FORM 6-K
Securities and Exchange Commission
washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 under
the Securities Exchange Act of 1934
For the month of April 2003
--------------------------------- --------------
CryptoLogic Inc.
-------------------------------------------------------------------------------
(Translation of registrant's name into English)
1867 Yonge Street, 7th Floor
Toronto, Ontario, Canada
M4S 1Y5
-------------------------------------------------------------------------------
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40F.
Form 20-F X Form 40-F
----------- ----------------
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(7):
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information
to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934.
Yes No X
-------------- -----------------
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-_______________
DOCUMENT INDEX
Document Page No.
1. Notice of Annual Meeting of Shareholders And Management 4
Information Circular.
2. Letter to Non-Registered Shareholders "Re: 22
New Electronic Access to Shareholder Materials
and Voting"
3. Letter to Registered Shareholders "Re: New 25
Electronic Access to Shareholder Materials and
Voting"
4. President & CEO Letter to Shareholders 27
5. Proxy for Annual Meeting of the Shareholders of 29
CryptoLogic Inc. to be held on May 1, 2003
6. Certificate pertaining to the Supplemental 32
Mailing List to Registered and Beneficial
Shareholders
Document 1
ANNUAL MEETING OF SHAREHOLDERS
OF
CRYPTOLOGIC INC.
TO BE HELD ON MAY 1, 2003
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
AND MANAGEMENT INFORMATION CIRCULAR
April 4, 2003
CRYPTOLOGIC INC.
7th Floor, 1867 Yonge Street
Toronto, Ontario, Canada
M4S 1Y5
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of CryptoLogic
Inc. ("CryptoLogic" or the "Company") will be held in Room 203, Metro Toronto
Convention Centre, 255 Front Street West, Toronto, Ontario, Canada, on May 1,
2003 at 4:30 p.m., Eastern time, for the following purposes:
1. To receive and consider the financial statements of the Company for
the fiscal year ended December 31, 2002, together with the
auditor's report thereon.
2. To elect the directors of the Company.
3. To appoint the auditors of the Company and authorize the directors
to fix their remuneration.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Dated at Toronto, Ontario, Canada on April 4, 2003
By the order of the Board of Directors
/s/ Robert Stikeman
---------------------------
Robert Stikeman
Secretary
If you are not able to be present at the meeting, please exercise your right
to vote by signing and returning the enclosed form of proxy, in the enclosed
postage-paid envelope to Equity Transfer Services Inc., 420 - 120 Adelaide
Street West, Toronto, Ontario, Canada, M5H 4C3, prior to the close of the last
business day prior to the meeting, or, if the meeting is adjourned,
forty-eight hours (excluding Saturdays, Sundays and holidays) before any
adjourned meeting, or be presented to the Chairman of the Meeting on the day
of the Meeting prior to the commencement thereof. If you are able to attend
the Meeting, sending your proxy will not prevent you from voting at the
Meeting.
INFORMATION CIRCULAR
(as at April 4, 2003, except as otherwise indicated)
TABLE OF CONTENTS
Notice of Annual Meeting of Shareholders
INFORMATION CIRCULAR
Solicitation of Proxies....................................................1
Appointment and Revocation of Proxies......................................1
Non-Registered Shareholders................................................2
Voting of Proxies..........................................................3
Voting Securities and Principal Holders of Voting Securities...............3
Financial Statements.......................................................4
Election of Directors......................................................4
New Director Nominees......................................................5
Re-Appointment of Auditors.................................................5
Statement of Corporate Governance Practices................................6
Mandate of the Board of Directors..........................................6
Shareholder Communications.................................................7
Expectations of Executive Officers.........................................7
Compensation of Directors..................................................7
Composition of the Board...................................................7
Board Approvals and Structure..............................................8
Board Committees - Size and Compensation...................................8
Directors' and Officers' Liability Insurance..............................10
Executive Compensation....................................................10
Long Term Incentive Plans.................................................11
Stock Options Exercised and Held..........................................11
Performance Graph.........................................................12
Employment Contracts with Named Executive Officers........................12
Indebtedness of Directors and Senior Officers.............................13
Interests of Insiders in Material Transactions............................13
Auditors, Registrars and Transfer Agents..................................13
Normal Course Issuer Bid..................................................13
Substantial Issuer Bid....................................................13
Legal Proceedings.........................................................14
Directors' Approval.......................................................14
CRYPTOLOGIC LOGO OMITTED
MANAGEMENT INFORMATION CIRCULAR
AND GENERAL PROXY INFORMATION for the
2003 ANNUAL MEETING OF SHAREHOLDERS
CRYPTOLOGIC INC.
THIS MANAGEMENT INFORMATION CIRCULAR IS FURNISHED IN CONNECTION WITH THE
SOLICITATION BY THE MANAGEMENT OF CRYPTOLOGIC INC. ("CryptoLogic" or the
"Company"), of proxies to be used at the Annual Shareholders' Meeting of
CryptoLogic to be held on Thursday, May 1, 2003, in Room 203, Metro Toronto
Convention Centre, 255 Front Street West, Toronto, Ontario, Canada, at 4:30
p.m. (Eastern time) and at all postponements or adjournments thereof, for the
purposes set forth in the attached Notice of Annual Meeting of Shareholders of
CryptoLogic Inc.
Solicitation of Proxies
The solicitation of proxies by this circular is being made in respect of
matters to be considered by shareholders of the Company by or on behalf of the
management of the Company.
The solicitation of proxies for the CryptoLogic meeting will be made primarily
by mail, but proxies may also be solicited personally or by telephone on
behalf of the Company. The total cost in respect of the solicitation of
proxies for the applicable meeting, including the legal, printing and other
costs associated with the preparation of this Management Information Circular
will be borne by the Corporation. The information contained herein is given as
at April 4, 2003, except where otherwise noted.
