April 15, 1997,
     between the Corporation and Michael Bradley

- -    Agreement for Purchase of Software Source Code, dated May 2, 1997, between
     the Corporation and Jeff Becker, doing business as Top Software

- -    Tool Kit License and Sublicense Agreement, undated, between the Corporation
     and Live Picture, Inc.

- -    The Independent Group's JPEG Software Readme, undated

- -    Limited Use License Agreement, dated June 10, 2004, between the Corporation
     and ISYS - Intelligent System Solutions Corporation, with Mutual
     Non-Disclosure Agreement (Y)

- -    Programming Services Agreement, dated June 5, 2002, between the Corporation
     and Ilya Vladimirovich Razmanov

- -    Programming Services Agreement, dated March 26, 2003, between the
     Corporation and Ilya Vladimirovich Razmanov

- -    Programming Services Agreement, dated April 26, 2004, between the
     Corporation and Ilya Vladimirovich Razmanov

- -    Master Subscription Agreement, undated, between the Corporation and
     salesforce.com [click-through license] (Y)

- -    Order Form for Sales Automation Software, dated May 27, 2004, between the
     Corporation and salesforce.com

- -    Untitled Contract, dated July 23, 2003, between the Corporation and GfK
     Marketing Services GmbH & Co. KG (Y)



- -    Client Agreement, dated February 12, 2003, between the Corporation and
     Nygard Dimensions

- -    Data Storage and Service Agreement, dated June 10, 1999, between the
     Corporation and Arcus Data Security, Inc. (Y)

- -    Release Agreement, dated March 2003, between the Corporation and Diane M.
     Calkins

- -    Release Agreement, dated July 5, 2004, between the Corporation and Allison
     Pankratz

- -    Release Agreement, dated June 30, 2004, between the Corporation and
     Jennifer Kellogg and Release Agreement, dated February 28, 2003, between
     the Corporation and Jennifer Kellogg

- -    Release Agreement, undated, between the Corporation and Jennifer Keeler

- -    Release Agreement, July 5, 2004, between the Corporation and Shawn Kardell

- -    Release Agreement, September 29, 2004, between the Corporation and James F.
     Morris

- -    Release Agreement, September 29, 2004, between the Corporation and Steve
     Eiswirth

- -    Release Agreement, February 26, 2003, between the Corporation and Jeannine
     Kellogg

- -    Release Agreement, February 26, 2003, between the Corporation and Bill
     Kellogg

- -    Release Agreement, dated February 25, 2003, between the Corporation and
     Jason Knutson

- -    Release Agreement, dated March 16, 2003, between the Corporation and
     Christina Zimmer

- -    Release Agreement, dated March 2, 2003, between the Corporation and Ian
     Kellogg (signed by Joe Kellogg)

- -    Release Agreement, dated March 2, 2003, between the Corporation and Sarah
     Kellogg (signed by Joe Kellogg)

- -    Release Agreement, dated January 6, 2003, between the Corporation and Joe
     Kellogg (signed by Joe Kellogg)

- -    Release Agreement, dated February 16, 2003, between the Corporation and
     Dominick Bailey (signed by Tony Luna)

- -    Release Agreement, dated May 10, 2004, between the Corporation and Shannon
     Weber and Release Agreement, dated February 25, 2003, between the
     Corporation and Shannon Weber

- -    Release Agreement, dated February 27, 2003, between the Corporation and
     Kristina M. Stewart

- -    Release Agreement, dated September 30, 2004, between the Corporation and
     Traci Lange

- -    Release Agreement, dated September 30, 2004, between the Corporation and
     Lee Gilmore (for Alissa and Blake Gilmore)

- -    Release Agreement, dated January 15, 2004, between the Corporation and
     Sonja Dahl

- -    Release Agreement, dated October 6, 2004, between the Corporation and
     Douglas Meisner

- -    Release Agreement, dated August 30, 2004, between the Corporation and Jim
     Fugelstad

- -    Independent Contractor Agreement, dated November 2002, between the
     Corporation and Michael Medford Photograph

- -    License Agreement, undated, between the Corporation and PictureQuest
     [click-through license] (Y)

- -    Royalty-Free License Agreement, undated, between the Corporation and Corbis
     [click-through license] (Y)

- -    Royalty-Free License Agreement, undated, between the Corporation and Getty
     Images, Inc. [click-through license] (Y)

- -    License Agreements, undated, between the Corporation and Getty Images, Inc.
     [click-through licenses] (Y)

- -    Royalty-Free License Agreement, undated, between the Corporation and
     imageshop b.v. [click- through license] (Y)



- -    MPEG License for Animation Shop, undated, between the Corporation and MPEG
     Software Simulation Group (Y)

- -    FreeType Project License 1.2 Agreement, undated, between the Corporation
     and FreeType [click through license] (Y)

- -    Output variable length bit strings by Jean-loup Gailly [GNU General Public
     License Version 2, June 1991; click through license] (Y)

- -    Rogue Wave Stingray License (Y)

- -    Xerces-C XML Parser - Apache Software License, Version 1.1 (Y)

- -    Point of Sale License Agreement, date August 27, 1999, between the
     Corporation and Ingram Micro, Inc. (Y)

- -    Designed for Microsoft Windows Logo License Agreement (PSP8 & Suite) [click
     through license] (Y)

- -    Designed for Microsoft Windows Logo License Agreement (PSP9 & Studio)
     [click through license] (Y)

Schedule 3.1.16.6

Schedule 3.1.16.7

Schedule 3.1.16.8

- -    Software Distribution Agreement, dated September 23, 2003, between the
     Corporation and Avery Dennison Office Products (PS Album); Promotional
     Agreement, dated January 7, 2003, between the Corporation and Avery
     Dennison Office Products (PSP 8); Promotional Agreement, dated January 28,
     2003, between the Corporation and Avery Dennison Office Products (PS
     Album); Promotional Agreement, dated May 17, 2004, between the Corporation
     and Avery Dennison Office Products Company (Y)

- -    Promotional Agreement, dated February 12, 2003, between the Corporation and
     Shutterfly, Inc. (Y) and Letter Agreement, dated December 12, 2001, between
     the Corporation, Dell Products L.P. and Shutterfly, Inc.; Dell
     Acknowledgement, dated March 8, 2001, as amended

- -    Translation Agreement, dated February 25, 2003, between the Corporation and
     Alpha CRC Ltd.

- -    Translation Agreement, dated December 19, 2003, between the Corporation and
     Alpha CRC Ltd.

- -    Translation Agreement, dated June 3,2002, between the Corporation and
     Concorde TEC B.V.

- -    Translation Agreement, dated June 3,2002, between the Corporation and
     naturalmenteSOGET

- -    Localization Proposals, dated September 10, 2003, August 25, 2003, August
     13, 2003, August 25, 2003, August 25, 2003 and November 17, 2003, from
     Rubric, Inc.

See Schedule 3.1.29.8.

Schedule 3.1.16.9

- -    Lease Agreement, undated, between the Corporation and Bennett Material
     Handling and Forklift lease, undated, between the Corporation and Stearns
     Bank National Association (Y)

- -    Lease Agreement, dated as of June 7, 2002, between the Corporation and Key
     Cadillac Oldsmobile



Schedule 3.1.16.10

- -    eBay Ad Insertion Order Standard Terms and Conditions, dated as of June 12,
     2003, between the Corporation and eBay Inc.

- -    eBay Standard Terms and Conditions for AGENCY Insertion Orders, undated,
     between the Corporation and eBay Inc.

- -    Order for Service, dated May 3, 2004, issued by the Corporation to Return
     Path, Inc.

- -    Proposal for the Purchase of UnityMail Enterprise License, dated May 16,
     2001, between the Corporation and MessageMedia, Inc.

- -    UnityMail Enterprise License Agreement, dated May 25, 2001, between the
     Corporation and MessageMedia, Inc. (Y)

- -    Letter Agreement, dated June 5, 2002, between the Corporation and Design
     Guys

- -    Confidential Disclosure Agreement, dated April 18, 2003, between the
     Corporation and Lexmark International, Inc

- -    Contract, dated December 12, 2002, between the Corporation and Pictos
     Technologies, Inc.

- -    Trademark and Domain Name Assignment, dated December 10, 2001, between the
     Corporation and AutoFX Software

- -    Loan Agreement, dated September 1, 2000, between the Corporation and BAL
     Corp.

- -    Letter of Understanding, dated March 26, 2003, between the Corporation and
     BAL Corp.

- -    Two Service Agreements, undated, between the Corporation and InfoTrends
     Research Group, Inc.

- -    Purchase of Service Agreement, dated April 29, 2003, between the
     Corporation and Opportunity Partners

- -    Internet Services Agreement, dated April 16, 1999, between the Corporation
     and US Internet Corp.

- -    Invoice from Paul Irmiter Shoots dated October 5, 2000

- -    Work Proposals, dated July 1, 2003, June 2, 2003, March 13, 2003, June 11,
     2003 and May 21, 2003, from Medialocate USA, Inc.

- -    Letter of Understanding, dated March 21, 2003, between the Corporation and
     Allsorts Distribution Ltd t/as Digital Workshop

- -    Mutual Confidentiality Agreement, dated January 23, 2004, between the
     Corporation and Ofoto, Inc.

- -    Mutual Confidentiality Agreement, dated September 12, 2004, between the
     Corporation and PhotoBox Limited

- -    Mutual Confidential Disclosure Agreement, dated May 10, 2000, between the
     Corporation and Shutterfly.com, Inc.

- -    Promotion and Rebate Agreement, dated December 22, 2001, between Microsoft
     Corporation and the Corporation

- -    Limited Use Agreement, dated September 12, 2002, between Oak Technology,
     Inc. and the Corporation (Y)

- -    In the normal course of its business, the Corporation enters into
     non-disclosure agreements with other parties.

- -    Dedicated Internet Access and Dedicated Web Hosting Service Agreement
     between the Corporation and Time Warner Telecom of Minnesota LLC



See Schedule 3.1.25 and Schedule 3.1.29.



                                                                 SCHEDULE 3.1.17

                         CERTAIN DISTRIBUTION AGREEMENTS

Schedule 3.1.17.1

- -    Distribution Agreement, dated June 9, 1998, between Ingram Micro Inc. and
     the Corporation, as amended July 1, 2002*

- -    Master Program Agreement, dated May 22, 2003, between Best Buy Canada Ltd.
     and the Corporation, as addended June 3, 2003*

- -    Computer Software Distribution Agreement, dated January 21, 1999, between
     the Corporation and Navarre Corporation*

- -    Navarre Corporation CPD Consignment Agreement, dated April 30, 2001,
     between the Corporation and Navarre Corporation*

- -    Agreement to Provide Special Marketing and Administration Funds for Office
     Max, dated May 1, 2000, between the Corporation and Navarre Corporation*

- -    Software Consignment Agreement - Office Depot, dated June 18, 2003, between
     the Corporation and Navarre Corporation*

- -    Software Consignment Agreement - Staples, dated July 1, 2003, between the
     Corporation and Navarre Corporation*

- -    Software Consignment Agreement - CompUSA, dated July 1, 2004, between the
     Corporation and Navarre Corporation*

- -    Marketing Accrual Program Agreement, dated January 1, 2000, between the
     Corporation and Office Depot, Inc.*

- -    Retail Service Contract - Best Buy, dated April 14, 2004, between the
     Corporation and National Retail Services Inc.*

- -    International Master Representative Agreement, dated as of January 1, 2004,
     between the Corporation and Questar*

- -    International Master Representative Agreement, dated as of January 1, 2004,
     between the Corporation and BerniSoft*

- -    International Master Representative Agreement, dated as of January 1, 2004,
     between the Corporation and Flaming Pear*

- -    International Master Representative Agreement, dated as of January 1, 2004,
     between the Corporation and Connect Distribution sp. z.o.o.*

- -    International Master Representative Agreement, dated as of January 1, 2004,
     between the Corporation and CompuTrolley.com*

- -    International Master Representative Agreement, dated as of January 1, 2004,
     between the Corporation and ProSoft*

- -    International Master Representative Agreement, dated as of January 1, 2004,
     between the Corporation and Avanquest France*

- -    Distribution Agreement, dated December 1, 2003, between the Corporation and
     Gem Distribution Ltd.*

- -    International Master Representative Agreement, dated as of January 1, 2004,
     between the Corporation and Communique Software [2003 agreement expired,
     but the 2004 agreement is unsigned]*



- -    International Master Representative Agreement between the Corporation and
     BroCo software BV [unsigned]*

- -    International Master Representative Agreement between the Corporation and
     Xpress Soft [unsigned]*

- -    International Master Representative Agreement, dated as of December 27,
     2002, between the Corporation and H.C. Top Systems B.V. [2003 agreement
     (signed December 27, 2002) expired, but the 2004 agreement is unsigned]*

- -    International Master Representative Agreement between the Corporation and
     Sector Zero, Productos informaticos SA [unsigned]*

- -    International Master Representative Agreement between the Corporation and
     Daou Data Systems Corp. [unsigned]*

- -    International Master Representative Agreement between the Corporation and
     Qast Systems Solutions Inc. [unsigned]*

- -    International Master Representative Agreement between the Corporation and
     The Bird Group [unsigned]*

- -    International Master Representative Agreement between the Corporation and
     Version, S.A. de CV [unsigned]*

- -    International Representative/Repubisher Agreement, executed as of November
     15, 2000, between the Corporation and Global Soft Distribution, Limited
     [2000 agreement expired, but the 2004 agreement is unsigned]*

- -    Representative Agreement, dated June 1, 2004, between the Corporation and
     CMI Sales, Inc.*

- -    Distribution and Marketing Agreement, dated April 1, 2001, between the
     Corporation and the Douglas Stewart Company*

- -    Letter Agreement, dated March 29, 2004, between the Corporation and Office
     Depot, Inc.*

- -    Reseller Agreement, dated May 1, 2004, between the Corporation and Digital
     Workshop *

- -    Standard Distribution Agreement, undated, between the Corporation and
     Academic Distributing, Inc. [unsigned]*

*    These agreements may not be terminated by the Corporation on 60 days or
     less than 60 days written notice without any requirement to pay any
     amounts, deliver any property, grant any rights or restrict the activities
     of the Corporation.

See Schedule 3.1.16.

Schedule 3.1.17.2

- -    The Corporation makes no representations as to whether termination of the
     international master representative Contracts may give rise to any
     obligations under applicable Laws.



                         EFFECTIVE DATE          TERMINATION
MASTER REPRESENTATIVE     OF AGREEMENT         FOR CONVENIENCE             FINANCIAL PENALTIES FOR TERMINATION
- ---------------------   ----------------   -----------------------   ----------------------------------------------
                                                            
Questar                 January 1, 2004    90 days written notice    All unsold inventory must be returned to the
                                                                     Corporation. The Corporation will pay the
                                                                     representative for any inventory and products
                                                                     the actual cost of the inventory, including
                                                                     the actual cost of assembly for any product
                                                                     packaged for




                                                            
                                                                     retail sale.

BerniSoft               January 1, 2004    90 days written notice    All unsold inventory must be returned to the
                                                                     Corporation. The Corporation will pay the
                                                                     representative for any inventory and products
                                                                     the actual cost of the inventory, including
                                                                     the actual cost of assembly for any product
                                                                     packaged for retail sale.

Flaming Pear            January 1, 2004    90 days written notice    All unsold inventory must be returned to the
                                                                     Corporation. The Corporation will pay the
                                                                     representative for any inventory and products
                                                                     the actual cost of the inventory, including
                                                                     the actual cost of assembly for any product
                                                                     packaged for retail sale.

Connect Distribution    January 1, 2004    90 days written notice    All unsold inventory must be returned to the
sp. z.o.o                                                            Corporation. The Corporation will pay the
                                                                     representative for any inventory and products
                                                                     the actual cost of the inventory, including
                                                                     the actual cost of assembly for any product
                                                                     packaged for retail sale.

CompuTrolley.com        January 1, 2004    90 days written notice    All unsold inventory must be returned to the
                                                                     Corporation. The Corporation will pay the
                                                                     representative for any inventory and products
                                                                     the actual cost of the inventory, including
                                                                     the actual cost of assembly for any product
                                                                     packaged for retail sale.

ProSoft                 January 1, 2004    90 days written notice    All unsold inventory must be returned to the
                                                                     Corporation. The Corporation will pay the
                                                                     representative for any inventory and products
                                                                     the actual cost of the inventory, including
                                                                     the actual cost of assembly for any product
                                                                     packaged for retail sale.

Avanquest France        January 1, 2004    180 days written notice   All unsold inventory must be returned to the
                                                                     Corporation. The Corporation will pay the
                                                                     representative for any inventory and products
                                                                     the actual cost of the inventory, including
                                                                     the actual cost of assembly for any product
                                                                     packaged for retail sale.

Gem Distribution - UK   December 1, 2003   90 days written notice    All complete product may be returned to the
                                                                     Corporation for full credit for the price paid
                                                                     net of rebates, and/or price protection.

Communique Software     unsigned           Previous agreement        All unsold inventory must be returned to the
                                           expired December          Corporation. The Corporation will pay the
                                           31, 2003; operating       representative for any inventory and products
                                           under unsigned            the actual cost of the inventory, including
                                                                     the actual cost of assembly for any product
                                                                     packaged for





                                                            
                                           agreement;                retail sale.
                                           previous agreement
                                           did not provide for
                                           termination without
                                           cause

BroCo Software          unsigned - 2004    Previous agreement        All unsold inventory must be returned to the
                        agreement has      expired December 31,      Corporation. The Corporation will pay the
                        been executed by   2003; operating           representative for any inventory and products
                        BroCo, but not     under unsigned            the actual cost of the inventory, including
                        countersigned by   agreement; previous       the actual cost of assembly for any product
                        the Corporation    agreement did not         packaged for retail sale.
                        per instructions   provide for termination
                        from Vector        without cause

Xpress Soft             unsigned           Previous agreement        All unsold inventory must be returned to the
                                           expired December 31,      Corporation. The Corporation will pay the
                                           2003; operating under     representative for any inventory and products
                                           unsigned agreement;       the actual cost of the inventory, including
                                           previous agreement did    the actual cost of assembly for any product
                                           not provide for           packaged for retail sale.
                                           termination without
                                           cause

H.C. Top Systems B.V.   December 27,       Previous agreement        All unsold inventory must be returned to the
                        2002               expired December 31,      Corporation. The Corporation will pay the
                                           2003; operating under     representative for any inventory and products
                                           unsigned agreement;       the actual cost of the inventory, including
                                           previous agreement did    the actual cost of assembly for any product
                                           not provide for           packaged for retail sale.
                                           termination without
                                           cause

Sector Zero,            unsigned           No 2003 agreement; new    All unsold inventory must be returned to the
Productos                                  MR in 2004; working       Corporation. The Corporation will pay the
informaticos SA                            under verbal agreement    representative for any inventory and products
                                           and purchase orders       the actual cost of the inventory, including
                                                                     the actual cost of assembly for any product
                                                                     packaged for retail sale.

Daou Data Systems       unsigned           No 2003 agreement; new    All unsold inventory must be returned to the
Corp.                                      MR in 2004; working       Corporation. The Corporation will pay the
                                           under verbal agreement    representative for any inventory and products
                                                                     the actual cost of the inventory, including
                                                                     the actual cost of





                                                            
                                           and purchase orders       assembly for any product packaged for retail
                                                                     sale.

Qast Systems            unsigned           No 2003 agreement; new    All unsold inventory must be returned to the
Solutions Inc.                             MR in 2004; working       Corporation. The Corporation will pay the
                                           under verbal agreement    representative for any inventory and products
                                           and purchase orders       the actual cost of the inventory, including
                                                                     the actual cost of assembly for any product
                                                                     packaged for retail sale.

The Bird Group          unsigned           Previous agreement        All unsold inventory must be returned to the
                                           expired December 31,      Corporation. The Corporation will pay the
                                           2003; operating under     representative for any inventory and products
                                           unsigned agreement;       the actual cost of the inventory, including
                                           previous agreement did    the actual cost of assembly for any product
                                           not provide for           packaged for retail sale.
                                           termination without
                                           cause

Version, S.A. de CV     unsigned           2002 MR (agreement        All unsold inventory must be returned to the
                                           terminated by the         Corporation. The Corporation will pay the
                                           Corporation); working     representative for any inventory and products
                                           under Verbal agreement    the actual cost of the inventory, including
                                           and purchase orders       the actual cost of assembly for any product
                                                                     packaged for retail sale.

Global Soft (aka P&A,   November 15,       Agreement expired         All unsold inventory must be returned to the
Inc.)                   2000               December 31, 2003;        Corporation. The Corporation will pay the
                                           operating under           representative for any inventory and products
                                           unsigned agreement;       the actual cost of the inventory, including
                                           previous agreement        the actual cost of assembly for any product
                                           did not provide for       packaged for retail sale.
                                           termination without
                                           cause





                                                                 SCHEDULE 3.1.20

                              LEASED REAL PROPERTY

     The Corporation leases approximately 74,224 square feet located at the
Fuller Road Business Center, 7905 Fuller Road, Eden Prairie, Minnesota.

- -    Lease Agreement, dated as of August 19, 1998, between the Corporation and
     Liberty Property Limited Partnership

     -    Amendment to Lease Agreement, dated as of March 6, 2003, between the
          Corporation and Liberty Property Limited Partnership



                                                                 SCHEDULE 3.1.22

                                 TITLE TO ASSETS

Schedule 3.1.22.1

Bremer Bank (successor to Firstar Bank of Minnesota, N.A.) has filed a blanket
security interest in connection with the revolving credit facility (No. 2097079
filed January 1, 1999, No. 2001131071 filed August 15, 2001 and #2003876236
filed September 17, 2003).

Schedule 3.1.22.3

The Corporation has in the past corrected defects in initial releases of the
versions of its products, which resulted in sending a modified version to
customers.



                                                                 SCHEDULE 3.1.23

                              ENVIRONMENTAL MATTERS

None.



                                                                 SCHEDULE 3.1.25

                               EMPLOYMENT MATTERS

Schedule 3.1.25.1

- -    Employment Agreement, dated December 3, 1998, between the Corporation and
     Robert Voit

- -    Employment Agreement, dated December 15, 1998, between the Corporation and
     Kris B. Tufto

- -    Employment Agreement, dated December 3, 1998, between the Corporation and
     Jon Ort

- -    The Corporation is a party to certain Change-in-Control Agreements listed
     in Schedule 3.1.6.



Schedule 3.1.25.2



                                 YEARS
                       HIRE       OF       STATE
      NAME             DATE    SERVICE*  EMPLOYED        TITLE           BASE      INCREASE 03  INCREASE 03  INCREASE 03
- ------------------  ---------  --------  --------  -----------------  -----------  -----------  -----------  -----------
                                                                                     
Lois Allen          05/23/03     1.33       MN     Receptionist       $ 25,773.00  $ 22,815.00
Kelly Anderson      12/30/96     7.73       MN     QA Engineer-I      $ 59,160.00  $ 59,160.00
Troy Bailow         O5/08/00     4.38       MN     Sr. SE - Level II  $ 96.663.00  $ 83.000.16  $ 90,000.00   $92,500.08
Gregory Beltz       03/15/04     0.52       MN     QA Engineer - II   $ 65.000.00
Jodie Blashack      03/25/98     6.50       MN     Customer Care      $ 70.200.00  $ 70,200.00
                                                   Manager
Gary Borthwick      03/25/02     2.50       MN     Technical Support  $ 35,984.00  $ 34,945.34
                                                   Rep
Diane Calkins       01/04/99     5.72       MN     Customer Service   $ 38.022.00  $ 36,214.19
                                                   Associate
David Carley        05/20/02     2.34       MN     Principal          $101.200.00  $ 84,000.00  $ 92,000.16  $101,200.08
                                                   Software
                                                   Engineer
Christopher Chase   02/24/04     0.58       MN     QA Engineer - II   $ 65,000.00
Marsha Chose        12/30/02     1.73       MN     Operations         $ 49,665.00  $ 45,150.00
                                                   Manager
Jodi Chromey        04/24/00     4.41       MN     Copywriter         $ 47,619.00  $ 39,000.00  $ 43,290.00
Tami Coyle          08/06/04     0.13       MN     Hr Generalist - I  $ 45,000.00
Sonja Dahl          08/31/98     6.06       MN     Web User           $ 67,200.00  $ 50,778.00  $ 58,640.16  $ 64,000.08
                                                   Interface Dev.
David Dean          01/25/99     5.66       MN     Technical          $ 46,278.00  $ 44,076.90
                                                   Support Rep
John Diebel         08/06/01     3.13       MN     Graphic            $ 57,200.00  $ 55,000.32
                                                   Artist - Level II
Sarah Dietl         12/01/03     0.81       MN     Int. Program       $ 70,000.00
                                                   Manager
Andrew Dolan        04/17/97     7.44       MN     Manager -          $ 77,023.20  $ 70,200.00  $ 73,008.00
                                                   Creative Services
Karen Drost         01/07/03     1.71       MN     Dir. of Corp       $120,000.00
                                                   Communication
Gregory Drozdek     03/25/02     2.50       MN     Technical          $ 41,602.00  $ 36,193.39
                                                   Support Rep - II
Susan Dub           04/01/02     2.48       MN     Chief Financial    $165,000.00  $140,000.16
                                                   Officer
Joseph Dwyer        05/13/02     2.36       MN     Sr.SE - II         $ 90,750.00  $ 78,750.00  $ 82,500.00  $ 90,750.00
Elshaddai Edwards   08/19/96     8.10       MN     Product Manager    $ 81,132.00  $ 69,942.24  $ 81,132.00
Robert Egelston     09/14/98     6.02       MN     Sr. SE - Level II  $104,286.00  $ 99,320.16  $104,286.00
Steve Eiswirth      07/16/98     6.19       MN     Tech Writer        $ 62,000.00  $ 58,000.08  $ 62,000.16
Dana Evans          06/08/04     0.29       MN     Volume             $ 50,000.00
                                                   Licensing Rep
Harold Fagley       6/24/2002    2.25       MN     Director of PD     $155,000.00  $140,000.16

Wenlei Fang         01/31/00     4.64       MN     Lead Internet      $ 80,000.00  $ 68,250.00  $ 71,662.56  $ 75,246.00
                                                   Technologies Eng.
Steven Favorito     06/02/03     1.31       MN     Financial Analyst  $ 61,812.00  $ 61,200.00
Evan Francen        03/10/00     4.54       MN     Network            $ 89,250.00  $ 77,896.08  $ 81,000.00  $ 85,000.08
                                                   Services Manager
Nathan Gaida        06/07/99     5.30       MN     Installation/      $ 66,000.00  $ 55,650.24  $ 60,000.00
                                                   Release
                                                   Engineer II
Kelly Gillitzer     03/04/04     0.55       MN     PR & Events        $ 45.000.00
                                                   Coordinator
Mike Goin           05/22/00     4.34       MN     Director of Sales  $114,640.00  $111,300.24  $114,640.08
Dixon Gould         03/01/99     5.56       MN     Director of        $125,000.00  $109,000.08  $113,000.16  $115,000.08
                                                   Technical
                                                   Alliances
Michael Greenhalgh  O8/25/03     1.08       MN     Senior Product     $120,000.00
                                                   Manager
Suzanne Gunderson   09/14/94    10.03       MN     N.A.               $ 40,950.00  $ 39,000.00  $ 40,950.00
                                                   Fulfillment
                                                   Coordinator
Dan Hagler          11/17/03     0.85       MN     Principal          $110,000.00  $ 88,000.08
                                                   Software
                                                   Engineer
Bonnie Hollenhorst  10/26/98     5.91       MN     Sr. Product        $ 96,000.00  $ 96,000.00
                                                   Marketing Mgr.
Pat Holt            12/16/02     1.77       MN     Webiste            $ 70,000.00  $ 60,000.00  $ 70,000.08
                                                   Program Mgr.
Thomas Huberty      12/30/96     7.73       MN     Sr. SE - Level II  $ 98,000.00  $ 98,000.16
James Huggett       06/16/03     1.27       MN     QA Engineer-II     $ 63,000.00
Misty Hunter        06/30/03     1.23       MN     Customer Service   $ 34,321.00  $ 34,321.32
                                                   Associate
Michael Hussey      03/15/04     0.52       MN     Customer Service   $ 31,200.00
                                                   Associate
Donovan Isdahl      04/01/02     2.48       MN     Sr. SE - Level I   $ 85,000.00  $ 70,000.08  $ 77,000.16
Scott Jensen        02/28/00     4.57       MN     Sr. SE - Level I   $ 93,600.00  $ 83,500.08  $ 90,000.00
Scott Johnson       04/03/00     4.47       MN     Mgr. OF Int. S&M   $ 93,000.00  $ 80,500.32  $ 88,000.08
Shawn Kardell       05/08/02     2.38       MN     Graphic Designer   $ 54,000.00  $ 50,000.16  $ 54,000.00
Jennifer Keeler     03/15/01     3.52       MN     Corporate Counsel  $132,500.00  $112,24O.32  $121,500.00


                                               YEAR END
                                                 BONUS                  BONUS
                                               POTENTIAL     BONUS       2004
       NAME         INCREASE 04  INCREASE 04     TOTAL     PAID 2003     PTD
- ------------------  -----------  -----------  ----------  ----------  ---------
                                                       
Lois Allen            25,772.50                           $   139.42
Kelly Anderson                                            $ 1,250.00
Troy Barlow           96,662.64                           $ 1,500.00   4,000.00
Gregory Beltz                                             $     0.00
Jodie Blashack                                  5,000.00  $   187.00

Gary Borthwick        35,985.38

Diane Calkins         38,023.86                           $   250.00

David Carley                                              $ 2,200.00   5,000.00


Christopher Chase                                                        200.00
Marsha Chose          49,665.12                           $ 2,041.66     179.55

Jodi Chromey          47,619.12                                          224.94
Tami Coyle
Sonja Dahl            67,200.00                           $   250.00     239.62

David Dean            46,281.78                           $   175.00     250.00

John Diebel           57,200.16                           $   189.47

Sarah Dietl                                     5,000.00  $   202.50

Andrew Dolan          77,023.20

Karen Drost                                    30,000.00  $ 5,000.00  20,250.00

Gregory Drozdek       37,649.45   $41,601.60                             200.00

Susan Dub            165,000.00                90,000.00  $ 1,250.00  70,000.00

Joseph Dwyer                                              $ 1,972.50   4,000.00
Elshaddai Edwards                              27,500.00  $ 9,010.00  12,000.00
Robert Egelston                                           $ 2,000.00     149.99
Steve Eiswirth                                            $ 1,000.00
Dana Evans                                      5,000.00                 250.00

Harold Fagley        155,000.16                90,000.00  $20,199.97  40,000.00

Wenlei Fang           80,000.16

Steven Favorito       61,812.00                           $    47.00
Evan Francen          89,250.00                           $   100.00

Nathan Gaida          66,000.00                           $ 1,500.00     200.00


Kelly Gillitzer

Mike Goin                                     140,000.00  $16,500.00  40,000.00
Dixon Gould          125,000.16                           $   135.00  10,000.00


Michael Greenhalgh   120,000.00                70,000.00  $   978.72   5,000.00

Suzanne Gunderson                                         $ 1,956.25


Dan Hagler           110,000.16                           $   250.00


Bonnie Hollenhorst                             23,125.00  $12,620.00  14,000.00

Pat Holt                                       10,000.00  $ 7,500.00   2,600.00

Thomas Huberty                                            $ 1,959.99     134.50
James Huggen                                                 $174.98     199.98
Misty Huntett

Michael Hussey

Donovan Isdahl        85,000.08                           $ 1,989.49   3,500.00
Scott Jensen          93,600.00                           $ 1,750.00   4,000.00
Scott Johnson         93,000.00                15,000.00  $ 5,000.00   7,687.47
Shawn Kardell                                             $   250.00
Jennifer Keeler      132,500.16                45,000.00  $   372.22  40,250.00


                                                                     PROFIT      PROFIT
                    YEAR END   COMMISSION  COMMISSION  COMMISSION    SHARING    SHARING
      NAME            BONUS       2003       PTD 04       2004        2003        2004
- ------------------  ---------  ----------  ----------  ----------  ----------  ---------
                                                             
Lois Allen                                                         $   702.34  $  210.86
Kelly Anderson                                                     $ 4,346.02  $  537.12
Troy Barlow                                                        $ 6,630.73  $  836.51
Gregory Beltz                                                                  $   32.70
Jodie Blashack       5,000.00                                      $ 4,358.40  $  646.10

Gary Borthwick                                                     $ 2,538.90  $  345.84

Diane Calkins                                                      $ 2,905.88  $  388.37

David Carley                                                       $ 6,569.65  $  876.80


Christopher Chase                                                              $   65.36
Marsha Chose                                                       $ 2,372.65  $  401.88

Jodi Chromey                                                       $ 3,168.99  $  398.43
Tami Coyle
Sonja Dahl                                                         $ 4,074.21  $  589.04

David Dean                                                         $ 3,438.55  $  422.57

John Diebel                                                        $ 4,223.74  $  522.16

Sarah Dietl          5,000.00                2,433.28    5,775.00              $  343.71

Andrew Dolan                                                       $ 5,391.00  $  704.87

Karen Drost         30,000.00                                      $40,488.34

Gregory Drozdek                                                    $ 2,727.49  $  339.08

Susan Dub           90,000.00                                      $44,886.86

Joseph Dwyer                                                       $ 6,137.26  $  786.26
Elshaddai Edwards   22,000.00                                      $ 5,494.00  $  746.72
Robert Egelston                                                    $ 7,627.26  $  965.65
Steve Eiswirth                                                     $ 4,515.58  $  570.63
Dana Evans           5,000.00                1,232.15   13,360.00

Harold Fagley       90,000.00                                      $44,886.86

Wenlei Fang                                                        $ 5,410.84  $  697.16

Steven Favorito                                                    $ 1,709.96  $  560.69
Evan Francen                                                       $ 6,131.81  $  785.00

Nathan Gaida                                                       $ 4,399.48  $  552.23


Kelly Gillitzer                                                                $   36.03

Mike Goin           40,000.00   31,907.02   28,130.55   46,430.00  $10,999.53  $1,409.90
Dixon Gould                                                        $ 8,555.98  $1,067.65


Michael Greenhalgh  70,000.00                                      $ 1,097.41  $1,069.77

Suzanne Gunderson                                                  $ 2,807.78  $  380.92


Dan Hagler                                                                     $  584.58


Bonnie Hollenhorst  18,500.00                                      $ 6,824.22  $  872.18

Pat Holt            10,000.00                6,657.71   17,909.00  $ 3,488.30  $  584.46

Thomas Huberty                                                     $ 7,158.74  $  879.73
James Huggett                                                      $ 1,630.43  $  579.84
Misty Hunter                                                       $   751.42  $  305.87

Michael Hussey                                                                 $   16.40

Donovan Isdahl                                                     $ 5,648.48  $  708.69
Scott Jensen                                                       $ 6,701.34  $  828.34
Scott Johnson       15,000.00   25,117.04   23,890.42   35,065.97  $ 7,930.77  $1,122.52
Shawn Kardell                                                      $ 3,839.75  $  538.03
Jennifer Keeler     45,000.00                                      $ 8,058.17  $1,118.26







                                YEAR
                      HIRE       OR       STATE
     NAME             DATE    SERVICE*  EMPLOYED        TITLE           BASE     INCREASE 03
     ----           --------  --------  --------  ----------------  -----------  -----------
                                                               
Douglas Keller      12/01/03     0.81      MN     QA Engineer -     $ 65,000.00
                                                  II
Jennifer Kellogg    11/05/01     2.88      MN     Sr. Product       $ 90,000.00  $ 78,120.00
                                                  Marketing Mgr.
Jessica Knutson     02/14/00     4.61      MN     Sr.               $ 55,000.00  $ 42,700.08
                                                  Graphic
                                                  Designer
Brian Kruse         09/03/02     2.05      MN     Principal         $108,100.00  $ 94,000.32
                                                  Software
                                                  Engineer
Diana Kutz          05/15/00     4.36      MN     HR                $ 55,000.00  $ 38,000.16
                                                  Representative
Heather Lane        04/29/02     2.40      MN     Executive         $ 55,000.00  $ 52,000.08
                                                  Assistant
Traci Lange         09/25/00     3.99      MN     Tech Writer       $ 55,000.00  $ 50,830.56
Tiffany Lavigne     12/27/00     3.74      MN     Accountant - II   $ 48,400.00  $ 48,400.08
Craig Letourncau    03/22/99     5.51      MN     VP Channels &     $145,800.00  $145,800.24
                                                  Bus. Devel
Bruce Lindbloom     08/18/03     1.10      MN     Imaging           $120,000.00
                                                  Engineering
                                                  Scientist
Gage Lockhart       10/25/99     4.91      MN     Technical         $ 44,554.00  $ 44,555.31
                                                  Support
Savita              06/18/01     3.26      MN     Applications      $ 88,200.00  $ 84,000.24
Mahabaleshwar                                     Engineer
John-Erich Mantius  08/11/98     6.12      MN     Director          $116,844.00  $109,200.00
                                                  International
                                                  Sales
Scott Martell       09/01/00     4.06      OH     Director-         $129,203.00  $120,750.00
                                                  Business Devlop
Patrick McGaughey   08/09/95     9.13      MN     Sr. SE-Level I    $ 87,360.00  $ 83,200.08
Doug Meisner        08/19/02     2.09      MN     Sr. Product       $110,160.00  $ 90,000.24
                                                  Manager
Uriel McMillan      05/21/98     6.34      MN     QA Engineer - I   $ 52,500.00  $ 42,000.24
Jeffrey Michaud     08/05/02     2.13      MN     Engineering       $141,750.00  $135,000.24
                                                  Manager
James Mork          07/07/97     7.21      MN     Principal SE -    $125,000.00  $115,000.08
                                                  II
James Morris        02/18/02     2.59      MN     Engineering       $111,300.00  $ 90,000.00
                                                  Manager
Wade Mueller        05/08/00     4.38      MN     Sr. User          $ 91,000.00  $ 68,000.16
                                                  Experience Eng.
Kathy Netzke        01/13/97     7.69      MN     Distribution      $ 33,280.00  $ 31,201.20
                                                  Associate
Steve Neumeyer      01/02/02     2.72      MN     SE-Level II       $ 68,000.00  $ 55,000.32
Jason Opsahl        02/08/99     5.62      MN     Controller        $ 95,000.00  $ 72,000.24
Jon Ort             03/01/94    10.57      MN     CTO               $156,600.00  $156,600.24
Darnell Otterson    07/20/98     6.18      MN     QA Engineer - I   $ 49,700.00  $ 45,150.00
Nancy Peterson      04/12/99     5.45      MN     QA Engineer - II  $ 66,800.00  $ 63,600.24
Richard Radach      12/01/03     0.81      MN     Web Developer     $ 65,000.00
Jon Radke           06/30/04     0.23      MN     QA Engineer - II  $ 60,000.00
Mark Ransom         06/23/97     7.25      MN     Sr. SE-Level II   $112,000.00  $108,150.24
Russell Rhode       04/28/00     4.40      MN     Sr. SE-Level II   $111,500.00  $104,000.16
Chad Rockvoy        10/12/98     5.95      MN     Principal Se - I  $105,000.00  $ 92,650.32
Andrew Rogers       05/07/01     3.38      MN     Technical         $ 37,440.00  $ 35,985.38
                                                  Support Rep
Betsy Rolland       06/16/03     1.27      MN     QA Engineer - II  $ 77,000.00
Satya               04/11/01     3.45      MN     Business          $ 98,500.00  $ 87,150.24
Sanagavarapu                                      Applications
                                                  Mgr.
Michael Schmidt     07/06/98     6.22      MN     Sr. SE-Level I    $ 90,500.00  $ 84,000.24
David Schroers      04/24/00     4.41      MN     Sr. SE-Level II   $ 95,000.00  $ 83,200.08
John Seals          06/17/02     2.27      MN     Web Team Lead     $ 82,500.00  $ 75,000.24
Melvin Shannon      07/31/00     4.15      MN     Technical         $ 39,313.51  $ 37,795.05
                                                  Support Rep.
Abe Shoberg         05/22/00     4.34      MN     QA Engineer - I   $ 50,000.00  $ 39,000.00
Russell Shotts      11/12/96     7.86      MN     Principal SE      $135,574.00
Gary Showalter      06/30/04     0.23      MN     Sr. QA Engineer   $ 75,000.00
Jason Smith         01/02/01     3.72      MN     Installation      $ 55,000.00  $ 48,000.24
                                                  Engineer
Rebocca Sowada      01/20/03     1.67      MN     QA Enginnering    $ 96,300.00
                                                  Manager
Shawn Spensley      02/16/04     0.60      MN     Ntnl              $ 80,000.00
                                                  Reseller
                                                  Channel Mgr.
Anders Stadheim     01/12/99     5.70      MN     Sr. SE-Level II   $ 98,700.00  $ 87,000.24
Maria Stockham      09/30/02     1.98      MN     Direct            $ 90,000.00  $ 80,000.40
                                                  Mrktg
                                                  Program Mgr.
John Strasser       11/17/03     0.85      MN     Associate         $ 46,000.00
                                                  Network Admin.
Adam Tetz           09/29/03     0.98      MN     Alliance          $ 62,000.00
                                                  Marketing
                                                  Specialist
Cheryl Theuninck    08/02/04     0.14      MN     Technical         $ 90,000.00
                                                  Alliance Mgr.
Brian Thomas        10/21/02     1.92      MN     Sr.               $ 95,000.00  $ 90,000.24
                                                  Fulfillment
                                                  Oprtns Mgr.
Jon Thompson        06/07/04     0.29      MN     Production        $ 50,000.00
                                                  Manager
Julie Toman         04/15/02     2.44      MN     Director of       $113,473.00  $101,000.16
                                                  Direct Marketing


                                                                         YEAR END
                                                                           BONUS
                                                                         POTENTIAL     BONUS
     NAME           INCREASE 03  INCREASE 03  INCREASE 04  INCREASE 04     TOTAL     PAID 2003
     ----           -----------  -----------  -----------  -----------  ----------  ----------
                                                                  
Douglas Keller                                                                      $   180.00

Jennifer Kellogg    $ 90,000.00                                          27,500.00  $10,410.00

Jessica Knutson     $ 44,835.12                 47,973.60  $ 55,000.08              $ 3,500.00


Brian Kruse         $108,100.08                                                     $ 2,234.50


Diana Kutz          $ 45,000.00  $ 55,000.08                                        $ 2,225.00

Heather Lane                                    55,000.00                           $ 3,000.00

Traci Lange         $ 55,000.08                                                     $ 1,000.00
Tiffany Lavigne
Craig Letourncau                                                        180,000.00  $   250.00

Bruce Lindbloom


Gage Lockhart

Savita              $ 88,200.00                                                     $   250.00
Mahabaleshwar
John-Erich Mantius  $116,844.00                                         140,000.00  $15,223.50


Scott Martell       $129,203.04                                         105,000.00  $20,500.00

Patrick McGaughey   $ 87,360.00                                                     $ 2,000.00
Doug Meisner        $102,000.00                110,160.00                23,125.00  $13,000.00

Uriel McMillan      $ 50,000.16                 52,500.00                           $ 1,199.50
Jeffrey Michaud     $141,750.00                                                     $15,000.00

James Mork          $120,750.00  $125,000.16                                        $ 2,000.00

James Morris        $ 95,400.00  $105,000.00   111,300.00                           $ 3,200.00

Wade Mueller        $ 85,000.08                 91,000.08                           $ 1,750.00

Kathy Netzke                                    33,281.28                           $ 1,550.00

Steve Neumeyer      $ 63,000.00                 68,000.16                           $ 1,311.60
Jason Opsahl        $ 85,000.08                 95,000.16
Jon Ort                                                                  50,000.00  $50,000.00
Darnell Otterson    $ 49,700.16                                                     $ 1,250.00
Nancy Peterson                                  66,800.16                           $ 1,000.00
Richard Radach                                                                      $   140.00
Jon Radke
Mark Ransom         $112,000.08                                                     $ 2,250.00
Russell Rhode       $108,250.08                111,500.16                           $ 2,000.00
Chad Rockvny                                   105,000.00                           $ 2,000.00
Andrew Rogers                                   37,441.44

Betsy Rolland                                   77,000.00                           $   249.98
Satya               $ 91,507.20  $ 95,000.16    98,500.08
Sanagavarapu

Michael Schmidt     $ 90,500.16                                                     $ 2,000.00
David Schroers      $ 89,000.16                 95,000.16                           $ 1,632.50
John Seals          $ 82,500.00
Melvin Shannon                                  39,313.51

Abe Shoberg         $ 45,000.00                 50,000.16                           $ 1,274.99
Russell Shotts                                                                      $ 2,000.00
Gary Showalter
Jason Smith         $ 51,500.16                 55,000.08                           $ 1,224.50

Rebocca Sowada                                  96,300.00                           $ 3,225.00

Shawn Spensley                                                           10,100.00


Anders Stadheim     $ 94,000.08                 98,700.00                           $ 1,999.99
Maria Stockham      $ 90,000.00                                          15,000.00  $ 8,744.98


John Strasser

Adam Tetz                                                                11,000.00


Cheryl Theuninck

Brian Thomas        $ 95,000.16                                          10,000.00


Jon Thompson

Julie Toman         $108,070.08                113,473.00               105,000.00  $15,000.00




                      BONUS
                       2004     YEAR END   COMMISSION  COMMISSION  COMMISSION  PROFIT SHARING  PROFIT SHARING
     NAME              PTD        BONUS       2003       PTD 04       2004          2003            2004
     ----           ---------  ----------  ----------  ----------  ----------  --------------  --------------
                                                                          
Douglas Keller                                                                                   $  319.15

Jennifer Kellogg    17,040.00   22,000.00                                        $ 5,935.97      $  772.28

Jessica Knutson        249.99                                                    $ 3,379.65      $  416.99


Brian Kruse          5,000.00                                                    $ 7,218.73      $  954.97


Diana Kutz          10,000.00                                                    $ 3,616.88      $  506.21

Heather Lane         5,250.00                                                    $ 3,731.73      $  454.65

Traci Lange                                                                      $ 3,899.70      $  507.86
Tiffany Lavigne                                                                  $ 2,767.37      $  417.68
Craig Letourncau    70,000.00  180,000.00                                        $44,886.86

Bruce Lindbloom                                                                  $ 1,359.82      $1,104.45


Gage Lockhart          167.48                                                    $ 3,291.90      $  401.32

Savita                                                                           $ 6,557.60      $  811.77
Mahabaleshwar
John-Erich Mantius  40,000.00   40,000.00   40,166.46   34,123.38   59,614.44    $10,960.46      $1,572.29


Scott Martell       20,000.00   30,000.00   23,459.41   28,599.22   40,447.50    $10,754.52      $1,496.87

Patrick McGaughey                                                                $ 6,413.21      $  819.50
Doug Meisner        23,500.00   18,500.00                                        $ 7,555.27      $1,013.89

Uriel McMillan       2,500.00                                                    $ 3,468.86      $  460.19
Jeffrey Michaud        202.50                                                    $10,367.30      $1,332.39

James Mork                                                                       $ 8,831.40      $1,167.07

James Morris         5,000.00                                                    $ 7,084.22      $  974.34

Wade Mueller           249.98                                                    $ 5,775.73      $  782.32

Kathy Netzke           175.00                                                    $ 2,353.71      $  289.21

Steve Neumeyer         194.98                                                    $ 4,640.31      $  593.65
Jason Opsahl           249.98                                                    $ 6,153.81      $  782.32
Jon Ort                250.00   50,000.00                                        $44,886.86
Darnell Otterson                                                                 $ 3,491.97      $  481.03
Nancy Peterson                                                                   $ 4,884.16      $  544.87
Richard Radach                                                                                   $  319.15
Jon Radke
Mark Ransom                                                                      $ 8,403.19      $1,030.83
Russell Rhode                                                                    $ 8,133.14      $  996.31
Chad Rockvny                                                                     $ 6,128.98      $  459.34
Andrew Rogers          200.00                                                    $ 2,524.60      $  310.77

Betsy Rolland                                                                    $ 1,782.71      $  549.22
Satya                                                                            $ 6,855.70      $  874.36
Sanagavarapu

Michael Schmidt                                                                  $ 6,593.05      $  832.95
David Schroers                                                                   $ 6,592.04      $  819.14
John Seals                                                                       $ 5,759.62      $  815.05
Melvin Shannon                                                                   $ 2,807.89      $  350.92

Abe Shoberg                                                                      $ 3,196.12      $  414.17
Russell Shotts                                                                   $10,358.47      $1,247.79
Gary Showalter
Jason Smith          2,500.00                                                    $ 3,877.59      $  483.67

Rebocca Sowada      15,247.49                                                    $ 4,668.58      $  842.36

Shawn Spensley       1,700.00    6,700.00               10,692.09   30,000.00                    $  110.53


Anders Stadheim      4,000.00                                                    $ 7,050.76      $  876.78
Maria Stockham       2,749.98   15,000.00    7,666.67    8,787.18   20,307.84    $ 6,356.22      $  868.26


John Strasser          249.98                                                                    $  275.24

Adam Tetz            5,164.50   13,000.00                                                        $  582.92


Cheryl Theuninck

Brian Thomas                                                                     $ 6,265.74      $  853.29


Jon Thompson

Julie Toman         20,250.00   30,000.00   26,863.79   34,677.97   55,659.57    $ 9,604.36      $1,381.18








                                YEARS
                      HIRE       OF       STATE
       NAME           DATE    SERVICE*  EMPLOYED        TITLE           BASE      INCREASE 03  INCREASE 03
       ----         --------  --------  --------  ----------------  -----------  ------------  -----------
                                                                          
Quan Truong         09/18/00     4.01      MN     Internet          $ 70,019.00  $  67,980.24  $ 70,019.04
                                                  Applications
                                                  Engnr
Kris Tuflo**        03/05/98     6.55      MN     CEO/President     $270,000.00  $ 216,000.24  $250,000.08
Neelima Uppalapati  01/01/02     2.72      MN     Applications      $ 88,200.00  $  80,000.40  $ 84,000.00
                                                  Engineer
Allison Pankratz    10/08/98     5.96      MN     Product           $ 55,000.00  $  46,000.08  $ 50,000.16
                                                  Marketing
                                                  Manager
Curtis Voit         06/23/03     1.25      MN     Shipping          $ 12,480.00
                                                  Associate
Kim Voit            03/16/98     6.52      MN     Customer          $ 36,462.00  $  36,463.80
                                                  Care Admin.
                                                  Assoc.
Robert Voit         04/01/91    13.48      MN     Chairman          $320,000.00  $ 240,000.24  $320,000.16
Ryan Waltrip        05/12/98     6.37      MN     QA Engineer       $ 56,070.00  $  51,480.00  $ 53,400.00
                                                  -Level I
Peter Ward          01/18/99     5.68      MN     Principal SE      $137,500.00  $ 133,090.32  $134,500.08
Shannon Weber       02/05/01     3.63      MN     Retail Channel    $ 66,924.00  $  58,500.00  $ 60,840.00
                                                  Manager
James Williams      11/16/98     5.85      MN     Network           $ 50,000.00  $  45,000.24  $ 50,000.16
                                                  Administrator
LaDonna Williams    05/10/04     0.37      MN     Sr. QA Engineer   $ 78,000.00
CliffWinkel         09/29/97     6.98      MN     Principal SE      $125,000.00  $ 111,300.24  $120,000.00
Amelia Winslow      09/07/04     0.04      MN     Accountant II/AP  $ 44,000.00
Travis Wolfe        04/15/02     2.44      MN     Technical         $ 54,600.00  $  41,601.60  $ 52,000.08
                                                  Support
                                                  Supervisor
Pei-Lin Yap         07/01/99     5.23      MN     QA Engineer - II  $ 58,465.00  $  53,150.40  $ 58,465.20
Krzysztof Zaklika   03/29/99     5.49      MN     External          $142,567.00  $ 138,415.44  $142,567.20
                                                  Development Mgr.


                                                            YEAR END
                                                              BONUS                  BONUS
                                                            POTENTIAL     BONUS      2004     YEAR END
       NAME         INCREASE 03  INCREASE 04  INCREASE 04     TOTAL    PAID 2003      PTD      BONUS
       ----         -----------  -----------  -----------  ----------  ----------  --------  ---------
                                                                        
Quan Truong                                                            $   100.00  1,000.00


Kris Tuflo**        $270,000.00                             90,000.00  $90,000.00            90,000.00
Neelima Uppalapati                 88,200.00                           $   183.64    165.00

Allison Pankratz                   55,000.08                12,500.00  $ 1,750.00            10,000.00


Curtis Voit                                                            $   500.00

Kim Voit


Robert Voit
Ryan Waltrip                       56,070.00                           $ 1,125.00

Peter Ward                        137,500.08                           $ 2,199.50
Shannon Weber                      66,924.00                17,000.00  $ 5,400.00  8,350.00  17,000.00

James Williams

LaDonna Williams                                                                     250.00
Cliff Winkel        $125,000.16                                        $ 2,000.00
Amelia Winslow
Travis Wolfe                       54,600.00                           $   175.00


Pei-Lin Yap                                                            $ 1,450.00  3,000.00
Krzysztof Zaklika




                    COMMISSION  COMMISSION  COMMISSION  PROFIT SHARING  PROFIT SHARING
       NAME            2003       PTD 04       2004          2003            2004
       ----         ----------  ----------  ----------  --------------  --------------
                                                         
Quan Truong                                               $ 5,225.95       $  644.44


Kris Tuflo**                                              $89,773.72
Neelima Uppalapati                                        $ 5,641.33       $  784.72

Allison Pankratz                                          $ 3,564.09       $  471.46


Curtis Voit                                               $   275.08       $  139.34

Kim Voit                                                  $ 2,548.19       $  316.95


Robert Voit                                               $89,773.72
Ryan Waltrip                                              $ 4,014.99       $  491.48

Peter Ward                                                $10,293.76       $1,237.91
Shannon Weber                                             $ 3,540.38       $  559.96

James Williams                                            $ 3,427.63       $  444.09

LaDonna Williams
Cliff Winkel                                              $ 8,645.94       $1,151.47
Amelia Winslow
Travis Wolfe                                              $ 2,993.73       $  456.31


Pei-Lin Yap                                               $ 4,081.68       $  572.34
Krzysztof Zaklika                                         $10,792.40       $1,312.15


*    Years of service is listed as of September 15, 2004.

**   Also received $4,515.00 for auto insurance in each of 2003 and 2004.



Schedule 3.1.25.3

The Corporation is a party to certain Change-in-Control Agreements listed in
Schedule 3.1.6. The Corporation has accrued or paid all earned bonuses, but not
has not accrued any unearned bonuses under the Jasc YE Bonus Program.

Schedule 3.1.25.4

The Corporation is a party to certain Change-in-Control Agreements listed in
Schedule 3.1.6.

Schedule 3.1.25.6

The Corporation may not have such agreements from employees that ceased to be
employees prior to September 2001.

Robert Voit, Jon Ort and Kris Tufto are not parties to the standard forms
because the relevant provisions are included in their employment agreements.

There are generally two generations of the Corporation's form agreements. The
Corporation has provided a copy of each individual's agreement to Corel and
Merger Subsidiary.



                                                                 SCHEDULE 3.1.26

                                 EMPLOYEE PLANS

- -    401(k) and Profit Sharing Plan (adopted 4/10/1996), effective 1/1/1996, as
     amended

     -    Restatement of Company's 401(k) Plan, effective 1/1/2000

     -    Restatement of Company's 401(k) Plan, effective 12/3/2001

     -    Restatement of Company's 401(k) Plan, adopted 1/1/2003

- -    Jasc Software, Inc. 1997 Executive Stock Plan, adopted 12/1/1997 -
     terminated 10/27/1998

     -    Non-statutory Stock Option Agreement

- -    Jasc Software, Inc. 1997 Omnibus Stock Plan, adopted 12/19/1997, as
     amended.

     -    Incentive Stock Option Agreement - Employee

     -    Incentive Stock Option Agreement - Executive

     -    Non-statutory Stock Option Agreement - Employee

     -    Non-statutory Stock Option Agreement - Executive

     -    Non-Statutory Stock Option Agreement - Non-Employee Director

- -    Jasc Software, Inc. Cafeteria Plan, adopted effective 1/1/1999

- -    Jasc Software, Inc. Deferred Compensation Plan for Directors, adopted and
     approved 12/21/2000

- -    Employee Profit Sharing Plan

- -    UNUM Life Insurance Company of America Life Insurance Plan

- -    Jefferson Pilot Financial Life and AD&D Insurance

- -    Jefferson Pilot Financial Short-Term Disability and Long-Term Disability
     Plans

- -    Tuition payment program

- -    Medica Choice Select

- -    Medica Elect

- -    Delta Dental Benefit Plan

- -    Short-Term and Long-Term Disability

- -    Bonus program letter agreements (see the 2004 bonus columns in 3.1.25.2)



                                                                 SCHEDULE 3.1.28

                                    INSURANCE



 INSURER             RISKS COVERED                                    AMOUNT OF COVERAGE
 -------             -------------                                    ------------------
                                       
Chubb       Worldwide Property Insurance     Blanket Personal Property, A/R, Papers   $6,000,000
                                             Business Income                  $500,000
                                             Personal Property in Transit             $25,000
                                             Personal Property any Location           $100,000
                                             Property on Exhibition           $50,000

Chubb       Worldwide General Liability      General Aggregate                        $2,000,000
            Insurance                        Products/Completed Operations            $2,000,000
                                             Advertising Injury & Personal Injury     $1,000,000
                                             Each Occurrence limit                    $1,000,000
                                             Damage to Rented Premises                $1,000,000
                                             Medical Expense limit            $10,000
                                             Employee Benefits liability:
                                                aggregate limit               $3,000,000
                                                each claim limit              $1,000,000
                                                deductible                            $1,000
                                             Information & Network Technology:
                                                aggregate                             $2,000,000
                                                deductible                            $50,000

Chubb       International Auto Liability     Excess Liability                 $1,000,000
                                             Medical expenses - each          $10,000
                                             Non-owned Autos - Damage                 $10,000 (agg.)
                                             Threshold Amount Benefit         $10,000

Chubb       International Workers            Bodily Injury by Accident        $1,000,000 (ea.)
            Compensation                     Bodily Injury by Disease         $1,000,000 (agg.)
                                             Bodily Injury by Disease         $1,000,000 (ea.)
                                                Repatriation:
                                                Each Employee                 $250,000
                                                Policy Limit                  $500,000

Chubb       Automobile Insurance             Liability                        $1,000,000
                                             Personal Injury Protection       Statutory
                                             Physical Damage:
                                                Comprehensive Deductible              $500
                                                Collision Deductible                  $500
                                             Hired Car:
                                                Comprehensive Deductible              $500
                                                Collision Deductible                  $500
                                             Physical Damage Limit            ACV or Cost of Repair, whichever is
                                             less, subject                            to the deductible
                                             Underinsured Motorist            $1,000,000
                                             Uninsured Motorist                       $1,000,000.

Chubb       Workers Compensation             Bodily Injury by Accident        $5000,000 (ea.)
                                             Bodily Injury by Disease         $500,000 (agg.)
                                             Bodily Injury by Disease         $500,000 (ea.)

Chubb       Umbrella Insurance               Excess Coverage over Aggregate limit     $5,000,000
                                             Umbrella Coverage limit          $5,000,000
                                             Products/Complete Operations limit       $5,000,000
                                             Advertising Injury & Personal Injury     $5,000,000
                                             Each Occurrence limit                    $5,000,000




                                       
Chubb       Crime Coverage                   Employee Theft                   $400,000
                                             Premises                                 $400,000
                                             In Transit                               $400,000
                                             Forgery                          $400,000
                                             Computer Fraud                   $400,000
                                             Funds Transfer Fraud                     $400,000
                                             ($25,000 deductible per loss)

Carolina    Management Liability Insurance   Limit of liability for policy    $2,000,000 subject to a Prior Acts
Casualty                                     period                           Exclusion effective 5/1/04 which
Insurance                                                                     applies a limit of $1,000,000 for
Company                                                                       acts prior to 5/1/04 and reported
                                                                              after 5/1/04





 INSURER             RISKS COVERED                                    AMOUNT OF COVERAGE
 -------             -------------                                    ------------------
                                       
UNUM Life   Life Insurance Plan              Life Insurance Plan
Insurance                                       Amount of Life Insurance - Employee   $10,000 benefit units
Company                                         Amount of Life Insurance - Spouse $5,000 benefit units
of                                              Amount of Life Insurance - Children   $2,000 benefit units
America                                      Accidental Death & Dismemberment
                                                Amount of Life Insurance - Employee   $10,000 benefit units
                                                Amount of Life Insurance - Spouse $5,000 benefit units
                                                Amount of Life Insurance - Children   $2,000 benefit units
                                                Repatriation Benefit                  Up to $5,000
                                                Education Benefit                     $100,000 (maximum)

Jefferson   Life and AD&D Insurance          Amount of Personal Life          $50,000
Pilot                                        Insurance AD&D Insurance                 $50,000
Financial                                    Principal Sum




                                                                 SCHEDULE 3.1.29

                              INTELLECTUAL PROPERTY

All of the representations and warranties in Schedule 3.1.29 are qualified by
reference to the Corporation's end-user and volume licenses issued pursuant to
license agreements in the ordinary course of the Business.

Schedule 3.1.29.1

PATENTS:
PATENT COUNSEL:
HENSLEY KIM & EDGINGTON; CONTACT: RICHARD HOLZER
LEE & HAYES (FOR THOSE NOTED BELOW WITH AN ASTERISK (*) AFTER THE TITLE



TITLE                                     COUNTRY     APPLICATION NUMBERS  FILING DATE                  STATUS
- -----                                     -------     -------------------  -----------                  ------
                                                                            
Adaptive Region Editing Tool                 US            10/781,572       2/17/2004   Pending - Missing Parts filed 8/10/04;
                                         (Utility)                                      assignment filed for recording 8/10/04
Assisted Adaptive Region Editing             US            60/545,654       2/17/2004   Pending
Tool                                   (Provisional)
Assisted Adaptive Region Editing             US        Not yet available    9/20/2004   New
Tool                                     (Utility)
Adaptive Sampling Region for a               US            10/940,596       9/14/2004   Pending - Filed with missing parts on
Region Editing Tool                      (Utility)                                      9/14/04
Method for Removing Defects from             US            09/900,506        7/6/2001   Pending - Response to first office
Images                                   (Utility)                                      action filed 8/6/04
Histogram Adjustment Features for            US            09/899,577        7/5/2001   Pending - An office action was
Use in Imaging Technologies              (Utility)                                      received and a response is due by
                                                                                        12/23/04.
Correction of "Red-eye" Effects in           US            09/899,572        7/5/2001   Pending - Response to restriction
Images                                   (Utility)                                      requirement filed 8/11/04
Assisted Scratch Removal                     US            09/900,479        7/6/2001   Pending
                                         (Utility)
Detection of Lines in Images                 US            09/897,736        7/2/2001   Pending
                                         (Utility)
Fine Moire Correction in Images              US            09/899,503        7/5/2001   Pending - No office actions received
                                         (Utility)
Moire Correction in Images                   US            09/897,716        7/2/2001   Pending - Issue fee payment due
                                         (Utility)                                      11/9/04; continuation to be filed
Removal of Block Encoding                    US            09/897,765        7/2/2001   Pending
Artifacts                                (Utility)
Manual Correction of an Image                US            09/897,769        7/2/2001   Pending - No office actions received
Color                                    (Utility)
Automatic Contrast Enhancement               US            09/900,744        7/6/2001   Pending - Issue fee payment due
                                         (Utility)                                      10/14/04; continuation to be filed
Automatic Saturation Adjustment              US            09/900,441        7/6/2001   Pending - Issue fee payment due
                                         (Utility)                                      10/14/04; continuation to be filed
Automatic Color Balance                      US            09/897,768        7/2/2001   Pending - No office actions received
                                         (Utility)
Iterative Fisher Linear Discriminant         US            60/545,652       2/17/2004   No action pending
Analysis*                              (Provisional)
Iterative Fisher Linear Discriminant         US            10/888,441        7/9/2004   Notice of missing parts received;
Analysis*                                (Utility)                                      formal action due by 10/25/04
Aspect Ratio Preserving Perspective          US            60/545,655       2/17/2004   No action pending
Transform*                             (Provisional)
Method and Apparatus for                     US            10/878,984       6/28/2004   Awaiting notice of missing parts
Correction of Perspective Distortion*    (Utility)
A Selection Tool Using Color                 US            60/545,653       2/17/2004   No action pending
Region and Edge Information*           (Provisional)
Method and Apparatus for Selection           US            10/886,937        7/8/2004   Notice of missing parts received;
an Object in an Image*                   (Utility)                                      formal papers due 10/19/04




TRADEMARKS:
TRADEMARK COUNSEL: FAEGRE & BENSON LLP, CONTACT: PATRICIA REDDING



                                                               REGISTRATION   REGISTRATION
COUNTRY         REFERENCE NO.   DATE FILED   APPLICATION NO.       DATE            NO.         STATUS
- -------         -------------   ----------   ---------------   ------------   ------------   ----------
                                                                           
AFTER SHOT
EUROPEAN            245814       4/11/2002       002649283                                   ABANDONED
UNION
JAPAN               246488       4/12/2002     2002-030117        1/17/2003        4638175   ABANDONED
UNITED              240849        2/6/2002      76/367,492        6/24/2003      2,730,488   REGISTERED
STATES

IMAGE EXPERT
CANADA              246652       8/19/1997         854,052       10/26/1999      TMA518671   REGISTERED
EUROPEAN            246621       2/13/1997       000457143         5/3/2003      000457143   REGISTERED
UNION
EUROPEAN            249166       7/10/2002       002781466                                   ABANDONED
UNION
JAPAN               246569        4/1/1997      H09-101285        3/31/2000        4372092   REGISTERED
MEXICO              248870        9/2/1997          306431        2/24/1998         570408   REGISTERED
UNITED              243565       10/1/1996      75/175,059         2/8/2000      2,315,168   REGISTERED
STATES

IMAGECOMMANDER
UNITED              220064       2/14/1994      74/489,264         3/5/1996      1,959,599   ABANDONED
STATES

IMAGEROBOT
UNITED              220065       3/12/1997      75/256,160                                   ABANDONED
STATES

JASC
ARGENTINA           214698       10/9/1998         2180537        1/25/2000        1771868   REGISTER
                                                                                             ED
BRAZIL              214699        1/8/1999       821345478        2/17/2004      821345478   REGISTER
                                                                                             ED
CANADA              220059      12/17/1997        0864,475        4/28/1999     TMA511,210   REGISTER
                                                                                             ED
CHILE               214700       1/29/1999         439,539        4/26/2001        594,940   REGISTER
                                                                                             ED
EUROPEAN            220061       5/22/1997          550483        5/22/1997         550483   REGISTER
UNION                                                                                        ED
JAPAN               212641        7/7/1998        10-57718        3/31/2000        4372132   REGISTER
                                                                                             ED
MEXICO              214701       10/6/1998          349452       10/18/1999         628945   REGISTER
                                                                                             ED
UNITED              220066        2/6/1997      75/237,624        9/28/1999      2,280,283   REGISTER
STATES                                                                                       ED
VENEZUELA           214702        3/2/1999       2940/1999        11/2/1999      P-216,224   REGISTER
                                                                                             ED

JASC MEDIA PRESENTER
UNITED STATES       212434        7/1/1998      75/511,881                                   ABANDON
                                                                                             ED

JASC SOFTWARE & DESIGN
CANADA              242391      11/28/2000         1084254         1/6/2004     TMA598,597   REGISTER
                                                                                             ED
EUROPEAN            242392      12/14/2000       002014314         1/7/2002      002014314   REGISTER
UNION                                                                                        ED
JAPAN               242393      12/12/2000     2000-133483        8/10/2001        4498011   REGISTER
                                                                                             ED
UNITED STATES       242390       6/26/2000      76/077,208        3/25/2003      2,699,238   REGISTER
                                                                                             ED

MEDIA MECCA
UNITED              220067       6/28/1994      74/543,383                                   ABANDON
STATES                                                                                       ED




                                                                   
PAINT SHOP PRO PHOTO ALBUM
UNITED STATES         302482     10/28/2002    78/179,063                            PENDING

PAINT SHOP PRO
ARGENTINA             214703      10/9/1998       2180538    1/25/2000   1.771.869   REGISTERED

BRAZIL                214704       1/8/1999     821345486    5/14/2002   821345486   REGISTERED

CANADA                220060      1/27/1998      0867,542   10/15/1999     517.985   REGISTERED

CHILE                 214705      1/29/1999       439.540    8/23/1999     546.579   REGISTERED

EUROPEAN              220062      5/19/1997        543413    10/6/1998      543413   REGISTERED
UNION
JAPAN                 212640       7/7/1998      10-57719    9/10/1999     4313533   REGISTERED

MEXICO                214706      10/6/1998        349453    4/23/1999      606668   REGISTERED

UNITED KINGDOM        220063      12/7/1994       2004112    11/1/1996     2004112   REGISTERED

UNITED STATES         216315       2/3/1999    75/633,592    12/3/2002    2,655264   REGISTERED

VENEZUELA             214707       3/5/1999     3311/1999    11/2/1999   P-216.265   REGISTERED

PAINT SHOP PRO (JAPANESE)
JAPAN                 212639       7/7/1998      10-57720    9/10/1999     4313534   REGISTERED

PHOTOEXPERT
EUROPEAN              245265      3/13/2002     002616258                            ABANDONED
UNION
JAPAN                 246515      4/12/2002   2002-030116    1/31/2003     4642555   REGISTERED

THE POWER TO CREATE
UNITED STATES         220068      7/30/1996    75/142,439    1/13/1998   2,128,336   REGISTERED

TRAJECTORY PRO
UNITED STATES     T32059USOO      2/28/2000    75/950,125                            ABANDONED

WEBDRAW
ARGENTINA             242395       5/9/2001       2337738    11/7/2002   1,894.088   ABANDONED

BRAZIL                242396       5/9/2001     823909131                            ABANDONED

CANADA                242397       5/8/2001       1102145                            ABANDONED

CHILE                 242398       5/8/2001       527.240   11/21/2001     609.184   REGISTERED

EUROPEAN              242399       5/8/2001     002207553                            ABANDONED
UNION
JAPAN                 242400       5/8/2001    2001-41172   12/21/2001    44531974   REGISTERED

MEXICO                242401       5/9/2001        484547    7/27/2001      708099   REGISTERED

UNITED STATES         242394      11/9/2000    78/034,599    7/29/2003   2,744,809   REGISTERED
VENEZUELA             242402       5/8/2001     7516/2001                            ABANDONED








NAME OF LICENSED SOFTWARE
THIRD PARTY LICENSES                                  LICENSOR                 SOURCE CODE IN POSSESSION
- -------------------------                             --------                 -------------------------
                                                                         
Image Expert Software                  Sierra Imaging, Inc., a subsidiary of              Yes
                                       Conexant Systems, Inc.
Independent JPEG Group - Release       Independent JPEG Group                             No
of 6b
ImageGear2001                          AccuSoft                                           No
Quicktime 5 and 6.5                    Apple                                              No
Embedded Software                      Bengt Computer Graphics LLC                        No
Software License Agreement             Bibble Labs, Inc.                                  No
SDK                                    Digimarc Corporation                               No
ECI Software Development               ECI                                                No
Kodak SDK for FlashPix                 Kodak Agreement                                    No
Visual Studio Redistribution EULA      Microsoft                                          No
Macromedia Player                      Macromedia                                         No
Macromedia Shockwave                   Macromedia                                         No
Xerces-C XML Parser - Apache           Apache Software                                    No
Software License Version 1.1
(Xerces)
Python License 1.6/2.0, 2.2.1, 2.3.2   Beopen.com                                         No
and 2.3.3
Microgetics (use of images)            Microgetics                                        No
nttdocomo (use of imode mark)          nttdocomo                                          No
Access Softek                          Access Softek                                      No
MSXML                                  Microsoft                                          No
Live Picture Tool Kit (through PSP7)   Live Picture Tool Kit                              No
Micrographics                          Micrographics                                      No
World Wide Web Consortium              World Wide Web Consortium                          No
Participation Agreement                Participation Agreement
Digital Camera Interface SDK 1.0       IXLA                                               No
InstallShield                          InstallShield                                      No
JPL Image Release Agreement            California Institute of Technology                 No
Netscape Client Software               Netscape                                           No
Netscape Browser                       Netscape                                           No
Shutterfly                             Conexant/Sierra Imaging                            No
Enroute                                Conexant/Sierra Imaging                            No
Ofoto                                  Ofoto                                              No
PhotoBox                               PhotoBox                                           No
Microsoft MDAC license                 Microsoft                                          No
Microsoft MFC License                  Microsoft                                          No
Microsoft XML license                  Microsoft                                          No
Microsoft Internet Explorer            Microsoft                                          No
Xceed FTP Library                      Xceed                                              No
Adobe Acrobat Reader                   Adobe                                              No
FreeType Project License version 1.2   FreeType                                           No
BCG Soft                               BCG                                                Yes
BCGPro                                 BCG                                                Yes
PhotoRecovery                          LC Technology International, Inc.                  No
MyPublisher                            MyPublisher, Inc.                                  No
Luminere                               IMSI                                               Yes
Xerces XML                             Apache Software                                    Yes
Output variable length bit strings     Jean-loup Gailly                                   Yes
Stingray libraries                     Rogue Wave                                         No


Related Agreements:

- -    The Independent Group's JPEG Software Readme, undated



- -    Source Code License Agreement, dated as of December 14, 2001, among
     Conexant Systems, Inc., Sierra Imaging, Inc. and the Corporation

- -    Annual Distribution License Agreement, undated, between the Corporation and
     AccuSoft Corporation

- -    Quicktime 5 Software Distribution Agreement, dated December 7, 2001,
     between the Corporation and Apple Computer, Inc., as amended August 2003

- -    Embedded Software Agreement, dated May 11, 1999, between the Corporation
     and Bengt Computer Graphics LLC, as amended January 24, 2002

- -    Software License Agreement, dated October 28, 2003, between the Corporation
     and Bibble Labs, Inc.

- -    License Agreement for Software Development Kit, dated November 17, 1999,
     between the Corporation and Digimarc Corporation

- -    Software Development and License Agreement, dated April 13, 2004, between
     ECI Technology Solutions and the Corporation, as addended April 13, 2004

- -    Kodak Digital Science Reference SDK for the FlashPix Format License
     Agreement, undated, between the Corporation and Kodak Corporation

- -    Redistributable Code-Microsoft Merge Modules License Agreement, undated,
     between the Corporation and Microsoft Corporation [click through license]

- -    License Agreement, undated, between the Corporation and Microsoft
     Corporation (MSXML) [click through license]

- -    License Agreement, undated, between the Corporation and Microsoft
     Corporation (MFC) [click through license]

- -    License Agreement, undated, between the Corporation and Microsoft
     Corporation (MDAC) [click through license]

- -    License Agreement, undated, between the Corporation and Microsoft
     Corporation (Internet Explorer) [click through license]

- -    Macromedia Player License Agreement, undated, between the Corporation and
     Macromedia

- -    Macromedia Shockwave and Flash Player License Agreement, undated, between
     Macromedia, Inc. and the Corporation

- -    Xerces-C XML Parser - Apache Software License, version 1.1, undated

- -    License Agreements, undated, between the Corporation and Python Software
     Foundation [click through licenses]

- -    License Agreement, dated June 26, 1999, between the Corporation and
     Microgetics Corporation

- -    Unlimited Copy License Agreement, undated, between the Corporation and
     Access Softek, Inc.

- -    Publishing Agreement, dated June 7, 1995, between the Corporation and
     Access Softek, Inc. and Publishing Agreement, dated June 8, 1995, between
     the Corporation and Access Softek, Inc.

- -    Software Distribution Agreement, dated October 20, 1991, between the
     Corporation and Micrographics

- -    Agreement, dated July 15, 1991, between the Corporation and Micrographics
     Corporation

- -    International World Wide Web Consortium Participation Agreement, dated
     January 26, 2000, among Massachusetts Institute of Technology, Institut
     Rocquencourt, Keio University and the Corporation

- -    Manufacturing Distribution Agreement, dated August 17, 1998, between the
     Corporation and IXLA Ltd., as amended November 1, 2001

- -    End User License Agreement, dated March 31, 2004, between the Corporation
     and InstallShield Software Corporation

- -    JPL Image Release, undated, between the Corporation and California
     Institute of Technology

- -    Netscape Client Software (Browser Suite) End User License Agreement,
     undated, between the Corporation and Netscape Communications Corporation

- -    Netscape Browser Redistribution Program License Agreement, undated, between
     the Corporation and Netscape Communications Corporation

- -    Promotional Agreement, dated February 12, 2003, between the Corporation and
     Shutterfly, Inc. and Letter Agreement, dated December 12, 2001, between the
     Corporation, Dell Products L.P. and Shutterfly, Inc.; Dell Acknowledgement
     dated March 8, 2001, as amended

- -    License Agreement, dated October 5, 2004, between the Corporation and Dell
     Products, L.P. (Y)

- -    Software License and Distribution Agreement, effective December 31, 1998,
     as amended August 16, 2001, between Enroute, Inc. and Sierra Imaging, Inc.,
     as sublicensed to the Corporation pursuant to a Letter Agreement, dated
     December 3, 2001, among the Corporation, Enroute, Inc. and Sierra Imaging,
     Inc.

- -    Tool Kit License and Sublicense Agreement, undated, between the Corporation
     and Live Picture, Inc.

- -    Redistributable Code-Microsoft Merge Modules License Agreement, undated,
     between the Corporation and Microsoft Corporation [click through license]



- -    License Agreement, undated, between the Corporation and Xceed Software,
     Inc. (No consent required - Corel must provide notice of transfer within 30
     days)

- -    License Agreement, undated, between the Corporation and Adobe Corporation
     (Reader 5.1) [click through license]

- -    License Agreement, undated, between the Corporation and BCGSoft Ltd. (BCG
     Pro) [click through license]

- -    License Agreement, undated, between the Corporation and BCGSoft Ltd. (BCG -
     not Pro) [click through license]

- -    Software License Agreement, dated March 18, 2004, between the Corporation
     and LC Technology International, Inc.

- -    Online Services Agreement, dated November 12, 2003, between the Corporation
     and MyPublisher, Inc., as amended October 7, 2004

- -    Output variable length bit strings by Jean-loup Gailly [GNU General Public
     License Version 2, June 1991; click through license]

- -    Rogue Wave Stingray License [click through license]

- -    Xerces-C XML Parser - Apache Software License, Version 1.1 [click through
     license]

EVALUATION LICENSES

                             
Sonic AuthorScript              Sonic
Sonic AuthorScript SDK and      Sonic
PrimoSDK
AccuSoft ImageGear Version 13   AccuSoft
ISYS                            ISYS



Related Agreements:

- -    Evaluation Agreement, dated March 25, 2003, between the Corporation and
     Sonic Solutions and Evaluation Agreement, dated December 3, 2003, between
     the Corporation and Sonic Solutions

- -    Limited Use License Agreement, dated June 10, 2004, between the Corporation
     and ISYS - Intelligent System Solutions Corporation

- -    Beta License Agreement, undated, between the Corporation and AccuSoft
     Corporation

DEVELOPMENT AGREEMENTS

- -    Software Development Agreement, dated February 9, 2004, between the
     Corporation and Ambient Design, Ltd.

- -    Independent Contractor Agreement, dated October 1, 2003, between the
     Corporation and Ambient Design, Ltd.

- -    Independent Contractor Agreement, dated November 5, 2003, between the
     Corporation and Ambient Design, Ltd.

- -    Independent Contractor Agreement, dated December 22, 2003, between the
     Corporation and Ambient Design, Ltd.

- -    Agreement, dated February 8, 2002, between the Corporation and Ambient
     Design Limited

- -    Programming Services Agreement, dated October 31, 2002, between the
     Corporation and Ambient Design Limited

- -    Professional Consulting Services Agreement, dated May 19, 2004, between the
     Corporation and Ambient Consulting, LLC

- -    Software Development Agreement, dated February 9, 2004, between the
     Corporation and Ambient Design, Ltd.

- -    Agreement for Purchase of Software Source Code, dated April 15, 1997,
     between the Corporation and Michael Bradley

- -    Agreement for Purchase of Software Source Code, dated May 2, 1997, between
     the Corporation and Jeff Becker, doing business as Top Software

- -    Programming Services Agreement, dated June 5, 2002, between the Corporation
     and Ilya Vladimirovich Razmanov

- -    Programming Services Agreement, dated March 26, 2003, between the
     Corporation and Ilya Vladimirovich Razmanov

- -    Programming Services Agreement, dated April 26, 2004, between the
     Corporation and Ilya Vladimirovich Razmanov

- -    Programming Services Agreement, dated April 20, 1999, between the
     Corporation and BAL

- -    Programming Services Agreement, dated February 2, 2000, between the
     Corporation and BAL, as amended February 21, 2000, May 20, 2000, April 1,
     2001, January 16, 2002, March 21, 2003, April 15, 2004

- -    License and Distribution Agreement, dated as of September 15, 2003, between
     the Corporation and CottageArts.net, LLC (Y)

- -    Retainer Agreement, dated September 8, 2003, between the Corporation and
     Michelle Shefveland of CottageArts.net



- -    Book Publishing Agreement, dated September 15, 2003, between the
     Corporation and Michelle Shefveland

- -    Reseller Agreement, dated May 1, 2004, between the Corporation and Digital
     Workshop

INCLUDABLES

- -    Online Services Agreement, dated November 12, 2003, between the Corporation
     and MyPublisher, Inc., as amended October 7, 2004

- -    Software License Agreement, dated March 18, 2004, between the Corporation
     and LC Technology International, Inc. for PhotoRecovery

TESTING

- -    Master Software Testing Agreement for Microsoft Compliance Programs at
     VeriTest, a Service of Lionbridge Technologies, dated May 16, 2000, between
     the Corporation and VeriTest, as addended

- -    Master Software Testing Agreement for Microsoft Logo Programs at VeriTest,
     inc., dated May 21, 1998, between the Corporation and VeriTest, inc.

- -    Independent Contractor Agreement, dated January 13, 2004, between the
     Corporation and Test & Automation Consulting, LLC

LICENSE TO

- -    Software Distribution Agreement, dated October 20, 1991, between the
     Corporation and Micrographics

ANIMATION SHOP LICENSES

- -    JPEG Working Group

- -    Kodak Digital Science Reference SDK for the FlashPix Format License
     Agreement, undated, between the Corporation and Kodak Corporation

- -    MPEG License for Animation Shop, undated, between the Corporation and MPEG
     Software Simulation Group

The Corporation has the following domain names:

     Aftershot.com
     Aftershot.net
     Aftershots.com
     Aftershots.net
     Aftershot.us
     Aftershot.info
     Aftershot.eu
     AnimationShop.info
     DarkRoomPlus.com
     DarkRoomPro.com
     FotoExpert.de
     ImageExpert.eu
     ImageExpert.us
     lmageRobot.com
     ImageRobot.info
     Jasc.biz
     Jasc.ca
     Jasc.ch
     Jasc.co.il
     Jasc.com
     Jasc.co.nz
     Jasc.co.za
     Jasc.de
     Jasc.eu
     Jasc.lu
     Jasc.nl
     Jasc.us
     JascSoftware.biz
     JascSoftware.com
     JascSoftware.net



     JascSoftware.org
     JascSoftware.co.uk
     JascPaintShopPro.co.uk
     MediaCenterPlus.com
     PaintShopPro.com
     PaintShopPro.biz
     PaintShopPro.de
     PaintShopPro.eu
     PaintShopPro.us
     PaintShopPro.co.uk
     PaintShopAlbum.com
     PaintShopPhotoAlbum.com
     PaintShopPocketAlbum.com
     PaintShopProAlbum.com
     PaintShopProPhotoAlbum.com
     PhotoExpert.de
     PSAlbum.com
     PSP8.com
     PSP9.com
     PSPAlbum.com
     PSPAlbum.com
     StudioAvenue.com
     StudioJasc.com
     Webdraw.eu
     Webdraw.us
     wwwjasc.com

Schedule 3.1.29.2

See Schedule 3.1.16.

Schedule 3.1.29.4

The Corporation recently released Paint Shop Pro 9. As is customary, most newly
released Software programs have some defects that are identified within the
first several months of use and are corrected by the Corporation's creation and
issuance of a modified version of the program.

Schedule 3.1.29.8

Material Licensed Software:

- -    The Independent Group's JPEG Software Readme, undated [click through
     license; no consent to assignment needed]

- -    Source Code License Agreement, dated as of December 14, 2001, among
     Conexant Systems, Inc., Sierra Imaging, Inc. and the Corporation

- -    Annual Distribution License Agreement, undated, between the Corporation and
     AccuSoft Corporation

- -    Quicktime 5 Software Distribution Agreement, dated December 7, 2001,
     between the Corporation and Apple Computer, Inc., as amended August 2003

- -    Embedded Software Agreement, dated May 11, 1999, between the Corporation
     and Bengt Computer Graphics LLC, as amended January 24, 2002

- -    Software License Agreement, dated October 28, 2003, between the Corporation
     and Bibble Labs, Inc.

- -    License Agreement for Software Development Kit, dated November 17, 1999,
     between the Corporation and Digimarc Corporation

- -    Software Development and License Agreement, dated April 13, 2004, between
     ECI Technology Solutions and the Corporation, as addended April 13, 2004

- -    Kodak Digital Science Reference SDK for the FlashPix Format License
     Agreement, undated, between the Corporation and Kodak Corporation

- -    Redistributable Code-Microsoft Merge Modules License Agreement, undated,
     between the Corporation and Microsoft Corporation [click through license;
     no consent to assignment needed]

- -    License Agreement, undated, between the Corporation and Microsoft
     Corporation (MSXML) [click through license]

- -    License Agreement, undated, between the Corporation and Microsoft
     Corporation (MFC) [click through license]

- -    License Agreement, undated, between the Corporation and Microsoft
     Corporation (MDAC) [click through license]



- -    License Agreement, undated, between the Corporation and Microsoft
     Corporation (Internet Explorer) [click through license]

- -    Macromedia Player License Agreement, undated, between the Corporation and
     Macromedia [click through license; no consent to assignment needed]

- -    Macromedia Shockwave and Flash Player License Agreement, undated, between
     Macromedia, Inc. and the Corporation [click through license; no consent to
     assignment needed]

- -    Xerces-C XML Parser - Apache Software License, version 1.1, undated [click
     through license; no consent to assignment needed]

- -    License Agreements, undated, between the Corporation and Python Software
     Foundation [click through licenses; no consent to assignment needed]

- -    License Agreement, dated June 26, 1999, between the Corporation and
     Microgetics Corporation

- -    Unlimited Copy License Agreement, undated, between the Corporation and
     Access Softek, Inc.

