8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): July 16, 2001

COREL CORPORATION
(Exact name of registrant as specified in its charter)

Canada (State of Other Jurisdiction of Incorporation)

 

0-20562	Not Applicable
(Commission File Number)	(I.R.S. Employer Identification Number)

1600 Carling Avenue
Ottawa, Ontario, Canada    KIZ 8R7
(Address of principal executive offices including zip code)

(613) 728-8200
(Registrant's telephone number, including area code)

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Item 5.

On July 16, 2001 Corel Corporation and Micrografx, Inc. announced that they had signed a definitive agreement whereby Corel will acquire Micrografx in a stock-for-stock transaction to be accounted for as a purchase transaction. The transaction is subject to regulatory approval and approval by Micrografx's shareholders. Micrografx is a recognized global leader in providing enterprise process and graphics software, solutions and services.

The deal is structured to provide Micrografx shareholders with a transaction value equivalent to one times Micrografx's fiscal 2001 annual revenues, subject to certain adjustments, totaling approximately US $32.0 million ("Transactional Value"), or approximately US $2.00 per Micrografx share.

In the event that Corel's common share price at closing is less than US $2.90, Corel will have the option to pay the Transaction Value in cash.

In the event that Corel's common share price at closing is equal to or greater than US $2.90, Corel will issue common stock with a then-current value equivalent to one-half of the Transaction Value at the closing, the number of shares to be issued being determined by Corel's common stock price at closing. In addition, Corel will issue participation rights for the remaining one-half Transaction Value. The value under these rights will be paid to the holders at the first anniversary of the closing date. In the event that Corel's common stock price at that time is equal to or less than the price at closing, Corel will pay in cash the remaining one-half Transaction Value. If Corel's common stock price at that time is higher than the price at closing, Corel will issue common stock with a then-current value equivalent to the remaining one-half Transaction Value plus, on a per share basis, 18 per cent of any increase in the price of Corel common stock in the 12-month period following closing. Corel expects that the maximum number of shares that it will issue is approximately 11.0 million.

On August 7, 2001 Corel Corporation and SoftQuad Software, Ltd. announced that they had signed a definitive agreement whereby Corel will acquire SoftQuad in a stock-for-stock transaction to be accounted for as a purchase transaction. SoftQuad Software, Ltd. is an internationally recognized developer of XML-enabling technologies and commerce solutions for e-business.

The transaction will be a stock-for-stock transaction. Each common share, or equivalent, of SoftQuad will be exchanged for .4152 of a Corel common share on closing, being the ratio of $1.50 to $3.6129. The $1.50 value for each SoftQuad share equals an approximate 34 per cent premium over the closing price of SoftQuad on August 6, 2001. The $3.6129 value for Corel common shares represents the prior 10 day volume weighted average share price of Corel common stock. At then current values, Corel would issue approximately 9.85 million shares if all in-the-money options and warrants of SoftQuad are exercised prior to closing.

The above noted exchange ratio will be fixed for movement in Corel's common share price between $2.71 per share and $4.52 per share. For prices outside this range, Corel would issue more shares at a lower price and fewer shares at a higher price. The maximum number of shares Corel could issue is approximately 11.2 million.

See Exhibits 2.1 - Merger Agreement between Corel Corporation, Calgary I Acquisition Corp. and Micrografx, Inc., 2.2 - Form of Participation Rights Agreement, 2.3 - Merger Agreement between Corel Corporation, Calgary II Acquisition Corp. and SoftQuad Software, Ltd., 99.1 - Press Release - Micrografx, Inc. Acquisition and 99.2 Press Release - SoftQuad Software, Ltd. Acquisition

Item 7. Financial Statements, Pro Forma Information and Exhibits

EXHIBITS.

(c) Exhibits

2.1 Merger Agreement dated as of July 16, 2001 as amended and restated between Corel Corporation, Calgary I Acquisition Corp. and Micrografx, Inc. ⁽¹⁾

2.2 Form of Participation Rights Agreement ⁽¹⁾

2.3 Merger Agreement dated as of August 7, 2001 between Corel Coporation, Calgary II Acquisition Corp. and SoftQuad Software, Ltd. ⁽²⁾

99.1 Press release issued by Corel Corporation on July 16, 2001.

99.2 Press release issued by Corel Corporation on August 7, 2001.

⁽¹⁾ Previously filed as an exhibit to the Company's Registration Statement No. 333-67310 and incorporated herein by reference. ⁽²⁾ Previously filed as an exhibit to the Company's Schedule 13D filed on August 15, 2001 and incorporated herein by reference.

