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): January 25, 2010

Corel Corporation

(Exact name of Registrant as specified in its charter)

CANADA	000-20562	98-0407194
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

Corel Corporation

1600 Carling Ave

Ottawa, Ontario

Canada A6 K1Z 8R7

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code:(613) 728-0826

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

On January 26, 2010, a special meeting of the shareholders of Corel Corporation (the “Company”) was held.  At the special meeting, the shareholders approved the special resolution authorizing the consolidation of all of the issued and outstanding common shares of the Company on the basis of one post-consolidation common share of the Company for each 871,589 pre-consolidation shares (the “Consolidation”).  Fractional new common shares were not issued.  Shareholders who did not hold sufficient shares to qualify for the issuance of new common shares pursuant to the Consolidation are entitled to receive cash consideration of U.S.$4.00 in respect of each pre-Consolidation share held in lieu of any fractional shares otherwise issuable as a result of the Consolidation.

Following approval of the Consolidation by the shareholders, the Company filed articles of amendment to effect the Consolidation.  The full text of the amendment to the Articles of Incorporation is filed as Exhibit 3.1 hereto and incorporated by reference herein.

The Consolidation is the second and final step in the acquisition of the Company by Corel Holdings, L.P., a limited partnership controlled by an affiliate of VCP II International, L.L.C., a manager of private equity funds.  The first step was a tender offer by Corel Holdings, L.P. for all of the Company’s outstanding common shares not already owned by Corel Holdings, L.P. and its affiliates at a price of U.S.$4.00 per share.  At the effective time of the Consolidation, the Company became a wholly-owned subsidiary of Corel Holdings, L.P. and its affiliates.

The full text of the Company’s press release regarding effectiveness of the Consolidation is set forth as Exhibit 99.1 hereto and incorporated by reference herein.

Also on January 26, 2010, Steven Cohen and Dan Ciporin resigned as directors of the Company.

On January 26, 2010, the Company applied to the NASDAQ Global Market to de-list its common shares and, later that day, the NASDAQ Global Market filed a Form 25 with the Securities and Exchange Commission regarding removal of the Company’s shares from listing on the NASDAQ Global Market.  The delisting became effective as of the close of business on January 26, 2010.  Also on January 26, 2010, the Company applied to the Toronto Stock Exchange (the “TSX”) to de-list its common shares.  It is anticipated that delisting from the TSX will become effective as of January 28, 2010.

On January 25, 2010, the Compensation Committee of the Company’s Board of Directors approved an amendment to the Company’s Amended 2006 Equity Incentive Plan (the “Plan”) to provide that all options granted prior to July 1, 2009 and all equity awards granted under the Plan would be cashed out, and all options granted on or after July 1, 2009 under the Plan would be assumed by the Company.  This treatment is consistent with the disclosure in the Company’s proxy statement filed with the Securities and Exchange Commission on December 29, 2009.  The full text of the amendment to the Amended 2006 Equity Incentive Plan is filed as Exhibit 10.1 hereto and incorporated by reference herein.

On January 25, 2010, the Company and Kris Hagerman entered into a letter agreement to clarify that his options will not become vested as a result of the Consolidation, consistent with the disclosure in the Company’s proxy statement filed with the Securities and Exchange Commission on December 29, 2009.  The full text of the agreement is filed as Exhibit 10.2 hereto and incorporated by reference herein.

On January 26, 2010, the Company and Vector Capital Partners II International, Ltd. entered into mutual releases with each of Dan Ciporin, Steven Cohen and Barry Tissenbaum (collectively, the “Designated Directors”) pursuant to which each of the Company and Vector Capital Partners II International, Ltd. released the Designated Directors from any and all claims they may have against the Designated Directors arising from their service as directors (excluding, in the case of Barry Tissenbaum, claims relating to services performed after the date of the release), and the Designated Directors released the Company and Vector Capital Partners II International, Ltd. from any claims they may have arising from their service as directors other than the compensation they were otherwise entitled to as directors of the Company (excluding, in the case of Barry Tissenbaum, claims relating to services performed after the date of the release).  The form of Mutual Release is filed as Exhibit 10.3 hereto and incorporated by reference herein.  Also on January 26, 2010, each of the directors of the Company entered into mutual releases among and between such directors pursuant to which each such director released the other directors from any and all claims they may have arising from their service as directors.

Item 1.01 Entry into a Material Definitive Agreement.

The information set forth in Item 3.01 is incorporatedby reference herein.

Item 3.03 Material Modification to Rights of Security Holders.

The information set forth in Item 3.01 is incorporatedby reference herein.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

The information set forth in Item 3.01 is incorporatedby reference herein.

