1.6 **“Business”**means the development, marketing or sale of computer software foroffice productivity, graphics, or digital media, or any other software which theCorporation may be involved in developing, marketing, or selling during the term ofthis Agreement;  1.7 **“Commencement Date”**means August 10, 2007;  1.8 **“Confidential Information”**means all information, intellectual property (includingtrade secrets) and facts relating to, used or proposed to be used in the Business ofthe Corporation and its Affiliates, acquired by the Executive during any period inwhich the Executive was affiliated with the Corporation in the capacity of anemployee, director or shareholder which is confidential based upon its nature or thecircumstances surrounding its disclosure, and includes, without limiting thegenerality of the foregoing, information: a) relating to the Corporation’s or an Affiliate’s products and servicesor to the Corporation’s or a Affiliate’s research and development projects orplans;  b) relating to the Corporation’s or an Affiliate’s trade secrets,technology, patentable and unpatentable inventions, discoveries, processes, testprocedures and results, records, specifications, data, formulations, know-how,samples, specimens, manufacturing processes and regulatory information;  c) relating to the Corporation’s or an Affiliate’s business policies,strategies, operations, finances, plans or opportunities, including the identityof, or particulars about, the Corporation’s or an Affiliate’s clients orsuppliers; 1.9 **“Change of Control”** a) means any transaction or series of transactions, whether by way ofconsolidation, amalgamation, merger, reorganization or plan of amalgamationinvolving Corel Corporation, into any other person (other than an Affiliate of theCorporation or Vector);  b) any transfer, conveyance, sale, lease, exchange or otherwise of allor substantially all of the assets of Corel Corporation, to any other person(other than Vector); and
 

 
 c) the lawful acquisition by any person, or by a group of persons actingjointly or in concert, of that number of voting shares of Corel Corporation, whichis 35% or more of the total voting shares issued and outstanding immediately aftersuch acquisition, unless Vector continues to hold a number of voting shares whichrepresents a greater percentage than the first-mentioned person or group ofpersons.Provided that shares of Corel Corporation acquired through a public offering shall bedeemed to not result in a Change of Control. 1.10 **“Date of Termination”**has the meaning set out in section 7.1 of thisAgreement;  1.11 **“Disability”**means the mental or physical state of the Executive such that: a) subject to applicable human rights legislation, due toillness, disease, mental or physical disability or similar cause, theExecutive cannot substantially perform his duties as an employee, officer ordirector of the Corporation or any of its Subsidiaries, as applicable;  b) a court of competent jurisdiction has declared theExecutive to be mentally incompetent or incompetent to manage his affairs;  c) the Executive is eligible for, has applied for, and hasbeen accepted for long-term disability benefits under the Corporation’slong-term disability plan; or  d) an attorney pursuant to a continuing power of attorney forpersonal care or similar instrument is appointed to manage the affairs of theindividual due to the Executive’s mental incompetence; 1.12 **“Just Cause”**means: a) theft, fraud, dishonesty or willful misconduct by theExecutive in connection with the executive’s duties or involving theproperty, business or affairs of the Corporation, or the carrying out of theExecutive’s duties;  b) the significant breach by the Executive in any materialrespect of the Executive’s employment agreement; or  c) any other conduct that would be determined by the courts ofCalifornia to constitute gross misconduct.
 

 
   Anything herein to the contrary notwithstanding, Executive’s employment shall notbe terminated for “Just Cause” above unless written notice stating the basis forthe termination is provided to Executive, Executive is given thirty (30) daysafter receipt of such notice to cure the neglect or conduct that is the basis ofsuch claim (but only with respect to curable actions or failures to act), andExecutive has an opportunity to be heard before the full Board of Directors, and,after such hearing, there is a majority vote of the non-employee directors of theCorporation to terminate Executive for Just Cause.  1.13 **“Good Reason”**means any of the following, unless consented to by theExecutive: a) any material reduction in the Executive’s annual basesalary, benefits or perquisites;  b) any material reduction in the Executive’s ability to earnincentive compensation. A material reduction shall include any unreasonablechange to targets and goals within any fiscal year or from year to year butshall exclude a reduction caused by the failure of the Corporation of theExecutive to meet incentive compensation targets or goals; or  c) any material reduction or material adverse change inExecutive’s title, the nature or scope of the authorities, power, functions,responsibilities or duties of the executive;  d) any breach by the Corporation of any of it’s obligationsunder this agreement.  e) a relocation of Executive’s principal place of employmentmore than thirty-five (35) miles from its current location;  f) the failure of any successor-in-interest to assume all ofthe obligations of the Corporation under this Agreement; or  g) the assignment of duties that are substantiallyinconsistent with Executive’s training, education, professional experienceand the job for which he was initially hired hereunder. 1.14 **“Salary”**has the meaning set out in section 3(a).  1.15 **“Vector**” means any entity or fund Affiliated with, or managed directly orindirectly by, Vector Capital Corporation or its Affiliates, or any other entitycontrolled, directly or indirectly, by such entities or funds
 