SIGNATURES

Pursuant to the requirement of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 17, 2001

COREL CORPORATION

(Registrant)

By:  /s/John Blaine

John Blaine

Chief Financial Officer, Executive Vice President Finance and Treasurer

(Principal Accounting Officer)

EX-99.1

Exhibit 99.1

For Immediate Release

Corel To Acquire Micrografx

Companies Sign Definitive Agreement;

Acquisition Advances Key Aspects of Corel's Growth Strategy

Ottawa, Canada, and Dallas, Texas - July 16, 2001 - Corel Corporation (NASDAQ: CORL, TSE: COR) and Micrografx, Inc. (OTCBB: MGXI) today announced that they have signed a definitive agreement whereby Corel will acquire Micrografx in a stock-for-stock transaction to be accounted for as a purchase transaction. The transaction is subject to regulatory approval and approval by Micrografx's shareholders.

This acquisition represents yet another important milestone in Corel's corporate strategy which is designed to position the company for long-term growth and profitability. As announced in January 2001, Corel's growth strategy provides a framework for the company's future that is being unfolded in three phases or "horizons". For the first horizon, Corel is focused on two goals: strengthening its position in the graphics market and effectively managing its business applications division to upgrade its large base of existing users. In horizon two, Corel will more fully embrace the power of the Web by developing advanced Web-based functionality within existing and new product lines. For horizon three, Corel will develop new technology to target fast-growing emerging markets, such as wireless and Web-based services. Corel is able to advance key aspects of each horizon as a result of this acquisition.

"This is clearly a strategic opportunity for both Corel and Micrografx, for three main reasons," said Derek Burney, president and CEO of Corel Corporation. "First, by adding these technologies to our arsenal of award-winning applications, we will broaden and enhance our current portfolio and tailor our products to the distinct customer segments we've identified. The technical illustration market is an important customer segment we're targeting and we look forward to combining Micrografx's demonstrated leadership in this area with our own strengths to better serve our customers.

"Second, in addition to adding value to our graphics lineup, we will leverage the innovative emerging technologies that Micrografx has developed to accelerate the execution of our horizon two and three objectives," added Mr. Burney. "These technologies will be key ingredients in our development of new offerings which will enable our customers to create graphics-rich content that can be output easily and simultaneously to multiple channels, including the Web.

"Finally, by devoting greater resources to Micrografx's Enterprise Process Management (EPM) division, we will become a major force in, what is for us, a new and lucrative market, while at the same time utilizing those technologies to broaden our portfolio of creative product applications."

"We are very pleased to be combining our resources with Corel's," said Jim Hopkins, chairman and CEO at Micrografx, Inc. "Supported by Corel's development expertise, market strengths, international reputation and strong financial position, we will be able to move forward with some exciting new business plans we've developed for our existing and emerging technologies."

Corel and Micrografx share synergies which, when the two operations are combined, are expected to generate new revenue opportunities and cost efficiencies from which its collective worldwide customer base will benefit. Based on preliminary estimates, after the realization of anticipated synergies and excluding any one-time integration costs, this acquisition is expected to be accretive to cash flow and cash earnings per share in the fourth quarter of Corel's fiscal 2001 and thereafter.Over the next several weeks, Corel and Micrografx will work together on a comprehensive plan outlining how best to integrate the two companies. Following the closing of the deal, which is expected to occur in Corel's fourth quarter, they will announce further details related to the integration plan.

Exchange terms:

The deal is structured to provide Micrografx shareholders with a transaction value equivalent to one times Micrografx's fiscal 2001 annual revenues, subject to certain adjustments, totaling approximately US $32.0 million ("Transaction Value"), or approximately US $2.00 per Micrografx share.

In the event that Corel's common share price at closing is less than US $2.90, Corel will have the option to pay the Transaction Value in cash.