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

The information set forth in Item 3.01 is incorporatedby reference herein.

Item 9.01 Financial Statements and Exhibits.

                (d) Exhibits

Exhibit No.	Description
3.1	Amendment to the Articles of Incorporation of Corel Corporation
10.1	Amendment to Corel Corporation’s Amended 2006 Equity Incentive Plan
10.2	Letter agreement between Kris Hagerman and Corel Corporation dated January 25, 2010
10.3	Form of Mutual Release by and among Corel Corporation, Vector Capital Partners II International, Ltd., Dan Ciporin, Steven Cohen and Barry Tissenbaum
99.1	Press release dated January 26, 2010

SIGNATURE

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

Dated: January 27, 2010

Corel Corporation
By:	/s/ Thomas Berquist
	Name:	Thomas Berquist
	Title:	Chief Financial Officer

EX-3.1

EXHIBIT 3.1

1. The Articles of Corel Corporation (the"Company") be amended to effect a consolidation of the issued and outstanding common shares of the Company (the "Shares") on the basis of one post-consolidation common share of the Company (a "New Common Share") for each 871,589 pre-consolidation Shares (the "Consolidation"); provided however, that:

(a) holders of Shares on the date that the certificate of amendment is issued to give effect to the Consolidation (the"Effective Date") shall not be entitled to receive a certificate for any fractional New Common Share following the Consolidation, and such holders shall not be entitled to exercise any of the rights of shareholders in respect of any fractional New Common Share. On the Effective Date, such holders shall have only the right to receive a cash payment equal to U.S.$4.00 in respect of each pre-Consolidation Share held immediately prior to the Effective Date, such payment (the "Consideration") to be made without interest as soon as practicable after the Effective Date upon presentation and surrender to the Company or the depositary designated by the Company (the "Depositary") for cancellation of the certificates representing such pre-Consolidation Shares.

EX-10.1

EXHIBIT 10.1

Amendment to Amended 2006 Equity Incentive Plan

THIS AMENDMENT (this “Amendment”) to the Amended 2006 EQUITY INCENTIVE PLAN (as amended to date, the “Plan”) by Corel Corporation (the “Company”) is entered into as of January 25, 2010.  Capitalized terms used herein without definition shall have the meanings assigned thereto in the Plan.

W I T N E S S E T H:

WHEREAS, on October 28, 2009, Corel Holdings L.P., which then held approximately 68% of the Company’s outstanding common shares, extended an offer to acquire the Company’s remaining publicly held common shares, and on December 29, 2009, the Company filed a definitive proxy statement with respect to the proposed second-step transaction pursuant to which Corel Holdings L.P. will complete its acquisition of the Company (together, these transactions are referred to as the “Take-Private Transaction”), which if completed will result in the Company becoming privately held;

WHEREAS, if a transaction similar to the Take-Private Transaction were completed by any party other than Corel Holdings L.P. or any of its affiliates, such transaction would constitute a “Significant Event” under the Plan;

WHEREAS, after due consideration, the Compensation Committee of the Board of Directors of the Company has concluded that in the context of the Take-Private Transaction, there is no reason to limit the rights of optionholders or distinguish the terms of the options based upon the identity of the acquiror; and

WHEREAS, pursuant to Section 7(a) of the Plan, the Board or Committee (each as defined in the Plan) may amend the Plan without the consent of participants, as long as the amendment does not impair the rights of participants, and without the consent of the Company’s shareholders except for certain matters specified in the Plan.

Section 1.  Amendment.  The definition of “Significant Event” in Section 2 of the Plan is hereby amended to read in its entirety as follows:

“Significant Event” means, unless otherwise defined in an Award Agreement or a written employment agreement between the Company and a Participant (which definition shall govern), the occurrence of any of the following events: (1) a person or group of persons becomes the beneficial owner of securities of the Company constituting 50% or more of the voting power of all outstanding voting securities of the Company, (2) a majority of the Company’s Board as of the date of adoption of this Plan (including any successors approved by the then existing Board) cease to constitute a majority of the Board; (3) a merger, consolidation, amalgamation or arrangement of the Company (or a similar transaction) occurs, unless after the event, 50% or more of the voting power of the combined company is beneficially owned by the same person or group of persons as immediately before the event; or (4) the Company’s shareholders approve a plan of complete liquidation or winding-up of the Company, or the sale or disposition of all or substantially all the Company’s assets (other than a transfer to an Affiliate of the Company); provided that the following shall not constitute a Significant Event: (i) any person or group of persons becoming the beneficial owner of the threshold of securities specified in (1) as a result of the acquisition of securities by the Company or a subsidiary which, by reducing the number of securities outstanding, increases the

proportional number of securities beneficially held by that person or group of persons, (ii) any acquisition of securities directly from the Company in connection with a bona fide financing or series of financings by the Company, (iii) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or its Affiliates or (iv) beneficial ownership by Corel Holdings, L.P., its Affiliates and/or its Control Persons or any increased ownership by any of them.  In addition, the completion of the Consolidation (as defined in the proxy statement filed with the Securities and Exchange Commission by the Company on December 29, 2009) shall constitute a “Significant Event”.

