Corel Computer NetWindertm Division to be Acquired by Hardware Canada Computing.

OTTAWA--(BUSINESS WIRE)--Jan. 20, 1999--COREL(NASDAQ:COSFF) (TSE:COS.) Corel signs letter of intent to receive 25 percent equity stake in one of Canada's fastest growing IT companies

Corel Corporation and Hardware Canada Computing (HCC) today announced they have signed a letter of intent to transfer the Corel Computer NetWinder(tm) division to HCC in exchange for a significant ownership position.

Under the terms of the agreement, HCC will acquire all of the assets of Corel Computer supporting the NetWinder family of Linux(r)-based thin client/thin server computers and other consideration, in exchange for a 25 percent equity stake in HCC. The agreement is expected to close by the end of Corel's fiscal first quarter 1999, subject to certain closing conditions including necessary approvals. No further details of the transaction are being released at this time, until all terms of the agreement are finalized.

"On several occasions Corel has entertained the idea of spinning off Corel Computer, but not until the time was right and in a fashion that would deliver the fullest possible value to our shareholders," said Corel president and chief executive officer Dr. Michael Cowpland. "The development of the NetWinder is essentially complete and we have seen extremely positive acceptance from our initial sales.

"We believe the NetWinder family will experience tremendous success from Hardware Canada Computing's status as one of Canada's largest VARs and its experience in the SPARC/UNIX space," Cowpland said. "Corel will continue to benefit from HCC's success through our ownership position while at the same time, continuing to further focus efforts on our core software business and our two flagship brands WordPerfect and CorelDRAW, including the delivery of those applications and more on the Linux platform."

Based in Ottawa, Canada, HCC was recently recognized as the 14th fastest growing IT company in the Financial Post/Deloitte & Touche Technology Fast-55. HCC has also been identified as Canada's 19th largest Value Added Reseller by International Data Corporation (IDC) Canada and is well positioned to serve the major world-wide telecom companies.

HCC, with sales approaching $60 million a year, is a leading manufacturer and supplier of UNIX(r), Windows NT(r) and SPARC(r) systems and is one of Sun Micro Electronics' largest OEMs in Canada.

HCC president Michael Mansfield said the acquisition of Corel Computer is a key ingredient in his company's entry into the Linux corporate operating system environment.

"Linux and open source code is the future," said Mansfield. "This acquisition has vaulted us into a world-class opportunity which will let us move forward with an initial public offering later this year."

HCC chairman and founder Mac Brown said his company has always taken a multi-vendor approach in order to offer the best solutions available to its corporate and government clients.

"This is a definite win/win for both Corel and HCC," Brown said. "With the NetWinder technology, our customers will now benefit from a scaleable and robust product line from HCC."

NOTICE TO MEDIA AND ANALYSTS

Please join Corel Corporation's Dr. Michael Cowpland, president and chief executive officer, Michael Mansfield, president of Hardware Canada Computing and other senior executives for a teleforum on Wednesday, January 20, 1999 at 6:10 p.m. (eastern standard time) to discuss the transfer of Corel's hardware division to Hardware Canada Computing.

This call will follow the separate teleforum discussing Corel's Q4 fiscal 1998 results.

Should you wish to participate, please dial the teleforum number 1-800-273-9672 approximately ten minutes before 6:10 p.m. An instant reply number will be provided for 24 hours commencing one hour after the end of the teleforum. The instant replay number is 416-695-5800, pass code access number 241577.

Following the announcement, analysts and members of the media will be invited to participate in a question and answer session.

About Corel Corporation

Corel Corporation is an internationally recognized developer of award-winning graphics and business productivity applications. Development of market-leading products such as the CorelDRAW(tm) line of graphics applications and the Corel(r) WordPerfect(r) Suite of business tools is continually evolving to meet the demands of the corporate, retail and academic markets. Committed to value, compatibility, choice and open standards, Corel develops products for the Windows(r), Macintosh(r), UNIX(r), Linux(r) and Java(tm) platforms. Corel's common stock trades on The NASDAQ Stock Market(sm) under the symbol COSFF and on the Toronto Stock Exchange under the symbol COS. For more information visit Corel's Web site at www.corel.com.

About HCC

Incorporated in February 1987, Hardware Canada Computing is a privately held company located in Ottawa, Canada. HCC manufactures its own line of SPARC/UNIX based systems under the brand name Horizon and has established a reseller network across Canada. In addition to its Horizon brand of SPARC systems, HCC is an original equipment manufacturer for the Telecom market, providing this niche market with SPARC motherboard, rack mount systems. HCC also resells a complete line of UNIX/NT products from Hewlett Packard and Silicon Graphics, as well as, file servers and NetCache products from Network Appliance. HCC is the largest reseller of Sun Micro Electronics in Canada. For more information, visit HCC's website at www.hcc.ca.

Corel, WordPerfect, CorelDRAW, and the Go further logo are trademarks or registered trademarks of Corel Corporation or Corel Corporation Limited. Hardware Canada Computing and Horizon are registered trademarks. SPARC is a registered trademark of SPARC International Inc. Products bearing SPARC trademarks are based on an architecture developed by Sun Microsystems Inc. All other product and company names are trademarks or registered trademarks of their respective companies or individuals.