FORM 20-F
[X] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
OR
[ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number
NYMOX PHARMACEUTICAL CORPORATION
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant's name into English)
Canada
(Jurisdiction of incorporation or organization)
175 Bouchard
Suite 100
Dorval, Quebec
H9S 1B1
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the
Act.
Title of each class Name of each exchange
on which registered
Common shares American Stock Exchange
Securities registered or to be registered pursuant to Section 12(g) of the
Act.
None
(Title of Class)
Securities registered or to be registered pursuant to Section 15(d) of the
Act.
None
(Title of Class)
Indicate the number of outstanding shares of each of the issuer's
classes of capital or common stock as of the close of the period covered
by the annual report: 17,924,382 shares as of June 1, 1996.
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such report(s), and (2)
has been subject to such filing requirements for the past 90 days.
Yes No X
Indicate by check mark which financial statement item the registrant
has elected to follow.
Item 17 Item 18 X
<PAGE>
PART I
Item 1. Description of Business
Introduction
NYMOX Pharmaceutical Corporation ("NYMOX" or the "Company," which
terms include the Company's subsidiaries) is a development stage
biomedical company, based in Dorval, Quebec, which specializes in the
research and development of neurological diagnostics and
pharmaceuticals for the aging population with emphasis on Alzheimer's
disease. NYMOX is in the process of developing unique patented
products which, subject to approval of regulatory authorities, will
be targeted for the global market. NYMOX has completed the research
and discovery phase of its Alzheimer's diagnostic AD7C test and
anticipates that it will be seeking regulatory approval in 1997 to
permit the Company to sell an AD7C test kit to laboratories. Pending
regulatory approval, the Company intends to sell the AD7C test
through a reference laboratory service. See "Diagnostic Products"
below.
NYMOX was incorporated in May 1995 for the purpose of acquiring all
of the common shares of DMS Pharmaceuticals Inc.("DMS"), a private
company which has been carrying on research and development since
1989 on neurological diagnostics and pharmaceuticals for the aging
population with emphasis on Alzheimer's disease. This acquisition
was completed in September 1995 for a consideration of 15,000,000
common shares of NYMOX. Immediately following the acquisition of
DMS, NYMOX acquired for cash a controlling interest in Monterey
Capital Inc. ("Monterey"), a public company listed on the Montreal
Exchange. Monterey was then amalgamated with a newly organized
subsidiary of NYMOX and 468,447 common shares of NYMOX were issued to
the minority shareholders of Monterey in the amalgamation.
Simultaneously, NYMOX completed a private placement of 1,578,635
common shares at a price of CAN$2.00 per share for net proceeds of
CAN$2,947,474 to finance its activities. In September 1995, all of
the stock of Monterey (which was then a wholly-owned subsidiary of
NYMOX) was sold to a person unrelated to NYMOX for the same amount as
paid by NYMOX in the transaction in which NYMOX acquired a
controlling interest in Monterey. The shares of NYMOX were listed on
the Montreal Exchange on December 18, 1995. In April 1996, NYMOX
completed private placements totaling 877,300 common shares at a per
share price of CAN$6.00 for aggregate net proceeds of CAN $5,065,203.
The net proceeds of these placements will be used in part to
accelerate the commercialization of NYMOX's AD7C test that is being
made available to doctors in North America and Europe.
As used herein, the terms "NYMOX" and the "Company" refer to NYMOX
Pharmaceutical Corporation and DMS, the predecessor of NYMOX
Pharmaceutical Corporation, whose acquisition by NYMOX Pharmaceutical
Corporation has been accounted for under the continuity of interest
method (equivalent to a pooling of interests under U.S. Generally
Accepted Accounting Principles).
Products in Development
The Company's primary purposes are (i) to develop certain products
based upon molecular systems incorporating extensive proprietary
technologies discovered, researched, and developed by the Company's
scientists and their collaborators over the past several years, and
(ii) to commercialize such products through reference laboratory
services, and upon receipt of regulatory approvals, manufacturing,
direct sales, licensing and other means, for use in the diagnosis,
prevention, and treatment of Alzheimer's disease.
NYMOX research and development is categorized into four areas
including characterization of biochemical markers of Alzheimer's
disease from brain tissue, cerebrospinal fluid, and blood;
development of commercially significant immunoassays based on the
aforementioned characterizations; screening and clinical testing of
new compounds for the treatment of Alzheimer's disease; and general
research utilizing proprietary opportunities in parallel technologies
such as the commercial applications of technologies developed in the
previous categories (e.g., application of methods initially
formulated in Alzheimer's disease diagnostics or therapeutics
research applied to other uses and markets, such as other diseases).
NYMOX holds exclusive patent rights to several biochemical markers
from the brain and also has extensive know-how in the development of
these and other markers. In addition to AD7C, NYMOX has several
other assays at other stages of research.
NYMOX therapeutic research is at the preclinical stage. The Company
based on animal studies to date, plans in the near term to seek
regulatory authority to begin human studies.
NYMOX is currently developing new compounds for the possible
treatment of Alzheimer's disease. There is no currently accepted
effective drug treatment in use today, although some compounds, such
as tacrine, have limited effectiveness. The main drawback of the
compounds developed by other companies to date has been their limited
usefulness: essentially managing symptoms on a very short-term basis
and with marginal statistical efficacy, limited by the inexorable
progression of the disease, and the fact that the therapies do not
address the underlying disease process.
Diagnostic Products
Alzheimer's disease ("AD") is the most important cause of dementia in
persons 60 years of age and older. Despite the obvious need for an
accurate clinical test, the definitive diagnosis of AD is currently
possible only by pathologic examination of postmortem brain. The
Company believes no reliable antemortem biochemical tests are
commercially available; antemortem diagnosis is imperfect and is at
best a process of exclusion of other diagnoses.
NYMOX has developed a test known as AD7C which the Company believes
reliably distinguishes Alzheimer's disease from normal individuals.
In trials to date, which have involved over 500 clinical samples, the
test has been positive in approximately 80% to 90% of verified
Alzheimer patients with a low positive rate in normal controls (i.e.,
low false positives). These trials have been confirmed by postmortem
brain verification and, therefore, NYMOX believes its AD7C test has
the accuracy that is necessary for a test to be useful. The trials
are, however, not complete and there can be no assurance that the
level of success experienced to date will be repeated with the
remaining study participants. In addition, there can be no
assurances that regulatory authorities will accept NYMOX's test
methodology or results in support of product applications. See
"Government Regulation."
The Company believes the low false positive rate in normal patients
is a very useful aid to clinicians investigating patients with subtle
or marginal symptoms: mental, emotional, cognitive, or behavioral.
If the doctor can rule out Alzheimer's with more assurance, a great
deal of patient and family anguish and anxiety will be avoided. A
low test score will help the doctor be more certain that Alzheimer's
disease is not the cause of the patient's symptoms.
The Company believes the AD7C test should significantly streamline
both the diagnostic work-up and follow-up management when used in
conjunction with sound clinical judgment by a qualified MD. The test
does not replace the doctor's diagnosis, which is a responsible
medical decision based on history, physical, and all the medical
data. The test should be considered an integral and important
component to the diagnosis. Due to its low false positive rate, the
Company believes AD7C is the only biochemical test that can offer
this assistance to the clinician.
NYMOX is in the process of preparing the test for the procedures of
regulatory submission, which is targeted for 1997. Regulatory
approval is necessary before a test kit can be marketed for
commercial distribution to other laboratories. It is, however,
possible under FDA procedures for the AD7C test to be made available
by NYMOX prior to FDA approval on the basis that samples are taken by
doctors and sent to NYMOX for processing in its reference
laboratories, which are currently in Dorval, Quebec and Rockville,
Maryland. The test will be performed by NYMOX technical staff on
patient samples sent by doctors and the results will be reported to
the doctor submitting the sample.
Development of Therapeutic Products
NYMOX is currently developing new compounds for the possible
treatment of Alzheimer's disease. There is no currently accepted
effective drug treatment in use today, although some compounds, such
as tacrine, have limited effectiveness. The main drawback of the
compounds developed by other companies to date has been their limited
usefulness: essentially managing symptoms on a very short-term basis
and with marginal statistical efficacy, limited by the inexorable
progression of the disease, and the fact that the therapies do not
address the underlying disease process.
NYMOX's research is aimed at compounds that could arrest the
progression of Alzheimer's disease and hence are targeted for long-
term use. Such compounds are not expected to show dramatic immediate
effects however, because they would not provide improvement per se on
their own. Furthermore, adequate demonstration of arrest of
progression sufficient to satisfy regulatory authorities may prove to
be a difficult and comparatively long-term task. On the other hand,
these "arrest of progression" compounds could be combined with
shorter acting treatments, and, because there will be curtailed
persistence of injury, the latter drugs could be active longer.
The development plan for each potential therapeutic product involves
four development stages:
i) Product Evaluation. The objective of product evaluation is to
conduct preliminary studies of potential screening candidates based
on in vitro screening methods to determine the feasibility of such
products for further testing, development and marketing.
ii) Optimization of Product Formulation. The activities in this
stage of development involve the Company in consultations with
investigators and scientific personnel. Preliminary selection of
screening candidates to become product candidates for further
development and further evaluation of drug efficacy is based on a
panel of research based biochemical measurements. Extensive
formulation work and in vitro testing are conducted for each of
various selected screening candidates and/or product candidates.
iii) Clinical Screening and Evaluation. During this phase of
development, portions of which may overlap with product evaluation
and optimization of product formulation, initial clinical screening
on product candidates is undertaken and full scale clinical trials
commence.
iv) Final Product Development. The activities to be undertaken in
final product development include making final clinical evaluations,
performing large-scale experiments to confirm the reproducibility of
clinical responses, fabricating clinical lots for any additional
extensive clinical testing that may be required, conducting any
further safety studies required by the FDA, performing process
development work to allow pilot scale production of the product,
completing production demonstration runs for each potential product,
filing new drug applications ("NDAs"), product license applications
("PLAs"), investigational device exemptions ("IDEs") (and required
supplements or amendments thereto) and undergoing comprehensive
regulatory approval programs and processes.
There can be no assurance that NYMOX will be able to complete
successful development and commercialization of any therapeutic
products.
Governmental Regulation
The design, development, testing, manufacturing and marketing of
pharmaceutical compounds are regulated by governmental regulatory
agencies, such as the FDA. For example, the Federal Food, Drug and
Cosmetic Act, the Controlled Substances Act and other United States
federal statutes and regulations impose requirements on the testing,
manufacture and approval of the Company's products marketed in the
United States. Non-compliance with applicable requirements can
result in fines and other judicially imposed sanctions, including the
initiation of product seizures, injunction actions and criminal
prosecutions based on products or manufacturing practices that
violate statutory requirements. In addition, informal administrative
remedies can involve voluntary recall of products, as well as the
refusal of the government to enter into supply contracts or to
approve NDAs. The FDA also has the authority to withdraw approval of
drugs in accordance with statutory due process procedures.
The FDA approval procedure is a two-step process. During the initial
product development stage, an investigational new drug application
(an "IND") for each product is filed with the FDA. A 30-day waiting
period after the filing of each IND is required by the FDA prior to
the commencement of initial (Phase I) clinical testing in healthy
subjects. If the FDA has not commented on or questioned the IND
within such 30-day period, initial clinical studies may begin. If,
however, the FDA has comments or questions, the questions must be
answered to the satisfaction of the FDA before initial clinical
testing can begin. In some instances, this process could result in
substantial delay and expense. Phase I studies are intended to
demonstrate the functional characteristics and safety of a product.
After Phase I testing, extensive efficacy and safety studies in
patients must be conducted. After completion of the required
clinical testing, an NDA is filed, and its approval, which is
required for marketing in the United States, involves an extensive
review process by the FDA. The Company expects that most of its new
drug formulations will require NDA filings. There can be no
marketing in the United States of any product for which an NDA is
required until the NDA has been approved by the FDA. The NDA itself
is a complicated and detailed document and must include the results
of extensive clinical and other testing, the cost of which is
substantial. The FDA is required to review applications within 180
days of their filing. However, in the process of reviewing
applications, the FDA frequently requests that additional information
be submitted and starts the 180-day regulatory review period anew
when the requested additional information is submitted. The effect
of such request and subsequent submission can significantly extend
the time for the NDA review process. Until an NDA is actually
approved, there can be no assurance that the information requested
and submitted will be considered adequate by the FDA to justify
approval. The packaging and labelling of products are also subject
to FDA regulation. It is impossible to anticipate the amount of time
that is required until the NDA has been approved by the FDA.
Whether or not FDA approval has been obtained, approval of a
pharmaceutical product by comparable regulatory authorities must be
obtained in any foreign country prior to the commencement of
marketing of the product in that country. The approval procedure
varies from country to country and can involve additional testing,
and the time required may differ from that required for FDA approval.
Although there are some procedures for unified filings for certain
European countries, in general each country has its own procedures
and requirements, many of which are time-consuming and expensive.
Thus, there can be substantial delays in obtaining required approvals
from both the FDA and foreign regulatory authorities after the
relevant applications are filed. After such approvals are obtained,
further delays may be encountered before the products become
commercially available. If, subsequent to approval, new information
becomes available concerning the safety or effectiveness of any
approved product, labelling for the affected product may need to be
revised, or approval of that product may be withdrawn.
All facilities and manufacturing techniques used for the
manufacturing of products for clinical use or for sale in the United
States must be operated in conformity with good manufacturing
practice ("GMP") regulations, the FDA regulations governing the
production of pharmaceutical products.
In vitro diagnostic products, medical nutrition devices and certain
delivery systems are regulated or potentially regulated under the
Federal Food, Drug and Cosmetic Act as medical devices. As medical
devices, these products would be subject to premarketing and
postmarketing requirements applicable to such devices, including
those governing:
(1) clinical testing;
(2) prior FDA approval in the form of
(a) an FDA determination through the 510(k) process of
substantial equivalence to a marketed device or
(b) an approved premarket approval application ("PMA");
(3) postmarketing record and reporting obligations; and
(4) GMP obligations.