Section 2.  Miscellaneous.

(a)  The Plan, as amended, is and shall continue to be in full force and effect.

(b)  All headings set forth in this Amendment are intended for convenience only and shall not control or affect the meaning, construction or effect of this Amendment or the Plan or of any of the provisions hereof or thereof.

(c)  The validity, construction, and effect of this Amendment and any rules and regulations relating to the this Amendment or Plan will be determined in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable in Ontario.

Section 3.  Authorization. This Amendment has been executed by the Company.

IN WITNESS WHEREOF, the undersigned has caused this Amendment to the Amended 2006 Equity Incentive Plan to be executed as of the same day and year first above written.

COREL CORPORATION

By:	/s/ Eleanor Lacey
Name:	Eleanor Lacey
Title:	Vice President & General Counsel
	Vice President, Business Development

EX-10.2

EXHIBIT 10.2

January 25, 2010

Kris Hagerman

Chief Executive Officer

Corel Corporation

Subject:  Amendment to Option Grant Agreement and Employment Agreement

Dear Kris,

Pursuant to the terms of your Employment Agreement with Corel Corporation (the “Company”) approved by the Company’s Board of Directors (the “Board”) to be effective as of July 28, 2009 (the “Employment Agreement”), and your options to purchase 1,887,708 shares of the Company’s stock granted by the Board on July 24, 2009, each with a per share exercise price of $2.20, (the “Option”), the Option would become vested on a Significant Event (as defined in the Company’s 2006 Equity Incentive Plan (as amended, the “Plan”)).

On October 28, 2009, Corel Holdings, L.P. (together with its affiliates, “Vector”) commenced an offer to purchase all of the Company’s stock pursuant to a tender offer (together with any second-step acquisition described in such offer to purchase, the “Offer”).  Under the current terms of the Plan, completion of the Offer would not be considered a Significant Event.  However, the parties wish to set forth their understanding in the event the Board of Directors takes action to cause a Significant Event to occur in connection with the Offer.

By signing this letter agreement, you agree that your Option will not become vested as a result of a Significant Event which occurs, directly or indirectly, as a result of the Offer, regardless of whether the definition of Significant Event is amended to provide that the Offer would constitute a Significant Event under the Plan.

The parties agree that this letter agreement relates only to the transactions contemplated by the Offer, and that if a Significant Event is completed by a party other than Vector or if a Significant Event occurs other than directly or indirectly as a result of the Offer, the Option will become vested in accordance with its terms and the terms of the Employment Agreement. If the Offer is terminated without Vector’s acquisition of additional shares of the Company’s stock, this letter agreement shall terminate.  Except as expressly set forth herein, no other change is being made to your Option, which otherwise remains outstanding and constitutes a binding obligation on the Company.  For the avoidance of doubt, you are not waiving your right to partial vesting in the event you are terminated without cause (to the extent provided under the Option or the Employment

Agreement) or to your right to continued vesting on and after the Offer based on your continued service to the Company and the vesting provisions of the Option.

By signing this letter agreement, you acknowledge and agree that this is a binding amendment to your Option, and that you have read and understand the terms set forth herein.

Corel Corporation   /s/ Alexander R. Slusky Alexander R. Slusky Director

I agree to the terms of this letter agreement.

