-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KY0HN1S/RszN8M8VOotxd8RXLycyji3WLG1miDiomCZnTmNlkB+SEAl85S6U0j4U 53TR/HR438aSjWGUh+/ccQ== 0000897069-96-000234.txt : 19970428 0000897069-96-000234.hdr.sgml : 19970428 ACCESSION NUMBER: 0000897069-96-000234 CONFORMED SUBMISSION TYPE: 20FR12G PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19960808 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: NYMOX PHARMACEUTICAL CORP CENTRAL INDEX KEY: 0001018735 STANDARD INDUSTRIAL CLASSIFICATION: IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: 20FR12G SEC ACT: 1934 Act SEC FILE NUMBER: 000-29134 FILM NUMBER: 96606081 BUSINESS ADDRESS: STREET 1: 175 BOUCHARD, STE 100 STREET 2: DORVAL, QUEBEC CITY: CANADA H9S 1B1 STATE: A8 BUSINESS PHONE: 5146363122 MAIL ADDRESS: STREET 1: 175 BOUCHARD, STE 100 STREET 2: DORVAL, QUEBEC CITY: CANADA, H9S 1B1 STATE: A8 20FR12B 1 FORM 20-F FOR NYMOX PHARMACEUTICAL CORP. 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 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.
At or for the Year Ended July 31, December 31, (12 months) (5 months) 1992 1993 1994 1995 1995 (CAN $) 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 $0.04
At July 31, 1996, the exchange rate between the CAN$ and US$ was CAN$1.3747 to US$1. The following table sets forth certain information regarding such exchange rate for the periods set forth below.
At or for the Year Ended July 31, December 31, March 31 (12 months) (5 months) (3 months) CAN$ to US $1 1992 1993 1994 1995 1995 1995 1996 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
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. 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 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 ========= 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) ========= 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 ========= 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. 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 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 ========= ========= 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 ========= ======= 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 ========= ========= 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. 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. 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. 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 ------- ------- 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. 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. 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. 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. 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). EX-3.1 2 ARTICLES OF INCORPORATION 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. EX-3.2 3 BYLAWS 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 EX-10.1 4 MEMORANDUM OF AGRMT. 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 EX-10.2 5 SHARE OPTION PLAN 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. -----END PRIVACY-ENHANCED MESSAGE-----