UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
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)
45324E103
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(CUSIP Number)
Mitchell D. Kaye, Manager with a copy to:
Brown Simpson Asset Management, LLC Steven E. Siesser, Esq.
152 West 57 Street Lowenstein Sandler PC
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)
September 16, 2003
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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 Sections 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 Section 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. 45324E103
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1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons
(entities only):
Brown Simpson Asset Management, LLC
13-3954392
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2. Check the Appropriate Box if a Member of a Group (See Instructions):
(a) Not
(b) Applicable
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3. SEC Use Only
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4. Source of Funds (See Instructions): WC
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d)
or 2(e): Not Applicable
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6. Citizenship or Place of Organization: New York, United States
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Number of 7. Sole Voting Power: *
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Shares Beneficially 8. Shared Voting Power: *
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Owned by
Each Reporting 9. Sole Dispositive Power: *
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Person With 10. Shared Dispositive Power: *
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11. Aggregate Amount Beneficially Owned by Each Reporting Person:
42,264,049*
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions): Not Applicable
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13. Percent of Class Represented by Amount in Row (11): 74.99%*
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14. Type of Reporting Person (See Instructions): IA
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______________________
* Goodnow Capital, L.L.C., a Delaware limited liability company ("Goodnow"), is
the holder of (i) 200 shares (the "Initial Shares") of Common Stock, par value
$0.001 per share (the "Common Stock"), of Incara Pharmaceuticals Corporation, a
Delaware corporation (the "Company"), and (ii) warrants (the "Company Warrant"),
subject to certain exercise restrictions contained therein, to purchase up to an
aggregate of 50,000,000 shares of Common Stock (the "Warrant Shares") at an
exercise price of $.10 per share, which number of Warrant Shares and the
exercise price are subject to adjustment as set forth therein. The Company
Warrant contains a provision which provides that in no event shall the Company
Warrant be exercisable, to the extent that the issuance of Warrant Shares
thereunder, after taking into account the Initial Shares and any other shares of
Common Stock then owned by Goodnow and its affiliates, would result in the
"beneficial ownership" (as defined in Section 13(d) of the Securities Exchange
Act of 1934, as amended, and Regulations 13D-G thereunder) by Goodnow and its
affiliates, of more than 74.99% of the outstanding Common Stock (the "Issuance
Limitation"). The Issuance Limitation may not be waived by Goodnow.
Goodnow is also the holder of a Guaranty, dated as of July 28, 2003 and as
amended on September 16, 2003 (the "Guaranty"), made by the Company in its favor
pursuant to which, among other things, (i) the Company guaranteed the
obligations of Incara, Inc., a wholly-owned subsidiary of the Company, under
that certain Secured Convertible Promissory Note, dated July 28, 2003 (the
"Note"), issued by Incara, Inc. to Goodnow in the aggregate principal amount of
$3,000,000 and (ii) any cash payment made under the Note may be converted, at
Goodnow's election, into shares of Common Stock at a conversion price of $.10
per share. Pursuant to the terms of the Note, the Note may not be prepaid by
Incara, Inc. prior to its December 24, 2003 maturity date and, therefore, no
shares of Common Stock are issuable in accordance with the terms of the Guaranty
within the next 60 days, unless the maturity date is accelerated by Goodnow as a
result of an event of default under the Note and a cash payment is thereafter
made under the Note by or on behalf of Incara, Inc. As a result, for purposes of
determining the beneficial ownership of Brown Simpson Asset Management, LLC, the
reporting person, any shares of Common Stock issuable in accordance with the
terms of the Guaranty have been excluded.
Item 1. Security and Issuer.
-------------------
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"). The Company has principal executive offices located
at 79 T.W. Alexander Drive, 4401 Research Commons, Suite 200, Research Triangle
Park, North Carolina 27709.
Item 2. Identity and Background.
-----------------------
The person filing this statement is Brown Simpson Asset Management,
LLC, a New York limited liability company ("BSAM"). The business address of BSAM
is 152 West 57th Street, 21st Floor, New York, New York 10019.
BSAM is the sole manager of Goodnow Capital, L.L.C., a Delaware
limited liability company ("Goodnow"). Pursuant to the Operating Agreement of
Goodnow, management and control of Goodnow is vested exclusively in the sole
manager and, as a result, BSAM possesses the sole power to vote and direct the
disposition of all securities of the Company owned by Goodnow.
Mitchell D. Kaye, whose business address is c/o Brown Simpson Asset
Management, LLC, 152 West 57th Street, 21st Floor, New York, New York 10019, is
the Manager of BSAM.
BSAM has never been convicted in any criminal proceeding (excluding
traffic violations or similar misdemeanors), nor has it been a party to any
civil proceeding commenced before a judicial or administrative body of competent
jurisdiction as a result of which it was or is now subject to a judgment, decree
or final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any violation
with respect to such laws.