- -    Publishing Agreement, dated June 7, 1995, between the Corporation and
     Access Softek, Inc. and Publishing Agreement, dated June 8, 1995, between
     the Corporation and Access Softek, Inc.

- -    Software Distribution Agreement, dated October 20, 1991, between the
     Corporation and Micrographics

- -    Agreement, dated July 15, 1991, between the Corporation and Micrographics
     Corporation

- -    End User License Agreement, dated March 31, 2004, between the Corporation
     and InstallShield Software Corporation

- -    Software License and Distribution Agreement, effective December 31, 1998,
     as amended August 16, 2001, between Enroute, Inc. and Sierra Imaging, Inc.,
     as sublicensed to the Corporation pursuant to a Letter Agreement, dated
     December 3, 2001, among the Corporation, Enroute, Inc. and Sierra Imaging,
     Inc.

- -    Online Services Agreement, dated November 12, 2003, between the Corporation
     and MyPublisher, Inc., as amended October 7, 2004

- -    Software License Agreement, dated March 18, 2004, between the Corporation
     and LC Technology -International, Inc. for PhotoRecovery

- -    Redistributable Code-Microsoft Merge Modules License Agreement, undated,
     between the Corporation and Microsoft Corporation [click through license]

- -    License Agreement, undated, between the Corporation and Microsoft
     Corporation (MSXML) [click through license]

- -    License Agreement, undated, between the Corporation and Microsoft
     Corporation (MFC) [click through license]

- -    License Agreement, undated, between the Corporation and Microsoft
     Corporation (MDAC) [click through license]

- -    License Agreement, undated, between the Corporation and Microsoft
     Corporation (Internet Explorer) [click through license]

- -    License Agreement, undated, between the Corporation and Xceed Software,
     Inc. [no consent required-- Corel must provide notice of transfer within 30
     days]

- -    License Agreement, undated, between the Corporation and Adobe Corporation
     (Reader 5.1) [click through license; no consent needed]

- -    License Agreement, undated, between the Corporation and BCGSoft Ltd. (BCG
     Pro) [click through license; no consent needed]

- -    License Agreement, undated, between the Corporation and BCGSoft Ltd. (BCG -
     not Pro) [click through license; no consent needed]

- -    License and Distribution Agreement, dated as of September 15, 2003, between
     the Corporation and CottageArts.net, LLC [no consent needed]

- -    Retainer Agreement, dated September 8, 2003, between the Corporation and
     Michelle Shefveland of CottageArts.net [no consent needed]

- -    Book Publishing Agreement, dated September 15, 2003, between the
     Corporation and Michelle Shefveland [no consent needed]

- -    Software Development Agreement, dated February 9, 2004, between the
     Corporation and Ambient Design, Ltd. [no consent needed]

- -    Independent Contractor Agreement, dated October 1, 2003, between the
     Corporation and Ambient Design, Ltd. [no consent needed]

- -    Independent Contractor Agreement, dated November 5, 2003, between the
     Corporation and Ambient Design, Ltd. [no consent needed]



- -    Independent Contractor Agreement, dated December 22, 2003, between the
     Corporation and Ambient Design, Ltd. [no consent needed]

- -    Agreement, dated February 8,2002, between the Corporation and Ambient
     Design Limited [no consent needed]

- -    Programming Services Agreement, dated October 31, 2002, between the
     Corporation and Ambient Design Limited [no consent needed]

- -    Professional Consulting Services Agreement, dated May 19, 2004, between the
     Corporation and Ambient Consulting, LLC [no consent needed]

- -    Software Development Agreement, dated February 9, 2004, between the
     Corporation and Ambient Design, Ltd. [no consent needed]

- -    Programming Services Agreement, dated June 5, 2002, between the Corporation
     and Ilya Vladimirovich Razmanov [no consent needed]

- -    Programming Services Agreement, dated March 26, 2003, between the
     Corporation and Ilya Vladimirovich Razmanov [no consent needed]

- -    Programming Services Agreement, dated April 26, 2004, between the
     Corporation and Ilya Vladimirovich Razmanov [no consent needed]

- -    Programming Services Agreement, dated April 20, 1999, between the
     Corporation and BAL [no consent needed]

- -    Programming Services Agreement, dated February 2, 2000, between the
     Corporation and BAL, as amended February 21, 2000, May 20, 2000, April 1,
     2001, January 16, 2002, March 21, 2003, April 15, 2004 [no consent needed]

- -    Software License Agreement, dated April 10, 2000, between the Corporation
     and IMSI [no consent needed]

- -    Intel Pentium 4 Processor Platform Enabling Program, dated December 3,
     2002, between the Corporation and Intel Americas Inc [no consent needed]

- -    TIFF-LZW/GIF-LZW Software Patent License Agreement, dated March 8, 1995,
     between the Corporation and Unisys Corporation [no consent needed]

- -    License Agreement, undated, between the Corporation and BCGSoft Ltd. (BCG
     Pro) [click through license; no consent needed]

- -    License Agreement, undated, between the Corporation and BCGSoft Ltd. (BCG -
     not Pro) [click through license; no consent needed]

- -    Agreement for Purchase of Software Source Code, dated May 2, 1997, between
     the Corporation and Jeff Becker, doing business as Top Software [no consent
     needed]

- -    FreeType Project License 1.2 Agreement, undated, between the Corporation
     and FreeType [click through license, no consent needed]

Schedule 3.1.29.9

See Schedule 3.1.29.1

Schedule 3.1.29.11

The Corporation does not have any obligation to escrow its source code, but it
does have the right to require some third parties to escrow Licensed Source Code
for the benefit of the Corporation.

Schedule 3.1.29.12

The Corporation's rights to the Proprietary Intellectual Property, to the Key
Software Programs and to the Proprietary Software may, from to time, be
infringed by piracy that ordinarily occurs in the software industry.

Schedule 3.1.29.13

See Schedule 3.1.32.

Schedule 3.1.29.14

See Schedule 3.1.32.



Schedule 3.1.29.15

The Corporation's delivery of documents, agreements and information to Corel in
the course of negotiating the Agreement may have breached the Corporation's
confidentiality obligations under agreements to which the Corporation is a
party.

Schedule 3.1.29.16

Each contract listed in these Schedules that is denoted with a "(Y)" may require
the approval or consent of the other party to such contract in connection with
the consummation of the Transactions or any subsequent transfers to direct or
indirect subsidiaries of Corel.

Schedule 3.1.29.18

See Schedule 3.1.32.

Schedule 3.1.29.19

- -    Source Code License Agreement, dated December 14, 2001, between Conexant
     Systems, Inc., Sierra Imaging, Inc. and the Corporation

Schedule 3.1.29.20

- -    Output variable length bit strings by Jean-loup Gailly [GNU General Public
     License Version 2, June 1991; click through license]

- -    Xerces-C XML Parser - Apache Software License [Xerces XML]



                                                                 SCHEDULE 3.1.30

                      PERMITS, REGISTRATIONS AND ELECTIONS



PERMIT                                             EXPIRATION DATE
- ------                                             ---------------
                                                
Defense Logistics Agency Trading Partner Program




                                 SCHEDULE 3.1.32

              LITIGATION AND OTHER PROCEEDINGS AND WARRANTY CLAIMS

Compression Labs

On April 23, 2004, Compression Labs Inc. initiated litigation against 31
companies for infringement of United States Patent No. 4,698,672 in the United
States District Court for the Eastern District of Texas, Marshall Division.
Compression Labs has retained Jenkens & Gilchrist and The Roth Law Firm to
represent it in the litigation.

The Corporation has been named a defendant in the suit. The other defendants
are: Adobe Systems Incorporated, Agfa Corporation, Apple Computer Incorporated,
Axis Communications Incorporated, Canon USA, Concord Camera Corporation,
Creative Labs Incorporated, Dell Incorporated, Eastman Kodak Company, Fuji Photo
Film Co U.S.A, Fujitsu Computer Products of America, Gateway Inc.,
Hewlett-Packard Company, International Business Machines Corp., JVC Americas
Corporation, Kyocera Wireless Corporation, Macromedia Inc., Matsushita Electric
Corporation of America, Oce' North America Incorporated, Onkyo Corporation,
PalmOne Inc., Panasonic Communications Corporation of America, Panasonic Mobile
Communications Development Corporation of USA, Ricoh Corporation, Riverdeep
Incorporated (d.b.a. Broderbund), Savin Corporation, Thomson S.A., Toshiba
Corporation and Xerox Corporation.

The Corporation has retained Merchant & Gould P.C., an intellectual property law
firm, to represent it in this litigation. An Answer to the April 2004 complaint
was filed July 6, 2004 and answers to interrogatories are due October 17, 2004.
The Corporation's patent counsel is currently evaluating all aspects of the
matter and is working with other defendants to form a joint defense team. The
Corporation requested indemnification from AccuSoft. AccuSoft supplied the
Corporation with a jpeg SDK starting in June 2002. AccuSoft has responded to the
Corporation's request by letter dated July 7, 2004 and indicated that if the
Corporation complies with the terms of the Annual Distribution License
Agreement, undated, between the Corporation and AccuSoft, it will indemnify the
Corporation.

MIT and EFI vs. Jasc Software. Inc.

The Corporation was one of 214 defendants in a patent litigation lawsuit filed
by Massachusetts Institute of Technology and Electronics for Imaging, Inc.
("EFI") alleging infringement of U.S. Patent No. 4,500,919. Merchant & Gould
P.C. was retained to represent the Company. On August 30, 2003, the Corporation
and EFI entered into a settlement agreement whereby the Corporation paid EFI
$250,000 for the patent at issue. On September 11, 2003, the Agreed Motion to
Dismiss was signed by the court. During the course of the settlement
discussions, EFI mentioned that they may have additional patents for which they
believe the Corporation may require a license.

Toshiba Corporation

About July 1998, Toshiba Corporation of Japan advised Met's Corporation, a
reseller in Japan, of possible infringement by the Corporation's Paint Shop Pro
software program. After discussion in Japan between the Corporation and Toshiba,
the Corporation sent a letter to Toshiba, on or about February 11, 2000, stating
that the Corporation was unwilling to sign a proposed settlement agreement. The
Corporation has not received any further communication from Toshiba since that
time.



Hewlett-Packard

On March 19, 2002, Disco Vision Associates, Inc. ("DVA") notified
Hewlett-Packard Company ("HP") that DVA believes certain Corporation-supplied
products infringe DVA's United States Patent No. 4,694,286. On August 4, 2004,
HP notified that Corporation of DVA's accusation and requested indemnification
from the Corporation.

Labor Matters

Brian Thomas:

Thomas was employed in the shipping and fulfillment area of the Corporation. By
letter dated September 16, 2004, Thomas notified the Corporation of his
resignation effective October 8, 2004. Thomas claimed that he was entitled to
certain bonuses from the Corporation, alleged he was treated unfairly by the
Corporation and implied that the Corporation had asked him to falsify records.
The Corporation denies any wrongdoing against Thomas and denies that it has
withheld payment of any compensation owed to him. On September 21, 2004, Thomas
sent a letter "notifying Jasc Software of pending litigation to be filed against
the Company ... for compensation that is owed [to Thomas] as part of [his]
employment at Jasc and for costs of litigation." The Corporation has not
received any additional information regarding Thomas' alleged claims and, to its
knowledge, no lawsuit has yet been commenced.

Debra Rubbelke:

Rubbelke has not threatened any litigation against the Corporation, but has in
the past had a lawyer contact the Corporation regarding her alleged disability
and the Corporation's efforts to provide reasonable accommodations. Rubbelke's
employment with the Corporation was terminated on September 17, 2004 due to
insubordinate and unprofessional behavior. She has requested a statement of the
reason for termination of her employment and has filed an unemployment
compensation claim. Other than the unemployment compensation claim, no claims
have been asserted or threatened to date.

Editions WSKA SA

The Corporation and Editions WSKA SA were parties to that certain International
Master Representative Agreement dated May 21, 2001, including a Representative
License Agreement. Pursuant to the terms of the Master Agreement and the License
Agreement, the Corporation appointed WSKA as its representative to market
certain of the Corporation's graphics and multimedia software products in a
designated sales territory. The corporation requested arbitration of its claims
against WSKA, which included a claim for non-payment of outstanding invoices in
the total amount of (euro)170,232.59 or $210,264.52. The Corporation served a
Notice of Claim on WSKA. WSKA did not formally respond to the Notice of Claim,
but informally asserted certain defenses and counterclaims and set-offs against
the Corporation's claim. The Corporation and Editions WSKA SA entered into a
Settlement Agreement and Release on March 26, 2004. WSKA SA's last payment was
September 22, 2004 for $5,000. WSKA SA has made all payment due under the note
as of the date of this Disclosure Schedule. Their next payment is due October
10, 2004.

Digital Workshop

The Corporation and Digital Workshop (Group) Ltd f/d/a Allsorts Distribution Ltd
t/as Digital Workshop ("Digital Workshop") were parties to that certain
International Master Representative



Agreement, dated December 12, 2002, pursuant to which the Corporation appointed
Digital Workshop as its representative to market certain of the Corporation's
graphic and multi-media software products in a designated sales territory.
Pursuant to this master representative agreement, the Corporation delivered
products to Digital Workshop and Digital Workshop was to pay royalties to the
Corporation for the sale of these products, which were never paid. On May 1,
2004, the Corporation and Digital Workshop entered into a Settlement Agreement
and Release pursuant to which Digital Workshop is to pay the Corporation an
aggregate of $500,000 plus accrued interest pursuant to the terms of a
promissory note issued by Digital Workshop to the Corporation on May 1, 2004.
Digital Workshop's last payment was October 1, 2004 for $16,808.22. Digital
Workshop has made all payment due under the note as of the date of this
Disclosure Schedule. Their next payment is due November 1, 2004. On May 1, 2004,
the parties entered into a reseller agreement. On June 1, 2004, the parties
mutually agreed to terminate the master representative agreement.

Casio

In December 2002, Casio sought payments for a license under certain of its Japan
patent numbers 2,134,277 and 2,808,590. Casio sought approximately $217,000 for
purported royalties due through December 2002, and further payments thereafter
based on a percentage of sales. The Corporation retained Merchant & Gould P.C.
and Japanese patent counsel to assess the infringement allegations. Japanese
patent counsel analyzed and responded to Casio's charges. Japanese counsel
concluded that there was no infringement, explained the basis for that position
to Casio's counsel, and told Casio's counsel that the Corporation owed no
royalties as a result.

On March 20, 2003, the Corporation's Japanese counsel met with representatives
of Casio. On April 1, 2003, the Corporation's Japanese counsel sent a letter to
Casio responding to a letter from Casio on March 14, 2003. On November 21, 2003,
Casio sent a letter to the Corporation offering a non-exclusive license to three
of their Japanese patents in exchange for a 30 million yen payment plus a 5%
excise tax.

On December 12, 2003, Japanese counsel sent a letter to Casio's counsel again
informing Casio's counsel of the Corporation's belief that it does not infringe
or owe any money to Casio. Japanese counsel invited Casio to show why they
disagreed with their Japanese counsel's analysis, and indicated further
negotiations would not be fruitful unless Casio explained their infringement
position. Casio never responded to this request.

QED Intellectual Property Ltd.

In January 1999, the Corporation received a letter from QED Intellectual
Property Ltd. ("QED") alleging the Corporation's infringement of certain patents
owned by Cintel Inc. ("Cintel") for which QED has been appointed worldwide
licensing agent. In February 1999, the Corporation requested information from
QED regarding which patent claims, if any, QED asserts are infringed and the
basis for any such assertion of infringement. Later that same month QED stated
that "it would appear that the color corrections made in Paint Shop Pro utilize
the inventions claimed in one or more of the claims of US Patents 4410908 and
4862251." The letter does not identify which claims are allegedly infringed, or
the basis for such allegations. The letter further indicates additional patents
which QED believes are highly relevant to the Corporation's business, but for
which no allegations of infringement are being made. Finally, QED proposed a
license fee of 2%



of the sales price of infringing products, to be backdated to May 1995. The
Corporation never responded to QED or received any further communication from
QED.

MetaCreations Corporation

The Corporation received a letter dated March 24, 1999, from counsel for
MetaCreations Corporation ("MetaCreations") stating that the Corporation's Paint
Shop Pro product appears to infringe United States Patent No. 5,767,860. The
Corporation retained the law firm of Schwegman, Lundberg, Woessner & Kluth, P.A.
to represent it in connection with this matter. On August 26, 1999. Mark Litman,
an attorney with Schwegman, issued a non-infringement opinion in favor of the
Corporation. On September 3, 1999, the Corporation wrote a letter to
MetaCreations' counsel stating that the Corporation believes that Paint Shop Pro
and its picture tubes do not infringe the patent in question. Additional
correspondence between the parties occurred. On or about November 19, 1999, the
Corporation sent a request for additional technical information to
MetaCreations. The Corporation has not been contacted by MetaCreations since
that letter.

Adobe Systems Incorporated

In November 1999, the Corporation received a letter from counsel for Adobe
Systems Incorporated ("Adobe") alleging that the Corporation's Postscript
Renderer product infringed Adobe's POSTSCRIPT trademark. In a letter dated
December 2, 1999, the Corporation informed counsel for Adobe that such use was
with Adobe's knowledge and consent as evidenced by Adobe's promotion of this
product on Adobe's own web site. In addition, the Corporation informed counsel
for Adobe that, in any event, the Corporation had previously decided to
discontinue its Postscript Renderer product. The Corporation has not received
any further communications from Adobe regarding this issue.

The Corporation received a letter from counsel for Adobe, dated December 28,
1999, alleging that the trade dress for the Corporation's Paint Shop Pro product
infringes the trade dress for Adobe's Photoshop product. This letter also stated
that the Corporation's use of the trademark PAINT SHOP PRO "may infringe"
Adobe's PHOTOSHOP trademark; however, the letter did not actually allege
trademark infringement or demand that the Corporation stop using its PAINT SHOP
PRO trademark. The letter further stated that Adobe was changing its own trade
dress to something that is "significantly different from ... JASC's infringing
packaging," and therefore "Adobe intends to take no further action with regard
to JASC's past infringement relating to the Photoshop(R) and Paint Shop Pro
products." In light of the absence of any actual claims or demands, the
Corporation responded to counsel for Adobe by letter dated January 13, 2000, in
which it simply requested that all future correspondence be directed to Faegre &
Benson LLP, counsel to the Corporation, rather than to the Corporation. Neither
Faegre & Benson LLP nor the Corporation have received any further communications
from Adobe on this matter.

Nina J. Kuch

Nina J. Kuch, through her counsel, asserted to the Corporation that some of its
products infringe United States Patent No. 4,878,843. At least three sets of
correspondence have occurred between counsel for Kuch and the Corporation, the
last occurring in February 2002. Mark A. Litman & Associates, P.A. provided an
opinion to the Corporation that the asserted claims of the Kuch patent are
invalid under 35 USC 102(a) or 35 USC 103(a).



MicroBasic Matter

On February 7, 2003, the Corporation served MicroBasic GmbH of Oberhaching
Germany ("MicroBasic") with a Notice of Claim that requested arbitration of the
Corporation's claims against MicroBasic for, amongst other matters,
approximately $500,000 for graphics and multimedia software products delivered
to MicroBasic for which no payment has been made. On March 3, 2003, the
Corporation delivered a settlement demand to MicroBasic, whose response
acknowledged its receipt and requested additional time for its consideration. On
November 25, 2003, the Corporation obtained an arbitration award against
MicroBasic in the amount of (euro)498,122.95, plus fees and expenses of
(euro)125,000, plus interest and other costs. An insolvency proceeding was filed
against MicroBasic on January 7, 2004. As a result, interest on the amounts due
to the Corporation under the arbitration award ceased accruing on January 6,
2004. Claims against MicroBasic had to be filed with the insolvency
administrator by March 22, 2004. The Corporation has submitted a claim in the
amount of (euro)623,192.19, which the insolvency administrator denied on May 4,
2004.

Walker Art Center

On the box for Paint Shop Pro v.7, the Corporation included a picture of "Spoon
and Cherry", a copyrighted artwork. The Corporation spoke with the Walker Art
Center, owner of "Spoon and Cherry" and agreed to cease using the picture on its
boxes.

Namo Interactive

On August 28, 2002, the Corporation received a letter from Cascabel Research LLC
alleging that Namo WebEditor, a product distributed by the Corporation in the
United States for Namo Interactive USA, Inc., infringed Cascabel Research LLC's
intellectual property rights. On August 23, 2002, the Corporation notified
Cascabel Research LLC indicating that the Corporation does not own Namo
WebEditor and indicating the Cascabel Research LLC should contact Namo
Interactive USA, Inc. regarding its letter. On October 8, 2002, the Corporation
notified Namo Interactive USA, Inc. of this correspondence and requested
indemnification from Namo Interactive USA, Inc. The Corporation has received no
further correspondence on this matter.



                                                                 SCHEDULE 3.1.35

                               BANK ACCOUNTS, ETC.



                                                                                AUTHORIZED
      BANK NAME                  ADDRESS                 ACCOUNT NUMBERS        SIGNATORIES
      ---------        --------------------------   ------------------------   ------------
                                                                      
Bremer Bank            360 Cedar Street             Checking: 873536592        Robert Voit
                       St. Paul, MN 55101           Cash Management: 6626063   Kris Tufto
                                                    Lockbox: 6355043277        Susan Dub

Royal Bank of Canada   Dixie & Meyerside Branch     Checking: 100-439-9        Robert Voit
                       6240 Dixie Road              Investment: 160001299      Susan Dub
                       Mississauga, ON L5T                                     Jason Opsahl
                       1A6

Barclays Bank PLC      131 Edgware Road             Sterling: 30959243         Robert Voit
                       London, England W2           Euros: 62496344            Kris Tufto
                       2HT




                                                                 SCHEDULE 3.1.37

                               CONDUCT OF BUSINESS

Previously in the Corporation's history (prior to approximately December 2002),
the Corporation published some software for games and utilities, which, during
the last 5 years, included Namo, Quick View Plus, SkyMap, Illuminations,
Pixel3D, Smart Address, Ornamatica and an arcade game pack.



                                                                  SCHEDULE 3.3.4

                                    CONSENTS

None.



                                                                  SCHEDULE 3.4.3

                                 CAPITALIZATION



                             NUMBER THE
                           CORPORATION IS          NUMBER OF SHARES ISSUED
        CLASS           AUTHORIZED TO ISSUE            AND OUTSTANDING
        -----           -------------------   ---------------------------------
                                        
Class A Common Shares   unlimited             43,750,000 Class A Common Shares
                                              issued to Vector CC Holdings, SRL

Class B Common Shares   unlimited             92,997,891 Class B Common Shares
                                              issued to Corel Holdings, L.P.,
                                              held as nominee for Vector CC
                                              Holdings III, SRL

Preferred Shares        unlimited             Nil

First series of the     10,390,000            10,390,000 Series A Preferred
Series A Preferred                            Shares issued to Vector CC
Shares                                        Holdings, SRL


There are 12,800,000 common shares reserved for issuance pursuant to the Corel
Share Option and Phantom Share Unit Plan dated December 1, 2003. To date,
options to purchase 3,375,150 common shares have been granted by Corel.



                                                                  SCHEDULE 3.4.6

                                    CONSENTS

Consent required pursuant to the First Amended and Restated Loan and Security
Agreement by and among Corel Holdings, L.P., Corel, Corel Inc., Wells Fargo
Foothill, Inc. and Cornell Place, LLC dated as of June 28, 2004.



                                                                  SCHEDULE 4.1.1

See Tab 26



                                                                SCHEDULE 4.1.2.1

See Tab 33



                                                                SCHEDULE 4.1.2.2

See Tab 34



                                                                  SCHEDULE 4.1.6

See Tab 17



                                                                SCHEDULE 4.2.2.1

See Tab 31



                                                                SCHEDULE 4.2.2.2

See Tab 32



                                                                    SCHEDULE 5.3

                               NEGATIVE COVENANTS

- -    The Corporation will request that option holders waive the 30-day notice
     period of the Fundamental Change under the 1997 Omnibus Stock Plan.

- -    The Corporation may amend the Jasc Software, Inc. 1997 Omnibus Stock Plan
     to allow optionees to exercise options by way of a net exercise.

- -    The Corporation will offset the amount due under the Note issued by Kris
     Tufto from the amount paid to him under his Change-in-Control Agreement.

- -    The Corporation has agreed to terminate the employment of, and pay
     severance to, Jon Ort and Craig Letourneau prior to the Closing Date.

- -    The Corporation's Board of Directors has approved a distribution of the
     Asset Consideration to Jasc Stockholders payable immediately upon receipt
     by the Corporation of the Asset Sale Consideration.

- -    The Corporation intends to enter into the following agreements:

     -    Co-Branding and Advertising Agreement between the Corporation and
          Ofoto b.v.

     -    License and Distribution Agreement between the Corporation and P. & A.
          America, Inc.

     -    Distribution Agreement between the Corporation and Gem Distribution
          Ltd.

     -    Independent Contractor Agreement between the Corporation and Jim
          Fugelstad

     -    Letter Agreement between the Corporation and Ofoto, Inc.

     -    New Deal Summary between the Corporation and Encore USA / Riverdeep
          Interactive

     -    Standard Distribution Agreement between the Corporation and Academic
          Distributing, Inc.

     -    Distribution Agreement between the Corporation and Take-Two
          Interactive Software Inc.

     -    Agreement between the Corporation and EJ Enterprises

     -    Amendment to Vendor Agreement, dated September 2, 2003, between the
          Corporation and Digital River, as amended

     -    Software Evaluation Agreement between the Corporation and Ligos
          Corporation

     -    Internet Services Agreement between the Corporation and US Internet
          Corp.

     -    Services Linking Agreement between the Corporation and Sonic Solutions

     -    Memo and Agreement between the Corporation and Olson & Company

     -    Public Relations Consulting Agreement between the Corporation and
          Kingswood Consulting

     -    Letter of Intent between the Corporation and AccuSoft Corporation

     -    Agreement between the Corporation and Vector OEM Content Limited

     -    Dedicated Internet Access and Dedicated Web Hosting Service Agreement
          between the Corporation and Time Warner Telecom of Minnesota LLC, as
          addended



                                                                 SCHEDULE 5.10.2

See Tab 11

EX-2.2

                                                                     Exhibit 2.2

                                                         TORYS DRAFT DATE 4/3/06


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


                            STOCK PURCHASE AGREEMENT

                                  By and Among

                           VECTOR CC HOLDINGS IV, SRL

                                       and

                              WINZIP COMPUTING LLC

                                       and

                               CAYMAN LTD. HOLDCO


                                       and

                                COREL CORPORATION

                                  April -, 2006


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

                                TABLE OF CONTENTS



                                                                                                    PAGE
                                                                                                    ----
                                                                                                 
Article I             PURCHASE AND SALE OF SHARES.................................................    1

         Section 1.01          Purchase and Sale of WinZip Shares.................................    1
         Section 1.02          Cancellation of WinZip Options; Issuance of Corel Options..........    2


Article II            CONSIDERATION...............................................................    2

         Section 2.01          Consideration......................................................    2


Article III           REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF THE SELLER.........    3

         Section 3.01          Organization and Qualification.....................................    3
         Section 3.02          Authority; Binding Nature of Agreement.............................    3
         Section 3.03          No Conflict........................................................    4
         Section 3.04          Capitalization; Title to Shares....................................    4
         Section 3.05          Financial Statements...............................................    4
         Section 3.06          Absence of Undisclosed Liabilities.................................    5
         Section 3.07          Absence of Certain Changes.........................................    5
         Section 3.08          Litigation.........................................................    6
         Section 3.09          Compliance with Laws...............................................    6
         Section 3.10          Title to Assets....................................................    7
         Section 3.11          Real Property......................................................    7
         Section 3.12          Intellectual Property..............................................    8
         Section 3.13          Contracts..........................................................   11
         Section 3.14          Governmental Authorizations........................................   12
         Section 3.15          Tax Matters........................................................   12
         Section 3.16          Employee Matters...................................................   13
         Section 3.17          Environmental Matters; Health and Safety...........................   15
         Section 3.18          Related Party Transactions.........................................   16
         Section 3.19          Material Relationships.............................................   16
         Section 3.20          Sales Policies; Warranties.........................................   16
         Section 3.21          Brokers and Finders................................................   16
         Section 3.22          Additional Representations and Warranties of the Seller............   16
         Section 3.23          Material Misstatements or Omissions................................   16
         Section 3.24          Exclusive Representations and Warranties...........................   17


Article IV            REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF THE PURCHASER......   17

         Section 4.01          Authority; Binding Nature of Agreement.............................   17
         Section 4.02          Non-Contravention..................................................   18
         Section 4.03          Due Incorporation; Good Standing...................................   18
         Section 4.04          Corel Shares.......................................................   18
         Section 4.05          Additional Representations and Warranties of the Purchaser.........   18



                                      - i -


                                TABLE OF CONTENTS

                                   (Continued)



                                                                                                    PAGE
                                                                                                    ----
                                                                                                 
Article V             ADDITIONAL COVENANTS AND AGREEMENTS OF THE SELLER AND WINZIP HOLDINGS.......   19

         Section 5.01          Publicity..........................................................   19
         Section 5.02          Confidential Information...........................................   19
         Section 5.03          Brokers and Finders................................................   19
         Section 5.04          Certain Filings....................................................   19
         Section 5.05          Company Information................................................   19
         Section 5.06          Further Assurances.................................................   20


Article VI            ADDITIONAL COVENANTS AND AGREEMENTS OF THE PURCHASER........................   20

         Section 6.01          Brokers and Finders................................................   20
         Section 6.02          Certain Filings....................................................   20
         Section 6.03          Nondisclosure......................................................   20
         Section 6.04          Further Assurances.................................................   21


Article VII           CERTAIN OTHER AGREEMENTS....................................................   21

         Section 7.01          Use of Name........................................................   21
         Section 7.02          Certain Tax Matters................................................   21
         Section 7.03          Access to Information..............................................   22
         Section 7.04          Conduct of Business Until Closing..................................   22
         Section 7.05          Negative Covenants.................................................   23
         Section 7.06          Non-Solicitation...................................................   23
         Section 7.07          Goodwill...........................................................   24
         Section 7.08          Restricted Property................................................   24
         Section 7.09          Termination........................................................   24


Article VIII          CLOSING.....................................................................   24

         Section 8.01          Time and Place of Closing..........................................   24
         Section 8.02          Conditions to Closing..............................................   25


Article IX            INDEMNIFICATION.............................................................   27

         Section 9.01          Indemnification of the Purchaser...................................   27
         Section 9.02          Indemnification of the Seller......................................   28
         Section 9.03          Survival of Representations and Warranties.........................   29
         Section 9.04          Additional Indemnification Provisions..............................   29


Article X             MISCELLANEOUS...............................................................   30

         Section 10.01         Expenses...........................................................   30
         Section 10.02         Notices............................................................   30
         Section 10.03         Entire Agreement...................................................   31



                                     - ii -


                                TABLE OF CONTENTS

                                   (Continued)



                                                                                                    PAGE
                                                                                                    ----
                                                                                                 
         Section 10.04         Severability.......................................................   31
         Section 10.05         Successors and Assigns.............................................   31
         Section 10.06         Governing Law......................................................   32
         Section 10.07         Waiver of Jury Trial...............................................   32
         Section 10.08         Counterparts.......................................................   32
         Section 10.09         Effect of Investigations...........................................   32
         Section 10.10         Waivers............................................................   32
         Section 10.11         No Third-Party Beneficiaries.......................................   32
         Section 10.12         Construction.......................................................   33
         Section 10.13         Preparation of Document............................................   33


ANNEXES

Annex A - Definitions
Annex B - WinZip Holdings Capitalization
Annex C - Corel Options

EXHIBITS

Exhibit A - Form of Corel Option
Exhibit B - Form of Registration Rights Agreement
Exhibit C - Form of Lockup Agreement

SCHEDULES

Seller Disclosure Schedule


                                    - iii -

                  THIS STOCK PURCHASE AGREEMENT made April -, 2006 by and among
Cayman Ltd. Holdco, a Cayman Islands corporation ("WinZip Holdings"); Vector CC
Holdings IV, SRL, a Barbados corporation (the "Seller"), the owner of all of the
issued and outstanding shares of all classes of capital stock of WinZip Holdings
(collectively, the "WinZip Shares"); Corel Corporation, a corporation existing
pursuant to the federal laws of Canada (the "Purchaser"); and, for the purposes
of Section 1.02 only, WinZip Computing LLC, a Delaware limited liability company
and an indirect, wholly-owned subsidiary of WinZip Holdings ("WinZip
Computing"). Capitalized terms used herein and not defined in the specific
Section in which they are used shall have the meanings assigned to such terms in
Annex A.

                              W I T N E S S E T H:

                  WHEREAS, the Company is engaged in the business of developing,
selling, marketing and distributing compression utility software, including,
without limitation, the Software Product (such activities and all incidental or
related businesses of the Company being herein referred to as the "Business");

                  WHEREAS, the Seller is the holder of the number of WinZip
Shares set forth opposite the Seller's name in Column C on Annex B, which WinZip
Shares constitute all of the issued and outstanding shares of all classes of
capital stock of WinZip Holdings;

                  WHEREAS, the persons set forth in Column A on Annex C (the
"WinZip Optionholders") are the holders of certain options to purchase
membership interests of WinZip Computing (the "WinZip Options"), which WinZip
Options were granted pursuant to the WinZip Computing LLC 2005 Class B Unit
Option Plan (the "WinZip Option Plan") and constitute all outstanding options to
purchase membership interests of WinZip Computing;

                  WHEREAS, the Purchaser desires to acquire from the Seller, and
the Seller desires to sell to the Purchaser, all of the WinZip Shares on the
terms and subject to the conditions hereinafter set forth; and

                  WHEREAS, pursuant to the terms of the WinZip Option Plan, the
transactions contemplated in this Agreement shall collectively constitute a
"Corporate Transaction" and accordingly, the WinZip Options shall be converted
into options to purchase common shares of the Purchaser (the "Corel Options").

                  NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter set forth and intending to be
legally bound, the Parties hereby agree as follows:

                                   ARTICLE I

                           PURCHASE AND SALE OF SHARES

                  Section 1.01 Purchase and Sale of WinZip Shares. Subject to
the terms and conditions of this Agreement and on the basis of the
representations, warranties, covenants and agreements herein contained, at the
Closing, the Seller shall sell, assign and convey to the

Purchaser, free and clear of all Liens, and the Purchaser shall purchase,
acquire and accept from the Seller, all of the WinZip Shares.

                  Section 1.02 Cancellation of WinZip Options; Issuance of Corel
Options. Subject to the terms and conditions of this Agreement and on the basis
of the representations, warranties, covenants and agreements herein contained:

                  (a) on or prior to the Closing, each of the Seller and WinZip
Computing shall take, and shall cause each WinZip Optionholder to take, all
actions as may be necessary to cancel each of the WinZip Options;

                  (b) at the Closing, the Seller shall deliver to the Purchaser
the certificates or other documentation evidencing each of the WinZip Options,
each marked "cancelled"; and

                  (c) at the Closing, the Purchaser shall grant to each WinZip
Optionholder 0.087325 Corel Options for each WinZip Option surrendered by such
WinZip Optionholder and delivered to the Purchaser pursuant to Section 1.02(b),
such that the Purchaser shall deliver to each WinZip Optionholder the number of
Corel Options set forth in Column C on Annex C, in each case upon the terms set
forth in Columns D and E on Annex C, by delivering an option certificate, in the
form attached as Exhibit A, to each such WinZip Optionholder (or to the Seller,
on behalf of each WinZip Optionholder). WinZip Computing hereby agrees and
affirms that, in accordance with the terms of the WinZip Option Plan: (i) the
Corel Options to be issued to each WinZip Optionholder pursuant to this
Agreement and the WinZip Option Plan preserve the economic value of the WinZip
Options to be surrendered by such WinZip Optionholder; and (ii) the terms
associated with the Corel Options to be issued to each WinZip Optionholder
pursuant to this Agreement and the WinZip Option Plan are substantially
equivalent to or better than the terms associated with the WinZip Options to be
surrendered by such WinZip Optionholder.

                                   ARTICLE II

                                 CONSIDERATION

                  Section 2.01 Consideration.

                  (a) In consideration of the sale, assignment and conveyance of
all of the WinZip Shares by the Seller to the Purchaser at the Closing, the
Purchaser shall issue or cause to be issued to the Seller four million three
hundred twenty-two thousand five hundred eighty-six (4,322,586) common shares of
the Purchaser (as adjusted pursuant to Section 2.02 (if applicable) the "Corel
Shares"), in accordance with Section 2.01(b) (the Corel Shares are sometimes
referred to collectively herein as the "Consideration"). The Parties hereby
agree that each Corel Share shall be valued for all purposes of this Agreement
at a value equal to the per-share IPO offering price (the "Per Share
Consideration").

                  (b) Issuance of the Corel Shares. At the Closing, the
Purchaser shall issue and deliver to the Seller a certificate, in negotiable
form, representing the Corel Shares. The delivery of the Corel Shares to the
Seller as provided above shall constitute full and final transfer of the
Consideration to the Seller.


                                     - 2 -

                                  ARTICLE III

                     REPRESENTATIONS, WARRANTIES, COVENANTS
                          AND AGREEMENTS OF THE SELLER

                  Except as set forth in the Disclosure Schedule, the Seller
represents and warrants, to and for the benefit of the Purchaser Indemnified
Parties for purposes of Article IX, only as to the matters expressly set forth
in this Article III. Disclosure of an item anywhere on the Disclosure Schedule
shall be deemed to be disclosure of such item with respect to, and therefore to
qualify each representation and warranty contained in, each Section and
subsection in this Article III where such qualification is reasonably apparent
from the text of the disclosure; provided, however, that for purposes of
determining whether the Seller has committed a fraudulent breach of a
representation or warranty, such qualification need not be reasonably apparent
from the text of the disclosure. Representations and warranties shall be deemed
to be qualified by the items set forth in the Disclosure Schedule even if they
do not expressly use the phrase "except as set forth in Part ___ of the
Disclosure Schedule" (or phrases of similar import). Notwithstanding any other
provisions of this Article III, the only representations and warranties made by
the Seller relating, directly or indirectly, to intellectual property assets or
intellectual property issues (including the Owned Intellectual Property),
including, but not limited to, any agreements, licenses, liabilities, ownership,
performance, software "bugs", design flaws, security vulnerabilities, warranties
as to merchantability, fitness for a particular purpose, or suitability of
software, title or infringement issues, or rights or authority or any other
matters relating thereto, are made in Section 3.13 hereof. The inclusion of any
direct or indirect reference to intellectual property assets or issues, or
rights or authority relating thereto, in any Part of the Disclosure Schedule
shall not be deemed to have the effect or to imply that any provision of this
Article III (other than Section 3.13) contains representations and warranties
pertaining to intellectual property assets or issues.

                  Section 3.01 Organization and Qualification. Each WinZip
Entity is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization and has full power and authority to own
its properties and to conduct the businesses in which it is now engaged. Each
WinZip Entity is in good standing in each other jurisdiction wherein the failure
to qualify or to be in good standing could reasonably be expected to result in a
Material Adverse Effect. Except as set forth on Part 3.01 of the Disclosure
Schedule, WinZip Holdings does not have any subsidiaries, own any capital stock
or other proprietary interest, directly or indirectly, in any other Person, nor
have any agreement with any Person to acquire any such capital stock or other
proprietary interest. Accurate and complete copies of the articles of
incorporation, including all amendments thereto and restatements thereof, and
by-laws (or other similar organizational documents, as applicable) of each
WinZip Entity and of the corporate minutes and the stock record books of each
WinZip Entity have been delivered to the Purchaser. Complete and accurate
records with respect to the issuance, transfer, redemption and cancellation of
all shares of capital stock are set forth in such stock record books.

                  Section 3.02 Authority; Binding Nature of Agreement. The
Seller and WinZip Holdings have all power, capacity and authority necessary to
enter into and to perform their obligations under this Agreement and each
Transaction Document to which they are party. This Agreement and each
Transaction Document constitutes the legal, valid and binding obligation of


                                     - 3 -

the Seller and WinZip Holdings, enforceable against the Seller and WinZip
Holdings in accordance with their terms, subject to (i) Laws of general
application relating to bankruptcy, insolvency and the relief of debtors, and
(ii) Laws governing specific performance, injunctive relief and other equitable
remedies.

                  Section 3.03 No Conflict. Neither the execution and delivery
of this Agreement or any Transaction Document by WinZip Holdings and the Seller,
nor, the performance by WinZip Holdings and the Seller pursuant hereto or
thereto, will (a) violate the certificate of incorporation, bylaws or other
similar organizational documents of any WinZip Entity, (b) result in a violation
or breach of, or permit any third party to rescind any term or provision of, or
constitute a default under, any indenture, mortgage, deed of trust or other
Contract, license or other agreement to which the Seller, the Company or any
other WinZip Entity is a party or by which either of them, or any of the
property or assets of the Company or any other WinZip entity, is bound, or
create any Lien upon any of the property or assets of the Company or any other
WinZip Entity, (c) violate any Law, order, award, judgment, or decree applicable
to or binding on the Seller, the Company or any other WinZip Entity, or any
permit, license or approval of any Governmental Authority which is material to
the operation of the business, or (d) require any notice to, or consent,
approval, order or authorization of, or the registration, declaration or filing
with, any Governmental Authority or other third party.

                  Section 3.04 Capitalization; Title to Shares.

                  (a) The authorized and outstanding shares of each class of
capital stock of WinZip Holdings are as set forth on Part 3.04(a) of the
Disclosure Schedule. As of the Closing Date, the Seller will own all of the
shares of stock set forth opposite the Seller's name in Column C on Annex B,
free and clear of all Liens (including any restriction on the right to vote,
sell or otherwise dispose of such shares). As of the Closing Date, the Seller
will have the unrestricted right to transfer the WinZip Shares to the Purchaser
and, upon transfer of the WinZip Shares to the Purchaser hereunder, the
Purchaser shall acquire good, valid and marketable title to the WinZip Shares,
free and clear of all Liens. The WinZip Shares constitute all of the outstanding
shares of capital stock of all classes of WinZip Holdings. All of the WinZip
Shares have been duly and validly authorized and issued, are fully paid and
non-assessable. WinZip Holdings, either directly or indirectly, owns all of the
issued and outstanding shares of capital stock (or other equity interests, as
applicable) of each other WinZip Entity, including, without limitation, the
Company.

                  (b) Other than the WinZip Options, there are no outstanding
subscriptions, warrants, options, calls, commitments or other rights or
agreements to which any WinZip Entity is subject to or bound relating to the
issuance, sale, transfer or redemption of shares of stock or other securities of
any WinZip Entity.

                  Section 3.05 Financial Statements. The Company has delivered
to the Purchaser the following financial statements (the "Financial
Statements"): (i) the unaudited Balance Sheet of the Company as of February 28,
2006 and the audited Balance Sheets of the Company as of November 30, 2003, 2004
and 2005, (ii) the unaudited Statement of Operations of the Company for the
fiscal quarter ended February 28, 2006 and the audited Statements of Operations
of the Company for the fiscal years ended November 30, 2003, 2004 and 2005,


                                     - 4 -

(iii) the unaudited Statement of Cash Flow of the Company for the fiscal quarter
ended February 28, 2006 and the audited Statements of Cash Flow for the fiscal
years ended November 30, 2003, 2004 and 2005, and (iv) the unaudited Statement
of Changes in Shareholder's Equity of the Company for the fiscal quarter ended
February 28, 2006 and audited Statements of Changes in Shareholders' Equity of
the Company for the fiscal years ended November 30, 2003, 2004 and 2005. The
Financial Statements (i) are accurate and complete in all material respects and
present fairly in all material respects the financial position of the Company as
of the respective dates thereof and the results of operations of the Company for
the periods covered thereby, and (ii) have been prepared in accordance with
United States generally accepted accounting principles applied on a consistent
basis throughout the periods covered.

                  Section 3.06 Absence of Undisclosed Liabilities. The Company
does not have any liabilities or obligations; either accrued, contingent or
otherwise, which are not reflected in this Agreement or the Disclosure Schedule,
except as have been incurred in the Ordinary Course of Business since November
30, 2005. As of the Closing, the WinZip Entities, on a consolidated basis, will
have Net Debt of no more than sixteen million five hundred thousand dollars
($16,500,000).

                  Section 3.07 Absence of Certain Changes. Since November 30,
2005, except as described in Part 3.07 of the Disclosure Schedule or as
contemplated by this Agreement, no WinZip Entity has:

                  (a) suffered any change in its financial condition, assets,
liabilities, net worth or business from that shown on the Balance Sheet that,
either individually or in the aggregate, has had a Material Adverse Effect;

                  (b) suffered any damage, destruction or loss, whether or not
covered by insurance, which has had a Material Adverse Effect;

                  (c) declared or made or agreed to declare or make any
distributions of any assets of any kind whatsoever to any shareholder (or other
holder of equity interests, as applicable) as a dividend, in redemption or as
the purchase price of any of the capital stock or other equity interests of such
WinZip Entity or in discharge or cancellation, whether in part or in whole, of
any indebtedness (whether in payment of principal, interest or otherwise) owing
to any of them, or for any other purpose, except the payment of normal
compensation and the reimbursement of bona fide business expenses in the
Ordinary Course of Business;

                  (d) issued or sold, or contracted to issue or sell, any shares
or other securities or any securities convertible into, or exchangeable for,
shares of stock, or securities, warrants, options or rights to purchase any of
the foregoing;

                  (e) mortgaged, pledged, hypothecated or otherwise encumbered
any of its material assets, tangible or intangible;

                  (f) sold or Transferred any of its assets, property or rights;
or canceled or agreed to cancel any of its debts or claims, except for fair
value, in the ordinary course of business;


                                     - 5 -

                  (g) suffered any change in its Business, its relationships
with customers, or its contracts with customers or suppliers which has had, or
would reasonably be expected to have, a Material Adverse Effect; provided,
however, that for purposes of determining whether the Seller has committed a
fraudulent breach of this Section 3.07(g), the phrase "or would reasonably be
expected to have," shall be disregarded;

                  (h) incurred any commitment (through negotiations or
otherwise) or any liability to any labor organization, or been involved in any
labor dispute;

                  (i) materially increased the amount of its indebtedness,
obligations or liabilities;

                  (j) entered or agreed to enter into any agreement or
arrangement granting any preferential rights to purchase a material part of its
assets, property or rights;

                  (k) placed any orders for materials, merchandise or supplies
in exceptional or unusual quantities based upon past operating practices or
accepted orders from customers under conditions relating to price, terms of
payment, time or delivery, or like matters materially different from the
conditions regularly and usually specified on acceptance of orders for similar
merchandise from customers similarly situated;

                  (l) made any change in the accounting practices or methods
followed by it; or

                  (m) entered into any other transaction other than in the
Ordinary Course of Business, or been involved in any event or experienced any
condition of any character, that, either individually or in the aggregate, has
had, or would reasonably be expected to have, a Material Adverse Effect;
provided, however, that for purposes of determining whether Seller has committed
a fraudulent breach of this Section 3.07(m), the phrase "or would reasonably be
expected to have," shall be disregarded.

                  Section 3.08 Litigation. There is no action, suit or
proceeding pending or, to the Seller's knowledge, threatened, at law, in equity,
by way of arbitration or before any Governmental Authority, (i) against the
Seller or WinZip Holdings relating to or affecting the Business or assets of the
Company, (ii) against the Company, (iii) against any other WinZip Entity, or
(iv) seeking to prevent or postpone the consummation of any of the Transactions.
To the Seller's knowledge, there are no existing facts or conditions which might
give rise to any charge, claim, litigation, proceeding, or investigation by any
third party which would reasonably be expected to have a Material Adverse
Effect, nor are there any facts or conditions which might give rise to any order
of condemnation, appropriation or other taking of any of the assets of the
Company.

                  Section 3.09 Compliance with Laws. The Company has all
necessary licenses, permits and other approvals of Governmental Authorities
necessary to operate the Business as now conducted, each of which licenses,
permits and approvals is in good standing, the Company has conducted the
Business, and properly filed all necessary reports, in accordance with
applicable Laws the violation of which would reasonably be expected to have a
Material Adverse Effect.


                                     - 6 -

                  Section 3.10 Title to Assets. The Company owns, and has good,
valid and marketable title to, all assets purported to be owned by it, including
all assets reflected on the Balance Sheet, and all of such assets are owned by
the Company free and clear of any Encumbrances, except for any lien for current
Taxes not yet due and payable. There are no assets that are material to the
Business of the Company that are being leased to the Company (other than real
property). As indicated in the introductory paragraph to this Article 3, the
Parties acknowledge that this Section 3.10 does not apply in any respect to
Intellectual Property.

                  Section 3.11 Real Property.

                  (a) The Company does not own, and has never owned, any real
property.

                  (b) Part 3.11 of the Disclosure Schedule lists: (i) the street
address of each parcel of real property leased by the Company as tenant,
together with, to the extent leased by the Company, all buildings and other
structures, facilities or improvements currently located thereon, all fixtures,
systems, equipment and items of personal property of the Company attached or
appurtenant thereto, and all easements, licenses, rights and appurtenances
relating to the foregoing (the "Leased Real Property"), (ii) the identity of the
lessor, lessee and current occupant (if different from lessee) of each such
parcel of Leased Real Property, (iii) the term (referencing applicable renewal
periods) and rental payment terms of the leases (and any subleases) pertaining
to each such parcel of Leased Real Property, and (iv) the current use of each
such parcel of Leased Real Property.

                  (c) Except as described on Part 3.11 of the Disclosure
Schedule, there is no material violation of any Law (including, without
limitation, any building, planning or zoning Law) relating to any of the Leased
Real Property. The Seller has made available to the Purchaser true and correct
copies of each deed for each parcel of Leased Real Property, to the extent
available, and all the title insurance policies, title reports, surveys,
certificates of occupancy, environmental reports and audits, appraisals,
permits, other title documents and other documents relating to or otherwise
affecting the Leased Real Property, the operation of the Business thereon or any
other uses thereof, in each case to the extent any such document is in any
WinZip Entity's possession. The Company is in peaceful and undisturbed
possession of each parcel of Leased Real Property and there are no contractual
or legal restrictions that preclude or restrict the ability to use the premises
for the purposes for which they are currently being used. To the Seller's
knowledge, all existing water, sewer, steam, gas, electricity, telephone and
other utilities required for the use, occupancy and operation of the Leased Real
Property are adequate for the conduct of the Business as it has been and
currently is conducted. To the Seller's knowledge, there are no material latent
defects or material adverse physical conditions affecting the Leased Real
Property or any of the facilities, buildings, structures, improvements,
fixtures, fixed assets and personalty of a permanent nature annexed, affixed or
attached to, located on or forming part of the Leased Real Property. Except as
set forth on Part 3.11 of the Disclosure Schedule, the Company has not leased or
subleased any parcel or any portion of any parcel of Leased Real Property to any
other Person, nor has the Company assigned its interest under any lease or
sublease listed on Part 3.11 of the Disclosure Schedule to any third party.

                  (d) The Seller has, or has caused to be, delivered to the
Purchaser correct and complete copies of all leases and subleases listed on Part
3.11 of the Disclosure Schedule and


                                     - 7 -

any and all ancillary documents pertaining thereto. With respect to each of such
leases and subleases, except as otherwise set forth on Part 3.11 of the
Disclosure Schedule:

                           (i) such lease or sublease, together with all
ancillary documents, is legal, valid, binding, enforceable and in full force and
effect and represents the entire agreement between the respective landlord and
tenant with respect to such property;

                           (ii) such lease or sublease will not cease to be
legal, valid, binding, enforceable and in full force and effect on terms
identical to those currently in effect as a result of the consummation of the
Transactions, nor will the consummation of the Transactions constitute a breach
or default under such lease or sublease or otherwise give the landlord a right
to terminate such lease or sublease;

                           (iii) with respect to each such lease or sublease:
(A) neither the Seller nor any WinZip Entity has received any notice of
cancellation or termination under such lease or sublease and no lessor has any
right of termination or cancellation under such lease or sublease except in
connection with the default of the Company thereunder, (B) neither the Seller
nor any WinZip Entity has received any notice of a breach or default under such
lease or sublease, which breach or default has not been cured, and (C) the
Company has not granted any other Person any rights, adverse or otherwise, under
such lease or sublease; and

                           (iv) neither the Company nor to the knowledge of the
Seller any other party to such lease or sublease, is in breach or default
thereunder in any material respect, and, to the knowledge of the Seller, no
event has occurred that, with notice or lapse of time, would constitute such a
breach or default or permit termination, modification or acceleration under such
lease or sublease.

                  (e) There are no condemnation proceedings or eminent domain
proceedings of any, kind pending or, to the knowledge of the Seller, threatened
against any of the Leased Real Property.

                  (f) All the Leased Real Property is occupied under a valid and
current certificate of occupancy or similar permit, the Transactions will not
require the issuance of any new or amended certificate of occupancy and, to the
knowledge of the Seller, there are no facts that would prevent the Leased Real
Property from being occupied after the Closing in the same manner as immediately
prior to the Closing.

                  (g) All improvements on the Leased Real Property constructed
by or on behalf of the Company or, to the knowledge of the Seller, constructed
by or on behalf of any other Person were constructed in compliance with all
applicable Laws (including, but not limited to, any building, planning or zoning
Laws) affecting such Leased Real Property.

                  Section 3.12 Intellectual Property.

                  (a) Part 3.12 of the Disclosure Schedule contains a complete
and accurate list of all Registered Owned Intellectual Property and specifies,
where applicable, the jurisdictions in which each such item of Registered Owned
Intellectual Property has been issued or registered and lists any pending
proceedings or actions before any court, tribunal (including the United


                                     - 8 -

States Patent and Trademark Office or equivalent authority anywhere in the
world) related to any of the Registered Owned Intellectual Property.

                  (b) Except as disclosed on Part 3.12 of the Disclosure
Schedule, all necessary registration, maintenance and renewal fees currently due
in connection with Registered Owned Intellectual Property have been made and all
necessary documents, recordations and certificates in connection with such
Registered Owned Intellectual Property have been filed with the relevant patent,
copyright, trademark or other authorities in the United States or foreign
jurisdictions, as the case may be, for the purposes of maintaining such
Registered Owned Intellectual Property. There are no actions that must be taken
by the Company within sixty (60) days after the date hereof, including the
payment of any registration, maintenance or renewal fees or the filing of any
documents, applications or certificates for the purposes of maintaining,
perfecting or preserving or renewing any Registered Owned Intellectual Property.

                  (c) All the Owned Intellectual Property is owned by the
Company free and clear of any Encumbrance and, except as set forth on Part 3.12
of the Disclosure Schedule, none of the Owned Intellectual Property infringes on
the Intellectual Property of any other Person; provided, however, that, in the
case of trademarks, the representations and warranties set forth in the first
sentence of this Section 3.12(c) are made to the knowledge of the Seller. To the
knowledge of the Seller, and except as set forth on Part 3.12 of the Disclosure
Schedule, no Person is using any Intellectual Property that infringes upon the
Owned Intellectual Property.

                  (d) Notwithstanding anything to the contrary contained herein,
the Company makes no representations or warranties concerning Patents except as
expressly set forth in this Section 3.12(d):

                           (i) The Company does not own, and has never owned,
any Patents.

                           (ii) Except as set forth in Part 3.12 of the
Disclosure Schedule, the Company has not received any written or oral claims
from the holders of Patents (or their representatives) alleging that one or more
of the Company's products infringe(s) on such, holders' Patents.

                  (e) Part 3.12 of the Disclosure Schedule contains a complete
and accurate list of all Licensed Intellectual Property, other than "shrink
wrap" and similar widely available commercial software. With respect to each of
the licenses and sublicenses pursuant to which the Company licenses Licensed
Intellectual Property from another Person:

                           (i) such license or sublicense is legal, valid,
binding, enforceable and in full force and effect and represents the entire
agreement between the respective licensor and licensee with respect to the
subject matter of such license or sublicense;

                           (ii) such license or sublicense will not cease to be
legal, valid, binding, enforceable and in full force and effect on terms
identical to those currently in effect as a result of the consummation of the
Transactions, nor will the consummation of the Transactions constitute a breach
or default under such license or sublicense or otherwise give the licensor or
sublicensor a right to terminate such license or sublicense;


                                     - 9 -

                           (iii) with respect to each such license or
sublicense: (A) the Company has not received any notice of cancellation or
termination under such license or sublicense, and (B) the Company has not
received any notice of a breach or default by the Company under such license or
sublicense, which breach or default has not been cured;

                           (iv) neither the Company, nor to the knowledge of the
Seller, any other party to such license or sublicense is in breach or default in
any material respect under such license or sublicense;

                           (v) no claims have been made in writing against the
Company alleging that any Licensed Intellectual Property is being licensed,
sublicensed or used in violation of any Intellectual Property of any Person; and

                           (vi) to the knowledge of the Seller, and except as
set forth on Part 3.12 of the Disclosure Schedule, no Person is using any
Intellectual Property that infringes upon the Licensed Intellectual Property.
For purposes of this Section 3.12(e)(vi), "Licensed Intellectual Property" shall
be deemed to exclude "shrink wrap" and similar widely available commercial
software.

                  (f) Except for non-exclusive license grants of the Software
Product in the Ordinary Course of Business, and except as set forth on Part 3.12
of the Disclosure Schedule, the Company has not Transferred ownership of or
granted any license of or right to use any Owned Intellectual Property to any
other Person. Part 3.12 of the Disclosure Schedule briefly describes the types
of agreements pursuant to which the Company grants licenses relating to the
Software Product to other Persons, how such licenses are customarily entered
into, and certain material terms of such licenses. Part 3.12 of the Disclosure
Schedule also sets forth a complete and accurate list of the Company's current
signed resale and e-commerce agreements. Except as set forth in Part 3.12 of the
Disclosure Schedule, the Company has provided to the Purchaser complete and
accurate copies of all of its site licenses that were entered into with terms
that differed from the then current standard site license terms.

                  (g) Upon the Closing, the Company shall continue to own or
possess, or own or possess adequate and enforceable licenses, sublicenses or
other rights to use, without payment of any fee other than fees disclosed in
Part 3.12 of the Disclosure Schedule, all the Owned Intellectual Property and
Licensed Intellectual Property.

                  (h) The Owned Intellectual Property and the Licensed
Intellectual Property constitute all the Intellectual Property currently used
in, and necessary in the conduct of, the Business and there are no other items
of Intellectual Property that are material to the Company or the Business;
provided, however, that nothing contained herein shall be construed as a
representation or warranty by the Seller that any item of Owned Intellectual
Property or Licensed Intellectual Property that is not included in the Software
Product (including without limitation any Internal-Use-Only IP) can be licensed
or sold by the Company without infringing on the Intellectual Property of any
other Person, or that no other Person is infringing on it.

                  (i) To the extent that any Intellectual Property has been
developed or created for the Company by an employee or consultant, the Company
has a written agreement with such


                                     - 10 -

Person with respect thereto and the Company thereby has obtained ownership of,
and is the exclusive owner of, all such Intellectual Property by operation of
law or by valid assignment.

                  (j) Except as set forth on Part 3.12 of the Disclosure
Schedule, the Company has taken reasonable steps to protect the Company's rights
in the Company's confidential information and trade secrets that it wishes to
protect or any trade secrets or confidential information of third parties
provided to the Company, and, without limiting the foregoing, the Company has
and enforces a policy requiring each employee and contractor to execute a
proprietary information/confidentiality agreement substantially in the form
provided to the Purchaser and all current and former employees and contractors
of the Company have executed such an agreement, except where the failure to do
so is not reasonably expected to be material to the Company. Part 3.12 of the
Disclosure Schedule briefly describes certain measures the Company has taken, or
not taken, to protect the value and confidentiality of its Intellectual
Property.

                  (k) The Company has made available to the Purchaser accurate
and complete copies of the Company's records relating to known "bugs" in the
Software Product. The Seller is not making any representations or warranties to
the Purchaser concerning the potential consequences of any or all of such
"bugs," or the merchantability, fitness for a particular purpose, accuracy or
completeness, or responses or results of the Software Product, or the absence of
any program defects or design flaws in the Software Product, including, without
limitation, defects or design flaws that may create or result in security
vulnerabilities. Annex B to the Disclosure Schedule contains additional
background information concerning certain "bugs" and product performance issues.

                  (l) Part 3.12 of the Disclosure Schedule describes the
Company's current privacy and upgrade statements.

                  (m) The Company's license agreements contain a complete and
accurate description of the Company's warranty policies.

                  Section 3.13 Contracts.

                  (a) In Part 3.13(a) of the Disclosure Schedule are identified:

                         (i) each Company Contract relating to the employment
of, or performance of services by, any employee or consultant;

                         (ii) each Company Contract imposing any material
restriction on the Company's right or ability to (A) compete with, (B) acquire
any product, asset or service from, (C) sell any product or asset to, (D)
perform any services for or (E) transact business with, any other Person;

                         (iii) each Company Contract with any WinZip Entity
(other than the Company);


                                     - 11 -

                         (iv) any current Company advertising agreements
pursuant to which the Company has made payments in excess of $125,000 within the
last three months or expects to make payments in excess of $125,000 within the
next three months; and

                         (v) any other Company Contract (other than license
grants of the Software Product) that involves the future payment or delivery of
cash or other consideration by or to the Company in an amount in excess of
$50,000 in any future calendar year.

                  (b) Contracts described in the preceding clauses "(i)" through
"(v)" are referred to in this Agreement as "Material Contracts."

                  (c) Except as set forth in Part 3.13(c) of the Disclosure
Schedule: (i) all Company Contracts are valid and in effect and the Company is
not in default under any such Company Contract, and to the Seller's knowledge,
no other party thereto is in default; and (ii) neither the Seller nor any WinZip
Entity has received notice of default under any Company Contract, and the Seller
knows of no event that has occurred which (after notice and lapse of time or
both) would become a breach or default under, or otherwise permit unilateral
modification, cancellation, acceleration or termination of any such Company
Contract.

                  Section 3.14 Governmental Authorizations. Part 3.14 of the
Disclosure Schedule identifies each material Governmental Authorization held by
the Company. Each such Governmental Authorization is valid and in full force and
effect and, collectively, such Governmental Authorizations constitute all
Governmental Authorizations necessary to enable the Company to conduct its
Business as it is currently conducted, in each case except where the absence or
invalidity of any such Governmental Authorizations would not reasonably be
expected to have a Material Adverse Effect.

                  Section 3.15 Tax Matters.

                  (a) All Tax Returns required to be filed by or on behalf of
any WinZip Entity with any Governmental Authority with respect to any taxable
period ending on or before the Closing Date (the "Company Returns") (i) have
been or will be filed on or before the applicable due date (including any
extensions of such due date), and (ii) have been or will be accurately and
completely prepared in all material respects in compliance with all applicable
Laws. All amounts, if any, shown on the Company Returns to be due on or before
the Closing Date have been or will be paid. The Seller has delivered to the
Purchaser accurate and complete copies of all Company Returns filed since
December 31, 2001 and before the Closing Date that have been requested by the
Purchaser.

                  (b) Part 3.15(b) of the Disclosure Schedule identifies all
examinations or audits of any Company Return filed after December 31, 2001 and
any extension or waiver requested or currently in effect. The Seller has
delivered to the Purchaser copies of all audit reports by a Governmental
Authority and similar documents (to which any WinZip Entity has access) relating
to the Company Returns filed after December 31, 2001.

                  (c) No claim or Legal Proceeding is pending or, to the
Seller's knowledge, has been threatened against or with respect to any WinZip
Entity in respect of any Tax. There are no unsatisfied liabilities for Taxes
with respect to any written notice of deficiency or similar


                                     - 12 -

written document received by any WinZip Entity with respect to any Tax. There
are no Liens for Taxes upon any of the assets of the Company, except liens for
current Taxes not yet due and payable. No WinZip Entity is required to include
any adjustment in taxable income for any tax period (or portion thereof) ending
after the Closing Date pursuant to Section 481 of the Code as a result of
transactions or events occurring, or accounting methods employed, prior to the
Closing.

                  (d) Except as set forth in Part 3.15(d) of the Disclosure
Schedule, there is no agreement, plan, arrangement or other Contract covering
any current or former employee or independent contractor of the Company that
could give rise to the payment of any amount that would not be deductible
pursuant to Section 280G or Section 162 of the Code.

                  (e) Notwithstanding anything to the contrary set forth herein,
the representations and warranties set forth in this Section 3.15 do not apply
to (i) state income and sales and use Taxes or (ii) city or local Taxes.

                  (f) No WinZip Entity has any liability for the Taxes of any
Person under Treasury Regulation Section 1.1502-6 (or any similar provision of
state, local or foreign Law), as a transferee or successor, by contract or
otherwise.

                  (g) Except as set forth in Part 3.15(g) of the Disclosure
Schedule, the Company has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party.

                  Section 3.16 Employee Matters.

                  (a) Except as described on Part 3.16 of the Disclosure
Schedule, the Company does not have any written or oral contracts of employment
with any employee of the Company, and the Company is not a party to or subject
to any collective bargaining agreements and has not been a party to or subject
to any collective bargaining agreement or collective bargaining plan during the
last five (5) years. The Company is not a party to any pending or, to the
Seller's knowledge, threatened labor dispute affecting the Business. The Company
has complied in all material respects with all applicable Laws relating to the
employment of labor, including but not limited to the provisions thereof
relative to wages, hours, collective bargaining, payment of Social Security,
unemployment and withholding taxes, and ensuring equality of opportunity for
employment. The Company is not liable for any arrears of wages or any Taxes or
penalties for failure to comply with any of the foregoing. The Company has not
entered into and is not obligated to enter into any agreement relating to the
payment of vacation pay to any employee and the Company does not have any
obligation to any employees to provide them with pay for vacation time, except
for vacation pay payable in the Ordinary Course of Business. A true and correct
statement of the names, employment status, and rates of compensation (including
salaries, wages, commissions and bonuses), and accrued paid absence time of all
employees of the Company, is set forth on Part 3.16 of the Disclosure Schedule.
The Company has paid all remuneration (including 2005 employment and incentive
bonuses) due and owing to employees.

                  (b) Part 3.16 of the Disclosure Schedule sets forth a correct
and complete list of every stock option, stock purchase, stock appreciation
right, bonus, deferred or current


                                     - 13 -

compensation, excess benefits, profit sharing, pension, thrift, savings,
retirement, severance, sickness, accident, medical, disability, hospitalization,
vacation, insurance or other plan,, agreement, arrangement, commitment or
practice which provides benefits to or for or on behalf of any one, or more
employees of the Company (including former employees) or their beneficiaries
(collectively, "Employee Benefit Plans"). The Seller has delivered to the
Purchaser true, correct and complete copies of all Employee Benefit Plans in
effect on the date of this Agreement, all descriptions thereof, all trust
agreements or other funding arrangements (including insurance or group annuity
contracts) relating thereto, and all amendments thereto.

                  (c) Except as listed on Part 3.16 of the Disclosure Schedule,
no employee benefit plan exists which covers or is maintained for the benefit of
any of the employees of the Company or to which the Company is required to make
contributions on account of any employees of the Company. With respect to each
Employee Benefit Plan, the Seller has delivered to the Purchaser true, complete
and correct copies of (i) the latest plan description and all modifications
thereto, (ii) the last three (3) financial statements for each Employee Benefit
Plan and the related trusts and other funding arrangements (including insurance
and group annuity contracts), and (iii) any filings, determinations or
qualification letters or rulings filed with, or issued by, a Governmental
Authority. No Employee Benefit Plan or any related trust owns any securities
issued by the Company or any other Person. No Taxes (or interest or penalties
with respect thereto) are due or owing with respect to any Employee Benefit
Plan.

                  (d) Each Employee Benefit Plan which is intended to qualify
for special Tax treatment, including Tax deferral (a "Qualified Plan"), has
received a favorable determination letter from the applicable Governmental
Authority. Each amendment to a Qualified Plan or a related trust has, where
required, been determined by the applicable Governmental Authority not to
adversely affect the qualified status of such Qualified Plan or the Tax exempt
status of the related trust. No event has occurred which would cause the loss of
the Tax exempt status of any related trust, or the imposition of any Tax
liability or penalty in connection with any Qualified Plan or a related trust.

                  (e) There are no actions, suits, arbitrations or claims
pending or, to the knowledge of the Seller, threatened against any Employee
Benefit Plan. Each Employee Benefit Plan is in compliance in all material
respects with all requirements of applicable Laws and has been administered in
all material respects in accordance with its terms and with applicable Laws.

                  (f) No Employee Benefit Plan provides benefits (including,
without limitation, death, health or medical benefits (whether or not insured))
with respect to current or former employees of the Company beyond their
retirement or other termination of service with the Company, other than (i)
coverage mandated by applicable Law, (ii) deferred compensation benefits in
accordance with the rules of the relevant Employee Benefit Plan, or (iii)
benefits the full cost of which are borne by the current or former employees (of
their beneficiaries) in accordance with the Employee Benefit Plan.

                  (g) The Company has not terminated an Employee Benefit Plan.


                                     - 14 -

                  Section 3.17 Environmental Matters; Health and Safety.

                  (a) There are no outstanding or, to the Seller's knowledge,
threatened actions, claims, proceedings, determinations or judgments by any
party, including but not limited to any Governmental Authority, against or
involving the Company in any manner arising under any national, international,
federal, state, local or other environmental, health or safety law, regulation,
order or requirement or requiring the remediation or removal of an existing
condition, or substance. The Company has not received any notice of, nor is the
Seller aware of, any outstanding or threatened orders, determinations or notices
of violation issued by any Governmental Authority administering environmental or
health and safety laws in connection with ownership of or operation by the
Company of the Business which have not been complied with or resolved to the
satisfaction of such Governmental Authority.

                  (b) The Business is being and has been operated in all
material respects in compliance with all applicable national, international,
federal, state, and local environmental or health and safety laws, regulations
and ordinances governing the Company and the Business including, but not limited
to, all discharges into or onto the soil and/or the ground or surface water,
emissions into the ambient air, and generation, accumulation, labeling,
transportation, handling, treatment, storage and disposal of waste material or
process by-products (including solid, hazardous or toxic waste or substances, if
any) or removal of any existing condition or substance. The Company has complied
in all material respects with all notice, record keeping and reporting
requirements imposed by any Governmental Authority and any informational
requests or demands arising under any national, international, federal, state,
local or other environmental or health and safety laws.

                  (c) The Leased Real Property has been operated by the Company
in a manner consistent with the representations of paragraphs (a), (b) and (e)
of this Section 3.17.

                  (d) All real properties formerly owned, leased or rented by
the Company for the Business were owned, operated and utilized by the Company
consistent with the representations of paragraphs (a), (b) and (e) of this
Section 3.17.

                  (e) The Company has not released, disposed of or caused or
permitted the disposal of any Hazardous Substances upon any of the Real Property
or any of the real properties from which the Company has conducted its Business.
The Company has not, directly or indirectly, disposed of any Hazardous
Substances off-site.

                  (f) There are no pending or, to the Seller's knowledge,
threatened actions, claims, proceedings or judgments against the Company by any
present or former officers, agents or employees of the Company alleging or
involving personal injury or damage as a result of violation of any national,
international, federal, state, local or other environmental or health and safety
Laws or otherwise involving environmental conditions under which such persons
were employed nor, to the Seller's knowledge, is there a basis for commencing
any such action, claim or proceeding.


                                     - 15 -

                  (g) To the Seller's knowledge, each of the real properties
owned, leased or rented by the Company are free of all asbestos,
asbestos-containing materials, polychlorinated biphenyls and all Hazardous
Substances.

                  Section 3.18 Related Party Transactions. To the Seller's
knowledge, no WinZip Entity (other than the Company) has any direct or indirect
interest in any material asset used in the Business or in any Material Contract.
No WinZip Entity (other than the Company) has any material indebtedness owing to
or from the Company.

                  Section 3.19 Material Relationships. To the Seller's
knowledge, no supplier, distributor, consultant or programmer for the Company or
material current customer of the Company (defined for this purpose as a customer
subject to a Company Contract that involves the future payment or delivery of
cash or other consideration to the Company by such customer in an amount in
excess of $75,000 in any future calendar year under such Company Contract) has
notified the Company of an intention to terminate or substantially reduce its
existing business relationship with the Company where such termination or
reduction has had, or would reasonably be expected to have, a Material Adverse
Effect.

                  Section 3.20 Sales Policies; Warranties. Part 3.20 of the
Disclosure Schedule briefly describes the Company's current policy with respect
to returns and refunds.

                  Section 3.21 Brokers and Finders. Neither any WinZip Entity
nor the Seller has entered into any contract with respect to the payment of any
brokerage fees, commissions or finders' fees in connection with the
Transactions.

                  Section 3.22 Additional Representations and Warranties of the
Seller.

                  (a) Access to Data. The Seller has had an opportunity to
discuss the Purchaser's business, management and financial affairs with the
Purchaser's management, and it has been given access to copies of documents,
which it has requested.

                  (b) No Reliance on Certain Types of Advice. The Seller is not
relying on the Purchaser for advice with respect to tax considerations, the
suitability of its investment in the Purchaser or legal or economic
considerations.

                  (c) Marketability. The Seller understands that the Purchaser
is closely held and that, until such time as the IPO shall have been consummated
and the Corel Shares registered pursuant to the Registration Rights Agreement,
there will be no public market for resale of the Corel Shares. It understands
that it is possible that a market for the Corel Shares will not ever develop. As
a consequence, the Seller understands that it may not be able to liquidate its
investment in the Purchaser, even in the event of an emergency. The Seller also
understands that, for the foregoing reasons, the Corel Shares may not be readily
accepted as collateral for a loan.

                  Section 3.23 Material Misstatements or Omissions. No
representation or warranty expressly made by the Seller in this Agreement or in
the Disclosure Schedule contains any untrue statement of a material fact, or
omits a material fact necessary to make the statement of facts contained
therein, in light of the circumstances in which they were made, not materially
misleading.


                                     - 16 -

                  Section 3.24 Exclusive Representations and Warranties. Except
as expressly set forth in this Article III, the Seller is not making any
representations or warranties to the Purchaser concerning the Company, any other
WinZip Entity or the Business, and therefore with the exception of such express
representations and warranties the Purchaser is acquiring WinZip Holdings on an
"as is, where is" basis. Without limiting the generality of the foregoing,
except as expressly set forth in this Article III, (i) the Seller makes no
implied representations or warranties of any kind, (ii) the Seller makes no
representations or warranties of any kind concerning matters occurring after the
Closing Date, including but not limited to the financial performance of the
Company after the Closing Date, (iii) the Seller makes no representations or
warranties of any kind relating, directly, or indirectly, to intellectual
property assets or intellectual property issues (including the Owned
Intellectual Property), including, but not limited to, any agreements, licenses,
liabilities, ownership, performance, software "bugs", design flaws, security
vulnerabilities, warranties as to merchantability, fitness for a particular
purpose, or suitability of software, title or infringement issues, or rights or
authority or any other matters relating thereto, and (iv) neither written
communications or verbal statements made by any officer, employee, agent,
advisor or consultant of the Seller or any WinZip Entity, nor information
furnished or set forth or obtained elsewhere, whether orally or in writing, or
pursuant to any due diligence investigation, shall be deemed a representation or
warranty of any kind and the Purchaser may not rely on any such written
communications, verbal statements or information.

                                   ARTICLE IV

                     REPRESENTATIONS, WARRANTIES, COVENANTS
                         AND AGREEMENTS OF THE PURCHASER

                  The Purchaser represents and warrants to the Seller as
follows:

                  Section 4.01 Authority; Binding Nature of Agreement. The
Purchaser has all power, capacity and authority necessary to enter into and to
perform its obligations under this Agreement and each Transaction Document. This
Agreement and each Transaction Document constitutes the legal, valid and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance
with its terms, subject to (i) Laws of general application relating to
bankruptcy, insolvency and the relief of debtors, and (ii) Laws governing
specific performance, injunctive relief and other equitable remedies.


                                     - 17 -

                  Section 4.02 Non-Contravention. Neither the execution and
delivery of this Agreement or any Transaction Document by the Purchaser nor the
performance by the Purchaser pursuant hereto or thereto, will (a) violate the
Purchaser's Articles of Incorporation or bylaws, (b) result in a violation or
breach of, or permit any third parry to rescind any term or provision of, or
constitute a default under, any indenture, mortgage, deed of trust or other
Contract, license or other agreement to which the Purchaser is a party or by
which the Purchaser or any of the Purchaser's property or assets is bound, (c)
violate any Law, order, award, judgment, or decree applicable to or binding upon
the Purchaser, or any permit, license or approval of any Governmental Authority,
or (d) require any notice to, or consent, approval, order or authorization of,
or the registration, declaration or filing with, any Governmental Authority or
other third party.

                  Section 4.03 Due Incorporation; Good Standing. The Purchaser
is a corporation duly continued and validly existing under the federal laws of
Canada and has all necessary, power and authority: (i) to conduct its business
in the manner currently being conducted; (ii) to own and use its assets in the
manner they are currently owned and used; and (iii) to consummate the
Transactions.

                  Section 4.04 Corel Shares. All of the Corel Shares have been
duly and validly authorized and issued and are fully-paid and non-assessable.
None of the Corel Shares are reserved for any purpose. All of the Corel Options
have been duly and validly authorized and issued. Sufficient common shares of
the Purchaser have been reserved for issuance pursuant to the Corel Options.

                  Section 4.05 Additional Representations and Warranties of the
Purchaser.

                  (a) Access to Data. The Purchaser has had an opportunity to
discuss the Company's Business, management and financial affairs with the
Company's management, and it has been given access to copies of documents, which
it has requested.

                  (b) No Reliance on Certain Types of Advice. The Purchaser is
not relying on the Seller for advice with respect to tax considerations, the
suitability of its investment in WinZip Holdings and in the Company or legal or
economic considerations.

                  (c) Marketability. The Purchaser understands that WinZip
Holdings is closely held and that there is no public market for resale of the
WinZip Shares. It understands that it is possible that a market for the WinZip
Shares will not ever develop. As a consequence, the Purchaser understands that
it may not be able to liquidate its investment in the WinZip Shares, even in the
event of an emergency. The Purchaser also understands that, for the foregoing
reasons, the WinZip Shares may not be readily accepted as collateral for a loan.


                                     - 18 -

                                   ARTICLE V

                       ADDITIONAL COVENANTS AND AGREEMENTS
                        OF THE SELLER AND WINZIP HOLDINGS

                  The Seller and WinZip Holdings hereby covenant and agree as
follows:

                  Section 5.01 Publicity. WinZip Holdings and the Seller
covenant and agree that any and all publicity (whether written or oral) and
notices to third-parties concerning the Transactions shall be subject to the
prior written approval of the Purchaser. The Seller shall assist the Purchaser
in informing the personnel and management of the Company of the change in the
ownership of the Company; provided always that such communications shall be made
only by or with the prior approval of the Purchaser.

                  Section 5.02 Confidential Information. The Seller acknowledges
that after the Closing the Purchaser and the Company could be irreparably
damaged if confidential information of the Company or the Business were
disclosed to or utilized on behalf of any Person other than the Purchaser and
its Affiliates, and the Seller covenants and agrees that it shall not, following
the Closing Date, without the prior written consent of the Purchaser, disclose
(or permit to be disclosed) or use (or permit to be used) in any way any such
information, unless (a) compelled to disclose such confidential information by
Law and, in any such event, the Seller gives the Purchaser prompt written notice
of any such requirement prior to any such disclosure; (b) such confidential
information is available to the public through no fault of the Seller; or (c)
such confidential information becomes available to the Seller from a third-party
who is under no confidential or fiduciary obligation to the Purchaser or the
Company with respect to such confidential information.

                  Section 5.03 Brokers and Finders. The Purchaser shall not have
any obligation to pay any fees, expenses or other compensation to any Person
dealt with by the Seller or any WinZip Entity in connection with this Agreement
and the Transactions; any such fees, expenses and other compensation shall be
the sole responsibility of the Seller; and the Seller hereby agrees to indemnify
and save the Purchaser and each WinZip Entity harmless from any and all Losses
arising from any claim for any such fees, expenses or other compensation.

                  Section 5.04 Certain Filings. The Seller and WinZip Holdings
shall make, and shall cause each other WinZip Entity to make, all filings with
Governmental Authorities that are required to be made by the Seller, WinZip
Holdings or any other WinZip Entity to carry out the Transactions. The Seller
and WinZip Holdings agree to assist, and shall cause each other WinZip Entity to
assist, the Purchaser in making all such filings, applications and notices as
may be necessary or desirable in order to obtain the authorization, approval or
consent of any Governmental Authority which reasonably may be required in
connection with the consummation of the Transactions.

                  Section 5.05 Company Information. In addition to taking the
actions specified in Section 7.03, at the Closing, and thereafter upon the
Purchaser's request, the Seller shall furnish any and all information in its
possession about each WinZip Entity relating to periods ending on or prior to
the Closing Date (collectively, "Company Information"), including


                                     - 19 -

company descriptions and financial information, that the Purchaser may
reasonably request in connection with or as a result of the consummation of the
Transactions.

                  Section 5.06 Further Assurances. The Seller and WinZip
Holdings agree to, and agree to cause each other WinZip Entity to, execute and
deliver such additional documents and instruments, and perform such additional
acts, as the Purchaser reasonably may request to effectuate or carry out and
perform all the terms, provisions and conditions of this Agreement and the
Transactions and to effectuate the intent and purposes hereof.

                                   ARTICLE VI

              ADDITIONAL COVENANTS AND AGREEMENTS OF THE PURCHASER

                  Section 6.01 Brokers and Finders. The Seller shall have no
obligation to pay any fees, expenses or other compensation to any Person dealt
with by the Purchaser in connection with this Agreement and the Transactions;
any such fees, expenses and other compensation shall be the sole responsibility
of the Purchaser; and the Purchaser hereby agrees to indemnify and save the
Seller harmless from any and all Losses arising from any claim for any such
fees, expenses or other compensation.

                  Section 6.02 Certain Filings. The Purchaser shall make or
cause to be made all filings with Governmental Authorities that are required to
be made by the Purchaser to carry out the Transactions. The Purchaser agrees to
assist each WinZip Entity and the Seller in making all such filings,
applications and notices as may be necessary or desirable in order to obtain the
authorization, approval or consent of any Governmental Authority which
reasonably may be required in connection with the consummation of the
Transactions.

                  Section 6.03 Nondisclosure.

                  (a) The Purchaser agrees not to, and will cause its
representatives and Affiliates not to, except as required by Law, at any time
disclose (i) the purchase price contemplated by the Original Stock Purchase
Agreement, (ii) the contents of the Original Stock Purchase Agreement or the
other agreements referred to therein, or (iii) the identity of the seller
pursuant to the Original Stock Purchase Agreement. In the event that the
Purchaser or any such representative or Affiliate becomes legally compelled to
disclose any such information, including, without limitation, in connection with
the IPO, the Purchaser shall provide the Seller with prompt written notice of
such requirement so that the Seller may seek a protective order or other remedy
or waive compliance with this Section 6.03(a). In the event that such protective
order or other remedy is not obtained, or the Seller waives compliance with this
Section 6.03(a), the Purchaser shall furnish only that portion of such
confidential information which is legally required to be provided and take all
commercially reasonable steps to obtain assurances that confidential treatment
will be accorded such information as may be reasonably determined by the Seller
to be "sensitive".

                  (b) Notwithstanding the foregoing, the preceding paragraph
shall not apply to (i) any information that, at the time of disclosure, is
publicly available and was not disclosed in breach of this Agreement or the
Original Stock Purchase Agreement by the Purchaser or the


                                     - 20 -

Seller, or their representatives or Affiliates, and (ii) communications in the
Ordinary Course of Business with investors that hold an interest, directly or
indirectly, in the Purchaser. The Purchaser agrees and acknowledges that
remedies at Law for any breach of its obligations under this Section 6.03(b) are
inadequate and that in addition thereto the Seller shall be entitled to seek
equitable relief, including injunction and specific performance, in the event of
any such breach, without the necessity of demonstrating the inadequacy of money
damages.

                  Section 6.04 Further Assurances. The Purchaser agrees to
execute and deliver such additional documents and instruments, and perform such
additional acts, as the Seller reasonably may request to effectuate or carry out
and perform all the terms, provisions and conditions of this Agreement and the
Transactions and to effectuate the intent and purposes hereof.

                                   ARTICLE VII

                            CERTAIN OTHER AGREEMENTS

                  Section 7.01 Use of Name. The Seller acknowledges that the
Company owns the name "WinZip", and any and all variants thereof and all other
trade names, trademarks or service marks under which the Company has ever
conducted its Business. The Seller agrees that the Seller has no right to use or
otherwise exploit such names and further agrees that the Seller has no right to
use any such names together or separately.

                  Section 7.02 Certain Tax Matters.

                  (a) The Seller shall be responsible for all transfer, excise,
stamp, sales, use, recording or similar taxes or fees arising out of the sale,
assignment and conveyance of the WinZip Shares by the Seller. The Seller shall
make any filings associated therewith required under applicable Law.

                  (b) The Purchaser shall cause each WinZip Entity to file when
due all Tax Returns that are required to be filed by such WinZip Entity
following the Closing Date.

                  (c) After the Closing Date, the Purchaser and the Seller
shall:

                           (i) assist in all reasonable respects (and cause
their respective Affiliates to assist) the other Parties in preparing any Tax
Returns which such Party is responsible for preparing and filing in accordance
with this Section 7.02;

                           (ii) cooperate in all reasonable respects in
preparing for any audits of, or disputes with taxing authorities regarding, and
Tax Returns of, any WinZip Entity;

                           (iii) make available to the other and to any taxing
authority as reasonably requested all information, records and documents
relating to Taxes of any WinZip Entity, except to the extent determined by
counsel for the Party involved to be privileged or work product;


                                     - 21 -

                           (iv) provide timely notice to the other in writing of
any pending or threatened tax audit or assessments of any WinZip Entity for any
taxable periods; and

                           (v) furnish the other with copies of all
correspondence received from any taxing authority in connection with any tax
audits or information request with respect to any such taxable period.

                  Section 7.03 Access to Information.

                  WinZip Holdings will give, and the Seller shall cause WinZip
Holdings to give, between the date hereof and the Closing, full access to the
premises, assets, books, accounts, tax returns, contracts, commitments, records
and personnel of each of the WinZip Entities to the Purchaser and its
accountants, legal advisers and representatives during normal business hours and
furnish the Purchaser and its representatives with all such information relating
to the Business and the Company's affairs and assets as the Purchaser may
reasonably request.