 
**2****Employment of the Executive** 2.1 The Corporation shall employ the Executive in the position of President andGeneral Manager, Digital Media, of the Corporation for an indefinite period, subjectto termination pursuant to section 7;  2.2 While employed by the Corporation: i. The Executive shall report to the Chief Executive Officerof Corel Corporation and shall perform such duties, have suchresponsibilities and exercise such powers and authorities as are assigned tohim by the Chief Executive Officer from time to time; and  ii. The Executive shall devote substantially all of hisbusiness time, attention and ability to the Business;  iii. The Executive shall work out of the Fremont, Californiaoffice, however Executive acknowledges that he will be required to spend atleast 50% of his business time traveling to attend to running the business.**3****Remuneration**          Commencing and effective as of the Commencement Date, the remuneration of the Executive forservices hereunder shall be as follows: 3.1 The Executive shall receive an annual gross salary (before deduction forincome taxes and other required deductions) of USD $300,000, which shall be reviewedperiodically and which may be increased (but not decreased without the prior writtenconsent of the Executive) at the discretion of the Board (the “Salary”), payable inaccordance with the policy of the Corporation for payments of salary to seniormanagement.  3.2 The Executive shall also be eligible for an incentive bonus of USD$300,000 (subject to statutory withholdings and deductions), at target. Theincentive bonus shall be paid based upon the successful realization of objectivesset on a periodic basis by the Corporation in consultation with the Executive. Allpayments will be made by bank credit transfer. Subject to section 8, payment of theincentive bonus for fiscal year 2007 will be paid on a pro rata basis for the periodof actual employment in the fiscal year and with all targets deemed to have beenattained at the 100% level.  3.3 The Executive shall be eligible to participate in the Corporation’sequity incentive plan. The Executive hereby acknowledges that the granting of
 

 
   options or other equity incentives is made only to full time employees; solely atthe Corporation’s discretion and that any such grant shall be subject to the termsand conditions of the grant and of the plan in effect, from time to time. Withoutlimiting the foregoing, nothing in this Agreement shall in any way alter the termsand conditions of any grant or of the plan. At the first scheduled CompensationCommittee meeting following Executives’ first day of employment, the Corporationshall recommend for approval a grant of 150,000 stock options which would vestaccording to the Corporation’s normal vesting schedule with 25% vesting on the oneyear anniversary date and remaining vesting quarterly thereafter. In addition,the Corporation will also recommend for approval a grant of 50,000 RestrictedShare Units (“RSUs”) to be vested during the term of Executive’s employment suchthat 12,500 of the RSUs shall vest on the six (6) month anniversary date of thegrant and the remaining 37,500 RSUs shall vest in increments of 6,250 at the endof each calendar quarter thereafter. 3.4 The Executive shall be entitled to participate in benefits as are enjoyedfrom time to time generally by its executives or its employees in accordance withthe established practices and policies of the Corporation as the Corporation may inits absolute discretion create from time to time. In this regard, the Executiveacknowledges having received a description of the benefits in force as of the datehereof.**4****Expenses**          The Corporation shall reimburse the Executive for all reasonable out-of-pocket expensesincurred by the Executive while employed by the Corporation in the performance of his duties underthis Agreement (including attendance at industry, financing and other conferences relevant to theExecutive’s performance of his duties hereunder), in accordance with the Corporation’s policy forreimbursement of expenses, upon presentation of receipts or such other supporting documentation asthe Corporation may reasonably require.**5****Vacation**          The Executive shall be entitled while employed by the Corporation to 4 weeks vacation with payper year, in accordance with its normal practices. Vacation shall be taken by the Executive atsuch time as may be reasonably acceptable to the Corporation having regard to its operations.
 

 
**6****Benefits**          While the Executive is employed by the Corporation, the Corporation shall provide to theExecutive the benefits made generally available to its executives or its employees (the“Benefits”). The Benefits shall be provided in accordance with and subject to the terms andconditions of the applicable fund, plan or arrangement relating thereto in effect from time totime.**7****Termination** 7.1 The employment of the Executive shall terminate or be terminable: a) by retirement or resignation on not less than 1 months writtennotice, of the Executive;  b) by the Corporation at any time on written notice to the Executive forJust Cause;  c) by the Corporation or the Executive at any time on written noticebecause of the occurrence of Disability;  d) automatically upon the death of the Executive;  e) by the Corporation at any time on written notice without Just Cause;or  f) by the Executive on written notice for Good Reason**8****Payments on Termination of Employment**8.1 If the employment of the Executive is terminated for retirement or resignation, pursuant tosection 7.1 (a), the Executive will receive payment for Salary, earned but unpaid incentivebonus, and accrued but unused vacation owing on the Date of Termination.8.2 If the employment of the Executive is terminated for Just Cause, pursuant to section 7.1(b), the Executive will receive payment for Salary and accrued but unused vacation owing on theDate of Termination.8.3 If the employment of the Executive is terminated at any time by the Corporation forDisability pursuant to section 7.1(c), by the death of the Executive pursuant to section7.1(d), by the Executive without Just Cause pursuant to section 7.1(e), or by the Executive forGood Reason pursuant to section 7.1(f), the following provisions shall apply conditional onthe Executive (or the Executive’s legal representative in the case of termination by reason ofdeath) providing a mutual full and final release to the Corporation in the form attached heretoas Schedule A:
 