Appointment and Revocation of Proxies
Together with this Management Information Circular, the shareholders of the
Company will also be sent a form of proxy ("Form of Proxy"). The persons named
in such proxy are directors and officers of the Company. A shareholder who
wishes to appoint some other person to represent him at the meeting may do so
by inserting such person's name in the blank space provided in the Form of
Proxy. Such other person need not be a shareholder of the Company.
-2-
To be valid, proxies given by shareholders of the Company must be deposited at
the offices of Equity Transfer Services Inc., 420 - 120 Adelaide Street West,
Toronto, Ontario, Canada, M5H 4C3, prior to the close of the last business day
prior to the meeting, or, if the meeting is adjourned, forty-eight hours
(excluding Saturdays, Sundays and holidays) before any adjourned meeting or be
presented to the Chairman of the Meeting on the day of the Meeting prior to
the commencement thereof. .
Pursuant to Section 110(4) of the Ontario Business Corporations Act, a
shareholder who has given a proxy may revoke the proxy: (a) by completing and
signing a proxy bearing a later date and depositing it as aforesaid; (b) by
depositing an instrument in writing executed by him or by his attorney
authorized in writing: (i) at the registered office of the Company at any time
up to and including the last business day preceding the day of the applicable
meeting, or any adjournment thereof, at which the proxy is to be used, or (ii)
with the chairman of the applicable meeting prior to the commencement of such
meeting on the day of such meeting or any adjournment thereof; or (c) in any
other manner permitted by law.
Non-Registered Shareholders
Pursuant to the requirements of the Canadian Securities Administrators, under
National Instrument 54-101, the Company has distributed copies of the Notice
of Meeting, this Management Information Circular and the Form of Proxy to the
clearing agencies and intermediaries for distribution to non-registered
shareholders of the Company who have not waived their right to receive such
materials. Non-registered shareholders may be forwarded a proxy already signed
by the intermediary or a voting instruction form to allow them to direct the
voting of the common shares they beneficially own. A voting instruction form
is normally mailed to non-registered shareholders by their broker.
Should a non-registered shareholder who receives either a Form of Proxy or a
voting instruction form from their broker or an intermediary wish to attend
and vote at the meeting in person (or have another person attend and vote on
his/her behalf), the non-registered shareholder should strike out the names of
the persons named in the proxy and insert his/her own, or another person's
name in the blank space provided; or, in the case of a voting instruction
form, follow the appropriate instructions on the form. In either case,
non-registered shareholders should carefully follow the instructions provided
by the intermediaries or their broker.
Please carefully check the contents of the package of shareholder materials
you have received. Shareholders should note that if you have received a voting
instruction form from your broker or an intermediary, it is not a valid Form
of Proxy and cannot substitute for a Form of Proxy at the Meeting. The
Scrutineer of the Meeting cannot count the votes of a non-registered
shareholder wishing to vote in person or by proxy at the Meeting unless such
shareholder holds a valid Form of Proxy from the Intermediary. Please contact
your broker or Equity Transfer Services Inc. immediately should you have any
questions or require instructions on the use of the voting instruction form
and how to obtain a valid Form of Proxy from your broker.
-3-
Voting of Proxies
The management representative designated in the Form of Proxy will vote, or
withhold from voting, the shares in respect of which he is appointed by proxy
on any ballot that may be called for in accordance with the instructions of
the shareholder as indicated on the proxy.
The enclosed Form of Proxy confers discretionary authority upon the
management's representatives designated therein with respect to amendments to
or variations of matters identified in the applicable Notice of Meeting and
with respect to other matters which may properly come before the applicable
meeting. At the date of this Management Information Circular, the management
of the Company is not aware of any such amendments, variations or other
matters.
Proxies received by management will be voted at the meeting of the Company, or
any adjournment thereof as specified therein by the person giving the proxy.
TO THE EXTENT NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED FOR MANAGEMENT'S
PROPOSALS AS STATED UNDER THE HEADINGS RELATING TO THESE MATTERS IN THIS
MANAGEMENT INFORMATION CIRCULAR. ALL PROXIES SUBMITTED, REGARDLESS OF HOW
VOTED, WILL BE INCLUDED FOR PURPOSES OF DETERMINING WHETHER A QUORUM IS
PRESENT FOR THE MEETING. The Board of Directors has approved management's
proposals. A quorum is required in order for the meeting to be properly
constituted. One-quarter of the total outstanding common shares of the Company
must be present in person or represented by proxy at the meeting in order to
form a quorum.
Voting Securities and Principal Holders of Voting Securities
The authorized capital of the Company consists of an unlimited number of
common shares ("Common Shares"). As of the date of this Management Information
Circular the issued and outstanding capital consists of 12,205,868 Common
Shares.
Holders of Common Shares are entitled to dividends as and when declared by the
Board of Directors, and are entitled to notice of, and to one vote per Common
Share at, any meeting of the shareholders of the Company.
Each holder of a Common Share of the Company at the close of business on March
31, 2003, will be entitled to one vote for each Common Share held, as
applicable, on all matters proposed to come or that come before the meeting,
except to the extent such shareholder has transferred any such shares after
the record date and the transferee of such shares establishes ownership
thereof and makes a written demand, not later than ten days before the date of
the meeting, to be included in the list of shareholders entitled to vote at
the meeting, in which case the transferee will be entitled to vote such
shares.