Mr. Kaye has never been convicted in any criminal proceeding
(excluding traffic violations or similar misdemeanors), nor has he been a party
to any civil proceeding commenced before a judicial or administrative body of
competent jurisdiction as a result of which he was or is now subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws. Mr. Kaye is a citizen of the United
States.
Item 3. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
Pursuant to a certain Secured Convertible Promissory Note, dated July
28, 2003 (the "Note"), issued by Incara, Inc., a wholly-owned subsidiary of the
Company, to Goodnow in the aggregate principal amount of $3,000,000, Goodnow has
advanced $1,500,000 to Incara, Inc. as of the date hereof and will advance the
remaining principal balance of the Note in accordance with the terms of a budget
approved by Goodnow (the "$3M Financing"). The Note is convertible, at the
option of Goodnow, into shares of common stock, par value $.001 per share, of
Incara, Inc. at a conversion price of $.10 per share (which conversion price is
subject to adjustment in accordance with the terms of the Note) and
automatically converts into shares of common stock of Incara, Inc. upon
consummation of the contemplated merger (the "Merger") of the Company with and
into Incara, Inc., with Incara, Inc. emerging as the surviving entity. The
obligations of Incara, Inc. under the Note are secured by a perfected,
first-priority security interest in the assets of Incara, Inc. Each of the
Company and Aeolus Pharmaceuticals, Inc., a wholly-owned subsidiary of the
Company ("Aeolus"), have guaranteed the obligations of Incara, Inc. under the
Note and the obligations of the Company and Aeolus pursuant to their respective
guarantees are secured by a perfected, first-priority security interest in their
respective assets. All funds advanced by Goodnow under the Note came directly
from (or, in the case of the remaining principal amount to be advanced by
Goodnow, will come directly from) the assets of Goodnow.
Pursuant to a Debenture and Warrant Agreement, dated as of September
16, 2003, among the Company, Incara, Inc. and Goodnow (the "Debenture and
Warrant Purchase Agreement"), Goodnow agreed to advance, subject to the
satisfaction of certain conditions set forth therein (including, without
limitation, the consummation of the Merger), up to an additional $5,000,000 to
Incara, Inc. in accordance with the terms of a budget approved by Goodnow. In
consideration for Goodnow entering into the Debenture and Warrant Purchase
Agreement and agreeing to provide up to an additional $5,000,000 in financing to
Incara, Inc. on the terms and subject to the conditions contained therein, (i)
the Guaranty, dated as of July 28, 2003 (as amended, the "Guaranty"), made by
the Company in favor of Goodnow was amended to permit Goodnow, at its election,
to convert any cash payments made in satisfaction of the Company's obligations
thereunder into Common Stock at a price of $.10 per share, (ii) Incara, Inc.
issued Goodnow a warrant (the "Incara, Inc. Warrant"), subject to certain
exercise restrictions contained therein, to purchase up to an aggregate of
50,000,000 shares of common stock of Incara, Inc. at an exercise price of $.10
per share, which Incara, Inc. Warrant expires upon consummation of the Merger
and the number of shares issuable thereunder will be reduced, share for share,
by the number of shares of Common Stock actually issued under the Company
Warrant (as defined below) and the number of shares of common stock of Incara,
Inc. actually issued under the Debenture (as defined below), (iii) the Company
issued Goodnow a warrant (the "Company Warrant" and together with the Incara,
Inc. Warrant, the "Warrants"), subject to certain exercise restrictions
contained therein, to purchase up to an aggregate of 50,000,000 shares of Common
Stock (the "Warrant Shares") at an exercise price of $.10 per share (the
"Warrant Exercise Price"), which Company Warrant expires upon consummation of
the Merger and the number of Warrant Shares issuable thereunder will be (A)
increased, to the extent of any cash payment made under the Note, in an amount
determined by dividing the amount of any such cash payment by the then-existing
Warrant Exercise Price (a "Warrant Share Increase Event"), and (B) reduced,
share for share, by the number of shares of common stock of Incara, Inc.
actually issued upon exercise of the Incara, Inc. Warrant or conversion of the
Debenture, and (iv) Incara, Inc. will issue, upon closing of the transactions
contemplated by the Debenture and Warrant Purchase Agreement, a Secured
Convertible Debenture (the "Debenture" and together with the Note, the Debenture
and Warrant Purchase Agreement, the Guaranty and the Warrants, the "Financing
Transaction Documents") in the aggregate principal amount of $5,000,000, which
Debenture is convertible into shares of common stock of Incara, Inc. at a
conversion price of $.10 per share and the number of shares issuable upon
conversion thereof will be reduced, share for share, by the number of shares of
common stock of Incara, Inc. or Company Common Stock that are actually issued
upon exercise of the Warrants following the issuance of the Debenture.
