OPEN TEXT CORP (Form: 10-Q, Received: 11/01/2012 06:02:25)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

______________________

FORM 10-Q

______________________



ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012 .



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 0-27544

______________________

OPEN TEXT CORPORATION

(Exact name of registrant as specified in its charter)

______________________




CANADA		98-0154400
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

275 Frank Tompa Drive, Waterloo, Ontario, Canada N2L 0A1

(Address of principal executive offices)

(519) 888-7111

(Registrant’s telephone number, including area code)

______________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý Accelerated filer ¨ Non-accelerated filer ¨ (Do not check if smaller reporting company) Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

At October 22, 2012, there were 58,483,175 outstanding Common Shares of the registrant.

OPEN TEXT CORPORATION

TABLE OF CONTENTS




	Page No
PART I Financial Information:
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of September 30, 2012 (unaudited) and June 30, 2012	3
Condensed Consolidated Statements of Income - Three Months Ended September 30, 2012 and 2011 (unaudited)	4
Condensed Consolidated Statements of Comprehensive Income - Three Months Ended September 30, 2012 and 2011 (unaudited)	5
Condensed Consolidated Statements of Cash Flows - Three Months Ended September 30, 2012 and 2011 (unaudited)	6
Unaudited Notes to Condensed Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3. Quantitative and Qualitative Disclosures about Market Risk	41
Item 4. Controls and Procedures	41
PART II Other Information:
Item 1A. Risk Factors	42
Item 5. Other Information	42
Item 6. Exhibits	43
Signatures	44

OPEN TEXT CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars, except share data)



	September 30, 2012			June 30, 2012
	(unaudited)
ASSETS
Cash and cash equivalents	$	302,235		$	559,747
Accounts receivable trade, net of allowance for doubtful accounts of $6,051 as of September 30, 2012 and $5,655 as of June 30, 2012 (note 3)	169,967			163,664
Income taxes recoverable (note 13)	14,588			17,849
Prepaid expenses and other current assets	45,632			44,011
Deferred tax assets (note 13)	12,450			4,003
Total current assets	544,872			789,274
Property and equipment (note 4)	85,332			81,157
Goodwill (note 5)	1,211,423			1,040,234
Acquired intangible assets (note 6)	468,699			312,563
Deferred tax assets (note 13)	142,536			115,128
Other assets (note 7)	23,760			23,739
Deferred charges (note 8)	65,592			68,653
Long-term income taxes recoverable (note 13)	13,423			13,545
Total assets	$	2,555,637		$	2,444,293
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities (note 9)	$	179,213		$	131,734
Current portion of long-term debt (note 10)	41,682			41,374
Deferred revenues	259,061			273,987
Income taxes payable (note 13)	16,308			27,806
Deferred tax liabilities (note 13)	1,350			1,612
Total current liabilities	497,614			476,513
Long-term liabilities:
Accrued liabilities (note 9)	18,389			14,247
Deferred credits (note 8)	9,518			10,086
Pension liability (note 11)	23,458			22,074
Long-term debt (note 10)	547,500			555,000
Deferred revenues	11,399			12,653
Long-term income taxes payable (note 13)	162,056			147,623
Deferred tax liabilities (note 13)	77,676			26,705
Total long-term liabilities	849,996			788,388
Shareholders’ equity:
Share capital (note 12)
58,483,175 and 58,358,990 Common Shares issued and outstanding at September 30, 2012 and June 30, 2012, respectively; Authorized Common Shares: unlimited	639,719			635,321
Additional paid-in capital	98,475			95,026
Accumulated other comprehensive income	45,723			44,364
Retained earnings	461,497			442,068
Treasury stock, at cost (793,494 shares at September 30, 2012 and at June 30, 2012, respectively)	(37,387		)	(37,387		)
Total shareholders’ equity	1,208,027			1,179,392
Total liabilities and shareholders’ equity	$	2,555,637		$	2,444,293

Guarantees and contingencies (note 18)

Related party transactions (note 21)

See accompanying Notes to Condensed Consolidated Financial Statements

OPEN TEXT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands of U.S. dollars, except share and per share data)

(unaudited)



	Three Months Ended September 30,
	2012			2011
Revenues:
License	$	55,656		$	65,028
Cloud services	44,884			—
Customer support	162,096			161,997
Professional service and other	63,558			61,021
Total revenues	326,194			288,046
Cost of revenues:
License	4,168			3,998
Cloud services	18,283			—
Customer support	25,823			26,269
Professional service and other	48,582			50,351
Amortization of acquired technology-based intangible assets (note 6)	23,782			20,790
Total cost of revenues	120,638			101,408
Gross profit	205,556			186,638
Operating expenses:
Research and development	39,906			43,458
Sales and marketing	64,515			64,880
General and administrative	28,133			25,761
Depreciation	6,109			5,258
Amortization of acquired customer-based intangible assets (note 6)	17,252			13,041
Special charges (note 16)	9,554			7,105
Total operating expenses	165,469			159,503
Income from operations	40,087			27,135
Other income (expense), net	(71		)	9,312
Interest expense, net	(4,368		)	(2,786		)
Income before income taxes	35,648			33,661
Provision for (recovery of) income taxes (note 13)	16,219			(1,325		)
Net income for the period	$	19,429		$	34,986
Net income per share—basic (note 20)	$	0.33		$	0.61
Net income per share—diluted (note 20)	$	0.33		$	0.60
Weighted average number of Common Shares outstanding—basic	58,424			57,412
Weighted average number of Common Shares outstanding—diluted	58,919			58,599

See accompanying Notes to Condensed Consolidated Financial Statements

OPEN TEXT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands of U.S. dollars)

(unaudited)



	Three Months Ended September 30,
	2012			2011
Net income for the period	$	19,429		$	34,986
Other comprehensive income—net of tax:
Net foreign currency translation adjustments	(476		)	(10,618		)
Net unrealized gain (loss) on cash flow hedges	1,944			(5,202		)
Net actuarial gain (loss) relating to defined benefit pension plans	(109		)	(548		)
Total other comprehensive income (loss), net, for the period	$	1,359		$	(16,368	)

Total comprehensive income	$	20,788		$	18,618

OPEN TEXT CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

(unaudited)



	Three Months Ended September 30,
	2012			2011
Cash flows from operating activities:
Net income for the period	$	19,429		$	34,986
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangible assets	47,143			39,089
Share-based compensation expense	3,102			4,844
Excess tax benefits on share-based compensation expense	(352		)	(332		)
Pension expense	242			137
Amortization of debt issuance costs	537			330
Amortization of deferred charges and credits	2,929			2,672
Loss on sale and write down of property and equipment	2			169
Deferred taxes	861			(14,849		)
Impairment and other non cash charges	—			(1,355		)
Changes in operating assets and liabilities:
Accounts receivable	19,442			21,654
Prepaid expenses and other current assets	3,024			5,842
Income taxes	4,373			15,024
Deferred charges and credits	(436		)	(9,046		)
Accounts payable and accrued liabilities	(20,255		)	(21,407		)
Deferred revenue	(18,070		)	(32,998		)
Other assets	(208		)	588
Net cash provided by operating activities	61,763			45,348
Cash flows from investing activities:
Additions of property and equipment	(5,038		)	(7,902		)
Purchase of Operitel Corporation, net of cash acquired	—			(6,260		)
Purchase of Global 360 Holding Corp., net of cash acquired	—			(247,711		)
Purchase of EasyLink Services International Corporation, net of cash acquired	(315,331		)	—
Purchase consideration for prior period acquisitions	(217		)	(274		)
Net cash used in investing activities	(320,586		)	(262,147		)
Cash flow from financing activities:
Excess tax benefits on share-based compensation expense	352			332
Proceeds from issuance of Common Shares	3,993			7,837
Purchase of Treasury Stock	—			—
Proceeds from long-term debt and revolver	—			48,500
Repayment of long-term debt and revolver	(7,667		)	(916		)
Net cash provided by (used in) financing activities	(3,322		)	55,753
Foreign exchange gain (loss) on cash held in foreign currencies	4,633			(3,800		)
Increase (decrease) in cash and cash equivalents during the period	(257,512		)	(164,846		)
Cash and cash equivalents at beginning of the period	559,747			284,140
Cash and cash equivalents at end of the period	$	302,235		$	119,294

Supplementary cash flow disclosures (note 19)

See accompanying Notes to Condensed Consolidated Financial Statements

OPEN TEXT CORPORATION

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three Months Ended September 30, 2012

(Tabular amounts in thousands, except share and per share data)

NOTE 1—BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements include the accounts of Open Text Corporation and our wholly-owned subsidiaries, collectively referred to as “OpenText” or the “Company”. All inter-company balances and transactions have been eliminated.

These condensed consolidated financial statements are expressed in U.S. dollars and are prepared in accordance with United States generally accepted accounting principles (U.S. GAAP). The information furnished reflects all adjustments necessary for a fair presentation of the results for the periods presented and includes the financial results of EasyLink Services International Corporation (EasyLink), with effect from July 2, 2012 (see note 17).

Use of estimates

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates, judgments and assumptions that affect the amounts reported in the condensed consolidated financial statements. These estimates, judgments and assumptions are evaluated on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe are reasonable at that time, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates. In particular, significant estimates, judgments and assumptions include those related to: (i) revenue recognition, (ii) allowance for doubtful accounts, (iii) testing of goodwill for impairment, (iv) the valuation of acquired intangible assets, (v) the valuation of long-lived assets, (vi) the recognition of contingencies, (vii) restructuring accruals, (viii) acquisition accruals and pre-acquisition contingencies, (ix) asset retirement obligations, (x) the realization of investment tax credits, (xi) the valuation of stock options granted and liabilities related to share-based payments, including the valuation of our long-term incentive plan, (xii) the valuation of financial instruments, (xiii) the valuation of pension assets and obligations, and (xiv) accounting for income taxes.

Reclassifications

Upon adoption of Accounting Standards Codification (ASC) Topic 740-10 “Income Taxes” (Topic 740-10) in the fiscal year ended June 30, 2007, we had elected to follow an accounting policy to classify interest related to liabilities for income taxes under the "Interest income (expense), net" line and penalties related to liabilities for income taxes under the "Other income (expense)" line in our Consolidated Statements of Income.

During the three months ended December 31, 2011, we elected to change this accounting policy to classify both interest and penalties relating to liabilities for income taxes to the "Provision for (recovery of) income taxes" line in our Consolidated Statements of Income.

The revised classification is more appropriate under the circumstances for the following reasons:


1.	During the three months ended December 31, 2011, we entered into a new credit agreement (see note 10) which effectively doubled our bank-related borrowings. In the context of this event, we believe it is preferable for the "Interest income (expense), net" line to be reflective of financial interest income and interest expense relating to borrowings.


2.	The revised policy is better aligned with the accounting policy followed by the Company’s publicly listed competitors and will lead to enhanced comparability with these companies.

The internal reorganization of the Company’s international subsidiaries in the fiscal year ended June 30, 2010, to consolidate our international intellectual property in certain jurisdictions, and recent business acquisitions have increased the complexity of determining the Company’s liability for income taxes in multiple jurisdictions and it is preferable to record the related interest and penalties associated with the liability for income taxes as a component of the “Provision for (recovery of) income taxes” line within our Consolidated Statements of Income.

As a result of this accounting policy change, certain prior period comparative figures have been adjusted to conform to current period presentation. "Other expense, net" was decreased by approximately $38,000 for the three months ended September 30, 2011 , from previously reported amounts. ‘Interest expense, net’ was decreased by approximately $1.6 million

for the three months ended September 30, 2011 from previously reported amounts. The "Provision for income taxes" was increased by approximately $1.6 million for the three months ended September 30, 2011 , from previously reported amounts.

There was no change to income from operations, net income or net income per share in any of the periods presented as a result of these reclassifications.

Cloud Services

Starting in the first quarter for the year ended June 30, 2013 (Fiscal 2013), in light of our acquisition of EasyLink on July 2, 2012, we adopted a policy to classify revenue and cost of revenues relating to "Cloud Services" as a separate line item within "Revenues" and "Cost of Revenues", respectively, on the Condensed Consolidated Statements of Income. No prior period comparative figures have been adjusted to conform to current period presentation since such prior period amounts are not material. For a detailed explanation of the products that make up our Cloud Services offerings please see our “Management Discussion and Analysis” included under Part I, Item 2 to this Quarterly Report on Form 10-Q.

Research and Development Tax Credits

Non-refundable research and development tax credits are now being reflected as a component of "Income tax" expense on the Condensed Consolidated Statements of Income. Certain prior period comparative figures have been adjusted on the Condensed Consolidated Balance Sheets to conform to current period presentation. As of June 30, 2012, long-term “Deferred tax assets” have been increased from previously reported amounts by approximately $34.9 million , with a corresponding decrease to “Long-term income taxes recoverable”. There was no change to total assets, liabilities, or shareholders' equity as a result of this reclassification. The prior period comparative figures on the Condensed Consolidated Statements of Income have not been adjusted as the amounts are not material.

NOTE 2—NEW ACCOUNTING PRONOUNCEMENTS AND ACCOUNTING POLICY UPDATES

Recently Adopted Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2011-05, "Comprehensive Income (Topic 220)—Presentation of Comprehensive Income" (ASU 2011-05), to require an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of Shareholders' equity.

In December 2011, the FASB issued Accounting Standards Update No. 2011-12, "Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income (AOCI) in Accounting Standards Update No. 2011-05" (ASU 2011-12), which indefinitely defers the requirement that companies present reclassification adjustments for each component of AOCI in both net income and other comprehensive income (OCI) on the face of the financial statements.

In the first quarter of Fiscal 2013, we adopted ASU 2011-05 and ASU 2011-12. Pursuant to the adoptions, we have presented a separate Condensed Consolidated Statement of Comprehensive Income. There were no other significant or material changes to our reporting as a result of these adoptions.

Recent Accounting Pronouncements

Testing Indefinite-Lived Intangible Assets for Impairment

In July 2012, the FASB issued Accounting Standards Update No. 2012-02, “Intangibles-Goodwill and Other (Topic 350)-Testing Indefinite-Lived Intangible Assets for Impairment” (ASU 2012-02), to allow entities to use a qualitative approach to test indefinite-lived intangible assets for impairment. ASU 2012-02 permits an entity to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying value. If it is concluded that this is the case, it is necessary to perform the currently prescribed quantitative impairment test by comparing the fair value of the indefinite-lived intangible asset with its carrying value. Otherwise, the quantitative impairment test is not required. ASU 2012-02 is effective for us in Fiscal 2014 and earlier adoption is permitted. We are currently evaluating the impact of our pending adoption of ASU 2012-02 on our consolidated financial statements.

NOTE 3—ALLOWANCE FOR DOUBTFUL ACCOUNTS



Balance of allowance for doubtful accounts as of June 30, 2012	5,655
Bad debt expense for the period	946
Write-off /adjustments	(550		)
Balance of allowance for doubtful accounts as of September 30, 2012	$	6,051

NOTE 4—PROPERTY AND EQUIPMENT



	As of September 30, 2012
	Cost		Accumulated Depreciation		Net
Furniture and fixtures	$	11,071	$	5,272	$	5,799
Office equipment	1,071		665		406
Computer hardware	54,267		36,772		17,495
Computer software	15,409		8,219		7,190
Leasehold improvements	29,324		15,053		14,271
Buildings	44,007		3,836		40,171
	$	155,149	$	69,817	$	85,332



	As of June 30, 2012
	Cost		Accumulated Depreciation		Net
Furniture and fixtures	$	10,828	$	4,577	$	6,251
Office equipment	975		596		379
Computer hardware	48,834		34,799		14,035
Computer software	13,558		7,404		6,154
Leasehold improvements	27,643		13,777		13,866
Buildings	44,034		3,562		40,472
	$	145,872	$	64,715	$	81,157

NOTE 5—GOODWILL

Goodwill is recorded when the consideration paid for an acquisition of a business exceeds the fair value of identifiable net tangible and intangible assets. The following table summarizes the changes in goodwill since June 30, 2012:



Balance, June 30, 2012	1,040,234
Acquisition of EasyLink (note 17)	171,019
Adjustments on account of foreign exchange	170
Balance, September 30, 2012	$	1,211,423

NOTE 6—ACQUIRED INTANGIBLE ASSETS



	As of September 30, 2012
	Cost		Accumulated Amortization			Net
Technology Assets	$	543,508	$	(333,299	)	$	210,209
Customer Assets	501,076		(242,586		)	258,490
Total	$	1,044,584	$	(575,885	)	$	468,699

	As of June 30, 2012
	Cost		Accumulated Amortization			Net
Technology Assets	$	473,008	$	(309,517	)	$	163,491
Customer Assets	374,396		(225,324		)	149,072
Total	$	847,404	$	(534,841	)	$	312,563

The weighted average amortization period for acquired technology and customer intangible assets is approximately six years and seven years, respectively.

The following table shows the estimated future amortization expense for the fiscal years indicated below. This calculation assumes no future adjustments to acquired intangible assets:



	Fiscal years ending June 30,
2013 (nine months ended June 30)	$	120,426
2014	102,881
2015	79,183
2016	54,233
2017 and beyond	111,976

Total	$	468,699

NOTE 7—OTHER ASSETS



	As of September 30, 2012		As of June 30, 2012
Debt issuance costs	$	7,926	$	8,463
Deposits and restricted cash	8,665		7,515
Long-term prepaid expenses and other long-term assets	7,169		7,761
	$	23,760	$	23,739

Debt issuance costs relate primarily to costs incurred for the purpose of obtaining our term loan and are being amortized over the term of the loan (see note 10). Deposits and restricted cash relate to security deposits provided to landlords in accordance with facility lease agreements and cash restricted per the terms of contractual-based agreements. Long-term prepaid expenses and other long-term assets primarily relate to certain advance payments on long-term licenses that are being amortized over the applicable terms of the licenses.

NOTE 8—DEFERRED CHARGES AND CREDITS

Deferred charges and credits relate to cash taxes payable and the elimination of deferred tax balances on account of legal

entity consolidations completed as part of an internal reorganization of our international subsidiaries. Deferred charges and credits are amortized to income tax expense over a period of six years.

NOTE 9—ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Current liabilities

Accounts payable and accrued liabilities are comprised of the following:



	As of September 30, 2012		As of June 30, 2012
Accounts payable—trade	$	10,803	$	7,574
Accrued salaries and commissions	41,119		50,821
Accrued liabilities*	114,943		64,830
Amounts payable in respect of restructuring and other Special charges (note 16)	10,215		7,068
Accruals relating to acquisitions	985		727
Asset retirement obligations	1,148		714
	$	179,213	$	131,734

Long-term accrued liabilities



	As of September 30, 2012		As of June 30, 2012
Amounts payable in respect of restructuring and other Special charges (note 16)	$	3,134	$	1,803
Accruals relating to acquisitions	1,285		1,141
Other accrued liabilities	9,767		7,678
Asset retirement obligations	4,203		3,625
	$	18,389	$	14,247

* The increase in accrued liabilities was primarily due to the acquisition of legacy EasyLink obligations.

Accruals relating to acquisitions

In relation to our acquisitions made before July 1, 2009, the date on which we adopted ASC Topic 805 "Business Combinations" (ASC Topic 805), we have accrued for costs relating to abandonment of excess legacy facilities. Such accruals were capitalized as part of the cost of the subject acquisition and have been recorded at present value less our best estimate for future sub-lease income and costs incurred to achieve sub-tenancy. The accrual for excess facilities will be discharged over the term of the respective leases. Any excess of the difference between the present value and actual cash paid for an abandoned facility will be charged to income and any deficits will be reversed to goodwill. The provisions for abandoned facilities are expected to be paid by February 2015. As of September 30, 2012 , the remaining balance of our acquisition accruals is $2.3 million ( June 30, 2012 - $1.9 million ).

Asset retirement obligations

We are required to return certain of our leased facilities to their original state at the conclusion of our lease. We have accounted for such obligations in accordance with ASC Topic 410 “Asset Retirement and Environmental Obligations” (ASC Topic 410). As of September 30, 2012 , the present value of this obligation was $5.4 million ( June 30, 2012 — $4.3 million ), with an undiscounted value of $5.9 million ( June 30, 2012 — $4.8 million ).

NOTE 10—LONG-TERM DEBT

Long-term debt

Long-term debt is comprised of the following:



	As of September 30, 2012		As of June 30, 2012
Long-term debt
Term Loan	$	577,500	$	585,000
Mortgage	11,682		11,374
	589,182		596,374
Less:
Current portion of long-term debt
Term Loan	30,000		30,000
Mortgage	11,682		11,374
	41,682		41,374
Non current portion of long-term debt	$	547,500	$	555,000

Term Loan and Revolver

Our term loan and revolver consists of a $600 million term loan facility (the Term Loan) and a $100 million committed revolving credit facility (the Revolver). Borrowings under the credit agreement are secured by a first charge over substantially all of our assets. We entered into and borrowed from this credit agreement on November 9, 2011.

The Term Loan has a five year term and repayments made under the Term Loan are equal to 1.25% of the original principal amount at each quarter for the first 2 years, 1.88% for years 3 and 4 and 2.5% for year 5. Currently our quarterly principal payment amounts to $7.5 million . The Term Loan bears interest at a floating rate of LIBOR plus 2.50% . For the three months ended September 30, 2012 , we recorded interest expense of approximately $4.1 million relating to the Term Loan.

For the three months ended September 30, 2011, we recorded interest expense of $1.8 million relating to our previously outstanding term loan.

The Revolver has a 5 year term with no fixed repayment date prior to the end of the term. As of September 30, 2012 , we have not drawn any amounts on the Revolver.

Mortgage

We currently have an "open" mortgage with a bank where we can pay all or a portion of the mortgage on or before August 1, 2013 . The original principal amount of the mortgage was Canadian $15.0 million and interest accrues monthly at a variable rate of Canadian prime plus 0.50% . Principal and interest are payable in monthly installments of Canadian $0.1 million with a final lump sum principal payment due on maturity. The mortgage is secured by a lien on our headquarters in Waterloo, Ontario, Canada. We first entered into this mortgage in December 2005.

As of September 30, 2012 , the carrying value of the mortgage was $11.7 million ( June 30, 2012 — $11.4 million ).

As of September 30, 2012 , the carrying value of the Waterloo building that secures the mortgage was $16.3 million ( June 30, 2012 — $16.3 million ).

For the three months ended September 30, 2012 , we recorded interest expense of $0.1 million relating to the mortgage (three months ended September 30, 2011 — $0.1 million ).

NOTE 11—PENSION PLANS AND OTHER POST RETIREMENT BENEFITS

The following table provides details of our defined benefit pension plans and long-term employee benefit obligations for Open Text Document Technologies GmbH (CDT) and Open Text Software GmbH (IXOS) as of September 30, 2012 and June 30, 2012 :



	Total benefit obligation		Current portion of benefit obligation*		Noncurrent portion of benefit obligation
CDT defined benefit plan	$	22,860	$	508	$	22,352
CDT Anniversary plan	475		88		387
CDT early retirement plan	43		43		—
IXOS defined benefit plan	719		—		719
Total as of September 30, 2012	$	24,097	$	639	$	23,458



	Total benefit obligation		Current portion of benefit obligation*		Noncurrent portion of benefit obligation
CDT defined benefit plan	$	21,461	$	475	$	20,986
CDT Anniversary plan	457		67		390
CDT early retirement plan	69		69		—
IXOS defined benefit plan	698		—		698
Total as of June 30, 2012	$	22,685	$	611	$	22,074



*	The current portion of the benefit obligation has been included within "Accounts payable and accrued liabilities" in the Condensed Consolidated Balance Sheets.

CDT Defined Benefit Plan

CDT sponsors an unfunded defined benefit pension plan covering substantially all CDT employees (CDT pension plan) which provides for old age, disability and survivors’ benefits. Benefits under the CDT pension plan are generally based on age at retirement, years of service and the employee’s annual earnings. The net periodic cost of this pension plan is determined using the projected unit credit method and several actuarial assumptions, the most significant of which are the discount rate and estimated service costs.

The following are the components of net periodic benefit costs for the CDT pension plan and the details of the change in the benefit obligation for the periods indicated:



	As of September 30, 2012			As of June 30, 2012
Benefit obligation—beginning of period	$	21,461		$	18,231
Service cost	113			326
Interest cost	220			873
Benefits paid	(111		)	(441		)
Actuarial (gain) loss	181			5,179
Foreign exchange (gain) loss	996			(2,707		)
Benefit obligation—end of period	22,860			21,461
Less: current portion	(508		)	(475		)
Noncurrent portion of benefit obligation	$	22,352		$	20,986

The following are the details of net pension expense for the CDT pension plan for the periods indicated:



	Three Months Ended September 30,
	2012		2011
Pension expense:
Service cost	$	113	$	85
Interest cost	220		227
Amortization of actuarial gains and losses	68		—
Net pension expense	$	401	$	312

The CDT pension plan is an unfunded plan and therefore no contributions have been made since the inception of the plan. Actuarial gains and losses in excess of 10% of the greater of the projected benefit obligation or the market-related value of plan

obligations are being amortized and recognized as a component of net periodic benefit costs over the average remaining service period of the plan's active employees. Currently there is approximately $0.2 million in accumulated other comprehensive income related to the CDT pension plan that is expected to be recognized as a component of net periodic benefit costs over the remaining fiscal year.