The failure to adhere to these requirements can result in a refusal
of permission to market, a withdrawal of permission to market and the
imposition of sanctions, including seizure, recall, notification,
injunction, and civil and criminal penalties. Additionally, as a
condition to marketing or continued marketing, the FDA may impose
certain postmarket surveillance and/or tracing requirements that may
significantly increase the regulatory costs associated with a
product. The PMA approval requirements are generally analogous to
the NDA approval requirements. The 510(k) process, while generally
less burdensome than the PMA requirements, requires affirmative FDA
approval and may be dependent upon the generation of safety and
effectiveness data, as well as manufacturing and quality assurance
data and information. There can be no assurance that a given medical
device will obtain the necessary approvals or that any approval will
be obtained within a specified time framework.
Under the Federal Food, Drug and Cosmetic Act, it is possible for a
given product to be regulated both as a drug and a medical device
subject to the corresponding requirements applicable to the
respective categories.
In response to rising health care costs in the United States, various
authorities have suggested that they may consider the implementation
of price restrictions, changes in reimbursement rates or other
regulations that potentially could adversely affect the
pharmaceutical industry and the Company.
Patents and Proprietary Information
NYMOX pursues a policy of seeking patent protection for valuable
patentable subject matter of its proprietary technology. NYMOX
believes that patent and trade secret protection is important in its
business, and that its success will depend, in part, on its ability
to obtain strong patents, to maintain trade secret protection and to
operate without infringing the proprietary rights of others. The
Company has certain patents issued and a number of applications
pending in the areas of therapeutics and diagnostics in the United
States. Similar patent applications have also been filed in most
European countries, Canada, Japan and selected countries worldwide
depending on the patent application in question.
NYMOX currently has issued patents in the United States claiming
brain markers and screening and diagnostic technologies. NYMOX also
has an exclusive license to patents from the Massachusetts General
Hospital covering rights to the AD7C diagnostic. Under this license,
the Massachusetts General Hospital ("MGH") benefits from research
funding and collaboration from NYMOX and is entitled to royalties of
4% from worldwide sales of the AD7C test. NYMOX has additional
patent applications pending covering therapeutics and diagnostics in
Alzheimer's disease and related conditions. NYMOX also has other
patents in a number of countries and has applications on file in
numerous other countries.
The commercial success of products incorporating the technologies may
depend, in part, upon NYMOX's ability to obtain strong patent
protection. Although NYMOX patents, pending patent applications, and
patents obtained in the future covering the NYMOX technologies may be
of importance to future operations, there can be no assurance that
any additional patents will be issued or that any patents, now or
hereafter issued, will be of commercial benefit.
Numerous other companies are believed to be working in the fields of
diagnostics and therapeutics for Alzheimer's disease and related
conditions. These companies have obtained patents covering various
technologies. The Company believes that the patents issued to date
will not preclude the Company from developing and marketing its
technologies; however, it is impossible to predict at this time the
extent to which licenses from third parties will be necessary. If
licenses were to be needed from third parties there can be no
assurance that such license could be obtained or could be obtained on
commercially reasonable terms.
There has been, and the Company believes that there may be in the
future, significant litigation in the industry regarding patent and
other intellectual property rights and that, if the Company becomes
involved in such litigation, it could consume substantial resources.
Significant legal issues remain as to the extent to which patent
protection may be afforded in the field of biotechnology in the
United States, Canada and other countries, and the scope of any such
protection has not yet been broadly tested. The Company, therefore,
also relies upon trade secrets, know-how, and continuing
technological advancement to develop and maintain its competitive
position. Disclosure and use of the Company's know-how is generally
controlled under agreements with the parties involved. In addition,
the Company has confidentiality agreements with its key employees,
consultants, officers and directors. There can be no assurance,
however, that all confidentiality agreements will be honoured, that
others will not independently develop equivalent technology, that
disputes will not arise as to the ownership of intellectual property,
or that disclosure of the Company's trade secrets will not occur.
Furthermore, there can be no assurance that others have not obtained
or will not obtain patent protection that will exclude the Company
from using its trade secrets and confidential information. To the
extent that consultants or research collaborators use intellectual
property owned by others in their work with the Company, disputes may
also arise as to the rights to related or resulting know-how or
inventions.
Competition
The pharmaceutical and biotechnology industries are characterized by
rapidly evolving technology and intense competition. The Company's
competitors include major pharmaceutical, diagnostic, chemical and
biotechnology companies, many of which have financial, technical and
marketing resources significantly greater than those of the Company.
In addition, many biotechnology companies have formed collaborations
with large, established pharmaceutical companies to support research,
development and commercialization of products that may be competitive
with those of the Company. Academic institutions, government
agencies and other public and private research organizations are also
conducting research activities and seeking patent protection and may
commercialize products on their own or through joint ventures. The
Company is aware of certain products manufactured or under
development by competitors that are used for the prevention,
treatment or detection of AD. The existence of these products, or
other products or treatments of which the Company is not aware, or
products or treatments that may be developed in the future, may
adversely affect the marketability of products developed by the
Company.
For certain of the Company's potential products, an important factor
in competition may be the timing of market introduction of the
Company's or competitors' products. The Company's competition will be
determined in part by the potential indications for which the
Company's products are developed and ultimately approved by
regulatory authorities. The development by competitors of new
treatment methods for those indications for which the Company is
developing products could render the Company's products non-
competitive or obsolete. The Company expects that competition among
products approved for sale will be based, among other things, on
product efficacy, safety, reliability, availability, price and
intellectual property protection.
In the field of Alzheimer's disease diagnostics, the competition
consists of other proposed biochemical markers being tested and
hypothesized to be of use in either diagnosing Alzheimer's disease or
ruling out the diagnosis of Alzheimer's. This distinction is highly
relevant because the Company believes data which refer only to
Alzheimer's disease cases is misleading. In reality, the diagnosis
is unknown prior to testing (hence the need for testing in the first
place), and therefore data on accuracy must reflect positives and
negatives. In other words, a test which diagnoses a certain
percentage of only the positives, and is uncertain or non-
contributory on the negatives will in fact have accuracy inversely
proportional to the number of normals. Therefore, in the usual
clinical setting where the vast majority of lab tests are normal
(i.e., negative), the accuracy of any test which only diagnoses a
proportion of the positives will turn out to be very small and
therefore not useful.
Marketing
NYMOX intends to retain responsibility for all commercial activities
related to AD7C worldwide with the exception of Japan, where NYMOX is
negotiating with Japanese companies for licensing of AD7C technology.
NYMOX offices and laboratories are present in the US and Canada, and
are intended to be established in Europe for these commercial
activities.
NYMOX plans to market and sell certain of its therapeutic products,
if successfully developed and approved, directly or through co-
promotion arrangements or other licensing arrangements with third
parties. In cases where NYMOX has sole or shared marketing rights,
it plans to build a small, focused sales force if and when such
products approach marketing approval in some markets, including
Europe. Implementation of this strategy will depend on many factors,
including the market potential of any products the Company develops
as well as on the Company's financial resources. To the extent the
Company will enter into co-promotion or other licensing arrangements,
any revenues received by the Company will be dependent on the efforts
of third parties.
Item 2. Description of Property
a) NYMOX laboratories in Dorval, Quebec, Canada comprise 15,000 sq.
ft. of leased space. The Company owns a full complement of
equipment used in all aspects of its R&D and its reference
laboratories. The US facility in Rockville, Maryland comprises
2,000 sq. ft. of leased space and is likewise fully equipped.
These leases expire in 1997.
b) Not applicable.
Item 3. Legal Proceedings
There are no material legal proceedings involving NYMOX or any of its
assets.
Item 4. Control of Registrant
a), b) The following table sets forth information as of August 1,
1996 regarding ownership of the common shares by Dr. Paul
Averback (see Item 10), who is the only person known to the
Company to own more than 10% of the common shares, and by
all directors and officers as a group.
Percent of
Name No. Shares Class
Dr. Paul Averback 12,643,895 70.5
All directors and officers
as a group 12,702,470 70.9
In addition, as of such date Dr. Averback's wife owns 1,190,297
common shares (6.6%) and 9022-1433 Canada Inc., a company owned by
Dr. Averback and his wife, owns 500,000 common shares (2.8%).
Pursuant to an escrow agreement (the "Escrow Agreement") dated
December 18, 1995 an aggregate of 11,522,331 common shares (the
"Escrowed Shares") of the Company owned by Dr. Paul Averback and his
wife are held in escrow by the Montreal Trust Company of Canada.
Except as provided hereinafter, the Escrowed Shares may not be sold,
assigned, hypothecated, pledged, charged, alienated, released from
escrow, transferred within escrow or otherwise in any manner dealt
with without the express consent, order, direction in writing of the
Montreal Exchange. The Escrowed Shares are eligible for automatic
release upon the following terms:
Number of
Release Date Shares
December 18, 1996 3,480,777
December 18, 1997 3,480,777
December 18, 1998 3,480,777
To the knowledge of the Company, no other shareholder beneficially
owns more than 10% of the shares of the Company.
c) Not applicable.
Item 5. Nature of Trading Market
The Common Shares of NYMOX have been listed and posted for trading on
the Montreal Exchange since December 18, 1995. The following table
sets out the high and low reported trading prices of the common
shares during the periods indicated.
High Low
(CDN$) (CDN$)
1995 December
(from December 18) $ 4.25 $ 2.30
1996 1st quarter 9.50 2.80
2nd quarter 19.40 8.00
3rd quarter (to July 19) 20.00 14.75
According to information furnished to the Company by the transfer
agent for the common shares, as of July 18, 1996, there were
approximately 61 holders of record of the common shares with
addresses in the United States and such holders owned an aggregate of
208,586 shares.
Item 6. Exchange Controls and Other Limitations Affecting Security
Holders
a) Canada has no system of exchange controls. There are no exchange
restrictions on borrowing from foreign countries nor on the
remittance of dividends, interest, royalties and similar
payments, management fees, loan repayments, settlement of trade
debts or the repatriation of capital.
b) There are no limitations on the rights of non-Canadians to
exercise voting rights on their shares of NYMOX.
Item 7. Taxation
Canadian Federal Income Taxation
The following discussion is a fair summary of the principal Canadian
federal income tax considerations generally applicable to purchasers
of the Company's Common Stock pursuant to this prospectus who, for
purposes of the Income Tax Act (Canada) (the "Canadian Act"), deal at
arm's length with the Company, hold shares of Common Stock as capital
property, are not residents of Canada at any time when holding Common
Stock and do not use or hold and are not deemed to use or hold Common
Stock in or in the course of carrying on business in Canada and, in
the case of insurers who carry on an insurance business in Canada and
elsewhere, do not hold Common Stock that is effectively connected
with an insurance business carried on in Canada.
This summary is based on the current provision of the Canadian Act,
the regulations thereunder, the Canada-United States Income Tax
Convention (1980) (the "Treaty") and the third protocol signed August
31, 1994 (the "protocol"), as amended. This summary takes into
account specific proposals to amend the Canadian Act and the
regulations thereunder publicly announced by the Minister of Finance
prior to the date hereof and on counsel's understanding of the
current published administrative and assessing practices of Revenue
Canada, Taxation. This summary does not take into account Canadian
provincial income tax laws or the income tax laws of any country
other than Canada.
A shareholder of the company will generally not be subject to tax
pursuant to the Canadian Act on a capital gain realized on a
disposition of Common Stock unless the Common Stock is "taxable
Canadian property" to the shareholder for purposes of the Canadian
Act and the shareholder is not eligible for relief pursuant to an
applicable bilateral tax treaty. The Common Stock will not be
taxable Canadian property to a shareholder provided that the Company
is a "public corporation" within the meaning of the Canadian Act and
provided that such shareholder, or persons with whom such shareholder
did not deal at arm's length (within the meaning of the Canadian
Act), or any combination thereof, did not own 25% or more of the
issued shares of any class or series of the Company at any time
within five years preceding the date of disposition. The Company has
qualified and elected to be a "public corporation" within the meaning
of the Canadian Act. In addition, the Treaty will generally exempt a
shareholder who is a resident of the United States for purposes of
the Treaty from tax in respect of a disposition of Common Stock
provided that the value of the shares of the Company is not derived
principally from real property (including resource property) situated
in Canada.
Any dividend, including stock dividends, paid or credited, or deemed
to be paid or credited, by the Company to a shareholder will be
subject to Canadian withholding tax at the rate of 25% on the gross
amount of the dividend, subject to the provisions of any applicable
income tax convention. Pursuant to the Treaty, the rate of
withholding tax generally will be reduced to 15% in respect of
dividends paid to a shareholder who is a resident of the United
States for purposes of the Treaty and further reduced to 10% if the
beneficial owner of the shares is a corporation owning at least 10%
of the voting shares of the Company. Pursuant to the Protocol, the
rate of withholding tax will generally be reduced to 5% by the year
1997, if the beneficial owner of the shares is a corporation owning
at least 10% of the voting shares of the Company.
United States Federal Income Taxation
For U.S. federal income tax purposes, an individual who is a citizen
or resident of the United States or a domestic corporation ("U.S.
Taxpayer") will recognize gain or loss on the sale of the Company's
Common Stock equal to the difference between the proceeds from such
sale and the adjusted cost basis in the Common Stock. The gain or
loss will be a capital gain or capital loss if the Company's Common
Stock is a capital asset in the hands of the U.S. Taxpayer.
For federal income tax purposes, a U.S. Taxpayer will be required to
include in his gross income, dividends received on the Company's
Common Stock. A U.S. Taxpayer who pays Canadian tax on a dividend on
the Common Stock will be entitled, subject to certain limitations, to
a credit (or alternatively, a deduction) against his federal income
tax liability. A domestic corporation that owns at least 10% of the
voting stock of the Company should consult its tax advisor as to
applicability of the dividends received deduction or deemed paid
foreign tax credit with respect to dividends paid on the Company's
Common Stock.
