SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
Counsel Corporation
(Name of Issuer)
Common Shares without par value
(Title of Class of Securities)
22226R102
(CUSIP Number)
Meyer F. Florence
150 Signet Drive
Weston, Ontario, Canada M9L 1T9
(416) 749-9300
(Name, Address and Telephone Number of Person Authorized to Received Notices
and Communications)
December 19, 2003
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box /X/.
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7 for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
CUSIP No. 22226R102
1) NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Bernard C. Sherman
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a)
---
(b) X
---
3) SEC USE ONLY
4) SOURCE OF FUNDS (SEE INSTRUCTIONS)
PF, SC
5) CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
---
6) CITIZENSHIP OR PLACE OF ORGANIZATION
Ontario, Canada
NUMBER OF 7) SOLE VOTING POWER
SHARES 579,150
BENEFICIALLY 8) SHARED VOTING POWER
OWNED BY 11,834,550
EACH 9) SOLE DISPOSITIVE POWER
REPORTING 579,150
PERSON WITH 10) SHARED DISPOSITIVE POWER
11,834,550
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,413,700
12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS)
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
21.2%
14) TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
IN
2
<PAGE>
SCHEDULE 13D
CUSIP No. 22226R102
1) NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
The Bernard Sherman 2000 Trust
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a)
---
(b) X
---
3) SEC USE ONLY
4) SOURCE OF FUNDS (SEE INSTRUCTIONS)
5) CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
---
6) CITIZENSHIP OR PLACE OF ORGANIZATION
Ontario, Canada
NUMBER OF 7) SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8) SHARED VOTING POWER
OWNED BY 10,854,400
EACH 9) SOLE DISPOSITIVE POWER
REPORTING 0
PERSON WITH 10) SHARED DISPOSITIVE POWER
10,854,400
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,854,400
12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS)
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.5%
14) TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
OO
3
<PAGE>
SCHEDULE 13D
CUSIP No. 22226R102
1) NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Sherman Holdings Inc.
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a)
---
(b) X
---
3) SEC USE ONLY
4) SOURCE OF FUNDS (SEE INSTRUCTIONS)
5) CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
---
6) CITIZENSHIP OR PLACE OF ORGANIZATION
Ontario, Canada
NUMBER OF 7) SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8) SHARED VOTING POWER
OWNED BY 10,854,400
EACH 9) SOLE DISPOSITIVE POWER
REPORTING 0
PERSON WITH 10) SHARED DISPOSITIVE POWER
10,854,400
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,854,400
12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS)
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.5%
14) TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
HC, CO
4
<PAGE>
SCHEDULE 13D
CUSIP No. 22226R102
1) NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Shermco Inc.
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a)
---
(b) X
---
3) SEC USE ONLY
4) SOURCE OF FUNDS (SEE INSTRUCTIONS)
5) CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
---
6) CITIZENSHIP OR PLACE OF ORGANIZATION
Ontario, Canada
NUMBER OF 7) SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8) SHARED VOTING POWER
OWNED BY 10,854,400
EACH 9) SOLE DISPOSITIVE POWER
REPORTING 0
PERSON WITH 10) SHARED DISPOSITIVE POWER
10,854,400
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,854,400
12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS)
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.5%
14) TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
HC, CO
5
<PAGE>
SCHEDULE 13D
CUSIP No. 22226R102
1) NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Sherfam Inc.
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a)
---
(b) X
---
3) SEC USE ONLY
4) SOURCE OF FUNDS (SEE INSTRUCTIONS)
WC
5) CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
---
6) CITIZENSHIP OR PLACE OF ORGANIZATION
Ontario, Canada
NUMBER OF 7) SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8) SHARED VOTING POWER
OWNED BY 10,854,400
EACH 9) SOLE DISPOSITIVE POWER
REPORTING 0
PERSON WITH 10) SHARED DISPOSITIVE POWER
10,854,400
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,854,400
12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS)
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.5%
14) TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
HC, CO
6
<PAGE>
SCHEDULE 13D
CUSIP No. 22226R102
1) NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Apotex Holdings Inc.
