Report from the annual general meeting of Cherry AB (publ) on 16 May 2017

At the annual general meeting of Cherry AB (publ), reg. no 556210-9909 on 16 May 2017, the following resolutions were, among others, adopted. The board of directors’ complete proposals have previously been published and are available in Swedish on the Company’s website, www.cherry.se, under the section Annual General Meeting.

Adoption of the balance sheet and income statement, disposition regarding the Company’s results and discharge from liability

The annual general meeting resolved to adopt the balance sheet and income statement and the consolidated balance sheet and income statement for the financial year 2016. The annual general meeting also resolved that no dividends shall be paid for the financial year 2016. The annual general meeting also discharged the board members and the managing director from liability for the financial year 2016.

Board of directors and auditor

The annual general meeting resolved in accordance with the nomination committee’s proposal as revised at the annual general meeting that the board of directors shall consist of five board members without deputies.

It was also resolved in accordance with the nomination committee’s proposal that remuneration for the board members for board and committee work shall be paid with a total of SEK 3,782,000, of which SEK 2,532,000 (inclusive of social fees) to the chairman of the board of directors, who also works in the Company, and SEK 250,000 each to the remaining board members. A board member may be allowed by the Company to invoice the remuneration through a company provided that it is cost neutral for the Company. It was resolved that remuneration to the auditors shall be paid in accordance with approved invoices. The annual general meeting also resolved in accordance with the nomination committee’s proposal to re-elect the current board members Morten Klein, Anna Bergius, Claes Ruthberg, Johan Moazed and Gunnar Lind as board members.

Morten Klein was elected as new chairman of the board of directors.

The annual general meeting re-elected, in accordance with the nomination committee’s proposal, the registered public accounting firm PricewaterhouseCoopers AB (PwC). PwC has informed that Aleksander Lyckow will remain as auditor in charge.

Resolution regarding principles for the appointment of a nomination committee, how members of the nomination committee are to be appointed and the tasks of the nomination committee

The annual general meeting resolved to adopt the principles proposed by the nomination committee for appointment of a nomination committee, how members of the nomination committee are to be appointed and the tasks of the nomination committee. The principles shall apply until further notice, meaning that the annual general meeting will not adopt resolutions regarding these principles and the tasks of the nomination committee each year unless the principles or tasks shall be amended or changed.

Resolution regarding guidelines for remuneration to senior executives

The annual general meeting resolved to adopt guidelines for remuneration to senior executives in accordance with the board of directors’ proposal. Remuneration to the CEO and other senior executives is composed of a fixed base salary, in some cases variable salary, occupational pensions and other benefits, and is resolved by the remuneration committee.

The board of directors shall be entitled in specific cases and under special circumstances to deviate from the guidelines for remuneration to senior executives. If such a deviation is made, information regarding the deviation and the reasons thereof shall be stated in the proposal for guidelines for remuneration to senior executives presented at the following annual general meeting.

Resolution regarding amendment of the articles of association

The annual general meeting resolved, in accordance with the board of directors’ proposal, to amend § 6, § 12 and § 13 of the articles of association. The amendment of § 6 entails that the possibility to elect deputy board members is removed. The current articles of association’s § 12, containing the central securities depository clause is moved to § 13 and updated due to changes in legislation. A new § 12 is introduced whereby an agenda for ordinary shareholders’ meetings is included.

Resolution to issue shares of series B against payment in kind

The annual general meeting resolved, in accordance with the board of directors’ proposal, against the below background, to issue new shares of series B (“Shares”) in Cherry AB (publ) against payment in kind in the form of 90 shares in Almor Holding Limited, reg. no C 66737, (the “Target Company”).

The wholly-owned subsidiary of Cherry AB (publ), Cherry Gaming Ltd., reg. no C 48654, (the “Subsidiary”) has on 1 July 2015 entered into an acquisition agreement regarding the Subsidiary’s acquisition of shares in the Target Company.

During July of 2015, the Subsidiary acquired 850 of a total of 1,200 shares in the Target Company, an additional 50 shares were acquired in October of 2015. The remaining 300 shares in the Target Company are owned by Bello Monte Ltd., reg. no C 70921, (the “Minority Shareholder”), which is in turn wholly-owned by Alexander Knopf who is now an executive in the Cherry AB (publ) group.