In determining the fair value of the CDT pension plan benefit obligations as of September 30, 2012 and June 30, 2012 , respectively, we used the following weighted-average key assumptions:



	As of September 30, 2012		As of June 30, 2012
Assumptions:
Salary increases	2.50	%	2.50	%
Pension increases	2.00	%	2.00	%
Discount rate	3.80	%	4.00	%
Employee fluctuation rate:
to age 30	1.00	%	1.00	%
to age 35	0.50	%	0.50	%
to age 40	—	%	—	%
to age 45	0.50	%	0.50	%
to age 50	0.50	%	0.50	%
from age 51	1.00	%	1.00	%

Anticipated pension payments under the CDT pension plan for the fiscal years indicated below are as follows:



2013 (nine months ended June 30)	$	381
2014	551
2015	597
2016	668
2017	740
2018 to 2022	5,180
Total	$	8,117

CDT Employee Benefit Obligations

CDT’s long-term employee benefit obligations arise under CDT’s “Anniversary plan” and an early retirement plan. The obligation is unfunded and carried at a fair value of $0.5 million for the Anniversary plan and approximately $43,000 for the early retirement plan as of September 30, 2012 ( $0.5 million and $0.1 million , respectively, as of June 30, 2012 ).

IXOS Defined Benefit Plans

Included in our pension liability, as of September 30, 2012 , is a net amount of $0.7 million ( June 30, 2012 — $0.7 million) that relates to two IXOS defined benefit pensions plans (IXOS pension plans) in connection with certain former members of the IXOS Board of Directors and certain IXOS employees, respectively. The net periodic pension cost with respect to the IXOS pension plans is determined using the projected unit credit method and several actuarial assumptions, the most significant of which are the discount rate and the expected return on plan assets.

NOTE 12—SHARE CAPITAL, OPTION PLANS AND SHARE-BASED PAYMENTS

Share Capital

Our authorized share capital includes an unlimited number of Common Shares and an unlimited number of Preference Shares. No Preference Shares have been issued.

Treasury Stock

During the three months ended September 30, 2012 and 2011, we did not repurchase any of our Common Shares for potential future reissuance under our Long Term Incentive Plans (LTIP) or otherwise.

As of September 30, 2012 , we have not reissued any Common Shares from treasury ( June 30, 2012 — nil ).

Share-Based Payments

Total share-based compensation cost for the periods indicated below is detailed as follows:



	Three Months Ended September 30,
	2012		2011
Stock options	$	1,339	$	798
Deferred stock units (Directors)	188		65
Restricted stock units	151		—
Restricted stock awards (legacy Vignette employees)	10		11
Performance stock units (Fiscal 2010, 2011 and 2012 LTIPs)	1,414		3,970
Total share-based compensation expense	$	3,102	$	4,844

Summary of Outstanding Stock Options

On September 27, 2012 at our Annual and Special Meeting of the Shareholders of Open Text Corporation, our shareholders approved a resolution reserving for issuance an additional 2,500,000 Common Shares under our 2004 Stock Option Plan. For more information regarding the amended 2004 Stock Option Plan, please see the Company's Form 8-K filed on October 2, 2012.

As of September 30, 2012 , options to purchase an aggregate of 2,011,176 Common Shares were outstanding and 2,971,170 Common Shares were available for issuance under our stock option plans. Our stock options generally vest over four years and expire between seven and ten years from the date of the grant. The exercise price of the options we grant is set at an amount that is not less than the closing price of our Common Shares on the NASDAQ on the trading day immediately preceding the applicable grant date.

A summary of activity under our stock option plans for the three months ended September 30, 2012 is as follows:



	Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)	Aggregate Intrinsic Value ($’000s)
Outstanding at June 30, 2012	2,147,151		$	40.07
Granted	65,000		54.52
Exercised	(102,600	)	32.92
Forfeited or expired	(98,375	)	43.95
Outstanding at September 30, 2012	2,011,176		$	40.71	4.31	$	31,242
Exercisable at September 30, 2012	932,551		$	26.26	2.17	$	26,951

We estimate the fair value of stock options using the Black-Scholes option pricing model, consistent with the provisions of ASC Topic 718, “Compensation—Stock Compensation” (ASC Topic 718), and SEC Staff Accounting Bulletin No. 107. The option-pricing models require input of subjective assumptions including the estimated life of the option and the expected volatility of the underlying stock over the estimated life of the option. We use historical volatility as a basis for projecting the expected volatility of the underlying stock and estimate the expected life of our stock options based upon historical data.

We believe that the valuation technique and the approach utilized to develop the underlying assumptions are appropriate in calculating the fair value of our stock option grants. Estimates of fair value are not intended, however, to predict actual future events or the value ultimately realized by employees who receive equity awards.

For the periods indicated, the following weighted-average fair value of options and weighted-average assumptions used were as follows:



	Three Months Ended September 30,
	2012			2011
Weighted–average fair value of options granted	$	18.23		$	17.66
Weighted-average assumptions used:
Expected volatility	40		%	41		%
Risk–free interest rate	0.62		%	0.80		%
Expected dividend yield	—		%	—		%
Expected life (in years)	4.35			4.34
Forfeiture rate (based on historical rates)	5		%	5		%

As of September 30, 2012 , the total compensation cost related to the unvested stock awards not yet recognized was $16.3 million , which will be recognized over a weighted-average period of approximately three years.

No cash was used by us to settle equity instruments granted under share-based compensation arrangements.

We have not capitalized any share-based compensation costs as part of the cost of an asset in any of the periods presented.

For the three months ended September 30, 2012 , cash in the amount of $3.4 million was received as the result of the exercise of options granted under share-based payment arrangements. The tax benefit realized by us during the three months ended September 30, 2012 from the exercise of options eligible for a tax deduction was $0.8 million .

For the three months ended September 30, 2011 , cash in the amount of $7.2 million was received as the result of the exercise of options granted under share-based payment arrangements. The tax benefit realized by us during the three months ended September 30, 2011 from the exercise of options eligible for a tax deduction was $0.4 million .

Long-Term Incentive Plans

On September 10, 2007, our Board of Directors (the Board) approved the implementation of an incentive plan called the “Open Text Corporation Long-Term Incentive Plan” (LTIP). The LTIP is a rolling three year program whereby we make a series of annual grants, each of which covers the respective performance period, to certain of our employees, and which vests upon the employee and/or the Company meeting pre-determined performance and market-based criteria. One criterion we use to measure performance is, if over the three year period the relative cumulative total shareholder return (TSR) of our Company, compared to the cumulative TSR of companies comprising a peer index group, is higher than a pre-determined target percentile (that is set at the date of grant), then a payout will be made. Depending on whether this target is met or exceeded with respect to the stipulations of the individual LTIPs, the amount of payout would be determined. In calculating the TSR achievement we use the average closing price of our Common Stock, as it trades over the last 30 days ending September 15th (following the third year in the LTIPs rolling three year program).

Grants made in Fiscal 2010 under the LTIP (Fiscal 2010 LTIP) took effect in Fiscal 2010 starting on July 1, 2009. We achieved a payout of 150% of the EPS target. We did not achieve our TSR target. Awards under the Fiscal 2010 LTIP will be issued in the second quarter of Fiscal 2013 in accordance with our insider trading policy, which states, in part, that stock awards may not be issued while a "trading window" is closed.

Grants made in Fiscal 2011 under the LTIP (Fiscal 2011 LTIP) took effect in Fiscal 2011 starting on July 1, 2010. Awards under the Fiscal 2011 LTIP may be equal to 50% , 100% or 150% of the target. We expect to settle the Fiscal 2011 LTIP awards in stock.

Grants made in Fiscal 2012 under the LTIP (Fiscal 2012 LTIP) took effect in Fiscal 2012 starting on February 3, 2012. Awards under the Fiscal 2012 LTIP will be interpolated between 0% and 150% of the target. We expect to settle the Fiscal 2012 LTIP awards in stock.

Performance Share Units (PSUs) granted under the LTIP equity plans (Fiscal 2010, 2011 and 2012 LTIP) have been measured at fair value as of the effective date, consistent with ASC Topic 718, and will be charged to share-based compensation expense over the remaining life of the plan. During the three months ended September 30, 2012 , $1.4 million has been charged to share-based compensation expense on account of the LTIP equity plans ( three months ended September 30, 2011 — $4.0 million ).

Deferred Stock Units (DSUs), Performance Stock Units (PSUs) and Restricted Stock Units (RSUs)

During the three months ended September 30, 2012 , we granted 299 deferred stock units (DSUs) to certain non-employee directors ( three months ended September 30, 2011 — 263 ). The DSUs were issued under the Company’s Deferred Share Unit Plan that came into effect on February 2, 2010 and will vest at the Company’s next annual general meeting following the granting of the DSUs.

During the three months ended September 30, 2012 and 2011, we did not grant any PSUs under LTIP equity plans, respectively.

During the three months ended September 30, 2012 and 2011, we did not grant any Restricted Stock Units (RSUs), respectively.

Restricted Stock Awards (RSAs)

On July 21, 2009, we granted, as part of our acquisition of Vignette, 574,767 OpenText restricted stock awards (RSAs) to certain legacy Vignette employees and directors as replacement for similar restricted stock awards held by these employees and directors when they were employed by Vignette. These awards were valued at $13.33 per RSA on July 21, 2009 and a portion was allocated to the purchase price of Vignette. The remaining portion is amortized, as part of share-based compensation expense, over the vesting period of these awards.

Employee Share Purchase Plan (ESPP)

During the three months ended September 30, 2012 , cash in the amount of approximately $0.6 million , was received from employees that will be used to purchase Common Shares in future periods ( three months ended September 30, 2011 — $0.6 million ).

NOTE 13—INCOME TAXES

Our effective tax rate represents the net effect of the mix of income earned in various tax jurisdictions that are subject to a wide range of income tax rates.

We recognize interest expense and penalties related to income tax matters in income tax expense.

For the three months ended September 30, 2012 and 2011, we recognized the following amounts as income tax-related interest expense and penalties:



	Three Months Ended September 30,
	2012	2011
Interest expense	1,854	1,562
Penalties	39	38
Total	1,893	1,600

As of September 30, 2012 and June 30, 2012 , the following amounts have been accrued on account of income tax-related interest expense and penalties:



	As of September 30, 2012		As of June 30, 2012
Interest expense accrued *	$	22,056	$	19,316
Penalties accrued *	$	5,818	$	4,040



*	These balances have been included within "Long-term income taxes payable" within the Condensed Consolidated Balance Sheets.

Included in the accrual balances as of September 30, 2012 are accrued interest expense and penalties of $0.4 million and $1.6 million , respectively, relating to the acquisition of EasyLink.

We believe that it is reasonably possible that the gross unrecognized tax benefits, as of September 30, 2012, could decrease tax expense in the next 12 months by $17.7 million , relating primarily to the expiration of competent authority relief and tax years becoming statute barred for purposes of future tax examinations by local taxing jurisdictions.

Our four most significant tax jurisdictions are Canada, the United States, Luxembourg and Germany. Our tax filings remain subject to examination by applicable tax authorities for a certain length of time following the tax year to which those filings relate. Tax years that remain open to examinations by local taxing authorities vary by jurisdiction up to ten years.

We are subject to tax examinations in all major taxing jurisdictions in which we operate and currently have examinations open in Canada, the United States, France and Spain. On a quarterly basis we assess the status of these examinations and the potential for adverse outcomes to determine the adequacy of the provision for income and other taxes.

We believe that we have adequately provided for any reasonably foreseeable outcomes related to our tax examinations and that any settlement will not have a material adverse effect on our consolidated financial position or results of operations. However, we cannot predict with any level of certainty the exact nature of any future possible settlements.

As at September 30, 2012, we have not provided for additional foreign withholding taxes or deferred income tax liabilities for temporary differences related to the undistributed earnings of our non-Canadian subsidiaries other than the United States, since such earnings are considered permanently invested in those subsidiaries, or are not subject to withholding taxes. It is not practicable to reasonably estimate the amount of additional deferred income tax liabilities or foreign withholding taxes that may be payable should these earnings be distributed in the future. We do plan to make periodic repatriations that will be subject to withholding taxes from our United States subsidiaries and have accrued additional tax cost attributable to these distributions in the amount of $0.2 million .

The effective tax rate has increased and is 45.5% for the three months ended September 30, 2012 compared to a recovery of 3.9% for the three months ended September 30, 2011. The tax recovery in Fiscal 2012 was primarily due to tax benefits realized in Fiscal 2012 relating to the internal reorganization of the acquired international subsidiaries of Metastorm Inc., in the amount of $4.1 million , and a Canadian election to file tax returns in U.S. dollar functional currency, in the amount of $5.9 million . Correspondingly, the Fiscal 2013 effective tax rate increased primarily due to an increase of $4.3 million related to the impact of adjustments in the United States and Australia upon filing of tax returns. The remainder of the differences are due to normal course movements and non material items.

NOTE 14—FAIR VALUE MEASUREMENTS

ASC Topic 820 “Fair Value Measurements and Disclosures” (ASC Topic 820) defines fair value, establishes a framework for measuring fair value, and addresses disclosure requirements for fair value measurements. Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value, in this context, should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including our own credit risk.

In addition to defining fair value and addressing disclosure requirements, ASC Topic 820 establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which are determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:


•	Level 1—inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.


•	Level 2—inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.


•	Level 3—inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis:

Our financial assets and liabilities measured at fair value on a recurring basis consisted of the following types of instruments as of September 30, 2012 and June 30, 2012:

September 30, 2012

June 30, 2012

Fair Market Measurements using:

September 30, 2012

Quoted prices

in active

markets for

identical

assets/

(liabilities)

Significant

other

observable

inputs

Significant

unobservable

inputs

June 30, 2012

Quoted prices

in active

markets for

identical

assets/

(liabilities)

Significant

other

observable

inputs

Significant

unobservable

inputs

(Level 1)

(Level 2)

(Level 3)

(Level 1)

(Level 2)

(Level 3)

Financial Assets:

Derivative financial instrument asset (note 15)

2,925

n/a

2,925

n/a

283

n/a

283

n/a

2,925

n/a

2,925

n/a

283

n/a

283

n/a

Our valuation techniques used to measure the fair values of the derivative instruments, the counterparty to which has high credit ratings, were derived from pricing models including discounted cash flow techniques, with all significant inputs derived from or corroborated by observable market data, as no quoted market prices exist for the derivative instruments. Our discounted cash flow techniques use observable market inputs, such as foreign currency spot and forward rates.

Our cash and cash equivalents, along with our accounts receivable and accounts payable and accrued liabilities balances, are measured and recognized in our consolidated financial statements at an amount which approximates their fair value (a Level 3 measurement) due to their short maturities.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

We measure certain assets at fair value on a nonrecurring basis. These assets are recognized at fair value when they are deemed to be other-than-temporarily impaired. During the three months ended September 30, 2012 and 2011, no indications of impairment were identified and therefore no fair value measurements were required.

If applicable, we will recognize transfers into and out of levels within the fair value hierarchy at the end of the reporting period in which the actual event or change in circumstance occurs. During the three months ended September 30, 2012 and 2011, we did not have any significant transfers in or out of Level 2 or Level 3.

NOTE 15—DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Foreign Currency Forward Contracts

In July 2010, we entered into a hedging program with a Canadian chartered bank to limit the potential foreign exchange fluctuations incurred on future cash flows related to a portion of the payroll expenses that are expected to be paid by our Canadian subsidiary. We operate internationally and are therefore exposed to foreign currency exchange rate fluctuations in the normal course of our business, in particular to changes in the Canadian dollar on account of large costs that are incurred from our centralized Canadian operations, and are denominated in Canadian dollars. As part of our risk management strategy, we use derivative instruments to hedge portions of our payroll exposure. We do not use these forward contracts for trading or speculative purposes. These forward contracts typically mature between one and twelve months.

We have designated these transactions as cash flow hedges of forecasted transactions under ASC Topic 815 “Derivatives and Hedging” (ASC Topic 815). As the critical terms of the hedging instrument, and of the entire hedged forecasted transaction, are the same, in accordance with ASC Topic 815 we have been able to conclude that changes in fair value or cash flows attributable to the risk being hedged are expected to completely offset at inception and on an ongoing basis. Accordingly, quarterly unrealized gains or losses on the effective portion of these forward contracts have been included within other comprehensive income. The fair value of the contracts, as of September 30, 2012 , is recorded within “Prepaid expenses and other current assets”.

As of September 30, 2012 , the notional amount of forward contracts we held to sell U.S. dollars in exchange for Canadian dollars was $74.7 million ( June 30, 2012 — $99.6 million ).

Fair Value of Derivative Instruments and Effect of Derivative Instruments on Financial Performance

The effect of these derivative instruments on our consolidated financial statements for the periods indicated below were as follows (amounts presented do not include any income tax effects).

Fair Value of Derivative Instruments in the Consolidated Balance Sheets (see note 14)



		As of September 30, 2012		As of June 30, 2012
Derivatives	Balance Sheet Location	Fair Value Asset (Liability)		Fair Value Asset (Liability)
Foreign currency forward contracts designated as cash flow hedges	Prepaid expenses and other current assets	$	2,925	$	283

Effects of Derivative Instruments on Income and Other Comprehensive Income (OCI)

Three Months Ended September 30, 2012

Derivative in Cash Flow

Hedging Relationship

Amount of Gain or (Loss)

Recognized in OCI on

Derivative (Effective

Portion)

Location of

Gain or (Loss)

Reclassified

from

Accumulated

OCI into

Income

(Effective

Portion)

Amount of Gain or

(Loss) Reclassified from

Accumulated OCI into

Income (Effective

Portion)

Location of

Gain or

(Loss)

Recognized

in Income on

Derivative

(Ineffective

Portion and

Amount

Excluded

from

Effectiveness

Testing)

Amount of Gain or

(Loss) Recognized in

Income on Derivative

(Ineffective Portion

and Amount Excluded

from Effectiveness

Testing)

Foreign currency forward contracts

3,398

Operating

expenses

756

N/A

—

Three Months Ended September 30, 2011

Derivative in Cash Flow

Hedging Relationship

Amount of Gain or (Loss)

Recognized in OCI on

Derivative (Effective

Portion)

Location of

Gain or (Loss)

Reclassified

from

Accumulated

OCI into

Income

(Effective

Portion)

Amount of Gain or

(Loss) Reclassified from

Accumulated OCI into

Income (Effective

Portion)

Location of

Gain or

(Loss)

Recognized

in Income on

Derivative

(Ineffective

Portion and

Amount

Excluded

from

Effectiveness

Testing)

Amount of Gain or

(Loss) Recognized in

Income on Derivative

(Ineffective Portion

and Amount Excluded

from Effectiveness

Testing)

Foreign currency forward contracts

(5,655

)

Operating

expenses

1,545

N/A

NOTE 16—SPECIAL CHARGES

Special charges include costs that relate to certain restructuring initiatives that we have undertaken from time to time under our various restructuring plans, as well as acquisition related costs and other similar charges.



	Three Months Ended September 30, 2012
	2012			2011
Fiscal 2013 Restructuring Plan	$	7,578		$	—
Fiscal 2012 Restructuring Plan	584			6,684
Fiscal 2011 Restructuring Plan	(15		)	979
Fiscal 2010 Restructuring Plan	(2		)	(18		)
Acquisition-related costs	804			815
Other charges	605			(1,355		)
Total	$	9,554		$	7,105

Reconciliations of the liability relating to each of our materially outstanding restructuring plans are provided below:

Fiscal 2013 Restructuring Plan

In the first quarter of Fiscal 2013, we began to implement restructuring activities to streamline our operations (Fiscal 2013 restructuring plan). These charges relate to workforce reductions and facility consolidations. We expect to incur more charges under the Fiscal 2013 restructuring plan, as we execute the remaining restructuring actions. As of September 30, 2012 , we expect total costs to be incurred in conjunction with the Fiscal 2013 restructuring plan to be approximately $15 million , of which $7.6 million has already been recorded within Special charges to date.

The recognition of these charges requires management to make certain judgments and estimates regarding the amount and timing of restructuring charges or recoveries. Our estimated liability could change subsequent to its recognition, requiring adjustments to the expense and the liability recorded. On a quarterly basis, we will conduct an evaluation of the related liabilities and expenses and revise our assumptions and estimates as appropriate.

A reconciliation of the beginning and ending liability for the three months ended September 30, 2012 is shown below.



Fiscal 2013 Restructuring Plan	Workforce reduction			Facility costs			Total
Balance as of June 30, 2012	$	—		$	—		$	—
Accruals and adjustments	4,872			2,706			7,578
Cash payments	(1,020		)	(184		)	(1,204		)
Foreign exchange	48			19			67
Balance as of September 30, 2012	$	3,900		$	2,541		$	6,441

Fiscal 2012 Restructuring Plan

In the first quarter of Fiscal 2012, we began to implement restructuring activities to streamline our operations (Fiscal 2012 restructuring plan). These charges relate to workforce reductions and facility consolidations. The recognition of these charges requires management to make certain judgments and estimates regarding the amount and timing of restructuring charges or recoveries. On a quarterly basis, we will conduct an evaluation of the related liabilities and expenses and revise our assumptions and estimates as appropriate.

Since the inception of the Fiscal 2012 restructuring plan, $17.5 million of costs have been recorded within Special charges. We do not expect to incur any further significant charges related to the Fiscal 2012 restructuring plan.

A reconciliation of the beginning and ending liability for the three months ended September 30, 2012 is shown below.



Fiscal 2012 Restructuring Plan	Workforce reduction			Facility costs			Total
Balance as of June 30, 2012	$	4,422		$	3,355		$	7,777
Accruals and adjustments	932			(348		)	584
Cash payments	(1,982		)	(380		)	(2,362		)
Foreign exchange	3			34			37
Balance as of September 30, 2012	$	3,375		$	2,661		$	6,036

Acquisition-related costs

Included within Special charges for the three months ended September 30, 2012 are costs incurred directly in relation to acquisitions in the amount of $0.7 million . Additionally, we incurred costs relating to financial advisory, legal, valuation and audit services and other miscellaneous costs necessary to integrate acquired companies into our organization, in the amount of $0.1 million .

Included within Special charges for the three months ended September 30, 2011 are costs incurred directly in relation to acquisitions in the amount of $0.8 million .

Other charges

Included within Special charges for the three months ended September 30, 2012 is a charge of approximately $0.6

million relating to revised sublease assumptions on a restructured facility acquired in a prior period.

Included within Special charges for the three months ended September 30, 2011 is (i) a recovery of $0.8 million relating to a reduction in an asset retirement obligation associated with a leased facility, and (ii) a recovery of $0.5 million relating to a new sublease on a restructured facility acquired in a prior period.

NOTE 17—ACQUISITIONS

Fiscal 2013

EasyLink Services International Corporation

On July 2, 2012, we acquired EasyLink Services International Corporation (EasyLink), a public company and global

provider of cloud-based electronic messaging and business integration services, based in Atlanta, Georgia. The acquisition will extend our product offerings as we continue to evolve in the Enterprise Information Management market category. Total consideration for EasyLink was $342.3 million , paid in cash. In accordance with ASC Topic 805, this acquisition was accounted for as a business combination.

The results of operations of EasyLink have been consolidated with those of OpenText beginning July 2, 2012.

The following tables summarize the consideration paid for EasyLink and the amount of the assets acquired and liabilities assumed, as well as the goodwill recorded as of the acquisition date:



Cash consideration paid	$	342,272

Acquisition related costs (included in Special charges in the Consolidated Statements of Income) for the three month ended September 30, 2012	$	749

The recognized amounts of identifiable assets acquired and liabilities assumed, based upon their fair values as of July 2, 2012, are set forth below:



Current assets (inclusive of cash acquired of $26,941)	$	64,395
Non-current assets	37,626
Intangible customer assets	126,600
Intangible technology assets	70,500
Total liabilities assumed	(127,868		)
Total identifiable net assets	171,253
Goodwill	171,019
	$	342,272

The finalization of the above purchase price allocation is pending the determination of certain potential unrecorded liabilities relating to legacy EasyLink litigation, onerous contracts, and sales tax-related matters. We expect to finalize this determination on or before June 30, 2013.

No portion of the goodwill recorded upon the acquisition of EasyLink is expected to be deductible for tax purposes.

The fair value of current assets acquired includes accounts receivable with a fair value of $26.6 million . The gross amount receivable was $27.9 million of which $1.3 million of this receivable was expected to be uncollectible.

The amount of EasyLink’s revenues and net income included in our Condensed Consolidated Statements of Income for the three months ended September 30, 2012 , and the unaudited pro forma revenues and net income of the combined entity, had the acquisition been consummated as of July 1, 2011, are set forth below:



	Revenues		Net Income
Actual from July 2, 2012 to September 30, 2012	$	43,459	$	593



	Three Months Ended September 30,
	2011
Supplemental Unaudited Pro forma Information
Total revenues	$	334,526
Net income*	$	48,628

*Included in pro forma net income are estimated amortization charges relating to the allocated values of intangible assets. In addition, for the three months ended September 30, 2011, pro forma net income includes a $13.2 million tax recovery relating to certain one-time tax benefits, recognized during the period.

