<PAGE>

                                                                     EXHIBIT 4.3

                       SHAREHOLDER RIGHTS PLAN AGREEMENT

THIS AGREEMENT dated as of February 11, 1999 is amended and restated as of March
31, 1999.

BETWEEN:
                               COREL CORPORATION
                              (the "Corporation")

                                                               OF THE FIRST PART
                                    - and -

                       MONTREAL TRUST COMPANY OF CANADA
                             (the "Rights Agent")

                                                              OF THE SECOND PART

WHEREAS:

A.   The Board of Directors has determined that it is advisable to adopt a
     shareholder rights plan (the "Rights Plan") to ensure, to the extent
     possible, that all shareholders of the Corporation are treated fairly in
     connection with any takeover offer for the Corporation or other acquisition
     of control of the Corporation.

B.   In order to implement the Rights Plan, the Board of Directors has:

     (a)  authorized and declared a distribution of one right (a "Right")
          effective at the Close of Business at the Record Time in respect of
          each Common Share outstanding at the Close of Business at the Record
          Time;

     (b)  authorized the issuance of one Right in respect of each Common Share
          issued after the Record Time and prior to the earlier of the
          Separation Time and the Expiration Time; and

     (c)  authorized the issuance of Rights Certificates to holders of Rights
          pursuant to the terms and subject to the conditions set forth herein.

C.   Each Right entitles the holder thereof, after the Separation Time to
     purchase securities of the Corporation pursuant to the terms and subject
     to the conditions set forth herein.

D.   The Corporation desires to appoint the Rights Agent to act on behalf of the
     Corporation, and the Rights Agent is willing to so act, in connection with
     the issuance, transfer, exchange and replacement of Rights Certificates,
     the exercise of Rights and other matters referred to herein.

     NOW THEREFORE in consideration of the premises and respective agreements
set forth herein, the parties hereby agree as follows:
<PAGE>

                                      -2-



                                   ARTICLE 1
                                INTERPRETATION

1.1 Certain Definitions

For the purposes of this agreement (the "Agreement"), including the recitals
hereto, the following terms have the meanings indicated:

(a)  "Acquiring Person" shall mean any Person who is at any time after the date
      ----------------
     hereof the Beneficial Owner of 20% or more of the outstanding Voting Shares
     of the Corporation; provided, however, that the term "Acquiring Person"
     shall not include

     (i)   the Corporation or any corporation controlled by the Corporation;

     (ii)  any Person who becomes the Beneficial Owner of 20% or more of the
           outstanding Voting Shares as a result of one or any combination of:

           (A)  a Voting Share Reduction;
           (B)  a Permitted Bid Acquisition;
           (C)  an Exempt Acquisition; and
           (D)  a Pro Rata Acquisition;

           provided, however, that if a Person shall become the Beneficial Owner
           of 20% or more of the outstanding Voting Shares by reason of one or
           any combination of a Voting Share Reduction, a Permitted Bid
           Acquisition, an Exempt Acquisition or a Pro Rata Acquisition, and
           thereafter becomes the Beneficial Owner of an additional one per cent
           of the Voting Shares then outstanding (otherwise than pursuant to a
           Voting Share Reduction, a Permitted Bid Acquisition, an Exempt
           Acquisition or a Pro Rata Acquisition), then, as of the date that
           such Person becomes a Beneficial Owner of such additional Voting
           Shares, such Person shall become an "Acquiring Person";

     (iii) for the period of 10 days after the Disqualification Date (as
           hereinafter defined any Person who becomes the Beneficial Owner of
           20% or more of the outstanding Voting Shares as a result of such
           Person becoming disqualified from relying on Clause 1.1(d)(v) hereof
           where such disqualification results solely because such Person is
           making or has announced a current intention to make a Take-over Bid,
           either alone or by acting jointly or in concert with any other
           Person. For the purposes of this definition, "Disqualification Date"
           means the first date of public announcement that such Person is
           making or has announced a current intention to make a Take-over Bid,
           alone or by acting jointly or in concert with another Person; or

     (iv)  an underwriter that becomes the Beneficial Owner of 20% or more of
           the Voting Shares in connection with a distribution of securities
           pursuant to an underwriting agreement with the Corporation.

(b)  "Affiliate" when used to indicate a relationship with a specified Person,
      ---------
     means a Person that directly or indirectly controls, or is controlled by,
     or is under common control with, such specified Person.

(c)  "Associate" shall mean, when used to indicate a relationship with a
      ---------
     specified Person, a spouse of that Person, any Person of the same or
     opposite sex with whom that Person is living in a conjugal relationship
     outside marriage, a child of that Person or a relative of that Person if
     that relative has
<PAGE>

                                      -3-

     the same residence as that Person.

(d)  A Person shall be deemed the "Beneficial Owner" of, and to have "Beneficial
                                   ----------------                   ----------
     Ownership" of, and to "Beneficially Own":
     ---------              ----------------

          (i)    any securities of which such Person or any of such Person's
                 Affiliates or Associates is owner at law or in equity;

          (ii)   any securities which the Person or any of such Person's
                 Affiliates or Associates has the right to acquire, within 60
                 days (whether such right is exercisable immediately or after
                 the passage of not more than 60 days thereafter or upon the
                 occurrence of a contingency or the making of a payment)
                 pursuant to any Convertible Security, agreement, arrangement,
                 pledge or understanding, whether or not in writing (other than
                 (x) customary agreements with and between underwriters and/or
                 banking group and/or selling group members with respect to a
                 distribution of securities and (y) pledges of securities in the
                 ordinary course of the pledgee's business); and

          (iii)  any securities that are Beneficially Owned within the meaning
                 of clauses (i) or (ii) of this Subsection 1.1 (d) by any other
                 Person with which such Person is acting jointly or in concert;

          provided, however, that a Person shall not be deemed the "Beneficial
          Owner" of, or to have "Beneficial Ownership" of, or to "Beneficially
          Own", any security:

          (iv)   because such security has been, or has been agreed to be,
                 deposited or tendered pursuant to a Lock-Up Agreement, as
                 defined below in this Subsection 1.1(d), or as otherwise
                 deposited or tendered to any Take-over Bid made by such Person
                 or any of such Person's Affiliates or Associates or any other
                 person acting jointly or in concert with such Person until the
                 earlier of such tendered security being (x) accepted
                 unconditionally for payment or exchange and (y) taken up and
                 paid for;

          (v)    because (A) such Person or any of the Affiliates or Associates
                 of such Person or any other Person acting jointly or in concert
                 with such Person, holds such security provided that the
                 ordinary business of any such Person (the "Fund Manager")
                 includes the management of investment funds for others and such
                 security is held by the Fund Manager in the ordinary course of
                 such business in the performance of such Fund Manager's duties
                 for the account of any other Person (a "Client"), (B) such
                 Person (the "Trust Company") is licensed to carry on the
                 business of a trust company under applicable laws and, as such,
                 acts as trustee or administrator or in a similar capacity in
                 relation to the estates of deceased or incompetent Persons
                 (each an "Estate Account") or in relation to other accounts
                 (each an "Other Account") and holds such security in the
                 ordinary course of such duties for such Estate Accounts or for
                 such Other Accounts, (C) such Person (the "Plan Administrator")
                 is the administrator or the trustee of one or more pension
                 funds or plans (a "Plan") registered under the laws of Canada
                 or any province thereof or the laws of the United States of
                 America or any state thereof, (D) such Person (the "Crown
                 Agent") is established by statute for purposes that include,
                 and the ordinary business or activity of such Person includes,
                 the management of investment funds for employee benefit plans,
                 pension plans, insurance plans, or various public bodies, or
                 (E) such Person is a Plan; provided, however, that in any
<PAGE>

                                      -4-

                 of the foregoing cases the Fund Manager, the Trust Company, the
                 Plan Administrator, the Crown Agent or the Plan, as the case
                 may be, is not then making or has not then announced an
                 intention to make a Take-over Bid, alone or by acting jointly
                 or in concert with any other Person, other than an Offer to
                 Acquire Voting Shares or other securities (X) pursuant to a
                 distribution by the Corporation or (Y) by means of a Permitted
                 Bid;

          (vi)   because such Person is a Client of the same Fund Manager as
                 another Person on whose account the Fund Manager holds such
                 security, or because such Person is an Estate Account or an
                 Other Account of the same Trust Company as another Person on
                 whose account the Trust Company holds such security, or because
                 such Person is a Plan with the same Plan Administrator as
                 another Plan on whose account the Plan Administrator holds such
                 securities;

          (vii)  because such Person is a Client of a Fund Manager and such
                 security is owned at law or in equity by the Fund Manager or
                 because such Person is an Estate Account or an Other Account of
                 a Trust Company and such security is owned at law or in equity
                 by the Trust Company or such Person is a Plan and such security
                 is owned at law or in equity by the Plan Administrator; or

          (viii) because such Person is the registered holder of securities as
                 a result of carrying on the business of or acting as a nominee
                 of a securities depositary.

          For purposes of this Agreement in determining the percentage of the
          outstanding Voting Shares with respect to which a Person is or is
          deemed to be the Beneficial Owner, any unissued Voting Shares as to
          which such Person is deemed the Beneficial Owner pursuant to this
          Subsection 1.1(d) shall be deemed outstanding.

          "Lock-Up Agreement" means an agreement between a Person and one or
          more holders of Voting Shares (each such holder herein referred to as
          a "Locked-up Person") (the terms of which are publicly disclosed and
          reduced to writing and a copy of which is made available to the public
          (including the Corporation) not later than the date of the Lock-up Bid
          (as defined below) or if the Lock-up Bid has been made prior to the
          date of the Lock-up Agreement not later than the date of the Lock-up
          Agreement) pursuant to which each Locked-up Person agrees to deposit
          or tender the Voting Shares held by such holder to a Take-over Bid
          (the "Lock-up Bid") made by the Person or any of such Person's
          Affiliates or Associates or any other Person referred to in Section
          1.1(d)(iii) provided that:

          (i)    the Lock-up Agreement permits the Locked-up Person to withdraw
                 its Voting Shares from the Lock-up Agreement in order to
                 deposit or tender the Voting Shares to another Take-over Bid or
                 to support another transaction prior to the Voting Shares being
                 taken up and paid for under the Lock-up Bid:

                 (A)  at a price or value per Voting Share that exceeds the
                      price or value per Voting Shares offered under the Lock-up
                      Bid; or

                 (B)  for a number of Voting Shares at least 7% greater than the
                      number of Voting Shares than the Offeror has offered to
                      purchase under the Lock-up Bid at a price or value per
                      Voting Shares that is not less than the price or value per
                      Voting Share offered under the Lock-up Bid; or
<PAGE>

                                      -5-

                 (C)  (a) that contains an offering price for each Voting Share
                      that exceeds by as much as or more than a specified amount
                      (the "Specified Amount") the offering price for each
                      Voting Share contained in or proposed to be contained in
                      the Lock-up Bid and (b) does not by itself provide for a
                      Specified Amount that is greater than 7% of the offering
                      price contained in or proposed to be contained in the
                      Lock-up Bid;

          for greater clarity, the agreement may contain a right of first
          refusal or require a period of delay to give the Person who made the
          Lock-up Bid an opportunity to match a higher price in another Take-
          over Bid or other similar limitation on a Locked-up Person's right to
          withdraw Voting Shares from the agreement, so long as the limitation
          does not preclude the exercise by the Locked-up Person of the right to
          withdraw Voting Shares during the period of the other Take-over Bid or
          transaction; and

          (ii)   no "break-up" fees, "top-up" fees, penalties, expenses or other
                 amounts that exceed in aggregate the greater of:

                 (A)  2 1/2% of the price or value of the consideration payable
                      under the Lock-up Bid to a Locked-up Person; and

                 (B)  50% of the amount by which the price or value of the
                      consideration received by a Locked-up Person under another
                      Take-over Bid or transaction exceeds the price or value of
                      the consideration that the Locked-up Person would have
                      received under the Lock-up Bid;

          shall be payable by such Locked-up Person if the Locked-up Person
          fails to deposit or tender Voting Shares to the Lock-up Bid, or
          withdraws Voting Shares previously tendered thereto in order to
          deposit or tender such Voting Shares to another Take-over Bid or
          support another transaction.


(e)  "Board of Directors" shall mean the board of directors of the Corporation
      ------------------
     or any duly constituted and empowered committee thereof.

(f)  "Business Day" shall mean any day, other than a Saturday or Sunday or a day
      ------------
     on which banking institutions in the City of Ottawa are authorized or
     obligated by law to close.

(g)  "Canadian Dollar Equivalent" of any amount which is expressed in United
      --------------------------
     States dollars shall mean on any day the Canadian dollar equivalent of such
     amount determined by reference to the U.S. - Canadian Exchange Rate in
     effect on such date.

(h)  "Canada Business Corporations Act " shall mean the Canada Business
      --------------------------------
     Corporations Act, R.S.C. 1985, c.C- 44, as amended and the regulations
     thereunder, as from time to time in effect.

(i)  "Close of Business" on any given date shall mean the time on such date (or,
      -----------------
     if such date is not a Business Day, the time on the next Business Day) at
     which the principal office of the transfer agent for the Common Shares in
     Toronto, Ontario (or after the Separation Time, the principal office of the
     Rights Agent in Toronto, Ontario) is closed to the public.