For any taxable year of the Company, if at least 75% of the Company's
gross income is "passive income" (as defined in the Internal Revenue
Code of 1986, as amended (the "Code")), or if at least 50% of the
Company's assets, by average fair market value, are assets that
produce or are held for the production of passive income, the Company
will be a Passive Foreign Investment Company, as defined in Section
1296 of the Code ("PFIC"). Counsel is not able to express an opinion
as to whether or not the Company is likely to be a PFIC in its future
taxable years because this depends, among other things, on the amount
and type of gross income that the Company will earn in the future and
the characterization of certain assets such as goodwill. While the
Company does not believe that it is likely to be a PFIC in its
current or future taxable years, there can be no assurance that the
Company will not be a PFIC for such years.
If the Company is a PFIC for any taxable year during which a U.S.
Taxpayer owns any Common Stock, the U.S. Taxpayer will be subject to
special U.S. federal income tax rules, set forth in Sections 1291 to
1297 of the Code, with respect to all of such U.S. Taxpayer's Common
Stock. For example, gifts, exchanges pursuant to corporate
reorganizations and use of the Common Stock as security for a loan
may be treated as taxable disposition, and a stepped-up basis upon
the death of such a U.S. Taxpayer may not be available. Furthermore,
in the absence of an election by such U.S. Taxpayer to treat the
Company as a "qualified electing fund" (the "QEF election"), as
discussed below, the U.S. Taxpayer would be required to report any
gain on disposition of any Common Stock as ordinary income rather
than capital gain and to compute the tax liability on such gain and
on certain distributions as if the items had been earned pro rata
over the U.S. Taxpayer's holding period (or a certain portion
thereof) for the Common Stock and would be subject to the highest
ordinary income tax rate for each taxable year of the U.S. Taxpayer
in which the items were treated as having been earned. Such U.S.
Taxpayer would also be liable for interest (which may be non-
deductible by certain U.S. Taxpayers) on the foregoing tax liability
as if such liability had been due with respect to each such prior
year.
If the Company is a PFIC for any taxable year during which a U.S.
Taxpayer owns any Common Stock, the adverse taxation of disposition
gains and certain distributions may be avoided by any U.S. Taxpayer
who makes a QEF election on or before the due date (including
extensions) for filing such U.S. Taxpayer's tax return for such
taxable year. Such a U.S. Taxpayer would be taxed on dividends and
capital gains as if the Company had never been a PFIC, with certain
adjustments to avoid double taxation of any amounts taxed as
described in the following sentence. Although such a U.S. Taxpayer
is taxed on its pro-rata share of the Company's earnings and profits
for the Company's taxable year in which the Company was (or was
treated as) a PFIC and which ends with or within such U.S. Taxpayer's
taxable year, regardless of whether such amounts are actually
distributed by the Company, the Company believes that it is not
likely to have any earnings and profits for any taxable year in the
near future in which it might be a PFIC. Therefore, although there
can be no assurance concerning such future earnings and profits, the
Company believes that any U.S. Taxpayer who has made a timely QEF
Election would not have any income in such a year by reason of the
QEF election. Should such an election be made (and if the Company is
a PFIC, U.S. Taxpayers are strongly urged to consider this special
election), there are a number of specific rules and requirements
applicable thereto, and such an electing U.S. Taxpayer is strongly
urged to consult his own tax advisor in that regard.
The foregoing discussion is limited to Canadian federal taxation and
United States federal taxation and does deal with Provincial or State
taxes. It is of a general and summary nature only and is not intended
to be, nor should it be considered to be, legal or tax advice to any
particular shareholder. Accordingly, prospective investors should
consult their own tax advisors as to the tax consequences of
receiving dividends from the Company or disposing of their common
stock.
Item 8. Selected Financial Data
The following table sets forth selected financial data for the
Company (which data are comprised of the data of DMS prior to its
acquisition by the Company), for the periods indicated, derived from
financial statements prepared in accordance with Canadian Generally
Accepted Accounting Principles (which are equivalent to U.S.
Generally Accepted Accounting Principles) that have been audited by
Deloitte & Touche, Montreal, Canada, in the case of the periods ended
July 31, 1995 and December 31, 1995, and by Bergeron & Senecal,
Brossard, Canada, in the case of the periods ended July 31, 1993 and
1994. The selected financial data for the period ended July 31, 1992
is unaudited. The data set forth below should be read in conjunction
with the Company's financial statements and notes thereto and
"Management's Discussion and Analysis of Financial Conditions and
Results of Operations" included elsewhere herein.
<TABLE>
<CAPTION>
At or for the Year Ended
July 31, December 31,
(12 months) (5 months)
1992 1993 1994 1995 1995
(CAN $)
<S> <C> <C> <C> <C> <C>
Current Assets $ - 0 - $ - 0 - $ - 0 - $ 11,963 $2,268,097
Capital Assets 12,576 12,576 12,576 338,953 366,155
Total Assets 239,403 251,352 239,403 350,916 2,634,252
Liabilities 167,532 9,000 45,376 121,589 151,297
Shareholders' Equity 71,871 242,352 194,027 229,327 2,482,955
Revenues - 0 - - 0 - - 0 - - 0 - - 0 -
Research & Development
Expenditures 36,769 32,519 55,325 371,939 571,215
Net Loss 37,769 34,519 58,325 377,570 693,846
Loss Per Share $0.03 $0.04
</TABLE>
At July 31, 1996, the exchange rate between the CAN$ and US$
was CAN$1.3747 to US$1. The following table sets forth certain information
regarding such exchange rate for the periods set forth below.
<TABLE>
<CAPTION>
At or for the Year Ended
July 31, December 31, March 31
(12 months) (5 months) (3 months)
CAN$ to US $1 1992 1993 1994 1995 1995 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C>
Period End $1.1917 $1.2817 $1.3825 $1.3609 $1.3695 $1.4074 $1.3591
Average During Period $1.1659 $1.2563 $1.3465 $1.3775 $1.3548 $1.4069 $1.3691
High $1.2062 $1.2945 $1.3990 $1.4267 $1.3820 $1.4267 $1.3865
Low $1.1189 $1.1813 $1.2839 $1.3395 $1.3271 $1.3865 $1.3510
</TABLE>
Item 9. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The Company is a development stage company which has not, during the
periods presented in Item 8 above, realized any revenues from
operations. Since the inception of the Company, capital resources
have been limited. Since NYMOX became public in December 1995, NYMOX
made a significant investment in staffing and equipment. Additional
costs are being financed through the proceeds of private placements
completed in December 1995 (net proceeds of CAN$2,947,474) and April
1996 (net proceeds of CAN$5,065,203).
At June 30, 1996, the Company's cash and cash equivalents were CAN
$6,042,006. The Company expects to spend on average CAN$200,000 per
month in the foreseeable future on non-capital expenditures as part
of its research and development programs. Additional costs will be
incurred for the marketing of the AD7C test and the operation of
NYMOX's reference laboratories in the US and in Canada. NYMOX does
not have commitments for material capital expenditures and has not
budgeted significant capital expenditures in the foreseeable future
since it currently owns all of the equipment necessary for its
current R & D activities.
The net proceeds from the two private placements of common shares,
should, in management's estimation, be sufficient to meet its
financial needs over the foreseeable future. NYMOX has no financial
obligations of significance as at June 30, 1996 other than long-term
lease commitments for its premises and research funding payments due
to MGH.
Currently, NYMOX does not generate revenues (other than interest on
short term investments) and the issuance of additional shares of its
capital represents its only source of financing.
Item 10. Directors and Officers
a) The directors and executive officers of NYMOX are:
Dr. Paul Averback, MD., D.A.B.P., President and Director (since
September 1995) of the Company, is the founder of the Company
and the inventor of much of its initial technology. He received
his MD. in 1975 and taught pathology at universities such as
Cambridge University, England (1977-1980) during which time he
initiated his research on Alzheimer's disease. He has practised
medicine in numerous Canadian institutions and from 1991 to 1995
was also Medical Director of the Urgence Lachine medical center.
Dr. Averback has published extensively in the scientific and
medical literature.
Dr. Hossein A. Ghanbari, Ph. D., Vice President and Director
(since September 1995) of the Company, holds a Ph. D. in
biochemistry from Pennsylvania State University. From 1982 to
1992, he was employed with Abbott Laboratories, where he was
responsible for the first marketed diagnostic test for
Alzheimer's disease (on brain tissue). From 1992 to 1994, he
was Senior Vice-President, Research and Planning, of Molecular
Geriatrics Corporation, a biopharmaceutical company specialized
in diseases associated with ageing. Dr. Ghanbari is the author
of numerous specialized publications and is a member of many
international professional associations.
Mr. Roy M. Wolvin, Secretary-Treasurer and Director (since
September 1995) of the Company . Prior to September 1995, Mr.
Wolvin was Account Manager, private business, for a Canadian
chartered bank. Mr. Wolvin holds a degree in Economics from
the University of Western Ontario.
Mr. John L. Melikoff, Director (since September 1995) of the
Company is portfolio manager for Interinvest Consulting
Corporation, an international private company specialized in
fund management. He was, from 1990 to 1991, a registered
representative with McNeil Mantha and from 1984 to 1989, with
Prudential Bache Securities.
Dr. Colin B. Bier, Director (since December 1995) of the
Company. Dr. Bier is a leading authority on toxicology and
pharmaceutical and biotechnological regulatory affairs and has
extensive management experience in the biomedical sector. Dr.
Bier was formerly Vice-President and Director of Toxicology at
Bio-Research Laboratories, President and Chief Executive Officer
of ITR Laboratories and has consulted, managed and been
affiliated with numerous biochemical enterprises.
Dr. J. Kenneth Harrington, Director (since January 1996) of the
Company, has over 30 years of experience with 3M's Life Sciences
businesses, including the positions of Vice-President of Riker
Pharmaceuticals and Group Director of 3M's European
pharmaceutical divisions. Dr. Harrington is a named inventor on
42 US patents, and has been involved in over 100 successful FDA
filings.
Dr. Iraj Beheshti, Ph.D., M.B.A., Vice President, Marketing.
Dr. Beheshti was Co-Founder and Director of Research and
Development (1985-1988) and President and CEO of London
Diagnostics (1988-1993). Prior to that he was Senior Scientist
with Abbott Laboratories. Before joining NYMOX, Dr. Beheshti
was Director of Operations of Acute Care and Outpatient
Laboratories at the University of Minnesota Medical School. Dr.
Beheshti is an authority in the medical diagnostics field and in
affairs dealing with the U.S. Food and Drug Administration. He
has been involved in the successful development and
commercialisation of numerous products, including 14 FDA
approved diagnostic kits.
Directors are elected at each annual meeting for a term of
office until the next annual meeting. Executive officers are
appointed by the Board of Directors and serve at the pleasure of
the Board.
b) There are no family relationships between any director or
executive officer and any other director or executive officer.
Item 11. Compensation of Officers and Directors
a) The table below provides compensation information for the
fiscal year ended December 31, 1995 for each executive officer
of the Company and for the directors and executive officers as
a group.
SUMMARY COMPENSATION TABLE
Fiscal Year Other
Name and ended Salary Cash
Principal Position December 31, (CAN$) Compensation
Dr. Paul Averback, 1995 $50,000(1) --
President and Director
Dr. Hossein A. Ghanbari, 1995 $90,000(2) --
Vice President and
Director
Mr. Roy Wolvin, 1995 $14,700(3) --
Secretary-Treasury and
Director
Dr. Iraj Beheshti, 1995 --(4) --
Vice President, Marketing
All directors and 1995 $154,700 --
executive officers as a
group
____________________
(1) Dr. Averback's current annual salary is CAN$150,000.
(2) Dr. Ghanbari's current annual salary is CAN$120,000.
(3) Mr. Wolvin's current annual salary is CAN$70,000.
(4) Mr. Beheshti's current annual salary is CAN$122,000.
No stock options were granted by NYMOX in 1995. See "Options
to Purchase Securities" in Item 12 for stock otions granted
thereafter.
The Company does not currently have written employment
contracts with the above-named executive officers.
Directors of the Company, with the exception of Dr. J. Kenneth
Harrington, are not paid any fee for board meeting attendance
but are reimbursed for expenses incurred in connection with
their office. Dr. J. Kenneth Harrington receives a fee of
US$1,000 per meeting.
b) The Company does not have any pension plans or other type of
plans providing retirement or similar benefits for directors
or executive officers.
Item 12. Options to Purchase Securities from Registrant or Subsidiaries
There are no rights, warrants or options presently outstanding
pursuant to which additional common shares could be issued, with
the exception of options enabling certain directors, employees and
consultants of NYMOX to acquire common shares under the Company's
stock option plan.
The Company has created a stock option plan (the "Plan") for its
key employees, its officers and directors and certain consultants.
The Plan is administered by the Board of Directors of the Company
(the "Board"). The Board may from time to time designate
individuals to whom options to purchase common shares of the
Company be granted and the number of shares to be optioned to each.
The total number of common shares to be optioned to any one
individual cannot not exceed 5% of the total issued and outstanding
shares and the maximum number of common shares which may be
optioned under the Plan cannot exceed 2,000,000 shares without
shareholder approval.
The option price per share for common shares which are the subject
of any option shall be fixed by the Board when such option is
granted and cannot involve a discount to the market price at the
time the option is granted. The period during which an option is
exercisable shall not exceed 10 years from the date the option is
granted. The options may not be assigned, transferred or pledged
and expire within three months of the termination of employment
and six months of the death of an individual.