The results of operations of EasyLink were combined with OpenText as of July 2, 2012 and hence there is no "reportable" proforma impact on revenues and net income for the three months ended September 30, 2012 .

The unaudited pro forma financial information in the table above is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the period presented or the results that may be realized in the future.

NOTE 18—GUARANTEES AND CONTINGENCIES

We have entered into the following contractual obligations with minimum payments for the indicated fiscal periods as follows:



	Payments due between
	Total		October 1, 2012— June 30, 2013		July 1, 2013— June 30, 2015		July 1, 2015— June 30, 2017		July 1, 2017 and beyond
Long-term debt obligations	$	650,854	$	47,011	$	117,800	$	486,043	$	—
Operating lease obligations*	147,672		24,679		52,464		32,993		37,536
Purchase obligations	6,743		4,257		2,387		99		—
	$	805,269	$	75,947	$	172,651	$	519,135	$	37,536

*Net of $3.1 million of sublease income to be received from properties which we have subleased to third parties.

Guarantees and Indemnifications

We have entered into agreements with customers which may include provisions for indemnifying our customers for legal claims that our software products infringe certain third party intellectual property rights and for liabilities related to breaches of our confidentiality obligations. We have not made any material payments in relation to such indemnification provisions and have not accrued any liabilities related to these indemnification provisions in our condensed consolidated financial statements.

Litigation

We are currently involved in various claims and legal proceedings. Quarterly, we review the status of each significant legal matter and evaluate such matters to determine how they should be treated for accounting and disclosure purposes in accordance with the requirements of ASC Topic 450-20-50 "Loss Contingencies" (ASC Topic 450-20-50). Specifically, this evaluation process includes the centralized tracking and itemization of the status of all our disputes and litigation items, discussing the nature of any litigation and claim, including any dispute or claim that is reasonably likely to result in litigation, with relevant internal and external counsel, and assessing the progress of each matter in light of its merits and our experience with similar proceedings under similar circumstances.

j2 Global, Inc. (j2) and its wholly-owned subsidiary Advanced Messaging Technologies, Inc. (AMT) have filed several patent infringement lawsuits alleging that OpenText and its subsidiaries and predecessors-in-interest, Captaris, Inc. and EasyLink, are infringing U.S. Patent Nos. 6,208,638, 6,597,688, 7,020,132, 6,350,066, and 6,020,980 by offering fax-related products. j2 and AMT are seeking injunctions, royalties and damages. Through the recent acquisition of EasyLink, the Company now has complete carriage of the defense of these cases, which are pending in the United States District Court for the Central District of California. In each of the cases, OpenText and its subsidiaries or predecessors-in-interest have asserted, or will assert, defenses and counterclaims contending that the patents are invalid and not infringed. In addition, OpenText and its subsidiaries or predecessors-in-interest have asserted that U.S. Patent Nos. 6,208,638, 6,497,688, and 7,020,132 are unenforceable due to j2's inequitable conduct before the United States Patent and Trademark Office (USPTO), and are seeking

to add counterclaims against j2 for tortious interference with prospective business advantage and unfair competition. Each of the cases is in the discovery, or an earlier, phase. In addition, j2 has requested that the USPTO open reexamination proceedings regarding U.S. Patent No. 6,020,980. The Company believes j2's patent infringement allegations are without merit and will continue to vigorously defend them.

In addition, one of OpenText's subsidiaries, Xpedite Systems, LLC (Xpedite), has sued j2 for patent infringement, alleging j2 is infringing U.S. Patent Nos. 5,872,640 and 7,804,823 through j2's offering of fax-related products. Xpedite is seeking an injunction, royalties and damages. j2 has asserted defenses and counterclaims asserting that the patents are invalid and not infringed, and j2 has requested that the USPTO undertake reexamination proceedings related to the patents, and the USPTO has agreed to do so. The litigation is stayed until the conclusion of the USPTO's reexamination proceedings.

Based on our assessment of ASC Topic 450, “Contingencies” (ASC Topic 450) no amount has been accrued in connection to these cases referred to above.

If the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated, we accrue a liability for the estimated loss in accordance with Topic 450. As of the date of this filing on Form 10-Q for the quarter ended September 30, 2012 , any such aggregated losses were not material to our consolidated financial position or result of operations and we do not believe as of the date of this filing that it is reasonably possible that a loss exceeding the amounts already recognized may have been incurred that would be material to our consolidated financial position or results of operations.

Contingencies

EasyLink is currently being assessed by the New York State Department of Taxation and Finance (the Department) for the potential applicability of telecommunications excise and franchise taxes to its New York State revenues for the calendar year ended December 31, 2000 through to calendar year ended December 31, 2009. The potential exposure under this assessment, based upon the notice issued by the Department, is approximately $10.5 million .

In addition, in July 2009 EasyLink was assessed approximately $0.5 million in tax, interest and penalties for sales tax in New York State for the period between March 2001 and May 2004. EasyLink is pursuing a judicial appeal of the July 2009 decision with New York State's Appellate Division. New York State sales tax audits are also currently underway for subsequent periods from June 2004 through to February 2011. The results of these audits for subsequent periods, and the potential sales tax exposure for EasyLink, are in significant part contingent upon the outcome of the above referenced sales tax appeal.

OpenText intends to vigorously defend against these claims.

NOTE 19—SUPPLEMENTAL CASH FLOW DISCLOSURES



	Three Months Ended September 30,
	2012		2011
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	4,240	$	2,582
Cash received during the period for interest	$	409	$	152
Cash paid during the period for income taxes	$	16,281	$	766

Cash paid for interest during the first quarter of Fiscal 2013 includes interest payments made on our Term Loan entered into on November 9, 2011 (see note 10 for more details).

Cash paid for taxes during the first quarter of Fiscal 2013 include payments of $6.1 million in the United States, $8.1 million in Germany and $1.2 million in the United Kingdom relating primarily to taxes exigible on certain internal reorganizations of our international subsidiaries.

NOTE 20—NET INCOME PER SHARE

Basic earnings per share are computed by dividing net income by the weighted average number of Common Shares outstanding during the period. Diluted earnings per share are computed by dividing net income by the shares used in the calculation of basic net income per share plus the dilutive effect of Common Share equivalents, such as stock options, using the treasury stock method. Common Share equivalents are excluded from the computation of diluted net income per share if their effect is anti-dilutive.



	Three Months Ended September 30,
	2012		2011
Basic earnings per share
Net income	$	19,429	$	34,986
Basic earnings per share	$	0.33	$	0.61
Diluted earnings per share
Net income	$	19,429	$	34,986
Diluted earnings per share	$	0.33	$	0.60
Weighted-average number of shares outstanding
Basic	58,424		57,412
Effect of dilutive securities	495		1,187
Diluted	58,919		58,599
Excluded as anti-dilutive*	1,024		—

* Represents options to purchase Common Shares excluded from the calculation of diluted net income per share because the exercise price of the stock options was greater than or equal to the average price of the Common Shares during the period.

NOTE 21—RELATED PARTY TRANSACTIONS

Our procedure regarding the approval of any related party transaction is that the material facts of such transaction shall be reviewed by the independent members of our Board and the transaction approved by a majority of the independent members of the Board. The Board reviews all transactions wherein we are, or will be, a participant and any related party has or will have a direct or indirect interest. In determining whether to approve a related party transaction, the Board generally takes into account, among other facts it deems appropriate: whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances; the extent and nature of the related person’s interest in the transaction; the benefits to the Company of the proposed transaction; if applicable, the effects on a director’s independence; and if applicable, the availability of other sources of comparable services or products.

During the three months ended September 30, 2012 , Mr. Stephen Sadler, a director, earned approximately $0.5 million ( three months ended September 30, 2011 — $0.4 million ) in consulting fees from OpenText for assistance with acquisition-related business activities. Mr. Sadler abstained from voting on all transactions from which he would potentially derive consulting fees.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation

This Quarterly Report on Form 10-Q, including this Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements regarding future events and our future results that are subject to the safe harbors within the meaning of the Private Securities Litigation Reform Act of 1995, and created under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts are statements that could be deemed forward-looking statements.

Certain statements in this report may contain words such as “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “may”, “could”, “would” and other similar language and are considered forward-looking statements or information under applicable securities laws. In addition, any information or statements that refer to expectations, beliefs, plans, projections, objectives, performance or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking, and based on our current expectations, estimates, forecasts and projections about the operating environment, economies and markets in which we operate. Such forward-looking information or statements are subject to important assumptions, risks and uncertainties that are difficult to predict, and the actual outcome may be materially different. Our assumptions, although considered reasonable by us at the date of this report, may prove to be inaccurate and consequently our actual results could differ materially from the expectations set out herein.

You should not rely too heavily on the forward-looking statements contained in this Quarterly Report on Form 10-Q because these forward-looking statements are relevant only as of the date they were made. We undertake no obligation to revise or publicly release the results of any revisions to these forward-looking information or statements. You should carefully review Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q and other documents we file from time to time with the

Securities and Exchange Commission and other applicable securities regulators. A number of factors may materially affect our business, financial condition, operating results and prospects. These factors include but are not limited to those set forth in Part II, Item 1A, “Risk Factors” and elsewhere in this report and in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K. Any one of these factors, and other factors that we are unaware of, or currently deem immaterial, may cause our actual results to differ materially from recent results or from our anticipated future results.

The following MD&A is intended to help readers understand our results of operations and financial condition, and is provided as a supplement to, and should be read in conjunction with, our condensed consolidated financial statements and the accompanying Notes to our Condensed Consolidated Financial Statements (the Notes) under Part I, Item 1 of this Form 10-Q.

All comparisons made herein generally refer to the three months ended September 30, 2012 compared with the three months ended September 30, 2011 , unless otherwise noted.

Where we say “we”, “us”, “our”, “Open Text” or “the Company”, we mean Open Text Corporation or Open Text Corporation and its subsidiaries, as applicable.

EXECUTIVE OVERVIEW

We are an independent company providing a comprehensive suite of information management software products that help people in organizations work, interact, and innovate in a secure, engaging, and productive way. We build software that allows companies to organize and manage their content, operate more efficiently and effectively, increase engagement with customers, collaborate with business partners, and address regulatory and business requirements associated with information management. Our products incorporate social and mobile experiences and are delivered for on premise implementation as well as through cloud and managed hosted services.

Our initial public offering was on the NASDAQ in 1996 and we were subsequently listed on the Toronto Stock Exchange in 1998. We are a multinational company and currently employ approximately 5,000 people worldwide.

Quarterly Summary:

During the quarter we saw the following activity:


•	Total revenue was $326.2 million , up 13.3% over the same period in the prior fiscal year.


•	License revenue was $55.7 million , down 14.3% over the same period in the prior fiscal year.


•	GAAP-based EPS, diluted, was $0.33 compared to $0.60 in the same period of the prior fiscal year.


•	Non-GAAP-based EPS, diluted, was $1.31 compared to $1.03 in the same period of the prior fiscal year.


•	GAAP-based operating income margin was 12.3% compared to 9.4% in the same period of the prior fiscal year.


•	Non-GAAP-based operating income margin was 28.7% compared to 25.3% in the same period of the prior fiscal year.


•	Operating cash flow was $61.8 million , up 36.2% over the same period in the prior fiscal year.


•	Cash and cash equivalents was $302.2 million as of September 30, 2012 , compared to $559.7 million as of June 30, 2012 .

Acquisitions

Our competitive position in the marketplace requires us to maintain a complex and evolving array of technologies, products, services and capabilities. In light of the continually evolving marketplace in which we operate, we regularly evaluate various acquisition opportunities within our traditional Enterprise Content Management (ECM) market and also in the broader Enterprise Information Management (EIM) marketplace. We made one acquisition during the first quarter of the fiscal year ending June 30, 2013 (Fiscal 2013).


•	On July 2, 2012, we acquired EasyLink Services International Corporation (EasyLink), a company based in Georgia, USA and a global provider of cloud-based electronic messaging and business integration services for approximately $315 million, inclusive of debt and net of cash acquired. See note 17 “Acquisitions” to our consolidated financial statements for more details.

We believe our acquisitions support our long-term strategic direction, strengthen our competitive position, expand our customer base, provide greater scale to accelerate innovation, grow our earnings and increase shareholder value. We expect to continue to strategically acquire companies, products, services and technologies to augment our existing business.

Outlook for the Remainder of Fiscal 2013

We believe we have a strong position in the EIM market. We continue to have approximately 50% of our revenues from

customer support revenues, which are generally a recurring source of income, and we expect this trend will continue. We also believe that our diversified geographic profile helps strengthen our position and helps to reduce our impact from a “downturn” in the economy that may occur in any one specific region. Our goal is to build on our leadership in ECM, Business Process Management (BPM) and Customer Experience Management (CEM) and to expand our position in Information Exchange (iX) and Discovery, to emerge as the leading vendor in EIM.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements. These estimates, judgments and assumptions are evaluated on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe are reasonable at that time, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from those estimates. The accounting policies that reflect our more significant estimates, judgments and assumptions and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following:


(i)	Revenue recognition,


(ii)	Goodwill,


(iii)	Acquired intangibles,


(iv)	Restructuring charges,


(v)	Business combinations,


(vi)	Foreign currency translation, and


(vii)	Income taxes.

RESULTS OF OPERATIONS

The following tables provide a detailed analysis of our results of operations and financial condition. For each of the periods indicated below, we present our revenues by product, revenues by major geography, cost of revenues by product, total gross margin, total operating margin, gross margin by product, and their corresponding percentage of total revenue. In addition, we provide non-GAAP measures for the periods discussed in order to provide additional information to investors that we believe will be useful as this presentation is in line with how our management assesses our Company's performance. See "Use of Non-GAAP Financial Measures" below for a reconciliation of non-GAAP-based measures to GAAP-based measures.

Summary of Results of Operations



	Three Months ended September 30,
(In thousands)	2012			Change increase (decrease)			2011
Total Revenues by Product Type:
License	$	55,656		$	(9,372	)	$	65,028
Cloud services	44,884			44,884			—
Customer support	162,096			99			161,997
Professional services and other	63,558			2,537			61,021
Total revenues	326,194			38,148			288,046
Total Cost of Revenues	120,638			19,230			101,408
Total GAAP-based Gross Margin	205,556			18,918			186,638
Total GAAP-based Gross Margin %	63.0		%				64.8		%
Total GAAP-based Operating Expenses	165,469			5,966			159,503
Total GAAP-based Income from Operations	$	40,087		$	12,952		$	27,135

% Revenues by Product Type:
License	17.1		%				22.6		%
Cloud services	13.8		%				—		%
Customer support	49.7		%				56.2		%
Professional services and other	19.4		%				21.2		%

Total Cost of Revenues by Product Type:
License	$	4,168		$	170		$	3,998
Cloud services	18,283			18,283			—
Customer support	25,823			(446		)	26,269
Professional services and other	48,582			(1,769		)	50,351
Amortization of acquired technology-based intangible assets	23,782			2,992			20,790
Total cost of revenues	$	120,638		$	19,230		$	101,408

% GAAP-based Gross Margin by Product Type:
License	92.5		%				93.9		%
Cloud services	59.3		%				N/A
Customer support	84.1		%				83.8		%
Professional services and other	23.6		%				17.5		%

Total Revenues by Geography:
Americas*	$	178,927		$	29,751		$	149,176
EMEA**	114,472			(2,981		)	117,453
Asia Pacific	32,795			11,378			21,417
Total revenues	$	326,194		$	38,148		$	288,046

% Revenues by Geography:
Americas*	54.9		%				51.8		%
EMEA**	35.1		%				40.8		%
Asia Pacific	10.0		%				7.4		%



	Three Months ended September 30,
(In thousands)	2012			Change increase (decrease)	2011
GAAP-based gross margin	63.0		%		64.8		%
GAAP-based operating margin	12.3		%		9.4		%
GAAP-based EPS, diluted	$	0.33			$	0.60
Non-GAAP-based gross margin	70.4		%		72.1		%
Non-GAAP-based operating margin	28.7		%		25.3		%
Non-GAAP-based EPS, diluted	$	1.31			$	1.03



*	Americas primarily consists of countries in North America and Latin America.
**	EMEA primarily consists of countries in Europe and the United Arab Emirates.
***	See "Use of Non-GAAP Financial Measures" below for a reconciliation of Non-GAAP based measures to GAAP based measures

Revenues, Cost of Revenues and Gross Margin by Product Type

1) License Revenues:

License Revenues consist of fees earned from the licensing of software products to customers. Our license revenues are impacted by the strength of general economic and industry conditions, the competitive strength of our software products, and our acquisitions. Cost of license revenues consists primarily of royalties payable to third parties.



	Three Months ended September 30,
(In thousands)	2012			Change increase (decrease)		2011
License Revenues :
Americas	$	28,227		(4,943	)	$	33,170
EMEA	22,611			(4,391	)	27,002
Asia Pacific	4,818			(38	)	4,856
Total license revenues	55,656			(9,372	)	65,028
Cost of License Revenues	4,168			170		3,998
GAAP-based License Margin	$	51,488		(9,542	)	$	61,030
GAAP-based License Margin %	92.5		%			93.9		%

% License Revenues by Geography:
Americas	50.7		%			51.0		%
EMEA	40.6		%			41.5		%
Asia Pacific	8.7		%			7.5		%

License revenues decreased by $9.4 million , which is geographically attributable to a decrease primarily in Americas of $4.9 million , and a decrease in EMEA of $4.4 million . Overall the decrease in license revenues were attributable to a lower number of deals greater than $0.5 million that closed in the first quarter of Fiscal 2013 as compared to the same period in the prior fiscal year (11 deals compared to 22), and also in part due to the weakening of the Euro, which negatively impacted results when compared to the same period in the prior fiscal year.

Cost of license revenues and margins remained relatively flat.

2) Cloud Services:

Cloud services revenues consist of “managed hosting” services arrangements (through dedicated servers) primarily acquired through EasyLink. These arrangements allow our customers to make use of legacy EasyLink and OpenText software, services and content over Internet enabled networks supported by OpenText data centers. The hosted web applications allow customers to transmit a variety of content between various mediums and to securely manage enterprise information without the commitment of investing in such related hardware infrastructure. Revenues are generated on several transactional usage-based models, are typically billed monthly in arrears, and can therefore fluctuate from period to period. Certain service fees are occasionally charged to customize hosted software for some customers and are either amortized over the expected economic life of the contract, in the case of setup fees, or recognized in the period they are provided. Cost of cloud services revenues is comprised primarily of third party network usage fees, maintenance of in-house data hardware center, technical support personnel-related costs and some third party royalty costs.



	Three Months ended September 30,
(In thousands)	2012			Change increase (decrease)	2011
Cloud Services:
Americas	$	28,724		28,724	N/A
EMEA	6,743			6,743	N/A
Asia Pacific	9,417			9,417	N/A
Total Cloud Services Revenues	44,884			44,884	—
Cost of Cloud Services Revenues	18,283			18,283	—
GAAP-based Cloud Services Revenues Margin	$	26,601		26,601	$	—
GAAP-based Cloud Services Revenues Margin %	59.3		%		N/A

% Cloud Services Revenues by Geography
Americas	64.0		%		N/A
EMEA	15.0		%		N/A
Asia Pacific	21.0		%		N/A

As a result of our EasyLink acquisition on July 2, 2012 during the first quarter of Fiscal 2013 we adopted a policy to classify revenues and cost of revenues relating to "Cloud Services" as a separate line item within "Revenues" and "Cost of Revenues", respectively, in our Condensed Consolidated Statements of Income. No prior period comparative figures have been adjusted to conform to current period presentation since such prior period amounts were not material.

3) Customer Support Revenues:

Customer support revenues consist of revenues from our customer support and maintenance agreements. These agreements allow our customers to receive technical support, enhancements and upgrades to new versions of our software products when and if available. Customer support revenues are generated from support and maintenance relating to current year sales of software products and from the renewal of existing maintenance agreements for software licenses sold in prior periods. Therefore, changes in customer support revenues do not always correlate directly to the changes in license revenues from period to period. The terms of support and maintenance agreements are typically twelve months, with customer renewal options. Cost of customer support revenues is comprised primarily of technical support personnel and related costs, as well as third party royalty costs.



	Three Months ended September 30,
(In thousands)	2012			Change increase (decrease)		2011
Customer Support Revenues :
Americas	$	87,990		3,771		$	84,219
EMEA	61,434			(4,549	)	65,983
Asia Pacific	12,672			877		11,795
Total customer support revenues	162,096			99		161,997
Cost of Customer Support Revenues	25,823			(446	)	26,269
GAAP-based Customer Support Margin	$	136,273		545		$	135,728
GAAP-based Customer Support Margin %	84.1		%			83.8		%

% Customer Support Revenues by Geography
Americas	54.3		%			52.0		%
EMEA	37.9		%			40.7		%
Asia Pacific	7.8		%			7.3		%

Customer support revenues increased by $0.1 million which was geographically attributable to an increase in Americas of $3.8 million , a decrease in EMEA of $4.5 million and an increase in Asia Pacific of $0.9 million . Overall we saw that recent acquisitions have contributed to revenue growth in all regions, however the weakening of the Euro negatively impacted results in EMEA when compared to the same period in the prior fiscal year.

Cost of customer support revenues was relatively stable, with margins remaining at approximately 84%.

4) Professional Service and Other Revenues:

Professional service and other revenues consist of revenues from consulting contracts and contracts to provide implementation, training and integration services (Professional Services). “Other” revenues consist of hardware revenues. These revenues are grouped within the “Professional Service and Other” category because they are relatively immaterial to our service revenues. Professional Services, if purchased, are typically performed after the purchase of new software licenses. Cost of professional service and other revenues consists primarily of the costs of providing integration, configuration and training with respect to our various software products. The most significant components of these costs are personnel-related expenses, travel costs and third party subcontracting.



	Three Months ended September 30,
(In thousands)	2012			Change increase (decrease)		2011
Professional Service and Other Revenues :
Americas	$	33,986		2,199		$	31,787
EMEA	23,684			(785	)	24,469
Asia Pacific	5,888			1,123		4,765
Total Professional Service and Other Revenues	63,558			2,537		61,021
Cost of Professional Service and Other Revenues	48,582			(1,769	)	50,351
GAAP-based Professional service and other Revenues Margin	$	14,976		4,306		$	10,670
GAAP-based Professional service and other Revenues Margin %	23.6		%			17.5		%

% Professional Service and Other Revenues by Geography
Americas	53.5		%			52.1		%
EMEA	37.3		%			40.1		%
Asia Pacific	9.2		%			7.8		%

Professional service and other revenues increased by $2.5 million which was geographically attributable to an increase in Americas of $2.2 million , a decrease in EMEA of $0.8 million and the remaining increase in Asia Pacific of $1.1 million . Overall we saw that recent acquisitions have contributed to revenue growth in all regions, however the weakening of the Euro negatively impacted results in EMEA when compared to the same period in the prior fiscal year.

Cost of professional service and other revenues decreased by $1.8 million , primarily as a result of a reduction in the use of subcontractors. As a result of efficiencies achieved and improved utilization, we are seeing stronger margins in professional services.

Amortization of acquired technology-based intangible assets

Amortization of acquired technology-based intangible assets increased by approximately $3.0 million due to acquisitions made during Fiscal 2013.

Operating Expenses



	Three Months ended September 30,
(In thousands)	2012			Change increase (decrease)		2011
Research and development	$	39,906		(3,552	)	$	43,458
Sales and marketing	64,515			(365	)	64,880
General and administrative	28,133			2,372		25,761
Depreciation	6,109			851		5,258
Amortization of acquired customer-based intangible assets	17,252			4,211		13,041
Special charges	9,554			2,449		7,105
Total operating expenses	$	165,469		5,966		$	159,503

In % of Total Revenues:
Research and development	12.2		%			15.1		%
Sales and marketing	19.8		%			22.5		%
General and administrative	8.6		%			8.9		%
Depreciation	1.9		%			1.8		%
Amortization of acquired customer-based intangible assets	5.3		%			4.5		%
Special charges	2.9		%			2.5		%

Research and development expenses consist primarily of personnel expenses, contracted research and development expenses, and facility costs. Research and development assists with organic growth, improves product stability and functionality, and as such we dedicate extensive efforts to update and upgrade our product offering. The primary driver is typically budgeted software upgrades and software development.



	Quarter-over-quarter Change between Fiscal
(In thousands)	2013 and 2012
Payroll and payroll-related benefits	$	(2,010	)
Contract labour and consulting	(906		)
Share based compensation	(578		)
Travel and communication	(707		)
Facilities	(696		)
Other miscellaneous	1,345
Total year-over-year change in research and development expenses	$	(3,552	)

Research and development expenses decreased by $3.6 million primarily due to a decrease in payroll and payroll-related benefits of $2.0 million . The decrease in these benefits was partially due to a redeployment of development resources as we continue to expand and evolve in the EIM market. Correspondingly, the change in labour resources resulted in a decrease in labour driven benefits, such as travel, consulting and facilities.

Sales and marketing expenses consist primarily of personnel expenses and costs associated with advertising and trade shows.