In the event that Corel's common share price at closing is equal to or greater than US $2.90, Corel will issue common stock with a then-current value equivalent to one-half of the Transaction Value at the closing, the number of shares to be issued being determined by Corel's common stock price at closing. In addition, Corel will issue participation rights for the remaining one-half Transaction Value. The value under these rights will be paid to the holders at the first anniversary of the closing date. In the event that Corel's common stock price at that time is equal to or less than the price at closing, Corel will pay in cash the remaining one-half Transaction Value. If Corel's common stock price at that time is higher than the price at closing, Corel will issue common stock with a then-current value equivalent to the remaining one-half Transaction Value plus, on a per share basis, 18 per cent of any increase in the price of Corel common stock in the 12-month period following closing. Corel expects that the maximum number of shares that it will issue is approximately 11.0 million.

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Corel Corporation

Corel Corporation provides its customers with the creative tools they need to unleash their imaginations. With its heritage of software innovation and a solid franchise of loyal customers worldwide, Corel has earned its reputation as an internationally recognized developer of award-winning graphics and business productivity applications on the Windows®, Macintosh®, Linux® and UNIX® platforms. In 2001, Corel will continue to expand its support of the Web, delivering the Internet's versatility to customers through exciting Web-based applications, content and services. Corel will also be developing applications for Microsoft's .NET platform as part of its commitment to provide customers with a full range of applications and services over the Internet. With its headquarters in Ottawa, Canada, Corel continues to be one of Silicon Valley North's most exciting and influential software companies. Corel's common stock trades on the NASDAQ Stock Market under the symbol CORL and on the Toronto Stock Exchange under the symbol COR. For more information on Corel Corporation, please visit www.corel.com

Micrografx, Inc.

Micrografx is a recognized global leader in providing enterprise process and graphics software, solutions and services. Micrografx Enterprise Process Management (EPM) solutions allow senior and mid-level executives to identify and value key performance improvement initiatives. These initiatives range from improving eBusiness processes, to quality initiatives like ISO 9000 and Six Sigma, and key line-of-business application initiatives such as supply chain management. Micrografx Graphics Software Division supplies companies and individuals with graphic solutions for technical illustration, business diagramming, and digital image processing. Visit www.micrografx.com for more information or contact 1-888-744-1210.

The proxy statement/prospectus will be filed with the Securities and Exchange Commission (SEC) by Corel and Micrografx. Investors and security holders are advised to read the proxy statement/prospectus and any other documents filed with the SEC regarding the acquisition referenced in the foregoing information, when it becomes available, because it will contain important information. This notice does not constitute an offer of any securities for sale. Investors and security holders may obtain a free copy of the proxy statement/prospectus (when available) and other documents filed by Corel and Micrografx with the SEC at its Web site at www.sec.gov or at the SEC's public reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549 or at any of the SEC's other public reference rooms in New York, New York, and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. The proxy statement/prospectus and such other documents may also be obtained at no charge by directing such requests to: Corel Corporation, 1600 Carling Avenue, Ottawa, ON, K1Z 8R7, Attention: Investor Relations, telephone (613) 728-8200, email: mailto:ir@corel.ca and to Micrografx, Inc., 8144 Walnut Hill Lane, Suite 1040, Dallas, Texas, 75231, Attention: Investor Relations, telephone: (469) 232-1000.

Micrografx, its officers, directors, employees and agents may be soliciting proxies from Micrografx's shareholders in connection with the acquisition. Information concerning the participants in this solicitation will be set forth in the proxy statement/prospectus.

This press release contains forward-looking statements as defined by the United States Private Securities Litigation Reform Act of 1995, involving the company's expectations about future financial results and other matters. These statements reflect management's current forecast of certain aspects of the companies future business. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results of operations to differ materially from historical results or current expectations. The words "plan", "expect", "believe", "intend", "anticipate", "forecast", "target", "estimate" and similar expressions identify forward-looking statements. Risk factors include the consummation, integration and impact of the Micrografx acquisition, shifts in customer demand, product shipment schedules, product mix, competitive products and pricing, technological shifts and other variables. Readers are referred to Corel's most recent reports filed with the Securities and Exchange Commission for a more complete discussion of the other risks and uncertainties. The factors underlying forecasts are dynamic and subject to change. As a result, forecasts speak only as of the date they are given and do not necessarily reflect the company's outlook at any other point in time. The companies do not undertake to update or review these forward-looking statements.