To the knowledge of the directors and officers of the Company, no person
beneficially owns or exercises control or direction over shares carrying more
than 10% of the votes attached to the issued and outstanding Common Shares
except Mr. Andrew Rivkin, who directs control over 1,775,000 Common Shares,
representing 14.5% of the outstanding Common Shares of the Company.
-4-
Financial Statements
The financial statements of the Company for the year ended December 31, 2002,
and the Auditors' Report thereon enclosed with this Management Information
Circular will be placed before the shareholders at the Annual Meeting for
their consideration.
Under National Instrument 54-101, adopted by the Canadian Securities
Administrators, a person or Corporation that in the future wishes to receive
interim financial statements from the Company must deliver a written request
for such material to the Company, together with a signed statement that the
person or Corporation is the owner of securities (other than debt instruments)
of the Company. Shareholders who wish to receive interim financial statements
are encouraged to send the enclosed notice to the Company or its Transfer
Agent.
OUTLINE OF MATTERS TO BE ACTED UPON
-----------------------------------
Election of Directors
The number of directors has been fixed at five. The table sets out the names
of the nominees of the directors of the Company who will, subject to the
by-laws of the Company and governing legislation, serve until the next annual
meeting of shareholders, or until their successors are duly elected or
appointed.
===========================================================================================================================
Common
Shares No. of
Owned Options
Name Position with Company/ as at Held as at
Municipality of Residence Present and Principal Occupation Director Since April 4, 2003 April 4, 2003
---------------------------------------------------------------------------------------------------------------------------
Lorne Abony CEO and Co-founder, May 1, 2003 Nil Nil
London, England Columbia Exchange Systems Ltd.
(technology company)
---------------------------------------------------------------------------------------------------------------------------
Stephen H. Freedhoff, CA, CFP Consultant to a national May 1, 2003 Nil Nil
Toronto, Ontario accounting firm.
---------------------------------------------------------------------------------------------------------------------------
Edward L. Greenspan, Q.C. Lawyer & Partner, Greenspan and May 1, 2003 Nil Nil
Toronto, Ontario White
(law firm)
---------------------------------------------------------------------------------------------------------------------------
Lewis N. Rose, CA President and CEO, CryptoLogic May 1, 2003 10,000 445,000
Toronto, Ontario Inc.
---------------------------------------------------------------------------------------------------------------------------
Robert H. Stikeman(1)(2)(3) Vice-Chairman and Secretary, May 30, 2002 5,000 95,000
Toronto, Ontario CryptoLogic Inc.
Lawyer & Partner,
Stikeman, Graham, Keeley &
Spiegel LLP (law firm)
---------------------------------------------------------------------------------------------------------------------------
(1) Member of the Corporate Governance & Compliance Committee
(2) Member of the Nominating Committee.
(3) Director of the Company since May 30, 2002.
-5-
New Director Nominees
Lorne Abony is Chief Executive Officer and co-founder of Columbia Exchange
Systems Ltd since July 2002. Prior thereto Mr. Abony was a venture partner at
Elucid Technology Ventures, a private equity and venture capital firm based in
New York City. Prior to Elucid, Mr. Abony was the founder and President of
Petopia, an online pet food and supply destination that in under two years
raised in excess of $100 million, acquired over 600,000 customers and grew to
U.S.$20 million in revenue. After filing its shares for listing on NASDAQ,
Petopia was sold to Petco in November 2000. Mr. Abony is a member of the Law
Society of Upper Canada and formerly practiced corporate and securities law at
a large Toronto law firm.
Stephen H. Freedhoff, CA, CFP has been a consultant to a national accounting
firm since July 1999. Previously he was a partner with a national accounting
firm.
Edward L. Greenspan , Q.C., L.L.D., D.C.L., is the senior partner of the
Toronto law firm of Greenspan, White. He has been practicing in Toronto since
1970 and received his Queen's Counsel in 1982. He taught law at the University
of Toronto Law School for approximately twenty-eight years. In 1999, he
received an honourary doctorate from the Law Society of Upper Canada, and in
2002 he received an honourary doctorate of civil law from the University of
Windsor. He has been involved in some of the most high profile cases in
Canada.
Lewis N. Rose, CA was appointed interim President and Chief Executive Officer
on July 15, 2002, and was appointed President and Chief Executive Officer on
March 7, 2003. From 2000 to July, 2002, he was CEO of E-TV Interactive
Technologies Inc., a private interactive technology company. From September
1998 to 2000 he was President and a Director of Alliance Atlantis
Communications Inc., one of the largest publicly traded television and film
entertainment companies in Canada, and President and a Director of its
predecessor, Atlantis Communications Inc., from September, 1997 to September,
1998. Mr. Rose was previously Chief Financial Officer and a Director of Maple
Leaf Foods Inc., the largest publicly traded food-processing company in
Canada, and President of Maple Leaf's Grocery Products Division.
RE-APPOINTMENT OF AUDITORS
It is proposed that KPMG LLP, chartered accountants, of Toronto, Ontario be
re-appointed as the Company's auditors and that the directors fix their
remuneration.
-6-
INFORMATION CONCERNING THE CORPORATION
--------------------------------------
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
The Toronto Stock Exchange ("TSX") requires each listed company to disclose
its approach to corporate governance, with reference to a series of corporate
governance guidelines that the TSX adopted in 1995 (the "Guidelines"). These
Guidelines are set out in Section 474 of the TSX Company Manual.
Mandate of the Board of Directors
The Board of Directors has plenary power from the shareholders to manage, or
supervise the management of the business and affairs of the Company. The board
adopted a governance policy on July 22, 1998. Generally the board meets a
minimum of four times each year. In addition, it meets more often when
non-routine matters requiring its approval are raised. It met thirteen times
during the calendar year 2002.
