UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER PURSUANT TO RULE 13A-16 AND L5D-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(FEBRUARY 6, 2002)
DIVERSINET CORP.
_______________________________________________________________________
(Name of Registrant)
2225 Sheppard Avenue East, Suite 1700, Toronto, Ontario M2J 5C2
________________________________________________________________________
(Address of principal executive offices)
1. Management Information Circular
2. Proxy Statement
3. Policy 41 Statement
Indicate by check mark whether the Registrant files or will file annual reports
under cover of Form 20-F or Form 40-F
Form 20-F X Form 40-F
--- ---
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 XXX
--- ---
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Form 6-K to be signed on its behalf by the
undersigned, thereunto duly authorized
DIVERSINET CORP. - SEC FILE NO.0-23304
--------------------------------------
(REGISTRANT)
DATE: FEBRUARY 6, 2002 BY: /s/ RICHARD PALMER
----------------------------------------------
RICHARD PALMER, EXECUTIVE VICE PRESIDENT & CFO
[GRAPHIC OMITED]
DIVERSINET CORP.
NOTICE OF ANNUAL AND GENERAL
MEETING OF SHAREHOLDERS
TAKE NOTICE THAT the annual meeting of shareholders of DIVERSINET CORP.
(the "Corporation") will be held at the Hilton Toronto, Tom Thompson Room, 145
Richmond Street W, Toronto, Ontario, on Thursday, March 7, 2002 at the hour of
2:00 o'clock in the afternoon (Toronto time), for the following purposes:
1. To consider and receive the financial statements of the Corporation for the
year ended October 31, 2001, together with the report of the auditors
thereon;
2. To elect directors;
3. To appoint auditors and authorize the directors to fix their remuneration;
4. To transact such other business as may properly come before the Meeting or
any adjournments thereof.
Holders of common shares who are unable to attend the Meeting in person are
requested to sign and return the enclosed form of proxy in the envelope provided
for that purpose.
The Corporation's financial statements for the year ended October 31, 2001, the
report of the auditors thereon to the shareholders, a management information
circular and a form of proxy are enclosed herewith.
The board of directors has fixed the close of business on January 31, 2002 as
the record date for the determination of holders of common shares entitled to
notice of the Meeting and any adjournments thereof.
The board of directors has by resolution fixed the close of business on the
second business day preceding the day of the Meeting or any adjournment thereof
(excluding Saturdays, Sundays and holidays) as the time before which proxies to
be used or acted upon at the Meeting or any adjournment thereof shall be
deposited with the Corporation.
DATED at Toronto this 31st day of January, 2002.
BY ORDER OF THE
BOARD OF DIRECTORS
/s/ NAGY MOUSTAFA
NAGY MOUSTAFA
President and Chief Executive Officer
DIVERSINET CORP.
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 7, 2002
MANAGEMENT INFORMATION CIRCULAR
SOLICITATION OF PROXIES
THIS MANAGEMENT INFORMATION CIRCULAR IS FURNISHED IN CONNECTION WITH THE
SOLICITATION OF PROXIES BY THE MANAGEMENT OF DIVERSINET CORP. (THE
"CORPORATION") FOR USE AT THE ANNUAL MEETING OF SHAREHOLDERS (THE "MEETING") OF
THE CORPORATION TO BE HELD AT THE TIME AND PLACE AND FOR THE PURPOSES SET FORTH
IN THE ATTACHED NOTICE OF ANNUAL MEETING OF SHAREHOLDERS (THE "NOTICE OF
MEETING"). IT IS EXPECTED THAT THE SOLICITATION WILL BE BY MAIL PRIMARILY, BUT
PROXIES MAY ALSO BE SOLICITED PERSONALLY BY REGULAR EMPLOYEES OF THE
CORPORATION. THE COST OF SOLICITATION WILL BE BORNE BY THE CORPORATION.
The Corporation may also pay brokers or other persons holding common shares in
their own names or in the names of nominees for their reasonable expenses of
sending proxies and proxy material to beneficial owners and obtaining their
proxies.
No person is authorized to give any information or to make any representations
other than those contained in this Circular and, if given or made, such
information or representation should not be relied upon as having been
authorized. Unless otherwise indicated, all dollar references in this circular
are to Canadian dollars.
APPOINTMENT AND REVOCATION OF PROXIES
The persons named in the enclosed form of proxy are officers of the Corporation.
A SHAREHOLDER HAS THE RIGHT TO APPOINT A PERSON (WHO NEED NOT BE A SHAREHOLDER)
TO ATTEND AND ACT FOR HIM AND ON HIS BEHALF AT THE MEETING OR ANY ADJOURNMENTS
THEREOF OTHER THAN THE PERSONS DESIGNATED IN THE ENCLOSED FORM OF PROXY. SUCH
RIGHT MAY BE EXERCISED BY STRIKING OUT THE NAMES OF THE PERSONS DESIGNATED IN
THE ENCLOSED FORM OF PROXY AND BY INSERTING IN THE BLANK SPACE PROVIDED FOR THAT
PURPOSE THE NAME OF THE DESIRED PERSON OR BY COMPLETING ANOTHER PROPER FORM OF
PROXY AND, IN EITHER CASE, DELIVERY OF THE COMPLETED AND EXECUTED PROXY TO THE
CORPORATION OR ITS TRANSFER AGENT PRIOR TO THE CLOSE OF BUSINESS ON THE SECOND
BUSINESS DAY PRECEDING THE DAY OF THE MEETING OR ANY ADJOURNMENTS THEREOF.