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a)
---
(b) X
---
3) SEC USE ONLY
4) SOURCE OF FUNDS (SEE INSTRUCTIONS)
5) CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
---
6) CITIZENSHIP OR PLACE OF ORGANIZATION
Ontario, Canada
NUMBER OF 7) SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8) SHARED VOTING POWER
OWNED BY 854,400
EACH 9) SOLE DISPOSITIVE POWER
REPORTING 0
PERSON WITH 10) SHARED DISPOSITIVE POWER
854,400
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
854,400
12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS)
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.5%
14) TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
HC, CO
7
<PAGE>
SCHEDULE 13D
CUSIP No. 22226R102
1) NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Apotex Inc.
2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(a)
---
(b) X
---
3) SEC USE ONLY
4) SOURCE OF FUNDS (SEE INSTRUCTIONS)
5) CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
---
6) CITIZENSHIP OR PLACE OF ORGANIZATION
Ontario, Canada
NUMBER OF 7) SOLE VOTING POWER
SHARES 0
BENEFICIALLY 8) SHARED VOTING POWER
OWNED BY 854,400
EACH 9) SOLE DISPOSITIVE POWER
REPORTING 0
PERSON WITH 10) SHARED DISPOSITIVE POWER
854,400
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
854,400
12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS)
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.5%
14) TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
HC, CO
8
<PAGE>
11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
980,150
12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS)
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.7%
14) TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
OO
9
<PAGE>
Item 1. Security and Issuer
The title and class of equity security to which this statement relates
is: Common Shares without par value ("Common Shares"). The name and address of
the principal executive office of the issuer is: Counsel Corporation (the
"Issuer"), Exchange Tower, Suite 1300, 130 King Street West, Toronto, Ontario,
Canada M5X 1E3.
Item 2. Identity and Background
(a) This statement is being filed jointly by the following parties: (i)
Bernard C. Sherman ("Dr. Sherman"), who directly owns 579,150 Common Shares of
the Issuer, who has sole voting and dispositive control, as the sole trustee, of
The Bernard Sherman 2000 Trust ("Sherman Trust"), who has voting and dispositive
control, as president and a member, of Sherman Foundation ("Foundation") which
directly owns 980,150 Common Shares of the Issuer, and who owns 99% of the
outstanding capital stock of Sherman Holdings Inc. ("Sherman Holdings"); (ii)
Sherman Trust which owns 99% of the common stock of Shermco Inc. ("Shermco");
(iii) Sherman Holdings which owns 99% of the preferred stock of Shermco; (iv)
Shermco which owns all of the outstanding capital stock of Sherfam Inc.
("Sherfam"); (v) Sherfam which directly has beneficial ownership of 10,000,000
Common Shares issuable upon conversion of Preferred Shares, Series A of the
Issuer and owns all the outstanding capital stock of Apotex Holdings Inc.
("Apotex Holdings"); (vi) Apotex Holdings which indirectly owns all of the
outstanding capital stock of Apotex Inc. ("Apotex"); (vii) Apotex which directly
owns 854,400 Common Shares of the Issuer; and (viii) the Foundation which
directly owns 980,150 Common Shares of the Issuer (individually, a "Reporting
Person" and, collectively, the "Reporting Persons").*
For each of the corporations (or trust or foundation ) listed above,
the following is a list of each executive officer, director and person
controlling such corporation and each executive officer and director of any
corporation or other person ultimately in control of such corporation (or trust
or foundation):
(i) Sherman Trust:
Sole Trustee: Bernard C. Sherman
(ii) Sherman Holdings:
Directors: Bernard C. Sherman
Michael ("Meyer") F. Florence
Officers: Bernard C. Sherman President and Secretary
Michael F. Florence Vice President
(iii) Shermco:
Directors: Bernard C. Sherman
Michael F. Florence
Jack M. Kay
R. Craig Baxter
Officers: Bernard C. Sherman Chief Executive Officer
and Chairman
Michael F. Florence President
Jack M. Kay Vice President
R. Craig Baxter Vice President,
Secretary and Treasurer
(iv) Sherfam:
Directors: Bernard C. Sherman
Michael F. Florence
Jack M. Kay
R. Craig Baxter
Officers: Bernard C. Sherman Chairman
Michael F. Florence President
Jack M. Kay Vice President
R. Craig Baxter Vice President,
Secretary and Treasurer
(v) Apotex Holdings:
Directors: Bernard C. Sherman
Michael F. Florence
R. Craig Baxter
Officers: Bernard C. Sherman President
Michael F. Florence Vice President
R. Craig Baxter Secretary and Treasurer
(vi) Apotex:
Directors: Bernard C. Sherman
Jack M. Kay
Officers: Bernard C. Sherman Chief Executive Officer
and Chairman
Jack M. Kay President and Chief
Operating Officer
Michael F. Florence Vice President
Honey Sherman Vice President
R. Craig Baxter Vice President,
Secretary and Treasurer
(vii) Foundation:
Directors: Bernard C. Sherman
Jack M. Kay
Anthony Miezlaiskis
Officers: Bernard C. Sherman President
Jack M. Kay Secretary
Anthony Miezlaiskis Treasurer
11
<PAGE>
(b) The principal office or residence address of each of the persons listed
in Item 2(a) above is as follows:
(i) Sherman Trust, Sherman Holdings, Shermco, Sherfam,
Apotex Holdings, Apotex and Foundation each have a principal business and office
address at 150 Signet Drive, Weston, Ontario, Canada M9L 1T9.
(ii) Dr. Sherman has a principal office address at 150 Signet Drive,
Weston, Ontario, Canada M9L 1T9.
(iii) Michael F. Florence has a principal office address at
150 Signet Drive, Weston, Ontario, Canada M9L 1T9.
(iv) Jack M. Kay has a principal office address at 150 Signet Drive,
Weston, Ontario, Canada M9L 1T9.
(v) R. Craig Baxter has a principal office address at 150 Signet
Drive, Weston, Ontario, Canada M9L 1T9.
(vi) Honey Sherman has a principal office address at 150 Signet
Drive, Weston, Ontario, Canada M9L 1T9.
(vii) Anthony Miezlaiskis has a principal office address at
150 Signet Drive, Weston, Ontario, Canada M9L 1T9.
(c) The principal business of each of the persons listed in Item 2(a) above
is as follows:
(i) Sherman Trust: Family Trust
(ii) Sherman Holdings: Holding Company
(iii) Shermco: Holding Company
(iv) Sherfam: Holding Company
(v) Apotex Holdings: Holding Company
(vi) Apotex : Pharmaceutical and Holding Company
(vii) Foundation: Private Foundation
(viii) Bernard C. Sherman: Dr. Sherman is Chief Executive Officer and
Chairman of the Board of Apotex, a Canadian manufacturer of generic
and brand name drugs. He is also Chairman of the Board of Cangene
Corporation, sole trustee of Sherman Trust,
12
<PAGE>
President of Sherman Holdings, Chief Executive Officer and Chairman of
Shermco, Chairman of Sherfam, President of Apotex Holdings and
President of Foundation.
(ix) Michael F. Florence: Mr. Florence has been President of Sherfam
since 1989. He is also a director and Vice President of Sherman
Holdings, a director and President of Shermco, a director and Vice
President of Apotex Holdings and Vice President of Apotex. Mr.
Florence and Dr. Sherman are brothers-in-law.
(x) Jack M. Kay: Mr. Kay is President of Apotex. He is also a
director of Shermco and Sherfam.
(xi) R. Craig Baxter: Mr. Baxter is a director and Vice President,
Secretary and Treasurer of Shermco. He is also a director and Vice
President, Secretary and Treasurer of Sherfam, a director and
Secretary and Treasurer of Apotex Holdings and Vice President,
Secretary and Treasurer of Apotex.
(xii) Honey Sherman is Vice President of Apotex. Ms. Sherman is the
spouse of Dr. Sherman.
(xiii) T. Miezlaiskis is Treasurer of Foundation.
