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Exhibit 10.3
STOCK TRANSFER AGREEMENT
BY AND BETWEEN
INFOGRAMES ENTERTAINMENT S.A.
ATARI, INC.
AND
ATARI INTERACTIVE, INC.
August 22, 2005
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AGREEMENT TO TRANSFER
SHARES OF HUMONGOUS, INC.
BY AND BETWEEN:
ATARI, INC, a corporation organized under
the laws of Delaware, United States,
having its principal office at 417 Fifth
Avenue, 10016, New York, NY, United
States (hereinafter referred to as
"ATARI"),
PARTY OF THE FIRST PART
ATARI INTERACTIVE, INC, a corporation
organized under the laws of Delaware,
United States, having its principal office
at 417 Fifth Avenue, 10016, New York,
NY, United States (hereinafter referred to
as "INTERACTIVE" and jointly with
Atari, as the "TRANSFERORS"),
PARTY OF THE SECOND PART
INFOGRAMES ENTERTAINMENT S.A., a French
corporation (societe anonyme) with
stated capital of (euro) 111,895,449,
having its principal office at 1 Place
Verrazzano 69 252 Lyon Cedex 09, registered
in the Lyon Trade and Companies
Register under number 341 699 106 and
represented by Mr. Bruno Bonnell, in his
capacity as Chairman and Chief Executive
Officer,
(hereinafter referred to as "IESA")
PARTY OF THE THIRD PART
(and referred to jointly as the
"PARTIES")
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RECITALS
BACKGROUND AND PROCEDURE OF THE PROPOSED
TRANSFER
IESA is the parent corporation of the Atari
Infogrames group of entertainment
software and interactive games companies.
IESA owns more than 50% of Atari's
shares and voting rights and all of
Interactive's shares and voting rights. IESA
also owns all of the shares of Atari Europe
and of its distribution subsidiaries
in the Asia-Pacific region.
Interactive is a wholly-owned subsidiary of
IESA and publishes the interactive
game software largely produced by
proprietary franchises and under license from
Hasbro.
Atari is listed on the NASDAQ exchange in
the United States. It develops,
publishes and distributes interactive game
software. Atari publishes and sells
games in the action/adventure,
role-playing, sport, family/children and other
segments.
Humongous, Inc, the company to which this
agreement pertains (hereinafter
referred to as "HUMONGOUS"), is a United
States corporation organized under the
laws of Delaware, having its principal
office at The Corporation Trust Company,
Corporation Trust Center, 1209 Orange
Street, Wilmington, Delaware 19081, United
States. Information about Humongous is
included in SCHEDULE 1 hereto.
Humongous has purchased certain
intellectual property rights relating to
characters or environments aimed at the
children's and family segment, such as
"Putt Putt", "Pajama Sam" and the
"Backyard" franchise, a top seller in the
United States, under a purchase agreement,
an original copy of which is attached
hereto as SCHEDULE 2 (the "PURCHASE
AGREEMENT").
As of the date hereof, Atari and
Interactive own all of the Humongous shares
outstanding (the "SHARES" or the
"TRANSFERRED SHARES"), to which an equivalent
number of voting rights are attached. The
respective number of Humongous shares
held by each Transferor is shown in
Schedule 3 hereto.
As part of the rationalization of its
publishing portfolio, Atari wishes to
transfer the business of Humongous and has
commenced the process of selling that
division. For its part, IESA wishes to
increase its investment in that sector
and purchase Transferors' interests,
thereby closing out Interactive's position.
Accordingly, the parties have met to
examine how control of Humongous could be
transferred to IESA, and have entered into
this stock transfer agreement (the
"STOCK TRANSFER AGREEMENT") pursuant to
which Transferors agree, among other
matters, to
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transfer their entire ownership interest in
Humongous to IESA, in consideration
for new shares of IESA (the "NEW SHARES"),
on the terms and conditions below.