A shareholder forwarding the enclosed proxy may indicate the manner in which the
appointee is to vote with respect to any specific item by checking the
appropriate space. If the shareholder giving the proxy wishes to confer a
discretionary authority with respect to any item of business then the space
opposite the item is to be left blank. The shares represented by the proxy
submitted by a shareholder will be voted in accordance with the directions, if
any, given in the proxy.
A shareholder who has given a proxy may revoke it at any time insofar as it has
not been exercised. A proxy may be revoked, as to any matter on which a vote
shall not already have been cast pursuant to the authority conferred by such
proxy, by instrument in writing executed by the shareholder or by his attorney
authorized in writing or, if the shareholder is a body corporate, under its
corporate seal or by an officer or attorney thereof duly authorized, and
deposited either with the Corporation or its transfer agent, Computershare Trust
Company, 100 University Avenue, Toronto, Ontario, M5J 2Y1 at any time up to and
including the last business day preceding the day of the Meeting or any
adjournments thereof, at which the proxy is to be used or with the Chairman of
such Meeting on the date of the Meeting or any adjournments thereof, and upon
either of such deposits the proxy is revoked. A proxy may also be revoked in
any other manner permitted by law.
EXERCISE OF DISCRETION BY PROXIES
The persons named in the enclosed form of proxy will vote the shares in respect
of which they are appointed in accordance with the direction of the Shareholders
appointing them. IN THE ABSENCE OF SUCH DIRECTION, SUCH SHARES WILL BE VOTED OR
VOTED IN FAVOR OF THE PASSING OF ALL THE RESOLUTIONS DESCRIBED BELOW. THE
ENCLOSED FORM OF PROXY CONFERS DISCRETIONARY AUTHORITY UPON THE PERSONS NAMED
THEREIN WITH RESPECT TO AMENDMENTS OR VARIATIONS TO MATTERS IDENTIFIED IN THE
NOTICE OF MEETING AND WITH RESPECT TO OTHER MATTERS WHICH MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF. At the time of printing of this
management information circular, management knows of no such amendments,
variations or other matters to come before the Meeting or any adjournments
thereof other than the matters referred to in the Notice of Meeting.
NON-REGISTERED HOLDERS
Only registered shareholders or the person they appoint as their proxyholders
are permitted to attend and/or vote at the Meeting. However, in any cases,
shares of the Corporation beneficially owned by a holder (a "Non-registered
Holder") are registered either:
(a) in the name of an intermediary (an "intermediary") that the
Non-Registered Holder deals with in respect of the shares, such as,
among others, banks, trust companies, securities dealers or brokers
and trustees or administrators of self-administered RRSPs, RRIFs,
RESPs and similar plans; or
(b) in the name of a clearing agency (such as The Canadian Depository for
Securities Limited) of which the Intermediary is a participant.
In accordance with the requirements of National Policy Statement No. 41 of the
Canadian Securities Administrators, the Corporation has distributed copies of
the Notice of Meeting, this Information Circular, the form of proxy, and the
2001 Annual Report (collectively, the "meeting materials") to the clearing
agencies and Intermediaries for onward distribution to Non-Registered Holders.
Intermediaries are required to forward meeting materials to Non-Registered
Holders unless a Non-Registered Holder has waived the right to receive them.
Very Often, Intermediaries will use service companies to forward the meeting
materials to Non-Registered Holders. Generally, Non-Registered Holders who have
not waived the right to receive meeting materials will either:
------
A. be given a form of proxy which has already been signed by the Intermediary
(typically by a facsimile, stamped signature), which is restricted as to
the number of shares beneficially owned by the Non-Registered Holder but
which is otherwise uncompleted. This form of proxy need not be signed by
the Non-Registered Holder. In this case, the Non-Registered Holder who
wishes to submit a proxy should otherwise properly complete the form of
proxy and deposit it as described above;
or
B. more typically, be given a voting instruction form which must be completed
and signed by the Non-Registered Holder in accordance with the directions
on the voting instruction form (which may in some cases permit the
completion of the voting instructions form by telephone).
The purpose of these procedures is to permit Non-Registered Holders to direct
the voting of the shares they beneficially own. Should a Non-Registered Holder
who receives either a proxy or a voting instruction form wish to attend and vote
at the Meeting in person (or have another person attend and vote on behalf of
---------
the Non-Registered Holder), the Non-Registered Holder should strike out the
names of the persons named in the proxy and insert the Non-Registered Holder's
(or such other person's) name in the blank space provided or, in the case of a
voting instruction form, follow the corresponding instructions on the form. IN
EITHER CASE, NON-REGISTERED HOLDERS SHOULD CAREFULLY FOLLOW THE INSTRUCTIONS OF
THEIR INTERMEDIARIES AND THEIR SERVICE COMPANIES.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As at January 31, 2002, 26,413,876 common shares of the Corporation were issued
and outstanding. Each common share entitles the registered holder thereof to
one vote at all meetings of shareholders.
All voting shareholders of record as of the time of the Meeting or any
adjournments thereof are entitled either to attend and vote thereat in person
the shares held by them or, provided a completed and executed proxy shall have
been delivered to Computershare Trust Company of Canada within the time
specified herein, to attend and vote thereat by proxy the shares held by them.