(d) During the past five years, none of the Reporting Persons or, to the
best knowledge and belief of the Reporting Persons, any of the persons listed in
Item 2(a) above has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
(e) During the past five years, none of the Reporting Persons or, to the
best knowledge and belief of the Reporting Persons, any of the persons listed in
Item 2(a) above has been or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation relating to such
laws.
(f) The place of organization or citizenship of each of the persons listed
in Item 2(a) above is as follows:
(i) Sherman Trust: Trust formed under the laws of Ontario, Canada
(ii) Sherman Holdings: Ontario Business Corporation
(iii) Shermco: Ontario Business Corporation
(iv) Sherfam: Ontario Business Corporation
(v) Apotex Holdings: Ontario Business Corporation
(vi) Apotex: Ontario Business Corporation
(vii) Foundation: Foundation formed under the laws of British
Columbia
(viii) Dr. Sherman: Ontario, Canada
13
<PAGE>
(ix) Michael F. Florence: Ontario, Canada
(x) Jack M. Kay: Ontario, Canada
(xi) R. Craig Baxter: Ontario, Canada
(xii) Honey Sherman: Ontario, Canada
(xiii) T. Miezlaiskis: Ontario, Canada
Item 3. Source and Amount of Funds or Other Consideration
The Reporting Persons filed a Schedule 13G on October 23, 2003 to
report the ownership of an aggregate of 2,334,800 Common Shares (1,076,400 of
which were issuable upon maturity of the Issuer's 6% Convertible Unsecured
Subordinated Debentures due October 31, 2003 (the "Debentures")). This Schedule
13D is being filed to report the acquisition of beneficial ownership of an
additional 10,000,000 Common Shares by the Reporting Persons through the
purchase on December 19, 2003 by Sherfam in a private placement (the
"Placement") of 10,000,000 Preferred Shares, Series A of the Issuer ("Preferred
Shares") for an aggregate purchase price of US$15,000,000, which Preferred
Shares are convertible into Common Shares. The source of funds with which
Sherfam acquired the Preferred Shares in the Placement was from working capital.
From November 17 through November 19, 2003 Dr. Sherman purchased an aggregate of
78,900 Common Shares in open market transactions for an aggregate purchase price
of US$101,662. Dr. Sherman used his personal funds in effecting such purchases.
Also, the Issuer had commenced a cash tender offer to purchase all of the
$40,861,000 aggregate principal amount of the Debentures outstanding (the
"Tender Offer"). Pursuant to the Trust Indenture under which the Debentures were
issued, the aggregate principal amount of any Debentures not tendered in the
Tender Offer were to be paid on maturity in Common Shares. Holders of the
Debentures that elected not to tender their Debentures into the Tender Offer
were entitled to receive 690 Common Shares per US$1,000 principal amount of
Debentures on maturity. Accordingly, on October 31, 2003, (i) as the holder of
an aggregate of US$725,000 principal amount of Debentures, Dr. Sherman received
500,250 Common Shares and (ii) as the holder of an aggregate of US$835,000
principal amount of Debentures, Foundation received 576,150 Common Shares.
Item 4. Purpose of Transaction
The Reporting Persons acquired the Common Shares of the Issuer to which
this Schedule 13D relates solely for investment purposes. Other than the right
to designate a director of the Issuer which right Sherfam has not yet exercised
and the possible acquisition of additional Common Shares upon conversion of any
Preferred Shares issued to Sherfam in lieu of cash dividends on the Preferred
Shares, the Reporting Persons do not have any present plans or proposals which
relate to or would result in actions referred in clauses (a) through (j) of
Item 4 of Schedule 13D. Each of the Reporting Persons expects to evaluate on an
ongoing basis the Issuer's financial condition, business, operations and
prospects, the market price of the Common Shares, conditions in the securities
markets generally, general economic conditions and other factors. Accordingly,
each Reporting Person reserves the right to change its plans and intentions at
any time, as it deems appropriate. In particular, any Reporting Person may
purchase additional Common Shares, or may sell or otherwise dispose of all or
portions of the Common Shares beneficially owned by such Reporting Person, in
public and private transactions and/or may enter into privately negotiated
derivative transactions with institutional counterparts to hedge the market risk
of some or all of its positions in, or to obtain greater exposure to, the Common
Shares or other securities. Any such Transactions may be effected at any time or
from time to time, subject to any applicable limitations imposed on the sale
of any of their Common Shares by the Act and by applicable Canadian law. See
"Item 6."