 
 a) The Corporation shall pay to the Executive, immediately following theDate of Termination, if not already paid, the Executive’s Salary and earned butunpaid incentive bonus, and accrued but unused vacation owing at the Date ofTermination;  b) The Corporation shall pay to the Executive forthwith following theDate of Termination, a lump sum payment equivalent (less deduction for incometaxes and other required deductions) to twelve (12) month’s Salary.  c) The Executive shall continue to receive health benefits for a periodof twelve (12) months following the Date of Termination, to the extent theCorporation is permitted by the terms of the relevant benefit plan(s) to providesuch health benefits and, to the extent the Corporation is not so permitted, theCorporation shall make a payment equal to the cost to the Corporation of suchbenefits for said period;  d) The Corporation shall reimburse expenses incurred by the Executive onor prior to the Date of Termination for which the Executive would be entitled toreimbursement but for the termination of his employment hereunder;  e) The vesting of the Executive’s RSUs referred to in 3.3 above shallaccelerate, if required, such that all such RSUs shall be fully vested upon theDate of Termination; and  f) The Executive shall receive an additional twelve (12) months ofaccelerated vesting of any outstanding equity awards and all vested stock optionsshall be exercisable for twelve (12) months from the Date of Termination.8.4 In the event the Executive is terminated by the Corporation without Just Cause withintwelve (12) months following a Change of Control or the Executive terminates his employment forGood Reason within twelve (12) months following a Change of Control, then in either case, inaddition to receiving the payments and benefits referred to in section 8.3, conditional on theExecutive providing a full and final release to the Corporation in the form attached hereto asSchedule A,the vesting of the Executive’s stock options referred to in 3.3 above shall accelerate, tothe extent required, such that effective upon the Date of Termination at least 50% of theoptions previously granted to the Executive shall become fully vested; and exercisable fortwelve (12) months from the Date of Termination.8.5 The Executive is not obligated to mitigate his damages or to seek alternative employment.The payments refereed to in section 8.3 (b) shall not be reduced if the Executive obtainsalternate employment following termination.
 

 
8.6 The Executive acknowledges and agrees that the provisions of this section 8 are insatisfaction of and substitution for any and all statutory and common law rights, includingwithout limitation, any right to reasonable notice of termination or any incentive bonusrelated to any partially completed fiscal year as tat the Date of Termination or thereafter.**9****Resignation as a Director and Officer**               On the Executive ceasing to be an employee of the Corporation for any reason, the Executiveshall forthwith resign as a director and officer of the Corporation and all of its Affiliates(unless such position is established through a shareholder agreement or other contractual right).**10****D & O Indemnification and Insurance**               The Executive shall be indemnified by the Corporation in his role as an officer thereof forall actions taken in the attempted performance in good faith of Executive’s duties to the fullextent permitted at law.  The Corporation shall maintain appropriate Directors & Officers Insuranceduring the term of Executive’s employment and for three (3) years following the Date ofTermination.    **11****Non-Solicitation** 11.1 The Executive shall not, during his employment and for the period ending twelve(12) months after the Date of Termination, directly or indirectly induce or solicit orattempt to induce: (i) any employee of the Corporation of any of its Affiliates asof the date of Termination to leave his or her employment; or  (ii) any customer of the Corporation of any of its Affiliates asof the Date of Termination to cease doing business with the Corporation orany of its Affiliates and/or to purchase products or services from any otherparty which products or services compete with the products and services ofthe Corporation.11.2 The Executive shall not, during his employment, directly or indirectly in any mannerwhatsoever including either individually, or in partnership, jointly or in conjunction withany other person, or as principal, agent, owner, consultant, contractor, executive, officer,director, advisor or shareholder: a) be engaged in any Competing Entity (as defined below);
 