The effect of the Financing Transaction Documents is that Goodnow will
have the right to purchase (whether by (i) conversion of the principal amount of
the Note into shares of common stock of Incara, Inc. or conversion of any
payments made under the Guaranty into shares of Common Stock in accordance with
the terms of the Guaranty, (ii) conversion of the principal amount of the
Debenture into shares of common stock of Incara, Inc., and/or (iii) exercise of
the Warrants) up to a maximum of 80,000,000 shares of common stock of the
Company or Incara, Inc., plus such additional number of shares of common stock
of the Company or Incara, Inc., as the case may be, that may be issuable at a
price of $.10 per share upon conversion of the accrued but unpaid interest owing
to Goodnow under the various Financing Transaction Documents. Pursuant to the
terms of the Note, the Note may not be prepaid prior to its December 24, 2003
maturity date and, therefore, no shares of Common Stock are issuable upon
conversion of payments made under the Guaranty within the next 60 days nor are
any additional shares of Common Stock issuable under the Company Warrant as a
result of a Warrant Share Increase Event within the next 60 days, unless the
maturity date is accelerated by Goodnow as a result of an event of default under
the Note and a cash payment is thereafter made under the Note or the Guaranty.
As a result, for purposes of determining the beneficial ownership of Brown
Simpson Asset Management, LLC, the reporting person, (i) any shares of Common
Stock issuable in accordance with the terms of the Guaranty and (ii) any
additional shares of Common Stock issuable under the Company Warrant as a result
of a Warrant Share Increase Event, have been excluded.
Each of the Guaranty and the Warrants contain, and the Debenture when
issued will contain, provisions which provide that in no event shall the
Guaranty or Debenture be convertible, or the Warrants be exercisable, to the
extent that the issuance of any shares of common stock issuable upon conversion
or exercise thereof, after taking into account the Initial Shares and any other
shares then outstanding, would result in the "beneficial ownership" (as defined
in Section 13(d) of the Securities Exchange Act of 1934, as amended, and
Regulations 13D-G thereunder) by Goodnow and their affiliates of more than
74.99% of the common stock of either the Company or Incara, Inc. (the "Issuance
Limitation"). The Issuance Limitation may not be waived by Goodnow.
All funds to be advanced by Goodnow under the Debenture will come
directly from the assets of Goodnow.
Item 4. Purpose of Transaction.
----------------------
The acquisition of the securities referred to herein is for the
purpose of having the ability to direct the strategic course of the Company. The
person filing this statement has no present intention to direct the day-to-day
management and affairs of the Company. However, through the covenants in the
Financing Transaction Documents, its minority position on the Company's board of
directors and its ability to elect a majority of the board of directors by
virtue of its stock ownership, the filing person has the ability, but not the
present intention, to direct the day-to-day management and affairs of the
Company.
Pursuant to the terms of the Debenture and Warrant Purchase Agreement,
Goodnow has agreed to provide up to an additional $5,000,000 in financing to
Incara, Inc. in consideration for, among other things, the issuance of the
Warrants and the Debenture and the shares of common stock of Incara, Inc. and/or
Company Common Stock issuable upon exercise or conversion thereof. As set forth
in the Debenture and Warrant Purchase Agreement, the Merger is one of the
conditions precedent to Goodnow's obligation to provide the additional
$5,000,000 in financing and, simultaneously with the execution and delivery of
the Debenture and Warrant Purchase Agreement, the Company and Incara, Inc.
entered into an Agreement and Plan of Merger and Reorganization. The Merger is
subject to, among other things, the approval of the Company's stockholders.
Pursuant to the Merger, it is contemplated that:
o each share of Common Stock outstanding immediately prior to the
Merger will be exchanged for the right to receive one share of
Incara, Inc. common stock;
o each share of the Company's Series B Preferred Stock outstanding
immediately prior to the Merger will be exchanged for the right
to receive one share of Series B Preferred Stock of Incara, Inc.,
with the same rights and privileges as the Company's Series B
Preferred Stock; and
o each share of the Company's Series C Preferred Stock outstanding
immediately prior to the Merger will be converted into the right
to receive 154.08320493 shares of common stock of Incara, Inc.
Pursuant to the Debenture and Warrant Purchase Agreement, Goodnow has
the right to designate one director to the board of directors of both the
Company and Incara, Inc. provided Goodnow owns at least 10% and less than 20% of
the outstanding Common Stock, on an as-converted, fully diluted basis. The
number of directors Goodnow may designate increases to two if Goodnow owns more
than 20% of the outstanding Common Stock on an as-converted, fully-diluted
basis. After consummation of the Merger, and including the directors designated
by Goodnow, the board of directors of Incara, Inc., the surviving entity, will
consist of seven (7) directors.
The Debenture and Warrant Purchase Agreement also provides for the
payment of a break-up fee to Goodnow in the amount of Five Hundred Thousand
Dollars ($500,000) in the event that the Company or Incara, Inc., as the case
may be, enters into one of the extraordinary transactions described in the
Debenture and Warrant Purchase Agreement.