                  Section 7.04 Conduct of Business Until Closing.

                  Except as expressly provided in this Agreement or with the
prior written consent of the Purchaser, prior to the Closing the Company and
each other WinZip Entity shall, and the Seller will cause the Company and each
other WinZip Entity to:

                  (a) operate the Business (including, without limitation, the
payment of payables and the collection of receivables) only in the ordinary
course, consistent with past practice and, to the extent consistent with that
operation, use best efforts to preserve its business organization, including the
services of its officers and employees, and its business relationships with
customers, suppliers and others having business dealings with it;

                  (b) maintain all its assets, whether owned or leased, in good
condition and repair and maintain insurance upon all its assets comparable in
amount, scope and coverage to that in effect on the date of this Agreement;

                  (c) satisfy all salary or bonus obligations to employees, as
incurred up until and including the Closing Date (including, without limitation,
all declared and owing 2005 bonus payments);

                  (d) maintain its books, records and accounts in the ordinary
course on a basis consistent with past practice (including the recording and/or
treatment of accounts receivable and payable); and

                  (e) do or refrain from doing all acts and things in order to
ensure that the representations and warranties in Article III remain true and
correct in all material respects at the Closing Date (except for any
representations and warranties which are qualified by materiality in Article
III, which representations and warranties are to be strictly true and correct)
as if those representations and warranties were made at and as of the Closing
Date, and to satisfy or cause to be satisfied the conditions in Section 8.02(a)
which are within its control.


                                     - 22 -

                  Section 7.05 Negative Covenants.

                  Except as expressly provided in this Agreement or with the
prior written consent of the Purchaser, prior to the Closing, no WinZip Entity
shall, and the Seller shall ensure that no WinZip Entity shall:

                  (a) amend its certificate of incorporation, by-laws,
constating documents or other organizational documents;

                  (b) merge or consolidate with, or acquire all or substantially
all the shares or assets of, any Person;

                  (c) Transfer, lease, license, sell or otherwise dispose of any
of its assets, other than inventory in the Ordinary Course of Business,
consistent with past practice;

                  (d) terminate any employee or alter any employee compensation,
benefits or other terms and conditions of employment (provided that the
Purchaser's consent to such an action may not be unreasonably withheld);

                  (e) declare or pay any dividends (whether in cash, in property
or otherwise) or make any other distributions of any kind in respect of its
capital stock (or other equity interests, as applicable), other than one or more
cash dividends not to exceed, individually or in the aggregate, seven million
five hundred thousand dollars ($7,500,000) at anytime after February 21, 2006,
or purchase, redeem or otherwise acquire or dispose of or issue any shares of
capital stock (or other equity interests, as applicable) or any notes, bonds or
other securities of any kind;

                  (f) otherwise incur any debt or liabilities outside of the
Ordinary Course of Business;

                  (g) make any payments outside of the Ordinary Course of
Business, including, without limitation, any payments to Affiliates or payments
in respect of debts or liabilities (other than trade liabilities incurred in the
Ordinary Course of Business and scheduled debt repayments); or

                  (h) without limiting the generality of this Section 7.05,
change the Company's pricing policies, announce new products, or enter into,
renew, amend or terminate significant Contracts.

                  Section 7.06 Non-Solicitation.

                  Neither the Seller (including its directors, officers,
employees and agents) nor any WinZip Entity shall initiate, encourage, cooperate
with, provide non-public information to or participate in any discussions with
any third party (other than their professional advisors) regarding the
Transactions or any other proposed financing of any WinZip Entity or sale of any
WinZip Entity's securities or assets, and the Seller and each WinZip Entity
shall immediately terminate any such discussions currently in progress. If,
prior to the earlier of the Closing and the termination of this Agreement, the
Seller or any WinZip Entity receives an inquiry concerning a proposed
transaction that could be inconsistent with the Transactions, then the Seller or
such


                                     - 23 -

WinZip Entity shall immediately notify the Purchaser of that event and provide
the Purchaser with a copy of that proposal (if in writing) or a summary of that
inquiry (if oral).

                  Section 7.07 Goodwill.

                  The Seller and each WinZip Entity covenants and agrees that
the Seller and such WinZip Entity shall not take or omit to take any action
which could directly or indirectly impair the goodwill of the Company or any
other WinZip Entity or the Business or the business reputation or good name of
the Company or any other WinZip Entity.

                  Section 7.08 Restricted Property. For a period of one (1) year
following the Closing Date, the Seller agrees not to Transfer the Restricted
Property to any Person, including, without limitation, the fund or funds or
other Persons holding an interest in the Seller or any other Affiliates.

                  Section 7.09 Termination.

                  This Agreement may be terminated and the Transactions may be
abandoned at any time prior to the Closing by:

                  (a) mutual written agreement of the Purchaser and the Seller;

                  (b) either the Purchaser or the Seller, by written notice to
the other, if the Transactions have not been consummated prior to the Drop Dead
Date (provided that the right to terminate this Agreement under this Section
7.09(b) will not be available to any Party whose failure to fulfill any of its
obligations under this Agreement has been the cause of or resulted in the
failure to consummate the Transactions by the Drop Dead Date); or

                  (c) either the Purchaser or the Seller, by written notice to
the other, if there will be any applicable Law that makes the consummation of
the Transactions illegal or otherwise prohibited or if any order of a
Governmental Authority of competent jurisdiction restrains or prohibits the
consummation of the Transactions, and that order becomes final and
non-appealable.

                  Sections 5.03, 6.01, 6.03 and 10.01 of this Agreement shall
survive the termination of this Agreement pursuant to this Section 7.09.

                                  ARTICLE VIII

                                     CLOSING

                  Section 8.01 Time and Place of Closing. The closing of the
Transactions (the "Closing") shall be held at 10:00 a.m. (New York time) on the
Business Day on which all of the Conditions to Closing described in Section 8.02
have been fully satisfied or waived by the appropriate Party or Parties or such
other date as may be mutually agreed upon by the Parties, which date shall in no
event be later than April 21, 2006 (the "Drop Dead Date"), unless such date has
been extended by mutual agreement of the Parties (the "Closing Date"), at the
offices of Torys LLP, 237 Park Avenue, New York, NY or such other place as may
be agreed to in writing.


                                     - 24 -

                  Section 8.02 Conditions to Closing.

                  At the Closing:

                  (a) The Seller shall have:

                           (i) delivered the WinZip Shares to the Purchaser by
delivering one or more certificates in negotiable form representing the WinZip
Shares. The certificates evidencing the WinZip Shares shall be (A) duly endorsed
in blank or accompanied by duly executed instruments of transfer duly endorsed
in blank; and (B) accompanied by any necessary documentary or stock transfer
stamps or taxes attached and cancelled. Upon the Closing all rights, title and
interest in and to the WinZip Shares shall immediately vest in the Purchaser;

                           (ii) delivered to the Purchaser the certificates or
other documentation evidencing each of the WinZip Options, each marked
"cancelled" in accordance with Section 1.02(b);

                           (iii) delivered to the Purchaser a certificate
executed by the Seller, in form and substance reasonably acceptable to the
Purchaser, confirming that (a) the representations and warranties of the Seller
made in or pursuant to this Agreement are true and correct in all material
respects (except for any representations and warranties which are qualified by
materiality in Article III, which representations and warranties are to be
strictly true and correct) on the Closing Date with the same force and effect as
if made at and as of the Closing Date, (b) the covenants contained in this
Agreement to be performed by the Seller and any WinZip Entity at or prior to the
Closing Date have been performed in all material respects, and (c) neither the
Seller nor any WinZip Entity is in breach of any agreement on its part contained
in this Agreement;

                           (iv) delivered to the Purchaser the Registration
Rights Agreement, executed by the Seller;

                           (v) delivered to the Purchaser the Lockup Agreement,
executed by the Seller;

                           (vi) delivered to the Purchaser evidence, in form and
substance reasonably satisfactory to the Purchaser, of the repayment in full of
the WFF Indebtedness;

                           (vii) delivered, or caused to be delivered, to the
Purchaser all consents required pursuant to any Contract, Permit or from any
Governmental Authority as a result of the entering into and performance of this
Agreement;

                           (viii) delivered to the Purchaser evidence of the
resignations of each of the directors and officers of WinZip Holdings and each
other WinZip Entity designated by the Purchaser to the Seller;

                           (ix) delivered to the Purchaser evidence that the
WinZip Entities, on a consolidated basis, have Net Debt of no more than sixteen
million five hundred thousand dollars ($16,500,000); and


                                     - 25 -

                           (x) delivered to the Purchaser all documents
reasonably requested by the Purchaser relating to the existence of the Seller
and WinZip Holdings, and the due authorization and consummation of the
Transactions and all other actions and proceedings taken at or before the
Closing in connection with the performance by the Seller and WinZip Holdings of
their obligations under this Agreement, which documents shall be in form and
substance reasonably satisfactory to the Purchaser.

                  (b) The Purchaser shall have:

                           (i) delivered the Corel Shares to the Seller in
accordance with Section 2.01(b) by delivering a certificate in negotiable form
representing the Corel Shares. Upon the Closing, subject to Section 7.08, all
rights, title and interest in and to the Corel Shares shall immediately vest in
the Seller;

                           (ii) delivered to the Seller the aggregate number of
Corel Options set forth in Column C on Annex C, in each case upon the terms set
forth in Columns D and E on Annex C, by delivering an option certificate, in the
form attached as Exhibit A, in the name of each of the WinZip Optionholders to
the Seller in accordance with Section 1.02(d);

                           (iii) delivered to the Seller the Registration Rights
Agreement, executed by the Purchaser;

                           (iv) delivered to the Seller all documents reasonably
requested by the Seller relating to the existence of the Purchaser, and the due
authorization and consummation of the Transactions and all other actions and
proceedings taken at or before the Closing in connection with the performance by
the Purchaser of its obligations under this Agreement, which documents shall be
in form and substance reasonably satisfactory to the Seller.

                  (c) In addition, the Closing shall be expressly conditioned
upon the occurrence of the following events:

                           (i) the IPO shall have been consummated;

                           (ii) no material adverse or prospective adverse
change in the condition (financial or otherwise), results of operation, assets,
properties, Business or prospects of any WinZip Entity shall have occurred;

                           (iii) no fire, war, strike, riot, labor dispute,
technical failure or act of God shall have occurred (1) that restrains or
prohibits the Company for a period of at least five (5) Business Days from
carrying on in any material respect the Business as the Business is being
carried on at the date of this Agreement, or (2) has or would reasonably be
expected to have a Material Adverse Effect on the Business, assets, financial
condition, results of operations or prospects of the Company and/or the Business
or which would materially and adversely effect the consummation of the
Transactions;

                           (iv) no Laws shall have been enacted that restrain or
prohibit the Company from carrying on the Business as the Business is being
carried on at the date of this Agreement; and


                                     - 26 -

                           (v) no proceeding shall be pending by any Person to
restrain or prohibit (1) the consummation of the Transactions, or (2) the
Company from carrying on the Business as the Business is being carried on at the
date of this Agreement.

                                   ARTICLE IX

                                 INDEMNIFICATION

                  Section 9.01 Indemnification of the Purchaser.

                  (a) The Seller (A) hereby agrees to defend, indemnify, and
hold harmless the Purchaser, each WinZip Entity and each of their respective
Affiliates, and each of their respective directors, managers, officers,
employees, representatives, agents, successors and assigns (individually, and
collectively, the "Purchaser Indemnified Parties") against and in respect of any
and all Losses caused by or resulting or arising from (i) the breach by WinZip
Holdings or the Seller of any of their covenants or agreements hereunder or
under any of the Transaction Documents (limited, in the case of WinZip Holdings,
to breaches occurring at or before Closing); and (ii) the breach or inaccuracy
of any of the representations or warranties made by the Seller herein (including
in any Exhibit or Schedule) or in any Transaction Document.

                  (b) The Purchaser Indemnified Parties shall promptly after any
of them becomes aware of any circumstance which might reasonably be expected to
become the subject matter of a claim to be made by any of them against the
Seller under this Agreement (a "Purchaser Claim"), advise the Seller in writing
of such circumstance, and shall provide the Seller, from time to time, such
information that the Seller shall reasonably request in connection therewith;
provided that any delay or failure to so advise the Seller shall not relieve the
Seller from any liability except to the extent that the defense of such
Purchaser Claim is prejudiced by such delay or failure. The Purchaser shall have
exclusive control and discretion in the conduct of the defense of any such
matter, however, the Seller shall not be required to make any indemnification
hereunder with respect to any amounts paid in settlement except to the extent
the Seller have approved the terms thereof, acting reasonably. The Seller shall
have the right to employ separate counsel in any action brought in respect of
any matter which is or may be the subject of a Purchaser Claim for
indemnification hereunder, and shall have the right to participate in the
defense thereof, but the fees and expenses related thereto, including fees and
expenses of counsel, shall be at the expense of the Seller.

                  (c) Notwithstanding anything to the contrary contained herein,
the liability of the Seller to Purchaser Indemnified Parties with respect to
claims for indemnification pursuant to Section 9.01(a) is subject to the
following:

                  The Seller shall not be liable to Purchaser Indemnified
Parties with respect to claims for indemnification pursuant to this Section
9.01:

                           (i) (A) to the extent that the dollar value of the
amounts indemnifiable for such breaches exceeds an aggregate of the product of
(i) ninety-three thousand


                                     - 27 -

two hundred thirty-eight (93,238) multiplied by (ii) the Per Share Consideration
(the "General Indemnity Cap"); and

                                (B) unless and until the aggregate amounts
indemnifiable for such breaches exceeds the product of (i) twenty-three thousand
two hundred ninety-nine (23,299) multiplied by (ii) the Per Share Consideration
(the "Threshold"), at which time all such amounts (including those below the
Threshold) shall be indemnifiable (subject to the General Indemnity Cap).

                           (ii) The limitations set forth in Section
9.01(c)(i)(A) above shall not apply with respect to fraud or to claims
respecting breaches of the representations and warranties set forth in Section
3.04 (Capitalization; Title to Shares), and Section 3.15 (Tax Matters)
(collectively, the "Seller Specified Representations"), provided that, for the
purposes of the application of this Section 9.01(c)(i)(B)(ii) only (i.e., not
for purposes of the use of the defined term "Seller Specified Representations"
elsewhere in this Agreement), the term "Seller Specified Representations" shall
not include representations and warranties in Section 3.04 which apply to the
Seller Tax Reorganization, which representations and warranties, for the
avoidance of doubt, shall be subject to the Threshold and the General Indemnity
Cap;

                           (iii) unless such claim is asserted in writing on or
prior to the applicable Survival Expiration Date, if any.

                  (d) Purchaser Claims shall be satisfied first by recourse to
the Restricted Property and thereafter by cash payments from Seller to
Purchaser. For the avoidance of doubt, in full or partial settlement of any
Purchaser Claims, the Seller shall surrender out of the Restricted Property
first (i) any cash that forms part of the Restricted Property, and, thereafter,
(ii) a number of Corel Shares equal to a fraction, the numerator of which shall
be the remaining aggregate dollar amount payable under such Purchaser Claim and
the denominator of which shall be the Per Share Consideration, as set forth in
Section 2.01 (rounding down to the nearest whole share).

                  Section 9.02 Indemnification of the Seller.

                  (a) The Purchaser hereby agrees to defend, indemnify, and hold
harmless the Seller and its Affiliates, and each of their respective directors,
managers, officers, employees, representatives, agents, successors and assigns
(individually, and collectively, the "Seller Indemnified Parties") against and
in respect of any and all Losses caused by or resulting or arising from (i) the
breach by the Purchaser of any of its covenants or agreements hereunder or under
any of the Transaction Documents; and (ii) the breach or inaccuracy of any of
the representations or warranties made by the Purchaser herein (including in any
Exhibit or Schedule) or in any Transaction Documents.

                  (b) The Seller Indemnified Parties shall promptly after any of
them becomes aware of any circumstance which might reasonably be expected to
become the subject matter of a claim to be made by any of them against the
Purchaser under this Agreement (a "Seller Claim"), advise the Purchaser of such
circumstance, and shall afford the Purchaser, from time to time, such
information as the Purchaser shall reasonably request in connection therewith;



                                     - 28 -

provided that any delay or failure to so advise the Purchaser shall not relieve
the Purchaser from any liability except to the extent that the defense of such
Seller Claim is prejudiced by such delay or failure.

                  (c) Notwithstanding anything to the contrary contained herein,
the Purchaser shall not be liable to Seller Indemnified Parties with respect to
claims for indemnification for breaches of representations and warranties
hereunder pursuant to Section 9.02(a):

                           (i) to the extent that the aggregate of all amounts
indemnifiable hereunder exceeds the General Indemnity Cap, except that the
foregoing limitations shall not apply with respect to fraud or to claims
respecting breaches of the representations and warranties set forth in Section
4.04 Corel Shares, (collectively, the "Purchaser Specified Representations");

                           (ii) unless and until the aggregate amounts
indemnifiable for such breaches exceeds the Threshold, at which time all such
amounts (including those below the Threshold) shall be indemnifiable (subject to
the General Indemnity Cap); and

                           (iii) unless such claim is asserted in writing on or
prior to the applicable Survival Expiration Date, if any.

                  (d) Seller Claims shall be satisfied exclusively by cash
payments from Purchaser to Seller.

                  Section 9.03 Survival of Representations and Warranties. The
representations and warranties of the Parties contained herein shall expire on
the first anniversary of the Closing Date; notwithstanding any investigation at
any time made by or on behalf of any Party, and shall not survive beyond such
period, provided that if written notice is properly given under this Article IX
with respect to any matter allegedly the subject of this Article IX prior to
such period, the obligations under this Article IX shall continue in force and
effect indefinitely until the applicable claim is finally resolved and provided
further that the Seller Specified Representations and the Purchaser Specified
Representations shall survive for the applicable statute of limitations or
applicable period of reassessment (for each date, the applicable "Survival
Expiration Date").

                  Section 9.04 Additional Indemnification Provisions.

                  (a) Except in the case of fraud, from and after the Closing,
the provisions of this Article IX shall be the exclusive basis for the assertion
of claims against, or the imposition of liability on, any Party in respect of
the Transactions, including any breach or alleged breach of this Agreement in
each case other than claims for specific performance.

                  (b) As used herein, "Losses" means any and all losses, claims,
assessments, demands, damages, liabilities, diminution in value, obligations,
costs and expenses, including without limitation, reasonable fees and
disbursements of counsel sustained or incurred by the Purchaser Indemnified
Parties (or any of them) or the Seller Indemnified Parties (or any of them), as
the case may be, in any action, dispute, claim or proceeding between any of the
Purchaser Indemnified Parties, on the one hand, and any of the Seller
Indemnified Parties, on the other hand, or involving a third-party claim against
any of the Purchaser Indemnified Parties or any of the Seller Indemnified
Parties, as the case may be, and other reasonable out of pocket


                                     - 29 -

costs and expenses incurred in connection with investigating, preparing or
defending any action, suit or proceeding, commenced or threatened, or any claim
whatsoever.

                  (c) Any payment by the Purchaser or the Seller under this
Agreement, other than the issuance of the Corel Shares, shall be treated for tax
purposes as an adjustment to the Consideration.

                  (d) No Purchaser Indemnified Person shall be required to make
any claim against any other Person or to take any other action to pursue any
claim hereunder against any of the Seller Indemnifying Persons. None of the
Seller Indemnifying Persons shall be entitled to any indemnification, right of
contribution, right of subrogation or other right of recovery from any WinZip
Entity in connection with any claim made by any Purchaser Indemnified Person
against the Seller Indemnified Persons (or any of them), hereunder, all of which
are expressly waived and released by each of the Seller Indemnified Persons.

                                    ARTICLE X

                                  MISCELLANEOUS

                  Section 10.01 Expenses. Except as otherwise specifically
provided herein, each Party shall pay its own expenses incidental to
negotiations, preparation of agreements and the Closing; provided that the
Purchaser shall pay reasonable expenses incurred by the Seller in connection
with the IPO.

                  Section 10.02 Notices. All notices, requests or instructions
hereunder shall be in writing and delivered personally, sent by telecopy, sent
by federal Express or other nationally recognized overnight carrier, or sent by
registered or certified mail, postage prepaid, as follows:

                  (a)  If to the Seller:

                       Vector CC Holdings IV, SRL
                       c/o Corporate Services Limited
                       Erin Court
                       Bishop's Court Hill
                       St. Michael, Barbados
                       Telecopy No.:  436-7057

                       with a copy to:

                       Vector Capital Corporation
                       456 Montgomery St., 19th Floor
                       San Francisco, CA 94104
                       Attention:  Dewey Chambers
                       Telecopy No.:  (415) 293-5100

                  (b)  If to WinZip Holdings:

                       Cayman Ltd. Holdco


                                     - 30 -


                       c/o Walkers SPV Limited
                       Walker House, Mary Street, P.O. Box 908GT
                       George Town, Grand Cayman
                       Cayman Islands

                       with a copy to the Purchaser at the address set forth in
                       Section 10.02(c).

                  (c)  If to the Purchaser:

                       Corel Corporation
                       1600 Carling Avenue
                       Ottawa, Ontario  K17 8R7
                       Canada
                       Attention:  Christopher DiFrancesco
                       Telecopy No.:  (613) 725-2691

                  Any of the above addresses may be changed at any time by
notice given as provided above; provided, however, that any such notice of
change of address shall be effective only upon receipt. All notices, requests or
instructions given in accordance herewith shall be deemed received on the date
of delivery, if hand delivered, telecopied or by overnight courier, and five (5)
Business Days after the date of mailing, if mailed by registered or certified
mail.

                  Section 10.03 Entire Agreement. This Agreement (including the
Annexes, Exhibits and Schedules) and the documents referred to herein
(including, for greater certainty, the Transaction Documents) contain the entire
agreement among the Parties with respect to the Transactions and supersedes all
prior agreements, understandings, negotiations and discussions, whether written
or oral, of the Parties, and no amendment or modification hereof shall be
effective unless in writing and signed by the Party against which it is sought
to be enforced.

                  Section 10.04 Severability. If one or more of the provisions
of this Agreement are held to be unenforceable under applicable law, such
provisions shall be excluded from this Agreement and the balance of this
Agreement shall be interpreted as if such provisions were so excluded and shall
be enforceable in accordance with its terms.

                  Section 10.05 Successors and Assigns.

                  (a) This Agreement shall be binding upon and inure to the
benefit of the successors and permitted assigns of the Parties.

                  (b) No Party may assign any of its rights, interests or
obligations under this Agreement without the written approval of the Seller in
the case of the Purchaser, and the Purchaser in the case of the Seller;
provided, however, that the Purchaser may assign any and all of its rights and
interests hereunder (i) to any Affiliate; (ii) in connection with a sale of all
or substantially all of the assets of the Purchaser or any of its corporate
parents, or direct or indirect consolidated subsidiaries; or (iii) to any bank
or other financial institution which has extended credit to the Purchaser or any
of its Affiliates. Any attempted assignment in violation of this Section
10.05(B) shall be null and void.


                                     - 31 -

                  Section 10.06 Governing Law. The validity of this Agreement
and of any of its terms or provisions, as well as the rights and duties of the
Parties under this Agreement, shall be construed pursuant to and in accordance
with the laws of the State of New York, without regard to the conflicts of laws
provisions thereof.

                  Section 10.07 Waiver of Jury Trial. EACH OF THE PARTIES WAIVES
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO TRIAL
BY JURY IN RESPECT OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION BASED ON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR ACTION OF ANY PARTY,
IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT,
TORT, EQUITY OR OTHERWISE. EACH OF THE PARTIES HEREBY AGREES THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY AND THAT THE PARTIES MAY FILE A COUNTERPART OF A COPY OF THIS AGREEMENT
WITH ANY COURT AS EVIDENCE OF THE CONSENT OF THE PARTIES TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.

                  Section 10.08 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument. Any counterpart or other
signature hereupon or upon a Transaction Document delivered by facsimile shall
be deemed for all purposes as constituting good and valid execution and delivery
of this Agreement or the Transaction Document, as applicable, by such Party.

                  Section 10.09 Effect of Investigations. Any due diligence
review, audit or other investigation or inquiry undertaken or performed by or on
behalf of the Purchaser shall not limit, qualify, modify or amend the
representations, warranties and covenants of, and indemnities by, the Seller
made or undertaken pursuant to this Agreement and the Transaction Documents,
irrespective of the knowledge and information received (or which should have
been received) therefrom by Purchaser.

                  Section 10.10 Waivers. The failure of any Party at any time or
times to require performance of any provision hereof shall in no manner affect
its right at a later time to enforce the same. No breach of any term, covenant,
representation or warranty contained in this Agreement shall be effective unless
in writing, and no waiver in any one or more instances shall be deemed to be a
further or continuing waiver of any such breach in other instances or a waiver
of any other breach of any other term, covenant, representation or warranty.

                  Section 10.11 No Third-Party Beneficiaries. This Agreement
shall be binding upon and inure solely to the benefit of the Parties and their
permitted assigns and nothing herein, whether express or implied, is intended to
or shall confer upon any other Person (other than Purchaser Indemnified Parties
and Seller Indemnified Parties) any legal or equitable right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement.


                                     - 32 -

                  Section 10.12 Construction.

                  (a) Unless the context otherwise requires: (i) "or" is not
exclusive; (ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP; (iii) terms defined in this Agreement in
their singular or plural forms have correlative meanings when used herein in
their plural or singular forms, respectively; (iv) pronouns and any variations
thereof refer to the masculine, feminine or neuter, singular or plural, as the
context may require; (v) any date specified for any action that is not a
Business Day shall be deemed to mean the first Business Day after such date;
(vi) a reference to a Person includes its successors and permitted assigns;
(vii) the word "including" shall mean "including without limitation"; (viii)
except where otherwise expressly provided, all references herein to dollar
amounts shall mean United States dollars; (ix) any reference to any federal,
state, local or foreign statute or law shall be to such statute or law as
amended at the applicable time, and shall be deemed also to refer to all rules
and regulations promulgated thereunder at the applicable time; and (x) the
inclusion of headings and a table of contents in this Agreement is for
convenience of reference only and shall not affect the construction or
interpretation hereof.

                  Section 10.13 Preparation of Document. The Parties have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the Parties and no
presumption or burden of proof shall rise favoring or disfavoring any Party by
virtue of the authorship of any of the provisions of this Agreement.


                                      * * *


                                     - 33 -

                  IN WITNESS WHEREOF, this Agreement has been duly executed by
the Parties as of the date first above written.

                                        COREL CORPORATION:

                                        By
                                             -----------------------------------
                                             Name:
                                             Title:



                                        VECTOR CC HOLDINGS IV, SRL:

                                        By
                                             -----------------------------------
                                             Name:
                                             Title:



                                        CAYMAN LTD. HOLDCO:

                                        By
                                             -----------------------------------
                                             Name:
                                             Title:



                                        For the purposes of Section 1.02 only:

                                        WINZIP COMPUTING LLC:

                                        By
                                             -----------------------------------
                                             Name:
                                             Title:


                                     - 34 -

                                                                         Annex A

                                   Definitions

                  Definitions. Capitalized terms used in this Agreement shall
have the following meanings:

         "AFFILIATE" shall mean, with respect to any Person, any other Person
that directly, or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with such Person. For the purposes of
this definition, "control" when used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership, directly or indirectly, of more than 10% of the voting or equity
securities or other interests of any such Person and/or by contract or
otherwise; and the terms "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.

         "AGREEMENT" shall mean this Stock Purchase Agreement, including the
preamble, recitals and all Annexes, Exhibits and Schedules, and all amendments
or restatements, as permitted, and the expressions "hereof", "herein", "hereto",
"hereunder", "hereby" and similar expressions refer to this Stock Purchase
Agreement; and unless otherwise indicated, references to "preamble", "recitals",
"Article", "Section", "Exhibit" or "Schedule" mean the preamble, recitals or the
specified Article, Section, Exhibit or Schedule of this Agreement.

         "BALANCE SHEET" shall mean the unaudited balance sheet of the Company
as of February 28, 2006, a true and correct copy of which has been delivered to
the Purchaser.

         "BENEFIT PLANS" shall have the meaning set forth in Section 3.20.

         "BUSINESS" shall have the meaning set forth in the recitals.

         "BUSINESS DAY" shall mean a day other than a Saturday or Sunday or
other day on which commercial banks in New York, New York are authorized or
required by law to close.

         "CLOSING" shall have the meaning set forth in Section 8.01.

         "CLOSING DATE" shall have the meaning set forth in Section 8.01.

         "CODE" shall mean the Internal Revenue Code of 1986, as amended.

         "COMPANY" shall mean, collectively, WinZip Computing and WinZip
International, and, for the purposes of Article III only, unless the context
shall otherwise require, includes all predecessor entities of WinZip Computing
and WinZip International.

         "COMPANY CONTRACT" shall mean any Contract of which the Seller is aware
to which the Company is a party or, to the Seller's knowledge, by which the
Company is bound.

         "COMPANY INFORMATION" shall have the meaning set forth in Section 5.05.


                                      A-1

         "COMPANY RETURNS" shall have the meaning set forth in Section 3.15.

         "CONSIDERATION" shall have the meaning set forth in Section 2.01(a).

         "CONTRACTS" shall mean any agreement, contract, subcontract or other
legally binding commitment or undertaking, whether written or oral.

         "COREL SHARES" shall have the meaning set forth in Section 2.01(a).

         "DROP DEAD DATE" shall have the meaning set forth in Section 8.01.

         "EMPLOYEE BENEFIT PLANS" shall have the meaning set forth in Section
3.16(b).

         "ENCUMBRANCES" shall mean Lien, pledge, security interest, right of
first refusal, preemptive right or community property interest.

         "ENVIRONMENTAL LAWS" shall mean all federal, state, local and foreign
laws, rules and regulations relating to environmental health and safety matters,
the pollution or protection of the environment (including ambient air, surface
water, ground water, land surface or subsurface strata) or the protection of
human health and safety from environmental hazards, including laws, rules and
regulations relating to emissions, discharges, releases or threatened releases
of Hazardous Substances, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances.

         "FINANCIAL STATEMENTS" shall have the meaning set forth in Section
3.05.

         "GAAP" shall mean United States generally accepted accounting
principles, as in effect from time to time, consistently applied.

         "GENERAL INDEMNITY CAP" shall have the meaning set forth in Section
9.01(c)(i)(A).

         "GOVERNMENTAL AUTHORITY" shall mean the collective reference to any
court, tribunal, government, or governmental or administrative agency, authority
or instrumentality, federal, state or local, or domestic or foreign, or any
arbitrator having competent jurisdiction over the matter or matters in question.

         "GOVERNMENTAL AUTHORIZATION" shall mean any: (a) permit, license,
certificate, franchise, permission, clearance, registration, qualification or
authorization issued, granted, given or otherwise made available by or under the
authority of any Governmental Authority or pursuant to any Law; or (b) right
under any Contract with any Governmental Authority.

         "HAZARDOUS SUBSTANCES" shall mean any chemical, compound, material or
substance that is defined, listed in, or otherwise classified pursuant to, any
of the Environmental Laws as a "hazardous substance", "hazardous material",
"hazardous waste", "toxic substance" or "toxic pollutant", (2) petroleum,
natural gas, natural gas liquids, liquefied natural gas, synthetic gas usable
for fuel and drilling fluids, produced waters, and other wastes associated with
the exploration, development or production of crude oil, natural gas or
geothermal resources and


                                      A-2

(3) any "medical waste" as defined in any of the Environmental Laws or the
disposition of which is regulated by any law, ordinance or regulation.

         "INTELLECTUAL PROPERTY" shall mean any or all of the following: (i) all
Patents; (ii) all inventions (whether patentable or not), invention disclosures,
improvements, trade secrets, proprietary information, know how, technology,
technical data and customer lists, and all documentation relating to any of the
foregoing; (iii) all copyrights, copyright registrations and applications
therefor and all other rights corresponding thereto throughout the world; (iv)
all industrial designs and any registrations and applications therefor
throughout the world; (v) all trade names, logos, common law trademarks and
service marks; trademark and service mark registrations and applications
therefor and all goodwill associated therewith throughout the world; (vi) all
databases and data collections and all rights therein throughout the world;
(vii) all computer software, including all source code, object code, firmware,
development tools, files, records and data, all media on which any of the
foregoing is recorded, all web addresses, sites and domain names, and (viii) all
documentation related to any of the foregoing.

         "INTERNAL-USE-ONLY IP" shall mean software that is used in the conduct
of the Company's business as it is currently conducted, but is not included in
the Software Product. Examples of Internal-Use-Only IP include, without
limitation, (i) the Company's database system, (ii) the software that the
Company uses to track downloads, and (iii) the Company's e-mail management
software.

         "IPO" shall mean the initial public offering of approximately - common
shares of the Purchaser in the United States and in Canada by the Purchaser and
certain shareholders of the Purchaser.

         "KNOWLEDGE" as used with respect to WinZip Holdings and/or the Seller
means the actual knowledge of any executive officer of WinZip Holdings and/or
the Seller, as appropriate.

         "LAW" shall mean any federal, state, local, municipal, foreign or other
law, statute, constitution, principle of common law, resolution, ordinance,
code, edict, decree, rule, regulation, ruling or requirement issued, enacted,
adopted, promulgated, implemented or otherwise put into effect by or under the
authority of any Governmental Authority, including, without limitation, federal
securities laws.

         "LEASED REAL PROPERTY" shall have the meaning specified in Section
3.11.

         "LEGAL PROCEEDING" shall mean any action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding), hearing, inquiry, audit, examination or
investigation commenced, brought, conducted or heard by or before, or otherwise
involving, any court or other Governmental Authority or any arbitrator or
arbitration panel.

         "LOCKUP AGREEMENT" shall mean the Lockup Agreement, in the form
attached hereto as Exhibit C.

         "LICENSED INTELLECTUAL PROPERTY" shall mean all Intellectual Property
that is licensed or sublicensed to the Company by a third party.


                                      A-3

         "LIENS" shall mean all liens, mortgages, charges, security interests,
covenants, easements, restrictions, adverse claims or other encumbrances of any
kind whatsoever and howsoever arising.

         "LOSSES" shall have the meaning set forth in Section 9.04(b).

         "MATERIAL CONTRACTS" shall have the meaning set forth in Section
3.13(b).

         "MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the
businesses, properties, assets, condition (financial or other), results of
operations and/or prospects of any WinZip Entity and/or the Business.

         "NET DEBT" shall mean long-term indebtedness of the WinZip Entities, on
a consolidated basis, minus cash.

         "ORDINARY COURSE OF BUSINESS" shall mean the ordinary course of
business of the Company, consistent with past practice.

         "ORIGINAL STOCK PURCHASE AGREEMENT" shall mean that certain Stock
Purchase Agreement dated as of January 18, 2005 pursuant to which Vector WZ
Holdings, Ltd., a Cayman Islands corporation acquired all of the issued and
outstanding securities of WinZip Computing, Inc., a Connecticut corporation.

         "OWNED INTELLECTUAL PROPERTY" shall mean all Intellectual Property that
is owned by any of the WinZip Entities.

         "PARTY" shall mean each of the parties to this Agreement.

         "PATENTS" shall mean all United States and foreign patents and
applications therefor and all reissues, divisions, renewals, extensions,
provisionals, continuations and continuations-in-part thereof.

         "PER SHARE CONSIDERATION" shall have the meaning set forth in Section
2.01(a).

         "PERMITS" shall have the meaning set forth in Section 3.17(b).

         "PERSON" shall mean any individual, partnership, venture,
unincorporated association, organization, syndicate, corporation, limited
liability company or other entity, trust, or trustee, executor, administrator or
other legal or personal representative, or Governmental Authority.

         "PURCHASER" shall have the meaning set forth in the preamble.

         "PURCHASER CLAIM" shall have the meaning set forth in Section 9.01(b).

         "PURCHASER INDEMNIFIED PARTIES" shall have the meaning set forth in
Section 9.01(a).

         "PURCHASER SPECIFIED REPRESENTATIONS" shall have the meaning set forth
in Section 9.02(c)(i).


                                      A-4

         "QUALIFIED PLAN" shall have the meaning set forth in Section 3.16(d).

         "REAL PROPERTY" shall have the meaning set forth in Section 3.11.

         "REGISTERED INTELLECTUAL PROPERTY" shall mean all United States,
international and foreign: (i) Patents; (ii) registered trademarks, applications
to register trademarks, intent-to-use applications, or other registrations or
applications related to trademarks; (iii) registered copyrights and applications
for copyright registration; and (iv) any other Intellectual Property that is the
subject of an application, certificate, filing, registration or other document
issued by, filed with, or recorded by, any state, government or other public
legal authority.

         "REGISTERED OWNED INTELLECTUAL PROPERTY" shall mean Owned Intellectual
Property that is Registered Intellectual Property.

         "REGISTRATION RIGHTS AGREEMENT" shall mean the Registration Rights
Agreement, in the form attached hereto as Exhibit B.

         "RESTRICTED PROPERTY" shall mean the Restricted Shares, together with
all dividends (whether cash, stock or otherwise) or other distributions made or
paid in respect of such Restricted Shares after the Closing Date.

         "RESTRICTED SHARES" shall mean ninety-three thousand two hundred
thirty-eight (93,238) Corel Shares.

         "SECURITIES ACT" shall have the meaning set forth in Section 4.05(a).

         "SELLER" shall have the meaning set forth in the preamble.

         "SELLER CLAIM" shall have the meaning set forth in Section 9.02(b).

         "SELLER INDEMNIFIED PARTIES" shall have the meaning set forth in
Section 9.02(a).

         "SELLER SPECIFIED REPRESENTATIONS" shall have the meaning set forth in
Section 9.01(c)(i).

         "SELLER TAX REORGANIZATION" shall mean any or all structuring steps
undertaken by the Seller and/or its Affiliates in respect of the WinZip Entities
subsequent to January 18, 2005.

         "SOFTWARE PRODUCT" shall mean the English-language version of the
WinZip software product that is delivered by the Company to the customer on a
distribution diskette (or the downloadable equivalent thereof) in the form in
which it was delivered at any time prior to the date of this Agreement
(including any beta versions that were released to the public).

         "SURVIVAL EXPIRATION DATE" shall have the meaning set forth in Section
9.03.

         "TAX RETURNS" shall mean any return, report, document, statement or
form required to be filed with respect to any Taxes (including any schedules
required to be attached thereto),


                                      A-5

including information returns, claims for refund, amended returns and
declarations of estimated Tax.

         "TAXES" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, withholding tax or payroll tax), levy, assessment, tariff, duty (including
any customs duty), deficiency or fee, and any related charge or amount
(including any fine, penalty or interest), imposed, assessed or collected by or
under the authority of any Governmental Authority.

         "THRESHOLD" shall have the meaning set forth in Section 9.01(c)(i)(B).

         "TRANSACTION DOCUMENTS" shall mean, collectively, the agreements,
instruments, certificates and other documents delivered pursuant hereto or
otherwise in connection herewith, including, without limitation, the
Registration Rights Agreement and the Lockup Agreement.

         "TRANSACTIONS" shall mean, collectively, the transactions contemplated
by this Agreement and the Transaction Documents.

         "TRANSFER" shall mean to directly or indirectly transfer, sell, assign,
hypothecate, pledge, encumber, mortgage, charge, grant a security interest in,
exchange, gift, bequest or otherwise dispose of or enter into any other
arrangement by which possession, legal title, beneficial ownership or the right
to receive proceeds or benefits of or from the subject matter passes from one
Person to another, or to the same Person in a different capacity, whether or not
voluntary and whether or not for value, and any agreement to effect any of the
foregoing, and the words "Transferred", "Transferring" and similar words have
corresponding meanings.

         "WFF CREDIT AGREEMENT" shall mean that certain Credit Agreement, dated
as of June 29, 2005, by and among WinZip International, as Borrower, WinZip
Holdings, as Parent Guarantor, Wells Fargo Foothill, Inc., as Arranger and
Administrative Agent, and the Lenders signatory thereto.

         "WFF INDEBTEDNESS" shall mean any indebtedness or other obligation of
any WinZip Entity under the WFF Credit Agreement and related documentation.

         "WINZIP COMPUTING" shall have the meaning set forth in the preamble.

         "WINZIP ENTITIES" shall mean, collectively, WinZip Holdings and each
direct or indirect subsidiary of WinZip Holdings set forth on Part 3.01 of the
Disclosure Schedule, including, without limitation, WinZip Computing and WinZip
International.

         "WINZIP HOLDINGS" shall have the meaning set forth in the preamble.

         "WINZIP INTERNATIONAL" shall mean WinZip International, LLC, a Delaware
limited liability company.

         "WINZIP OPTION PLAN" shall have the meaning set forth in the recitals.


                                      A-6

         "WINZIP OPTIONS" shall have the meaning set forth in the recitals.

         "WINZIP OPTIONHOLDERS" shall have the meaning set forth in the
preamble.

         "WINZIP SHARES" shall have the meaning set forth in the preamble.


                                      A-7

                                                                         Annex B

                         WinZip Holdings Capitalization



           A                        B                      C                       D                      E

                                                    NO. OF SHARES OF          PERCENTAGE
                             CLASS OF STOCK          STOCK HELD BY            INTEREST IN
                              HELD BY SUCH                SUCH                APPLICABLE             PERCENTAGE
      SHAREHOLDER              SHAREHOLDER            SHAREHOLDER                CLASS                INTEREST
      -----------              -----------            -----------                -----                --------
                                                                                         



                                      B-1

                                                                         Annex C

                                  Corel Options



           A                        B                      C                       D                      E

                                                                            EXERCISE PRICE         OTHER MATERIAL
         WINZIP                 NUMBER OF              NUMBER OF               OF COREL            TERMS OF COREL
      OPTIONHOLDER           WINZIP OPTIONS          COREL OPTIONS              OPTIONS                OPTIONS
      ------------           --------------          -------------              -------                -------
                                                                                       




                                      C-1

EX-3.1

                                                                     Exhibit 3.1

(GRAPHIC) Industry Canada               Industrie Canada

CERTIFICATE                             CERTIFICAT
OF CONTINUANCE                          DE PROROGATION

CANADA BUSINESS                         LOI CANADIENNE SUR
CORPORATIONS ACT                        LES SOCIETES PAR ACTIONS

COREL CORPORATION                       434590-8

Name of corporation-Denomination        Corporation number-Numero de la societe
de la societe

I hereby certify that the above-named   Je certifie que la societe susmentionnee
corporation was continued under         a ete prorogee en vertu de l'article 187
section 187 of the Canada Business      de la Loi canadienne sur les societes
Corporations Act, as set out in the     par actions, tel qu'il est indique dans
attached articles of continuance.       les clauses de prorogation ci-jointes.


/s/ Richard G. Shaw                     January 27, 2006 / le 27 janvier 2006
- -------------------------------------   Date of Continuance - Date de la
Richard G. Shaw                         prorogation
Director - Directeur

CANADA (GRAPHIC)



(GRAPHIC) Industry Canada               Industrie Canada

                                                             
                                                     FORM 11                FORMULE 11
Canada Business    Loi canadienne sur les   ARTICLES OF CONTINUANCE   CLAUSES DE PROROGATION
Corporations Act    societes par actions          (SECTION 187)            (ARTICLE 187)



1 - Name of the Corporation             Denomination sociale de la societe
COREL CORPORATION

2 - The province or territory in        La province ou le territorie au Canada
Canada where the registered office is   ou se situera le siege social
to be situated

PROVINCE OF ONTARIO

3 - The classes and the maximum         Categories et le nombre maximal
number of shares that the corporation   d'actions que la societe est autorisee a
is authorized to issue                  emettre

an unlimited number of Common Shares and an unlimited number of Preferred
Shares, issuable in series, the rights, privileges, restrictions and conditions
of which are set out on the attached Schedule A

4 - Restrictions, if any, on share      Restrictions sur le transfert des
transfers                               actions, s'il y a lieu

See attached Schedule B

5 - Number (or minimum and maximum      Nombre (ou nombre minimal et maximal)
number) of directors                    d'administrateurs

minimum number of one: maximum number
often

6 - Restrictions, if any, on business   Limites imposees a I'activite
the corporation may carry on            commerciale de la societe, s'il y a lieu

None

7 - (1) If change of name effected,     (1) S'il y a changement de denomination
previous name                           sociale, indiquer la denomination
                                        sociale anterieure

(2) Details of incorporation            (2) Details de la constitution

Certificate and Articles of Amalgamation of Corel Corporation and 1679043
Ontario Limited under the Business Corporation Act (Ontario) dated December 1,
2005 to form Corel Corporation.

8 - Other provisions, if any             Autres dispositions, s'il y a lieu

The directors may appoint one or more additional directors, who shall hold
office for a term expiring not later than the close of the next annual meeting
of the shareholders, but the total number of directors so appointed may not
exceed one third of the number of directors elected at the previous annual
meeting of shareholders.


Date               Signature                     7 - Capacity of - En qualite de


January 27, 2006   /s/ Darren Sukonick               Assistant Secretary
                   ----------------------------

For Departmental Use Only                  Printed Name - Non et lettres moulees
A I'usage du ministere seulement           Darren Sukonick

Corporation No.
N(degrees) de la societe

IC 3247 (2001/11)                               DSG 03/2002

                                                                CANADA (GRAPHIC)



                                   SCHEDULE A

1.   PREFERRED SHARES

     The Preferred Shares, as a class, shall be designated as Preferred Shares
and shall have attached thereto the following rights, privileges, restrictions
and conditions:

1.1  Directors' Right to Issue in One or More Series

     The Preferred Shares may be issued at any time or from time to time in one
or more series. Before any shares of a series are issued, the board of directors
of the Corporation shall fix the number of shares that will form such series and
shall, subject to the limitations set out in the Articles, determine the
designation, rights, privileges, restrictions and conditions to be attached to
the Preferred Shares of such series, the whole subject to the filing with the
Director (as defined in the Canada Business Corporations Act (the "Act")) of
Articles of Amendment containing a description of such series including the
rights, privileges, restrictions and conditions determined by the board of
directors of the Corporation.

1.2  Ranking of the Preferred Shares

     The Preferred Shares of each series shall rank on a parity with the
Preferred Shares of every other series with respect to dividends and return of
capital and shall be entitled to a preference over the Common Shares of the
Corporation and over any other shares ranking junior to the Preferred Shares
with respect to priority in payment of dividends and in the distribution of
assets in the event of the liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary, or any other distribution of the
assets of the Corporation among its shareholders for the purpose of winding up
its affairs. If any cumulative dividends, whether or not declared, or declared
non-cumulative dividends or amounts payable on return of capital are not paid in
full in respect of any series of the Preferred Shares, the Preferred Shares of
all series shall participate rateably in respect of such dividends in accordance
with the sums that would be payable on such shares if all such dividends were
declared and paid in full, and in respect of such return of capital in
accordance with the sums that would be payable on such return of capital if all
sums so payable were paid in full; provided, however, that if there are
insufficient assets to satisfy in full all such claims as aforesaid, the claims
of the holders of the Preferred Shares with respect to return of capital shall
be paid and satisfied first and any assets remaining thereafter shall be applied
towards the payment and satisfaction of claims in respect of dividends. The
Preferred Shares of any series may also be given such other preferences not
inconsistent with the rights, privileges, restrictions and conditions attached
to the Preferred Shares as a class over the Common Shares of the Corporation and



over any other shares ranking junior to the Preferred Shares as may be
determined in the case of such series of Preferred Shares.

1.3  Voting Rights

     Except as hereinafter referred to or as required by law or unless provision
is made in the Articles relating to any series of Preferred Shares that such
series is entitled to vote, the holders of the Preferred Shares as a class shall
not be entitled as such to receive notice of, to attend or to vote at any
meeting of the shareholders of the Corporation.

1.4  Amendment With Approval of Holders of Preferred Shares

     The rights, privileges, restrictions and conditions attached to the
Preferred Shares as a class may be added to, changed or removed but only with
the approval of the holders of the Preferred Shares given as hereinafter
specified.

1.5  Approval of Holders of the Preferred Shares

     The approval of the holders of the Preferred Shares to add to, change or
remove any right, privilege, restriction or condition attaching to the Preferred
Shares as a class or in respect of any other matter requiring the consent of the
holders of the Preferred Shares may be given in such manner as may then be
required by law, subject to a minimum requirement that such approval be given by
resolution signed by all the holders of the Preferred Shares or passed by the
affirmative vote of at least 2/3 of the votes cast at a meeting of the holders
of the Preferred Shares duly called for that purpose.

     The formalities to be observed with respect to the giving of notice of any
such meeting or any adjourned meeting, the quorum required therefor and the
conduct thereof shall be those from time to time prescribed by the by-laws of
the Corporation with respect to meetings of shareholders, or if not so
prescribed, as required by the Act as in force at the time of the meeting. On
every poll taken at every meeting of the holders of the Preferred Shares as a
class, or at any joint meeting of the holders of two or more series of Preferred
Shares, each holder of Preferred Shares entitled to vote thereat shall have one
vote in respect of each $1.00 of the issue price of each Preferred Share held.

     COMMON SHARES

     The holders of the Common Shares shall be entitled to vote at all meetings
of shareholders of the Corporation except meetings at which only the holders of
the Preferred Shares as a



class or the holders of one or more series of the Preferred Shares are entitled
to vote, and shall be entitled to one vote at all such meetings in respect of
each Common Share held.

     After payment to the holders of the Preferred Shares of the amount or
amounts to which they may be entitled, the holders of the Common Shares shall be
entitled to receive any dividend declared by the board of directors of the
Corporation and to receive the remaining property of the Corporation upon
dissolution.



                                   SCHEDULE B

No shares of the Corporation may be transferred without either:

(a)  the approval of the directors of the Corporation expressed by a resolution
     passed at a meeting of the board of directors or by an instrument or
     instruments in writing signed by a majority of the directors; or

(b)  the approval of the holders of at least a majority of the shares of the
     Corporation entitling the holders thereof to vote in all circumstances
     (other than holders of shares who are entitled to vote separately as a
     class) for the time being outstanding expressed by a resolution passed at a
     meeting of the holders of such shares or by an instrument or instruments in
     writing signed by the holders of a majority of such shares.

EX-3.2

                                                                     Exhibit 3.2

   (GRAPHIC)
CANADAIAN FLAG

Industry Canada                         Industrie Canada

CERTIFICATE                             CERTIFICAT
OF AMENDMENT                            DE MODIFICATION

CANADA BUSINESS                         LOI CANADIENNE SUR
CORPORATIONS ACT                        LES SOCIETES PAR ACTIONS

                                     
          COREL CORPORATION                             434590-8
   Name of corporation-Denomination     Corporation number-Numero de la societe
            de la societe

I hereby certify that the articles of   Je certifie que les statuts de la
the above-named corporation were        societe susmentionnee ont ete modifies:
amended:

a)   under section 13 of the Canada     [ ]  a)   en vertu de l'article 13 de la
     Business Corporations Act in                 Loi canadienne sur les
     accordance with the attached                 societes par actions,
     notice;                                      conformement a l'avis
                                                  ci-joint;

b)   under section 27 of the Canada     [ ]  b)   en vertu de l'article 27 de la
     Business Corporations Act as set             Loi canadienne sur les
     out in the attached articles of              societes par actions, tel
     amendment designating a series               qu'il est indique dans les
     of shares;                                   clauses modificatrices
                                                  ci-jointes designant une serie
                                                  d'actions;

c)   under section 179 of the Canada    [X]  c)   en vertu de l'article 179 de
     Business Corporations Act as set             la Loi canadienne sur les
     out in the attached articles of              societes par actions, tel
     amendment;                                   qu'il est indique dans les
                                                  clauses modificatrices
                                                  ci-jointes;

d)   under section 191 of the Canada    [ ]  d)   en vertu de l'article 191 de
     Business Corporations Act as set             la Loi canadienne sur les
     out in the attached articles of              societes par actions, tel
     reorganization;                              qu'il est indique dans les
                                                  clauses de reorganisation
                                                  ci-jointes;




/s/ Richard G. Shaw                         MARCH 31, 2006 / LE 31 MARS 2006
- -------------------------------------   Date of Amendment - Date de modification
Richard G. Shaw
Director - Directeur

   (GRAPHIC)
CANADAIAN FLAG



   (GRAPHIC)
CANADAIAN FLAG

                                                           
INDUSTRY CANADA    INDUSTRIE CANADA                 FORM 4               FORMULAIRE 4
                                            ARTICLES OF AMENDMENT   CLAUSES MODIFICATRICES
CANADA BUSINESS    LOI CANADIENNE SUR LES    (SECTIONS 27 OR 177)    (ARTICLES 27 OU 177)
CORPORATIONS ACT   SOCIETES PAR ACTIONS



1 -- Name of the Corporation - Denomination sociale de is societe

COREL CORPORATION

2 -- Corporation No. - No de la societes

434590-8

3 -- The articles of the above-named corporation are amended as follows:

Las statuts de la sociate mentinnee cl-dessus sont modifies de la facon
sulvante:

The articles of the Corporation are amended to:

1. Change each 11.710548 issued and outstanding Common Shares into 1 Common
Share (the "Reverse Share Split"), and any fractional Common Share resulting
from the Reverse Share Split shall be rounded up to the nearest whole Common
Share.

2. Delete the following from section 4 of the certificate and articles of
continuance of the Corporation dated January 27, 2006;

"No shares of the Corporation may be transferred without either:

(a) the approval of the directors of the Corporation expressed by a resolution
passed at a meeting of the board of directors or by an instrument or instruments
in writing signed by a majority of the directors; or

(b) the approval of the holders of at least a majority of the shares of the
Corporation entitling the holders thereof to vote in all circumstances (other
than holders of shares who are entitled to vote separately as a class) for the
time being outstanding expressed by a resolution passed at a meeting of the
holders of such shares or by an instrument or instruments in writing signed by
the holders of a majority of such shares.".

                                                                                          
Signature                Printed Name - Nom en lettres moultes   4 - Capacity of - En qualite de   5 - Tel. No. -No de tel


/s/ Darren Sukonick      Darren Sukonick                         Authorized officer                416-865-8195
- ----------------------




FOR DEPARTMENTAL USE ONLY

                                                                     (GRAPHIC)
                                                                  CANADAIAN FLAG

EX-3.3

                                                                     Exhibit 3.3

                                  BY-LAW NO. 1
                                       OF
                               COREL CORPORATION
                               (THE "CORPORATION")

                                1. INTERPRETATION

1.1 Expressions used in this By-law shall have the same meanings as
corresponding expressions in the Canada Business Corporations Act (the "Act").

                                2. FINANCIAL YEAR

2.1 Until changed by the directors, the financial year of the Corporation shall
end on the last day of November in each year.

                                  3. DIRECTORS

3.1 Number. The number of directors shall be not fewer than the minimum and not
more than the maximum provided in the articles. At each election of directors
the number elected shall be the number of directors then in office unless the
directors or the shareholders otherwise determine.

3.2 Quorum. A quorum of directors shall be a majority or, such greater or lesser
number as the directors or shareholders may from time to time determine.

3.3 Calling of Meetings. Meetings of the directors shall be held at such time
and place as the Chair of the Board, the President or any two directors may
determine.

3.4 Notice of Meetings. Notice of the time and place of each meeting of
directors shall be given to each director by telephone not less than 48 hours
before the time of the meeting or by written notice not less than four days
before the date of the meeting, provided that the first meeting immediately
following a meeting of shareholders at which directors are elected may be held
without notice if a quorum is present. Meetings may be held without notice if
the directors waive or are deemed to waive notice.

3.5 Meeting by Telephonic or Electronic Facility. If all the directors of the
Corporation consent, a meeting of directors or of a committee of directors may
be held by means of a telephonic, electronic or other communication facility
that permits all persons participating in the meeting to communicate adequately
with each other, and a director participating in a meeting by such means is
deemed to be present at that meeting.



                                       -2-


3.6 Chair. The Chair of the Board, or in the Chair's absence the President if a
director, or in the President's absence a director chosen by the directors at
the meeting, shall be chair of any meeting of directors.

3.7 Voting at Meetings. At meetings of directors each director shall have one
vote and questions shall be decided by a majority of votes. In case of an
equality of votes the chair of the meeting shall have a second or casting vote.

                                  4. COMMITTEES

4.1 Committees of Directors. The directors may appoint from among their number
one or more committees of directors and delegate to them any of the powers of
the directors except those which under the Act a committee of directors has no
authority to exercise.

4.2 Audit Committee. The directors shall appoint from among their number an
audit committee composed of not fewer than three directors, a majority of whom
are not officers or employees of the Corporation or any affiliate of the
Corporation. The audit committee shall review the financial statements of the
Corporation and shall report thereon to the directors of the Corporation before
such financial statements are approved by the directors. The auditor of the
Corporation is entitled to receive notice of every meeting of the audit
committee and, at the expense of the Corporation, to attend and be heard
thereat; and, if so requested by a member of the audit committee, shall attend
every meeting of the committee held during the term of office of the auditor.
The auditor of the Corporation or any member of the audit committee may call a
meeting of the committee.

4.3 Transaction of Business. The powers of a committee appointed by the
directors may be exercised at a meeting at which a quorum is present or by
resolution in writing signed by all members of the committee entitled to vote on
that resolution at a meeting of the committee. Meetings of a committee may be
held at any place in or outside Canada.

4.4 Procedure. Unless otherwise determined by the directors each committee shall
have power to fix its quorum and to regulate its procedure, including the power
to adopt a committee charter. Unless otherwise determined by each committee, a
majority of the committee members shall constitute a quorum.



                                       -3-


                                   5. OFFICERS

5.1 General. The directors may from time to time appoint a Chair of the Board, a
President, one or more Vice-Presidents, a Secretary, a Treasurer and such other
officers as the directors may determine.

5.2 Chair of the Board. The Chair of the Board, if any, shall be appointed from
among the directors and when present shall be chair of meetings of directors and
shareholders and shall have such other powers and duties as the directors may
determine.

5.3 President. Unless the directors otherwise determine the President shall be
the chief executive officer of the Corporation and shall have general
supervision of its business and affairs and in the absence of a Chair of the
Board shall be chair of meetings of directors and shareholders when present.

5.4 Vice-President. A Vice-President shall have such powers and duties as the
directors or the chief executive officer may determine.

5.5 Secretary. The Secretary shall give required notices to shareholders,
directors, auditors and members of committees, act as secretary of meetings of
directors and shareholders when present, keep and enter minutes of such
meetings, maintain the corporate records of the Corporation, have custody of the
corporate seal and shall have such other powers and duties as the directors or
the chief executive officer may determine.

5.6 Treasurer. The Treasurer shall keep proper accounting records in accordance
with the Act, have supervision over the safekeeping of securities and the
deposit and disbursement of funds of the Corporation, report as required on the
financial position of the Corporation, and have such other powers and duties as
the directors or the chief executive officer may determine.

5.7 Assistants. Any of the powers and duties of an officer to whom an assistant
has been appointed may be exercised and performed by such assistant unless the
directors or the chief executive officer otherwise direct.

5.8 Variation of Duties. The directors may, from time to time, vary, add to or
limit the powers and duties of any officer.



                                       -4-


5.9 Term of Office. Each officer shall hold office until the officer's successor
is elected or appointed, provided that the directors may at any time remove any
officer from office but such removal shall not affect the rights of such officer
under any contract of employment with the Corporation.

                        6. INDEMNIFICATION AND INSURANCE

6.1 Indemnification of Directors and Officers. The Corporation shall indemnify a
director or officer, a former director or officer or a person who acts or acted
at the Corporation's request as a director or officer, or in a similar capacity
of another entity, and the heirs and legal representatives of such a person to
the fullest extent permitted by the Act.

6.2 Insurance. The Corporation may purchase and maintain insurance for the
benefit of any person referred to in the preceding section to the extent
permitted by the Act.

                                 7. SHAREHOLDERS

7.1 Quorum. A quorum for the transaction of business at a meeting of
shareholders shall be one person present and being, or representing by proxy,
shareholders holding in the aggregate not less than 20% of the issued shares
entitled to be voted at the meeting. If within half an hour from the time set
for a general meeting, a quorum is not present, the meeting, if convened by
requisition of shareholders, shall be dissolved; but otherwise it shall stand
adjourned to the same day in the next week at the same time and place without
any requirement to give notice of the adjourned meeting to shareholders. If at
the adjourned meeting a quorum is not present within half an hour from the time
set for the meeting, the person or persons present and being, or representing by
proxy, one or more shareholders entitled to attend and vote at the meeting shall
constitute a quorum.

7.2 Casting Vote. In case of an equality of votes at a meeting of shareholders
the Chair of the meeting shall have a second or casting vote.

7.3 Scrutineers. The Chair at any meeting of shareholders may appoint one or
more persons (who need not be shareholders) to act as scrutineer or scrutineers
at the meeting.

7.4 Electronic Meetings and Voting. If the directors or shareholders call a
meeting of shareholders, they, as the case may be, may determine that the
meeting of shareholders shall be held entirely by means of a telephonic,
electronic or other communication facility that permits all participants



                                       -5-


to communicate adequately with each other during the meeting, and any vote at
that meeting of shareholders shall be held entirely by means of that
communication facility

                             8. DIVIDENDS AND RIGHTS

8.1 Declaration of Dividends. Subject to the Act, the directors may from time to
time declare dividends payable to the shareholders according to their respective
rights and interests in the Corporation.

8.2 Payment. A dividend payable in money shall be paid by electronic funds
transfer or by cheque to the order of each registered holder of shares of the
class or series in respect of which it has been declared and shall be paid by
electronic funds transfer as directed by such holder and, if paid by cheque,
shall be mailed by prepaid ordinary mail to such registered holder at the
address of such holder in the Corporation's securities register, unless such
holder otherwise directs. In the case of joint holders the cheque shall, unless
such joint holders otherwise direct, be paid to the order of all of such joint
holders and shall be paid by electronic funds transfer as directed by such joint
holders and, if paid by cheque, shall be mailed to them at their address in the
Corporation's securities register. The payment by electronic funds transfer or
mailing of such cheque as aforesaid, unless the same is not paid on due
presentation, shall satisfy and discharge the liability for the dividend to the
extent of the sum represented thereby plus the amount of any tax which the
Corporation is required to and does withhold.

8.3 Non-Receipt of Cheques. In the event of non-receipt of any dividend cheque
by the person to whom it is sent as aforesaid, the Corporation shall issue to
such person a replacement cheque for a like amount on such terms as to
indemnity, reimbursement of expenses and evidence of non-receipt and of title as
the directors may from time to time prescribe, whether generally or in any
particular case.

8.4 Unclaimed Dividends. Any dividend unclaimed after a period of six years from
the date on which the same has been declared to be payable shall be forfeited
and shall revert to the Corporation.

                           9. EXECUTION OF INSTRUMENTS

9.1 Deeds, transfers, assignments, agreements, proxies and other instruments may
be signed on behalf of the Corporation by any one director or any one officer
holding the position of Chief Executive Officer, Chief Financial Officer, Chief
Operating Officer, Secretary or an Executive Vice President.



                                       -6-


                                   10. NOTICE

10.1 A notice mailed to a shareholder, director, auditor or member of a
committee shall be deemed to have been received at the time it would be
delivered in the ordinary course of mail unless there are reasonable grounds for
believing that the shareholder or director did not receive the notice or the
document at that time or at all.

10.2 Electronic Delivery. Provided the addressee has consented in writing or
electronically in accordance with the Act and the regulations thereunder, the
Corporation may satisfy the requirement to send any notice or document referred
to in section 10.1 by creating and providing an electronic document in
compliance with the Act and the regulations under the Act. An electronic
document is deemed to have been received when it enters the information system
designated by the addressee or, if the document is

posted on or made available through a generally accessible electronic source,
when the addressee receives notice in writing of the availability and location
of that electronic document, or, if such notice is sent electronically, when it
enters the information system designated by the addressee.

10.3 Accidental omission to give any notice to any shareholder, director,
auditor or member of a committee or non-receipt of any notice or any error in a
notice not affecting the substance thereof shall not invalidate any action taken
at any meeting held pursuant to such notice.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


          RESOLVED THAT the foregoing by-law is made a by-law of the Corporation
by the signatures hereto of all the directors of the Corporation pursuant to the
Canada Business Corporations Act, as of January 27, 2006.


                                        /s/ Alexander Slusky
                                        ----------------------------------------
                                        Alexander Slusky


                                        /s/ Douglas McCollam
                                        ----------------------------------------
                                        Douglas McCollam


                                        /s/ Ian Giffen
                                        ----------------------------------------
                                        Ian Giffen


                                        /s/ Steven Cohen
                                        ----------------------------------------
                                        Steven Cohen


                                        /s/ Amish Mehta
                                        ----------------------------------------
                                        Amish Mehta



          RESOLVED THAT the foregoing by-law is made a by-law of the Corporation
by the signatures hereto of all the directors of the Corporation pursuant to the
Canada Business Corporations Act, as of January 27, 2006.

                                        VECTOR CC HOLDINGS, SRL


                                        By: /s/ Alexander Slusky
                                            ------------------------------------
                                        Name: Alexander Slusky
                                        Title: Manager


                                        COREL HOLDINGS, L.P., acting by its
                                        General Partner, VECTOR CAPITAL PARTNERS
                                        II INTERNATIONAL, LTD.


                                        By: /s/ Alexander Slusky
                                            ------------------------------------
                                        Name: Alexander Slusky
                                        Title: Director


                                        /s/ Robert V. Voit
                                        ----------------------------------------
                                        Robert V. Voit, as Trustee




                                        /s/ Randy Eisenbach
                                        ----------------------------------------
                                        Randy Eisenbach

EX-4.1

                                                                     Exhibit 4.1

                          REGISTRATION RIGHTS AGREEMENT

                                  BY AND AMONG

                                COREL CORPORATION

                                     AND THE

                                  STOCKHOLDERS

                                  NAMED HEREIN

                                   DATED AS OF

                                 _______, 200[6]



                                TABLE OF CONTENTS



                                                                            PAGE
                                                                            ----
                                                                         
ARTICLE I     DEFINITIONS................................................     1

ARTICLE II    REGISTRATION RIGHTS........................................     5

ARTICLE III   REPRESENTATIONS, WARRANTIES AND AGREEMENTS.................    15

ARTICLE IV    INDEMNIFICATION AND CONTRIBUTION...........................    17

ARTICLE V     MISCELLANEOUS..............................................    22



                                       -i-



                          REGISTRATION RIGHTS AGREEMENT

          This Registration Rights Agreement (this "Agreement"), dated as of
_____, 200[6], is entered into by and among Corel Corporation, a Canadian
corporation (the "Company"), Vector Capital Partners II International, Ltd. and
Vector CC Holdings SRL (the "Demand Holders") and the persons listed on Annex A
hereto (the "Piggyback Holders," and together with the Demand Holders, the
"Stockholders"))

                                    RECITALS

          WHEREAS, the Company is offering to sell its common shares in an
initial public offering ("IPO") registered under the Securities Act of 1933, as
amended, pursuant to a registration statement on Form F-1, File No. 333-_____
(the "IPO Registration Statement") in the United States and pursuant to a long
form prospectus, including any amendments or supplements thereto, in the English
and French languages, in Canada (the "Canadian IPO Prospectus");

          WHEREAS, in connection with the IPO the Company intends to effect a
_____ for-one reverse stock split (the "Reverse Split") and issue common shares
to one or more of the Demand Holders (or their designated Affiliates) as
consideration for the Company's acquisition (the "Acquisition") of Cayman
Limited Holdco, a holding company that owns WinZip, formed in the Cayman
Islands;

          WHEREAS, the Demand Holders will own _____ common shares of the
Company immediately prior to the initial closing of the IPO, after giving effect
to the Reverse Split and the Acquisition, (the "Demand Shares");

          WHEREAS, the Piggyback Holders will collectively own _____ common
shares of the Company immediately prior to the initial closing of the IPO, after
giving effect to the Reverse Split (the "Piggyback Shares" and, together with
the Demand Shares, the "Shares");

          WHEREAS, the Stockholders have certain registration rights with
respect to the Shares currently owned by them, which are set forth in Section
2.5 and Schedule B of the Amended and Restated Minority Shareholders Agreement
dated as of _____ by and among the Company, the Stockholders and the trustee
("Existing Registration Rights"); and

          WHEREAS, in contemplation of the IPO, the parties have agreed to
terminate and replace the Existing Registration Rights with the respective
rights and obligations set forth in this Agreement.

          NOW, THEREFORE, in consideration of the premises, covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:


                                    ARTICLE I

                                   DEFINITIONS

          Section 1.01 Definitions.

          The following terms, as used in this Agreement, shall have the
following meanings:

          "Affiliate" shall mean, with respect to a specified Person, any other
Person, other than the Company or any of its Subsidiaries, that directly, or
indirectly through one or more intermediaries, controls, is controlled by or is
under common control with the specified Person. For purposes of this definition,
the term "control" (including, with correlative meanings, the terms
"controlling", "controlled by" and "under common control with") shall mean, with
respect to any Person, the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.

          "Blackout Periods" shall have the meaning set forth in Section
2.01(a).

          "Canadian Prospectus" shall mean a prospectus (including a short form
prospectus) prepared in accordance with applicable Canadian Securities Laws for
the purpose of qualifying securities for distribution on any province or
territory of Canada

          "Canadian IPO Prospectus" shall have the meaning set forth in the
recitals.

          "Canadian Securities Laws" shall mean statutes and regulations
applicable to the trading of securities in any province or territory of Canada,
including applicable rules, policy statements and blanket rulings and orders
promulgated by Canadian securities regulatory authorities.

          "Commission" shall mean the United States Securities and Exchange
Commission.

          "Common Shares" shall have the meaning set forth in the recitals.

          "Company" shall have the meaning set forth in the preamble.

          "Demand Holder" shall have the meaning set forth in the preamble,
provided, the term "Demand Holder" shall also include any Permitted Transferee
of a Demand Holder that holds Registrable Securities with a fair market value of
at least $[500,000].

          "Demand Request" shall have the meaning set forth in Section 2.01(a).

          "Exchange Act" shall mean the United States Securities Exchange Act of
1934, as amended.


                                       -2-



          "Existing Registration Rights" shall have the meaning set forth in the
preamble.

          "IPO" shall have the meaning set forth in the recitals.

          "IPO Date" shall mean the date of the first closing of the initial
sale of Common Shares in an initial public offering.

          "IPO Participants shall have the meaning set forth in Section 2.04(b).

          "IPO Registration Statement" shall have the meaning set forth in the
recitals.

          "Maximum Number" shall have the meaning set forth in Section 2.01(b).

          "Other Securities" shall have the meaning set forth in the definition
of Registrable Securities.

          "Piggyback Holder" shall have the meaning set forth in the preamble,
provided, the term "Piggyback Holder" shall also include any Permitted
Transferee of a Piggyback Holder that holds Registrable Securities.

          "Permitted Transferees" shall mean, with respect to any Holder, such
Holder's Affiliates.

          "Person" shall mean any individual, corporation, partnership, joint
venture, limited liability company, joint-stock company, association,
unincorporated organization, trust or other entity, including any government or
any political subdivision, agency or instrumentality thereof.

          "Preliminary Prospectus" shall mean any preliminary prospectus that
may be included in any Registration Statement.

          "Prospectus" or "prospectus" shall mean the prospectus included in any
registration statement filed under the Securities Act or filed pursuant to
Canadian Securities Laws (including, without limitation, a prospectus that
includes any information previously omitted from a prospectus filed as part of
an effective registration statement in reliance upon Rule 430A promulgated under
the Securities Act or the Canadian Securities Law equivalent thereof), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
registration statement, and by all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.

          "Public Offering" shall mean the offer of Common Shares on a broadly
distributed basis in the United States and/or Canada, not limited to
sophisticated investors, pursuant to a firm-commitment or best-efforts
underwriting arrangement.


                                       -3-



          "Registrable Securities" shall mean all or any portion of the Common
Shares owned by any Stockholder from time to time during the term of this
Agreement. As to any particular Registrable Securities, such Common Shares shall
cease to be Registrable Securities when: (i) a registration statement with
respect to the sale of such Common Shares shall have become effective under the
Securities Act or when a prospectus has been receipted under applicable Canadian
Securities Laws and such Common Shares shall have been disposed of under such
registration statement or pursuant to such Prospectus, (ii) such Common Shares
shall have been sold pursuant to Rule 144 or equivalent provisions under
Canadian Securities Laws, as applicable, (iii) such securities shall have
otherwise been transferred or disposed of, and subsequent transfer or
disposition of such Common Shares shall not require their registration or
qualification under the Securities Act, Canadian Securities Laws or any state,
territorial or provincial securities laws or similar laws then in force or (iv)
such Common Shares shall have been repurchased by the Company or otherwise shall
cease to be outstanding. If as a result of any reclassification, stock split,
stock dividend, bonus issue, business combination, exchange offer or other
transaction or event, any capital stock, evidences of indebtedness, warrants,
options, rights or other securities (collectively, "Other Securities") are
issued or transferred to any Stockholder in respect of Registrable Securities
held by such holder, references herein to Registrable Securities, Shares and
Common Shares, shall, as the context requires, be deemed to include such Other
Securities.

          "Registration Expenses" shall mean any and all expenses incident to
the performance of or compliance with any registration or marketing of
securities pursuant to Article 2, including: (i) the fees, disbursements and
expenses of the Company's counsel and accountants in connection with this
Agreement and the performance of the Company's obligations hereunder (including
the expenses of any annual audit letters and "cold comfort" letters required or
incidental to the performance of such obligations); (ii) all expenses, including
filing fees, in connection with the preparation, printing and filing of the
registration statement, any preliminary prospectus or final prospectus, any
other offering document and amendments and supplements thereto and the mailing
and delivering of copies thereof to any underwriters and dealers; (iii) the cost
of printing and producing any agreements among underwriters, underwriting
agreements, selling agreements and any other documents in connection with the
offering, sale or delivery of the securities to be disposed of; (iv) all
expenses in connection with the qualification of the securities to be disposed
of for offering and sale under provincial, territorial or state securities laws,
including the fees and disbursements of counsel for the underwriters or the
Stockholders in connection with such qualification and in connection with any
blue sky and legal investment surveys, including the cost of printing and
producing any such blue sky or legal investment surveys; (v) the filing and
legal fees incident to securing any required review by the National Association
of Securities Dealers, Inc. and/or Canadian securities regulatory authorities;
(vi) transfer agents' and registrars' fees and expenses and the fees and
expenses of any other agent or trustee appointed in connection with such
offering; (vii) all security engraving and security printing expenses; (viii)
all fees and expenses payable in connection with the listing of the securities
on any securities exchange or automated inter-dealer quotation system; (ix) any
other fees and disbursements of underwriters customarily paid by the issuers of
securities, but excluding


                                       -4-



underwriting discounts and commissions and transfer taxes, if any; (x) the costs
and expenses of the Company and its officers relating to analyst or investor
presentations or any "road show" undertaken in connection with the registration
and/or marketing of any Registrable Securities; and (xi) other reasonable
out-of-pocket costs, fees and expenses, including the fees and expenses of one
outside legal counsel retained by the Stockholders.

          "register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement of the
Company under the Securities Act and the effectiveness of such registration
statement. In addition, unless inconsistent with the context: (i) the term
"registration" and any reference to the act of registering include the
qualification under Canadian Securities Laws of a Canadian Prospectus in respect
of a distribution of the Registrable Securities; the term "registered" as
applied to the Registrable Securities, includes a distribution of Registrable
Securities so qualified; the term "registration statement" includes a Canadian
Prospectus; (iv) any reference to a registration statement having become
effective, or similar references, shall include a Canadian Prospectus for which
a final receipt has been obtained from the relevant Canadian securities
regulatory authorities; and (v) the provisions of this Agreement shall be
applied to any proposed distribution of securities hereunder in any province or
territory of Canada or to which the prospectus requirements under any Canadian
Securities Laws shall otherwise apply.

          "Rule 144" shall mean Rule 144 (or any successor provisions) under the
Securities Act.

          "Rule 415 Offering" means an offering on a delayed or continuous basis
pursuant to Rule 415 (or any successor rule to similar effect) under the
Securities Act.

          "Securities Act" shall mean the United States Securities Act of 1933,
as amended, including all rules and regulations thereunder.

          "Selling Stockholder" shall mean a Stockholder included in a relevant
Registration Statement.

          "Stockholder" shall have the meaning set forth in the preamble,
provided, the term "Stockholder" shall also include any Permitted Transferee of
a Stockholder that holds Registrable Securities from time to time.

                                   ARTICLE II

                               REGISTRATION RIGHTS

          Section 2.01

          (a) Demand Rights. At any time, and from time to time, on or after the
IPO Date, a Demand Holder shall have the right to require the Company to effect
the registration under the Securities Act and/or applicable Canadian Securities
Laws for a Public Offering of all or part of such Demand Holder's Registrable
Securities (a "Demand Registration"), by delivering to the Company written
notice naming, if


                                       -5-



applicable, the Demand Holders whose Registrable Securities are to be included
in such registration (collectively, the "Demanding Holders"), specifying the
number of Registrable Securities to be included in such registration and the
intended method of distribution thereof (which requested method of disposition
may be a Rule 415 Offering and/or the Canadian Securities Law equivalent
thereof, including National instrument 44-102) (the "Demand Request"). Upon
receipt of such Demand Request, the Company shall comply with Section 2.05.

          (b) Limitations and Conditions. The Company's obligations pursuant to
Section 2.01(a) above are subject to the following limitations and conditions:

               (i) the Company shall not be obligated to fulfill the
     requirements or effect or maintain a registration referred to therein (A)
     during any period of time (not to exceed ninety (90) days in the aggregate
     with respect to each request) when the Company has determined to proceed
     with a Public Offering for its own account and, in the good faith judgment
     of the managing underwriter thereof, the fulfillment of such requirements
     or such filing would have an adverse effect on such Public Offering, (B)
     during any period of time (not to exceed sixty (60) days with respect to
     each request) when the Company is in possession of material non-public
     information that the board of directors of the Company has in its good
     faith judgment determined could materially and adversely affect a material
     business situation, financing transaction or negotiation affecting the
     Company, (C) during the 90-day period following the effectiveness of any
     previous registration statement or (D) during the 180-day period following
     the effectiveness of the IPO Registration Statement, except, in the case of
     clause (D) hereof, as permitted under Section 2.4 hereof or with the prior
     written consent of Morgan Stanley & Co. Incorporated ("Morgan Stanley")(the
     periods of time referred to in clauses (A), (B), (C) and (D) hereof being
     hereinafter referred to as "Blackout Periods"); provided that the aggregate
     period of time during which the Company shall be relieved from its
     obligation to effect a registration pursuant to Section 2.01(b)(i), shall
     in no event, except in the case of clause (D), exceed ninety (90)
     consecutive days with respect to each request; provided, further, that, in
     the case of a Blackout Period pursuant to clause (A) hereof, the Blackout
     Period shall earlier terminate upon the completion or abandonment of the
     relevant Public Offering; provided, further, that in the case of a Blackout
     Period pursuant to clause (B) hereof, the Blackout Period shall commence
     upon the delivery of notice to the Stockholders and shall terminate upon
     the earlier of: (i) public disclosure by the Company or public admission by
     the Company of such material nonpublic information or (ii) such time as
     such material nonpublic information shall be publicly disclosed or such
     time that the Company is no longer in possession of material nonpublic
     information; provided, further, that in the event the Stockholders are
     notified of the initiation of a Blackout Period pursuant to clause (B)
     hereof, the Stockholders shall cease and desist from effecting any further
     sales pursuant to an effective registration statement or a receipted
     prospectus during such Blackout Period; provided, further, that in the case
     of a Blackout Period pursuant to clauses (A), (B), (C) or (D) hereof, the
     Company shall furnish to the Demand Holder, upon request, a certified
     resolution of the


                                       -6-



     Company's board of directors to the effect that an event permitting a
     Blackout Period has occurred; provided, further, that the Company shall not
     be entitled to exercise its rights under clause (B) hereof more than one
     (1) time in any twelve (12) month period; and provided, further, if the
     Demand Holder withdraws its Demand Request pursuant to Section 2.01(e),
     such request shall not be considered a Demand Request for purposes of
     Section 2.01(a) and such Demand Request shall be of no further effect;

               (ii) the number of Common Shares to be sold in any such Public
     Offering shall not exceed the maximum number which the managing underwriter
     thereof considers in good faith to be appropriate based on market
     conditions and other relevant factors, including pricing and the proportion
     of Common Shares being sold by the Company and by such holders (the
     "Maximum Number"); and

               (iii) the Registrable Securities to be offered pursuant to such
     request have an aggregate offering price of at least US $[100,000] (based
     on the then current market price on the date of delivery of the Demand
     Request).

          (c) Number of Demands. Any Demand Holder may exercise its rights under
Section 2.01(a): (x) on an unlimited number of occasions with respect to
registration statements on Form F-3 or S-3 and/or any Canadian Securities Law
equivalent thereof (or any successors thereto) from such time that the Company
becomes eligible to use such forms; and (y) on not more than three occasions
after the date hereof with respect to registration statements on Form F-1 or S-1
and/or any Canadian Securities Law equivalent thereof (or any successors
thereto); provided that the Company shall not be obligated to effect more than
one registration of Registrable Securities in any 90-day period.

          (d) Ineffective Demands. A request by a Demand Holder that the Company
effect a registration shall not be considered a Demand Request if: (i) the
registration statement relating thereto does not become effective; (ii) after it
has become effective such registration statement (or the use of the Prospectus
contained in such registration statement) is (A) interfered with by any stop
order, injunction or other order or requirement of the Commission, Canadian
securities regulators or other governmental agency or court for any reason other
than a misrepresentation or an omission by any Demand Holder or (B) delayed,
withdrawn, suspended or terminated and, in each case, as a result thereof, at
least 80% of the Registrable Securities requested to be registered cannot be
completely distributed in accordance with the plan of distribution set forth in
the related registration statement; or (iii) the conditions to closing specified
in any purchase agreement or underwriting agreement entered into in connection
with such registration are not satisfied or waived other than because of some
act or omission by such Demand Holder.

          (e) Withdrawal of Demands. Any such Demanding Holder delivering a
Demand Request shall have the right, at any time prior to the effective date of
the registration statement relating to such Demand Request, to withdraw such
Demand


                                       -7-



Request without liability to such Demanding Holder, by giving written notice to
the Company.

          (f) Selection of Underwriters. In the event that any registration
pursuant to Section 2.01(a) shall involve, in whole or in part, an underwritten
offering, the Demanding Holders shall select the lead managing underwriter or
underwriters and bookrunner or bookrunners for such underwritten offering (after
consultation with the Company), as well as counsel for the Selling Holders, with
respect to such registration; provided, that the Company shall have the right to
appoint other syndicate members with the consent of the Demanding Holders not to
be unreasonably withheld.

          (g) Inclusion of Non-Stockholders. Subject to Section 2.10, the
Company shall have the right to cause the registration of additional equity
securities for sale for the account of any Person that is not a Stockholder
(including the Company and any directors, officers or employees of the Company)
in any registration of Registrable Securities requested by the Stockholders;
provided that the number of Registrable Securities to be included in such
registration (including those sought by the Stockholders) shall not exceed the
Maximum Number; and provided, further, that in all cases, the Demand Holders
shall have priority over any such other Person.

          Section 2.02

          (a) "Piggy-Back" Rights. If the Company proposes to register any of
its Common Shares, any other equity securities or securities convertible into or
exchangeable for its equity securities under the Securities Act and/or
applicable Canadian Securities Laws (including, without limitation, in
connection with a Demand Request), whether or not for sale for its own account,
in a manner that would permit registration of Registrable Securities for sale
for cash to the public under the Securities Act and/or applicable Canadian
Securities Laws, the Company shall give written notice of such proposal at least
thirty (30) days before the anticipated filing date, to each Stockholder. In the
event that the Company elects to file a "universal shelf" registration statement
or the Canadian Securities Law equivalent thereof which registers any of the
classes of securities referred to in the first sentence of this Section 2.02(a),
the Company shall take such steps as would permit the shelf registration
statement to be used to permit secondary sales by the Stockholders and shall
give written notice of any proposal to make an offering off the shelf
registration statement of any class of securities referred to in the first
sentence of this Section 2.02(a) at least ten (10) days before, and, if
practicable, up to thirty (30) days before, the anticipated offering date, to
each Stockholder. Such notices, as applicable, shall specify at a minimum the
intended method of distribution of such Common Shares or other securities, the
number of Common Shares or other securities proposed to be registered or
offered, the proposed filing date of such registration statement or offering
date in the case of a shelf takedown, any proposed means of distribution of such
Common Shares or other securities and the proposed managing underwriter, if any.
Subject to Section 2.03, upon the written request of a Stockholder (the
"Piggyback Request"), given within fifteen (15) days after the transmittal of
any such written notice by email or facsimile confirmed by mail (which request
shall specify the Registrable Securities intended to be disposed of by such
Stockholder), the Company


                                       -8-



will include in the prospectus with respect to such Public Offering, or any
prospectus supplement in the case of a shelf takedown, the number of the
Registrable Securities referred to in such Stockholder's request; provided,
that, any participation in such Public Offering by such Stockholder shall be on
substantially the same terms as the Company's participation therein; and
provided, further, that the number of Registrable Securities to be included in
any such Public Offering shall not exceed the Maximum Number.

          (b) Withdrawal of Request. Any such Stockholder shall have the right
to withdraw a request to include Registrable Securities in any Public Offering
pursuant to Section 2.02(a), without any liability of such Stockholder by giving
written notice to the Company of its election to withdraw such request at any
time prior to the proposed effective date of such registration statement.

          (c) Exception to Piggyback Rights. The Company shall not be required
to effect any registration of Registrable Securities under Section 2.02(a)
incidental to the registration of any equity securities on a Form S-8, Form S-4
or Form F-4 or any similar registration under Canadian Securities Laws (or any
successors thereto).

          Section 2.03 Allocation of Securities Included in a Public Offering.
If the registration referred to in Section 2.01(a) and Section 2.02(a) is to be
a Public Offering and the managing underwriter thereof advises the Company and
the Selling Holders in writing that the number of Common Shares sought to be
included in such Public Offering (including those sought to be offered by the
Company and those sought to be offered by the Selling Holders) exceeds the
Maximum Number, the Common Shares to be included in such Public Offering shall
be allocated pursuant to the procedures of this Section 2.03.

          (a) Demand Allocation. If a registration or Public Offering is
effected pursuant to Section 2.01(a), the number of Registrable Securities
included in such registration shall be allocated: (x) first, pro rata among the
Demand Holders, and (y) second, pro rata among all of the other Selling Holders
on the basis of the relative number of the Registrable Shares then held by each
such Selling Holder (with any number in excess of a Selling Holder's request
reallocated among the remaining Selling Holders in a like manner) or in such
manner as shall be designated by the Selling Holders.