Specifically, the board is responsible for the following:
1. Regular review and approval of general business strategy and direction.
2. Annual review and approval of business plans.
3. Annual and quarterly review and approval of financial statements.
4. Regular review of senior management's performance.
5. Regular review of corporate governance practices.
6. Regular review of compensation plans and their application.
7. Specific approval to changes to corporate by-laws.
8. Approval of the issuance of securities.
9. Declaration of dividends.
10. Purchase or redemption of shares.
11. Review of the stock option plan and administration of same.
12. Annual disclosure of the composition of the board, specifically the
number of unrelated and related directors.
The board is also responsible to ensure that the following are in place and
operating effectively:
1. A strategic and operational planning process.
2. A risk identification, management and compliance process.
3. A management development and successor planning process including
appointing, training and monitoring senior management.
4. A corporate communication policy and full disclosure practices.
5. Annual review of internal controls and systems contracts, management
organization and management information systems.
-7-
It is expected that members of the Board of Directors of CryptoLogic will:
1. Act in the best interests of the Company to maximize shareholder value.
2. Actively promote business opportunities and business relationships to
the benefit of the Company
3. Carry out their duties proactively as directors to assist management
with corporate governance and management concerns.
4. Devote sufficient time to stay current on the Company's plans and
activities in order to knowledgeably contribute to its development.
5. Avoid conflicts of interest and personal or business dealings with the
Company for their own accounts or any business with which they are
associated.
Shareholder Communications
The board has generally delegated the communications policy to senior
management of the Company. The President, Chief Financial Officer and Director
of Communications generally handle shareholder communications.
Expectations of Executive Officers
Through its regular contact with the executive management team, the board is
involved in monitoring and assessing the executive officers, most of whom
participate in presentations to the board at its meetings.
Compensation of Directors
The Company pays each non-management director an annual fee of Cdn$7,500 and a
fee of Cdn$750 for each directors' or committee meeting attended. Management
officers who are also directors do not receive any directors' fees.
During the year ended December 31, 2002, the Company paid non-management
directors the following:
1. Aggregate annual fees of Cdn$29,375, either directly or to certain
companies controlled by the said directors.
2. Aggregate per-meeting fees of Cdn$63,000.
For the year ended December 31, 2002, the Company also paid an aggregate fee
of Cdn$60,000 to the Chairman of the Board.
In addition, the directors are eligible to receive stock options under the
Company's stock option plan. See "Executive Compensation" below
Composition of the Board
Of the five proposed directors, three are "unrelated directors" within the
meaning of the Guidelines. In the Guidelines, an "unrelated director" is a
director who is free from any interest and any business or other relationship,
which could, or could reasonably be perceived to, materially interfere with
that director's ability to act with a view to the best interests of the
Company, other than an interest arising from shareholding. In considering
their qualifications as unrelated directors, the board took into account
certain relationships the directors have, or have had, with the Company.
-8-
Lewis Rose will be a "related director", within the meaning of the Guidelines,
by virtue of his office.
Robert Stikeman is a partner in a law firm that provides advice to the Company
and reports to the board; not to management. While the board does not believe
his relationship with the Company should reasonably be perceived to materially
interfere with his ability to act in the best interest of the Company, under
the Guidelines, he is considered a "related director", as he has a business
relationship with the board as a paid advisor.
The Company has no "significant shareholders", which the Guidelines define as
shareholders with the ability to exercise a majority of votes for the election
of directors.
Board Approvals and Structure
The board responds to and, if it considers appropriate, approves with such
revisions as it may require, corporate objectives and recommended courses of
action that have been brought forward by management. The board retains plenary
power for those functions it has not specifically delegated to management. In
addition to maintaining the powers it must retain by statute, significant
business activities, actions and communications that the Company proposes to
take or submit are subject to board approval.
Annual capital and operating budgets and significant changes thereto; the
Annual Information Form; annual and quarterly financial statements; this
Management Information Circular; major changes in the organizational structure
of the Company; major acquisition and disposition transactions involving the
repurchase of shares under normal course and substantial issuer bids; major
financing transactions including the issuance of shares, debt securities and
the like; major banking relationships; dividends; appointments of officers;
stock option plans; and, the issuance of stock options are all subject to
board approval.
Board Committees - Size and Compensation
There are four board committees. During fiscal 2002 the committees consisted
of the following:
1. Audit Committee comprised of three members, all of whom were unrelated
directors.
The Audit Committee has direct communication channels with internal
personnel responsible for financial-statement preparation and with the
Company's external auditors. The Audit Committee monitors audit
functions and the preparation of financial statements, and meets with
external auditors independent of management. Additional responsibilities
include the review of any auditors' reports to management, the review of
internal controls and the review of transactions between officers and
the Company. The Audit Committee met quarterly in 2002.
-9-
2. Corporate Governance and Compliance Committee comprised of four members,
three of whom were unrelated directors.
The Corporate Governance Committee reviews the Company's corporate
governance practices and recommends changes to the board, taking into
account, among other things, the TSX's Guidelines. The Corporate
Governance Committee is also responsible for assessing the effectiveness
of the board as a whole and its committees.
The Compliance Committee reviews the Company's compliance practices
relating to the license and certification of its gaming software in
regulated jurisdictions. The Compliance Committee also assesses global
legislative developments as they may affect the Company's business
around the world.
3. Compensation Committee comprised of three members, all of whom were
unrelated directors.
The Compensation Committee establishes salary ranges and long-term
share-based incentives for the positions held by executive officers
following an annual review of the responsibilities of the officer, the
officer's performance, experience and years of service and the salary
levels for similar positions in comparable companies, as well as
reviewing management's recommendations on stock option grants to
employees. The Compensation Committee meets as required to make
recommendations to the Board of Directors.
