-----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, QMCEiQ6xn1LhX+q+ImtixzWRohKeU046OVFfQlkRQoIPsuamNQg8rAa/ecVoDE6W tijMdLetODrDzcOS6YSITA== 0000950131-00-006971.txt : 20010101 0000950131-00-006971.hdr.sgml : 20010101 ACCESSION NUMBER: 0000950131-00-006971 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20001229 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENDOREX CORP CENTRAL INDEX KEY: 0000812796 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 411505029 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: SEC FILE NUMBER: 333-36950 FILM NUMBER: 799032 BUSINESS ADDRESS: STREET 1: 28101 BALLARD DR. CITY: LAKE FOREST STATE: IL ZIP: 60045 BUSINESS PHONE: 847-573-8990 MAIL ADDRESS: STREET 1: 28101 BALLARD DR. CITY: LAKE FOREST STATE: IL ZIP: 60045 FORMER COMPANY: FORMER CONFORMED NAME: IMMUNOTHERAPEUTICS INC DATE OF NAME CHANGE: 19920703 S-3/A 1 0001.txt AMENDMENT NUMBER 1 TO S-3 As filed with the Securities and Exchange Commission on December 28, 2000 Registration No. 333-36950 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT Under The Securities Act of 1933 --------------- ENDOREX CORPORATION (Exact Name Of Registrant As Specified In Its Charter) --------------- DELAWARE 41-1505029 (State or Other Jurisdiction Of (I.R.S. Employer Incorporation or Organization) Identification Number) 28101 BALLARD DRIVE, SUITE F LAKE FOREST, ILLINOIS 60045 (847) 573-8990 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) --------------- STEVE J. KOULOGEORGE CONTROLLER ENDOREX CORPORATION 28101 Ballard Drive, Suite F Lake Forest, Illinois 60045 (847) 573-8990 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service) --------------- COPIES TO: RICHARD R. PLUMRIDGE, ESQ DARREN R. HENSLEY, ESQ JOHN P.J. KIM, ESQ BROBECK, PHLEGER & HARRISON LLP 370 Interlocken Blvd., Suite 500 Broomfield, CO 80021 (303) 410-2000 --------------- Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check box. [_] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [_] --------------- The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said section 8(a), may determine. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ + + +The information in this prospectus is not complete and may be changed. These + +securities may not be sold until the Registration Statement filed with the + +Securities and Exchange Commission is effective. This prospectus is not an + +offer to sell these securities and it is not soliciting an offer to buy these + +securities in any state where the offer or sale is not permitted. + ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ SUBJECT TO COMPLETION, DATED DECEMBER 29, 2000 PROSPECTUS 8,147,018 Shares ENDOREX CORPORATION Common Stock This prospectus relates to the resale of up to 8,147,018 shares of our common stock by certain of our current stockholders. We are registering our common stock for resale by the selling stockholders identified in this prospectus. Once issued, the prices at which such stockholders may sell the shares will be determined by the prevailing market for the shares or in negotiated transactions. We will not receive any proceeds from the sale of shares offered under this prospectus. Our common stock is traded on the American Stock Exchange (AMEX) under the symbol "DOR." The closing price on December 28, 2000 was $0.8125. ----------- The shares of common stock of Endorex offered or sold under this prospectus involve a high degree of risk. See "Risk Factors" beginning on page 3. ----------- Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. ----------- The date of this prospectus is TABLE OF CONTENTS
Page ---- The Company................................................................ 1 Risk Factors............................................................... 1 Forward Looking Information................................................ 8 Use of Proceeds............................................................ 8 Plan of Distribution....................................................... 8 Selling Stockholders....................................................... 11 Where to Find More Information............................................. 14 Legal Matters.............................................................. 15 Experts.................................................................... 15
i THE COMPANY Endorex Corporation is a development stage drug delivery company founded in 1985. Our principal executive office is located in the northern Chicago suburbs at 28101 Ballard Drive, Suite F, Lake Forest, Illinois 60045 and our telephone number is (847) 573-8990. RISK FACTORS An investment in our shares being offered in this prospectus involves a high degree of risk and if any of the risks discussed below come to fruition you may lose all or part of your investment. The U.S. Securities and Exchange Commission, or SEC, allows us to "incorporate by reference" information that we file with them, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus, and information that we file later with the SEC will periodically update and supersede this information. In deciding whether to purchase shares of our common stock, you should carefully consider the following risk factors, in addition to other information contained in this prospectus, in our most recent annual report on Form 10-KSB and in any other documents incorporated by reference into this prospectus from other SEC filings. This prospectus also contains forward- looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed here or incorporated by reference. Factors that could cause or contribute to differences in our actual results include those discussed in this section, as well as those discussed elsewhere in this prospectus and in other documents incorporated by reference into this prospectus. If we cannot obtain additional funding, our product development and commercialization efforts may be reduced or discontinued. We will require additional funding to sustain our research and development efforts, provide for future clinical trials, and continue our operations until we are able to generate sufficient revenue from the sale and/or licensing of our products. We cannot be certain whether we will be able to obtain required additional funding on terms satisfactory to us, if at all. In addition, we have expended, and will continue to expend, substantial funds on the development of our product candidates and for clinical trials. We currently have commitments to expend additional funds for the development of the Orasome oral delivery system, the MEDIPAD(R) infusion pump for iron chelation therapy, license contracts, severance arrangements, employment agreements, and consulting agreements. If we are unable to raise additional funds when necessary, we may have to reduce or discontinue development, commercialization or clinical testing of some or all of our product candidates or enter into financing arrangements on terms that we would not otherwise accept. We have had significant losses and anticipate future losses. We are a development stage company, have experienced significant losses since inception and have a significant accumulated deficit. We expect to incur significant additional operating losses in the future and expect cumulative losses to substantially increase due to expanded research and development efforts, preclinical studies and clinical trials. All of our products are currently in development, preclinical studies or clinical trials (cancer products), and we have not generated significant revenues from product sales, or licensing. There can be no guarantee that we will ever generate product revenues sufficient to become profitable or to sustain profitability. We are dependent on our joint ventures with Elan Corporation plc and any future joint ventures and corporate partnerships. Our strategy for research, development and commercialization of certain of our products is to rely on arrangements with corporate partners. As a result, our ability to commercialize products is dependent upon the success of third parties in performing preclinical studies and clinical trials, obtaining regulatory approvals, manufacturing and successfully marketing our products. In connection with our two joint ventures with Elan, we 1 are obligated to fund research and development activities in proportion to our ownership interest in each joint venture, currently 80.1% of each joint venture, based on the research and development plan and budget that we mutually agree upon with Elan. If we do not have sufficient resources to meet our funding obligations under each of the two Elan joint ventures, we may have to terminate the venture prior to commercialization or renegotiate the terms of the joint venture with Elan, or our interest in the venture may be diluted. Newco, our MEDIPAD(R) iron chelator joint venture with Elan, has licensed its first product on a worldwide basis to Schein Pharmaceutical, which has been acquired by Watson Laboratories. Watson has agreed to develop and market this product in the United States, and Newco and Watson will jointly seek partners for marketing the product outside of the United States. We cannot assure you that Watson and Newco will successfully develop, market, commercialize or get the necessary regulatory approvals for this product in the United States or internationally. Watson has applied to the U.S. Food and Drug Administration, or FDA, to approve marketing of the iron chelation drug it plans to commercialize but has indicated that the regulatory approval process may be delayed. We have also signed an exclusive research and option agreement with Novo Nordisk to license our Orasome(TM) oral delivery system for their human growth hormone product, Norditropin(R). We cannot assure you that Novo Nordisk will license and develop this technology for this product. We cannot assure you that our arrangements with our corporate partners, including the joint ventures with Elan, will be successful or that the development efforts carried out by them will continue. We intend to pursue additional collaborations in the future; however, the terms available may not be acceptable to us and the collaborations may not be successful. In addition, the amount and timing of resources that our collaborators devote to these activities are not within our control. Problems in product development may cause our cash depletion rate to increase. We have limited experience with clinical trials and if we encounter unexpected difficulties with our operations or clinical trials, we may have to expend additional funds, which would increase our cash depletion rate. Our ability to manage expenses and our cash depletion rate are keys to the continued development of product candidates and the completion of ongoing clinical trials. Our cash depletion rate will vary substantially from quarter to quarter as we fund non-recurring items associated with clinical trials, product development, patent legal fees and consulting fees. Our product development and commercialization efforts may not be successful. Our product candidates, which have not received regulatory approval, are generally in the early stages of development. If the initial results from any of the clinical trials are poor, those results will adversely effect our ability to raise additional capital, which will affect our ability to continue full-scale research and development for our oral delivery technology. In addition, product candidates resulting from our research and development efforts, if any, are not expected to be available commercially for several years, if at all. Our products, if