UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
INCARA PHARMACEUTICALS CORPORATION
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(Name of Issuer)
Common Stock, par value $0.001 per share
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(Title of Class of Securities)
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45325S-10-1
(CUSIP Number)
with a copy to:
Mitchell D. Kaye, Manager Steven E. Siesser, Esq.
Xmark Asset Management, LLC Lowenstein Sandler PC
152 West 57th Street, 21st Floor 65 Livingston Avenue
New York, New York 10019 Roseland, New Jersey 07068
(212) 247-8200 (973) 597-2500
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 19, 2004
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule l3G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box. |_|
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7 for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
CUSIP No. 45325S-10-1
________________________________________________________________________________
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Xmark Asset Management, LLC
13-3954392
________________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
Not applicable (a) [_]
Not applicable (b) [_]
________________________________________________________________________________
3 SEC USE ONLY
________________________________________________________________________________
4 SOURCE OF FUNDS*
WC
________________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [_]
Not applicable
________________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York, United States
________________________________________________________________________________
7 SOLE VOTING POWER
NUMBER OF *
SHARES _________________________________________________________________
8 SHARED VOTING POWER
BENEFICIALLY
*
OWNED BY
_________________________________________________________________
EACH 9 SOLE DISPOSITIVE POWER
REPORTING *
PERSON _________________________________________________________________
10 SHARED DISPOSITIVE POWER
WITH
*
________________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
91,070,394*
________________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
Not applicable [_]
________________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
65.58%*
________________________________________________________________________________
14 TYPE OF REPORTING PERSON*
IA
* The reporting person is Xmark Asset Management, LLC ("XAM"), a New York
limited liability company, which is the sole manager of Goodnow Capital, L.L.C.,
a Delaware limited liability company ("Goodnow"). Goodnow is the holder of
81,070,394 shares (the "Goodnow Shares") of common stock, par value $0.001 per
share (the "Common Stock"), of Incara Pharmaceuticals Corporation, a Delaware
corporation (the "Company"). Pursuant to the Operating Agreement of Goodnow,
management and control of Goodnow is vested exclusively in the sole manager and,
as a result, XAM possesses the sole power to vote and direct the disposition of
all securities of the Company owned by Goodnow.
In addition, pursuant to the terms of a certain Voting Trust Agreement, dated as
of April 19, 2004, by and among Great Point Partners on behalf of Biomedical
Value Fund, L.P. and Biomedical Offshore Value Fund, Ltd. (collectively, the
"Biomedical Funds"), the Company and XAM, as voting trustee: (i) the Biomedical
Funds transferred into a voting trust (the "Voting Trust") the 10,000,000 shares
(the "Voting Trust Shares") of Common Stock purchased by the Biomedical Funds
from the Company pursuant to that certain Purchase Agreement, dated as of April
19, 2004 (the "Purchase Agreement"), by and among the Company and the investors
named therein, in exchange for a voting trust certificate; (ii) XAM, as the
voting trustee of the Voting Trust, has the exclusive right and power to vote
the Voting Trust Shares and to give written consents with respect to any lawful
corporate action of the Company, and (iii) except as set forth in clause (ii)
above, all powers and privileges affecting the Voting Trust Shares attach to the
voting trust certificates issued in exchange therefore. While XAM may be deemed
to be the beneficial owner of the Voting Trust Shares due to its power to vote
and give written consents with respect to the Voting Trust Shares, XAM does not
own and expressly disclaims any pecuniary interest in and to the Voting Trust
Shares.
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As a result of the fact that XAM possesses the sole power to vote and direct the
disposition of the Goodnow Shares and the sole power to vote the Voting Trust
Shares, for purposes of Reg. Section 240.13d-3, XAM may be deemed to
beneficially own 91,070,394 shares of Common Stock, or 65.58% of the shares
deemed issued and outstanding as of April 19, 2004.
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Item 1. Security and Issuer.
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This statement relates to the common stock, par value $0.001 per share
(the "Common Stock"), of Incara Pharmaceuticals Corporation, a Delaware
corporation (the "Company").
Item 3. Source and Amount of Funds.
