sc13d

/s/ JAVAID AZIZ

Javaid Aziz

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QzTy2Twy7G8E3ENcst+rkmnD5nc1FrARGU13po9WiHDKBpi87k0t21aBplmkwMHG O3G6QuvMU1lE278Yhr31hg== 0000950137-08-014417.txt : 20081215 0000950137-08-014417.hdr.sgml : 20081215 20081215172701 ACCESSION NUMBER: 0000950137-08-014417 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20081215 DATE AS OF CHANGE: 20081215 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Aziz Javaid CENTRAL INDEX KEY: 0001452070 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: BUSINESS PHONE: 44-7976-105555 MAIL ADDRESS: STREET 1: APARTMENT 426, 6TH FLOOR, BLOCK D CITY: 6 IMPASSE DE LA FONTAINE STATE: O9 ZIP: 052917 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CRYPTOLOGIC LTD CENTRAL INDEX KEY: 0001094036 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-59141 FILM NUMBER: 081250596 BUSINESS ADDRESS: STREET 1: MARINE HOUSE, 3RD FLOOR STREET 2: CLANWILLIAM PLACE CITY: DUBLIN STATE: L2 ZIP: 2 BUSINESS PHONE: 416-545-1455 MAIL ADDRESS: STREET 1: MARINE HOUSE, 3RD FLOOR STREET 2: CLANWILLIAM PLACE CITY: DUBLIN STATE: L2 ZIP: 2 FORMER COMPANY: FORMER CONFORMED NAME: CRYPTOLOGIC INC DATE OF NAME CHANGE: 19990827 SC 13D 1 c48243sc13d.htm SCHEDULE 13D sc13d

CUSIP No. G3159C109


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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULES 13d-1(a) AND AMENDMENTS THERETO FILED
PURSUANT TO RULE 13d-2(a)

(Amendment No. )*

Cryptologic Limited

(Name of Issuer)

Common Shares

(Title of Class of Securities)

G3159C109

(CUSIP Number)

Michael M. Froy
Sonnenschein Nath & Rosenthal LLP
7800 Sears Tower
Chicago, Illinois 60606
(312) 876-8000

(Name, Address and Telephone Number of Person Authorized

to Receive Notices and Communications)

December 4, 2008

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Section 240.13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.


CUSIP No.		G3159C109

NAMES OF REPORTING PERSONS

Javaid Aziz

CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP

(a) o

(b) o

SEC USE ONLY

SOURCE OF FUNDS (SEE INSTRUCTIONS)

CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)

CITIZENSHIP OR PLACE OF ORGANIZATION

SOLE VOTING POWER

NUMBER OF

1,274,810*

SHARED VOTING POWER

BENEFICIALLY

OWNED BY

EACH

SOLE DISPOSITIVE POWER

REPORTING

PERSON

1,274,810*

WITH

SHARED DISPOSITIVE POWER

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

1,274,810*

CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

9.8%

TYPE OF REPORTING PERSON


*		Comprised of (i) 550,000 Common Shares, (ii) currently exercisable options to acquire up to an additional 489,394 Common Shares acquired on December 4, 2008 upon consummation of the transactions contemplated by that certain Stock Purchase Agreement dated as of December 4, 2008 as described herein, and (iii) currently exercisable options to acquire up to an additional 235,416 Common Shares acquired from the Issuer pursuant to executive compensation arrangements.

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CUSIP No. G3159C109

ITEM 1. SECURITY AND ISSUER

This statement on Schedule 13D (this “Schedule 13D”) relates to the Common Shares, no par value per share (the “Common Shares”), of Cryptologic Limited, a Guernsey, Channel Islands corporation (the “Issuer” or the “Company”), the principal executive offices of which are located at Marine House, 3rd Floor, Clanwilliam Place, Dublin 2, Ireland.

ITEM 2. IDENTITY AND BACKGROUND

(a) - (c) This Schedule 13D is being filed on behalf of Javaid Aziz. In this Schedule 13D, Mr. Aziz is sometimes referred to as the “Reporting Person”. Javaid Aziz is a retired investor. Mr. Aziz served as President and Chief Executive Officer of the Issuer from April 2007 to February 2008. His address is Apartment 426, 6th Floor, Block D, Park Palace 6 Impasse de la Fontaine, Monaco.