Other than as set forth above in this Item 4, BSAM has no present
plans or intentions which relate to or would result in any of the transactions
required to be described in Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
------------------------------------
Based upon information provided by the Company in the Debenture and
Warrant Purchase Agreement, there were 14,095,531 shares of Common Stock issued
and outstanding as of September 16, 2003. As of September 16, 2003, Goodnow owns
200 shares of Common Stock and has rights to acquire 80,000,000 shares of Common
Stock pursuant to the Company Warrant and/or the Guaranty (excluding any
additional shares of Common Stock that may be issued as a result of any interest
due and payable on the Note or the Debenture). Pursuant to the terms of the
Note, the Note may not be prepaid prior to its December 24, 2003 maturity date
and, therefore, no shares of Common Stock are issuable upon conversion of the
Guaranty within the next 60 days nor are any additional shares of Common Stock
issuable under the Company Warrant as a result of a Warrant Share Increase Event
within the next 60 days, unless the maturity date is accelerated by Goodnow as a
result of an event of default under the Note and a cash payment is thereafter
made under the Note or the Guaranty. As a result, for purposes of determining
the beneficial ownership of Brown Simpson Asset Management, LLC, the reporting
person, (i) any shares of Common Stock issuable in accordance with the terms of
the Guaranty and (ii) any additional shares of Common Stock issuable upon under
the Company Warrant as a result of a Warrant Share Increase Event, have been
excluded. As a result of the Issuance Limitation, the Company Warrant is, within
the next 60 days, exercisable for an aggregate of 42,263,849 shares of Common
Stock. BSAM is the sole manager of Goodnow. Pursuant to the Operating Agreement
of Goodnow, management and control of Goodnow is vested exclusively in the sole
manager and, as a result, BSAM possesses the sole power to vote and direct the
disposition of all securities held by Goodnow. Thus, as of September 16, 2003,
for the purposes of Reg. Section 240.13d-3 of the Securities Exchange Act of
1934, as amended, BSAM may be deemed to beneficially own 42,264,049 shares of
Common Stock, or 74.99% of the shares of Common Stock deemed issued and
outstanding as of that date.
The 200 shares of Common Stock currently owned by Goodnow were
acquired directly from the Company at a price of $0.17 per share pursuant to a
Subscription Agreement, dated as of August 28, 2003, by and between Goodnow and
the Company.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to
Securities of the Issuer.
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In connection with the $3M Financing, in addition to the Guaranty
issued to the Company by Goodnow, Goodnow and the Company entered into a
Security Agreement, dated July 28, 2003 (the "Initial Security Agreement"),
pursuant to which, among other things, the Company granted Goodnow a security
interest in all of its assets to secure the Company's obligations under the
Guaranty.
In connection with the financing transactions described herein, (i)
the Company, Incara, Inc. and Goodnow entered into a Registration Rights
Agreement, dated September 16, 2003, requiring the Company and Incara, Inc. to
register for resale the shares of common stock issuable upon conversion and/or
exercise, as the case may be, of the Note, the Guaranty, the Warrants and the
Debenture, by the filing of a registration statement with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as amended, and
performing certain obligations related to such registration, and (ii) the
Company, Goodnow and certain stockholders of the Company entered into a Voting
Agreement pursuant to which, among other things, such stockholders agreed to
grant an irrevocable proxy to Goodnow to vote such stockholder's shares of
Common Stock in favor of the Merger.
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 BSAM and any person or entity.
Item 7. Material to be Filed as Exhibits.
--------------------------------
1. Secured Convertible Promissory Note, dated July 28, 2003, in the
aggregate principal amount of $3,000,000 issued by Incara, Inc. to Goodnow
Capital, L.L.C. as successor-by-merger to Goodnow Capital, Inc., incorporated by
reference to Exhibit 10.97 to the Quarterly Report of Incara Pharmaceuticals
Corporation on Form 10-Q for the fiscal quarter ended June 30, 2003.
2. Security Agreement, dated as of July 28, 2003, between Incara
Pharmaceuticals Corporation and Goodnow Capital, L.L.C. as successor-by-merger
to Goodnow Capital, Inc., incorporated by reference to Exhibit 10.99 to the
Quarterly Report of Incara Pharmaceuticals Corporation on Form 10-Q for the
fiscal quarter ended June 30, 2003.
3. Subscription Agreement, dated as of August 28, 2003, by and
between Incara Pharmaceuticals Corporation and Goodnow Capital, L.L.C.
4. Guaranty, dated as of July 28, 2003 and as amended on September
16, 2003, made by Incara Pharmaceuticals Corporation in favor of Goodnow
Capital, L.L.C. as successor-by-merger to Goodnow Capital, Inc., incorporated by
reference to Exhibit 10.98 to the Quarterly Report of Incara Pharmaceuticals
Corporation on Form 10-Q for the fiscal quarter ended June 30, 2003.