The Corporation has fixed January 31, 2002, as the record date for the purpose
of determining shareholders entitled to receive notice of the Meeting. In
accordance with the provisions of the Business Corporations Act (Ontario) (the
"Act"), the Corporation will prepare a list of holders of shares at the close of
business on the record date. Each holder of voting shares named in the list
will be entitled to vote at the Meeting or any adjournments thereof the shares
shown opposite his name on the list except to the extent that; (a) the
shareholder has transferred any of his shares after the date on which the list
was prepared; and (b) the transferee of those shares produces properly endorsed
share certificates or otherwise establishes that he owns such shares and demands
not later than ten (10) days before the Meeting or any adjournments thereof that
his name be included in the list before the Meeting or any adjournments thereof,
in which case the transferee is entitled to vote his shares at the Meeting or
any adjournments thereof.
To the knowledge of the directors and senior officers of the Corporation, there
are no persons, firms or corporations which beneficially own or exercise control
or direction over securities of the Corporation carrying more than ten (10%)
percent of the voting rights attached to any class of outstanding voting
securities of the Corporation.
BUSINESS TO BE TRANSACTED AT THE MEETING
A. FINANCIAL STATEMENTS
The consolidated financial statements of the Corporation for the fiscal year
ended October 31, 2001 and the report of the auditors thereon accompany this
circular.
B. ELECTION OF DIRECTORS
The Board of Directors of the Corporation presently consists of eight (8)
directors to be elected annually. The number of directors to be elected at the
Meeting has been fixed at eight (8) persons. ALL OF THE NOMINEES ARE NOW
DIRECTORS OF THE CORPORATION AND HAVE BEEN DIRECTORS SINCE THE DATES INDICATED
BELOW. UNLESS AUTHORITY TO DO SO IS WITHHELD, THE PERSONS NAMED IN THE ENCLOSED
FORM OF PROXY INTEND TO VOTE FOR THE ELECTION OF THE NOMINEES WHOSE NAMES ARE
SET FORTH BELOW. Management does not contemplate that any of the nominees will
be unable to serve as a director but if that should occur for any reason prior
to the Meeting or any adjournments thereof, it is intended that discretionary
authority shall be exercised by the person named in the enclosed form of proxy
to vote the proxy for the election of any other person or person in place of any
nominee or nominees unable to serve. Each director elected will hold office
until the close of business of the first annual meeting of shareholders of the
Corporation following his election unless his office is earlier vacated in
accordance with the Corporation's by-laws.
The statement as to the shares of the Corporation beneficially owned or over
which control or discretion is exercised by the nominees for election as
directors hereinafter named is in each instance based upon information furnished
by the person concerned. The names of the nominees for election as directors,
their positions with the Corporation, the year they became a director of the
Corporation and the number of shares beneficially owned, directly or indirectly,
or over which control or direction is exercised is as follows:
NUMBER OF SHARES BENEFICIALLY
POSITION WITH APPOINTED OWNED, DIRECTLY OR INDIRECTLY, OR
NAME AND PRESENT PRINCIPAL OCCUPATION THE CORPORATION SINCE OVER WHICH CONTROL OR DIRECTION IS
EXERCISED
- ------------------------------------------------ ----------------- --------- ----------------------------------
Nagy Moustafa President, Chief 1997 522,250
President, Chief Executive Officer and Chairman Executive Officer
of the Corporation and Chairman
Richard Palmer(4) Executive Vice 2001 1,400
Executive Vice President, Chief Financial President,
Officer of the Chief Financial
Corporation Officer
Frank Clegg(2) (3) (5) Director 1998 NIL
President
Microsoft Canada
David F. Masotti (1) (3) (7) Director 1998 NIL
Independent Consultant
John A. McMahon(2) (3) (8) Director 1998 NIL
Chairman and Chief Executive Officer
Continua Capital Inc.
Mark C. Steinman (1) (3) (9) Director 1998 NIL
Executive Vice-President and Chief Financial
Officer
Stelco Inc.
Tony Werner (2) (3) (10) Director 1998 NIL
Chief Technology Officer
Liberty Media Corporation
William W. Linton (1) (3) (6) Director 2000 NIL
President and Chief Executive Officer
Call-Net Enterprises Inc.
<FN>
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
(3) Member of the Special Committee.
(4) Mr. Palmer has been Executive Vice President and Chief Financial Officer
since August 1, 2000. On December 12, 2001 he was appointed a Director.
From 1988 to July 2000 he held various positions culminating with the
position of Senior Vice President, Finance at CTV Inc. (broadcaster).
(5) Mr. Clegg was appointed President of Microsoft Canada in 2000 (software
development and information). From 1996 to 2000 he was the Vice-President,
Microsoft Corp. - Central Region.
(6) Mr. Linton was appointed President and Chief Executive Officer of Call-Net
Enterprises Inc. in September of 2000 (a Canadian telecommunications
company). From 1998 to 1999 he was the Chairman and Chief Executive Officer
of PRIOR Data Sciences, Inc. (software development and consulting). From
1994 to 1997 he was the Executive Vice-President and Chief Financial
Officer of SHL Systemhouse, Inc. (information technology).
(7) Mr. Masotti is currently an Independent Consultant. He was the President
and CEO of Skulogix Inc. (provider of Internet-based transaction services
to retailers and manufacturers) from 1998 to 2000. From 1997 to 1998 he
held the position of President of Spar Space Systems (aerospace equipment)
and from 1996 to 1997 he held the position of Senior Vice-President,
Business Development, Spar Aerospace Limited.
(8) Mr. McMahon is the Managing Partner of Continua Capital Inc. (strategic
business and financial consulting services to emerging technology
companies). From 1998 to 2000 he was the Chairman of NAME Inc. formerly
EcomPark Inc. (strategic Internet services company). From 1995 to 1997 he
was a strategic management consultant for several Canadian technology
companies and an investment bank.