(d) and (e) During the last five years, the Reporting Person has not been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or funding any violation with respect to such laws.

(f) The Reporting Person is a citizen of the United Kingdom.

ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION

The total purchase price of the 550,000 Common Shares and the option to acquire up to 489,934 Common Shares beneficially owned by the Reporting Person was $1,265,000. The source of funds was personal funds of the Reporting Person. The Reporting Person also holds options to acquire up to an additional 525,000 Common Shares from the Issuer pursuant to executive compensation arrangements in connection with the Reporting Person’s service as President and Chief Executive Officer of the Issuer from April 2007 to February 2008, of which options to acquire up to 235,416 Common Shares are currently exercisable.

ITEM 4. PURPOSE OF TRANSACTION

The Reporting Person acquired beneficial ownership of the Common Shares disclosed herein as part of his investment activities.

On December 4, 2008, Mr. Aziz entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Pabrai Investment Fund 4, L.P. (“PIF4”), Pabrai Investment Fund II, L.P. (“PIF2”), Pabrai Investment Fund 3, Ltd. (“PIF3”) and Dalal Street LLC (“Dalal Street”, and collectively with PIF4, PIF3 and PIF2, the “Sellers”). Pursuant to the Stock Purchase Agreement, Mr. Aziz acquired from the Sellers 550,000 Common Shares of the Company for an aggregate purchase price of $1,265,000. Mr. Aziz also has the option (the “Option”) to purchase up to 489,394 Common Shares of the Company (collectively, the “Option Shares”) from the Sellers on the following terms and conditions: (a) beginning on December 4, 2008 and continuing through December 17, 2008, Mr. Aziz has the option to purchase all or a portion of the Option Shares, in increments of 10,000 shares, at a price equal to $2.12 per share; and (b)

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CUSIP No. G3159C109

beginning on December 18, 2008 and continuing through April 30, 2009, Mr. Aziz has the option to purchase all or a portion of any remaining Option Shares, in increments of 10,000 shares, at a price equal to $2.12 per share; provided, however, that if Mr. Aziz exercises such option on a date when the closing sale price per share of the Common Shares of the Company as reported in the NASDAQ on such date (the “Closing Price”) is greater than $2.12 per share (the amount of such difference being called the “Excess Amount”), then the purchase price per share shall be equal to (i) $2.12 plus (ii) 50% of the Excess Amount. The Option expires at 12:00 am Pacific Standard Time, May 1, 2009. In addition, beginning on December 18, 2008 and continuing through April 30, 2009, the Sellers may not in the aggregate sell in excess of an average of 10,000 Common Shares of the Company per calendar day to any individual or entity other than Mr. Aziz. In addition, prior to the Sellers selling any such shares to any individual or entity other than Mr. Aziz, the Sellers shall first provide Mr. Aziz with an opportunity to purchase such shares on terms and conditions satisfactory to the Sellers. The foregoing summary of the Stock Purchase Agreement is qualified in its entirety by reference to that document, a copy of which is filed as Exhibit 1 to this Schedule 13D and is incorporated by reference herein.

The Reporting Person also holds options to acquire up to an additional 525,000 Common Shares from the Issuer pursuant to executive compensation arrangements in connection with the Reporting Person’s service as President and Chief Executive Officer of the Issuer from April 2007 to February 2008. Such holdings are comprised of (i) options to acquire 500,000 Common Shares at an exercise price of CDN$28.66 per share, of which options to acquire 218,750 Common Shares are currently exercisable, and (ii) options to acquire 25,000 Common Shares at an exercise price of US$18.56 per share, of which options to acquire 16,666 Common Shares are currently exercisable. In the event there is a transaction resulting in a change in control of the Issuer prior to February 28, 2009 (as described in the executive compensation arrangement documentation), then all such options shall become fully vested and exercisable. All such options expire on February 28, 2009.