          (b) Piggyback Allocation. If a registration or Public Offering is
effected pursuant to Section 2.02(a): the number of Registrable Securities
included in such registration shall be allocated: (x) first, to securities
sought to be included at the request of the Company ("Company Securities"), (y)
second, among the Demand Holders up to the full number of the Registrable
Securities included in the Piggyback Request, in excess of the number of Company
Securities, to the nearest extent possible on a pro rata basis, and (y) third,
among the other Selling Holders up to the full number of the Registrable
Securities included in the Piggyback Request, in excess of the number of Company
Securities, to the nearest extent possible on a pro rata basis.

          Section 2.04 (a) IPO Participation. The Company shall register for
resale the Registrable Securities held by the Stockholders listed on Annex B
hereto (the


                                       -9-



"IPO Participants") in the amounts set forth next to their respective names on
Annex B (allocated between the firm commitment underwritten offering and the
over-allotment option, as set forth on Annex B) on the IPO Registration
Statement and the Canadian IPO Prospectus, provided, such number of Registrable
Securities may be reduced and/or re-allocated between the firm commitment
underwritten offering and the over-allotment option [on a pro rata basis] in the
sole discretion of the Company.

          (b) Conditions to IPO Participation. As a condition to inclusion of
any Registrable Securities for resale under the IPO Registration Statement
and/or the Canadian IPO Prospectus, each IPO Participant must: (x) execute and
comply with the terms and provisions of an underwriting agreement in form and
substance reasonably satisfactory to the Company and customary for transactions
of this type;(y) execute and comply with the terms and provisions of a custody
agreement and irrevocable power of attorney in form and substance reasonably
satisfactory to the Company and customary for transactions of this type, and (z)
provide the Company and counsel with such documents, certificates, resolutions
and representations as may be reasonably requested in connection with satisfying
the conditions to closing the IPO (including any closing of the over-allotment
option) pursuant to the IPO underwriting agreement.

          Section 2.05 (a) Requirements with Respect to Registration. Subject to
Section 2.06, if and whenever the Company is required by the provisions hereof
to register any Registrable Securities under the Securities Act and/or Canadian
Securities Laws, including receipt of a Demand Request pursuant to Section
2.01(a), the Company shall comply with the provisions of this Section 2.05. The
Company shall prepare and file with the Commission and/or applicable Canadian
securities regulatory authorities as expeditiously as possible (and, in the case
of a Demand Request, no more than sixty (60) days after receipt of such Demand
Request) a Registration Statement with respect to such Registrable Securities
and use its best efforts to cause such Registration Statement to become and
remain effective; provided, however, that, as far in advance as practicable
before filing any Registration Statement or Prospectus or any amendments or
supplements thereto, the Company shall furnish to and afford each Selling Holder
and the managing underwriter(s), if any, a reasonable opportunity to review and
comment on copies of all such documents (including copies of any documents to be
incorporated by reference therein and all exhibits thereto) proposed to be
filed, and the Company shall make any corrections reasonably requested by a
Selling Holder with respect to such information before filing such registration
statement or Prospectus or any amendments or supplements thereto.

          (b) Maintaining Compliance and Effectiveness. The Company shall
prepare and file with the Commission and/or applicable Canadian securities
regulatory authorities as expeditiously as possible such amendments and
supplements to such registration statement and the prospectus used in connection
therewith and take such action as may be necessary to keep such registration
statement current and effective for a period of not less than one hundred eighty
(180) days (or such shorter period which shall terminate when all of such
Registrable Securities have been disposed of), and to comply with the provisions
of the Securities Act and/or applicable Canadian Securities Laws with


                                      -10-


respect to the disposition of such Registrable Securities during such period in
accordance with the intended methods of disposition set forth in such
registration statement.

          (c) Notification of Certain Events. The Company shall promptly notify
each Selling Holder (A) when the registration statement or any amendment or
supplement thereto has been filed, and, with respect to the registration
statement or any post-effective amendment thereto, when the same has become
effective or receipted, as applicable, (B) of any request by the Commission or
by any other regulatory body or other body having jurisdiction relating to such
offering for amendments or supplements to the registration statement or the
Prospectus or for additional information, (C) of any order issued or threatened
by the Commission and/or applicable Canadian securities regulatory authorities
suspending the effectiveness of such registration statement or preventing or
suspending the use of a prospectus or (D) of the issuance of any notification or
order with respect to the suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any jurisdiction
or the initiation of any proceedings for such purpose. The Company shall use its
best efforts to prevent the issuance of any such order referred to in (C) or (D)
and, if any such order is issued, shall use its best efforts to obtain the
withdrawal of any such order at the earliest possible moment. The Company shall
promptly notify each Selling Holder and the managing underwriter(s), if any, in
writing at any time when a Prospectus is required to be delivered under the
Securities Act and/or applicable Canadian Securities Laws of the happening of
any event as a result of which the Prospectus included in such registration
statement, as then in effect, contains an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and the Company shall promptly prepare and furnish to each
Selling Holder a reasonable number of copies of any supplement or amendment to
such Prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such Prospectus shall not 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, in light of the
circumstances under which they are made, not misleading.

          (d) Other Qualifications. The Company shall use its best efforts to
register or qualify the Registrable Securities covered by such registration
statement under the state, local provincial and territorial securities or blue
sky laws of such jurisdictions in the United States and Canada as the Selling
Holders or the managing underwriter(s) shall reasonably request, and do any and
all other acts and things that may be reasonably necessary or advisable to
enable each Selling Holder and underwriter to consummate the disposition of the
Registrable Securities in such jurisdictions; provided, however, that in no
event shall the Company be required (A) to qualify to do business as a foreign
corporation in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph, or (B) to execute or file any general consent
to service of process in any such jurisdiction. The Company shall use its best
efforts to cause all Registrable Securities covered by such registration
statement to be registered with or approved by such other governmental agencies
or authorities in the United States and Canada as may be necessary to enable the
Selling Holders to consummate the disposition of such Registrable Securities.


                                      -11-



          (e) Listing. The Company shall use its best efforts to cause all
Registrable Securities covered by such registration statement to be (A) listed
on the Nasdaq and the Toronto Stock Exchange and (B) listed or qualified for
trading on any other stock exchange or quotation service on which the Company's
outstanding Common Shares are listed or qualified for trading; provided that the
applicable listing requirements are satisfied no later than the effective date
of such registration statement.

          (f) Documents to be Delivered. The Company shall furnish to each
Selling Holder and each underwriter, if any, of the Registrable Securities
covered by such registration statement such number of copies of (A) such
registration statement and each amendment and supplement thereto (in each case
including all exhibits), including conformed copies, (B) the Prospectus included
in such registration statement (including each preliminary prospectus), in
conformity with the requirements of the Securities Act and/or applicable
Canadian Securities Laws, (C) such documents incorporated by reference in such
registration statement or Prospectus, and (D) such other documents as such
Selling Holder or such underwriter, if any, may reasonably request, and a copy
of any and all transmittal letters or other correspondence to or received from
the Commission and/or applicable Canadian securities regulatory authorities or
any other governmental agency or self-regulatory body or other body having
jurisdiction (including any domestic or foreign securities exchange) relating to
such offering.

          (g) Opinions and Comfort Letters. In connection with an underwritten
offering of Registrable Securities, the Company shall (A) cause opinions of
counsel to the Company (which counsel and opinions shall be reasonably
satisfactory to the managing underwriter(s)), to be delivered to the
underwriters and the Selling Holders covering the matters customarily covered in
opinions requested in underwritten offerings by selling security holders and (B)
cause "cold comfort" letters and updates thereof (which letters and updates
shall be reasonably satisfactory to the managing underwriter(s)) from the
independent certified public accountants of the Company (and, if necessary, any
other independent certified public accountants of any subsidiary of the Company
or of any business acquired or owned by the Company for which financial
statements and financial data are, or are required to be, included in the
Registration Statement), to be delivered to each of the underwriters and the
Selling Holders of such Registrable Securities included in such underwritten
offering, such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with underwritten
offerings by selling security holders.

          (h) Earnings Statement. The Company shall comply with all applicable
rules and regulations of the Commission and/or applicable Canadian securities
regulatory authorities and make generally available to security holders earnings
statements satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder (or any similar rule promulgated under the Securities Act or
applicable Canadian Securities Laws) not later than 45 days after the end of any
12-month period (or 90 days after the end of any 12-month period if such period
is a fiscal year) (A) commencing at the end of any fiscal quarter in which
Registrable Securities are sold to underwriters in a Public Offering and (B) if
not sold to underwriters in such an offering,


                                      -12-



commencing on the first day of the fiscal quarter of the Company after the
effective date of a registration statement, which statements shall cover said
12-month periods.

          (i) Cooperation on Regulatory Filings. The Company shall cooperate
with each Selling Holder and the managing underwriter, if any, participating in
the disposition of such Registrable Securities in connection with any filings
required to be made with the National Association of Securities Dealers, Inc.
and/or applicable securities regulatory authorities in Canada.

          (j) Cooperation in Marketing. The Company shall use its best efforts
to cooperate as requested by the Selling Holders in customary marketing efforts
undertaken in connection with the Registrable Securities, including sending
appropriate officers of the Company to attend any "road shows" and investor and
rating agency presentations scheduled in connection with any such registration.

          (k) Share Certificates. The Company shall furnish for delivery in
connection with the closing of any offering of Registrable Securities pursuant
to a registration effected pursuant to Section 2.01(a) or Section 2.02(a)
unlegended certificates representing ownership of the Registrable Securities
being sold in such denominations as shall be requested by each Selling Holder or
the underwriters.

          (l) General Cooperation. The Company shall enter into any other
customary agreements and take such other actions as are reasonably required in
order to expedite or facilitate the disposition of any Registrable Securities or
otherwise.

          (m) Condition to Company's Obligation. It shall be a condition
precedent to the obligation of the Company to take any action with respect to
any Registrable Securities that the holder thereof, shall furnish to the Company
such information regarding such holder, the Registrable Securities and any other
Company securities held by such holder as the Company shall reasonably request
and as shall be required in connection with the action taken by the Company.

          (n) Actions Upon Notice of Certain Events. Each holder of Registrable
Securities agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 2.04(c), such
Stockholder will forthwith discontinue disposition of Registrable Securities
until such Stockholder's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 2.04(c), and, if so directed by the Company
such Stockholder will deliver to the Company (at the Company's expense) all
copies (including, without limitation, any and all drafts), other than permanent
file copies, then in such Stockholder's possession, of the prospectus covering
such Registrable Securities current at the time of receipt of such notice. In
the event that the Company shall give any such notice, the period mentioned in
Section 2.04(b) shall be extended by the greater of (A) three months, or (B) the
number of days during the period from and including the date of the giving of
such notice pursuant to Section 2.04(c) to and including the date when each
holder of Registrable Securities covered by such registration statement shall
have received the copies of the supplemented or amended prospectus contemplated
by Section 2.04(c).


                                      -13-



          Section 2.06 Transfers; Rights of Transferee of Registrable
Securities.

          Each Stockholder agrees not to make any transfer of all or any portion
of the Registrable Securities unless:

          (a) there is then in effect a registration statement under the
Securities Act and/or applicable Canadian Securities Laws covering such proposed
transfer and such transfer is made in accordance with such registration
statement;

          (b) such transfer is made in accordance with Rule 144 or equivalent
provisions under Canadian Securities Laws; or

          (c) such transfer shall not require any registration or qualification
under the Securities Act or Canadian Securities Laws. Notwithstanding the
foregoing, a Stockholder may transfer all or a portion of the Registrable
Securities to a Permitted Transferee, and such Permitted Transferee shall be
deemed a Stockholder hereunder. The transferring Stockholder shall provide
notice to the Company of any such transfer stating the name and address of such
Permitted Transferee and identifying the number of Registrable Securities
transferred.

          Section 2.07 Registration Expenses.

          Except as otherwise provided herein, the Company shall pay all
Registration Expenses with respect to any particular offering (or proposed
offering).

          Section 2.08 Underwriting; Due Diligence.

          (a) Underwriting Agreements. If requested by the underwriters for any
underwritten offering of Registrable Securities pursuant to a registration
requested under Section 2.01 or Section 2.02, the Company shall enter into an
underwriting agreement with such underwriters for such offering, which agreement
will contain such representations and warranties and covenants by the Company
and such other terms and provisions as are customarily contained in underwriting
agreements, including indemnification and contribution provisions substantially
to the effect and to the extent provided in Article 4, and agreements as to the
provision of opinions of counsel and accountants' letters to the effect and to
the extent provided in Section 2.04(g). The Selling Holders on whose behalf the
Registrable Securities are to be distributed by such underwriters shall be
parties to any such underwriting agreement and the representations and
warranties by, and the other agreements on the part of, the Company to and for
the benefit of such underwriters, shall also be made to and for the benefit of
such Selling Holders. Such underwriting agreement shall also contain such
representations and warranties by such Selling Holders and such other terms and
provisions as are customarily contained in underwriting agreements with respect
to secondary distributions on the part of selling stockholders, including,
without limitation, custody agreements (including irrevocable powers of
attorney) and indemnification and contribution provisions substantially to the
effect and to the extent provided in Article 4.


                                      -14-



          (b) Access to Information. In connection with the preparation and
filing of each Registration Statement registering Registrable Securities under
the Securities Act or applicable Canadian Securities Laws pursuant to Section
2.01 or Section 2.02 or pursuant to Section 2.08, upon reasonable notice the
Company shall give the Selling Holders and the underwriters, if any, and their
respective counsel and accountants, such reasonable and customary access to its
books, records and properties and such opportunities to discuss the business and
affairs of the Company with its officers and the independent public accountants
who have certified the financial statements of the Company as shall be
necessary, in the opinion of such Selling Holders and such underwriters, or
their respective counsel, to conduct a reasonable investigation within the
meaning of the Securities Act or applicable Canadian Securities Laws; provided
that such Selling Holders and the underwriters, and their respective counsel and
accountants shall use their reasonable best efforts to coordinate any such
investigation of the books, records and properties of the Company and any such
discussions with the Company's officers and accountants so that all such
investigations occur at the same time and all such discussions occur at the same
time.

          Section 2.09 Unregistered Offerings.

          The parties hereto hereby agree that, in the event that the Company or
one or more Demand Holders propose to make an offering or a sale to a strategic
purchaser of Common Shares, any other equity securities or securities
convertible or exchangeable for equity securities of the Company (other than an
acquisition by the Company financed through the issuance of Common Shares) that
is exempt from, or not subject to, the registration requirements of the
Securities Act and/or the prospectus requirements under applicable Canadian
Securities Laws, the Company and management shall reasonably cooperate with such
Demand Holders(s) and their advisers in performing due diligence and marketing
such offering to potential investors.

          Section 2.10 Registration Rights of Other Persons.

          Prior to the date on which the Stockholder holds Registrable
Securities representing less than 50% of the outstanding Common Shares of the
Company, the Company may not, without the prior written consent of the Demand
Holders, grant to any other Person the right to request a registration of
securities of the Company under the Securities Act or Canadian Securities Laws;
provided that, if any such written consent is given, the terms of any such right
granted or issued shall not be more favorable to such Person than the terms of
this Agreement or, any more favorable terms shall also be granted to the Demand
Holders. On and after such date the Company may grant to any other Person the
right to request a registration of securities of the Company under the
Securities Act and/or Canadian Securities Laws, or the right to be included as a
Selling Holder in connection with any registration of Registrable Securities;
provided that, any such rights may not be exercised by any Person prior to the
second anniversary of the IPO Date and provided, further, that the proviso in
the preceding sentence is complied with.


                                      -15-



          Section 2.11 Termination of Existing Registration Rights; Inconsistent
Agreements.

          The Company and each Stockholder acknowledge and agree that this
Agreement shall effectively terminate and replace the Existing Registration
Rights and any and all prior agreements to which the Company and such
Stockholder are a party with respect to the subject matter hereof. The Company
and each Stockholder acknowledge and agree that any rights, privileges and/or
obligations of the parties under the Existing Registration Rights or any other
prior agreement with respect to the matters set forth herein shall be terminated
and shall be of no further force and effect as of the date of this Agreement.

          The Company shall not hereafter enter into any agreement with respect
to its securities which is inconsistent with, violates or diminishes the rights
granted to the Stockholders in this Agreement.

                                   ARTICLE III

                   REPRESENTATIONS, WARRANTIES AND AGREEMENTS

          Section 3.01 Company Representations, Warranties and Agreements.

          The Company represents and warrants to, and agrees with, each
Stockholder that:

          (a) The Company has all requisite corporate power and authority to
execute, deliver, and perform this Agreement. This Agreement has been duly
authorized, executed, and delivered by the Company. No consent, authorization,
approval, order, license, certificate, or permit of or from, or declaration or
filing with, any United States federal, state, local, or other governmental
authority or any court or other tribunal is required by the Company for the
execution, delivery or performance of this Agreement by the Company (except
filings under the Securities Act and/or Canadian Securities Laws which will be
made and any consents under state, local, provincial or territorial securities
or blue sky laws which will be obtained).

          (b) The Company shall not enter into any transaction involving the
issuance or transfer by any other Person of Other Securities to a Stockholder,
or any merger or consolidation in which it is not the surviving Person or any
sale, lease or other transfer of all or substantially all the assets of the
Company, unless effective provision is made for the assumption by such other
Person, jointly and severally with the Company if the Company shall remain in
existence, of all of the obligations of the Company hereunder, and in the case
of any such issuance or transfer, the registration of such Other Securities on
the same basis as the registration of the other Registrable Securities
hereunder.

          (c) The execution and delivery of this Agreement by the Company does
not, and the consummation of the transactions contemplated hereby will not,
violate, conflict with, or result in a breach of any provision of, or constitute
a default (with or


                                      -16-



without notice or lapse of time or both) under, or result in the termination of,
or accelerate the performance required by, or result in a right of termination,
cancellation, or acceleration of any obligation or the loss of a material
benefit under, or result in the creation of any lien, security interest, charge
or encumbrance upon any of the properties or assets of the Company or any of its
subsidiaries pursuant to any provisions of (A) the articles of incorporation,
by-laws or similar governing documents of the Company or any of its
subsidiaries, (B) any statute, law, ordinance, rule, regulation, judgment,
decree, order, injunction, writ, permit or license of any governmental authority
applicable to the Company or any of its subsidiaries or any of their respective
properties or assets or (C) any note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, concession, contract, lease or other instrument,
obligation or agreement of any kind to which the Company or any of its
subsidiaries is a party or by which it or any of its properties or assets may be
bound or affected as soon as the conditions can be so satisfied.

          (d) The Company covenants that it will file any reports required to be
filed by it under the Securities Act, the Exchange Act and Canadian Securities
Laws, will make available "adequate current public information concerning the
Company within the meaning of paragraph (c) of Rule 144 and that it will take
such further action as any Stockholder may reasonably request, all to the extent
required from time to time to enable such Stockholder to sell Registrable
Securities without registration pursuant to the available exemptions under the
Securities Act and/or Canadian Securities Laws. Upon the request of any
Stockholder, the Company will deliver to it a written statement as to whether it
has complied with such requirements.

          Section 3.02 Stockholder Representations, Warranties and Agreements.

          Each Stockholder represents and warrants to, and agrees with, the
Company, that:

          (a) If such Stockholder is an entity, it is duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
organization and has all requisite power and authority to execute, deliver, and
perform this Agreement. This Agreement has been duly authorized by such
Stockholder and has been duly executed and delivered by it.

          (b) Neither Stockholder nor any of its Affiliates will take, directly
or indirectly, during the term of this Agreement, any action designed to
stabilize (except as may be permitted by applicable law) or manipulate the price
of any security of the Company.

          (c) Stockholder shall promptly furnish to the Company upon the
Company's request any and all information as may be required by, or as may be
necessary or advisable to comply with the provisions of, the Securities Act, the
Exchange Act, and/or applicable Canadian Securities Laws in connection with the
preparation and filing of any Registration Statement pursuant hereto, or any
amendment or supplement thereto, or any Preliminary Prospectus or Prospectus
included therein and/or filed with Canadian securities regulators.


                                      -17-


          Section 3.03 Survival of Representations and Agreements.

          All representations, warranties, covenants and agreements contained in
this Agreement shall be deemed to be representations, warranties, covenants and
agreements at the effective date of each Registration Statement contemplated by
this Agreement, and such representations, warranties, covenants and agreements
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Company, any Stockholder, or any other
Person and shall survive termination of this Agreement.

                                   ARTICLE IV

                        INDEMNIFICATION AND CONTRIBUTION

          Section 4.01 Indemnification and Contribution.

          (a) Indemnification by the Company. In the event of any registration
of any Registrable Securities under the Securities Act and applicable Canadian
Securities Laws pursuant to this Agreement, the Company will, and it hereby
does, indemnify and hold harmless, to the full extent permitted by law, each
Selling Holder, their directors and officers, employees, stockholders, general
partners, limited partners, members, advisory directors and managing directors
(and directors, officers, stockholders, general partners, limited partners,
members, advisory directors, managing directors and controlling persons
thereof), each other person who participates as an underwriter in the offering
or sale of such securities and each other person, if any, who controls, is
controlled by or is under common control with any such Selling Holder or any
such underwriter within the meaning of the Securities Act and Canadian
Securities Laws, against any and all losses, claims, damages or liabilities,
joint or several, and expenses (including any amounts paid in any settlement
effected with the Company's consent) to which such Selling Holder, any such
director, or officer, employee, stockholder, general or limited partner, member,
or advisory or managing director or any such underwriter or controlling person
may become subject under the Securities Act and Canadian Securities Laws, state
securities or blue sky laws, common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof) or
expenses arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained, on the effective date thereof,
in any registration statement under which such Registrable Securities were
registered under the Securities Act and applicable Canadian Securities Laws, any
prospectus (including each preliminary prospectus) contained therein, or any
amendment or supplement thereto or (ii) any 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 the case of a prospectus (including
each preliminary prospectus), in light of the circumstances under which they are
made), and the Company will reimburse each such Selling Holder and each such
director, officer, employee, general partner, limited partner, advisory
director, managing director or underwriter and controlling person for any legal
or any other expenses reasonably incurred by them as such expenses are incurred
in connection with investigating or defending such loss, claim, liability,
action or proceeding; provided that the Company shall not be liable in


                                      -18-



any such case to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement or amendment or supplement thereto
or in any such prospectus (including each preliminary prospectus) in reliance
upon and in conformity with written information furnished to the Company through
an instrument duly executed by such Selling Holder or such director, officer,
employee, general or limited partner, managing director or underwriter
specifically stating that it is for use in the preparation thereof; provided,
further, that the Company shall not be required to indemnify any such person if
such untrue statement or omission or alleged untrue statement or omission was
contained or made in any preliminary prospectus and corrected in the final
prospectus or any amendment or supplement thereto and the final prospectus does
not contain any other untrue statement or omission or alleged untrue statement
or omission of a material fact that was the subject matter of the related
proceeding and any such loss, liability, claim, damage or expense suffered or
incurred by such indemnified person resulted from any action, claim or suit by
any person who purchased Registrable Securities which are the subject thereof
from such indemnified person and it is established in the related proceeding
that such indemnified person failed to deliver or provide a copy of the final
prospectus (as amended or supplemented) to such person with or prior to the
confirmation of the sale of such Registrable Securities sold to such person if
required by applicable law, unless such failure to deliver or provide a copy of
the final prospectus (as amended or supplemented) was a result of noncompliance
by the Company with this Agreement or as a result of the failure of the Company
to provide such final prospectus. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of each Selling
Holder or any such director, officer, employee, general partner, limited
partner, managing director, underwriter or controlling person and shall survive
the transfer of such securities by any Selling Holder.

          (b) Indemnification by Selling Holders and Underwriters. The Company
may require, as a condition to including Registrable Securities in any
registration statement filed pursuant to this Agreement, that the Company will
have received an undertaking reasonably satisfactory to it from any Selling
Holder or any underwriter to indemnify and hold harmless the Company and its
directors, officers, employees, controlling persons and all other prospective
sellers and their respective directors, officers, general and limited partners,
managing directors, and their respective controlling persons, against any and
all losses, claims, damages or liabilities, joint or several, and expenses
(including any amounts paid in any settlement effected with the consent of the
applicable Selling Holder and underwriter) to which the Company and its
directors, officers, employees, controlling persons or any other prospective
sellers and their respective directors, officers, general and limited partners,
managing directors, and their respective controlling persons may become subject
under the Securities Act and Canadian Securities Laws, state securities or blue
sky laws, common law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) or expenses arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained, on the effective date thereof, in any registration
statement under which such Registrable Securities were registered under the


                                      -19-



Securities Act or applicable Canadian Securities Laws, any prospectus (including
each preliminary prospectus) contained therein, or any amendment or supplement
thereto or (ii) any 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 the case of a prospectus (including each preliminary
prospectus), in light of the circumstances under which they are made), and the
applicable Selling Holder and underwriter will reimburse the Company and its
directors, officers, employees, controlling persons and all other prospective
sellers and their respective directors, officers, general and limited partners,
managing directors, and their respective controlling persons for any legal or
any other expenses reasonably incurred by them as such expenses are incurred in
connection with investigating or defending such loss, claim, liability, action
or proceeding; provided that any Selling Holder and any underwriter shall only
be liable in any such case if any such loss, claim, damage, liability (or action
or proceeding in respect thereof) or expense arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement or amendment or supplement thereto or in any
such prospectus (including each preliminary prospectus) in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by such Selling Holder or any such underwriter
specifically stating that it is for use in the preparation thereof; provided,
further, that such Selling Holder or underwriter shall not be required to
indemnify the Company if such untrue statement or omission or alleged untrue
statement or omission was contained or made in any preliminary prospectus and
corrected in the final prospectus or any amendment or supplement thereto and the
final prospectus does not contain any other untrue statement or omission or
alleged untrue statement or omission of a material fact that was the subject
matter of the related proceeding and is covered by such Selling Holder's or
underwriter's obligation under this Section 6.2 and any such loss, liability,
claim, damage or expense suffered or incurred by the Company resulted from any
action, claim or suit by any person who purchased Registrable Securities or
other securities of the Company which are the subject thereof from the Selling
Holder or the Company or another holder and it is established in the related
proceeding that a copy of the final prospectus (as amended or supplemented) was
delivered or provided to such person with or prior to the confirmation of the
sale of such Registrable Securities sold to such Person if required by
applicable law. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of the Company or any such director,
officer, employee or controlling person or other indemnified person. No Selling
Holder shall be liable under any indemnity provided pursuant to this Agreement
for any amounts exceeding the product of the purchase price per Registrable
Security and the number of Registrable Securities being sold pursuant to such
registration statement or prospectus by such Selling Holder.

          (c) Notices of Claims, Etc. Promptly after receipt by an indemnified
party hereunder of written notice of the commencement of any action or
proceeding with respect to which a claim for indemnification may be made
pursuant to this Agreement, such indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party, promptly give written
notice to the latter of the commencement of such action; provided that the
failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under this Agreement,


                                      -20-



except to the extent that the indemnifying party is actually materially
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such claim, the indemnifying party will be
entitled to participate in and, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof, unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties arises in respect of such claim after the assumption of the
defense thereof or a court of competent jurisdiction determines that the
indemnifying party is not vigorously defending such action or proceeding. An
indemnifying party will not be subject to any liability for any settlement made
without its consent (which consent shall not be unreasonably withheld). No
indemnifying party will consent to entry of any judgment or enter into any
settlement of any pending or threatened proceeding which (i) does not include as
an unconditional term thereof the giving by the claimant or plaintiff to all
indemnified parties of a release from all liability in respect to such claim or
litigation, (ii) involves the imposition of equitable remedies or the imposition
of any non-financial obligations on such indemnified party or (iii) otherwise
adversely affects such indemnified party, other than as a result of the
imposition of financial obligations for which such indemnified party will be
indemnified hereunder. Notwithstanding anything to the contrary contained
herein, an indemnifying party will not be obligated to pay the fees and expenses
of more than one counsel (together with local counsel) for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim, in which event the indemnifying party shall be obligated
to pay the fees and expenses of such additional counsel or counsels (together
with the fees of local counsel).

          (d) Contribution. If the indemnification provided for in this Article
4 shall for any reason be unavailable or insufficient to an indemnified party in
respect of any loss, liability, cost, claim or damage referred to therein, then
each indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, liability, cost, claim or damage (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying party
or parties on the one hand and the indemnified party or parties on the other
hand from the offering or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the indemnified party or parties on the one hand and the
indemnifying party or parties on the other hand in connection with the offering
shall be


                                      -21-



deemed to be in the same respective proportions as the net proceeds from the
offering (before deducting expenses) and the total underwriting discounts and
commissions received by the underwriters, in each case as set forth in the table
on the cover of a prospectus, bear to the aggregate public offering price of the
securities. The relative fault of the indemnified and indemnifying parties shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the indemnified or
indemnifying parties and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by an indemnified party as a result of the loss,
cost, claim, damage or liability, or action in respect thereof, referred to
above in this paragraph (d) shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. The Company and the Selling Holders agree that it would not be
just and equitable if contribution pursuant to this Article 4 were determined by
pro rata allocation (even if the underwriters 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 paragraph. Notwithstanding
any other provision of this Article 4, no Selling Holder shall be required to
contribute any amount in excess of the amount by which the net proceeds of the
offering received by such Selling Holder exceed the amount of any damages which
such Selling Holder has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. Each Selling
Holder's obligations to contribute pursuant to this Section 4.01(d) are several
in the proportion that the net proceeds of the offering received by such Selling
Holder bears to the total net proceeds of the offering received by all the
Selling Holders and not joint. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act or applicable
Canadian Securities Laws) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.

          (e) Indemnification and contribution similar to that specified in the
preceding paragraphs of this Article 4 (with appropriate modifications) shall be
given by the Company, the Selling Holders with Registrable Securities included
in such registration and the underwriters with respect to any required
registration or other qualification of securities under any state law or
regulation or governmental authority.

          (f) The obligations of the parties under this Article 4 shall be in
addition to any liability which any party may otherwise have to any other party.

                                    ARTICLE V

                                  MISCELLANEOUS

          Section 5.01 Remedies.

          In the event of breach by any party of any of its obligations under
this Agreement, the other parties, in addition to being entitled to exercise all
rights provided


                                      -22-



herein or granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company and each
Stockholder agrees that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by the Company or such Stockholder, as
the case may be, of any of the provisions of this Agreement and hereby further
agrees that, in the event of any action for specific performance in respect of
such breach, the Company or such Stockholder, as the case may be, shall waive
the defense that a remedy at law would be adequate. No failure or delay on the
part of the Company or any Stockholder in exercising any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.

          Section 5.02 Amendments; Waivers and Termination.

          The provisions of this Agreement, including the provisions of this
sentence, may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, without the written
consent of the Company and a majority of the Demand Holders.

          Section 5.03 Notices.

          All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, by electronic mail or facsimile
(in each case, receipt of which is confirmed) or mailed by registered or
certified mail (return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):

          if to the Company, to:

               Corel Corporation
               1600 Carling Avenue
               Ottawa, Ontario
               Canada K1Z8R7
               Attention: General Counsel,

          with a copy to:

               ___________________________

          if to a Stockholder, to the address for such Stockholder set forth in
          the share register maintained by the Company, as amended from time to
          time.

          Section 5.04 Interpretation.

          When a reference is made in this Agreement to a Section, such
reference shall be to a Section of this Agreement unless otherwise indicated.
The headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.


                                      -23-



          Section 5.05 Counterparts.

          This Agreement may be executed in two or more counterparts, all of
which shall be considered one and the same agreement and shall become effective
when two or more counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.

          Section 5.06 Entire Agreement; No Third Party Beneficiaries.

          This Agreement (including the documents and the instruments referred
to herein) (a) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, and (b) is not intended to confer upon any
Person other than the parties hereto and their respective successors and
permitted assigns, any rights or remedies hereunder.

          Section 5.07 Governing Law.

          This Agreement shall be governed by and construed in accordance with
the laws of the [State of New York] applicable to contracts to be performed
entirely within such State.

          Section 5.08 Severability.

          Wherever possible, each provision hereof shall be interpreted in such
a manner as to be valid, legal and enforceable under applicable law, but in case
any one or more of the provisions contained herein shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect, such provision
shall be ineffective to the extent, but only to the extent, of such invalidity,
illegality or unenforceability without invalidating or rendering unenforceable
the remainder of this Agreement, unless such a construction would be
unreasonable or materially impair the rights of any party hereto.

          Section 5.09 Successors and Assigns.

          All covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors and permitted assigns of the parties hereto whether so
expressed or not. This Agreement shall not be assignable by the Company or the
Stockholder except to a Permitted Transferee.

          Section 5.10 Canadian Offering.

          Although this Agreement has been drafted in contemplation of an IPO
involving a Public Offering in both the United States and Canada, the Company
may, in its sole discretion, decide not to proceed with the Canadian Public
Offering. In the event that no Public Offering in Canada is consummated at the
time of the IPO or at any relevant time under this Agreement, the Company's
Common Shares are no longer actively traded on the TSX, all provisions in this
Agreement that relate to the registration


                                      -24-



of Registrable Securities in Canada, including without limitation, references to
Canadian Securities Laws, the Canadian Prospectus, Canadian securities
regulatory authorities and the Toronto Stock Exchange, shall be of no force and
effect and this Agreement shall be interpreted for all purposes as if such
provisions did not exist..

          Section 5.11 Use of Terms.

          This Agreement contemplates the filing of Registration Statements
under the Securities Act and prospectuses under Canadian Securities Laws on
numerous occasions involving various offers of securities. In connection with
such Registration Statements and prospectuses, there may be identified therein
one or more underwriters through which securities are to be offered on behalf of
the Company or the Stockholder, or both, pursuant to either a "firm-commitment"
or "best-efforts" arrangement, and, in the case where there is more than one
underwriter, one or more of the underwriters may be designated as the "manager"
or "representative" or the "co-managers" or "representatives" of the several
underwriters. Accordingly, all references herein to an "underwriter" or
"underwriters" are intended to refer to a "principal underwriter" (as defined in
Rule 405 under the Securities Act) and to provide for those transactions in
which securities may be offered by or through one or more underwriters, and not
to imply that any of the transactions contemplated hereby is conditioned in any
manner whatsoever on the participation therein by one or more underwriters on
behalf of any party.


                                      -25-



          IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                      -26-



                                                                         ANNEX A

                                PIGGYBACK HOLDERS


                                      -27-



                                                                         ANNEX B

                      IPO PARTICIPANTS



        REGISTRABLE SECURITIES   REGISTRABLE SECURITIES
        TO BE INCLUDED IN IPO     TO BE INCLUDED IN IPO
NAME   FIRM COMMITMENT PORTION    OVER-ALLOTMENT OPTION
- ----   -----------------------   ----------------------
                           




                                      -28-

EX-4.2

Exhibit 4.2

EX-10.2

                                                                    Exhibit 10.2

                         EXECUTIVE EMPLOYMENT AGREEMENT

                             Effective June 17, 2005

                               (this "AGREEMENT")

BETWEEN:

                  COREL CORPORATION, a corporation existing under the laws of
                  the Province of Ontario

                  (the "CORPORATION")

                  - and -

                  DAVID C. DOBSON, an individual currently residing in the State
                  of Connecticut

                  (the "EXECUTIVE")

      WHEREAS the Corporation wishes to employ the Executive and the Executive
wishes to become an employee of the Corporation;

      AND WHEREAS the Corporation and the Executive agree that it is desirable
to enter into this Agreement to specify the terms and conditions of the
Executive's employment with the Corporation;

      NOW THEREFORE in consideration of the mutual covenants and agreements
contained in this Agreement, and other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the Corporation and the Executive
agree as follows.

1.    INTERPRETATION

1.1   DEFINITIONS. In this Agreement, the following capitalized terms have the
      following meanings:

      (a)   "AFFILIATE" means an affiliated entity and as defined in Ontario
            Securities Commission Rule 45-501 and "controlled" has the meaning
            given in that Rule, as amended or replaced from time to time, and
            "affiliated" has a corresponding meaning.

      (b)   "BASE GRANT" has the meaning set out in Section 3.4.

      (c)   "BOARD" means the board of directors of the Corporation.

      (d)   "CHANGE OF CONTROL" means:

            (1)   any transaction or series of transactions, whether by way of
                  consolidation, amalgamation, merger, reorganization or plan of
                  amalgamation involving the Corporation, with or into any other
                  person (other than Vector);



Corel Corporation Executive Employment Agreement                    Page 2 of 15

            (2)   any transfer, conveyance, sale, lease, exchange or otherwise
                  of all or substantially all of the assets of the Corporation,
                  to any other person (other than Vector); and

            (3)   the lawful acquisition, directly or indirectly and by any
                  means whatsoever, by any person, or by a group of persons
                  acting jointly or in concert, of that number of voting shares
                  of the Corporation, which is 35% or more of the total voting
                  shares issued and outstanding immediately after such
                  acquisition, unless Vector continues to hold a number of
                  voting shares which represents a greater percentage than the
                  first-mentioned person or group of persons.

            Provided that an initial public offering of the Corporation, whether
            or not a Qualified IPO, shall not be a Change of Control.

      (e)   "COMPETING ENTITIES" has the meaning set out in Section 7.1.

      (f)   "EBITDA" has the meaning set out in Section 3.2.

      (g)   "GOOD REASON" means the occurrence of any of the following events
            without the written consent of the Executive:

            (1)   a reduction by the Corporation in the Executive's salary;

            (2)   the taking of any action by the Corporation which would, in
                  the aggregate, materially adversely affect the Executive's
                  participation in or materially reduce the Executive's
                  incentive compensation, pension, life insurance, health,
                  accident, disability benefits or other benefits in plans in
                  which the Executive is participating;

            (3)   any breach by the Corporation of any of its material
                  obligations contained in this Agreement which remains uncured
                  for more than 10 days after the Executive provides written
                  notice of the breach to the Corporation; and;

            (4)   a material adverse reduction of the Executive's
                  responsibilities or reporting relationships.

      (h)   "IPO GRANT" has the meaning set out in Section 3.5.

      (i)   "IPO LOAN" has the meaning set out in Section 4.3.

      (j)   "LOAN" has the meaning set out in Section 4.3.

      (k)   "NON-IPO LOAN" has the meaning set out in Section 4.3.

      (l)   "PLAN" means the Corel Corporation Share Option and Phantom Share
            Unit Plan dated December 1, 2003 as amended from time to time.

      (m)   "QUALIFIED IPO" has the meaning set out in Section 3.5.

      (n)   "REASONABLE NOTICE PERIOD" means:



Corel Corporation Executive Employment Agreement                    Page 3 of 15

            (1)   if the Executive's employment is terminated prior to the first
                  anniversary of the Start Date, eighteen months; and

            (2)   if the Executive's employment is terminated on or after the
                  first anniversary of the Start Date, the greater of 12 months
                  or the period from the Termination Date to the date that is 18
                  months from the first anniversary of the Start Date.

      (O)   "SALARY" has the meaning set out in Section 3.1.

      (p)   "SHARES" means Class A common shares of the Corporation.

      (q)   "TERMINATION DATE" means the Executive's last day of active
            employment and does not include any period of statutory or
            reasonable notice or any period of deemed employment and "terminate"
            and "terminated" have corresponding meanings.

      (r)   "VECTOR" means any entity or fund Affiliated with, or managed
            directly or indirectly by, Vector Capital Corporation or its
            Affiliates, or any other entity controlled, directly or indirectly,
            by any such entities or funds.

1.2   HEADINGS, SECTIONS AND PLURAL. The inclusion of headings in this Agreement
      is for convenience of reference only and shall not affect its construction
      or interpretation. Throughout this Agreement, whenever required by
      context, words importing the singular include the plural and vice versa.
      In this Agreement, references to "Sections" or to "Schedules" are
      references to sections in or schedules to this Agreement, unless expressly
      stated otherwise.

1.3   DEDUCTIONS AND WITHHOLDINGS. The payments to the Executive set out in this
      Agreement are subject to applicable deductions and withholdings.

1.4   BENEFIT CONTRIBUTIONS AND PARTICIPATION. The Corporation's contributions
      to, the Executive's participation in, and any conversion of, the group
      benefit plans as set out in this Agreement are subject to the terms and
      conditions of the benefit plans, and changes to or cancellations of such
      plans over time, as may be made with such notice to the Executive as is
      practical in the circumstances, and in the sole discretion of the
      Corporation.

1.5   CURRENCY. Unless otherwise indicated, all dollar amounts referred to in
      this Agreement are in Canadian currency.

1.6   PREVAILING AGREEMENT. In the event of any inconsistencies between this
      Agreement and the Plan, the provisions in this Agreement supersede the
      Plan to the extent of such inconsistencies.

2.    TERM AND DUTIES

2.1   START DATE. The Corporation agrees to employ the Executive and the
      Executive agrees to become employed with the Corporation on the terms and
      conditions set out in this Agreement commencing on a date which is no
      later than June 27, 2005 (the "START DATE"), The terms and conditions of
      employment set out in this Agreement are conditional upon the Executive
      starting work with the Corporation on the Start Date.



Corel Corporation Executive Employment Agreement                    Page 4 of 15

2.2   POSITION. The Executive will serve in an executive capacity as the Chief
      Executive Officer of the Corporation and in such other capacities as may
      be agreed upon by the Corporation and the Executive from time to time. The
      Executive will report to the Board.

2.3   DUTIES. The Executive will perform the duties customarily performed in his
      position including, without limitation, regularly reporting his activities
      and the results thereof to the Board. The Executive agrees to serve as a
      director and/or officer of the Corporation and its Affiliates as requested
      by the Corporation in good faith and without compensation other than as
      set out in Section 3, The Executive will work primarily from the
      Corporation's head office in Ottawa, Ontario, but understands and agrees
      that he will be required to travel frequently throughout the world as the
      business needs of the Corporation require.

2.4   GOOD FAITH. The Executive shall devote his full business time and
      attention to the affairs of the Corporation and will use his best efforts,
      skills and abilities to honestly, faithfully, diligently and in good faith
      promote the Corporation's best interests, and he shall not have any
      interests that conflict with those of the Corporation. The Executive shall
      observe and abide by the policies of the Corporation in effect from time
      to time.

2.5   THIRD PARTY OBLIGATIONS. The Executive represents and warrants that he
      honestly and reasonably believes after proper enquiry, that his
      obligations under this Agreement will not breach any obligations the
      Executive owes to third parties, including any of the Executive's former
      employers and that at the date hereof, he is not aware of any claims or
      threatened claims that he has breached any such obligations in connection
      with his obligations under this Agreement.

2.6   WORK STATUS. The Executive will be required to work in Canada and may be
      requested by the Board to work in the United States and internationally,
      as needed and determined by the Board. The Executive represents and
      warrants that he is legally entitled to work in Canada.

3.    COMPENSATION

3.1   BASE SALARY. The Corporation agrees to pay the Executive an annual base
      salary of $415,000, payable in accordance with the Corporation's payroll
      practices in effect from time to time, subject to annual review and to
      increase as determined by the Board ("SALARY").

3.2   DISCRETIONARY BONUS. The Executive will be eligible to participate in the
      Corporation's annual bonus plan with a target bonus of 100% of Salary for
      the achievement of all targets. Any bonus payment is subject to
      achievement by the Executive of the performance targets established by the
      Board in consultation with the Executive before the start of each fiscal
      year. Currently, the performance targets are based on a combination of
      revenue targets and target earnings before interest, tax, depreciation and
      amortization ("EBITDA"). The Executive's individual weighting of revenue
      and EBITDA targets for 2005 are set out on Schedule "A". To be eligible
      for the bonus payment, the Executive must have been actively employed
      throughout the fiscal year in respect of which his performance was
      assessed, unless provided otherwise in this Agreement. Notwithstanding the
      above, the Executive will be eligible for a pro-rated bonus in his first
      fiscal year of employment proportionate to his length of active employment
      in that year, with a minimum guaranteed bonus for the Executive's first
      part fiscal year of employment of $250,000.

3.3   SHARE BASED COMPENSATION PLAN PARTICIPATION. The Executive will be
      eligible to participate in the Plan and such other share based incentive
      plans or similar plans as may be



Corel Corporation Executive Employment Agreement                    Page 5 of 15

      established for senior executives by the Corporation. All options granted
      to the Executive, including the Base Grant of options and the IPO Grant of
      options are governed by the terms and conditions of the Plan, including
      any restrictions on exercise of options and any requirements to agree to
      conditions, restrictions or agreements set out in the Plan, except with
      respect to the vesting terms, which are governed by this Agreement. Except
      as expressly provided in Section 5.3 of this Agreement or pursuant to the
      Plan, no share based compensation may vest on or after the Termination
      Date.

3.4   BASE GRANT OF OPTIONS. On the Start Date, the Corporation will grant to
      the Executive options to acquire 3,718,258 Shares of the Corporation (the
      "BASE GRANT"), subject to the terms and conditions set out in this
      Agreement and the Plan. The Base Grant of options will have an exercise
      price of 10 Cent in USD per Share. The Base Grant of options will be
      exercisable as to 25% on and after the Start Date (the "VESTED BASE
      GRANT") and as to additional 6.25% on and after the end of each quarter
      commencing after the first anniversary of the Start Date and for 10 years
      from the date of grant.

3.5   IPO GRANT OF OPTIONS. On the Start Date, the Corporation will grant to the
      Executive options to acquire 929,565 Shares of the Corporation (the "IPO
      GRANT"), subject to the terms and conditions set out in this Agreement and
      the Plan. The IPO Grant of options will have an exercise price of 10 Cent
      in USD per Share. The IPO Grant of options will be exercisable on the
      Start Date and for 8 years after an initial public offering of the
      Corporation that yields proceeds to the Corporation of not less than $75
      million (a "QUALIFIED IPO").

3.6   VESTED BASE GRANT AND IPO GRANT. The Vested Base Grant of options and the
      IPO Grant of options are subject to the following terms and conditions. If
      the Executive's Termination Date, as defined in the Plan, occurs prior to
      the first anniversary of the Start Date, the Corporation may, but is not
      required to, repurchase any or all Shares issued to the Executive on the
      exercise of the Vested Base Grant of options for an amount equal to 10
      Cent in USD per Share and the unexercised portion of the Vested Base Grant
      of options will immediately expire. If the Executive's Termination Date
      occurs prior to a Qualified IPO or if a Qualified IPO is not completed on
      or before the second anniversary of the Start Date, the Corporation may,
      but is not required to, repurchase any or all Shares issued to the
      Executive on the exercise of the IPO Grant of options for an amount equal
      to 10 Cent in USD per Share and the unexercised portion of the IPO Grant
      of options will immediately expire.

3.7   PAYMENTS FOR DISTRIBUTIONS ON BASE GRANT OF OPTIONS AND IPO GRANT OF
      OPTIONS. If dividends or other distributions are paid on Shares of the
      Corporation at a time when the Executive holds unexercised options under
      the BASE Grant of options or the IPO Grant of options, the Corporation
      will provide the Executive with a payment equivalent to distributions the
      Executive would have been eligible to receive had the Base Grant of
      options and the IPO Grant of options held by the Executive been fully
      exercised, provided, however, that at any time after the IPO Grant of
      options is forfeited, the Executive shall not be entitled to a payment in
      respect of any dividends or other distributions in respect of the IPO
      Grant of options.

4.    EXPENSES, BENEFITS AND VACATION

4.1   GENERAL EXPENSES. THE Corporation will reimburse the Executive for his
      reasonable and approved business expenses, including travel expenses,
      incurred by him in connection with the performance of his duties under
      this Agreement, upon providing appropriate receipts



Corel Corporation Executive Employment Agreement                    Page 6 of 15

      satisfactory to the Corporation and in accordance with the Corporation's
      policies in effect from time to time.

4.2   RELOCATION EXPENSES. The Executive agrees to relocate to Canada and
      thereafter to maintain his full-time residence in Canada for the duration
      of his employment. The Corporation will reimburse the Executive for the
      reasonable relocation expenses incurred by him to relocate himself and his
      family to Canada, upon providing appropriate receipts satisfactory to the
      Corporation and in accordance with the Corporation's policies, to a
      maximum total of $40,000.

4.3   LOAN. The Corporation will make a loan to the Executive in the amount of
      $562,500 with interest compounded annually at the prime rate of interest
      provided by the Royal Bank of Canada to its customers and secured against
      the Base Grant of options or any Shares issuable upon exercise thereof
      (the "LOAN"). $312,500 of the Loan (the "IPO LOAN") and interest thereon
      will be forgiven on the earlier of (1) the completion of a Qualified IPO
      of the Corporation or (2) the first filing of a registration statement
      with respect to a Qualified IPO of the Corporation. $250,000 of the Loan
      (the "NON-IPO LOAN"), plus interest thereon shall be repaid by the
      Executive on or before the earlier of (1) the completion of a Qualified
      IPO of the Corporation or (2) the first filing of a registration statement
      with respect to a Qualified IPO of the Corporation. Payments pursuant to
      Section 3.7 shall be applied to repayment of the Non-IPO Loan, plus
      interest thereon, until the Non-IPO Loan is repaid in full. In the event
      any amount of the Non-IPO Loan and interest thereon, remains outstanding
      on the date of a Qualified IPO, it shall be repaid in full in cash, at the
      Executive's election, with any balance outstanding repaid by the
      cancellation of vested Base Grant of options and/or IPO Grant of options
      valued by subtracting the exercise price from the fair market value of a
      Share at the relevant date. The whole outstanding amount of the Loan and
      of the interest thereon is immediately due and payable on the Termination
      Date and first by applying any payments to be made to the Executive
      pursuant to Article 5 of this Agreement to repayment and second by the
      cancellation of vested Base Grant of options and/or IPO Grant of options
      valued by subtracting the exercise price from the fair market value of a
      Share at the relevant date and third by cash payment by the Executive save
      and except that in the event that the Executive's employment is terminated
      by the Corporation without cause or by the Executive for Good Reason, any
      amount outstanding of the IPO Loan shall be forgiven.

4.4   BENEFIT PLANS. The Executive will be eligible to participate in the group
      benefit plans available to employees of the Corporation from time to time,
      subject to Section 1.4. To the extent permitted by the insurers, the
      Corporation will request the waiver of the waiting periods and
      pre-existing condition limitations for participating in the benefit plans.

4.5   VACATION. The Executive will be entitled to four weeks of vacation time
      per year to be taken at times that are consistent with the business
      interests of the Corporation, and in accordance with the Corporation's
      vacation policies. The Executive may carry forward up to four weeks of
      vacation time to subsequent vacation years, provided that in each vacation
      year the Executive takes at least the minimum vacation time required under
      the Ontario Employment Standards Act, 2000 as amended.

4.6   FEES. The Corporation will reimburse the Executive for legal advice in
      connection with completing this Agreement to a maximum of $6,250 upon the
      Executive providing appropriate receipts satisfactory to the Corporation.



Corel Corporation Executive Employment Agreement                    Page 7 of 15

5.    TERMINATION

5.1   TERMINATION BY EXECUTIVE. The Executive may terminate his employment with
      the Corporation (other than for Good Reason) at any time by providing the
      Corporation with two months of notice in writing. Whether or not, upon
      receipt of the Executive's resignation, the Corporation terminates the
      Executive's employment before the date the resignation was to be
      effective, the Corporation will, in full satisfaction of its obligations
      to the Executive: (a) pay the Executive's Salary and vacation pay accrued
      until the date the resignation is or was to be effective; (b) reimburse
      the outstanding expenses properly incurred by the Executive until the date
      his employment ceases; (c) continue its contributions to the group benefit
      plans until the date the resignation is or was to be effective, subject to
      Section 1.4; and continue the vesting of the Base Grant of options to the
      date the resignation is or was to be effective.

5.2   TERMINATION BY CORPORATION FOR CAUSE. The Corporation may terminate the
      Executive's employment at any time with cause and without prior notice or
      any further obligations by the Corporation, and the Executive will be
      ineligible for any bonus or pro-rated bonus payment. On the termination of
      the Executive's employment for cause, the Corporation will, in full
      satisfaction of its obligations to the Executive, pay the Executive's
      Salary and vacation pay accrued until the Termination Date and reimburse
      the outstanding expenses properly incurred by the Executive until the
      Termination Date.

5.3   TERMINATION BY CORPORATION WITHOUT CAUSE OR RESIGNATION BY THE EXECUTIVE
      FOR GOOD REASON. The Corporation may terminate the Executive's employment
      at any time, without cause and the Executive may resign for Good Reason,
      on providing written notification. If the Corporation terminates the
      Executive's employment without cause or the Executive resigns for Good
      Reason and the Executive signs and delivers to the Corporation a full and
      final release of the Corporation and its Affiliates and all directors
      thereof, in the form attached to this Agreement as Schedule "B", the
      Corporation will, in full satisfaction of its obligations to the Executive
      and regardless of any other income that the Executive may earn in
      mitigation:

      (a)   Pay the Executive's Salary and vacation pay accrued until the
            Termination Date and reimburse the Executive's outstanding expenses
            properly incurred until the Termination Date;

      (b)   Pay the Executive a bonus pursuant to Section 3.2 pro-rated for the
            portion of the year prior to the Termination Date calculated at 100%
            of target performance;

      (c)   Pay on-going Salary payments for the Reasonable Notice Period from
            the Termination Date based on the Executive's Salary in effect at
            the Termination Date, in accordance with the Corporation's payroll
            practices;

      (d)   Continue to make contributions in respect of the Executive to the
            Corporation's group benefit plans for the Reasonable Notice Period
            from the Termination Date to the extent permitted by such plans,
            provided that, to the extent such contributions may not be
            continued, the Corporation shall pay to the Executive the cost to
            the Corporation of such contributions as if the Executive remained
            employed by the Corporation;

      (e)   Authorize the Executive to exercise the vested share based
            compensation held by the Executive until 90 days after the
            Termination Date, or for such longer period as is provided in the
            Plan. All share based compensation that is not vested as at the
            Termination Date shall be forfeited, except that if the Executive's
            employment is



Corel Corporation Executive Employment Agreement                    Page 8 of 15

      terminated in accordance with this Section 5.3 prior to the first
      anniversary of the Start Date, 464,738 of the Base Grant of options shall
      be vested as of the Termination Date.

5.4   DEATH OF THE EXECUTIVE. Upon the death of the Executive, this Agreement
      automatically terminates without notice or any further obligations by the
      Corporation. Upon the death of the Executive, the Corporation will, in
      full satisfaction of its obligations: (a) pay the outstanding accrued
      Salary and vacation pay accrued until the date of the Executive's death;
      (b) reimburse the expenses properly incurred by the Executive up to the
      date of his death; (c) pay the Executive a bonus pursuant to Section 3.2,
      pro-rated for the portion of the year prior to the Executive's date of
      death assigning target performance was achieved; and (d) if the
      Executive's death occurs prior to the second anniversary of the Start
      Date, the Base Grant of Options will continue to vest until the second
      anniversary of the Start Date.

5.5   CONSEQUENCES OF TERMINATION. The termination of the Executive's employment
      for any reason, including resignation and termination with cause and
      without cause, terminates any officer positions the Executive may hold
      with the Corporation or any of its Affiliates and the Executive agrees to
      immediately resign as a director of the Corporation and any of its
      Affiliates and to sign any documentation necessary to give effect to this
      Section 5.5.

5.6   CONVERSION OF BENEFITS ON TERMINATION. On the earlier of the termination
      of Executive's participation in the group benefit plans or the cessation
      of his employment for any reason, the Executive may be eligible to convert
      the group insured benefits to private coverage within 30 days, without
      evidence of insurability. The Executive is responsible for promptly
      arranging for any conversion options he may have or obtaining alternate
      benefits if he chooses to do so.

5.7   COMPLIANCE WITH LAWS. The Executive's entitlements under this Section 5
      are provided in full satisfaction of the Executive's entitlements to
      notice of termination, pay in lieu of notice, and severance pay, if any,
      under the Ontario Employment Standards Act, 2000, under this Agreement, at
      common law or otherwise.

5.8   CHANGE OF CONTROL. In the event that there is a Change of Control and not
      less than 6 months following the Change of Control, the Executive's
      employment is terminated for any reason other than for cause, he resigns
      for Good Reason or he resigns for any reason the share based compensation
      awarded to the Executive shall become fully exercisable on the earlier of
      the Date of Termination and the date that is 6 months after the Change of
      Control and shall otherwise be governed by the terms of the Plan.

6.    CONFIDENTIAL INFORMATION AND RETURN OF PROPERTY

6.1   CONFIDENTIALITY OBLIGATION. The Executive covenants and agrees that he
      shall not, at any time during his employment with the Corporation or any
      time thereafter, without the prior written consent of the Corporation,
      directly or indirectly, communicate, reveal or disclose, in any manner, to
      anyone, or use for any purpose other than in carrying out his duties under
      this Agreement in furtherance of the Corporation's business interests, any
      confidential or proprietary information concerning, or learned as a result
      of his employment with, the Corporation or its predecessors, successors,
      Affiliates or related companies including, without limitation, information
      concerning their assets, businesses, affairs, pricing, costs, technical
      information, financial information, plans or opportunities, manufacturing,
      processes, sales and distribution, marketing, research and development,
      customers, suppliers or employees.



Corel Corporation Executive Employment Agreement                    Page 9 of 15

6.2   RETURN OF PROPERTY. Upon ceasing to be employed by the Corporation or upon
      request of the Corporation at any time, the Executive shall return to the
      Corporation all property belonging to the Corporation or its predecessors,
      successors, Affiliates or related companies including, without limitation,
      all documents in any format whatsoever including electronic format, that
      is in his possession or control, and the Executive agrees not to retain
      any copies of such property in any format whatsoever including electronic
      format.

7.    NON-COMPETITION

7.1   COMPETING ENTITIES. In this Agreement, "COMPETING ENTITIES" means
      Microsoft, the Star Office Division of Sun Microsystems, Adobe,
      Macromedia, Quark, Intervideo, Pinnacle Systems, Sonic Solutions,
      Autodesk, the Lotus Division of IBM, ULEAD, Sigmaflow or ACD Systems or
      any of their successors, and, on notice to the Executive, other entities
      that the Corporation may add to this definition, from time to time before
      the termination of the Executive's employment, acting in good faith after
      consultation with the Executive, whose business consists of developing or
      marketing word processing, spreadsheet, presentation, process management,
      flowcharting, digital imaging or graphics software, which the Corporation
      determines is in competition with its business.

7.2   COMPETITIVE ACTIVITIES. The Executive covenants and agrees that, while
      employed with the Corporation and for 24 months thereafter, the Executive
      shall not, directly or indirectly, in any manner whatsoever including,
      without limitation, either individually, or in partnership, jointly or in
      conjunction with any other person, or as employee, principal, agent,
      consultant, director, shareholder, lender or otherwise:

      (a)   be engaged in or by any Competing Entities in order to provide
            products or services similar to the products and services provided
            by the Corporation;

      (b)   have any financial or other interest including, without limitation,
            an interest by way of royalty or other compensation arrangements, in
            or in respect of any Competing Entities, excluding the ownership of
            not more than 1 % of the issued shares of a corporation, the shares
            of which are listed on a recognized stock exchange or traded in the
            over-the-counter market in Canada or the United States, which
            carries on a business that competes with the Corporation or its
            Affiliates; or

      (c)   advise, lend money to or guarantee the debts or obligations of any
            Competing Entities.

8.    NON-SOLICITATION

8.1   EMPLOYEE AND CONTRACTOR NON-SOLICITATION. The Executive covenants and
      agrees that, while employed with the Corporation and for 24 months
      thereafter, the Executive shall not induce or solicit or attempt to induce
      or solicit, or assist any person to induce or solicit any employee of the
      Corporation or its Affiliates or any contractor who regularly provides
      services to the Corporation or its Affiliates, or assist or encourage any
      employee of the Corporation or its Affiliates or any contractor who
      regular who regularly provides services to the Corporation or its
      Affiliates to accept employment or engagement elsewhere that competes with
      the business of the Corporation or its Affiliates.



Corel Corporation Executive Employment Agreement                   Page 10 of 15

9.    PROPRIETARY AND MORAL RIGHTS

9.1   PROPRIETARY RIGHTS. The Executive recognizes the Corporation's proprietary
      rights in the tangible and intangible property of the Corporation and
      acknowledges that Executive has not obtained or acquired and shall not
      obtain or acquire any rights, title or interest, in any of the property of
      the Corporation or its predecessors, successors, Affiliates or related
      companies including, without limitation, any writing, communications,
      manuals, documents, instruments, contracts, agreements, files, literature,
      data, technical information, know-how, secrets, formulas, products,
      methods, procedures, processes, devices, apparatuses, trademarks, trade
      names, trade styles, service marks, logos, copyrights, patents,
      inventions, discoveries, whether or not protected by patent or copyright,
      which the Executive may have conceived or made, or may conceive or make,
      either alone or in conjunction with others, and related to the business of
      the Corporation or its predecessors, successors, Affiliates or related
      companies (collectively, the "MATERIALS"). The Executive agrees that
      during his employment with the Corporation and any time afterwards all
      Materials shall be the sole and exclusive property of the Corporation.

9.2   WAIVER OF MORAL RIGHTS. The Executive irrevocably waives to the greatest
      extent permitted by law, for the benefit of and in favour of the
      Corporation, all the Executive's moral rights whatsoever in the Materials
      including, without limitation, any right to the integrity of any
      Materials, any right to be associated with any Materials and any right to
      restrict or prevent the modification or use of any Materials in any way
      whatsoever. The Executive irrevocably transfers to the Corporation all
      rights to restrict any violations of moral rights in any of the Materials
      including, without limitation, any distortion, mutilation or other
      modification.

9.3   ASSIGNMENT OF RIGHTS. If the Executive has acquired or does acquire,
      however, any right, title or interest in any of the Materials or in any
      intellectual property rights relating to the Materials, the Executive
      irrevocably assigns all such right, title and interest throughout the
      world exclusively to the Corporation including, without limitation, any
      renewals, extensions or reversions relating thereto and any right to bring
      an action or to collect compensation for past infringements.

9.4   REGISTRATIONS. The Corporation will have the exclusive right to obtain
      copyright registrations, letters patent, industrial design registrations,
      trade-mark registrations or any other protection in respect of the
      Materials and the intellectual property rights relating to the Materials
      anywhere in the world. At the expense and request of the Corporation, the
      Executive shall, both during and after the Executive's employment with the
      Corporation, execute all documents and do all other acts necessary in
      order to enable the Corporation to protect its rights in any of the
      Materials and the intellectual property rights relating to the Materials.

10.   REMEDIES

10.1  DEFENCES. The Executive agrees that all restrictions in Sections 6, 7, 8
      and 9 are necessary and fundamental to the protection of the business
      carried on by the Corporation and that all such restrictions are
      reasonable and valid, and the Executive waives all defences of the
      Executive to the strict enforcement thereof by the Corporation.

10.2  INJUNCTIVE RELIEF. The Executive acknowledges that a breach by the
      Executive of any of his obligations in Sections 6, 7, 8 and 9 will result
      in the Corporation suffering irreparable harm, which cannot be calculated
      or fully or adequately compensated by recovery of damages alone.
      Accordingly, the Executive agrees that the Corporation shall be entitled
      to interim and



Corel Corporation Executive Employment Agreement                   Page 11 of 15

      permanent injunctive relief without proof of actual damages, specific
      performance and other equitable remedies, in addition to any other relief
      to which the Corporation may become entitled.

11.   OBLIGATIONS NOT EXHAUSTIVE

11.1  FIDUCIARY. THE Executive acknowledges that the obligations contained in
      Sections 6, 7, 8 and 9 are in addition to any obligations that the
      Executive may now or hereafter owe to the Corporation, at law, in equity
      or otherwise. Nothing contained in this Agreement is a waiver, release or
      reduction of any fiduciary obligations that the Executive owes to the
      Corporation.

12.   GENERAL

12.1  SURVIVAL. Sections 6, 7, 8, 9, 10, 11 and this Section 12.1 survive the
      termination of this Agreement and the Executive's employment for any
      reason whatsoever.

12.2  SEVERABILITY. If any provision of this Agreement is declared void or
      unenforceable, such provision shall be deemed severed from this Agreement
      to the extent of the particular circumstances giving rise to such
      declaration, and such provision as it applies to other persons and
      circumstances and the remaining terms and conditions of this Agreement
      shall remain in full force and effect.

12.3  ENTIRE AGREEMENT. This Agreement, including the attached Schedules and the
      documents referenced therein, constitutes the entire agreement between the
      Corporation and the Executive on the subject-matter herein and it
      supersedes all prior agreements and understandings, whether written or
      oral. There are no representations, warranties or collateral agreements on
      the subject-matter herein that exist outside of this Agreement.

12.4  AMENDMENTS. This Agreement may only be amended by written agreement
      executed by the Corporation and the Executive. However, changes to the
      Executive's position, duties, vacation, benefits and compensation, over
      the course of time, do not affect the validity or enforceability of
      Sections 5, 6, 7, 8 and 9.

12.5  GOVERNING LAW. This Agreement shall be governed by, and construed and
      interpreted in accordance with the laws of the Province of Ontario and the
      laws of Canada applicable therein. The Corporation and the Executive each
      irrevocably attorns to the exclusive jurisdiction of the courts of Ontario
      and the courts of Ontario shall have the sole and exclusive jurisdiction
      to entertain any action arising under this Agreement.

12.6  ASSIGNMENT THE Corporation may assign this Agreement, and it enures to the
      benefit of the Corporation, its successors or assigns.

12.7  INDEPENDENT LEGAL ADVICE. The Executive acknowledges that he has been
      encouraged to obtain independent legal advice regarding the execution of
      this Agreement, and that he has either obtained such advice or voluntarily
      chosen not to do so, and hereby waives any objections or claims he may
      make resulting from any failure on his part to obtain such advice.

12.8  WAIVER. No waiver of any of the provisions of this Agreement shall be
      effective or binding, unless made in writing and signed by the party
      purporting to give the same. No waiver of any of the provisions of this
      Agreement shall be deemed or shall constitute a waiver of any other



Corel Corporation Executive Employment Agreement                   Page 12 of 15

      provisions, whether or not similar, nor shall such waiver constitute a
      continuing waiver, unless expressly stated otherwise.

12.9  EFFECTIVE DATE. This Agreement is effective the date it is made.

      IN WITNESS WHEREOF this executive employment agreement has been executed
by the Corporation and the Executive effective on the date first written above.

                                          COREL CORPORATION

                                          /s/ Amish Mehta
                                          --------------------------------
                                          PER: AMISH MEHTA

                                          /s/ David C. Dobson
                                          --------------------------------
                                          DAVID C. DOBSON



Corel Corporation Executive Employment Agreement                   Page 13 of 15

                                  SCHEDULE "A"

                             EBITDA TARGETS FOR 2005

      The Fiscal Year 2005 target would be a combination of Revenue (40%) and
EBITDA (60%). The targets and associated payouts (full year) are as follows:

                       REVENUE - 40% of 2005 Target Bonus



 TARGET USD          ACCOMPLISHMENT
- ------------         --------------
                                    
$ 90,000,000               60%            No incentive below
$120,000,000               80%                    50%
$150,000,000              100%                   100%
$165,000,000              110%                   135%
$180,000,000              120%                   170%


                        EBITDA - 60% OF 2005 TARGET BONUS



 TARGET USD         ACCOMPLISHMENT
- -----------         --------------
                                  
$31,860,000              60%            No incentive below
$42,480,000              80%                   100%
$53,100,000             100%                   150%
$64,080,000             120%                   200%




Corel Corporation Executive Employment Agreement                   Page 14 of 15

                                  SCHEDULE "B"

                             FULL AND FINAL RELEASE

            I, DAVID C. DOBSON, on my own behalf and that of my heirs, executors
and assigns, in consideration of the terms and conditions set out in my
Agreement with Corel Corporation ("COREL") dated June __, 2005, payments made to
me pursuant to those terms and conditions and other good and valuable
consideration, the sufficiency of which is hereby acknowledged, do hereby
release and forever discharge Corel, its subsidiaries, parents, predecessors,
successors, related companies, affiliates, divisions and their present and
former directors, officers, representatives, shareholders, owners, employees,
administrators, agents and lawyers (collectively, the "RELEASEES") jointly and
severally, from any and all actions, causes of action, covenants, contracts,
claims, demands, complaints, proceedings, grievances, damages, costs or loss of
any nature or kind, past, present or future arising out of or in any way
relating to or connected with my hiring, my employment with Corel or the
termination of my employment, stock options or other share based incentive plans
and benefit plans.

            I do hereby declare and acknowledge that the consideration set out
above satisfies all obligations of the Releasees, arising from or out of my
hiring, my employment with Corel or the termination of my employment, stock
options or other share based incentive plans and benefit plans including,
without limitation, any obligations under the Ontario Employment Standards Act,
2000, as amended, the Ontario Human Rights Code, as amended and the Ontario
Workplace Safety and Insurance Act, 1997, as amended, or any similar legislation
in any other jurisdiction . I covenant and undertake that I will not file or
advance any claims or complaints under the Ontario Employment Standards Act,
2000, as amended including claims in respect of pay in lieu of notice and
severance pay, the Ontario Human Rights Code, as amended, and the Ontario
Workplace Safety and Insurance Act, 1997, as amended, or any similar legislation
in any other jurisdiction, arising out of my hiring, my employment with Corel or
the termination of my employment, stock options or other share based incentive
plans and benefit plans.

            And for the said consideration, I further agree not to make any
claim or take any other proceedings against any person, entity, corporation,
partnership or Crown in which any claim could or does arise with respect to any
matters which may have arisen between the parties to this release up to the
present time, concerning and relating to any action I may have as against any
other party as a result of my hiring, my employment with Corel or termination of
my employment, stock options or other share based incentive plans and benefit
plans.

            Notwithstanding the foregoing, I do not release my rights and
entitlements set out in Section 5 of the Agreement or any right or entitlement I
may have to indemnity or to enforce any indemnity as a director or officer of
Corel or its affiliates or to benefits under any policy of directors and
officers insurance.

            And for said consideration I further agree to save harmless and
indemnify the Releasees from and against any and all claims, charges, taxes,
penalties or demands made by the Canada Revenue Agency, its predecessors or
successors, or any similar governmental authority in any other jurisdiction,
requiring any of the Releasees to pay any amounts under the Income Tax Act
(Canada) and other duly recognized federal, provincial and local taxing
authorities in respect of income tax payable by me in excess of the income tax
previously withheld, and from and against any and all claims, charges, taxes or
penalties and demands made on behalf of or related to Employment Insurance or
Canada Pension Plan under the applicable statutes and regulations, or any other
similar



Corel Corporation Executive Employment Agreement                   Page 15 of 15

legislation in any other jurisdiction, with respect to any amounts which may, in
the future, be found to be payable by any of the Releasees with respect to the
payment of the consideration referred to above.

            It is understood and agreed that the giving of the consideration set
out above is deemed to be no admission of liability whatsoever on the part of
the Releasees and, in fact, any liability is expressly denied.

            I will not say, publish or do any act or thing that disparages or
casts the Releasees in any unfavourable light, or which could result in injury
to their reputation. Except to the extent required by applicable law, I will
make no public statements or announcements regarding my past employment with
Corel or any of the matters set forth herein without first consulting with Corel
and obtaining its prior written approval as to the timing and content of the
proposed statements or announcements. Notwithstanding the foregoing, I
understand that I may disclose particulars of my past employment with Corel and
my termination therefrom in a bona fide job search or application for
government employment insurance benefits.

            And I hereby declare that I have read and fully understand this
release. I have had the opportunity to seek independent legal advice. I
understand that this release contains a full and final release of any claims,
which I have or may have relating to my hiring, my employment with Corel and the
termination of my employment, stock options or other share based incentive plans
and benefit plans. I voluntarily accept the said consideration for the purpose
of making full and final compromise, adjustment and settlement of all claims as
set out above.

            IN WITNESS WHEREOF, I, DAVID C. DOBSON set my hand and seal hereto
this _________________________ day of ________________________________, 200_.

SIGNED, SEALED AMD DELIVERED            )
in the presence of                      )
                                        )
__________________________________      )   _________________________________
Witness Signature                       )   DAVID C. DOBSON
                                        )
__________________________________      )
Witness Name                            )

EX-10.3

                                                                    Exhibit 10.3

December 12, 2003

PRIVATE & CONFIDENTIAL

Mr. Doug McCollam
178 Main Road
Hudson, Quebec
JOP 1H0

Dear Doug,

We are excited by prospect of you joining our team and helping to lead Corel
Corporation (the "Company") through the challenging and exciting times ahead of
us. The company is pleased to offer you the position of Chief Financial Officer,
effective January 19,2004 on the terms set out below.

1.   REMUNERATION

1.1  Your base salary will be CDN $250,000 per annum.

1.2  The Company is prepared to pay you a target bonus of 100% of the base
     salary in additional bonus payments based upon meeting financial targets.
     For fiscal year 2004, the financial target shall be based upon a 100% bonus
     payable upon the attainment of EBITDA of US $27M. There shall be no bonus
     payable in the event EBITDA is less the US $15M. At EBITDA of US $15M or
     higher the bonus shall be calculated in a linear manner with no maximum.
     Provided that this agreement is signed and returned on or before 5:00 p.m
     on Saturday December 13, 2003 and provided you commence your duties with
     the Company on or before Monday January 19, 2004, there shall be no pro
     rata reduction in the 2004 bonus by reason of your having commenced
     employment following the start of the 2004 Fiscal years. EBITDA target of
     .27M is before impact of bonus expense.

1.3  For fiscal yean following 2004, the Company shall set financial and other
     targets at its discretion. Notwithstanding, for fiscal year 2005 the
     financial targets set for you shall not be higher than the financial
     targets set for the CEO of the Company.

1.4  Your salary will be reviewed annually.

2.   EQUITY

1.1  The Company will grant you options/phantom options units covering 0.5% of
     the outstanding common stock of the company at a strike price of US $0.10
     per option and based upon a valuation of the Company at the amount paid by
     Vector for the acquisition of the Company. The options will be subject to
     vesting and other terms as defined in the Company's Phantom Option Plan.



                                                                          Page 2


2.   BENEFITS

2.1  You are entitled to participate in the Company's existing benefit plan. The
     Company's Group Insurance Benefits, including Life Insurance, Short Term
     and Long-Term Disability Benefits, and Extended Health and Dental Benefits
     will be made available to you and your eligible dependents upon
     commencement of employment. The Company reserves the right to amend, cost
     share, or, terminate these benefits from time to time. In the event that
     you purchase extended or enhanced benefits under any of the plans, the
     Company shall reimburse the premiums paid by you to a maximum amount of CDN
     $2,000 per annum.

2.2  You shall be entitled to four weeks annual vacation, in addition to
     statutory holidays, subject to the Company's policies regarding vacation
     carry-over and pay-out.

3.   TRANSITION EXPENSES

3.1  The Company will assist you in your transition to Ottawa as follows:

     a) reimburse you up to $700 per week for documented accommodation, meal and
     travel expenses until you obtain rental accommodations or until the
     expiration of 10 weeks, whichever is earlier;

     b) beginning once you obtain rental accommodations, reimburse you up to CDN
     $1,500 per month for documented rental accommodation expenses (i.e. rent
     and utilities) and mileage expense between Montreal and Ottawa.

     c) provide you with a one-time CDN $20,000 allowance to be disbursed as you
     deem appropriate to cover one time costs associated with your move to
     Ottawa and other first year expenses associated with your transition from
     your old employer to the Company.

4.   CONFIDENTIALITY OBLIGATIONS

4.1  You acknowledge that, that during the course of your employment with the
     Company, you will acquire confidential information, including information
     concerning the names and affairs of clients, information concerning
     products, trade secrets and information concerning the market for products
     sold by the Company and the marketing strategies of the Company, all of
     which you hereby acknowledge to be confidential and protectable property of
     the Company (collectively, the "Confidential Information").

4.2  You agree, during the term of your employment with the Company or
     thereafter, unless required by law that you will not disclose to any person
     or use any Confidential Information which you may have acquired in the
     course of or incidental to your employment with the Company.

5.   NON-SOLICITATION OBLIGATIONS

5.1  You agree that, during the period of employment with the Company and, in
     the event of the termination of your employment for any reason whatsoever,
     within one year of the date of such



                                                                          PAGE 3


     termination either indirectly or directly, by any means, in any capacity,
     approach, solicit, or contact in the course of being engaged in a business
     competitive with the Company or attempt to direct away from the Company:

     (a)  any client or potential client referred to you by the Company during
          the term of your employment with the Company and

     (b)  any client or potential client made known by you by the Company in
          during the term of your employment, or in any manner assist any person
          in any of the foregoing activities.

5.2  You agree that, during the period of your employment by the Company and,
     in the event of the termination of your employment, for a period of one
     year to not directly of indirectly attempt or agree to recruit, train or
     solicit any person employed by the Company to provide services to yourself
     or any person who engages in a business similar to the business of the
     Company or in any manner assist any person in any of the foregoing
     activities.

6.   SEVERANCE PROVISIONS

6.1  (a) If the Company releases you for cause, or you cease your employment
     relationship with the Company as a result of a voluntary decision on your
     part, no severance or notice payments will be payable.

     (b) If your employment is terminated in any other circumstances, your will
     be entitled to receive the greater of:

          (i) such payments and benefits as are required by the minimum
          standards set out in the applicable employment standards legislation;
          or

          (ii) one month notice or at the Company option payment of one month of
          base salary, for each completed year of service or part thereof, not
          to exceed 3 months;

     which, in either case, you acknowledge and agree is in satisfaction of and
     substitution for any and all statutory and common law rights, including
     without limitation, any right to reasonable notice of termination.

     (c) In the event you decide to voluntarily leave the employ of the Company
     you will provide the Company with 45 days written notice prior of such
     voluntary termination.

7.   TRANSITION

7.1  Commencing January 19, 2004 you will be responsible for the finance, legal,
     facilities and the application side of the MIS group with the Company.
     Thereafter, the remaining G&A functions of the Company shall be
     transitioned to your responsibility at such time and in such manner as
     deemed appropriate by the Company. Notwithstanding, it is acknowledged that
     it is the Company's intention (but not its commitment) that all G & A
     responsibilities shall be transitioned to you by the end of Q3 of fiscal
     year 2004.

8.   GENERAL

8.1  If any provision or any severable part of any provision of this Agreement
     is determined to be void or unenforceable, it will not be deemed to affect
     or impair the validity of any other provision or part of any provision in
     this Agreement and each such provision and part thereof is



                                                                          PAGE 4


     deemed to be separate and distinct and, to the fullest extent permitted by
     law, such void or unenforceable provision or part of the provision will be
     severed, and will be deemed to be of no further force and effect.

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

8.3  You acknowledge and agree that this Agreement and all attachments contain
     the entire agreement between you and the Company concerning the subject
     matter hereof and supercedes all prior representations, agreements,
     negotiations, discussions and undertakings, written or oral, between you
     and the Company. This Agreement may only be amended, modified or
     supplemented by written agreement signed by both you and the President on
     behalf of the Company.

It is indeed a pleasure to extend this offer on behalf of Corel Corporation. We
wish you every success in your new position. Please indicate your acceptance of
this offer by signing a copy of this letter and returning to me by 5:00 p.m. on
Saturday December 13,2003, otherwise, this offer letter shall expire at 5:00
p.m. on Saturday, December 13, 2003.

Yours truly,


/s/ AMISH MEHTA
- -------------------------------------
AMISH MEHTA
INTERIM CEO
COREL CORPORATION

I accept the terms of employment as stated above.


/s/ Doug McCollam
- -------------------------------------   DEC 13, 2003
Doug McCollam                           Date

EX-10.4

                                                                    Exhibit 10.4

                              EMPLOYMENT AGREEMENT

             THIS AGREEMENT is made as of the 13th day of May, 2005

BETWEEN:

               COREL INC.

               (the "Corporation")

               - AND -

               RANDY EISENBACH

               (the "Executive")

RECITAL:

          WHEREAS The Corporation and the Executive wish to enter into this
Agreement to set out the rights and obligations of each of them respecting the
Executive's continued employment with the Corporation.

          AND WHEREAS this Agreement shall replace and supersede all previous
employment agreements including the Employment Agreement dated December 1, 2004.

          NOW THEREFORE in consideration of the mutual covenants and agreements
contained in this Agreement and other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the Corporation and
the Executive agree as follows:

1.   DEFINITIONS

In this Agreement,

     1.1  "Accommodation and Travel Expenses" means the amounts referred to in
          sections 4.2, 4.3 and 4.4;

     1.2  "Agreement" means this agreement as it may be amended from time to
          time;

     1.3  "Affiliate" has the meaning attributed to such term in the Business
          Corporations Act (Ontario) as the same may be amended from time to
          time and any successor legislation thereto, and includes an Associate;



     1.4  "Associate" has the meaning attributed to such term in the Business
          Corporations Act (Ontario) as the same may be amended from time to
          time and any successor legislation thereto;

     1.5  "Benefits" has the meaning set out in section 6;

     1.6  "Board" means the Board of Directors of Corel Corporation;

     1.7  "Business" means the bus iness development, marketing or sale of
          computer software for office productivity or graphics;

     1.8  "Commencement Date" means May 13, 2005;

     1.9  "Confidential Information" means all information, intellectual
          property (including trade secrets) and facts relating to and used or
          proposed to be used in the Business of the Corporation and its
          Affiliates, acquired by the Executive during any period in which the
          Executive was affiliated with the Corporation in the capacity of an
          employee, director or shareholder which is confidential based upon its
          nature or the circumstances surrounding its disclosure, and includes,
          without limiting the generality of the foregoing, information:

          (i)  relating to the Corporation's or an Affiliate's products and
               services or to the Corporation's or a Affiliate's research and
               development projects or plans;

          (ii) relating to the Corporation's or an Affiliate's trade secrets,
               technology, patentable and unpatentable inventions, discoveries,
               processes, test procedures and results, records, specifications,
               data, formulations, know-how, samples, specimens, manufacturing
               processes and regulatory information;

          (iii) relating to the Corporation's or an Affiliate's business
               policies, strategies, operations, finances, plans or
               opportunities, including the identity of, or particulars about,
               the Corporation's or an Affiliate's clients or suppliers;

     1.10 "Date of Termination" has the meaning set out in section 7.1 of this
          Agreement;

     1.11 "Disability" means the mental or physical state of the Executive such
          that:

          (i)  subject to applicable human rights legislation, due to illness,
               disease, mental or physical disability or similar cause, the
               Executive cannot substantially perform his duties as an employee,
               officer or director of the Corporation or any of its
               Subsidiaries, as applicable;



          (ii) a court of competent jurisdiction has declared the Executive to
               be mentally incompetent or incompetent to manage his affairs;

          (iii) the Executive is eligible for, has applied for, and has been
               accepted for long-term disability benefits under the
               Corporation's long-term disability plan; or

          (iv) an attorney pursuant to a continuing power of attorney for
               personal care or similar instrument is appointed to manage the
               affairs of the individual due to the Execctive's mental
               incompetence;

     1.12 "Just Cause" means:

          (i)  theft, fraud, dishonesty or willful misconduct by the Executive
               involving the property, business or affairs of the Corporation,
               or the carrying out of the Executive's duties;

          (ii) the breach by the Executive in any material respect of the
               Executive's employment agreement; or

          (iii) any other conduct that would be determined by the courts of
               Texas to constitute misconduct;

     1.13 "Good Reason" means any of the following, unless consented to by the
          Executive:

          (i)  a material reduction in the Executive's titles, reporting
               relationships, powers, authority, duties or responsibilities; or

          (ii) a material reduction in the Executive's annual base salary,
               benefits and perquisites.

     1.14 "Salary" has the meaning set out in section 3.1.

2.   EMPLOYMENT OF THE EXECUTIVE

     2.1  The Corporation shall continue to employ the Executive, and the
          Executive shall continue to serve the Corporation, in the position of
          Chief Operating Officer of the Corporation for the Term of this
          Agreement subject to termination pursuant to section 7;

     2.2  While employed by the Corporation:

          (a)  The Executive shall report to the Chief Executive Officer of
               Corel Corporation and the Board and shall perform such duties,
               have such responsibilities and exercise such powers and
               authorities as are



               assigned to him by the Chief Executive Officer and the Board from
               time to time; and

          (b)  The Executive shall devote the whole of his business time,
               attention and ability to the Business;

          (c)  The Executive shall work on a remote basis from Dallas, Texas,
               however Executive acknowledges that he will be required to spend
               up to 50% of his time traveling to the Minneapolis, UK, and
               Ottawa offices to attend to meetings required to run the
               business.

          (d)  For as long as the Executive remains ordinarily resident in Texas
               and submits US tax returns accordingly, the Corporation agrees
               that it will cover costs incurred to calculate any incremental
               cross border employment tax obligations incurred by Executive by
               virtue of his employment with the Corporation and that the
               Corporation will make such payments as are required to compensate
               the Executive for any such incrementalobligation such that the
               Executive's after tax compensation is equalized to the level as
               if Executive had worked 100% of the time in Texas.

     2.3  This Agreement replaces all previous agreements between the Executive
          and the Corporation (and its Affiliates, Associates and their
          predecessors and assignors) and the Executive hereby expressly waives
          all rights he would otherwise have under any such previous agreements,
          including the right to any severance benefits, benefits on change of
          control, and, for the period following March 1, 2005, any salary or
          incentive compensation, under said previous agreements.

3.   REMUNERATION

     Commencing and effective as of the Commencement Date, the remuneration of
the Executive for services hereunder shall be as follows:

     3.1  The Executive shall receive an annual gross salary (before deduction
          for income taxes and other required deductions) of USD $260,000, which
          shall be reviewed periodically and which may be increased at the
          discretion of the Board (the "Salary"), payable in accordance with the
          policy of the Corporation for payments of salary to senior management.
          The Salary shall be effective March 1, 2005;

     3.2  The Executive shall also be eligible for an incentive bonus component
          of USD $130,000, (subject to statutory withholdings and deductions).
          The incentive bonus shall prorated for the fiscal year 2005 and will
          be based upon the successful realization of targets set on a periodic
          basis by Corporation. The incentive bonus shall be effective from
          March 1, 2005. The terms and conditions related to the calculation of
          the incentive bonus component, including the calculation of any
          payment of same prior to or



          following termination, shall be governed in accordance the incentive
          bonus plan.

          All payments in respect of 3.1 and 3.2 will be made by bank credit
     transfer.

     3.3  The Executive acknowledges that the granting of options is made only
          to full time employees, solely at Corporation's discretion and subject
          to the terms and conditions of any grant and of Corporation's stock
          option plan in effect, from time to time.