(9) Mr. Steinman has been the Executive Vice-President and Chief Financial
Officer of Stelco Inc. (steel manufacturer) since July 12, 1999. From 1996
to May 1999 he was the Senior Vice-President and Chief Financial Officer of
Spar Aerospace Limited.
(10) Mr. Werner was appointed the Chief Technology Officer of Liberty Media
Corporation on August 27, 2001. From November 2000 to August 27, 2001 Mr.
Werner was the President and Chief Executive Officer of Aurora Networks
(designs and manufactures next generation optical networking equipment for
the Broadband Industry). From 1997 to November 2000 he was the Executive
Vice President of Engineering and Chief Technology Officer for AT&T
Broadband formerly TCI Communications, Inc. ("TCIC") (cable communications
services).
As at the date of this information circular, the directors and officers of the
Corporation as a group, directly and indirectly, beneficially own or exercise
control or discretion over 693,066 Common Shares, representing approximately 3%
of the issued and outstanding Common Shares of the Corporation.
C. APPOINTMENT OF AUDITORS
Shareholders will be asked at the Meeting to approve the appointment of KPMG,
LLP Chartered Accountants, as auditors to the Corporation at a remuneration to
be fixed by the directors. KPMG, LLP were appointed as the auditors of the
Corporation on August 29, 2000. From March 1, 1999 to August 29, 2000 Ernst &
Young, LLP were the Corporation's auditors. Prior to that time Zeifman &
Company, LLP were the Corporation's auditors. UNLESS THE SHAREHOLDER DIRECTS
THAT HIS OR HER COMMON SHARES ARE TO BE WITHHELD FROM VOTING IN CONNECTION WITH
THE APPOINTMENT OF AUDITORS, THE PERSONS NAMED IN THE ENCLOSED FORM OF PROXY
INTEND TO VOTE FOR THE APPOINTMENT OF KPMG, LLP, CHARTERED ACCOUNTANTS AS
AUDITORS OF THE CORPORATION UNTIL THE NEXT ANNUAL MEETING OF SHAREHOLDER AND TO
AUTHORIZE THE DIRECTORS TO FIX THEIR REMUNERATION.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation earned during the fiscal years
ended October 31, 1999, October 31, 2000 and October 31, 2001 from the
Corporation by its President and Chief Executive Officer and the other officers
of the Corporation (the "Named Executive Officers"). The Corporation has
determined that it had a total of five "Named Executive Officers" during the
fiscal year.
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------- -----------------
NAME AND PRINCIPAL SECURITIES UNDER ALL OTHER
POSITION SALARY BONUS(6) OTHER ANNUAL OPTIONS COMPENSATION
YEAR ($) ($) COMPENSATION GRANTED (#) ($)
- -------------------- ---- -------- ---------- ------------ ----------------- -------------
Nagy Moustafa (1) 2001 200,000 125,000(9) 6,000 400,000 NIL
President and Chief 2000 200,000 212,500 6,000 500,000 NIL
Executive Officer 1999 200,000 250,000 6,000 500,000 NIL
Richard Palmer (2) 2001 150,000 50,000(9) 4,800 305,000 NIL
Executive Vice 2000 33,077 9,082 1,000 100,000 NIL
President and Chief 1999 N/A N/A N/A N/A N/A
Financial Officer
Nick Darwish (3) 2001 140,000 50,000(9) 4,800 50,000 NIL
Vice-President, 2000 86,667 69,260 4,000 87,500 NIL
Business 1999 N/A N/A N/A N/A N/A
Development
Hussam Mahgoub (4) 2001 120,000 50,000(9) 4,800 50,000 NIL
Vice-President 2000 120,000 64,000 4,800 40,000 NIL
Products 1999 70,356 40,850 2,800 60,000 10,000(7)
Verne Meredith (5) 2001 172,197 NIL 3,500 130,000 147,635(8)
Vice-President 2000 125,725 68,000 NIL 97,500 NIL
Sales and Marketing 1999 N/A N/A N/A N/A N/A
NOTES:
<FN>
(1) Nagy Moustafa was appointed President and Chief Executive Officer of the
Corporation on November 10, 1997. See "Management Employment Contracts".
(2) Richard Palmer was appointed ExecutiveVice President and Chief Financial
Officer of the Corporation on August 1, 2000. See "Management Employment
Contracts".
(3) Nick Darwish was appointed Vice-President, Business Development of the
Corporation on December 20, 1999. Subsequent to fiscal 2001 Mr. Darwish was
appointed Vice President Sales and Marketing. See "Management Employment
Contracts".
(4) Hussam Mahgoub was appointed Vice-President, Products of the Corporation on
April 1, 1999. See "Management Employment Contracts".
(5) Verne Meredith was hired on a permanent full-time basis on January 2, 2001
to fulfill the role of Vice-President, Sales and Marketing. See "Management
Employment Contracts". Mr. Meredith's employment with the Corporation
terminated on September 21 2001. Amounts for fiscal 2000 were paid to
Marketing Services International of which Mr. Meredith was the principal
shareholder.
(6) Bonus allocations, if any, are determined annually at the discretion of the
Board of Directors on the recommendations of the Compensation Committee.
Bonuses are paid in the fiscal year following the year in which they are
earned as the determination is made by the Board subsequent to the end of
the fiscal year.
(7) $10,000 paid in consideration of personal moving expenses.
(8) Severance paid to Verne Meredith upon termination of his employment on
September 21, 2001.