	Quarter-over-quarter Change between Fiscal
(In thousands)	2013 and 2012
Payroll and payroll-related benefits	$	1,765
Commissions	(4,684		)
Contract labour and consulting	(309		)
Share based compensation	(104		)
Travel and communication	(898		)
Marketing expenses	2,470
Facilities	229
Other miscellaneous	1,166
Total year-over-year change in sales and marketing expenses	$	(365	)

Sales and marketing expenses decreased by $0.4 million , primarily due to a decrease in commission benefits of $4.7 million , which was largely the result of lower commission accruals recorded in the current quarter due to lower license revenues. This decrease was offset by an increase in marketing expenses of $2.5 million primarily as the result of a global "sales kick off" event held earlier this quarter, and an increase in payroll and payroll related benefits of $1.8 million on account of an increase in headcount, in part from the redeployment of development resources and from new acquisitions.

General and administrative expenses consist primarily of personnel expenses, related overhead, audit fees, other professional fees, consulting expenses and public company costs.



	Quarter-over-quarter Change between Fiscal
(In thousands)	2013 and 2012
Payroll and payroll-related benefits	$	1,416
Contract labour and consulting	30
Share based compensation	(1,304		)
Travel and communication	240
Facilities and Information Technology (IT) costs	(345		)
Other miscellaneous	2,335
Total year-over-year change in general and administrative expenses	$	2,372

General and administrative expenses increased by $2.4 million primarily due to other miscellaneous expenses, such as an increase in legal fees and other items. Payroll and payroll-related benefits were also higher in the first quarter of Fiscal 2013, as compared to the same period in the prior fiscal year, primarily due to an increase in headcount resulting from acquisitions.

Depreciation expenses:



	Three Months Ended September 30,
(In thousands)	2012		Change increase (decrease)		2011
Depreciation	$	6,109	$	851	$	5,258

Depreciation expenses increased by $0.9 million primarily due to acquisitions made during Fiscal 2013.

Amortization of acquired customer-based intangible assets:



	Three Months Ended September 30,
(In thousands)	2012		Change increase (decrease)		2011
Amortization of acquired customer-based intangible assets	$	17,252	$	4,211	$	13,041

Amortization expenses of acquired customer-based intangible assets increased by $4.2 million due to acquisitions made during Fiscal 2013.

Special charges:

Special charges typically relate to amounts that we expect to pay in connection with restructuring plans relating to employee workforce reduction and abandonment of excess facilities, impairment of long-lived assets, acquisition related costs and other similar charges. Generally, we implement such plans in the context of integrating existing OpenText operations with that of acquired entities. Actions related to such restructuring plans are typically completed within a period of one year. In certain limited situations, if the planned activity does not need to be implemented, or an expense lower than anticipated is paid out, we record a recovery of the originally recorded expense to Special charges.



	Three Months Ended September 30,
(In thousands)	2012		Change increase (decrease)		2011
Special charges	$	9,554	$	2,449	$	7,105

Special charges increased by $2.4 million primarily due to new restructuring activities implemented during the first quarter of Fiscal 2013 and on account of additional acquisition-related costs. For more details on Special charges, see note 16 "Special Charges" to our consolidated financial statements.

Net other income (expenses):

Net other income (expense) relates to certain non-operational charges consisting primarily of transactional foreign exchange gains (losses). These income (expenses) are dependent upon the change in foreign currency exchange rates vis-à-vis the functional currency of the legal entity and we are unable to predict the impact of these income (expenses) on our net income.



	Three Months Ended September 30,
(In thousands)	2012			Change			2011
Other income (expense), net	$	(71	)	$	(9,383	)	$	9,312

Net interest expense:

Net interest expense is primarily comprised cash interest paid and accrued on our debt facilities offset by interest income earned on our cash and cash equivalents.



	Three Months Ended September 30,
(In thousands)	2012			Change		2011
Interest income (expense), net	$	(4,368	)	(1,582	)	$	(2,786	)

Net interest expense increased by $1.6 million , primarily due to interest incurred on a new financing agreement we entered into on November 9, 2011, as compared to our outstanding debt during the first quarter of Fiscal 2012. For more details see note 10 "Long-Term Debt" to our consolidated financial statements.

Provision for (recovery of) income taxes:

We initiated an internal reorganization of our international subsidiaries in Fiscal 2010 and we continue to integrate acquisitions into this new organizational structure for the following reasons: 1) to consolidate our intellectual property within certain jurisdictions, 2) to effect an operational reduction of our global subsidiaries with a view to, eventually, having a single operating legal entity in each jurisdiction, 3) to better safeguard our intellectual property in jurisdictions with well established legal regimes and protections and 4) to simplify the management of our intellectual property ownership.

We operate in several tax jurisdictions and are exposed to various foreign tax rates. We also note that we are subject to tax rate discrepancies between our domestic tax rate and foreign tax rates that are significant and these discrepancies are primarily related to the United States, Luxembourg and Germany.



	Three Months Ended September 30,
(In thousands)	2012		Change increase (decrease)		2011
Provision for (recovery of) income taxes	$	16,219	$	17,544	$	(1,325	)

The effective tax rate has increased and is 45.5% for the three months ended September 30, 2012 compared to a recovery of 3.9% for the three months ended September 30, 2011. The tax recovery in Fiscal 2012 was primarily due to tax benefits realized in Fiscal 2012 relating to the internal reorganization of the acquired international subsidiaries of Metastorm Inc., in the amount of $4.1 million, and a Canadian election to file tax returns in U.S. dollar functional currency, in the amount of $5.9 million. Correspondingly, the Fiscal 2013 effective tax rate increased primarily due to an increase of $4.3 million related to the impact of adjustments in the United States and Australia upon filing of tax returns. The remainder of the differences are due to normal course movements and non material items.

Use of Non-GAAP Financial Measures

In addition to reporting financial results in accordance with U.S. GAAP, the Company provides certain financial measures that are not in accordance with U.S. GAAP. These non-U.S. GAAP financial measures have certain limitations in that they do not have a standardized meaning and thus the Company's definition may be different from similar non-U.S. GAAP financial measures used by other companies and/or analysts and may differ from period to period. Thus it may be more difficult to compare the Company's financial performance to that of other companies. However, the Company's management compensates for these limitations by providing the relevant disclosure of the items excluded in the calculation of these non-U.S. GAAP financial measures both in its reconciliation to the U.S. GAAP financial measures and its consolidated financial statements, all of which should be considered when evaluating the Company's results. The Company uses these non-U.S. GAAP financial measures to supplement the information provided in its consolidated financial statements, which are presented in accordance with U.S. GAAP. The presentation of non-U.S. GAAP financial measures are not meant to be a substitute for financial measures presented in accordance with U.S. GAAP, but rather should be evaluated in conjunction with and as a supplement to such U.S. GAAP measures. OpenText strongly encourages investors to review its financial information in its entirety and not to rely on a single financial measure. The Company therefore believes that despite these limitations, it is appropriate to supplement the disclosure of the U.S. GAAP measures with certain non-U.S. GAAP measures. Non-U.S. GAAP net income and non-U.S. GAAP EPS are calculated as net income or net income per share on a diluted basis, excluding, where applicable, the amortization of acquired intangible assets, other income (expense), share-based compensation, and restructuring, all net of tax. The Company's management believes that the presentation of non-U.S. GAAP net income and non-U.S. GAAP EPS provides useful information to investors because it excludes non-operational charges. The use of the term “non-operational charge” is defined by the Company as those that do not impact operating decisions taken by the Company's management and is based upon the way the Company's management evaluates the performance of the Company's business for use in the Company's internal reports. In the course of such evaluation and for the purpose of making operating decisions, the Company's management excludes certain items from its analysis, such as amortization of acquired intangible assets, restructuring costs, share-based compensation, other income (expense) and the taxation impact of these items. These items are excluded based upon the manner in which management evaluates the business of the Company and are not excluded in the sense that they may be used under U.S. GAAP. The Company believes the provision of supplemental non-U.S. GAAP measures allows investors to evaluate the operational and financial performance of the Company's core business using the same evaluation measures that management uses, and is therefore a useful indication of OpenText's performance or expected performance of future operations and facilitates period-to-period comparison of operating performance. As a result, the Company considers it appropriate and reasonable to provide, in addition to U.S. GAAP measures, supplementary non-U.S. GAAP financial measures that exclude certain items from the presentation of its financial results.

The following charts provide unaudited reconciliations of U.S. GAAP based financial measures to non-U.S. GAAP based financial measures for the following periods presented:

Reconciliation of selected GAAP-based measures to Non-GAAP based measures for the three months ended September 30, 2012, and 2011 respectively.

(in thousands except for per share data)



	Three Months Ended September 30,
	2012										2011
	GAAP-based Measures			Adjust-ments			Note		Non-GAAP-based		GAAP-based Measures			Adjust-ments			Note		Non-GAAP-based
Cost of revenues
Customer Support	25,823			(38		)	(1	)	25,785		26,269			(24		)	(1	)	26,245
Professional Service and Other	48,582			(177		)	(1	)	48,405		50,351			(99		)	(1	)	50,252
Amortization of acquired technology-based intangible assets	23,782			(23,782		)	(2	)	—		20,790			(20,790		)	(2	)	—
GAAP-based gross profit/ Non-GAAP-based gross profit	205,556			23,997					229,553		186,638			20,913					207,551
Operating Expenses
Research and development	39,906			(338		)	(1	)	39,568		43,458			(1,076		)	(1	)	42,382
Sales and marketing	64,515			(1,666		)	(1	)	62,849		64,880			(1,770		)	(1	)	63,110
General and administrative	28,133			(883		)	(1	)	27,250		25,761			(1,874		)	(1	)	23,887
Amortization of acquired customer-based intangible assets	17,252			(17,252		)	(2	)	—		13,041			(13,041		)	(2	)	—
Special charges	9,554			(9,554		)	(3	)	—		7,105			(7,105		)	(3	)	—
GAAP-based income from operations/ Non-GAAP-based operating income	40,087			53,690					93,777		27,135			45,779					72,914
Other income (expense), net	(71		)	71			(4	)	—		9,312			(9,312		)	(4	)	—
Provision for (recovery of) income taxes	16,219			(3,702		)	(5	)	12,517		(1,325		)	11,143			(5	)	9,818
GAAP-based net income for the period/ Non-GAAP-based net income	19,429			57,463			(6	)	76,892		34,986			25,324			(6	)	60,310
GAAP-based earnings per share/ Non GAAP-based earnings per share-diluted	$	0.33		$	0.98		(6	)	$	1.31	$	0.60		$	0.43		(6	)	$	1.03



(1)	Adjustment relates to the exclusion of share based compensation expense from our non-GAAP-based operating expenses as this expense is excluded from our internal analysis of operating results.
(2)	Adjustment relates to the exclusion of amortization expense from our non-GAAP-based operating expenses as the timing and frequency of amortization expense is dependent on our acquisitions and is hence excluded from our internal analysis of operating results.
(3)	Adjustment relates to the exclusion of Special charges from our non-GAAP-based operating expenses as Special charges are generally incurred in the aftermath of acquisitions and are not indicative or related to continuing operations and are therefore excluded from our internal analysis of operating results.
(4)	Adjustment relates to the exclusion of Other income (expense) from our non-GAAP-based operating expenses as Other income (expense) relates primarily to the transactional impact of foreign exchange and is generally not indicative or related to continuing operations and is therefore excluded from our internal analysis of operating results.
(5)	Adjustment relates to differences between the GAAP-based tax provision (recovery) and a non-GAAP-based tax rate; these rate differences are due to the income tax effects of expenses that are excluded for the purpose of calculating non-GAAP-based adjusted net income.
(6)	Reconciliation of non-GAAP-based adjusted net income to GAAP-based net income:



	Three Months Ended September 30,
	2012						2011
				Per share						Per share
Non-GAAP-based net income	$	76,892		$	1.31		$	60,310		$	1.03
Less:
Amortization	41,034			0.70			33,831			0.58
Share-based compensation	3,102			0.05			4,843			0.08
Special charges	9,554			0.16			7,105			0.12
Other (income) expense	71			—			(9,312		)	(0.16		)
GAAP-based provision for (recovery of) income tax	16,219			0.28			(1,325		)	(0.02		)
Tax on non-GAAP-based provision	(12,517		)	(0.21		)	(9,818		)	(0.17		)
GAAP-based net income	$	19,429		$	0.33		$	34,986		$	0.60

LIQUIDITY AND CAPITAL RESOURCES

The following table sets forth changes in cash flow from operating, investing and financing activities for the periods indicated:



	Three Months Ended September 30,
(In thousands)	2012			Change increase (decrease)			2011
Cash and cash equivalents	$	302,235		$	182,941		$	119,294

Cash provided by operating activities	$	61,763		$	16,415		$	45,348
Cash used in investing activities	$	(320,586	)	$	(58,439	)	$	(262,147	)
Cash provided by (used in) financing activities	$	(3,322	)	$	(59,075	)	$	55,753

Cash and cash equivalents

Cash and cash equivalents primarily consist of deposits held at major banks with original maturities of 90 days or less. We do not hold any securities or other investments at this time.

We anticipate that our cash and cash equivalents, as well as available credit facilities and committed loan facilities, will be sufficient to fund our anticipated cash requirements for working capital, contractual commitments, capital expenditures, and operating needs for the next 12 months. However, any material or further acquisition-related activities may require additional sources of financing.

We do not have any restrictions on repatriation of cash from foreign subsidiaries nor do we expect taxes on repatriation of cash held in foreign subsidiaries to have a material effect on our overall liquidity, financial condition or results of operations.

Cash flows provided by operating activities

Cash flows from operating activities increased by $16.4 million primarily due to an increase in net income before the impact of non cash items of $8.2 million and increased working capital changes of $8.2 million.

Cash used in investing activities

Our cash used in investing activities is primarily on account of acquisitions.

Cash flows used in investing activities increased by $58.4 million . This was primarily due to the higher purchase consideration for EasyLink over our acquisition of Global 360 Holding Corp, purchased in the first quarter of Fiscal 2012.

Cash flows from financing activities

Our cash flows from financing activities consist of long-term debt financing and amounts received from stock options exercised by our employees. These inflows are typically offset by scheduled and non-scheduled repayments of our long-term debt financing and, when applicable, the repurchases of our Common Shares.

Cash flows provided by financing activities decreased by $59.1 million . In the first quarter of Fiscal 2012 we borrowed $48.5 million under our credit facilities, which was not repeated in the first quarter of Fiscal 2013. In addition, we had higher cash outflows resulting from a larger loan repayment of $6.8 million and less cash collected from the issuance of Common Shares by $3.8 million.

Long-term Debt and Credit Facilities

Term loan and Revolver

The Revolver has a 5 year term with no fixed repayment date prior to the end of the term. As of September 30, 2012 , we have

not drawn any amounts on the Revolver.

The material financial covenants under the credit facility are that:

•

We must maintain a “consolidated leverage” ratio of no more than 3:1 at the end of each financial quarter. Consolidated leverage ratio is defined for this purpose as the proportion of our total debt, including guarantees and letters of credit, over our trailing twelve months net income before interest, taxes, depreciation, amortization, restructuring, share-based compensation and other miscellaneous charges, all defined as “EBITDA” as per the credit agreement; and


•	We must maintain a “consolidated interest coverage” ratio of 3:1 or more at the end of each financial quarter. Consolidated interest coverage ratio is defined for this purpose as our consolidated EBITDA over our consolidated interest expense, as defined in the credit agreement.

As of September 30, 2012, we were in compliance with all covenants relating to this credit facility. For more details relating to our Term Loan, please see note 10 "Long-Term Debt" to our consolidated financial statements.

Mortgage

We currently have an "open" mortgage with the bank where we can pay all or a portion of the mortgage on or before August 1, 2013 . The original principal amount of the mortgage was Canadian $15.0 million and interest accrues monthly at a variable rate of Canadian prime plus 0.50% . Principal and interest are payable in monthly installments of Canadian $0.1 million with a final lump sum principal payment due on maturity. The mortgage is secured by a lien on our headquarters in Waterloo, Ontario, Canada. We first entered into this mortgage in December 2005. As of September 30, 2012, the carrying value of the mortgage was $11.7 million .

Pensions

As of September 30, 2012, our total unfunded pension plan obligation was $24.1 million , of which $0.6 million is payable within the next 12 months. We expect to be able to make the long-term and short-term payments related to this obligation in the normal course. For a detailed discussion see note 11 "Pension Plans and Other Post Retirement Benefits" to our consolidated financial statements.

Commitments and Contractual Obligations

We have entered into the following contractual obligations with minimum annual payments for the indicated fiscal periods as follows:



	Payments due between
	Total		October 1, 2012— June 30, 2013		July 1, 2013— June 30, 2015		July 1, 2015— June 30, 2017		July 1, 2017 and beyond
Long-term debt obligations	$	650,854	$	47,011	$	117,800	$	486,043	$	—
Operating lease obligations*	147,672		24,679		52,464		32,993		37,536
Purchase obligations	6,743		4,257		2,387		99		—
	$	805,269	$	75,947	$	172,651	$	519,135	$	37,536

*Net of $3.1 million of sublease income to be received from properties which we have subleased to third parties.

The long-term debt obligations are comprised of interest and principal payments on our Term Loan and a mortgage on our headquarters in Waterloo, Ontario, Canada. See note 10 "Long-Term Debt" to our consolidated financial statements.

Guarantees and Indemnifications

Litigation

Based on our assessment of ASC Topic 450, “Contingencies” (ASC Topic 450) no amount has been accrued in connection to these cases referred to above.

Contingencies

OpenText intends to vigorously defend against these claims.

Off-Balance Sheet Arrangements

We do not enter into off-balance sheet financing as a matter of practice except for the use of operating leases for office space, computer equipment, and vehicles. None of the operating leases described in the previous sentence has, or potentially may have, a material current or future effect on our financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources. In accordance with U.S. GAAP, neither the lease liability nor the underlying asset is carried on the balance sheet, as the terms of the leases do not meet the criteria for capitalization.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are primarily exposed to market risks associated with fluctuations in interest rates on our Term Loan and foreign currency exchange rates.

Interest rate risk

Our exposure to interest rate fluctuations relate primarily to our Term Loan. As of September 30, 2012 , we had an outstanding balance of $577.5 million on the Term Loan. The Term Loan bears a floating interest rate of LIBOR plus a fixed rate of 2.5%. As of September 30, 2012 , an adverse change in LIBOR of 100 basis points (1.0%) would have the effect of increasing our annual interest payment on the Term Loan by approximately $5.8 million , assuming that the loan balance as of September 30, 2012 is outstanding for the entire period.

Foreign currency risk

Our reporting currency is the U.S. dollar. On account of our international operations, a substantial portion of our cash and cash equivalents is held in currencies other than the U.S. dollar. As of September 30, 2012 , this balance represented approximately 54% of our total cash and cash equivalents. A 10% adverse change in foreign exchange rates versus the U.S. dollar would have decreased our reported cash and cash equivalents by approximately 5%. Additionally, we have hedged certain of our Canadian dollar foreign currency exposures relating to our payroll expenses in Canada. Based on the foreign exchange forward contracts outstanding as at September 30, 2012 , a one cent change in the Canadian dollar to U.S. dollar exchange rates would cause a change of approximately $0.7 million in the mark to market on our existing foreign exchange forward contracts.

Our international operations expose us to foreign currency fluctuations. Revenues and related expenses generated from subsidiaries, other than those located in the U.S., are generally denominated in the functional currencies of the local countries. These functional currencies include Euros, Canadian dollars, Australian dollars and British pounds. The income statements of our international operations are translated into U.S. dollars at the average exchange rates in each applicable period. To the extent the U.S. dollar strengthens against foreign currencies, the foreign currency conversion of these foreign currency denominated transactions into U.S. dollars results in reduced revenues, operating expenses and net income (loss) for our international operations. Similarly, our revenues, operating expenses and net income (loss) will increase for our international operations if the U.S. dollar weakens against foreign currencies. We cannot predict the effect foreign exchange fluctuations will have on our results going forward. However, if there is a change in foreign exchange rates versus the U.S. dollar, it could have a material effect on our results of operations.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, our management, with the participation of the Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of September 30, 2012, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act were recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that information required to be disclosed by us in the reports we file under the Exchange Act (according to Rule 13(a)-15(e)) is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

Based on the evaluation completed by our management, in which our Chief Executive Officer and Chief Financial Officer participated, our management has concluded that there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the fiscal quarter ended September 30, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II OTHER INFORMATION

Item 1A. Risk Factors

Risk Factors

In addition to the information set forth below, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for our fiscal year ended June 30, 2012. These are not the only risks and uncertainties facing us. Our business is also subject to general risks and uncertainties that affect many other companies.

We may have exposure to greater than anticipated state tax liabilities in the United States, as a result of our acquisition of EasyLink

Certain EasyLink cloud service offerings may be subject to telecommunications excise, franchise and sales taxes in states where EasyLink may not have collected and remitted such taxes from customers. We believe that the delivery of such cloud services are not “telecommunication services”, and therefore, we believe that such cloud service offerings are not subject to various telecommunication taxes, including telecommunications excise, franchise and sales tax. However, certain state taxing authorities may disagree with this position and may continue to audit our cloud service offerings and may subject us to payments (including interest and penalties) on account of such taxes. In the event that actual results differ from our reserves set up in this regard, we may need to record additional expense that could have a material impact on our financial condition and results of operations.

Item 5. Other Information

Revised Employment and Restricted Share Unit Agreements

On October 30, 2012 the Company entered into a revised employment agreement with Mr. Mark Barrenechea, the Company's President and Chief Executive Officer. A copy of the employment agreement between Mr. Barrenechea and the Company is attached as an exhibit to this Quarterly Report on Form 10-Q.

Also on October 30, 2012 the Company entered into an amending agreement (Amended RSU Grant Agreement) with Mr. Barrenechea relating to the Restricted Share Unit Grant Agreement dated February 3, 2012 whereby 33,333 restricted share units were granted to Mr. Barrenechea. The purpose of the Amended RSU Grant Agreement is to make the terms and conditions of Mr. Barrenechea's restricted share unit grant consistent with the terms and conditions of his revised employment agreement discussed above. There were no changes to the number of restricted share units granted to Mr. Barrenechea. A copy of the Amended RSU Grant Agreement between Mr. Barrenechea and the Company is attached as an exhibit to this Quarterly Report on Form 10-Q.

Item 6. Exhibits and Financial Statement Schedules

The following documents are filed as a part of this report:



Exhibit Number		Description of Exhibit
10.1		2004 Stock Option Plan, as amended September 27, 2012 (1)
10.2*		OpenText Corporation Long-Term Incentive Plan 2015 for eligible employees, effective October 3, 2012
10.3*		Employment Agreement, dated October 30, 2012 between Mark Barrenechea and the Company
10.4*		Amending Agreement to the Restricted Share Unit Grant Agreement, between Mark Barrenechea and the Company
31.1		Certification of the Chief Executive Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of the Chief Executive Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of the Chief Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		XBRL instance document
101.SCH		XBRL taxonomy extension schema
101.CAL		XBRL taxonomy extension calculation linkbase
101.DEF		XBRL taxonomy extension definition linkbase
101.LAB		XBRL taxonomy extension label linkbase
101.PRE		XBRL taxonomy extension presentation

* Indicates management contract relating to compensatory plans or arrangements


(1)	Filed as an Exhibit to the Company’s Report on Form 8-K, as filed with the SEC on October 2, 2012 and incorporated herein by reference

SIGNATURES

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 thereunto duly authorized.

OPEN TEXT CORPORATION

Date: November 1, 2012



By:	/s/ M ARK B ARRENECHEA
	Mark Barrenechea President and Chief Executive Officer (Principal Executive Officer)
	/s/ P AUL M C F EETERS
	Paul McFeeters Chief Financial Officer and Chief Administrative Officer (Principal Financial Officer)
	/s/ S UJEET K INI
	Sujeet Kini Vice President, Controller (Principal Accounting Officer)

Exhibit 10.2

OPEN TEXT CORPORATION

SHARE UNIT PLAN FOR ELIGIBLE EMPLOYEES

LTIP 2015

Effective October 3, 2012

- 2 -


Section 1	Interpretation

1.1 Purpose

The purpose of the Plan is to provide a long term incentive to key employees which establishes a strong link to business strategy, operating performance and market performance.

1.2 Definitions

As used in the Plan, the following terms have the following meanings:


(a)	“Account” has the meaning ascribed thereto in Section 2.5;


(b)	“Affiliate” means an affiliate of the Corporation or another corporation, as applicable, as determined in accordance with the CBCA ;


(c)	“Applicable Law” means any applicable provision of law, domestic or foreign, including, without limitation, applicable securities legislation, together with all regulations, rules, policy statements, rulings, notices, orders or other instruments promulgated thereunder, and Stock Exchange Rules;


(d)	“Associate” has the meaning ascribed thereto in the CBCA;


(e)	“Beneficiary” means an individual who, on the date of an Eligible Employee's death, is the person who has been designated in accordance with Section 5.7 and the laws applying to the Plan, or where no such individual has been validly designated by the Eligible Employee, or where the individual does not survive the Eligible Employee, the Eligible Employee's legal representative;


(f)	“Board” means those individuals who serve from time to time as the directors of the Corporation;


(g)	“CBCA” means the Canada Business Corporations Act , R.S. 1985, c. C-44, as amended from time to time.