Options to purchase up to 1,415,000 common shares have been granted
under the Plan by the Board of Directors on January 17, 1996 ( the
"Granting Date") . Of these:
i) options to purchase 645,000 common shares of the Corporation at a
price of CAN$3.25 per share were granted for a period of 10 years
to a total of 11 beneficiaries;
ii) one senior executive of the Corporation was granted additional
options to acquire 200,000 common shares of the Corporation at a
price of CAN$3.25 per share effective as of each of the first three
anniversary dates of the Granting Date (for a total of 600,000
additional shares), provided he still be associated with the
Corporation;
iii) two directors of the Corporation were granted additional options to
acquire 5,000 common shares of the Corporation, effective as of
each of the first five anniversary dates of the Granting Date (for
a total of 25,000 additional shares each), at the closing price of
the common shares of the Corporation on the Montreal Exchange on
the trading day immediately preceding such anniversary date, or at
such other minimum price allowed by the regulatory authorities
having jurisdiction, provided they still be associated with the
Corporation;
iv) one director of the Corporation was granted additional options to
acquire 20,000 common shares of the Corporation, effective as of
each of the first four anniversary dates of the Granting Date (for
a total of 80,000 additional shares), at the closing price of the
common shares of the Corporation on the Montreal Exchange on the
trading day immediately preceding such anniversary date, or at such
other minimum price allowed by the regulatory authorities having
jurisdiction; and
v) one senior executive of the Corporation was granted additional
options to acquire 10,000 common shares of the Corporation,
effective as of each of the first four anniversary dates of the
Granting Date (for a total of 40,000 additional shares), at the
closing price of the common shares of the Corporation on the
Montreal Exchange on the trading day immediately preceding such
anniversary date, or at such other minimum price allowed by the
regulatory authorities having jurisdiction.
All of the above options are effective for a period of 10 years
from the Granting Date. The options described in paragraphs ii) to
v) are subject to the approval of the Montreal Exchange.
In addition, on April 30, 1996, options to purchase 115,000 common
shares of the Corporation at a price of CAN$11.50 per share were
granted for a period of 10 years to a total of 5 beneficiaries and
options to purchase 25,000 common shares of the Corporation at a
price of CAN$15.50 per share were granted on June 7, 1996 for a
period of 10 years to one beneficiary.
Item 13. Interest of Management in Certain Transactions
a) Dr. Paul Averback was the controlling shareholder of DMS.
NYMOX acquired all of the shares of DMS in September 1995 for
a consideration of 15,000,000 common shares of NYMOX, of which
13,093,559 were issued to Dr. Averback.
From time to time, Dr. Averback has advanced funds to NYMOX on
an interest free basis and without any specified date of
repayment. There have been no advances outstanding since
CAN$43,658 was repaid to Dr. Averback during the quarter ended
March 31, 1996. During the last three fiscal years, the
highest aggregate advance outstanding from Dr. Averback was
CAN$43,658.
b) Dr. Hossein Ghanbari, a director and senior officer of the
Corporation has received a loan of CAN$56,000 from NYMOX to
assist him in the purchase of a home following his move from
the United States to assume his duties with the Company. This
loan is interest free and has no fixed terms of repayment.
PART II
Item 14. Description of Securities to be Registered
a) NYMOX's authorized capital is comprised of an unlimited number
of common shares of which 17,924,382 common shares are
currently issued and outstanding and 1,555,000 are reserved
for issuance under NYMOX's stock option plan. (See Item 12
"Options to Purchase Securities from Registrant or
Subsidiaries.")
Holders of common shares are entitled to receive notice of,
and to attend and vote at, all meetings of the shareholders of
the Company. Each share carries one vote at any meeting.
Hence, holders of a majority of common shares can elect all
directors of the Company and other shareholders would not be
able to elect any other director.
Holders of common shares are entitled to dividends as and when
declared by the directors and, upon liquidation, to receive
such assets of the Company as may be distributable to such
holders. The common shares have no preemptive rights and are
not convertible into any other security. There is no sinking
fund applicable to the common shares and the holders are not
subject to assessment by NYMOX.
The registrar and transfer agents of NYMOX are Montreal Trust
Company of Canada at their Montreal office.
b) Not applicable.
c) Not applicable.
PART III
Item 15. Defaults upon Senior Securities
Not applicable.
Item 16. Changes in Securities and Changes in Security for Registered
Securities
Not applicable.
PART IV
Item 17. Financial Statements
Not applicable.
Item 18. Financial Statements
The financial statements listed in Item 19 are incorporated by
reference in this Item.
Item 19. Financial Statements and Exhibits
a) Financial statements (which appear after the signature page
hereto):
At and For the Period Ended March 31, 1996:
Balance Sheet -- March 31, 1996
Statement of Loss and Deficit
Statements of Changes in Financial Position
Notes
At and For the Periods Ended July 31, 1995 and December 31, 1995:
Auditors' Report
Consolidated Balance Sheets -- July 31, 1995 and
December 31, 1995
Consolidated Statements of Loss and Deficit for Five Months
ended December 31, 1995 and Twelve Months ended
July 31, 1995
Consolidated Statements of Changes in Financial Position for
Five Months ended December 31, 1995 and Twelve Months
ended July 31, 1995
Notes to Consolidated Financial Statements
At and For the Periods Ended July 31, 1993 and 1994:
Auditor's Reports
Balance Sheets -- July 31, 1993 and 1994
Statements of Loss and Deficit for the years ended
July 31, 1993 and 1994
Statements of Changes in Financial Position for the years
ended July 31, 1993 and 1994
Notes
b) The list of exhibits contained in the Exhibit Index is
incorporated by reference and the exhibits listed therein are
filed herewith.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant certifies that it meets all of the
requirements for filing on Form 20-F and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized.
NYMOX PHARMACEUTICAL CORPORATION
(Registrant)
/s/ PAUL AVERBACK
Title: President
Date: August 8, 1996
<PAGE>
NYMOX PHARMACEUTICAL CORPORATION
Balance Sheet
(Unaudited)
As at March 31, 1996
Assets
Current assets:
Cash and term deposits $ 1,641,216
Research and development investment tax
credits receivable 21,000
Other receivables 26,199
Advance to director 56,000
---------
1,744,415
Capital assets 78,448
Patents 360,674
---------
$ 2,183,537
=========
Liability and Shareholders' Equity
Current liability:
Accounts payable $ 69,065
Shareholders' equity:
Capital stock 4,022,641
Deficit (1,908,169)
---------
2,114,472
---------
$ 2,183,537
=========
<PAGE>
NYMOX PHARMACEUTICAL CORPORATION
Statement of Loss and Deficit
(Unaudited)
Quarter ended March 31, 1996
Revenues:
Interest $ 34,792
Expenses:
Research and development 285,257
Less investment tax credits (21,000)
--------
264,257
General and administrative 141,755
Financial (6,939)
Depreciation 4,202
--------
403,275
--------
Net loss (368,483)
Deficit, beginning of period (1,539,686)
---------
Deficit, end of period $(1,908,169)
=========
<PAGE>
NYMOX PHARMACEUTICAL CORPORATION
Statement of Changes in Financial Position
(Unaudited)
Quarter ended March 31, 1996
Cash provided by (used in):
Operations:
Net loss $ (368,483)
Item not involving cash:
Depreciation 4,202
Net changes in non-cash operating working
capital items (84,908)
-------
(449,189)
Investment:
Purchase of capital assets (77,170)
--------
Decrease in cash (526,359)
Cash position, beginning of period 2,167,575
---------
Cash position, end of period $ 1,641,216
=========
<PAGE>
NYMOX PHARMACEUTICAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996
(Unaudited)
The accompanying unaudited consolidated financial statements of NYMOX
Pharmaceutical Corporation (the "Company") do not include all information
and disclosures required by Canadian Generally Accepted Accounting
Principles. These statements should be read in conjunction with the
consolidated financial statements and notes thereto for the five-month
period ended December 31, 1995 and the twelve-month period ended July 31,
1995 included elsewhere in this Form 20-F.
The accompanying consolidated financial statements have not been
audited by independent accountants in accordance with generally accepted
auditing standards, but in the opinion of management, such financial
statements include all adjustments, consisting only of normal recurring
accruals, necessary to summarize fairly the Company's financial position
and results of operations.
<PAGE>
Auditors' report
To the Shareholders of
Nymox Pharmaceutical Corporation
We have audited the consolidated balance sheet of Nymox Pharmaceutical
Corporation as at December 31, and July 31, 1995 and the consolidated
statements of loss and deficit and of changes in financial position for
the five-month period ended December 31, 1995 and the twelve-month period
ended July 31, 1995. These financial statements are the responsibility of
the Corporation's management. Our responsibility is to express an opinion
on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial state-
ments. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation.
In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the Corporation as at
December 31, and July 31, 1995 and the results of its operations and the
changes in its financial position for the five-month period ended
December 31, 1995 and the twelve-month period ended July 31, 1995 in
accordance with generally accepted accounting principles.
DELOITTE & TOUCHE
Chartered Accountants
January 22, 1996
<PAGE>
NYMOX PHARMACEUTICAL CORPORATION
Consolidated statement of loss and deficit
five-month period ended December 31, 1995
December 31 July 31
1 9 9 5 1 9 9 5
(5 months) (12 months)
Expenses
Research and development $ 571,215 $ 371,939
General and administrative 134,631 5,631
--------- --------
Loss before income taxes 705,846 377,570
Income tax recovery (Note 5) (12,000) -
--------- --------
Net loss 693,846 377,570
Deficit, beginning of period 636,043 258,473
Share issue costs 209,797 -
--------- ---------
Deficit, end of period $ 1,539,686 $ 636,043
========= =========
Loss per share $ 0.04 $ 0.03
========= =========
<PAGE>
NYMOX PHARMACEUTICAL CORPORATION
Consolidated balance sheet
as at December 31, 1995
December 31 July 31
1 9 9 5 1 9 9 5
Current assets
Cash and cash equivalents $ 2,167,574 $ 11,963
Advance to a director 56,000 -
Prepaid expenses and deposits 44,523 -
--------- ---------
2,268,097 11,963
Capital assets (Note 4) 366,155 338,953
--------- ---------
$ 2,634,252 $ 350,916
========= =========
Current liabilities
Accounts payable and accrued
liabilities $ 107,639 $ 77,931
Advance from a director 43,658 43,658
--------- --------
151,297 121,589
--------- --------
Shareholders' equity
Capital stock (Note 6) 4,022,641 865,370
Deficit (1,539,686) (636,043)
--------- -------
2,482,955 229,327
--------- -------
$ 2,634,252 $ 350,916
========= =======
<PAGE>
NYMOX PHARMACEUTICAL CORPORATION
Consolidated statement of changes in financial position
five-month period ended December 31, 1995
December 31 July 31
1 9 9 5 1 9 9 5
(5 months) (12 months)
Operating activities
Net loss $ (693,846) $ (377,570)
Item not affecting cash
Amortization 1,400 -
Changes in non-cash working capital
items (70,815) 76,213
--------- ---------
(763,261) (301,357)
--------- ---------
Investing activities
Acquisition of capital assets (28,602) (99,550)
--------- ---------
Financing activities
Issue of shares 3,157,271 412,870
Share issue costs (209,797) -
--------- ---------
2,947,474 412,870
--------- ---------
Net cash inflow 2,155,611 11,963
Cash, beginning of period 11,963 -
--------- ---------
Cash, end of period $ 2,167,574 $ 11,963
========= =========
<PAGE>
NYMOX PHARMACEUTICAL CORPORATION
Notes to the consolidated financial statements
five-month period ended December 31, 1995
1. Status and nature of activities
Nymox Pharmaceutical Corporation (the "Corporation") was
incorporated under the Canada Business Corporations Act on May 30,
1995 and became a public company under applicable security laws on
September 20, 1995.
The Corporation was formed for the purpose of acquiring all of the
common shares of DMS Pharmaceutical Inc. (DMS), a private company
carrying on research and development in the field of neurological
diagnostics and pharmaceuticals for the aging population. This
acquisition was completed during September 1995 for a consideration
of 15,000,000 common shares of the Corporation, resulting in the
shareholders of DMS becoming the shareholders of the Corporation.
Immediately following the acquisition, the Corporation acquired for
cash consideration a controlling interest in Monterey Capital Inc.
("Monterey") a public company.
Monterey was subsequently amalgamated with a wholly-owned subsidiary
of the Corporation with the result that the non-controlling
shareholders of Monterey received 468,447 common shares of the
Corporation. The Corporation then listed its shares on the Montreal
Exchange.
The shares of the amalgamated corporation carrying on the business
of Monterey were subsequently sold at an amount equal to the cash
consideration paid.
2. Basis of presentation
The accompanying consolidated financial statements combine
historical financial information of the business of DMS described
above as though it had been carried on by the Corporation as a legal
entity since August 1, 1994. These consolidated financial statements
reflect the financial position and results of operations under the
continuity of interest method.
3. Significant accounting policies
Consolidation
The consolidated financial statements have been prepared in
accordance with Canadian generally accepted accounting principles
and include the accounts of the Corporation and its subsidiary.
Research and development
The Corporation incurs costs which relate to the research and
development of neurological diagnostics and pharmaceuticals for the
aging population. Such costs, net of any government grants and
investment tax credits where applicable, are expensed as incurred.
Cash and cash equivalents
Cash and cash equivalents represent unrestricted cash and highly
liquid investments with a maturity of three months or less.
Capital assets
Capital assets are recorded at cost. Amortization, which is applied
to the costs less residual value, is computed using the following
methods and rates:
Computer software and equipment Straight-line 20%
Equipment Straight line 20%
Patents Over the years remaining
of the initial 17-year
life of the patent,
beginning in the year of
commercial production of
the developed products
4. Capital assets
December 31 July 31
1 9 9 5 1 9 9 5
Accumulated
Cost amortization Net book value
Computer software
and equipment $ 8,533 $ - $ 8,533 $ -
Equipment 14,080 1,400 12,680 12,576
Patents 344,941 - 344,941 326,376
Intellectual
property rights 1 - 1 1
--------- --------- --------- ---------
$ 367,555 $ 1,400 $366,155 $ 338,953
========= ========= ========= =========
5. Income taxes
December 31 July 31
1 9 9 5 1 9 9 5
(5 months) (12 months)
Income tax recovery at
statutory rates $ (269,615) $(143,477)
Non-recognition of losses 257,615 (143,477)
---------- ----------
$ (12,000) $ -
========== ==========
The Corporation and its subsidiary have losses carried forward
totalling approximately $1,338,000, which are available to reduce
future years' taxable income. The benefits of the losses carried
forward have not been reflected in these financial statements. These
losses expire as follows:
1996 $ 113,000
1997 11,000
1998 40,000
1999 36,000
2000 59,000
2001 377,000
2002 702,000
The Corporation has investment tax credits available in the amount
of approximately $40,000, the benefits of which have not been
recorded in these financial statements.