(9) Bonuses for fiscal 2001 are payable upon attaining certain corporate
objectives during fiscal 2002.
OPTION GRANTS IN FISCAL YEAR ENDED OCTOBER 31, 2001
Details of options granted to each Named Executive Officer during the fiscal
year ended October 31, 2001 are as follows:
% OF TOTAL EXERCISE MARKET VALUE OF
NAME SECURITIES OPTIONS PRICE SECURITIES
UNDER GRANTED /SECURITY UNDERLYING
OPTIONS TO EMPLOYEES IN ($) OPTIONS ON THE DATE EXPIRATION DATE (1)
GRANTED FINANCIAL YEAR OF GRANT/SECURITY
(#) ($)
- ------------------- ----------- ---------------- ---------- -------------------- --------------------
Nagy Moustafa 400,000 21% US$2.22 US$2.22 January 11, 2006
President and Chief
Executive Officer
Richard Palmer 225,000 12% US$1.00 US$1.00 October 1, 2006
Executive Vice 80,000 4.3% US$2.22 US$2.22 January 11, 2006
President and Chief
Financial Officer
Nick Darwish 26,250 1.4% US$2.22 US$2.22 January 11, 2006
Vice-President 50,000 2.7% US$1.53 US$1.53 July 24, 2006
Business
Development
Hussam Mahgoub 30,000 1.6% US$2.22 US$2.22 January 11, 2006
Vice-President
Products
Verne Meredith 30,000 1.6% US$2.22 US$2.22 January 11, 2006
Vice-President 100,000 5.4% US$4.22 US$4.22 January 2, 2006
Sales and
Marketing
<FN>
(1) Pursuant to the Stock Option Plan of the Corporation, unexercised options
are subject to early expiration upon the termination of employment of the
optionee with the Corporation or its affiliates and on the optionee's
retirement or death.
OPTIONS EXERCISED DURING THE FISCAL YEAR ENDED OCTOBER 31, 2001
Details of aggregate number of options exercised by each Named Executive Officer
during the fiscal year ended October 31, 2001 and particulars of the fiscal year
end value of unexercised options held by Named Executive Officers are as
follows:
VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
SECURITIES AGGREGATE AT OCTOBER 31, 2001 (#) AT OCTOBER 31, 2001 (US$)
NAME AND ACQUIRED ON VALUE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE (1)
PRINCIPAL POSITION EXERCISE # (US$)
Nagy Moustafa NIL NIL 750,000/550,000 116,637/13,562
President and Chief
Executive Officer
Richard Palmer NIL NIL 61,667/343,333 NIL/94,162
Executive Vice President
and Chief Financial
Officer
Hussam Mahgoub NIL NIL 65,382/64,168 NIL/NIL
Vice-President, Products
Nick Darwish NIL NIL 54,477/109,273 NIL/NIL
Vice-President
Business Development
Verne Meredith NIL NIL NIL/NIL NIL/NIL
Vice-President
Sales and Marketing
<FN>
(1) Based on a closing market price of US$1.27 per Common Share of the Corporation on October 31, 2001 on the
NASDAQ (the last trading day in the fiscal year of the Corporation).
OTHER COMPENSATION MATTERS
There were no long-term incentive awards other than stock options made to the
Named Executive Officers of the Corporation during the fiscal year ended October
31, 2001. There are no pension plan benefits in place for the Named Executive
Officers and none of the Named Executive Officers, senior officers or directors
of the Corporation is indebted to the Corporation.
MANAGEMENT EMPLOYMENT CONTRACTS
Nagy Moustafa, the Corporation's President and Chief Executive Officer is
employed pursuant to a written employment contract effective September 29, 1997
as amended. The contract provides for a five year term with an annual base
salary of $220,000 and an annual performance bonus of up to $250,000. The
contract provides for payment of twenty-four (24) months salary upon termination
of employment, including termination as a result of a change-in-control or a
change in responsibilities following a change-in-control. The agreement also
contains certain non-competition and non-disclosure provisions.
Richard Palmer, Executive Vice-President and Chief Financial Officer, is
employed pursuant to a written employment contract effective August 1, 2000 as
amended. The contract is renewable annually with a base salary of $180,000 and
a performance bonus of up to $150,000 ($250,000 for fiscal 2002) payable upon
the achievement of personal goals and corporate objectives as agreed upon. The
contract provides for payment of twelve (12) months salary upon termination of
employment and twenty-four (24) months salary upon termination of employment as
a result of a change-in-control or a change in responsibilities following a
change-in-control. The agreement also contains certain non-competition and
non-disclosure provisions and is subject to certain termination provisions.
MANAGEMENT EMPLOYMENT CONTRACTS (CONT'D)
Hussam Mahgoub, Vice-President, Products is employed pursuant to a written
employment contract effective April 1, 1999 as amended. The contract is
renewable annually with a base salary of $132,000 and a performance bonus of up
to $100,000 payable upon the achievement of personal goals and corporate
objectives as agreed upon. The contract provides for payment of six (6) months
salary upon termination of employment and twenty-four (24) months salary upon
termination of employment as a result of a change-in-control or a change in
responsibilities following a change-in-control. The agreement also contains
certain non-competition and non-disclosure provisions and is subject to certain
termination provisions.
Nick Darwish, Vice-President, Business Development is employed pursuant to a
written employment contract effective December 20, 1999 as amended. The
contract is renewable annually with a base salary of $154,000 and a performance
bonus of up to $100,000 payable upon the achievement of personal goals and
corporate objectives as agreed upon. The contract provides for payment of six
(6) months salary upon termination of employment and twenty-four (24) months
salary upon termination of employment as a result of a change-in-control or a
change in responsibilities following a change-in-control. The agreement also
contains certain non-competition and non-disclosure provisions and is subject to
certain termination provisions.