(h)	“Change in Control” means either of the following events:


i.	the sale of all or substantially all of the assets of the Corporation; or

ii.

any transaction whereby any person, together with Affiliates and Associates of such person, or any group of persons acting in concert (collectively, “ Acquiror ” or “ Acquirors ”), acquires beneficial ownership of more than 50% of the issued common shares of the Corporation on a fully diluted basis, or any transaction as a result of which beneficial ownership of common shares constituting more than 50% in the aggregate of the issued common shares of the Corporation on a fully diluted basis cease to be held by persons who are shareholders of the Corporation as at the date hereof or by Affiliates or Associates of such present shareholders.

For purposes of this definition, the term “ group ” and “ beneficial ownership ” shall have the meanings ascribed thereto under Section 14(d)92) of the Securities Act and Rule 13d-3

- 3 -

of the General Rules of the Securities Act and provide that “ Change in Control ” as it applies to a US Taxpayer means either of the following events:

iii.

the acquisition, through one acquisition or a series of acquisitions during a 12-month period ending on the date of the last acquisition, by any one person or more than one person acting as a group (as determined by paragraph (i)(5)(v)(B) of Section §1.409A-3, Part 1, Title 26, Code of Federal Regulations), of assets of the Corporation that have a total gross fair market value (determined without regard to the liabilities associated with such assets) equal to or more than 40 percent of the total gross fair market value of all of the assets of the Corporation (determined without regard to the liabilities associated with such assets) immediately before such acquisition or acquisitions; or


iv.	the acquisition by any one person, or more than one person acting as a group (as determined by paragraph (i)(5)(v)(B) of Section §1.409A-3, Part 1, Title 26, Code of Federal Regulations), of shares of the Corporation that, together with shares held by such person or group, constitute more than 50 percent of the total fair market value or total voting power of the shares of such Corporation;


(i)	“Code” means the United States Internal Revenue Code of 1986, as amended;


(j)	“Committee” means the Compensation Committee of the Board or such other committee of the Board which may be appointed by the Board to, among other things, interpret, administer and implement the Plan;


(k)	“Common Share” means a common share of the Corporation;


(l)	“Corporate Transaction” means a Sale Transaction resulting in a Change in Control;


(m)	“Corporation” means Open Text Corporation and includes any successor corporation thereof, and any reference in the Plan to action by the Corporation means action by or under the authority of the Board or the Committee;


(n)	“Director” means a member of the Board;

(o)

“Disability” means the Eligible Employee's physical or mental incapacity that prevents him from substantially fulfilling his duties and responsibilities on behalf of the Corporation or, if applicable, an Affiliate of the Corporation, and in respect of which the Eligible Employee commences receiving, or is eligible to receive, disability benefits under the Corporation's or an Affiliate of the Corporation's long-term disability plan;


(p)	“Disability Date” means the date on which the Eligible Employee first becomes eligible for long-term disability benefits under the Corporation's or an Affiliate of the Corporation's long‑term disability plan;


(q)	“Eligible Employee” means such employee of the Corporation or an Affiliate of the Corporation as the Committee may designate from time to time as eligible to participate in the Plan;


(r)	“Employed” means, with respect to an Eligible Employee, that:

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i.	he is performing work at a workplace of the Corporation or an Affiliate of the Corporation, and has not been given or received, a notice of termination of employment by the Corporation or an Affiliate of the Corporation; or


ii.	he is not actively at work at a workplace of the Corporation or an Affiliate of the Corporation due to an approved leave of absence, maternity or parental leave or Disability and has not been given, or received, a notice of termination of employment by the Corporation or an Affiliate of the Corporation.

For greater certainty, an Eligible Employee shall not be considered “Employed” or otherwise an employee of the Corporation or an Affiliate of the Corporation during a notice period that arises upon the involuntary termination of employment (whether wrongful or otherwise) of the Eligible Employee by the Corporation or an Affiliate of the Corporation, as applicable;


(s)	“Executive Leadership Team” means the Chief Executive Officer of the Corporation together with those executives of the Corporation as may be determined by the Committee from time.

(t)

“Fair Market Value” means, with respect to any particular date, the simple average closing price of the Common Shares as traded on the stock exchange on which the highest aggregate volume of Common Shares have traded on each of the five trading days immediately preceding the particular date. In the event that the Common Shares are not listed and posted for trading on any stock exchange, the Fair Market Value shall be the fair market value of the Common Shares as determined by the Corporation in its sole discretion, acting reasonably and in good faith;


(u)	“Grant Agreement” means an agreement between the Corporation or an Affiliate and an Eligible Employee under which a Share Unit is granted, as contemplated by Section 2.1, together with such schedules, amendments, deletions or changes thereto as are permitted under the Plan;


(v)	“Grant Date” means the date as of which a Share Unit is granted to an Eligible Employee;


(w)	“Incumbent Director” means any Director who was a Director immediately prior to a Change in Control and any successor to an Incumbent Director who was recommended by or appointed to succeed any Incumbent Director by the affirmative vote of the Directors when that vote includes the affirmative vote of a majority of the Incumbent Directors then on the Board;


(x)	“Just Cause” means:


i.	the failure by the Eligible Employee to perform his duties according to the terms of his employment (other than those (A): that follow a demotion in his position or duties; or (B) resulting from the Eligible Employee's Disability) after the Corporation or an Affiliate of the Corporation has given the Eligible Employee reasonable notice of such failure and a reasonable opportunity to correct it;


ii.	the engaging by the Eligible Employee in any act that is materially injurious to the Corporation or an Affiliate of the Corporation, monetarily or otherwise, but not including, following a Change in Control, the expression

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of opinions contrary to those Directors who are not Incumbent Directors or those of the Acquirors;

iii.

the engaging by the Eligible Employee in any act of dishonesty resulting or intended to result directly or indirectly in personal gain of the Eligible Employee at the expense of the Corporation or an Affiliate of the Corporation, including the failure by the Eligible Employee to honour his fiduciary duties to the Corporation or an Affiliate of the Corporation and his duty to act in the best interests of the Corporation or an Affiliate of the Corporation;


iv.	the failure by the Eligible Employee to comply with the provisions of any applicable employment contract where the Eligible Employee elects to terminate his employment with the Corporation or an Affiliate of the Corporation;


v.	the failure of the Eligible Employee to abide by the terms of any resolution passed by the Board; or


vi.	the failure by the Eligible Employee to abide by the policies, procedures and codes of conduct of the Corporation or an Affiliate of the Corporation;

(y)

“Performance Conditions” means such financial and/or operational performance criteria as may be determined by the Committee in respect of vesting of Share Units granted to any Eligible Employee and set out in a Grant Agreement. Performance Conditions may apply to the Corporation, an Affiliate, the Corporation and its Affiliates as a whole, a business unit of the Corporation or group comprised of the Corporation and some of its Affiliates or a group of Affiliates, either individually, alternatively or in any combination, and measured either in total, incrementally or cumulatively over a specified performance period, on an absolute basis or relative to a pre-established target, to previous years' results or to a designated comparator group, or otherwise;

(z)

“Performance Period” means the period specified in the Grant Agreement applicable to the grant of Share Units over which the Performance Conditions or Time-Based Conditions set out in such Grant Agreement will be measured for purposes of determining the number of Share Units that will vest in an Eligible Employee during or immediately following the end of such period. Unless the applicable Grant Agreement provides otherwise, the Performance Period for a grant of Share Units shall be a three year period commencing on the first day of the Corporation's fiscal year that includes the Grant Date of the Share Units;


(aa)	“Performance Share Unit” or “PSU” means a Share Unit, the vesting of which is subject to Performance Conditions;


(bb)	“Plan” means this Open Text Corporation Share Unit Plan for Eligible Employees, as amended from time to time;


(cc)	“Restricted Share Unit” means a Share Unit, the vesting of which is subject to Time-Based Conditions;


(dd)	“Sale Transaction” means any merger, amalgamation or plan of arrangement involving the Corporation, acquisition or take-over bid for the Common Shares of the Corporation, or similar transaction, or series of transactions, or the sale of all or substantially all of the assets of the Corporation, provided that a Sale Transaction shall exclude: (i) any share

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transfer, reorganization, asset transfer, or similar transaction to which the parties are limited to the Corporation and/or any of its present or future Affiliates; (ii) the completion of a treasury offering of securities of the Corporation or an Affiliate of the Corporation; or (iii) the public offering or the dividend or other distribution by the Corporation or one of its Affiliates of shares in the capital of the Corporation;


(ee)	“Share Purchase Trust” means a trust established pursuant to Section 4.1 hereof, to acquire and hold Shares for delivery from time to time to Eligible Employees upon settlement of Vested Share Units;


(ff)	“Share Unit” means a unit credited by the Corporation to an Eligible Employee by way of a bookkeeping entry in the books of the Corporation pursuant to the Plan, the value of which at any particular date shall be the Fair Market Value at that date;


(gg)	“Stock Exchange” means any of The Toronto Stock Exchange, The NASDAQ Stock Market, or if the Shares are not listed on The Toronto Stock Exchange or The NASDAQ Stock Market, such other stock exchange on which the Shares are listed, or if the Shares are not listed on any stock exchange, then on the over-the-counter market;


(hh)	“Stock Exchange Rules” means the applicable rules of any stock exchange upon which shares of the Corporation are listed;


(ii)	“Termination Date” means the date an Eligible Employee ceases to be Employed by the Corporation or its Affiliates;


(jj)	“Time-Based Conditions” means conditions as to vesting of Share Units relating to periods of time during which the Eligible Employee remains Employed by the Corporation or its Affiliates, as may be determined by the Committee and set out in a Grant Agreement;


(kk)	“Trustee” means such bank or trust company that is independent of and unaffiliated with the Corporation and any Affiliate as may from time to time be appointed by the Committee as trustee of a Share Purchase Trust and may be the same person as the Agent;

(ll)

“Vested Share Units” means, in respect of an Eligible Employee, the percentage (which may be more or less than 100% but shall not exceed the maximum specified in the applicable Grant Agreement) of the Share Units granted to the Eligible Employee that has vested in accordance with Article 3 by virtue of satisfaction of Performance Conditions or Time-Based Conditions as set out in the applicable Grant Agreement at the applicable time;


(mm)	“U.S. Taxpayer” means an Eligible Employee who is subject to section 409A of the Code.

1.3 Effective Date

The Plan shall be effective as of October 3, 2012.

1.4 Construction

In this Plan, all references to the masculine include the feminine; references to the singular shall include the plural and vice versa, as the context shall require. If any provision of the Plan or part hereof is determined to be void or unenforceable in whole or in part, such determination shall not affect the validity or enforcement of any other provision or part thereof. Headings wherever used herein are for reference purposes only and do not limit or extend the meaning of the provisions contained herein. References to “Section” or “Sections” mean a section or sections contained in the Plan unless expressly stated otherwise. All amounts referred to in this Plan are stated in Canadian dollars unless otherwise indicated.

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1.5 Administration

The Committee shall, in its sole and absolute discretion: (i) interpret and administer the Plan; (ii) establish, amend and rescind any rules and regulations relating to the Plan; (iii) have the power to delegate, on such terms and conditions as the Committee deems appropriate, any or all of its powers hereunder to any officer or employee of the Corporation except the Committee shall not, and shall not be permitted to, delegate any such powers, rights or duties (A) with respect to the grant, amendment, administration or settlement of any Share Unit of an Eligible Employee who is a member of the Executive Leadership Team (or like group of senior executives, including the Chief Executive Officer of the Corporation) or otherwise to the extent delegation is not consistent with the CBCA, the mandate of the Committee or any Stock Exchange Rules or (B) with respect to the establishment or determination of the achievement of Performance Conditions or the establishment of Time-Based Conditions and any such purported delegation or action shall not be given effect; and (iv) make any other determinations that the Committee deems necessary or desirable for the administration of the Plan. The Committee may also appoint or engage a trustee, custodian or administrator to administer or implement the Plan or any aspect of it, subject to the foregoing limitations. The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan in the manner and to the extent the Committee deems, in its sole and absolute discretion, necessary or desirable. Any decision of the Committee with respect to the administration and interpretation of the Plan shall be conclusive and binding on the Eligible Employee and any other person claiming an entitlement or benefit through the Eligible Employee. All expenses of administration of the Plan shall be borne by the Corporation as determined by the Committee.

1.6 Governing Law

The Plan shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.


Section 2	Grant of Share Units

2.1 Grant

Each Eligible Employee may, in the sole discretion of the Committee, receive a grant of Share Units in such number as may be specified by the Committee, with effect from such date(s) as the Committee may specify.

2.2 Grant Agreement

Each grant of Share Units and the participation of an Eligible Employee in the Plan shall be evidenced by a written Grant Agreement issued by the Corporation or an Affiliate containing such terms and in such form as may be prescribed by the Committee. Each Grant Agreement shall set forth, at a minimum, the Grant Date of the Share Units to which the Grant Agreement relates, the number of such Share Units, applicable Performance Conditions and/or Time-Based Conditions as to vesting, the applicable Performance Period(s) and the treatment of such Share Units upon termination of employment.

The Committee may prescribe terms for Grant Agreements in respect of Eligible Employees who are subject to the laws of a jurisdiction other than Canada in connection with their participation in the Plan that are different than the terms of the Grant Agreements for Eligible Employees who are subject to the laws of Canada in connection with their participation in the Plan, and/or deviate from the terms of the Plan set out herein, for purposes of compliance with Applicable Law in such other jurisdiction or where in the Committee's opinion such terms or deviations are necessary or desirable to obtain more advantageous treatment for the Corporation, an Affiliate or the Eligible Employees in respect of the Plan under the Applicable Law of the other jurisdiction. Notwithstanding the foregoing, the terms

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of any Grant Agreement shall be consistent with the Plan to the extent practicable having regard to the Applicable Law of the jurisdiction in which such Grant Agreement is applicable.

2.3 Share Units

Each Share Unit will give an Eligible Employee the right to receive one Share, or where specified in the applicable Grant Agreement, a cash payment in an amount equal to the Fair Market Value, provided such Share Unit becomes a Vested Share Unit in accordance with the terms of the Plan and the applicable Grant Agreement. For greater certainty, an Eligible Employee or Beneficiary shall have no right to receive any Shares or payment, and no Shares shall be delivered or payment made as compensation, damages, or otherwise, with respect to any Share Units that are forfeited or otherwise do not become Vested Share Units.

2.4 Waiver or Change of Performance or Time-Based Conditions

The Committee may, without the consent of any Eligible Employee, subsequent to the making of a grant of Share Units:


(a)	waive any Performance Condition or Time-Based Condition applicable to such Share Units, or determine that it has been satisfied;

(b)

change or replace any Performance Condition or modify the weighting as between different Performance Conditions applicable to a particular grant of Performance Share Units as the Committee sees fit in the event of a material change affecting the Corporation including a material acquisition, disposition, change in Applicable Law or change in accounting or reserves/resources booking standards applicable to the Corporation provided that the Committee reasonably determines that (i) the change or replacement is required to preserve the rights of the Eligible Employees under the Plan on a basis substantially proportionate to that which existed prior to the event giving rise to the change or replacement, or (ii) that the change or replacement will not materially adversely affect the likelihood of vesting or amount of any grant of Performance Share Units.

2.5 Other Terms and Conditions

Subject to the terms of the Plan, the Committee may, in its sole discretion, determine other terms or conditions of any Share Units, including terms or conditions pertaining to confidentiality of information relating the Corporation's operations or businesses and any other additional conditions with respect to the grant or vesting of Share Units, in whole or in part, which other terms or conditions shall be set out in the applicable Grant Agreement. In addition, the Committee may, in its sole discretion, authorize the vesting of Share Units granted or credited to an Eligible Employee hereunder that would, in the absence of such authorization, be forfeited pursuant to Section 3.1.

For greater certainty, no term or condition imposed under a Grant Agreement may have the effect of causing settlement (in cash or in Shares) of any of an Eligible Employee's Share Units to occur after December 31 of the calendar year following the year in which the Eligible Employee's Termination Date occurs.

2.6 Dividends

A Grant Agreement may include provision for the accrual of dividend equivalent amounts for the account of an Eligible Employee as hereinafter provided. If a Grant Agreement provides that dividend equivalent amounts will be accrued in respect of the Share Units to which such Grant Agreement relates, on each payment date for dividends paid on Common Shares, an Eligible Employee shall be credited with dividend equivalents in respect of the Share Units credited to the Eligible Employee's

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Account as of the record date for payment of dividends. Such dividend equivalents shall be converted into additional Share Units (including fractional Share Units) based on the Fair Market Value as of the date such additional Share Units are credited.

2.7 Eligible Employee's Account

The Corporation shall maintain in its books an account for each Eligible Employee (an “Account”) recording at all times the number of Performance Share Units and Restricted Share Units standing to the credit of an Eligible Employee. Upon settlement or forfeiture of Share Units credited to an Eligible Employee in the manner described herein, such Share Units shall be cancelled. A written confirmation of the balance in each Eligible Employee's Account shall be provided by the Corporation to the Eligible Employee at least annually.

2.8 Adjustments and Reorganizations

In the event of any stock split, stock consolidation, combination or exchange of Common Shares, Corporate Transaction, spin-off, dividend or other distribution of the Corporation's assets to shareholders, or any other change in the capital of the Corporation affecting Common Shares, such proportionate adjustments, if any, as the Committee in its discretion may deem appropriate to reflect such change, shall be made with respect to the number of Share Units outstanding under the Plan.

2.9 No Corporate Action Restriction.

The existence of the Plan and/or the Share Units granted hereunder shall not limit, affect or restrict in any way the right or power of the Board or the shareholders of the Corporation to make or authorize (i) any adjustment, recapitalization, reorganization or other change in the capital structure or business of the Corporation or an Affiliate, (ii) any merger, consolidation, amalgamation or change in ownership of the Corporation or an Affiliate, (iii) any issue of bonds, debentures, capital, preferred or prior preference stocks ahead of or affecting the capital stock of the Corporation or an Affiliate or the rights thereof, (iv) any dissolution or liquidation of the Corporation or an Affiliate, (v) any sale or transfer of all or any part of the assets or business of the Corporation or an Affiliate or (vi) any other corporate act or proceeding with respect to the Corporation or an Affiliate. No Eligible Employee or any other person shall have any claim against the Corporation, any Affiliate, any member of the Board or the Committee, or the board of directors of an Affiliate, or any officers, employees, officers or agents of a the Corporation or any Affiliate, as a result of any such action.


Section 3	Vesting

3.1 Vested Share Units

Vesting of Share Units shall be determined in accordance with Section 3.2, Section 3.3, Section 3.4, Section 3.5 or Section 3.6 as applicable. Share Units which have been granted to an Eligible Employee and which do not become Vested Share Units shall be forfeited by the Eligible Employee and the Eligible Employee will have no further right, title or interest in such Share Units.

3.2 Continued Employment

Subject to Section 3.6, Performance Share Units that are the subject of a grant to an Eligible Employee and dividend equivalent Performance Share Units, if any, credited to the Eligible Employee's Performance Share Unit Account in respect thereof shall vest and become Vested Share Units on the date that the applicable Performance Conditions have been satisfied in accordance with the Grant Agreement governing such grant or the committee waives such Performance Conditions, provided that the Eligible Employee remains Employed throughout the Performance Period.

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Subject to Section 3.6, Restricted Share Units that are the subject of a grant to an Eligible Employee and dividend equivalent Restricted Share Units, if any, credited to the Eligible Employee's Restricted Share Unit Account in respect thereof shall vest and become Vested Share Units in accordance with the Time-Based Conditions in the Grant Agreement governing such grant, provided that the Eligible Employee remains Employed at the times specified in the Time-Based Conditions.

For greater certainty, an Eligible Employee shall not be considered to have ceased being Employed for purposes of this Section 3.2 where, during a Performance Period, he or she ceases employment with the Corporation and immediately commences employment with an Affiliate or ceases employment with an Affiliate and immediately commences employment with the Corporation or another Affiliate.

3.3 Long-Term Disability or Death

Subject to Section 3.6, in the event of an Eligible Employee's Disability or death during a Performance Period, the number of Share Units that vest with respect to such Performance Period shall be determined in accordance with the formula A x [B / C] , where

A equals the number of Share Units that would otherwise have vested referable to the Performance Period pursuant to Section 3.2;

B equals the number of days between the Grant Date relating to the Share Units and the Eligible Employee's Disability Date or date of death, as applicable; and

C equals the total number of days between the Grant Date relating to the Share Units and the final day of the Performance Period relating to the Share Units.

For purposes of this Section and Section 5.8, Performance Share Units shall vest on the final day of the Performance Period in the case where the Committee waives the Performance Conditions under Section 2.4.

For greater certainty, for the purposes of this Section, for Restricted Share Units, the foregoing determination shall be made for all Restricted Share Units that are subject to a grant reflected in a Grant Agreement, and the number of previously unvested Restricted Share Units that shall vest pursuant to this Section shall be the number of Restricted Share Units determined to be vested pursuant to the formula set forth above in this Section minus the Restricted Share Units subject to the grant reflected in such Grant Agreement, if any, which have previously vested pursuant to the Time-Based Conditions set forth in such Grant Agreement.

3.4 Termination without Cause

Subject to Section 3.6, unless otherwise determined by the Committee, in the event the Eligible Employee's employment is terminated by the Corporation or an Affiliate of the Corporation without Just Cause during a Performance Period, the number of Share Units that vest with respect to such Performance Period shall:

(a) in the event the Eligible Employee's Termination Date is after the completion of the eighteenth (18 ^th ) month in the applicable Performance Period, be determined in accordance with the formula A x [B / C] where

A equals the number of Share Units that would otherwise have vested referable to the Performance Period pursuant to Section 3.2;

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B equals the number of days between the Grant Date relating to the Share Units and the Eligible Employee's Termination Date (rounded up to the nearest whole number of months); and

C equals the total number of days between the Grant Date relating to the Share Units and the final day of the Performance Period relating to the Share Units, and

(b) in the event the Eligible Employee's Termination Date is before the commencement of the nineteenth (19 ^th ) month in the applicable Performance Period, be 0 (other than Share Units which have previously met Time-Based Conditions for vesting).

For greater certainty, for the purposes of this Section, for Restricted Share Units, the foregoing determination shall be made for all Restricted Share Units that are subject to a grant reflected in a Grant Agreement, and the number of previously unvested Restricted Share Units that shall vest pursuant to this Section shall be the number of Restricted Share Units determined to be vested pursuant to the formula set forth above in this Section minus Restricted Share Units, if any, which have previously vested pursuant to the Time-Based Conditions set forth in such Grant Agreement.

3.5 Other Terminations of Employment

In the event that, during a Performance Period, (i) the Eligible Employee's employment is terminated by the Corporation or an Affiliate of the Corporation for Just Cause; (ii), subject to Section 3.6, an Eligible Employee voluntarily terminates his employment with the Corporation or an Affiliate of the Corporation; or (iii) subject to Section 3.6, the Eligible Employee ceases to be Employed other than due to a voluntary termination of employment or termination of employment by the Corporation or an Affiliate of the Corporation for Just Cause and Section 3.4 does not apply to the Eligible Employee, no portion of the Share Units granted in respect of such Performance Period shall vest and the Eligible Employee shall receive no payment or other compensation in respect of such Share Units or loss thereof, on account of damages or otherwise.

3.6 Change in Control

In the event of a Change in Control during a Performance Period, the Share Units granted in respect of such Performance Period shall vest in accordance with this Section 3.6, notwithstanding Section 3.2, Section 3.3, Section 3.4 and clauses (ii) and (iii) of Section 3.5. If the Change in Control occurs within the first six (6) months following the Grant Date, no portion of the Share Units granted as of such Grant Date shall vest. If the Change in Control occurs after the commencement of the seventh (7 ^th ) month following the Grant Date but before the completion of the eighteenth (18 ^th ) month following the Grant Date, 50% of the Share Units granted as of such Grant Date shall vest. If the Change in Control occurs after the commencement of the nineteenth (19 ^th ) month following the Grant Date month, 100% of the Share Units granted in such grant shall vest.


Section 4	Purchase of Shares and Settlement of Vested Share Units

4.1 Establishment of Share Purchase Trusts

The Corporation or, on the direction of the Committee, an Affiliate, may establish one or more Share Purchase Trusts, on such terms and conditions as the Committee shall determine and in compliance with Applicable Law, and may contribute cash for the purchase of Shares thereto, in such

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amounts as the Committee shall determine, on behalf of the Corporation and/or on behalf of such other Affiliate(s) as the Committee may direct.

4.2 Purchase of Shares by Trustee

Shares delivered to Eligible Employees from a Share Purchase Trust in connection with the settlement of Vested Share Units shall be purchased on the open market by the Trustee acting through a broker designated by the Trustee who is a member of the Stock Exchange. Subject to the foregoing part of this Section 4.2, any such designation of a broker may be changed from time to time.

