Novell Confidential




                                   AMENDMENT 2
                                       TO
                            PRODUCT LICENSE AGREEMENT

                  Amendment 2 Effective Date: December 18, 1998

         This  Amendment  ("Amendment  2") amends and  supplements  the  Product
License  Agreement,  effective May 16, 1995,  between  Novell,  Inc. and FileNet
Corporation  (the  "Agreement"),  as amended by  Amendment  1 to the  Agreement,
effective June 27, 1996  ("Amendment 1"). In the event of a conflict between the
Agreement  and  this  Amendment  2, the  provisions  of this  Amendment  2 shall
control.  Except as expressly  amended and supplemented by this Amendment 2, the
terms and conditions of the Agreement will remain in effect unchanged.

1.   CONSIDERATION.  Novell shall pay FileNet One Million  ($1,000,000)  Dollars
     within  ten (10) days of the  Amendment  2.Effective  Date and  receipt  of
     invoice from FileNet.

2.   Section 1 of the  Agreement  is hereby  modified as follows.  The  licenses
     granted to Novell with  respect to Visual  WorkFlo  are hereby  terminated.
     Commencing  on the  Amendment 2 Effective  Date,  the  licenses  granted to
     Novell with respect to Ensemble  Lite are  converted to  fully-paid-up  and
     royalty-free  licenses and shall be limited to use with Novell's  GroupWise
     5.5x  product  and prior  versions  that  include  Ensemble  Lite as of the
     Amendment  2  Effective  Date.  Novell  shall  have  no  obligation  to pay
     Royalties or minimum Royalties in connection with the licensing of Ensemble
     Lite as set forth herein.

3.   Sections II, III, IV, V and VIII of the Agreement are hereby deleted.

4.   Section  VI.A of the  Agreement  is hereby  deleted and  replaced  with the
     following provision:

          Beginning  upon the date of  shipment  of  Ensemble  to a customer  of
          Novell for revenue (the "Ensemble Effective Date") and until such time
          as Novell has paid an additional two million  dollars  ($2,000,000) in
          Ensemble  Royalties  to FileNet,  Novell  shall pay FileNet an initial
          Royalty of five percent (5%) of Novell's standalone Ensemble suggested
          list price for  standalone  Ensemble  and two percent (2%) of Novell's
          standalone  Ensemble  suggested  list price for bundled  Ensemble,  or
          fifty percent (50%) of the minimum per copy Royalty  amounts set forth
          in  Exhibit  E,  whichever  is higher.  Thereafter,  Novell  shall pay
          FileNet a Royalty of ten percent (10%) of Novell's standalone Ensemble
          suggested list price for standalone  Ensemble and four percent (4%) of
          Novell's   standalone   Ensemble  suggested  list  price  for  bundled
          Ensemble, or the minimum per copy Royalty amounts set forth in Exhibit
          E, whichever is higher. In the case of products sold as upgrades (i.e.
          customers  purchasing  (i) a new version of  standalone  Ensemble  for
          which they own a previous version of such product, or (ii) in the case
          of bundles,  a Novell product which contains a new version of Ensemble
          for which they own a previous  version of such  Novell  product),  the
          Royalty  shall be  reduced  to  twenty  percent  (20%) of the  Royalty
          applicable to Ensemble as set forth in Exhibit E.

5.   Sections  VI.B  and  VII of the  Agreement  shall  be  applicable  only  to
     Ensemble.  The last  sentence of Section  VII.A of the  Agreement is hereby
     deleted.

6.   Section  XVIII of the  Agreement  is hereby  modified as follows.  The last
     sentence of Section XVIII.B of the Agreement is deleted.  The last sentence
     of Section  XVIII.C of the  Agreement  is deleted.  Section  XVIII.E of the
     Agreement is deleted and replaced with the following:

     E.   Without  Cause.  This  Agreement  may be  terminated  by either  party
          without  cause or penalty at any time after  November 24, 1999 upon 90
          days prior written notice.

7.   Section XIX of the Agreement is hereby deleted and replaced in its entirety
     with the following:

     XIX. EFFECT OF  TERMINATION.  Upon  termination of this  Agreement,  Novell
          shall remove the  standalone  and bundled  Ensemble  Products from its
          price  lists.  Termination  of this  Agreement  shall not  affect  the
          licenses  granted to Novell prior to termination.  Upon termination of
          this Agreement,  FileNet agrees to promptly make available and deliver
          at no  additional  charge a  fully-paid-up,  perpetual  license to the
          source code for Ensemble for maintenance purposes only.

8.   Section 4 of Amendment 1 is hereby deleted.

9.   The parties  acknowledge  and agree that the rights and  obligations  under
     Section XI of the Agreement shall survive  termination or expiration of the
     Agreement for a period of ninety (90) days.

10.  Ensemble Lite Source Code and Technical Assistance.  Upon FileNet's receipt
     of the payment  specified in Section 1 of this  Amendment 2, FileNet agrees
     to  promptly  make  available  and  deliver  at  no  additional   charge  a
     fully-paid-up,  perpetual  license to the source code for Ensemble Lite for
     maintenance  purposes only.  Upon delivery of such source code for Ensemble
     Lite to Novell,  FileNet's  obligations  under  Section XI of the Agreement
     shall  terminate  in  connection  with all  Ensemble  Products  other  than
     Ensemble.

11.  General Release. Upon receipt of the payment specified in Section 1 of this
     Amendment 2 to FileNet by Novell of the invoice from FileNet dated December
     18, 1998,  the Amendment 2 Effective  Date, and for other good and valuable
     consideration,  each of Novell and FileNet releases and forever discharges,
     and by these  presents  does for itself  and its  successors  and  assigns,
     remise,  release,  and forever  discharge the other party,  its  respective
     predecessors  and  successors and present and former  officers,  directors,
     employees,   and  agents  and  their  respective   heirs,   administrators,
     executors, successors, and assigns (hereinafter collectively referred to as
     "Releasees")  of and from all manner of actions,  causes of action,  suits,
     debts, covenants, contracts, controversies, damages, judgments, claims, and
     demands whatsoever in law or in equity, whether or not well founded in fact
     or in law and  whether or not  presently  known to Novell  and/or  FileNet,
     which  against each of the  Releasees or any of them it ever had, or has as
     of the Amendment 2 Effective Date,  including without limitation any claims
     arising out of or related to oral or written  discussions,  commitments  or
     agreements  between  Novell and FileNet in connection  with the  Agreement,
     Amendment  1,  and  this  Amendment  2,  thereto  except  for the  mutually
     acknowledged  continuing  obligations under the  aforementioned  Agreement,
     Amendment 1, and this Amendment 2.

12.  SIGNATURES.  When executed by both parties,  this  Amendment 2 shall become
     effective on the Amendment 2 Effective Date.


Novell, Inc.                               FileNet Corporation


Signature:        /s/                      Signature:        /s/
         ______________________________             ____________________________

Name:    Christopher Stone                 Name:    Mary K. Carringotn
         ______________________________             ____________________________

Title:   Senior Vice President             Title:   Senior Vice President
                                                    General Counsel
         ______________________________             ____________________________

Date:    December 20, 1998                 Date:    December 17, 1998