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Corel and Microsoft Announce Strategic Alliance

Oct 03, 2000, 00:15 (11 Talkback[s])

PRESS RELEASE: Corel Corporation and Microsoft Corporation (NASDAQ: MSFT) today announced that they have formed a strategic alliance that will see the two companies expand their relationship to encompass projects related to Microsoft's new .NET initiative.

As part of this expanded relationship, Microsoft has purchased 24 million non-voting convertible preferred shares at a purchase price of U.S.$5.625 per share or a total purchase price of U.S. $135 million. The companies will also work together to support the development, testing and marketing of new products related to the .NET platform. Joint-marketing initiatives will include participation in product launches and trade show events and representation on mutual Web sites. In addition, both companies have agreed to settle certain legal issues between Corel and Microsoft.

"We are pleased to announce this latest development in our relationship with Microsoft, and what we believe to be an important step forward in our strategy for long-term growth," said Corel's interim President and CEO Derek J. Burney.

"Corel has long recognized the potential of the Internet to speed up the delivery of applications and services to our customers worldwide," added Mr. Burney. "Our most recent work has focused on strategies to move our applications, including CorelDRAW and WordPerfect as well as our Linux distribution - Corel LINUX OS, on to the Web. By leveraging Corel's development expertise and popular product line with Microsoft's .NET platform, we believe we have found a great combination to accelerate this process. .NET promises to be a robust platform that we can use to build innovative, easy-to-use and reliable Web applications and services that will benefit our customers."

"Microsoft is very excited to see strong commitment from Corel for the .NET platform. Corel has some of the best-known software on the market and expertise in online-service delivery, graphics and interface design. Coupled with Microsoft's .NET initiative, our companies will be able to cooperate on projects that will benefit customers worldwide," said Yuval Neeman, Vice President, Microsoft?s Developer Division.

While neither Microsoft nor any of its affiliates are entitled to convert the preferred shares, they will be saleable to, and convertible by other parties, into an aggregate of 24 million common shares of Corel. Based on the number of shares currently outstanding, the common shares issuable upon conversion of the preferred shares would represent approximately 24.6 per cent of the outstanding Corel common shares after the conversion. The preferred shares do not carry any preferential dividends over the common shares.

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