(j)  "Closing Price" per security of any securities on any date of determination
      -------------
     shall mean:
<PAGE>

                                      -6-

     (i)   the closing board lot sale price or, if such price is not available,
           the average of the closing bid and asked prices, for such securities
           as reported by the stock exchange or national securities quotation
           system on which such securities are listed or admitted to trading
           (provided that, if at the date of determination such securities are
           listed or admitted to trading on more than one stock exchange or
           national securities quotation system, such price or prices shall be
           determined based on the stock exchange or quotation system on which
           such securities are then listed or admitted to trading on which the
           largest number of such securities were traded during the most
           recently completed calendar year); or

     (ii)  if for any reason none of such prices is available on such day or the
           securities are not listed or admitted to trading on a stock exchange
           or a national securities quotation system, the last sale price, or in
           case no sale takes place on such date, the average of the high bid
           and low asked prices for each of such securities in the over-the-
           counter market;

     provided, however, that (A) if for any reason none of such prices are
     available on such date, the "Closing Price" per security of such securities
     on such date shall mean the fair value per security of the securities on
     such date as determined by a nationally or internationally recognized
     investment dealer or investment banker with respect to the fair value per
     security of such securities, and (B) if the Closing Price so determined is
     expressed in United States dollars, such amount shall be converted to the
     Canadian Dollar Equivalent.

(k)  "Common Shares", when used with reference to the Corporation, shall mean
      -------------
     the Common Shares in the share capital of the Corporation as presently
     constituted, as such shares may be subdivided, consolidated, reclassified
     or otherwise changed from time to time, and "Common Shares" when used with
     reference to any Person other than the Corporation means the class or
     classes of shares (or similar equity interest) with the greatest per share
     voting power entitled to vote generally in the election of all directors of
     such other Person or the equity securities or other equity interest having
     power (whether or not exercised) to control or direct the management of
     such other Person or, if such other Person is a corporation controlled by
     another Person, the Person (other than an individual) which ultimately
     controls such first mentioned other Person.

(l)  "Competing Permitted Bid" means a Take-Over Bid that:
      -----------------------

     (i)   is made after a Permitted Bid has been made and prior to the expiry
           of the Permitted Bid;

     (ii)  satisfies all components of the definition of a Permitted Bid other
           than the requirement in Clause (ii)(A)(x) thereof; and

     (iii) contains, and the take-up and payment for securities tendered or
           deposited is subject to irrevocable and unqualified provisions that
           no Voting Shares shall be taken up or paid for pursuant to the
           Takeover Bid prior to the Close of Business on a date that is no
           earlier than the later of (i) 21 days after the date of the Take-over
           Bid, and (ii) the 45th day after the earliest date on which any other
           Permitted Bid that is then in existence was made.

(m)  "controlled": a body corporate is "controlled" by another Person if and
      ----------
     only if:

     (i)   securities entitled to vote in the election of directors carrying
           more than 50% of the votes for the election of directors are held,
           directly or indirectly, by or for the benefit of the other Person;
           and

     (ii)  the votes carried by such securities are entitled, if exercised, to
           elect a majority of the
<PAGE>

                                      -7-

           board of directors of such body corporate;
           and "controls", "controlling" "under common control with" shall be
                --------    -----------   -------------------------
           interpreted accordingly.

(n)  "Convertible Security" means, with respect to any security, a security
      --------------------
     convertible into or exchangeable for the first-mentioned security.

(o)  "Co-Rights Agents" shall have the meaning ascribed thereto in Subsection
      ----------------
     4.1 (a).

(p)  "Disposition Date" has the meaning ascribed thereto in Subsection 5.1 (b).
      ----------------

(q)  "Disqualification Date" has the meaning ascribed thereto in Clause 1.1
      ---------------------
     (a)(iii).

(r)  "Effective Date" shall mean the Close of Business on the date on which The
      --------------
     Toronto Stock Exchange accepts notice for filing of this Agreement.

(s)  "Election to Exercise" has the meaning ascribed thereto in Subsection
      --------------------
     2.2(d).

(t)  "Exempt Acquisition" means a share acquisition in respect of which the
      ------------------
     Board of Directors has waived the application of Section 3.1 pursuant to
     Subsection 5.1(b), 5.1(d) or 5.1(e) or which was made on or prior to the
     date of this Agreement.

(u)  "Exercise Price" shall mean, as of any date, the price at which a holder of
      --------------
     a Right may purchase the securities issuable upon exercise of one whole
     Right and, until adjustment thereof in accordance with the terms hereof,
     the Exercise Price shall be $100.00.

(v)  "Expansion Factor" has the meaning ascribed thereto in Subclause
      ----------------
     2.3(b)(iv)(A)(1).

(w)  "Expiration Time" shall mean the earlier of (i) the Termination Time; and
      ---------------
     (ii) the Close of Business on the date on which the first annual meeting of
     shareholders of the Corporation following the third anniversary of the date
     of this Agreement is held; provided, however, that if the resolution
     referred to in Section 5.15 is approved by the Independent Shareholders in
     accordance with Section 5.15 at or prior to such annual meeting,
     "Expiration Time" means the earlier of (i) the Termination Time; and (ii)
     the Close of Business on the sixth anniversary of the date of this
     Agreement.

(x)  "Fiduciary" shall mean a trust company registered under the trust company
      ---------
     legislation of Canada or any province thereof when engaged in a fiduciary
     capacity, a trust company organized under the laws of any state of the
     United States, a portfolio manager registered under the securities
     legislation of one or more provinces of Canada or an investment adviser
     registered under the United States Investment Advisers Act of 1940 or any
     other securities legislation of the United States or any state of the
     United States.

(y)  "Flip-in Event" shall mean a transaction or event in or pursuant to which
      -------------
     any Person becomes an Acquiring Person.

(z)  "holder" shall have the meaning ascribed thereto in Section 2.8.
      ------

(aa) "Independent Shareholders" shall mean holders of outstanding Voting
      ------------------------
     Shares, other than Voting Shares Beneficially Owned by (i) any Acquiring
     Person; (ii) any Offeror other than a Person who at the relevant time is
     deemed not to Beneficially Own such Voting Shares by reason of Clause
     1.1(d)(v) hereof; (iii) any Person acting jointly or in concert with such
     Acquiring Person or Offeror
<PAGE>

                                      -8-

     referred to in (ii); (iv) any Associate or Affiliate of such Acquiring
     Person or Offeror referred to in (ii); and (v) any employee benefit plan,
     deferred profit sharing plan and any similar plan or trust for the benefit
     of employees of the Corporation unless the beneficiaries of the plan or
     trust direct the manner in which the Voting Shares are to be voted or
     withheld from voting or direct whether the Voting Shares are to be tendered
     to a Take-over Bid.

(ab) "Market Price" per security of any securities on any date of determination
      ------------
     shall mean the average of the daily Closing Prices on The Toronto Stock
     Exchange (or if the securities are not then listed on The Toronto Stock
     Exchange, on such other exchange on which such securities are listed or
     quoted as determined by the Board of Directors) per security of such
     securities on each of the 20 consecutive Trading Days through and including
     the Trading Day immediately preceding such date of determination; provided,
     however, that if an event of a type analogous to any of the events
     described in Section 2.3 hereof shall have caused any Closing Price used to
     determine the Market Price on any Trading Day not to be fully comparable
     with the Closing Price on the Trading Day immediately preceding such date
     of determination, each such Closing Price so used shall be appropriately
     adjusted in a manner analogous to the applicable adjustment provided for in
     Section 2.3 hereof in order to make it fully comparable with the Closing
     Price on the Trading Day immediately preceding such date of determination.

(ac) "Nominee" has the meaning ascribed thereto in Subsection 2.2(c).
      -------

(ad) "Offer to Acquire" shall include:
      ----------------

     (i)  an offer to purchase or a solicitation of an offer to sell Voting
          Shares, or a public announcement of an intention to make such an offer
          or solicitation; and

     (ii)  an acceptance of an offer to sell Voting Shares, whether or not such
          offer to sell has been solicited;

     or any combination thereof, and the Person accepting an offer to sell shall
     be deemed to be making an Offer to Acquire to the Person that made the
     offer to sell.

(ae) "Offeror" shall mean a Person who has announced a current intention to
      -------
     make, or who is making, a Take-over Bid.

(af) "Offeror's Securities" shall mean the Voting Shares Beneficially Owned on
      --------------------
     the date of a Take-over Bid by an Offeror.

(ag)  "Permitted Bid" means a Take-over Bid made by way of a Take-over Bid
       -------------
     circular which also complies with the following additional provisions:

     (i)   the Take-over Bid is made to all holders of record of Voting Shares
           wherever resident as registered on the books of the Corporation,
           other than the Offeror;

     (ii)  the Take-over Bid contains, and the take-up and payment for
           securities tendered or deposited thereunder is subject to,
           irrevocable and unqualified conditions that:

           (A)  no Voting Shares shall be taken up or paid for pursuant to the
                Take-over Bid (x) prior to the Close of Business on a date which
                is not less than 45 days following the date of the Take-over Bid
                and (y) unless, at the Close of Business on that date,
<PAGE>

                                      -9-

                the Voting Shares deposited or tendered pursuant to the Take-
                over Bid and not withdrawn constitute more than 50% of the
                Voting Shares outstanding which are held by Independent
                Shareholders;

          (B)   unless the Take-over Bid is withdrawn, Voting Shares may be
                deposited pursuant to such Take-over Bid at any time prior to
                the Close of Business on the date of the first take-up of or
                payment for Voting Shares;

          (C)   any Voting Shares deposited pursuant to the Take-over Bid may be
                withdrawn until taken up and paid for; and

          (D)   in the event that the requirement set forth in Subclause (A)(y)
                of this Clause 1.1(ag)(ii) is satisfied, the Offeror will make a
                public announcement of that fact and the Take-over Bid will
                remain open for deposits and tenders of Voting Shares for not
                less than 10 Business Days from the date of such public
                announcement.

     For purposes of this Agreement,  the term "Permitted Bid" shall include a
     Competing Permitted Bid.

(ah) "Permitted Bid Acquisition" means an acquisition of Voting Shares made
      -------------------------
     pursuant to a Permitted Bid or a Competing Permitted Bid.

(ai) "Person" includes any individual, firm, partnership, association, trust,
      ------
     trustee, executor, administrator, legal personal representative,
     government, governmental body or authority, corporation, or other
     incorporated or unincorporated organization, syndicate or other entity.

(aj) "Pro Rata Acquisition" means an acquisition by a Person of Voting Shares
      --------------------
     pursuant to (i) any dividend reinvestment plan or share purchase plan of
     the Corporation made available to all holders of Voting Shares (other than
     holders resident in any jurisdiction where participation in any such plan
     is restricted or impractical as a result of applicable law), (ii) a stock
     dividend, a stock split or other event pursuant to which such Person
     becomes the Beneficial Owner of Voting Shares on the same pro rata basis as
     all other holders of Voting Shares of the same class or series, (iii) the
     acquisition or exercise of rights to purchase Voting Shares distributed to
     all holders of Voting Shares (other than holders resident in any
     jurisdiction where such distribution is restricted or impractical as a
     result of applicable law) by the Corporation pursuant to a rights offering
     (but only if such rights are acquired directly from the Corporation) or
     (iv) a distribution of Voting Shares or Convertible Securities in respect
     thereof offered pursuant to a prospectus or by way of a private placement
     or a conversion or exchange of any such Convertible Security, provided such
     Person does not thereby acquire a greater percentage of Voting Shares or
     Convertible Securities so offered than the Person's percentage of Voting
     Shares Beneficially Owned immediately prior to such acquisition.

(ak) "Record Time" means the Close of Business on the Effective Date.
      -----------

(al) "Redemption Price" shall have the meaning attributed thereto in Subsection
      -----------------
     5.1(a).

(am) "Regular Periodic Cash Dividend" means cash dividends paid on the Common
      -------------------------------
     Shares at regular intervals in any fiscal year of the Corporation to the
     extent that such cash dividends do not exceed in the aggregate in any
     fiscal year, on a per share basis, the greatest of:

     (i)   200% of the aggregate amount of cash dividends declared payable by
           the Corporation on its Common Shares in its immediately preceding
           fiscal year divided by the number of
<PAGE>

                                      -10-

           Common Shares outstanding as at the end of such fiscal year;

     (ii)  300% of the arithmetic mean of the aggregate amounts of cash
           dividends declared payable by the Corporation on its Common Shares in
           its three immediately preceding fiscal years divided by the
           arithmetic mean of the number of Common Shares outstanding as at the
           end of each of such fiscal years; and

     (iii) 100% of the aggregate consolidated net income of the Corporation,
           before extraordinary items, for its immediately preceding fiscal year
           divided by the number of Common Shares outstanding as at the end of
           such fiscal year.

(an) "Right" shall mean the herein described rights to purchase securities
      -----
     pursuant to the terms and subject to the conditions set forth herein.

(ao) "Rights Certificate" shall mean the certificates representing the Rights
      ------------------
     after the Separation Time which shall be substantially in the form attached
     hereto as Exhibit A.

(ap) "Rights Register" and "Rights Registrar" shall have the respective meanings
      ---------------       ----------------
     ascribed thereto in Subsection 2.6(a).

(aq) "Securities Act" shall mean the Securities Act (Ontario), R.S.O. 1990,
      ---------------
     c.S.5, as amended and the regulations and rules made thereunder, as from
     time to time in effect.

