CUSIP No. G3159C109
ITEM 1. SECURITY AND ISSUER
This
Amendment No. 3 to 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.
This Amendment No. 3 amends and restates in full each of
the items set forth below. Terms used but not defined in this
Amendment No. 3 shall have the respective meanings given
to such terms in the Schedule 13D as originally filed with the
Securities and Exchange Commission on December 15, 2008 (“Original 13D”).
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The total purchase price of the shares disclosed herein as beneficially owned by the
Reporting Person was $3,914,574, comprised of the following: (1) the $1,265,000 purchase price of
the 550,000 Common Shares and the Option (as defined below) to acquire up to 489,934 Common Shares
acquired by the Reporting Person on December 4, 2008 pursuant to the Stock Purchase Agreement
described below, (2) the $678,400 purchase price of the 320,000 Common Shares acquired upon the
partial exercise of the Option on December 17, 2008, (3) the $625,278 purchase price of the 168,994
Common Shares acquired from the Sellers in accordance with Section 3(b) of the Stock Purchase
Agreement on January 30, 2009, and (4) the $1,345,896 aggregate purchase price of the 350,000
Common Shares acquired in open market purchases. The source of funds for such purchases were
$3,882,465 of personal funds in personal and retirement accounts of the Reporting Person and a
$32,109 unsecured promissory note in favor of PIF3 (as defined below)
maturing on April 30, 2009. 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 and the option described in the following sentence for an aggregate purchase price of
$1,265,000. Mr. Aziz also acquired
an 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
had 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) beginning on December 18, 2008 and continuing through the termination of the parties’
obligations under the Stock Purchase Agreement on January 30, 2009, Mr. Aziz had 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 exercised such option on a date
when the closing sale price per share of the Common Shares as reported on the NASDAQ on such date
(the “Closing Price”) was greater than $2.12 per share (the amount of such difference being called
the “Excess Amount”), then the purchase price per share would be equal to (i) $2.12 plus (ii) 50%
of the Excess Amount. In addition, beginning on December 18, 2008 and continuing through the
termination of the parties’ obligations under the Stock Purchase Agreement on January 30, 2009, the
Sellers were required, prior to selling any such Common Shares to any individual or entity other
than Mr. Aziz, to 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.
On December 17, 2008, the Reporting Person partially exercised the Option and acquired
320,000 Common Shares from the Sellers for an aggregate purchase price of $678,400.
Immediately following such exercise, the Option remained exercisable for 169,394 Option
Shares on the terms summarized above.
On January 30, 2009, in accordance with Section (3)(b) of the Stock Purchase Agreement, the
Reporting Persons acquired 168,994 Common Shares from the Sellers for an aggregate purchase price
of $625,278. The Reporting Person and the Sellers also agreed to terminate all rights, obligations
and agreements under the Stock Purchase Agreement (including the Option) as of that date.
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 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 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. On December 23, 2008, the Company issued a press release expressing its belief that many of the
issues raised by the Reporting Person were being addressed by the Issuer’s management and
indicating that the Issuer’s Board of Directors had determined to reject the request for greater
shareholder representation on the Board via the proposed addition of the Reporting Person and a
second appointee.
On January 9, 2009, the Reporting Person sent the Chairman of the Board of the
Issuer correspondence, a copy of which is attached as Exhibit 3 hereto and incorporated herein by
reference, updating and expanding his views and analysis with respect to the Company’s operations
and strategic direction. The Reporting Person also reiterated his desire to serve on the Board of
Directors of the Issuer along with a second appointee, with such persons to replace 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 a
meeting of stockholders of 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.
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