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The funds used by Goodnow Capital, L.L.C., a Delaware limited liability
company (the "Goodnow"), to advance the remaining $2,500,000 of the Secured
Convertible Debenture, dated January 14, 2004 (the "Debenture"), issued by the
Company to Goodnow in the aggregate principal amount of $5,000,000 were drawn
from working capital.
Item 4. Purpose of Transaction.
----------------------
After giving effect to the securities issued pursuant to the Purchase
Agreement (as defined in Item 5 below), Goodnow will continue to own a majority
of the outstanding Common Stock. As the owner of a majority of the outstanding
Common Stock, Goodnow can control the outcome of matters that may be submitted
to the vote of the Company's stockholders at annual or special meetings of
stockholders. Goodnow also can initiate, through the calling of a special
meeting of stockholders or through action by written consent in lieu of a
stockholders' meeting, corporate actions that are subject to the vote of the
Company's stockholders. Such corporate actions may include, and are not limited
to, the approval of each of the types of events described in clauses (a) through
(i) under Item 4 of Schedule 13D.
Under the Company's Amended Bylaws and the Delaware General Corporation
Law, the Company's stockholders have the right to replace, with or without
cause, management and members of the Board of Directors of the Company, without
prior notice, and through action by written consent in lieu of a stockholders'
meeting. Any such actions may be taken by written consent of a majority of the
stockholders entitled to vote on such matter, and Goodnow's ownership of Common
Stock entitles Goodnow to take such actions without the vote or consent of any
other stockholders. The replacement of members of the Board of Directors and
management may be subject to the terms and conditions set forth in agreements
between the Company and such members and management, including without
limitation, employment agreements, severance agreements, option plans and option
grant agreements.
Goodnow intends to utilize its voting rights as a majority stockholder
in order to continue the Company's shift in focus from research to clinical
development, in large part by identifying and soliciting individuals with
neurosciences experience to serve as members of the Company's Board of Directors
and/or to serve the Company in a management capacity.
Goodnow has considered taking certain of the foregoing actions,
including without limitation, the replacement of members of the Board of
Directors and members of the Company's management. Goodnow may, from time to
time, exercise its right as majority stockholder to effect any such changes.
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Item 5. Interest in Securities of the Issuer.
------------------------------------
Based upon information provided by the Company, after giving effect to
the shares of Common Stock issued pursuant to the Purchase Agreement and upon
conversion of the entire Debenture, there were 138,873,867 shares of Common
Stock issued and outstanding on April 19, 2004.
Pursuant to the terms of a Purchase Agreement, dated as of April 19,
2004 (the "Purchase Agreement"), by and among the Company and the investors
named therein (the "Investors"), the Company raised approximately $10,260,000
through the issuance and sale to the Investors of 41,040,000 shares of Common
Stock and warrants to purchase 16,416,000 shares of Common Stock.
In connection with the transactions contemplated by the Purchase
Agreement, XAM entered into a certain Voting Trust Agreement, dated as of April
19, 2004 (the "Voting Trust Agreement"), with Great Point Partners on behalf of
Biomedical Value Fund, L.P. and Biomedical Offshore Value Fund, Ltd.
(collectively, the "Biomedical Funds") and the Company. Pursuant to the terms of
the Voting Trust Agreement: (i) the Biomedical Funds transferred into a voting
trust (the "Voting Trust") the 10,000,000 shares (the "Voting Trust Shares") of
Common Stock purchased by the Biomedical Funds from the Company pursuant to the
Purchase Agreement in exchange for a voting trust certificate; (ii) XAM, as the
voting trustee of the Voting Trust, has the exclusive right and power to vote
the Voting Trust Shares and to give written consents with respect to any lawful
corporate action of the Company; and (iii) except as set forth in clause (ii)
above, all powers and privileges affecting the Voting Trust Shares attach to the
voting trust certificates issued in exchange therefor. During the term of the
Voting Trust Agreement, any shares of Common Stock issued upon exercise of those
warrants issued to the Biomedical Funds pursuant to the Purchase Agreement shall
become subject to the Voting Trust and result in an increase in the number of
Voting Shares. XAM, as voting trustee, has no right, title or interest in or to
any dividends or other distributions of cash or other property or securities
(other than any distribution of shares of Common Stock which shall remain
subject to the Voting Trust), if any, with respect to the Voting Trust Shares.