     3.4  The Executive shall be entitled to participate in benefits as are
          enjoyed from time to time generally by Employees in accordance with
          the established practices and policies of the Corporation as the
          Corporation may in its absolute discretion create from time to time.
          In this regard, the Corporation acknowledges having received a
          description of the benefits in force as of the date hereof.

4.   EXPENSES.

     4.1  The Corporation shall reimburse the Executive for all reasonable
          out-of-pocket expenses incurred by the Executive while employed by the
          Corporation in the performance of his duties under this Agreement
          (including attendance at industry, financing and other conferences
          relevant to the Executive's performance of his duties hereunder), in
          accordance with the Corporation's policy for reimbursement of
          expenses, upon presentation of receipts or such other supporting
          documentation as the Corporation may reasonably require

     4.2  The Corporation shall provide accommodation in Ottawa of the
          Executive's choosing, for the sole use by the Executive and his
          family, subject to the following. The Corporation shall offset the
          first $3,000 CDN per month for costs incurred for Executive's
          accommodation, utilities and furniture, Should a furnished
          accommodation not be available, Corporation shall provide a one-time
          reimbursement of $10,000 CDN to be used by the Executive to furnish
          suitable accommodations and the offset described above shall reduce to
          $2,500 CDN per month. Except as provided for in the foregoing, any
          additional expense related to the accommodation and furniture shall be
          borne by the Executive.

     4.3  The Executive shall be reimbursed for travel expenses for family
          members who join or accompany the Executive on business related trips
          and to return there from, including travel to and from Ottawa, to a
          maximum of USD $10,000 per calendar year.



     4.4  The Executive shall be reimbursed for ground transportation costs
          incurred while in Ottawa to a maximum of $500 CDN per month.

5.   VACATION

     The Executive shall be entitled while employed by the Corporation to 4
weeks vacation with pay per year, in accordance with its normal practices.
Vacation shall be taken by the Executive at such time as may be reasonably
acceptable to the Corporation having regard to its operations.

6.   BENEFITS

     While the Executive is employed by the Corporation, the Corporation shall
provide to the Executive the benefits made generally available to its senior
executives, save and except any long term incentive, profit sharing, option or
similar plan, other than as expressly set out in this Agreement (the
"Benefits"). The Benefits shall be provided in accordance with and subject to
the terms and conditions of the applicable fund, plan or arrangement relating
thereto in effect from time to time.

7.   TERMINATION

     7.1  The employment of the Executive shall terminate or be terminable:

          (a)  by retirement or resignation on not less than 1 months written
               notice, of the Executive;

          (b)  by the Corporation at any time on written notice to the Executive
               for Just Cause;

          (c)  by the Corporation or the Executive at any time on written notice
               because of the occurrence of Disability;

          (d)  automatically upon the death of the Executive;

          (e)  by the Corporation at any time on written notice without Just
               Cause;

          (f)  by the Executive on written notice for Good Reason; or

          (g)  by the Executive, within six (6) months of the hire date of a new
               CEO, and on three (3) months written notice from the Executive.

8.   PAYMENTS ON TERMINATION OF EMPLOYMENT

     8.1  If the employment of the Executive is terminated for retirement or
          resignation, pursuant to section 7.1 (a), the Executive will receive
          payment



          for Salary, incentive bonus, and accrued but unused vacation owing on
          the Date of Termination

     8.2  If the employment of the Executive is terminated for Just Cause,
          pursuant to section 7.1 (b), the Executive will receive payment for
          Salary and accrued but unused vacation owing on the Date of
          Termination.

     8.3  If the employment of the Executive is terminated at any time by the
          Corporation for Disability pursuant to section 7.1(c), by the death of
          the Executive pursuant to section 7.1 (d) without Just Cause pursuant
          to section 7.1(e), or by resignation for Good Reason pursuant to
          section 7.1(f), the following provisions shall apply conditional on
          the Executive (or the Executive's legal representative in the case of
          termination by reason of death) providing a full and final release to
          the Corporation in the form attached hereto as Schedule A:

          (a)  The Corporation shall pay to the Executive, immediately following
               the Date of Termination, if not already paid, the Executive's
               Salary owing at the Date of Termination and any accrued but
               unused vacation in accordance with the Corporation's policy,

          (b)  The Corporation shall pay to the Executive forthwith following
               the Date of Termination, a lump sum payment in USD equivalent
               (less deduction for income taxes and other required deductions)
               to six (6) month's annual Salary.

          (c)  The Executive shall continue to receive health benefits to the
               extent the Corporation is permitted by the terms of the relevant
               benefit plan(s) to provide such health benefits for six (6)
               months following the date of termination and, to the extent the
               Corporation is not so permitted, the Corporation shall make a
               payment equal to the cost to the Corporation of such benefits for
               said period;

          (d)  The Corporation shall reimburse expenses incurred by the
               Executive on or prior to the Date of Termination for which the
               Executive would be entitled to reimbursement but for the
               termination of his employment hereunder;

          (e)  The Executive shall continue to be reimbursed and/or receive, as
               the case may be, the Accommodation and Travel Expenses, to the
               extent that same are incurred, for six (6) months following the
               date of termination; and

          (f)  The Executive is not obligated to mitigate his damages or to seek
               alternative employment. The payments refereed to in section 8.3
               shall not be reduced if the Executive obtains alternate
               employment following termination.



     8.4  If the employment of the Executive is terminated by at any time by the
          Executive, pursuant to section 7.1(g), the following provisions shall
          apply conditional on the Executive providing the requisite notice and
          executing a full and final release to the Corporation in the form
          attached hereto as Schedule A:

          (a)  The Corporation shall pay to the Executive, immediately following
               the Date of Termination, if not already paid, the Executive's
               Salary owing at the Date of Termination and any accrued but
               unused vacation in accordance with the Corporation's policy,

          (b)  The Corporation shall pay to the Executive forthwith following
               the Date of Termination, a lump sum payment in USD equivalent
               (less deduction for income taxes and other required deductions)
               to three (3) month's annual Salary.

          (c)  The Executive shall continue to receive health benefits to the
               extent the Corporation is permitted by the terms of the relevant
               benefit plan(s) to provide such health benefits for three (3)
               months following the date of termination and, to the extent the
               Corporation is not so permitted, the Corporation shall make a
               payment equal to the cost to the Corporation of such benefits for
               said period;

          (d)  The Corporation shall reimburse expenses incurred by the
               Executive on or prior to the Date of Termination for which the
               Executive would be entitled to reimbursement but for the
               termination of his employment hereunder;

          (e)  The Executive shall continue to be reimbursed and/or receive, as
               the case may be, the Accommodation and Travel Expenses, to the
               extent that same are incurred, for three (3) months following the
               date of termination; and

          (f)  The Executive is not obligated to mitigate his damages or to seek
               alternative employment. The payments refereed to in section 8.4
               shall not be reduced if the Executive obtains alternate
               employment following termination.

     8.5  The Executive acknowledges and agrees that the provisions of this
          section 8 are in satisfaction of and substitution for any and all
          statutory and common law rights, including without limitation, any
          right to reasonable notice of termination.



9.   RESIGNATION AS A DIRECTOR AND OFFICER

     On the Executive ceasing to be an employee of the Corporation for any
reason, the Executive shall forthwith resign as a director and officer of the
Corporation and all of its Affiliates (unless such position is established
through a shareholder agreement or other contractual right).

10.  NON-COMPETITION AND NON-SOLICITATION

     10.1 The Executive shall not, during his employment and for the period
          ending 12 months after the Date of Termination, directly or indirectly
          in any manner whatsoever including either individually, or in
          partnership, jointly or in conjunction with any other person, or as
          principal, agent, owner, consultant, contractor, executive, officer,
          director, advisor or shareholder:

          (a)  be engaged in any undertaking;

          (b)  have any financial or other interest (including an interest by
               way of royalty or compensation arrangements) in or in respect of
               the business of any person which carries on a business; or

          (c)  advise, render or provide services to, lend money to or guarantee
               the debts or obligations of any person which carries on a
               business;

          in any province of Canada or any state of the United States, if, at
          the relevant time, the Corporation is carrying on business in such
          state or province, which is the same as or which competes in any
          material respect with the Business or any material part thereof
          carried on by the Corporation or any of its Affiliates on the Date of
          Termination or within the preceding 6 months;

     10.2 The Executive shall not, during his employment and for the period
          ending 24 months after the Date of Termination, directly or indirectly
          employ or retain as an independent contractor any employee of the
          Corporation or any of its Affiliates or induce or solicit, or attempt
          to induce, any such person to leave his or her employment;

     10.3 Nothing in this Agreement shall prevent the Executive from owning not
          more than 5% of any class of securities of an entity, the securities
          of which are listed on a recognized stock exchange or traded in the
          over the counter market in Canada, which carries on a business which
          is the same as or which competes with the business of the Corporation
          or any of its Affiliates.

11.  CONFIDENTIALITY

     11.1 The Executive agrees that all Confidential Information is the property
          of the Corporation or its Affiliates and that he shall keep the
          Confidential Information secret and confidential and shall not use
          (other than in



          connection with his employment with the Corporation or any of its
          Affiliates) or disclose to any person, directly or indirectly, any
          Confidential Information at any time hereafter, provided, however,
          that nothing in this section shall preclude the Executive from
          disclosing or using Confidential Information if:

          (a)  the Confidential Information is available to the public or in the
               public domain at the time of such disclosure or use, without
               breach of this Agreement;

          (b)  disclosure is required to be made by any law, regulation,
               governmental body, or authority or by court order; or

          (c)  disclosure is made to a court or other governmental regulatory or
               arbitral body which is determining the rights of the parties
               under this Agreement;

     11.2 The Executive acknowledges and agrees to return to the Corporation,
          upon the termination of his employment under this Agreement all
          records, books, samples, paper, notes or other documents or assets
          belonging to the Corporation or any Affiliate or relating to their
          business and to return any written Confidential Information;

     11.3 The Executive further acknowledges and agrees that the obligations
          under this section 11 and shall exist and continue in full force and
          effect notwithstanding any breach or repudiation, or alleged breach or
          repudiation, of or termination of this Agreement by the Corporation;

     11.4 For greater certainty, the Corporation acknowledges that this section
          11 is not intended to apply to the skill, expertise, know-how and
          experience of the Executive gained in the performance of his
          employment or with respect to any skill, expertise, know-how and
          experience the Executive obtained prior to or outside his employment
          or directorship duties with the Corporation.

12.  INTELLECTUAL PROPERTY

     The Executive hereby assigns the Corporation his entire right, title and
interest in any invention, work or formula, whether patentable or not or
copyrightable or not, which is conceived or made solely by the Executive or
jointly by the Executive and any other person or persons prior to termination of
the Executive's employment and which relates in any manner to the Business,
research or other activities of the Corporation or which is suggested by or
results from any task assigned to or performed by the Executive on behalf of the
Corporation. The Executive covenants and agrees that (i) he shall promptly
disclose to the Corporation any invention or work covered by this paragraph,
(ii) if requested by the Corporation, he shall promptly execute a specific
assignment of title to the Corporation for such invention or work, and (iii) he
shall take all reasonable actions necessary to assist the Corporation, at the
Corporation's expense, to



secure patent or copyright protection in the United States, Canada and in
foreign countries.

13.  REMEDIES

     The Executive acknowledges that a breach or threatened breach by the
Executive of any provision of any of sections 10, 11 or 12 of this Agreement
shall result in the Corporation and/or its Affiliates suffering irreparable harm
which cannot be calculated or fully or adequately compensated by the recovery of
damages alone. Accordingly, the Executive agrees that the Corporation and/or its
Affiliates shall be entitled to (and the Executive shall not argue or take a
position that the Corporation or any Affiliate shall not suffer irreparable
harm) interim, interlocutory and permanent injunctive relief, specific
performance and other equitable remedies, in addition to any other relief to
which the Corporation and/or its Affiliates may become entitled.

14.  NOTICE

     Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be given by facsimile or other means of
electronic communication or by delivery by hand as hereinafter provided. Any
such notice or other communication, if mailed by registered mail, shall be
deemed to have been received on the day such mail is delivered by the post
office, or if sent by facsimile or other means of electronic communication,
shall be deemed to have been received on the business day following the sending,
or if delivered by hand shall be deemed to have been received at the time it is
delivered to the applicable address noted below either to the individual
designated below or to an individual at such address having apparent authority
to accept deliveries on behalf of the addressee. Notice of change of address
shall also be governed by this section. In the event of a general discontinuance
of postal service due to strike, lock-out or otherwise, notices or other
communications shall be delivered by hand or sent by facsimile or other means of
electronic communication and shall be deemed to have been received in accordance
with this section. Notices and other communications shall be addressed as
follows:

          (a) if to the Executive:

               Randy Eisenbach
               7402 Sugarbush
               Garland, TX
               75044

          (b) if to the Corporation:

               Corel Corporation
               1600 Carling Avenue
               Ottawa, Ontario KIZ 8R7

               Attention: General Counsel
               Telecopier No: (613) 725-2691



15.  ASSIGNMENT

     This Agreement shall be assignable by the Corporation, but shall not be
assignable by the Executive.

16.  INVALIDITY OF PROVISIONS

     Each of the provisions contained in this Agreement is distinct and
severable and a declaration of invalidity or unenforceability of any such
provision by a court of competent jurisdiction shall not affect the validity or
enforceability of any other provision hereof.

17.  ENTIRE AGREEMENT

     This Agreement constitutes the entire agreement between the parties
pertaining to the subject matter of this Agreement. There are no warranties,
representations or agreements between the parties in connection with the subject
matter of this Agreement except as specifically set forth or referred to in this
Agreement. No reliance is placed on any representation, opinion, advice or
assertion of fact made by the Corporation or its directors, officers and agents
to the Executive, except to the extent that the same has been reduced to writing
and included as a term of this Agreement. Accordingly, there shall be no
liability, either in tort or in contract, assessed in relation to any such
representation, opinion, advice or assertion of fact, except to the extent
aforesaid.

18.  WAIVER, AMENDMENT

     Except as expressly provided in this Agreement, no amendment or waiver of
this Agreement shall be binding unless executed in writing by the party to be
bound thereby. No waiver of any provision of this Agreement shall constitute a
waiver of any other provision nor shall any waiver of any provision of this
Agreement constitute a continuing waiver unless otherwise expressly provided.

19.  CURRENCY

     All amounts in this Agreement shall be paid in currency expressly noted.
For payments to be received under this agreement in US Dollars, in the event
that the Executive's compensation or other remuneration or reimbursement of
these US Dollar amounts are required to transferred to a Canadian payroll system
or otherwise paid in any currency other than US Dollars, the Executive shall
receive an amount in such other currency taking into consideration the then
prevailing exchange rate applicable to US currency conversion from the other
currency.

20.  GOVERNING LAW

     This Agreement shall be governed by and construed in accordance with the
laws of Texas.



21.  SEVERABILITY AND JUDICIAL MODIFICATION

     IF any provision of this Agreement is held by a court or arbitration panel
of competent jurisdiction to be enforceable only if modified, such holding shall
not affect the validity of the remainder of this Agreement, the balance of which
shall continue to be binding upon the parties hereto with any such modification
to become a part hereof and treated as though originally set forth in this
Agreement. The parties further agree that any such court or arbitration panel is
expressly authorized to modify any such unenforceable provision of this
Agreement in lieu of severing such unenforceable provision from this Agreement
in its entirety, whether by rewriting the offending provision, deleting any or
all of the offending provision, adding additional language to this Agreement, or
by making such other modifications as it deems warranted to carry out the intent
and agreement of the parties as embodied herein to the maximum extent permitted
by law. The parties expressly agree that this Agreement as so modified by the
court or arbitration panel shall be binding upon and enforceable against each of
them. In any event, should one or more of the provisions of this Agreement be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions hereof, and
if such provision or provisions are not modified as provided above, this
Agreement shall be construed as if such invalid, illegal or unenforceable
provisions had never been set forth herein.

22.  COUNTERPARTS

     This Agreement may be signed in counterparts and each of such counterparts
shall constitute an original document and such counterparts, taken together,
shall constitute one and the same instrument. Counterpart signature pages may be
delivered by facsimile.

23.  ACKNOWLEDGEMENT

     Each of the Corporation and the Executive acknowledges that:

     (a)  he or it has had sufficient time to review and consider this Agreement
          thoroughly;

     (b)  he or it has read and understands the terms of this Agreement and his
          or its obligations hereunder;

     (c)  he or it was afforded the opportunity to retain independent legal
          advice concerning the interpretation and effect of this Agreement; and

     (d)  this Agreement is entered into voluntarily and without any pressure.

     IN WITNESS WHEREOF the parties have executed this Agreement as of the date
first written above.



     (c)  he or it was afforded the opportunity to retain independent legal
          advice concerning the interpretation and effect of this Agreement; and

     (d)  this Agreement is entered into voluntarily and without any pressure.

     IN WITNESS WHEREOF the parties have executed this Agreement as of the date
first written above.

                                        COREL INC.


                                        BY: /s/ Amish Mehta
                                            ------------------------------------


SIGNED, SEALED & DELIVERED          )
IN THE PRESENCE OF                  )
                                    )
                                    )
/s/ Gail Oxley                      )   /s/ Randy Elsenbach
- ------------------------------------)   ----------------------------------------
WITNESS                             )   EXECUTIVE
                                    )
GAIL OXLEY                          )
WITNESS NAME (PRINTED)              )

EX-10.5

                                                                    Exhibit 10.5

(COREL LOGO)

                              EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT is made as of the 1 day of January 2003 between Corel
Corporation, 1600 Carting Ave., Ottawa, Ontario, Canada, K1Z 8R7 ("the
Employer") and Amanda Bedborough of Pharos, Fishery Road, Bray, Berks SL6 1UN
("the Employee").

WHEREAS the Employer and the Employee wish to enter into an agreement ("this
Agreement" which includes Appendix A hereto) pursuant to which the Employee will
provide the Employee's services to the Employer as set out below, and the
Employer will hire and retain the services of the Employee as an employee of the
Employer.

IT IS AGREED that, in consideration of the mutual covenants and agreements set
out below, the parties hereby mutually covenant and agree as follows:

1.   EMPLOYMENT TERM

1.1  The employment under this Agreement ("the Employment") shall commence 1st
     January 2003. That date from which the Employee's period of continuous
     employment will be calculated for statutory purposes shall be 1st October
     2001, Subject to Clause 13 below, the Employment shall be for an indefinite
     term.

2.   EMPLOYMENT-DUTIES

2.1  The Employee is employed by the Employer on a full-time basis as Executive
     Vice President, Europe, the Middle East and Africa (EMEA) Operations
     reporting to the Chief Executive Officer. The Employee's normal duties
     include supervision of sales, marketing and finance functions for Employer
     in EMEA. In addition to the Employee's normal duties, the Employee may be
     required to undertake other duties from time to time with reasonable notice

2.2  During the Employment, the Employee shall devote the Employee's full time,
     attention and skill to the business and affairs of the Employer and any
     Associated Employer (as defined herein and including, without limitation,
     Corel UK Limited. Corel GmbH and Corel S.A.R.L.) for whom the Employee is
     required to perform the duties and responsibilities set out in this
     Agreement. Furthermore, during the Employment the Employee shall not,
     without the prior written consent of the Employer, directly or indirectly
     carry on or be engaged concerned or interested in any other business,
     trade, occupation or activity which interferes with the Employment or which
     is for the benefit of any person, corporation or enterprise whose business
     interests are either competitive or in conflict with those of the Employer
     or any Associated Employer.

2.3  The Employee shall comply with all policies, rules or codes of conduct of
     the Employer or any Associated Employer that are applicable to the Employee
     from time to time and as amended by the Employer in its absolute
     discretion. In particular, the Employee will comply with the policies
     applicable to her from time to time in relation to entering into any
     contract or similar commitment or signing any document in the name of or on
     behalf of the Employer or any Associated Employer and is excluded from
     doing so other than as authorised.

  Corel Corporation Corporate Headquarters, 1600 Carling Ava., Ottawa, Ontario,
      Canada K1Z 8R7 Tel.:1-613-728-8200) Fax: 1-613-728-9790 www.corel.com



3.   HOURS OF WORK

3.1  The Employee's normal hours of work are 37.5 hours per week but the
     Employee is required to work such additional hours and/or more flexible
     hours (that is, different start and finish times) for no additional
     remuneration as may be necessary for the proper performance of the
     Employee's duties and the proper functioning of the business.

3.2  To the extent necessary, the Employee agrees with the Company that the
     limit on the Employee's working time of not more than an average of 48
     hours per week over a 17 week period imposed by r.4(1) Working Time
     Regulations 1998 shall not apply during the Employment subject to the right
     of the Employee to terminate the agreement provided for in this Clause 3.2
     on three (3) months' written notice to the Employer given at any time.

4.   PLACE OF WORK

4.1  The Employee's normal place of work shall be the Corel UK limited offices
     at Sapphire Court, Bell Street, Maidenhead, Berkshire SL6 1BU, or any such
     place of business of the Employer or Associated Employer as the Employer
     may reasonably determine from time to time within a 30 mile radius of the
     normal place of work. The Employee shall be required to travel both inside
     and outside of the UK in connection with the performance of the Employee's
     duties.

5.   SALARY AND BENEFITS

5.1  In consideration of all services rendered by the Employee in the course of
     the Employment, the Employee shall receive a gross annual salary of
     L140,000 ("Base Salary"), subject to statutory withholdings and deductions.
     Base Salary shall be paid by equal monthly instalments on the 25th of each
     month in arrears by credit transfer. Base Salary shall be reviewed annually
     by the Employer and may (if at all) be increased from time to time by such
     amount as the Employer may in its absolute discretion decide and notify to
     the Employee in writing.

5.2  In addition to Base Salary, the Employee will be eligible for an incentive
     bonus of L95,000 based upon the successful realization of certain
     revenue, pre-tax operating income and/or other targets to be established
     each year in advance by the Employer. Notwithstanding the foregoing, the
     Employee acknowledges that Incentive Bonus shall be governed by a separate
     written agreement (the "Compensation Plan") between the Employee and the
     Employer which shall supercede and replace the provisions referred to in
     this Section 5.2 without the need for any amendment to this Agreement. The
     Employee agrees to execute such Compensation Plan upon its receipt.
     Thereafter, the Employee agrees to execute such further Compensation Plans,
     as they may be amended from time to time, at the request of the Employer

5.3  Employee may receive a separate annual bonus at the sole and absolute
     discretion of the Employer's Board of Directors. The Employee acknowledges
     that she has no expectation to any bonus in any year, that the payment of
     said bonus for one or more years shall not affect the absolute discretion
     exercisable by the Board regarding any future bonus and that said
     discretion shall not be effected by any representation to the contrary.



5.4  The Employee shall, in accordance with the Employer's established practices
     and policies as amended from time to time, be eligible to participate in
     such additional benefit schemes as the Employer may in its discretion
     provide from time to time. The Employee's entitlement under any such
     schemes shall be subject to the scheme rules in force from time to time.

5.5  The Employee may be invited to participate in such stock, stock option or
     similar incentive plans as Employer may in its absolute discretion
     determine from time to time. The Employee's rights under any such plan
     shall be subject to the rules of such plan as amended by the Employer from
     time to time and do not form part of the Employee's rights under this
     contract.

5.6  The Employee acknowledges having received a description of the benefit
     schemes (other than salary, incentive bonus and discretional annual bonus)
     in force as of the date of this Agreement and further acknowledges that
     except as set out in this Agreement, the Employee is entitled to no further
     benefits. The Employer reserves the right in its absolute discretion to
     vary or discontinue the provision of any and all benefits provided under
     this Agreement.

5.7  The Employer may at its discretion provide the Employee with a car
     allowance of L1300 per month which shall be reviewed periodically by
     the Employer at its sole discretion. Such allowance shall be paid at the
     same time as Salary is paid and subject to any statutory withholdings or
     deductions.

5.8  The Employer will reimburse the Employee for all petrol receipts, both
     business mileage and personal mileage. The personal mileage will be subject
     to appropriate tax legislation and requirements.

6.   PENSION ARRANGEMENTS

6.1  The Employee is eligible to receive Employer pension contributions to a
     person pension plan 75% subject to the "allowable maximum" as defined under
     the Income and Corporation Taxes Act, as said plan may be amended from time
     to time. The Employer reserves the right to cease Employer contributions to
     the Plan by giving the Employee three months' written notice.

6.2  A contracting-out certificate is not currently in force in respect of the
     Employee's Employment.

7.   EXPENSES

7.1  The Employer shall reimburse the Employee in respect of out-of-pocket
     expenses properly and reasonably incurred by the Employee wholly,
     exclusively and necessarily in or about the performance of the Employee's
     duties provided that any expense claim is supported by satisfactory
     documentation and made in accordance with the Employer's expenses policy in
     force from time to time.



8.   HOLIDAY

8.1  The Employee shall be entitled to 30 working days' paid annual holiday
     (which accrues at the rate of 2.50 days per complete month of service) to
     be taken at times approved of by and agreed in advance with the Chief
     Executive Officer, in addition to the usual public and bank holidays. The
     holiday year is 1 January to 31 December inclusive in each year. No more
     than 10 days may normally be taken at one time. A maximum of 5 days holiday
     may be carried forward from one holiday year to the next but only with the
     prior written approval of the Chief Executive Officer and provided it is
     taken by 31 March in the holiday year to which it has been carried forward.
     The Employer may exceptionally agree to other arrangements regarding the
     carry forward of holiday prior to the end of the relevant holiday year,
     which arrangements will be in writing and signed by both parties.

8.2  Subject to relevant law, any accrued holiday entitlement, which is not
     taken or carried forward in accordance with Clause 9.1, will lapse and the
     Employee will not be entitled to payment in lieu thereof.

8.3  Holiday entitlement in the holiday years in which the Employment starts or
     ends shall be calculated at the rate of 2.50 for each complete month of
     employment.

8.4  Upon termination of the Employment, the Employee's accrued holiday
     entitlement will be calculated pro rata to the date of termination in
     accordance with Clause 9.3 above and the appropriate amount will be paid to
     the Employee, or if holiday days have been taken in excess of the
     Employee's accrued entitlement, the Employer will deduct an amount in
     respect of the excess from the Employee's final payment of wages.

8.5  The Employer may require the Employee to take any accrued but untaken
     holiday in any period during which the Employee is not required to perform
     any duties or at any time after either party has served notice of
     termination.

9.   INCAPACITY DUE TO SICKNESS OR INJURY

9.1  As soon as possible on the first day of absence, the Employee must notify
     the Employer by telephone of the fact of absence due to sickness or injury,
     indicate the nature of sickness or injury and, if possible, how long the
     Employee is likely to be absent. If the Employee is unable to use the
     telephone, the Employee should ask someone else to do this on the
     Employee's behalf.

9.2  For absences of up to 7 successive calendar days, the Employee will be
     required to complete and sign a self-certification form upon the Employee's
     return to work (but the Employer reserves the right to require the Employee
     to provide a doctor's certificate to substantiate the reasons for absence).

9.3  For absences of 8 successive calendar days or more, the Employee will be
     required to submit a medical certificate provided and signed by a doctor or
     a hospital in respect of that period of absence. Thereafter, medical
     certificates must be provided on a weekly basis.



9.4  The Employer will pay Statutory Sick Pay ("SSP") where the Employee
     qualifies for it subject to and in accordance with the relevant statutory
     rules that apply from time to time. The Employee's qualifying days for SSP
     purposes are Monday to Friday inclusive of both days.

9.5  There is no general entitlement to Employer sick pay. However, the Employer
     may at its sole discretion pay the Employee an ex gratia allowance
     ("sickness allowance") of an amount equal to the Employee's Salary less SSP
     and/or any social security benefits recoverable by the Employee. Any
     sickness allowance that the Employer decides to pay will, generally, be
     paid for a period of up to 3 months in aggregate in any 12 month period,
     the first day of absence being the first day of the 12 month period for
     calculating the accumulation of benefit. The payment period may be
     extended, exceptionally, either at an amount equal to full sickness pay or
     some lesser rate, entirely at the discretion of the Employer.

9.6  In the event of sickness or injury being caused by negligence or any third
     party and the Employee being paid sickness allowance by the Employer during
     any period of absence attributable to such sickness or injury, the Employee
     will take all reasonable steps to claim damages in respect thereof.
     Sickness allowance will be regarded as a loan to be repaid in the event of
     a successful claim.

10.  MEDICAL EXAMINATION

     During the Employment, the Employer may require the Employee to be examined
     by a medical practitioner nominated by the Employer at its expense.

11.  DATA PROTECTION

11.1 The Employee hereby acknowledges that the Employee has signed the
     Employer's Personal Data Consent Form ("the Consent Form") by which the
     Employee consents to the processing, disclosure and transfer of personal
     data and sensitive personal data provided by the Employee to the Employer
     or any Associated Employer in accordance with legal requirements and
     including without limitation the specific purposes identified in the
     Consent Form.

11.2 In addition, the Employee agrees to treat any personal data relating to
     other employees or customers of the Company or Associated Employer to which
     the Employee has access in the course of the Employment, in accordance with
     all legal requirements. In particular, the Employee will not use such data
     other than in connection with and to the extent necessary for the purposes
     of the Employment. Any infringement could result in the invoking of
     disciplinary proceedings against the Employee.

12.  TERMINATION

12.1 No notice or any payment in lieu of notice will be given where the Employer
     is entitled to dismiss the Employee on a summary basis. The Employer
     reserves the right to suspend the Employee with pay from duty in connection
     with the investigation of summary dismissal grounds. Without prejudice to
     the generality of this Clause 13.1, the Employer may terminate the
     Employment with immediate effect at any time if the Employee;



     12.1.1 commits any serious or persistent breach or non-observance of any of
          the terms, conditions or stipulations contained in this Agreement or
          any of the policies, rules or codes of conduct of the Employer or any
          regulatory body in force and as amended from time to time;

     12.1.2 is guilty of gross misconduct or gross negligence in connection with
          or affecting the business or affairs of the Employer or any Associated
          Employer form which the Employee is required to perform duties;

     12.1.3 is guilty of conduct which brings or is likely to bring the Employee
          or the Employer or any Associated Employer into disrepute;

     12.1.4 is convicted of an arrestable offence (other than an offence under
          road traffic legislation for which a non-custodial penalty is
          imposed); or

     12.1.5 engages in any act which, directly or indirectly, results in the
          Executive being unable to travel freely and without difficulty between
          the United Kingdom, any member of the EEC, the United States and
          Canada.

12.2 The Employment may be terminated by mutual agreement of the parties in
     writing, in which event the Employee shall continue to accrue and receive
     the Salary and benefits up to the agreed date of termination.

12.3 The Employment will automatically terminate without the need for prior
     advance notice or payment in lieu of notice upon the Employee attaining the
     age of 65 if the Employee is still employed by the Employer immediately
     before the Employee's 65th birthday.

12.4 The Employment will automatically terminate by operation of law in the
     event of the death of the Employee.

12.5 Without limitation to the termination provisions of 13.1, 13.2, 13.3, 13.4,
     and 13.7, the Employment may also be terminated with notice. The Employment
     may be terminated by the Employee giving three (3) months written notice.
     The Employment may be terminated by the Employer giving twelve (12) months
     written notice. In the event there is a Change of Control (as defined in
     Schedule A hereto) and the Employer terminates the Employment with notice
     under this Clause 13.5 during the period beginning one (1) month prior to
     the Change of Control and ending six (6) months following the change of
     control, the Employer shall be required to provide eighteen (18) months
     written notice (instead of the aforementioned twelve (12) months written
     notice). The Company reserves the right at its absolute discretion to
     terminate the Employment under this Clause 13.5 by paying Base Salary and
     benefits (as defined at Clause 5.1 above), and no more, for the length of
     the notice period specified above in lieu of notice.

     The Employment may be terminated by the Employer giving 12 months' written
     notice in the following situations:

          13.5.1 the Parent Company and its subsidiaries, taken as a whole,
          cease to operate as a going concern;



          13.5.2 any action by the Corporation without the Executive's consent
          that constitutes constructive termination of the Executive's
          employment with the Corporation, including (i) any material reduction
          in the Executive's titles, reporting relationships, powers, authority,
          duties or responsibilities; (ii) any reduction in the Executive's base
          salary; or (iii) any material reduction in the value of the
          Executive's employee group insurance or health benefit plans and
          programmes;

          13.5.3 the Corporation fails to pay, when due, any amount payable by
          it to the Executive pursuant to this Agreement;

          13.5.4 any term of the Executive's employment with the Corporation is
          changed without the Executive's consent in any proceedings under any
          bankruptcy, reorganization, arrangement, dissolution, winding-up or
          liquidation statute or law of any jurisdiction, including the
          Companies' Creditors Arrangement Act (Canada).

12.6 On termination of the Employment for whatever reason and howsoever arising,
     the Employee shall immediately:

     12.6.1 Deliver up to the Employer all property, documents including without
          limitation notes, memoranda, correspondence and other material on
          which data or information is recorded or stored and confidential or
          other information of the Employer, any Associated Employer or any
          other third party which has been entrusted to the Employer which is
          under the Employee's control or possession and the Employee will not
          retain any copies of the same;

     12.6.2 Repay all outstanding debts or loans due to the Employer or any
          Associated Employer and the Employer is hereby authorised to deduct
          from any of the Employee's wages a sum in repayment of all or any part
          of such debts or loans; and

     12.6.3 Execute written resignations from any and all positions held with
          Employer and any Associated Employer.

12.7 For the avoidance of doubt, none of the provisions of this Agreement shall
     relieve the Employee from the Employee's duty to mitigate any and all
     damages resulting from the termination of Employment for whatever reason
     and howsoever arising.

13.  GARDEN LEAVE

13.1 The Employer may at any time notwithstanding any other provision of this
     Agreement, direct that:

     13.1.1 the Employee performs no duties; and/or

     13.1.2 the Employee refrain from contacting any customer, clients,
          advertisers, suppliers, agents, professional advisers, brokers or
          employees of the Employer or any Associated Employer; and/or



     13.1.3 the Employee does not enter all or any premises belonging to the
          Employer or any Associated Employer.

13.2 Any suspension or exclusion of the Employee in accordance with 14.1 shall
     be for a period of 9 months and during such period the Employee's Base
     Salary and car allowance and non salary related benefits and no more, shall
     continue to be paid or provided by the Employer. During any period of
     notice, suspension or exclusion, the Employee must continue to comply
     without exception with all the Employee's obligations under this Agreement
     including Clause 2.3,

13.3 The Employer reserves the right to require the Employee to take any accrued
     holiday entitlement during any period that the Employee is directed to
     perform no duties and/or not to enter any premises of the Employer of
     Associated Employer pursuant to this Clause 14.

14.  MISCELLANEOUS

14.1 The Employee hereby warrants that, by virtue of entering into this
     Agreement, the Employee is not and will not be in breach of any express or
     implied terms of any contract, court order, any agreement with a third a
     party which has created or could create any third party rights, or of any
     other obligations legally binding upon him which are or could become
     inconsistent with the Employee's obligations under this Agreement. The
     Employee further agrees that the Employee will fully disclose to the
     Employer at the Employee's earliest opportunity any such prior contract,
     court order, agreements or other legal obligation as well as any claims
     made or notices provided by a third party which allege any such agreement
     or interest.

14.2 The Employee undertakes and agrees that after the termination of the
     Employee's employment hereunder and prior to entering into any contractual
     relationship with any other party to serve as an officer, director,
     employee, partner, advisor, joint-venturer or in any other capacity with
     any other business, undertaking, association, partnership, firm, enterprise
     or venture, the Employee shall disclose to such other party the terms of
     this Agreement.

14.3 There are no collective agreements applicable to the Employment.

14.4 The Employer shall be entitled at any time during the Employment or on its
     termination to deduct from the Employee's wages or any other sums due to
     the Employee from the Employer any monies due from the Employee to the
     Employer in respect of any overpayment of any kind made to the Employee or
     in respect of any debt or other sum due from the Employee.

15.  DEFINITIONS AND INTERPRETATION

15.1 In this Agreement unless the context otherwise requires:

     "ASSOCIATED EMPLOYER" means any company which is a holding company or a
     subsidiary of the Employer or a subsidiary of the Employer's holding
     company and "holding company" and "subsidiary" shall have the meanings
     given by s.736 Companies Act 1985 as amended from time to time;



     "INTELLECTUAL PROPERTY" includes without limitation all improvements,
     inventions, know-how and discoveries, technology, letters patent,
     copyrights, computer programs, utility models, design rights, trade marks,
     service marks, documentation, processes, techniques or procedures in any
     way related to the Employer's business which are developed, invented, or
     written by the Employee alone or together with others, applications for
     registration of any of the foregoing and the right to apply for them in any
     part of the world, and including all derivative works during the course of
     the Employment, or at any time using the Employer's confidential
     information.

15.2 This Agreement, contains the entire understanding and agreement between the
     parties with respect to the Employment and supersedes any and all
     subsisting agreements arrangements representations and undertakings
     (written or oral, express or implied) relating to the Employment which such
     agreements, arrangements representations and undertakings shall be deemed
     to have been terminated by mutual consent. Both parties hereby release and
     forever discharge the other of and from all manner of actions, causes of
     action, claims and demands whatsoever under or in respect of any such prior
     agreements and representations.

15.3 Except as provided herein, no amendment or variation of any of the
     provisions of this Agreement shall be valid unless made in writing and
     signed by each of the parties. The Employer reserves the right to make
     reasonable changes to any of the terms of this Agreement with reasonable
     notice.

15.4 This Agreement and the rights and obligations of the parties hereunder
     shall be governed by and construed in accordance with the English law and
     is subject to the exclusive jurisdiction of the English Courts.

15.5 Any reference in this Agreement to a person shall where the context permits
     include a reference to a body corporate and to any unincorporated body of
     persons.

15.6 Any word in this Agreement which denotes the singular shall where the
     context permits include the plural and vice versa and any word in this
     Agreement which denotes to the masculine gender shall where the context
     permits include the feminine and/or the neuter genders and vice versa.

15.7 Any reference in this Agreement to a statutory provision shall be deemed to
     include a reference to any statutory amendment modification or re-enactment
     of it.

16.  SEVERABILITY

16.1 In the event that any provision of this Agreement or part thereof shall be
     deemed void, invalid, illegal or unenforceable by a court or other lawful
     authority of competent jurisdiction, this Agreement shall continue in force
     with respect to the enforceable provisions and all rights accrued under the
     enforceable provisions shall survive any such declaration.

17.  NOTICES

17.1 Any consent, approval, notice, request, or demand required or permitted to
     be given under this Agreement by one party to the other shall be in writing
     to be effective and



     shall be deemed to have been sufficiently served by one party on the other
     if it is delivered personally, sent via facsimile or is sent by registered
     or recorded delivery prepaid post (air mail if overseas) addressed to the
     Employers registered office for the lime being, or the Employee's last know
     address or facsimile number.

17.2 Any consent, approval, notice, request or demand aforesaid if delivered
     personally (for example, if left with an adult person at the above address
     of the Employee and if left with the receptionist at the above address of
     the Employer) or faxed shall be deemed to have been given on the date of
     such delivery or facsimile. Any notice sent by post shall be deemed (in the
     absence of evidence of earlier receipt) to be received two (2) days after
     posting (six (6) if sent by air mail) and in proving the time such notice
     was sent it shall be sufficient to show that the envelope containing it was
     properly addressed, stamped and posted.

18.  NON WAIVER

18.1 The parties acknowledge and agree that a failure by either party to enforce
     any particular provision of this Agreement shall not be considered a waiver
     of any of its rights and will not release the other party of any
     responsibility for performance under this Agreement.

IN WITNESS whereof the parties have duly executed this Agreement as of the date
first above written.


Signed: /s/ A. J. BEDBOROUGH
        -----------------------------
Name: A. J. BEDBOROUGH
Title: EUP, EMEA OPERATIONS


Signed: /s/ Derek Burney
        -----------------------------
Name: Derek Burney
Title: Chief Executive Office

FOR AND ON BEHALF OR COREL UK LIMITED



                                   APPENDIX A

          CONFIDENTIALITY, POST TERMINATION UNDERTAKINGS, OWNERSHIP OF
           PROPERTY, INVENTIONS, DISCOVERIES, INDUSTRIAL DESIGNS, ETC.

A1   CONFIDENTIALITY

A1.1 The Employee agrees to hold in strict confidence the business and affairs
     of the Employer or any Associated Employer and any of their customers or
     clients. The Employee shall not (other than in the proper performance of
     the Employee's duties or with the prior written consent of the Employer or
     unless ordered by a court of competent jurisdiction), at any time either
     during the Employment or after its termination, directly or indirectly
     disclose or communicate to any third party or use for the Employee's own
     benefit or the benefit of any third party other than the Employer or any
     Associated Employer any confidential information which may come to the
     Employee's knowledge in the course of the Employment and the Employee shall
     during the continuation of the Employment use best endeavours to prevent
     the unauthorised publication or misuse of any confidential information,
     subject to such restriction ceasing to apply in accordance with Clause A1.4
     below.

A1.2 For the avoidance of doubt and without prejudice to the generality of
     Clause A1.1 above the following is a non-exhaustive list of matters which
     in relation to the Employer and Associated Employers are considered
     confidential and must be treated as such by the Employee:

     A1.2.1 Information disclosed in confidence to the Employer or any
          Associated Employer by or on behalf of a customer or client or
          prospective customer or client;

     A1.2.2 Information respecting the identity of any customer or client of the
          Employer or any Associated Employer;

     A1.2.3 Information otherwise disclosed to the Employer on a confidential
          basis by third parties; and

     A1.2.4 Information otherwise identified to the Employee us confidential
          information of the Employer or by its nature confidential including
          without limitation any part of the Employer's computer systems,
          software source code, system logic, systems, marketing plans, patents,
          trade secrets, know-how, technical expertise, financial information,
          product information, customer information, remuneration packages and
          other information relating to the business of the Employer, whether
          verbal or written, regardless of the form or medium, with respect to
          the business of the Employer, as well as all proprietary and other
          information of a confidential nature which is provided to the Employer
          by third parties.



A1.3 The Employee's obligations of confidence described at Clause A1.1 above
     include, without limiting the generality of the foregoing:

     A1.3.1 Refraining from copying the Employer's or any Associated Employer's
          confidential information without the Employer's prior written
          permission or as required by the Employee's duties;

     A1.3.2 Refraining from removing the Employer's or any Associated Employer's
          confidential information from the Employer's premises without the
          written permission of the Employer unless so required by the duties of
          the Employee's role;

     A1.3.3 Immediately returning upon request the confidential information of
          the Employer or any Associated Employer's in the possession or control
          of the Employee;

     Al.3.4 Taking every reasonable step to prevent third parties from examining
          and/or making copies of any documents or papers (whether in electronic
          or hard copy form) prepared by the Employee or that come into the
          Employee's possession or under the Employee's control by reason of the
          Employment;

     A1.3.5 Using the Employee's best efforts to follow all security policies of
          the Employer or any Associated Employer's.

A1.4 The Employee's obligations of confidence described above will not apply to
     information which:

     A1.4.1 Enters the public domain other than by breach of obligations of
          confidence owed by the Employee;

     A1.4.2 Rightfully received by the Employee, outside of the course of the
          Employment, from a third party without confidentiality limitations.

A1.5 The mingling of confidential Information with information that falls within
     one or more of the exceptions above shall not impair the status of, or
     obligations of confidence and non-use respecting, the confidential parts.

A1.6 The Employee agrees to promptly advise the Employer of any information
     known to the Employee prior to the commencement of the Employment which
     could be considered confidential information but which the Employee
     considers to be excluded from the provisions of this Agreement. The
     Employee further agrees to disclose any information which the Employee
     believes is qualified by this paragraph before acting upon it.

A2   POST TERMINATION UNDERTAKINGS

A2.1 For the purposes of this Clause A2:

     "THE BUSINESS" means the development and marketing of software owned or
     marketed by the Employer or any Associated Employer (including without
     limitation productivity software such as word-processing, presentation,
     spreadsheet, process management and database applications as well as
     graphics application, desktop publishing application



     software and XML) or the provision of consulting, maintenance, support or
     training services in connection with such software by the Employer or any
     Associated Employer at the date of termination of the Employment and with
     which the Employee has been concerned to a material extent in the 12 months
     immediately preceding such termination; and

     "ASSOCIATED EMPLOYER" means any Associated Employer in respect of which the
     Executive has carried out material duties in the period of 12 months prior
     to the date of termination of the Employment.

A2.2 The Employee undertakes that the Employee will not, either during the
     Employment or for the period of 6 months after the termination of the
     Employment, without the prior written consent of the Employer either alone
     or jointly with or on behalf of any person directly or indirectly:

     A2.2.1 solicit or entice away or endeavour to solicit or entice away from
          the Employer or any Associated Employer any person who at the date of
          termination of the Employment is employed or engaged by the Employer
          or any Associated Employer and (i) is employed or engaged in a sales
          and/or marketing capacity and with whom the Employee has had material
          contact during the course of the Employment or (ii) is directly
          managed by or reports to the Employee (in both cases whether or not
          such person would commit a breach of contract by so doing);

     A2.2.2 in connection with the carrying on of any business in competition
          with the Business approach, canvass or solicit or cause to be
          approached canvassed or solicited for orders in respect of any
          services provided and/or any goods sold by the Employer or and
          Associated Employer any third party who or which at the date of
          termination of the Employment or at any time during the period of 12
          months prior to that date is a customer or customer or client of the
          Employer or any Associated Employer and with whom or which the
          Employee shall have had dealings during the course of the Employment,
          or who or which became a customer or client of the Employer or any
          Associated Employer within six (6) months after the termination of the
          Employment and in respect of whom or which the Employee shall have had
          material involvement with the marketing effort in respect of such
          customer or client during the course of the Employment;

     A2.2.3 in connection with the carrying on of any business in competition
          with the Business do business with any person who or which has at any
          time during the period of 12 months immediately preceding the date of
          termination of the Employment done business with the Employer or any
          Associated Employer as and with whom or which the Employee shall have
          had dealings during the course of the Employment or who has done
          business with the Employer or Associated Employer within six (6)
          months after the termination of the Employment and in respect of whom
          or which the Employee shall have had material involvement with the
          marketing effort in respect of such person during the course of the
          Employment.



A2.3 The Employee covenants with the Employer that the Employee will not for the
     period of 6 months after the termination of the Employment without the
     prior written consent of the Employer either alone or jointly with or on
     behalf of any person directly or indirectly carry on or set up or be
     employed or engaged by or otherwise assist in or be interested in any
     capacity (save as a shareholder of not more than two (2) percent in
     aggregate of any class of shares, debentures or other securities of any
     company which are quoted on or dealt in any recognised investment exchange)
     in any business anywhere within the EEC which is in competition with the
     Business.

A2.4 The Employee agrees to notify the Employer immediately of any offer of
     employment or engagement or arrangement made with or to the Employee which
     may give rise to a breach of one or more of the covenants contained in
     Clauses A2.2 and A2.3 ("a notifiable offer") and further undertakes that on
     receipt of a notifiable offer the Employee will immediately inform the
     third party or parties responsible for the notifiable offer of the
     existence of those covenants.

A2.5 The periods during which Clauses A2.2 and A2.3 are expressed to operate
     shall each be reduced by such period as the Employee shall have complied
     with a direction to perform no duties and/or not to enter all or any
     premises of the Employer or any Associated Employer pursuant to Clause 14.

A2.6 The undertakings contained in Clauses A2.2 and A2.3 are intended to be
     separate and severable and enforceable as such.

A3   OWNERSHIP OF PROPERTY

A3.1 The Employee agrees that during the term of the Employment and at any time
     after the termination of the Employment, any and all equipment devices or
     other property provided to the Employee by the Employer shall remain the
     property of the Employer. The foregoing shall include all property (whether
     in electronic or hard copy form) including without limitation computers,
     peripherals, software, cellular phones and any other equipment.

A3.2 On request by the Employer, and in any event upon termination of the
     Employment howsoever arising and for whatever reason, the Employee shall
     immediately return to the Employer any and all of the foregoing property
     and shall return to the Employer any other property which has been leased
     or rented by the Employer for use by the Employee.

A3.3 The Employee hereby agrees that in the event that the Employee does not
     return any and all of the foregoing property, the Employee will pay to the
     Employer a sum equal to the fair market value of the property as reasonably
     determined by the Employer. The Employee authorises the Employer in such
     cases to set off and/or deduct such amount from the Employee's final
     payment of wages or any other sums due to the Employee from the Employer.
     In the event that such amount exceeds the Employees final payment of wages
     and other sums due to the Employee, the Employee agrees to make a payment
     to the Employer of an amount equal to the outstanding excess.

A4   INVENTIONS, DISCOVERIES, INDUSTRIAL DESIGNS, ETC.



A4.1 If at any time during the Employment the Employee makes or discovers or
     participates in the making or discovery of any Intellectual Property
     including (without limitation):

     A4.1.1 Conceiving or making any invention or discovery, whether patentable
          or not;

     A4.1.2 Becoming the author of any design capable of being protected as an
          industrial design, design patent or other design protection;

     A4.1.3 Becoming the author of any work in which copyright may exist;

     A4.1.4 Developing any confidential information which may be capable or
          being protected as a trade secret;

     which relates to or is capable of being used in the business of the
     Employer or any Associated Employer, the Employee shall (subject to the
     relevant provisions of the Patents Act 1977, the Registered Designs Act
     1949 and the Copyright Designs and Patents Act 1988) immediately disclose
     and deliver up to the Employer full details, information, documents and
     other things (in whatever form or media) related thereto and at the request
     and expense of the Employer shall do all things which may be necessary or
     desirable for obtaining appropriate forms of protection In such parts of
     the world as may be specified by the Employer and for vesting all rights in
     such Intellectual Property in the Employer, any Associated Employer or a
     company nominated by the Employer.

A4.2 The Employee hereby irrevocably appoints the Employer to be the Employee's
     agent in the Employee's name and on the Employee's behalf to sign any
     instrument, execute or do any act and generally to use the Employee's name
     for the purpose of giving to the Employer or its nominee the full benefit
     of the provisions of this Clause A4 and in favour of any third party a
     certificate in writing signed by any director or the secretary of the
     Employer that any instrument or act falls within the authority conferred by
     this Clause A4.2 shall be conclusive evidence that such is the case.

A4.3 The Employee hereby waives all of the Employee's moral rights (as defined
     in the Copyright Designs and Patents Act 1988) in respect of any acts of
     the Employer or acts of third parties done with the Employer's authority in
     relation to any Intellectual Property which is the property of the Employer
     by virtue of Clause A4.1.

A4.4 The Employee acknowledges that from time to time, the Employer uses the
     image, likeliness, voice or other representation of its employees in
     connection with the production of corporate reports, advertising and
     promotional materials and training videos. The Employee hereby agrees that
     if, during the course of the Employment, the Employee participates in such
     productions, the Employer may use the Employee's image, likeness, voice or
     other representation in perpetuity, in all media and in all territories for
     the purposes described above without further compensation to the Employee.

A4.5 All rights and obligations under this Clause A4 in respect of Intellectual
     Property made or discovered by the Employee during the Employment shall
     continue in full force and effect after the termination of the Employment
     and shall be binding upon the Employee's personal representatives.



A4.6 The Employee acknowledges that any and all Intellectual Property created by
     the Employee during the course of the Employment shall vest in and be owned
     by and constitute the property of the Employer and to the extent that they
     do not automatically so vest in part consideration of the monies received
     by the Employee pursuant to this Agreement the Employee hereby assigns and
     transfers with full title guarantee such Intellectual Property.

A5   CHANGE OF CONTROL

     "CHANGE OF CONTROL" means the occurrence of any of the following events:

     A5.1.1 the Employer is merged, or consolidated or reorganized into or with
          another corporation or other legal person in any transaction or series
          of related transactions (other than a transaction to which only the
          Employer and one or more of its subsidiaries are parties) and as a
          result of such merger, consolidation or reorganization, less than 51 %
          of the combined voting power of the outstanding voting securities of
          the surviving entity or person immediately after such transaction or
          series of related transactions, are held in the aggregate by persons
          or entities who were holders of voting securities of the Employer
          immediately prior to such transaction;

     A5.1.2 the Employer sells all or substantially all of its assets to any
          other corporation or other legal person in any sale or series of
          related sales (other than a transaction to which only the Employer and
          one or more of its subsidiaries are parties);

     A5.1.3 the Employer's Board of Directors approves the distribution to the
          Employer's shareholders of all or substantially all of the Employer's
          net assets, or the Employer's Board of Directors, shareholders or a
          court of

     competent jurisdiction approves the dissolution or liquidation of the
     Employer;

          or

     A.5.1.4 any other transactions or series of related transactions occur
          which have substantially the same effect as the transactions specified
          in any of the preceding clauses (other than transactions to which only
          the Employer and one or more of its subsidiaries are parties).


Signed: /s/ A. J. BEDBOROUGH
        ----------------------------
Name: A. J. BEDBOROUGH
Title: EVP EMEA OPERATIONS


Signed: /s/ Derek Burney
        ----------------------------
Name: Derek Burney
Title: Chief Executive Officer

FOR AND ON BEHALF OF COREL CORPORATION



(COREL LOGO)

Waiver as Appendix to Employment Contract dated 1st January 2003

I, Amanda Bedborough, hereby confirm that upon signature of this employment
contract, I cede any right to sue Corel Corporation or any of its subsidiaries
regarding reasons for unfair dismissal when notice of termination is paid as
stands in Article 12 of the attached employment contract.


Signed: /s/ Amanda Bedborough
        ----------------------------
Amanda Bedborough

Date: 23/04/03

EX-10.6

                                                                    Exhibit 10.6

                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT is made as of 20th day of January, 2005.

BETWEEN:

                                COREL CORPORATION

                                     (hereinafter referred to as the "Employer")

                                                               OF THE FIRST PART

                                     - and -

                             JACQUELINE A. MAARTENSE

                                     (hereinafter referred to as the "Employee")

                                                              OF THE SECOND PART

          WHEREAS the Employer and the Employee wish to enter into an agreement
          pursuant to which the Employee will provide the Employee's services to
          the Employer as hereinafter set forth, and the Employer will hire and
          retain the services of the Employee as an employee of the Employer.

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

1.   EMPLOYMENT

     a.   The Employee is employed on a full-time basis as EXECUTIVE VICE
          PRESIDENT GLOBAL PRODUCT MARKETING AND COMMUNICATIONS.

     b.   The Employee is employed on a full-time basis for the Employer and it
          is understood that the hours of work involved will vary and may be
          irregular. The Employee acknowledges that this clause constitutes
          agreement to work such hours.

     c.   The Employee acknowledges and hereby agrees to carry out all lawful
          instructions given to the Employee by the Employer.

     d.   The Employee acknowledges and hereby agrees to observe all policies of
          the Employer as the Employer may in its absolute discretion create
          from time to time and to perform all services associated with the
          position herein.

     e.   The Employee acknowledges and agrees that during the currency of this
          agreement, the Employee shall devote the Employee's full-time and
          skill to the duties and responsibilities contemplated herein and shall
          not be engaged in any other employment in any other capacity or any
          other activity that interferes with the provision of the services
          contemplated herein or that is for the benefit of any person,
          corporation or enterprise whose business interests are either
          competitive or in conflict with those of the Employer.



                                       -2-


2.   EMPLOYMENT TERM

          Subject to being terminated pursuant to the provisions of paragraph 5
          hereof, the term of this agreement shall be indefinite commencing on
          JANUARY 21, 2005.

3.   SALARY AND BENEFITS

     a.   For all services rendered by the Employee in the course of the
          employment hereunder, the Employee shall receive a gross annual salary
          of CDN $300,00.00(subject to statutory withholdings and deductions).
          The said salary is to be paid at such times and in such fashion as is
          in keeping with the ordinary practices and policies of the Employer.

     b.   Employee will also be eligible for an incentive bonus component of
          CDN $100,000.00 (subject to statutory withholdings and deductions)
          based upon the successful realization of targets set on a periodic
          basis by Employer. TO CLARIFY AND WITHOUT LIMITATION TO SECTION 11
          HEREIN, THIS AMOUNT REPLACES ALL PROFIT SHARING COMMITMENTS REFERRED
          TO IN THE OFFER LETTER DATED OCTOBER 25, 2004. All payments will be
          made by bank credit transfer.

     c.   Employee shall be reimbursed, in accordance with Employer's policies
          and procedures, up to CDN $3,500.00 per month for payments made by
          Employee for house and car rental in Ottawa. Said rental payment
          reimbursement shall continue until May 31, 2005 and thereafter cease.
          The Employee shall be entitled to reimbursement of relocation expenses
          for the moving of Employee's household to Ottawa to a maximum 25,000
          US$

     d.   The Employee shall be entitled to participate in such additional
          benefits as are enjoyed from time to time generally by Employees in
          accordance with the established practices and policies of the Employer
          as the Employer may in its absolute discretion create from time to
          time. In this regard, the Employee acknowledges having received a
          description of the benefits in force as of the date hereof.

     e.   Employee acknowledges that the granting of options is made only to
          full time employees, solely at Employer's discretion and subject to
          the terms and conditions of any grant and of Employer's stock option
          plan in effect, from time to time.

     f.   The Employee acknowledges that except as hereinafter set out, there
          are no further benefits and that changes may be made to the current
          benefit program(s), from time to time, by the Employer, as the
          Employer may in its absolute discretion decide without the necessity
          of an amendment hereto.

4.   VACATION

          The Employee shall be entitled to vacation in accordance with the
          Executive Vacation Plan, with the annual accrual beginning at 5 weeks
          per year. The Employee shall take the Employee's vacation entitlement
          in each 12 month period and shall not accrue more than one year's
          vacation entitlement from one 12 month period to the next. Without in
          any way limiting the generality of the foregoing, and subject to
          compliance with the Employment Standards Act, S.0.2000, c. 41 as
          amended, any vacation entitlement not taken in the appropriate 12



                                       -3-


          month period or the year following shall be lost unless specific
          arrangements are made between the parties, which arrangements are to
          be confirmed in writing and signed by each of the parties hereto prior
          to the expiration of the said period,

5.   TERMINATION

          This agreement and the employment of the Employee hereunder may be
          terminated in the following manner:

     A.   TERMINATION BY THE EMPLOYER

          i.   This agreement may be terminated effective at any time for cause
               by the Employer giving notice in writing of such termination to
               the Employee. If this agreement and the employment of the
               Employee hereunder is so terminated pursuant to this clause (i),
               the Employee shall receive any statutory benefits to which the
               Employee shall be entitled and shall continue to accrue and
               receive the Employee's said annual salary and benefits through to
               the date of termination indicated in the termination notice and
               no more.

          ii.  Between February 3, 2005 and November 1, 2005, this agreement and
               the employment of the Employee hereunder may be terminated at any
               time by the Employer by providing the Employee a payment equal to
               nine (9) months base salary or a payment of base salary that
               would have been paid during the months not yet worked between
               February 1, 2005 and November 1, 2005, whichever is greater. In
               addition, the Employer will provide payment for the equivalent
               number of months of pro rata bonus, as well as maintain the
               Employee's benefits for said period. However, if maintaining
               benefits is not possible, the Employer will pay to the Employee
               an amount equal to the cost of such benefits, grossed up so that
               the after tax value of the payments is equal to the cost of the
               benefits. The Employee acknowledges that the foregoing provisions
               are in satisfaction of and substitution for any and all statutory
               and common law rights, including without limitation, any right to
               reasonable notice of termination.

          iii. After November 1, 2005, this agreement and the employment of the
               Employee hereunder may be terminated at any time by the Employer
               giving to the Employee such notice, or payment in lieu thereof,
               equal to nine (9) months of base salary in lieu of notice, plus
               one (1) month of salary for each completed year of employment, to
               maximum payment of twelve (12) months salary. In addition, the
               Employer will provide payment for the equivalent number of months
               of pro rata bonus payout, as well as maintain the Employee's
               benefits for said period. However, if maintaining benefits is not
               possible, the Employer will pay to the Employee an amount equal
               to the cost of such benefits, grossed up so that the after tax
               value of the payments is equal to the cost of the benefits. The
               Employee acknowledges that the foregoing provisions are in
               satisfaction of and substitution for any and all statutory and
               common law rights, including without limitation, any right to
               reasonable notice of termination.

          iv.  For the purposes of (ii) and (iii) above, the "pro rata bonus'
               payment to the Employee shall be the greater of (a) the pro rata
               bonus calculated assuming the targets would have been achieved at
               the 100% level; or (b) the pro rata bonus calculated at the



                                       -4-


          actual percentage of target achieved as of the effective date of
          termination.

     b.   TERMINATION BY THE EMPLOYEE

          This agreement and the employment of the Employee hereunder may be
          terminated at any time by the Employee giving to the Employer 1 weeks
          notice. In the event the Employee terminates employment in accordance
          with the foregoing and, in addition, both

          (i) Good Reason exists for Employee terminating employment; and

          (ii) cause does not exist for Employer to terminate Employee's
          employment, then the Employee shall receive the termination the
          payments as described in subsections 5 a (ii) or (iii) above, as the
          case may be.

          For the purposes of this subparagraph "Good Reason" means (i) the
          material reduction or material modification of Employees's authority,
          duties, title, salary, employee benefits or responsibilities without
          Employee's prior written consent, or (ii) any requirement that
          Employee move her principal place of employment from the Ottawa Area.

     c.   RENTAL ACCOMMODATION REIMBURSEMENT

          In the event that: (i) the Employee enters into a 1 year lease in
          respect of rental accommodations in Ottawa prior to May 31,2005; and
          (ii)the Employee's employment is terminated by the Employer pursuant
          to section 5(a)(ii) or (iii) above or is terminated by Employee for
          Good Reason pursuant to section 5(b) above, during the first year of
          said 1 year lease; and (iii) the Employee is unable to terminate or
          otherwise mitigate Employee's obligations to pay rent for the period
          between the effective date of termination and the end of the 1 year
          lease, then, in such a case, (iv) the Employer shall reimburse the
          Employee for the actual cost of rental payments made by the Employee
          to a maximum of CDN$2085 per month for the balance of the first year
          of the 1 year lease. Notwithstanding the foregoing, the Employee shall
          take reasonable steps as directed by the Employer to mitigate any
          obligations under the remainder of the lease by negotiating an early
          termination of the lease with the lessor or by attempting to sublet
          the premises, and, in either case, the Employer shall be entitled to
          reduce its obligations under this section 5 (c) to the extent of any
          mitigation obtained.

     d.   TERMINATION BY MUTUAL AGREEMENT

          This agreement and the employment of the Employee hereunder may be
          terminated by mutual agreement of the parties hereto in writing, in
          which event the Employee shall continue to accrue and receive the
          Employee's said annual salary and benefits through to the date of
          termination reached pursuant to such mutual agreement.

     e.   TERMINATION BY DEATH

          This agreement and the employment of the Employee hereunder shall be
          automatically terminated by the death of the Employee. All
          compensation to the Employee shall cease at the Employee's death.

     F.   EFFECT of TERMINATION ON STOCK OPTIONS

          Upon termination all stock options shall be treated in accordance with
          the provisions of



                                       -5-


          the Employer's option plan, as same may be amended from time to time.
          Employee acknowledges that for the purposes of said plan the effective
          date of termination is the date specified in the notice (a and b
          above), established by mutual agreement (c above) or the date of death
          (d above) and shall not be affected by the subsequent decision of any
          Court or other body that the termination was improper, unlawful,
          unfair, without sufficient notice or otherwise deficient in any
          respect. Notwithstanding the foregoing and the terms and conditions
          of the option plan, if, prior to Employees one year anniversary of
          employment:

               (i) Employee is terminated without just cause or Employee
               terminates employment with Good Reason (in accordance with
               subsection 5 b above);

               AND

               (ii) the Employer completes a public offering, is acquired by
               another entity or is merged with another entity such that
               following said merger less than 50% of the shares of the merged
               entity are owned by persons who previously owned the shares of
               the Employer;

               THEN upon the occurrence of the latter of (i) and (ii), the
               Employer shall, at its option, either:

               (iii) cause 25% of the initial grant of Employees options to
               immediately vest;

               OR

               (iv) pay Employee the cash equivalent of the fair market value of
               25% of the initial grant of Employees options (i.e. the fair
               market value of the shares less the option price).

6.   CONFIDENTIALITY, NON-DISCLOSURE AND NON-COMPETITION

     a.   The Employee agrees to hold in strict confidence the business and
          affairs of the Employer and each of its customers/clients. The
          Employee agrees that during the term of this agreement or any renewal
          thereof or at any time thereafter, the Employee will not directly or
          indirectly disclose to any third party or use for any purpose other
          than that of the Employer without the prior written approval of the
          Employer, the following:

               i. Information disclosed to the Employer by or on behalf of a
               customer/client prospective customer/client;

               ii. Information respecting the identity of any customer/client of
               the Employer;

               iii. Information otherwise disclosed to the Employer on a
               confidential basis by third parties, and

               iv. Information otherwise identified to the Employee as
               confidential information of the Employer including without
               limitation any part of the Employer's computer systems, software
               source code, system logic, systems, marketing plans, patents,
               trade secrets, know-how, technical expertise, financial
               information, product information, customer information,
               remuneration packages and other information relating to the
               business of the Employer, whether verbal or written, regardless
               of the form or medium, with respect to the business of the
               Employer, as well as all proprietary and other information of a
               confidential nature which is provided to the Employer by third
               parties.



                                       -6-


     b.   The Employee's obligations of confidence described above include,
          without limiting the generality of the foregoing:

          i.   Refraining from copying the Employer's confidential information
               without the Employer's prior written permission or as required by
               the Employee's duties.

          ii.  Refraining from removing the Employer's confidential information
               from the Employer's premises without the written permission of
               the Employer.

          iii. Immediately returning upon request the confidential information
               of the Employer in the possession or control of the Employee.

          iv.  Taking every reasonable step to prevent third parties from
               examining and/or making copies of any documents or papers
               (whether in electronic or hard copy form) prepared by the
               Employee or that come into the Employee's possession or under the
               Employee's control by reason of the Employee's employment
               hereunder;

          v.   Using the Employee's best efforts to follow all security policies
               of the Employer, and

          vi.  Upon termination of this agreement, turning over to the Employer
               all documents or papers (whether in electronic or hard copy form)
               and any other materials in the Employee's possession or under the
               Employee's control that relate to the business of the Employer or
               its customers/clients.

     c.   The Employee's obligations of confidence described above do not apply
          to information which is

          i.   available to the public other than by breach of obligations of
               confidence owed by the employee;

          ii.  rightfully received by the Employee, outside of the course of the
               Employee's employment, from a third party without confidentiality
               limitations;

          iii. independently developed by the Employee without recourse to any
               confidential information of the Employer or its
               customers/clients; or

          iv.  known to the Employee prior to first receipt of the same in the
               course of the Employee's employment.

          The mingling of confidential information with information that falls
          within one or more of the exceptions above shall not impair the status
          of, or obligations of confidence and non-use respecting, the
          confidential parts.

     d.   The Employee agrees to promptly advise the Employer of any information
          known to the Employee prior to the Employee's employment with the
          Employer which could be



                                       -7-


          considered confidential information but which the Employee considers
          to be excluded from the provisions of this agreement. The Employee
          further agrees to disclose any information which the Employee believes
          is qualified by this paragraph before acting upon it.

     e.   The Employee acknowledges that the Employee has a fiduciary obligation
          to the Employer and the Employee agrees that the Employee will not
          during the Employee's employment with the Employer or within 12 months
          thereafter, directly or indirectly:

          i.   hire or attempt to obtain the withdrawal from the Employer or its
               affiliates of any of their respective Employees or consultants;

          ii.  approach, solicit, service or deal with any customer/client,
               potential customer/client or maturing business opportunity of the
               Employer or its affiliates in order to attempt to direct any such
               customer/client, potential customer/client or maturing business
               opportunity away from the Employer or its affiliates;

          iii. solicit or divert any business away from the Employer or its
               affiliates;

          iv.  induce or persuade any customer/client, potential
               customer/client, supplier, agent or other person under contract
               or otherwise associated or doing business with the Employer or
               its affiliates to reduce or alter any such association or
               business with the Employer or its affiliates; or

          v.   otherwise interfere or attempt to interfere with any of the
               contractual, business or economic relationships of the Employer
               or its affiliates with other parties.

     f.   The Employee agrees that the Employee will not either:

          i.   during the Employee's employment with the Employer; or

          ii.  within 6 months thereafter

          serve as an executive, officer, director, employee or in any advisory
          capacity with any competitor, in whole or in part, of the Employer, or
          either individually or in partnership or jointly or in conjunction
          with any person or person's firm, trust, partnership, association,
          syndicate or corporation, as principal, agent, shareholder, trustee or
          in any other matter whatsoever otherwise carry on or be engaged in or
          be concerned with any person or persons, firm, trust, partnership,
          association, syndicate or corporation which is a competitor, in whole
          or in part, of the Employer, except as a shareholder holding less than
          two percent of the outstanding shares or securities of any such
          corporation whose shares or securities are listed and posted for
          trading on a stock exchange recognized for such purpose by the Ontario
          Securities Commission. Notwithstanding the foregoing, if such
          competitor has two or more divisions located at different addresses
          then this paragraph will not prohibit the Employee from becoming
          engaged in a division that neither develops nor markets software
          competitive with the software owned or marketed by the Employer nor
          provides services that are competitive with the services provided by
          the Employer provided further that in such case all other obligations
          of the Employee under this agreement shall continue to apply.

          For the purposes of this clause 6 f., a competitor is Microsoft and/or
          Adobe product lines



                                       -8-


          that compete directly with the Employer's products.

     g.   The Employee acknowledges that a breach of any of the foregoing
          provisions will give rise to irreparable harm and injury
          non-compensable in damages. Accordingly, the Employer or such other
          party may seek and obtain injunctive relief against the breach or
          threatened breach of the foregoing provisions, in addition to any
          other legal remedies which may be available. The Employee further
          acknowledges and agrees that the enforcement of a remedy hereunder by
          way of injunction will not prevent the Employee from earning a
          reasonable livelihood. The Employee further acknowledges and agrees
          that the covenants contained herein are necessary for the protection
          of the Employer's legitimate business interests and are reasonable in
          scope and content. The Employee further agrees to notify the Employer
          immediately of any breach of the Employee's obligations under this
          agreement which comes to the attention of the Employee.

     h.   The provisions of this paragraph shall survive the termination of the
          employment relationship herein and shall be enforceable not
          withstanding the existence of any claim or cause of action of the
          Employee against the Employer whether predicated upon this agreement
          or otherwise.

7.   OWNERSHIP OF PROPERTY

     a.   The Employee agrees that during the term of his employment with the
          Employer and thereafter any and all equipment, devices or other
          property provided to the Employee by the Employer shall remain the
          property of the Employer. The foregoing shall include all property
          (whether in electronic or hard copy form) including without limitation
          computers, peripherals, software, cellular phones and any other
          equipment;

     b.   Upon termination of this agreement, the Employee shall immediately
          return to the Employer any and all of the foregoing property and shall
          return to the Employer any other property which has been leased or
          rented by the Employer for use by the Employee.

8.   INVENTIONS, DISCOVERIES, INDUSTRIAL DESIGNS, ETC.

     a.   If, during the term of this agreement or any renewal hereof, the
          Employee should:

          i.   Conceive or make any invention or discovery, whether patentable
               or not;

          ii.  Become the author of any design capable of being protected as an
               industrial design, design patent or other design protection;

          iii. Become the author of any work in which copyright may exist;

          iv.  Develop any confidential information which may be capable or
               being protected as a trade secret;

          and if such invention, discovery, design, work or confidential
          information relates in any way



                                       -9-


          to the business of the Employer or any affiliated entity, such
          invention, discovery, industrial design, work or confidential
          information shall be the sole and exclusive property of the Employer
          or any affiliated entity. The Employee agrees during the term of his
          employment with the Employer and thereafter to promptly disclose to
          the Employer all details and information related thereto and to
          execute on demand any applications, transfers, assignments, moral
          rights waivers and other documents as the Employer may consider
          necessary or advisable for the purpose of vesting in the Employer or
          its designate full title to and enjoyment of such invention,
          discovery, industrial design, work or confidential information, and to
          assist in every way possible in the prosecution of applications for
          the registration of intellectual property rights relating thereto.

     b.   The foregoing shall apply to all improvements, inventions, know-how
          and discoveries, technology, patents, copyrightable materials,
          computer programs, designs, documentation, processes, techniques or
          procedures in any way related to the Employer's business which are
          developed, invented, or written by the Employee alone or together with
          others, including all derivative works during the course of the
          Employee's employment with the Employer, or at any time using the
          Employer's confidential information.

     c.   The Employee acknowledges that from time to time, the Employer uses
          the image, likeliness, voice or other representation of its Employee's
          in connection with the production of corporate reports, advertising
          and promotional materials and training videos. The Employee hereby
          agrees that if, during the course of the Employee's employment with
          the Employer, the Employee participates in such productions, the
          Employer may use the Employee's image, likeness, voice or other
          representation in perpetuity, in all media and in all territories for
          the purposes described above without further compensation to the
          Employee.

9.   DISCLOSURE

     a.   The Employee acknowledges that the Employee is not a party to any
          prior agreements which have created, or which could create in any
          third party rights which are or could become inconsistent with the
          Employee's obligations herein, and the Employee agrees that the
          Employee will fully disclose to the Employer at the Employee's
          earliest opportunity any such prior agreements as well as any claims
          made or notices provided by a third party which allege any such
          agreement or interest.

     b.   The Employee undertakes and agrees that after the termination of the
          Employee's employment hereunder and prior to entering into any
          contractual relationship with any other party to serve as an officer,
          director, employee, partner, advisor, joint-venturer or in any other
          capacity with any other business, undertaking, association,
          partnership, firm, enterprise or venture, the Employee shall disclose
          to such other party the terms of this Agreement,

10.  APPLICABLE LAW

          This agreement and the rights and obligations of the parties hereunder
          shall be construed and governed in accordance with the laws of the
          Province of Ontario.

11.  ENTIRE AGREEMENT

          This agreement contains the entire understanding and agreement between
          the parties hereto with respect to the employment of the Employee and
          the subject matter hereof and any and



                                      -10-


          all previous agreements and representations, written or oral, express
          or implied, between the parties hereto or on their behalf, relating to
          the employment of the Employee by the Employer and the subject matter
          hereof, are hereby terminated and cancelled and each of the parties
          hereto hereby releases and forever discharges the other of and from
          all manner of actions, causes of action, claims and demands whatsoever
          under or in respect of any such prior agreements and representations.
          Except as provided herein, no amendment or variation of any of the
          provisions of this agreement shall be valid unless made in writing and
          signed by each of the parties hereto.

12.  SEVERABILITY

          In the event that any provision herein or part thereof shall be deemed
          void, invalid, illegal or unenforceable by a court or other lawful
          authority of competent jurisdiction, this agreement shall continue in
          force with respect to the enforceable provisions and all rights
          accrued under the enforceable provisions shall survive any such
          declaration, and any non-enforceable provision shall, to the extent
          permitted by law, be replaced by a provision which, being valid, comes
          closest to the intention underlying the invalid, illegal or
          unenforceable provision.

13.  NOTICES

          Any consent, approval, notice, request, or demand required or
          permitted to be given by one party to the other shall be in writing
          (including, without limitation, telex or telecopy communications) to
          be effective and shall be deemed to have been given on the earlier of
          receipt or the fifth day after mailing by registered mail as follows:

     a)   If to the Employer, to it at:

          Corel Corporation
          1600 Carling Avenue
          Ottawa, Ontario
          K1Z 8R7

     b)   If to the Employee, at:

          JACQUELINE MAARTENSE
          R.R. #1
          BOX 4211
          PEMBROKE, ONTARIO
          K8A 6W2
          or such other address as may have been designated by written notice.

          Any consent, approval, notice, request or demand aforesaid if
          delivered, telexed or telecopied shall be deemed to have been given on
          the date of such delivery, telex or telecopy transmission. Any such
          delivery shall be sufficient, inter alia, if left with an adult person
          at the above address of the Employee in the case of the Employee, and
          if left with the receptionist at the above address of the Employer in
          the case of the Employer. The Employer or the Employee may change its
          or the Employee's address for service, from time to time, by notice
          given in accordance with the foregoing.

14.  NON WAIVER

          The parties acknowledge and agree that a failure by either party to
          enforce any particular



                                      -11-


          provision of this agreement shall not be considered a waiver of any of
          its rights and will not release the other party of any responsibility
          for performance under this agreement.

15.  INDEPENDENT LEGAL ADVICE

          The Employee acknowledges that the Employee is aware that the Employee
          has the right to obtain independent legal advice before signing this
          agreement. The Employee hereby acknowledges and agrees that either
          such advice has been obtained or that the Employee does not wish to
          seek or obtain such independent legal advice. The Employee further
          acknowledges and agrees that the Employee has read this agreement and
          fully understands the terms of this agreement, and further agrees that
          all such terms are reasonable and that the Employee signs this
          agreement freely, voluntarily and without duress.

          IN WITNESS WHEREOF the parties hereto have duly executed this
          agreement as of the date first above written.

                                    )   COREL CORPORATION

                                    )
                                    )   Per: /s/ Amish Mehta
                                    )        -----------------------------------
                                    )        Amish Mehta, CEO
                                    )
                                    )
/s/ Gail Oxley                      )   /s/ Jacqueline A. Maartense
- ------------------------------------    ----------------------------------------
Gail Oxley, VP - Human Resources        Jacqueline A. Maartense

EX-10.7

                                                                    Exhibit 10.7

                                COREL CORPORATION

                    SHARE OPTION AND PHANTOM SHARE UNIT PLAN

                                DECEMBER 1, 2003

                           (AS AMENDED JUNE 29, 2005)



                                TABLE OF CONTENTS

                                                                            
SECTION 1.
   INTERPRETATION AND ADMINISTRATIVE PROVISIONS............................    1
   1.01   Purpose..........................................................    1
   1.02   Definitions......................................................    1
   1.03   Administration...................................................    3
   1.04   Governing Law....................................................    3
   1.05   Common Shares Reserved for Issuance..............................    3

SECTION 2.
   UNITS...................................................................    4
   2.01   Grant of Units...................................................    4
   2.02   Vesting of Units.................................................    4
   2.03   Exercise Price...................................................    4
   2.04   Prohibition on Transfer or Assignment of Units...................    4
   2.05   Termination, Retirement, Death or Resignation....................    5
   2.06   End of Participation.............................................    5
   2.07   Acceleration of Exercise of Units................................    5
   2.08   Agreements.......................................................    6

SECTION 3.
   EXERCISE OF UNITS.......................................................    6
   3.01   Exercise of Options..............................................    6
   3.02   Exercise of Phantom Share Units..................................    6
   3.03   Phantom Share Unit Payment.......................................    6
   3.04   Discretionary Issuance of Shares.................................    6
   3.05   No Exercise of Options Prior to IPO..............................    7
   3.06   No Exercise of Phantom Share Units Outside of Window.............    7
   3.07   Termination of Options and Phantom Share Units...................    7

SECTION 4.
   GENERAL.................................................................    7
   4.01   Capital Adjustments..............................................    7
   4.02   Non-Exclusivity..................................................    8
   4.03   Unfunded Plan....................................................    8
   4.04   Successors and Assigns...........................................    8
   4.05   Amendment and Termination........................................    8





                                      -ii-


                                                                           
   4.06   No Special Rights................................................    9
   4.07   Other Employee Benefits..........................................    9
   4.08   Rights Prior to Exercise.........................................    9
   4.09   Compliance with Legislation......................................    9
   4.10   Tax Consequences.................................................    9
   4.11   No Liability.....................................................   10
   4.12   Effective Date...................................................   10





                                COREL CORPORATION
                    SHARE OPTION AND PHANTOM SHARE UNIT PLAN

                                   SECTION 1.
                  INTERPRETATION AND ADMINISTRATIVE PROVISIONS

1.01 PURPOSE

     The purposes of this Plan are to (i) support the achievement of the
     Corporation's performance objectives, (ii) ensure that interests of key
     persons are aligned with the success of the Corporation, and (iii) provide
     compensation opportunities to attract, retain and motivate employees to
     promote the long-term success of the Corporation and its subsidiaries.

1.02 DEFINITIONS

     For the purposes of this Plan, the following terms have the following
     meanings:

     "BOARD" means the board of directors of the Corporation;

     "COMMITTEE" means any committee of the Board appointed by the Board from
     time to time to administer this Plan;

     "COMMON SHARE" means a common share in the capital of the Corporation;

     "CORPORATION" means Corel Corporation;

     "DISABILITY" means the mental or physical state of the Participant such
     that:

          (i)  the Board determines that the Participant is unable, due to
               illness, disease, mental or physical disability or similar cause,
               to substantially perform his or her duties with the Corporation
               or a Participating Company for any consecutive 3 month period or
               for any period of 6 months (whether or not consecutive) in any
               consecutive 12 month period and that there is no reasonable
               prospect of the Participant returning to active employment at the
               end of such period;

          (ii) a court of competent jurisdiction has declared the Participant to
               be mentally incompetent or incapable of managing his or her
               affairs or has appointed a guardian of the property of the
               Participant; or

          (iii) an attorney pursuant to a continuing power of attorney for
               property or similar instrument manages the affairs of the
               Participant due to the Participant's mental incapacity.



                                      -2-


     "ELIGIBLE PERSON" means any employee, officer or consultant of a
     Participating Company (and includes any such person who is on a leave of
     absence authorized by a Participating Company) or any trust settlement or
     other arrangement under which such an employee, officer or consultant can
     or may benefit; provided however that such trust settlement or other
     arrangement shall cease to be an Eligible Person contemporaneously with the
     employee, officer or consultant ceasing to be an Eligible Person;

     "EXERCISE DATE" means the date on which an Eligible Person gives notice to
     the Corporation that the Eligible Person wishes to exercise an Option or a
     Phantom Share Unit;

     "EXERCISE PRICE" means the exercise price of an Option or Phantom Share
     Unit as determined by the Committee at the date of grant and as modified
     pursuant to the terms of this Plan;

     "FAIR MARKET VALUE" means, prior to an IPO, fair market value of a Common
     Share as determined by the Board in its absolute discretion at the relevant
     time and, following an IPO, means the weighted average trading price of a
     Common Share on the principal stock exchange on which the Common Shares are
     traded for the 5 trading days immediately preceding the applicable day;

     "IPO" means an initial public offering of the Common Shares;

     "JUST CAUSE" mean "Cause" or "Just Cause" as defined in any agreement
     between the Participant and the Participating Employer and, in the absence
     of such definition, has the meaning given to it by the courts of Ontario
     from time to time;

     "OPTION" means a right granted to an Eligible Person to purchase a Common
     Share of the Corporation pursuant to the terms of this Plan;

     "PARTICIPANT" means any person to whom a Unit has been granted;

     "PARTICIPATING COMPANY" means Corel Corporation and such of its
     subsidiaries as are designated by the Board from time to time;

     "PHANTOM SHARE UNIT" means a right granted to an Eligible Person to
     receive, on the terms set out in this Plan, a payment equal to the Fair
     Market Value of a Common Share as at the Exercise Date minus the Exercise
     Price of the Phantom Share Unit;

     "PHANTOM SHARE UNIT PAYMENT" has the meaning set out in section 3.02;

     "PLAN" means the Share Option and Phantom Share Unit Plan of the
     Corporation dated as of the date hereof;

     "RETIREMENT" means the retirement of a Participant at or after the earlier
     of the date the Participant is entitled to an undeferred pension under the
     registered pension plan of a Participating Company, or the date the
     Participant attains the age of 65;



                                      -3-


     "TERMINATION DATE" means the date a Participant ceases to be an Eligible
     Person; and

     "UNIT" means an Option together with a Phantom Share Unit.

     Where the context so requires, words importing the singular number include
     the plural and vice versa, and words importing the masculine gender also
     include the feminine and neuter genders.

1.03 ADMINISTRATION

     Subject to the Committee reporting to the Board on all matters relating to
     this Plan and obtaining approval of the Board for those matters required by
     the Committee's mandate, this Plan will be administered by the Committee
     which has the sole and absolute discretion to: (i) grant Units to Eligible
     Persons; (ii) determine the exercise price, vesting, terms, limitations,
     restrictions and conditions upon such grants; (iii) interpret and
     administer this Plan; (iv) establish, amend and rescind any rules and
     regulations relating to this Plan (subject to obtaining any required
     regulatory approval); and (iv) make any other determinations that the
     Committee deems necessary or desirable for the administration of this Plan.
     The Committee may correct any defect or supply any omission or reconcile
     any inconsistency in this Plan, in the manner and to the extent the
     Committee deems, in its sole and absolute discretion, necessary or
     desirable (subject to obtaining any required regulatory approval). Any
     decision of the Committee with respect to the administration and
     interpretation of this Plan shall be conclusive and binding on the
     Participants. At any time during which the Board has not appointed a
     Committee, the Board shall perform all the responsibilities and have all of
     the powers and duties of the Committee.

1.04 GOVERNING LAW

     This Plan is to be governed by and interpreted in accordance with the laws
     of the Province of Ontario.

1.05 COMMON SHARES RESERVED FOR ISSUANCE

     The Corporation hereby reserves 14,800,000 Common Shares for issuance under
     this Plan. Any Common Share subject to an Option that, for any reason, has
     been cancelled or terminated without having been exercised, will again be
     available for issuance under this Plan.

     Under no circumstances may this Plan, together with all of the
     Corporation's other previously established or proposed share compensation
     arrangements, result, at any time, in the number of shares reserved for
     issuance pursuant to Options to any one person exceeding 5% of the
     outstanding issue.



                                      -4-


                                   SECTION 2.
                                      UNITS

2.01 GRANT OF UNITS

     The Committee may grant Units only to Eligible Persons.

2.02 VESTING OF UNITS

     (a)  Units granted must be exercised no later than 10 years after the date
          of grant or such shorter period as the Committee may require.

     (b)  The Committee may determine when any Unit will become exercisable and
          may determine that the Unit will be exercisable in installments. In
          the absence of any other determination (including, without limitation,
          in a Participant's employment agreement), Units will become
          exercisable as follows:

          (i)  as to 25% on the first anniversary of the date of grant; and

          (ii) as to an additional 25%, at the end of the second, third and
               fourth anniversaries of the date of grant,

          provided that unless the Committee expressly provides to the contrary,
          Units which are not exercisable prior to a Participant's Termination
          Date shall not become exercisable thereafter. Any period of statutory
          or common law notice of termination of employment or any period of
          deemed employment following a Participant's last day of active
          employment shall not be recognized for vesting or any other purpose
          under this Plan.