The Reporting Person expects to continuously review his investment in the Issuer and, depending on various factors, including but not limited to, his evaluation of the business and prospects of the Issuer, the price of the Common Shares, the terms and conditions of the transaction, prevailing market conditions and such other considerations as the Reporting Person deems relevant, may at any time or from time to time, and subject to any applicable regulatory requirements, acquire additional Common Shares or other securities convertible into or exercisable or exchangeable for Common Shares from time to time on the open market, in privately-negotiated transactions, or upon the exercise or conversion of securities convertible into or exercisable or exchangeable for Common Shares.

The Reporting Person also may, at any time, subject to compliance with any applicable regulatory requirements, dispose of some or all of its, his Common Shares, or such other securities he owns or may subsequently acquire depending on various factors, including but not limited to, his evaluation of the business and prospects of the Issuer, the price of the shares, the terms and conditions of the transaction and prevailing market conditions, as well as liquidity and diversification objectives. In addition, the Reporting Person may, from time to time, enter into stock trading plans intended to satisfy the requirements of Securities and Exchange Commission Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (“Exchange Act”).

The Reporting Person, together with his representatives, intends, at any time and from time to time, to engage in a proactive dialogue with members of the Board of Directors and

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CUSIP No. G3159C109

management of the Issuer, as well as with other stockholders and other interested parties, regarding the undervaluation and strategic configuration of the Issuer, potential strategic alternatives available to the Issuer to increase stockholder value and other matters relating to the Reporting Persons’ investment in the Common Shares of the Issuer, including, without limitation, the business, operations, governance, management, strategy and future plans of the Issuer. The Reporting Person also intends to participate in and influence the affairs of the Issuer through the exercise of his voting rights with respect to his shares of Issuer stock.

On December 4 and 5, 2008, the Reporting Person sent the Chairman of the Board of the Issuer correspondence, a copy of which is attached as Exhibit 2 hereto and incorporated herein by reference, expressing his view that the Company should promptly execute on a recovery plan designed to stabilize revenues, streamline the Issuer’s size and operations, achieve significant cost reductions, more effectively manage cash flows, review and simplify the Issuer’s legal, tax and management structure, reduce the number of locations from which the Issuer conducts its operations, reduce the number of exchanges on which the Common Shares are traded, and take other steps to improve the Issuer’s operating and financial performance. The Reporting Person also expressed his desire to serve on the Board of Directors of the Issuer along with a second appointee, with such persons replacing two existing directors. The Reporting Person intends to continue this dialogue and closely monitor his investment in the Issuer. If a satisfactory response is not received, the Reporting Person intends to consider all alternatives available to him, including, without limitation, with respect to the 2009 annual meeting of stockholders of the Issuer. As of the date of this Schedule 13D, the Reporting Person has not received any material, non-public information from the Issuer.

Except as indicated herein, the Reporting Person does not have any plan or proposal that related to or would result in any of the transactions or other matters specified in clauses (a) through (j) of Item 4 of Schedule 13D. The Reporting Person may, at any time and from time to time, review or reconsider his position and/or change his purpose and/or formulate plans or proposals with respect thereto.

ITEM 5. INTEREST IN SECURITIES OF THE ISSUER

(a) - (b) The following table sets forth the number of Common Shares beneficially owned by the Reporting Person as of the close of business on December 12, 2008, and the percentage of the outstanding Common Shares that such number represents. Beneficial ownership is determined according to the rules of the SEC and generally includes any shares over which a person possesses sole or shared voting or investment power as well as any shares that such person has the right to acquire within 60 days of the applicable date, including through the exercise of options or other rights. Common Shares not currently outstanding which are subject to options, warrants or other rights that are exercisable or convertible within 60 days after the applicable date are deemed outstanding for the purpose of calculating the percentage ownership of the person holding those options, warrants or other rights but are not treated as outstanding for the purpose of calculating the percentage ownership of any other person. Accordingly, the applicable percentage ownership for the Reporting Person is based upon 12,955,193 Common Shares representing the sum of the 12,719,777 Common Shares outstanding as of November 21, 2008 as reported by the Issuer in its Form 6-K filed with the SEC on December 1, 2008, plus the 235,416 Common Shares not currently outstanding subject to exercisable options acquired by the Reporting Person from the Issuer pursuant to executive

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CUSIP No. G3159C109

compensation arrangements. Such calculation does not reflect Exchangeable Shares of the Issuer, shares subject to options held by the Reporting Person that are not exercisable within 60 days of the date of this Schedule 13D, or shares subject to options or rights held by any other person. Except as disclosed herein, the Reporting Person has sole investment and voting power with respect to the shares described below.