approved, may not be immediately used by doctors unfamiliar with our product applications. We or our marketing partner may be required to implement an aggressive education and promotion plan with doctors in order to gain market recognition, understanding and acceptance of our products. Any such effort may be time consuming and might not be successful. Accordingly, we cannot guarantee that our product development efforts, including clinical trials, or commercialization efforts will be successful or that any of our products, if approved, can be successfully marketed. Our technology and products may prove ineffective or harmful, or be too expensive to market successfully. Our future success is significantly dependent on our ability to develop and test products for which we will seek approval from the FDA and/or from similar agencies in other countries, to market to certain defined patient 2 groups. Although we are involved in developing oral versions of injectable drugs and vaccines that have already been approved by the FDA, the oral products we are currently developing will require significant additional laboratory and clinical testing and investment for the foreseeable future. Our product candidates may not show sufficient efficacy in animal models to justify continuing research into clinical testing stages or may not prove to be effective in clinical trials or they may cause harmful side effects during clinical trials. In addition, our product candidates, if approved, may prove impracticable to manufacture in commercial quantities at a reasonable cost and/or with acceptable quality. Any of these factors could negatively affect our financial position and results of operations. Our product development and commercialization efforts may be reduced or discontinued due to difficulties or delays in clinical trials. We may encounter unanticipated problems, including development, manufacturing, distribution, financing and marketing difficulties, during the product development, approval and commercialization process. Our product candidates may take longer than anticipated to progress through clinical trials. In addition, patient enrollment in the clinical trials may be delayed or prolonged significantly, thus delaying the clinical trials and causing increased costs. If we experience any such difficulties or delays, we may have to reduce or discontinue development, commercialization or clinical testing of some or all of our product candidates. Our dependence on a limited number of suppliers may negatively impact our ability to complete clinical trials and market our products. Prior to commercial distribution of any of our products, if approved, we will be required to identify and contract with a commercial supplier or manufacturer. We cannot guarantee that these suppliers or manufacturers will be able to qualify their facilities under regulations imposed by the FDA or that they will be able to label and supply us with drugs in a timely manner, if at all. Accordingly, any change in our existing or future contractual relationships with, or an interruption in supply from, any third-party service provider or supplier could negatively impact our ability to complete clinical trials and to market our products, if approved. We do not have a sales force to market our products. If and when we receive approval from the FDA for our initial product candidates, the marketing of these products will be contingent upon our ability to either license these products or enter into marketing agreements with partner companies or our ability to recruit, develop, train and deploy our own sales force. We currently intend to sell our products in the United States and internationally in collaboration with one or more marketing partners. However, we presently have only one agreement for the licensing or marketing of our product candidates, and we cannot assure you that we will be able to enter into any such additional agreements in a timely manner or on commercially favorable terms, if at all. Additionally, we do not presently have a sales force, or possess the resources or experience necessary to market any of our product candidates, if and when they are approved. Development of an effective sales force requires significant financial resources, time and expertise. We cannot assure you that we will be able to obtain the financing necessary to establish such a sales force in a timely or cost effective manner, if at all, or that such a sales force will be capable of generating demand for our product candidates, if and when they are approved. We maintain only limited product liability insurance and may be exposed to claims if our insurance coverage is insufficient. The manufacture and sale of our products involves an inherent risk of product liability claims. We currently have product liability insurance with limits of liability of $10 million. Because product liability insurance is expensive and difficult to obtain, we cannot assure you that we will be able to maintain existing insurance or obtain additional product liability insurance on acceptable terms or with adequate coverage against potential liabilities. Our inability to obtain sufficient insurance coverage on acceptable terms or to otherwise protect against potential product liability claims in excess of our insurance coverage, if any, could negatively impact our financial position and results of operations. 3 We use hazardous chemicals and radioactive and biological materials in our business. Any claims relating to improper handling, storage, or disposal of these materials could be time consuming and costly. Our research and development processes involve the controlled use of hazardous materials, including hazardous chemicals and radioactive and biological materials. Our operations also produce hazardous waste products. We cannot eliminate the risk of accidental contamination or discharge and any resultant injury from these materials. Federal, state, and local laws and regulations govern the use, manufacture, storage, handling, and disposal of these materials. We believe that our current operations comply in all material respects with these laws and regulations. We could be subject to civil damages in the event of an improper or unauthorized release of, or exposure of individuals to, hazardous materials. In addition, we could be sued for injury or contamination that results from our use or the use by third parties or our collaborators of these materials, and our liability may exceed our total assets. Compliance with environmental laws and regulations may be expensive, and current or future environmental regulations may impair our research, development, or commercialization efforts. We may not be able to compete with our competitors in the biotechnology industry. The biotechnology industry is intensely competitive, subject to rapid change and sensitive to new product introductions or enhancements. Virtually all of our existing competitors have greater financial resources, larger technical staffs, and larger research budgets than we have, as well as greater experience in developing products and conducting clinical trials. Our competitors in the vaccine delivery field include Aviron, which is developing a nasal flu vaccine that is in Phase III clinical trials, BioVector, which is in Phase II trials with an intranasal flu vaccine and another major vaccine, specialized biotechnology firms, universities, and governmental agencies. Our competitors in the liposomal formulation field include The Liposome Company (owned by Elan Corporation), NexStar (owned by Gilead Sciences, Inc.) and Sequus (owned by ALZA Corporation). Our competitors in the field of the oral delivery of protein and peptide-based drugs include Emisphere Technologies, which has started Phase III trials for oral heparin and (through its collaborator Novartis) Phase I trials with oral calcitonin; Unigene Laboratories, which has an oral calcitonin product in PhaseI/II trials; and Nobex Corp. (formerly known as Protein Delivery) which has an oral insulin in Phase II trials. In addition, there may be other companies which are currently developing competitive technologies and products or which may in the future develop technologies and products which are comparable or superior to our technologies and products. Accordingly, we cannot assure you that we will be able to compete successfully with our existing and future competitors or that competition will not negatively affect our financial position or results of operations in the future. We may not be successful if we are unable to obtain and maintain patents and licenses to patents. Our success depends, in large part, on our ability to obtain and maintain a proprietary position in our products through patents, trade secrets and orphan drug designations. We have been granted several United States patents and have submitted several United States patent applications and numerous corresponding foreign patent applications, and have also obtained licenses to patents and patent applications owned by other entities. However, we cannot assure you that any of these patent applications will be granted or that our patent licensors will not terminate any of our patent licenses. We also cannot guarantee that any issued patents will provide competitive advantages for our products or that any issued patents will not be successfully challenged or circumvented by our competitors. Further, the laws of certain countries may not protect our proprietary rights to the same extent as U.S. law. We are dependent upon our license of oral delivery technology from MIT, and licenses from Elan in connection with our two joint ventures with Elan. We cannot assure you that the technology underlying such licenses will be profitable, or that we will be able to retain licenses for such technologies or that we will obtain patent protection outside the United States. To the extent that we rely on trade secret protection and confidentiality agreements to protect our technology, others may develop similar technology, or otherwise obtain access to our findings or research materials embodying those findings. The application of patent law to the field of biotechnology is relatively new and has resulted in considerable litigation. There is a substantial risk in the rapidly developing biotechnology industry that patents and other intellectual property rights held by us could be infringed by others or that products developed by us or their method of manufacture could be covered by patents 4 owned by other companies. Although we believe that our products and services do not infringe on any third party's patents, we cannot be certain that we can avoid litigation involving such patents or other proprietary rights. Patent and proprietary rights litigation entails substantial legal and other costs, and we may not have the necessary financial resources to defend or prosecute our rights in connection with any litigation. Responding to, defending or bringing claims related to patents and other intellectual property rights may require our management to redirect our human and monetary resources to address these claims and may take years to resolve. We may not be able to successfully sell our cancer products business. On March 1, 2000 we announced our decision to exit and/or divest our oncology business and related products to focus on our drug delivery business and products. We cannot assure you that we will be able to implement this new business strategy or that it will be successful if implemented. Subsequently, we granted a third party an option to purchase our Perillyl