According to acquisition agreements the Subsidiary has an option to acquire an additional 90 shares from the Minority Shareholder after 31 December 2016, which has been called on by the board of directors. The purchase price of the shares in the Target Company shall pursuant to an agreement consist of (i) EUR 1,219,899.50 to be paid in cash and (ii) newly issued Shares in Cherry AB (publ) corresponding to a value of SEK 11,717,891.50, which is based on an agreed, by the Minority Shareholder and Cherry AB (publ) established price per share of SEK 307.

The issue of new Shares in accordance with the above may result in an increase of the share capital in Cherry AB (publ) with a maximum of SEK 20,992.95 by an issue of a maximum of 38,169 Shares, each with a quotient value of SEK 0.55. The issue of new Shares causes a dilution of 0.18 percent the total number of shares in the Company and 0.13 percent of the total number of votes in the Company, calculated as, respectively, the number of new Shares and votes divided by, respectively, the current number of shares and votes in the Company.

Resolution regarding issue of warrants 2017/2020 and resolution regarding approval of transfer of warrants etc.

The annual general meeting resolved, in accordance with the board of directors’ proposal, to adopt a long-term incentive program for employees or consultants in Sweden, Norway, Austria and Malta. The program consists of an issue of a maximum of 175,500 warrants, giving a right to subscribe to one new share of series B in Cherry AB (publ) each.

The right to subscribe for the warrant shall fall to the wholly-owned subsidiary Cherry Casino Syd AB (the “Subsidiary”) which shall transfer the shares to employees in accordance with the conditions of the program, which entail, inter alia, that a right to acquire the warrants shall only fall to the persons who at the time of the expiration of the subscription period has not terminated or had terminated their employment or consultancy relationship and, as regards participants outside of Sweden,  have been employed during the entirety of the vesting period until the time of subscription. Transfer of the warrants to participants in Sweden shall be made at a price corresponding to the market value of the warrant (i.e. the premium) which means that these warrants will not lead to any employee costs for the Company. Transfer of the warrants to participants in Malta, Austria or Norway shall be made at no cost, which leads to estimated employee costs of approximately SEK 2,500,000 based on the preliminary calculated market value of SEK 27.52 per warrant and social fees which are estimated to approximately SEK 850,000 based on assumptions regarding distribution between the relevant countries and the assumption that the share price at the time of subscription is SEK 600.

The warrants can be exercised during the period 15 – 30 June 2020. The subscription price shall be the higher of SEK 450 or 150 percent of the volume weighted average payment price for shares of series B in Cherry AB (publ) during the period 1 – 14 June 2017. A full exercise of all warrants will cause a dilution of approximately 0.85 percent of the total number of shares in the Company and approximately 0.59 percent of the total number of votes in the Company, calculated as, respectively, the total number of new shares and votes in case of full subscription divided by, respectively, the current number of shares and votes in the Company.

Resolution regarding share split

The annual general meeting further resolved, in accordance with the board of directors’ proposal, on a split of the shares in the Company. The resolution entails both a change of the articles of association’s § 5 first paragraph whereby the limits on the number of shares in the Company are changed to be at least 85,000,000 and at most 340,000,000, of which shares of series A shall be possible to issue of an amount of at most 9,500,000 shares and shares of series B shall be possible to issue of an amount corresponding to at most 100 percent of the Company’s share capital.

The share split effects all shares of series A and series B and is conducted so that, respectively, one share of series A and series B is split into five new shares of the same series (share split 1:5). The record date for the share split shall be 1 July 2017 or the later date resolved by the board of directors. After registration of the share split at the Swedish Companies’ Registration Office, the total number of shares in the Company will, taking into account the above mentioned issue of shares against payment in kind, be 101,204,505 shares, of which 4,988,000 shares are of series A and 98,216,505 shares are of series B.

Resolution regarding approval of directed issue of warrants in the subsidiary Yggdrasil

The annual general meeting resolved, in accordance with the board of directors’ proposal, to approve a directed issue of warrants in the subsidiary Yggdrasil Gaming Sweden AB (“Yggdrasil”). Yggdrasil shall issue a maximum of 2,263 warrants giving a subsequent right to subscribe to a total of 2,263 shares of series B in Yggdrasil.

The warrants shall be acquired at market conditions at a price to be established based on a market value of the warrants calculated by using the Black & Scholes formula.