	Common Shares Beneficially Owned
	Common		Option
Reporting Person	Shares		Shares			Total		Percent
Javaid Aziz		550,000		724,810	(1)		1,274,810		9.8	%


(1)		Comprised of (i) the right to acquire up to 489,394 Common Shares upon exercise of the Option, and (ii) currently exercisable options to acquire up to an additional 235,416 Common Shares acquired from the Issuer pursuant to executive compensation arrangements over which the Reporting Person may be deemed to have investment and/or voting power. The Option and compensatory options are summarized in Item 4 above, which disclosure is incorporated herein by reference.

(c) Except as described in Item 4 hereof, which is incorporated herein by reference, neither of the Reporting Persons has engaged in any transaction during the past 60 days in any Common Shares.

(d) Except as described herein, no one other than the Reporting Person has the right to receive dividends from, or the proceeds from the sale of, any of the securities of the Issuer reported on this Schedule 13D.

(e) Not applicable.

ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS, OR RELATIONSHIPS RESPECT TO SECURITIES OF THE ISSUER

Except as set forth in Items 4 and 5 hereof, which are incorporated herein by reference, or as described in this Item 6, to the knowledge of the Reporting Person, there are no other contracts, arrangements, understandings or relationships (legal or otherwise) between the person named in Item 2 and any person with respect to any securities of the Issuer, including but not limited to, transfer or voting of any of the securities of the Issuer, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies. The Reporting Person has not taken any actions that would cause him to be a member of a “group” for purposes of Section 13(d) of the Exchange Act. The foregoing summary is qualified in its entirety by reference to the full text of Exhibit 1 to this Schedule 13D, which exhibit is incorporated herein by reference.

ITEM 7. MATERIAL TO BE FILED AS EXHIBITS

See Exhibit Index appearing following the signature page hereto, which is incorporated herein by reference.

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CUSIP No. G3159C109

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete, and correct.

Date: December 15, 2008

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CUSIP No. G3159C109

EXHIBIT INDEX


Number		Description

1.		Stock Purchase Agreement, dated as of December 4, 2008, by and between the Reporting Person and Pabrai Investment Fund 4, L.P., Pabrai Investment Fund II, L.P., Pabrai Investment Fund 3, Ltd. and Dalal Street LLC.

2.		Correspondence, dated December 4 and 5, 2008, from the Reporting Person to the Issuer.

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EX-1 2 c48243exv1.htm EX-1 exv1

EXHIBIT 1

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (“Agreement”), entered into as of December 4, 2008 (the "Effective Date”), by and among Javaid Aziz or an affiliate(s) or an associate(s) (the “Buyer”) and Pabrai Investment Fund 4, L.P. (“PIF4”), Pabrai Investment Fund II, L.P. (“PIF2”), Pabrai Investment Fund 3, Ltd. (“PIF3”) and Dalal Street LLC (“Dalal Street”, and collectively with PIF4, PIF3 and PIF2, the “Sellers”).

RECITALS:

A. The Sellers own an aggregate of 1,039,394 common shares of Cryptologic Ltd. (the "Company”), of which PIF4 owns 594,894, PIF3 owns 324,906, PIF2 owns 119,194 and Dalal Street owns 400 (collectively, such shares being referred to herein as the “Shares”).

B. The Buyer desires to purchase certain of the Shares from the Sellers and have the right to purchase additional Shares, all on the terms and conditions set forth herein.