5. Debenture and Warrant Purchase Agreement, dated as of September
16, 2003, among Incara Pharmaceuticals Corporation, Incara, Inc. and Goodnow
Capital, L.L.C., incorporated by reference to Exhibit 10.100 to the Registration
Statement on Form S-4 filed by Incara, Inc. with the Securities and Exchange
Commission on September 19, 2003.
6. Warrant, dated September 16, 2003, issued by Incara
Pharmaceuticals Corporation in favor of Goodnow Capital, L.L.C., incorporated by
reference to Exhibit 4.7 to the Registration Statement on Form S-4 filed by
Incara, Inc. with the Securities and Exchange Commission on September 19, 2003.
7. Warrant, dated September 16, 2003, issued by Incara, Inc. in
favor of Goodnow Capital, L.L.C., incorporated by reference to Exhibit 4.6 to
the Registration Statement on Form S-4 filed by Incara, Inc. with the Securities
and Exchange Commission on September 19, 2003.
8. Form of Secured Convertible Debenture to be issued pursuant to
the Debenture and Warrant Purchase Agreement.
9. Agreement and Plan of Merger and Reorganization, dated as of
September 16, 2003, by and between Incara Pharmaceuticals Corporation and
Incara, Inc., incorporated by reference to Exhibit 2.1 to the Registration
Statement on Form S-4 filed by Incara, Inc. with the Securities and Exchange
Commission on September 19, 2003.
10. Registration Rights Agreement, dated as of September 16, 2003,
among Incara Pharmaceuticals Corporation, Incara, Inc. and Goodnow Capital,
L.L.C., incorporated by reference to Exhibit 10.101 to the Registration
Statement on Form S-4 filed by Incara, Inc. with the Securities and Exchange
Commission on September 19, 2003.
11. Voting Agreement, dated as of September 16, 2003, among Incara
Pharmaceuticals Corporation, Goodnow Capital, L.L.C. and certain stockholders of
Incara Pharmaceuticals Corporation.
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.
September 26, 2003
BROWN SIMPSON ASSET MANAGEMENT, LLC
/s/ Mitchell D. Kaye
------------------------------------
Mitchell D. Kaye, Manager
Attention: Intentional misstatements or omissions of fact constitute Federal
criminal violations (See 18 U.S.C. 1001).
EXHIBIT 3
SUBSCRIPTION AGREEMENT
Subscription Agreement, dated August 28, 2003 (the "Agreement"), by
and between Incara Pharmaceuticals Corporation, a Delaware corporation (the
"Company"), and Goodnow Capital, L.L.C., a Delaware limited liability company
(the "Subscriber").
W I T N E S S E T H
WHEREAS, the Company desires to issue and sell to the Subscriber, and
the Subscriber desires to subscribe for and purchase, two hundred (200) shares
(the "Shares") of the Company's Common Stock, par value $0.001 per share (the
"Common Stock"), for an aggregate purchase price of $34.00 (the "Purchase
Price") or $0.17 per share.
NOW THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, each
of the parties hereto agrees as follows:
Section 1. Purchase and Sale of Common Stock.
Upon the terms and subject to the conditions of this Agreement, the
Company is hereby selling, assigning, transferring, conveying and delivering to
the Subscriber the Shares, and the Subscriber is hereby purchasing the Shares
from the Company in exchange for the Purchase Price.
Section 2. Access to Information.
The Subscriber is fully familiar with the affairs of the Company,
including without limitation, its business, condition and current operations.
The Company has provided to the Subscriber an opportunity to ask questions and
receive answers concerning the business, condition and current operations of the
Company and the terms and conditions of this subscription.
Section 3. Subscriber's Acknowledgments.
The Company has disclosed to the Subscriber and the Subscriber
understands that:
(a) The Shares have not been registered under the Securities
Act of 1933, as amended (the "Act"), or state securities laws and, therefore,
the Shares cannot be resold or transferred unless they are subsequently
registered under the Act and applicable state securities or "Blue Sky" laws or
exemptions from such registration are available.
(b) A legend summarizing the restrictions on transfer of the
Shares will be placed on the Shares.
(c) The Shares have not been registered under the Act in
reliance upon an exemption under the provisions of the Act which depends, in
part, upon the investment intent of the purchaser. In this regard, the
Subscriber understands that it is the position of the Securities and Exchange
Commission (the "SEC") that the statutory basis for such exemption would not be
present if the representation of the purchaser merely meant that its present
intention was to hold such Shares for a short period, such as the capital gains
period of the Internal Revenue Code, for a deferred sale, for a market rise, or
for a sale if the market does not rise (assuming that a market develops) for a
year, or for any other fixed period. The Subscriber realizes that, in the view
of the SEC, a purchase now with an intent to resell would represent a purchase
with an intent inconsistent with this investment representation, and the SEC
might regard such a sale or disposition as a deferred sale to which the
exemption is not available.