/s/ Kris Hagerman

Kris Hagerman

EX-10.3

EXHIBIT 10.3

MUTUAL RELEASE

Each of Corel Corporation (the "Company"), Vector Capital Partners II International, Ltd. on its own behalf and on behalf its controlled affiliates, subsidiaries and their respective predecessors, successors and assigns (collectively the "Releasor") in consideration of the release to be provided to the Releasor below and for other good and valuable consideration, the adequacy of which is hereby acknowledged, hereby, effective as of the date hereof, irrevocably and unconditionally remises, releases and forever discharges the undersigned individual (the "Director"), a director of the Company and his heirs, executors, legal personal representatives, administrators, trustees, successors and assigns (the "Director Released Parties") of and from all and any actions, manner of actions, causes of actions, suits, proceedings, executions, judgements, duties, debts, dues, accounts, bonds, losses, injury, indemnities, expenses, interest, covenants (whether express or implied), agreements, liens, liabilities, grievances, claims, costs, damages, monies and demands of every nature and description whatsoever, at law or in equity, or under any statute whether known or unknown, suspected or claimed, matured or unmatured, contingent or otherwise (collectively, the "Claims"), which the Releasor now has, or ever had or hereafter can, shall or may have or assert, now or at any time in the future, for or by reason of or in any way arising out of any cause, matter or thing whatsoever which arises as a result (for the avoidance of doubt, either directly or indirectly) of the Director having been a director of the Company of every nature and kind, save and except that this release shall not be effective to release the Director from any Claims arising out of or relating to fraud or criminal conduct on the part of the Director.

The Director in consideration for the release to be provided to the Director Released Parties above and for other good and valuable consideration, the adequacy of which is hereby acknowledged, effective as of the date hereof, irrevocably and unconditionally remises, releases and forever discharges the Releasor, and their present and former directors, officers, employees, partners and agents and each of their heirs, executors, legal personal representatives, administrators, trustees, successors and assigns, of and from all Claims which the Director Released Parties now have, or ever had or hereafter can, shall or may have or assert, now or at any time in the future, for or by reason of or in any way arising out of any cause, matter or thing whatsoever which arises as a result (for the avoidance of doubt, either directly or indirectly) of the Director having been a director of the Company of every nature and kind.

Notwithstanding anything contained herein, this release shall not extend to or affect, or constitute a release of the Director Released Parties' right to sue, claim against or recover from the Company and shall not constitute an agreement to refrain from bringing, taking or maintaining any action against the Company in respect of:

·  any corporate indemnity existing by statute, contract or pursuant to any of the constating documents of the Company provided in the Director Released Parties' favour;

·  the Director Released Parties' entitlement to any insurance maintained for the benefit or protection of existing or former directors and/or officers of the

Company including without limitation, directors' and officers' liability insurance; or

·  any unpaid remuneration or entitlements to have expenses reimbursed.

Each of the Releasor and the Director covenants and agrees that it shall not commence, maintain or enforce or cause to be commenced, maintained or enforced or join, assist, aid or act in concert in any manner whatsoever with any other person in any proceedings of any kind or nature whatsoever (including without limitation any cross claim, counterclaim, third party action or application) against any person as a result of any injury, loss or damage that the Releasor or the Director Released Parties, as the case may be, may have suffered in respect of any or all matters released by it in this release, including, without limitation, proceedings against any person who has or might be entitled to claim contribution, indemnity, damages or other relief from the other, as applicable, whether pursuant to statute or otherwise.

Each of the Releasor and the Director covenants and agrees that if it hereafter makes or participates in the making of any claim or commences or threatens to commence or participate in any claim against the other for or by reason of any cause, matter, claim or action that, pursuant to this instrument, has been released by the party, this release may be raised as an estoppel and complete bar to any such claim.

Each of the Releasor and the Director covenants and warrants that it has not transferred or assigned, nor entered into any agreement to transfer or assign, to any other person any Claim or any interest in any Claim, held by the Releasor or the Director, as applicable, or formerly held by the Releasor or the Director, as applicable,  in respect of any or all matters released by it, pursuant to the terms of this release.

Each of the Releasor and the Director hereby expressly waives and relinquishes to the fullest extent permitted by law, the provisions, rights and benefits of any statute, law, rule or regulation which might otherwise render a release unenforceable with respect to any matters released hereunder.

The Releasor reasonably believes that it is fully familiar with the facts and circumstances which are sufficient to enable it to enter into this release. The Releasor further expressly acknowledges and agrees that the release set forth herein extends to any matters which are presently unknown, as well as matters which may be known as at the date hereof.

The Director reasonably believes that it is fully familiar with the facts and circumstances which are sufficient to enable it to enter into this release. The Director further expressly acknowledges and agrees that the release set forth herein extends to any matters which are presently unknown, as well as matters which may be known as at the date hereof.

The Releasor hereby acknowledges that it is aware of the terms of this release and that it represents a full and final release and discharge of all claims.

The Releasor also acknowledges and agrees that the Releasor has relied wholly upon the Releasor's own judgment, belief and knowledge and has not been influenced in making this release by any representations or statements by the Director.

The Director hereby acknowledges that it is aware of the terms of this release and that it represents a full and final release and discharge of all claims except as expressly set out above.