C. In consideration of the recitals (which are deemed to be a part of this Agreement) and of the respective representations, warranties, covenants, agreements and conditions contained herein, the Buyer and the Sellers hereby agree as follows:

AGREEMENTS

1. Acquisition and Sale of Shares. Upon the terms set forth herein, on the Effective Date, Buyer hereby purchases 550,000 Shares (collectively, the “Purchased Shares”) from the Sellers, severally and not jointly, and each Seller, severally and not jointly, hereby sells to Buyer all of such Seller’s right, title and interest in the Purchased Shares owned by it at a price per Share of $2.30, for an aggregate purchase price of $1,265,000 (the “Purchase Price”). The Purchase Price shall be payable by the Buyer to the Sellers in cash by wire transfer of immediately available funds to the account set forth on Exhibit A hereto. The Purchase Price shall be allocated among the Sellers on a pro rata basis based upon the number of Purchased Shares sold by such Seller. The allocation of Purchased Shares to be sold by each of the Sellers shall be determined in the sole discretion of Dalal Street. Upon payment of the Purchase Price in accordance herewith, each of the Sellers selling Purchased Shares shall transfer to the Buyer all of such Seller’s right, title and interest in the Purchased Shares being sold by such Seller.

2. Option to Purchase Remaining Shares. Each Seller hereby grants the Buyer, severally and not jointly, an option to purchase up to such portion of the 489,394 Shares (collectively, the “Option Shares”) owned by such Seller following the sale to Buyer of the Purchased Shares and which Option Shares are then owned by such Seller and not subject to any binding agreement to sell such Option Shares as of the time that such Seller receives an applicable Exercise Notice (as defined below), on the following terms and conditions:

a. Beginning on the Effective Date and continuing through December 17, 2008, the Buyer shall have the option to purchase all or a portion of the Option Shares, in increments of 10,000 Shares, at a price equal to $2.12 per Share.

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b. Beginning on December 18, 2008 and continuing through April 30, 2009, the Buyer shall have the option to purchase all or a portion of any remaining Option Shares, in increments of 10,000 shares, at a price equal to $2.12 per Share; provided, however, that if the Buyer exercises such option on a date when the closing sale price per share of the common shares of the Company as reported in the NASDAQ on such date (the “Closing Price”) is greater than $2.12 per share (the amount of such difference being called the “Excess Amount”), then the purchase price per Share shall be equal to (i) $2.12 plus (ii) 50% of the Excess Amount.

c. The options described in Section 2(a) and 2(b) shall be exercisable by delivery by the Buyer of written notice (the “Exercise Notice”) to the Sellers which shall state: (i) the Buyer’s election to exercise the option; (ii) the number of Option Shares with respect to which the option is being exercised (the “Exercised Shares”); (iii) the Closing Price of the common shares of the Company on the date of the Exercise Notice; (iv) the aggregate price of such Option Shares payable by the Buyer to the Sellers calculated in accordance with this Section 2 (the “Exercise Price”); and (v) such other representations or agreements as may be reasonably requested by the Sellers. The Buyer shall pay to the Sellers the aggregate Exercise Price as to all Exercised Shares identified in an Exercise Notice within one business day of the date of such Exercise Notice, and such payment shall be made by the Buyer in cash by wire transfer of immediately available funds to the account set forth on Exhibit A hereto. No option shall be deemed to be exercised until receipt by the Sellers of the aggregate Exercise Price identified in an Exercise Notice. The Exercise Notice shall be delivered by the Buyer to Mohnish Pabrai c/o Dalal Street, LLC via either (i) email delivery to mpabrai@pabraifunds.com, (ii) facsimile to (949) 453-0307 or (iii) such other method as may be specified by the Sellers, and shall not be deemed effective until actual receipt.

d. The Exercise Price shall be allocated among the Sellers on a pro rata basis based upon the number of Exercised Shares sold by each of them. The allocation of Exercised Shares to be sold by each of the Sellers shall be determined in the sole discretion of Dalal Street. Upon payment of the Exercise Price in accordance herewith, each Seller selling Exercised Shares shall transfer to the Buyer all of such Seller’s right, title and interest in such Exercised Shares.

e. In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, stock split, combination or exchange of shares or other change in corporate structure affecting the common shares of the Company or the declaration of any other dividend, then Dalal Street shall have the right to make adjustments to any applicable Exercise Price as it determines to be appropriate and equitable in its sole discretion by providing written notice to the Buyer prior to or following Sellers receipt of any Exercise Notice and to any calculation of Shares under this Agreement.

f. The options granted under this Section 2 shall expire at 12:00 am Pacific Standard Time, May 1, 2009.

g. Notwithstanding anything to the contrary contained herein, on or after December 18, 2008 each Seller shall be entitled to sell or otherwise transfer or commit to sell or transfer any Option Shares owned by such Seller prior to such Seller’s receipt of an Exercise Notice that would apply to such Shares, subject only the provisions of Section 3 below.

