AMENDMENT NO. 1
THIS AMENDMENT NO. 1 dated as of August 10, 2001 ("Amendment No. 1") to
the PURCHASE AGREEMENT, dated as of June 11, 2001 (the "Original Purchase
Agreement"), is made and entered into by and among Micro Focus International
Limited, a company incorporated under the laws of the British Virgin Islands,
MERANT plc, a company incorporated in England and Wales, and Micro Focus
International Limited, a company incorporated under the laws of the Cayman
Islands. Capitalized terms not otherwise defined herein have the meanings set
forth in the Original Purchase Agreement. Whenever reference is made hereby to
the "Agreement", such term shall mean the Original Purchase Agreement, as
amended by this Amendment No. 1.
Recitals
Purchaser and Seller have heretofore entered into the Original Purchase
Agreement. The undersigned now wish to amend certain provisions of the Original
Purchase Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Effective as of the date hereof, the parties hereto
agree to effect a novation, whereby Micro Focus International Limited, a
corporation incorporated under the laws of the Cayman Islands is substituted in
the place of Micro Focus International Limited, a corporation incorporated under
the laws of the British Virgin Islands for all purposes of the Original Purchase
Agreement and this Amendment No. 1, and accordingly, from and after the date
hereof, (i) all references to "Purchaser" in the Original Purchase Agreement and
this Amendment No. 1 will be deemed to refer to Micro Focus International
Limited, a corporation incorporated under the laws of the Cayman Islands and
(ii) Micro Focus International Limited, a corporation incorporated under the
laws of the British Virgin Islands will have no further obligations or
liabilities with respect to the Purchase Agreement or this Amendment No. 1.
Promptly following the date hereof, Micro Focus International Limited, a
corporation incorporated under the laws of the British Virgin Islands will be
liquidated or otherwise dissolved.
SECTION 2. Section 1.3(a) of the Agreement is amended by deleting
the words "On the Closing Date," in the last sentence thereof and replacing them
with the words "On the Funding Date (as defined in Section 1.8 hereof),".
SECTION 3. Section 1.4(a) of the Agreement is amended and restated
in its entirety as follows:
"(a) Closing Determination. Seller and Purchaser agree, that pending
the final determination of the Actual Tangible Net Book Value as provided
elsewhere in this Section 1.4, the Division's estimated Tangible Net Book Value
as of the Closing Date (the "Estimated Tangible Net Book Value") is $2,000,000.
For avoidance of doubt, each of the parties agrees that the determination of
Actual Tangible Net Book Value is to be made as of the Closing Date. "Tangible
Net Book Value" means, except as otherwise set forth in this Section 1.4, the
aggregate net book value of the Division Assets, less the sum of (i) the
aggregate amount of all Permitted Subsidiary Cash Transfers (as defined in
Section 1.8) plus the amount of any withholding taxes associated
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therewith, (ii) the aggregate net book value of all intangible Division Assets
(including, without limitation, the aggregate net book value of (A) any
capitalized software costs related to internal research and development, (B)
software purchased for resale and (C) purchased software, the license of which
is not transferable to Purchaser) and (iii) the aggregate net book value of all
liabilities of the Division to be assumed by Purchaser which would be required
to be set forth on the face of a Closing Date balance sheet, all as determined
in accordance with U.S. GAAP applied in a manner consistent with Seller's past
practices; it being agreed that (A) the calculation of Tangible Net Book Value
will not include accounts receivable related to the delivery of future services,
unless a corresponding amount of deferred revenue liability with respect to such
accounts receivable is included in the calculation of the Division's
liabilities, (B) for avoidance of doubt, the calculation of the assets and
liabilities of the Division will include the assets and liabilities of the
Acquired Subsidiaries, as adjusted for any Permitted Subsidiary Cash Transfers,
(C) the calculation of Tangible Net Book Value will not include the benefit of,
or the burden of, any asset or liability which inures to the benefit of, or is
to be borne by, Seller or its post-closing Affiliates, (D) notwithstanding the
agreement of the parties to leave all maintenance contracts related to the
Business with Seller and its Affiliates as specified in Section 1.7 hereof and
notwithstanding any provision to the contrary contained herein, the
determination of Tangible Net Book Value will be made as if all maintenance
contracts and the related deferred revenue liabilities with respect thereto are
to be transferred to Purchaser and its Affiliates and (E) notwithstanding any
provision to the contrary contained herein, the determinations of prepaid
assets, inventory and property, plant and equipment, any other fixed assets and
any other assets or liabilities to be included in the determination of Tangible
Net Book Value will be made based on the specifically identified schedules of
such assets made pursuant to Section 1.9 of this Agreement, in each case as
updated to reflect activity through the Closing Date. If the Estimated Tangible
Net Book Value is less than $10,000,000, the Cash Portion of the Purchase Price
otherwise deliverable to Seller on the Funding Date will be reduced by an amount
equal to such shortfall. As the parties have agreed that the Estimated Tangible
Net Book Value is $2,000,000, the Cash Portion of the Purchase Price will be
reduced by $8,000,000, from $62,500,000 to $54,500,000."