(d) No federal or state agency has made any finding or
determination as to the fairness of the investment, nor have they made any
recommendation or endorsement concerning the Shares.
(e) This Agreement is not revocable by the Subscriber and
the Subscriber is executing this Agreement intending to be legally bound
thereby.
(f) For the sale of stock contemplated by this Agreement, the
Subscriber hereby waives the prohibition on sales of stock by the Company
contained in Section 8(d) of the Guaranty dated July 28, 2003 issued by the
Company in favor of the Subscriber.
Section 4. Subscriber's Representations.
The Subscriber hereby represents and warrants to the Company as
follows:
(a) The Subscriber is a validly existing limited liability
company under the laws of the State of Delaware, and has all requisite power and
authority to purchase the Shares pursuant to this Agreement. The person signing
this Agreement on behalf of the Subscriber has been duly authorized to act on
behalf of and to bind the Subscriber.
(b) This Agreement has been duly executed and delivered by the
Subscriber and constitutes a valid and binding obligation of the Subscriber,
enforceable against the Subscriber in accordance with its terms, except as may
be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization or
similar laws affecting creditors' rights generally or by general equitable
principles and except insofar as the enforceability of any provision of such
agreement would be restricted or void by reason of public policy.
(c) The Subscriber is acquiring the Shares for its own account
for investment only and not for or with a view to resale or distribution.
(d) The Subscriber can bear the economic risk of losing its
entire investment in the Shares. The Subscriber is prepared to bear the economic
risk of this investment for an indefinite time. The Subscriber is an "accredited
investor" as that term is defined in Rule 501 of the Act.
Section 5. Representations of the Company.
The Company hereby represents and warrants to the Subscriber as
follows:
(a) The Company is duly incorporated, validly existing and in
good standing in its jurisdiction of incorporation. The Company has full power
and authority to enter into, deliver and perform this Agreement, and it has
taken all action required to authorize the execution and delivery of this
Agreement and to consummate the transactions contemplated hereby, and the person
signing this Agreement on behalf of the Company has been duly authorized to act
on behalf of and to bind the Company.
(b) This Agreement has been duly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company
enforceable against it in accordance with its terms, except as may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization or similar laws
affecting creditors' rights generally or by general equitable principles and
except insofar as the enforceability of any provision of such agreements would
be restricted or void by reason of public policy.
(c) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not (i) violate,
conflict with or result in an event of default under any agreement or contract
to which the Company is a party or by which it is bound, (ii) violate any
applicable law, ordinance, rule or regulation of any governmental body having
jurisdiction over the Company or its business or any order, judgment or decree
applicable to the Company, (iii) require the Company to obtain the consent of
any third party, (iv) result in the creation of any liens, claims, charges or
encumbrances on the Shares, or (v) violate any provision of its certificate of
incorporation or by-laws.
(d) All of the issued shares of capital stock of the Company
have been duly and validly authorized and issued and are fully paid and
non-assessable. The Shares have been duly and validly authorized and, when
issued and delivered and paid for, will be duly and validly issued and fully
paid.
Section 6. Deliveries.
(a) Simultaneously with the execution of this Agreement, the
Subscriber shall deliver to the Company the Purchase Price, payable by wire
transfer to an account of the Company or by a certified or official bank check.
(b) Immediately after the Company's receipt of the executed
signature page from the Subscriber and the Purchase Price for the Shares, the
Company shall instruct its stock transfer agent to deliver to the Subscriber
certificates representing the Shares registered in the name of the Subscriber or
its nominees.
Section 7. Miscellaneous.
(a) This Agreement, and all matters arising directly or
indirectly hereunder, shall be governed by, and construed in accordance with,
the internal laws of the State of New York, without reference to the choice of
law principles thereof.
(b) This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and may be amended only
by a writing executed by the Company and the Subscriber.
(c) This Agreement may be executed in counterparts, each of
which shall be deemed an original instrument, but all of which shall together
constitute one and the same instrument.
[SIGNATURES ON NEXT PAGE]
IN WITNESS WHEREOF, the parties hereto have executed this Subscription
Agreement as of the date first above written.
INCARA PHARMACEUTICALS CORPORATION
By:
--------------------------------------------
Name: Clayton I. Duncan
Title: President and Chief Executive Officer
GOODNOW CAPITAL, L.L.C.