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3. Restrictions on Sellers’ Ability to Sell Shares.

a. Between the Effective Date and December 17, 2008, the Sellers shall not sell any Shares to any individual or entity other than the Buyer or an affiliate of Buyer.

b. Beginning on December 18, 2008 and continuing through April 30, 2009, the Sellers may not in the aggregate sell in excess of an average of 10,000 Shares per calendar day to any individual or entity other than the Buyer or an affiliate of Buyer. By way of example, in the event that Sellers sell 5,000 Shares on December 18, 13,000 Shares on December 24, and 2,000 Shares on December 27, Sellers would be entitled to sell up to an aggregate of 80,000 Shares on December 28. Notwithstanding the foregoing, prior to a Seller selling any Shares pursuant to this Section 3(b) to any individual or entity other than the Buyer or an Affiliate of Buyer, such Seller shall first provide the Buyer with an opportunity to purchase such Shares on terms and conditions satisfactory to such Seller.

c. After April 30, 2009, the Sellers shall not be restricted in selling Shares.

4. Representations, Warranties and Covenants of the Sellers. Each Seller hereby represents, warrants and covenants to Buyer that:

a. Title to Shares. Such Seller owns beneficially, free and clear of any liens, options, security interests, or pledges created by such Seller (collectively, “Liens”), the Shares to be sold by it pursuant to this Agreement, and, upon delivery of and payment for the Shares pursuant hereto such Seller has conveyed to Buyer valid title thereto, free and clear of any Liens other than those pursuant to applicable securities laws and as provided pursuant to this Agreement.

5. Representations, Warranties and Covenants of Buyer. Buyer hereby represents, warrants and covenants to the Sellers that:

a. Investment Experience. Buyer is knowledgeable, sophisticated and experienced in making, and is qualified to make, decisions with respect to investments in the Shares, and has had the opportunity to review Company’s publicly-filed documents. Buyer will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the Shares, nor will Buyer engage in any short sale that results in a disposition of any of the Shares by the Buyer, except in compliance with the Securities Act of 1933, the Exchange Act of 1934 and applicable state securities and blue sky laws. Buyer is an “accredited investor” within the meaning of Rule 501(a) of Regulation D promulgated under the Securities Act of 1933. Sellers have advised Buyer to seek appropriate legal and tax counsel in connection with the transactions contemplated by this Agreement.

b. Receipt of Information. Buyer is the former Chief Executive Officer of the Company. Buyer fully understands, and has access to information regarding, the financial

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condition and results of operations, business and prospects of the Company, and has all the information Buyer considers necessary or appropriate for deciding whether to acquire the Shares in accordance with the terms of this Agreement. Buyer has not relied upon, and hereby disclaims, any representation or warranty made by Sellers regarding the Company. Buyer is making and has made Buyer’s decision to acquire the Shares pursuant to this Agreement based upon Buyer’s own investigation and judgment with respect to the value of the Shares.

c. Press Release or Other Statements. The Buyer shall not issue any press release or other public or private statement with respect to or in any way identifying the Sellers, the Pabrai Funds or Mohnish Pabrai without the prior written consent of Dalal Street.

6. Miscellaneous.

a. Seller Indemnity. Each Seller agrees severally and not jointly to indemnify, defend and hold harmless the Buyer, from and against any and all losses, damages, claims, demands, deficiencies, costs, and expenses (including reasonable attorneys’ fees and expenses) of every kind, nature or description which arise out of or result from or as a consequence of any breach of any representation, warranty or undertaking made by such Seller in this Agreement or in any other document, exhibit, certificate or instrument delivered in connection herewith.