Alcohol cancer program and it's related assets. Pursuant to its terms, the option lapsed without being exercised by the third party. We cannot assure you that an alternative purchaser will be found or that we will be able to divest our oncology business and related products. Our product development and commercialization efforts may be reduced or discontinued due to difficulties or delays in clinical trials. We may encounter unanticipated problems, including development, manufacturing, distribution, financing and marketing difficulties, during the product development, regulatory approval and commercialization process. Our product candidates may take longer than anticipated to progress through clinical trials. In addition, patient enrollment in the clinical trials may be delayed or prolonged significantly, thus delaying the clinical trials and causing increased costs. If we experience any such difficulties or delays, we may have to reduce or discontinue development, commercialization or clinical testing of some or all of our product candidates. Our product development and commercialization efforts may be reduced or discontinued due to delays or failure in obtaining regulatory approvals. We will need to do substantial additional development and clinical testing prior to seeking any regulatory approval for commercialization of our product candidates. Testing, manufacturing, commercialization, advertising, promotion, export and marketing, among other things, of our proposed products are subject to extensive regulation by governmental authorities in the United States and other countries. The testing and approval process requires substantial time, effort and financial resources and we cannot guarantee that any approval will be granted on a timely basis, if at all. At least initially, we intend, to the extent possible, to rely on licensees to obtain regulatory approval for marketing our products. The failure by us or our licensees to adequately demonstrate the safety and efficacy of any of our product candidates under development could delay, limit or prevent regulatory approval of the product, which may require us to reduce or discontinue development, commercialization or clinical testing of some or all of our product candidates. Companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in conducting advanced human clinical trials, even after obtaining promising results in earlier trials. Furthermore, the United States Food & Drug Administration may suspend clinical trials at any time on various grounds, including a finding that the subjects or patients are being exposed to an unacceptable health risk. Also, even if regulatory approval of a product is granted, such approval may entail limitations on the indicated uses for which it may be marketed. Accordingly, we may experience difficulties and delays in obtaining necessary governmental clearances and approvals to market our products, and we may not be able to obtain all necessary governmental clearances and approvals to market our products. Our products, if approved, may not be commercially viable due to health care changes and third-party reimbursement limitations. Recent initiatives to reduce the federal deficit and to change health care delivery are increasing cost- containment efforts. We anticipate that Congress, state legislatures and the private sector will continue to review 5 and assess alternative benefits, controls on health care spending through limitations on the growth of private health insurance premiums and Medicare and Medicaid spending, price controls on pharmaceuticals, and other fundamental changes to the health care delivery system. Any such changes could negatively impact the commercial viability of our products, if approved. Our ability to successfully commercialize our product candidates, if and when they are approved, will depend in part on the extent to which appropriate reimbursement codes and authorized cost reimbursement levels of such products and related treatment are obtained from governmental authorities, private health insurers and other organizations, such as health maintenance organizations. In the absence of national Medicare coverage determination, local contractors that administer the Medicare program, within certain guidelines, can make their own coverage decisions. Accordingly, there can be no assurance that any of our product candidates, if approved and when commercially available, will be included within the then current Medicare coverage determination or the coverage determination of state Medicaid programs, private insurance companies and other health care providers. In addition, third-party payers are increasingly challenging the prices charged for medical products and services. Also, the trend toward managed health care and the growth of health maintenance organizations in the United States may all result in lower prices for our products, if approved and when commercially available, than we currently expect. The cost containment measures that health care payers and providers are instituting and the effect of any health care changes could negatively affect our financial performance, if and when one or more of our products are approved and available for commercial use. Our operations and financial performance could be negatively affected if we cannot attract and retain key personnel. Our success is dependent, in part, upon Michael S. Rosen, our President and Chief Executive Officer. We also believe that our future success will depend largely upon our ability to attract and retain highly skilled research and development and technical personnel. Although we maintain and are the beneficiary of key man insurance on Mr. Rosen, we do not believe the proceeds would be adequate to compensate us for his loss. We face intense competition in our recruiting activities, including competition from larger companies with greater resources. We cannot assure you that we will be successful in attracting or retaining skilled personnel. The loss of certain key employees or our inability to attract and retain other qualified employees could negatively affect our operations and financial performance. Our stock price is highly volatile and our common stock is thinly traded. The market price of our common stock, like that of many other development- stage public pharmaceutical and biotechnology companies, has been highly volatile and may continue to be so in the future. Factors such as disclosure of results of preclinical and clinical testing, adverse reactions to products, governmental regulation and approvals, and general market conditions may have a significant effect on the market price of the common stock and our other equity securities. Since it commenced trading on the American Stock Exchange on August 6, 1998, our common stock has been thinly traded. We cannot guarantee that a more active trading market will develop in the future. Investors may suffer substantial dilution. Endorex has a number of agreements or obligations that may result in dilution to investors. These include: . warrants to purchase 2,012,622 shares of common stock at $2.54375 per share, subject to adjustment, issued in connection with the October 1997 private placement of our common stock; . warrants to purchase 230,770 shares of common stock at $10.00 per share, subject to adjustment, held by Elan; . warrants to purchase 43,334 shares of common stock at $2.3125 per share, subject to adjustment, held by the Aries Master Fund II and warrants to purchase 23,334 shares of common stock at $2.3125 per 6 share, subject to adjustment, held by the Aries Domestic Fund, L.P., both issued on May 19, 1997 pursuant to a senior line of credit that has been subsequently retired; . warrants to purchase 452,383 shares of common stock at $5.91, subject to adjustment, held by certain investors pursuant to the April 2000 private placement of our common stock; . warrants to purchase 226,190 shares of common stock at $5.25, subject to adjustment, issued to the finder in connection with the April 2000 private placement of our common stock; . conversion rights and dividend rights of preferred stock held by Elan, consisting of 92,973, subject to adjustment, shares of Series B Convertible Preferred Stock ($8.0 million original liquidation value) bearing an 8% cumulative payment-in-kind dividend and convertible at liquidation value into common stock at $7.38 per share, subject to adjustment, and 91,218, subject to adjustment, shares of Series C Exchangeable Convertible Preferred Stock ($8.4 million original liquidation value) bearing a 7% cumulative payment-in-kind dividend and which is exchangeable for part of Endorex's interest in one of the joint ventures with Elan or convertible at liquidation value into common stock at $8.86 per share; . options to purchase approximately 1.6 million shares of common stock issued to participants in our stock option plan with a weighted average exercise price of approximately $2.78; and . anti-dilution rights under the above warrants and preferred stock, which can permit purchase of additional shares and/or lower exercise/conversion prices under certain circumstances. To the extent that anti-dilution rights are triggered, or warrants, options or conversion rights are exercised, our stockholders will experience substantial dilution and the Company's stock price may decrease. Future sales of common stock by our existing stockholders could adversely affect our stock price. The market price of our common stock could decline as a result of sales by our existing stockholders of shares of common stock in the market, or the perception that these sales could occur. These sales also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. We have not paid cash dividends. We have never paid cash dividends on our common stock and we do not anticipate paying any dividends in the foreseeable future. We currently intend to retain earnings, if any, for the development of our business. We have certain interlocking relationships that may present potential conflicts of interest. Lindsay A. Rosenwald, M.D., is the Chairman and sole stockholder of Paramount Capital Asset Management, Inc., or PCAM, Paramount Capital, Inc., or Paramount, and Paramount Capital Investment LLC, or PCI, a merchant banking and venture capital firm specializing in biotechnology companies. PCAM is the investment manager of The Aries Master Fund II, a Cayman Island exempted company, and the general partner of each of the Aries Domestic Fund, L.P. and the Aries Domestic Fund II, L.P., each of which is a significant stockholder of Endorex. In addition, certain officers, employees and/or associates of Paramount and/or its affiliates own securities in a subsidiary of Endorex. In the regular course of its business, PCI identifies, evaluates and pursues investment opportunities in biomedical and pharmaceutical products, technologies and companies. Generally, Delaware corporate law requires that any transactions between Endorex and any of its affiliates be on terms that, when taken as a whole, are substantially as favorable to us as those then reasonably obtainable from a person who is not an affiliate in an arms-length transaction. Nevertheless, neither such affiliates nor PCI is obligated pursuant to any agreement or understanding with us to make any additional products or technologies available to us. We do not expect and you should not expect, that any biomedical or pharmaceutical product or technology identified by such affiliates or PCI in the future will be made available to us. In addition, certain of the current officers and directors of Endorex or any officers or directors of the company hereafter appointed may from time to time serve as officers, directors or consultants of other biopharmaceutical or biotechnology companies. There can be no assurance that such other companies will not have interests in conflict with us. 7 Certain directors and stockholders have significant influence. Our directors, executive officers and principal stockholders and certain of their affiliates have the ability to influence the election of directors and most other stockholder actions. In particular, pursuant to a placement agency agreement, Paramount could propose up to three persons for nomination as directors until October, 2000. Such directors remain on our board. This arrangement may discourage or prevent any proposed takeover of Endorex, including transactions in which stockholders might otherwise receive a premium for their shares over the then current market prices. Such stockholders may influence corporate actions, including influencing elections of directors and significant corporate events. FORWARD-LOOKING INFORMATION This prospectus includes "forward-looking statements" regarding future events or our future performance within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements other than statements of historical facts included in this prospectus or incorporated by reference regarding our financial position and business strategy may constitute forward-looking statements. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we can not guarantee that these expectations will prove to be correct. Important factors that could cause actual results to differ materially from our expectations are listed in this prospectus, or incorporated by reference and they include the forward-looking statements under "risk factors." All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf, are expressly qualified or incorporated by reference in their entirety by these statements. USE OF PROCEEDS We will not receive any proceeds from the sale of the shares. All proceeds will be received by the selling stockholders. See "Selling Stockholders". PLAN OF DISTRIBUTION Endorex is registering all 8,147,018 shares on behalf of the selling stockholders. Endorex will receive no proceeds from this offering. The selling stockholders named in the table below or pledgees, donees, transferees or other successors-in-interest selling shares received from the selling stockholders as a gift, partnership distribution or other non-sale related transfer after the date of this prospectus may sell the shares from time to time. The selling stockholders will act independently of Endorex in making decisions with respect to the timing, manner and size of each sale. The sales may be made on one or more exchanges or in the over-the-counter market or otherwise, at prices and at terms then prevailing or at prices related to the then current market price, or in negotiated transactions. The selling stockholders may effect these transactions by selling the shares to or through broker-dealers. The shares may be sold by one or more of, or a combination of, the following: . a block trade in which the broker-dealer so engaged will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; . purchases by a broker-dealer as principal and resale by this broker- dealer for its account through this prospectus; . an exchange distribution that complies with the rules of the exchange; . ordinary brokerage transactions and transactions in which the broker solicits purchasers; and . in privately negotiated transactions. To the extent required, this prospectus may be amended or supplemented from time to time to describe a specific plan of distribution. In effecting sales, broker-dealers engaged by the selling stockholders may arrange for other broker-dealers to participate in the resales. 8 The selling stockholders may enter into hedging transactions with broker- dealers in connection with distributions of the shares or otherwise. In these transactions, broker-dealers may engage in short sales of the shares in the course of hedging the positions they assume with the selling stockholder. The selling stockholders also may sell shares short and redeliver the shares to close out these short positions. The selling stockholders may enter into option or other transactions with broker-dealers, which require the delivery to the broker-dealer of the shares. The broker-dealer may then resell or otherwise transfer these shares through this prospectus. The selling stockholders each may also loan or pledge the shares to a broker-dealer. The broker-dealer may sell the shares so loaned, or upon a default the broker- dealer may sell the pledged shares by use of this prospectus. Broker-dealers or agents may receive compensation in the form of commissions, discounts or concessions from the selling stockholder. Broker- dealers or agents may also receive compensation from the purchasers of the shares for whom they act as agents or to whom they sell as principals, or both. Compensation as to a particular broker-dealer might be in excess of customary commissions and will be in amounts to be negotiated in connection with the sale. Broker-dealers or agents and any other participating broker-dealers or the selling stockholders may be deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act in connection with sales of the shares. Accordingly, any commission, discount or concession received by them and any profit on the resale of the shares purchased by them may be deemed to be underwriting discounts or commissions under the Securities Act. Because the selling stockholders may be deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act, the selling stockholders will be subject to the prospectus delivery requirements of the Securities Act. In addition, any securities covered by this prospectus which qualify for sale through Rule 144 promulgated under the Securities Act may be sold under Rule 144 rather than through this prospectus. The selling stockholders have advised Endorex that they have not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of the securities. There is no underwriter or coordinating broker acting in connection with the proposed sale of shares by the selling stockholder. The shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states the shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with. Under applicable rules and regulations under the Securities Exchange Act, any person engaged in the distribution of the shares may not engage in market making activities with respect to our common stock for a period of one business day before the commencement of this distribution. In addition, the selling stockholders will be subject to applicable provisions of the Securities Exchange Act and the associated rules and regulations under the Securities Exchange Act, including Regulation M, which provisions may limit the timing of purchases and sales of shares of our common stock by the selling stockholder. Endorex will make copies of this prospectus available to the selling stockholders and has informed each of them of the need for delivery of copies of this prospectus to purchasers at or before the time of any sale of the shares. Endorex will file a supplement to this prospectus, if required, under Rule 424(b) under the Securities Act upon being notified by the selling stockholders that any material arrangement has been entered into with a broker-dealer for the sale of shares through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer. This supplement will disclose: . the name of the selling stockholders and of the participating broker- dealer(s); . the number of shares involved; . the price at which these shares were sold; . the commissions paid or discounts or concessions allowed to the broker- dealer(s), where applicable; 9 . that the broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus; and . other facts material to the transaction. In addition, upon being notified by any selling stockholder that a donee or pledgee intends to sell more than 500 shares, Endorex will file a supplement to this prospectus. Endorex will bear all costs, expenses and fees in connection with the registration of the shares. The selling stockholders will bear all commissions and discounts, if any, attributable to their respective sales of the shares. The selling stockholders may agree to indemnify any broker-dealer or agent that participates in transactions involving sales of the shares against some liabilities, including liabilities arising under the Securities Act. Endorex and the selling stockholders have agreed to indemnify each other against some liabilities in connection with the offering of the shares, including liabilities arising under the Securities Act. 10 SELLING STOCKHOLDERS The following table sets forth the names of the selling stockholders and the number of shares being registered for sale as of the date of the prospectus and sets forth the number of shares of common stock known by us to be beneficially owned by each of the selling stockholders. Except as indicated below, none of the selling stockholders has had a material relationship with the Company within the past three years other than as a result of the ownership of the shares or other securities of the Company. The shares offered by this prospectus may be offered from time to time by the selling stockholders. This information is based upon information provided by each respective selling stockholder, schedules 13D and other public documents filed with the SEC. The number of shares of common stock beneficially owned and used to calculate the percentage beneficial ownership of each listed person includes the shares of common stock underlying warrants or preferred stock held by such persons that are exercisable or convertible within 60 days of December 7, 2000. The term "selling stockholders" includes the stockholders listed below and their transferees, assignees, pledgees, donees or other successors. The percent of beneficial ownership for each stockholder is based on 12,741,866 shares of common stock outstanding as of December 7, 2000.
Beneficial Number of Shares of Common Stock Ownership Registered for Sale Hereby(1) After Offering(2) --------------------------------- ----------------- Shares of Common Stock Shares of Underlying Number of Shares Common Series B Beneficially Shares of Stock and Series C Owned Prior Common Underlying Preferred Number of Selling Stockholder to Offering(2)(3) Stock Warrants Stock Shares Percent ------------------- ----------------- --------- ---------- ------------ --------- ------- AFAX Group Ltd.......... 66,138 52,910 13,228 -- -- -- Aries Domestic Fund, LP(4).................. 1,076,081 565,332 56,533 -- 454,216 3.54% The Aries Master Fund II(5).................. 2,369,986 1,121,587 112,159 -- 1,136,240 8.81% Banque SCS Alliances S.A.................... 132,275 105,820 26,455 -- -- -- Beacon Global Advisors.. 132,275 105,820 26,455 -- -- -- Credito Privato Commericale............ 132,275 105,820 26,455 -- -- -- Crescent International Ltd.................... 132,275 105,820 26,455 -- -- -- Deephaven Private Placement.............. 132,275 105,820 26,455 -- -- -- DG Lux Lacuna APO Biotech................ 317,460 253,968 63,492 -- -- -- Drax Holdings Group L.P.................... 502,930 211,640 52,910 -- 238,380 1.87% Elan Pharmaceutical Investments, Ltd.(6)... 2,827,768 -- -- 2,289,306 538,462 3.53% Robert I. Falk.......... 113,815 52,910 13,228 -- 47,677 * Financiere Tuileries.... 39,683 31,746 7,937 -- -- -- Heritage Finance and Trust Co............... 127,552 84,656 21,164 -- 21,732 * Peter Kash(7)........... 78,865 78,865 -- -- -- -- Peter Kash and Donna Kash JTWROS............ 1,109 1,109 -- -- -- -- Keys Foundation, Curacao................ 105,820 84,656 21,164 -- -- -- Nomura Bank (Switzerland) Ltd...... 264,550 211,640 52,910 -- -- -- Paramount Capital, Inc.(8)................ 235,190 -- 226,190 -- 9,000 -- PKB Privatbank AG....... 219,672 169,312 42,328 -- 8,032 * Tis Prager.............. 13,228 10,582 2,646 -- -- -- Lindsay A. Rosenwald, M.D.(9)................ 4,900,384 -- 1,434,032 -- 3,466,352 24.45% St. John's Trust........ 132,275 105,820 26,455 -- -- -- Bruno Widmer............ 15,445 10,582 2,646 -- 2,217 *