Mr. Meredith was hired as an employee of Diversinet Corp. pursuant to a written
employment contract effective January 2, 2001. The contract was renewable
annually with a base salary of $170,000 and a performance bonus of up to
$130,000 payable upon the achievement of sales and marketing department goals
and corporate objectives as agreed upon. The contract provided for payment of
six (6) months salary upon termination of employment. The agreement also
contained certain non-competition and non-disclosure provisions and was subject
to certain termination provisions. The employment contract was terminated on
September 21, 2001.
COMPOSITION OF THE COMPENSATION COMMITTEE
During the fiscal year ended October 31, 2001 Frank Clegg (Chair), John McMahon
and Tony Werner, all of whom are "unrelated" directors (see Statement of
Corporate Governance Practices), comprised the Corporation's compensation
committee (the "Compensation Committee").
REPORT ON EXECUTIVE COMPENSATION
It is the responsibility of the Compensation Committee to determine the level of
compensation in respect of the Corporation's senior executives (including Named
Executive Officers) with a view to providing such executives with a competitive
compensation package having regard to performance. Performance is defined to
include achievement of the Corporation's strategic objective of growth,
development of the business, enhancement of shareholder value and attainment of
annual goals as set by the Board of Directors.
Compensation for executive officers is composed primarily of three components;
base salary, performance bonuses and the granting of stock options. Performance
bonuses are considered from time to time having regard to the above referenced
objectives as well as the terms of each officer's employment contract.
In establishing the levels of base salary, the award of stock options and
performance bonuses the Compensation Committee takes into consideration
individual performance, responsibilities, length of service and levels of
compensation provided by industry competitors.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The Chief Executive Officer's compensation is paid in accordance with the terms
of his employment contract (See "Management Employment Contracts") which
provides for payment of an annual base salary of $220,000 and an annual
performance bonus of up to $250,000. In addition, Mr. Moustafa participates in
the Corporation's stock option plan.
Mr. Moustafa's bonus of $125,000 in respect of the year ended October 31, 2001,
representing 50% of the maximum bonus payable under his employment contract is
payable upon the achievement of certain corporate objectives in fiscal 2002.
The amount of the bonus was based on the achievement by the Corporation and
senior management for the year ended October 31, 2001.
Mr. Moustafa was granted options in respect of an aggregate of 400,000 common
shares in accordance with the Corporation's stock option plan. The grant of
options to Mr. Moustafa during the year ended October 31, 2001 was considered by
the Compensation Committee as being desirable to maintain Mr. Moustafa's
compensation at a competitive level.
The Compensation Committee did not directly base Mr. Moustafa's bonus and option
grants on rates for comparable employers, although the Compensation Committee
did consider the compensation of CEOs of other issuers in the same industry in
determining Mr. Moustafa's overall compensation.
Submitted on behalf of the Compensation Committee:
John McMahon (Chair)
Frank Clegg
Tony Werner
COMPENSATION OF DIRECTORS
The directors of the Corporation receive no compensation for attending meetings
of the Board of Directors or a committee of the Board of Directors.
None of the directors of the Corporation was compensated in his capacity as a
director by the Corporation during the fiscal year ended October 31, 2001
pursuant to any other arrangement or in lieu of any standard arrangement. It
has been the Corporation's practice to grant to a director 100,000 options to
acquire common shares of the Corporation upon his or her election as a director.
In addition the Corporation may grant directors additional options from time to
time. During fiscal 2001 each "unrelated" director received an additional grant
of 40,000 options. Such options are exercisable to acquire common shares at the
market price on the day preceding the grant pursuant to the terms of the
Corporation's stock option plan.
DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
The Corporation maintains insurance for its directors and officers against
liability in their respective capacities as directors and officers. The annual
premium payable by the Corporation in respect of such insurance is $207,966 USD
and the total amount of insurance purchased for the directors and officers as a
group is $15,000,000 USD. In addition to the premiums, the Corporation is
liable to the extent of up to $125,000 USD per claim under the deductible
provisions of the policy. No claims have been made under these policies to
date.
INDEBTEDNESS OF DIRECTORS AND OFFICERS
None of the directors or officers of the Corporation, any proposed nominee for
election as a director or any of their associates or affiliates is or has been
indebted to the Corporation at any time since the beginning of the last
completed fiscal year other than routine indebtedness (as defined in the
Securities Act (Ontario)).
STOCK PERFORMANCE CHART
The following graph and chart assume that $100 was invested over a five year
period commencing on October 31, 1997 and ending on October 31 of each
subsequent year thereafter by comparing the yearly percentage change in the
cumulative total shareholder return over those four years on the Corporation's
common shares.
[GRAPHIC OMITED]
TSE 300 DIVERSINET
STOCK INDEX CORP.
October 31, 1997 100 100
October 31, 1998 92 89
October 31, 1999 109 813
October 31, 2000 147 417
October 31, 2001 106 86
INTERIM FINANCIAL STATEMENTS
Pursuant to National Policy Statement No. 41 published by the Canadian
Securities Administrators in November, 1987, the Corporation is not required to
mail out its interim quarterly financial statements. The Corporation maintains
a supplemental mailing list containing the names of the holders of the
securities of the Corporation to whom the interim financial statements of the
Corporation will be mailed. A return card is enclosed with this management
information circular permitting shareholders to request that they be placed on
the supplemental mailing list.