14
<PAGE>
Item 5. Interest in Securities of the Issuer
(a) and (b)
<TABLE>
<CAPTION>
Amount Sole Power to Shared Power to
Reporting Person Beneficially Percent of Sole Power to Vote Shared Power to Vote Dispose or Direct Dispose or Direct
Owned (1) Class or Direct the Vote or Direct the Vote the Disposition of the Disposition of
<S> <C> <C> <C> <C> <C> <C>
1. Dr. Sherman 12,413,700(2) 21.2 579,150 11,834,550(2) 579,150 11,834,550(2)
2. Sherman Trust 10,854,400(2) 18.5 0 10,854,400(2) 0 10,854,400(2)
3. Sherman Holdings 10,854,400(2) 18.5 0 10,854,400(2) 0 10,854,400(2)
4. Shermco 10,854,400(2) 18.5 0 10,854,400(2) 0 10,854,400(2)
5. Shermfam 10,854,400(2) 18.5 0 10,854,400(2) 0 10,854,400(2)
6. Apotex Holdings 854,400 1.5 0 854,400 0 854,400
7. Apotex 854,400 1.5 0 854,400 0 854,400
8. Foundation 980,150 1.7 0 980,150 0 980,150
</TABLE>
(1) By virtue of the relationships described in Item 2(a) above, Dr.
Sherman, Sherman Trust, Sherman Holdings and Shermco may be deemed to
possess indirect beneficial ownership of the Common Shares beneficially
owned by Sherfam and Apotex. By virtue of the relationships described
in Item 2(a) above, Apotex Holdings may be deemed to possess indirect
beneficial ownership of the Common Shares beneficially owned by Apotex.
By virtue of the relationships described in Item 2(a) above, Dr.
Sherman may be deemed to possess indirect beneficial ownership of the
Common Shares beneficially owned by Foundation.
(2) 10,000,000 of such Common Shares are issuable upon conversion of the
Preferred Shares.
The filing of this statement by Sherman Trust, Sherman Holdings,
Shermco and Apotex Holdings shall not be construed as an admission that any of
Sherman Trust, Sherman Holdings, Shermco and Apotex Holdings, is, for the
purposes of Section 13(d) of the Act, the beneficial owner of any securities
covered by this statement.
Because of the relationships described in Item 2(a) above, the
Reporting Persons may be deemed to constitute a "group" within the meaning of
Rule 13d-5 under the Act, and as such, each member of the group would be deemed
to beneficially own, in the aggregate, all the shares of Common Stock held by
members of the group. The Reporting Persons disclaim membership in a group.
(c)
The following purchase or sales of Common Shares have been made by the
Reporting Persons in the past sixty days:
15
<PAGE>
<TABLE>
<CAPTION>
Amount of Nature of
Reporting Person Date of the Transaction Securities Involved Price Per Share Transaction Effected
---------------- ----------------------- ------------------------ --------------- ---------------------
<S> <C> <C> <C> <C>
Dr. Sherman October 31, 2003 500,250 Common Shares Issued upon conversion of From Issuer
US$725,000 principal amount of
Debentures
Foundation October 31, 2003 576,150 Common Shares Issued upon conversion of From Issuer
US$835,000 principal amount of
Debentures
Dr. Sherman November 17, 2003 45,400 Common Shares $1.28 Open Market Purchase
Dr. Sherman November 18, 2003 29,500 Common Shares $1.30 Open Market Purchase
Dr. Sherman November 19, 2003 4,000 Common Shares $1.30 Open Market Purchase
Sherfam December 19, 2003 10,000,000 Common Shares Issuable upon conversion of From Issuer
10,000,000 Preferred Shares
</TABLE>
(d) No person other than the Reporting Persons, with respect to the Common
Shares beneficially owned by each of them, has any right to receive or the
power to direct the receipt of dividends from, or the proceeds from the sale of,
the Common Shares.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to
Securities of the Issuer
There are no contracts, arrangements, understandings or relationships
(legal or otherwise) among the Reporting Persons and any other person with
respect to the securities of the Issuer except for those set forth below:
The Issuer has agreed with Sherfam that, as long as any Preferred Shares
remain outstanding, except with Sherfam's prior written consent, the Issuer will
not issue, or agree to issue, (a) any shares having rights equal or superior to
the Preferred Shares or (b) any shares of the Issuer at a price less than
US$1.50 per share or other securities of the Issuer entitling the holder thereof
to acquires shares of the Issuer at a price less than US$1.50 per such security
or share. The foregoing restriction does not apply to the exercise or
conversion of securities issued prior to December 19, 2003 and to shares issued
pursuant to employee option and benefit plans.
