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);

 

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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:

 

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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.

 

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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

 

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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

 

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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.

 

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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

 

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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.

 

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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.

 

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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

 

<PAGE>

 

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

 

<PAGE>

 

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

 

<PAGE>

 

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

 

<TABLE>

<CAPTION>

 TARGET USD          ACCOMPLISHMENT

------------         --------------

<S>                  <C>                  <C>

$ 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%

</TABLE>

 

                        EBITDA - 60% OF 2005 TARGET BONUS

 

<TABLE>

<CAPTION>

 TARGET USD         ACCOMPLISHMENT

-----------         --------------

<S>                 <C>                 <C>

$31,860,000              60%            No incentive below

$42,480,000              80%                   100%

$53,100,000             100%                   150%

$64,080,000             120%                   200%

</TABLE>

 

<PAGE>

 

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

 

<PAGE>

 

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                            )