SECTION 4. Section 1.5 of the Agreement is hereby deleted. Each of
the parties will make its own allocation of the Purchase Price as such party
sees fit.
SECTION 5. A new Section 1.8 is hereby added to the Agreement:
"1.8 Effectiveness of Closing. Notwithstanding any provision in this
Agreement to the contrary, Purchaser and Seller agree that the transactions
contemplated by this Agreement shall be deemed to be effective as of the opening
of business on August 1, 2001 in each of the countries in which the Business
conducts business, and that all references in the Agreement to the Closing Date
shall be deemed to be a reference to such date. However, during the period from
the Closing Date through and including the date Purchaser funds (the "Funding")
the cash portion of the purchase price deliverable to Seller pursuant to Section
1.3 hereof (the "Funding Date"), neither Seller nor any of its Affiliates
(including any Acquired Subsidiary) shall (i) transfer, assign or otherwise
expend any cash or any cash equivalents of any Acquired Subsidiary, except (A)
to the extent any such cash expenditure is made to a third party (i.e.,
excluding Seller or any of its Affiliates) or any Transferred Employee of the
Business for the payment of liabilities or obligations exclusively related to
the Business (a "Permitted Cash Use") or (B) for transfers of cash from the
Acquired Subsidiaries
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incorporated in Norway, Canada, Italy or Japan to reduce the intercompany
liabilities of such Acquired Subsidiaries ("Permitted Subsidiary Cash
Transfers"), so long as following any such Permitted Subsidiary Cash Transfers
and as of the Funding Date, the Acquired Subsidiaries, in the aggregate, have
cash and cash equivalents of not less than $3.4 million, (ii) sell, assign or
otherwise transfer any other asset of any kind or nature of the Business or
(iii) cause any Acquired Subsidiary to incur, assume or otherwise become liable
with respect to any liability or obligation which is not exclusively related to
the Business or with respect to any Indebtedness. During the period from the
Closing Date through and including the Funding Date (the "Accounting Period"),
Seller has and will continue to, directly or indirectly through one or more of
its Affiliates, carry on the Business as agent and trustee and for the account
of Purchaser and its Affiliates in accordance with the following provisions:
(a) Seller shall, as soon as practicable following the date hereof
(but in no event later than September 15, 2001), make available information
regarding the Business with respect to the Accounting Period, which information
will show:
(i) All cash receipts received by Seller or its Affiliates
with respect thereto;
(ii) All cash payments made by Seller or its Affiliates
(excluding any Acquired Subsidiary) to any third party to the extent any such
cash payment is exclusively related to the Business;
(iii) Any cash payments by any Acquired Subsidiary
constituting a Permitted Cash Use or a Permitted Subsidiary Cash Transfers; and
(iv) Any other cash assignments, transfers or other payments
made by any Acquired Subsidiary.