NOW, THEREFORE, THE PARTIES HAVE AGREED AS
FOLLOWS:
1 - TRANSFERS
1.1 Transfers
On the Closing Date, each of the
Transferors shall transfer the number of
Transferred Shares appearing next to its
name in SCHEDULE 3 hereto to IESA,
which accepts them, amounting to all of the
common stock outstanding of
Humongous.
The Parties agree that the Transfers
contemplated herein constitute a single
transaction. Accordingly, unless otherwise
decided by IESA, each of the Parties'
obligations to complete the Transfer shall
be contingent on the simultaneous
Transfer by each Transferor of all of its
Transferred Shares.
1.2 Closing
The closing of the transactions provided
for in this agreement (the "CLOSING")
shall take place at the principal office of
IESA at 1 Place Verrazzano, 69252
Lyon Cedex 09, on August 22, 2005 (the
"CLOSING DATE").
2 - VALUATION OF SHARES TRANSFERRED
Pursuant to a decision by IESA's board of
directors on July 26, 2005 to approve
the transaction in principle, IESA's
management made a valuation of Humongous
based on several criteria, including
comparisons with recent similar
transactions and purchase offers from third
parties.
This process put a value on all of the
Transferred Shares of USD 10,976,638, or
(euro) 9,032,782.97, based on a euro/dollar
exchange rate of 1.2152 agreed to by
the parties (the exchange rate in effect on
August 19, 2005), or (euro)
94,091.4893 per Transferred Share.
Accordingly, IESA and Transferors have
agreed to value the ninety-six (96)
Transferred Shares at (euro)
9,032,782.97.
CCI Conseils, represented by Mr. Francois
de Bustamante (the "TRANSFER
APPRAISER") was appointed Transfer
Appraiser (Commissaire aux Apports) by the
Chief Judge of the Lyon Commercial Court on
August 9, 2005, as required by
Article L. 225-147(6) of the French
Commercial Code (Code de Commerce) for the
purpose of issuing a report on the
transactions referred to herein. His report
will be made available to IESA's Board of
Directors and shareholders, as
required by law.
3 - CONSIDERATION FOR THE TRANSFER
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Pursuant to the foregoing, Transferors
shall receive consideration for their
Shares in the form of fully paid-up New
Shares, on the following terms:
3.1 Exchange Ratio
For the purpose of calculating the
consideration for Shares with a transfer
value (euro) 9,032,782.97, the parties
agree to use a ratio based on the average
closing price of IESA shares on the
Euronext Paris Eurolist over the three
trading sessions immediately preceding the
Closing Date, or (euro) 1.45.
Accordingly, the exchange ratio is set at
64,891 (rounded off) New Shares for
one (1) Transferred Share. A total of
6,229,505 New Shares shall thus be issued,
of which:
For Atari, Inc.
5,840,161 New Shares
For Atari Interactive, Inc.
389,344 New Shares.
3.2 Capital increase
The New Shares will be issued on the
Closing Date by IESA's board of directors,
under the authority to increase capital
with a waiver of pre-emptive rights
granted to it by resolution 11 of the IESA
annual shareholders' meeting of
January 19, 2005 authorizing IESA capital
stock to be increased by up to 10% to
pay for the acquisition by the company of
shares or other equity securities,
where the provisions of Article L.225-148
of the Commercial Code do not apply.
Capital stock will accordingly be increased
by (euro) 3,798,727.96.
The New Shares will be issued and allocated
to Transferors pro rata the
Transferred Shares, as indicated in clause
3.1 above and in Schedule 3.
On the Closing Date, the New Shares issued
to Transferors will be recorded as
registered shares by Euro Emetteur Finance,
IESA's transfer agent.
3.3 Value of New Shares in
excess of par
The New Shares issued as consideration for
the Transfers shall generate premiums
in excess of par of (euro) 5,234,055.01, to
which all costs, duties, taxes and
fees incurred by this Transfer will be
charged.
Paid-in capital resulting from this excess
value will be recognized in a special
account on the liabilities and
shareholders' equity side of IESA's balance
sheet, to which new and existing
shareholders shall have a claim, and which may
be freely used by the board of directo