XAM possesses the sole power to vote the Voting Trust Shares and therefore may
be deemed to be the beneficial owner of the Voting Trust Shares, however, XAM
does not own and expressly disclaims any pecuniary interest in or to the Voting
Trust Shares.
Concurrent with the closing of the transactions contemplated by the
Purchase Agreement, Goodnow advanced the remaining $2,500,000 of the Debenture
and converted the entire Debenture (including all accrued but unpaid interest)
into 50,468,750 shares of Common Stock (the "Debenture Conversion Shares").
In addition, upon consummation of the transactions contemplated by the
Purchase Agreement, Goodnow's warrant to purchase 12,500,000 shares of Common
Stock at an exercise price of $.40 per share expired in accordance with its
terms.
XAM possesses the sole power to vote and direct the disposition of all
securities of the Company owned by Goodnow. In addition to the Debenture
Conversion Shares, Goodnow owns, as of the date hereof, an additional 30,601,644
shares (the "Initial Goodnow Shares" and together with the Debenture Conversion
Shares, the "Goodnow Shares") of Common Stock. XAM's interest in the Goodnow
Shares is limited to its pecuniary interest in Goodnow, if any.
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Based upon the fact that XAM possesses the sole power to vote
and direct the disposition of the Goodnow Shares and the sole power to vote the
Voting Trust Shares, for purposes of Reg. Section 240.13d-3, XAM may be deemed
to beneficially own 91,070,394 shares of Common Stock, or 65.58% of the shares
deemed issued and outstanding as of April 19, 2004.
Since the date of filing of the prior amendment to this
Schedule 13D, XAM did not engage in any transactions in Common Stock or
securities convertible into, exercisable for or exchangeable for Common Stock,
by XAM or any person or entity for which XAM possesses voting or investment
control over the securities thereof, other than as specified above.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
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On April 19, 2004, the Company and Goodnow entered into an Agreement
and Amendment No. 1 (the "Agreement and Amendment") to that certain Debenture
and Warrant Purchase Agreement, dated as of September 16, 2003 (the "Debenture
and Warrant Purchase Agreement"), by and among the Company, its former parent
and Goodnow. Pursuant to the Agreement and Amendment: (i) Goodnow consented to
the financing contemplated by the Purchase Agreement; (ii) Goodnow advanced the
balance of the principal amount of the Debenture (i.e. $2,500,000) to the
Company and converted the entire principal balance then outstanding under the
Debenture, together with all accrued but unpaid interest, into 50,468,750 shares
of Common Stock; (iii) the Company was authorized to terminate the security
interests held by Goodnow as security for the Debenture; and (iv) the
affirmative and negative covenants set forth in the Debenture and Warrant
Purchase Agreement, except to the limited extent modified by the Agreement and
Amendment, will remain in place and in effect in accordance with their terms.
As described in more detail in Item 5 above, XAM entered into the
Voting Trust Agreement in connection with the transactions contemplated by the
Purchase Agreement.
The descriptions of the transactions and agreements set forth in this
Schedule 13D are qualified in their entirety by reference to the complete
agreements governing such matters, each of which are incorporated by reference
to this Schedule 13D as exhibits pursuant to Item 7 hereof.
Except as otherwise described herein, no contracts, arrangements,
understandings or similar relationships exist with respect to the securities of
the Company between XAM and any person or entity.
Item 7. Material to be Filed as Exhibits.
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1. Voting Trust Agreement, dated as of April 19, 2004, by and among
Biomedical Value Fund, L.P., Biomedical Offshore Value Fund, Ltd., Xmark Asset
Management, LLC and Incara Pharmaceuticals Corporation to be filed by further
amendment to this Schedule 13D/A.
2. Agreement and Amendment No. 1 to the Debenture and Warrant Purchase
Agreement, dated as of April 19, 2004, by and between Incara Pharmaceuticals
Corporation and Xmark Asset Management, LLC incorporated by reference to Exhibit
10.104 to the Current Report on Form 8-K, dated April 19, 2004, filed by the
Company.
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Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
April 29, 2004
XMARK ASSET MANAGEMENT, LLC
/s/ Mitchell D. Kaye
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Mitchell D. Kaye, Manager
Attention: Intentional misstatements or omissions of fact constitute Federal
criminal violations (See 18 U.S.C. 1001).
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