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
The Toronto Stock Exchange (the 'TSE") has issued a series of guidelines (the
"TSE Guidelines") for effective corporate governance. These guidelines deal
with matters such as the constitution and independence of corporate boards,
their functions, the effectiveness and education of board members and other
items dealing with sound corporate governance. The TSE requires that each
listed corporation disclose on an annual basis its approach to corporate
governance. Although the Corporation is not listed on the TSE, it refers to the
TSE guidelines for guidance. The Corporation's approach to corporate governance
is described below.
The Board of Directors is responsible for the supervision of the management of
the Corporation's business and affairs. Under applicable law, the board is
required to carry out its duties with a view to the best interests of the
Corporation.
The frequency of the meetings of the Board of Directors as well as the nature of
the agenda items change depending upon the state of the Corporation's affairs
and in light of opportunities or risks which the Corporation faces from time to
time.
COMPOSITION OF THE BOARD
The TSE Guidelines recommend that a Board of Directors be constituted with a
majority of individuals who qualify as "unrelated directors". The TSE
Guidelines define an "unrelated director" as a director who is independent of
management and 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 corporation,
other than an interest arising from shareholding. The TSE Guidelines also
recommend that in circumstances where a corporation has a "significant
shareholder" (a shareholder with the ability to exercise the majority of votes
for the election of directors), the Board of Directors should include a number
of directors who do not have interests in or relationships with either
corporation or the significant shareholder, which fairly reflects the investment
in the corporation by shareholders other than the significant shareholder. The
Corporation does not have a "significant shareholder" at this time.
The directors of the Corporation have examined these definitions in the TSE
Guidelines and have individually considered their respective interests in and
relationships with the Corporation. As a consequence, the Board of Directors
has concluded that six of the Board's eight members are "unrelated" within the
meaning of the guidelines. Mr. Nagy Moustafa, President and Chief Executive
Officer and Richard Palmer, Executive Vice President and Chief Financial Officer
are related by virtue of being members of the management team. The Corporation
does not have a significant shareholder (as defined above). The Board of
Directors considers its current size of eight to be appropriate at the current
time.
The Board of Directors believes that the presence of the President and Chief
Executive Officer and the Executive Vice President and Chief Financial Officer
on the Corporation's Board of Directors is key to the effective corporate
governance of the Corporation. The knowledge and insight that these directors
bring to the Board has been instrumental in creating a Board of Directors that
functions effectively and, in turn, achieving the Corporation's successful
development.
The Board of Directors has established a committee of outside directors to deal
with corporate governance issues on an ad hoc basis.
Given that there is minimal turnover of the members of the Board of Directors,
the board has determined that an orientation or education program for new
members to the Board of Directors is not necessary at this time.
At present, in addition to those matters which must by law be approved by the
Board of Directors, management seek board approval for any transaction that is
out of the ordinary course of business or could be considered to be material to
the business of the Corporation.
The Board of Directors has three standing committees: the Audit Committee, the
Compensation Committee and the Special Committee. The Board of Directors does
not have an Executive Committee.
COMMITTEES
AUDIT COMMITTEE
The Audit committee is comprised of three "unrelated" directors. The Audit
Committee's responsibilities included reviewing the Corporation's financial
report procedures, the role of the internal auditor, the internal audit plan and
the adequacy of its internal controls and information systems, the external
audit plan and the independence and terms of engagement and fees of the external
auditors and the performance of the Corporation's external auditors. The
committee also has the responsibility to review, and to recommend for approval,
the Corporation's interim unaudited consolidated financial statements and annual
consolidated financial statements, and related press releases, prior to their
approval by the full Board. The members of the Audit committee are Mark
Steinman (Chair), William Linton and David Masotti.
COMPENSATION COMMITTEE
The Compensation Committee is comprised of three "unrelated" directors. It is
the responsibility of the Compensation Committee to determine the level of
compensation in respect of the Corporation's senior executives (including Named
Executive Officers) with a view to providing such executives with a competitive
compensation package having regard to performance. Performance is defined to
include achievement of the Corporation's strategic objective of growth,
development of the business, enhancement of shareholder value and attainment of
annual goals as set by the Board of Directors.
SPECIAL COMMITTEE
The "unrelated" Directors are authorized (but not obligated) to meet from time
to time as a Special Committee of the board with the membership and of such
Special Committee from time to time determined by a majority of the "unrelated"
Directors.
In furtherance of its mandate, a Special Committee may engage such professional
advisers, as it considers appropriate, including legal, financial and accounting
advisers, all at the expense of the Corporation.
GENERAL
Management knows of no matters to come before the Meeting or any adjournments
thereof other than the matters referred to in the Notice of the Meeting.
However, if any other matters which are not now known to management should
properly come before the Meeting or any adjournments thereof, the proxy
solicited hereby will be voted on such matters in accordance with the best
judgment of the persons voting the proxy.
DIRECTORS' APPROVAL
The undersigned hereby certifies that the contents and sending of this
management information circular have been approved by the Board of Directors of
the Corporation.
DATED at Toronto, Ontario, the 31st day of January, 2002.
BY ORDER OF THE
BOARD OF DIRECTORS
/s/ Nagy Moustafa
President and Chief Executive Officer
January 31, 2002
Toronto, Ontario
[GRAPHIC OMITED]
FORM OF PROXY SOLICITED BY THE MANAGEMENT OF
DIVERSINET CORP.