(ar) "Separation Time" means the Close of Business on the eighth Business Day
      ----------------
     after the earlier of:

     (i)   the Stock Acquisition Date; and

     (ii)  the date of the commencement of, or first public announcement or
           disclosure of the intent of any Person (other than the Corporation or
           any corporation controlled by the Corporation) to commence, a Take-
           over Bid (other than a Permitted Bid, so long as such Take-over Bid
           continues to satisfy the requirements of a Permitted Bid) or such
           later Business Day as may be determined at any time or from time to
           time by the Board of Directors;

     provided, however, that if any such Take-over Bid expires, is canceled, is
     terminated or is otherwise withdrawn prior to the Separation Time, such
     Take-over Bid shall be deemed, for purposes of this Subsection 1.l(ar)
     never to have been made, and, provided further, that if the Board of
     Directors determines, pursuant to Section 5.1, to waive the application of
     Section 3.1 to a Flip-In Event, the Separation Time in respect of such
     Flip-In Event shall be deemed never to have occurred.

(as) "Stock Acquisition Date" shall mean the first date of public announcement
      ----------------------
     or disclosure by the Corporation or an Acquiring Person of facts indicating
     that a Person has become an Acquiring Person (which, for the purposes of
     this definition, shall include, without limitation, a report filed pursuant
     to Section 101 of the Securities Act or Section 13(d) of the U.S. Exchange
     Act disclosing such information).

(at)  "Take-over Bid" means an Offer to Acquire Voting Shares of any class, or
       -------------
     Convertible Securities with respect thereto, where the Voting Shares
     subject to the Offer to Acquire, together with the Voting Shares into or
     for which the securities subject to the Offer to Acquire are convertible or
     exchangeable and the Offeror's Securities constitute in the aggregate 20%
     or more of the outstanding Voting Shares at the date of the Offer to
     Acquire.
<PAGE>

                                      -11-

(au) "Termination Time" means the time at which the right to exercise Rights
      ----------------
     shall terminate pursuant to Section 5.1 hereof.

(av) "Trading Day" when used with respect to any securities, means the day on
      -----------
     which the principal Canadian or United States securities exchange (as
     determined by the Board of Directors) on which such securities are listed
     or admitted to trading is open for the transaction of business or, if the
     securities are not listed or admitted to trading on any Canadian or United
     States securities exchange, a Business Day.

(aw) "U.S. - Canadian Exchange Rate" on any date shall mean:
      -----------------------------

     (i)  if on such date the Bank of Canada sets an average noon spot rate of
          exchange for the conversion of one United States dollar into Canadian
          dollars, such rate; and

     (ii) in any other case, the rate for such date for the conversion of one
          United States dollar into Canadian dollars which is calculated in the
          manner which shall be determined by the Board of Directors from time
          to time acting in good faith;

(ax) "U.S. Exchange Act" means the United States Securities Exchange Act of
      -----------------
     1934, as amended, and the rules and regulations thereunder as from time to
     time in effect.

(ay) "Voting Share Reduction" means an acquisition or redemption by the
      ----------------------
     Corporation of Voting Shares which, by reducing the number of Voting Shares
     outstanding, increases the percentage of Voting Shares Beneficially Owned
     by any Person to 20% or more of the Voting Shares then outstanding.

(az) "Voting Shares", when used in reference to the Corporation, shall mean the
      -------------
     Common Shares and any other securities the holders of which are entitled to
     vote generally on the election of directors of the Corporation, and "voting
                                                                          ------
     shares", when used with reference to any Person other than the Corporation,
     ------
     means common shares of such other Person and any other securities the
     holders of which are entitled to vote generally in the election of the
     directors of such other Person.

1.2  Currency

     All sums of money which are referred to in this Agreement are expressed in
lawful money of Canada, unless otherwise specified.

1.3  Number and Gender

     Wherever the context will require, terms (including defined terms) used
herein importing the singular number only shall include the plural and vice
versa and words importing any one gender shall include all others.

1.4  Sections and Headings

     The division of this Agreement into Articles, Sections, Subsections,
Clauses and Subclauses and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement. The terms this "Agreement", "hereunder", "hereof' and similar
                           ---------    ---------    ------
expressions refer to this Agreement as amended or supplemented from time to time
and not to any particular Article, Section or other portion hereof and include
any Agreement or instrument supplemental or ancillary hereto. Unless something
in the subject matter or context is inconsistent therewith, references herein to
Articles, Sections, Subsections, Clauses and Subclauses are to Articles,
Sections, Subsections, Clauses and Subclauses
<PAGE>

                                      -12-

of this Agreement.

1.5  Statutory References

     Unless the context otherwise requires, any reference to a specific Section,
Subsection, Clause or Rule of any statute or regulation shall be deemed to refer
to the same as it may be amended, reenacted or replaced or, if repealed and
there shall be no replacement therefor, to the same as it is in effect on the
date of this Agreement.

1.6  Determination of Percentage Ownership

     The percentage of Voting Shares Beneficially Owned by any Person, shall,
for the purposes of this Agreement, be and be deemed to be the product
determined by the formula:

     100 x  A
            -
            B

     where:

     A=   the aggregate number of votes for the election of all directors
          generally attaching to the Voting Shares Beneficially Owned by such
          Person; and
     B=   the aggregate number of votes for the election of all directors
          generally attaching to all outstanding Voting Shares.

     Where any person is deemed to Beneficially Own unissued Voting Shares
     pursuant to Subsection 1.1(d), such Voting Shares shall be deemed to be
     outstanding for the purpose of both A and B in the formula above.

1.7  Acting Jointly or in Concert

     For the purposes of this Agreement, a Person is acting jointly or in
concert with every Person who is a party to an agreement, commitment or
understanding, whether formal or informal, with the first Person for the purpose
of acquiring or offering to acquire Voting Shares or Convertible Securities in
respect thereof (other than customary agreements with and between underwriters
and banking group or selling group members with respect to a distribution of
securities or pursuant to a pledge of securities in the ordinary course of the
pledgee's business).

1.8  Generally Accepted Accounting Principles

     Wherever in this Agreement reference is made to generally accepted
accounting principles, such reference shall be deemed to be the recommendations
at the relevant time of the Canadian Institute of Chartered Accountants, or any
successor institute, applicable on a consolidated basis (unless otherwise
specifically provided herein to be applicable on an unconsolidated basis) as at
the date on which a calculation is made or required to be made in accordance
with generally accepted accounting principles. Where the character or amount of
any asset or liability or item of revenue or expense is required to be
determined, or any consolidation or other accounting computation is required to
be made for the purpose of this Agreement or any document, such determination or
calculation shall, to the extent applicable and except as otherwise specified
herein or as otherwise agreed in writing by the parties, be made in accordance
with generally accepted accounting principles applied on a consistent basis.

                                   ARTICLE 2
<PAGE>

                                     -13-

                                  THE RIGHTS

2.1  Legend on Common Share Certificates

     (a)  Certificates representing the Common Shares, including without
          limitation Common Shares issued upon the conversion of Convertible
          Securities, issued after the Record Time but prior to the Close of
          Business on the earlier of the Separation Time and the Expiration
          Time, shall also evidence one Right for each Common Share represented
          thereby and shall have impressed on, printed on, written on or
          otherwise affixed to them the following legend:

          "Until the Separation Time (as defined in the Rights Agreement
          referred to below), this certificate also evidences and entitles the
          holder hereof to certain Rights as set forth in a Shareholder Rights
          Plan Agreement, dated as of February 11, 1999 (the "Rights
          Agreement"), between Corel Corporation (the "Corporation") and
          Montreal Trust Company of Canada  (the "Rights Agent"), the terms of
          which are hereby incorporated herein by reference and a copy of which
          is on file at the registered office of the Corporation. Under certain
          circumstances, as set forth in the Rights Agreement, such Rights may
          be amended or redeemed, may expire, may become void (if, in certain
          cases, they are "Beneficially Owned" by an "Acquiring Person", as such
          terms are defined in the Rights Agreement, or a transferee thereof) or
          may be evidenced by separate certificates and may no longer be
          evidenced by this certificate. The Corporation will mail or arrange
          for the mailing of a copy of the Rights Agreement to the holder of
          this certificate without charge as soon as practicable after the
          receipt of a written request therefor."

     (b)  Certificates representing Common Shares that are issued and
          outstanding at the Record Time shall evidence one Right for each
          Common Share evidenced thereby, notwithstanding the absence of the
          foregoing legend, until the earlier of the Separation Time and the
          Expiration Time.

2.2  Initial Exercise Price; Exercise of Rights; Detachment of Rights

     (a)  Subject to adjustment as herein set forth, including without
          limitation as set forth in Article 3, each Right will entitle the
          holder thereof, from and after the Separation Time and prior to the
          Expiration Time, to purchase one Common Share for the Exercise Price
          as at the Business Day immediately preceding Separation Time (which
          Exercise Price and number of Common Shares are subject to adjustment
          as set forth below). Notwithstanding any other provision of this
          Agreement, any Rights held by the Corporation or any of its
          subsidiaries shall be void.

     (b)  Until the Separation Time, (i) the Rights shall not be exercisable and
          no Right may be exercised; and (ii) for administrative purposes, each
          Right will be evidenced by the certificate for the associated Common
          Share registered in the name of the holder thereof (which certificate
          shall be deemed to represent a Rights Certificate) and will be
          transferable only together with, and will be transferred by a transfer
          of, such associated Common Share.

     (c)  From and after the Separation Time and prior to the Expiration Time,
          the Rights may be exercised, and the registration and transfer of the
          Rights shall be separate from and independent of Common Shares.
          Promptly following the Separation Time, the Corporation will prepare
          or cause to be prepared and the Rights Agent will mail to each holder
          of
<PAGE>

                                      -14-



           record of Common Shares as of the Separation Time and, in respect of
           each Convertible Security converted into Common Shares after the
           Separation Time and prior to the Expiration Time, promptly after such
           conversion, the Corporation will prepare or cause to be prepared and
           the Rights Agent will mail to the holder so converting (other than an
           Acquiring Person and in respect of any Rights Beneficially Owned by
           such Acquiring Person which are not held of record by such Acquiring
           Person, the holder of record of such rights (a "Nominee") at such
           holder's address as shown by the records of the Corporation (the
           Corporation hereby agreeing to furnish copies of such record to the
           Rights Agent for this purpose):

           (i)  a Rights Certificate in substantially the form of Exhibit A
                hereto appropriately completed, representing the number of
                Rights held by such holder at the Separation Time and having
                such marks of identification or designation and such legends,
                summaries or endorsements printed thereon as the Corporation may
                deem appropriate and as are not inconsistent with the provisions
                of this Agreement, or as may be required to comply with any law,
                rule or regulation or judicial or administrative order, or with
                any article or regulation of any stock exchange or quotation
                system on which the Rights may from time to time be listed or
                traded, or to conform to usage; and

           (ii) a disclosure statement prepared by the Corporation describing
                the Rights, provided that a Nominee shall be sent the materials
                provided for in (i) and (ii) only in respect of all Common
                Shares held of record by it which are not Beneficially Owned by
                an Acquiring Person and the Corporation may require any Nominee
                or suspected Nominee to provide such information and
                documentation as the Corporation may reasonably require for such
                purpose.

(d)  Rights may be exercised in whole or in part on any Business Day after the
     Separation Time and prior to the Expiration Time by submitting to the
     Rights Agent, at its principal office in Toronto, or any other office of
     the Rights Agent designated for that purpose from time to time by the
     Corporation:

     (i)   the Rights Certificate evidencing such Rights;

     (ii)  an election to exercise (an "Election to Exercise") substantially in
                                        --------------------
           the form attached to the Rights Certificate duly completed, and
           executed in a manner acceptable to the Rights Agent; and

     (iii) payment by certified cheque, banker's draft or money order payable to
           the order of the Rights Agent, of a sum equal to the Exercise Price
           multiplied by the number of Rights being exercised and a sum
           sufficient to cover any transfer tax or charge which may be payable
           in respect of any transfer involved in the transfer or delivery of
           Rights Certificates or the issuance or delivery of certificates for
           Common Shares in a name other than that of the holder of the Rights
           being exercised.

(e)  Upon receipt of a Rights Certificate, which is accompanied by an
     appropriately completed and duly executed Election to Exercise (which does
     not indicate that such Right is null and void as provided by Subsection
     3.1(b)) and payment as set forth in Subsection 2.2(d), the Rights Agent
     (unless otherwise instructed by the Corporation) will thereupon promptly:
<PAGE>

                                      -15-

     (i)   requisition from the transfer agent of the Common Shares certificates
           representing the number of Common Shares to be purchased (the
           Corporation hereby irrevocably authorizing its transfer agent to
           comply with all such requisitions);

     (ii)  after receipt of such Common Share certificates, deliver such
           certificates to, or to the order of, the registered holder of such
           Rights Certificate, registered in such name or names as may be
           designated by such holder,

     (iii) when appropriate, requisition from the Corporation the amount of
           cash, if any, to be paid in lieu of issuing fractional Common Shares;

     (iv)  when appropriate, after receipt of such cash, deliver such cash to,
           or to the order of, the registered holder of the Rights Certificate;
           and

     (v)   tender to the Corporation all payments received on exercise of the
           Rights.

(f)  If the holder of any Rights shall exercise less than all the Rights
     evidenced by such holder's Rights Certificate, a new Rights Certificate
     evidencing the Rights remaining unexercised subject to the Subsection
     5.5(a) will be issued by the Rights Agent to such holder or to such
     holder's duly authorized assigns.