4.3 Purchase of Shares by Agent

Shares delivered to Eligible Employees in connection with the settlement of Vested Share Units otherwise than from a Share Purchase Trust shall be purchased on the open market by the Agent through a broker designated by the Agent who is a member of the Stock Exchange. Subject to the foregoing part of this Section 4.3, any such designation of a broker may be changed from time to time. The Corporation shall notify the Agent as to the number of Shares to be purchased by the Agent on behalf of the Eligible Employee, on the basis of one Share for each Vested Share Units, subject to provision for applicable taxes and other source deductions in accordance with Section 10.4. As soon as practicable thereafter, the Agent shall purchase on the open market the number of Shares specified in the notice from the Corporation and shall advise the Eligible Employee, or the Eligible Employee's Beneficiary, as applicable, and the Corporation of:


(i)	the aggregate purchase price of the Shares;


(ii)	the purchase price per share or, if the Shares were purchased at different prices, the average purchase price (computed on a weighted average basis per share);


(iii)	the amount of any related brokerage commission; and


(iv)	the settlement date for the purchase of the Shares.

On the settlement date in respect of the Shares purchased hereunder, upon payment of the aggregate purchase price and related brokerage commission by the Corporation or an Affiliate on behalf of the Eligible Employee or the Eligible Employee's Beneficiary, as applicable, the Agent shall credit such Shares to an account with the Agent in the name of the Eligible Employee or the Eligible Employee's Beneficiary, as applicable.

4.4 Settlement

Subject to Section 5.1, on the Settlement date an Eligible Employee's Vested Share Units shall be settled in the form of Shares, or a cash payment as determined by the Committee, no later than December 31 of the calendar year in which the Share Units become Vested Share Units. In the event of a Change in Control, Share Units that vest in accordance with Section 3.6 shall be settled, as determined by the Committee, no later than December 31 of the calendar year including the effective date of the Change in Control. Vested Share Units shall be settled through any of the following:


(a)	through the delivery to the Eligible Employee or his or her Beneficiary, as applicable of Shares from a Share Purchase Trust subject to Section 4.2;


(b)	through the purchase of Common Shares by the Agent for the account of the Eligible Employee or his or her Beneficiary, as applicable, in accordance with Section 4.3;

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(c)	a cash payment to the Eligible Employee or his or her Beneficiary, as applicable determined in accordance with Section 4.5, or


(d)	any combination of Common Shares from a Share Purchase Trust, Shares purchased by the Agent in accordance with Section 4.3 and/or cash, all as determined by the Committee.

4.5 Settlement in Cash


4.5.1	Subject to Section 5.1, settlement of Vested Share Units in cash pursuant to Section 4.4 shall be made through the payment of an aggregate amount determined by the formula A x B , where:

A equals the Fair Market Value on the day such Share Units become Vested Share Units (or, where applicable, the date of a Change in Control),

B equals the number of Vested Share Units being settled in cash.

4.5.2

Subject to Section 5.1, in the event that at the time contemplated for the purchase of Shares under Section 4.3 there is no public market for the Shares, or at the time contemplated for the delivery of Shares the Committee determines, in its sole discretion, that having regard to Applicable Law, it would be impractical or result in a breach of such Applicable Law to provide Shares to an Eligible Employee or a group of Eligible Employees, the obligations of the Corporation or any Affiliate with respect to such Eligible Employee(s)' Vested Share Units shall be met by a payment in cash in such amount as is reasonably determined by the Committee to be equitable in the circumstances based on the value of the Shares at the time of payment, such determination to be final and binding for all purposes.

4.6 Repayment Following Misconduct

An individual who was an Eligible Employee shall, upon demand by the Corporation, repay the Fair Market Value of any Shares and any cash payment received on account of any Vested Share Units where, as a direct or indirect result of fraud, wilful misconduct, gross negligence, including a material error in judgement (individually and collectively, “Misconduct”) by the Eligible Employee affecting the financial performance or financial statements of the Corporation, or the price of the Common Shares, the number or Fair Market Value of such Vested Share Units was larger than it would have been in the absence of such Misconduct and the Eligible Employee shall reimburse the Corporation for its reasonable costs, including out-of-pocket expenses, incurred in recovering from the Eligible Employee the amount to be repaid to the Corporation pursuant to this Section 4.6.


Section 5	General

5.1 Withholding

So as to ensure that the Corporation, an Affiliate or the Trustee, as applicable, will be able to comply with the applicable provisions of any federal, provincial, state or local law relating to the withholding of tax or other required deductions, including on the amount, if any, includable in the income of an Eligible Employee, the Corporation, an Affiliate or the Trustee, as applicable, may withhold or cause to be withheld from any amount payable to an Eligible Employee, either under this Plan, or otherwise, such amount as may be necessary to permit the Corporation, the Affiliate or the Trustee, as applicable, to so comply. The Corporation, an Affiliate and the Trustee shall also have the right in its discretion to satisfy any such liability for withholding or other required deduction amounts by selling or requiring an Eligible Employee to sell Shares which would otherwise be delivered or provided to the Eligible Employee hereunder. The Committee may require an Eligible Employee, as a condition to the settlement of any

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Share Units, to pay or reimburse the Corporation, an Affiliate or the Trustee for any such withholding or other required deduction of amounts related to the settlement of such Share Unit.

5.2 Successors and Assigns

The Plan shall be binding on all successors and permitted assigns of the Corporation and an Eligible Employee, including without limitation, the estate of such Eligible Employee and the legal representative of such estate, or any receiver or trustee in bankruptcy or representative of the Corporation's or the Eligible Employee's creditors.

5.3 Plan Amendment


5.3.1	The Board may amend the Plan as it deems necessary or appropriate, but no such amendment shall, without the consent of the Eligible Employee or unless required for purposes of compliance with Applicable Law, adversely affect the rights of an Eligible Employee with respect to any Share Units which the Eligible Employee has then been granted under the Plan.

5.3.2

Notwithstanding Section 5.3.1, any amendment of the Plan shall be such that the Plan continuously meets the requirements of Section 409A of the Code with respect to U.S. Taxpayers. For avoidance of doubt, and notwithstanding Section 5.3.1, if any provision of the Plan contravenes any regulations or U.S. Treasury guidance promulgated under Section 409A of the Code or would cause the Performance Share Units to give rise to the interest and penalties under Section 409A of the Code, such provision of the Plan shall, with respect to U.S. Taxpayers, be modified, without the need for any consent of any Eligible Employee, to maintain, to the maximum extent practicable, the original intent of the applicable provision without violating the provisions of Section 409A of the Code.

5.4 Plan Termination

The Board may terminate the Plan at any time, including in the event of a Corporate Transaction, but no such termination shall, without the consent of the Eligible Employee or unless required for purposes of compliance with Applicable Law, adversely affect the rights of an Eligible Employee with respect to any Share Units which the Eligible Employee has then been granted under the Plan. Notwithstanding the foregoing, any termination of the Plan shall be such that the Plan continuously meets the requirements of Section 409A of the Code with respect to U.S. Taxpayers.

5.5 Applicable Trading Policies and Reporting Requirements

The Committee and each Eligible Employee will ensure that all actions taken and decisions made by the Committee or an Eligible Employee, as the case may be, pursuant to the Plan, comply with applicable securities regulations and policies of the Corporation relating to insider trading and “black out” periods. All Share Units shall be considered a “security” of the Corporation solely for reporting purposes under the insider trading policy of the Corporation.

5.6 Currency

All payments and benefits under the Plan shall be determined and paid in the lawful currency of Canada.

5.7 Designation of Beneficiary

Subject to the requirements of Applicable Law, an Eligible Employee may designate in writing a person as a beneficiary to receive any benefits that are payable under the Plan upon the death of

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such Eligible Employee. The Eligible Employee may, subject to Applicable Law, change such designation from time to time. Such designation or change shall be in the form of Schedule C. The initial designation of each Eligible Employee shall be executed and filed with the Secretary of the Corporation within sixty (60) days following the Effective Date of the Plan. Changes to such designation may be filed from time to time thereafter.

5.8 Death of Participant

In the event of an Eligible Employee's death, any and all Share Units then credited to the Eligible Employee's Account(s) shall become payable to the Eligible Employee's Beneficiary in accordance with Section 3.3 (subject to Section 3.6) and the date of death shall be deemed to be the Termination Date.

5.9 Rights of Participants


5.9.1	Except as specifically set out in the Plan, no Eligible Employee, or any other person shall have any claim or right to any benefit in respect of Share Units granted or any amounts payable pursuant to the Plan.


5.9.2	Rights of Eligible Employees respecting Share Units and other benefits under the Plan shall not be transferable or assignable other than by will or the laws of descent and distribution.


5.9.3	The Plan shall not be construed as granting an Eligible Employee a right to be retained as an employee of the Corporation or an Affiliate or a claim or right to any future grants of Share Units or other benefits under the Plan.


5.9.4	Under no circumstances shall Share Units be considered Common Shares nor shall they entitle any Eligible Employee or other person to exercise voting rights or any other rights attaching to the ownership of Common Shares, nor shall any Eligible Employee or other person be considered the owner of Common Shares or any interest therein by virtue of this Plan.

5.10 Compliance with Applicable Law


(a)	Any obligation of the Corporation pursuant to the terms of the Plan is subject to compliance with Applicable Law. The Eligible Employees shall comply with Applicable Law and furnish the Corporation with any and all information and undertakings as may be required to ensure compliance therewith.

(b)

It is the Corporation's intent that this Plan comply with the requirements of Section 409A of the Code, its regulations and guidance issued thereunder and the Corporation has made good faith efforts to draft the Plan accordingly. In the event of any ambiguity in the language or any agreement entered into under the Plan or in the operation of the Plan, the Plan and any such agreement shall be construed, interpreted and operated in a manner that will result in compliance with the requirements of Section 409A of the Code its regulations and guidance issued thereunder.

Exhibit 10.3

EMPLOYMENT AGREEMENT

AGREEMENT, dated as of October 30, 2012, (including any schedules hereto the “ Agreement ”), between Open Text Corporation, a corporation incorporated under the laws of Canada (the “ Corporation ”), and Mark Barrenechea (the “ Executive ”).

WHEREAS, the Executive has been serving the Corporation as its President and Chief Executive Officer since January 2, 2012;

WHEREAS, the Corporation has determined to enter into a new employment agreement with the Executive; and

WHEREAS, the Corporation and the Executive mutually desire that the Executive continue to serve the Corporation as the President and Chief Executive Officer of the Corporation on the terms and conditions set forth herein and the parties hereto shall contemporaneously execute the Restrictive Covenants Agreement (as defined below) set forth in Schedule “C”.

NOW, THEREFORE, in consideration of the premises and mutual covenants herein and for other good and valuable consideration, the parties agree as follows:

1. Position and Duties

(a) The Corporation hereby agrees to continue to employ the Executive as its President and Chief Executive Officer, and the Executive hereby accepts such position and agrees to serve the Corporation in such capacity during the Term, as defined in Section 3 hereof. The Executive shall have such duties and responsibilities as are consistent with the Executive's position as set forth herein and as may be assigned by the Corporation from time to time in accordance with the terms hereof. The Executive shall be subject to, and shall act in accordance with, all reasonable instructions and directions of the Board of Directors of the Corporation (the “ Board ”) and all policies and rules of the Corporation applicable to executive officers.

(b) During the Term, excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive shall devote his full working time, energy and attention to the performance of his duties and responsibilities hereunder and shall diligently endeavor to promote the business and best interests of the Corporation. Notwithstanding the foregoing, to the extent that it does not interfere with the performance of Executive's duties hereunder, Executive may (i) with the prior consent of the Board, serve on the board of directors or equivalent body of up to one other company that is not a competitor of the Corporation; (ii) serve on the boards of directors or equivalent bodies of trade associations and/or charitable organizations; (iii) engage in charitable activities and community affairs; and (iv) manage his personal, financial and legal affairs.

(c) During the Term, the Executive shall work at the headquarters of the Corporation in Waterloo, Ontario and shall be located in the Waterloo or Greater Toronto Area, subject to necessary business travel. The Executive shall also be a director of the Corporation.

2. Compensation

(a) Base Salary

As compensation for the agreements made by the Executive herein and the performance by the Executive of his obligations hereunder, during the Term, the Corporation shall pay the Executive a base salary at the rate of US$620,000 per annum (the “ Base Salary ”), payable in accordance with the Corporation's payroll practice as in effect from time to time, except to the extent that the Executive has previously elected

to defer the receipt of such Base Salary pursuant to an arrangement that meets the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “ Code ”). While the Base Salary may be increased, it may not be decreased during the Term.

(b) Variable Compensation

In addition to the Base Salary, with respect to each fiscal year of the Corporation during the Term, the Executive shall be eligible to earn an annual bonus (the “ Variable Compensation ”), with a target amount of US$775,000 (the “ Target Bonus ”), based on the achievement of annual individual and Corporation performance objectives established by the Board, subject to the Executive's employment with the Corporation through the applicable payment date for any such Variable Compensation. Notwithstanding anything to the contrary herein, the Variable Compensation shall be paid no later than the 15 ^th day of the third month following the close of the fiscal year to which the Variable Compensation relates, except to the extent that the Executive has previously elected to defer the receipt of such Variable Compensation pursuant to an arrangement that meets the requirements of Section 409A of the Code.

During the Term, the Executive will be eligible to participate in all Long Term Incentive Programs (“ LTIP ”) as and when approved by the Compensation Committee of the Board (the “ Compensation Committee ”). The value of LTIP is generally determined at the beginning of the LTIP term (typically three years) in relation to the Executive's On-Target-Earnings (“OTE”). OTE equals the Base Salary plus Target Bonus. The value target to be used for the three (3) year term of each LTIP shall be determined by the Board. As of the date hereof, the value target determined by the Board is US$2,093,000. The Executive is currently a participant in the Corporation's 2014 LTIP.

(d) Equity Plans

The Corporation shall permit the Executive to participate in any share option plan, share purchase plan or similar plan offered by the Corporation from time to time to its similarly situated executive officers in the manner and to the extent authorized by the Compensation Committee.

The Executive received a grant of (1) 400,000 options pursuant to the Open Text Corporation 2004 Stock Option Plan (the “ 2004 Stock Option Plan ”) on February 3, 2012, (2) 100,000 options pursuant to the 2004 Stock Option Plan on May 3, 2012 (the options described in clauses (1) and (2), together, the “ 2012 Options ”) and (3) 33,333 restricted stock units (the “ 2012 RSUs ” and, together with the 2012 Options, the “ 2012 Equity Awards ”) pursuant to the Restricted Share Unit Grant Agreement dated as of February 3, 2012 (the “ Original RSU Agreement ”).

(e) Stock Ownership

The Executive agrees to comply with the Equity Ownership Guidelines as set out in accordance with Schedule “A.”

(f) Reimbursement of Expenses

During the Term, the Corporation shall reimburse the Executive for all business expenses incurred by the Executive in performing his duties and responsibilities under this Agreement (“ Business Expenses ”), in accordance and to the extent consistent with the Corporation's policies or practices for reimbursement of business expenses incurred by other Corporation executive officers.

(g) Other Benefits

During the Term, for so long as the Executive meets the eligibility requirements of the applicable plan, practice, policy or program, and except as specifically provided herein: (i) the Executive shall be entitled to participate in all savings and retirement plans, practices, policies and programs of the

Corporation which are made available generally to similar situated executive officers of the Corporation; (ii) the Executive and/or the Executive's family, as the case may be, shall be entitled to participate in, and shall receive all benefits under, all perquisite and welfare benefit plans, practices, policies and programs (including the Corporation's health insurance and disability plans) provided by the Corporation which are made available to similarly situated executive officers of the Corporation (for the avoidance of doubt, such plans, practices, policies or programs shall not include any plan, practice, policy or program which provides benefits in the nature of severance or continuation pay), including those benefits set forth in Schedule “B”, as amended from time to time; and (iii) the Executive shall be entitled to 20 days paid vacation per fiscal year of the Corporation at a time approved in advance by the Chair of the Board, which approval shall not be unreasonably withheld but shall take into account the staffing requirements of the Corporation and the need for the timely performance of the Executive's responsibilities, subject to the Corporation's policy respecting same in effect from time to time.

(h) Annual Compensation Review

Other than as herein provided, there shall be no cost-of-living increase or merit increase in the Base Salary or increases in any bonuses payable to the Executive unless approved by the Board or the Compensation Committee. The Board and Compensation Committee shall review annually the Base Salary and all other compensation to be received by the Executive under this Agreement.

3. Term

The Executive shall serve, pursuant to this Agreement, as President and Chief Executive Officer commencing on January 2, 2012 (the “ Effective Date ”) and expiring on the third anniversary of the Effective Date (such period, the “ Term ”); provided that, on the third anniversary of the Effective Date and on each anniversary thereafter, the Term shall be extended automatically for an additional one-year period unless either party provides the other party with notice of non-renewal at least three (3) months before any such anniversary. Notwithstanding the foregoing, the Executive's employment hereunder may be terminated prior to the end of the Term upon his “ Separation from Service ” with the Corporation (as hereinafter defined) in connection with the earliest to occur of any of the events described in Section 4 hereof, in which case the Term shall be terminated as of the date of the Executive's Separation from Service. For purposes of this Agreement, the Executive's Separation from Service shall be deemed to occur when the level of services performed by the Executive for the Corporation decreases to a level equal to 20% or less of the average level of services performed by the Executive for the Corporation during the immediately preceding 36-month period (or, if shorter, during the period from the Effective Date to the date of the relevant determination) and Executive's employment with the Corporation terminates (within the meaning of Treas. Regs. Section 1.409A-1(h)(ii)), and the date of the Executive's Separation from Service (the “ Date of Separation from Service ”) shall be the date determined in accordance with Sections 5(b) and (as applicable) 5(c) hereof.

4. Separation from Service

(a) Death

The Executive shall separate from service with the Corporation, and the Term shall terminate, upon the Executive's death.

(b) Disability

The Corporation shall be entitled to terminate the Executive's employment for “ Disability ,” and the Executive shall separate from service with the Corporation, if, as a result of the Executive's incapacity due to physical or mental illness or injury, the Executive (i) shall become eligible to receive a benefit under the Corporation's long-term disability plan applicable to the Executive, or (ii) has been unable, due to physical or mental illness or incapacity, to perform the essential duties of his employment with reasonable accommodation for a continuous period of one hundred twenty (120) days or, during any period of twelve

(12) consecutive months during the Term, an aggregate of one hundred-eighty (180) days, whether consecutive or not.

The Corporation may terminate the Executive's employment for Cause, and upon such termination the Executive shall separate from service with the Corporation. For purposes of this Agreement, the term “ Cause ” shall mean, when used in connection with the Executive's Separation from Service with the Corporation: (i) the Executive's failure to attempt in good faith to perform his duties (other than as a result of physical or mental illness or injury); (ii) the Executive's willful misconduct or gross negligence of a material nature in connection with the performance of his duties as an employee, which is or could reasonably be expected to be injurious to the Corporation, or any of its affiliates (whether financially, reputationally or otherwise); (iii) a breach by the Executive of the Executive's fiduciary duty or duty of loyalty to the Corporation or its affiliates; (iv) except in connection with the Executive's good faith performance of duties, the Executive's intentional and unauthorized removal, use or disclosure of the Corporation's or any affiliate's document (in any medium or form) relating to the Corporation or an affiliate, or the customers of the Corporation or an affiliate thereof and which may be injurious to the Corporation, its customers or their respective affiliates; (v) the willful performance by the Executive of any act or acts of dishonesty in connection with or relating to the Corporation's or its affiliates' business or the willful misappropriation (or willful attempted misappropriation) of any of the Corporation's or any of its affiliates' funds or property; (vi) the indictment of the Executive or a plea of guilty or nolo contendere by the Executive to any felony or other serious crime, in each case involving moral turpitude; (vii) a material breach of any of the Executive's obligations under any agreement entered into between the Executive and the Corporation or any of its affiliates that is material to the employment relationship between Corporation or any of its affiliates and the Executive, including without limitation, this Agreement; or (viii) a material breach of the Corporation's policies or procedures, which breach causes or could reasonably be expected to cause harm to the Corporation or its business reputation; provided that each of the following shall have occurred: (w) the Corporation shall have delivered written notice to the Executive of its intention to terminate the Executive's employment for Cause, which notice specifies in reasonable detail the circumstances claimed to give rise to the Corporation's right to terminate the Executive's employment for Cause; (x) the Executive shall have the opportunity to cure the breach, to the extent such circumstances are reasonably susceptible to cure; (y) the Executive shall have the opportunity to present his case to the full Board (with the assistance of his own counsel); and (z) the Executive shall not have cured such circumstances as determined by a majority of the Board in good faith, to the extent such circumstances are reasonably susceptible to cure as determined by the Board in good faith, within thirty (30) days following the Corporation's delivery of such notice.

(d) Corporation Termination Other than for Cause and Executive Voluntary Termination (Other Than for Good Reason)

The Corporation may terminate the employment of the Executive for any reason other than for Cause, notwithstanding any other provision of this Agreement, upon compliance with the terms of Section 6(a) hereof. The Executive may voluntarily terminate his employment, other than for Good Reason, provided that the Executive provides the Corporation with a Notice of Separation from Service (as defined below) specifying the date of his Separation from Service, which shall not be less than ninety (90) days after the date of such Notice. Upon such termination, in each case, the Executive shall separate from service with the Corporation. In the event of non-renewal of this Agreement by the Corporation in accordance with Section 3 hereof, the Corporation shall comply with the terms of Section 6(a) hereof.

(e) Good Reason

The Executive may terminate his employment and separate from service with the Corporation for Good Reason. For purposes of this Agreement, the term “ Good Reason ” shall mean, when used in

connection with the Executive's Separation from Service with the Corporation, unless the Executive shall have consented in writing thereto, (i) a material diminution in the Executive's duties and responsibilities other than a change in such Executive's duties and responsibilities that arises solely out of a reorganization of the Corporation resulting in a similar change to similarly situated executive officers' duties and responsibilities; (ii) a material reduction in the Executive's Base Salary or Target Bonus, unless a proportional reduction in base salary or target bonus, as applicable, is also applicable to similarly situated executive officers; (iii) a relocation of the Executive's primary work location more than fifty (50) miles from the Executive's work location on the Effective Date or relocation outside of Waterloo or the Greater Toronto Area; or (iv) a reduction in the Executive's title or position with the Corporation other than a change in such Executive's title or position that arises solely out of a reorganization of the Corporation resulting in a similar change to similarly situated executive officers' title or position; provided, that in each case, within thirty (30) days following the occurrence of any of the events set forth herein, the Executive shall have delivered a Notice of Separation from Service to the Corporation of his intention to terminate his employment for Good Reason, which notice specifies in reasonable detail the circumstances claimed to give rise to the Executive's right to terminate employment for Good Reason, the Corporation shall not have cured such circumstances within thirty (30) days following the Corporation's receipt of such notice, and the Executive's Separation from Service with the Corporation shall have occurred within sixty (60) days following such failure to cure.

5. Procedure for Separation from Service

(a) Notice of Separation from Service . Any separation or intended separation of the Executive from service with the Corporation (other than a separation from service on account of the death of Executive) shall be communicated by written “ Notice of Separation from Service ” to the other party hereto in accordance with Section 14(a) hereof.

(b) Date of Separation from Service . The Date of Separation from Service shall mean: (i) if the Separation from Service occurs due to the Executive's death, the date of the Executive's death; (ii) if the Separation from Service occurs due to a termination by the Corporation pursuant to Section 4(b), the date on which the Executive receives a Notice of Separation from Service from the Corporation; (iii) if the Separation from Service occurs due to the Executive's voluntary termination without Good Reason, the date specified in the Notice of Separation from Service given pursuant to Section 4(d) hereof; (iv) if the Separation from Service occurs due to the Executive's termination with Good Reason, the date of his termination of employment in accordance with Section 4(e) hereof; and (v) if the Separation from Service occurs for any other reason, the date on which a Notice of Separation from Service is given or any later date (within thirty (30) days, or any alternative time period agreed upon by the parties, after the giving of such notice) set forth in such Notice of Separation from Service.

(c) Section 409A of the Code . Notwithstanding anything to the contrary in Section 5(b), the determination of whether and when the Date of Separation from Service from the Corporation occurs for the purpose of determining when any amount that is “nonqualified deferred compensation” subject to Section 409A of the Code (“ 409A Amount ”) becomes due and payable shall be made in a manner consistent with, and based on the presumptions set forth in, Treas. Regs. Section 1.409A-1(h). Solely for purposes of the determination referred to in the preceding sentence, “ Corporation ” shall include all persons with whom the Corporation would be considered a single employer under Sections 414(b) and 414(c) of the Code. In the event that the Date of Separation from Service (as determined in accordance with this Section 5(c)) occurs prior to the Date of Separation from Service (as determined in accordance with Section 5(b)), the Corporation will pay, or commence payment of, any 409A Amounts on the Date of Separation from Service determined in accordance with Section 5(b), but not later than December 31 of the calendar year in which the Date of Separation from Service (as determined in accordance with this Section 5(c)) occurs, subject to Section 6(b) and Section 7(b)(iv).