The risk factors relating to Micrografx include, but are not limited to, the following: the consummation of Corel's acquisition of Micrografx, product development, product introductions, licensing agreements, technological change, competition, international operations, changes in distribution channels, seasonality, growth in the enterprise solutions business of Micrografx, market demand and acceptance of products, the impact of changing economic conditions, fluctuation in foreign currency exchange rates, and others detailed in Micrografx's Annual Report on Form 10-K, Quarterly Reports on Forms 10-Q and other SEC filings.

Corel and its logo are trademarks or registered trademarks of Corel Corporation or Corel Corporation Limited. All other product, font, company names and logos are trademarks or registered trademarks of their respective owners.

Corel Press Contact:

Louise Hanlon, Communications Manager

(613) 728-0826 ext. 5288

mailto:louiseh@corel.com

Micrografx Press Contact:

Greg DeWitt, Chief Financial Officer

(468) 232-1000

mailto:gregd@micrografx.com

EX-99.2

Exhibit 99.2

For Immediate Release

Corel To Acquire SoftQuad

Companies Sign Definitive Agreement:

Acquisition Advances Next Phase of Corel's Growth Strategy

Ottawa & Toronto, Canada - August 7, 2001 - Corel Corporation (NASDAQ: CORL, TSE: COR) and SoftQuad Software, Ltd. (OTC BB: SXML) today announced that they have signed a definitive agreement whereby Corel will acquire SoftQuad in a stock-for-stock transaction to be accounted for as a purchase transaction.

This acquisition advances key aspects of the company's growth strategy and builds upon its recently-announced plans to acquire Micrografx, Inc. By acquiring SoftQuad and its ground-breaking XML-enabling technologies, Corel is adding a key ingredient required to implement horizon two of its growth strategy. In addition, this acquisition will enable Corel to enrich the existing XML capabilities within its WordPerfect® product line.

"Upon completion of this acquisition, we believe we will have the core technologies needed to realize our vision of providing customers with an expansive cross-media publishing solution," said Derek Burney, president and CEO of Corel Corporation. "We intend to give customers the tools they need to create, manage and simultaneously deploy customized content across multiple delivery channels, including the Web. This streamlined production process will afford them maximum flexibility while saving them valuable time and resources. Our solution will capitalize on SoftQuad's expertise in the XML arena and its strong partnerships with leading content management system vendors, Micrografx's innovative emerging technologies and Corel's internationally recognized strengths in graphics and publishing. This acquisition will also benefit our WordPerfect customers. By integrating SoftQuad's market-leading XML technologies into our award-winning word-processing application, we will further enhance the XML functionality that many of our customers in the government and legal community currently enjoy.

"We are very excited about the opportunities that lie ahead for Corel. With a clear focus on our immediate goals and intelligent investments to supplement our long-term growth, we believe we now have the tools necessary to position Corel as the new industry standard in emerging segments where there are currently no established leaders."

"We are pleased to be joining forces with a company that shares our vision for pervasive XML content," said Roberto Drassinower, CEO of SoftQuad. "With Corel's development expertise, international brand recognition and strong balance sheet, we will be able to accelerate the delivery of XML-based content creation, transformation and exchange solutions to our shared customer base."

Corel and SoftQuad share synergies which, when the two operations are combined, are expected to generate new revenue opportunities and cost efficiencies from which its collective global customer base will benefit. Based on preliminary estimates, after the realization of anticipated synergies and excluding any one-time integration costs, this acquisition is expected to be accretive to cash flow and cash earnings per share within approximately twelve months from the date of closing. The company does not expect any significant negative impact on cash flow as a result of this acquisition. Over the next several weeks, Corel and SoftQuad will work together on a comprehensive plan outlining how best to integrate the two companies. Following the closing of the deal, expected in the fourth quarter of Corel's fiscal 2001, the companies will announce further details related to the integration plan.

Exchange terms:

The transaction will be a stock-for-stock transaction. Each common share, or equivalent, of SoftQuad will be exchanged for .4152 of a Corel common share on closing, being the ratio of $1.50 to $3.6129. The $1.50 value for each SoftQuad share equals an approximate 34 per cent premium over the closing price of SoftQuad on August 6, 2001. The $3.6129 value for Corel common shares represents the prior 10 day volume weighted average share price of Corel common stock. At current values, Corel would issue approximately 9.85 million shares if all in-the-money options and warrants of SoftQuad are exercised prior to closing. All figures are expressed in US currency.