- -------- *Less than 1%. (1) This prospectus includes 3,369,577 shares of common stock that were previously registered on a registration statement on Form S-2, Registration No. 333-44583, filed by the Company with the SEC on January 21, 1998, but which were not sold while such registration statement was effective. 11 (2) The calculations for the beneficial ownership of each selling stockholder assumes (i) that any shares subject to warrants or conversion privileges within 60 days of December 7, 2000 shall be deemed owned and outstanding for the purpose of determining beneficial ownership and the percentage of outstanding shares beneficially owned by such person, but shall not be deemed to be outstanding for the purpose of computing the percentage beneficially owned by any other person, and (ii) that such selling stockholder has sold all of its shares registered hereunder. Some of the selling stockholders may also sell shares of common stock registered under prior registration statements or pursuant to Rule 144. Because the selling stockholders may offer all, some or none of the shares pursuant to this prospectus, and because there are currently no agreements, arrangements or understandings with respect to the sale of any of the shares, no estimate can be given as to the number of shares that will be held by the selling stockholders after completion of the sale of shares hereunder. See " Plan of Distribution." (3) On April 12, 2000, the Company, pursuant to a private placement to certain investors, issued 1,809,522 shares of common stock and warrants exercisable for 452,383 shares of common stock issuable upon exercise of the warrants until April 12, 2005 at a price of $5.91 per share. The number of shares of common stock beneficially owned by each such selling stockholder includes the shares of common stock underlying warrants issued pursuant to the April 2000 private placement if such selling stockholder was an investor in the April 2000 private placement. The registration statement of which this prospectus is a part was filed pursuant to registration rights granted to the investors in the April 2000 private placement. (4) Number of shares beneficially owned includes 23,334 shares of common stock issuable upon exercise of warrants exercisable until May 19, 2002 at a price of $2.3125 per share, and 56,533 shares issuable upon exercise of warrants exercisable until April 16, 2003 at a price of $2.54375 per share. Does not include warrants to purchase 1,434,032 shares of common stock held by Lindsay A. Rosenwald, M.D., the Chairman of PCAM, which is the general partner of the Aries Domestic Fund, L.P., in his individual capacity. Dr. Rosenwald and PCAM share the power to vote and/or dispose of the shares of common stock held by the Aries Domestic Fund, L.P., but disclaim beneficial ownership thereof except to the extent of their pecuniary interest therein, if any. (5) Number of shares beneficially owned includes 43,334 shares of common stock issuable upon exercise of warrants exercisable until May 19, 2002 at a price of $2.3125 per share, and 112,159 shares of common stock issuable upon exercise of warrants exercisable until April 16, 2003 at a price of $2.54375 per share. Does not include warrants to purchase 1,434,032 shares of common stock held by Lindsay A. Rosenwald, M.D., the Chairman of PCAM, which is the investment manager of The Aries Master Fund II, in his individual capacity. Dr. Rosenwald and PCAM share the power to vote and/or dispose of the shares of common stock held by The Aries Master Fund II, but disclaim beneficial ownership thereof except to the extent of their pecuniary interest therein, if any. (6) Number of shares beneficially owned includes 1,259,757 shares of common stock issuable upon conversion of Series B Preferred Stock, 1,029,549 shares of common stock issuable upon conversion of Series C Preferred Stock and 230,770 shares issuable upon exercise of warrants exercisable until January 21, 2004 at a price of $10.00 per share. (7) Does not include 1,109 shares over which Peter Kash and Donna Kash have beneficial ownership as joint tenants with rights of survivorship. Mr. Kash is a Senior Managing Director of Paramount. (8) As compensation for services as financial advisor and finder for the April 2000 private placement, the Company issued warrants for 226,190 shares of common stock exercisable until October 11, 2007, at a price of $5.25 to Paramount. Paramount has indicated that it will transfer all or a portion of such warrants to its employees, officers and its affiliates. The securities beneficially owned by Paramount include 9,000 shares of common stock issuable upon exercise of options exercisable until October 23, 2009 at a price of $2.54 per share. (9) Lindsay A. Rosenwald, M.D., is the Chairman and sole stockholder of PCAM, which is the Investment Manager and General Partner of the Aries Master Fund II and Aries Domestic Fund, L.P., respectively. Paramount's chairman and sole stockholder is Lindsay A. Rosenwald, M.D. The securities beneficially owned by Lindsay A. Rosenwald include 1,434,032 shares of common stock issuable upon exercise of warrants exercisable until April 16, 2003 at a price of $2.54375 per share, 1,076,081 shares beneficially 12 owned by Aries Domestic Fund, L.P., 2,369,986 shares beneficially owned by Aries Master Fund II and 20,284 shares beneficially owned by Aries Domestic Fund II, L.P. Dr. Rosenwald disclaims beneficial ownership of the shares owned by the Aries Master Fund II, Aries Domestic Fund II, L.P. and Aries Domestic Fund, L.P., except to the extent of any pecuniary interest therein. Relationships with Selling Stockholders In addition to the relationships set forth in the table above and the footnotes thereto, we have the following relationships with the selling stockholders. On June 13, 1996, Dominion Resources, Inc., or Dominion, entered into an agreement with The Aries Fund and the Aries Domestic Fund, L.P., or collectively, the Aries Funds, with us as a party to the agreement, whereby the Aries Funds purchased an aggregate of 266,667 shares of common stock from Dominion at $1.50 per share. As part of the transaction, Dominion transferred to the Aries Funds certain of its rights under an existing agreement with us, including the right to designate one of our directors and the right to have the shares registered under the Securities Act. Upon completion of the sale of the 266,667 shares, Steven H. Kanzer was elected to our Board of Directors as a designee of the Aries Funds. On June 26, 1996, the Aries Funds purchased from us an additional 333,334 shares of common stock at a price of $3.00 per share. The purchase agreements relating to such shares contains various representations and warranties concerning us and our activities and also various affirmations and negative covenants, and grant to the Aries Funds the right to have the shares registered under the Securities Act and restricts us from entering into mergers, acquisitions, or sales of our assets without the prior approval of the Aries Funds. In connection with a credit agreement entered into by us and the Aries Funds, on May 19, 1997, we issued to the Aries Funds warrants to purchase an aggregate of 66,668 shares of common stock. Such warrants are exercisable until May 19, 2002, at an exercise price of $2.31250 per share, subject to adjustment under certain circumstances. PCAM is the investment manager of the Aries Fund and the general partner of the Aries Domestic Fund, L.P. Lindsay Rosenwald, M.D., is the president and sole stockholder of PCAM and of Paramount. Pursuant to a placement agreement dated as of July 1, 1997 between Paramount and us, until October 2000 Paramount could propose up to three persons for nomination as our directors and our Board of Directors could not exceed six persons without the prior written consent of Paramount. We issued and sold an aggregate of 8,648,718 shares of common stock to certain accredited investors in a private placement on July 16, and October 10, and on October 16, 1997, in consideration of an aggregate amount of $20,000,000. The net proceeds to us after deducting commissions and expenses of Paramount, which acted as the placement agent for the private placement, were $17,400,000. In connection with the private placement, we issued and sold to Paramount and/or its designees warrants, or Placement Warrants, to purchase up to an aggregate of 864,865 shares of common stock. Also in connection with the execution of a financial advisory agreement, dated October 16, 1997, between us and Paramount, we issued and sold to Paramount warrants, or the Advisory Warrants, to purchase up to an aggregate of 1,297,297 shares of common stock. The Placement Warrants and the Advisory Warrants are exercisable until April 16, 2003, at an exercise price of $2.54375 per share, subject to adjustment under certain circumstances. On January 21, 1998, we established a joint venture, Innovaccines, with Elan for the exclusive research, development and commercialization of oral and mucosal prophylactic and therapeutic vaccines. As part of the transaction, Elan International Services, Ltd., or EIS, a wholly owned subsidiary of Elan, made a $2.0 million initial investment by purchasing 307,692 shares of common stock and warrants to acquire 230,770 shares of common stock. The warrants are excercisable until January 21, 2004 at an exercise price of $10.00 per share, subject to adjustment under certain circumstances. In addition, in connection with the joint venture and the execution of a license agreement, we issued $8.0 million of Series B Convertible Preferred Stock to EIS. We are in the process of negotiating and documenting an approximately $2,500,000 line of credit with Elan that will be 13 used solely to pay our funding obligations for Innovaccines; as of December 20, 2000, Elan has paid approximately $1,500,000 of our funding obligations for Innovaccines. On October 21, 1998, we established a second joint venture, Endorex Newco, Ltd., with Elan for the exclusive research, development and commercialization of the Medipad(R) disposable drug delivery system with two undisclosed drugs. In connection with the joint venture and the execution of a license agreement, we issued $8.4 million of Series C Convertible Preferred Stock to EIS. We have committed credit availability of approximately $4,800,000 from Elan for the purposes of funding Newco. Pursuant to a Financial Advisory Agreement dated as of October 25, 1999 between Paramount and us, Paramount will provide to us financial advisory services for a period of twelve months from the date of the agreement. Paramount will receive as compensation for its services $5,000 per month for the term of the Financial Advisory Agreement and received options for 46,000 shares of common stock at an exercise price of $2.54 per share. Of these options, options for 10,000 shares of common stock were