2.03 EXERCISE PRICE

     The Exercise Price of a Unit granted pursuant to this Plan shall be
     determined by the Committee at the date of grant, shall not be less than
     the Fair Market Value per Common Share calculated with reference to the
     date of grant and shall be the same for both the Option component and the
     Phantom Share Unit component of the Unit.

2.04 PROHIBITION ON TRANSFER OR ASSIGNMENT OF UNITS WITHOUT CONSENT

     No Participant may deal with any Unit or any interest in it or transfer or
     assign any Unit now or hereafter held by the Participant without the
     express written consent of the Committee. A purported transfer or
     assignment of any Unit without the express written consent of the Committee
     will not be valid and the Corporation will not issue any Common Share upon
     the attempted exercise of a transferred or assigned Unit. If express
     written consent of the Committee is given to the transfer or assignment of
     any Unit and such transfer or assignment takes place consequent upon such
     written consent the Unit will continue in full force and effect.



                                      -5-


2.05 TERMINATION, RETIREMENT, DEATH OR RESIGNATION

     (a)  If a Participant ceases to be an Eligible Person as a result of a
          resignation of employment, each Unit held by the Participant which is
          exercisable as at the Termination Date may be exercised during the
          period ending 30 days after the Termination Date after which all
          unexercised Units held by the Participant will expire.

     (b)  If a Participant ceases to be an Eligible Person as a result of a
          termination of employment without Just Cause, each Unit held by the
          Participant which is exercisable as at the Termination Date may be
          exercised during the period ending 90 days after the Termination Date
          after which all unexercised Units held by the Participant will expire.
          This provision will apply with effect as at the Participant's last day
          of active employment. Any period of statutory or common law notice of
          termination of employment or any period of deemed employment following
          a Participant's last day of active employment shall not be recognized
          for exercise or any other purposes under this Plan.

     (c)  If a Participant ceases to be an Eligible Person as a result of a
          termination of employment for Just Cause, each Unit held by the
          Participant (whether exercisable or not) will cease to be exercisable
          on the Termination Date.

     (d)  If a Participant ceases to be an Eligible Person as a result of a
          Retirement or a Disability, each Unit held by the Participant which is
          exercisable as at the Termination Date may be exercised during the
          period ending 36 months after the Termination Date after which all
          unexercised Units held by the Participant will expire.

     (e)  If a Participant ceases to be an Eligible Person as a result of a
          death, each Unit held by the Participant as at the date of death which
          is exercisable as at the date of death may be exercised by the
          Participant's legal representatives during the period ending 12 months
          after the date of death after which all unexercised Units held by the
          Participant will expire.

     (f)  Notwithstanding the foregoing, no Unit may be exercised after its
          stated expiration.

2.06 END OF PARTICIPATION

     At the time a Participant ceases to hold Units which are or may become
     exercisable, the Participant ceases to be a Participant.

2.07 ACCELERATION OF EXERCISE OF UNITS

     Notwithstanding any other provisions of this Plan, the Committee may at any
     time give written notice to all Participants advising that their respective
     Units are all immediately exercisable and may be exercised only within 30
     days of such written notice or such other period as determined by the
     Committee and not thereafter and that all rights of the



                                      -6-


     Participants under any Units not exercised within such period will
     terminate at the expiration of such period.

2.08 AGREEMENTS

     Each grant of Units must be confirmed by an agreement in the form attached
     as Schedule A signed by the Corporation and by the Participant
     acknowledging that the Participant agrees to be bound by the terms of this
     Plan.

                                   SECTION 3.
                                EXERCISE OF UNITS

3.01 EXERCISE OF OPTIONS

     In order to exercise an Option, the Participant must file with the
     Secretary of the Corporation a completed Notice of Exercise in the form
     attached as Schedule B. The Exercise Price of each Common Share purchased
     under an Option must be paid in full by bank draft or certified cheque at
     the time of exercise. Upon receipt of a Notice of Exercise and payment in
     full and subject to the terms of this Plan, the Common Share in respect of
     which the Option is exercised will be duly issued as fully paid and
     non-assessable.

3.02 EXERCISE OF PHANTOM SHARE UNITS

     In order to exercise a Phantom Share Unit, the Participant must file with
     the Secretary of the Corporation a completed Notice of Exercise in the form
     attached as Schedule B. Upon receipt of the Notice of Exercise and subject
     to the terms of this Plan, the Corporation shall make a payment to the
     Participant equal to the Fair Market Value of a Common Share, minus the
     Exercise Price multiplied by the number of Phantom Share Units exercised (a
     "Phantom Share Unit Payment").

3.03 PHANTOM SHARE UNIT PAYMENT

     The Committee may, in its absolute discretion, elect to pay all or any
     portion of a Phantom Share Unit Payment in four equal installments over the
     12-month period following receipt of the completed Notice of Exercise.

3.04 DISCRETIONARY ISSUANCE OF SHARES

     (a)  The Committee may, in its absolute discretion, elect to satisfy the
          exercise of a Phantom Share Unit by issuing Common Shares as if the
          Participant had elected to exercise the Option Component of a Unit
          rather than the Phantom Share Unit Component of the Unit. Prior to an
          IPO, the Committee may, in its absolute discretion, elect to
          repurchase Common Shares by payment to the Participant equal to the
          Fair Market Value of the Common Shares.

     (b)  If any Common Shares are issued pursuant to section 3.04(a) prior to
          an IPO, as a condition to such issuance, each Participant eligible to
          receive Common Shares



                                      -7-


     may be required, at the sole discretion of the Corporation, to enter into
     an agreement in the form prescribed by the Corporation which provides for,
     among other things, (i) restrictions on transfers of Common Shares held by
     the Participant; (ii) obligations of the Participant to dispose of Common
     Shares held by the Participant in connection with certain specified
     transactions; and (iii) the exercise by designated persons of voting rights
     attached to the Common Shares held by the Participant. The Corporation may
     require the Participant, at the sole discretion of the Corporation, to
     enter into the agreement described above prior to the issuance of Common
     Shares, or at any time subsequent. If the Participant fails to duly enter
     into such agreement at the request of the Corporation, the Corporation
     shall not be obligated to issue to the Participant any securities of the
     Corporation issuable under this Plan, or pay any amounts payable to the
     Participant under this Plan.

3.05 NO EXERCISE OF OPTIONS PRIOR TO IPO

     Notwithstanding any other provision of this Plan, the Option component of a
     Unit does not vest and may not be exercised prior to an IPO.

3.06 NO EXERCISE OF PHANTOM SHARE UNITS OUTSIDE OF WINDOW

     Notwithstanding any other provision of this Plan, Phantom Share Units may
     only be exercised during such times as may be specified by the Committee,
     in its absolute discretion.

3.07 TERMINATION OF OPTIONS AND PHANTOM SHARE UNITS

     When the Option component of a Unit is exercised, the Phantom Share Unit
     component of the Unit will be terminated and may not be exercised. When the
     Phantom Share Unit component of a Unit is exercised, the Option component
     of the Unit will be terminated and may not be exercised.

                                   SECTION 4.
                                     GENERAL

4.01 CAPITAL ADJUSTMENTS

     In the event of any stock dividend, stock split, combination or exchange of
     shares, merger, consolidation, spin-off or other distribution (other than
     normal cash dividends) of the Corporation's assets to shareholders, or any
     other change in the capital of the Corporation affecting Common Shares, the
     Committee may make such proportionate adjustments, if any, as the Committee
     in its discretion may deem appropriate to reflect such change, with respect
     to (i) the number or kind of shares, other securities or other property
     reserved for issuance pursuant to this Plan; (ii) the number or kind of
     shares, other securities or other property subject to or in respect of
     which unexercised Units previously granted are exercisable and the Exercise
     Price of those Units; provided, however, that no substitution or adjustment
     will obligate the Corporation to issue or sell fractional shares. Provided
     that, for greater certainty, this section authorizes the



                                      -8-


     Corporation if it were to divest a business or division and distribute
     proceeds of the divestiture to the shareholders of the Corporation, to make
     reasonable accommodation or financial provision to the holders of Units.

4.02 NON-EXCLUSIVITY

     Nothing contained herein will prevent the Board from adopting other or
     additional compensation arrangements for the benefit of any Participant,
     subject to any required regulatory or shareholder approval.

4.03 UNFUNDED PLAN

     To the extent any individual holds any rights under this Plan, such rights
     (unless otherwise determined by the Committee) shall be no greater than the
     rights of a general unsecured creditor of the Corporation.

4.04 SUCCESSORS AND ASSIGNS

     This Plan shall be binding on all successors and assigns of the Corporation
     and a Participant, including without limitation, the legal representative
     of a Participant, or any receiver or trustee in bankruptcy or
     representative of the Corporation's or Participant's creditors.

4.05 AMENDMENT AND TERMINATION

     (a)  The Committee may amend, suspend or terminate this Plan or any portion
          thereof at any time in accordance with applicable legislation, and
          subject to any required regulatory or shareholder approval. Except as
          specifically provided for in this Plan, no amendment, suspension or
          termination may materially adversely affect any Units, or any rights
          pursuant thereto, granted previously to any Participant without the
          consent of that Participant.

     (b)  If this Plan is terminated, the provisions of this Plan and any
          administrative guidelines, and other rules adopted by the Committee
          and in force at the time of this Plan, will continue in effect as long
          as a Unit or any rights pursuant thereto remain outstanding. However,
          notwithstanding the termination of this Plan, the Committee may make
          any amendments to this Plan or the Units it would be entitled to make
          if this Plan were still in effect.

     (c)  With the consent of the Participant affected thereby, the Committee
          may amend or modify any outstanding Unit and, with the consent of a
          majority of the Participants affected, the Committee may amend or
          modify the Units held by any group of Participants, in any manner to
          the extent that the Committee would have had the authority to
          initially grant the award as so modified or amended, including without
          limitation, to change the date or dates as of which, or the price at
          which, a Unit becomes exercisable, subject to the prior approval of
          the relevant stock exchanges, if any.



                                      -9-


4.06 NO SPECIAL RIGHTS

     Nothing contained in this Plan or in any Units will confer upon any
     Participant any right to the continuation of the Participant's employment
     by a Participating Company or interfere in any way with the right of any
     Participating Company at any time to terminate that employment or to
     increase or decrease the compensation of the Participant.

4.07 OTHER EMPLOYEE BENEFITS

     The amount of any compensation deemed to be received by a Participant as a
     result of the exercise of Unit or the sale of Common Shares received upon
     an exercise of an Option will not constitute compensation with respect to
     which any other employee benefits of that Participant are determined,
     including, without limitation, benefits under any bonus, pension,
     profit-sharing, insurance or salary continuation plan, except as otherwise
     specifically determined by the Committee.

4.08 RIGHTS PRIOR TO EXERCISE

     The holder of a Unit is not entitled to be treated as a Shareholder of the
     Corporation and, in particular, has no right to receive dividends or to
     vote until the Participant becomes an actual shareholder of the Corporation
     following exercise of an Option in accordance with the terms of this Plan.

4.09 COMPLIANCE WITH LEGISLATION

     The Committee may postpone any exercise of any Unit or the issue of any
     Common Shares pursuant to this Plan for as long as the Committee in its
     discretion may deem necessary in order to permit the Corporation to effect
     or maintain qualification of the Common Shares issuable pursuant thereto
     under the securities laws of any applicable jurisdiction, or to determine
     that the Common Shares are exempt from that qualification. The Corporation
     is not obligated by any provision of this Plan or grant hereunder to sell
     or issue Common Shares in violation of the law of any government having
     jurisdiction therein. In addition, if the Common Shares are listed on a
     stock exchange, the Corporation will have no obligation to issue any Common
     Shares pursuant to this Plan until such Common Shares have been duly
     listed.

4.10 TAX CONSEQUENCES

     It is the responsibility of the Participant to complete and file any tax
     returns which may be required under applicable tax laws within the periods
     specified in those laws as a result of the Participant's participation in
     this Plan. Neither the Corporation nor any Participating Company shall be
     held responsible for any tax or other liabilities or consequences which
     result from the Participant's participation in this Plan, including any
     employment related taxes or benefit costs, whether or not such costs are
     the primary responsibility of the Corporation or any Participating Company.



                                      -10-


4.11 NO LIABILITY

     The Corporation shall not be liable to any Participant for any loss
     resulting from a decline in the market value of any Common Shares.

4.12 EFFECTIVE DATE

     This Plan will become effective December 1, 2003.



                                COREL CORPORATION
                    SHARE OPTION AND PHANTOM SHARE UNIT PLAN

                                   SCHEDULE A

            OPTION AND PHANTOM SHARE UNIT AGREEMENT AND CONFIRMATION

[NAME OF EMPLOYEE]
(the "Participant")

          Pursuant to the Corel Corporation Share Option and Phantom Share Unit
Plan (the "Plan") effective December 1, 2003 and in consideration of services
provided to any Participating Company by the Participant, Corel Corporation
hereby grants to the Participant _________ Units comprised of ____________
Options to acquire Common Shares of Corel Corporation at an Exercise Price of
$_________ per Common Share and __________ Phantom Share Units with an Exercise
Price of $_________.

          All capitalized terms not defined in this agreement have the meaning
set out in this Plan.

          Subject to earlier expiry in accordance with this Plan, the Units
shall cease to be exercisable and shall expire on ________________, _______. The
Units will vest and become exercisable as follows:

     (a)  as to 25%, at any time during the term of such Unit from and after the
          first anniversary of the date of grant of the Units; and

     (b)  as to an additional 25%, at any time during the term of such Unit from
          and after the second, third and fourth anniversaries of the date of
          grant of the Units,

          provided that the Option component of a Unit does not vest and may not
          be exercised prior to an IPO.

          Corel Corporation and the Participant understand and agree that the
granting and exercise of this Unit and the issue of Common Shares are subject to
the terms and conditions of this Plan, all of which are incorporated into and
form a part of this agreement.

          Each time the Participant exercises the Option component of a Unit,
the Phantom Share Unit component of the Unit will be terminated and may not be
exercised. Each time the Participant exercises the Phantom Share Unit component
of a Unit, the Option component of the Unit will be terminated and may not be
exercised.

          DATED ______________________, _______.

                                        COREL CORPORATION


                                        Per:
                                             -----------------------------------



                                      -2-


          I agree to the terms and conditions set out herein and confirm and
acknowledge that I have not been induced to enter into this agreement or acquire
any Unit by expectation of employment or continued employment with any
Participating Company.


                                        ----------------------------------------
                                        Signature

                                        ----------------------------------------
                                        Name (please print)



                                COREL CORPORATION
                    SHARE OPTION AND PHANTOM SHARE UNIT PLAN

                                   SCHEDULE B

                               NOTICE OF EXERCISE

TO: COREL CORPORATION
    Attention: The Secretary

          Pursuant to the Corel Corporation Share Option and Phantom Share Unit
Plan (the "Plan"), the undersigned elects:

          [ ]  to exercise _______ Options to purchase Common Shares and
               encloses cash or a certified cheque payable to Corel Corporation
               in the aggregate amount of $______________, being the Exercise
               Price of $_________ per Common Share.

          The undersigned requests that the Common Shares be issued in his or
          her name as follows in accordance with the terms of this Plan:

          ----------------------------------------------------------------------
          (Print Name)

          ----------------------------------------------------------------------
          (Address)

OR

          [ ]  to exercise _______ Phantom Share Units to receive a payment
               equal to the Fair Market Value of a Common Share as at the date
               hereof minus the Exercise Price of $_________ per Common Share
               for each Phantom Share Unit exercised.

     DATED _________________, _______.


                                        ----------------------------------------
                                        Signature

                                        ----------------------------------------
                                        Name (please print)

EX-10.8

                                                                    EXHIBIT 10.8

                                COREL CORPORATION

                              EQUITY INCENTIVE PLAN

            Section 1. Purpose. The purposes of this Corel Corporation Equity
Incentive Plan (the "Plan") are to encourage selected employees, officers,
directors and consultants of, and other individuals providing services to, Corel
Corporation (together with any successor, the "Company") and its Affiliates (as
defined below) to acquire a proprietary interest in the growth and performance
of the Company, to generate an increased incentive to contribute to the
Company's future success and prosperity thus enhancing the value of the Company
for the benefit of its shareholders, and to enhance the ability of the Company
and its Affiliates to attract and retain exceptionally qualified individuals
upon whom, in large measure, the sustained progress, growth and profitability of
the Company depend.

            Section 2. Definitions. As used in the Plan, the following terms
will have the meanings set out below:

            "Affiliate" means, with respect to any entity, any entity that,
directly or through one or more intermediaries, is controlled by such entity,
including any entity in which such entity owns a significant equity interest, as
determined by the Committee.

            "Award" means any Option, Share Appreciation Right, Restricted
Share, Restricted Share Unit, Performance Share Unit, or Other Share-Based Award
granted under the Plan.

            "Award Agreement" means any written agreement, contract or other
instrument or document evidencing any Award granted under the Plan.

            "Board" means the Board of Directors of the Company.

            "Cause", as used in connection with the termination of a
Participant's employment, means (1) with respect to any Participant employed
under a written employment agreement with the Company or an Affiliate of the
Company which agreement includes a definition of "cause," "cause" as defined in
that agreement or, if that agreement contains no such definition, a material
breach by the Participant of that agreement, or (2) with respect to any other
Participant, the failure to perform adequately in carrying out the Participant's
employment responsibilities, including any directives from the Board, or the
Participant engaging in behavior in the Participant's personal or business life
as to lead the Committee in its reasonable judgment to determine that it is in
the best interests of the Company to terminate the Participant's employment.

            "Code" means the Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated under it.

            "Committee" means the Compensation Committee of the Board, provided,
however, to the extent deemed necessary or appropriate, a committee other than
the Compensation Committee may be designated by the Board to administer the Plan
and such other committee may be vested with any of the powers and
responsibilities hereunder and shall be



                                       -2-

considered the Committee for any and all of such purposes hereunder. To the
extent the Company desires to grant Incentive Stock Options, such committee
shall be composed of not less than two directors of the Company, neither of whom
shall be employees of the Company or its Affiliates and each of whom shall
otherwise be "outside directors" for purposes of Section 162(m) of the Code. To
the extent the Company is no longer a "foreign private issuer" as defined in
Exchange Act Rule 3b-4 and wishes to have a "Qualified Plan" as defined in Rule
16b-3(b)(4), such committee shall be composed of not less than two directors of
the Company, each of whom are "non-employee directors" for purposes of Exchange
Act Section 16 and Rule 16b-3 thereunder.

            "Common Shares" means any or all, as applicable, of the common
shares of the Company and any other securities or property as may become the
subject of Awards, or become subject to Awards, pursuant to an adjustment made
under Section 4(b) of the Plan and any other securities of the Company or any
Affiliate or any successor that may be so designated by the Committee.

            "Consultant" means any consultant of, or other individual providing
services to, the Company or any Affiliate, provided that, for purposes of Awards
made to individuals in Canada, a consultant means a person that (1) is engaged
to provide services to the Company and/or an Affiliate, other than services
provided in relation to a distribution of securities, (2) provides the services
under a written contract with the Company and/or the Affiliate and (3) spends or
will spend a significant amount of time and attention on the affairs and
business of the Company and/or the Affiliate.

            "Control Person" means, with respect to any entity, a person that
controls such entity.

            "Employee" means any employee of the Company or of any Affiliate.

            "Exchange Act" means the United States Securities Exchange Act of
1934, as amended.

            "Fair Market Value" means (1) with respect to any property other
than the Common Shares, the fair market value of that property determined by
those methods or procedures as may be established from time to time by the
Committee and (2) with respect to the Common Shares, the closing sale price
reported for such Common Shares on the date of reference on the Principal
Market. If there is no closing sale price reported on any such date, the Fair
Market Value will be determined by the Committee in accordance with the
regulations promulgated under Section 2031 of the Code, or by any other
appropriate method selected by the Committee.

            "Good Reason", as used in connection with the termination of a
Participant's employment, means (1) with respect to any Participant employed
under a written employment agreement with the Company or an Affiliate of the
Company, "good reason" or similar term as defined in that written agreement or,
if such agreement contains no such definition, a material breach by the Company
of that agreement, or (2) with respect to any other Participant, a failure



                                      -3-

by the Company to pay that Participant any amount otherwise vested and due and a
continuation of that failure for 30 business days following notice to the
Company of that failure.

            "Incentive Stock Option" means an option granted under Section 6(a)
of the Plan that is intended to meet the requirements of Section 422 of the Code
or any successor provision.

            "insider" has the same meaning as found in the Securities Act
(Ontario), as amended, and also includes associates and affiliates of the
insider; and "issuances to insiders" includes direct and indirect issuances to
insiders.

            "Non-Qualified Stock Option" means an option granted under Section
6(a) of the Plan that is not intended to be an Incentive Stock Option. Any stock
option granted by the Committee which is not designated an Incentive Stock
Option will be deemed a Non-Qualified Stock Option.

            "Option" means an Incentive Stock Option or a Non-Qualified Stock
Option.

            "Other Share-Based Award" means any right granted under Section
6(e)(i) of the Plan.

            "Participant" means any individual granted an Award under the Plan.

            "Performance Share Unit" means any right granted under Section 6(e)
of the Plan.

            "Person" means any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, or
government or political subdivision of a government.

            "Principal Market" means the principal stock exchange, quotation
system or other market on which the Common Shares are listed, admitted to
trading, posted for trading or quoted upon which has occurred the greatest
trading volume of the Common Shares for the six months (or, to the extent the
Common Shares have not been listed, admitted to trading, posted for trading or
quoted for at least six months, the next longest period since the Common Shares
were initially listed, admitted to trading, posted for trading or quoted) prior
to the date of reference, provided, however, that to the extent deemed necessary
or appropriate, the Principal Market shall be as determined by the Committee in
accordance with applicable law, rules and regulations.

            "Released Securities" means securities that were Restricted Shares
but with respect to which all applicable restrictions have expired, lapsed or
been waived in accordance with the terms of the Plan or the applicable Award
Agreement.

            "Restricted Shares" means any Common Shares granted under Section
6(c) of the Plan, any right granted under Section 6(c) of the Plan that is
denominated in Common Shares or any other Award under which issued and
outstanding Common Shares are held subject to certain restrictions.

            "Restricted Share Unit" means a right to receive a Common Share or
the Fair Market Value of a Common Share granted under Section 6(d) of the Plan.



                                      -4-

            "Securities Act" means the United States Securities Act of 1933, as
amended.

            "Share Appreciation Right" means any right granted under Section
6(b) of the Plan.

            "Significant Event" means, unless otherwise defined in an Award
Agreement or a written employment agreement between the Company and a
Participant (which definition shall govern), the occurrence of any of the
following events: (1) a person or group of persons becomes the beneficial owner
of securities of the Company constituting 50% or more of the voting power of all
outstanding voting securities of the Company, (2) a majority of the Company's
Board as of the date of adoption of this Plan (including any successors approved
by the then existing Board) cease to constitute a majority of the Board; (3) a
merger, consolidation, amalgamation or arrangement of the Company (or a similar
transaction) occurs, unless after the event, 50% or more of the voting power of
the combined company is beneficially owned by the same person or group of
persons as immediately before the event; or (4) the Company's shareholders
approve a plan of complete liquidation or winding-up of the Company, or the sale
or disposition of all or substantially all the Company's assets (other than a
transfer to an Affiliate of the Company); provided that the following shall not
constitute a Significant Event: (i) any person or group of persons becoming the
beneficial owner of the threshold of securities specified in (1) as a result of
the acquisition of securities by the Company or a subsidiary which, by reducing
the number of securities outstanding, increases the proportional number of
securities beneficially held by that person or group of persons, (ii) any
acquisition of securities directly from the Company in connection with a bona
fide financing or series of financings by the Company, (iii) any acquisition by
an employee benefit plan (or related trust) sponsored or maintained by the
Company or its Affiliates or (iv) beneficial ownership by Corel Holdings, L.P.,
its Affiliates and/or its Control Persons or any increased ownership by any of
them.

            "U.S. Participant" means any Participant residing in the United
States or who is a U.S. citizen.

            Section 3. Administration.

            (a)   The Plan will be administered by the Committee subject to the
                  Committee reporting to the Board as required by the
                  Committee's mandate.

            (b)   Subject to the terms of the Plan and applicable law, and in
                  addition to other express powers and authorizations conferred
                  on the Committee by the Plan, the Committee will have full
                  power and authority to, subject to the Plan: (1) designate
                  Participants; (2) determine the type or types of Awards to be
                  granted to an eligible Employee or other individual under the
                  Plan; (3) determine the number and classification of Common
                  Shares to be covered by (or with respect to which payments,
                  rights or other matters are to be calculated in connection
                  with) Awards; (4) determine the terms and conditions of any
                  Award; (5) determine whether, to what extent, and under what
                  circumstances Awards may be settled or exercised in cash,
                  Common Shares, other securities, other Awards or other
                  property, or canceled, forfeited or suspended, and the method
                  or methods by which



                                      -5-

                  Awards may be settled, exercised, canceled, forfeited or
                  suspended; (6) determine requirements for the vesting or
                  exercisability of Awards or performance criteria to be
                  achieved in order for Awards to vest, the acceleration of
                  vesting or the waiver of forfeiture or other restrictions on
                  awards; (7) determine whether, to what extent and under what
                  circumstances cash, Common Shares, other securities, other
                  Awards, other property and other amounts payable with respect
                  to an Award under the Plan will be deferred either
                  automatically or at the election of the holder or of the
                  Committee; (8) interpret and administer the Plan and any
                  instrument or agreement relating to, or Award made under, the
                  Plan; (9) establish, amend, suspend or waive any rules and
                  regulations and appoint any agents as it will deem appropriate
                  for the proper administration of the Plan; (10) determine
                  whether awards will be adjusted for dividend entitlements;
                  (11) amend or adjust the terms and conditions of outstanding
                  Awards; (12) implement an Award exchange program, (13) arrange
                  for financing by broker-dealers (including payment by the
                  Company of commissions) and establish award exercise
                  procedures, (14) establish procedures for payment of
                  withholding tax obligations with cash or shares and (15) make
                  any other determination and take any other action that the
                  Committee deems necessary or desirable for the administration
                  of the Plan.

            (c)   Unless otherwise expressly provided in the Plan, all
                  designations, determinations, interpretations and other
                  decisions under or with respect to the Plan or any Award will
                  be within the sole discretion of the Committee, may be made at
                  any time and will be final, conclusive and binding upon all
                  Persons, including the Company, any Affiliate, any
                  Participant, any holder or beneficiary of any Award, any
                  shareholder and any Employee.

            (d)   Any reference in this Plan to the date of termination or
                  cessation or a Participant's employment shall mean the
                  Participant's last day of active employment and shall not
                  include any period of statutory, contractual or reasonable
                  notice or any period of deemed employment.

            (e)   Notwithstanding the foregoing, the maximum number of Common
                  Shares underlying or relating to Awards which may be granted
                  to any one Participant under this Plan in any calendar year
                  will not exceed 500,000 Common Shares, subject to the
                  adjustments provided in Section 4(b), and no Awards under this
                  Plan will be granted after December 31, 2015.

            (f)   Notwithstanding anything to the contrary in this Plan:

                  (i)   the maximum number of securities of the Company issuable
                        to insiders at any time under (A) this Plan and (B) all
                        of the Company's other security based compensation
                        arrangements, shall not exceed ten percent (10%) of the
                        Company's total issued and outstanding securities,
                        subject to the adjustments provided in Section 4(b); and



                                      -6-

                  (ii)  the maximum number of securities of the Company issued
                        to insiders within any one year period under (A) this
                        Plan and (B) all of the Company's other security based
                        compensation arrangements, shall not exceed ten percent
                        (10%) of the Company's total issued and outstanding
                        common shares, subject to the adjustments provided in
                        Section 4(b).

            Section 4. Common Shares Available for Awards.

            (a)   Common Shares Available. Subject to adjustment as provided in
                  Section 4(b):

                  (i)   Calculation of Number of Common Shares Available. The
                        number of Common Shares available for granting Awards
                        under the Plan initially will be 2,850,000 any or all of
                        which Awards may be or may be based on Common Shares,
                        any other related security or any combination. In
                        addition, no more than 500,000 Common Shares may be
                        issued on the exercise of Incentive Stock Options and no
                        more than 700,000 Common Shares may be issued as
                        Restricted Shares.

                  (ii)  Shares Becoming Again Available. If, after the effective
                        date of the Plan, any Common Shares covered by an Award
                        granted under the Plan or to which such an Award relates
                        lapses, expires, terminates or is forfeited; are settled
                        in cash; or otherwise terminate or are canceled without
                        the delivery of Common Shares or other consideration,
                        and Common Shares surrendered to the Company as payment
                        of exercise price, withholding tax or as part of an
                        Award exchange program will to that extent again be, or
                        will become, available for granting Awards under the
                        Plan.

                  (iii) Accounting for Awards. For purposes of this Section 4,

                        (A)   if an Award is denominated in or based upon Common
                              Shares, the number of Common Shares covered by
                              that Award or to which that Award relates will be
                              counted on the date of grant of that Award against
                              the total number of Common Shares available for
                              granting Awards under the Plan and against the
                              maximum number of Awards available to any
                              Participant; and

                        (B)   Awards not denominated in Common Shares may be
                              counted against the total number of Common Shares
                              available for granting Awards under the Plan and
                              against the maximum number of Awards available to
                              any participant in that amount and at such time as
                              the



                                      -7-

                              Committee determines under procedures adopted by
                              the Committee consistent with the purposes of the
                              Plan;

                        provided, however, that Awards that operate in tandem
                        with (whether granted simultaneously with or at a
                        different time from), or that are substituted for, other
                        Awards may be counted or not counted under procedures
                        adopted by the Committee in order to avoid double
                        counting.

                        Any Common Shares that are delivered by the Company, and
                        any Awards that are granted by, or become obligations
                        of, the Company, through the assumption by the Company
                        or an Affiliate of, or in substitution for, outstanding
                        awards previously granted by an acquired company will,
                        in the case of Awards granted to Participants who are
                        executive officers or directors of the Company, be
                        counted against the Common Shares available for granting
                        Awards under the Plan.

                  (iv)  Sources of Common Shares Deliverable Under Awards. Any
                        Common Shares delivered pursuant to an Award may
                        consist, in whole or in part, of authorized and unissued
                        Common Shares or of outstanding Common Shares acquired
                        on the open market.

            (b)   Adjustments. In the event that the Committee determines that
                  any dividend or other distribution (whether in the form of
                  cash, Common Shares, other securities or other property),
                  recapitalization, stock split, stock dividend, reverse stock
                  split, reorganization, merger, consolidation, split-up,
                  spin-off, combination, repurchase or exchange of Common Shares
                  or other securities of the Company, issuance of warrants or
                  other rights to purchase Common Shares or other securities of
                  the Company, or other similar corporate transaction or event
                  affects the Common Shares such that an adjustment is
                  determined by the Committee to be appropriate in order to
                  prevent dilution or enlargement of the benefits or potential
                  benefits intended to be made available under the Plan, then
                  the Committee will, in any manner as it may deem equitable,
                  adjust any or all of (1) the number and kind of Common Shares
                  (or other securities or property) which thereafter may be made
                  the subject of Awards, (2) the number and kind of Common
                  Shares (or other securities or property) subject to
                  outstanding Awards, and (3) the grant or exercise price with
                  respect to any Award or, if deemed appropriate, make provision
                  for a cash payment to the holder of an outstanding Award;
                  provided, however, that the number of Common Shares subject to
                  any Award denominated in Common Shares will always be a whole
                  number.

            (c)   Significant Events. If a Significant Event occurs, and unless
                  otherwise provided in an Award Agreement or a written
                  employment contract between the Company and a Participant and
                  except as otherwise set out in



                                      -8-

                  this paragraph, the Committee, in its sole discretion, may
                  provide that (1) the successor corporation will assume each
                  Award or replace it with a substitute Award, (2) the Awards
                  will become exercisable or vested in whole or in part upon
                  written notice, (3) the Awards will be surrendered for a cash
                  payment, or (4) any combination of the foregoing will occur.
                  Awards to Participants who are directors of the Company shall
                  automatically become exercisable and vested in full on the
                  occurrence of a Significant Event. If a U.S. Participant is
                  entitled to receive payments that would qualify as excess
                  "parachute payments'" under Section 280G of the Code, those
                  payments may be reduced so that the participant is not subject
                  to the excise tax under Section 4999 of the Code if such a
                  reduction would result in the U.S. Participant receiving a
                  greater after-tax payment.

            Section 5. Eligibility. Any Employee, including any officer or
employee-director of the Company or of any Affiliate, and any Consultant of the
Company or any Affiliate will be eligible to be designated a Participant. A
non-employee director will be eligible to receive Non-Qualified Stock Options
under the Plan. No more than 500,000 Common Shares may be the subject of the
total Awards granted to any one Participant in any calendar year. In the case of
any "specified employee" who is a U.S. Participant, distributions may not be
made prior to the date which is 6 months after the date of separation from
service (or, if earlier, the date of death of the Employee). For purposes of the
preceding sentence, a specified employee is a key employee (as defined in
section 416(i) of the Code without regard to paragraph (5) thereof).

            Section 6. Awards.

            (a)   Options. The Committee is hereby authorized to grant to
                  eligible individuals options to purchase Common Shares (each,
                  an "Option") which will contain the following terms and
                  conditions and with any additional terms and conditions, in
                  either case not inconsistent with the provisions of the Plan,
                  as the Committee determines:

                  (i)   Exercise Price. The purchase price per Common Share
                        purchasable under an Option will be determined by the
                        Committee; provided, however, that the exercise price
                        will not be less than one hundred percent (100%) of the
                        Fair Market Value of a Common Share on the date of grant
                        of that Option, or any other price as required under
                        Section 6(a)(iv).

                  (ii)  Time and Method of Exercise. Subject to the terms of
                        Section 6(a)(iii), the Committee will determine the time
                        or times at which an Option may be exercised in whole or
                        in part, and the method or methods by which, and the
                        form or forms (including, without limitation, cash,
                        Common Shares, outstanding Awards, or other property, or
                        any combination thereof, having a Fair Market Value on
                        the exercise date equal to the relevant exercise price)
                        in



                                      -9-

                        which, payment of the exercise price with respect
                        thereto may be made or deemed to have been made.

                  (iii) Exercisability Upon Death, Retirement and Termination of
                        Employment. Subject to the condition that no Option may
                        be exercised in whole or in part after the expiration of
                        the Option period specified in the applicable Award
                        Agreement:

                        (A)   Subject to the terms of paragraph (D) below, upon
                              the death of a Participant while employed or
                              within three (3) months of retirement or
                              disability as defined in paragraph (B) below, the
                              Person or Persons to whom such Participant's
                              rights with respect to any Option held by such
                              Participant are transferred by will or the laws of
                              descent and distribution may, prior to the
                              expiration of the earlier of: (1) the outside
                              exercise date determined by the Committee at the
                              time of granting the Option, or (2) twelve (12)
                              months after such Participant's death, purchase
                              any or all of the Common Shares with respect to
                              which such Participant was entitled to exercise
                              such Option immediately prior to such
                              Participant's death, and any Options not so
                              exercisable will lapse on the date of such
                              Participant's death;

                        (B)   Subject to the terms of paragraph (D) below, upon
                              termination of a Participant's employment with the
                              Company (x) as a result of retirement pursuant to
                              a retirement plan of the Company or an Affiliate
                              or disability (as determined by the Committee) of
                              such Participant, (y) by the Company other than
                              for Cause, or (z) by the Participant with Good
                              Reason, such Participant may, prior to the
                              expiration of the earlier of: (1) the outside
                              exercise date determined by the Committee at the
                              time of granting the Option, or (2) three (3)
                              months after the date of such termination,
                              purchase any or all of the Common Shares with
                              respect to which such Participant was entitled to
                              exercise any Options immediately prior to such
                              termination, and any Options not so exercisable
                              will lapse on such date of termination;

                        (C)   Subject to the terms of paragraph (D) below, upon
                              termination of a Participant's employment with the
                              Company under any circumstances not described in
                              paragraphs (A) or (B) above, such Participant's
                              Options will be immediately canceled to the extent
                              not theretofore exercised;



                                      -10-

                        (D)   Upon (i) the death of the Participant, or (ii)
                              termination of the Participant's employment with
                              the Company (x) by the Company other than for
                              Cause (y) by the Participant with Good Reason or
                              (z) as a result of retirement or disability as
                              defined in paragraph (B) above, the Company will
                              have the right to cancel all of the Options such
                              Participant was entitled to exercise at the time
                              of such death or termination (subject to the terms
                              of paragraphs (A) or (B) above) for a payment in
                              cash equal to the excess, if any, of the Fair
                              Market Value of one Common Share on the date of
                              death or termination over the exercise price of
                              such Option for one Common Share times the number
                              of Common Shares subject to the Option and
                              exercisable at the time of such death or
                              termination; and

                        (E)   Upon expiration of the respective periods set out
                              in each of paragraphs (A) through (B) above, the
                              Options of a Participant who has died or whose
                              employment has been terminated will be canceled to
                              the extent not theretofore canceled or exercised.

                        (F)   For purposes of paragraphs (A) through (D) above,
                              the period of service of an individual as a
                              director or Consultant of the Company or an
                              Affiliate will be deemed the period of employment.

                  (iv)  Incentive Stock Options. The following provisions will
                        apply only to Incentive Stock Options granted under the
                        Plan:

                        (A)   No Incentive Stock Option will be granted to any
                              eligible Employee who, at the time such Option is
                              granted, owns securities possessing more than ten
                              percent (10%) of the total combined voting power
                              of all classes of securities of the Company or of
                              any Affiliate, except that such an Option may be
                              granted to such an Employee if, at the time the
                              Option is granted, the exercise price is at least
                              one hundred ten percent (110%) of the Fair Market
                              Value of the Common Shares (determined in
                              accordance with Section 2) subject to the Option,
                              and the Option by its terms is not exercisable
                              after the expiration of five (5) years from the
                              date the Option is granted; and

                        (B)   To the extent that the aggregate Fair Market Value
                              of the Common Shares with respect to which
                              Incentive Stock Options (without regard to this
                              subsection) are exercisable for the first time by
                              any individual during any calendar year (under all
                              plans of the Company and its Affiliates) exceeds



                                      -11-

                              $100,000, such Options will be treated as
                              Non-Qualified Stock Options. This subsection will
                              be applied by taking Options into account in the
                              order in which they were granted. If some but not
                              all Options granted on any one day are subject to
                              this subsection, then such Options will be
                              apportioned between Incentive Stock Option and
                              Non-Qualified Stock Option treatment in such
                              manner as the Committee will determine. For
                              purposes of this subsection, the Fair Market Value
                              of any Common Shares will be determined, in
                              accordance with Section 2, as of the date the
                              Option with respect to such Common Shares is
                              granted.

            (b)   Share Appreciation Rights. The Committee is hereby authorized
                  to grant to eligible Employees "Share Appreciation Rights."
                  Each Share Appreciation Right will consist of a right to
                  receive the excess of (1) the Fair Market Value of one Common
                  Share on the date of exercise or, if the Committee will so
                  determine in the case of any such right other than one related
                  to any Incentive Stock Option, at any time during a specified
                  period before or after the date of exercise over (2) the grant
                  price of the right as specified by the Committee, which will
                  not be less than one hundred percent (100%) of the Fair Market
                  Value of one Common Share on the date of grant of the Share
                  Appreciation Right, which amount will be satisfied in cash or
                  in Common Shares with a Fair Market Value determined as at the
                  applicable date, equal to such amount or in a combination
                  thereof. Subject to the terms of the Plan and any applicable
                  Award Agreement, the grant price, term, methods of exercise,
                  methods of settlement and any other terms and conditions of
                  any Share Appreciation Right granted under the Plan will be as
                  determined by the Committee. The Committee may impose such
                  conditions or restrictions on the exercise of any Share
                  Appreciation Right as it may deem appropriate, provided that
                  Share Appreciation Rights may be payable on a deferred basis
                  only to the extent provided for in the applicable Award
                  Agreement. Share Appreciation Rights may be granted in
                  conjunction with a related Option or separately as a
                  free-standing Share Appreciation Right.

            (c)   Restricted Shares.

                  (i)   Issuance. The Committee is hereby authorized to grant to
                        eligible Employees "Restricted Shares" which will
                        consist of the right to receive, by purchase or
                        otherwise, Common Shares which are subject to such
                        restrictions as the Committee may impose (including,
                        without limitation, any limitation on the right to vote
                        such Common Shares or the right to receive any dividend
                        or other right or property), which restrictions may
                        lapse separately or in combination at such time or
                        times, in such installments or otherwise, as the
                        Committee may deem appropriate.



                                      -12-

                  (ii)  Registration. Restricted Shares granted under the Plan
                        may be evidenced in such manner as the Committee may
                        deem appropriate, including, without limitation,
                        book-entry registration or issuance of a share
                        certificate or certificates. In the event any share
                        certificate is issued in respect of Restricted Shares
                        granted under the Plan, that certificate will be
                        registered in the name of the Participant and will bear
                        an appropriate legend referring to the terms, conditions
                        and restrictions applicable to those Restricted Shares.

                  (iii) Forfeiture. Except as otherwise determined by the
                        Committee, upon termination of a Participant's
                        employment for any reason during the applicable
                        restriction period, all of the Participant's Restricted
                        Shares which had not become Released Securities by the
                        date of termination of employment will be forfeited and
                        reacquired by the Company; provided, however, that the
                        Committee may, when it finds that a waiver would be in
                        the best interests of the Company, waive in whole or in
                        part any or all remaining restrictions with respect to
                        the Participant's Restricted Shares. Unrestricted Common
                        Shares, evidenced in any manner as the Committee will
                        deem appropriate, will be issued to the holder of
                        Restricted Shares promptly after those Restricted Shares
                        become Released Securities.

            (d)   Restricted Share Units. The Committee is hereby authorized to
                  grant to eligible Employees "Restricted Share Units" each of
                  which will consist of the right to receive one Common Share or
                  cash equal to the Fair Market Value of one Common Share,
                  subject to the terms of any applicable Award Agreement and
                  which are subject to such restrictions as the Committee may
                  impose which restrictions may lapse separately or in
                  combination at any time or times, in such installments or
                  otherwise, as the Committee may deem appropriate. The
                  Committee may impose any conditions or restrictions on the
                  exercise of Restricted Share Units as it may deem appropriate.
                  The Committee may also grant Restricted Share Units that are
                  designated as "Deferred Share Units", which may have all of
                  the rights and restrictions that may be applicable to
                  Restricted Share Units, except that the Deferred Share Units
                  may not be redeemed for Common Shares or cash equal to the
                  Fair Market Value of Common Shares until the Participant has
                  ceased to hold all offices, employment and directorships with
                  the Company and its Affiliates.

            (e)   Performance Share Units.

                  (i)   The Committee is hereby authorized to grant to eligible
                        Employees "Performance Share Units." Each Performance
                        Share Unit will consist of a right, (i) denominated or
                        payable in cash, Common Shares, other securities or
                        other property (including, without



                                      -13-

                        limitation, Restricted Shares), and (ii) which will
                        confer on the holder thereof rights valued as determined
                        by the Committee and payable to, or exercisable by, the
                        holder of the Performance Share Unit, in whole or in
                        part, upon the achievement of such performance goals
                        during such performance periods as the Committee will
                        establish.

                  (ii)  The initial value of a Performance Share Unit will be
                        established by the Committee at the date of grant and,
                        to the extent related to Common Shares, other securities
                        or other property will initially be equal to 100% of the
                        Fair Market Value of a Common Share, such other security
                        or such other property on the date of grant.

                  (iii) Subject to the terms of the Plan and any applicable
                        Award Agreement, the performance goals to be achieved
                        during any performance period, the length of any
                        performance period, the amount of any Performance Share
                        Unit granted, the termination of a Participant's
                        employment and the amount of any payment or transfer to
                        be made pursuant to any Performance Share Unit will be
                        determined by the Committee and by the other terms and
                        conditions of any Performance Share Unit.

                  (iv)  The Committee will issue performance goals prior to the
                        commencement of the performance period to which such
                        performance goals pertain. The performance goals may be
                        based upon the achievement of corporation-wide,
                        divisional or individual goals, or any other basis
                        determined by the Committee. The Committee may modify
                        the performance goals as necessary to align them with
                        the Company's corporate objectives if there is a
                        subsequent material change in the Company's business,
                        operations or capital or corporate structure.

            (f)   Other Share-Based Awards. The Committee is hereby authorized
                  to grant to eligible Employees "Other Share-Based Awards."
                  Each Other Share-Based Award will consist of a right (1) which
                  is other than an Award or right described in Section 6(a),
                  (b), (c), (d) or (e) above and (2) which is denominated or
                  payable in, valued in whole or in part by reference to, or
                  otherwise based on or related to, Common Shares (including,
                  without limitation, securities convertible into Common Shares)
                  as are deemed by the Committee to be consistent with the
                  purposes of the Plan; provided, however, that such right will
                  comply, to the extent deemed desirable by the Committee, with
                  applicable law. Subject to the terms of the Plan and any
                  applicable Award Agreement, the Committee will determine the
                  terms and conditions of Other Share-Based Awards. Common
                  Shares or other securities delivered pursuant to a purchase
                  right granted under this Section 6(e)(i) will be purchased for
                  such consideration, which may be paid by such method or
                  methods and in such form or forms,



                                      -14-

                  including, without limitation, cash, Common Shares, other
                  securities, other Awards, other property, or any combination
                  thereof, as the Committee will determine.

            (g)   General.

                  (i)   No Cash Consideration for Awards. Awards may be granted
                        for no cash consideration or for such minimal cash
                        consideration as may be required by applicable law.

                  (ii)  Awards May Be Granted Separately or Together. Awards
                        may, in the discretion of the Committee, be granted
                        either alone or in addition to, in tandem with, or in
                        substitution for any other Award, except that in no
                        event will an Incentive Stock Option be granted together
                        with a Non-Qualified Stock Option in such a manner that
                        the exercise of one Option affects the right to exercise
                        the other. Awards granted in addition to or in tandem
                        with other Awards may be granted either at the same time
                        as or at a different time from the grant of such other
                        awards.

                  (iii) Forms of Payment Under Awards. Subject to the terms of
                        the Plan and of any applicable Award Agreement, payments
                        or transfers to be made by the Company or an Affiliate
                        upon the grant, exercise or payment of an Award may be
                        made in such form or forms as the Committee will
                        determine, including, without limitation, cash, Common
                        Shares, other securities, other Awards, or other
                        property, or any combination thereof, and may be made in
                        a single payment or transfer, in installments, or on a
                        deferred basis, in each case in accordance with rules
                        and procedures established by the Committee. Such rules
                        and procedures may include, without limitation,
                        provisions for the payment or crediting of reasonable
                        interest on installment or deferred payments. In
                        accordance with the above, the Committee may elect (1)
                        to pay a Participant (or such Participant's permitted
                        transferee) upon the exercise of an Option in whole or
                        in part, in lieu of the exercise thereof and the
                        delivery of Common Shares thereunder, an amount of cash
                        equal to the excess, if any, of the Fair Market Value of
                        one Common Share on the date of such exercise over the
                        exercise price of such Option for one Common Share times
                        the number of Common Shares subject to the Option or
                        portion thereof so exercised or (2) to settle other
                        share-denominated Awards in cash. The Committee may
                        provide for financing by broker-dealers (including
                        payment by the Company of commissions) and may establish
                        procedures (including broker-dealer assisted cashless
                        exercise) for payment of withholding tax obligations in
                        cash or in Common Shares.



                                      -15-

                  (iv)  Limits on Transfer of Awards.

                        (A)   No award (other than Released Securities), and no
                              right under any such Award, may be assigned,
                              alienated, pledged, attached, sold or otherwise
                              transferred or encumbered by a Participant
                              otherwise than by will or by the laws of descent
                              and distribution (or, in the case of Restricted
                              Shares, to the Company) and any such purported
                              assignment, alienation, pledge, attachment, sale
                              or other transfer or encumbrance will be void and
                              unenforceable against the Company or any
                              Affiliate.

                        (B)   Each award, and each right under any Award, will
                              be exercisable during the Participant's lifetime
                              only by the Participant or, if permissible under
                              applicable law, by the Participant's guardian or
                              legal representative.

                  (v)   Terms of Awards. The term of each Award will be for such
                        period as may be determined by the Committee; provided,
                        however, that in no event will the term of any Option
                        exceed a period of ten years from the date of its grant.

                  (vi)  Common Share Certificates. All certificates for Common
                        Shares delivered under the Plan pursuant to any Award or
                        the exercise thereof will be subject to any stop
                        transfer orders and other restrictions as the Committee
                        may deem advisable under the Plan or the rules,
                        regulations, and other requirements of the Securities
                        and Exchange Commission, any stock exchange upon which
                        such Common Shares are then listed, and any applicable
                        federal, state, provincial or territorial securities
                        laws, and the Committee may cause a legend or legends to
                        be put on any such certificates to make appropriate
                        reference to such restrictions.

                  (vii) Delivery of Common Shares or Other Securities and
                        Payment by Participant of Consideration. No Common
                        Shares or other securities will be delivered pursuant to
                        any Award until payment in full of any amount required
                        to be paid pursuant to the Plan or the applicable Award
                        Agreement is received by the Company. Such payment may
                        be made by such method or methods and in such form or
                        forms as the Committee will determine, including,
                        without limitation, cash, Common Shares, other
                        securities, other Awards or other property, or any
                        combination thereof; provided that the combined value,
                        as determined by the Committee, of all cash and cash
                        equivalents and the Fair Market Value of any such Common
                        Shares or other property so tendered to the Company, as
                        of the date of such tender, is at least equal to the
                        full amount required to be



                                      -16-

                        paid pursuant to the Plan or the applicable Award
                        Agreement to the Company.

            Section 7. Amendments; Adjustments and Termination. Except to the
extent prohibited by applicable law and unless otherwise expressly provided in
an Award Agreement or in the Plan:

            (a)   Amendments to the Plan. Subject to Section 7(g) and the
                  requirements of applicable law, rules and regulations, the
                  Board may amend, alter, suspend, discontinue, or terminate the
                  Plan without the consent of any shareholder, Participant,
                  other holder or beneficiary of an Award, or other Person;
                  provided, however, that, subject to the Company's rights to
                  adjust Awards under Section 7(e) and (f), any amendment,
                  alteration, suspension, discontinuation, or termination that
                  would impair the rights of any Participant, or any other
                  holder or beneficiary of any Award previously granted, will
                  not to that extent be effective without the consent of that
                  Participant, other holder or beneficiary of an Award, as the
                  case may be; and provided further, however, that
                  notwithstanding any other provision of the Plan or any Award
                  Agreement, without the approval of the shareholders of the
                  Company no amendment, alteration, suspension, discontinuation,
                  or termination will be made that would:

                  (i)   increase the total number of Common Shares available for
                        Awards under the Plan, except as provided in Section 4;
                        or

                  (ii)  otherwise cause the Plan to cease to comply with any tax
                        or regulatory requirement, including for these purposes
                        any approval or other requirement.

            (b)   Section 409A of the Code. This Plan will be construed and
                  interpreted to comply with Section 409A of the Code to the
                  extent required to preserve the intended tax consequences of
                  this Plan. The Company reserves the right to amend this Plan
                  to the extent it reasonably determines is necessary in order
                  to preserve the intended tax consequences of this Plan in
                  light of Section 409A of the Code and any regulations or
                  guidance under that section. In no event will the Company be
                  responsible if Awards under this Plan result in penalties to a
                  U.S. Participant under Section 409A of the Code.

            (c)   Section 162(m) of the Code. Performance-based awards to U.S.
                  Participants must be made by an independent committee. Awards
                  to any Participant whom the independent committee determines
                  to be a "covered employee" under Section 162(m) of the Code
                  may be subject to restrictions, including the establishment of
                  performance goals, as necessary for the Award to meet the
                  requirements set out in the Code for performance-based
                  compensation.



                                      -17-

            (d)   Amendments to Awards. The Committee may waive any conditions
                  or rights under, amend any terms of, or alter, suspend,
                  discontinue, cancel or terminate, any Award previously
                  granted, prospectively or retroactively; provided, however,
                  that, subject to the Company's rights to adjust Awards under
                  Section 7(e) and (f), any amendment, alteration, suspension,
                  discontinuation, cancellation or termination that would impair
                  the rights of any Participant or holder or beneficiary of any
                  Award previously granted, will not to that extent be effective
                  without the consent of the Participant or holder or
                  beneficiary of an Award, as the case may be.

            (e)   Adjustment of Awards Upon Certain Acquisitions. In the event
                  the Company or any Affiliate assumes outstanding employee
                  awards or the right or obligation to make future awards in
                  connection with the acquisition of another business or another
                  corporation or business entity, the Committee may make any
                  adjustments, not inconsistent with the terms of the Plan, in
                  the terms of Awards as it deems appropriate in order to
                  achieve reasonable comparability or other equitable
                  relationship between the assumed awards and the Awards granted
                  under the Plan as so adjusted.

            (f)   Adjustments of Awards Upon the Occurrence of Certain Unusual
                  or Nonrecurring Events. The Committee is hereby authorized to
                  make adjustments in the terms and conditions of, and the
                  criteria included in, Awards in recognition of unusual or
                  non-recurring events (including, without limitation, the
                  events described in Section 4(b) or Section 4(c)) affecting
                  the Company, any Affiliate, or the financial statements of the
                  Company or any Affiliate, or of changes in applicable laws,
                  regulations, or accounting principles, whenever the Committee
                  determines that those adjustments are appropriate in order to
                  prevent dilution or enlargement of the benefits or potential
                  benefits intended to be made available under the Plan.

            (g)   Termination. The Plan will automatically terminate on January
                  1, 2016 unless we elect to terminate it sooner.

            Section 8. General Provisions.

            (a)   No Right to Awards. No Employee or other Person will have any
                  claim to be granted any Award under the Plan, and there is no
                  obligation for uniformity of treatment of Employees, or
                  holders or beneficiaries of Awards under the Plan. The terms
                  and conditions of Awards need not be the same with respect to
                  each recipient.

            (b)   Delegation. Subject to the terms of the Plan and applicable
                  law, the Committee may delegate to one or more officers or
                  managers of the Company or any Affiliate, or to a committee of
                  such officers or managers, the authority, subject to such
                  terms and limitations as the Committee will



                                      -18-

                  determine, to grant Awards to, or to cancel, modify, waive
                  rights with respect to, alter, discontinue, suspend, or
                  terminate Awards.

            (c)   Correction of Defects, Omissions, and Inconsistencies. The
                  Committee may correct any defect, supply any omission, or
                  reconcile any inconsistency in the Plan or any Award in the
                  manner and to the extent it will deem desirable to carry the
                  Plan into effect.

            (d)   Withholding. The Company or any Affiliate will be authorized
                  to withhold from any Award granted, from any payment due or
                  transfer made under any Award or under the Plan or from any
                  compensation or other amount owing to a Participant the amount
                  (in cash, Common Shares, other securities, other Awards, or
                  other property) of withholding, taxes or other amounts payable
                  by the Company, any Affiliate or the Participant and which are
                  due or payable in respect of an Award, its exercise, or any
                  payment or transfer under such Award or under the Plan and to
                  take any other action as may be necessary in the opinion of
                  the Company or Affiliate to satisfy all obligations for the
                  payment of those taxes. Neither the Corporation nor any
                  Participating Company shall be held responsible for any tax or
                  other liabilities or consequences which result from the
                  Participant's participation in this Plan, including any
                  employment related taxes or benefit costs, whether or not such
                  costs are the primary responsibility of the Corporation or any
                  Participating Company.

            (e)   No Limit on Other Compensation Arrangements. Nothing contained
                  in the Plan will prevent the Company or any Affiliate from
                  adopting or continuing in effect other or additional
                  compensation arrangements, and those arrangements may be
                  either generally applicable or applicable only in specific
                  cases.

            (f)   No Right to Employment. The grant of an Award will not be
                  construed as giving a Participant the right to be retained in
                  the employ, as an officer or director or as a Consultant of
                  the Company or any Affiliate. Further, the Company or an
                  Affiliate may at any time dismiss a Participant from
                  employment, as an office or director or as a Consultant, ,
                  free from any liability, or any claim under the Plan, unless
                  otherwise expressly provided in the Plan or in any Award
                  Agreement.

            (g)   Governing Law. The validity, construction, and effect of the
                  Plan and any rules and regulations relating to the Plan will
                  be determined in accordance with the laws of the Province of
                  Ontario and the federal laws of Canada applicable in Ontario.

            (h)   Severability. If any provision of the Plan or any Award is or
                  becomes or is deemed to be invalid, illegal or unenforceable
                  in any jurisdiction or as to any Person or Award under any law
                  deemed applicable by the Committee, that provision will be
                  construed or deemed amended to conform to



                                      -19-

                  applicable laws, or if it cannot be construed or deemed
                  amended without, in the determination of the Committee,
                  materially altering the intent of the Plan or the Award, that
                  provision will be stricken as to that jurisdiction, Person or
                  Award and the remainder of the Plan and any such Award will
                  remain in full force and effect.

            (i)   No Trust or Fund Created. Neither the Plan nor any Award will
                  create or be construed to create a trust or separate fund of
                  any kind or a fiduciary relationship between the Company or
                  any Affiliate and a Participant or any other Person. To the
                  extent that any Person acquires a right to receive payments
                  from the Company or any Affiliate pursuant to an Award, that
                  right will be no greater than the right of any unsecured
                  general creditor of the Company or any Affiliate.

            (j)   No Fractional Common Shares. No fractional Common Shares will
                  be issued or delivered pursuant to the Plan or any Award, and
                  the Committee will determine whether cash, other securities,
                  or other property will be paid or transferred in lieu of any
                  fractional Common Shares or whether those fractional Common
                  Shares or any rights thereto will be canceled, terminated, or
                  otherwise eliminated.

            (k)   Headings. Headings are given to the Sections and subsections
                  of the Plan solely as a convenience to facilitate reference.
                  Those headings will not be deemed in any way material or
                  relevant to the construction or interpretation of the Plan or
                  any provision of the Plan.

            Section 9. Adoption, Approval, Effective Date and Termination Date
of the Plan. The Plan will be adopted by the Board of Directors and the
shareholders of the Company prior to the completion of the Company's initial
public offering (the "IPO") and will become effective immediately prior to the
closing of the IPO.

EX-10.10

                                                                   Exhibit 10.10

             FORM OF OFFICER AND DIRECTOR INDEMNIFICATION AGREEMENT

      THIS INDEMNIFICATION AGREEMENT ("Agreement") is made as of this day of   ,
2006, between Corel Corporation, a corporation existing under the laws of Canada
(the "Company"), and     (the "Indemnified Party").

      WHEREAS, the Indemnified Party is an executive officer/member of the Board
of Directors of the Company and in such capacity is performing a valuable
service for the Company; and

      WHEREAS, the by-laws of the Company (the "By-laws") provide for the
indemnification of its directors and executive officers to the maximum extent
authorized by law; and

      WHEREAS, Section 124 of the Canada Business Corporations Act (the "CBCA")
permits, and in some cases requires, the Company to indemnify individuals who
are or were directors and officers of the Company, or who act or acted at the
Company's request as directors or officers or in a similar capacity of other
entities (an "Other Entity", a term which, for the purposes of this Agreement
will include a corporation or other entity that becomes an Other Entity in the
future). All such individuals, including those acting in a capacity similar to
director and/or officer of an Other Entity, are referred to as "Directors" and
"Officers", respectively, and the phrase "Director and Officer" means an
individual who is or was either, or both, a Director and/or an Officer; and

      WHEREAS, the number of lawsuits and shareholders' derivative lawsuits
against corporations, their directors and officers has increased in recent
years, such lawsuits frequently are without merit and seek damages in amounts
having no reasonable relationship to the amount of compensation received by the
directors and officers from the corporation, and such lawsuits whether or not
meritorious are expensive and time-consuming to defend; and

      WHEREAS, the Company wishes to have the Indemnified Party continue to
serve as a Director and Officer free from undue concern for unpredictable or
unreasonable claims for damages by reason of the Indemnified Party's status as a
Director and Officer, by reason of the Indemnified Party's decisions or actions
on its behalf or by reason of the Indemnified Party's decisions or actions in
another capacity while serving as a Director and Officer; and

      WHEREAS, the Indemnified Party has expressed reluctance to continue to
serve as a Director and Officer without assurances that adequate insurance and
indemnification is and will continue to be provided; and

      WHEREAS, in order to induce the Indemnified Party to continue to serve as
a Director and Officer, the Company has determined and agreed to enter into this
Agreement with the Indemnified Party;



      NOW, THEREFORE, in consideration of the sum of $1.00 now given by the
Indemnified Party to the Company, of the Indemnified Party's continued service
as a Director and Officer, and of the mutual covenants and agreements contained
in this Agreement and other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), the parties agree as follows:

      1. Indemnified Party Liability Insurance.


            (a) Except as provided in (b) below, the Company hereby agrees to
use its best efforts to obtain and maintain directors and officers liability
insurance for the Indemnified Party for so long as the Indemnified Party shall
continue to serve as a Director and Officer and thereafter so long as the
Indemnified Party shall be subject to any possible claim or threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that the Indemnified Party was a
Director and Officer.

            (b) The Company shall have no obligation hereunder to obtain or
maintain directors and officers liability insurance if, in the reasonable
business judgment of the Board of Directors of the Company, such insurance is
not reasonably available, the premium costs for such insurance are
disproportionate to the amount of coverage provided, or the coverage provided by
such insurance is limited, by exclusions or otherwise, so as to provide an
insufficient benefit.

            (c) In all policies of directors and officers liability insurance,
the Indemnified Party shall be covered as an insured party in such a manner as
to provide the Indemnified Party the same rights and benefits, subject to the
same limitations, as are accorded to the Company's executive officer or director
most favourably insured by such policies.

            (d) The Company shall give prompt written notice to the Indemnified
Party of any amendment or other change or modification, or any proposed
amendment, change or modification, to any policy of directors and officers
liability insurance maintained by the Company and covering the Indemnified
Party.

      2. Indemnification. Subject only to the exclusions set forth in this
Agreement, the Company hereby agrees to hold harmless and indemnify the
Indemnified Party to the full extent authorized or permitted by Section 124 of
the CBCA, including any amendment thereof, or any other statutory provisions
authorizing or permitting such indemnification which are adopted after the date
hereof. Notwithstanding the foregoing, the Company shall not be required to
indemnify the Indemnified Party for any losses to the extent that such losses
are covered by directors and officers liability insurance as described in
Section 1 above. Without limiting the generality of the foregoing:

            (a) Third Party Actions. The Company shall hold harmless and
indemnify the Indemnified Party if the Indemnified Party was or is a party or is
threatened to be made a party to any claim, demand, action, suit, investigation
or proceeding, whether civil, criminal, administrative or investigative (other
than an action

                                       2


by or in the right of the Company), whether anticipated, threatened, pending,
commenced, continuing or completed, and any appeal or appeals therefrom
(collectively, "proceedings") by reason of the fact that the Indemnified Party
is or was or had agreed to serve (so long as the Indemnified Party actually is
serving or did so serve) as a Director and Officer, against any and all costs,
charges and expenses actually and reasonably incurred by the Indemnified Party
or on the Indemnified Party's behalf in connection with such proceeding.

            (b) Suits By or in the Right of the Company or an Other Entity. The
Company shall hold harmless and indemnify the Indemnified Party if the
Indemnified Party is or was a party or is threatened to be made a party to any
proceeding by or in the right of the Company or an Other Entity by reason of the
fact that the Indemnified Party is or was or had agreed to be (so long as the
Indemnified Party actually is or did become) a Director and Officer against any
and all costs, charges and expenses. In respect of an action by or on behalf of
the Company or an Other Entity to procure a judgment in its favour to which the
Indemnified Party is made a party by reason of being or having been a Director
and Officer, indemnification under Section 2, including the making of expense
advances under Section 2(e) and Section 6(c), shall be made only after obtaining
approval of the court having jurisdiction.

            (c) Partial Indemnification. If the Indemnified Party is entitled to
indemnification under any provision of this Agreement for a portion of the
costs, charged and expenses actually and reasonably incurred by the Indemnified
Party or on the Indemnified Party's behalf in the investigation, defense, appeal
or settlement of such proceeding, but not, however, for the total amount
thereof, the Company shall nevertheless indemnify the Indemnified Party for the
portion thereof to which the Indemnified Party is entitled.

            (d) Advancement of Expenses. All costs, charged and expenses
incurred by the Indemnified Party or on the Indemnified Party's behalf in
defending a proceeding, or in enforcing the Indemnified Party's rights under any
provisions of this Agreement, shall be paid by the Company in advance of the
final disposition of such proceeding in the manner prescribed by Section 4
hereof.

            (e) Amendments to Indemnification Rights. The Company shall not
adopt any amendment to its Articles of Amendment, as amended (the "Articles") or
By-Laws the effect of which would be to deny, diminish or encumber the
Indemnified Party's rights to indemnity pursuant to the Articles, By-Laws, the
CBCA or any other applicable law as applied to any act or failure to act
occurring in whole or in part prior to the date (the "Effective Date") upon
which the amendment was approved by the Company's Board of Directors or
shareholders, as the case may be. In the event that the Company shall adopt any
amendment to the Articles or By-Laws the effect of which is to change the
Indemnified Party's rights to indemnity under such instruments, such amendment
shall apply only to acts or failures to act occurring entirely after the
Effective Date thereof. The Company shall give written notice to the Indemnified
Party of any proposal with respect to any such amendment no later than the date
such amendment is first presented to the Board of Directors (or any committee
thereof) for consideration, and

                                       3


shall provide a copy of any such amendment to the Indemnified Party promptly
after its adoption.

            (f) Indemnification for Expenses as a Witness. To the extent the
Indemnified Party is, by reason of the Indemnified Party's status as a Director
and Officer, a witness in any proceeding, the Company shall indemnify the
Indemnified Party against all costs, charges and expenses in connection
therewith.

            (g) Definition of Costs, Charges and Expenses. "Costs, charges and
expenses" shall include:

                  (i) all liabilities, damages, costs, charges and expenses
whatsoever that the Indemnified Party may sustain or incur as a result of
serving as a Director and Officer in respect of any act, matter, deed or thing
whatsoever made, done, committed, permitted or acquiesced in by the Indemnified
Party as a Director and Officer, whether before or after the effective date of
this Agreement;

                  (ii) an amount paid to settle an action or satisfy a judgment,
except in respect of an action to which paragraph (b), above, is applicable;

                  (iii) a fine, penalty, levy or charge paid to any domestic or
foreign government (federal, state, provincial, municipal or otherwise) or to
any regulatory authority, agency, commission or board of any domestic or foreign
government, or imposed by any court or any other law, regulation or rule-making
entity having jurisdiction in the relevant circumstances (collectively, a
"Governmental Authority"), including as a result of a breach or alleged breach
of any statutory or common law duty imposed on directors or officers or of any
law, statute, rule or regulation or of any provision of the articles, by-laws or
any resolution of the Company or an Other Entity;

                  (iv) an amount paid to satisfy a liability arising as a result
of the failure of the Company or an Other Entity to pay wages, vacation pay and
any other amounts that may be owing to employees or to make contributions that
may be required to be made to any pension plan, retirement income plan or other
benefit plan for employees or to remit to any Governmental Authority payroll
deductions, income taxes or other taxes, or any other amounts payable by the
Company or an Other Entity;

                  (v) legal costs on a solicitor and his own client basis,
including those incurred in enforcing the Indemnified Party's rights under this
Agreement, and other fees and expenses of other professionals and experts; and

                  (vi) lost wages in connection with participating in any
proceeding, including as a witness.

      3. Limitations on Indemnification. An indemnity pursuant to Section 2
hereof shall be paid by the Company only if the Indemnified Party:

                                       4


            (a) acted honestly and in good faith with a view to the best
interests of either the Company or the Other Entity, as the case may be; and

            (b) in the case of a criminal or administrative proceeding that is
enforced by a monetary penalty, the Indemnified Party had reasonable grounds for
believing that the Indemnified Party's conduct was lawful.

            (referred to collectively as the "Standards of Conduct")

      4. Additional Limitations on Indemnification. No indemnity pursuant to
Section 2 hereof shall be paid by the Company:

            (a) on account of the Indemnified Party's conduct which is finally
adjudged in a non-appealable decision to have been fraudulent, dishonest or
willful misconduct, or a knowing violation of law;

            (b) on account of the receipt by the Indemnified Party of any
personal profit or advantage to which the Indemnified Party is adjudged in a
final, non-appealable decision not to be entitled;

            (c) for costs, charges and expenses incurred by the Indemnified
Party, as a plaintiff, in a proceeding against the Company or against directors
or other officers of the Company (other than suits brought by the Indemnified
Party to enforce the Indemnified Party's rights under any provisions of this
Agreement), unless such proceeding is authorized by the Board of Directors or
such indemnification is required by law;

            (d) if a final, non-appealable decision by a court having
jurisdiction in the matter shall determine that such indemnification is not
lawful;

            (e) for amounts paid by the Indemnified Party in settlement of any
proceeding without the Company's written consent;

            (f) in respect of any proceeding initiated by the Indemnified Party
(i) against the Company or an Other Entity, unless it is brought to establish or
enforce any right under this Agreement; (ii) against any Director or Officer
unless the Company or the Other Entity, as the case may be, has joined in or
consented to the initiation of such proceeding; or (iii) against any other
corporation, partnership, trust, joint venture, unincorporated entity or person,
unless it is a counterclaim.

      5. Successful Defense. Notwithstanding Sections 3 and 4, to the extent
that the Indemnified Party has been successful on the merits or otherwise in the
defense of any action, suit or proceeding referred to in subsections (a) or (b)
of Section 2, or in the defense of any claim, issue or matter therein, the
Company shall indemnify the Indemnified Party against any and all expenses
(including attorneys' fees) actually and reasonably incurred by the Indemnified
Party or on the Indemnified Party's behalf in connection therewith. Dismissal of
any action with prejudice, or a settlement not involving any payment or
assumption of liability, shall be deemed a successful defense.

                                       5


      6. Indemnification Procedures.

            (a) Notice to the Company. Promptly after receipt by the Indemnified
Party of notice of the commencement of any proceeding, the Indemnified Party
shall, if a claim in respect thereof is to be made against the Company under
this Agreement, notify the Company of the commencement thereof. Such notice
shall set forth in reasonable detail the events giving rise to such claim and
the amount requested, if known. Failure of the Indemnified Party to provide such
notice shall not relieve the Company of its obligations under this Agreement
except to the extent such failure has a material and adverse effect on the
ability of the Company to meet such obligations.

            (b) Notice to Insurers. If, at the time of receipt of such notice,
the Company has directors and officers liability insurance in effect, the
Company shall give prompt notice of the commencement of proceeding to the
insurers in accordance with the procedures set forth in the respective policies
in favour of the Indemnified Party. The Company shall thereafter take all
necessary or desirable action to cause such insurers to pay, on behalf of the
Indemnified Party, all losses and expenses payable as a result of such
proceeding in accordance with the terms of such policies.

            (c) Advancement of Expenses. Subject to subsections (d) and (e)
below, the costs, charges and expenses reasonably incurred by the Indemnified
Party or on the Indemnified Party's behalf in investigating, defending or
appealing any proceeding, or in enforcing the Indemnified Party's rights under
any provisions of this Agreement, covered by Section 2 above shall be paid by
the Company within 20 days of the Indemnified Party's written request therefor
even if there has been no final disposition of such proceeding. The Indemnified
Party's written request shall provide the Company with a written affirmation of
the Indemnified Party's good faith belief that the Indemnified Party is entitled
to indemnification under this Agreement, state the amount requested and shall be
accompanied by copies of the invoices or other relevant documentation. The
Company shall have no obligation to make expense advances to the Indemnified
Party unless and until a majority of those members of the Company's Board of
Directors who have no interest in the relevant proceeding, authorize the making
of such advances to the Indemnified Party. The Board of Directors may, before
authorizing expense advances, retain independent counsel or make any inquiries
it considers appropriate in the circumstances for the purpose of confirming the
Indemnified Party's compliance with the Standards of Conduct and entitlement to
indemnity. The Board of Directors shall have discretion in deciding whether or
not to authorize such advances, but shall exercise its discretion reasonably, in
light of all relevant circumstances, and in good faith.

            (d) Undertaking to Repay Advances. The Indemnified Party agrees that
the Indemnified Party will reimburse the Company for all advances paid by the
Company to the Indemnified Party under this Agreement in the event and only to
the extent that it shall ultimately be determined that the Indemnified Party was
not entitled to be indemnified under this Agreement in respect of those amounts.
If requested by the Company, the Indemnified Party will provide a written
undertaking to the Company

                                       6


confirming the Indemnified Party's obligations under the preceding sentence as a
condition to receiving an expense advance.

            (e) Assumption of Defense by the Company. Except as otherwise
provided below, the Company, jointly with any other indemnifying party similarly
notified, will be entitled to assume the defense of any proceeding of which it
has been notified by the Indemnified Party pursuant to subsection (a) above,
with counsel reasonably satisfactory to the Indemnified Party. After notice from
the Company to the Indemnified Party of its election to assume the defense
thereof, the Company will not be liable to the Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred by the
Indemnified Party; provided, however, that the Indemnified Party shall have the
right to employ the Indemnified Party's own counsel in such proceeding at the
expense of the Company if, at any time after such notice from the Company, (i)
the employment of counsel by the Indemnified Party has been authorized by the
Company, (ii) the Indemnified Party shall have reasonably concluded based on the
advice of counsel that there may be a conflict of interest between the Company
and the Indemnified Party in the conduct of such defense, or (iii) the Company
shall not in fact have employed counsel to assume the defense of such action, in
each of which cases the fees and expenses of the Indemnified Party's counsel
shall be subject to reimbursement in accordance with the terms of this
Agreement. The Company shall not be entitled to assume the Indemnified Party's
defense of any proceeding brought by the Company or an Other Entity or as to
which the Indemnified Party shall have made the conclusion provided for in
clause (ii) above.

            (f) Determination of Right to Entitlement.

                  (i) In the event that the Indemnified Party incurs liability
for any costs, charged and expenses and indemnification is sought under this
Agreement, the Company shall pay (or provide for payment if so required by the
terms of any judgment or settlement) such amounts within 30 business days of the
Indemnified Party's written request therefor unless a determination is made
within such 30 business days that the claims giving rise to such request are
excluded or indemnification is otherwise not due under this Agreement. Such
determination, and any determination required by applicable law as to whether
the Indemnified Party has met the standard of conduct required to qualify and
entitle the Indemnified Party, partially or fully, to indemnification under
Section 2 of this Agreement, shall be made, at the Company's discretion, (1) by
the Board of Directors of the Company by a majority vote of the directors who
were not parties to such action, suit or proceeding even though less than a
quorum, or (2) if such a majority is not obtainable, or even if obtainable a
majority of the disinterested directors so directs, by written opinion of
independent legal counsel selected by the Company and reasonably satisfactory to
the Indemnified Party, or (3) by the Company's shareholders; provided, however,
that if a change of control has occurred such determination shall be made by
written opinion of independent legal counsel selected by the Indemnified Party
or, if requested by the Indemnified Party, by the Company. The term "independent
legal counsel" shall mean for this purpose a lawyer or firm of lawyers
experienced in matters of corporation law that is not now nor has within the
previous three years been retained to represent the Indemnified Party, the
Company or any other party to the proceeding giving

                                       7


rise to the claim for indemnification hereunder; provided that "independent
legal counsel" shall not include any person who under applicable standards of
professional conduct would have a conflict of interest in representing the
Indemnified Party or the Company in an action to determine the Indemnified
Party's rights under this Agreement. The term "change of control" shall mean:
(1) the consummation of any transaction after which any "person" or "group" (as
such terms are used in Sections 3(a)(9), 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934 (the "Exchange Act")) other than Vector Capital
Corporation, related investment funds and co-investors and their affiliates is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities, or possesses the power to vote or
control the vote of securities, of the Company representing 30% or more of the
combined voting power of the common shares of the Company; or (2) the
shareholders of the Company approve a merger or consolidation of the Company
with any other corporation or entity, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at least 66-2/3%
of the combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation, or
the shareholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.

                  (ii) Notwithstanding the foregoing, the Indemnified Party may
within 60 days after a determination adverse to the Indemnified Party has been
made as provided above, or if no determination has been made within 30 business
days of the Indemnified Party's written request for payment, any court of
competent jurisdiction, or may seek an award in arbitration to be conducted by a
single arbitrator pursuant to the rules of the Arbitration Act, 1991 (Ontario),
which award shall be deemed final, unappealable and binding, to determine
whether the Indemnified Party is entitled to indemnification under this
Agreement, and such court or arbitrator, as the case may be, shall thereupon
have the exclusive authority to make such determination unless and until such
court or arbitrator dismisses or otherwise terminates such action without having
made a determination. The court or arbitrator, as the case may be, shall make an
independent determination of entitlement irrespective of any prior determination
made by the Board of Directors, independent legal counsel or shareholders. In
any such action before the court or arbitrator, the Indemnified Party shall be
presumed to be entitled to indemnification and the Company shall have the burden
of proving that indemnification is not required under this Agreement. All fees
and expenses of any arbitrator pursuant to this provision shall be paid by the
Company.

            (g) Enforcement Expenses. In the event that the Indemnified Party
brings suit or takes any other action to enforce the Indemnified Party's rights
or to collect monies due under this Agreement, and if the Indemnified Party is
successful therein, the Company shall reimburse (to the extent not previously
advanced) the Indemnified Party for all of the Indemnified Party's reasonable
expenses, including legal fees, in any such suit or action.

                                       8


      7. Presumptions/Knowledge.


            (a) For purposes of any determination hereunder the Indemnified
Party will be deemed, subject to compelling evidence to the contrary, to have
acted in good faith and in the best interests of the Company. The Company will
have the burden of establishing the absence of good faith.

            (b) The knowledge and/or actions, or failure to act, of any other
director, officer, agent or employee of the Company or any other entity will not
be imputed to the Indemnified Party for purposes of determining the right to
indemnification under this Agreement.

            (c) The Company will have the burden of establishing that any
expense it wishes to challenge is not reasonable.

      8. Settlement. The parties wish to encourage the settlement of any
proceeding. Accordingly, the parties agree as follows:

            (a) the Company may, with the prior written consent of Indemnified
Party (which consent shall not be unreasonably withheld or delayed), enter into
an agreement to settle any proceeding;

            (b) if the Indemnified Party refuses after requested by the Company,
acting reasonably, to give consent to the terms of a proposed settlement which
is otherwise acceptable to the Company, the Company may require the Indemnified
Party to negotiate or defend the claim independently of the Corporation. In that
case, any amount recovered by the claimant in excess of the amount for which
settlement could have been made by the Company shall not be recoverable under
this Agreement, and the Company will only be responsible for costs, charges and
expenses up to the time at which settlement could have been made;

            (c) the Company shall not be liable for any settlement of any
proceeding effected without its prior written consent (which consent shall not
be unreasonably withheld or delayed);

            (d) the Indemnified Party shall have the right to negotiate a
settlement in respect of any proceeding, provided that unless the Company has
approved the settlement, the Indemnified Party shall pay any compensation or
other payment to be made under the settlement and the costs of negotiating and
implementing the settlement, and shall not seek indemnity from the Company in
respect of such compensation, payment or costs; and

            (e) the settlement of a proceeding shall not create a presumption
that the Indemnified Party did not meet or would not have met the Standards of
Conduct.

      9. Continuation of Indemnification. The Company's obligations to indemnify
the Indemnified Party hereunder shall continue throughout the period the
Indemnified Party is a Director and Officer and thereafter so long as the
Indemnified

                                       9


Party shall be subject to any possible proceeding by reason of the fact that the
Indemnified Party was a Director and Officer.

      10. Tax Adjustment. Should any payment made pursuant to this Agreement,
including the payment of insurance premiums or any payment made by an insurer
under an insurance policy, be deemed to constitute a taxable benefit or
otherwise be or become subject to any tax or levy, then the Company shall pay
any amount as may be necessary to ensure that the amount received by or on
behalf of the Indemnified Party, after the payment of or withholding for such
tax, fully reimburses the Indemnified Party for the actual cost, expense or
liability incurred by or on behalf of the Indemnified Party.

      11. Successors and Assigns. This Agreement shall be binding upon the
Company, its successors and assigns (including any transferee of all or
substantially all of its assets and any successor by merger or otherwise by
operation of law), and shall inure to the benefit of the Indemnified Party and
the Indemnified Party's heirs, personal representatives, executors and
administrators and shall be binding upon the Indemnified Party and the
Indemnified Party's successors in interest under this Agreement.

      12. Rights Not Exclusive. The rights provided hereunder shall not be
deemed exclusive of any other rights to which the Indemnified Party may be
entitled under any provision of law, Articles of Incorporation, By-law, other
agreement, vote of shareholders or of disinterested directors or otherwise, both
as to action in the Indemnified Party's official capacity and as to action in
any other capacity while occupying any of the positions referred to in the third
recital to this Agreement.

      13. Subrogation. Upon payment of any amount under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the
Indemnified Party's rights of recovery therefor and the Indemnified Party shall
take all reasonable actions requested by the Company to secure such rights,
including, without limitation, execution of all documents necessary to enable
the Company to enforce such rights.

      14. Severability. In the event that any provision of this Agreement shall
be held to be invalid, illegal or unenforceable for any reason, such provision
shall be limited or modified in its application to the minimum extent necessary
to avoid a violation of law, and, as so limited or modified, such provision and
the balance of this Agreement shall be enforceable in accordance with their
terms.

      15. Integration. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to the
subject matter hereof.


      16. Modification. No amendment, modification, termination or cancellation
of this Agreement shall be effective unless in writing signed by both parties
hereto.

      17. Notices. All notices given under this Agreement shall be in writing
and delivered either (i) personally, (ii) by registered or certified mail
(postage prepaid, return receipt requested), (iii) by recognized overnight
courier service or (iv) by telecopy (if

                                       10


promptly followed by a copy delivered as provided in clauses (i), (ii) or (iii)
above), as follows:

         If to the Indemnified Party:  [NAME]
                                       [ADDRESS]

         If to the Company:            1600 Carling Avenue
                                       Ottawa, Ontario
                                       Canada  K1P 6L2
                                       Attention: Christopher DiFrancesco
                                       Vice President, Legal and General Counsel

Notices hereunder given as provided above shall be deemed to be duly given upon
delivery if delivered personally, three business days after mailing if by
registered or certified mail, one business day after mailing if by overnight
courier service and upon confirmation of transmission if by telecopy.

      18. Governing Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the Province of Ontario.

                                       11


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

                                  COREL CORPORATION

                                  By:
                                       -------------------------------------
                                       Name:
                                       Title:


                                       -------------------------------------
                                       [INDEMNIFIED PARTY]


                                       12

EX-10.11

                                                                   Exhibit 10.11

                              LEASE OF OFFICE SPACE

                                                          DATE: DECEMBER 9, 2003

BETWEEN:

                           CHURCHILL OFFICE PARK LTD.

                                                                    ("Landlord")

AND

                                COREL CORPORATION

                                                                      ("Tenant")

PREMISES: 1600 Carling Avenue, Suites 100, 200, 220 and 300, Ottawa, Ontario.

LANDLORD AND TENANT, in consideration of the covenants herein contained, hereby
agree as follows:

ARTICLE 1.00 DEFINITIONS

1.01 DEFINITIONS

     In this Lease:

     (a)  "Annual Rent" means:

          (i)  for the period from the Commencement Date to and including the
               last day of the Term for Premises B, both the Annual Rent for
               Premises A and the Annual Rent for Premises B; and

          (ii) for the balance of the Term, the Annual Rent for Premises A.

     (b)  "Annual Rent for Premises A" means in respect of the following
          period(s), the following annual amount(s), monthly installment (s) and
          annual rates calculated on the basis of the Square Feet in Premises A:



                                                         Monthly     Annual Square
Period                                 Annual Amount   Installment     Foot Rate
- ------                                 -------------   -----------   -------------
                                                            
January 1, 2004 to December 31, 2008    $767,216.78     $63,934.73       $22.03


     (c)  "Annual Rent for Premises B" means in respect of the following
          period(s), the following annual amount(s), monthly installments) and
          annual rates calculated on the basis of the Square Feet in Premises B:



                                                         Monthly     Annual Square
Period                                 Annual Amount   Installment     Foot Rate
- ------                                 -------------   -----------   -------------
                                                            
January 1, 2004 to December 31, 2006    $767,216.78     $63,934.73       $22.03


     (d)  "Article" means an article of this Lease.

     (e)  "Building" has the meaning ascribed thereto in Schedule B.

     (f)  "Business Day" means any day except Saturday, Sunday and statutory
          holidays in the Province of Ontario.

     (g)  "Commencement Date" means January 1, 2004, being the first day of the
          Term.

     (h)  "Common Areas" has the meaning ascribed thereto in Schedule B.

     (i)  "Environmental Laws" means any federal, provincial, municipal or local
          law, ordinance or regulation related to environmental conditions on,
          under, at, near or about the Land (as defined in Schedule B) or



                                        2


          Building, or related to Landlord, Tenant or the Land, air, soil or
          ground water condition, including without limitation, the generation,
          storage or disposal of Hazardous Substances (as defined in Section
          6.05 of Schedule B), now or hereafter enacted or promulgated by any
          governmental authority having jurisdiction over Landlord, Tenant, the
          Land or Building (the "Authorities").

     (j)  "Event of Default" has the meaning ascribed thereto in Section 19.03
          of this Lease.

     (k)  "Fiscal Year" means the period ending on December 31st (all or part of
          which falls within the Term) or such other period from time to time
          determined by Landlord.

     (l)  "Lease" means this lease, Schedules A, B, C and, if applicable, D to
          this Lease, and every properly executed instrument which by its terms
          amends, modifies or supplements this Lease.

     (m)  "Leasehold Improvements" means the alterations, fixtures and
          improvements in or serving the Premises made from time to time by or
          on behalf of Tenant or any prior occupant of the Premises with the
          exception only of furniture and equipment not in the nature of
          fixtures.

     (n)  "Normal Business Hours" has the meaning ascribed thereto in Schedule
          B.

     (o)  "Operating Costs" means the amounts determined in accordance with
          Section 2.02 of Schedule B.

     (p)  "Other Charges" means amounts payable to Landlord under Article 4.04.

     (q)  "Premises A" means the area on the first and second floors of the
          Building shown hatched on Schedule A-l having a gross leasable area of
          approximately 34,826 square feet and shall extend from the upper
          surface of the structural sub-floor to the lower surface of the
          suspended ceiling within the boundaries of the Premises as described
          in Section 3.00 of Schedule B.