The offer is directed to senior executives and key individuals within the Yggdrasil group, approximately 25 persons. Warrants that are not exercised can be acquired by a subsidiary within the Yggdrasil group to be subscribed at a later time by new senior executives or key individuals. The reasons for the deviation from the shareholders’ preferential rights is to enable employees to take part of and work for a positive value development and to be able to recruit competent and committed personnel.

The warrants can be exercised during the period 1 August 2020 – 1 October 2020 to subscribe for new shares at a subscription price corresponding to 190 percent of the calculated market value of a share of series B, however no less than at a subscription price corresponding to the quotient value. The right to exercise the warrants demands, under special circumstances, that the participant enters into a post-sale purchase right agreement with Cherry AB (publ), provided that it does not entail negative tax implications.  A full exercise of all warrants will cause a dilution of Cherry AB (publ)’s ownership in Yggdrasil whereby the ownership decreases from approximately 84 percent to approximately 82 percent of the shares in Yggdrasil.

Resolution to approve a transfer of shares in the wholly-owned subsidiary Roundtable Holding Limited

The annual general meeting resolved in accordance with the board of directors’ proposal regarding  approval of transfer of shares in the wholly-owned subsidiary Roundtable holding Limited. The approval relates to a transfer of 8,000 shares of series A to Dario Arruda, or a company controlled by Dario Arruda, and 1,000 shares of series B to Dominic Watson, or a company controlled by Dominic Watson, in the wholly-owned subsidiary Roundtable Holding Limited. Dario Arruda and Dominic Watson are employees of Roundtable Holding Limited. The transfer corresponds to 9 percent of the shares in Roundtable Holding Limited. The purchase price for the shares is EUR 0.10 per share. Pursuant to the agreement, Cherry AB (publ) is entitled to re-purchase the shares from the buyers at a price corresponding to the purchase price if a buyer terminates his employment with Roundtable Holding Limited within three years of the date of the transfer of the shares.

Resolution to approve a directed issue of warrants in the wholly-owned subsidiary Roundtable Holding Limited

The annual general meeting resolved in accordance with the board of directors’ approval to approve a directed issue of warrants in Roundtable Holding Limited of a total of 2,300 warrants giving a subsequent right to subscribe to a total of 2,300 shares of series B in Roundtable Holding Limited. The warrants shall be issued at no cost.

The offer is directed to senior executives and key individuals within the Roundtable Holding Limited. The reasons for the deviation from the shareholders’ preferential rights is to enable employees to take part of and work for a positive value development and to be able to recruit competent and committed personnel.

The warrants can be exercised during the period 16 June 2020 – 30 June 2020 to subscribe for new shares in Roundtable Holding Limited at a subscription price of EUR 46. The right to exercise the warrants demands, under special circumstances, that the participant enters into a post-sale purchase right agreement with Cherry AB (publ), provided that it does not entail negative tax implications. A full exercise of all warrants will, combined with the above mentioned transfer of shares, cause a dilution of Cherry AB (publ)’s ownership in Roundtable Holding Limited whereby the ownership decreases from 100 percent to approximately 88.7 percent.

Resolution on authorization for the board of directors to resolve new issue of shares

The annual general meeting further resolved, in accordance with the board of directors’ proposal, to authorize the board of directors to, at one or several occasions, resolve to issue an amount of new shares of series B corresponding to a maximum dilution, at the time of the authorization, of 10 percent, against payment in cash and/or in kind and to in connection therewith deviate from the shareholders’ preferential rights. The subscription price of the new shares shall be based on the market price for the Company’s shares.

For further information, please contact:

Anders Holmgren, CEO, +46 708 607 534, anders.holmgren@cherry.se

Carolina Haglund Strömlid, Head of Investor Relations & Communications, +46 708 807 173, carolina.stromlid@cherry.se

Cherry in brief 

Cherry is a Swedish innovating and fast growing gaming company established in 1963. The business strategy is to create shareholder value by owning and developing fast-growing and profitable businesses within the gaming and casino industry. Cherry operates within five diversified business areas, Online Gaming through ComeOn!, Performance-based Marketing through Game Lounge, Gaming Technology through XCaliber. Game Development through Yggdrasil Gaming and Restaurant Casino through Cherry Spelglädje. The objective is to grow organic in combination with strategic acquisitions of fast-growing companies. Cherry employs around 1 100 people and has more than 6,000 shareholders. The Company’s B-shares are listed on AktieTorget.