The information shall show the net difference between (A) the sum of the
cash receipts referred to in clause (i) above plus the amount of the cash
assignments, transfers or other payments made by any Acquired Subsidiary
pursuant to clause (iv), minus (B) the cash payments referred to in clause (ii)
above. In the event the amounts in clause (A) of the previous sentence exceed
the amounts in clause (B) thereof, Seller shall promptly pay over to Purchaser
the net result derived therefrom. In the event the amounts in clause (B) of the
second preceding sentence exceed the amounts in clause (A) thereof, Purchaser
shall promptly pay over to Seller the net result derived therefrom. In either
case (whether a payment by Purchaser or Seller), appropriate credit will be
given for any previous remittances of receipts made by Seller to Purchaser
pursuant to the Transition Services Agreement.
(b) Any comments or objections which Purchaser may have with respect
to the information rendered pursuant to Section 1.8(a) above shall be discussed
promptly between Purchaser and Seller. If such comments or objections result in
the matter under discussion being resolved, then any appropriate amendment shall
be made to such information and payment shall be made in accordance with Section
1.8(a), as adjusted hereby. If they do not result in such resolution, then the
matter in dispute shall be dealt with in the manner outlined in Section 1.4 of
this Agreement.
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(c) If any claim which is covered by insurance of Seller or its
Affiliates shall arise during the Accounting Period in respect of any of the
Division Assets of the Business, Seller shall promptly submit all relevant
documents to the insurers to substantiate such claim in trust for Purchaser and
turn over the proceeds to Purchaser. Seller shall promptly inform Purchaser of
the circumstances giving rise to any such insurance claim."
SECTION 6. A new Section 1.9 is hereby added to the Agreement:
"1.9 Certain Schedules. Seller and Purchaser acknowledge and agree
that the Schedules contemplated by each of Section 1.1(a)(ii), Section 1.1(a)(v)
and Section 1.1(a)(vi) of the Original Purchase Agreement have not been prepared
and mutually agreed upon as contemplated in such Sections of the Original
Purchase Agreement. Accordingly, promptly following the date hereof, the parties
will mutually prepare, and the parties will confer and mutually agree upon a
specifically identifiable list of assets contemplated by Section 1.1(a)(ii),
Section 1.1(a)(v) and Section 1.1(a)(vi) of the Original Purchase Agreement
which lists of assets will be used to calculate Tangible Net Book Value as
contemplated in Section 1.4 of this Agreement."
SECTION 7. Section 2.6 of the Agreement is amended by deleting the
reference to the word "Closing" and replacing it with the word "Funding" and
deleting the words "Closing Date" and replacing them with the words "Funding
Date".
SECTION 8. Section 2.7(a) of the Agreement is amended by deleting
the reference to the words "Closing Date" and replacing them with the words
"Funding Date".
SECTION 9. Section 2.9(a) of the Agreement is amended by deleting
the reference to the word "Closing" and replacing it with the word "Funding".
SECTION 10. Section 2.16(b) of the Agreement is amended by deleting
the reference to the word "Closing" and replacing it with the word "Funding".
SECTION 11. Section 4.2 of the Agreement is amended by deleting the
reference to the words "Closing Date" and replacing them with the words "Funding
Date".
SECTION 12. Section 6.1(a) and Section 6.2(a) of the Agreement are
amended by deleting each reference therein to the word "Closing" and replacing
it with the word "Funding" and deleting each reference therein to the words
"Closing Date" and replacing them with the words "Funding Date".
SECTION 13. Section 6.1(b), Section 6.1(c), Section 6.2(b) and
Section 6.2(c) of the Agreement are amended by deleting each reference therein
to the words "Closing Date" and replacing them with the words "Funding Date".
SECTION 14. The Transferred Employees Schedule attached hereto sets
forth, as of August 9, 2001, the updated list of Transferred Employees
contemplated by Section 5.6(a) of the Original Purchase Agreement, to reflect
hiring and termination activity between June 11, 2001 and August 9, 2001.