(g)  The Corporation shall:

     (i)   take all such action as may be necessary and within its power to
           ensure that all Common Shares delivered upon the exercise of Rights
           shall, at the time of delivery of the certificates for such Common
           Shares (subject to payment of the Exercise Price), be duly and
           validly authorized, executed, issued and delivered as fully paid and
           non-assessable;

     (ii)  take all such action as may reasonably be considered to be necessary
           and within its power to comply with any applicable requirements of
           the Canada Business Corporations Act or the Securities Act, the U.S.
           Exchange Act, the United States Securities Act of 1933, as amended,
           and comparable legislation of each of the provinces and territories
           of Canada and states of the United States of America, or the rules
           and regulations thereunder or any other applicable law, rule or
           regulation, in connection with the issuance and delivery of the
           Rights, the Rights Certificates and the issuance of any Common Shares
           upon exercise of the Rights;

     (iii) use reasonable efforts to cause all Common Shares issued upon
           exercise of the Rights to be listed on the stock exchanges on which
           the Common Shares are listed at that time;

     (iv)  cause to be reserved and kept available out of its authorized and
           unissued Common Shares, the number of Common Shares that, as provided
           in this Agreement, will from time to time be sufficient to permit the
           exercise in full of all outstanding Rights;

     (v)   pay when due and payable, if applicable, any and all federal,
           provincial, state and municipal taxes (not in the nature of income,
           capital gains or withholding taxes) and charges which may be payable
           in respect of the original issuance or delivery of the Rights
           Certificates or certificates for Common Shares issued upon the
           exercise of Rights, provided that the Corporation shall not be
           required to pay any transfer tax or charge which may be payable in
           respect of any transfer of Rights or the issuance or delivery of
           certificates for Common Shares issued upon the exercise of Rights, in
           a name other than that of the holder
<PAGE>

                                      -16-

           of the Rights being transferred or exercised; and

     (vi)  after the Separation Time, except as permitted by Section 5.1 or
           Section 5.4 hereof, not take (or permit any corporation it controls
           to take) any action if at the time such action is taken it is
           reasonably foreseeable that such action will diminish substantially
           or otherwise eliminate the benefits intended to be afforded by the
           Rights.

2.3  Adjustments to Exercise Price; Number of Rights

(a)  The Exercise Price, the number and kind of securities subject to purchase
     upon exercise of each Right and the number of Rights outstanding are
     subject to adjustment from time to time as provided in this Section 2.3 and
     in Article 3.

(b)  In the event that the Corporation shall at any time after the Record Time
     and prior to the Expiration Time:

     (i)   declare or pay a dividend on the Common Shares payable in Voting
           Shares or Convertible Securities in respect thereof other than
           pursuant to any dividend reinvestment plan;

     (ii)  subdivide or change the then outstanding Common Shares into a greater
           number of Common Shares;

     (iii) consolidate or change the then outstanding Common Shares into a
           smaller number of Common Shares; or

     (iv)  issue any Voting Shares (or Convertible Securities in respect
           thereof) in respect of, in lieu of or in exchange for existing Common
           Shares, whether in a reclassification, amalgamation, statutory
           arrangement, consolidation or otherwise;

     the Exercise Price and the number of Rights outstanding (or, if the payment
     or effective date therefor shall occur after the Separation Time, the
     securities purchasable upon the exercise of Rights) shall be adjusted as
     follows:

     (A)   If the Exercise Price and number of Rights outstanding are to be
           adjusted:

           1)  the Exercise Price in effect after such adjustment will be equal
               to the Exercise Price in effect immediately prior to such
               adjustment divided by the number of Common Shares (or other
               securities of the Corporation) (the "Expansion Factor") that a
                                                    ----------------
               holder of one Common Share immediately prior to such dividend,
               subdivision, change, combination or issuance would hold
               thereafter as a result thereof; and

           2)  each Right held prior to such adjustment will become that number
               of Rights equal to the Expansion Factor, and the adjusted number
               of Rights will be deemed to be allocated among the Common Shares
               with respect to which the original Rights were associated (if
               they remain outstanding) and the securities of the Corporation
               issued in respect of such dividend, subdivision, change,
               consolidation or issuance, so that each such Common Share (or
               other security of the Corporation) will have exactly one Right
               associated with it.

     (B)   If the securities purchasable upon exercise of Rights are to be
           adjusted, the securities
<PAGE>

                                      -17-

           purchasable upon exercise of each Right after such adjustment will be
           the securities that a holder of the securities purchasable upon
           exercise of one Right immediately prior to such dividend,
           subdivision, change, consolidation or issuance would hold thereafter
           as a result thereof.

(c)  Adjustments pursuant to Subsection 2.3(b) shall be made successively,
     whenever an event referred to in Subsection 2.3(b) occurs.

(d)  If an event occurs which would require an adjustment under both this
     Section 2.3 and Section 3.1 hereof, the adjustment provided for in this
     Section 2.3 shall be in addition to, and shall be made prior to, any
     adjustment required pursuant to Section 3.1 hereof.

(e)  In the event the Corporation shall at any time after the Record Time and
     prior to the Separation Time issue any Common Shares otherwise than in a
     transaction referred to in Subsection 2.3(b), each such Common Share so
     issued shall automatically have one new Right associated with it, which
     Right shall be evidenced by the certificate representing such Common Share.

(f)  In the event the Corporation shall, at any time after the Record Time and
     prior to the Expiration Time, fix a record date for the making of a
     distribution to all holders of Common Shares of rights or warrants
     entitling them (for a period expiring within 45 calendar days after such
     record date) to subscribe for or purchase Common Shares (or Convertible
     Securities in respect of Common Shares) at a price per Common Share (or, in
     the case of such a Convertible Security, having a conversion, exchange or
     exercise price per share (including the price required to be paid to
     purchase such Convertible Security)) less than 90% of the Market Price per
     Common Share on such record date, the Exercise Price in effect after such
     record date will equal the Exercise Price in effect immediately prior to
     such record date multiplied by a fraction;

     (i)  of which the numerator shall be the number of Common Shares
          outstanding on such record date plus the number of Common Shares which
          the aggregate offering price of the total number of Common Shares so
          to be offered (and/or the aggregate initial conversion, exchange or
          exercise price of the Convertible Securities so to be offered
          (including the price required to be paid to purchase such Convertible
          Securities)) would purchase at such Market Price per Common Share; and

     (ii) of which the denominator shall be the number of Common Shares
          outstanding on such record date plus the number of additional Common
          Shares to be offered for subscription or purchase (or into which the
          Convertible Securities so to be offered are initially convertible,
          exchangeable or exercisable).

     In case such subscription price is satisfied, in whole or in part, by
     consideration other than cash, the value of such consideration shall be as
     determined in good faith by the Board of Directors. Such adjustment shall
     be made successively whenever such a record date is fixed. To the extent
     that such rights or warrants are not exercised prior to the expiration
     thereof, the Exercise Price shall be readjusted in the manner contemplated
     above based on the number of Common Shares (or securities convertible into
     or exchangeable for Common Shares) actually issued on the exercise of such
     rights or warrants.

     For purposes of this Agreement, the granting of the right to purchase
     Common Shares (whether from treasury or otherwise) pursuant to any dividend
     or interest reinvestment plan or any share purchase plan providing for the
     reinvestment of dividends or interest payable on securities of the
     Corporation or the investment of periodic optional payments or employee
     benefit or similar plans
<PAGE>

                                      -18-

     (so long as such right to purchase is in no case evidenced by the delivery
     of rights or warrants by the Corporation) shall not be deemed to constitute
     an issue of rights or warrants by the Corporation; provided, however, that
     in the case of any dividend or interest reinvestment or share purchase
     plan, the right to purchase Common Shares is at a price per share of not
     less than 90% of the current Market Price per share (determined as provided
     in such plans) of the Common Shares.

(g)  In the event the Corporation shall at any time after the Record Time and
     prior to the Expiration Time fix a record date for the making of a
     distribution to all holders of Common Shares of (i) evidences of
     indebtedness or assets (other than a Regular Periodic Cash Dividend or a
     dividend paid in Common Shares, but including any dividend payable in
     securities other than Common Shares), (ii) rights or warrants entitling
     them to subscribe for or purchase Voting Shares (or Convertible Securities
     in respect of Voting Shares), at a price per Voting Share (or, in the case
     of a Convertible Security in respect of Voting Shares, having a conversion,
     exchange or exercise price per share (including the price required to be
     paid to purchase such Convertible Security)) less than 90% of the Market
     Price per Common Share on such record date (excluding rights or warrants
     referred to in Subsection 2.3(f)) or (iii) other securities of the
     Corporation, the Exercise Price in effect after such record date shall be
     equal to the Exercise Price in effect immediately prior to such record date
     less the fair market value (as determined in good faith by the Board of
     Directors) of the portion of the assets, evidences of indebtedness, rights
     or warrants or other securities so to be distributed applicable to each of
     the securities purchasable upon exercise of one Right. Such adjustment
     shall be made successively whenever such a record date is fixed.

(h)  Each adjustment made pursuant to Section 2.3 shall be made as of

     (i)  the payment or effective date for the applicable dividend,
          subdivision, change, combination or issuance, in the case of an
          adjustment made pursuant to Subsection 2.3(b) above; and

     (ii) the record date for the applicable dividend or distribution, in the
          case of an adjustment made pursuant to Subsections 2.3(f) or 2.3(g)
          above, subject to readjustment to reverse the same if such
          distribution shall not be made.

(i)  In the event the Corporation shall at any time after the Record Time and
     prior to the Expiration Time issue any shares (other than Common Shares),
     or rights or warrants to subscribe for or purchase any such shares, or
     Convertible Securities in respect of any such shares, in a transaction
     referred to in any of subclauses 2.3(b)(i) to (iv) above, if the Board of
     Directors acting in good faith determines that the adjustments contemplated
     by Subsections 2.3(b), 2.3(f) and 2.3(g) above in connection with such
     transaction will not appropriately protect the interests of the holders of
     Rights, the Board of Directors may from time to time, but subject to
     obtaining the prior approval of the holders of the Rights obtained as set
     forth in Subsection 5.4(b), determine what other adjustments to the
     Exercise Price, number of Rights or securities purchasable upon exercise of
     Rights would be appropriate and, notwithstanding Subsections 2.3(b), 2.3(f)
     and 2.3(g) above, such adjustments, rather than the adjustments
     contemplated by Subsections 2.3(b), 2.3(f) and 2.3(g) above, shall be made
     upon the Board of Directors providing written certification thereof to the
     Rights Agent pursuant to Subsection 2.3(q).

(j)  Notwithstanding anything herein to the contrary, no adjustment of the
     Exercise Price shall be required unless such adjustment would require an
     increase or decrease of at least 1% in such Exercise Price; provided,
     however, that any adjustments which by reason of this Subsection 2.3(j))
     are not required to be made shall be carried forward and taken into account
     in any subsequent adjustment. All adjustments to the Exercise Price made
     pursuant to this Section 2.3 shall be
<PAGE>

                                      -19-

     calculated to the nearest cent.

(k)  All Rights originally issued by the Corporation subsequent to any
     adjustment made to an Exercise Price hereunder shall evidence the right to
     purchase, at the adjusted Exercise Price, the number of Common Shares
     purchasable from time to time hereunder upon exercise of the Rights, all
     subject to further adjustment as provided herein.

(l)  Unless the Corporation shall have exercised its election, as provided in
     Subsection 2.3(m), upon each adjustment of an Exercise Price as a result of
     the calculations made in Subsections 2.3(f) and 2.3(g), each Right
     outstanding immediately prior to the making of such adjustment shall
     thereafter evidence the right to purchase, at the adjusted Exercise Price,
     that number of Common Shares obtained by:

     (i)  multiplying (A) the number of Common Shares covered by a Right
          immediately prior to such adjustment, by (B) the Exercise Price in
          effect immediately prior to such adjustment; and

     (ii) dividing the product so obtained by the Exercise Price in effect
          immediately after such adjustment.

(m)  The Corporation may elect on or after the date of any adjustment of an
     Exercise Price to adjust the number of Rights, in lieu of any adjustment in
     the number of Common Shares purchasable upon the exercise of a Right. Each
     of the Rights outstanding after the adjustment in the number of Rights
     shall be exercisable for the number of Common Shares for which a Right was
     exercisable immediately prior to such adjustment. Each Right held of record
     prior to such adjustment of the number of Rights shall become the number of
     Rights obtained by dividing the relevant Exercise Price in effect
     immediately prior to adjustment of the relevant Exercise Price by the
     relevant Exercise Price in effect immediately after adjustment of the
     relevant Exercise Price. The Corporation shall make a public announcement
     of its election to adjust the number of Rights, indicating the record date
     for the adjustment, and, if known at the time, the amount of the adjustment
     to be made. This record date may be the date on which the relevant Exercise
     Price is adjusted or any day thereafter, but, if the Rights Certificates
     have been issued, shall be at least 10 calendar days later than the date of
     the public announcement. If Rights Certificates have been issued, upon each
     adjustment of the number of Rights pursuant to this Subsection 2.3(m), the
     Corporation shall, as promptly as practicable, cause to be distributed to
     holders of record of Rights Certificates on such record date, Rights
     Certificates evidencing, subject to Section 5.5, the additional Rights to
     which such holders shall be entitled as a result of such adjustment, or, at
     the option of the Corporation, shall cause to be distributed to such
     holders of record in substitution and replacement for the Rights
     Certificates held by such holders prior to the date of adjustment, and upon
     surrender thereof, if required by the Corporation, new Rights Certificates
     evidencing all the Rights to which such holders shall be entitled after
     such adjustment. Rights Certificates so to be distributed shall be issued,
     executed and countersigned in the manner provided for herein and may bear,
     at the option of the Corporation, the relevant adjusted Exercise Price and
     shall be registered in the names of holders of record of Rights
     Certificates on the record date specified in the public announcement.