6. Capital stock
All share information has been presented as if the acquisition of
DMS (see Note 1) took place August 1, 1994.
Authorized
An unlimited number of common shares
December 31 July 31
1 9 9 5 1 9 9 5
Issued and outstanding
17,047,083 common shares
(July 31, 1995 - 15,000,001) $4,022,641 $865,370
========= =======
The events more fully described in Note 1 to these financial
statements were completed with the following share transactions:
A total of 15,000,000 common shares were issued in exchange for
all of the issued and outstanding shares of DMS which shares had a
value for accounting purposes of $857,869. The stated value of the
common shares of the Corporation issued in this transaction was
$30,000,000.
A total of 468,447 common shares were issued in connection with
the Monterey transactions. The value for accounting purposes of
these shares is $1 and the stated value is $962,046.
During the period, the Corporation issued 1,578,635 common shares
for cash consideration of $3,157,270.
Loss per share
The weighted average number of common shares outstanding during the
five-month period ended December 31, 1995 and the twelve-month
period ended July 31, 1995 used to calculate the loss per share was
16,432,958 and 14,789,724, respectively.
Options
During the period, the Corporation adopted a plan to grant options
to acquire common shares to its employees, consultants, officers and
directors at prices and expiry dates to be determined by the board
of directors. The maximum number of shares issuable in respect of
the options is the lesser 5% of the issued and outstanding common
shares and 2,000,000 common shares.
7. Subsequent event
On January 17, 1996, the Corporation granted options to acquire
1,245,000 common shares at a price of $3.25 per share and
exercisable to 2006.
8. Comparative figures
Certain comparative figures have been reclassified to conform with
the presentation adopted in the current period.
<PAGE>
AUDITOR'S REPORT
To the shareholders of
DMS PHARMACEUTICAL INC.
We have audited the balance sheet of DMS PHARMACEUTICAL INC. as at
July 31, 1994 and the statements of loss and deficit and changes in
financial position for the year then ended. These financial statements
are the responsability of the company's management. Our responsibility is
to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all
material respects, the financial position of the company as at July 31,
1994 and the results of its operations for the year then ended in
accordance with generally accepted accounting principles.
BERGERON & SENECAL
Chartered Accountants.
Brossard, Quebec,
July 8, 1995.
<PAGE>
AUDITOR'S REPORT
To the shareholders of
DMS PHARMACEUTICAL INC.
We have audited the balance sheet of DMS PHARMACEUTICAL INC. as at
July 31, 1993 and the statements of loss and deficit and changes in
financial position for the year then ended. These financial statements
are the responsability of the company's management. Our responsibility is
to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all
material respects, the financial position of the company as at July 31,
1993 and the results of its operations for the year then ended in
accordance with generally accepted accounting principles.
BERGERON & SENECAL
Chartered Accountants.
Brossard, Quebec,
July 8, 1995.
<PAGE>
DMS PHARMACEUTICAL INC.
BALANCE SHEET
As at July 31, 1994 and 1993
1994 1993
$ $
ASSETS
FIXED ASSETS (Note 3) 12 576 12 576
OTHER ASSETS
Subscription receivable - 11 949
Patents 226 826 226 826
Intellectual property rights 1 1
------- -------
226 827 238 776
------- -------
239 403 251 352
------- -------
<PAGE>
DMS PHARMACEUTICAL INC.
BALANCE SHEET
As at July 31, 1994 and 1993
1994 1993
$ $
LIABILITIES
CURRENT
Accounts payable and accrued charges 12 000 9 000
ADVANCES FROM DIRECTORS, without
specified terms of repayment and
interest rate 33 376 -
------ ------
45 376 9 000
------ ------
SHAREHOLDER'S EQUITY
CAPITAL STOCK (Note 4)
Authorized:
Unlimited number of common shares
with no par value,
Issued and fully paid:
2 213 125 common shares 452 500 442 500
DEFICIT (258 473) (200 148)
------- -------
194 027 242 352
------- -------
239 403 251 352
------- -------
See accompanying notes to financial statements.
<PAGE>
DMS PHARMACEUTICAL INC.
STATEMENT OF LOSS AND DEFICIT
For the year ended July 31, 1994 and 1993
1994 1993
$ $
REVENUES - -
EXPENSES
Research and development costs 55 325 32 519
Professional fees 500 500
Capital taxes 2 500 1 500
------- -------
58 325 34 519
------- -------
NET LOSS FOR THE YEAR (58 325) (34 519)
DEFICIT at beginning of year (200 148) (165 629)
-------- --------
DEFICIT at end of year (258 473) (200 148)
-------- --------
See accompanying notes to financial statements.
<PAGE>
DMS PHARMACEUTICAL INC.
STATEMENT OF CHANGES IN FINANCIAL POSITION
For the year ended July 31, 1994 and 1993
1994 1993
$ $
OPERATING ACTIVITIES
Net loss for the year (58 325) (34 519)
Increase in non cash working
capital balances 3 000 2 000
------- -------
Liquidities used for operating
activities (55 325) (32 519)
------- -------
FINANCING ACTIVITIES
Increase (decrease) of advances
from directors 33 376 (160 532)
Common shares issued 10 000 205 000
------- -------
Liquidities provided by financing
activities 43 376 44 468
------- -------
INVESTMENT ACTIVITIES
Increase (decrease) of subscription
receivable and liquidities provided
by (used for) investment activities 11 949 (11 949)
------- -------
INCREASE IN CASH POSITION - -
CASH POSITION, at beginning of year - -
------- -------
CASH POSITION, at end of year - -
------- -------
See accompanying notes to financial statements.
<PAGE>
DMS PHARMACEUTICAL INC.
COMPLEMENTARY NOTES
As at July 31, 1994 and 1993
1. STATUS AND NATURE OF BUSINESS
The company was incorporated under Part 1A of the Quebec Corporations'
Act. It is involved in research and development in Alzheimer disease.
2. SIGNIFICANT ACCOUNTING POLICIES
a) Fixed assets:
Fixed assets are recorded at cost.
b) Patents:
Patents are recorded at cost. Amortization is provided by the
straight line method over a period of 17 years from the date of the
marketing of developed products.
3. FIXED ASSETS 1994 1993
$ $
Scientific equipment 11 445 11 445
Office equipment 1 131 1 131
------ ------
12 576 12 576
------ ------
4. CAPITAL STOCK
During the year, the company issued 2 500 common shares for a cash
consideration of $10 000.
<PAGE>
EXHIBIT INDEX
NYMOX PHARMACEUTICAL CORPORATION
Form 20-F Registration Statement
Exhibit No. Description
Form 20-F EDGAR
1.1 3.1 Articles of Incorporation, as amended, of
the Registrant
1.2 3.2 Bylaws of the Registrant
3.1 10.1 Memorandum of Agreement between Paul
Averback and the Registrant
3.2 10.2 Share Option Plan of the Registrant
3.3 10.3 Research and License Agreement between The
General Hospital Corporation and the
Registrant (to be filed by amendment).
EXHIBIT NO. 1.1
(EDGAR EXHIBIT 3.1)
ARTICLES OF INCORPORATION, AS AMENDED,
OF
NYMOX PHARMACEUTICAL CORPORATION
1. Name of Corporation
Nymox Pharmaceutical Corporation
2. The place in Canada where the registered office is to be
situated -
Metropolitan Region of Montreal, Province of Quebec
3. The classes and any maximum number of shares that the
corporation is authorized to issue
An unlimited number of Common shares.
4. Restrictions, if any, on share transfers
N/A
5. Number (or minimum and maximum number) of directors
Minimum: 5 Maximum: 15
6. Restrictions, if any, on business of the corporation may
carry on
N/A
7. Other provisions, if any
Appointment of directors
The directors shall have the right to appoint one or more
additional directors, who shall hold office for a term
expiring not later than the close of the next annual
meeting of shareholders, but the total number of directors
so appointed may not exceed one third of the number of
directors elected at the previous annual meeting of
shareholders, the whole in accordance with section 106(8)
of the Canada Business Corporations Act.
EXHIBIT 1.2
(EDGAR EXHIBIT 3.2)
NYMOX PHARMACEUTICAL CORPORATION
LIST OF BY-LAWS
No. 1 Relating generally to the conduct
of the affairs of the Corporation. May 30, 1995
BY-LAW NO. I
A by-law relating generally to the transaction of the business and
affairs of
NYMOX PHARMACEUTICAL CORPORATION
CONTENTS
Section I - Interpretation
Section II - Business of the Corporation
Section III - Borrowing and Securities
Section IV - Directors
Section V - Committees
Section VI - Officers
Section VII - Protection of Directors,
Officers and Others
Section VIII - Shares
Section IX - Meetings of Shareholders
Section X - Notices
Section XI - Effective Date
BE IT ENACTED as a by-law of the Corporation as follows:
SECTION I
INTERPRETATION
1.1 Definitions - In the by-laws of the Corporation, unless the context
otherwise requires:
"Act" means the Canada Business Corporations Act and any statute that
may be substituted therefor, as from time to time amended;
"appoint" includes "elect" and vice versa;
"articles" means the articles attached to the certificate of
incorporation dated May 30, 1995 of the Corporation as from time to
time amended or restated;
"board" means the board of directors of the Corporation;
"by-laws" means this by-law and all other by-laws of the Corporation
from time to time in force and effect;
"meeting of shareholders" means an annual meeting of shareholders and
a special meeting of shareholders; "special meeting of shareholders"
means a special meeting of all shareholders entitled to vote at an
annual meeting of shareholders;
"non-business day" means Saturday, Sunday and any other day that is a
holiday as defined in the Interpretation Act (Canada);
"recorded address" means in the case of a shareholder his address as
recorded in the securities register; and in the case of joint
shareholders the address appearing in the securities register in
respect of such joint holding or the first address so appearing if
there are more than one; and in the case of a director, officer,
auditor or member of a committee of the board, his latest address as
recorded in the records of the Corporation; "address" includes in all
cases a telex number;
"signing officer" means, in relation to any instrument, any person
authorized to sign the same on behalf of the Corporation by
subsection 2.4 or by a resolution passed pursuant thereto;
"unanimous shareholder agreement" means a written agreement among all
the shareholders of the Corporation; or among all such shareholders
and a person who is not a shareholder, that restricts in whole or in
part, the powers of the directors to manage the business and affairs
of the Corporation, as from time to time amended.
Save as aforesaid, words and expressions defined in the Act have
the same meanings when used herein; and words importing the singular
number include the plural and vice versa; words importing gender include
the masculine, feminine and neuter genders; and words importing persons
include individuals, bodies corporate, partnerships, trusts and
unincorporated organizations.
SECTION II
BUSINESS OF THE CORPORATION
2.1 Registered Office - Until changed in accordance with the Act, the
registered office of the Corporation shall be located in the limits of the
judicial district stipulated in the articles and at such address in the
same district as the board may choose from time to time.
2.2 Corporate Seal - Unless the Corporation adopts one by resolution of
the board, the Corporation shall have no corporate seal.
2.3 Financial Year - Until changed by the board, the financial year of
the Corporation shall end on the last day of July in each year.
2.4 Execution of Instruments - Deeds, transfers, assignments, contracts,
obligations, certificates and other instruments may be signed on behalf of
the Corporation by the chairman of the board president, managing director,
director, secretary or as the directors may otherwise authorize, from time
to time, by resolution. Any such authorization may be general or confined
to specific instances. In addition, the board may from time to time
direct the manner in which the person or persons by whom any particular
instrument or class of instruments may or shall be signed Any signing
officer may affix the corporate seal to any instrument requiring the same.
2.5 Declarations - The president, any vice-president, treasurer,
secretary, secretary-treasurer general manager, chairman of the board,
managing-director, or any other officer or person nominated for the
purpose by the president or any vice-president are, and any one of them is
authorized and empowered to appear and make answer for, on behalf and in
the name of the Corporation to all writs, orders and interrogatories upon
articulated facts issued out of any court and to declare for, on behalf
and in the name of the Corporation any answer to writs of attachment by
way of garnishment in which the Corporation is garnishee and to make all
affidavits and sworn declarations in connection therewith or in connection
with any and all judicial proceedings to which the Corporation is a party
and to make demands of abandonment or petitions for winding-up or
bankruptcy orders upon any debtor of the Corporation and to attend and
vote at all meetings of creditors of the Corporation's debtors and grant
proxies in connection therewith, and may generally do all such things in
respect thereof as they deem to be in the best interests of the
Corporation.
2.6 Banking Arrangements - The banking business of the Corporation
including, without limitation, the borrowing of money and the giving of
security therefor, shall be transacted with such banks, trust companies or
other bodies corporate or organizations as may from time to time be
designated by or under the authority of the board. Such banking business
or any part thereof shall be transacted under such agreements,
instructions and delegations of power as the board may from time to time
prescribe or authorize.
2.7 Voting Rights in Other Bodies Corporate - The signing officers of the
Corporation may execute and deliver proxies and arrange for the issuance
of voting certificates or other evidence of the right to exercise the
voting rights attaching to any securities held by the Corporation. Such
instruments, certificates or other evidence shall be in favor of such
person or persons as may be determined by the officers executing such
proxies or arranging for the issuance of voting certificates or such other
evidence of the right to exercise such voting rights. In addition, the
board may from time to time, direct the manner in which and the person or
persons by whom any particular voting rights or class of voting rights may
or shall be exercised.
SECTION III
BORROWING AND SECURITIE
3.1 Borrowing Power - The Board of Directors has the borrowing powers
provided by the Law.
SECTION IV
DIRECTORS
4.1 Number of Directors and Quorum - Until changed in accordance with the
Act, the board shall consist of not fewer than five (5) and not more than
fifteen (15) directors. The directors may from time to time, fix by
resolution the quorum for meetings of the board of directors and, until
otherwise decided by resolution of the board, and under reserve of any
unanimous shareholders agreement, a quorum for all meetings of the board
shall consist of a majority of the number of directors then in office.