6. Separation Payments

(a) Non-renewal by the Corporation; By the Corporation other than for Cause or by the Executive for Good Reason

In the event of non-renewal of this Agreement by the Corporation in accordance with Section 3 hereof or the Executive's Separation from Service due to termination (A) by the Corporation other than for Cause (including a Separation from Service as a result of Disability but not death) or (B) by the Executive for Good Reason, subject to (in respect of clauses (ii) through (iv)) the Executive's continued compliance with Section 6(i) below, Section 20 below and the Restrictive Covenants Agreement described in Section 10 below, the Corporation shall pay to the Executive the amounts described below at the times specified below, and, except for (x) the Executive's rights of indemnification and insurance provided in Section 9 hereof and (y) any vested benefits under any tax-qualified pension plans of the Corporation, the Corporation shall have no additional obligations under this Agreement:

(i) Accrued Payments . Within thirty (30) days following the Date of Separation from Service, (w) any Base Salary earned by the Executive but not paid through the Date of Separation from Service (reduced by any amounts that the Executive received in connection with benefits paid or payable as a result of Disability, if applicable); (x) any Variable Compensation earned by the Executive for the fiscal year prior to the year in which the Date of Separation from Service has occurred but not yet paid prior to the Date of Separation from Service (except that, with respect to (w) and (x), to the extent that the Executive has previously elected to defer the receipt of such Base Salary or Variable Compensation pursuant to an arrangement that meets the requirements of Section 409A of the Code, the timing of the payment of such Base Salary or Variable Compensation shall be in accordance with the terms of such arrangement); (y) the Executive's accrued but unused vacation pay through the Date of Separation from Service; and (z) any Business Expenses not reimbursed as of the Date of Separation from Service (the amounts described in (w) through (z), together, the “ Accrued Payments ”);

(ii) Separation Payments. In respect of each month during the 24-month period measured from the day of the Executive's Date of Separation from Service (the “ Severance Period ”), (x) an amount equal to one-twelfth of the Base Salary as in effect for the year in which the Date of Separation from Service occurs shall be paid in equal installments in accordance with the Corporation's standard payroll practices (reduced by any amounts received by and/or payable to Executive in connection with benefits paid or payable as a result of Disability, if applicable) (the “ Salary Continuation Payments ”); and (y) an amount equal to one-twelfth of the Target Bonus as in effect for the year in which the Date of Separation from Service occurs shall be paid once a month (together with the Salary Continuation Payments, the “ Separation Payments ”);

(iii) Pro Rata Bonus. At the time that Variable Compensation for the Corporation's fiscal year in which the Date of Separation from Service occurred would otherwise be paid (but in no event later than the 15 ^th day of the third month following the close of such fiscal year), an amount equal to the product of (i) the Target Bonus for such fiscal year that the Executive would have received had the Executive remained employed with the Corporation and (ii) a fraction, the numerator of which is the number of full weeks the Executive was employed with the Corporation in such fiscal year and the denominator of which is fifty-two (the “ Pro Rata Bonus ”); provided that, to the extent that the Executive has previously elected to defer the receipt of such bonus pursuant to an arrangement that meets the requirements of Section 409A of the Code, the timing of the payment of the Pro Rata Bonus shall be in accordance with the terms of such arrangement; and

(iv) Continued Group Medical Benefits. The Executive's ability to participate in the medical plan of the Corporation shall continue only through the Date of Separation from Service. If the Executive elects to continue his health and dental insurance coverage pursuant to COBRA, the Corporation shall reimburse the Executive for the COBRA premiums for the Executive and his

dependents for the number of months corresponding to the Severance Period; provided, however, that if the Executive is eligible to receive comparable medical or other welfare benefits under another employer-provided plan, the COBRA premium reimbursement described herein shall be terminated. The Executive shall promptly notify the Corporation of any changes in his medical benefits coverage.

(b) Timing of Separation Payments

Notwithstanding anything to the contrary in this Section 6, in the event that Executive is a “specified employee” (within the meaning of Section 409A(2)(B) of the Code) on the Date of Separation from Service, no Separation Payments that are 409A Amounts shall be paid until the earlier of (x) the date of the Executive's death or (y) the first business day of the first calendar month that begins after the six-month anniversary of the Date of Separation from Service (determined in accordance with Section 5(c) hereof) at which time all Separation Payments which would otherwise have been paid that would otherwise have been paid during such period of delay shall be paid with Interest (as defined below) and the remaining Separation Payments shall be paid in accordance with Section 6(a) above. “ Interest ” shall mean interest at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code, from the date on which payment would otherwise have been made but for any required delay through the date of payment.

In the event of the Executive's Separation from Service with the Corporation due to termination by the Corporation for Cause or voluntarily by the Executive other than for Good Reason, the Corporation shall pay the Executive, within thirty (30) days following the Date of Separation from Service, any Accrued Payments. In the event of the Executive's Separation from Service with the Corporation due to termination voluntarily by the Executive other than for Good Reason, the Board of Directors, in their sole and absolute discretion, may waive the notice period required by Section 4(d) above, in which case the Executive's employment shall be deemed to terminate immediately, provided the Executive shall (1) be entitled to compensation due on account of Annual Base Salary and benefits earned up to the last date of the notice period specified by the Executive in his Notice of Separation from Service and (2) be entitled to any Variable Compensation earned and prorated during such notice period. In the event of the Executive's Separation from Service with the Corporation due to termination voluntarily by the Executive other than for Good Reason, regardless of whether or not the notice period required by Section 4(d) above is waived, any outstanding 2012 Options shall continue to vest and be exercisable up to the last date of the notice period specified by the Executive in his Notice of Separation from Service, at which time any 2012 Options that have not vested shall terminate and be of no further force and effect and any 2012 Options that are vested shall remain outstanding for 90 days at which time they shall terminate and be of no further force and effect. In the event of a Separation from Service by the Corporation for Cause, the 2012 Equity Awards shall terminate and be of no further force and effect as of Date of Separation from Service. Except as provided in this Section 6(c), and except for the Executive's rights of indemnification and insurance provided in Section 9 hereof and any vested benefits under any tax qualified pension or equity incentive compensation plans of the Corporation, and continuation of health insurance benefits on the terms and to the extent required by statute as may be applicable to the Executive, the Corporation shall have no additional obligations under this Agreement.

(d) Death

In the event of the Executive's Separation from Service with the Corporation as a result of the Executive's death, the Corporation shall pay the Executive's estate within thirty (30) days following the Date of Separation from Service, the Accrued Payments. Except as provided in this Section 6(d), and except for the Executive's rights of indemnification and insurance provided in Section 9 hereof and any vested benefits under any tax qualified pension or equity incentive compensation plans of the Corporation, the Corporation shall have no additional obligations under this Agreement.

(e) 2012 Equity Awards

(1) In the event of a Separation from Service by the Corporation other than for Cause (including a Separation from Service as a result of Disability but not death) or by the Executive for Good Reason:

(A) any “Unvested” 2012 RSUs will continue to “Vest” on the “Vesting Dates” (as such terms are defined in the Original RSU Agreement) and be settled as set forth in the Original RSU Agreement until the 90 ^th day following the last day of the Severance Period at which time any outstanding 2012 RSUs that have not yet “Vested” and been settled will terminate and be of no further force and effect; and

(B) any outstanding 2012 Options shall continue to vest and be exercisable until the 90 ^th day following the last day of the Severance Period at which time any outstanding 2012 Options will terminate and be of no further force and effect, provided that any 2012 Options that vest during the 90-day period following the Severance Period shall remain exercisable for an additional 90 days after the date of vesting at which time any such outstanding 2012 Options shall terminate and be of no further force and effect.

(2) In addition, notwithstanding anything contained in this Section 6 or elsewhere in this Agreement, in the event of Separation from Service due to death of the Executive, the estate of the Executive shall be entitled to exercise any 2012 Options which have vested as at the date of death of the Executive, at any time during the period which is twelve (12) months following the date of death of the Executive. In addition, any 2012 Equity Awards which would have otherwise vested during such twelve (12) month period shall continue to vest and be exercisable or settled, as applicable, during that period and to the extent that any unvested 2012 Options have vested during such period, the Executive's estate shall be entitled to exercise those 2012 Options within a period which starts on the day of vesting and ends twelve (12) months from the date of death of the Executive.

(f) Options

Except as expressly stipulated in Section 6(e) or Section 7 hereof, any stock options which have not vested as of the Date of Separation from Service shall terminate and be of no further force and effect as of the Date of Separation from Service and neither any period of notice nor any payment in lieu thereof upon Separation from Service hereunder shall be considered as extending the period of employment for the purposes of vesting of options notwithstanding anything to the contrary in any other agreement between the Corporation and the Executive. In the event of a Separation from Service other than by the Corporation for Cause, the Executive shall have the right to exercise any options which are vested as at the Date of Separation from Service for 90 days following such date at which time such unexercised options will expire. In the event of a Separation from Service by the Corporation for Cause, all options, vested and unvested, shall terminate and be of no further force and effect as of Date of Separation from Service and neither any period of notice nor any payment in lieu thereof upon Separation from Service hereunder shall be considered as extending the period of employment for the purposes of vesting of options notwithstanding anything to the contrary in any other agreement between the Corporation and the Executive. In addition, notwithstanding anything contained in this Section 6 or elsewhere in this Agreement, in the event of Separation from Service due to death of the Executive, the estate of the Executive shall be entitled to exercise any options which have vested as at the date of death of the Executive, at any time during the period which is twelve (12) months following the date of death of the Executive at the end of which period such options will expire. For greater clarity, the reference to options in this Section 6(f) specifically excludes the 2012 Options.

(g) Long Term Compensation

Except as expressly provided in Section 7 below, in the event of the Executive's Separation from Service for any reason, all outstanding awards granted under any LTIP shall continue to be governed by the terms set forth in such LTIP.

(h) No Further Entitlements

Except as expressly provided in this Section 6 and Section 7 below, in the event of the

Executive's Separation from Service for any reason, the Executive will not be entitled to receive any further payments, in lieu of notice or as damages for any reason whatsoever. Except as to any entitlement as expressly provided in this Agreement, the Executive hereby waives any claims the Executive may have against the Corporation for or in respect of termination pay, severance pay, or notice in lieu thereof on account of loss of office or employment.

(i) Release

Notwithstanding anything to the contrary in this Agreement, the payments and benefits described in Section 6(a) and Section 6(e) above, other than the Accrued Payments, shall commence being made to the Executive, subject to the condition that Executive has delivered to the Corporation an executed copy of a release substantially in the form attached as Schedule “D” and that such release has become effective, enforceable and irrevocable in accordance with its terms, on the date that is 30 days after the Date of Separation from Service or, to the extent required, on the date specified in Section 6(b) above.

7. Change in Control

(a) Definition

For purposes of this Agreement, a “ Change in Control ” shall mean the occurrence of any of the following events: (i) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Corporation on a consolidated basis to any person or group of related persons for purposes of Section 13(d) of the Securities Exchange Act of 1934 (the “ Exchange Act ” and a “ Group ,” respectively); (ii) the approval by the holders of the outstanding voting power of the Corporation of any plan or proposal for the liquidation or dissolution of the Corporation; (iii) any person or Group shall become the beneficial owner (within the meaning of Section 13(d) of the Exchange Act), directly or indirectly, of shares representing more than 50% of the aggregate outstanding voting power of the Corporation and such person or Group actually has the power to vote such shares in any such election; (iv) the replacement of a majority of the Board over a twelve-month period from the directors who constituted the Board at the beginning of such period, and such replacement shall not have been approved by a vote of at least a majority of the Board then still in office who were members of such Board at the beginning of such period; (v) consummation of a reorganization, merger, consolidation or similar transaction involving the Corporation and/or any entity controlled by the Corporation, or a sale or other disposition of substantially all of the assets of the Corporation, or the acquisition of assets or stock of another entity by the Corporation or any entity controlled by the Corporation (each, a “ Business Combination ”) unless following such Business Combination the shareholders of the Corporation immediately prior to the Business Combination own at least 50% of the then-outstanding equity securities and of the combined voting power of the corporation or other entity resulting from such Business Combination (including, without limitation, an entity that, as a result of such Business Combination, owns the Corporation or substantially all of the Corporation's assets either directly or through one or more subsidiaries); or (vi) a change in the status of the Corporation as a public company. Notwithstanding the foregoing, for the purposes of this Agreement, an event or series of events shall not be deemed to be a Change in Control to the extent that the application of the relevant definition of Change in Control would cause any tax to become due under Section 409A of the Code.

(b) Change-in-Control Benefits and Payments

In the event of the Executive's Separation from Service due to termination by the Corporation other than for Cause or by the Executive for Good Reason within the one (1) year period following a Change in Control, then the Executive shall be entitled to the following, notwithstanding any else in this Agreement to the contrary:

(i) payments under Section 6(a) of this Agreement at the time and in the manner set forth therein;

(ii) all 2012 Equity Awards and any other then outstanding equity compensation awards which have not yet vested as of the Date of Separation from Service shall vest immediately upon such Date of Separation from Service and the Executive shall have the right to exercise all of such options for 90 days following such Date of Separation from Service at which time they will terminate and be of no further force and effect; and

(iii) all outstanding awards granted under any LTIP shall vest 100% and any payments under Section 6.2(b) of the Schedule to the LTIP (Special Provisions Applicable to Eligible Employees Subject to Section 409A of the United States Internal Revenue Code) shall be made as set forth therein except that the Target Bonus (as defined in the LTIP) shall vest 100%;

(iv) notwithstanding anything to the contrary in this Section 7, in the event that Executive is a “specified employee” (within the meaning of Section 409A(2)(B) of the Code) on the Date of Separation from Service, no Separation Payments that are 409A Amounts shall be paid and no 2012 RSUs that are 409A amounts will be settled until the earlier of the date of the Executive's death or the first business day of the first calendar month that begins after the six-month anniversary of the Date of Separation from Service (determined in accordance with Section 5(c) hereof) at which time all 2012 RSUs that are 409A amounts will be settled and all Separation Payments which would otherwise have been paid that would otherwise have been paid during such period of delay shall be paid with Interest (as defined below) and the remaining Separation Payments shall be paid in accordance with Section 6(a) above. “ Interest ” shall mean interest at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code, from the date on which payment would otherwise have been made but for any required delay through the date of payment.

(i) If it is determined (as hereafter provided) that any payment or distribution by the Corporation to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise pursuant to or by reason of any other agreement, policy, plan, program or arrangement of the Corporation, including without limitation any stock options or other equity award, or the lapse or termination of any restriction on or the vesting or exercisability of any of the foregoing (a “ Payment ”), would be subject to the excise tax imposed by Section 4999 of the Code (or any successor provision thereto), or any interest or penalties with respect to such excise tax (such tax or taxes, together with any such interest and penalties, are hereafter collectively referred to as the “ Excise Tax ”), then the Payments shall be payable either (x) in full or (y) as to the maximum value of such lesser amount which would result in no portion of the Payments being subject to the Excise Tax and Executive shall receive the greater, on an after-tax basis, of (x) or (y) above. The reduction of the amounts payable under this Agreement, if applicable, shall be made as follows:

(1) a reduction of cash payments for which the full amount is treated as a Payment;

(2) to the extent further reduction is required by this Section 7(c)(i), cancellation of accelerated vesting (or, if necessary, payment) of cash awards for which the full amount is not treated as a Payment;

(3) to the extent further reduction is required by this Section 7(c)(i), cancellation of any accelerated vesting of equity awards; and

(4) to the extent further reduction is required by this Section 7(c)(i), a reduction of any continued employee benefits.

In selecting the equity awards (if any) for which vesting will be reduced under the third clause (3) above, awards shall be selected in a manner that maximizes the after-tax aggregate amount of Payments provided to Executive, provided that if (and only if) necessary in order to avoid the imposition of an additional tax under Code Section 280G, awards instead shall be selected in the reverse order of the date of grant. For the avoidance of doubt, for purposes of measuring an equity award's value to Executive

when performing the foregoing reduction, such equity award's value shall equal the then aggregate fair market value of the vested shares underlying the award less any aggregate exercise price less applicable taxes. Also, if two or more equity awards are granted on the same date, each award will be reduced on a pro-rata basis.

(ii) Subject to the provisions of Section 7(c)(i) of this Agreement, all determinations required to be made under this Section 7(c), including whether an Excise Tax is payable by Executive and the amount of such Excise Tax and whether and, if so, what reductions are required by Section 7(c)(i), will be made by a nationally recognized firm of certified public accountants (the “ Accounting Firm ”) chosen by the Corporation. The Corporation will direct the Accounting Firm to submit its determination and detailed supporting calculations to both the Corporation and Executive within fifteen (15) calendar days after the date of the event giving rise to the Payment or the Date of Separation from Service, if applicable, and any other such time or times as may be reasonably requested by the Corporation or Executive. If the Accounting Firm determines that an Excise Tax would be payable by Executive, it will perform the calculation set out in Section 7(c)(i). Any determination by the Accounting Firm as to the determination made under Section 7(c)(i) will be binding upon the Corporation and Executive. If the Accounting Firm determines that no Excise Tax is payable by Executive, it will, at the same time as it makes such determination, furnish Executive with an opinion that he has substantial authority not to report any Excise Tax on his federal, state, local income or other tax return. The Corporation and Executive will each cooperate with the Accounting Firm in connection with the preparation and issuance of the determination contemplated by this Section 7(c)(ii).

(iii) The fees and expenses of the Accounting Firm for its services in connection with the determinations and calculations contemplated by Section 7(c)(ii) of this Agreement will be borne by the Corporation and paid as incurred. If such fees and expenses are initially advanced by Executive, the Corporation will reimburse Executive the full amount of such fees and expenses within fifteen (15) business days after receipt from Executive of a statement therefor and reasonable evidence of his payment thereof.

(iv) As expressly permitted by Q/A #32 of the Code Section 280G regulations, with respect to performing any present value calculations that are required in connection with this Section 7, Executive and Corporation each affirmatively elect to utilize the Applicable Federal Rates (“ AFR ”) that are in effect as of the Effective Date and the Accounting Firm shall therefore use such AFRs in their determination and calculations.

8. No Mitigation

Except as expressly provided herein, the Executive shall not be required to seek other employment or otherwise mitigate the amount of any payments to be made by the Corporation pursuant to this Agreement. Except as otherwise provided herein, the payments provided pursuant to this Agreement shall not be reduced by any compensation earned by the Executive as the result of employment by another employer after the termination of the Executive's employment or otherwise. The Corporation's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Corporation may have against the Executive or others.

9. Legal Fees; Indemnification; Liability Insurance

(a) In the event of any contest or dispute between the Corporation and the Executive with respect to this Agreement or the Executive's employment hereunder, each of the parties shall be responsible for its respective legal fees and expenses.

(b) During the Term and for so long as there exists liability thereafter with regard to the Executive's activities during the Term on behalf of the Corporation, the Corporation shall indemnify the Executive to the fullest extent permitted by applicable law (and in no event in connection with the Executive's

gross negligence or willful misconduct), and shall at the Corporation's election provide the Executive with legal representation or shall advance to the Executive reasonable attorneys' fees and expenses as such fees and expenses are incurred (subject to an undertaking from the Executive to repay such advances if it shall be finally determined by a judicial decision which is not subject to further appeal that the Executive was not entitled to the reimbursement of such fees and expenses).

(c) During the Term and for six years thereafter, the Executive shall be entitled to the same directors' and officers' liability insurance coverage that the Corporation provides generally to its other directors and officers, as may be amended from time to time for such directors and officers.

10. Restrictive Covenants

The Executive agrees to execute contemporaneously with his execution of this Agreement the confidentiality and non-solicitation agreement annexed hereto as Schedule “C” (the “ Restrictive Covenants Agreement ”).

11. Injunctive Relief

It is impossible to measure in money the damages that will accrue to the Corporation or any of its affiliates in the event that the Executive breaches any of the Restrictive Covenants. In the event that the Executive breaches any such Restrictive Covenant, the Corporation or any of its affiliates shall be entitled to an injunction restraining the Executive from violating such Restrictive Covenant (without posting any bond). If the Corporation or any of its affiliates shall institute any action or proceeding to enforce any such Restrictive Covenant, the Executive hereby waives the claim or defense that the Corporation or any of its affiliates has an adequate remedy at law and agrees not to assert in any such action or proceeding the claim or defense that the Corporation or any of its affiliates has an adequate remedy at law. The foregoing shall not prejudice the Corporation's or any of its affiliates' right to require the Executive to account for and pay over to the Corporation or any of its affiliates, and the Executive hereby agrees to account for and pay over, the compensation, profits, monies, accruals or other benefits derived or received by the Executive as a result of any transaction constituting a breach of any of the Restrictive Covenants.

12. Arbitration; Forum Selection

(a) Arbitration

If there is a disagreement or dispute between the parties with respect to this Agreement or the interpretation thereof, such disagreement or dispute will be referred to binding arbitration to be conducted by a single arbitrator, if Executive and the Corporation agree upon one, otherwise by three arbitrators appointed as hereinafter set out, pursuant to the provisions of the American Arbitration Association's (the “ AAA ”) rules governing commercial arbitration in effect at the time of the arbitration, except as modified herein. A party who wishes to arbitrate shall give written notice of such intention to the other party (a “ Notice of Intention ”). The arbitrator shall be appointed by agreement by agreement of Executive and the Corporation or, in default of agreement within ten (10) Business Days of service of the Notice of Intention, each of Executive and the Corporation shall within five (5) Business Days of the expiry of the aforesaid ten (10) Business Day period, select one arbitrator and notify the other of its selection, with the third arbitrator to be chosen by the first two named arbitrators within five (5) Business Days of the expiry of the aforesaid five (5) Business Day period. If one of the parties does not so notify the other of its selection within the prescribed time, then the arbitrator selected by the other party in accordance with the above procedure shall be the sole arbitrator. The arbitration shall be held in the City of San Francisco. The procedure to be followed shall be as agreed by the parties or, in default of agreement, determined by the arbitrator(s), provided, however, that depositions or examinations for discovery will not be allowed but information may be exchanged by other means. The parties will use their best efforts to ensure that the arbitration hearing is conducted no later than sixty (60) days after the arbitrator is, or arbitrators are, selected. The final decision of the arbitrator or arbitrators or any two of the three arbitrators will be furnished to the parties in writing and will constitute a

conclusive determination of the issue in question, binding upon the parties, without right of appeal. The fees and expenses of the arbitration shall be in the discretion of the arbitrator(s). Judgment upon the award may be entered in any court of competent jurisdiction.

(b) Forum Selection

The parties hereby agree that all demands, claims, actions, causes of action, suits, proceedings and litigation between or among the parties or arising out of the employment relationship between the Executive and the Corporation not subject to the Arbitration provision in Section 12(a) hereof shall be filed, tried and litigated only in a federal or state court located in San Francisco, California. In connection with the foregoing, the parties hereto irrevocably consent to the jurisdiction and venue of such court and expressly waive any claims or defenses of lack of jurisdiction of or proper venue by such court.

13. Section 409A

(a) The intent of the parties is that payments and benefits under this Agreement comply with Section 409A of the Code and the regulations and guidance promulgated thereunder (except to the extent exempt as short-term deferrals or otherwise) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. If the Executive notifies the Corporation (with specificity as to the reason therefor) that the Executive believes that any provision of this Agreement (or of any award of compensation, including equity compensation or benefits) would cause Executive to incur any additional tax or interest under Section 409A of the Code or the Corporation independently makes such determination, the Corporation shall, after consulting with Executive and solely in the event and to the extent the Corporation's outside counsel deems it necessary to avoid any such additional tax or interest, reform such provision to comply with Section 409A of the Code. To the extent that any provision hereof is modified in order to comply with Section 409A of the Code, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit to the Executive and the Corporation of the applicable provision without violating the provisions of Section 409A of the Code.

(b) It is intended that each installment, if any, of the payments and benefits, if any, provided to the Executive under Section 6 hereof shall be treated as a separate “payment” for purposes of Section 409A of the Code. Neither the Corporation nor the Executive shall have the right to accelerate or defer the delivery of any such payments or benefits except to the extent specifically permitted or required by Section 409 of the Code.

(c) All reimbursements and in-kind benefits provided under this Agreement shall be made or provided in accordance with the requirements of Section 409A of the Code to the extent that such reimbursements or in-kind benefits are subject to Section 409A of the Code. All expenses or other reimbursements paid pursuant herewith that are taxable income to the Executive shall in no event be paid later than the end of the calendar year next following the calendar year in which Executive incurs such expense or pays such related tax. With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Section 409A of the Code, the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, the amount of expenses eligible for reimbursement, or in-kind benefits provided, during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, provided that, the foregoing clause shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code, if applicable, solely because such expenses are subject to a limit related to the period the arrangement is in effect and such payments shall be made on or before the last day of the Executive's taxable year following the taxable year in which the expense occurred.

(d) Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., “payment shall be made within thirty (30) days following the Date of Separation from Service”), the actual date of payment within the specified period shall be within the sole discretion of

the Corporation.