(n)  In any case in which this Section 2.3 shall require that an adjustment in
     an Exercise Price be made effective as of a record date for a specified
     event, the Corporation may elect to defer until the occurrence of such
     event the issuance to the holder of any Right exercised after such record
     date of the number of Common Shares and other securities of the
     Corporation, if any, issuable upon such
<PAGE>

                                      -20-

     exercise over and above the number of Common Shares and other securities of
     the Corporation, if any, issuable upon such exercise on the basis of the
     relevant Exercise Price in effect prior to such adjustment; provided,
     however, that the Corporation shall deliver to such holder an appropriate
     instrument evidencing such holder's right to receive such additional Common
     Shares (fractional or otherwise) or other securities upon the occurrence of
     the event requiring such adjustment.

(o)  Notwithstanding anything in this Section 2.3 to the contrary, the
     Corporation shall be entitled to make such adjustments in the Exercise
     Price, in addition to those adjustments expressly required by this Section
     2.3, as and to the extent that in its good faith judgment the Board of
     Directors shall determine to be advisable in order that any (i) subdivision
     or consolidation of the Common Shares, (ii) issuance wholly for cash of any
     Common Shares at less than the applicable Market Price, (iii) issuance
     wholly for cash of any Common Shares or securities that by their terms are
     exchangeable for or convertible into or give a right to acquire Common
     Shares, (iv) stock dividends, or (v) issuance of rights, options or
     warrants referred to in this Section 2.3, hereafter made by the Corporation
     to holders of its Common Shares, shall not be taxable to such shareholders.

(p)  Irrespective of any adjustment or change in the securities purchasable upon
     exercise of the Rights, the Rights Certificates theretofore and thereafter
     issued may continue to represent the securities so purchasable which were
     represented in the initial Rights Certificates issued hereunder.

(q)  Whenever an adjustment to the Exercise Price is made pursuant to this
     Section 2.3, the Corporation shall

     (i)  promptly prepare a certificate setting forth such adjustment and a
          brief statement of the facts accounting for such adjustment; and

     (ii) promptly file with the Rights Agent and with each transfer agent for
          the Common Shares a copy of such certificate and mail a brief summary
          thereof to each holder of Rights who requests a copy.

     Failure to file such certificate or to cause such notice to be given as
     aforesaid, or any defect therein, shall not affect the validity of any such
     adjustment or change.

2.4  Date on Which Exercise is Effective

     Each Person in whose name any certificate for Common Shares is issued upon
the exercise of Rights shall for all purposes be deemed to have become the
holder of record of the Common Shares represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered (together with a duly completed
Election to Exercise) and payment of the Exercise Price for such Rights (and any
applicable transfer taxes and other governmental charges payable by the
exercising Person hereunder) was made; provided, however, that if the date of
such surrender and payment is a date upon which the Common Share transfer books
of the Corporation are closed, such Person shall be deemed to have become the
record holder of such shares on, and such certificate shall be dated, the next
Business Day on which the Common Share transfer books of the Corporation are
open.

2.5  Execution, Authentication, Delivery and Dating of Rights Certificates

     (a)  The Rights Certificates shall be executed on behalf of the Corporation
          by its Chief Executive Officer, President, and by one of its Chief
          Financial Officer, its Treasurer, its Secretary or its Controller. The
          signature of any of these officers on the Rights Certificates may be
          manual or facsimile. Rights Certificates bearing the manual or
          facsimile signatures
<PAGE>

                                      -21-

          of individuals who were at any time the proper officers of the
          Corporation shall bind the Corporation, notwithstanding that such
          individuals or any of them have ceased to hold such offices prior to
          the countersignature and delivery of such Rights Certificates.

     (b)  Promptly following the Separation Time, the Corporation will notify
          the Rights Agent of such Separation Time and will deliver Rights
          Certificates executed by the Corporation to the Rights Agent for
          countersignature and a statement describing the Rights, and the Rights
          Agent shall countersign (manually or by facsimile signature in a
          manner satisfactory to the Corporation) and deliver such Rights
          Certificates and statement to the holders of the Rights pursuant to
          Section 2.2 hereof. No Rights Certificate shall be valid for any
          purpose until countersigned by the Rights Agent as aforesaid.

     (c)  Each Rights Certificate shall be dated the date of countersignature
          thereof.

2.6  Registration, Transfer and Exchange

     (a)  After the Separation Time, the Corporation shall cause to be kept a
          register (the "Rights Register") in which, subject to such reasonable
          regulations as it may prescribe, the Corporation will provide for the
          registration and transfer of Rights. The Rights Agent is hereby
          appointed "Rights Registrar" for the purpose of maintaining the Rights
          Register for the Corporation and registering Rights and transfers of
          Rights as herein provided and the Rights Agent hereby accepts such
          appointment. In the event that the Rights Agent shall cease to be the
          Rights Registrar, the Rights Agent will have the right to examine the
          Rights Register at all reasonable times.

     (b)  After the Separation Time and prior to the Expiration Time, upon
          surrender for registration of transfer or exchange of any Rights
          Certificate, and subject to the provisions of Subsections 2.6(d) and
          3.1(b) below, the Corporation will execute, and the Rights Agent will
          countersign, deliver and register, in the name of the holder or the
          designated transferee or transferees, as required pursuant to the
          holder's instructions, one or more new Rights Certificates evidencing
          the same aggregate number of Rights as did the Rights Certificates so
          surrendered.

     (c)  All Rights issued upon any registration of transfer or exchange of
          Rights Certificates shall be valid obligations of the Corporation, and
          such Rights shall be entitled to the same benefits under this
          Agreement as the Rights surrendered upon such registration of transfer
          or exchange.

     (d)  Every Rights Certificate surrendered for registration of transfer or
          exchange shall be duly endorsed, or be accompanied by a written
          instrument of transfer in form satisfactory to the Corporation or the
          Rights Agent, as the case may be, duly executed by the holder thereof
          or such holder's attorney duly authorized in writing. As a condition
          to the issuance of any new Rights Certificate under this Section 2.6,
          the Corporation may require the payment of a sum sufficient to cover
          any tax or other governmental charge that may be imposed in relation
          thereto and any other expenses (including the fees and expenses of the
          Rights Agent) in connection therewith.

2.7  Mutilated, Lost, Stolen and Destroyed Rights Certificates

     (a)  If any mutilated Rights Certificate is surrendered to the Rights Agent
          prior to the Expiration Time, the Corporation shall execute and the
          Rights Agent shall countersign and
<PAGE>

                                      -22-

          deliver in exchange therefor a new Rights Certificate evidencing the
          same number of Rights as did the Rights Certificate so surrendered.

     (b)  If there shall be delivered to the Corporation and the Rights Agent
          prior to the Expiration Time: (i) evidence to their reasonable
          satisfaction of the destruction, loss or theft of any Rights
          Certificate; and (ii) such security or indemnity as may be reasonably
          required by them to save each of them and any of their agents
          harmless, then, in the absence of notice to the Corporation or the
          Rights Agent that such Rights Certificate has been acquired by a bona
          fide purchaser, the Corporation shall execute and, upon the
          Corporation's request the Rights Agent shall countersign and deliver,
          in lieu of any such destroyed, lost or stolen Rights Certificate, a
          new Rights Certificate evidencing the same number of Rights as did the
          Rights Certificate so destroyed, lost or stolen.

     (c)  As a condition to the issuance of any new Rights Certificate under
          this Section 2.7, the Corporation may require the payment of a sum
          sufficient to cover any tax or other governmental charge that may be
          imposed in relation thereto and any other expenses (including the fees
          and expenses of the Rights Agent) connected therewith.

     (d)  Every new Rights Certificate issued pursuant to this Section 2.7 in
          lieu of any destroyed, lost or stolen Rights Certificate shall
          evidence a contractual obligation of the Corporation, whether or not
          the destroyed, lost or stolen Rights Certificate shall be at any time
          enforceable by anyone, and shall be entitled to all the benefits of
          this Agreement equally and proportionately with any and all other
          Rights duly issued hereunder.

2.8  Persons Deemed Owners

     The Corporation, the Rights Agent and any agent of the Corporation or the
Rights Agent may deem and treat the person in whose name a Rights Certificate
(or, prior to the Separation Time, the associated Common Share certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby for
all purposes whatsoever. As used in this Agreement, unless the context otherwise
requires, the term "holder" of any Rights shall mean the registered holder of
such Rights (or, prior to the Separation Time, the associated Common Shares).

2.9  Delivery and Cancellation of Certificates

     All Rights Certificates surrendered upon exercise or for redemption, for
registration of transfer or for exchange shall, if surrendered to any person
other than the Rights Agent, be delivered to the Rights Agent and, in any case,
shall be promptly cancelled by the Rights Agent. The Corporation may at any time
deliver to the Rights Agent for cancellation any Rights Certificates previously
countersigned and delivered hereunder which the Corporation may have acquired in
any manner whatsoever, and all Rights Certificates so delivered shall be
promptly cancelled by the Rights Agent. No Rights Certificate shall be
countersigned in lieu of or in exchange for any Rights Certificates cancelled as
provided in this Section 2.9 except as expressly permitted by this Agreement.
The Rights Agent shall, subject to applicable law, destroy all cancelled Rights
Certificates and deliver a certificate of destruction to the Corporation.

2.10 Agreement of Rights Holders

     Every holder of Rights, by accepting such Rights, consents and agrees with
the Corporation and the Rights Agent and with every other holder of Rights:

(a)  to be bound by and subject to the provisions of this Agreement, as amended
     from time to time in
<PAGE>

                                      -23-

     accordance with the terms hereof, in respect of all Rights held;

(b)  that, prior to the Separation Time, each Right will be transferable only
     together with, and will be transferred by a transfer of, the associated
     Common Share;


(c)  that, after the Separation Time, the Rights will be transferable only on
     the Rights Register as provided herein;


(d)  that, prior to due presentment of a Rights Certificate (or, prior to the
     Separation Time, the associated Common Share certificate) for registration
     of transfer, the Corporation, the Rights Agent and any agent of the
     Corporation or the Rights Agent may deem and treat the Person in whose name
     the Rights Certificate (or, prior to the Separation Time, the associated
     Common Share certificate) is registered as the absolute owner thereof and
     of the Rights evidenced thereby (notwithstanding any notations of ownership
     or writing on such Rights Certificate or the associated Common Share
     certificate made by anyone other than the Corporation or the Rights Agent)
     for all purposes whatsoever, and neither the Corporation nor the Rights
     Agent shall be affected by any notice to the contrary;

(e)  that such holder of Rights has waived its right to receive any fractional
     Rights or any fractional Common Shares or other securities upon exercise of
     a Right (except as provided herein);

(f)  that, subject to the provisions of Section 5.4, without the approval of any
     holder of Rights or Voting Shares and upon the sole authority of the Board
     of Directors acting in good faith, this Agreement may be supplemented or
     amended from time to time as provided herein; and

(g)  notwithstanding anything in this Agreement to the contrary, neither the
     Corporation nor the Rights Agent shall have any liability to any holder of
     a Right or any other Person as a result of its inability to perform any of
     its obligations under this Agreement by reason of any preliminary or
     permanent injunction or other order, decree or ruling issued by a court of
     competent jurisdiction or by a governmental, regulatory or administrative
     agency or commission, or any statute, rule, regulation or executive order
     promulgated or enacted by any governmental authority, prohibiting or
     otherwise restraining performance of such obligation.


                                   ARTICLE 3
                           ADJUSTMENTS TO THE RIGHTS

3.1  Flip-in Event

     (a)  Subject to Sections 3. 1 (b) and 5. 1, in the event that prior to the
          Expiration Time a Flip-in Event occurs, each Right shall thereafter
          constitute the right to purchase from the Corporation, upon exercise
          thereof in accordance with the terms hereof, that number of Common
          Shares of the Corporation as have an aggregate Market Price on the
          date of consummation or occurrence of such Flip-in Event equal to
          twice the Exercise Price for an amount in cash equal to the Exercise
          Price (such right to be appropriately adjusted in a manner analogous
          to the applicable adjustment provided for in Section 2.3 in the event
          that, after such date of consummation or occurrence, an event of a
          type analogous to any of the events described in Section 2.3 shall
          have occurred with respect to such Common Shares).
<PAGE>

                                      -24-


     (b)  Notwithstanding anything in this Agreement to the contrary, upon the
          occurrence of any Flip-in Event, any Rights that are or were
          Beneficially Owned on or after the earlier of the Separation Time and
          the Stock Acquisition Date, or which may thereafter be Beneficially
          Owned, by:

          (i)  an Acquiring Person (or any Affiliate or Associate of an
               Acquiring Person or any other Person acting jointly or in concert
               with an Acquiring Person or any Associate or Affiliate of such
               other Person); or

          (ii) a transferee of Rights, direct or indirect, from an Acquiring
               Person (or from any Affiliate or Associate of an Acquiring Person
               or any Person acting jointly or in concert with an Acquiring
               Person or any associate or Affiliate thereof) where such a
               transferee becomes a transferee concurrently with or subsequent
               to the Acquiring Person becoming such in a transfer that the
               Board of Directors has determined is part of a plan, arrangement
               or scheme of an Acquiring Person (or of any Person acting jointly
               or in concert with an Acquiring Person or any Associate or
               Affiliate of an Acquiring Person), that has the purpose or effect
               of avoiding Clause 3.1(b)(i);

          shall become null and void without any further action and any holder
          of such Rights (including any transferee of, or other successor
          entitled to, such Rights, whether directly or indirectly) shall
          thereafter have no right to exercise such Rights under any provisions
          of this Agreement and further shall thereafter not have any rights
          whatsoever with respect to such Rights, whether under any provision of
          this Agreement or otherwise. The holder of any Rights represented by a
          Rights Certificate which is submitted to the Rights Agent upon
          exercise or for registration of transfer or exchange which does not
          contain the necessary certifications set forth in the Rights
          Certificate establishing that such Rights are not void under this
          Subsection 3.1(b) shall be deemed to be an Acquiring Person for the
          purposes of this Subsection 3.1 (b) and such Rights shall become null
          and void.