4.2 Qualification - No person shall be qualified for election as a
director if he is less than eighteen (18) years of age; if he is of
unsound mind and has been so found by a court in Canada or elsewhere; if
he is not an individual; or if he has the status of a bankrupt. A
director need not be a shareholder. A majority of the directors shall be
resident Canadians.
4.3 Election, Number and Term - The election of directors shall take
place at the first meeting of shareholders and at each annual meeting of
shareholders and all the directors then in office shall retire but, if
qualified, shall be eligible for re-election. The number of directors to
be elected at any such meeting shall be the number of directors then in
office unless the directors or the shareholders otherwise determine. The
election shall be by resolution. If an election of directors is not held
at the proper time, the incumbent directors shall continue in office until
their successors are elected.
4.4 Removal of Directors - Subject to the provisions of the Act and to
the provisions of any unanimous shareholders agreement, the shareholders
may by ordinary resolution passed at a special meeting remove any director
from office and the vacancy created by such removal may be filled at the
same meeting, failing which it may be filled by the directors.
4.5 Vacation of Office - A director ceases to hold office when: he dies;
he is removed from office by the shareholders; he ceases to be qualified
for election as a director; or his written resignation is sent or
delivered to the Corporation, or if a time is specified in such
resignation, at the time so specified, whichever is later.
4.6 Vacancies - Subject to the Act, a quorum of the board may fill a
vacancy in the board except a vacancy resulting from an increase in the
minimum number of directors or from a failure of the shareholders to elect
the minimum number of directors. In the absence of a quorum of the board,
or if the vacancy has arisen from a failure of the shareholders to elect
the minimum number of directors, the board shall forthwith call a special
meeting of shareholders to fill the vacancy. If the board fails to call
such meeting or if there are no such directors then in office, any
shareholder may call the meeting.
4.7 Action by the Board - Subject to any unanimous shareholder agreement,
the board shall manage the business and affairs of the Corporation.
Subject to subsection 4.8, the powers of the board may be exercised by
resolution passed at a meeting at which a quorum is present or by
resolution in writing signed by all the directors entitled to vote on that
resolution at a meeting of the board. Where there is a vacancy in the
board, the remaining directors may exercise all the powers of the board so
long as a quorum remains in office.
4.8 Meetings by Telephone - If all the directors consent, a director may
participate in a meeting of the board or of a committee of the board by
means of such telephone or other communication facilities as permit all
persons participating in the meeting to hear each other, and a director
participating in such a meeting by such means is deemed to be present at
the meeting Any such consent shall be effective whether given before or
after the meeting to which it relates and may be given with respect to all
meetings of the board and of committees of the board held while a director
holds office.
4.9 Place of Meetings - Meetings of the board may be held at any place in
or outside Canada unless the directors decide otherwise by unanimous
resolution.
4.10 Calling of Meetings - Meetings of the board shall be held from time
to time and at such place as the board, the chairman of the board, the
managing director, the president or any two directors may determine.
4.11 Notice of Meeting - Notice of the time and place of each meeting of
the board shall be given in the manner provided in subsection 10.1 to each
director not less than forty-eight (48) hours before the time when the
meeting is to be held. A notice of a meeting of directors need not
specify the purpose of, or the business to be transacted at the meeting
except where the Act requires such purpose or business to be specified,
including any proposal to:
(a) submit to the shareholders any question or matter requiring
approval of the shareholders;
(b) fill a vacancy among the directors or in the office of auditor;
(c) issue securities;
(d) declare dividends;
(e) purchase, redeem or otherwise acquire shares of the Corporation;
(f) pay a commission for the sale of shares;
(g) approve a management proxy circular;
(h) approve a take-over bid circular or directors' circular;
(i) approve any annual financial statements; or
(j) adopt, amend or repeal by-laws.
A director may in any manner waive notice of or otherwise
consent to a meeting of the board and attendance of a director at a
meeting of directors is a waiver of notice of the meeting except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business on the grounds that the meeting is not
lawfully called.
4.12 First Meeting of New Board - Provided a quorum of directors is
present, each newly elected board may without notice hold its first
meeting immediately following the meeting of shareholders at which such
board is elected.
4.13 Adjourned Meeting - Notice of an adjourned meeting of the board is
not required if the time and place of the adjourned meeting is announced
at the original meeting.
4.14 Regular Meetings - The board may appoint a day or days in any month
or months for regular meetings of the board at a place and hour to be
named. A copy of any resolution of the board fixing the place and time of
such regular meetings shall be sent to each director forthwith after being
passed, but no other notice shall be required for any such regular meeting
except where the Act requires the purpose thereof or the business to be
transacted thereat to be specified.
4.15 Chairman - The chairman of any meeting of the board shall be the
first mentioned of such of the following officers as have been appointed
and who is a director and is present at the meeting: chairman of the
board, managing director, president, or a vice-president who is a
director. If no such officer is present, the directors present shall
choose one from amongst them to be chairman.
4.16 Votes to Govern - At all meetings of the board every question shall
be decided by a majority of the votes cast on the question. In the event
of a tie the chairman of the meeting shall not be entitled to a second or
casting vote.
4.17 Conflict of Interest - A director or officer who is a party to, or
who is a director or officer of or has a material interest in any person
who is a party to, a material contract or proposed material contract with
the Corporation, shall disclose the nature and extent of his interest at
the time and in the manner provided by the Act.
4.18 Remuneration and Expenses - Subject to any unanimous shareholder
agreement, the directors shall be paid such remuneration for their
services as the board may from time to time determine. The directors
shall also be entitled to be reimbursed for travelling and other expenses
properly incurred by them in attending meetings of the board or any
committee thereof. Nothing herein contained shall preclude any director
from serving the Corporation in any other capacity and receiving
remuneration therefor.
4.19 Only One Director - Where the Corporation has only one (1) director,
that director shall constitute the board and a meeting.
SECTION V
COMMITTEES
5.1 Committee of Directors - The board may appoint a committee of
directors, however designated, and delegate to such committee any of the
powers of the board except those which, under the Act, a committee of
directors has no authority to exercise. A majority of the members of such
committee shall be resident Canadians.
5.2 Transaction of Business - Subject to the provisions of subsection
4.8, the powers of a committee of directors may be exercised by a meeting
at which a quorum is present or by resolution in writing signed by all the
members of such committee who would have been entitled to vote on that
resolution at a meeting of the committee. Meetings of such committee may
be held at any place in or outside Canada.
SECTION VI
OFFICERS
6.1 Appointment - Subject to any unanimous shareholder agreement, the
board may, from time to time, appoint a president, one or more vice-
presidents (to which title may be added words indicating seniority or
function), a secretary, a treasurer and such other officers as the board
may determine, including one or more assistants to any of the officers so
appointed. The board may specify the duties of and, in accordance with
this by-law and subject to the provisions of the Act, delegate to such
officers powers to manage the business and affairs of the Corporation.
Subject to subsections 6.2 and 6.3, an officer may but need not be a
director and one person may hold more than one office.
6.2 Chairman of the Board - The board may, from time to time, also
appoint a chairman of the board who shall be a director. If appointed,
the board may assign to him any of the powers and duties that are by any
provisions of this by-law assigned to the managing director or to the
president; and he shall, subject to the provisions of the Act, have such
other powers and duties as the board may specify. During the absence or
disability of the chairman of the board, his duties shall be performed and
his powers exercised by the managing director, if any, or by the
president.
6.3 Managing Director - The board may, from time to time, appoint a
managing director who shall be a resident Canadian and a director. If
appointed, he shall be the chief executive officer and, subject to the
authority of the board, shall have general supervision of the business and
affairs of the Corporation; and he shall, subject to the provisions of the
Act, have such other powers and duties as the board may specify. During
the absence or disability of the president, or if no president has been
appointed, the managing director shall also have the powers and duties of
that office.
6.4 President - If appointed, the president shall be the chief operating
officer and, subject to the authority of the board, shall have general
supervision of the business of the Corporation; and he shall have such
other powers and duties as the board may specify. During the absence or
disability of the managing director, or if no managing director has been
appointed, the president shall also have the powers and duties of that
office.
6.5 Vice-President - A vice-president shall have such powers and duties
as the board or the chief executive officer may specify.
6.6 Secretary - The secretary shall attend and be the secretary of all
meetings of the board shareholders and committees of the board and shall
enter or cause to be entered in records kept for that purpose minutes of
all proceedings thereat; he shall give or cause to be given, as and when
instructed, all notices to shareholders, directors, officers, auditors and
members of committees of the board; he shall be the custodian of the stamp
or mechanical device generally used for affixing the corporate seal of the
Corporation and of all books, papers, records, documents and instruments
belonging to the Corporation, except when some other officer or agent has
been appointed for that purpose; and he shall have such other powers and
duties as the board or the chief executive officer may specify.
6.7 Treasurer - The treasurer shall keep proper accounting records in
compliance with the Act and shall be responsible for the deposit of money,
the safekeeping of securities and the disbursement of the funds of the
Corporation; he shall render to the board whenever required an account of
all his transactions as treasurer and of the financial position of the
Corporation; and he shall have such other powers and duties as the board
or the chief executive officer may specify.
6.8 Powers and Duties of Other Officers - The powers and duties of all
other officers shall be such as the terms of their engagement call for or
as the board or the chief executive officer may specify. Any of the
powers and duties of an officer to whom an assistant has been appointed
may be exercised and performed by such assistant, unless the board or the
chief executive officer otherwise directs.
6.9 Variation of Powers and Duties - The board may, from time to time and
subject to the provisions of the Act, vary, add to or limit the powers and
duties of any officer.
6.10 Term of Office - The board, in its discretion, but subject to the
provisions of any unanimous shareholders agreement may remove any officer
of the Corporation, without prejudice to such officer's rights under any
employment contract. Otherwise each officer appointed by the board shall
hold office until his successor is appointed.
6.11 Terms of Employment and Remuneration - The terms of employment and
the remuneration of officers appointed by the board shall be settled by it
from time to time.
6.12 Conflict of Interest - An officer shall disclose his interest in any
material contract or proposed material contract with the Corporation in
accordance with subsection 4.18.
6.13 Agents and Attorneys - The board shall have power from time to time
to appoint agents or attorneys for the Corporation in or outside Canada
with such powers of management or otherwise including the power to sub-
delegate as may be thought fit.
6.14 Fidelity Bonds - The board may require such officers, employees and
agents of the Corporation as the board deems advisable to furnish bonds
for the faithful discharge of their powers and duties, in such form and
with such surety as the board may from time to time determine.
SECTION VII
PROTECTION OF DIRECTORS, OFFICERS AND OTHERS
7.1 Limitation of Liability - No director or officer shall be liable for
the acts, receipts, neglects or defaults, of any other director or officer
or employee, or for joining in any receipt or other act for conformity, or
for any loss, damage or expense happening to the Corporation through the
insufficiency or deficiency of title to any property acquired for or on
behalf of the Corporation or for the insufficiency or deficiency of any
security in or upon which any of the moneys of the Corporation shall be
invested, or for any loss or damage arising from the bankruptcy,
insolvency or tortious acts of any person with whom any of the moneys,
securities or effects of the Corporation shall be deposited, or for any
loss occasioned by any error of judgment or oversight on his part, or for
any other loss, damage or misfortune whatever which shall happen in the
execution of the duties of his office or in relation thereto, unless the
same are occasioned by his own wilful neglect or default; provided that
nothing herein shall relieve any director or officer from the duty to act
in accordance with the Act and the regulations thereunder or from
liability for any breach thereof.
7.2 Indemnity - Subject to the limitations contained in the Act, the
Corporation shall indemnify a director or officer, a former director or
officer, or a person who acts or acted at the Corporation's request as a
director or officer of a body corporate of which the Corporation is or was
a shareholder or creditor (or a person who undertakes or has undertaken
any liability on behalf of the Corporation or any such body corporate) and
his heirs and legal representatives against all costs, charges and
expenses, including an amount paid to settle an action or satisfy a
judgment, reasonably incurred by him in respect of any civil, criminal or
administrative action or proceeding to which he is made a party by reason
of being or having been a director or officer of the Corporation or such
body corporate, if
(a) he acted honestly and in good faith with a view to the best
interests of the Corporation; and
(b) in the case of a criminal or administrative action or proceeding
that is enforced by a monetary penalty, he had reasonable
grounds for believing that his conduct was lawful.
SECTION VIII
SHARES
8.1 Allotment - The board may, from time to time, allot or grant options
to purchase the whole or any part of the authorized and unissued shares of
the Corporation at such times and to such persons and for such
consideration as the board shall determine, provided that no share shall
be issued until it is fully paid as prescribed by the Act.
8.2 Commissions - The board may from time to time authorize the
Corporation to pay a commission to any person in consideration of his
purchasing or agreeing to purchase shares of the Corporation, whether from
the Corporation or from any other person, or procuring or agreeing to
procure purchasers for any such shares.
8.3 Registration of Transfer - Subject to the provisions of the Act, no
transfer of shares shall be registered in a securities register except
upon presentation of the certificate representing such shares with a
transfer endorsed thereon or delivery therewith duly executed by the
registered holder or by his attorney or successor duly appointed, together
with such reasonable assurance or evidence of signature, identification
and authority to transfer as the board may from time to time prescribe,
upon payment of all applicable taxes and any fees prescribed by the board,
upon compliance with such restrictions on transfer as are authorized by
the articles and the by-laws.
8.4 Lien for Indebtedness - If the articles provide that the Corporation
shall have a lien on shares registered in the name of a shareholder
indebted to the Corporation, such lien may be enforced, subject to any
other provision of the articles and to any unanimous shareholder
agreement, by the sale of the shares thereby affected or by any other
action, suit, remedy or proceeding authorized or permitted by law or by
equity and, pending such enforcement, may refuse to register a transfer of
the whole or any part of such shares.