 
 b) have any financial or other interest (including an interest by way ofroyalty or compensation arrangements) inor in respect of the business of anyCompeting Entity; or c) advise, render or provide services to, lend money to or guarantee thedebts or obligations of any Competing Entity.For the purposes of this Agreement, a Competing Entity are defined as Microsoft; Adobe, Google,Yahoo, Sun; Sony, Sigmaflow; ACD Systems; Autodesk; Quark, Pinnacle, Sonic, Nero, Cyberlink,Avid, Muvee, and Magix or any of their successors, and, on notice to the Executive, otherentities that the Corporation may add to this definition, from time to time before terminationof the Executive’s employment, acting in good faith, whose business consists of developing ormarketing word processing, spreadsheet, presentation, process management, flowcharting, digitalimaging or graphics software which the Corporation determines is in competition with itsbusiness.Nothing in this Agreement shall prevent the Executive from owning not more than 5% of any classof securities of an entity, the securities of which are listed on a recognized stock exchangeor traded in the over the counter market in Canada which carries on a business which is thesame as or which competes with the business of the Corporation or any of its Affiliates;**12****Confidentiality**12.1 The Executive agrees that all Confidential Information is the property of theCorporation or its Affiliates and that he shall keep the Confidential Information secret andconfidential and shall not use (other than in connection with his employment with theCorporation or any of its Affiliates) or disclose to any person, directly or indirectly, anyConfidential Information at any time hereafter, provided, however, that nothing in thissection shall preclude the Executive from disclosing or using Confidential Information if: a) the Confidential Information is available to the public or in the publicdomain at the time of such disclosure or use, without breach of this Agreement;  b) disclosure is required to be made by any law, regulation, governmentalbody, or authority or by court order; or  c) disclosure is made to a court or other governmental regulatory orarbitral body which is determining the rights of the parties under this Agreement;12.2 The Executive acknowledges and agrees to return to the Corporation or destroy upon theCorporation’s request, upon the termination of his employment under this Agreement, allrecords, books, samples, paper, notes or other
 

 
documents or assets belonging to the Corporation or any Affiliate or relating to theirbusiness and to return or destroy upon the Corporation’s request, any written ConfidentialInformation;12.3 The Executive further acknowledges and agrees that the obligations under this section 12shall exist and continue in full force and effect notwithstanding any breach or repudiation,or alleged breach or repudiation, of or termination of this Agreement by the Corporation;12.4 For greater certainty, the Corporation acknowledges that this section 12 is not intendedto apply to the skill, expertise, know-how and experience of the Executive gained in theperformance of his employment or with respect to any skill, expertise, know-how andexperience the Executive obtained prior to or outside his employment or directorship dutieswith the Corporation.**13****Intellectual Property**               The Executive hereby assigns the Corporation his entire right, title and interest in anyinvention, work or formula, whether patentable or not or copyrightable or not, which is conceivedor made solely by the Executive or jointly by the Executive and any other person or persons duringthe Executive’s employment and which relates in any manner to the Business, research or otheractivities of the Corporation or which results from any task assigned to or performed by theExecutive on behalf of the Corporation. The Executive covenants and agrees that (i) he shallpromptly disclose to the Corporation any invention or work covered by this paragraph, (ii) ifrequested by the Corporation, he shall promptly execute a specific assignment of title to theCorporation for such invention or work, and (iii) he shall take all reasonable actions necessary toassist the Corporation, at the Corporation’s expense, to secure patent or copyright protection inthe United States, Canada and in foreign countries.**14****Remedies**               The Executive acknowledges that a breach or threatened breach by the Executive of anyprovision of any of sections 11, 12 or 13 of this Agreement shall result in the Corporation and/orits Affiliates suffering irreparable harm which cannot be calculated or fully or adequatelycompensated by the recovery of damages alone. Accordingly, the Executive agrees that theCorporation and/or its Affiliates shall be entitled to (and the Executive shall not argue or take aposition that the Corporation or any Affiliate shall not suffer irreparable harm) interim,interlocutory and permanent injunctive relief, specific performance and other equitable remedies,in addition to any other relief to which the Corporation and/or its Affiliates may become entitled.**15****Notice**               Any notice or other communication required or permitted to be given hereunder shall be inwriting and shall be given by facsimile or other means of
 

 
electronic communication or by delivery by hand as hereinafter provided. Any such notice orother communication, if mailed by registered mail, shall be deemed to have been received on the daysuch mail is delivered by the post office, or if sent by facsimile or other means of electroniccommunication, shall be deemed to have been received on the business day following the sending, orif delivered by hand shall be deemed to have been received at the time it is delivered to theapplicable address noted below either to the individual designated below or to an individual atsuch address having apparent authority to accept deliveries on behalf of the addressee. Notice ofchange of address shall also be governed by this section. In the event of a general discontinuanceof postal service due to strike, lock-out or otherwise, notices or other communications shall bedelivered by hand or sent by facsimile or other means of electronic communication and shall bedeemed to have been received in accordance with this section. Notices and other communicationsshall be addressed as follows:if to the Executive:Jeff Hastings