immediately exercisable upon the issuance of such options and expired on October 25, 2000; options for 9,000 shares of common stock became exercisable after October 25, 2000 and expire on October 25, 2009; options for 9,000 shares of common stock become exercisable after April 25, 2001 and expire on October 25, 2009; and options for 18,000 shares of common stock become exercisable after October 25, 2002 and expire on October 25, 2009. Pursuant to a Finder Agreement dated as of February 29, 2000, as amended on April 6, 2000, between Paramount and us, Paramount agreed to act as a finder in connection with our April 2000 private placement of common stock and warrants. In return for its services under the Finder Agreement, Paramount received a cash payment of $598,500 and warrants exercisable for 226,190 shares of common stock at an exercise price of $5.25 per share, subject to adjustment under certain circumstances. The warrants became exercisable on October 12, 2000 and expire on October 11, 2007. WHERE TO FIND MORE INFORMATION We file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any document we file at the SEC's public reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our SEC filings are also available to the public from the SEC's web site at http://www.sec.gov. We have filed with the SEC a registration statement on Form S-3 under the Securities Act with respect to the common stock offered hereby. This prospectus does not contain all of the information set forth in the Registration Statement and the exhibits and the schedules thereto. For further information with respect to the Company and such common stock, reference is made to the registration statement and exhibits and schedules thereto. Statements contained in this prospectus as to the contents of any contract or other document referred to are not necessarily complete, and, with respect to any contract or other document filed as an exhibit to the registration statement or documents incorporated herein by reference, each such statement is qualified in all respects by reference to the applicable exhibit, or documents incorporated by reference therein. Copies of the registration statement and the exhibits are on file at the offices of the SEC and may be obtained upon payment of the prescribed fee or may be examined without charge at the public reference facilities of the SEC described above. The SEC allows us to "incorporate by reference" into this prospectus the documents we file with them, which means that we can disclose important information to you by referring you to these documents. The information that we incorporate by reference into this prospectus is considered to be part of this prospectus. We incorporate by reference into this prospectus the documents listed below: . Annual Report on Form 10-KSB for the year ended December 31, 1999, as filed with the SEC on March 30, 2000 and as amended by Form 10-KSB/A as filed with the SEC on November 27, 2000; 14 . Quarterly Reports on Form 10-QSB, as filed with the SEC on May 15, 2000, August 14, 2000 and November 13, 2000; . Current Reports on Form 8-K, as filed with the SEC on March 20, 2000 and November 9, 2000; . Definitive Proxy Statement with respect to the Annual Meeting of Stockholders as filed with the SEC on April 13, 2000; . All other reports filed by the Company pursuant to Section 13(a) or 15(d) of the Exchange Act since the end of the Company's fiscal year ended December 31, 1999; and . The description of our common stock contained in our registration statement on Form 8A/A as filed with the SEC on August 4, 1998. We will also incorporate by reference each of the following documents that we will file with the SEC after the date of this prospectus until this offering is completed: . Reports filed under Sections 13 (a) and (c) of the Exchange Act; . Definitive proxy or information statements filed under Section 14 of the Exchange Act in connection with any subsequent stockholders' meeting; and . Any reports filed under Section 15 (d) of the Exchange Act. We will provide, without charge, upon written or oral request of any person to whom a copy of this prospectus is delivered, a copy of any or all of the foregoing documents and information that has been or may be incorporated by reference herein (other than exhibits to such documents). Requests for such documents and information should be directed to the following address: Endorex Corporation Attention: Steve J. Koulogeorge Controller 28101 Ballard Drive, Suite F Lake Forest, Illinois 60045 Telephone number: (847) 573-8990 You should rely only on the information incorporated by reference or provided in this prospectus or the prospectus supplement. We have authorized no one to provide you with different information. We are not making an offer of these securities in any state where the offer is not permitted. You should not assume that the information in this prospectus is accurate as of any date other than on the front of this document. Our common stock is traded on the American Stock Exchange under the symbol "DOR". Reports, proxy statements and other information concerning Endorex may be inspected at the Nasdaq-Amex Market Group at 80 Merritt Blvd., Trumbull, CT 06611. LEGAL MATTERS The validity of the shares offered hereby will be passed upon for the Company by Brobeck, Phleger & Harrison LLP, Broomfield, Colorado. EXPERTS The consolidated financial statements incorporated in this Prospectus by reference to the Annual Report on Form 10-KSB for the year ended December 31, 1999, as amended by Form 10-KSB/A, have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. 15 8,147,018 Shares ENDOREX CORPORATION Common Stock PROSPECTUS December 29, 2000 PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution The selling stockholders will not pay any of the expenses of this offering. The following table sets forth an estimate of the expenses to be incurred by the Company in connection with the issuance and distribution of the securities being registered:
Amount to Be Paid --------- Registration Fee--SEC........................................... $ 7,000 Legal Fees and Expenses......................................... 40,000 Accounting Fees and Expenses.................................... 10,000 Printing Fees and Expenses...................................... 10,000 Miscellaneous................................................... 3,000 ------- Total....................................................... $70,000 =======
Item 15. Indemnification of Directors and Officers Article Thirteenth of the Company's Certificate of Incorporation, as amended, and Article VII of the Company's By-Laws provide that the Company may indemnify each current and former director, officer, and any employee or agent of the corporation, his or her heirs, executors, and administrators, against expenses reasonably incurred or any amounts paid by him or her in connection with any action, suit, or proceeding to which he or she may be made a party by reason of being or having been a director, officer, employee or agent of the corporation to the fullest extent permitted by the Delaware General Corporation Law. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. Reference is made to Section 145 of the Delaware General Corporation Law as such Section pertains to indemnification matters. Item 16. Exhibits
Exhibit No. Description ------- ----------- --- 3.1 Series B Preferred Certificate of Designation, Preferences and Rights filed as of January 21, 1998 (1). 3.2 Series C Preferred Certificate of Designation, Preferences and Rights filed as of October 21, 1998 (1). 4.1 Form of Subscription Agreement by and between the Registrant and each investor dated as of April 11, 2000. * 4.2 Form of Amendment and Supplement to Subscription Agreement entered into by each investor as of April 11, 2000. * 4.3 Form of Second Amendment and Supplement to Subscription Agreement entered into by each investor as of April 11, 2000. * 4.4 Form of Investor Warrant issued to each investor dated as of April 12, 2000. * 4.5 Form of Finder Warrant issued to Paramount Capital, Inc. dated as of April 12, 2000. *
II-1
Exhibit No. Description ------- ----------- --- 4.6 Warrant issued to Aries Fund dated as of May 19, 1997. * 4.7 Warrant issued to Aries Domestic Fund, L.P. dated as of May 19, 1997. * 4.8 Warrant issued to Paramount Capital, Inc. dated as of October 16, 1997. (2) 4.9 Warrant issued to Paramount Capital, Inc. dated as of October 16, 1997. (2) 5.1 Opinion of Brobeck, Phleger & Harrison, LLP. * 10.1 Finder Agreement between the Registrant and Paramount Capital, Inc. dated as of February 29, 2000 * 10.2 Amendment and Supplement to Finder Agreement dated as of April 6, 2000. * 10.3 Financial Advisory Agreement between the Registrant and Paramount Capital, Inc. dated as of October 25, 1999. * 10.4 Purchase Agreement among Dominion Resources, Inc., The Aries Fund, a Cayman Island Trust, The Aries Domestic Fund, L.P., and the Registrant dated as of June 13, 1996. 23.1 Consent of PricewaterhouseCoopers LLP, Independent Auditors. 23.2 Consent of Brobeck, Phleger & Harrison, LLP. Reference is made to Exhibit 5.1. * 24.1 Power of Attorney. *
- -------- *Previously filed. (1) Incorporated by reference to our Quarterly Report on Form 10-QSB, for the period ended on September 30, 1998. (2) Incorporated by reference to our Quarterly Report on Form 10-QSB, as amended, for the period ended on September 30, 1997. Item 17. Undertakings Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to: (i) include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post- effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. II-2 Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) include any additional or changed material information on the plan of distribution; PROVIDED, HOWEVER, that paragraphs (1) (i) and (1) (ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to section 13 or 15(d) of the Securities Exchange Act that are incorporated by reference in the registration statement. (2) That, for the purpose of determining liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. The undersigned registrant hereby undertakes that, for the purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to section 13(a) or section 5(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Lake Forest, State of Illinois, on December 29, 2000. Endorex Corporation /s/ Michael S. Rosen By: ____________________________ Michael S. Rosen President, Chief Executive Officer, and Director Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities indicated on December 29, 2000. /s/ Michael S. Rosen President, Chief Executive Officer, and ___________________________________________ Director (Principal Executive Officer) Michael S. Rosen /s/ Steve J. Koulogeorge Controller ___________________________________________ (Principal Financial and Accounting Steve J. Koulogeorge Officer) * Director ___________________________________________ Richard Dunning * Director ___________________________________________ Steve H. Kanzer * Director ___________________________________________ Paul D. Rubin * Director ___________________________________________ H. Laurence Shaw * Director ___________________________________________ Kenneth Tempero * Director ___________________________________________ Steven Thornton
/s/ Michael S. Rosen *By:____________________________ Michael S. Rosen Attorney-in-fact II-4 EXHIBITS