14. Miscellaneous

(a) Any notice or other communication required or permitted under this Agreement shall be effective only if it is in writing and shall be deemed to be given when delivered personally or four days after it is mailed by registered or certified mail, postage prepaid, return receipt requested or one day after it is sent by a reputable overnight courier service and, in each case, addressed as follows (or if it is sent through any other method agreed upon by the parties):

If to the Corporation:

c/o Open Text Corporation

275 Frank Tompa Drive

Waterloo, Ontario

Canada N2L 0A1

If to the Executive:

Mark Barrenechea

Address on file.

or to such other address as any party hereto may designate by notice to the others.

(b) This Agreement shall constitute the entire agreement among the parties hereto with respect to the Executive's employment hereunder, and supersedes and is in full substitution for any and all prior understandings or agreements with respect to the Executive's employment, including without limitation the employment agreement dated as of January 2, 2012 between the Corporation and the Executive.

(c) This Agreement may be amended only by an instrument in writing signed by the parties hereto, and any provision hereof may be waived only by an instrument in writing signed by the party or parties against whom or which enforcement of such waiver is sought. The failure of any party hereto at any time to require the performance by any other party hereto of any provision hereof shall in no way affect the full right to require such performance at any time thereafter, nor shall the waiver by any party hereto of a breach of any provision hereof be taken or held to be a waiver of any succeeding breach of such provision or a waiver of the provision itself or a waiver of any other provision of this Agreement.

(d) The parties hereto acknowledge and agree that each party has reviewed and negotiated the terms and provisions of this Agreement and has had the opportunity to contribute to its revision. Accordingly, the rule of construction to the effect that ambiguities are resolved against the drafting party shall not be employed in the interpretation of this Agreement. Rather, the terms of this Agreement shall be construed fairly as to both parties hereto and not in favor or against either party.

(e) The parties hereto hereby represent that they each have the authority to enter into this Agreement, and the Executive hereby represents to the Corporation that the execution of, and performance of duties under, this Agreement shall not constitute a breach of or otherwise violate any other agreement to which the Executive is a party. The Executive hereby further represents to the Corporation that he will not utilize or disclose any confidential information obtained by the Executive in connection with any former employment with respect to his duties and responsibilities hereunder.

(f) This Agreement is binding on and is for the benefit of the parties hereto and their respective successors, assigns, heirs, executors, administrators and other legal representatives. Neither this Agreement nor any right or obligation hereunder may be assigned by the Executive.

(g) The Corporation shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Corporation to assume this Agreement in the same manner and to the same extent that the Corporation would have been required to perform it if no such succession had taken place. As used in the Agreement, “the Corporation” shall mean both the Corporation as defined above and any such successor that assumes this Agreement, by operation of law or otherwise.

(h) Any provision of this Agreement (or portion thereof) which is deemed invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction and subject to this Section 14(h), be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions thereof in such jurisdiction or rendering that or any other provisions of this Agreement invalid, illegal, or unenforceable in any other jurisdiction. If any covenant should be deemed invalid, illegal or unenforceable because its scope is considered excessive, such covenant shall be modified so that the scope of the covenant is reduced only to the minimum extent necessary to render the modified covenant valid, legal and enforceable. No waiver of any provision or violation of this Agreement by the Corporation shall be implied by the Corporation's forbearance or failure to take action.

(i) The Corporation may withhold from any amounts payable to the Executive hereunder all federal, state, city or other taxes that the Corporation may reasonably determine are required to be withheld pursuant to any applicable law or regulation, (it being understood that the Executive shall be responsible for payment of all taxes in respect of the payments and benefits provided herein).

(j) This Agreement shall be governed by and construed in accordance with the laws of the State California without reference to its principles of conflicts of law.

(k) This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. A facsimile of a signature shall be deemed to be and have the effect of an original signature.

(l) The headings in this Agreement are inserted for convenience of reference only and shall not be a part of or control or affect the meaning of any provision hereof.

15. Disclosure

During the Term, the Executive shall promptly disclose to the Board of Directors full information concerning any interest, direct or indirect, of the Executive (as owner, shareholder, partner, lender or other investor, director, officer, employee, consultant or otherwise) or any member of his family in any business that is reasonably known to the Executive to purchase or otherwise obtain services or products from, or to sell or otherwise provide services or products to, the Corporation or to any of its suppliers or customers.

16. Return of Materials

All files, forms, brochures, books, materials, written correspondence, memoranda, documents, manuals, computer disks, software products and lists (including lists of customers, suppliers, products and prices) pertaining to the business of the Corporation or any of its subsidiaries, Affiliates, and Associates that may come into the possession or control of the Executive shall at all times remain the property of the Corporation or such subsidiary, Affiliate or Associate, as the case may be. On termination of the Executive's employment for any reason, the Executive agrees to deliver promptly to the Corporation all such property of the Corporation in the possession of the Executive or directly or indirectly under the control of the Executive. The Executive agrees not to make for his personal or business use or that of any other party, reproductions or copies of any such property or other property of the Corporation.

17. Resignation of Directorships, etc.

The Executive agrees that after Separation from Service, he will, at the request of the Board,

tender his resignation from any position he may hold as an officer or director of the Corporation or any of its subsidiaries, Affiliates or Associates, and the Executive further covenants and agrees, if so requested by the Board, not to stand for re-election to any office of the Corporation or any of its subsidiaries, Affiliates or Associates at any time following termination of the Executive's employment hereunder.

18. No Derogation

Nothing herein derogates from any rights the Executive may have under applicable law, except as set out in this section. The parties agree that the rights, entitlements and benefits set out in this Agreement to be paid to the Executive are in full satisfaction of any rights or entitlements the Executive may have as against the subsidiaries, Affiliates and Associates of the Corporation as a result of the termination of his employment with such subsidiaries, Affiliates or Associates.

19. Currency

All dollars referenced herein are in US dollars unless expressly provided to the contrary.

20. Non-Disparagement

Each of the parties to this Agreement covenants and agrees not to engage in any pattern of conduct that involves the making or publishing of written or oral statements or remarks (including, without limitation, the repetition or distribution of derogatory rumors, allegations, negative reports or comments) which are disparaging, deleterious or damaging to the integrity, reputation or goodwill of the other party, which for the purposes of the Corporation, includes its subsidiaries, Affiliates or Associates or its and their management. For the sake of clarity, nothing in this Section 20 shall prohibit statements or remarks made in the good faith performance of the Corporation or Executive's obligations under this Agreement or in accordance with applicable law.

21. No Set-Off

The existence of any claim, demand, action or cause of action of the Executive against the Corporation, whether or not based upon this Agreement, will not constitute a defense to the enforcement by the Corporation of any covenant or agreement of the Executive contained herein.

* * * * *

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

Mark Barrenechea

/s/ Mark Barrenechea

Mark Barrenechea

Open Text Corporation

/s/ Tom Jenkins

Name: Tom Jenkins

Title: Chairman & Chief Strategy Officer

Schedule A

Equity Ownership Guidelines

EQUITY OWNERSHIP GUIDELINES

In a continuing effort to align the interests of the Executives of Open Text Corporation, with the

interest of Open Text's shareholders, the Board of Directors (the “Board”) hereby establishes

the following recommended Open Text Equity Ownership guidelines (the “Guidelines”).

COVERED EXECUTIVES

These Guidelines cover Open Text's Executive Chairman/CSO, CEO/President, all NEO's (Named

Executive Officers), and the Executive Leadership Team (the “Covered Executives”).

OWNERSHIP GUIDELINES

The Board recommends that the Covered Executives (i) achieve the equity ownership levels

within five (5) years of the date of the establishment of these Guidelines (i.e., by October 1, 2014)

or, for an executive who becomes a Covered Executive after the date of these Guidelines were

adopted, within five (5) years after the date of his/her qualifications as a Covered Executive,

and (ii) hold the number of Open Text shares or share equivalents recommended for so long as

they are Covered Executives.



Executive Title	Required Equity Ownership
Executive Chairman*	4x base salary
CEO/President*	4x base salary
Executive Leadership Team	1x base salary

* The share ownership level for new incumbents to the Executive Chairman and CEO/President roles will be reviewed and approved by the Compensation Committee at that time.

Covered Executives may achieve these Guidelines through the exercise of stock option awards, purchases under the Open Text Employee Stock Purchase Plan (ESPP), through an open market purchase made in compliance with applicable securities laws or through any equity plan(s) Open Text may adopt from time to time providing for the acquisition of Open Text shares. Until the Guideline is met, it is recommended that a Covered Executive retains a portion of any stock option exercise or LTIP award in shares of Open Text stock to contribute to these Guidelines.

For compliance guidance purposes, the shares will be valued at the greater of their book value (i.e., purchase price) or the current market value, whichever is greater. The Compensation Committee of the Board will review the recommended executive ownership guideline achievement levels on an annual basis.

Schedule B

Benefits

Benefits to be enjoyed by the Executive during the term of this Agreement shall include, but are not limited to:


(i)	reimbursement of reasonable cell phone expenses consistent with corporate policy;


(ii)


(iii)	each year, you will be entitled to a US $5,000 perquisite allowance which may be used for reimbursement of the following types of services or fees:


•	Financial planning


•	Tax planning


•	Estate planning


•	Athletic/Health Club


•	Additional Executive Life Insurance


(iv)	the services of Medisys Health Group Inc ., or a provider of your choice (including your personal physician) shall be paid to provide annual mandatory and regular Health Examinations to the Senior Executive Team.


(v)	U.S. Medical benefits insurance under the Corporation's expatriate policy, subject to applicable taxes.

(vi)

Reimbursement of any automobile lease payments and other automobile expenses made or incurred by the Executive for use of an automobile in connection with the performance of his/her duties hereunder not to exceed US $950.00 per month or US $11,400 per year (the “Aggregate Reimbursement Limit”). The Aggregate Reimbursement Limit shall be reviewed every two (2) years on the anniversary of the Agreement. No monthly automobile lease payment and other related expense shall exceed 1/12 ^th of the stipulated Aggregate Reimbursement Limit in any given year of the term of this agreement.


(vii)	Reimbursement of reasonable fuel costs in lieu of a mileage charge associated with Executive operating the vehicle in the performance of his duties.

Schedule C

Restrictive Covenants Agreement

EMPLOYEE CONFIDENTIALITY AND

NON-SOLICITATION AGREEMENT

As an employee of Open Text Corporation or any related or affiliated company (the “Company”):

A. I understand and agree that I have a responsibility to protect and avoid the unauthorized use or disclosure of confidential information of the Company; and

B. I have a responsibility not to solicit or entice away from the Company any customer of the Company or any employee of the Company.

I. Confidential Information . For purposes of this Agreement, the term “confidential information” means all information that is not generally known and which I obtained from the Company, or learn, discover, develop, conceive or create during the term of my employment with the Company, and which relates directly to the business or to assets of the Company. Confidential information includes, but is not limited to: inventions, discoveries, know-how, ideas, computer programs, designs, algorithms, processes and structures, product information, research and development information, lists of clients and other information related thereto, financial data and information, business plans and processes, and any other information of the Company that the Company informs me, or which I should know by virtue of my position or the circumstances in which I learned it, is to be kept confidential. Confidential information also includes information obtained by the Company in confidence from its vendors or its clients. Confidential information may or may not be labeled as “confidential”. If I am unsure as to whether information is “confidential”, I will ask my manager for assistance.

Confidential information does not include any information that has been made generally available to the public. It also does not include any general technical skills or general experience gained by me during my employment with the Company. I understand that the Company has no objection to my using these skills and experience in any new business venture or employment following the cessation of my employment with the Company.

I recognize and acknowledge that in the course of my employment with the Company I may obtain knowledge of confidential and proprietary information of a special and unique nature and value and I may become familiar with trade secrets of the Company relating to the conduct and details of the Company's business. While I am employed by the Company and for a period of three years following the cessation of my employment I agree:

A. to keep confidential and hold in secrecy and not disclose, divulge, publish, reveal or otherwise make known, directly or indirectly, or suffer or permit to be disclosed, divulged, published, revealed or otherwise made known to any person whatsoever, or used (except for the benefit and proper purposes of the Company), and shall faithfully do all in my power to assist the Company in holding in secrecy all of the Company's confidential information as defined above.

B. to keep confidential and hold in secrecy and not disclose, divulge, publish, reveal or otherwise make known, directly or indirectly, or suffer or permit to be disclosed, divulged, published, revealed or otherwise made known to any person whatsoever, or used (except for the benefit and proper purposes of the Company) any and all secrets or confidential information related to the Company's activities or affairs which I now

know or which are hereafter disclosed or made known to me or otherwise learned or acquired by me, including information respecting the business affairs, prospects, operations or strategic plans respecting the Company, which knowledge I gain in my capacity as an employee of the Company and which knowledge is not publicly available or disclosed.

II. Agreement Not to Solicit . I agree that while I am an employee of the Company and for six (6) months thereafter that I will:

A. not solicit or entice or attempt to solicit or entice away from the Company any of the employees of the Company to enter into employment or service with any person, business, firm or corporation other than the Company;

B. not solicit or entice or attempt to solicit or entice away from the Company any customer or any other person, firm or corporation dealing with the Company.

III. Return of Documents . Upon the cessation of my employment with the Company for any reason, I agree to return to the Company all records, documents, memoranda, or other papers, copies or recordings, tapes, disks containing software, computer source code listings, routines, file layouts, record layouts, system design information, models, manuals, documentation and notes as are in my possession or control. I acknowledge and agree that all such items are strictly confidential and are the sole and exclusive property of the Company.

IV. General .

A. I further represent and warrant that I have not entered into any Agreement with any previous or present employer which would prevent me from accepting employment with the Company or which would prevent me from lawfully executing this Agreement.

B. I understand that the obligations outlined in this Agreement are the concern and responsibility of all employees of the Company. I agree to report in writing any violations of these policies to my manager or to the Vice-President of Human Resources.

C. All the provisions of this Agreement will be deemed severable, and if any part of any provision is held illegal, void or invalid under applicable law, such provision may be changed to the extent reasonably necessary to make the provision, as so changed, legal, valid and binding. If any provision of this Agreement is held illegal, void or invalid in its entirety, the remaining provisions of this Agreement will not in any way be affected or impaired, but will remain binding in accordance with its terms.

D. This Agreement and all the rights and obligations arising herefrom shall be interpreted and applied in accordance with the laws of the Province of Ontario and in the courts of the Province of Ontario there shall be exclusive jurisdiction to determine all disputes relating to this Agreement and all the rights and obligations created hereby. I hereby irrevocably attorn to the jurisdiction of the courts of the Province of Ontario.

E. I acknowledge that my employment with the Company is contingent on my acceptance and my observance of this Agreement, and that such employment is adequate and sufficient consideration to bind me to all of the covenants and agreements made by me under this Agreement.

Gordon A. Davies Mark Barrenechea

Print Name of Witness Print Name of Employee

/s/ Gordon A. Davies /s/ Mark Barrenechea

Signature of Witness Signature of Employee

Date: October 30, 2012

Schedule D

GENERAL RELEASE

1. Release of Claims and Waiver of Rights.

(a) In consideration of any payments and benefits being provided to me under Sections 6(a) and 6(e) of the employment agreement (the “Employment Agreement”) dated October 30, 2012, as it may have been amended to the date hereof, between me and Open Text Corporation (the “Company”), those payments and benefits being good and valuable consideration, the adequacy and sufficiency of which are acknowledged by me (the “Payments”), I, Mark J. Barrenechea, hereby release, remise and acquit Company, its present and past parents, subsidiaries and affiliates, their successors, assigns, benefit plans and/or committees, and their respective present or past officers, directors, managers, supervisors, employees, shareholders, attorneys, advisors, agents and representatives in their individual and corporate capacity, and their successors and assigns (the “Releasees”), from, and hold them harmless against, any and all claims, obligations, or liabilities (including attorneys, fees and expenses), asserted or unasserted, known or unknown, that I, my heirs, successors or assigns have or might have, which have arisen by reason of any matter, cause or thing whatsoever related to my employment (or termination of my employment) with the Company on or prior to the date on which this General Release is signed.

(b) The terms “claims, obligations, or liabilities” (whether denominated claims, demands, causes of action, obligations, damages or liabilities) include, but are not limited to, any and all claims under any contract with the Company, claims of age, disability, race, religion, national origin, sex, retaliation, and/or other forms of employment discrimination, breach of express or implied contract, breach of employee handbook, practices or procedures, libel, slander, intentional tort or wrongful dismissal, claims for reinstatement or reemployment, arising under any federal, state, or local common or statutory law; claims for unpaid salary, commission or fringe benefits; or any other statutory claim before any state or federal court, tribunal or administrative agency, arising out of or in any way related to my employment relationship with the Company and its affiliates and the termination of that relationship. I will not file or permit to be filed on my behalf any such claim.

(c) This General Release constitutes, among other things, a waiver of all rights and claims I may have under the Age Discrimination in Employment Act of 1967 (29 U.S.C. 621, et seq.) (“ADEA”), the Americans with Disabilities Act of 1990, the Family and Medical Leave Act of 1993, Title VII of the United States Civil Rights Act of 1964, all as amended including the amendment set forth in 42 U.S.C. § 1981 concerning damages in cases of intentional discrimination in employment, the California Fair Employment and Housing Act, and Labor Code section 201, et seq. and section 970, et seq., and any other comparable national or state laws, all as amended. I agree that because this General Release specifically covers known and unknown claims, I am waiving my rights under Section 1542 of the California Civil Code, which states: "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor."

(d) Notwithstanding the preceding paragraphs (b) or (c) or any other provision of this Agreement, this General Release is not intended to interfere with my right to file a charge with the Equal Employment Opportunity Commission (the “EEOC”) in connection with any claim I believe I may have against the Company or its affiliates. However, by executing this General Release, I hereby waive the right to recover in any proceeding I may bring before the EEOC or any state human rights commission or in any proceeding brought by the EEOC or any state human rights commission on my behalf. In addition, this General Release is not intended to interfere with my right to challenge that my waiver of any and all ADEA claims pursuant to this General Release is a knowing and voluntary waiver, notwithstanding my specific representation that I have entered into this General Release knowingly and voluntarily.

(e) This General Release is for any relief, no matter how denominated, including, but not limited to, injunctive relief, wages, back pay, front pay, compensatory damages, or punitive damages.

(f) This General Release shall not apply to any rights in the nature of indemnification or payments under (i) applicable law, (ii) the charter, bylaws or operating agreements of the Company, (iii) the indemnification agreement dated January 2, 2012 or (iv) applicable directors and officers insurance policies which I may have with respect to claims against me relating to or arising out of my employment with the Company and its affiliates or my service on their respective boards of directors, or any vested benefit to which I am entitled under any tax qualified pension plan of the Company or its affiliates, COBRA continuation coverage benefits or any other similar benefits required to be provided by statute. Furthermore, notwithstanding anything to the contrary contained in this Section 1, I do not release any of the Releasees from the Company's obligation to timely provide me with all payments and benefits to which I am entitled pursuant to the terms of the Employment Agreement, or any other obligations of the Company under the Employment Agreement.

2. Representations and Covenants. I hereby represent and agree to all of the following:

(a) I have carefully read this General Release.

(b) I understand it fully.

(d) Before executing this General Release, I had twenty-one (21) days to consider my rights and obligations under this General Release.

(e) The period of time I had to consider my rights and obligations under this General Release was reasonable.

(f) Before signing this General Release, I was advised to consult with an attorney and given a reasonable period of time to do so and in executing this General Release have not relied on any representation or statement not set forth herein.

(g) Execution of this General Release and the General Release becoming enforceable (in accordance with paragraph (h) below) within 30 days from the date of my “separation from service” (as determined under Section 409A of the Internal Revenue Code of 1986, as amended, and the rules and regulations issued thereunder) is a condition to the Payments, which payments and benefits are in addition to anything of value to which I am already entitled to receive from the Company and its affiliates.

(h) For a period of seven (7) days following the date on which I sign this General Release, I may revoke it. Any such revocation must be made in writing and received by the Corporate Secretary of the Company, by the seventh day following the date on which I sign this General Release. The Company's obligation to pay the consideration as set forth in Section 1 above shall not become effective or enforceable until this seven (7) day revocation period has expired without my having exercised my right to revoke.

(i) There are no pending lawsuits, charges, employee dispute resolution proceedings, administrative proceedings or other claims of any nature whatsoever, that I have brought (and which are pending) against any Releasee, in any state or federal court, before any agency or other administrative body or in any other forum.

(j) I am not aware of any material violation of any laws or Company policies or procedures by a Company employee or officer that has not been reported to Company officials .

(k) If I violate my obligations under the Employment Agreement and such violation causes material harm to the Company, I understand that, in addition to other relief to which the Company may be entitled, the

Company shall be entitled to cease providing the Payments and benefits provided to me pursuant to Section 1 above unless such violation is cured (if capable of being cured) within 30 days of notification by the Company to me of such violation (and, following such cure, all suspended payments shall be made in a single lump sum), and this General Release will remain in full force and effect.

(l) If I should hereafter make any claim or demand or commence or threaten to commence any action, claim or proceeding against the Releasees with respect to any matter, cause or thing which is the subject of the release under Section 1 of this General Release, this General Release may be raised as a complete bar to any such action, claim or proceeding, and the applicable Releasee may recover from me all costs incurred in connection with such action, claim or proceeding, including attorneys' fees.

(m) If any provision of this General Release is declared illegal, invalid, or unenforceable by any court of competent jurisdiction and cannot be modified to be enforceable, such provisions will immediately become null and void, leaving the remainder of this General Release in full force and effect.

(n) This General Release shall be governed by and construed in accordance with the laws of the State of California, without regard to conflicts of laws principles.

4. Declaration. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.

___________________________ Date: ___________________

Mark J. Barrenechea

Acknowledged before me this ______________

________________, NOTARY PUBLIC

Exhibit 10.4

AMENDING AGREEMENT TO THE

RESTRICTED SHARE UNIT GRANT AGREEMENT

This Amending Agreement is made as of the 30 ^th day of October, 2012 between Open Text Corporation (the “Corporation”) and Mark J. Barrenechea (the “Executive”).

Whereas the Corporation and the Executive entered into an employment agreement dated as of January 2, 2012 (the “Original Employment Agreement”);

Whereas the Corporation granted to the Executive 33, 333 Restricted Share Units (the “RSU Grant”) pursuant to the Original Employment Agreement and detailed more fully in the Restricted Share Unit Grant Agreement dated as of February 3, 2012 (the “Original RSU Agreement”);

Whereas the Corporation and the Executive have entered into a new employment agreement, entered into contemporaneously with this Amending Agreement and dated as of the date set forth above (the “New Employment Agreement”); and

Whereas the Corporation and the Executive desire to amend the Original RSU Agreement such that the terms and conditions of the RSU Grant are consistent with the terms and conditions of the Executive's employment with the Corporation, as set forth in the New Employment Agreement.

Now, therefore, the parties hereto covenant and agree with each other as follows:


1.	Sections 7, 8, 9, 10 and 11 of the Original RSU Agreement are deleted in their entirety and the following shall be inserted in lieu thereof and the remaining Sections of the Original RSU Agreement shall be re-numbered accordingly:

“In the event the Executive's employment with the Corporation is terminated, whether by death, Disability, voluntary termination, Cause, Good Reason or otherwise, the vesting, ability to exercise, termination and acceleration of vesting (if any) of the RSUs, in each case, shall be governed by the terms and conditions set forth in the New Employment Agreement.”


2.	All definitions set forth in Schedule “A” and used in Sections 7, 8, 9, 10 or 11 of the Original RSU Agreement are deleted in their entirety. To the extent any such definition is necessary, the definitions set forth in the New Employment Agreement shall prevail and control.


3.	Schedule “B” of the Original RSU Agreement is deleted in its entirety.


4.	In the event of any uncertainty or inconsistency in the terms and conditions of the RSU Grant, the provisions of the New Employment Agreement, as amended or modified from time to time, shall prevail and control.


5.	Except as specifically set forth herein, the Original RSU Agreement shall remain in full force and effect.


6.	All capitalized terms used herein but not defined shall have the meanings assigned to them in the Original RSU Agreement or the New Employment Agreement.

In witness whereof the parties hereto have executed this Amending Agreement on the date first written above.



OPEN TEXT CORPORATION			MARK BARRENECHEA
/s/ Gordon A. Davies			/s/ Mark Barrenechea
Name: Gordon A. Davies			Mark Barrenechea
Title: Chief Legal Officer and Corporate Secretary

Exhibit 31.1

CERTIFICATIONS

I, Mark Barrenechea, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of Open Text Corporation;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Securities Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and


5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.




By:		/s/ M ARK B ARRENECHEA
	Mark Barrenechea President and Chief Executive Officer

Date: November 1, 2012

Exhibit 31.2

CERTIFICATIONS

I, Paul McFeeters, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of Open Text Corporation;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Securities Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Securities Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and


5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.




By:		/s/ P AUL M C F EETERS
	Paul McFeeters Chief Financial Officer and Chief Administrative Officer

Date: November 1, 2012

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Open Text Corporation (the “Company”) for the quarter ended September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark Barrenechea, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ M ARK B ARRENECHEA

Mark Barrenechea

President and Chief Executive Officer

Date: November 1, 2012

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Open Text Corporation (the “Company”) for the quarter ended September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Paul McFeeters, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ P AUL M C F EETERS

Paul McFeeters

Chief Financial Officer and Chief Administrative Officer

Date: November 1, 2012