b. Buyer Indemnity. The Buyer agrees unconditionally to indemnify, defend and hold harmless the Sellers, from and against any and all losses, damages, claims, demands, deficiencies, costs, and expenses (including reasonable attorneys’ fees and expenses) of every kind, nature or description which arise out of or result from or as a consequence of any breach of any representation, warranty or undertaking made by the Buyer in this Agreement or in any other document, exhibit, certificate or instrument delivered in connection herewith.

c. Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. No party hereto may assign its rights or obligations pursuant to this Agreement without the prior written consent of the other parties hereto.

d. Governing Law. This Agreement shall be governed by and construed under the laws of the State of Delaware without giving effect to principles of conflict of laws.

e. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

f. Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

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g. Amendments and Waivers. This Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of all of the parties hereto.

h. Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

i. Entire Agreement. This Agreement supersedes all prior written and oral agreements and understandings among the parties as to the subject matter hereof and constitutes the entire agreement of the parties with respect to the subject matter hereof.

* * * * *

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


BUYER:		SELLERS:

/s/ JAVAID AZIZ Javaid Aziz		PABRAI INVESTMENT FUND 4, L.P. a Delaware limited liability partnership


By:	Dalal Street, LLC, its general partner

By:	/s/ MOHNISH PABRAI
	Name:	Mohnish Pabrai
	Title:	Chief Executive Officer


PABRAI INVESTMENT FUND 3, LTD. a British Virgin Islands corporation
By:	Dalal Street, LLC, its investment manager

By:	/s/ MOHNISH PABRAI
	Name:	Mohnish Pabrai
	Title:	Chief Executive Officer


PABRAI INVESTMENT FUND II, L.P. a Delaware limited partnership
By:	Dalal Street, LLC, its general partner

By:	/s/ MOHNISH PABRAI
	Name:	Mohnish Pabrai
	Title:	Chief Executive Officer


DALAL STREET, LLC a California limited liability company
By:	/s/ MOHNISH PABRAI
	Name:	Mohnish Pabrai
	Title:	Chief Executive Officer

-6-

EX-2 3 c48243exv2.htm EX-2 exv2

EXHIBIT 2

Correspondence, dated December 5, 2008, from the Reporting Person to the Issuer

Dear Bob,

Thank you for your and Stephen Freedhoff’s time on the call today.

First of all a few general points:

-		I stated that I own or have options to buy just over One Million Ordinary Shares. This excludes the 525,000 share options that I was granted when I was the President and CEO of Cryptologic.

-		I was pleased to hear you say that “cash was king”. Please be fully convinced that we are entering into a deep depression (and not a friendly recession) and that this is going to be very severe in the UK which is the major market for Cryptologic and others. The recovery will not be V-shaped but will be L-shaped. This requires a very different mindset to ensure survival.

-		We didn’t discuss M&A options but quite frankly until the board and management put their house in order no sensible deals will be possible, in fact it may even deter parties from approaching Cryptologic.

My objectives as a significant shareholder are to ensure that my investment, my asset, is being well cared for in these tough times. My intervention is aimed to achieve this as I have significant personal wealth tied up in Cryptologic shares, and much more so than the whole Board of Directors of Cryptologic put together.

I have to be convinced that all the necessary actions are being taken in a timely way and to the desired intensity and that those doing so are not tied to any past legacy or decisions made and that they are prepared to dismantle and downsize the business appropriately and with speed. There is no time for traditional timelines or protocols!

Specifically I wish to see the following:

#1 The revenue and expense forecast for Q4 2008 and the financial plan for 2009 by month, to include revenue, expenses, profit and cash.

#2 The manpower plan to support this financial plan where not only are the absolute numbers reduced to the range of 150-200 but this is done consistently through all levels of management, resulting in a pyramid shape structure as opposed to a mushroom shaped structure.

#3 The senior management structure and cost needs to be reduced by 50%. The “new” company cannot afford a CEO, CFO and CTO on their present compensation levels.

#4 A major simplification of the company’s legal, tax and management structure(s), hence my view that the Irish office should be closed and the number of market listings reduced.

#5 Immediate write-offs of failed investments or those which do not support the objectives of the “new” company. There is no logic to prolong the P&L agony.

#6 A cash focus which addresses share buy backs, dividends, cancellation fees from WPT

and WH, and an up front cash payment from Boss/GTECH for the poker business.