By:
--------------------------------------------
Name: Mitchell D. Kaye
Title: Authorized Person
EXHIBIT 8
SECURED CONVERTIBLE DEBENTURE
$5,000,000* Maturity Date:
December 24, 2004
FOR VALUE RECEIVED, Incara, Inc. (f/k/a Incara Cell Technologies,
Inc.), a Delaware corporation (the "Maker"), hereby promises to pay to the order
of Goodnow Capital, L.L.C., a Delaware limited liability company and the
successor-by-merger to Goodnow Capital, Inc., or its successors, assigns and
legal representatives (the "Holder"), at 152 West 57th Street, 21st Floor, New
York, New York 10019, or at such other location as the Holder may designate from
time to time, the aggregate principal sum of all advances (each, an "Advance"
and, collectively, the "Advances") made by the Holder to the Maker, in lawful
money of the United States of America, together with interest on each such
Advance at a rate of 10% per annum. This Secured Convertible Debenture (this
"Debenture") is the Debenture of the Maker referred to in that certain Debenture
and Warrant Purchase Agreement (the "Purchase Agreement"), dated as of September
16, 2003, by and among the Holder, the Maker and Incara Pharmaceuticals
Corporation, a Delaware corporation and the parent of the Maker (the "Parent").
This Debenture is subject to the terms and conditions of the Purchase Agreement.
Capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Purchase Agreement.
1. Advances. Subject to the terms and conditions contained herein
and in the Purchase Agreement, the Holder shall make Advances to the Maker from
time to time upon 10 Business Days written request of the Maker, subject to an
aggregate limit of Five Million Dollars ($5,000,000)**, and only in accordance
with the terms of the budget attached hereto as Exhibit A (the "Budget") or any
development plan (the "Plan") approved in writing by the Holder. The proceeds of
any Advance shall be used by the Maker only for the specific purposes set forth
in the Budget or the Plan. For purposes of clarity, the reference in the
preceding sentence to the Maker's use of proceeds of any Advance shall be deemed
to include the making of advances to Parent prior to the Merger for its payment
of those payables specified in the Budget. The principal amount of each Advance
made by the Holder and all payments made by the Maker shall be entered by the
Holder on its books and records; which books and records shall be conclusive
evidence of the amounts outstanding hereunder absent manifest error.
_________________
* The face value of this Debenture will be reduced on a dollar for dollar
basis by the aggregate exercise price paid by the Holder upon exercise of
the Warrants (as defined in the Purchase Agreement) prior to the issuance
of this Debenture.
** The aggregate limit of $5,000,000 will be reduced on a dollar for dollar
basis by the aggregate exercise price paid by the Holder upon exercise of
the Warrants (as defined in the Purchase Agreement) prior to the issuance
of this Debenture.
2. Maturity Date. Subject to acceleration as provided herein, the
aggregate principal amount of the Advances and accrued interest thereon shall be
due and payable on December 24, 2004 (the "Maturity Date").
3. Interest on Overdue Amounts. If the Maker fails to pay any amount
hereunder when due, whether on the Maturity Date, upon acceleration or
otherwise, and such failure continues for a period of five (5) Business Days or
more, interest shall thereafter accrue on any overdue amounts at a rate of 15%
per annum until paid in full.
4. Calculation of Interest Interest hereunder shall be calculated on
the basis of a 360-day year for the actual number of days elapsed.
5. Prepayment. The Maker may not prepay this Debenture at any time
without the prior written consent of the Holder. Any permitted prepayments
hereunder shall be applied first, to the payment of any expenses then owed to
the Holder, second, to accrued interest on this Debenture and third, to the
payment of the principal outstanding under this Debenture. The Maker shall not
have the right to set off or otherwise deduct from amounts payable by it
hereunder any amounts whether liquidated or unliquidated, which the Holder or
any of its Affiliates may owe to the Maker, which right is hereby expressly
waived to the maximum extent permitted by applicable law.
6. Conversion.
(a) At any time on or prior to the Maturity Date, the Holder
shall have the right to convert all or any portion of the principal of and
accrued interest on this Debenture into a number (rounded down in the case of
any fractional shares) of fully paid and non-assessable shares of common stock,
par value $.001 per share, of the Maker (the "Common Stock") equal to the amount
being converted divided by $0.10 (the "Conversion Price"), which Conversion
Price assumes that the Parent Common Stock will be converted into Common Stock
on a one-for-one basis in the Merger. The Conversion Price shall be
appropriately adjusted for stock splits, reverse stock splits,
reclassifications, recapitalizations, or other similar occurrences affecting the
number of shares of Common Stock outstanding or the number of shares of Parent
Common Stock outstanding prior to the Merger. The number of shares of Common
Stock issuable upon conversion of this Debenture shall be reduced, share for
share, by the number of (i) shares of Parent Common Stock that are actually
issued following the issuance of this Debenture upon exercise of the Parent
Warrant and (ii) shares of Common Stock that are actually issued following the
issuance of this Debenture upon exercise of the Company Warrant.