The Director also acknowledges and agrees that the Director has relied wholly upon the Director's own judgment, belief and knowledge and has not been influenced in making this release by any representations or statements by the Releasor.

Each of the Director and the Releasor hereby acknowledges that in the event that any provision of this release, or any part thereof, shall be found to be void or invalid by a court of competent jurisdiction, such void or invalid provision, or part thereof, shall be deemed to be severed from this release without in anyway affecting the validity, enforceability or effect of any of the remaining provisions, or parts thereof, which shall be and remain in full force and effect.

The Director and the Releasor each agree that no party hereto shall assign its rights or transfer its obligations hereunder without the prior written consent of the other parties hereto and the parties agree to promptly sign such further documents and instruments, and do and perform and cause to be done and performed such further and other acts and things as may be necessary or desirable in order to give full effect to this release and every part thereof.

Each of the Director and the Releasor agree that this release may be executed in counterparts and by facsimile, each of which so executed shall be deemed to be an original and all such counterparts together shall constitute one and the same instrument.

This release shall be binding upon and enure to the benefit of the Releasor and its successors and assigns. This release shall be binding upon and enure to the benefit of the Director and his successors, heirs, legal representatives and assigns.

The parties agree that they have each had the opportunity of obtaining independent legal counsel before executing this release.

This release shall be governed by and construed in accordance with the laws of Ontario and the federal laws of Canada applicable therein.

[Remainder of this page intentionally left blank]

IN WITNESS WHEREOF the parties have executed this release this ______________ day of __________, 2010.

SIGNED & DELIVERED In the presence of:
Witness	Director on his own behalf and on behalf of the applicable Director Released Parties

COREL CORPORATION on its own behalf and behalf of its controlled affiliates and subsidiaries

Name: Eleanor Lacey

Title: Vice President & General Counsel,

       Vice President, Business Development

VECTOR CAPITAL PARTNERS II INTERNATIONAL, LTD. on its own behalf and behalf of its controlled affiliates and subsidiaries

Alexander R. Slusky

Director

EX-99.1

Exhibit 99.1

Shareholders Approve Consolidation of Corel Corporation Shares

OTTAWA, Canada, January 26, 2010 -- Corel Corporation (NASDAQ:CREL; TSX:CRE, “Corel”) announced today that the shareholders of Corel approved its previously announced stock consolidation. The consolidation represented the second and final step in the acquisition of Corel by Corel Holdings, L.P., a limited partnership controlled by an affiliate of Vector Capital. Following approval of the Consolidation, Corel filed articles of amendment to effect the consolidation with the result that Corel is now wholly-owned by Corel Holdings, L.P. and its affiliates.

Shareholders other than Corel Holdings, L.P. and its affiliates will receive cash consideration of U.S.$4.00 in respect of each pre-consolidation share held by such holder.

Corel’s common shares will be delisted from the NASDAQ stock market and the Toronto Stock Exchange promptly following the consolidation, and thereafter Corel will cease to be a reporting issuer under Canadian law and its reporting obligations under U.S. securities laws will be suspended.

Further information about the consolidation and how shareholders may receive the cash consideration for their pre-consolidation shares is available in Corel’s proxy statement filed with the Securities and Exchange Commission and the Canadian securities regulatory authorities on December 29, 2009.

About Corel

Corel is one of the world’s top software companies with more than 100 million active users in over 75 countries. We develop software that helps people express their ideas and share their stories in more exciting, creative and persuasive ways. Through the years, we’ve built a reputation for delivering innovative, trusted products that are easy to learn and use, helping people achieve new levels of productivity. The industry has responded with hundreds of awards for software innovation, design and value.

Our award-winning product portfolio includes some of the world’s most widely recognized and popular software brands, including CorelDRAW®Graphics Suite, Corel®Painter™, Corel DESIGNER®Technical Suite, Corel®Paint Shop Pro®Photo, Corel®VideoStudio®, Corel®WinDVD®, Corel®WordPerfect®Office, WinZip®,and the recently released Corel®Digital Studio™2010. Our global headquarters are in Ottawa, Canada, with major offices in the United States, United Kingdom, Germany, China, Taiwan and Japan.

© 2010 Corel Corporation. All rights reserved. Corel, Corel DESIGNER, CorelDRAW, Paint Shop Pro, Painter, WinDVD, WordPerfect, WinDVD, WinZip and the Corel logo are trademarks or registered trademarks of Corel Corporation and/or its subsidiaries. All other product names and any registered and unregistered trademarks mentioned are used for identification purposes only and remain the exclusive property of their respective owners.

Contact:

Catherine Hughes, 613-728-0826 x1659

catherine.hughes@corel.com