8.5 Share Certificates - Every holder of one or more shares of the
Corporation shall be entitled, at his option, to a share certificate, or
to a non-transferable written acknowledgment of his right to obtain a
share certificate, stating the number and class or series of shares held
by him as shown on the securities register. Share certificates and
acknowledgments of a shareholder's right to a share certificate,
respectively, shall be in such form as the board shall from time to time
approve. Any share certificate shall be signed in accordance with
subsection 2.4 and need not be under the corporate seal; unless the board
otherwise determines that certificates representing shares in respect of
which a transfer agent and/or registrar has been appointed shall not be
valid unless countersigned by or on behalf of such transfer agent and/or
registrar. The signature of one of the signing officers or, in the case
of share certificates which are not valid unless countersigned by or on
behalf of a transfer agent and/or registrar, the signatures of both
signing officers, may be printed or mechanically reproduced in facsimile
upon share certificates and every such facsimile signature shall for all
purposes be deemed to be the signature of the officer whose signature it
reproduces and shall be binding upon the Corporation.
8.6 Replacement of Share Certificates - The board or any officer or agent
designated by the board may in its or his discretion direct the issue of a
new share certificate in lieu of and upon cancellation of a share
certificate that has been mutilated or in substitution for a share
certificate claimed to have been lost, destroyed or wrongfully taken, upon
payment of such fee, not exceeding three dollars, upon providing for the
indemnification and reimbursement of expenses and upon proof of loss of
said share certificate as the board may from time to time prescribe,
whether generally or in any particular case.
8.7 Joint Shareholders - If two or more persons are registered as joint
holders of any share the Corporation shall not be bound to issue more than
one certificate in respect thereof, and delivery of such certificate to
one of such persons shall be sufficient delivery to all of them. Any one
of such persons may give effectual receipts for the certificate issued in
respect thereof or for any dividend, bonus, return of capital or other
money payable or warrant issuable in respect of such share.
8.8 Deceased Shareholders - In the event of the death of a holder, or of
one of the joint holders, of any share, the Corporation shall not be
required to make any entry in the securities register in respect thereof
or to make payment of any dividends thereon except upon production of all
such documents as may be required by law and upon compliance with the
reasonable requirements of the Corporation and its transfer agents.
SECTION IX
MEETINGS OF SHAREHOLDERS
9.1 Annual Meetings - The annual meeting of shareholders shall be held at
such time in each year and, subject to subsection 9.3, at such place as
the board, the chairman of the board, the managing director or the
president may from time to time determine, for the purpose of considering
the financial statements and reports required by the Act to be placed
before the annual meeting, electing directors, appointing auditors and for
the transaction of such other business as may properly be brought before
the meeting.
9.2 Special Meetings - The board, the chairman of the board, the managing
director or the president shall have power to call a special meeting of
shareholders at any time. The president or the secretary of the
Corporation shall, upon receipt of a request signed by the registered
holders of at least fifty-one percent (51%) of the issued voting shares of
the Corporation, call a special general meeting of the shareholders of the
Corporation by way of written notice given in accordance with subsection
10.1 accompanied by an agenda specifying the date, time, place and purpose
of the meeting, to be addressed to each shareholder having the right to
vote at such meeting.
9.3. Place of Meetings - Meetings of shareholders shall be held at the
registered office of the Corporation or elsewhere in the municipality in
which the registered office is situate or, if the board shall so
determine, at some other place in Canada or, if all the shareholders
entitled to vote at the meeting so agree, at some place outside Canada.
9.4 Notice of Meetings - Notice of the time and place of each meeting of
shareholders shall be given in the manner provided in subsection 10.1 not
less than twenty-one (21) nor more than fifty (50) days before the date of
the meeting to each director, to the auditor and to each shareholder who
at the close of business on the record date for notice, if any, is entered
in the securities register as the holder of one or more shares carrying
the right to vote at the meeting Notice of a meeting of shareholders
called for any purpose other than consideration of the financial
statements and auditor's report, election of directors and reappointment
of the incumbent auditor shall state the nature of such business in
sufficient detail to permit the shareholder to form a reasoned judgment
thereon and shall state the text of any special resolution to be submitted
to the meeting. A shareholder and any other person entitled to attend a
meeting of shareholders may in any manner waive notice of or otherwise
consent to a meeting of shareholders, and attendance of any such person at
a meeting of shareholders is a waiver of notice of the meeting, except
when he attends a meeting for the express purpose of objecting to the
transaction of any business on the grounds that the meeting is not
lawfully called.
9.5 Meetings without Notice - A meeting of shareholders may be held
without notice at any time and place permitted by the Act (a) if all the
shareholders entitled to vote thereat are present in person or represented
by proxy or if those not present or represented by proxy waive notice of
or otherwise consent to such meeting being held, and (b) if the auditors
and the directors are present or waive notice of or otherwise consent to
such meeting being held. At such a meeting any business may be transacted
which the Corporation at a meeting of shareholders may transact. If the
meeting is held at a place outside Canada, shareholders not present or
represented by proxy but who have waived notice of or otherwise consented
to such meeting, shall also be deemed to have consented to the meeting
being held at such place.
9.6 Chairman, Secretary and Scrutineers - The chairman of any meeting of
shareholders shall be the first mentioned of such of the following
officers as have been appointed and who is present at the meeting:
president, managing director, chairman of the board, or a vice-president
who is a shareholder. If no such officer is present within fifteen (15)
minutes from the time fixed for holding the meeting, the persons present
and entitled to vote shall choose one from amongst them to be chairman.
If the secretary of the Corporation is absent, the chairman shall appoint
some person, who need not be a shareholder, to act as secretary of the
meeting. If desired, one or more scrutineers, who need not be
shareholders, may be appointed by a resolution or by the chairman with the
consent of those present at the meeting.
9.7 Persons Entitled to be Present - The only persons entitled to be
present at a meeting of shareholders shall be those entitled to vote
thereat, the directors and auditors of the Corporation and others who,
although not entitled to vote, are entitled to or required under any
provision of the Act or the articles or by-laws to be present at the
meeting. Any other person may be admitted only on the invitation of the
chairman of the meeting or with the consent of those present at the
meeting.
9.8 Quorum - A quorum for the transaction of business at any meeting of
shareholders shall be composed of those persons who are shareholders
entitled to vote thereat or a duly appointed proxyholder for an absent
shareholder so entitled, and together holding or representing by proxy
more than five percent (5%) of the outstanding shares of the Corporation
entitled to vote at the meeting. If a quorum is present at the opening of
any meeting of shareholders, the shareholders present or represented by
proxy may proceed with the business of the meeting notwithstanding that a
quorum is not present throughout the meeting. If a quorum is not present
at the opening of any meeting of shareholders, the shareholders present or
represented by proxy may adjourn the meeting to a fixed time and place but
may not transact any other business.
9.9 Right to Vote - Every person shall be entitled to vote at the meeting
who at the time is entered in the securities register as the holder of one
or more shares carrying the right to vote at such meeting.
9.10 Proxies - Every shareholder entitled to vote at a meeting of
shareholders may appoint a proxyholder, or one or more alternate
proxyholders, who need not be shareholders, to attend and act at the
meeting in the manner and to the extent authorized and with the authority
conferred by the proxy. A proxy shall be in writing executed by the
shareholder or his attorney and shall conform with the requirements of the
Act.
9.11 Time for Deposit of Proxies - The board may specify in a notice
calling a meeting of shareholders a time, preceding the time of such
meeting by not more than forty-eight (48) hours excluding non-business
days, before which time proxies to be used at such meeting must be
deposited. A proxy shall be acted upon only if, prior to the time so
specified, it shall have been deposited with the Corporation or an agent
thereof specified in such notice or, if no such time is specified in such
notice, unless it has been received by the secretary of the Corporation or
by the chairman of the meeting or any adjournment thereof prior to the
time of voting.
9.12 Joint Shareholders - If two or more persons hold shares jointly, any
one of them present in person or represented by proxy at a meeting of
shareholders may, in the absence of the other or others, vote the shares;
but if two or more of those persons are present, in person or by proxy
vote, they shall vote as one on the shares jointly held by them.
9.13 Votes to Govern - At any meeting of shareholders every question
shall, unless otherwise required by the articles or by-laws or by-law, be
determined by the majority of the votes cast on the question. In the
event of a tie, either upon a show of hands or upon a poll, the chairman
of the meeting shall not be entitled to a second or casting vote.
9.14 Show of Hands - Subject to the provisions of the Act, any question at
a meeting of shareholders shall be decided by a show of hands unless a
ballot thereon is required or demanded as hereinafter provided. Upon a
show of hands every person who is present and entitled to vote shall have
one vote. Whenever a vote by show of hands shall have been taken upon a
question unless a ballot thereon is so required or demanded, a declaration
by the chairman of the meeting that the vote upon the question has been
carried or carried by a particular majority or not carried and an entry to
that effect in the minutes of the meeting shall be prima facie evidence of
the fact without proof of the number or proportion of the votes recorded
in favor of or against any resolution or other proceeding in respect of
the said question, and the result of the vote so taken shall be the
decision of the shareholders upon the said question.
9.15 Ballots - On any question proposed for consideration at a meeting of
shareholders, and whether or not a show of hands has been taken thereon,
any shareholder or proxyholder entitled to vote at the meeting may require
or demand a ballot. A ballot so required or demanded shall be taken in
such manner as the chairman shall direct. A requirement or demand for a
ballot may be withdrawn at any time prior to the taking of the ballot. If
a ballot is taken each person present shall be entitled, in respect of the
shares which he is entitled to vote, to that number of votes provided by
the Act or the articles, and the result of the ballot so taken shall be
the decision of the shareholders upon the said question.
9.16 Adjournment - If a meeting of shareholders is adjourned for less than
thirty (30) days, it shall not be necessary to give notice of the
adjourned meeting, other than by announcement at the earliest meeting that
is adjourned. If a meeting of shareholders is adjourned by one or more
adjournments for an aggregate of thirty (30) days or more, notice of the
adjourned meeting shall be given as for an original meeting.
9.17 Resolution in Writing - A resolution in writing signed by all the
shareholders entitled to vote on that resolution at a meeting of
shareholders is as valid as if it had been passed at a meeting of the
shareholders unless a written statement with respect to the subject matter
of the resolution is submitted by a director or the auditors in accordance
with the Act.
9.18 Only One Shareholder - Where the Corporation has only one shareholder
or only one holder of any class or series of shares, the shareholder
present in person or by proxy constitutes a meeting.
SECTION X
NOTICES
10.1 Method of Giving Notices - Any notice (which term includes any
communication or document) to be given (which term includes sent,
delivered or served) pursuant to the Act, the regulations thereunder, the
articles, the by-laws or otherwise to a shareholder, director, officer
auditor or member of a committee of the board shall be sufficiently given
if delivered personally to the person to whom it is to be given or if
delivered to his recorded address or if mailed to him at his recorded
address by prepaid ordinary or air mail or if sent to him at his recorded
address by any means of prepaid transmitted or recorded communication. A
notice so delivered shall be deemed to have been given when it is
delivered personally or to the recorded address as aforesaid a notice so
mailed shall be deemed to have been given when deposited in a post office
or public letter box; and a notice so sent by any means of transmitted or
recorded communication shall be deemed to have been given when dispatched
or delivered to the appropriate communication company or agency or its
representative for dispatch. The secretary may change or cause to be
changed the recorded address of any shareholder, director, officer,
auditor or member of a committee of the board in accordance with any
information believed by him to be reliable.
10.2 Notice to Joint Shareholders - If two or more persons are registered
as joint holders of any share, any notice shall be addressed to all of
such joint holders but notice to one of such persons shall be sufficient
notice to all of them.
10.3 Computation of Time - In computing the date when notice must be given
under any provision requiring a specified number of days' notice of any
meeting or other event, the date of giving the notice shall be excluded
and the date of the meeting or other event shall be included.
10.4 Undelivered Notices - If any notice given to a shareholder pursuant
to subsection 10.1 is returned on three (3) consecutive occasions because
he cannot be found, the Corporation shall not be required to give any
further notices to such shareholder until he informs the Corporation in
writing of his new address.
10.5 Omissions and Errors - The accidental omission to give any notice to
any shareholder director, officer, auditor or member of a committee of the
board or the non-receipt of any notice by any such person or any error in
any notice not affecting the substance thereof shall not invalidate any
action taken at any meeting held pursuant to such notice or otherwise
founded thereon.
10.6 Persons Entitled by Death or Operation of Law - Every person who, by
operation of law, transfer, death of a shareholder or any other means
whatsoever, shall become entitled to any share shall be bound by every
notice in respect of such share which shall have been duly given to the
shareholder from whom he derives his title to such share prior to his name
and address being entered on the securities register (whether such notice
was given before or after the happening of the event upon which he became
so entitled) and prior to his furnishing to the Corporation the proof of
authority or evidence of his entitlement prescribed by the Act.
10.7 Waiver of Notice - Any shareholder (or his duly appointed
proxyholder), director, officer auditor or member of a committee of the
board may at any time waive notice, or waive or abridge the time for any
notice, required to be given to him under any provision of this Act, the
regulations thereunder, the articles, the by-laws or otherwise and such
waiver or abridgement shall cure any default in the giving or in the time
of such notice, as the case may be. Any such waiver or abridgement shall
be in writing except a waiver of notice of a meeting of shareholders or of
the board which may be given in any manner.
SECTION XI
EFFECTIVE DATE
11.1 Effective Date - This by-law shall come into force when confirmed by
the shareholders in accordance with the Act.
ENACTED by the board the 30th day of May, 1995.
The President, The Secretary,
PIERRE BARNARD PIERRE BARNARD
CONFIRMED by the shareholders in accordance with the Act the
30th day of May, 1995.
The Secretary,
PIERRE BARNARD
EXHIBIT 3.1
(EDGAR EXHIBIT 10.1)
MEMORANDUM OF AGREEMENT MADE AND ENTERED INTO IN THE CITY OF MONTREAL, ON
THE 19TH DAY OF SEPTEMBER, 1995.