4. Nominating Committee comprised of four members, three of whom were
unrelated directors.
The Nominating Committee recommends the appointment of new directors to
the Company's board, following interviews with candidates. The
Nominating Committee also assesses the effectiveness of the board as a
whole, its committees, and the contribution of individual directors.
The Company has a formal process of orientation and education for new members
of the board. When relevant, this process is supplemented informally by
members of the board.
The board has developed a position description for the Chief Executive
Officer. As it has plenary power, any responsibility that is not delegated to
management or a board committee remains with the board.
The board has not adopted a formal system that would enable an individual
director to engage an outside advisor at the expense of the Company in
appropriate circumstances; however, the chairmen of the Audit Committee and
the Corporate Governance and Compliance Committee have been authorized to
retain advice in matters relating to the affairs of the Audit Committee or the
Corporate Governance and Compliance Committee as the case may be.
-10-
Directors' and Officers' Liability Insurance
The Company has purchased directors' and officers' liability insurance, no
part of which is payable by the directors or officers of the Company. The
aggregate premium of US$450,000 represents insurance coverage from April 20,
2002 to April 20, 2003 for any liabilities due to future acts limited to
US$10,000,000 per policy year. There is a deductible provision of up to
US$100,000 for any claim the Company makes, but no such provision for claims
any director or officer makes.
EXECUTIVE COMPENSATION
As at December 31, 2002, the Company had two officers. The aggregate cash
compensation earned by the Named Executive Officers during the year ended
December 31, 2002, including those officers no longer with the Company, was
Cdn$1,721,726.
The following table presented in accordance with the regulations of the
Securities Act (Ontario), sets forth all compensation paid in respect of the
Chief Executive Officer and those executive officers who received in excess of
Cdn$100,000 per year in salary and bonus ("Named Executive Officers").
SUMMARY COMPENSATION TABLE
(in Canadian Dollars)
============================================================================= ===================================================
Annual Compensation Long-Term Compensation |
Awards |
|
|
|
------------------------------------------------------------------------------------------------------------------|--------------
|
Securities |
Other Under Restricted |
Annual Options/ Shares or | All
Name and Principal Compen- SARs Restricted LTIP | Other
Position Year Salary Bonus sation Granted Share Units Pay-outs |Compensation
($) ($) ($) (#) ($) ($) | ($)
------------------------------------------------------------------------------------------------------------------|--------------
Lewis Rose (1) 2002 132,794 150,000 6,000 320,000 Nil Nil | Nil
Interim President and CEO |
|
James Ryan (2) 2002 202,427 90,000 9,067 85,000 Nil Nil | Nil
CFO |
|
Jean Noelting (3) 2002 202,166 - 6,000 - Nil Nil | 510,000
President & CEO 2001 360,577 216,200 12,000 600,000 Nil Nil | Nil
|
|
David Outhwaite (4) 2002 171,205 - 4,200 - Nil Nil | Nil
Vice-President & COO 2001 233,077 62,500 7,200 30,000 Nil Nil | Nil
2000 147,483 5,000 - 50,000 Nil Nil | Nil
|
Anatoly Plotkin (5) 2002 205,367 - - 15,000 Nil Nil | 50,000
Executive Vice-President 2001 183,077 10,000 --- -- Nil Nil | Nil
2000 145,078 -- 75,000 Nil Nil | Nil
----------------------------------------------------------------------------------------------------------------------------------
Notes:
(1) Lewis Rose was appointed Interim President and CEO of the Company on
July 15, 2002 and assumed the role of President and CEO on March 7,
2003.
-11-
(2) James Ryan was appointed the Chief Financial Officer of the Company on
January 22, 2002. He received a signing bonus of $25,000, and for 2002
he was awarded a cash bonus of $32,500 and a stock bonus of $32,500 in
common shares.
(3) Jean Noelting resigned as President and CEO on July 12, 2002. Other
compensation included payment of $510,000 upon his resignation and
retention of 250,000 share purchase options until expiry on January 12,
2004.
(4) David Outhwaite resigned as Vice-President and COO on August 2, 2002
(5) Anatoly Plotkin resigned as Executive Vice-President on November 7,
2002. Other compensation included a payment of $50,000 upon his
resignation.
LONG TERM INCENTIVE PLANS
There were no such plans awarded in the last completed fiscal year. The
Company has no outstanding stock appreciation rights.
Options Granted During The Most Recently Completed Financial Year
Ended December 31, 2002 to Named Executive Officers
==========================================================================================================================
Securities % of Total Options Market Value of Securities
Under Granted to Employees Underlying Options on
Options in Exercise Price the Date of Grant Expiration
Name Granted (#) Financial Year (Cdn.$/Security) (Cdn.$/Security) Date
--------------------------------------------------------------------------------------------------------------------------
Lewis Rose 320,000 43% $8.59 $8.59 7/22/07
James Ryan 60,000 8% $26.09 $26.09 1/4/07
James Ryan 25,000 3% $8.16 $8.16 8/13/07
Anatoly Plotkin 15,000 2% $8.16 $8.16 8/13/07
==========================================================================================================================
STOCK OPTIONS EXERCISED AND HELD
The following information concerns each exercise of options during the most
recently completed financial year ended December 31, 2002 by the Corporation's
Named Executive Officers, and the financial year end value of unexercised
options held, on an aggregate basis.