     (r)  "Premises B" means the area on the second and third floors of the
          Building shown hatched on Schedule A-2 having a gross leasable area of
          approximately 34,826 square feet and shall extend from the upper
          surface of the structural sub-floor to the lower surface of the
          suspended ceiling within the boundaries of the Premises as described
          in Section 3.00 of Schedule B.

     (s)  "Premises" means:

          (i)  for the period from the Commencement Date to and including the
               last day of the Term for Premises B, both Premises A and Premises
               B; and

          (ii) for the balance of the Term, means Premises A.

     (t)  "Prime" means the rate of interest per annum from time to time
          announced by Toronto Dominion Bank or its successors and reported to
          the Bank of Canada as its prime rate for Canadian dollar loans.

     (u)  "Rent" means the aggregate of all amounts payable by Tenant pursuant
          to any provision of this Lease except under Article 4.03.

     (v)  "Rental Taxes" means any tax or duty imposed upon either Landlord or
          Tenant which is measured by or based in whole or in part directly upon
          the Rent payable under this Lease or in respect of the rental or
          rental value of Premises under this Lease whether existing at the date
          hereof or hereafter imposed by any governmental authority including,
          without limitation, goods and services taxes, value added tax,
          business transfer tax, sales tax, federal sales tax, excise taxes or
          duties or any tax similar to the foregoing.

     (w)  "Rules and Regulations" means the rules and regulations from time to
          time made by Landlord and consisting as of the Commencement Date of
          those listed in Schedule C.

     (x)  "Square Feet in Premises A" means approximately 34,826 square feet to
          be determined by Landlord in accordance with Section 3.00 of Schedule
          B.

     (y)  "Square Feet in Premises B" means approximately 34,826 square feet to
          be determined by Landlord in accordance with Section 3.00 of Schedule
          B.

     (z)  "Square Feet in the Premises" means:

          (i)  for the period the Commencement Date to and including the last
               day of the Term for Premises B, the total square footage of the
               Square Feet in Premises A and the Square Feet in Premises B,
               being approximately 69,652 square feet; and

          (ii) for the balance of the Term, the Square Feet in Premises A, being
               approximately 34,826 square feet;

          in each case to be determined by Landlord in accordance with Section
          3.00 of Schedule B.



                                        3


     (aa) "Tenant's Proportionate Share" means the amount determined in
          accordance with section 2.01(c) of Schedule B.

     (bb) "Term" means:

          (i)  with respect to Premises A, the Term for Premises A; and

          (ii) with respect to Premises B, the Term for Premises B.

     (cc) "Term for Premises A" shall have the meaning ascribed thereto in
          Article 3.01.

     (dd) "Term for Premises B" shall have the meaning ascribed thereto in
          Article 3.01.

ARTICLE 2.00 GRANT OF LEASE

2.01 SURRENDER OF PRIOR LEASE.

     Prior to the Commencement Date, the relationship between Landlord and
     Tenant was governed by a lease made as of December 1, 1996 (the "Prior
     Lease"). Landlord and Tenant have agreed that such lease is to be
     surrendered and replaced by this Lease. Accordingly, the Prior Lease is
     hereby surrendered as of midnight on December 31, 2003 (the "Surrender
     Date"), being the day preceding the Commencement Date of this Lease and
     shall thereafter be of no further force or effect save and except as
     provided in this Section 2.01 and in Section 2.02 of this Lease.

     Notwithstanding the foregoing and any provision of this Lease or the Prior
     Lease to the contrary, Landlord and Tenant agree that:

     (a)  the surrender of the Prior Lease is without prejudice to the parties'
          respective covenants and obligations thereunder for the period from
          December 1, 1996 (being the commencement date of the same) up to and
          including December 31, 2003, including without limitation, Tenant's
          obligation to pay for such period all Rent (as defined in the Prior
          Lease) and additional rent, including without limitation, Operating
          Expenses, Real Estate Taxes, Tax on Capital and the Electrical Amount
          (each as defined in the Prior Lease, and together with the Rent, being
          herein called the "Prior Rent") as contemplated by the Prior Lease,
          including without limitation, the payment of the adjustments of such
          amounts pursuant to Section 6.06 of the Prior Lease;

     (b)  Tenant confirms that Landlord is not in breach of any obligation under
          the Prior Lease, and that it has no claims against Landlord and will
          not make any claims in respect of any adjustment, readjustment,
          billings, alleged overpayments of Prior Rent, security deposits,
          deposits, credits or any other matter relating to the Prior Lease
          except as expressly provided for in this Section 2.0l(b). Tenant has
          paid $1,685,062.35 (including $110,237.72 GST) on account of the Prior
          Rent for the period from January 1, 2004 to and including March 31,
          2004. Landlord shall reimburse Tenant $1,685,062.35 (including
          $110,237.72 GST) for the difference between the Prior Rent for the
          period from January 1, 2004 to and including March 31, 2004 and the
          Rent payable in accordance with this Lease for the same three (3)
          month period (the "Reimbursement Amount"). Such Reimbursement Amount
          shall be applied by Landlord in payment of the Rent under this Lease
          as it accrues commencing April 1, 2004;

     (c)  immediately following the Surrender Date, Tenant shall remove all
          Tenant's personal property and, in accordance with Section 14.04 of
          the Prior Lease, remove those improvements, alterations, additions and
          repairs described in Schedule H to this Lease (jointly and severally,
          the "Prior Improvements") from the premises leased to Tenant pursuant
          to the Prior Lease (excluding for this purpose, the Premises), and
          restore such premises to their original condition and repair any
          damage to such premises or the Building, as the case may be,
          occasioned by the installation, removal or restoration of such Prior
          Improvements. Tenant shall complete the removal of its personal
          property and the Prior Improvements from floors six, seven and eight
          of the Building by April 18, 2004, and from floors four and five of
          the Building by May 16, 2004. Such alterations by Tenant shall be
          carried out in accordance with Section 7.03 of this Lease and Tenant's
          access to the Land and Building for such purpose shall be subject to,
          and Tenant shall abide by, all building safety and other rules and
          regulations relating to the use of the Building, shipping and removing
          goods, removal of property, and alterations that may be contained in
          this Lease or may otherwise be communicated to Tenant by Landlord and,
          in addition, all exculpatory clauses, indemnities and releases
          contained in this Lease shall bind Tenant in respect of such activity.
          If Tenant fails to remove its personal property as aforesaid, such
          personal property shall at the option of Landlord become its property,
          and may be appropriated, sold, removed, destroyed or otherwise
          disposed of by Landlord without notice or obligation to compensate
          Tenant or to account to Tenant, and Tenant shall pay to Landlord on
          demand all costs incurred by Landlord in connection therewith, plus an
          administration fee of fifteen percent (15%) of such costs; and

     (d)  Landlord confirms that Tenant is not in breach of any obligation under
          the Prior Lease and has paid the Prior Rent in accordance with the
          Prior Lease, and that subject to Tenant's performance of its
          obligations pursuant to subsection 2.01(c) and its obligation to pay
          adjustments with respect to the Prior Rent in accordance with the
          Prior Lease, Landlord has no claims against Tenant and will not make
          any claims in respect of any other matter relating to the Prior Lease,
          in being agreed and understood in this regard that Landlord shall be
          entitled to and Tenant shall pay all adjustments with respect to the
          Prior Rent in accordance with the Prior Lease.



                                        4


2.02 PRIOR CLAIMS.

     Landlord and Tenant agree that although the Prior Lease is by Section 2.01
     of this Lease surrendered and is as of the Commencement Date of this Lease
     of no further force or effect, such surrender shall not apply to any third
     party claims involving either or both Landlord and Tenant with respect to
     the Prior Lease or the Land which relate to the period prior to the
     Commencement Date of this Lease, it being agreed and understood that such
     claims shall be dealt with in accordance with the applicable provisions of
     the Prior Lease. Third party claims which relate to the period from and
     after the Commencement Date of this Lease shall be dealt with in accordance
     with the applicable provisions of this Lease. Landlord and Tenant represent
     and warrant to the other party that as of the Commencement Date of this
     Lease, neither party has actual knowledge of any third party claims arising
     prior to the Surrender Date relating to the Prior Lease.

2.03 TENANT'S AUTHORITY.

     Tenant represents and warrants that it has as of the Surrender Date the
     right, full power and authority to surrender the Prior Lease to Landlord on
     the conditions contained herein, and that, as of the Surrender Date, Tenant
     has not executed any other instruments, deeds or other documents (excluding
     only this Lease) nor entered into any unwritten transactions pursuant to
     which the Premises (as defined in the Prior Lease), the Prior Lease or the
     unexpired portion of the term of the Prior Lease, including any renewals or
     extensions thereof, shall in any way be charged, encumbered, liened,
     assigned or otherwise transferred or subleased. For the purposes of
     clarity, the parties acknowledge and agree that the space in the Building
     occupied by Cafe" Plus and by BMO Nesbitt Burns, respectively, is and
     always has been occupied pursuant to direct leases between such parties and
     the Landlord, and not by subleases from the Tenant.

2.04 LANDLORD'S AUTHORITY.

     Landlord represents and warrants that as of the Surrender Date it has the
     right, full power and authority to agree to accept Tenant's surrender of
     the Prior Lease on the conditions contained herein.

2.05 GRANT

     Landlord hereby demises and leases the Premises to Tenant, and Tenant
     hereby leases and accepts the Premises from Landlord, in a "then as is"
     condition, to have and to hold during the Term, subject to the terms and
     conditions of this Lease. Landlord hereby grants to Tenant a non-exclusive
     licence throughout the Term subject to control of Landlord and to
     Landlord's right to alter them in accordance with this Lease to use those
     parts of the Common Areas providing access to or, in the case of the area
     above the suspended ceiling to the lower surface of the structural ceiling,
     servicing the Premises.

2.06 QUIET ENJOYMENT

     If there has been no Event of Default, Tenant shall be entitled to peaceful
     and quiet enjoyment of the Premises for the Term without interruption or
     interference by Landlord or any person claiming through Landlord.

2.07 COVENANTS OF LANDLORD AND TENANT

     Landlord covenants to observe and perform all of the terms and conditions
     to be observed and performed by Landlord under this Lease. Tenant covenants
     to pay the Rent when due under this Lease and to observe and perform all of
     the terms and conditions to be observed and performed by Tenant under this
     Lease.

2.08 NET LEASE

     Tenant acknowledges and agrees that it is intended that the Lease and the
     Rent payable hereunder are completely net and carefree to Landlord.

ARTICLE 3.00 TERM AND POSSESSION

3.01 TERM

     The Term of this Lease, unless terminated earlier as provided in this
     Lease, in respect of each of Premises A and Premises B, as the case may be,
     is as follows:

     The Term for Premises A shall be five (5) years beginning on the 1st day of
     the month of January, 2004 and ending on the last day of the month of
     December, 2008, unless extended pursuant to Article 21.04 of Schedule D, in
     which case the Term for Premises A shall end on December 31, 2010.

     The Term for Premises B shall be three (3) years beginning on the 1st day
     of the month of January, 2004 and ending on the last day of the month of
     December, 2006, unless extended pursuant to Article 21.05 of Schedule D, in
     which case the Term for Premises B shall end on December 31, 2008, unless
     further extended pursuant to Article 21.06 of Schedule D, in which case the
     Term for Premises B shall end on December 31, 2010.

     Where the context requires, the references in this Lease to Term shall
     mean, the Term in respect of each of the Premises A and B, as applicable,
     as provided in this Article 3.01.



                                        5


3.02 ACCEPTANCE OF PREMISES

     Taking possession of all or any part of the Premises by Tenant shall be
     conclusive evidence as against Tenant that the Premises or such part
     thereof are in satisfactory condition except for water leaking into the
     Building and accumulating in the ground floor corridor on the far west side
     of the Building, which leak Landlord agrees to repair without delay.
     Landlord also acknowledges that there is a water leak in the Building which
     leak causes the accumulation of water in the Building's atrium, which area
     is not a part of the Premises, but which leak Landlord also agrees to
     repair without delay.

ARTICLE 4.00 RENT, OPERATING COSTS AND TAXES

4.01 ANNUAL RENT

     Subject to the application by Landlord of the Reimbursement Amount pursuant
     to subsection 2.01(b), Tenant shall pay to Landlord as Annual Rent the
     amount(s) set out in Article 1.01(a), payable in advance and without notice
     in monthly installments as set out in Article 1.01 (a), on the Commencement
     Date and on the first day of each calendar month thereafter during the
     Term.

4.02 OPERATING COSTS, TAXES AND UTILITIES

     Tenant shall pay to Landlord, at the times and in the manner provided in
     Article 4.07, Taxes, utilities and Tenant's Proportionate Share of
     Operating Costs all as determined under this Lease including Schedule B.

4.03 RENTAL TAXES

     Tenant shall pay to Landlord all Rental Taxes applicable from time to time.
     Landlord shall calculate the amount of Rental Taxes payable by Tenant in
     accordance with the applicable legislation and Tenant shall pay such amount
     together with monthly installments of Rent. The amount payable by Tenant
     under this Article 4.03 shall be deemed not to be Rent for the purpose of
     such calculation but in the event of a failure by Tenant to pay under this
     Article 4.03, Landlord shall have the same rights and remedies as it has in
     the Event of Default by Tenant in the payment of Rent.

4.04 OTHER CHARGES

     Tenant shall pay to Landlord, at the times and in the manner provided in
     this Lease or, if not so provided, upon demand by Landlord, all amounts
     (other than those payable under Articles 4.01, 4.02, and 4.03) that are
     payable by Tenant under this Lease.

4.05 PAYMENT OF RENT - GENERAL

     All amounts payable by Tenant under this Lease, except that payable under
     Article 4.03, shall be deemed to be Rent and shall be payable and
     recoverable as Rent in the manner herein provided, and Landlord shall have
     all rights against Tenant for default in any such payment as in the case of
     arrears of Rent. Tenant shall pay to Landlord Rent, in legal tender of the
     jurisdiction in which the Building is located, without deduction or
     set-off, as a covenant independent of all other covenants of Landlord or
     Tenant in this Lease. Tenant's obligation to pay Rent shall survive the
     expiration or earlier termination of this Lease.

4.06 RENT - ADJUSTMENT

     If the Term begins on a day other than the first day of a calendar month or
     ends on a day other than the last day of a calendar month, the Rent payable
     for such month shall be prorated on a per diem basis using a three hundred
     and sixty five (365) day period.

4.07 PAYMENT - OPERATING COSTS AND TAXES

     (a)  Prior to the Commencement Date and not less than fifteen (15) days
          prior to the beginning of each Fiscal Year thereafter, Landlord shall
          compute and deliver to Tenant a bona fide estimate of Taxes and
          Tenant's Proportionate Share of Operating Costs for the appropriate
          Fiscal Year and without further notice Tenant shall pay to Landlord in
          monthly installments one-twelfth (1/12th) of such estimate
          simultaneously with Tenant's payments of Annual Rent.

     (b)  Landlord shall deliver to Tenant within one hundred twenty (120) days
          after the end of each Fiscal Year a written statement (the
          "Statement") setting out in reasonable detail the amount of Operating
          Costs and Taxes for such Fiscal Year and certified by a representative
          of Landlord. If the amount of Taxes and Tenant's Proportionate Share
          of Operating Costs actually paid by Tenant to Landlord during such
          Fiscal Year differs from the amount of Taxes and Tenant's
          Proportionate Share of Operating Costs payable for such Fiscal Year,
          Tenant shall pay such difference to Landlord or Landlord shall pay
          such difference to Tenant, as the case may be, without interest within
          thirty (30) days after the date of delivery of the Statement. Failure
          of Landlord to render any statement under this section shall not
          prejudice Landlord's right to render such Statement thereafter or with
          respect to any other period, or relieve Tenant from its obligations
          hereunder. Landlord shall not, however, be permitted to claim against
          Tenant for any amount not included in a Statement or for any
          adjustment of any amount included in a Statement (in each case save
          and except for Taxes) unless such claim is made within eighteen (18)



                                        6


          months following the last day of the Fiscal Year to which such
          Statement pertains, it being agreed and understood in this regard that
          such limitation shall not apply to Taxes.

          Landlord's estimate of Operating Costs and Taxes for the calendar year
          2004 is $16.77 per square foot. As the foregoing is only an estimate,
          Landlord makes no representation or warranty as to the amount of the
          Operating Costs or Taxes.

     (c)  If Tenant disputes the accuracy of any Statement, Tenant shall
          nevertheless make payment in accordance with the Statement, but the
          disagreement shall be promptly referred by Landlord for prompt
          decision to an independent professional consultant, agreed upon by
          Landlord and Tenant, both acting reasonably, who is qualified by
          education and experience to make such decision and who shall be deemed
          to be acting as an expert and not an arbitrator. The consultant's
          signed determination shall be final and binding on both Landlord and
          Tenant. Any adjustment required to any previous payment made by Tenant
          or Landlord by reason of any such determination shall be made within
          fourteen (14) days thereof, and the party required to pay such
          adjustment shall bear all costs of the consultant, except that if the
          amount to be paid is three percent (3%) or less of the amount in
          dispute, Tenant shall pay all such costs.

     (d)  Tenant may only dispute a Statement and claim a re-adjustment by
          notice given to Landlord within six (6) months after the date of
          delivery of the Statement to Tenant.

ARTICLE 5.00 USE OF PREMISES

5.01 USE

     The Premises shall be actively, diligently and continuously used and
     occupied only as a business office for the business of computer software
     development, maintenance and sales. Tenant shall operate the business
     office in a first-class, reputable manner befitting the reputation and
     image of the Building.

5.02 COMPLIANCE WITH LAWS

     Tenant shall use and occupy and shall cause the Premises to be used and
     occupied in a safe, careful and proper manner so as not to contravene any
     present or future governmental or quasi-governmental laws in force or
     regulations or orders, including without limitation all applicable
     Environmental Laws. To the extent Tenant's use or occupancy of the
     Premises, improvements are necessary to comply with any of the foregoing or
     with the requirements of insurance carriers, Tenant shall pay to Landlord
     the entire cost thereof. Tenant will immediately advise Landlord in writing
     of (i) any and all governmental or regulatory notices, orders and/or
     actions instituted, completed, or threatened affecting the Premises; and
     (ii) all claims made or threatened by any third party against Tenant,
     Landlord or the Premises arising out of Tenant's use or occupancy of the
     Premises and the Land.

5.03 ABANDONMENT

     Tenant shall not vacate or abandon the Premises.

5.04 NUISANCE

     Tenant shall not cause or maintain any nuisance in or about the Premises,
     and shall keep the Premises free of debris or anything kept in a manner
     which attracts rodents, vermin and anything of a dangerous, noxious or
     offensive nature or which could create a fire hazard (through undue load on
     electrical circuits or otherwise) or undue vibration, heat or noise.

5.05 EXTRAORDINARY INSTALLATIONS

     Tenant shall not install anything that might affect the integrity or
     capacity of either the structure or the systems of the Building without the
     prior written consent of Landlord, which consent may be arbitrarily
     withheld at Landlord's sole discretion.

5.06 JEOPARDY OF INSURANCE

     Tenant shall neither do nor omit to do anything that might result in the
     actual or threatened reduction or cancellation of or material adverse
     change in the insurance maintained by Landlord in respect of the Building,
     or, except as permitted in accordance with the terms of this Lease, that it
     will neither do or omit to do anything that might result in any increase in
     the premiums for insurance maintained by Landlord in respect of the
     Building. If the premiums for such insurance are increased as a result of
     the use or occupancy of the Premises or any article kept on the Premises or
     any act or omission of Tenant or any person for whom Tenant is in law
     responsible or any subtenant of the Premises, Tenant shall pay to Landlord
     the entire amount of such increase, or if any such insurance is actually,
     or threatened to be, either cancelled, reduced or materially adversely
     changed by an insurer by reason of the use or occupancy of the Premises,
     and if Tenant fails to remedy the condition or the use or occupancy giving
     rise to such actual or threatened cancellation, reduction or change within
     two (2) Business Days after notice thereof, Landlord may, without limiting
     its other remedies for the default, either:

     (a)  re-enter and take possession of the Premises forthwith upon notice by
          Landlord to Tenant of its intention to do so; or



                                       7


     (b)  enter upon the Premises and remedy the condition, use or occupancy
          giving rise to such actual or threatened cancellation, reduction or
          change, and Tenant shall pay to Landlord its costs reasonably incurred
          doing so forthwith on demand. No such entry by Landlord shall be
          deemed a re-entry or a breach of Article 2.02 and Landlord shall not
          be liable for any damage to either the Premises or any property
          located on the Premises as a result of such entry.

ARTICLE 6.00 SERVICES, MAINTENANCE, REPAIR AND ALTERATIONS BY LANDLORD

6.01 OPERATION OF BUILDING

     Landlord shall operate and maintain the Building in a first-class,
     reputable manner befitting the reputation and image of the Building, in
     accordance with all applicable laws and regulations and with standards from
     time to time prevailing for similar office buildings in the area in which
     the Building is located, subject, however,to the limitations occasioned by
     the design and age of the Building and the capacity of its systems and
     shall provide the services set out in Articles 6.02, 6.03 and 6.04, subject
     to such limitations, and shall be entitled to make the alterations set out
     in Article 6.06. Landlord's costs associated with this Article 6.00 that
     are properly includable in Operating Costs shall be included.

6.02 SERVICES TO PREMISES

     Landlord shall provide in the Premises:

     (a)  heat, ventilation and cooling as required for the comfortable use and
          occupancy of the Premises during Normal Business Hours;

     (b)  janitor services, in accordance with the Building cleaning standards
          which may change from time to time, provided that Tenant shall leave
          the Premises in a reasonably tidy condition at the end of each
          business day;

     (c)  electric power for lighting and small business office equipment (but
          not lighting or equipment using amounts of power disproportionate to
          that used by typical office tenants); and

     (d)  replacement of the standard fluorescent tubes, light bulbs and
          ballasts used in the Building as required from time to time as a
          result of normal usage.

6.03 BUILDING SERVICES

     Landlord shall provide in the Building:

     (a)  domestic running water and necessary supplies in washrooms sufficient
          for the normal use thereof by occupants in the Building;

     (b)  elevator or escalator service if included in the Building;

     (c)  heat, ventilation, cooling, lighting, electric power, domestic running
          water, and janitor service in those areas of the Building from time to
          time designated by Landlord for use during Normal Business Hours by
          Tenant in common with all tenants and other persons in the Building
          but under the exclusive control of Landlord;

     (d)  a general directory board on which Tenant shall be entitled to have
          its name shown, provided that Landlord shall have exclusive control
          thereof and of the space thereon to be allocated to each tenant;

     (e)  maintenance, repair, and replacement as set out in Article 6.04; and

     (f)  building security outside Normal Business Hours.

6.04 MAINTENANCE, REPAIR AND REPLACEMENT

     Landlord shall operate, maintain, repair and replace the systems,
     facilities and equipment necessary for the provision of services of
     Landlord under Articles 6.02 and 6.03 and shall maintain and repair the
     foundations, structure and roof of the Building and repair damage to the
     Building which Landlord is obligated to insure against under Article 9.00,
     provided that:

     (a)  if all or part of such systems, facilities and equipment require
          maintenance or inspections or are destroyed, damaged or impaired,
          Landlord shall promptly and diligently complete the necessary repair
          or replacement, (it being agreed and understood mat Landlord shall
          have a reasonable time in which to do so), and during the period of
          repair or replacement shall only be required to maintain such services
          as are reasonably possible in the circumstances;

     (b)  Landlord shall use reasonable diligence in carrying out its
          obligations under this Article 6.04, but shall not be liable in any
          circumstances for any direct, indirect or consequential damages to
          Tenant or any other person or property for any failure to do so;



                                       8


     (c)  no reduction or discontinuance of such services or loss of use of the
          Premises shall be construed as an eviction of Tenant or (except as
          specifically provided in this Lease) release Tenant from any
          obligation under this Lease; and

     (d)  nothing contained herein shall derogate from the provisions of Article
          16.00.

6.05 ADDITIONAL SERVICES

     (a)  If from time to time requested in writing by Tenant and to the extent
          that Landlord is reasonably able to do so, Landlord may elect to
          provide in the Premises services in addition to those set out in
          Article 6.02, provided that Tenant shall within thirty (30) days of
          receipt of any invoices for any such additional service pay Landlord
          therefor at such reasonable rates as Landlord may from time to time
          establish.

     (b)  Tenant shall not without Landlord's written consent install in the
          Premises equipment which generates sufficient heat to affect the
          temperature otherwise maintained in the Premises by the air
          conditioning system as normally operated. Landlord may install
          supplementary air conditioning units, facilities or services in the
          Premises, or modify its air conditioning system, as may in Landlord's
          reasonable opinion be required to maintain proper temperature levels,
          and Tenant shall pay Landlord at the same time and in the same manner
          as Tenant is required to pay Annual Rent hereunder for the month
          immediately following delivery to Tenant of the invoice for all the
          costs thereof reasonably incurred by Landlord in connection therewith,
          including installation, operation and maintenance expenses plus ten
          percent (10%) of such costs for overhead.

     (c)  If Landlord shall from time to time reasonably determine that the use
          of electricity or any other utility or service in the Premises is
          disproportionate to the use of other typical office tenants, Landlord
          may separately charge Tenant for the excess costs attributable to such
          disproportionate use calculated on a consistent and reasonable basis.

     (d)  upon the request of Tenant, Landlord shall install and maintain at
          Tenant's expense, metering devices for measuring the use of any
          utility or service in the Premises. Tenant shall pay Landlord within
          thirty (30) days of receipt of any invoice for the cost of
          installation and maintenance of such device plus ten percent (10%) of
          such cost on account of Landlord's overhead. In addition, Landlord may
          in its sole discretion elect to install and maintain at Landlord's
          expense, metering devices for measuring the use of any utility or
          service in the Premises.

6.06 ALTERATIONS BY LANDLORD

     Landlord may from time to time:

     (a)  make repairs, replacements, changes or additions to the structure,
          systems, facilities and equipment in the Building (including the
          Premises) where necessary to serve the Premises or other parts of the
          Building;

     (b)  make changes in or additions to any part of the Building not in or
          forming part of the Premises;

     (c)  terminate or amend Tenant's right of use of any of the Common Areas or
          eliminate or change the location and size of any of the Common Areas
          or their facilities, provided that access by Tenant to the Premises
          from the elevator lobbies remains available;

     (d)  retain contractors and employ all personnel, including supervisory
          personnel and managers, that Landlord considers necessary for the
          effective maintenance, repair, operation, management and control of
          the Building; and

     (e)  do and perform such other acts in and to the Building or any of its
          component parts as Landlord considers reasonable for the proper and
          efficient maintenance, repair, operation, management and control of
          the Building,

     provided that in the course of Landlord's exercise of its rights hereunder,
     Landlord shall be deemed not to have re-entered the Premises nor to have
     breached Article 2.02. Landlord shall perform all of its work as
     expeditiously as is reasonably possible so as to interfere as little as is
     reasonably possible with Tenant's use of the Premises.

6.07 ACCESS BY LANDLORD

     Tenant shall permit Landlord, its agents and consultants to enter the
     Premises outside Normal Business Hours, and during Normal Business Hours if
     such entry is necessitated by an emergency or will not unreasonably disturb
     or interfere with Tenant's use of the Premises, to inspect, to provide
     services or make repairs, replacements, changes or alterations as set out
     in this Lease, to take such steps as Landlord may deem necessary, acting as
     would a reasonable and prudent landlord, for the safety, improvement or
     preservation of the Premises or the Building, to remedy any nuisance in the
     Premises, to show the Premises to mortgagees, prospective mortgagees,
     purchasers, and prospective purchasers and, during the last eighteen (18)
     months of the Term, to prospective tenants. Except in case of emergency or
     imminent injury or damage, Landlord shall provide twenty-four (24) hours'
     notice to Tenant prior to such entry, unless such entry is to perform
     Landlord's usual maintenance activities in which case Landlord need only
     telephone Tenant rather than give written notice; but in



                                        9


     no case shall any such entry constitute a re-entry by Landlord or an
     eviction or entitle Tenant to any abatement of Rent.

6.08 ENERGY, CONSERVATION, SAFETY AND SECURITY POLICIES

     Landlord shall be deemed to have observed and performed the terms and
     conditions to be performed by Landlord under this Lease, including those
     relating to the provision of utilities and services, if in so doing it acts
     in accordance with any directive, policy or request of any governmental or
     quasi-governmental authority in respect of any energy, conservation, safety
     or security matter. Tenant shall at the written request of Landlord comply
     with any such directive, policy or request.

ARTICLE 7.00 MAINTENANCE, REPAIR, ALTERATIONS AND IMPROVEMENTS BY TENANT

7.01 CONDITION OF PREMISES

     Except to the extent that Landlord is specifically responsible therefor
     under this Lease, Tenant shall maintain and repair the Premises and all
     Leasehold Improvements therein and keep them in good order and condition,
     including:

     (a)  repainting and redecorating the Premises and cleaning window coverings
          and carpets in each case at reasonable intervals; and

     (b)  making repairs, replacements and alterations as needed, including
          those necessary to comply with the requirements of any governmental or
          quasi-governmental authority having jurisdiction.

     In the last eighteen (18) months of the Term, Tenant's obligations pursuant
     to subsection 7.01(a) shall exclude reasonable wear and tear.

7.02 FAILURE TO MAINTAIN PREMISES

     If Tenant fails to perform any obligation under Article 7.01, then on not
     less than ten (10) days notice to Tenant Landlord may enter the Premises
     and perform such obligation without liability to Tenant for any loss or
     damage to Tenant thereby incurred, and Tenant shall pay Landlord all costs
     reasonably incurred in connection therewith, plus fifteen percent (15%) of
     such cost for overhead and supervision, within ten (10) days of its receipt
     of Landlord's invoice therefor.

7.03 ALTERATIONS BY TENANT

     Tenant may from time to time at its own expense install Leasehold
     Improvements and alter existing Leasehold Improvements (the "Tenant's
     Work") provided that:

     (a)  the Tenant's Work shall not commence without the prior written
          approval of Landlord;

     (b)  Tenant shall have furnished Landlord with two (2) complete sets of
          professionally prepared working drawings (which shall include any
          architectural, structural, electrical, mechanical, computer system
          wiring and telecommunication plans) of the proposed Tenant's Work.
          Landlord requires that Tenant retain Landlord's base building
          mechanical, electrical and structural engineering consultants to
          ensure compatibility of base building systems and the Tenant's Work.
          If Tenant uses other consultants for the preparation of Tenant's
          working drawings, then Landlord may elect to retain architects and
          engineers to review such working drawings for the purpose of approving
          the proposed Tenant's Work (it being understood that notwithstanding
          such approval, Landlord shall have no responsibility with respect to
          the adequacy of such working drawings). Tenant shall pay on demand to
          Landlord all costs reasonably incurred for the examination of such
          drawings by either Landlord or an outside consultant plus an amount
          equal to ten percent (10%) of such costs for overhead;

     (c)  prior to commencement of the Tenant's Work, Landlord shall have
          approved, acting as would a reasonable and prudent landlord, the
          contractors and subcontractors and their respective labour
          affiliations;

     (d)  Tenant shall have provided prior to the commencement of the Tenant's
          Work, performance and payment bonds as well as proof of workers
          compensation, all risks, builders' risk, and contractors' public
          liability and property damage insurance coverage, with Landlord and
          any mortgagee, as required by Landlord to be named as additional
          insureds, in amounts with insurers, and in form reasonably
          satisfactory to Landlord, which shall remain in effect during the
          entire period in which the Tenant's Work will be carried out;

     (e)  Tenant will deliver a complete list identifying every contractor and
          sub-contractor, accompanied by an up-to-date valid clearance
          certificate for each of them issued by the appropriate worker
          compensation, safety and insurance authority and Tenant will not use
          any contractor or permit the use of any sub contractor that is not
          identified on the list;

     (f)  Tenant acknowledges that certain Tenant's Work may require
          modification and interfacing with the base building and its systems
          and structure. If any proposed Tenant's Work could affect the
          structure, the exterior walls or the systems of the Building, Landlord
          may require that any such Tenant's Work be



                                       10


          performed by either Landlord or its contractors in which case Tenant
          shall pay all Landlord's costs, reasonably incurred in connection
          therewith, plus ten percent (10%) thereof for overhead;

     (g)  Tenant shall have provided to Landlord a copy of the contract for the
          Tenant's Work and evidence satisfactory to Landlord, acting as would a
          reasonable and prudent landlord, as to the existence of all necessary
          permits;

     (h)  Tenant shall perform the Tenant's Work or cause the Tenant's Work to
          be performed: (i) in accordance with any construction methods and
          procedures manual for the Building; (ii) in accordance with the plans
          and specifications submitted to and approved by Landlord, acting as
          would a reasonable and prudent landlord; (iii) in accordance with any
          conditions, regulations, procedures or rules imposed by Landlord,
          acting as would a reasonable and prudent landlord; (iv) in compliance
          with all applicable laws (including occupational health and safety,
          and workplace hazardous materials information system requirements and
          legislation); and (v) in a good and workmanlike and expeditious manner
          using new materials;

     (i)  Landlord may inspect construction as it proceeds (the onus being on
          Tenant to advise Landlord whenever any phase has been completed so
          that an inspection can be made);

     (j)  upon completion of the Tenant's Work, Tenant shall provide Landlord
          with a complete set of "as built" drawings for the Tenant's Work; and

     (k)  if Tenant fails to observe any of the requirements of this Article,
          Landlord, acting as would a reasonable and prudent landlord, may
          require that construction stop and that the Premises be restored to
          their prior condition failing which Landlord may do so and Tenant
          shall pay Landlord's cost plus fifteen percent (15%) thereof for
          overhead.

     Any increase in Operating Costs or Taxes attributable to such Tenant's Work
     shall be borne by Tenant.

     Notwithstanding the foregoing, Tenant shall not require Landlord's prior
     written approval with respect to any Tenant's Work the aggregate cost of
     which is reasonably anticipated not to exceed Five Thousand Dollars
     ($5,000), provided such Tenant's Work will not affect the structure,
     exterior walls or systems of the Building (such exempted Tenant's Work
     being herein called the "Exempted Work"). It is further agreed that Tenant
     shall not be required to comply with subsection 7.03(b) or to provide
     performance and payment bonds with respect to the Exempted Work.

7.04 TELEPHONE AND COMPUTER SYSTEMS

     With Landlord's prior written consent, which may be withheld in Landlord's
     sole discretion, Tenant may utilize a telecommunication service provider
     which does not currently service the Building, subject to the provisions of
     this Lease, including but not limited to the following:

     (a)  the service provider shall execute and deliver Landlord's standard
          form of license agreement which shall include a provision for Landlord
          to receive compensation for the use of the space for the service
          provider's equipment and materials;

     (b)  Landlord shall incur no expense or liability whatsoever with respect
          to any aspect of the provision of telecommunication services,
          including without limitation, the cost of installation, service,
          materials, repairs, maintenance, and interruption or loss of
          telecommunication service;

     (c)  Landlord must first reasonably determine that there is sufficient
          space in the risers of the Building for the installation of the
          service provider's equipment and materials;

     (d)  Tenant shall indemnify and hold harmless Landlord for all losses,
          claims, demands, expenses, and judgments against Landlord caused by or
          arising out of, either directly or indirectly, any acts or omissions
          by the service provider or Tenant or those for whom they are
          responsible at law; and

     (e)  Tenant shall incorporate in its agreement with its service provider a
          provision granting the Tenant the right to terminate the service
          provider agreement if required to do so by Landlord and Landlord shall
          have the right at any time from time to time during the Term to
          require Tenant at its expense to exercise the termination right.

     As part of the Tenant's Work, Tenant shall be responsible for the costs
     associated with the supply and installation of telephone, computer and
     other communications equipment and systems and related wiring within the
     Premises to the boundary of the Premises for hook up or other integration
     with telephone and other communications equipment and systems of a
     telephone or other communications service provider, which equipment and
     systems of the service provider are located or are to be located in the
     Building pursuant to Landlord's standard form of license agreement.

     Landlord shall supply space in risers in the Building and space on the
     floor(s) of the Building in which the Premises are located, the location of
     which shall be designated by Landlord in its sole discretion, to
     telecommunication service providers who have entered into Landlord's
     standard form of license agreement for the purpose, without any cost or
     expense to Landlord therefor, of permitting installation in such risers and
     on



                                       11


     such floor(s) of telephone and other communications services and systems
     (including data cable patch panels) to the Premises at a point designated
     by Landlord.

     Landlord shall have the right to assume control of cables and other
     telecommunications equipment in the Building and may designate them as part
     of the Common Areas.

7.05 LIENS

     Tenant shall pay before delinquency all costs for Tenant's Work which could
     result in any lien or encumbrance on the Land or Building, shall keep the
     title to the Land and the Building free and clear of any lien or
     encumbrance and shall indemnify and hold harmless Landlord from and against
     any claim, loss, cost, demand and legal or other expense, whether in
     respect of any lien or otherwise, arising from the supply of material,
     services or labour for such work or otherwise. Tenant shall immediately
     notify Landlord of any such lien or encumbrance in respect of the Tenant's
     Work of which it has or reasonably should have knowledge, and shall cause
     the same to be removed or vacated within five (5) Business Days failing
     which Landlord may take such action as Landlord deems necessary, acting as
     would a reasonable and prudent landlord, to remove or vacate the same and
     Tenant shall pay to Landlord on demand the entire cost thereof plus an
     administration fee of fifteen percent (15%) of such cost.

7.06 SIGNS WITHIN THE PREMISES

     Any sign, lettering or design in the Premises that is visible from the
     exterior of the Premises shall be subject to approval by Landlord and shall
     conform to the uniform pattern of identification signs for tenants in the
     Building as prescribed by Landlord. Tenant shall not inscribe or affix any
     sign, lettering or design which is visible from the exterior of the
     Building.

7.07 REMOVAL OF LEASEHOLD IMPROVEMENTS - EXPIRATION OR TERMINATION OF TERM

     Subject as hereinafter provided, immediately prior to the expiration of the
     Term, or immediately following the termination thereof, Tenant shall remove
     all Leasehold Improvements, personal property and any signs, restore the
     Premises to the then current base building standard of the Building and
     repair any damage to the Building or the Premises occasioned by such
     installation, removal and restoration. Such removal shall be carried out in
     accordance with Section 7.03, it being agreed and understood in this
     regard, however, that the fee to be paid by Tenant to Landlord for
     Landlord's supervision of such work shall be ten percent (10%) of the total
     cost of such Tenant's Work. Landlord may by notice to Tenant given prior to
     the expiration of the Term stipulate which Leasehold Improvements are not
     to be removed. Upon reasonable prior notice from Tenant to Landlord,
     Landlord agrees to give such notice (stipulating which leasehold
     improvements are not to be removed) thirty (30) days prior to the
     expiration of the Term. Upon the expiration or earlier termination of the
     Term, all personal property of Tenant remaining in the Premises shall at
     the option of Landlord become its property, and may be appropriated, sold,
     removed, destroyed or otherwise disposed of by Landlord without notice or
     obligation to compensate Tenant or to account to Tenant, and Tenant shall
     pay to Landlord on demand all costs reasonably incurred by Landlord in
     connection therewith, plus an administration fee of ten percent (10%) of
     the costs.

ARTICLE 8.00 TAXES

8.01 LANDLORD'S TAXES

     Landlord shall pay before delinquency (subject to Tenant's obligation to
     pay Operating Costs and Taxes under Article 4.02) every real estate tax,
     assessment, licence fee and other charge, excepting Tenant's taxes under
     Article 8.02, which is imposed, levied, assessed or charged by any
     governmental or quasi-governmental authority having jurisdiction upon or on
     account of the Land or the Building.

8.02 TENANT'S TAXES

     Tenant shall pay to the appropriate authority before delinquency every tax,
     assessment, licence fee, excise and other charge, however described, other
     than any tax assessed against Tenant pursuant to the Income Tax Act, which
     is imposed, levied, assessed or charged by any governmental or
     quasi-governmental authority having jurisdiction upon or on account of:

     (a)  operations at, occupancy of, or conduct of business in or from the
          Premises by or with the permission of Tenant; and

     (b)  Leasehold Improvements and all property in the Premises that is not
          owned by Landlord,

     provided that if Landlord so elects by notice to Tenant, Tenant shall pay
     to Landlord any amounts payable under this Article 8.02 in monthly
     installments and Landlord shall remit such amounts to the appropriate
     authorities. Notwithstanding the foregoing, Landlord agrees not to exercise
     such election so long as Tenant punctually pays the Rent as and when
     required under this Lease.

8.03 RIGHT TO CONTEST

     Tenant shall not contest the validity or amount of any tax, assessment,
     licence fee, excise fee and other charge payable under Article 8.01. Tenant
     shall have the right to contest the validity or amount of any tax,
     assessment, licence fee, excise fee and other charge payable under Article
     8.02, provided that no contest by Tenant may



                                       12


     involve the possibility of forfeiture, sale or disturbance of Landlord's
     interest in the Premises or result in any increase in taxes paid by other
     tenants in the Building or taxes under Article 8.01 and that upon the final
     determination of any contest by Tenant, Tenant shall promptly pay the
     amount found to be due, together with any costs, penalties and interest.
     Tenant shall indemnify Landlord for any costs, expenses, liabilities or
     damages, including without limitation increases in taxes which are or may
     be suffered by Landlord directly or indirectly as a result of such contest.

ARTICLE 9.00 INSURANCE

9.01 LANDLORD'S INSURANCE

     Landlord shall maintain (Landlord's cost of compliance with this Article
     9.01 being included in Operating Costs) liability insurance in an amount
     not less than $5,000,000.00 per occurrence, all risk property insurance on
     a replacement cost basis, rental income insurance, boiler and pressure
     vessel insurance, and other insurance on the Building and all property and
     interest of Landlord in the Building as determined by Landlord with
     coverage and in amounts that are comparable to coverages typically
     maintained by the owners of similar buildings in the vicinity of the
     Building.

9.02 TENANT'S INSURANCE

     Tenant shall maintain:

     (a)  all risk property insurance in amounts sufficient to fully cover, on a
          replacement cost basis without deduction for depreciation, all
          Leasehold Improvements and all property, including without limitation
          Tenant's inventory, furniture and movable equipment, in the Premises
          which is not owned by Landlord;

     (b)  if applicable, boiler and machinery insurance on a replacement cost
          basis to cover Leasehold Improvements and all property in the Premises
          that is not owned by Landlord;

     (c)  liability insurance on an occurrence basis, against claims for bodily
          injury, personal injury and property damage in or about the Premises,
          contractual liability, tenant's legal liability, non-owned automobile
          liability, and owner's and contractors protective liability, in an
          amount not less than $5,000,000.00 in respect of each occurrence;

     (d)  business interruption insurance; and

     (e)  any other form of insurance, with terms and in a form, with such
          amounts and against such risks, as Landlord may in its discretion
          require, acting as would a reasonable and prudent landlord.

     Policies for such insurance shall (i) be with an insurer with a minimum AM
     Best rating of A-, or in the absence of an AM Best rating, an A rating from
     Standard & Poors, (ii) require at least thirty (30) days' written notice to
     Landlord of termination and, if available on commercially reasonable terms,
     at least thirty (30) day's written notice to Landlord of any material
     alteration to the insurance required under this section 9.02 during the
     Term, (iii) waive any right of subrogation against Landlord and those for
     whom Landlord is at law responsible, (iv) contain a provision that Tenant's
     insurance is primary, (v) not call into contribution any other insurance
     available to Landlord, (vi) contain a severability of interests clause and
     a cross-liability clause, where applicable, and (vii) add Landlord and its
     mortgagees as additional insureds. If requested by Landlord, Tenant shall
     from time to time promptly deliver to Landlord evidence satisfactory to
     Landlord that all premiums thereon have been paid and certificates of
     insurance confirming the above. If Tenant's policy does not require
     Tenant's insurer to give Landlord at least thirty (30) days written notice
     of any material alteration to the insurance required under this section
     9.02, Tenant hereby covenants to give Landlord such notice.

9.03 TENANT'S FAILURE TO INSURE

     Should Tenant fail to maintain the insurance required in Article 9.02, in
     addition to its rights under Article 19.03, Landlord may elect to obtain
     the required insurance. Tenant shall upon demand pay to Landlord, as Rent,
     Landlord's cost of obtaining such insurance.

ARTICLE 10.00 INJURY TO PERSON OR PROPERTY

10.01 INDEMNITY BY TENANT

(a)  Tenant indemnifies and holds harmless Landlord, its directors, officers,
     shareholders, employees and agents from any and all claims, demands, and
     costs for damage and injury, including death, to the person or property of
     any person, firm or corporation, (except for Landlord and its employees)
     arising out of the Tenant's use of or operations in the Premises, including
     the Land and Building, except where the damage or injury arises out of the
     negligence of Landlord, its directors, officers, employees and agents and
     those for whom in law it is responsible or any other tenant in the
     Building.

(b)  Tenant hereby releases Landlord and its directors, officers, shareholders,
     employees and agents from any and all liability for loss or claim,
     including all resulting consequential and indirect losses, as a result of
     loss, damage or injury to the property and persons of Tenant and its
     employees, or as a result of damages or losses including economic losses
     relating to damage to the Building or loss of access to the Premises, and
     whether or not such loss or claim may have arisen out of the negligence of
     Landlord or those for whom Landlord is in law



                                       13


     responsible; and Tenant agrees to indemnify and hold harmless Landlord and
     its directors, officers, shareholders, employees and agents from any loss,
     cost, damage, expense, suit, action, and demand relating to such claim or
     loss, including all resulting consequential and indirect losses and
     excluding such claims or losses relating to any loss, cost, damage,
     expense, suit, action, or demand of or by third parties except where such
     losses relate to suits, actions or claims of third party clients or
     customers of Tenant.

10.02 INDEMNITY BY LANDLORD

     (a)  Landlord indemnifies and holds harmless Tenant, its directors,
          officers, shareholders, employees, and agents from any and all claims,
          demands and costs for damage and injury, including death, to the
          person or property of any person, firm or corporation, (except for the
          Tenant and its employees) arising out of the Landlord's operations in
          the Land and Building, except where the damage or injury arises out of
          the negligence of Tenant, its directors, officers, employees and those
          for whom in law it is responsible or any other tenant in the Building.

     (b)  Landlord hereby releases Tenant and its directors, officers,
          shareholders, employees and agents from any and all liability for loss
          or claim, including all resulting consequential and indirect losses,
          as a result of loss, damage or injury to the property and persons of
          Landlord and its employees and whether or not such loss or claim may
          have arisen out of the negligence of Tenant or those for whom Tenant
          is in law responsible; and Landlord agrees to indemnify and hold
          harmless Tenant and its directors, officers, shareholders, employees
          and agents from any loss, cost, damage, expense, suit, action, and
          demand relating to such claim or loss, including all resulting
          consequential and indirect losses of Landlord, and excluding such
          claims or losses relating to any loss, cost, damage, expense, suit,
          action, or demand of or by third parties.

10.03 EXTENDED MEANING

     Any and all release and indemnity clauses which are included in the Lease
     for the benefit of Landlord are intended also to benefit the mortgagees and
     property managers and asset managers of Landlord and the officers,
     directors, shareholders, employees, and agents of each one of them, and,
     for the purposes of such clauses, Landlord is hereby acting as agent or
     trustee on behalf of and for the benefit of the persons or entities
     mentioned above.

ARTICLE 11.00 ASSIGNMENT, SUBLETTING AND OTHER TRANSFERS

11.01 TRANSFER

     "Transfer" means all or any of the following, whether by conveyance,
     written agreement or otherwise, and whether or not by operation of law: an
     assignment of this Lease by Tenant or any interest in this Lease, in whole
     or in part, any mortgage, charge, debenture (floating or otherwise), or
     encumbrance of this Lease or Tenant's interest in this Lease, in whole or
     in part, a sublease, or sharing or parting with possession of all or any
     part of the Premises, a change in a partnership if the change results in a
     change in the' effective control of Tenant and, a transfer or other dealing
     in respect of all or part of the corporate shares of Tenant or an affiliate
     of Tenant that results in a change in the effective voting control of
     Tenant. "Transferor" and "Transferee" have meanings corresponding to this
     definition of "Transfer" and in the case of a Transfer involving corporate
     shares, or partnership interests, the "Transferor". is the person or entity
     with effective control, or voting control before the Transfer and the
     Transferee is the person or entity with effective control, or voting
     control after the Transfer.

     "Special Transfer" means a Transfer to a single Transferee, which single
     Transferee may include more than one entity (as for example, in the case of
     a joint venture), of all or substantially all of Corel Corporation's
     assets, or of all or substantially all of Corel Corporation's share
     capital, and "Special Transferee" shall have a meaning corresponding to
     this definition of "Special Transferee".

11.02 LANDLORD'S CONSENT

     Tenant will not effect or attempt to effect a Transfer without the prior
     written consent of Landlord which shall not be unreasonably withheld or
     delayed unless Landlord elects to terminate the Lease pursuant to Article
     11.04. Landlord shall be deemed to be acting reasonably in withholding its
     consent if:

     (a)  the Transfer would violate any covenant or restriction given to any
          other tenant of the Building;

     (b)  in Landlord's opinion, acting as would a reasonable and prudent
          landlord:

          (i)  either the financial background or the business history and
               capability of the proposed Transferee is not satisfactory;

          (ii) the nature or character of the proposed business of the proposed
               Transferee is such that it may be reasonably anticipated to harm
               Landlord's business or reputation or reflect unfavourably on the
               Building, Landlord, or other tenants of the Building, or the
               image of any of them, or is unethical, immoral or illegal;

     (c)  the proposed Transferee or any principal of the proposed Transferee or
          any principal shareholder of the proposed Transferee has a history of
          defaults under other commercial leases or does not have a satisfactory
          history of compliance with laws;



                                       14


     (d)  Landlord at the time has, or will have in the next ensuing three (3)
          month period, other premises in the Building suitable for leasing to
          the proposed Transferee;

     (e)  Intentionally Deleted.

     (f)  the proposed Transfer is in favour of any existing tenant or occupant
          of the Building or of any other building owned or operated by Landlord
          or any of its affiliates within the city in which the Building is
          situated;

     (g)  the amount of rent to be paid by the proposed Transferee is less than
          that provided for in this Lease or the terms of the proposed Transfer
          are otherwise in any respect more favourable to the proposed
          Transferee than those of this Lease are to Tenant;

     (h)  the proposed Transfer is a mortgage, charge or other encumbrance of
          Tenant's rights or interest under this Lease;

     (i)  an Event of Default on the part of Tenant hereunder has occurred and
          is continuing;

     (j)  the proposed Transfer is a sublease by an existing sublessee of the
          Premises or any part thereof;

     (k)  Landlord does not receive sufficient information to enable it to make
          a determination concerning the matters set out above; or

     (1)  there is any other reasonable ground not stated above for withholding
          consent.

11.03 PUBLIC CORPORATIONS

     A Transfer that occurs as the result of a change in control of a Tenant
     will not require the consent of Landlord if the shares are listed and
     traded on any recognized stock exchange in Canada or the United States.

11.04 LANDLORD'S TERMINATION RIGHT

     If Tenant requests Landlord's consent to a Transfer it will provide full
     particulars concerning the Transfer including without limitation, copies of
     any written offer, agreement or draft agreement pertaining to the Transfer,
     payments and any other consideration to be made or provided by the proposed
     Transferee in consideration for the Transfer, and any other information
     concerning the proposed Transfer or the financial and business history of
     the proposed Transferee that Landlord may require. Landlord will within
     fifteen (15) days (or, in the case of a Special Transfer, within five (5)
     Business Days) after its receipt of the request for consent and all such
     information, notify Tenant that either (i) it consents to the Transfer, or
     (ii) unless the proposed Transfer is a Special Transfer, it elects to
     cancel this Lease as to the whole or part of the Premises affected by the
     proposed Transfer, or (iii) it does not consent to the Transfer. If
     Landlord elects to terminate this Lease, Tenant may, by notice to Landlord
     given within seven (7) days after receipt of Landlord's notice, withdraw
     its request for Landlord's consent. In that case, Landlord's election to
     terminate this Lease will be void. If Tenant fails to withdraw its request
     for Landlord's consent, Tenant will deliver, in accordance with the
     provisions of this Lease, vacant possession of the whole or the part, as
     the case may be, of the Premises affected by the termination on the date
     specified in Landlord's notice, which date will not be less than thirty
     (30) days nor more than one hundred and twenty (120) days after the date
     the notice is given or at the Landlord's option on the date the proposed
     Transfer is to take effect. If Tenant is required to deliver possession of
     a part only of the Premises, Tenant will pay all costs incurred in
     connection with rendering that part functionally separate and suitable for
     separate use and occupancy, including partitioning and providing entrances
     and services, plus a sum equal to ten percent (10%) of the costs as an
     administration fee. For the purpose of clarity, the parties acknowledge and
     agree that Landlord will not have the right cancel this Lease with respect
     to a Special Transfer. Further, if Landlord fails to notify Tenant that it
     consents or does not consent to Tenant's request for a Special Transfer
     within such five (5) Business Day period, Landlord will be deemed to have
     denied its consent.

11.05 ACCEPTANCE OF RENT

     After a Transfer, Landlord may collect Rent from the Transferee and apply
     the net amount collected to the Rent payable hereunder but no acceptance by
     Landlord of any payments by a Transferee constitutes a waiver of the
     requirement for Landlord's consent to the Transfer or an acceptance of the
     Transferee nor will it release Tenant from its covenants and obligations
     under this Lease. Any documents evidencing a Transfer may, at Landlord's
     option, be prepared by Landlord or its solicitors.

11.06 CONDITIONS OF CONSENT

     Any consent by Landlord to a Transfer will be subject to the following
     conditions:

     (a)  Tenant will pay to Landlord fifty percent (50%) of any money or other
          consideration (including without limitation, any amount payable by the
          Transferee to Tenant in excess of the Annual Rent payable by Tenant
          under Article 4.01) from time to time paid by any Transferee to Tenant
          in connection with the Transfer;

     (b)  if Landlord requires, the Transferee shall execute an agreement
          directly with Landlord agreeing to be bound by this Lease, and in the
          case of a sublease the Transferee shall waive any right to obtain
          relief



                                       15


          from forfeiture, to obtain a direct lease from Landlord or to become
          the tenant of Landlord notwithstanding any statute or law that would
          otherwise give those rights to sub-tenants;

     (c)  Tenant and each Transferee will be bound by this Lease and any renewal
          or extension of the Term regardless of whether or when any renewal or
          extension of the Term of this Lease is made, whether agreed to by
          Tenant or a Transferee, and regardless of any surrender and new lease
          that is deemed at law to occur as the result of any renewal or
          extension of this Lease; it being agreed and understood that Corel
          Corporation's obligations and liability in this regard shall be
          limited to the options to extend described in sections 21.04, 21.05
          and 21.06 of this Lease, and any other renewals or extensions
          specifically agreed to in writing by Corel Corporation. The liability
          of Tenant and each Transferee will continue as though Tenant and each
          subsequent Transferee had signed each renewal or extension of this
          Lease. Tenant and each Transferee will also be bound by any amendment
          of this Lease, regardless of whether or when made, whether agreed to
          by Tenant or a Transferee, and regardless of any surrender and new
          lease that is deemed at law to occur as a result of any amendment, in
          each case, provided such amendment does not increase Tenant's and
          Transferee's obligations under this Lease. The liability of Tenant and
          each Transferee will continue as though Tenant and each subsequent
          Transferee had signed each such amendment of this Lease;

     (d)  Tenant shall pay all legal costs reasonably incurred by Landlord in
          connection with documents relating to a Transfer or Landlord's consent
          together with Landlord's reasonable administrative charge for
          considering a request to consent and, as a condition of considering a
          request for consent, Landlord may require payment of a reasonable
          deposit of at least five hundred dollars ($500.00) on account of its
          costs;

     (e)  if this Lease is disaffirmed, disclaimed, terminated, repudiated, or
          surrendered (each of these transactions being referred to as an "Early
          Termination") by any trustee in bankruptcy of a Transferee, by any
          court appointed officer, or by a Transferee in connection with any
          insolvency proceedings, Tenant and any Transferee (except the bankrupt
          or insolvent Transferee) will be considered, on notice from Landlord
          given within thirty (30) days after the Early Termination, to have
          entered into a lease with Landlord on the same terms and conditions as
          are contained in this Lease except that the term of the lease shall
          commence on the date of the Early Termination and shall expire on the
          date this Lease would have expired but for the Early Termination; and

     (f)  no consent to a Transfer will be considered as a waiver of the
          requirement for Landlord's consent in respect of a subsequent
          Transfer.

ARTICLE 12.00 SURRENDER

12.01 POSSESSION

     Upon the expiration or other termination of the Term, Tenant shall
     immediately quit and surrender vacant possession of the Premises in
     substantially the condition in which Tenant is required to maintain the
     Premises excepting only reasonable wear and tear, damage covered by
     Landlord's insurance under Article 9.01 and the obligation of Tenant to
     remove Leasehold Improvements and repair damage to the Premises in
     accordance with Article 7.07. Upon such surrender, all right, title and
     interest of Tenant in the Premises shall cease.

12.02 MERGER

     The voluntary or other surrender of this Lease by Tenant or the
     cancellation of this Lease by mutual agreement of Tenant and Landlord shall
     not work as a merger, and shall at Landlord's option either terminate any
     and all subleases or operate as an assignment to Landlord of all or any
     subleases or subtenancies. Landlord's option hereunder shall be exercised
     by notice to Tenant and all known subtenants in the Premises or any part
     thereof. If this Lease is surrendered by operation of law or otherwise,
     Tenant will indemnify Landlord against all claims by subtenants or others
     claiming by or through Tenant in respect of any interest in this Lease.

12.03 PAYMENTS AFTER TERMINATION

     No payments of money by Tenant to Landlord after the expiration or other
     termination of the Term or after the giving of any notice (other than
     payment in full of arrears of Rent and any accelerated Rent before
     termination of the Term, when a notice of default has been given) by
     Landlord to Tenant, shall reinstate, continue or extend the Term or make
     ineffective any notice given to Tenant prior to the payment of such money.
     After the giving of notice or the commencement of a suit, or after final
     judgment granting Landlord possession of the Premises, Landlord may receive
     and collect any sums of Rent and other amounts payable by Tenant under this
     Lease, and the payment thereof shall not make ineffective any notice, or in
     any manner affect any pending suit or any judgment theretofore obtained.

12.04 SURVIVAL OF OBLIGATIONS

     If Tenant has failed to perform any of its obligations under this Lease,
     such obligations and the rights of Landlord in respect thereto shall
     survive the expiration or other termination of the Term.



                                       16


ARTICLE 13.00 HOLDING OVER

13.01 MONTH-TO-MONTH TENANCY

     If without Landlord's written consent Tenant remains in possession of the
     Premises after the expiration or other termination of the Term, Tenant
     shall occupy the Premises, as a month-to-month tenant at a monthly rental
     equal to twice the Rent determined in accordance with Article 4.00 or such
     other rental and on such other terms as may be stated in such consent, and
     such tenancy may be terminated by Landlord at any time upon notice of
     termination to Tenant.

     If with Landlord's written consent, which consent Landlord may withhold in
     its sole discretion, Tenant remains in possession of the Premises after the
     expiration or other termination of the Term, Tenant shall occupy the
     Premises, as a month-to-month tenant at a monthly rental equal to 105% of
     the Rent determined in accordance with Article 4.00, and such tenancy may
     be terminated by Landlord at any time upon notice of termination to Tenant.

13.02 GENERAL

     Any overholding by Tenant shall be subject to all other terms and
     conditions of this Lease except any right of renewal, any exclusive use or
     other restriction, any option to lease, any right of first refusal and any
     other preemptive or collateral right, and nothing contained in mis Article
     13.00 shall be construed to limit or impair any of Landlord's rights of
     re-entry or eviction or other rights and remedies or constitute a waiver
     thereof.

ARTICLE 14.00 RULES AND REGULATIONS

14.01 PURPOSE

     The Rules and Regulations are for the safety, benefit and convenience of
     all tenants and other persons in the Building.

14.02 OBSERVANCE

     Tenant shall at all times comply with, and shall cause its employees,
     agents, licensees and invitees to comply with, the Rules and Regulations.

14.03 MODIFICATION

     Landlord may from time to time, for the purposes set out in Article 14.01,
     amend, delete from, or add to the Rules and Regulations, provided that any
     such modification shall be (i) not inconsistent with any other provision of
     this Lease; (ii) reasonable and have general application to substantially
     all tenants in the Building; and (iii) effective only upon delivery of a
     copy thereof to Tenant at the Premises.

14.04 NON-COMPLIANCE

     Landlord shall use its reasonable efforts to secure compliance by all
     tenants of the Building and other persons with the Rules and Regulations
     from time to time in effect, but shall not be responsible to Tenant for
     failure of any person to comply with such Rules and Regulations.

ARTICLE 15.00 EXPROPRIATION

15.01 EXPROPRIATION

     Landlord and Tenant will co-operate with each other regarding any
     expropriation of the Premises or the Building or any part of them so that
     each receives the maximum award to which it is entitled at law. To the
     extent any part of the Building or the Land other than the Premises is
     expropriated, the full proceeds accruing or awarded as a result thereof
     belong to Landlord and Tenant will abandon or assign to Landlord any rights
     that Tenant may have or acquire by operation of law to those proceeds or
     awards and will execute any documents that Landlord requires to give effect
     thereto.

ARTICLE 16.00 DAMAGE BY FIRE OR OTHER CASUALTY

16.01 LIMITED DAMAGE TO PREMISES

     If all or part of the Premises are rendered untenantable by damage from
     fire or other casualty which, in the reasonable opinion of the Architect,
     can be substantially repaired under applicable laws and governmental
     regulations within one hundred eighty (180) days from the date of such
     casualty (employing normal construction methods without overtime or other
     premium), Landlord shall, to the extent of insurance proceeds which it
     receives and to the extent that any mortgagee(s) entitled to be paid such
     insurance proceeds consents to the use of same, forthwith repair such
     damage other than damage to Leasehold Improvements and any other property
     that is not the responsibility of or is not owned by Landlord.



                                       17


16.02 MAJOR DAMAGE TO Premises

     If all or part of the Premises are rendered untenantable by damage from
     fire or other casualty which, in the reasonable opinion of the Architect,
     cannot be substantially repaired under applicable laws and governmental
     regulations within one hundred eighty (180) days from the date of such
     casualty (employing normal construction methods without overtime or other
     premium), then Landlord may elect to terminate this Lease as of the date of
     such casualty by notice delivered to Tenant not more than ten (10) days
     after receipt of the Architect's opinion.

     During the last eighteen (18) months of the Term for Premises A, if all or
     part of the Premises are rendered untenantable by damage from fire or other
     casualty which, in the reasonable opinion of the Architect, cannot be
     substantially repaired under applicable laws and governmental regulations
     within one hundred eighty (180) days from the date of such casualty
     (employing normal construction methods without overtime OR other premium),
     then either or both Tenant and Landlord may elect to terminate this Lease
     as of the date of such casualty by notice delivered to the other not more
     than ten (10) days after receipt of the Architect's opinion.

     If neither party exercises its election to terminate this Lease as
     aforesaid, Landlord shall, to the extent of insurance proceeds which it
     receives and to the extent that any mortgagee(s) entitled to be paid such
     insurance proceeds consents to the use of same, forthwith repair such
     damage other than damage to Leasehold Improvements and any other property
     that is not the responsibility of or is not owned by Landlord. In executing
     repairs under this Article 16.00, Landlord may use new plans and
     specifications.

16.03 ABATEMENT

     If Landlord is required to repair damage to the Premises under Articles
     16.01 or 16.02, the Annual Rent payable by Tenant shall be proportionately
     reduced to the extent that the Premises are rendered unusable by Tenant in
     its business, from the date of the casualty until completion by Landlord of
     the repairs to the Premises or until Tenant again uses the Premises (or the
     part thereof rendered untenantable) in its business, whichever first
     occurs.

16.04 MAJOR DAMAGE TO BUILDING

     If the Building or its systems are damaged to such an extent that its
     operation is affected, or if twenty five percent (25%) or more of the
     Square Feet in the Building are damaged or destroyed, Landlord may elect to
     terminate this Lease as of the date of such damage (or on the date of
     notice if the Premises are unaffected by such casualty) by notice given to
     Tenant not more than sixty (60) days after the date of such casualty.

16.05 LIMITATION ON LANDLORD'S LIABILITY

     Except as specifically provided in this Article 16.00, there shall be no
     reduction of Rent and Landlord shall have no liability to Tenant by reason
     of any injury to or interference with Tenant's business or property arising
     from fire or other casualty, howsoever caused, or from the making of any
     repairs resulting therefrom in or to any portion of the Building or the
     Premises. Notwithstanding anything contained herein, Rent payable by Tenant
     hereunder shall not be abated if the damage is caused by any act or
     omission of Tenant, its agents, servants, employees or anyone for whom
     Tenant is responsible at law, or any other person entering upon the
     Premises under express or implied invitation of Tenant.

ARTICLE 17.00 TRANSFERS BY LANDLORD

17.01 SALE, CONVEYANCE AND ASSIGNMENT

     Nothing in this Lease shall restrict the right of Landlord to sell the
     Building or transfer, assign or otherwise deal with its title thereto or
     any interest therein, subject to the rights of Tenant under this Lease.

17.02 EFFECT OF SALE, CONVEYANCE OR ASSIGNMENT

     A sale, transfer or assignment of the Building or the title thereto or any
     interest therein shall operate to release Landlord from liability under
     this Lease, from and after the effective date thereof except as such may
     relate to the period prior to such effective date, and Tenant shall
     thereafter look solely to Landlord's successor in interest. The obligations
     of Tenant under this Lease shall not be affected by any such sale, transfer
     or assignment, and Tenant shall attorn to Landlord's successor in interest.

17.03 SUBORDINATION

     At the option of any mortgagee, chargee or other encumbrancer of the Lands
     ("Mortgagee"), or Landlord, this Lease shall be prior to, or shall be
     subject and subordinate in all respects to, any and all mortgages and deeds
     of trust now or hereafter placed on the Building or the Land. Tenant, on
     request by Landlord or Mortgagee and without cost to Landlord or Mortgagee,
     shall execute and deliver any and all instruments further evidencing such
     priority or subordination. If Tenant fails to execute and deliver the
     required instrument or instruments to further evidence such priority or
     subordination, Tenant hereby irrevocably constitutes and appoints Landlord
     the true and lawful attorney of Tenant to execute any and all instruments
     necessary to do so.

17.04 ATTORNMENT

     Subject to Article 17.05, if the interest of Landlord is transferred to any
     person (herein called a "Purchaser") by reason of foreclosure or other
     proceedings for enforcement of any mortgage or deed of trust, or by
     delivery of a



                                       18


     deed in lieu of such foreclosure or other proceedings, or if any Mortgagee
     shall take possession of the Building or the Premises Tenant shall, at the
     option of Purchaser or Mortgagee, immediately attorn to Purchaser or
     Mortgagee. Landlord may require Tenant, at Landlord's cost, to enter into
     an agreement in the form required by any Purchaser or Mortgagee to attorn
     to Purchaser or Mortgagee in order to give effect to what is stated above.
     Tenant hereby irrevocably appoints Landlord the true and lawful attorney of
     Tenant to execute any and all instruments necessary to give effect to what
     is stated above.

17.05 EFFECT OF ATTORNMENT

     Upon attornment under Article 17.04 the obligations of Tenant under this
     Lease shall continue in full force and effect upon all the same terms,
     conditions and covenants in this Lease except that, after such attornment,
     Purchaser or Mortgagee shall not be:

     (a)  liable for any act or omission of Landlord;

     (b)  subject to any offsets or defenses which Tenant might have against
          Landlord; or

     (c)  bound by any prepayment by Tenant of more than one month's installment
          of Rent, or by any previous modification of this Lease, unless such
          prepayment or modification shall have been approved in writing by
          Purchaser or Mortgagee or any predecessor in interest except Landlord.

ARTICLE 18.00 NOTICES, ACKNOWLEDGEMENTS, AUTHORITIES FOR ACTION

18.01 NOTICES

     Any notice from one party to the other hereunder shall be in writing and
     shall be deemed duly given if delivered, if mailed by registered or
     certified mail or if sent by facsimile to Tenant at the Premises (whether
     or not Tenant has departed from, vacated or abandoned the same); or to
     Landlord, as the case may be, at the property management office for the
     Building, as designated from time to time, and addressed to the attention
     of the Property Manager. Any notice shall be deemed to have been given at
     the time of delivery or, if mailed, three (3) days after the date of
     mailing thereof or if made or given by facsimile, on the next business day
     following the transmittal thereof, as evidenced by confirmation of receipt.
     Either party shall have the right to designate by notice, in the manner
     above set forth, a different address to which notices are to be mailed. No
     notice given by email or by other similar electronic means will be
     considered to have been given in writing.

18.02 ACKNOWLEDGEMENTS

     Tenant shall at any time and from time to time upon not less than ten (10)
     days' prior notice from Landlord execute, acknowledge and deliver a written
     statement certifying:

     (a)  that this Lease is in full force and effect, subject only to such
          modifications (if any) as may be set out therein;

     (b)  that Tenant is in possession of the Premises and paying Rent as
          provided in this Lease;

     (c)  the dates (if any) to which Rent is paid in advance;

     (d)  that there are not, to Tenant's knowledge, any uncured defaults on the
          part of Landlord hereunder, or specifying such defaults if any are
          claimed; and

     (e)  as to such other matters relating to Tenant, this Lease or the
          Premises, as any building purchaser or mortgage lender, actual or
          prospective, may reasonably request.

     Any such statement may be addressed to and relied upon by any such
     purchaser or lender. If Tenant fails to deliver such statement, Tenant
     shall be deemed to have acknowledged that this Lease is in full force and
     effect, without modification except as may be represented by Landlord, and
     that there are no uncured defaults in Landlord's performance.

18.03 AUTHORITIES OF ACTION

     Landlord may act in any matter provided for herein by its property manager
     and any other person who shall from time to time be designated in writing
     by Landlord to Tenant. Tenant acknowledges that if this Lease has been
     executed for and on behalf of, in the name of and with the authority of
     Landlord by the property manager then the covenants and agreements of
     Landlord are obligations of Landlord and its successors and assigns only
     and are not obligations personal to or enforceable against the property
     manager in its own right.

ARTICLE 19.00 DEFAULT

19.01 INTEREST AND COSTS

     Tenant shall pay to Landlord upon Landlord's written demand interest at a
     rate equal to the lesser of Prime plus five percent (5%) per annum and the
     maximum rate permitted by applicable law, on all Rent required to be paid
     hereunder from the due date for payment thereof until the same is fully
     paid and satisfied. Tenant shall indemnify Landlord against all costs and
     charges (including legal fees and disbursements on a solicitor and his



                                       19


     client basis) reasonably incurred in enforcing payment thereof, and in
     obtaining possession of the Premises after default of Tenant in accordance
     with Article 19.03 or upon expiration or other termination of the Term of
     this Lease, or in enforcing any covenant, proviso or agreement of Tenant
     herein contained. On each occurrence of default in the payment of Rent,
     Tenant shall pay to Landlord on demand in addition to the aforesaid
     interest a two hundred dollar ($200) administration fee.

19.02 RIGHT OF LANDLORD TO PERFORM COVENANTS

     All covenants and agreements to be performed by Tenant under this Lease
     shall be performed by Tenant without any abatement of Rent, except as
     otherwise provided in Article 16.00 of this Lease. If Tenant fails to
     perform any act on its part to be performed hereunder, and such failure
     continues for ten (10) days after notice thereof from Landlord, Landlord
     may (but shall not be obligated so to do) perform such act without
     releasing Tenant from any of its obligations relative thereto. All sums
     paid or costs reasonably incurred by Landlord in so performing such acts
     under this Article 19.02, together with interest thereon at the rate set
     out in Article 19.01 and an administration fee of fifteen percent (15%) of
     all such costs, from the date each such payment was made or each such cost
     was incurred by Landlord, shall be payable by Tenant to Landlord on demand.

19.03 EVENTS OF DEFAULT

     If and whenever:

     (a)  the Rent hereby reserved is not paid in full when due, and such
          default continues for seven (7) days after the due date;

     (b)  the Lease or any goods, chattels or equipment of Tenant is seized,
          taken or exigible in execution or in attachment or if a writ of
          execution or enforcement is issued against Tenant;

     (c)  Tenant becomes insolvent or commits an act of bankruptcy or becomes
          bankrupt or takes the benefit of any statute that may be in force for
          bankrupt or insolvent debtors or becomes involved in voluntary or
          involuntary dissolution, winding-up or liquidation proceedings or if a
          receiver is appointed for all or part of the business, property,
          affairs or revenues of Tenant, or if Tenant makes a proposal,
          arrangement or compromise with creditors;

     (d)  Tenant makes a bulk sale of its goods, moves or commences, attempts or
          threatens to move its goods, chattels and equipment out of the
          Premises (other than in the normal course of its business) or ceases
          to conduct business from the Premises;

     (e)  Tenant fails to observe, perform and keep each of the covenants,
          agreements, provisions, stipulations and conditions herein contained
          to be observed, performed and kept by Tenant (other than its covenant
          to pay Rent) and persists in such failure after ten (10) days' notice
          by Landlord requiring that Tenant remedy, correct, desist or comply
          (or if any such breach would reasonably require more than ten (10)
          days to rectify, unless Tenant commences rectification within the ten
          (10) day notice period and thereafter promptly, effectively and
          continuously proceeds with the rectification of the breach); or

     (f)  Tenant purports to effect a Transfer other than in compliance with the
          provisions of this Lease,

     then and in any of such events (each or any, being herein called an "Event
     of Default"), the full amount of the current month's and the next ensuing
     three months' installments of Rent shall immediately become due and payable
     and Landlord may immediately distrain for the same, together with any
     arrears then unpaid and at the option of Landlord, Landlord may terminate
     this Lease by giving notice thereof, and Landlord may without notice or any
     form of legal process whatsoever forthwith re-enter the Premises, anything
     contained in any statute or at law to the contrary notwithstanding, and may
     expel all persons and remove all property from the Premises and such
     property may be removed and sold or disposed of by Landlord as it deems
     advisable or may be stored in a public warehouse or elsewhere at the cost
     of Tenant without Landlord being considered guilty of trespass or
     conversion or becoming liable for any loss or damage which may be
     occasioned thereby, provided, however, that such termination shall be
     wholly without prejudice to the right of Landlord to recover arrears of
     Rent and damages for any Event of Default by Tenant hereunder. Should
     Landlord at any time terminate this Lease by reason of any such Event of
     Default, then, in addition to any other remedies it may have, it may
     recover from Tenant all damages it may incur as a result of such
     termination. If Landlord re-enters and terminates this Lease and Tenant
     fails to remove its property within ten (10) days after notice requiring it
     to do so is given, Tenant will be deemed to have abandoned its property and
     Landlord will be entitled to retain it or dispose of it for Landlord's
     benefit. Tenant expressly waives the provisions of Section 19(2) of the
     Commercial Tenancies Act (Ontario) and any successor or replacement
     legislation or any similar legislation of the province in which the
     Building is situated.

19.04 WAIVER OF EXEMPTION AND REDEMPTION

     Notwithstanding anything contained in any statute now or hereafter in force
     limiting or abrogating the right of distress, none of Tenant's goods,
     chattels or trade fixtures on the Premises at any time during the Term
     shall be exempt from levy by distress for Rent in arrears, and upon any
     claim being made for such exemption by Tenant or on distress being made by
     Landlord this agreement may be pleaded as an estoppel against Tenant in any
     action brought to test the right to the levying upon any such goods as are
     named as exempted in any such statute, Tenant hereby waiving all and every
     benefit that could or might have accrued to Tenant under and by virtue of
     any such statute but for this Lease. Tenant hereby also expressly waives
     any and all rights of redemption granted



                                       20


     by or under any present or future laws if Tenant is evicted or dispossessed
     for any cause. In exercising its right to distrain, Landlord, in addition
     to the rights reserved to it, shall have the right:

     (a)  to enter the Premises by force or otherwise without being liable for
          any prosecution therefor;

     (b)  to change the locks on the Premises without re-entering the Premises
          or terminating this Lease in order to prevent the removal of the
          property to be distrained; and

     (c)  to levy distress after sunset and before sunrise.

19.05 PAYMENTS

     Notwithstanding any termination of this Lease, Landlord shall be entitled
     to receive Rent and all Rental Taxes up to the time of termination plus
     accelerated Rent as herein provided and damages including but not limited
     to (i) damages for the loss of Rent suffered by reason of this Lease having
     been prematurely terminated; (ii) all costs reasonably incurred in
     reclaiming, repairing and re-leasing the Premises; and (iii) all legal fees
     and disbursements reasonably incurred in connection therewith, on a
     solicitor and his client basis.

19.06 REMEDIES CUMULATIVE

     No reference to or exercise of any specific right or remedy by Landlord
     shall prejudice or preclude Landlord from exercising or invoking any other
     remedy in respect thereof, whether allowed at law or in equity or expressly
     provided for herein. No such remedy shall be exclusive or dependent upon
     any other such remedy, but Landlord may from time to time exercise any one
     or more of such remedies independently or in combination.

19.07 COLLATERAL RIGHTS

     Tenant acknowledges that any right of first refusal, option to lease, right
     of first offer or other right to lease, and any exclusive use restriction
     or similar restriction granted to it under this Lease is collateral in
     nature and not fundamental to this Lease. The remedies of Tenant in
     connection with any breach of such rights are limited to an action in
     damages and will not entitle Tenant to treat any breach of such rights as a
     repudiation or fundamental breach of this Lease by Landlord.

ARTICLE 20.00 MISCELLANEOUS

20.01 RELATIONSHIP OF PARTIES

     Nothing contained in this Lease shall create any relationship between the
     parties hereto other than that of landlord and tenant, and it is
     acknowledged and agreed that Landlord does not in any way or for any
     purpose become a partner of Tenant in any business, or a joint venturer or
     a member of a joint or common enterprise with Tenant.

20.02 CONSENT NOT UNREASONABLY WITHHELD

     Except as otherwise specifically herein provided, whenever the consent or
     approval of Landlord or Tenant is required under the terms of this Lease,
     such consent or approval shall not be unreasonably withheld or delayed.
     Tenant's sole remedy if Landlord unreasonably withholds or delays its
     consent or approval if it is not entitled hereunder to do so shall be an
     action for specific performance, and Landlord shall not be liable for
     damages. If either party withholds any consent or approval, such party
     shall on written request deliver to the other party a written statement
     giving the reasons therefor.

20.03 NAME OF BUILDING

     Landlord shall have the right, from time to time, to change the name,
     number or other designation of the Building.

20.04 APPLICABLE LAW AND CONSTRUCTION

     This Lease shall be governed by and construed under the laws of Ontario,
     and its provisions shall be construed as a whole according to their common
     meaning and not strictly for or against Landlord or Tenant. The words
     Landlord and Tenant shall include the plural as well as the singular. If
     this Lease is executed by more than one person as tenant, Tenant's
     obligations hereunder shall be joint and several obligations. Time is of
     the essence of this Lease. The captions of the Articles are included for
     convenience only and shall have no effect upon the construction or
     interpretation of this Lease.

20.05 ENTIRE AGREEMENT

     Tenant acknowledges and agrees that it has not relied upon any statement,
     representation, agreement or warranty except such as are set out in this
     Lease. This Lease contains the entire agreement between the parties hereto
     with respect to the subject matter of this Lease save and except an
     indemnity agreement given by Corel Corporation, as indemnitor, to Oxford
     Properties Group Inc., Churchill Office Park Ltd. and OPGI Management
     Limited Partnership, with respect to an action commenced by David Lang Real
     Estate Ltd. in the Ontario Superior Court of Justice by statement of claim
     no. 04-CV-026325 issued in Ottawa on January 7, 2004 (herein called the
     "Indemnity Agreement").



                                       21


20.06 CROSS-DEFAULT

     A default by Tenant under the Indemnity Agreement shall constitute a
     default under this Lease, and Landlord shall be entitled to all remedies in
     respect thereof to which Landlord would be entitled pursuant to this Lease,
     mutatis mutandis.

20.07 REGISTRATION

     Neither the Tenant nor anyone on the Tenant's behalf or claiming under the
     Tenant (including any Transferee) shall register this Lease or any Transfer
     against the Lands. The Tenant may register a notice or caveat of this Lease
     provided that: (a) a copy of the Lease is not attached; (b) no financial
     terms are disclosed; (c) the Landlord gives its prior written approval to
     the notice or caveat; and (d) the Tenant pays the Landlord's reasonable
     costs on account of the matter. The Landlord may limit such registration to
     one or more parts of the Lands. Upon the expiration or other termination of
     the Term the Tenant shall immediately discharge or otherwise vacate any
     such notice or caveat. If any part of the Lands which in the opinion of the
     Landlord are surplus is transferred, the Tenant shall forthwith at the
     request of the Landlord discharge or otherwise vacate any such notice or
     caveat as it relates to such part. If any part of the Lands are made
     subject to any easement, right-of-way or similar right, the Tenant shall
     immediately at the request of the Landlord postpone its registered interest
     to such easement, right-of-way or similar right.

20.08 AMENDMENT OR MODIFICATION

     No amendment, modification, or supplement to this Lease shall be valid or
     binding unless set out in writing and executed by the parties hereto in the
     same manner as the execution of this Lease.

20.09 CONSTRUED COVENANTS AND SEVERABILITY

     All of the provisions of this Lease are to be construed as covenants and
     agreements as though the words importing such covenants and agreements were
     used in each separate Article hereof. Should any provision of this Lease be
     or become invalid, void, illegal or not enforceable, it shall be considered
     separate and severable from this Lease and the remaining provisions shall
     remain in force and be binding upon the parties hereto as though such
     provision had not been included.

20.10 PLANNING ACT

     It is an express condition of this Lease that the provisions of the
     Planning Act (Ontario) and amendments thereto be complied with, if
     necessary or any successor replacement legislation or any similar
     legislation of the Province in which the Building is situated.

20.11 NO IMPLIED SURRENDER OR WAIVER

     No provision of this Lease shall be deemed to have been waived by Landlord
     unless such waiver is in writing signed by Landlord. Landlord's waiver of a
     breach shall not prevent a subsequent act, which would have originally
     constituted a breach, from having all the force and effect of any original
     breach. Landlord's receipt of Rent with knowledge of a breach shall not be
     deemed a waiver of any breach. Landlord's failure to enforce against Tenant
     or any other tenant in the Building any of the Rules and Regulations shall
     not be deemed a waiver thereof. Nothing done by Landlord shall be deemed to
     be an acceptance of a surrender of the Premises, and no agreement to accept
     a surrender of the Premises shall be valid, unless in writing signed by
     Landlord. The delivery of keys by Tenant to any of Landlord's agents or
     employees shall not operate as a termination of this Lease or a surrender
     of the Premises. No payment by Tenant, or receipt by Landlord, of a lesser
     amount than the Rent due hereunder shall be deemed to be other than on
     account of the earliest stipulated Rent, nor shall any endorsement or
     statement on any cheque or any letter accompanying any cheque, or payment
     as Rent, be deemed an accord and satisfaction, and Landlord may accept such
     cheque or payment without prejudice to Landlord's right to recover the
     balance of such Rent or to pursue any other remedy available to Landlord.

20.12 APPLICATION OF PAYMENTS

     Regardless of any instruction from Tenant, or any written direction or any
     endorsement on any cheque, transmittal letter or any other form of
     communication purporting to direct otherwise, Landlord may apply any
     payment which it receives from Tenant against any amount owed to it by
     Tenant and if Landlord does not notify Tenant otherwise, each payment will
     be considered to be a payment on account of the Rent or Rental Taxes that
     have been unpaid the longest.

20.13 SUCCESSORS BOUND

     Except as otherwise specifically provided, the covenants, terms, and
     conditions contained in this Lease shall apply to and bind the heirs,
     successors, executors, administrators and assigns of the parties hereto as
     limited by this Lease.

20.14 LIABILITY OF LANDLORD

     In addition to the limitation on liability in Articles 16.05, 17.02 and
     elsewhere in this Lease, the liability of Landlord hereunder shall be
     limited to its interest in the Building from time to time. If there is more
     than one



                                       22


     person constituting Landlord, the liability of each said person hereunder
     shall be several and be limited to its percentage interest in the Building.

20.15 FORCE MAJEURE

     Notwithstanding any other provision of this Lease, if Landlord or Tenant
     is, in good faith, delayed or prevented from doing anything required by
     this Lease, because of a strike, labour trouble, inability to obtain
     materials or services, power failure, restrictive governmental laws or
     regulations, riots, insurrection, sabotage, rebellion, war, act of God, or
     any other similar reason, that is not the fault of the party delayed, the
     doing of the thing is excused for the period of the delay and the party
     delayed will do what was delayed or prevented within the appropriate period
     after the delay. The preceding sentence does not excuse Tenant from payment
     of Rent or Landlord from payment of amounts that it is required to pay, in
     the amounts and at the times specified in this Lease.

IN WITNESS OF THIS LEASE Landlord and Tenant have properly executed it as of the
date set out on page one.

                                        LANDLORD:
                                        CHURCHILL OFFICE PARK LTD.


                                        PER: /s/ GARY MARTIN
                                             -----------------------------------
                                        Name: GARY MARTIN
                                        Title: VICE PRESIDENT


                                        PER: /s/ NANCY L. BRENEVOST
                                             -----------------------------------
                                        Name: NANCY L. BRENEVOST
                                        Title: VICE PRESIDENT, LEGAL & ASSISTANT
                                               SECRETARY

                                        I/We have the authority to bind the
                                        Corporation.

                                        TENANT:
                                        COREL CORPORATION


                                        PER: /s/ RANDY EISENBACH
                                             -----------------------------------
                                        NAME: RANDY EISENBACH
                                        TITLE: Chief Operating Officer


                                        Per: /s/ DOUGLAS R. MACOLLAM
                                             -----------------------------------
                                        Name: DOUGLAS R. MACOLLAM
                                        Title: Chief Finance Officer

                                        I/We have the authority to bind the
                                        Corporation.