BY AND BETWEEN: PAUL AVERBACK, of the city of Beaconsfield,
Province of Quebec,
(hereinafter called the "Vendor")
PARTY OF THE FIRST PART
AND: 3152359 CANADA INC. [subsequent to execution
of this Memorandum of Agreement, the name of
3152359 Canada Inc. was changed to NYMOX
Pharmaceutical Corporation], duly
incorporated according to law, and having
its head office and principal place of
business in Dorval, Province of Quebec,
(hereinafter called the "Purchaser")
PARTY OF THE SECOND PART
1. PREAMBLE
1.1 WHEREAS the Vendor is the owner of 2,000,000 common shares in the
capital stock of DMS Pharmaceutical Inc. (hereinafter referred to as the
"Purchased Shares"); and
1.2 WHEREAS the Vendor wishes to sell to the Purchaser and the Purchaser
wishes to purchase from the Vendor all of the Purchased Shares, subject to
the terms and conditions hereinafter set forth.
NOW, THEREFORE, THE PARTIES HAVE AGREED AS FOLLOWS:
2. SALE OF SHARES
2.1 The Vendor hereby sells, assigns and transfers to the Purchaser and
the Purchaser hereby purchases from the Vendor the Purchased Shares.
3. CONSIDERATION
3.1 The consideration for the Purchased Shares is the issuance by the
Purchaser of fully paid and non-assessable common shares in its capital
stock having a fair market value equal to the fair market value of the
Purchased Shares, which have been established by the parties to be
$26,187,118.
3.2 Upon delivery by the Vendor of the certificate for the Purchased
Shares, the Purchaser will issue to the Vendor 13,093,559 fully paid and
non-assessable common shares in its capital stock and will credit its
stated capital and surplus accounts for such shares with an amount in the
aggregate equal to $26,187,118.
4. JOINT ELECTION
4.1 The parties agree to file a joint election in accordance with
subsection 85(1) of the Income Tax Act (Canada) and section 518 of the
Quebec Taxation Act in the prescribed form and within the prescribed time
limitation, whereby they shall elect an amount for tax purposes which
shall be determined by the Vendor provided that the Purchased Shares will
be deemed to have been sold by the Vendor to the Purchaser and acquired by
the Purchaser at an amount which shall be no less than the adjusted cost
base of the Purchased Shares to the Vendor.
5. REPRESENTATIONS AND WARRANTIES OF THE VENDOR
5.1 The Vendor hereby represents and warrants to the Purchaser that:
5.1.1 he is the legal and beneficial owner of record of the
Purchased Shares;
5.1.2 he has full power and authority to sell the Purchased
Shares and his title to such shares is good, valid and
enforceable, free and clear of any claims, liens,
encumbrances or charges of any nature whatsoever;
5.1.3 the certificates for the Purchased Shares delivered
pursuant hereto are genuine, valid and subsisting
certificates.
6. CONCLUDING PROVISIONS
6.1 The invalidity of any particular provision of this Agreement shall
not affect any other provision hereof, but this Agreement shall be
construed as if such invalidated provision was omitted.
6.2 This Agreement shall be binding upon and enure to the benefit of the
parties hereto and their respective heirs, successors, assigns and legal
representatives.
6.3 This Agreement shall be governed by and construed and enforced in
accordance with the laws of the Province of Quebec.
6.4 The parties agree to sign and execute such further documents as may
be necessary to give effect to the foregoing.
7. LANGUAGE
7.1 At the request of all the parties hereto, this Agreement has been
drafted in English; a la demande de toutes les parties aux presentes,
cette convention a ete redigee en anglais.
IN WITNESS WHEREOF, the parties have signed on the date and at the
place first hereinabove mentioned.
3152359 CANADA INC.
Per:
PAUL AVERBACK
EXHIBIT 3.2
(EDGAR EXHIBIT 10.2)
NYMOX PHARMACEUTICAL CORPORATION
SHARE OPTION PLAN
SECTION I - PURPOSE OF THE PLAN
1.1 The purpose of this share option plan (the "Plan") is to provide key
employees, consultants, officers and directors of NYMOX PHARMACEUTICAL
CORPORATION (the "Company") and its subsidiaries (the Company and its
subsidiaries, present and future, being hereinafter referred to
collectively as the "Corporations") with a proprietary interest through
the granting of options to purchase shares of the Company, subject to
certain conditions as hereinafter set forth, for the following purposes:
1.1.1 to increase the interest in the Corporations' welfare of
those key employees and directors who share primary
responsibility for the management, growth and protection of
the business of the Corporations;
1.1.2 to furnish an incentive to such employees, consultants and
directors to continue their services for the Corporations;
and
1.1.3 to provide a means through which the Corporations may
attract able persons to enter its employment.
1.2 For the purposes of the Plan, a subsidiary of the Company shall be
any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if, at the time of the granting of
the option hereunder, each of the corporations other than the last
corporation in the unbroken chain owns shares to which are attached more
than fifty percent (50%) of the aggregate voting rights attached to all
classes of shares in one of the other corporations in such chain.
SECTION II - ADMINISTRATION OF THE PLAN
2.1 The Plan shall be administered by the Board of Directors of the
Company (the "Board").
2.2 The Board may, from time to time, as it may deem expedient, adopt,
amend and rescind rules and regulations for carrying out the provisions
and purposes of the Plan. The interpretation, construction and
application of the Plan and any provisions thereof made by the Board,
shall be final and binding on all holders of options granted under the
Plan and all persons eligible under the provisions of the Plan to
participate therein. No member of the Board shall be liable for any
action taken or for any determination made in good faith in the
administration, interpretation, construction or application of the Plan.
SECTION III - GRANTING OF OPTIONS
3.1 The Board may, from time to time, designate employees, consultants,
officers and directors of the Corporations to whom options to purchase
Common Shares of the capital stock of the Company (the "Common Shares")
may be granted, the number of shares to be optioned to each and the time
period during which such options may be exercised (provided that such
period shall not exceed 10 years from the date the option is granted),
provided that
3.1.1 the total number of Common Shares to be optioned to any one
individual shall not exceed five percent (5%) of the total of
the issued and outstanding Common Shares;
3.1.2 the total number of shares to be optioned shall not exceed the
number provided in Section IV hereof.
3.2 Options may only be granted by the Company pursuant to decisions of
the Board. No option shall be granted to any person who is not an
employee, a consultant, an officer or a director of any of the
Corporations.
3.3 The granting of options hereunder and the obligation of the Company
to deliver its Common Shares pursuant hereto shall be subject to the
Company obtaining the approval of any competent authority which may be
required in connection with the granting of options hereunder or the
authorization, issuance or sale of the optioned shares, and, if required,
the Company having effectively listed the optioned shares on any stock
exchange on which Common Shares may then be listed. The Company shall use
its best efforts to obtain all approvals necessary to give effect to this
Plan.
SECTION IV - SHARES SUBJECT TO THE PLAN
4.1 The maximum number of Common Shares which may be optioned under the
Plan shall not exceed 2,000,000 Common Shares at any time, less the number
of Common Shares previously reserved for issuance under any other employee
share option plans, options for services and employee share purchase
plans.
4.2 The Common Shares in respect of which options are not exercised or
which lapse shall be available for subsequent options to be granted
pursuant to the provisions hereof.
SECTION V - OPTION PRICE
5.1 The option price per share for Common Shares which are the subject of
any option shall be fixed by the Board when such option is granted. The
option price for said shares shall not be less than the reported closing
price for the Common Shares on any stock exchange on which the Common
Shares may then be listed on the last trading day before the day on which
the option is granted. If no sale is reported on any such stock exchange
on that day, the reported closing price shall be deemed to be the average
of the highest bid and asked quotations, if any, for such shares on any
stock exchange on which the Common Shares are listed on that date.
SECTION VI - CONDITIONS GOVERNING OPTIONS
6.1 Agreement
Options shall be evidenced by a stock option agreement in a form
reproduced as Schedule A, which such changes as the Board may authorize
from time to time, not inconsistent with the Plan.
6.2 Employment
The granting of an option to an employee, officer or director shall not
impose upon any of the Corporations any obligation to retain the optionee
in its employ.
6.3. Option Term
The period during which an option is exercisable shall not, subject to the
provisions of the Plan, exceed ten (10) years from the date the option is
granted.
6.4 Exercise of Options
Prior to its expiration or earlier termination in accordance with the
Plan, each option shall be exercisable as to the whole or any portion
thereof at the time or times stipulated. The Board of Directors may, at
the time of granting a particular option, impose such conditions as it
shall determine in its sole discretion regarding the time or times at
which the option may be exercised in whole or in part.
6.5 Non-assignability of Option Rights
Each option granted hereunder is personal to the optionee and shall not be
assignable or transferable by the optionee, whether voluntarily or by
operation of law, except by will or by the laws of succession of the
domicile of the deceased optionee. No option granted hereunder shall be
pledged, hypothecated, charged, transferred, assigned or otherwise
encumbered or disposed of on pain of nullity, and may be exercised only by
the optionee.
6.6 Effect of Termination of Employment or Death
6.6.1 Upon an optionee's employment with the Corporations being
terminated for cause or upon an optionee's being removed from office
as officer or director or becoming disqualified from being a director
by law, any option or the unexercised portion thereof granted to him
shall terminate forthwith.
6.6.2 Upon an optionee's employment or office with the
Corporations being terminated (except in the case of transfer from
one corporation to another corporation contemplated herein) otherwise
than by reason of death, termination for cause or retirement at
normal retirement age, or upon an optionee's ceasing to be a director
other than by reason of death, removal or disqualification by law,
any option or unexercised portion thereof granted to such optionee
may be exercised by him for that number of Common Shares only which
he was entitled to acquire under the option pursuant to paragraph 6.4
at the time of such termination or cessation. Such option shall only
be exercisable within ninety (90) days after such termination or
cessation or prior to the expiration of the term of the option,
whichever occurs earlier.
6.6.3 If an optionee dies while employed by the Corporations or
while serving as an officer or director of the Corporations, any
option or unexercised portion thereof granted to such optionee may be
exercised by a legatee or legatees of such optionee under the
optionee's last will or by his personal representative for that
number of Common Shares in respect of which the option has not
previously been exercised. Such option shall only be exercisable
within one hundred and eighty (180) days after the optionee's death
or prior to the expiration of the term of the option, whichever
occurs earlier.
6.7 Rights as a Stockholder
The optionee (or his personal representatives or legatees) shall have no
rights whatsoever as a shareholder in respect of any shares covered by his
option until the date of issuance of a share certificate to him (or his
personal representatives or legatees) for such shares. Without in any way
limiting the generality of the foregoing, no adjustment shall be made for
dividends or other rights for which the record date is prior to the date
such share certificate is issued.
6.8 Method of Exercise
Subject to the provisions of the Plan, an option granted under the Plan
shall be exercisable (from time to time as provided in paragraph 6.4
hereinabove) by the optionee's (or his personal representative or
legatees) giving notice in writing to the Company at its registered
office, addressed to its Secretary, which notice shall specify the number
of Common Shares in respect of which the option is being exercised and
shall be accompanied by full payment, by cash or certified cheque, of the
purchase price for the number of shares specified. Upon such exercise of
the option, the Company shall forthwith cause the transfer agent and
registrar of the Company to deliver to the optionee (or his personal
representatives or legatees) a certificate in the name of the optionee
representing in the aggregate such number of shares as the optionee (or
his personal representative or legatees) shall have then paid for and as
are specified in such written notice of exercise of option. If required
by the Board by notification to the optionee at the time of granting of
the option, it shall be a condition of such exercise that the optionee
shall represent that he is purchasing the Common Shares in respect of
which the option is being exercised for investment only and not with a
view of resale or distribution.
SECTION VII - ADJUSTMENT TO SHARES SUBJECT TO THE OPTION
7.1 In the event that the outstanding Common Shares of the Company are
hereafter changed into or exchanged for a different number or kind of
shares or other securities of the Company or of another corporation, or in
the event that there is a reorganization, amalgamation, consolidation,
reclassification, dividend payable in capital stock or other change in the
capital stock of the Company, the Board shall make such adjustments as it
deems appropriate in the number and kind of shares for the purchase of
which options may be granted under the Plan and such adjustments shall be
final and binding.
SECTION VIII - AMENDMENT OR DISCONTINUANCE OF THE PLAN
8.1 The Board may amend, subject to the prior approval of The Montreal
Exchange or other relevant regulatory authorities, or discontinue the Plan
or the terms of any options granted under the Plan at any time, provided,
however, that no such amendment may detrimentally alter any option
previously granted to an optionee under the Plan without the consent of
the optionee, except to the extent required by law.
8.2 Notwithstanding anything contained to the contrary in this Plan or in
any resolution of the Board in implementation thereof:
8.2.1 in the event the Company proposes to amalgamate, merge or
consolidate with any other corporation (other than with a wholly-
owned subsidiary of the Company) or to liquidate, dissolve or wind-
up, or in the event an offer to purchase the Common Shares or any
part thereof shall be made to all holders of Common Shares, the
Company shall have the right, upon written notice thereof to each
optionee holding options under this Plan, to permit the exercise of
all such options within the thirty (30) day period next following the
date of such notice and to determine that upon the expiration of such
thirty (30) day period, all rights of optionees to such options or to
exercise same (to the extent theretofore exercised) shall ipso facto
terminate and cease to have any further force or effect whatsoever;
8.2.2 the Board may, by resolution, advance the date on which any
option may be exercised, in the manner to be set forth in such
resolution. The Board shall not, in the event of any such
advancement, be under any obligation to advance the date upon which
any option may be exercised by any other optionee; and
8.2.3 the Board may, by resolution, but subject to applicable
regulatory provisions, decide that any of the provisions hereof
concerning the effect of termination of the optionee's employment or
cessation of the optionee's directorship shall not apply for any
reason acceptable to the Board.
SECTION IX - EFFECTIVE DATE OF PLAN
9.1 This Plan was adopted by the Board on October 10, 1995. Should
changes be required in this Plan by any securities commission or other
governmental body of any province of Canada to which this Plan has been
submitted or by The Montreal Exchange or by any other exchange on which
the Common Shares may from time to time be listed, such changes shall be
made in this Plan as are necessary to conform with such requests and if
such changes are approved by the Board, this Plan, as amended, shall
remain in full force and effect in its amended form as of and from October
10, 1995.
By order of the Board of Directors
Date: October 10, 1995.