     (c)  Any Rights Certificate that represents Rights Beneficially Owned by a
          Person described in either of Clauses 3.1(b)(i) or 3.1(b)(ii) or
          transferred to any Nominee of any such Person, and any Rights
          Certificate issued upon transfer, exchange, replacement or adjustment
          of any other Rights Certificate, referred to in this sentence, shall
          contain or will be deemed to contain the following legend:

                  "The Rights represented by this Rights Certificate were issued
                  to a Person who was an Acquiring Person or an Affiliate or an
                  Associate of an Acquiring Person (as such terms are defined in
                  the Rights Agreement) or acting jointly or in concert with any
                  of them. This Rights Certificate and the Rights represented
                  hereby shall be void in the circumstances specified in
                  Subsection 3.1(b) of the Shareholder Rights Plan Agreement."

          The Rights Agent shall not be under any responsibility to ascertain
          the existence of facts that would require the imposition of such
          legend but shall be required to impose such legend only if instructed
          to do so in writing by the Corporation or if a holder fails to certify
          upon transfer or exchange in the space provided to do so.

     (d)  After the Separation Time, the Corporation shall do all such acts and
          things necessary and within its power to ensure compliance with the
          provisions of this Section 3.1 including, without limitation, all such
          acts and things as may be required to satisfy the requirements
<PAGE>

                                      -25-

          of the Canada Business Corporations Act, the Securities Act and the
          securities laws or comparable legislation in each of the provinces of
          Canada and in any other jurisdiction where the Corporation is subject
          to such laws and the rules of the stock exchanges or quotation systems
          where the Common Shares are listed or quoted at such time in respect
          of the issue of Common Shares upon the exercise of Rights in
          accordance with this Agreement.

3.2  Fiduciary Duties of the Board of Directors of the Corporation

     For clarification, it is understood that nothing contained in this Article
3 shall be considered to affect the obligations of the Board of Directors to
exercise its fiduciary duties. Without limiting the generality of the foregoing,
nothing contained herein shall be construed to suggest or imply that the Board
of Directors shall not be entitled to recommend that holders of the Voting
Shares reject or accept any Take-over Bid or take any other action including,
without limitation, the commencement, prosecution, defense or settlement of any
litigation and the submission of additional or alternative Take-over Bids or
other proposals to the shareholders of the Corporation with respect to any
Takeover Bid or otherwise that the Board of Directors believes is necessary or
appropriate in the exercise of its fiduciary duties.

                                   ARTICLE 4
                               THE RIGHTS AGENT

4.1  General

(a)  The Corporation hereby appoints the Rights Agent to act as agent for the
     Corporation and the holders of the Rights in accordance with the terms and
     conditions hereof, and the Rights Agent hereby accepts such appointment.
     The Corporation may from time to time appoint such co-rights agents ("Co-
     Rights Agents") as it may deem necessary or desirable subject to the prior
     written approval of the Rights Agent. In the event the Corporation appoints
     one or more Co-Rights Agents, the respective duties of the Rights Agent and
     Co-Rights Agents shall be as the Corporation may determine with the written
     approval of the Rights Agent. The Corporation agrees to pay to the Rights
     Agent reasonable compensation for all services rendered by it hereunder
     and, from time to time, on demand of the Rights Agent, its reasonable
     expenses and other disbursements reasonably incurred in the administration
     and execution of this Agreement and the exercise and performance of its
     duties hereunder, including the reasonable fees and disbursements of
     counsel and other experts consulted by the Rights Agent pursuant to
     Subsection 4.3(a). The Corporation also agrees to indemnify the Rights
     Agent, its officers, directors, employees and agents for, and to hold it
     harmless against, any loss, liability, cost, claim, action, damage, suit or
     expense, incurred without negligence, bad faith or wilful misconduct on the
     part of the Rights Agent, for anything done or omitted by the Rights Agent
     in connection with the acceptance and administration of this Agreement,
     including the legal costs and expenses, which right to indemnification will
     survive the termination of this Agreement or the removal or resignation of
     the Rights Agent.

(b)  The Rights Agent shall be protected and shall incur no liability for or in
     respect of any action taken, suffered or omitted by it in connection with
     its administration of this Agreement in reliance upon any certificate for
     Common Shares, Rights Certificate, certificate for other securities of the
     Corporation, instrument of assignment or transfer, power of attorney,
     endorsement, affidavit, letter, notice, direction, consent, certificate,
     statement, or other paper or document believed by it to be genuine and to
     be signed, executed and, where necessary, verified or acknowledged, by the
     proper Person or Persons.

(c)  The Corporation shall inform the Rights Agent in a reasonably timely manner
     of events which may
<PAGE>

                                      -26-

     materially affect the administration of this Agreement by the Rights Agent
     and, at any time upon request, shall provide to the Rights Agent an
     incumbency certificate certifying the then current officers of the
     Corporation.

4.2  Merger, Amalgamation, Consolidation or Change of Name of Rights Agent

(a)  Any corporation into which the Rights Agent or any successor Rights Agent
     may be merged or amalgamated or with which it may be consolidated, or any
     corporation resulting from any merger, amalgamation or consolidation to
     which the Rights Agent or any successor Rights Agent is a party, or any
     corporation succeeding to the shareholder services business of the Rights
     Agent or any successor Rights Agent, will be the successor to the Rights
     Agent under this Agreement without the execution or filling of any document
     or any further act on the part of any of the parties hereto, provided that
     such corporation would be eligible for appointment as a successor Rights
     Agent under the provisions of Section 4.4 hereof. In case at the time such
     successor Rights Agent succeeds to the agency created by this Agreement any
     of the Rights Certificates have been countersigned but not delivered any
     such successor Rights Agent may adopt the countersignature of the
     predecessor Rights Agent and deliver such Rights Certificates so
     countersigned; and in case at that time any of the Rights Certificates have
     not been countersigned, any successor Rights Agent may countersign such
     Rights Certificates either in the name of the predecessor Rights Agent or
     in the name of the successor Rights Agent; and in all such cases such
     Rights Certificates will have the full force provided in the Rights
     Certificates and in this Agreement.

(b)  In case at any time the name of the Rights Agent is changed and at such
     time any of the Rights Certificates shall have been countersigned but not
     delivered, the Rights Agent may adopt the countersignature under its prior
     name and deliver Rights Certificates so countersigned; and in case at that
     time any of the Rights Certificates shall not have been countersigned, the
     Rights Agent may countersign such Rights Certificates either in its prior
     name or in its changed name; and in all such cases such Rights Certificates
     shall have the full force provided in the Rights Certificates and in this
     Agreement.

4.3  Duties of Rights Agent

     The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the
Corporation and the holders of Rights Certificates, by their acceptance thereof,
shall be bound:

(a)  The Rights Agent may retain and consult with legal counsel (who may be
     legal counsel for the Corporation) or such other experts that the Rights
     Agent considers necessary to carry out its duties under this Agreement and
     the opinion of such counsel or other expert will be full and complete
     authorization and protection to the Rights Agent as to any action taken or
     omitted by it in good faith and in accordance with such opinion; the Rights
     Agent may also, with the approval of the Corporation (such approval not to
     be unreasonably withheld), consult with such other experts as the Rights
     Agent shall consider necessary or appropriate to properly carry out the
     duties and obligations imposed under this Agreement (at the expense of the
     Corporation) and the Rights Agent shall be entitled to act and rely in good
     faith on the advice of any such expert.

(b)  Whenever in the performance of its duties under this Agreement the Rights
     Agent deems it necessary or desirable that any fact or matter be proved or
     established by the Corporation prior to taking or suffering any action
     hereunder, such fact or matter (unless other evidence in respect thereof be
     herein specifically prescribed) may be deemed to be conclusively proved and
     established
<PAGE>

                                      -27-

     by a certificate signed by a person believed by the Rights Agent to be a
     senior officer of the Corporation and delivered to the Rights Agent; and
     such certificate will be full authorization to the Rights Agent for any
     action taken or suffered in good faith by it under the provisions of this
     Agreement in reliance upon such certificate.

(c)  The Rights Agent will be liable hereunder only for its own negligence, bad
     faith or wilful misconduct.

(d)  The Rights Agent will not be liable for or by reason of any of the
     statements of fact or recitals contained in this Agreement or in the
     certificates for Common Shares, or the Rights Certificates (except its
     countersignature thereof) or be required to verify the same, and all such
     statements and recitals are and will be deemed to have been made by the
     Corporation only.

(e)  The Rights Agent will not be under any responsibility in respect of the
     validity of this Agreement or the execution and delivery hereof (except the
     due authorization, execution and delivery hereof by the Rights Agent) or in
     respect of the validity or execution of any Common Share certificate, or
     Rights Certificate (except its countersignature thereon) nor will it be
     responsible for any breach by the Corporation of any covenant or condition
     contained in this Agreement or in any Rights Certificate; nor will it be
     responsible for any change in the exercisability of the Rights (including
     the Rights becoming void pursuant to Subsection 3.1(b) hereof or any
     adjustment required under the provisions of Section 2.3) hereof or
     responsible for the manner, method or amount of any such adjustment or the
     ascertaining of the existence of facts that would require any such
     adjustment (except with respect to the exercise of Rights after receipt of
     the certificate contemplated by Section 2.3 describing any such adjustment
     or any written notice from the Corporation or any holder that a Person has
     become an Acquiring Person); nor will it by any act hereunder be deemed to
     make any representation or warranty as to the authorization of any Common
     Shares to be issued pursuant to this Agreement or any Rights or as to any
     Common Shares, when issued, being duly and validly authorized, issued and
     delivered as fully paid and non-assessable.

(f)  The Corporation agrees that it will perform, execute, acknowledge and
     deliver or cause to be performed, executed, acknowledged and delivered all
     such further and other acts, instruments and assurances as may reasonably
     be required by the Rights Agent for the carrying out or performing by the
     Rights Agent of the provisions of this Agreement.

(g)  The Rights Agent is hereby authorized and directed to accept instructions
     with respect to the performance of its duties hereunder from any person
     designated in writing by the Corporation, and to apply to such individuals
     for advice or instructions in connection with its duties, and it shall not
     be liable for any action taken or suffered by it in good faith in
     accordance with instructions of any such individual. It is understood that
     instructions to the Rights Agent shall, except where circumstances make it
     impractical or the Rights Agent otherwise agrees, be given in writing and,
     where not in writing, such instructions shall be confirmed in writing as
     soon as reasonably practicable after the giving of such instructions.

(h)  Subject to applicable law, the Rights Agent and any shareholder or
     director, officer or employee of the Rights Agent may buy, sell or deal in
     Common Shares, Rights or other securities of the Corporation or become
     pecuniarily interested in any transaction in which the Corporation may be
     interested, or contract with or lend money to the Corporation or otherwise
     act as fully and freely as though it were not the Rights Agent under this
     Agreement. Nothing herein shall preclude the Rights Agent from acting in
     any other capacity for the Corporation or for any other legal entity.
<PAGE>

                                      -28-

(i)  The Rights Agent may execute and exercise any of the rights or powers
     hereby vested in it or perform any duty hereunder either itself or by or
     through its attorneys or agents, and the Rights Agent will not be
     answerable or accountable for any act, default, neglect or misconduct of
     any such attorneys or agents or for any loss to the Corporation resulting
     from any such act, default, neglect or misconduct, provided reasonable care
     was exercised in the selection and continued employment thereof.

4.4  Change of Rights Agent

     The Rights Agent may resign and be discharged from its duties under this
Agreement by giving 60 days' prior written notice (or such lesser notice as is
acceptable to the Corporation) to the Corporation, to each transfer agent of
Common Shares and to the holders of the Rights, all in accordance with Section
5.9 and at the expense of the Corporation. The Corporation may remove the Rights
Agent by giving 30 days' prior written notice to the Rights Agent, to each
transfer agent of the Common Shares and to the holders of the Rights in
accordance with Section 5.9. If the Rights Agent should resign or be removed or
otherwise become incapable of acting, the Corporation will appoint a successor
to the Rights Agent. If the Corporation fails to make such appointment within a
period of 30 days after such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of any Rights (which holder shall, with such notice, submit such
holder's Rights Certificate for inspection of the Corporation), then the holder
of any Rights or the Rights Agent may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent at the Corporation's
expense. Any successor Rights Agent, whether appointed by the Corporation or by
such a court, must be a corporation incorporated under the laws of Canada or a
province thereof and authorized to carry on the business of a trust company in
the Province of Ontario. After appointment, the successor Rights Agent will be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent, upon receipt of any outstanding fees and expenses then
owing, shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Corporation will file notice thereof in
writing with the predecessor Rights Agent and each transfer agent of the Common
Shares and mail a notice thereof in writing to the holders of the Rights in
accordance with Section 5.9. Failure to give any notice provided for in this
Section 4.4, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.