Aggregated Option Exercises During the Most Recently Completed Financial Year
and Financial Year-End Option Values
=============================================================================================================================
Securities Aggregate Value of in the Money
Acquired on Value Options at Year
Exercise Realized Options at Year End End(1)
Name (#) ($) (#) Cdn. $
-----------------------------------------------------------------------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
-----------------------------------------------------------------------------------------------------------------------------
Lewis Rose Nil Nil 80,000 240,000 Nil Nil
James Ryan Nil Nil Nil 85,000 Nil Nil
Jean Noelting Nil Nil 250,000 Nil Nil Nil
David Outhwaite Nil Nil Nil Nil Nil Nil
Anatoly Plotkin Nil Nil 75,000 15,000 Nil Nil
=============================================================================================================================
Note:
(1) Based on the closing price of the Common Shares on the Toronto Stock
Exchange on December 31, 2002 of Cdn$7.50
-12-
PERFORMANCE GRAPH
The following graph compares the total cumulative shareholder return since
December 31, 1996 for $100 invested in the Company's common shares on such
date with the total cumulative return of the S&P/TSX Composite Index (formerly
the TSE 300 Composite Index).
[OBJECT OMITTED]
The Company's closing prices as at December 31 (in Canadian Dollars):
1997 $28.50
1998 $12.30
1999 $25.90
2000 $14.25
2001 $27.70
2002 $7.50
Employment Contracts with Named Executive Officers
The following summarizes the material terms of the employment contracts into
which the Company has entered with the Named Executive Officers.
All of the Named Executive Officers have entered into employment contracts
with the Company that provide for an annual base salary and certain other
compensation. The employment contracts further provide that the Named
Executive Officers are eligible for participation in bonuses, subject to
recommendations reviewed by the Corporate Governance and Compliance Committee
and reviewed and approved by the Board of Directors.
-13-
Lewis Rose, the President and Chief Executive Officer of the Company entered
into an employment agreement with the Company dated July 15, 2002, and amended
March 7, 2003, to become President and Chief Executive Officer for an
indefinite term, with an entitlement to twelve months' notice upon termination
without cause and twenty-four months' notice in the event of a change of
control of the Company.
Jim Ryan, the Chief Financial Officer of the Company, entered into an
employment agreement with the Company on January 22, 2002, for an indefinite
term with an entitlement to six months' notice upon termination without cause.
INDEBTEDNESS OF DIRECTORS AND SENIOR OFFICERS
None of the current directors or officers of the Company is or has been
indebted to it at any time during the most recently completed fiscal year
ended December 31, 2002.
INTERESTS OF INSIDERS IN MATERIAL TRANSACTIONS
No insider of the Company has any interest, direct or indirect, in any
material transactions involving it during the fiscal year ended December 31,
2002.
AUDITORS, REGISTRARS AND TRANSFER AGENTS
KPMG LLP, chartered accountants, of Toronto, Ontario, Canada, are the
Company's auditors.
Equity Transfer Services Inc. of Toronto, Ontario, Canada, is the Company's
transfer agent and registrar.
NORMAL COURSE ISSUER BID
In May 2002 the Company gave notice of its intent to issue a Normal Course
Issuer Bid (the "Bid") for up to 5% of the outstanding Common Shares over a
twelve-month period, commencing May 20, 2002 and ending May 19, 2003 in
accordance with the rules of the Toronto Stock Exchange. The Company has
repurchased and cancelled 110,000 Common Shares under the Bid. No Common
Shares were repurchased and cancelled during the period January 1, 2003 to
March 6, 2003.
SUBSTANTIAL ISSUER BID
On November 12, 2001, the Company made a Substantial Issuer Bid by way of an
Issuer Bid Circular to purchase for cash up to 1,000,000 Common Shares under a
"dutch auction" priced between Cdn$25.00 and Cdn$28.00 per Common Share, which
expired on January 11, 2002. The Substantial Issuer Bid resulted in 3,692
Common Shares being purchased for cancellation on December 21, 2001 at a price
of Cdn$28.00 per share and 1,001,242 Common Shares being purchased for
cancellation on January 11, 2002 at a price of Cdn$28.00 per share.
-14-
LEGAL PROCEEDINGS
There are no legal proceedings involving CryptoLogic or its property that
materially affect its business as at the date of this Management Information
Circular.
DIRECTORS' APPROVAL
The directors of the Company have approved the contents and sending of this
Management Information Circular, and it has been sent to the Company's
directors, shareholders and auditors.
Toronto, Ontario, Canada
April 7, 2003
CRYPTOLOGIC INC.
/s/ Robert Stikeman
-----------------------
Robert Stikeman
Secretary
Document 2
ON COMPANY LETTERHEAD
CRYPTOLOGIC LOGO OMITTED
April 4, 2003
Dear Shareholder:
Re: New Electronic Access to Shareholder Materials and Voting
CryptoLogic's goal is to provide investors with efficient and effective access
to shareholder communications. We are pleased to introduce electronic delivery
of CryptoLogic's shareholder documents as well as enable you to vote online.
Shareholders will have electronic access to the following documents easily and
quickly:
o Annual report;
o Supplemental information including quarterly reports;
o Notice of shareholder meetings; and
o Information circular and proxy related materials.
This initiative is meant to increase convenience for you, provide benefits to
our environment, and reduce costs; however, electronic delivery may not be
accessible or suitable for everyone. In this case, paper copies of
CryptoLogic's documents will continue to be provided.
How to enroll for electronic access of documents
------------------------------------------------
If you prefer the electronic option, you must have an electronic mail (e-mail)
account and Internet access.
Electronic Delivery: To register for electronic access of future
shareholder materials, please go to
www.investordeliverycanada.com and follow the
instructions. You will require the 12 character
Control Number displayed on the enclosed Voting
Instruction Form.