Exhibit No. Description ------- ----------- 3.1 Series B Preferred Certificate of Designation, Preferences and Rights filed as of January 21, 1998(1). 3.2 Series C Preferred Certificate of Designation, Preferences and Rights filed as of October 21, 1998(1). 4.1 Form of Subscription Agreement by and between the Registrant and each investor dated as of April 11, 2000. * 4.2 Form of Amendment and Supplement to Subscription Agreement entered into by each investor as of April 11, 2000. * 4.3 Form of Second Amendment and Supplement to Subscription Agreement entered into by each investor as of April 11, 2000. * 4.4 Form of Investor Warrant issued to each investor dated as of April 12, 2000. * 4.5 Form of Finder Warrant issued to Paramount Capital, Inc. dated as of April 12, 2000. * 4.6 Warrant issued to Aries Fund dated as of May 19, 1997. * 4.7 Warrant issued to Aries Domestic Fund, L.P. dated as of May 19, 1997. * 4.8 Warrant issued to Paramount Capital, Inc. dated as of October 16, 1997(2). 4.9 Warrant issued to Paramount Capital, Inc. dated as of October 16, 1997(2). 5.1 Opinion of Brobeck, Phleger & Harrison, LLP. * 10.1 Finder Agreement between the Registrant and Paramount Capital, Inc. dated as of February 29, 2000. * 10.2 Amendment and Supplement to Finder Agreement dated as of April 6, 2000. * 10.3 Financial Advisory Agreement between the Registrant and Paramount Capital, Inc. dated as of October 25, 1999. * 10.4 Purchase Agreement among Dominion Resources, Inc., The Aries Fund, a Cayman Island Trust, The Aries Domestic Fund, L.P., and the Registrant dated as of June 13, 1996. 23.1 Consent of PricewaterhouseCoopers LLP, Independent Auditors. 23.2 Consent of Brobeck, Phlegar & Harrison, LLP. Reference is made to Exhibit 5.1. * 24.1 Power of Attorney. *
- -------- * Previously Filed. (1) Incorporated by reference to our Quarterly Report on Form 10-QSB, for the period ended on September 30, 1998. (2) Incorporated by reference to our Quarterly Report on Form 10-QSB, as amended, for the period ended on September 30, 1997. EX-10.4 2 0002.txt PURCHASE AGREEMENT Exhibit 10.4 PURCHASE AGREEMENT AGREEMENT dated as of June 13, 1996 by and among ImmunoTherapeutics, Inc., a Delaware corporation (the "Company"), Dominion Resources, Inc., a Delaware corporation ("Seller") and The Aries Fund, a Series of the Aries Trust, a Cayman Island Trust (the "Trust") and The Aries Domestic Fund, L.P., a Delaware limited partnership (the "Partnership") (herein the Trust and the Fund are collectively referred to as the "Purchasers"). WITNESSETH: WHEREAS, the Seller desires to sell to Purchasers, at a price of $.10 per share, 4,000,000 shares of the Company's Common Stock (the "Shares"); and WHEREAS, the Purchasers desire to purchase the Shares upon and subject to the terms and conditions hereinafter set forth; and WHEREAS, such shares were purchased by the Seller from the Company pursuant to a Purchase Agreement dated March 1, 1996 (the "March Purchase Agreement") (a copy of which is attached hereto as Exhibit "All); and WHEREAS, the Company has been joined with and made a party to this Agreement for the purpose of confirming the transfer of the Shares and the assignment by the Seller to the Purchasers of certain rights (the "Rights")under the March Purchase Agreement; NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein, the parties hereto hereby agree as follows: 1. Purchase and Sale,-of the shares. Subject to the terms and conditions set forth herein, the Seller hereby agrees to sell and transfer to Purchasers, and Purchasers hereby agree to purchase from the Seller, in the amounts set forth on Exhibit "B" hereto, the Shares at the Closing (as such term is defined in Section 2.1 hereof). The purchase price for the Shares sold pursuant to this Agreement shall be $.10 per Share, together with the assignment of the Rights. 2. Closing; Termination. 2.1 Closing. The closing of the purchase and sale of the Shares will take place at the offices of Purchasers at 375 Park Avenue, Suite 1501, New York, New York. Such closing (the "Closing") will take place at 11:00 A.M., local time, on June 13, 1996. Such Closing may take place at such other time and place or on such later date as may be mutually agreeable to the parties hereto. At such Closing, the Seller will deliver to Purchasers certificates for the Shares purchased as not forth in Section I hereof, against payment of the purchase price therefor by Purchasers, by wire transfer or certified check payable to the Seller. The Shares shall be registered in Purchasers, name or the name of the nominee of Purchasers in such denominations as Purchasers shall request according to their instructions delivered to the Seller not less than two (2) days prior to the Closing. 2.2 Termination. In the event that the transactions contemplated by this Agreement to take place at or prior to the Closing have not been consummated by June 29, 1996, this Agreement shall, at the option of Purchasers, terminate and be of no further force and effect, and any payment made by Purchasers to Seller shall be refunded to Purchasers by Seller, and there shall be no further liability on the part of any party hereto except for breaches of this Agreement prior to the time of such termination. 3. Conditions to the Obligations of Purchasers at the Closing. The obligation of Purchasers to purchase and pay for the Shares to be purchased by Purchasers at the Closing is subject to the satisfaction on or prior to June 29, 1996 of the following conditions, satisfaction of which conditions shall not be deemed waived unless waived in writing by Purchasers: 3.1 Opinion of Counsel to the Company. Purchasers shall have received from William S. Clarke, P.A., counsel for the Company, its opinion dated the date of the Closing substantially in the form of Exhibit B hereto. 3.2 Representations And Warranties. All of the representations and warranties of the Company contained in the March Purchase Agreement shall continue to be true and correct on the Closing as of the date made. 3.3 Performance of Covenants. All of the covenants and agreements of the Seller contained in this Agreement and required to be performed on or prior to the date of the Closing shall have been performed in a manner reasonably satisfactory in all respects to Purchasers. 3.4 Legal Action. No action or proceeding before any court or governmental body shall be pending or threatened wherein an unfavorable judgment, decree or order would prevent the carrying out of this Agreement or any of the transactions contemplated hereby, declare unlawful the transactions contemplated by this Agreement or cause such transactions to be rescinded. 3.5 Consent. The Seller and the Company shall have obtained in writing all consents required to enable each of them to observe and comply with all of their respective obligations under this Agreement and to consummate the transactions contemplated hereby. 3.6 Board and committee Representation. The person designated by Purchasers shall have been elected as a member of the Company's Board of Directors and William McManus shall have resigned as a Director of the Company. 3.7 Closing Documents. (a) The Company shall have delivered to Purchasers a certificate executed by the President of the Company dated the date of the Closing stating that the conditions set forth in Sections 3.2 through 3.6 hereof as applicable to the Company have been satisfied, and (b) the Seller shall have delivered to Purchasers a certificate executed by the President of the Seller dated the date of the Closing stating that the conditions set forth in Sections 3.2 through 3.6 hereof am applicable to the Sellers have been satisfied, and (c) Purchasers shall have received such certificates, assignments of the Rights, other documents and instruments as Purchasers may reasonably request in connection with, and to effect, the transactions contemplated by this Agreement. 3.8 Proceedings. All corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby to be consummated at the Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to Purchasers. 3.9 Redemption of Rights. The Board of Directors shall redeem prior to the Closing all of the Company' a outstanding rights pursuant to Section 24(a)(i) of the Rights Agreement dated as of September 23, 1994 between the Company and American Stock Transfer and Trust Company. 4. Conditions to the Obligations of the Seller, at the Closing. The obligation of the Seller to sell the Shares to Purchasers as set forth herein at the Closing is subject to the satisfaction on or prior to the date of the Closing of the following conditions, any of which may be waived by the Company: 4.1 Representations and Warranties. The representations and warranties of Purchasers contained in this Agreement shall be true and correct at and as of the date of the Closing with the same effect as if made on the date of the Closing, except to the extent of changes caused by the transactions contemplated hereby. 4.2 Legal Action. No action or proceeding before any court or governmental body shall be pending or threatened wherein an unfavorable judgment, decree or order would prevent the carrying out of this Agreement or any of the transactions contemplated hereby, declare unlawful the transactions contemplated by this Agreement or cause such transactions to be rescinded. 4.3 Proceedings. All proceedings taken or to be taken by Purchasers in connection with the transactions contemplated hereby shall be reasonably satisfactory in form and substance to the Company. 5. Conditions to the Obligations of the Company at the Closing. The obligation of the Company to fulfill the conditions to the Closing at the Closing is subject to the satisfaction on or prior to the date of the Closing of the following conditions, any of which may be waived by the Company: 5.1 Representations and Warranties. The representations and warranties of Purchasers contained in this Agreement shall be true and correct at and as of the date of the Closing with the same effect au if made on the date of the Closing, except to the extent of changes caused by the transactions contemplated hereby. 5.2 Performance of Covenants. All of the covenants and agreements of the Purchasers and the Seller contained in this Agreement and required to be performed an or prior to the date of the Closing shall have been performed in a manner reasonably satisfactory in all respects to the Company. 5.3 Board and Committee Representation. The person designated by Purchasers shall have been elected as a member of the Company's Board of Directors and William McManus shall have resigned as a Director of the Company. 5.4 Legal Action. No action or proceeding before any court or governmental body shall be pending or threatened wherein an unfavorable judgment, decree or order would prevent the carrying out of this Agreement or any of the transactions contemplated hereby, declare unlawful the transactions contemplated by this Agreement or cause such transactions to be rescinded. 5.5 Proceedings. All proceedings taken or to be taken by Purchasers in connection with the transactions contemplated hereby to be consummated at the Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to the Company. 6. Representation and Warranties of the Seller. The Seller hereby represents and warrants to Purchasers au follows: 6.1 Organization of Seller. The Seller is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation. 6.2 Authorization. The Seller has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of the Seller, enforceable in accordance with its terms and conditions. The Seller need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order to consummate the transactions contemplated by this Agreement. 