                                   ARTICLE 5
                                 MISCELLANEOUS

5.1  Redemption, Waiver and Termination

(a)  Subject to the prior consent of the holders of the Voting Shares obtained
     as set forth in Subsection 5.4(b), the Board of Directors acting in good
     faith may, at any time prior to the later of the Stock Acquisition Date and
     the Separation Time, elect to redeem all but not less than all of the then
     outstanding Rights at a redemption price of $0.0001 per Right appropriately
     adjusted in a manner analogous to the applicable adjustments provided for
     in Section 2.3 in the event that an event of the type analogous to any of
     the events described in Section 2.3 shall have occurred (such redemption
     price being herein referred to as the "Redemption Price").

(b)  The Board of Directors shall waive the application of Section 3.1 in
     respect of the occurrence of any Flip-in Event if the Board of Directors
     has determined, following the Stock Acquisition Date and prior to the
     Separation Time, that a Person became an Acquiring Person by inadvertence
     and without any intention to become, or knowledge that it would become, an
     Acquiring Person under
<PAGE>

                                      -29-

     this Agreement and, in the event that such a waiver is granted by the Board
     of Directors, such Stock Acquisition Date shall be deemed not to have
     occurred. Any such waiver pursuant to this Subsection 5.1(b) may only be
     given on the condition that such Person, within 10 days after the foregoing
     determination by the Board of Directors or such later date as the Board of
     Directors may determine (the "Disposition Date"), has reduced its
     Beneficial Ownership of Voting Shares such that the Person is no longer an
     Acquiring Person. If the Person remains an Acquiring Person at the Close of
     Business on the Disposition Date, the Disposition Date shall be deemed to
     be the date of occurrence of a further Stock Acquisition Date and Section
     3.1 shall apply thereto.

(c)  In the event that a Person acquires Voting Shares pursuant to a Permitted
     Bid or an Exempt Acquisition referred to in Subsection 5.1(d), then the
     Board of Directors of the Corporation shall, immediately upon the
     consummation of such acquisition and without further formality, be deemed
     to have elected to redeem the Rights at the Redemption Price.

(d)  The Board of Directors acting in good faith may, prior to the occurrence of
     the relevant Flip-in Event, upon prior written notice delivered to the
     Rights Agent, determine to waive the application of Section 3.1 to a Flip-
     in Event that may occur by reason of a Take-over Bid made by means of a
     Take-over Bid circular to all holders of record of Voting Shares provided
     that if the Board of Directors waives the application of Section 3.1 in
     respect of a Take-over Bid pursuant to this Subsection 5.1(d), the Board of
     Directors shall also be deemed to have waived the application of Section
     3.1 in respect of any other Take-over Bid made by means of a circular to
     all holders of record of Voting Shares prior to the expiry of any Take-over
     Bid in respect of which a waiver is, or is deemed to have been, granted
     under this Subsection 5.1 (d).

(e)  The Board of Directors may, prior to the Close of Business on the eighth
     Business Day following a Stock Acquisition Date or such later Business Day
     as they may from time to time determine, upon prior written notice
     delivered to the Rights Agent, waive the application of Section 3.1 to the
     related Flip-in Event, provided that the Acquiring Person has reduced its
     Beneficial Ownership of Voting Shares (or has entered into a contractual
     arrangement with the Corporation, acceptable to the Board of Directors, to
     do so within 10 days of the date on which such contractual arrangement is
     entered into or such later date as the Board of Directors may determine)
     such that at the time the waiver becomes effective pursuant to this
     Subsection 5.1 (e) such Person is no longer an Acquiring Person. In the
     event of such a waiver becoming effective prior to the Separation Time, for
     the purposes of this Agreement, such Flip-in Event shall be deemed not to
     have occurred.

(f)  Where a Take-over Bid that is not a Permitted Bid Acquisition is withdrawn
     or otherwise terminated after the Separation Time has occurred and prior to
     the occurrence of a Flip-in Event, or if the Board of Directors grants a
     waiver under Subsection 5.1 (e) after the Separation Time, the Board of
     Directors may elect to redeem all the outstanding Rights at the Redemption
     Price. Upon the Rights being redeemed pursuant to this Subsection 5.1(f),
     all the provisions of this Agreement shall continue to apply as if the
     Separation Time had not occurred and Rights Certificates representing the
     number of Rights held by each holder of record of Common Shares at the
     Separation Time had not been mailed to each such holder, for all purposes
     of this Agreement the Separation Time shall be deemed not to have occurred
     and the Corporation shall be deemed to have issued replacement Rights to
     the holders of its then outstanding Common Shares.

(g)  If the Board of Directors is deemed under Subsection 5.1(c) to have elected
     or elects under Subsection 5.1(a) to redeem the Rights, the right to
     exercise the Rights will thereupon, without further action and without
     notice, terminate and the only right thereafter of the holders of Rights
     shall be to receive the Redemption Price.
<PAGE>

                                      -30-

(h)  Within 10 days after the Board of Directors is deemed under Subsection
     5.1(c) to have elected or elects under Subsection 5.1(a) or (f) to redeem
     the Rights, the Corporation shall give notice of redemption to the holders
     of the then outstanding Rights by mailing such notice to each such holder
     at his last address as it appears upon the registry books of the Rights
     Agent or, prior to the Separation Time, on the registry books of the
     transfer agent for the Voting Shares. Any notice which is mailed in the
     manner herein provided shall be deemed given, whether or not the holder
     receives the notice. Each such notice of redemption will state the method
     by which the payment of the Redemption Price will be made.

5.2  Expiration

     No person will have any rights pursuant to this Agreement or in respect of
any Right after the Expiration Time, except in respect of any right to receive
cash, securities or other property which has accrued at the Expiration Time and
except as specified in Subsections 4.1(a) and 4.1(b) hereof.

5.3  Issuance of New Rights Certificates

     Notwithstanding any of the provisions of this Agreement or of the Rights to
the contrary, the Corporation may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the number or kind or class of shares
purchasable upon exercise of Rights made in accordance with the provisions of
this Agreement.

5.4  Supplements and Amendments

(a)  Subject to Subsections 5.4(b) and (c) and this Subsection 5.4(a), the
     Corporation may from time to time amend, vary or delete any of the
     provisions of this Agreement and the Rights provided that no amendment,
     variation or deletion made on or after the date of the meeting of
     Shareholders at which the resolution referred to in Section 5.21 is to be
     considered shall be made without the prior consent of the holders of the
     Rights, given as provided in Subsection 5.4(b) below, except that
     amendments, variations or deletions made for any of the following purposes
     shall not require such prior approval but shall be subject to subsequent
     ratification in accordance with Subsection 5.4(b):

     (i)  in order to make such changes as are necessary in order to maintain
          the validity of this Agreement and the Rights as a result of any
          change in any applicable legislation, regulations or rules; or

     (ii) in order to make such changes as are necessary in order to cure any
          clerical or typographical slip.

(b)  Any amendment, variation or deletion made by the Board of Directors
     pursuant to Subsection 5.4(a) shall:

     (i)  if made prior to the Separation Time, be submitted to the shareholders
          of the Corporation at the next meeting of shareholders and the
          shareholders may, by resolution passed by a majority of the votes cast
          by Independent Shareholders who vote in respect of such amendment,
          variation or deletion, confirm or reject such amendment or supplement;
          or

     (ii) if made after the Separation Time, be submitted to the holders of
          Rights at a meeting to be held on a date not later than the date of
          the next meeting of shareholders of the Corporation and the holders of
          Rights may, by resolution passed by a majority of the votes cast by
          the holders of Rights which have not become void pursuant to
          Subsection 3.1(b) who vote in
<PAGE>

                                      -31-

          respect of such amendment, variation or deletion, confirm or reject
          such amendment or supplement.

     Any amendment, variation or deletion pursuant to Subsection 5.4(a) shall be
     effective only when so consented to by the holders of Voting Shares or
     Rights, as applicable (except in the case of an amendment, variation or
     deletion referred to in any of Clauses 5.4(a)(i) or (ii), which shall be
     effective from the date of the resolution of the Board of Directors
     adopting such amendment, variation or deletion and shall continue in effect
     until it ceases to be effective (as in this paragraph described) and, where
     such amendment, variation or deletion is confirmed, it shall continue in
     effect in the form so confirmed). If an amendment, variation or deletion
     pursuant to Clause 5.4(a)(i) or (ii) is rejected by the shareholders or the
     holders of Rights or is not submitted to the shareholders or holders of
     Rights as required, then such amendment, variation or deletion shall cease
     to be effective from and after the termination of the meeting at which it
     was rejected or to which it should have been but was not submitted or from
     and after the date of the meeting of holders of Rights that should have
     been but was not held, and no subsequent resolution of the Board of
     Directors to amend, vary or delete any provision of this Agreement to
     substantially the same effect shall be effective until confirmed by the
     shareholders or holders of Rights, as the case may be.

     (c)  For greater certainty, (i) no amendment, variation or deletion to the
          provisions of Article 4 shall be made except with the concurrence of
          the Rights Agent thereto, and (ii) neither the exercise by the Board
          of Directors of any power or discretion conferred on it hereunder nor
          the making by the Board of Directors of any determination or the
          granting of any waiver it is permitted to make or give hereunder shall
          constitute an amendment, variation or deletion of the provisions of
          this Agreement or the Rights, for purposes of this Section 5.4 or
          otherwise.

     (d)  The approval, confirmation or consent of the holders of Rights with
          respect to any matter arising hereunder shall be deemed to have been
          given if the action requiring such approval, confirmation or consent
          is authorized by the affirmative votes of the holders of Rights
          present or represented at and entitled to be voted at a meeting of the
          holders of Rights and representing a majority of the votes cast in
          respect thereof. For the purposes hereof, each outstanding Right
          (other than Rights which are void pursuant to the provisions hereof or
          which, prior to the Separation Time, are held otherwise than by
          Independent Shareholders) shall be entitled to one vote, and the
          procedures for the calling, holding and conduct of the meeting shall
          be those, as nearly as may be, which are provided in the Corporation's
          Bylaws and the Canada Business Corporations Act with respect to
          meetings of shareholders of the Corporation.

     (e)  The Corporation shall be required to provide the Rights Agent with
          notice in writing of any such amendment, variation or deletion to this
          Agreement as referred to in this Section 5.4 within 5 days of
          effecting such amendment, variation or deletion.

     (f)  Any supplement of amendment to this Agreement pursuant to Subsections
          5.4 (b) through (e) shall be subject to the receipt of any requisite
          approval or consent from any governmental or regulatory authority
          having jurisdiction over the Corporation, including without limitation
          any requisite approval of stock exchanges on which the Common Shares
          are listed.

5.5  Fractional Rights and Fractional Shares

(a)  The Corporation will not be required to issue fractions of Rights or to
     distribute Rights Certificates
<PAGE>

                                      -32-

     which evidence fractional Rights. After the Separation Time there shall be
     paid, in lieu of such fractional Rights, to the registered holders of the
     Rights Certificates with regard to which fractional Rights would otherwise
     be issuable, an amount in cash equal to the same fraction of the Market
     Price of a whole Right. The Rights Agent shall have no obligation to make
     any payments in lieu of fractional Rights unless the Corporation shall have
     provided the Rights Agent with the necessary funds to pay in full all
     amounts payable in accordance with Section 2.2(e).

(b)  The Corporation shall not be required to issue fractional Common Shares
     upon exercise of the Rights or to distribute certificates that evidence
     fractional Common Shares. In lieu of issuing fractional Common Shares, the
     Corporation shall pay to the registered holder of Rights Certificates at
     the time such Rights are exercised as herein provided, an amount in cash
     equal to the same fraction of the Market Price of one Common Share at the
     date of such exercise.  The Rights Agent shall have no obligation to make
     any payments in lieu of fractional Common Shares unless the Corporation
     shall have provided the Rights Agent with the necessary funds to pay in
     full all amounts payable in accordance with Section 2.2(e).

5.6  Rights of Action

     Subject to the terms of this Agreement, rights of action in respect of this
Agreement, other than rights of action vested solely in the Rights Agent, are
vested in the respective holders of the Rights; and any holder of any Rights,
without the consent of the Rights Agent or of the holder of any other Rights
may, on such holder's own behalf and for such holder's own benefit and the
benefit of other holders of Rights, enforce, and may institute and maintain any
suit, action or proceeding against the Corporation to enforce, or otherwise act
in respect of, such holder's right to exercise such holder's Rights in the
manner provided in this Agreement and in such holder's Rights Certificate.
Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement and will be
entitled to specific performance of the obligations under, and injunctive relief
against actual or threatened violations of, the obligations of any Person
subject to this Agreement.

5.7  Holder of Rights Not Deemed a Shareholder

     No holder, as such, of any Rights or Rights Certificate shall be entitled
to vote, receive dividends or be deemed for any purpose the holder of Common
Shares or any other securities which may at any time be issuable on the exercise
of Rights, nor shall anything contained herein or in any Rights Certificate be
construed to confer upon the holder of any Rights, as such, any of the rights of
a shareholder of the Corporation or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders (except as provided in Section
5.8 hereof) or to receive dividends or subscription rights or otherwise, until
such Rights shall have been exercised in accordance with the provisions hereof.