                                  SCHEDULE A-1

                                Corel Corporation
                      1600 Carling Avenue, Ottawa, Ontario
                              Suite No.: 100 & 200
                                   Premises A
                       Square Feet in the Premises: 33,022

                                FIRST FLOOR PLAN

                                SECOND FLOOR PLAN



                                  SCHEDULE A-2

                                Corel Corporation

                      1600 Carling Avenue, Ottawa, Ontario
                              Suite No.: 220 & 300
                                   Premises B
                       Square Feet in the Premises: 39,155

                                SECOND FLOOR PLAN

                                THIRD FLOOR PLAN



                                   SCHEDULE B

                              CHURCHILL OFFICE PARK

SECTION 1.00 WORDS AND PHRASES

1.01 DEFINITIONS

     In this Lease, including this Schedule:

     (a)  "Architect" means such firm of professional architects or engineers
          that Landlord may from time to time engage for the preparation of
          construction drawings for the Building or for general supervision of
          architectural and engineering aspects of it, and includes any
          consultant or consultants that Landlord, or the firm of professional
          architects or engineers Landlord engages, appoints, as long as the
          consultant or consultants act within the scope of their appointment
          and speciality.

     (b)  "Building" means those developments and improvements from time to time
          constructed on the Land and is the Building in which the Premises are
          located, and includes all portions of the development and improvements
          above or below grade.

     (c)  "Capital Tax" means the amount determined by multiplying each of the
          "Applicable Rates" by the Capital and totalling the products.
          "Capital" is the amount of capital which Landlord determines, without
          duplication, is invested from time to time by Landlord, the owner(s)
          of the Building and the Land, any company related to Landlord or the
          owners(s) within the meaning of the Income Tax Act (Canada), or all of
          them, in doing all or any of the following: acquiring, developing,
          expanding, redeveloping and improving the Building and the Land.
          Capital will not be increased by any financing or re-financing except
          to the extent that the proceeds are invested in doing all or any of
          the foregoing. "Applicable Rate" is the capital tax rate specified
          from time to time under any law which imposes a tax in respect of the
          capital of corporations and for greater certainty includes Large
          Corporations Tax levied under the Income Tax Act (Canada) as amended
          from time to time. Each Applicable Rate will be considered to be the
          rate that would apply if each of Landlord, the owners of the Building
          and the Land and the related companies referred to above were taxable
          corporations that employed no capital outside the Province in which
          the Land is located.

     (d)  "Common Areas" means at any time the total of those portions of the
          Land and Building designated by Landlord from time to time or not
          leased or designated for lease to tenants that Landlord provides for
          use in common by Landlord, Tenant, other tenants of the Building or
          their sublessees, agents, employees, customers, invitees or licensees,
          whether or not those areas are open to the general public or to all
          tenants of the Building, and includes, without limitation, the
          Delivery Facilities, the main entrance lobbies, passenger elevators,
          fire service and access corridors which are not exclusive to any
          tenant of the Building, the Parking Facilities, public washrooms and
          fixtures, chattels, systems, decor, signs, facilities or landscaping
          contained, maintained or used in connection with those areas, and are
          deemed to include city sidewalks abutting the Land and any pedestrian
          walkway system (either at, above or below grade), park or other
          facility open to the general public for which Landlord directly or
          indirectly is subject to obligations in its capacity as owner of the
          Land or Building, or both.

     (e)  "Delivery Facilities" means at any time those portions, if any, of the
          Common Areas in the Building or on the Land on or below grade
          designated by Landlord from time to time as facilities to be used for
          the purposes of loading, unloading, delivering, dispatching and
          holding of letters, packages, merchandise, goods and materials of any
          kind entering or leaving the Building and giving vehicular access to
          such portions of the Building, (if any).

     (f)  "Land" means those lands legally described as:

          In the City of Ottawa and being:

          FIRSTLY:

          Part of Lots 98, 99 and 100 and all of Lots 101, 102 and 103, the
          North Half of Lot 109 and all of Lots 110 to 116 (both inclusive),
          Plan 367 and the lane lying adjacent to Lots 100 to 120 (both
          inclusive), on Plan 367 and part of Lot Letter I, Concession A, R.F.
          (formerly Township of Nepean), designated as Parts 1, 2, 3, 4 and 5 on
          Plan 5R-8051.

          SECONDLY:

          Lots 104 to 108 (both inclusive) and the South Half of Lot 109 on Plan
          367, City of Ottawa.

          THIRDLY:

          Lots 117, 118 and 119 on Plan 367, City of Ottawa, save and except
          those lands described in instrument number 377194.



                                        2


          FOURTHLY:

          Part of the lande on Plan 367j, City of Ottawa, lying adjacent to Lots
          119 to 123 (both inclusive), designated as Part 1 on Plan 5R-8586.

          FIFTHLY:

          Part of Lots 120 to 123 (both inclusive) on Plan 367 and all that part
          of Lot Letter I, Concession A (R.F.) (formerly Township of Nepean),
          now in the City of Ottawa, designated as Part 2 on Plan 5R-9403.

     (g)  "Normal Business Hours" means, except as otherwise designated by
          Landlord from time to time, from 8:00 a.m. to 6:00 p.m., Monday
          through Friday, excluding days that are legal or statutory holidays in
          the municipality in which the Building is located.

     (h)  "Parking Facilities" means those portions, (if any), of the Common
          Areas on or below street level designated by Landlord from time to
          time for vehicular parking.

SECTION 2.00 DETERMINATION OF OPERATING COSTS AND TAXES

2.01 DEFINITIONS

     In this Lease:

     (a)  "Square Feet in the Building" means, as determined in accordance with
          the method of measurement set forth in Section 3.00, the aggregate of
          the gross leasable office areas of the Building calculated on a full
          floor tenancy basis in accordance with Section 3.01, and the retail
          areas calculated in accordance with Section 3.03. If, from time to
          time, there is a material change in the gross leasable space in the
          Building, (except as caused by a change in the ratio of single tenancy
          floors to multiple tenancy floors) "Square Feet in the Building"
          shall, from the effective date of the change until any further change,
          mean the number of square feet in the Building determined on
          completion of that change on the basis set out in Section 3.00.

     (b)  "Taxes" means the aggregate of all taxes, rates, charges, levies and
          assessments payable by Landlord accruing in respect of the calendar
          year in which each Fiscal Year begins and imposed by any competent
          taxing or assessing authority upon or in respect of the Building, the
          Land and all improvements therein or thereon. In determining Taxes,
          any corporate, income, excess profits and business tax imposed upon
          the income of Landlord and any other impost of a personal nature
          charged or levied against Landlord shall be excluded, except to the
          extent that it is levied in lieu of taxes, rates, charges, levies or
          assessments in respect of the Land or improvements thereon. Taxes
          shall in all instances be calculated on the basis of the Building
          being assessed as fully constructed, leased and occupied and taxed at
          the applicable occupied tax rates.

     (c)  "Tenant's Proportionate Share" means an amount determined by
          multiplying Operating Costs for the Fiscal Year by a fraction having
          as its numerator the Square Feet in the Premises and having as its
          denominator the Square Feet in the Building.

2.02 DETERMINATION OF OPERATING COSTS

     "Operating Costs" means the aggregate of all costs in a Fiscal Year,
     calculated as if the Building were one hundred percent (100%) occupied by
     tenants throughout such Fiscal Year, established in accordance with
     generally accepted accounting principles and this Lease, without
     duplication and confirmed in a certificate of Landlord signed by a
     responsible representative thereof (without personal liability) equal to
     the sum of all direct and indirect costs reasonably incurred or charged by
     or on behalf of Landlord, whether or not paid, on either an accrual or cash
     basis, or in part on both, as Landlord may determine on account of the
     ownership, administration, operation, management, supervision, maintenance,
     repair and replacement of the Building and for services provided generally
     to tenants thereof, including, without limitation:

     (a)  amounts paid to, or reasonably attributable to the salaries, severance
          and other remuneration of, all personnel (whether on or off-site and
          whether employed by Landlord or a management company) involved in the
          administration, operation, management, maintenance, repair,
          replacement, security, supervision, landscaping or cleaning of the
          Building, including reasonable fringe benefits and other employment
          costs;

     (b)  auditing, accounting, legal and other professional and consulting fees
          and disbursements incurred in connection with the maintenance and
          operation of the Building, including those incurred with respect to
          the preparation of the statements required under the provisions of the
          Lease and costs of minimizing, contesting, or appealing assessment of
          Taxes (whether or not successful);

     (c)  the costs of:

          (i)  operating, cleaning, maintaining, and repairing (major, minor or
               otherwise) the Building, and the systems, facilities and
               equipment serving the Building and of all replacements and
               modifications to the Building, and the systems, facilities and
               equipment serving the Building,



                                        3


               including without limitation those made by Landlord in order to
               comply with laws or regulations or required by Landlord's
               insurance carrier or resulting from normal wear and tear to the
               Building, and the systems, facilities and equipment serving the
               Building;

          (ii) providing, installing, modifying and upgrading energy
               conservation equipment and systems, life safety systems and
               telecommunication systems and equipment if any;

          (iii) making alterations, replacements or additions to the Building
               intended to reduce Operating Costs, improve the operation of the
               Building and the systems, facilities and equipment serving the
               Building, or maintain their operation; and

          (iv) replacing machinery or equipment which by its nature requires
               periodic replacement;

     all to the extent that such costs are fully chargeable in the Fiscal Year
     in which they are incurred in accordance with generally accepted accounting
     principles;

     (d)  depreciation or amortization of the costs referred to in part (c) as
          determined in accordance with generally accepted accounting
          principles, if such costs have not been charged fully in the Fiscal
          Year in which they are incurred;

     (e)  interest on the undepreciated or unamortized balance of the costs
          referred to in part (d);

     (f)  a management fee equal to the greater (in respect of each Fiscal Year)
          of four percent (4%) of the gross revenue received or receivable by
          Landlord in respect of the Building and the Land in such Fiscal Year
          (excluding revenues under this Section 2.02(f)) and fifteen percent
          (15%) of Operating Costs in such Fiscal Year (excluding costs under
          this Section 2.02(f), Taxes and interest), it being agreed and
          understood in this regard, however, that so long as the Building is
          managed by a third party manager, the amount to be included pursuant
          to this subsection 2.02(f) shall not exceed the actual amount payable
          by Landlord to such third party manager;

     (g)  Capital Taxes;

     (h)  Taxes (excluding the amounts payable by Tenant pursuant to Article
          2.08);

     (i)  all insurance maintained by Landlord in respect of the Building and
          Land and its operation, including insurance for loss of Rent, and the
          amounts of losses incurred or claims paid below insurance deductible
          amounts; and

     (j)  market rental on all areas utilized by the Landlord or its manager for
          the operation and management of the Building.

2.03 LIMITATION ON OPERATING COSTS

     In determining Operating Costs, the cost (if any) of the following shall be
     excluded, except as specifically provided in Section 2.02;

     (a)  major repairs that are required as a result of structural failure due
          to defective design or construction, but maintenance, to the
          foundation, columns, structural elements of sub-floors, bearing walls
          and roof (including the roof membrane or weather covering) of the
          Building shall be included as part of Operating Costs;

     (b)  interest on, and the capital retirement of debt;

     (c)  expenses relating to decorating or redecorating or renovating rentable
          space for tenants or occupants of the Building and costs relating to
          tenant inducements, allowances or similar expenses;

     (d)  all leasing expenses, real estate brokers fees, leasing commissions,
          legal fees, advertising, and space planners fees;

     (e)  changes made to accommodate specific requirements of specific tenants
          of the Building;

     (f)  cleaning costs, garbage removal and other costs which are peculiar to
          the premises of the retail tenants of the Building;

     (g)  repairs or maintenance done for the direct account of other tenants;
          and

     (h)  any increase in insurance premiums resulting from any special uses in
          the Building by other tenants.

2.04 ALLOCATION

     Where this Lease provides for the allocation, or the like, of costs or
     expenses or where an allocation of a part of some total or aggregate cost
     or expense is to be made to the Premises or to Tenant, any such allocation,
     or the like, is to be made by Landlord on a reasonable basis.



                                        4


2.05 WHEN SERVICES ARE NOT PROVIDED

     Notwithstanding Section 2.02, when and if any service which is normally
     provided by Landlord to some tenants of the Building:

     (a)  is not provided to Tenant under the specific terms of this Lease, in
          determining Operating Costs for the calculation of Tenant's
          Proportionate Share, Landlord shall exclude the costs of that service,
          except as any such costs relate to the Common Areas; or

     (b)  is not provided by Landlord in a significant portion of the Building,
          in determining Tenant's Proportionate Share, Landlord shall divide the
          cost of that service by the difference between the Square Feet in the
          Building and the number of square feet in the Building to which
          Landlord does not provide the service, both calculated on the basis
          set out in Section 3.00.

2.06 SHARED FACILITIES, SERVICES AND UTILITIES

     If any facilities, services or utilities:

     (a)  for the operation, administration, management, repair and maintenance
          of the Building are provided from another building or other buildings
          owned or operated by Landlord or its manager; or

     (b)  for the operation, administration, management, repair and maintenance
          of another building or other buildings owned or operated by Landlord
          or its manager are provided from the Building;

     the net costs, charges and expenses therefor shall, for the purposes of
     Section 2.02, be allocated by Landlord, acting reasonably, between the
     Building and other building or buildings on a reasonable basis.

2.07 PARTIAL FISCAL YEAR

     If the Term commences after the beginning of a Fiscal Year or terminates
     before the end of it, any amount payable by Tenant to Landlord under
     Article 4.07 shall be adjusted proportionately and accordingly.

2.08 TAXES

     If any portion of the Taxes are levied separately against the Premises by
     any competent taxing authority resulting in an allocation of a portion of
     the Taxes to the Tenant, whether payable by the Tenant or the Landlord,
     then the Tenant shall promptly pay such portion of the Taxes as directed by
     the Landlord together with any amounts payable under Section 2.02(h).

     Notwithstanding the inclusion of certain Taxes in Operating Costs, if any
     of the Taxes are not levied separately against the Premises, then Landlord
     may in its sole and unfettered discretion, but acting as would a reasonable
     and prudent landlord, determine, allocate and adjust Taxes as among tenants
     and occupants of the Building. Nothing herein shall compel or require
     Landlord to adjust, continue to adjust or to make the same determination or
     allocation of Taxes from year to year or in any Fiscal Year.

SECTION 3.00 DETERMINATION OF SQUARE FEET IN PREMISES

3.01 OFFICE SPACE - SINGLE TENANCY FLOORS

     The number of square feet of office space in the Premises on a
     single-tenancy floor in the Building (if any) shall be calculated from
     dimensioned Architect's drawings to the inside face of the glass in the
     permanent exterior building walls (whether or not the glass extends to the
     floor) or to the inside finish of those walls where they contain no glass.
     It shall include all space within exterior building walls, except for
     stairs (other than stair and duct shafts exclusively serving a tenant
     occupying offices on more than one floor), elevator shafts, flues, pipe
     shafts, vertical ducts, and other vertical risers which penetrate the floor
     and their enclosing walls. No deduction shall be made for washrooms,
     janitor rooms, air-conditioning rooms, fan rooms, or for electrical and
     telephone rooms, including vertical risers in these rooms within and
     servicing only the floor or servicing a single tenant on more than one
     floor, or for any other rooms, corridors or areas available to Tenant,
     columns located wholly or partially within the space, or for any enclosures
     around the periphery of the Building used for the purpose of heating,
     ventilating or cooling.

3.02 OFFICE SPACE - MULTIPLE TENANCY FLOORS

     The number of square feet of office space in the Premises on a multiple
     tenancy floor in the Building (if any), whether above or below grade, shall
     be calculated from dimensioned Architect's drawings to the inside face of
     permanent exterior building walls or to the inside face of the glass as
     described in Section 3.01 for a single tenancy floor, to the face of
     permanent interior walls and to the center line of demising partitions, and
     includes a portion of unallocated space on the same floor(s) as the
     Premises, as determined by Landlord, acting reasonably, from time to time.
     No deduction shall be made for any columns located wholly or partially
     within the rentable space, or for any enclosures around the periphery of
     the Building used for the purpose of cooling, heating or ventilating.



                                        5


3.03 RETAIL SPACE

     The number of square feet of retail space in the Premises (if any), whether
     above or below grade, shall be calculated from dimensioned Architect's
     drawings to the inside face of permanent exterior building walls, to the
     face of permanent interior walls, to the center line of demising
     partitions, and to the center line of a pre-determined lease line (usually
     referred to as the storefront line) in the case of retail space facing onto
     either an interior public mall or corridor or onto a public street or lane.
     No deduction shall be made for vestibules inside the permanent exterior
     building walls or inside the pre-determined lease line, or for any columns
     located wholly or partially within the rentable space.

SECTION 4.00 LOADING AND DELIVERY

4.01 The delivering, dispatching, holding, loading and unloading of letters,
     correspondence, packages, merchandise, goods and materials of any kind to
     the Premises or from them shall be done only at those times, and in such
     manner and through those elevators, entrances and corridors as Landlord
     designates from time to time.

4.02 Landlord accepts no liability and is hereby relieved and released by Tenant
     in respect of the operation of the Delivery Facilities, or the adequacy
     thereof, or of the acts or omissions of any person or persons engaged in
     the operation thereof, or in the acceptance, holding, handling, delivery or
     dispatch of any goods for or on behalf of Tenant, or for any claim of
     Tenant by reason of damage, loss, theft or acceptance, holding, handling,
     delivery or dispatch, or any error, negligence or delay therein.

4.03 Landlord may from time to time make and amend regulations for the orderly
     and efficient operation of the Delivery Facilities and may require the
     payment of reasonable charges for delivery services and demurrage provided
     by Landlord.

SECTION 5.00 ELECTRICITY AND SERVICES

5.01 Notwithstanding Article 6.02(c) of this Lease, Tenant shall be solely
     responsible for all direct and indirect costs relating to the provision of,
     or arising under the contract for the supply of, all electricity required
     in the Premises, whether or not separately metered. Tenant agrees that it
     shall not engage any person to provide utility services to the Premises.
     Electricity required for such heating, ventilation, and cooling of the
     Premises as are provided by Landlord under Article 6.02(a) of the Lease
     shall be assessed and paid as a part of Operating Costs.

5.02 If electricity is not separately metered to the Premises but is supplied to
     Tenant through a meter common to other tenants (or group of tenants) in the
     Building, then Landlord shall pay the cost of that electricity and (subject
     to Article 6.02 of this Lease), acting as would a reasonable and prudent
     landlord, apportion that cost among all tenants supplied through that
     common meter. Upon receipt of Landlord's statement of apportionment, Tenant
     shall reimburse Landlord for the amount for which Tenant is shown by the
     statement to be liable, provided that Landlord may elect at any time by
     notice to Tenant to estimate the amount for which Tenant will be liable and
     require Tenant to pay that amount in monthly instalments simultaneously
     with Tenant's payments of Rent, in which case the provisions of Article
     4.05 of this Lease shall apply. Tenant shall also pay to Landlord an
     administration fee equal to ten percent (10%) of the amounts payable by it
     under this Section.

SECTION 6.00 REDEVELOPMENT AND DEMOLITION

6.01 RELOCATION - COMMON AREAS

     Landlord may from time to time relocate or eliminate any Common Areas in
     whole or in part and may increase or reduce their dimensions provided that
     access by Tenant to the Premises from the elevator lobbies remains
     available.

6.02 INTENTIONALLY DELETED.

6.03 REDEVELOPMENT

     Landlord may construct additional improvements on the Land or on any
     adjacent land, may renovate the Building and may add storeys to the
     Building. Neither the construction or the demolition by either Landlord or
     any other person of any improvement on either the Land or any land adjacent
     thereto or within the Building nor the noise, dust, vibration or other
     inconvenience or the reduction of light, air or view occasioned by such
     construction or demolition shall affect the obligations of Tenant or result
     in any liability of Landlord, unless such noise, dust, vibration or other
     inconvenience occasioned by such construction or demolition renders any
     portion of the Premises unfit for occupancy in which case the Rent payable
     by Tenant hereunder will be abated during the period such part of the
     Premises is unfit for occupancy, such abatement to be in direct proportion
     to the space within the Premises so rendered unfit for occupancy.

6.04 DEMOLITION

     Notwithstanding anything contained in this Lease, Landlord may terminate
     the Lease at any time if it is Landlord's intention to demolish or
     substantially renovate the Building. Landlord will give Tenant not less
     than twelve (12) calendar months' notice of such termination.



                                        6


6.05 HAZARDOUS SUBSTANCES

     "HAZARDOUS SUBSTANCE" means and includes any pollutant or toxic substance
     under the Environmental Protection Act including any toxic refuse or waste
     material, pollutant, dangerous substance, industrial waste, hot liquid
     waste, toxic substance, or any liquid, substance or material which if
     ignited could be a pollutant or dangerous or toxic to human life including,
     without limitation, urea formaldehyde foam insulation, asbestos or
     polychlorinated biphenyl ("PCBs") and, further, any materials, substances,
     or condition which is prohibited, controlled or regulated by Environmental
     Law or is hazardous, toxic or polluting referred to and further described
     in Section 6.06.

6.06 TENANT'S RESPONSIBILITY REGARDING HAZARDOUS SUBSTANCES PROHIBITION RE:
     CERTAIN MATERIALS

     (a)  Notwithstanding any other provision of this Lease, Tenant agrees that
          it will not use or permit the use of any asbestos, polychlorinated
          biphenyls or radon in any construction of the Leasehold Improvements
          in the Premises or in any use of the Premises.

     (b)  Tenant covenants with Landlord and agrees to observe, perform and
          comply with the terms and provisions set forth below regarding
          Hazardous Substances.

6.07 TENANT'S RESTRICTIONS

     Tenant shall not cause or permit to occur to the Premises, Building, Land,
     or Common Areas:

     (a)  any violation of any Environmental Law now or hereafter enacted,
          related to environmental conditions on, under, or about the Premises,
          or arising from Tenant's use or occupancy of the Premises, including,
          but not limited to, soil and ground water conditions; or

     (b)  the use, generation, manufacture, refining, production, processing,
          storage and release (which includes, without limitation, releasing,
          spilling, leaking, pumping, pouring, emitting, emptying, discharging,
          depositing, injecting, escaping, leaching, disposing or dumping), of
          any Hazardous Substance on, under, or about the Premises, or the
          transportation to or from the Land or Building of any Hazardous
          Substance.

6.08 ENVIRONMENTAL CLEAN-UP

     Tenant shall, at Tenant's own expense, comply with all Environmental Laws
     regulating the use, generation, storage, transportation, or disposal of
     Hazardous Substances.

     (a)  Tenant shall conduct its business and require its officers, employees,
          agents, contractors and any subtenants or other persons claiming any
          interest in the Premises or right to occupy the Premises, through, by
          or under Tenant to conduct their businesses in compliance in all
          respects with Environmental Laws. Tenant will permit the Landlord to
          conduct inspections and appraisal of the Premises and of the books and
          records of Tenant relating to the Premises for the purposes of
          monitoring and ensuring compliance with Environmental Law.

     (b)  Tenant shall, at Tenant's own expense, make all submissions to,
          provide all information required by, and comply with all requirements
          of all Authorities.

     (c)  Tenant upon becoming aware of or suspecting the existence of Hazardous
          Substances upon or environmental damage to the Premises, Land or
          Building shall promptly notify Landlord of the same and upon receipt
          of any warning, notice, order or directive respecting Hazardous
          Substances on or environmental damage to the Premises will promptly
          provide a copy to Landlord.

     (d)  Should any Authority or any third party demand that a cleanup plan be
          prepared and that a clean-up be undertaken because of any deposit,
          spill, discharge, or other release of Hazardous Substances that occurs
          during the Term of this Lease, at or from the Premises, or which
          arises at any time from Tenant's use or occupancy of the Premises,
          then Tenant shall, at Tenant's own expense, prepare and submit the
          required plans and all related bonds and other financial assurances;
          and Tenant shall carry out all such cleanup plans.

     (e)  Tenant shall promptly provide all information regarding the use,
          generation, storage, transportation, or disposal of Hazardous
          Substances that is requested by Landlord. If Tenant fails to fulfill
          any duty imposed under this Section 6.08 within a reasonable time,
          Landlord may do so; and in such case, Tenant shall cooperate with
          Landlord in order to prepare all documents Landlord deems necessary or
          appropriate to determine the applicability of the Environmental Laws
          to the Premises and Tenant's use thereof, and for compliance
          therewith, and Tenant shall execute all documents promptly upon
          Landlord's request. No such action by Landlord and no attempt made by
          Landlord to mitigate damages under any Environmental Laws shall
          constitute a waiver of any of Tenant's obligations under this Section
          6.08.

6.09 AIR EMISSIONS COMPLIANCE - ONTARIO

     Without in any way limiting Tenant's obligation under this Lease to comply
     with all Environmental Laws, Tenant covenants and agrees as follows:



                                        7


     (a)  to comply with all Environmental Laws pertaining to air emissions
          including, without limitation, Ontario Regulation 127/01 "Airborne
          Contaminant Discharge - Monitoring and Reporting" as amended from time
          to time (the "Regulation");

     (b)  at Tenant's cost and expense to deliver to Landlord, two (2) copies of
          any and all reports Tenant is required to file with any Authority
          relating the reporting of air emissions, on the date that each such
          report is required to be delivered to such Authority; and

     (c)  on or before the Commencement Date, to designate an accredited
          environmental consultant approved by Landlord in writing, for the
          purpose of carrying out and ensuring compliance by Tenant at its sole
          cost, with all Environmental Laws, including without limitation, the
          Regulation, provided however that Landlord has the right at any time
          and from time to time to require Tenant to use Landlord's designated
          environmental consultant, at Tenant's sole cost and expense for such
          purposes.

6.10 TENANT'S INDEMNITY

     (a)  Tenant shall indemnify, defend, and hold harmless Landlord, the
          manager of the property, and their respective officers, directors,
          beneficiaries, shareholders, partners, agents, and employees from all
          fines, suits, procedures, claims, and actions of every kind, and all
          costs associated therewith (including attorney's and consultants'
          fees) arising out of or in any way connected with any use, generation,
          manufacture, refining, production, processing, storage and release
          (includes, without limitation, releasing, spilling, leaking, pumping,
          pouring, emitting, emptying, discharging, depositing, injecting,
          escaping, leaching, disposing or dumping), of Hazardous Substances
          that occurs during the Term of this Lease, at or from the Premises, or
          which arises at any time from Tenant's use or occupancy of the
          Premises, or from Tenant's failure to provide all information, make
          all submissions, and take all steps required by all Authorities under
          the laws and all other Environmental Laws.

     (b)  Tenant's obligations and liabilities under this Article 6.10 shall
          survive the expiration or sooner termination of this Lease, the
          re-entry or re-letting of the Premises by Landlord and the sale of the
          Land and shall remain in full force and effect for the benefit of
          Landlord, its successors and assigns.



                                   SCHEDULE C

                              RULES AND REGULATIONS

1.   SECURITY

     Landlord may from time to time adopt appropriate systems and procedures for
     the security or safety of the Building, any persons occupying, using or
     entering the same, or any equipment, finishings or contents thereof, and
     Tenant shall comply with Landlord's reasonable requirements relative
     thereto.

2.   LOCKS

     Landlord may from time to time install and change locking mechanisms on
     entrances to the Building, common areas thereof, and the Premises, and
     (unless 24 hour security is provided by the Building) shall provide to
     Tenant a reasonable number of keys and replacements therefor to meet the
     bona fide requirements of Tenant. In these rules "keys" include any device
     serving the same purpose. Tenant shall not add to or change existing
     locking mechanisms on any door in or to the Premises without Landlord's
     prior written consent. If with Landlord's consent, Tenant installs lock(s)
     incompatible with the Building master locking system:

     (a)  Landlord, without abatement of Rent, shall be relieved of any
          obligation under the Lease to provide any service to the affected
          areas which require access thereto,

     (b)  Tenant shall indemnify Landlord against any expense as a result of
          forced entry thereto which may be required in an emergency, and

     (c)  Tenant shall at the end of the Term and at Landlord's request remove
          such lock(s) at Tenant's expense.

3.   RETURN OF KEYS

     At the end of the Term, Tenant shall promptly return to Landlord all keys
     for the Building and Premises which are in possession of Tenant.

4.   WINDOWS

     Tenant shall observe Landlord's rules with respect to maintaining window
     coverings at all windows in the Premises so that the Building presents a
     uniform exterior appearance, and shall not install any window shades,
     screens, drapes, covers or other materials on or at any window in the
     Premises without Landlord's prior written consent. Tenant shall ensure that
     window coverings are closed on all windows in the Premises while they are
     exposed to the direct rays of the sun.

5.   REPAIR, MAINTENANCE, ALTERATIONS AND IMPROVEMENTS

     Tenant shall carry out Tenant's repair, maintenance, alterations and
     improvements in the Premises only during times agreed to in advance by
     Landlord and in a manner which will not interfere with the rights of other
     tenants in the Building.

6.   WATER FIXTURES

     Tenant shall not use water fixtures for any purpose for which they are not
     intended, nor shall water be wasted by tampering with such fixtures. Any
     cost or damage resulting from such misuse by Tenant shall be paid for by
     Tenant.

7.   PERSONAL USE OF PREMISES

     The Premises shall not be used or permitted to be used for residential,
     lodging or sleeping purposes or for the storage of personal effects or
     property not required for business purposes.

8.   HEAVY ARTICLES

     Tenant shall not place in or move about the Premises without Landlord's
     prior written consent any safe or other heavy article which in Landlord's
     reasonable opinion may damage the Building, and Landlord may designate the
     location of any heavy articles in the Premises.

9.   CARPET PADS

     In those portions of the Premises where carpet has been provided directly
     or indirectly by Landlord, Tenant shall at its own expense install and
     maintain pads to protect the carpet under all furniture having casters
     other than carpet casters.



                                       2


10.  BICYCLES, ANIMALS

     Tenant shall not bring any animals or birds into the Building, and shall
     not permit bicycles or other vehicles inside or on the sidewalks outside
     the Building except in areas designated from time to time by Landlord for
     such purposes.

11.  DELIVERIES

     Tenant shall ensure that deliveries of materials and supplies to the
     Premises are made through such entrances, elevators and corridors and at
     such times as may from time to time be designated by Landlord, and shall
     promptly pay or cause to be paid to Landlord the cost of repairing any
     damage in the Building caused by any person making such deliveries.

12.  FURNITURE AND EQUIPMENT

     Tenant shall ensure that furniture and equipment being moved into or out of
     the Premises is moved through such entrances, elevators and corridors and
     at such times as may from time to time be designated by Landlord, and by
     movers or a moving company approved by Landlord, and shall promptly pay or
     cause to be paid to Landlord the cost of repairing any damage in the
     Building caused thereby.

13.  SOLICITATIONS

     Landlord reserves the right to restrict or prohibit canvassing, soliciting
     or peddling in the Building.

14.  FOOD AND BEVERAGES

     Only persons approved from time to time by Landlord may prepare, solicit
     orders for, sell, serve or distribute foods or beverages in the Building,
     or use the elevators, corridors, stairwells, balconies or other common
     areas for any such purpose. Except with Landlord's prior written consent
     and in accordance with arrangements approved by Landlord, Tenant shall not
     permit on the Premises the use of equipment for dispensing food or
     beverages or for the preparation, solicitation of orders for, sale, serving
     or distribution of food or beverages. Notwithstanding the foregoing, by its
     execution of this Lease, Landlord consents to and approves of the three (3)
     drink vending machines, one (1) snack vending machine and seven (7) coffee
     machines located within the Premises as of the Commencement Date.

15.  REFUSE

     Tenant shall place all refuse in proper receptacles provided by Tenant at
     its expense in the Premises or in receptacles (if any) provided by Landlord
     for the Building, and shall keep sidewalks and driveways outside the
     Building, and lobbies, corridors, stairwells, ducts and shafts of the
     Building, free of all refuse.

16.  OBSTRUCTIONS

     Tenant shall not obstruct or place anything in or on the sidewalks or
     driveways outside the Building or in the lobbies, corridors, stairwells,
     balconies or other common areas of the Building, or use such locations for
     any purpose except access to and exit from the Premises without Landlord's
     prior written consent. Landlord may remove at Tenant's expense any such
     obstruction or thing (unauthorized by Landlord) without notice or
     obligation to Tenant.

17.  DANGEROUS OR IMMORAL ACTIVITIES

     Tenant shall not make any use of the Premises which involves the danger of
     injury to any person, nor shall the same be used for any immoral purpose.

18.  PROPER CONDUCT

     Tenant shall not conduct itself in any manner which is inconsistent with
     the character of the Building as a first quality building or which will
     impair the comfort and convenience of other tenants in the Building.

19.  EMPLOYEES, AGENTS AND INVITEES

     In these Rules and Regulations, Tenant includes the employees, agents,
     invitees and licensees of Tenant and others permitted by Tenant to use or
     occupy the Premises.

20.  ATM AND VENDING MACHINES

     The Tenant shall not have the right to install automatic teller machines
     (ATMs) or, subject to Rule 14, vending machines in the Premises.



                                   SCHEDULE D

                        SUPPLEMENTAL TERMS AND CONDITIONS

ARTICLE 21.01 REQUIRED CONDITIONS

For the purposes of this Lease, Tenant agrees that the following shall
constitute the required conditions (the "Required Conditions"):

(a)  execution and delivery of the Lease by Tenant and Landlord;

(b)  from the Commencement Date to the applicable date, there has not been more
     than one (1) Event of Default;

(c)  either COREL CORPORATION or a Special Transferee is in possession and
     occupancy of at least ninety percent (90%) of the Square Feet in the
     Premises and is carrying on business therefrom and has not sublet at any
     time more than ten percent (10%) of the Square Feet in the Premises or
     assigned this Lease other than to a Special Transferee;

(d)  except where the Transfer occurs as a result of trading in the shares of
     Tenant listed on a recognized stock exchange in Canada or the United
     States, there has not been a Transfer other than to a Special Transferee;
     and

(e)  no lien, (construction or otherwise) affects the Land, the Premises or the
     Building, and no claim under workplace safety and insurance legislation has
     been made in connection with anything done by or on behalf of Tenant.

ARTICLE 21.02 PARKING - PREMISES A

So long as subsection 21.01 (a) of the Required Conditions has been met,
Landlord shall make provision for and Tenant shall take 36 unreserved stalls in
the underground Parking Facility and 54 unreserved stalls in the above-ground
Parking Facility throughout the Term for Premises A. Tenant will sign Landlord's
standard form of parking agreement, amended to confirm that save and except for
Operating Costs and Taxes otherwise payable pursuant to this Lease, Tenant shall
not be required to pay any additional or further amount to Landlord for such
parking. Landlord confirms that its estimate of Operating Costs and Taxes for
the calendar year 2004 of $16.77 per square foot includes the Operating Costs
and Taxes with respect to the Parking Facility.

ARTICLE 21.03 PARKING - PREMISES B

So long as subsection 21.01(a) of the Required Conditions has been met, Landlord
shall make provision for and Tenant shall take 36 unreserved stalls in the
underground Parking Facility and 54 unreserved stalls in the above-ground
Parking Facility throughout the Term for Premises B. Tenant will sign Landlord's
standard form of parking agreement, amended to confirm that save and except for
Operating Costs and Taxes otherwise payable pursuant to this Lease, Tenant shall
not be required to pay any additional or further amount to Landlord for such
parking. Landlord confirms that its estimate of Operating Costs and Taxes for
the calendar year 2004 of $16.77 per square foot includes Operating Costs and
Taxes with respect to the Parking Facility.

ARTICLE 21.04 OPTION TO EXTEND - PREMISES A

Provided the Required Conditions have been met both on the date of exercise and
on expiration of the Term for Premises A, Tenant shall have the option to extend
the Term for Premises A for one (1) additional term of two (2) years upon giving
Landlord not more than eighteen (18) months and not less than nine (9) months
notice prior to the expiration of the Term for Premises A. The extension will be
on Landlord's then current standard form of lease extension agreement on the
same terms and conditions as are contained in this Lease, except that:

(a)  there shall be no further option to extend the Term for Premises A beyond
     this Option to Extend; and

(b)  the Annual Rent for Premises A payable during the extension term shall be
     the then current Market Rent.

ARTICLE 21.05 FIRST OPTION TO EXTEND - PREMISES B

Provided the Required Conditions have been met both on the date of exercise and
on expiration of the Term for Premises B, Tenant shall have the option to extend
the Term for Premises B for one (1) additional term of two (2) years upon giving
Landlord not more than eighteen (18) months and not less than nine (9) months
notice prior to the expiration of the Term for Premises B. The extension will be
on Landlord's then current standard form of lease extension agreement on the
same terms and conditions as are contained in this Lease, except that:

(a)  subject only to Article 21.06, there shall be no further option to extend
     the Term for Premises B beyond this First Option to Extend; and

(b)  the Annual Rent for Premises B payable during the first extension term
     shall be the then current Market Rent.

ARTICLE 21.06 SECOND OPTION TO EXTEND - PREMISES B

Provided the Required Conditions have been met both on the date of exercise and
on expiration of the then current Term for Premises B and provided Tenant has
exercised its options to extend both the Term for Premises B under Article 21.05



                                        2

and the Term for Premises A under Article 21.04 of this Lease, Tenant shall have
the option to extend the Term for Premises B for one (1) additional term of two
(2) years upon giving Landlord not more than eighteen (18) months and not less
than nine (9) months notice prior to the expiration of then current Term for
Premises B. The extension will be on Landlord's then current standard form of
lease extension agreement on the same terms and conditions as are contained in
this Lease, except that:

(a)  there shall be no further option to extend the Term for Premises B beyond
     this Second Option to Extend; and

(b)  the Annual Rent for Premises B payable during the second extension term
     shall be the then current Market Rent.

ARTICLE 21.07 MARKET RENT

"Market Rent" means the rate of Annual Rent per square foot per annum for
premises similar to Premises A or Premises B, as the case may be, located in the
Building and in buildings similar to the Building in a comparable location as
the Building for a term equal in duration to the extension term in question and
taking into account the parking rights granted pursuant to this Lease with
respect to Premises A or Premises B, as the case may be, pursuant to Articles
21.02 and 21.03, respectively.

1.   Notice of Market Rent

At least 90 days prior to the date on which the Market Rent is to first become
payable, Landlord shall give Tenant notice (the "Market Rent Notice") of its
determination thereof.

2.   Final Determination of Market Rent

(a)  Whether or not Tenant agrees with Landlord's determination of Market Rent,
     Tenant shall nevertheless pay to Landlord the amount set out in the Market
     Rent Notice from and after the date on which it first becomes payable and
     until the Market Rent has been finally determined. If Tenant does not so
     agree, Tenant shall give notice (the "Dispute Notice") to Landlord to that
     effect within 10 days of the giving of the Market Rent Notice. In the
     absence of a Dispute Notice, Tenant shall be deemed to have accepted
     Landlord's determination of Market Rent.

(b)  If Tenant has given Dispute Notice and Landlord and Tenant have not agreed
     in writing as to Market Rent within 10 days after the Dispute Notice is
     given, Market Rent shall be determined as follows:

     (i)  Within fifteen (15) days of the date on which Tenant has given its
          Dispute Notice, Landlord and Tenant shall each appoint an independent
          and qualified person to determine the Market Rent and by notice advise
          the other of the identity of its appointee;

     (ii) If either Landlord or Tenant, having given notice of its appointee,
          considers the appointee of the other to be either not independent or
          not qualified, it may by notice to the other given within seven (7)
          days of the date on which the notice of the appointment is given
          protest such appointment with reasons;

     (iii) If within ten (10) days of the date on which the notice of protest is
          given the parties cannot agree as to an alternate appointee, the party
          whose appointee is the subject of the protest shall within the next
          10-day period either give notice to the other of a new appointee or
          bring an action for a judicial determination as to whether its
          original appointee was either independent or qualified or both,
          according to the particulars of the protest;

     (iv) If such party elects to make a new appointment, the right of the other
          party to protest as aforesaid shall apply with respect to the new
          appointee; if it is judicially determined that an appointee was either
          not independent or unqualified, the party whose appointee was
          ineligible shall within ten (10) days of such determination give
          notice to the other of a new appointee whereupon the preceding
          provisions of this section shall again apply;

     (v)  If within the 15-day period set out in the subparagraph (i) of this
          subsection either Landlord or Tenant fails to make an appointment and
          so to identify its appointee, the Market Rent shall be determined by
          the appointee of the party which has made an appointment and so given
          notice thereof;

     (vi) Within thirty (30) days of the date on which the identity of either
          the single appointee or the two appointees has been ascertained,
          either the appointee or appointees, as the case may be, shall
          determine the Market Rent and each party, or the party making the only
          appointment, as the case may be, shall give notice of the
          determination made by its appointee to the other;

     (vii) If the appointee of either party fails to do so, or if either party
          fails to give notice to the other party of the determination of Market
          Rent within the time limit as aforesaid, the determination of Market
          Rent made by the appointee of the other party shall govern;

     (viii) If the determinations of Market Rent by the two appointees differs
          by less than 10%, then Market Rent shall be the average of the two
          determinations;

     (ix) If the determinations of Market Rent by the two appointees differ by
          10% or more, then the two appointees will select a third independent
          and qualified person who will choose one or other of the
          determinations made as aforesaid and the rate so chosen will be Market
          Rent;


                                        3


     (x)  If the two appointees cannot agree on the selection of the third
          person, then the provisions of the Arbitrations Act shall apply for
          the appointment of a single arbitrator. The sole function of the
          person so appointed shall be to choose one or the other of the
          determinations made as aforesaid.

(c)  If Market Rent as determined pursuant to subsection (b) is greater than
     Tenant has paid in accordance with the Market Rent Notice, Tenant shall
     immediately pay to Landlord the difference and shall thereafter make the
     payments of minimum (basic) rent equal to the Market Rent as so determined.
     If the amount of Market Rent is less than that stipulated in the Market
     Rent Notice, Landlord shall immediately refund to Tenant any overpayment
     made by Tenant.

(d)  If Market Rent as determined pursuant to subsection (b) is less than 90% of
     the amount stipulated in the Market Rent Notice, Landlord shall pay the
     fees of all the appraisers and, if applicable, the arbitrator and if Market
     Rent as so determined is 90% or more of the amount so stipulated, Tenant
     shall pay all such fees.

ARTICLE 21.08 EXTERIOR SIGNAGE

So long as subsections 21.01 (a), (c) and (e) of the Required Conditions are
met, Tenant shall have the non-exclusive right to affix the following corporate
identification signage on the exterior of the Building:

(i)  one (1) channel sign on the east face of the Building, such signage not to
     exceed six (6) feet in height or twenty-four (24) feet in width; and

(ii) one (1) channel sign on the west face of the Building, such signage not to
     exceed six (6) feet in height or twenty-four (24) feet in width;

in each case provided that:

(a)  Tenant shall be solely responsible for the cost of installing such signage
     and the supervision of such installation;

(b)  the installation of such signage signage shall constitute Tenant's Work and
     shall be carried out in compliance with Section 7.03 of this Lease, and all
     laws, statutory requirements and regulations including without limitation,
     the by-laws of the City of Ottawa and all other applicable by-laws and
     regulations;

(c)  Tenant shall be solely responsible for the cost of maintaining such signage
     and shall maintain such signage in good order and condition in manner
     befitting a first-class building, and otherwise in compliance with Article
     7.00 of this Lease;

(d)  The corporate name on such signage shall not be changed from Corel without
     Landlord's prior written consent, acting as would a reasonable and prudent
     landlord, (or any replacement name consented to by Landlord);

(e)  at the expiration or other termination of this Lease, such signage shall be
     removed at Tenant's sole cost and expense and any damage caused by the
     installation, placement or removal of such signage shall be immediately
     repaired and Tenant shall pay the cost of such repairs immediately upon
     demand; it being agreed and understood in this regard that Landlord may,
     in. its sole and absolute discretion, elect to carry out such removal and
     repairs, in which case Tenant shall promptly reimburse Landlord all costs
     reasonably incurred by Landlord in this regard plus ten percent (10%) of
     such costs on account of Landlord's overhead; and

(f)  the Tenant shall indemnify the Landlord and save it harmless from all costs
     and expenses incurred by the Landlord in relation to the installation,
     removal, operation, maintenance and repair of such signage and for any
     damage caused by the removal of same.

Within thirty (30) days after the execution of this Lease by each of the
parties, Tenant shall remove its signage from the north face of the Building in
accordance with subsection 21.08(e), mutatis mutandis. If Tenant fails to
exercise its option to extend the Term for Premises B pursuant to either
Articles 21.05 or 21.06, Tenant shall before the expiration of the Term for
Premises B also remove all of its signage from the exterior of the Building in
accordance with subsection 21.08(e), mutatis mutandis.

Landlord hereby acknowledge and confirms it approves Tenant's exterior signage
on both the east face and west face of the Building as they exist as of the
Commencement Date.

Notwithstanding the foregoing, if at any time during the Term or any extension
thereof:

     (A)  Landlord leases other premises in the Building comprising more than
          seventy thousand (70,000) square feet (measured in accordance with
          Section 3.00 of Schedule B, mutatis mutandis), Tenant shall remove its
          signage from the east face of the Building, or if such signage has
          already been removed pursuant to this subsection 21.08(B), Tenant
          shall remove its remaining signage from the west face of the Building;
          and

     (B)  the Square Feet in the Premises is less than thirty-two thousand
          (32,000) square feet and Landlord leases other premises in the
          Building comprising more than thirty-two thousand (32,000) square feet
          (measured in accordance with Section 3.00 of Schedule B, mutatis
          mutandis), Tenant shall remove its signage from the east face of the
          Building, or if such signage has already been removed pursuant to
          either subsections 21.08(A) or (B), Tenant shall remove its remaining
          signage from the west face of the Building.



                                       4


In each such case, Tenant shall remove such signage within thirty (30) days
following notice to Tenant to this effect. Such removal shall be carried out in
accordance with subsection 21.08(e), mutatis mutandis, and Tenant acknowledges
and agrees that following the expiration of such thirty (30) day notice period,
Tenant's right to affix such signage is terminated.

ARTICLE 21.09 INITIAL LETTER OF CREDIT

In order to induce Landlord to enter into this Lease, Tenant has agreed, and
shall, obtain and deliver to Landlord not later than March 31, 2004, an
irrevocable unconditional transferable standby letter of credit issued by a
Schedule I Canadian chartered bank in favour of Landlord in the amount of One
Million Dollars ($l,000,000CDN) (the "INITIAL LETTER OF CREDIT") for a period
expiring December 31, 2004. Such Initial Letter of Credit shall be substantially
in the form attached hereto as Schedule E, and shall be, and shall state that it
is, transferable by Landlord to any assignee of this Lease, or Landlord's
successor in interest, which transfer shall be valid and effective upon notice
thereof to the issuing bank.

Provided Tenant is not in monetary default and further provided Tenant
demonstrates to Landlord by December 21, 2004 that Tenant's rolling 12-month
EBITDA (as defined below) exceeds $3,000,000CDN as of November 30, 2004,
Landlord shall immediately return the Initial Letter of Credit to Tenant
together with an irrevocable direction to the issuing bank surrendering the
Initial Letter of Credit for cancellation.

If, however, by December 21, 2004, Tenant fails to demonstrate to Landlord that
its rolling 12-month EBITDA exceeds $3,000,000CDN as of November 30, 2004,
Tenant shall deliver to Landlord a replacement letter of credit (on the same
terms and conditions) for a further forty-five (45) day period in the amount of
$1,000,000CDN (each of which replacement letters of credit is herein called the
"REPLACEMENT LETTER OF CREDIT") at least seven (7) Business Days prior to the
expiration of the Initial Letter of Credit, failing which Landlord shall have
the right without further notice to Tenant and without prejudice to any and all
of its rights herein (which are hereby reserved) to cash or otherwise call upon
the entire Initial Letter of Credit or Replacement Letter of Credit, as the case
may be, as satisfaction for the failure to deliver the further Replacement
Letter of Credit in the time and in the manner as aforesaid. Thereafter, Tenant
shall deliver to Landlord a Replacement Letter of Credit at least seven (7)
Business Days prior to the expiration of the then expiring Replacement Letter of
Credit unless, prior to the end of each such consecutive one (1) month period,
Tenant is not in monetary default and demonstrates to Landlord that its rolling
12-month EBITDA then exceeds $3,000,000CDN. In no event, however, shall the term
of the Replacement Letter of Credit be required to extend beyond sixty (60) days
following the expiration of the Term, as extended.

For the purposes of this Article 21.09, "EBITDA" means earnings before interest,
taxes, depreciation and amortization as defined by a certain loan and security
agreement dated August 27, 2003, as amended from time to time, between Corel
Inc. and Wells Fargo Foothill, Inc.

For the purposes of the balance of this Article, the Initial Letter of Credit
and Replacement Letter of Credit shall be collectively called the "LETTER OF
CREDIT". The Letter of Credit shall be, and shall state that it is payable to
Landlord upon delivery to the issuing bank of a certificate of Landlord
confirming that it is entitled to draw down on the Letter of Credit pursuant to
the Lease. The obligations of the issuing bank under the Letter of Credit shall
be absolute and unconditional and shall be in no way released, discharged or
reduced and the rights of Landlord under the Letter of Credit shall be in no way
prejudiced or impaired by any neglect, delay or forbearance of Landlord in
demanding, requiring or enforcing performance by Tenant or any other obligated
person of any of its obligations under this Lease or by granting any extensions
of time for performance, or by waiving any performance (except as to the
particular performance which has been waived), or by permitting or consenting to
any Transfer or by the bankruptcy, receivership, insolvency or any other
creditor's proceedings of or against Tenant, or by the winding-up or dissolution
of Tenant, or any other event or occurrence which would have the effect at law
of terminating the existence of obligations of Tenant prior to the expiration of
this Lease or by any agreements or other dealings between Landlord and Tenant
having the effect of amending or altering this Lease or the obligations of
Tenant hereunder or by any want of notice by Landlord to the issuing bank of any
default of Tenant or by any matter, thing, act or omission of Landlord
whatsoever.

Landlord, at its option, may in addition to any and all other rights and
remedies provided for in this Lease or by law, appropriate and draw upon the
Letter of Credit:

(a)  in full in the event of the bankruptcy, insolvency, dissolution, winding-up
     or other liquidation of Tenant;

(b)  if the Rent is overdue and unpaid, so much thereof as is necessary to
     compensate Landlord for loss or damage sustained or suffered by Landlord
     due to such breach on the part of Tenant, and in which case Tenant shall,
     within ten (10) days after demand by Landlord, remit to Landlord a new
     Letter of Credit in an amount sufficient to restore the total amount of the
     Letter of Credit to the original sum deposited; and

(c)  in full if Tenant fails to deliver to Landlord a Replacement Letter of
     Credit as provided above;

it being agreed and understood in this regard that Landlord agrees not to draw
upon the Letter of Credit for a non-Rent default save and except as otherwise
provided in subsections 21.09(a) and (c).

If Tenant pays all of the Rent payable by Tenant to Landlord, the Letter of
Credit shall be returned in full to Tenant without interest within sixty (60)
days following the expiration of the Term, as extended.

ARTICLE 21.10 FURTHER LETTER OF CREDIT

If at any time during the Term of this Lease, Tenant proposes, intends, is
compelled, demanded or otherwise takes any steps to transfer, convey or
otherwise deal in respect of all or part of the corporate shares of Tenant, that
results in a change in the effective voting control of Tenant, or if Tenant
proposes, intends, is compelled, demanded or otherwise



                                       5


takes any steps to sell, transfer or otherwise convey any or all of Tenant's
WordPerfect or Corel Draw (such product lines being herein jointly and severally
called the "MAJOR PRODUCTS", and each such event being called an "IMPEDING
TRIGGERING TRANSFER"), Tenant shall immediately give notice to Landlord of the
Impending Triggering Transfer and make arrangements satisfactory to Landlord,
acting as would a reasonable and prudent landlord, to ensure the issuance in
favour of Landlord of an irrevocable unconditional transferable standby letter
of credit by a Schedule I Canadian chartered bank coincident with the transfer,
conveyance or sale of such corporate shares of Tenant or an affiliate of Tenant
resulting in a change in the effective voting control of Tenant, or the sale,
transfer or conveyance of any or all of the Major Products (each such event
being herein called a "TRIGGERING TRANSFER").

Coincident with a Triggering Transfer, Tenant shall obtain and deliver to
Landlord an irrevocable unconditional transferable standby letter of credit
issued by a Schedule I Canadian chartered bank in favour of Landlord in an
amount equal to the lesser of:

(a)  $l,000,000CDN; and

(b)  the then outstanding balance of the Original Deferred Rent (as defined
     below) determined in accordance with and by reference to the amortization
     schedule attached as Schedule F hereto and assuming the Rent has been paid
     to and including such date. If Tenant has not paid the Rent to and
     including such date, the then outstanding balance of the Original Deferred
     Rent shall be calculated by reference to the number of monthly installments
     of Annual Rent paid to such date;

(the "FURTHER LETTER OF CREDIT") for a period expiring February 28, 2009, being
two (2) months following the expiry of the initial Term for Premises A. Such
Further Letter of Credit shall be substantially in the form attached hereto as
Schedule G, and shall be, and shall state that it is, transferable by Landlord
to any assignee of this Lease or Landlord's successor in interest, which
transfer shall be valid and effective upon notice thereof to the issuing bank.

For the purposes of this Article 21.10 "ORIGINAL DEFERRED RENT" means Three
Million, Two Hundred and Sixty-Three Thousand, Eight Hundred and Seven Dollars
($3,263,807).

The Further Letter of Credit shall be and state that it shall be automatically
renewed each year during the Term, as extended, unless the issuing bank provides
to Landlord with sixty (60) days prior written notice that it elects not to
consider the Further Letter of Credit renewed, as which time Landlord shall have
the right, without further notice to Tenant, and without prejudice to any and
all of its rights herein (which are hereby reserved) to cash or otherwise call
upon the entire amount of the Further Letter of Credit and apply it in the
manner set out in this Article 21.10.

Provided Tenant is not on the relevant Reduction Date (as hereinafter defined)
in monetary default and is not then bankrupt, dissolved, wound-up or otherwise
liquidated or insolvent, from and after September 1, 2007 the value of the
Further Letter of Credit shall be reduced on the first day of each month during
the term of the Further Letter of Credit (each of which are herein called the
"REDUCTION DATE") by Sixty Thousand Dollars ($60,000CDN).

The Further Letter of Credit shall be, and shall state that it is payable to
Landlord upon delivery to the issuing bank of a certificate of Landlord
confirming that it is entitled to draw down on the Further Letter of Credit
pursuant to the Lease. The obligations of the issuing bank under the Further
Letter of Credit shall be absolute and unconditional and shall be in no way
released, discharged or reduced and the rights of Landlord under the Further
Letter of Credit shall be in no way prejudiced or impaired by any neglect, delay
or forbearance of Landlord in demanding, requiring or enforcing performance by
Tenant or any other obligated person of any of its obligations under this Lease
or by granting any extensions of time for performance, or by waiving any
performance (except as to the particular performance which has been waived), or
by permitting or consenting to any Transfer or by the bankruptcy, receivership,
insolvency or any other creditor's proceedings of or against Tenant, or by the
winding-up or dissolution of Tenant, or any other event or occurrence which
would have the effect at law of terminating the existence of obligations of
Tenant prior to the expiration of this Lease or by any agreements or other
dealings between Landlord and Tenant having the effect of amending or altering
this Lease or the obligations of Tenant hereunder or by any want of notice by
Landlord to the issuing bank of any default of Tenant or by any matter, thing,
act or omission of Landlord whatsoever.

Landlord, at its option, may, in addition to any and all other rights and
remedies provided for in this Lease or by law, appropriate and draw upon the
Further Letter of Credit:

(a)  in full in the event of the bankruptcy, insolvency, dissolution, winding-up
     or other liquidation of Tenant; and

(b)  if the Rent is overdue and unpaid, so much thereof as is necessary to
     compensate Landlord for loss or damage sustained or suffered by Landlord
     due to such breach on the part of Tenant, and in which case Tenant shall,
     within ten (10) days after demand by Landlord, remit to Landlord a new
     Further Letter of Credit in an amount sufficient to restore the total
     amount of the Further Letter of Credit to the original sum deposited as
     reduced on the Reduction Dates, if any, as provided above;

it being agreed and understood in this regard that Landlord agrees not to draw
upon the Further Letter of Credit for a non-Rent default save and except as
otherwise provided in subsection 21.10(a).



                                   SCHEDULE E

                        FORM OF LETTER OF CREDIT FOR THE
                            INITIAL LETTER OF CREDIT

                      IRREVOCABLE STANDBY LETTER OF CREDIT

DATE:     MARCH _, 2004

AMOUNT:   $1,000,000 CAD

CUSTOMER: Corel Corporation

TO:       CHURCHILL OFFICE PARK LTD. (THE "LANDLORD")

We, Royal Bank of Canada, hereby issue in your favour our Irrevocable Standby
Letter of Credit for the above-mentioned amount.

This Standby Letter of Credit is available for payment up to the amount of
$1,000,000 which may be drawn on by you at any time and from time to time upon
written demand for payment made upon us by you, which demand we shall honour
without enquiring whether you have a right as between yourself and our Customer
to make such demand and without recognizing any claim of our Customer.

Provided, however, that you are to deliver to us at such time as a written
demand for payment is made upon us a certificate purported to be signed by an
appropriate officer of the Landlord confirming that pursuant to the terms of the
lease dated as of _________ between the Customer, as tenant and the Landlord
(the "Lease"), the Landlord is entitled to draw down on this Letter of Credit.

The original Standby Letter of Credit (together with any amendments thereto)
must accompany the demand for endorsement of any payment thereon.

Partial drawings are permitted. The amount of this Letter of Credit shall be
reduced from time to time as advised by notice in writing given to this branch
from time to time by you.

This Letter of Credit shall expire with the close of business on December 31,
2004.

This Standby Letter of Credit is, transferable by the Landlord to any assignee
of the Lease, or any purchaser of the property, from the Landlord, which
transfer shall be valid and effective upon notice thereof to the issuer of the
letter of credit.

The rights of the Landlord hereunder in respect of the letter of credit shall
continue in full force and effect and shall not be waived, released, discharged,
impaired or affected by reason of the release or discharge of the Tenant in any
receivership, bankruptcy, insolvency, winding up or other creditor's
proceedings, including, without limitation, any proceedings under the Bankruptcy
and Insolvency Act (Canada) or the Companies' Creditors Arrangement Act
(Canada), or the surrender, disclaimer, repudiation or termination of this Lease
and any such proceedings and shall continue with respect to the periods prior
thereto and thereafter as if the Lease had not been surrendered, disclaimed,
repudiated or terminated.

This Standby Letter of Credit is subject to the "Uniform Customs and Practice
for Documentary Credits (1993 Revision) International Chamber of Commerce,
(Publication 500)" and engages us in accordance with the terms thereof.


                                        Per:                                 c/s
                                             --------------------------------

                                        I have the authority to bind the
                                        Corporation.



                                   SCHEDULE F

                          AMORTIZATION SCHEDULE FOR THE
                             ORIGINAL DEFFERED RENT


COREL CORPORATION
Amortization Schedule for Deferred Rent:
Periods (mths) 60
Original Amount $3,263,807.00



                     UN-AMORTIZED
PERIOD     DATE        BALANCE
- ------   --------   -------------
              
   1     1-Jan-04   $3,195,033.86
   2     1-Feb_04   $3,152,885.99
   3     1-Mar-04   $3,110,386.90
   4     1-Apr-04   $3,067,533.65
   5     1-May-04   $3,024,323.28
   6     1-Jun-04   $2,980,752.84
   7     1-Jul-04   $2,936,819.30
   8     1-Aug-04   $2,892,519.65
   9     1-Sep-04   $2,847,850.84
  10     1-Oct-04   $2,802,809.78
  11     1-Nov-04   $2,757,393.39
  12     1-Dec-04   $2,711,598.52
  13     1-Jan-05   $2,665,422.03
  14     1-Feb_05   $2,618,860.74
  15     1-Mar-05   $2,571,911.43
  16     1-Apr-05   $2,524,670.89
  17     1-May-05   $2,476,835.83
  18     1-Jun-05   $2,428,702.99
  19     1-Jul-05   $2,380,169.04
  20     1-Aug-05   $2,331,230.63
  21     1-Sep-05   $2,281,884.41
  22     1-Oct-05   $2,232,126.97
  23     1-Nov-05   $2,181,954.89
  24     1-Dec-05   $2,131,364.70
  25     1-Jan-06   $2,080,352.93
  26     1-Feb_06   $2,028,916.06
  27     1-Mar-06   $1,977,050.55
  28     1-Apr-06   $1,924,752.83
  29     1-May-06   $1,872,019.29
  30     1-Jun-06   $1,818,846.31
  31     1-Jul-06   $1,765,230.22
  32     1-Aug-06   $1,711,167.32
  33     1-Sep-06   $1,656,653.91
  34     1-Oct-06   $1,601,685.21
  35     1-Nov-06   $1,546,260.45
  36     1-Dec-06   $1,490,372.81
  37     1-Jan-07   $1,434,019.44
  38     1-Feb_07   $1,377,196.46
  39     1-Mar-07   $1,319,899.96
  40     1-Apr-07   $1,262,125.98
  41     1-May-07   $1,203,870.55
  42     1-Jun-07   $1,145,129.66
  43     1-Jul-07   $1,085,899.27
  44     1-Aug-07   $1,026,175.28
  45     1-Sep-07   $  965,953.60
  46     1-Oct-07   $  905,230.07
  47     1-Nov-07   $  844,000.51
  48     1-Dec-07   $  782,260.70
  49     1-Jan-08   $  720,006.40
  50     1-Feb_08   $  657,233.31
  51     1-Mar-08   $  593,937.11
  52     1-Apr-08   $  530,113.44
  53     1-May-08   $  465,757.91
  54     1-Jun-08   $  400,866.08
  55     1-Jul-08   $  335,433.49
  56     1-Aug-08   $  269,455.62
  57     1-Sep-08   $  202,927.94
  58     1-Oct-08   $  135,845.87
  59     1-Nov-08   $   68,204.77
  60     1-Dec-08   $        0.00




                                   SCHEDULE G

                        FORM OF LETTER OF CREDIT FOR THE
                            FURTHER LETTER OF CREDIT

                      IRREVOCABLE STANDBY LETTER OF CREDIT

DATE: _________

AMOUNT: $__________

CUSTOMER: COREL CORPORATION

TO: (THE "BENEFICIARY")

We, ___________________________________, hereby issue in your favour our
Irrevocable Standby Letter of Credit for the above-mentioned amount.

This Standby Letter of Credit is available for payment up to the amount of
$_________________ which may be drawn on by you at any time and from time to
time upon written demand for payment made upon us by you, which demand we shall
honour without enquiring whether you have a right as between yourself and our
Customer to make such demand and without recognizing any claim of our Customer.

Provided, however, that you are to deliver to us at such time as a written
demand for payment is made upon us a certificate purported to be signed by an
appropriate officer of the Beneficiary confirming that pursuant to the terms of
a certain lease dated December 9, 2003 between the Beneficiary and the Customer
for premises at 1600 Carling Avenue in the City of Ottawa, Ontario (the
"Lease"), the Beneficiary is entitled to draw down on this Letter of Credit.

The original Standby Letter of Credit (together with any amendments thereto)
must accompany the demand for endorsement of any payment thereon.

Partial drawings are permitted.

From and after September 8, 2007 the amount of this Letter of Credit shall be
reduced $60,000CDN on the eighth day of each month commencing September 8, 2007.

This Letter of Credit shall expire with the close of business
on _____________________, provided that it is a condition of this Letter of
Credit that it shall be deemed to be automatically extended annually without
amendment for additional periods of one (1) year from the present or any future
expiration date hereof until February 28, 2009, unless sixty (60) days prior to
such date we notify you in writing by registered mail that we elect not to
consider this Letter of Credit renewed for any such additional period. Upon
receipt by you of such notice, you may draw by means of your demand accompanied
by your written certification that the amount drawn down will be retained and
used by you to meet the obligations incurred or to be incurred in connection
with the Lease.

This Standby Letter of Credit is transferable by the Landlord to any assignee of
the Lease, or any purchaser of the property, from the Landlord, which transfer
shall be valid and effective upon notice thereof to the issuer of the letter of
credit.

The rights of the Landlord hereunder in respect of the letter of credit shall
continue in full force and effect and shall not be waived, released, discharged,
impaired or affected by reason of the release or discharge of the Tenant in any
receivership, bankruptcy, insolvency, winding up or other creditor's
proceedings, including, without limitation, any proceedings under the Bankruptcy
and Insolvency Act (Canada) or the Companies' Creditors Arrangement Act
(Canada), or the surrender, disclaimer, repudiation or termination of this Lease
and any such proceedings and shall continue with respect to the periods prior
thereto and thereafter as if the Lease had not been surrendered, disclaimed,
repudiated or terminated.

This Standby Letter of Credit is subject to the "Uniform Customs and Practice
for Documentary Credits (1993 Revision) International Chamber of Commerce,
(Publication 500)" and engages us in accordance with the terms thereof.


                                        Per:                                 c/s
                                             -----------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        Per:
                                             -----------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                        I/We have the authority to
                                        bind the Corporation.



                                   SCHEDULE H

                 PRIOR IMPROVEMENTS TENANT IS REQUIRED TO REMOVE

For the purposes of subsection 2.0 l(c) of this Lease, Prior Improvements shall
mean:

1.   all interior partitions;

2.   all labs and kitchenettes, including without limitation all plumbing and
     cabinetry;

3.   all carpeting and vinyl flooring;

4.   all data and communication cabling back to the source;

5.   all electrical wiring back to the electrical panel; and

6.   all plumbing.

Tenant shall not remove any of the washrooms or the fixtures and plumbing
therein.

EX-10.12

                                                                   Exhibit 10.12

                                                               EXECUTION VERSION

                ADVISORY SERVICES EXPENSE REIMBURSEMENT AGREEMENT

                 made as of February 23, 2006 (this "Agreement")

     BETWEEN:

               COREL CORPORATION, a corporation incorporated pursuant to the
               federal laws of Canada

               ("Corel")

               - and -

               VECTOR CAPITAL CORPORATION, a Delaware corporation

               ("Vector")

     WHEREAS from time to time Corel may request Vector to provide Advisory
Services (as defined below), solely on the terms and within the scope specified
by Corel; and

     WHEREAS Vector expects to incur certain reasonable out-of-pocket costs and
expenses in connection with the providing of Advisory Services to Corel and
Corel has agreed to reimburse Vector for these costs and expenses; and

     WHEREAS Corel and Vector have entered into this Agreement to confirm the
terms and conditions of Corel's obligation to reimburse Vector for certain
reasonable costs and expenses incurred by Vector in connection with the
providing of Advisory Services to Corel;

     NOW THEREFORE in consideration of the mutual covenants and agreements in
this Agreement, and other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), Corel and Vector agree as
follows.

1.   ADVISORY SERVICES

1.1  SCOPE OF SERVICES. From time to time at the written request of Corel,
     Vector will provide, or will cause to be provided, the following services
     to Corel (collectively, "Advisory Services"): (i) evaluation and analysis
     (including the conducting of due diligence) of potential M&A transactions,
     including the review of potential acquisition targets; (ii) evaluation and
     analysis of potential strategic business relationships; (iii) analysis of
     planning and structuring considerations and alternatives applicable to
     Corel Corporation and its direct and indirect subsidiaries; and (iv) other
     services as requested by Corel. For greater certainty, Advisory Services
     will be comprised only of services described in this Section 1.1 which are
     provided by Vector for the benefit of Corel.



1.2  NO FEES FOR ADVISORY SERVICES. Except for the reimbursement of
     out-of-pocket costs and expenses expressly contemplated in Section 2 below,
     Vector will not receive any fees or other remuneration for the provision of
     Advisory Services to Corel.

1.3  TERM AND TERMINATION. This Agreement is for a term of three (3) years from
     the date of execution (the "Initial Term"). The Initial Term shall
     automatically be extended for an additional three (3) years unless one of
     the parties to this Agreement provides, within ninety (90) days prior to
     the expiration of the Initial Term, the other party with express written
     notice indicating the desire to terminate this Agreement upon the
     expiration of the Initial Term. This Agreement may be terminated by either
     party (i) without notice, immediately upon the other party (A) committing a
     breach of the terms of this Agreement; or (B) being the subject of a
     voluntary or involuntary bankruptcy and/or insolvency proceeding; and (ii)
     upon ninety (90) days prior written notice, without cause. No fees or
     damages will be payable in connection with any termination pursuant to this
     Agreement, provided that all Reimbursable Expenses incurred prior to the
     effective date of termination will be reimbursed in accordance with this
     Agreement.

1.4  ENGAGEMENT NOT EXCLUSIVE. Corel may engage other parties to provide
     Advisory Services on terms and conditions agreed upon with those other
     parties. Vector may provide Advisory Services to other parties
     (collectively, "Other Clients") provided, however, that the provision of
     Advisory Services to Other Clients does not result in Vector providing
     confidential information in respect of Corel to Other Clients.

2.   REIMBURSEMENT OF EXPENSES

2.1  REIMBURSEMENT. Subject to the limitations set out in Section 2.2 below,
     Corel will reimburse Vector for reasonable out-of-pocket costs and expenses
     which are incurred by Vector and reasonably relate to the provision of
     Advisory Services to Corel ("Reimbursable Expenses"). Vector will provide
     Corel with reasonable back-up documentation supporting the characterization
     of costs and expenses as Reimbursable Expenses ("Supporting
     Documentation"). Corel will reimburse Vector for Reimbursable Expenses
     within sixty (60) days of the end of the month in which the Supporting
     Documentation for the applicable Reimbursable Expense was provided by
     Vector to Corel. Reimbursement payments by Corel pursuant to this Agreement
     will be made in accordance with the payment instructions set out on
     SCHEDULE A to this Agreement.

2.2  LIMITATIONS ON REIMBURSEMENT. Reimbursable Expenses in excess of $250,000
     in any fiscal year of Corel must be approved, prior to reimbursement by
     Corel, by the independent members of the audit committee of Corel's board
     of director.

2.3  NOT EMPLOYEES. Individuals providing Advisory Services under this Agreement
     will in no event be considered employees of Corel. The costs and expenses
     of all of those individuals, whether employees of Vector or consultants to
     or agents or representatives of Vector, will be Vector's responsibility
     including all compensation, statutory deductions and remittances.


                                       2



3.   GENERAL

3.1  ASSIGNMENT. Vector may not assign this Agreement. Corel may assign this
     Agreement to a direct or indirect wholly-owned subsidiary, and this
     Agreement enures to the benefit of and is binding upon the successors and
     assigns of Corel.

3.2  CONFIDENTIALITY. Vector agrees to (and to cause its affiliates to) keep
     confidential, and not make use of (other than in the course of providing
     Advisory Services) or disclose to any person, any information or matter
     relating to Corel or the Advisory Services provided to Corel, provided that
     the following information shall not be subject to this restriction (i)
     information that was previously publicly disclosed by Corel; (ii)
     information that otherwise becomes legally known by Vector; or (iii)
     information which is required to be disclosed by applicable law.

3.3  SEVERABILITY. If a provision of this Agreement is declared void or
     unenforceable, such provision will be deemed severed from this Agreement to
     the extent of the particular circumstances giving rise to such declaration
     and such provision as it applies to other persons and circumstances and the
     remaining terms and conditions of this Agreement will remain in full force
     and effect.

3.4  ENTIRE AGREEMENT. This Agreement contains the entire understanding of
     Vector and Corel on these matters.

3.5  NOTICES. All notices, requests or instructions hereunder shall be in
     writing and delivered personally, sent by telecopy, sent by federal express
     or other nationally recognized overnight carrier, or sent by registered or
     certified mail, postage prepaid, as follows:

          (i)  If to Vector:

               Vector Capital Corporation
               456 Montgomery Street
               19th Floor
               San Francisco, CA 94014
               Attention: Dewey Chambers
               Telecopy No.: (415) 293-5100

          (ii) If to Corel:

               Corel Corporation
               1600 Carling Avenue
               Ottawa, Ontario K17 8R7
               Canada
               Attention: Christopher DiFrancesco
               Telecopy No.: (613) 725-2691


                                       3



               with a copy to:

               Torys LLP
               79 Wellington Street West
               Toronto, Ontario Canada M5K 1N2
               Attention: Darren E. Sukonick, Esq.
               Telecopy No.: (416) 865-7380

     Any of the above addresses may be changed at any time by notice given as
     provided above; provided, however, that any such notice of change of
     address shall be effective only upon receipt. All notices, requests or
     instructions given in accordance herewith shall be deemed received on the
     date of delivery, if hand delivered, telecopied or by overnight courier,
     and five (5) Business Days after the date of mailing, if mailed by
     registered or certified mail.

3.6  AMENDMENT: This Agreement may only be amended by an agreement in writing
     signed by Vector and Corel, provided that any amendment is approved, in
     advance, by independent members of the audit committee of Corel's board of
     directors.

3.7  LAWS. This Agreement shall be governed by and construed in accordance with
     the laws of the [State of New York without regard to the law of the
     conflicts of law of such State].

4.   INDEMNIFICATION

4.1  Corel will indemnify Vector, its shareholders, officer, directors and
     employees, and all of its former shareholders, directors, officers and
     employees, agents, representatives and independent contractors (the "Vector
     Indemnified Parties"), and hold the Vector Indemnified Parties harmless
     against all costs, charges and expenses, including all amounts paid to
     settle an action or satisfy a judgment, reasonably incurred by any of the
     Vector Indemnified Parties in respect of any civil, criminal or
     administrative action or proceeding to which any of the Vector Indemnified
     Parties is a party by reason of Vector being or having been engaged by
     Corel to provide Advisory Services, so long as:

     (i)  the Vector Indemnified Party in question acted honestly, in good faith
          and with a view to the best interests of Corel and its affiliates; and

     (ii) in the case of a criminal or administrative action or proceeding that
          is enforced by a monetary penalty, the Vector Indemnified Party in
          question had reasonable grounds for believing that his/her conduct was
          lawful.

                                      * * *


                                       4



     IN WITNESS WHEREOF the parties have executed this Agreement as of the date
first written above.

                                        COREL CORPORATION


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------


                                        VECTOR CAPITAL CORPORATION


                                        By: /s/ DEWEY W. CHAMBERS
                                            ------------------------------------
                                        Name: DEWEY W. CHAMBERS
                                        Title: CHIEF FINANCIAL OFFICER



     IN WITNESS WHEREOF the parties have executed this Agreement as of the date
first written above.

                                        COREL CORPORATION


                                        By: /s/ CHRIS DIFRANCESCO
                                            ------------------------------------
                                        Name: CHRIS DIFRANCESCO
                                        Title: V P Legal, General Counsel
                                               & Secretary


                                        VECTOR CAPITAL CORPORATION


                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------



                                   SCHEDULE A

                           VECTOR PAYMENT INSTRUCTIONS


                                       6

EX-10.13

                                                                   Exhibit 10.13

                      AGREEMENT AND FULL AND FINAL RELEASE

                                     BETWEEN

                                COREL CORPORATION

                                       AND

                              JACQUELINE MAARTENSE

                            EFFECTIVE JANUARY 20, 2006

The terms and conditions set out below, along with the attached Full and Final
Release, will constitute our binding agreement regarding the terms and
conditions of your transition from Corel:

     1. Effective January 20, 2006 you will cease to have the title and
     responsibilities as EVP Global Marketing. You will continue as an employee
     (until the Termination Date as defined below) without title and without any
     pre-assigned duties and responsibilities as you are on a leave of absence.

     2. Unless your employment is otherwise terminated earlier you will continue
     to receive all benefits until June 8, 2006 and thereafter continue to
     receive health and dental benefit coverage, until June 8, 2007.

     3. On June 8, 2007 or such other earlier date as you may advise (in either
     case the "Termination Date") your employment relationship with Corel will
     be deemed to have terminated without cause.

     4. On the first regularly scheduled payroll date following the Termination
     Date, Corel will provide you with a retiring allowance in an amount equal
     to (i) 11 months' base salary; and, (ii) 11 months incentive pay,
     calculated at 100% achievement. This retiring allowance shall be paid in
     the most advantageous manner that is permitted by law, having regard to tax
     and E.I. considerations, as you might direct.

     5. Corel will provide you with full RSP matching payments for the calendar
     year 2006 and, provided the Termination Date is on or after January 1,
     2007, for calendar year 2007. On the first regularly scheduled payroll date
     following the Termination Date Corel shall pay out all accrued vacation
     entitlement accrued through the Termination Date.

     6. Your stock options shall be treated in accordance with the Corel Stock
     Option Plan (i.e. options shall continue to vest until the Termination Date
     and vested option may be exercised until 90 days after your Termination
     Date, at which point all vested and unvested options shall expire). Until
     the Termination Date you will respect your



     previously executed Lock Up Agreement and all company-wide blackout
     periods. We will formally remove you as an officer of the company and will
     not designate you as a deemed "insider" for securities law purposes nor for
     the purpose of any internal trading restrictions applicable to company
     designated or deemed insiders.

     7.The foregoing terms and conditions shall be in lieu of the provisions of
     paragraphs 5(a)(ii), (iii), and (iv), 5(b), and 5(f) of your Employment
     Agreement dated the 20th day of January 2005.

     8. You will express your formal agreement to these terms by executing this
     Agreement in the space below and returning it along with the attached Full
     and Final Release.


                                       /s/ Randy Eisenbach
                                       -----------------------------------------
                                       Corel Corporation
                                       By: Randy Eisenbach
                                       Its: Chief Operating Officer


Witness: /s/ Gail Oaley                /s/ Jacqueline Maartense
         ---------------------------   -----------------------------------------
         Gail Oaley                    Jacqueline Maartense


                             FULL AND FINAL RELEASE

1.   FULL AND FINAL RELEASE

KNOW ALL PERSONS by these presents that Jacqueline Maartense ("the Releasor")
for good and valuable consideration as set out in the Agreement effective
Janaury 20, 2006 (the "Agreement") the sufficiency of such consideration being
hereby acknowledged, does hereby remise, release and forever discharge Corel
Corporation, its successors, administrators, assigns, affiliated and related
companies, and their respective directors, officers, employees and agents
(hereinafter collectively referred to as the "Releasee"), of and from all
actions, causes of action, damages, claims, crossclaims and demands whatsoever,
(including all damage, loss and injury not now known or anticipated but which
may arise in the future and all effects and consequences thereof), and from all
statutory claims whatsoever, (including but not limited to all statutory claims
under the Ontario Human Rights Code and the Ontario Employment Standards Act),
however and wherever arising, which the Releasor had, now has, or which the
Releasor, his/her heirs, administrators and assigns, or any of them, hereafter
can, shall or may have by reason of or arising from the employment of the
Releasor by the Releasee or from the cessation of the employment relationship
between them.

IN ADDITION TO AND WITHOUT ANY LIMITATION TO THE FOREGOING, the Releasee
acknowledges that she has not been subjected to any form of discrimination
contrary to any statute or otherwise at law, has waived any right to
reinstatement to her former or any other position with the Releasee under any
applicable legislation and agrees that to the extent any such claim is asserted
by the Releasor in the future, such assertion shall constitute bad faith on the
part of the Releasor.

AND FOR THE SAID CONSIDERATION the Releasor further agrees not to make or
continue any claim or take or continue any proceedings against any other person
or corporation or entity here in Canada or



elsewhere in the world, with respect to anything existing at the present time
between the parties to this release with respect to the subject matter of this
release.

IT IS UNDERSTOOD AND AGREED that the said payment is deemed to be no admission
whatsoever of liability on the part of the Releasee.

2.   CONFIDENTIALITY AND NON-DISPARAGEMENT UNDERTAKING

AND FOR THE SAME CONSIDERATION the undersigned, intending to be legally bound,
hereby further agrees and undertakes to protect in strict confidence, and not to
use or disclose, any and all information relating to the terms of the Letter and
the fact of the settlement between the Releasor and the Releasee.

The Releasor agrees that he/she will not say, publish or do any act or thing
that disparages or casts the Releasee, its officers, directors, employees,
agents and/or representatives in any unfavorable light, or which could result in
injury to any such person's reputation. Except to the extent required by
applicable law, the Releasor shall make no public statements or announcements
regarding the Releasor's past employment by Releasor or any of the matters set
forth herein without first consulting with Releasor and obtaining its prior
written approval as to the timing and content of the proposed statements and/or
announcements. Notwithstanding the foregoing the Releasor may disclose
particulars of Releasor's employment and termination in any bona fide job search
or application for government unemployment or other like benefits.

3.   AGREEMENT AND INDEMNITY

IT IS FURTHER UNDERSTOOD AND AGREED THAT FOR THE SAME CONSIDERATION, the
Releasor further covenants and agrees to save harmless and indemnify the
Releasee from and against all claims, charges, taxes or penalties and demands
which may be made by the Minister of National Revenue requiring the Releasee to
pay income tax under the Income Tax Act (Canada) in respect of income tax
payable by the Releasor in excess of the income tax previously withheld, and in
respect of any and all


                                        2



claims, charges, taxes or penalties and demands which may be made on behalf of
or related to the Minister of National Revenue, the Employment Insurance
Commission, the Canada Pension Commission, or the Workplace Safety and Insurance
Board, under the applicable statutes and regulations, with respect to any
amounts which may, in the future be found to be payable by the Releasee in
respect of the Releasor.

4.   BENEFIT OF RELEASE, AGREEMENT AND UNDERTAKING

IT IS UNDERSTOOD AND AGREED that this Release, Agreement and Undertaking shall
enure to the benefit of the Releasee, its successors, administrators, assigns,
affiliates and related companies, and its officers and directors, and shall be
binding upon the Releasor, his/her heirs, executors, administrators and assigns.

AND THE RELEASOR HEREBY DECLARES that he/she fully understands the terms of this
settlement, has obtained independent legal representation in connection with
this Release and the Agreement, and that she voluntarily accepts the terms and
conditions of the Agreement and this Release for the purpose of making full and
final compromise, adjustment and settlement of all claims as aforesaid, whether
arising by force of contract, at common law or under applicable statutes.

     IN WITNESS WHEREOF the said Jacqueline Maartense has hereunto set hand this
9 day of March, 2006 at the City of Ottawa, in the Province of Ontario.

SIGNED in the presence of Gail Oaley
                                     )
                                     )
                                     )
/s/ Gail Oaley                       )   /s/ Jacqueline Maartense
- -------------------------------------)   ---------------------------------------
Witness                              )   Jacqueline Maartense
Name: Gail Oaley


                                        3

EX-21.1

                                  EXHIBIT 21.1 SUBSIDIARIES OF COREL CORPORATION

ENTITY                                       JURISDICTION OF INCORPORATION
- ------                                       -----------------------------
Corel do Brasil Ltda.                        Brazil

Softquad Limited                             United Kingdom

Corel California Inc.                        California

Corel International Corp.                    Barbados

Corel Japan Ltd.                             Japan

Corel SARL                                   France

Corel UK Limited                             United Kingdom

Corel Holdings US, LLC                       Delaware

Corel GmbH                                   Germany

Corel Corporation Limited                    Ireland

Corel PTY Ltd.                               Australia

Cayman Limited Holdco                        Cayman Islands

WinZip Computing S.L.                        Spain

Ross-Dale Training SGPS, Lda.                Madeira

WinZip International LLC                     Delaware

WinZip Computing LP                          Spain

WinZip Spain S.L.                            Spain

WinZip Computing LLC                         Delaware

Corel Holdings Corporation                   New Brunswick

Corel Inc.                                   Delaware

Micrografx (Europe) AG                       Switzerland

Micrografx Italia S.r.L.                     Italy

Micrografx Technology N.V.                   Netherlands Antilles

Micrografx B.V.                              Netherlands

EX-23.1

                                                                    EXHIBIT 23.1

            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the use in this Registration Statement on Form F-1 of our
report dated March 7, 2006 (except as to notes 2, 12 and 18 which are as of
March 31, 2006), relating to the financial statements of Corel Corporation and
our report dated March 7, 2006 on the financial statement schedule I (filed as
exhibit 99.1) of Corel Corporation, which appear in such Registration Statement.
We also consent to the references to us under the headings "Experts" and
"Selected Financial Data" in such Registration Statement.

/s/ PricewaterhouseCoopers LLP

Ottawa, Canada
April 4, 2006

EX-23.2

                                                                    EXHIBIT 23.2

                       CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in this Registration Statement on Form F-1 of our
report dated March 7, 2006 relating to the financial statements of WinZip
Computing, Inc., which appears in such Registration Statement. We also consent
to the reference to us under the heading "Experts" in such Registration
Statement.

/s/ PricewaterhouseCoopers LLP

Hartford, Connecticut
April 4, 2006

EX-23.3

                                                                    Exhibit 23.3

            Consent of Independent Registered Public Accounting Firm

We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated January 30, 2004, with respect to the financial
statements of Jasc Software, Inc. included in the Registration Statement on Form
F-1 and related Prospectus of Corel Corporation for the registration of shares
of its common stock.

/s/ Ernst & Young LLP

Minneapolis, Minnesota
April 3, 2006

EX-99.1

                                                                               .
                                                                               .
                                                                               .
                                                                    EXHIBIT 99.1

COREL CORPORATION
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS OF USD)



                                                        BALANCE AT      ADDITIONS CHARGED      DEDUCTIONS,     BALANCE AT
                                                       BEGINNING OF        TO EXPENSES        RETURNS, AND       END OF
                                                          PERIOD            OR REVENUE          WRITEOFFS        PERIOD
                                                                                                   
Allowance for Doubtful Accounts

      Year ended November 30, 2005                            1,033                  528               444          1,117
      Year ended November 30, 2004                            1,584                  (89)              462          1,033
      From August 29, 2003 to November 30, 2003               1,842                  327               585          1,584
      From December 1, 2003 to August 28, 2003                6,470                  756             5,383          1,843

Promotional rebates

      Year ended November 30, 2005                            1,614                5,282             5,848          1,048
      Year ended November 30, 2004                            1,447                3,140             2,973          1,614
      From August 29, 2003 to November 30, 2003                 773                1,834             1,160          1,447
      From December 1, 2003 to August 28, 2003                  178                5,207             4,612            773

Allowance for Sales Returns

      Year ended November 30, 2005                           10,492                8,316            11,908          6,900
      Year ended November 30, 2004                           10,290                8,637             8,435         10,492
      From August 29, 2003 to November 30, 2003              12,712                1,719             4,141         10,290
      From December 1, 2003 to August 28, 2003                8,004                8,982             4,274         12,712

EX-99.2

                                                                    Exhibit 99.2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON FINANCIAL STATEMENT
SCHEDULE

TO THE DIRECTORS OF COREL CORPORATION

Our audits of the combined consolidated financial statements referred to in our
report to the directors dated March 7, 2006 (except as to Notes 2, 12 and 18
which are as of March 31, 2006), appearing in the Form F-1 also included an
audit of the Financial Statement Schedule I. In our opinion, the financial
statement schedule represents fairly, in all material respects, the information
set forth therein when read in conjunction with the related combined
consolidated financial statements.

Ottawa, Canada
March 7, 2006