#7 Compensation plans for the senior management team which are based on monthly cash targets, with definition and rules clearly spelt out for Accounts Receivable and Accounts Payable.

#8 Board approval required for all new capital (CAPEX) and expense committments (OPEX) over $50,000, to include new hires, and changes in any terms and conditions of doing business with employees, suppliers or licensees.

#9 A fresh evaluation as to whether the terms for the disposal of the poker business (to Boss/GTECH) are favourable given the cash situation and focus of the company.

Lastly, Board representation. It is the wish of myself and many other significant shareholders that we are directly represented on the Board of Cryptologic. Notwithstanding the fact that I was previously the CEO, which is in the past, I am now a significant shareholder and my personal membership is not for negotiation. The numerical strength of two directors is comensurate with my shareholding and of others who are interested in ensuring their investment is in safe hands. We do not wish to increase the size or cost of the Board hence two current members will have to leave, and thus my suggestion below.

On a personal note you should know that I am non-resident, not ordinarily resident and non-domiciled in the UK hence my membership of the Board does not infringe any aspect of Cryptologic’s constitution.

I would like a conference call with you and Brian Hadfield next Wednesday 10th December at a time to suit you to discuss and have resolved all of the above points with a view that a major public announcement can be made to the market on Tuesday 16th December, leaving enough time before the Christmas holidays for any implementation plans to be executed — we cannot wait until February/March 2009 for this.

I look forward to hearing back soonest as to the best time for our conference call on Wednesday 10th December.

Thank you for your cooperation so far.

Regards, Javaid.

-2-

Correspondence, dated December 4, 2008, from the Reporting Person to the Issuer

Dear Bob,

I hope you are well.

I would like to inform you that at the present I own and have options to buy just over One Million Ordinary Shares in Cryptologic (circa 8% of Cryptologic) and write to you in this respect.

I am, alongwith many other shareholders, very concerned about the strategic and financial management of Cryptologic. The quarter on quarter downward trend in revenue, the upward and unpredictable trend in controllable expenses, ever increasing losses, decreasing free cash in the bank and the cataclysmic fall in the share price since May 2008 of 90% is very perturbing.

I am sure you and the Board share these concerns especially as you are all shareholders as well.

As a part but major owner of the business I would like to meet with you to understand the actions that are being taken to protect the shareholders interests. In particular I would like to discuss the following:

#1 The company’s financial condition and short/mid-term cash needs as well as plans to achieve long term viability

	-		The short range expense plan and the separation of at least 150 heads

	-		The revenue forecast for Q4 2008 and the financial plan for 2009 by month

#2 The composition of the senior management team, board and overheads cost such that they are halved

	-		The possible closure of the Irish office and implementation of Cyprus as the HQ

	-		The de-listing from TSX & LSE

#3 The write-offs of non-cash balance sheet items to improve the P&L (Agile, Parbet, AliOnline)

#4 The complete cancellation of the dividend

#5 The status of the termination payments from WPT and WH for early contract termination

#6 The terms of the poker business transition to Boss/GTECH

#7 The compensation plans for the executive management team to reflect the importance of cash management and the recovery plan for 2009

#8 The replacement of Wai Ming and Tom Byrne as directors by myself and one other nominee of my choice

In the meantime I would like the Board to implement a freeze of all new capital (CAPEX) and expense committments (OPEX) over $50,000, to include new hires, and changes in any terms and conditions of doing business with employees, suppliers or licensees including the disposal of the poker business.

At this stage I would like to work with you constructively and in harmony and do not intend to go public with this letter or be an activist and call an EGM. However I will not hesitate to do so in the event that I do not get your cooperation or see any progress in the business, an action for which I have the requisite support of other significant shareholders.

I would like to schedule this meeting for either the 10th, 11th, 12th, 15th or

-3-

16th December, either in London or Dublin, and would want you to be accompanied by the CEO (Brian Hadfield) and a true independent non-executive director (David Gavagan).

I would appreciate your reply soonest and in any event by Monday 8th December and look forward to getting your initial reaction and thoughts when I call you tomorrow Friday at 09.00 Toronto time.

Regards, Javaid.

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