FOR USE AT THE ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD ON
MARCH 7, 2002
The undersigned shareholder(s) of DIVERSINET CORP. (the "Corporation") hereby
appoints Nagy Moustafa, President and Chief Executive Officer of the
Corporation, or failing him Richard Palmer, Executive Vice President and Chief
Financial Officer of the Corporation, or in lieu of the foregoing,
______________________________________________, as nominee of the undersigned to
attend, act and vote for the undersigned at the annual and general meeting of
shareholders of the Corporation (the "Meeting") to be held on the 7th day of
March, 2002 and at all adjournments thereof (the "Meeting").
The undersigned specifies that all of the voting shares owned by him and
represented by this form of proxy shall be:
(a) VOTED FOR ( ) WITHHELD FROM VOTING ( )
in respect of the election of directors;
(b) VOTED FOR ( ) WITHHELD FROM VOTING ( )
in respect of the appointment of KPMG LLP as
auditors and authorizing the directors to fix
their remuneration;
(c) VOTED at the discretion of the proxy nominee
on such matters as may properly come before
the Meeting or any adjournment thereof;
hereby revoking any proxy previously given.
IF ANY AMENDMENTS OR VARIATIONS TO MATTERS
IDENTIFIED IN THE NOTICE OF MEETING ARE PROPOSED
AT THE MEETING OR ANY ADJOURNMENTS THEREOF OR IF
ANY OTHER MATTERS PROPERLY COME BEFORE THE MEETING
OR ANY ADJOURNMENTS THEREOF, THIS PROXY CONFERS
DISCRETIONARY AUTHORITY TO VOTE ON SUCH AMENDMENTS
OR VARIATIONS ON SUCH OTHER MATTERS ACCORDING TO
THE BEST JUDGMENT OF THE PERSON VOTING THE PROXY
AT THE MEETING OR ANY ADJOURNMENTS THEREOF.
DATED THIS ______ DAY OF ____________, 2002.
___________________________________________
Signature of Shareholder
___________________________________________
Name of Shareholder (Please Print)
SEE NOTES ON REVERSE
NOTES:
1. This form of proxy must be dated and signed by the appointor or his
attorney authorized in writing or, if the appointor is a body corporate,
this form of proxy must be executed by an officer or attorney thereof duly
authorized.
2. A SHAREHOLDER HAS THE RIGHT TO APPOINT A PERSON (WHO NEED NOT BE A
SHAREHOLDER) TO ATTEND AND ACT FOR HIM AND ON HIS BEHALF AT THE MEETING
OTHER THAN THE PERSONS DESIGNATED IN THE ENCLOSED FORM OF PROXY. SUCH RIGHT
MAY BE EXERCISED BY STRIKING OUT THE NAMES OF THE PERSONS DESIGNATED
THEREIN AND BY INSERTING IN THE BLANK SPACE PROVIDED FOR THAT PURPOSE THE
NAME OF THE DESIRED PERSON OR BY COMPLETING ANOTHER FORM OF PROXY AND, IN
EITHER CASE, DELIVERING THE COMPLETED AND EXECUTED PROXY TO THE CORPORATION
OR ITS TRANSFER AGENT PRIOR TO THE CLOSE OF BUSINESS ON THE SECOND BUSINESS
DAY PRECEDING THE DAY OF THE MEETING OR ANY ADJOURNMENTS THEREOF.
3. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS OF THE SHAREHOLDER ON ANY BALLOT THAT MAY BE CALLED FOR AND,
SUBJECT TO SECTION 114 OF THE BUSINESS CORPORATIONS ACT (ONTARIO), WHERE A
CHOICE IS SPECIFIED, THE SHARES SHALL BE VOTED ACCORDINGLY AND WHERE NO
CHOICE IS SPECIFIED, THE SHARES SHALL BE VOTED FOR THE MATTERS REFERRED TO.
WHERE NO SPECIFICATION IS MADE TO VOTE OR WITHHOLD FROM VOTING IN RESPECT
OF THE ELECTION OF DIRECTORS OR THE APPOINTMENT OF AUDITORS, THE SHARES
WILL BE VOTED.
4. Proxies to be used at the Meeting must be received at the Corporation's
office or the office of its transfer agent prior to the close of business
on the second business day preceding the day of the Meeting or any
adjournments thereof.
5. Please date the proxy. If not dated, the proxy shall be deemed to be dated
on the date on which it is mailed.
6. This proxy ceases to be valid one year from its date.
7. If your address as shown is incorrect, please give your correct address
when returning this proxy.
PLEASE RETURN THIS FORM OF PROXY, COMPUTERSHARE TRUST COMPANY OF CANADA
IN THE ENVELOPE PROVIDED FOR PROXY DEPARTMENT
THAT PURPOSE (OR BY FAX) TO: 100 UNIVERSITY AVENUE
TORONTO, ONTARIO
M5J 2Y1
FAX: (416) 981-9800
CUSIP # 25536K204
To: REGISTERED AND BENEFICIAL SHAREHOLDERS
Pursuant to National Policy Statement no. 41/Shareholder Communication,
Diversinet Corp. (the "Corporation") is required to maintain a Supplemental
Mailing List of shareholders who wish to receive interim financial statements of
the Corporation. If you wish to be placed on the Supplemental Mailing List,
please complete the information below and return this form to the address
indicated below.
PLEASE PRINT
NAME: ____________________________________________________
ADDRESS: ____________________________________________________
PROVINCE/STATE: ____________________________________________________
POSTAL/ZIP CODE: ____________________________________________________
Computershare Trust Company of Canada
100 University Avenue
Toronto, Ontario
M5J 2Y1