Atari 2009 Annual Report Download - page 155

ANNUAL FINANCIAL REPORT – REGISTRATION DOCUMENT
155
IN ADDITION TO THE ABOVE FINANCIAL INSTRUMENTS CARRYING RIGHTS TO THE COMPANY'S
CAPITAL, THE COMPANY HAS GIVEN THE FOLLOWING COMMITMENTS AS PART OF THE
ACQUISITION OF CRYPTIC STUDIOS:
Debt obligation granted to holders of Cryptic Studios stock options and a minority shareholder in
relation to the earn-out payment for the acquisition of Cryptic Studios
As part of the acquisition of Cryptic Studios, on December 12, 2008 the Company granted a debt obligation to the
holders of Cryptic Studios stock options as consideration for the cancellation of their options, giving rise to the same
rights as those granted to convertible bond holders in relation to the earn-out payment for the acquisition of Cryptic
Studios. In accordance with this obligation, the holders of the cancelled Cryptic Studios stock options are entitled to
receive a maximum of 407,603 new shares issued under an offering reserved for said option holders, to be paid up by
set-off. The exact number of new shares to be issued will be determined based on the revenue generated for the
Champions Online and Star Trek Online video games. The amount of the debt will be indexed to upward or downward
changes in the reference price for Atari shares between the completion date of the Cryptic Studios acquisition and the
settlement date (corresponding to March 1, 2011). In any event, the full payment of the portion of the earn-out payment
settled in new Atari shares would result in the issue by the Company of 407,603 new Atari shares.
The Cryptic Studios stock option holders have undertaken to take up the above-described rights issue which will be
submitted for approval at an Extraordinary Shareholders‟ Meeting to be held by the March 1, 2011 debt settlement date.
This will result in the issue of a maximum of 407,603 new shares of the Company and will be reserved for the
beneficiaries of the debt obligation. The issue will be paid up by offsetting the debt corresponding to the earn-out
payment and the issue price will represent the average of the prices quoted for Atari shares over the ten trading days
preceding the earn-out payment.
If the Company‟s shareholders vote against the rights issue the debt will be settled in cash for an amount corresponding
to the average of the prices quoted for Atari shares over the ten trading days preceding the March 1, 2011 earn-out
payment date, for an amount representing no more than 700% of the €5.90 reference price set for Atari shares at the
date Cryptic Studios was acquired.
In addition, as consideration for the transfer of a minority shareholder‟s interest in Cryptic Studios, the Company has
granted a debt obligation to that shareholder, who was unable to enter into the Stock Purchase and Transfer Agreement
at the time of the acquisition. This obligation gives the minority shareholder concerned the same rights as those granted
to the convertible bond holders in relation to the earn-out payment for the acquisition of Cryptic Studios, as he would
have received convertible bonds as consideration for the transfer of his Cryptic Studios shares if he had transferred
them at the time of the company‟s acquisition. The payment of the debt would entitle the shareholder to receive a
maximum of 1,234 new shares in the Company, issued under a rights offering reserved for him and paid up by
capitalizing the debt due to him in connection with the earn-out payment for the acquisition of Cryptic Studios.
Cryptic bonus
As part of the December 2008 acquisition of Cryptic Studios it was agreed that Atari could pay a bonus if revenue targets
for the Champions Online and Star Trek Online video games were exceeded. The bonus represents a maximum amount
of USD 20 million and would be payable as follows:
 either in cash, with half the amount payable by the end of November 2010 and the remaining half payable by
mid-May 2011; or
 by issuing, at the option of the Company, new common stock of the Company through a rights issue reserved
for the beneficiaries of the bonus.