6.3 Non-Contravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (a) violate any provision of Seller's charter or by-laws, or (b) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which the Seller is a party or by which it is bound or to which any of its assets is subject. 6.4 Brokers' Fees. The Seller has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this agreement for which the Purchasers could become liable or obligated. 6.5 Shares. The Seller holds of record and owns -beneficially the Shares, free and clear of any restrictions on transfer (other than any restrictions under the Securities Act and state securities laws), taxes, security interests, options, warrants, purchase rights, contracts, commitments, equities, claims, and demands. The Seller is not a party to any option, warrant, purchase right, or other contract or commitment that could require the Seller to sell, transfer, or otherwise dispose of any capital stock of the Company (other than this Agreement) . The Seller is not a party to any voting trust, proxy, or other agreement or understanding with respect to the voting of any capital stock of the Company. All of the Shares are validly issued, fully paid and non- assessable. 7. Representations and Warranties of the Company. The Company hereby represents and warrants to the Purchasers as follows: 7.1 Organization of the Company. The Company is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation. 7.2 Authorization. The Company has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of the company, enforceable in accordance with its terms and conditions. The Company need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order to consummate the transactions contemplated by this Agreement. 7.3 Non-Contravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (a) violate any provision of the Company's charter to by-laws, or (b) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which the Company is a party or by which it is bound or to which any of its assets is subject. 7.4 March Purchase Agreement. All of the representations and warranties of the company contained in Section 6 of the March Purchase Agreement are true and correct on the date of this Agreement. 7.5 Assignment of Rights. The Rights assigned and transferred by Seller to the Purchasers pursuant to this Agreement will be, upon consummation with the Closing, enforceable against the Company by the Purchasers as assignee of Seller after the date of the Closing in accordance with the terms thereof. 8. Representations and Warranties of the Purchasers. The Purchasers jointly and severally represent and warrant to Seller and the Company as follows: 8.1 Organization of the Purchasers. Each of the Purchasers are entities duly organized or created, validly existing, and in good standing under the laws of the jurisdiction of its incorporation. 8.2 Authorization. Each of the Purchasers has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of each of the Purchasers, enforceable in accordance with its terms and conditions. Each of the Purchasers need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order to consummate the transactions contemplated by this Agreement. 8.3 Non-Contravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (a) violate any provision of either of Purchasers' organizational documents (which includes all documents pursuant to which Purchasers were organized or created), or (b) conflict with, result in a beach of, constitute a default under, result in the acceleration of, crate in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which either of Purchasers is a party or by which either is bound or to which any of its assets is subject. 8.4 Brokers' Fees. Neither of the Purchasers has any liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which Seller could become liable or obligated. 8.5 Investment. Purchasers are not acquiring the Shares with a view to or for sale in connection with any distribution thereof within the meaning of the Securities Act of 1933. Each of Purchasers is acquiring the Shares to be purchased by it for its own account, beneficially and not as a nominee for or for the account of any other person. 9. Covenants of the Seller. The Seller covenants and agrees with Purchasers and the Company as follows: 9.1 Assignment of Rights. Concurrently with and subject to consummation of the Closing, the Seller has assigned to the Purchasers the following Rights under the March Purchase Agreement: (i) all rights of Dominion to the performance of those obligations of the Company set forth in Section 8 of the March Purchase Agreement, (ii) all rights of Dominion, if any, to enforce any claims of Dominion against the Company for breach of any representation or warranty against the Company set forth in Section 6 of the March Purchase Agreement, and (iii) the rights, as a holder of Securities under Section 9 of the March Purchase Agreement, to registration of the shares under the Securities Act of 1933, as amended. 10. Covenants of the Company. The Company covenants and agrees with the Seller and the Purchasers as follows: 10.1 Consent to Assignment of the Rights. The Company herewith consents to the assignment of the Rights and agrees that such Rights shall be enforceable by the Purchasers as set forth in Section 9.1 hereof. 11. Miscellaneous. 11.1 Survival of Representations, warranties and Covenants. All representations, warranties, covenants and agreements contained in this Agreement, or in any document, exhibit, schedule or certificate by any party delivered in connection herewith shall survive the execution and delivery of this Agreement and the date of each Closing and the consummation of the transactions contemplated hereby, regardless of any investigation made by any party or on its behalf, provided that, such representations and warranties shall survive until December 31, 1996. 11.2 Expenses. The Seller agrees to pay, and save Purchasers harmless against liability for the payment of (a) fees and expenses (including, without limitation, attorneys' fees) incurred with respect to any amendments or waivers (whether or not the same shall become effective) under or with respect to this Agreement and the transactions contemplated hereby, (b) stamp and other taxes which may be payable in respect of the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby including the issuance, delivery and acquisition of the Shares, and (c) fees and expenses (including, without limitation, reasonable attorneys' fees) incurred in respect of the enforcement of the rights granted under this Agreement and the transactions contemplated hereby. 11.3 Amendments and Waivers. This Agreement and all exhibits and schedules hereto set forth the entire agreement and understanding among the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them. This Agreement may be amended, the Company may take any action herein prohibited or omit to take any action herein required to be performed by it, and any breach of any covenant, agreement, warranty or representation may be waived, only if the Company has obtained the written consent or waiver of (a) Purchasers, if the amendment, action, omission or waiver is one which affects their rights or obligations under this Agreement and (b) the holders of 51% of the Shares then outstanding if the amendment, action, omission or waiver is one which affects their rights or obligations under this Agreement. No course of dealing between or among any persons having any interest in this Agreement will be deemed effective to modify, amend or discharge any part of this Agreement or any rights or obligations of any person under or by reason of this Agreement. 11.4 Successors and Assigns. This Agreement may not be assigned by the Company except with the prior written consent of the holders of 51% of the Shares then outstanding. This Agreement shall be binding upon and inure to the benefit of each of the Company and Seller and their respective permitted successors and assigns and Purchasers and their successors and assigns. The provisions hereof which are for Purchasers, benefit as purchasers or holders of the Shares, are also for the benefit of, and enforceable by, any subsequent holder of such Shares. 11.5 Notices. All notices, demands and other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given personally or when mailed by certified or registered mail, return receipt requested and postage prepaid, and addressed to the addresses of the respective parties set forth below or to such changed addresses as such parties may have fixed by notice; provided, however, that any notice of change of address shall be effective only upon receipt: To the Purchasers: Aries Financial Services, inc. 375 Park Avenue - Suite 1501 New York, New York 10152 With a Copy to: David Walner, Esquire 375 Park Avenue - Suite 1501 New York, New York 10152 To the Company: ImmunoTherapeutics, Inc. 3233 Fifteenth Street South Fango, North Dakota 58104 Attention: Dr. Gerald Vesica With a Copy to: William S. Clarke, P.A. 5 Independence way Princeton, New Jersey 08540 To the Seller: Dominion Resources, inc. The Abbey 355 Madison Avenue Morristown, New Jersey 07960 With a Copy to: William E. McManus, III, Esquire Spencer's Corner 90 Main Street - Suite 211 Centerbrook, Connecticut 06409-1058 11.6 Governing Law. The validity, performance, construction and effect of this Agreement shall be governed by the internal laws of the State of New Jersey without giving effect to principles of conflicts of law. 11.7 Counterparts. This Agreement may be executed in any number of counterparts and, notwithstanding that any of the parties did not execute the same counterpart, each of such counterparts shall, for all purposes, be deemed an original, and all such counterparts shall constitute one and the same instrument binding on all of the parties thereto. 11.8 Headings. The headings of the Sections hereof are inserted as a matter of convenience and for reference only and in no way define, limit or describe the scope of this Agreement or the meaning of any provision hereof. 11.9 Severability. In the event that any provision of this Agreement or the application of any provision hereof is declared to be illegal, invalid or otherwise unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall not be affected except to the extent necessary to delete such illegal, invalid or unenforceable provision unless the provision held invalid shall substantially impair the benefit of the remaining portion of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written. ImmunoTherapeutics, Inc. By: __________________________________ Name: Title: Dominion Resources, Inc. By: __________________________________ Name: Title: The Aries Fund, a Series of the Aries Trust By: __________________________________ Name: Title: The Aries Domestic Fund, L.P. By: __________________________________ Name: Title: EXHIBIT "B" The ARIES Fund, 3,000,000 A Series of the ARIES TRUST The Aries Domestic Fund, L.P. 1,000,000 EX-23.1 3 0003.txt CONSENT OF PRICEWATERHOUSECOOPERS Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS ---------------------------------- We hereby consent to the incorporation by reference in this Registration Statement on Form S-3 of our report dated February 4, 2000 relating to the financial statements, which appears in Endorex Corporation's Annual Report on Form 10-KSB for the year ended December 31, 1999, as amended by Form 10-KSB/A. We also consent to the reference to us under the heading "Experts" in such Registration Statement. PricewaterhouseCoopers LLP Chicago, Illinois December 29, 2000 -----END PRIVACY-ENHANCED MESSAGE-----