If you hold Cryptologic shares in multiple
accounts, you will receive meeting packages and
a corresponding Control Number for each account.
You must register for each account. An e-mail
confirmation of your election(s) for this option
will be sent to your e-mail address.
You will be notified when company materials are
made available online for your review. Please
note that if your email fails, the materials
will be delivered through regular mail.
2
Electronic Voting: You will receive an e-mail notification on how
to access Cryptologic's documents when they
become available, as well as a Control Number to
enable you to vote your shares through the
www.proxyvotecanada.com Internet website. The
control number is also displayed on the Voting
Instruction Form if you received paper copies of
documents.
Your enrollment for this option will remain in
effect until you cancel it. You may cancel your
enrollment at any time by accessing the
www.investordeliverycanada.com website. Please
record your Enrollment Number and PIN (personal
identification number) in a secure place for
future reference.
We hope that you will take advantage of this new online service. If you have
any questions, please contact your broker.
Document 3
ON COMPANY LETTERHEAD
CRYPTOLOGIC LOGO OMITTED
April 4, 2003
Dear Shareholder:
Re: New Electronic Access to Shareholder Materials and Voting
CryptoLogic's goal is to provide investors with efficient and effective access
to shareholder communications. We are pleased to introduce electronic delivery
of CryptoLogic's shareholder documents as well as enable you to vote online.
Shareholders will have electronic access to the following documents easily and
quickly:
o Annual report;
o Supplemental information including quarterly reports;
o Notice of shareholder meetings; and
o Information circular and proxy related materials.
This initiative is meant to increase convenience for you, provide benefits to
our environment, and reduce costs; however, electronic delivery may not be
accessible or suitable for everyone. In this case, paper copies of
CryptoLogic's documents will continue to be provided.
How to enroll for electronic access of documents
------------------------------------------------
If you prefer the electronic option, you must have an electronic mail (e-mail)
account and Internet access.
Electronic Delivery: To register for electronic access of future
shareholder materials, please complete the
enclosed Supplemental Mail List Form or go to
www.equitytransfer.com, click `eDelivery' and
follow the instructions.
You will be sent an email notification when
company information is available online for your
review. Please note that if your email fails,
the materials will be delivered through regular
mail.
Electronic Voting: To vote online, please go to www.equityvote.com,
click n `eProxy' and follow voting instructions.
You will require your Voter ID Number displayed
on the enclosed proxy form.
We hope that you will take advantage of this new online service. If you have
any questions, please contact CryptoLogic's transfer agent, Equity Transfer at
416-361-0930 or by email at info@equitytransfer.com.
Document 4
ON COMPANY LETTERHEAD
CRYPTOLOGIC LOGO OMITTED
April 4, 2003
Dear Shareholder:
On behalf of the Board of Directors, I am pleased to invite you to attend
CryptoLogic's Annual General Meeting of Shareholders to be held of Thursday,
May 1, 2003 at 4:30 p.m. (Eastern Time) at the Metro Toronto Convention
Centre, Room 203, 255 Front Street West, Toronto, Ontario, Canada.
At the meeting, your Management will report on CryptoLogic's performance in
2002, and on our growth strategies that leverage our strengths as a global
leader in the growing Internet gaming industry. We will also take this
opportunity to demonstrate CryptoLogic's exciting suite of interactive games.
Please find enclosed the following:
1. Notice of Meeting;
2. Management Information Circular;
3. Proxy Form;
4. Supplemental Mailing List Request Form;
5. Enrolment for Electronic Delivery of Future Shareholder Documents; and
6. 2002 Annual Report.
Kindly return your proxy to ensure your vote is recorded.
We look forward to welcoming you to this year's Annual Meeting of
Shareholders.
Yours sincerely,
/s/ Lewis Rose
-----------------------
Lewis Rose
President and CEO
Document 5
PROXY
Annual Meeting of the Shareholders of
CRYPTOLOGIC INC.
to be held on May 1, 2003
THIS PROXY IS SOLICITED ON BEHALF OF MANAGEMENT OF CRYPTOLOGIC INC.
The undersigned shareholder of CryptoLogic Inc. (the "Company"), hereby
appoints ROBERT STIKEMAN, or failing him, LEWIS N. ROSE, or instead of either
of them, ____________________________, as proxy with power of substitution, to
attend and vote for the undersigned at the Annual Meeting of Shareholders of
the Company to be held on May 1, 2003 at the Metro Toronto Convention Centre,
Room 203, 255 Front Street West, Toronto, Ontario, Canada at the hour of 4:30
p.m. (Eastern Time), and at any adjournments thereof, to the same extent and
with the same powers if the undersigned were personally present at the said
meeting or any adjournments thereof, and without limiting the general
authorization and power hereby given, the persons named above are specifically
directed to vote as follows:
1. FOR |_| or WITHHOLD|_| for the election of the
persons proposed as directors in the Management
Information Circular until the next Annual Meeting
of the shareholders or until their successors
shall be elected and shall qualify.
2. FOR |_| or WITHHOLD |_| for the re-appointment of
auditors: KPMG LLP and authorizing the directors
to fix the auditor's remuneration.
3. FOR |_| or AGAINST |_| in his discretion, on such
other issues as many properly come before the
meeting.
TO BE VALID, THIS PROXY MUST BE SIGNED AND DEPOSITED
WITH EQUITY TRANSFER SERVICES INC., 120 ADELAIDE STREET
WEST, SUITE 420, TORONTO, ONTARIO, M5H 4C3, NOT LATER
THAN THE CLOSE OF BUSINESS ON APRIL 30, 2003, OR, IF
THE MEETING IS ADJOURNED, 48 HOURS (EXCLUDING
SATURDAYS, SUNDAYS AND HOLIDAYS) BEFORE ANY ADJOURNED
MEETING.