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SECTION 15. A new Section 5.14 is hereby added to the Agreement:
"5.14 Transition Countries. Purchaser and Seller agree that, with
respect to the portion of the Division Assets located in each of Australia,
Belgium, France and the Netherlands (each, a "Transition Country"), Seller
shall, directly or indirectly through one or more of its Affiliates, during the
period from the Funding Date until the Transition Expiration Date (as defined
below) (the "Transition Period"), carry on that part of the Business as agent
and trustee and for the account of Purchaser and its Affiliates in accordance
with the following provisions:
(a) Seller shall, within thirty (30) days after the end of each
calendar month of the Transition Period, and also within thirty (30) days after
the end of the Transition Period, prepare an account for the Business in each
Transition Country, showing for each such calendar month or other period:
(i) All cash receipts received by Seller or its Affiliates
with respect thereto; and
(ii) All cash payments made by Seller or its Affiliates to
any third party, including any Transferred Employee, to the extent any such cash
payment is exclusively related to the Business.
The account shall show the net difference between (i) and (ii), and
shall be accompanied by payment of the difference to Purchaser if (i) is greater
than (ii) (less any previous remittances of receipts with respect thereto made
pursuant to the Transition Services Agreement), or an invoice to Purchaser for
the difference if (ii) is greater than (i), which invoice Purchaser shall pay
within ten (10) days after receipt.
(b) Any comments or objections which Purchaser may have with respect
to the accounts rendered for that Transition Country under Section 5.14(a) above
shall be discussed promptly between Purchaser and Seller. If such comments or
objections result in the matter under discussion being resolved, then any
appropriate amendment shall be made to such account and Purchaser and Seller
shall account to each other accordingly. If they do not result in such
resolution, then the matter in dispute shall be dealt with in the manner
outlined in Section 1.4 of this Agreement.
(c) Upon transfer of the Division Assets subject to this Section
5.14, such assets will be transferred subject to any liabilities associated
therewith incurred between the Funding Date and the date such assets are
transferred and such assets will be transferred on the same basis that such
assets were to be transferred as of the date hereof.
(d) "Transition Expiration Date" means (i) with respect to
Australia, the last to occur of Purchaser's establishment of a newly-formed
Australian Subsidiary and Purchaser's receipt of a GST exemption certificate
from the appropriate governmental authorities, (ii) with respect to Belgium, the
last to occur of Purchaser's establishment of a newly-formed Belgium Subsidiary
and receipt of a transferor's tax certificate from the appropriate governmental
authorities and (iii) with respect to any other Transition Country, Purchaser's
establishment of a newly-formed Subsidiary incorporated in such Transition
Country; provided that, notwithstanding the foregoing, in no event shall the
Transition Expiration Date extend beyond September 30, 2001. In the event the
preconditions specified in the preceding sentence are not satisfied by September
30, 2001, Purchaser will arrange
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(at Purchaser's sole cost and expense) for the purchase of the Division Assets
located in such Transition Country by an alternative purchaser no later than
September 30, 2001."
SECTION 16. Except as expressly set forth herein, all terms and
conditions of the Original Purchase Agreement shall remain unchanged.
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IN WITNESS WHEREOF, this Amendment No. 1 has been duly executed and
delivered by the duly authorized officer of each party hereto as of the date
first written above.
MICRO FOCUS INTERNATIONAL LIMITED, a
Cayman Islands corporation
By: /s/ XXXXX XXXXXXX
---------------------------------------
Name: Xxxxx Xxxxxxx
Title: President
MICRO FOCUS INTERNATIONAL LIMITED, a
British Virgin Islands corporation
By: /s/ XXXXX XXXXXXX
---------------------------------------
Name: Xxxxx Xxxxxxx
Title: President
MERANT plc
By: /s/ XXX XXXXXX
---------------------------------------
Name: Xxx Xxxxxx
Title: Senior Vice President and Chief
Financial Officer
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