5.8  Notice of Proposed Actions

     In case the Corporation proposes after the Separation Time and prior to the
Expiration Time to effect the liquidation, dissolution or winding up of the
Corporation or the sale of all or substantially all of the Corporation's assets,
then, in each such case, the Corporation shall give to each holder of a Right,
in accordance with Section 5.9 hereof, a notice of such proposed action, which
shall specify the date on which such liquidation, dissolution, or winding up is
to take place, and such notice shall be so given at least 20 Business Days prior
to the date of the taking of such proposed action by the Corporation.
<PAGE>

                                      -33-

5.9  Notices

     Notices or demands authorized or required by this Agreement to be given or
made to or by the Rights Agent, the holder of any Rights or the Corporation will
be sufficiently given or made and shall be deemed to be received if delivered or
sent by first-class mail, postage prepaid, or by fax machine or other means of
printed telecommunication, charges prepaid and confirmed in writing by mail or
delivery, addressed (until another address is filed in writing with the Rights
Agent or the Corporation, as applicable), as follows:

     (a)  if to the Corporation:

          Corel Corporation
          1600 Carling Avenue
          Ottawa, Ontario
          K1Z 8R7
          Attention: Corporate Secretary
          Facsimile No. (613) 725-2691

     (b)  if to the Rights Agent:

          Montreal Trust Company of Canada
          151 Front Street West
          8/th/ Floor
          Toronto, Ontario M5J 2N1
          Attention: Senior Manager, Client Services
          Facsimile No. (416) 981-9800

     (c)  if to the holder of any Rights, to the address of such holder as it
          appears on the registry books of the Rights Agent or, prior to the
          Separation Time, on the registry books of the Corporation for the
          Common Shares.

5.10 Costs of Enforcement

     The Corporation agrees that if the Corporation or any other Person the
securities of which are purchasable upon exercise of Rights fails to fulfil any
of its obligations pursuant to this Agreement, then the Corporation or such
Person will reimburse the holder of any Rights for the costs and expenses
(including legal fees) incurred by such holder in actions to enforce his rights
pursuant to any Rights or this Agreement.

5.11 Regulatory Approvals

     Any obligation of the Corporation or action or event contemplated by this
Agreement, shall be subject to applicable law and to the receipt of any
requisite approval or consent from any governmental or regulatory authority.
Without limiting the generality of the foregoing, any issuance or delivery of
debt or equity securities (other than non- convertible debt securities) of the
Corporation upon the exercise of Rights and any amendment to this Agreement
shall be subject to any required prior consent of the stock exchange(s) on which
the Corporation is from time to time listed or has been listed during the six
months prior to such amendment.
<PAGE>

                                      -34-

5.12 Declaration as to Non-Canadian and Non-U.S. Holders

     If in the opinion of the Board of Directors (who may rely upon the advice
of counsel), any action or event contemplated by this Agreement would require
compliance with the securities laws or comparable legislation of a jurisdiction
outside Canada and the United States of America, its territories and
possessions, the Board of Directors acting in good faith may take such actions
as it may deem appropriate to ensure that such compliance is not required,
including without limitation establishing procedures for the issuance to a
Canadian resident Fiduciary of Rights or securities issuable on exercise of
Rights, the holding thereof in trust for the Persons entitled thereto (but
reserving to the Fiduciary or to the judiciary and the Corporation, as the
Corporation may determine, absolute discretion with respect thereto) and the
sale thereof and remittance of the proceeds of such sale, if any, to the Persons
entitled thereto. In no event shall the Corporation or the Rights Agent be
required to issue or deliver Rights or securities issuable on exercise of Rights
to Persons who are citizens, residents or nationals of any jurisdiction other
than Canada and a province or territory thereof and the United States of America
and any state thereof in which such issue or delivery would be unlawful without
registration of the relevant Persons or securities for such purposes.

5.13 Successors

     All the covenants and provisions of this Agreement by or for the benefit of
the Corporation or the Rights Agent shall bind and enure to the benefit of their
respective successors and assigns hereunder.

5.14 Benefits of this Agreement

     Nothing in this Agreement shall be construed to give to any Person other
than the Corporation, the Rights Agent and the holders of the Rights any legal
or equitable right, remedy or claim under this Agreement; this Agreement shall
be for the sole and exclusive benefit of the Corporation, the Rights Agent and
the holders of the Rights.

5.15 Shareholder Review

     At or prior to the first annual meeting of shareholders of the Corporation
following the third anniversary of the date of this Agreement, provided that a
Flip-in Event has not occurred prior to such time, the Board of Directors shall
submit a resolution ratifying the continued existence of this Agreement to the
Independent Shareholders for their consideration and, if thought advisable,
approval. Unless a majority of the votes cast by Independent Shareholders who
vote in respect of such resolution are voted in favour of the continued
existence of this Agreement, the Board of Directors shall, immediately upon the
confirmation by the chairman of such shareholders' meeting of the result of the
vote on such resolution and without further formality, be deemed to have elected
to redeem the Rights at the Redemption Price.

5.16 Determination and Actions by the Board of Directors

     All actions, calculations, interpretations and determinations (including
all omissions with respect to the foregoing) which are done or made by the Board
of Directors, in good faith, (x) may be relied on by the Rights Agent, and (y)
shall not subject the Board of Directors to any liability to the holders of the
Rights or to any other parties.

5.17 Governing Law

     This Agreement and the Rights issued hereunder shall be deemed to be a
contract made under the laws of the Province of Ontario and for all purposes
will be governed by and construed in accordance with
<PAGE>

                                      -35-

the laws of such province applicable to contracts to be made and performed
entirely within such province.

5.18 Language

     Les parties aux presentes ont exige que la presente convention ainsi que
tous les documents et avis qui s'y rattachent et ou qui en coulent soient
rediges en langue anglaise. The parties hereto have required that this Agreement
and all documents and notices related thereto and or resulting therefrom be
drawn up in English.

5.19 Counterparts

     This Agreement may be executed in any number of counterparts and each of
such counterparts will for all purposes be deemed to be an original, and all
such counterparts shall together constitute one and the same instrument.

5.20 Severability

     If any term or provision hereof or the application thereof to any
circumstance is, in any jurisdiction and to any extent, invalid or
unenforceable, such term or provision will be ineffective only to the extent of
such invalidity or unenforceability without invalidating or rendering
unenforceable the remaining terms and provisions hereof or the application of
such term or provision to circumstances other than those as to which it is held
invalid or unenforceable.

5.21 Effective Date

     This Agreement is effective as of the Effective Date. If the Rights Plan is
not confirmed by resolution passed by a majority of the votes cast by
Independent Shareholders who vote in respect of such Rights Plan at a meeting to
be held not later than August 11, 1999 then this Agreement and any outstanding
Rights shall be of no further force and effect from the earlier of (a) the date
of the meeting, and (b) August 11, 1999.
<PAGE>

                                      -36-

5.22 Time of the Essence

     Time shall be of the essence hereof.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
     duly amended and restated effective March 31, 1999.


                         COREL CORPORATION


                         By: /s/ Michael C.J. Cowpland
                            ---------------------------------------


                         By: /s/ Michael O'Reilly
                            ---------------------------------------


                         MONTREAL TRUST COMPANY OF CANADA


                         By: /s/ Dan Dishy
                            ---------------------------------------


                         By: /s/ Christine Lawton
                            ---------------------------------------
<PAGE>

                                      -37-

                                   EXHIBIT A

                          Form of Rights Certificate

Certificate No.                                                          Rights


THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE CORPORATION, ON THE
TERMS SET FORTH IN THE SHAREHOLDER RIGHTS PLAN AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES (SPECIFIED IN SUBSECTION 3. I (b) OF SUCH AGREEMENT), RIGHTS
BENEFICIALLY OWNED BY AN ACQUIRING PERSON, CERTAIN RELATED PARTIES OF AN
ACQUIRING PERSON OR A TRANSFEREE OF AN ACQUIRING PERSON OR ANY SUCH RELATED
PARTIES WILL BECOME VOID WITHOUT FURTHER ACTION.

Rights Certificate

This certifies that _______________________ is the registered holder of the
number of Rights set forth above, each of which entitles the registered holder
thereof, subject to the terms, provisions and conditions of the Shareholder
Rights Plan Agreement made as of February 11, 1999 (the "Rights Agreement")
between Corel Corporation, a corporation existing under the laws of Ontario (the
"Corporation") and Montreal Trust Company of Canada, a trust company
incorporated under the laws of Canada, as Rights Agent (the "Rights Agent"),
which term shall include any successor Rights Agent under the Rights Agreement,
to purchase from the Corporation, at any time after the Separation Time and
prior to the Expiration Time (as such terms are defined in the Rights
Agreement), one fully paid common share of the Corporation (a "Common Share") at
the Exercise Price referred to below, upon presentation and surrender of this
Rights Certificate, together with the Form of Election to Exercise appropriately
completed and duly executed, to the Rights Agent at its principal office in
Toronto. Until adjustment thereof in certain events as provided in the Rights
Agreement, the Exercise Price shall be $100.00 per Right (payable by certified
cheque, bankers draft or money order payable to the order of the Rights Agent).
The number of Common Shares which may be purchased for the Exercise Price is
subject to adjustment as set forth in the Rights Agreement.

This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Rights Agent, the Corporation and the holder of the Rights Certificates. Copies
of the Rights Agreement are on file at the registered office of the Corporation
and are available upon written request.

This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal office of the Rights Agent in Toronto, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
evidencing an aggregate number of Rights equal to the aggregate number of Rights
evidenced by the Rights Certificate or Rights Certificates surrendered. If this
Rights Certificate shall be exercised in part, the registered holder shall be
entitled to receive, upon surrender hereof, another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.

Subject to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate may be redeemed by the Corporation at a redemption price of $0.0001
per Right subject to adjustment in certain events.

No fractional Common Shares will be issued upon the exercise of any Right or
Rights evidenced hereby, but in lieu thereof a cash payment will be made, as
provided in the Rights Agreement.
<PAGE>

                                      -38-

No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Common Shares or
any other securities which may at any time be issuable upon the exercise hereof,
nor shall anything contained in the Rights Agreement or herein be construed to
confer upon the holder hereof, as such, any of the rights of a shareholder of
the Corporation or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of any meeting or other
actions affecting shareholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights or otherwise, until the Rights
evidenced by this Rights Certificate shall have been exercised as provided in
the Rights Agreement.

This Rights Certificate shall not be valid for any purpose until it shall have
been countersigned by the Rights Agent.

WITNESS the facsimile signature of the proper officers of the Corporation.

Date: ____________________


                         COREL CORPORATION

                         Per: ________________________________

                         Per: _________________________________


                         Countersigned:

                         MONTREAL TRUST COMPANY OF CANADA,
                         in the City of Toronto

                         Per: _________________________________
<PAGE>

                                      -39-

                         FORM OF ELECTION TO EXERCISE

The undersigned hereby irrevocably elects to exercise _________________ whole
Rights represented by this Rights Certificate to purchase the Common Shares
issuable upon the exercise of such Rights and requests that certificates for
such Common Shares be issued in the name of and delivered to:


__________________________________
Name

__________________________________
Address

__________________________________
City and Province

__________________________________
Social Insurance No. or other taxpayer identification number

If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall be
registered in the name of and delivered to:

_________________________________
Name

_________________________________
Address

_________________________________
City and Province

_________________________________
Social Insurance No. or other taxpayer identification number

Date:___________________    _______________________________
                            Signature
Signature Guaranteed
                            (Signature must correspond to name as written upon
                            the face of this Rights Certificate in every
                            particular, without alteration or enlargement or any
                            change whatsoever)

Signature must be guaranteed by a Canadian chartered bank or trust company, a
member of a recognized stock exchange in Canada or a member of the Securities
Transfer Association Medallion (Stamp) Program.

                    (To be completed by the holder if true)

The undersigned hereby represents, for the benefit of the Corporation and all
holders of Rights and Common Shares, that the Rights evidenced by this Rights
Certificate are not and, to the knowledge of the undersigned, have never been,
Beneficially Owned by an Acquiring Person or by an Affiliate or Associate of an
Acquiring Person, any other Person acting jointly or in concert with an
Acquiring Person or any Affiliate or Associate
<PAGE>

                                      -40-

of any such other Person (as such terms are defined in the Rights Agreement).

                                        _____________________________
                                        Signature


                                    NOTICE

In the event that the certifications set forth above in the Form of Election to
Exercise are not completed, the Corporation shall deem the Beneficial Owner of
the Rights represented by this Rights Certificate to be an Acquiring Person (as
defined in the Rights Agreement) and, accordingly, such Rights shall be null and
void.
<PAGE>

                                      -41-

                              FORM OF ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

_______________________________________________________________________
(Please print name and address of transferee)
the Rights represented by this Rights Certificate, together with all right,
title and interest therein.

Date: ______________________   ____________________________________
                               Signature

____________________________

(Signature Guaranteed)         (Signature must correspond to name as written
                               upon the face of this Rights Certificate in every
                               particular, without alteration or enlargement or
                               any change whatsoever)

Signature must be guaranteed by a Canadian chartered bank or trust company, a
member of a recognized stock exchange in Canada or a member of the Securities
Transfer Association Medallion (Stamp) Program.

                   (To be completed by the assignor if true)

The undersigned hereby represents, for the benefit of the Corporation and all
holders of Rights and Common Shares, that the Rights evidenced by this Rights
Certificate are not and, to the knowledge of the undersigned have never been,
Beneficially Owned by an Acquiring Person or by an Affiliate or Associate of an
Acquiring Person, any other Person acting jointly or in concert with an
Acquiring Person or any Affiliate or Associate of any such other Person (as such
terms are deemed in the Rights Agreement).


                                             ___________________________________
                                             Signature

                                             ___________________________________
                                             (Please print name below signature)


                                    NOTICE

In the event that the certifications set forth above in the Form of Assignment
are not completed, the Corporation shall deem the Beneficial Owner of the Rights
represented by this Rights Certificate to be an Acquiring Person (as defined in
the Rights Agreement) and, accordingly, such Rights shall to be null and void.