The above noted exchange ratio will be fixed for movement in Corel's common share price between $2.71 per share and $4.52 per share. For prices outside this range, Corel would issue more shares at a lower price and fewer shares at a higher price. The maximum number of shares Corel could issue is approximately 11.2 million.

The transaction is subject to regulatory approval and approval by SoftQuad's shareholders.

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Corel Corporation

Corel Corporation provides its customers with the creative tools they need to unleash their imaginations. With its heritage of software innovation and a solid franchise of loyal customers worldwide, Corel has earned its reputation as an internationally recognized developer of award-winning graphics and business productivity applications on the Windows®, Macintosh®, Linux® and UNIX® platforms. Corel will continue to expand its support of the Web, delivering the Internet's versatility to customers through exciting Web-based applications, content and services. Corel will also be developing applications for Microsoft's .NET platform as part of its commitment to provide customers with a full range of applications and services over the Internet. With its headquarters in Ottawa, Canada, Corel continues to be one of Silicon Valley North's most exciting and influential software companies. Corel's common stock trades on the NASDAQ Stock Market under the symbol CORL and on the Toronto Stock Exchange under the symbol COR. For more information on Corel Corporation, please visit www.corel.com

SoftQuad Software, Inc.

SoftQuad Software, Ltd. is an internationally recognized developer of XML-enabling technologies and commerce solutions for e-business. A founding member of the World Wide Web Consortium (W3C), the Organization for the Advancement of Structured Information Standards (OASIS) and XML.org, SoftQuad has been instrumental in shaping and developing both the standards and technologies that are changing the way companies exchange information and do business over the Web. Headquartered in Toronto, Canada, with U.S. offices in Seattle and San Francisco, and European operations based in London, England, SoftQuad was first to market with an advanced, yet easy-to-use XML content creation solution, XMetaL. It has become the premier enabling technology for XML-based content applications in electronic publishing, e-commerce and knowledge management.

Investors and security holders are advised to read the joint proxy statement/prospectus regarding the business combination transaction referenced in the foregoing information, when it becomes available, because it will contain important information. The joint proxy statement/prospectus will be filed with the Securities and Exchange Commission by Corel and SoftQuad. Investors and security holders may obtain a free copy of the joint proxy statement/prospectus (when available) and other documents filed by Corel and SoftQuad with the Commission at the Commission's Web site at www.sec.gov. The joint proxy statement/prospectus and such other documents may also be obtained for free from Corel by directing such request to: Corel Corporation, 1600 Carling Avenue, Ottawa, Ontario, Canada, K1Z 8R7, Attention: Investor Relations, telephone (613) 728-8200, email: ir@corel.ca, and to SoftQuad, 161 Eglinton Avenue East, Suite 400, Toronto, Ontario, Canada, M4P 1J5, Attention: Investor Relations, telephone: (416) 544-9000, email:investorinfo@softquad.com.

This press release contains forward-looking statements as defined by the United States Private Securities Litigation Reform Act of 1995, involving the company's expectations about future financial results and other matters. These statements reflect management's current forecast of certain aspects of the company's future business. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results of operations to differ materially from historical results or current expectations. The words "plan", "expect", "believe", "intend", "anticipate", "forecast", "target", "estimate" and similar expressions identify forward-looking statements. Risk factors include shifts in customer demand, product shipment schedules, product mix, competitive products and pricing, technological shifts and other variables. Readers are referred to Corel's most recent reports filed with the Securities and Exchange Commission for a more complete discussion of the other risks and uncertainties. The factors underlying forecasts are dynamic and subject to change. As a result, forecasts speak only as of the date they are given and do not necessarily reflect the company's outlook at any other point in time. The company does not undertake to update or review these forward-looking statements.

Corel, WordPerfect and its logo are trademarks or registered trademarks of Corel Corporation or Corel Corporation Limited. All other product, font, company names and logos are trademarks or registered trademarks of their respective owners.

Corel Press Contact:

Louise Hanlon

(613) 728-0826 ext. 5182

mailto:louiseh@corel.com

SoftQuad Press Contact:

Muriel Guilbert (Parker LePla)

(206) 625-1541

mailto:murielg@parkerlepla.com

Corel Investor Relations Contact:

John Hladkowicz

(613) 728-0826 ext. 1194

mailto:johnh@corel.com

SoftQuad Investor Relations Contact

Bruce Wigle

(416) 544-9000 ext. 2206

mailto:Bwigle@softquad.com