This proxy revokes and supersedes all proxies of
earlier date.
THIS PROXY MUST BE DATED.
DATED this ____ day of _______, 2003
------------------------------------------------
Name of Shareholder (Please Print)
------------------------------------------------
Signature of Shareholder
(SEE NOTES ON REVERSE)
NOTES:
(1) A shareholder has the right to appoint a person to
represent him at the meeting other than the
management representatives designated in this
proxy. Such right may be exercised by inserting in
the space provided the name of the other person
the shareholder wishes to appoint. Such other
person need not be a shareholder.
(2) If an individual, please sign exactly as your
shares are registered.
If the shareholder is a corporation, this proxy
must be executed by a duly authorized officer or
attorney of the shareholder and, if the
corporation has a corporate seal, its corporate
seal should be affixed.
If shares are registered in the name of an
executor, administrator or trustee, please sign
exactly as the shares are registered. If the
shares are registered in the name of a deceased or
other shareholder, the shareholder's name must be
printed in the space provided, the proxy must be
signed by the legal representative with his name
printed below his signature and evidence of
authority to sign on behalf of the shareholder
must be attached to this proxy.
(3) Reference is made to the accompanying management
information circular for further information
regarding completion and use of this proxy and
other information relating to the meeting.
(4) If a share is held by two or more persons, any one
of them present or represented by proxy at a
meeting of shareholders may, in the absence of the
other or others, vote in respect thereof, but if
more than one of them are present or represented
by proxy they shall vote together in respect of
the share so held.
(5) If this proxy is not dated in the space provided,
it is deemed to bear the date on which it is
mailed by management of the Corporation.
Document 6
CRYPTOLOGIC INC.
1867 YONGE STREET, 7TH FLOOR, TORONTO, ONTARIO, CANADA M4S 1Y5
----------------------------------------------------------------------------
April 4, 2003
To Registered and Beneficial Shareholders:
In accordance with National Instrument 54-101, shareholders may elect annually
to have their names added to the issuer's Supplemental Mailing List. In order
to receive interim financial statements, please complete the following and
forward to the offices of:
EQUITY TRANSFER SERVICES INC
Suite 420, 120 Adelaide Street West
Toronto, Ontario, Canada, M5C 4C3
I HEREBY CERTIFY that I am a shareholder of the Company, and as such, request
that you add me to your Supplemental Mailing List.
-------------------------------------------------------------------------------
NAME (PLEASE PRINT)
-------------------------------------------------------------------------------
ADDRESS
-------------------------------------------------------------------------------
CITY PROVINCE/STATE POSTAL/ZIP CODE
--------------------------- ------------------------------------
COUNTRY E-MAIL*
SIGNED:
-----------------------------
(Signature of Shareholder)
* If you wish to receive electronic notification of the availability and/or
release of supplemental information, please read the attached consent and
provide your e-mail address above. Alternatively, you may register at:
www.equitytransfer.com
----------------------
Please ensure your mailing address is complete, in the event that electronic
delivery fails, you may receive information by mail.
THE CONSENT FORM MUST BE SIGNED TO RECEIVE INFORMATION ELECTRONICALLY
CONSENT FORM
1. I acknowledge that access to both Internet Email and The World Wide Web
is required in order to access documents electronically. I will receive
by email notification of the availability of a document in electronic
format. The notification email will not contain the actual document. The
notification email will contain a web address (or hyperlink) where the
document can be found. By entering this address into my web browser, I
can view, download, and print the document from my computer.
2. I acknowledge documents distributed electronically will be distributed
in Adobe's Portable Document Format (PDF). The Adobe Acrobat Reader
software is required to view documents in PDF format. The Reader
software is available free of charge from Adobe's web site at
www.adobe.com. The Reader software must be correctly installed on my
system before I will be able to view documents in PDF format.
3. I acknowledge that I may receive at no cost from the deliverer(s) a
paper copy of any documents delivered electronically if I contact the
deliverer by telephone (416-361-0152), by fax (416-361-0470), by email
(info@equitytransfer.com) or regular mail (120 Adelaide Street West,
Suite 420, Toronto, ON, Canada, M5H 4C3.
4. For the below named issuer(s) the documents will be maintained for a
minimum of 6 months and a maximum of 12 months from the date of posting
to the web site. Specific cancellation dates will be noted on the
documents themselves.
5. I understand that I will be provided with a paper copy of any document
intended to be delivered electronically, if electronic delivery fails.
6. I understand that my consent may be revoked or changed, including any
change in electronic mail address to which documents are delivered, at
any time by notifying the deliverer of such revised or revoked consent
by telephone (416-361-0152), by fax (416-361-0470), by email
(info@equitytransfer.com) or regular mail (120 Adelaide Street West,
Suite 420, Toronto, ON, Canada, M5H 4C3.
7. I understand that I am not required to consent to electronic delivery.
I have read and understand this "Consent to Electronic Delivery of Documents"
form and consent to the electronic delivery of the documents listed above that
the deliverer elects to deliver to me electronically, all in accordance with
my instructions above.
----------------------------------
SIGNATURE OF SHAREHOLDER
I am a REGISTERED SHAREHOLDER and I further consent to receiving other issuer
information electronically by inserting my account code (as shown on the proxy
under the barcode) here: _____________ - _______________ - __________________
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CryptoLogic Inc.
----------------------------------------------
(Registrant)
Date: April 14, 2003 By: /s/ James A. Ryan
----------------- ----------------------------------------
(Signature)
James A. Ryan
Chief Financial Officer