The Issuer has agreed with Sherfam that, as long as any Preferred Shares
are owned by Sherfam, Sherfam has the right to nominate Dr. Sherman (or such
other individual acceptable to the Issuer and Sherfam) for election by the
Issuer's shareholders as a director of the Issuer. If requested by Sherfam, the
Issuer has agreed, in the interim, to increase the size of the Issuer's board of
directors and appoint Dr. Sherman (or such other individual) as a director of
the Issuer. Sherfam has not exercised this right as of the date of this
Schedule 13D.
Sherfam has agreed with the Issuer that until December 19, 2006 Sherfam
will not sell, otherwise transfer, pledge or create a security interest in the
Preferred Shares or the Common Shares issued upon conversion of the Preferred
Shares. Notwithstanding the foregoing, transfers to "affiliates," "related
persons" or "associates" (as such terms are defined by the Business Corporations
16
<PAGE>
Act (Ontario)) of Sherfam or to Dr. Sherman, his family members, trusts the
beneficiaries of which include the foregoing permitted transferees or a
charitable foundation of which Dr. Sherman is a trustee are permitted.
The Issuer has agreed with Sherfam that, as long as any Preferred Shares
remain outstanding, dividends declared by the Issuer on the Common Shares may
not exceed US$0.09 per share per annum (on a non-cumulative basis). The Issuer
has agreed that it will not declare or pay any dividends on the Common Shares,
nor set aside funds for such purposes, if the Issuer is in default of its
dividend or redemption obligations on the Preferred Shares.
The Issuer has granted Sherfam the right, with certain exceptions, to
include all or any part of the Common Shares issuable upon conversion of the
Preferred Shares in any registration statement filed by the Issuer with the
Securities and Exchange Commission (the "SEC") offering Common Shares for its
own account. The Issuer has agreed not to grant U.S. registration rights equal
to or superior to the foregoing rights granted Sherfam.
The Issuer has agreed with Sherfam that the Issuer will not amend or
otherwise alter any provisions of the Issuer's articles which adversely affect
the holders of the Preferred Shares without the approval of the holders of the
Preferred Shares.
The Issuer has agreed with Sherfam that the Preferred Shares shall have the
following rights:
/s/ Bernard C. Sherman
----------------------
Bernard C. Sherman
THE BERNARD SHERMAN 2000 TRUST
By: /s/ Bernard C. Sherman
----------------------
Bernard C. Sherman
Sole Trustee
SHERMAN HOLDINGS INC.
By: /s/ Bernard C. Sherman
----------------------
Bernard C. Sherman
President
SHERMCO INC.
By: /s/ Bernard C. Sherman
----------------------
Bernard C. Sherman
Chairman
SHERFAM INC.
By: /s/ Bernard C. Sherman
----------------------
Bernard C. Sherman
Chairman
APOTEX HOLDINGS INC.
By: /s/ Bernard C. Sherman
----------------------
Bernard C. Sherman
President
APOTEX INC.
By: /s/ Bernard C. Sherman
----------------------
Bernard C. Sherman
Chairman
SHERMAN FOUNDATION
By: /s/ Bernard C. Sherman
----------------------
Bernard C. Sherman
President