(b) To effect the conversion of this Debenture, the Holder shall
surrender this Debenture to the Maker together with a written notice of
conversion specifying the date on which such conversion is to be effected, which
date may not be less than two Business Days after the date of such notice,
unless the Maker consents to an earlier date (such date, the "Conversion Date")
and a representation letter to the Maker containing customary private placement
representations and warranties so that the issuance of the shares of Common
Stock upon conversion of this Debenture shall be exempt from registration under
the 1933 Act. Promptly following the Conversion Date (but in no event more than
three (3) Business Days thereafter), the Maker shall issue to the Holder the
shares of Common Stock into which this Debenture has been converted, registered
in the name of the Holder or its nominee and shall deliver the certificate(s)
representing such shares to the Holder at the address specified by the Holder,
and, unless the Holder has converted all of the principal and accrued interest
on this Debenture into Common Stock, a new Debenture representing the principal
and accrued interest which the Holder did not convert into Common Stock (which
new Debenture shall be in the form of this Debenture and shall continue to be
convertible into shares of Common Stock at the Holder's election). From and
after the Conversion Date, the Holder shall be treated for all purposes as the
owner of the shares of Common Stock into which this Debenture has been converted
and the certificate(s) for such shares shall be issued as of the Conversion
Date.
(c) Notwithstanding anything herein to the contrary, in no event
shall the Holder be entitled to convert any portion of this Debenture in excess
of that portion of this Debenture upon conversion of which the sum of (1) the
number of shares of Common Stock beneficially owned by the Holder and its
Affiliates (other than shares of Common Stock which may be deemed beneficially
owned through the ownership of the unconverted portion of this Debenture or the
unexercised or unconverted portion of any other security of the Holder subject
to a limitation on exercise or conversion analogous to the limitations contained
herein) and (2) the number of shares of Common Stock issuable upon the
conversion of the portion of this Debenture with respect to which the
determination of this Section 6(c) is being made, would result in beneficial
ownership by the Holder and its Affiliates of more than 74.99% of the then
outstanding shares of Common Stock. For purposes of the immediately preceding
sentence, "beneficial ownership" shall be determined in accordance with Section
13(d) of the 1934 Act and Regulation 13D-G thereunder, except as otherwise
provided in clause (1) of such sentence. As used in this Section 6(c), the term
"Affiliate" means any person or entity that, directly or indirectly through one
or more intermediaries, controls or is controlled by or is under common control
with a person or entity, as such terms are used in and construed under Rule 144
under the 1933 Act.
(d) The Maker shall, at all times prior to full conversion or
satisfaction of this Debenture, reserve a sufficient number of duly authorized
shares of Common Stock to satisfy the conversion rights granted to the Holder
hereunder without regard to the limitations specified in Section 6(c). When the
shares of Common Stock issuable upon the conversion of this Debenture are
authorized for quotation on Nasdaq or listing on the New York Stock Exchange (or
authorized for listing or quotation on any other national securities exchange or
the Over-the-Counter Bulletin Board or the "pink sheets", as the case may be),
the Maker shall keep the shares of Common Stock issuable upon the conversion of
this Debenture authorized for quotation on Nasdaq or listing on the New York
Stock Exchange (or authorized for listing or quotation on any other national
securities exchange or the Over-the-Counter Bulletin Board or the "pink sheets",
as the case may be).
(e) Except as provided in Section 6(f) below, if and whenever the
Maker shall issue or sell, or is, in accordance with any of Sections 6(e)(i)
through (vi) hereof, deemed to have issued or sold, any shares of Common Stock
for a consideration per share less than the Conversion Price in effect
immediately prior to the time of such issue or sale, then and in each such case
(a "Trigger Issuance") the then-existing Conversion Price shall be reduced, as
of the close of business on the effective date of the Trigger Issuance, to a
Conversion Price determined as follows:
Adjusted Conversion Price = (A x B) + D
-----------
A+C
where
A = the number of shares of Common Stock outstanding
(including any Additional Shares of Common Stock (as defined
below) immediately preceding such Trigger Issuance);
B = the Conversion Price in effect immediately preceding
such Trigger Issuance;
C = the number of Additional Shares of Common Stock (as
adjusted for stock splits, stock combinations, recapitalizations,
and dividends and the like) outstanding or deemed outstanding
hereunder as a result of such Trigger Issuance; and
D = the aggregate consideration, if any, received or
deemed to be received by the Maker upon such Trigger Issuance.
For purposes of this Section 6(e), "Additional Shares of Common Stock"
shall mean all shares of Common Stock issued by the Maker or deemed to be issued
pursuant to the provisions of this Section 6(e), except for those issuances
covered by Section 6(f) below.
For purposes of this Section 6(e), the following Sections 6(e)(i) to
6(e)(vi) shall also be applicable (subject, in each such case, to the provisions
of Section 6(f) below):
(i) Issuance of Rights or Options. In case at any time the Maker
shall in any manner grant (directly and not by assumption in the
Merger) any warrants or other rights to subscribe for or to purchase,
or any options for the purchase of, Common Stock or any stock or
security convertible into or exchangeable for Common Stock (such
warrants, rights or options being called "Options" and such
convertible or exchangeable stock or securities being called
"Convertible Securities"), whether or not such Options or the right to
convert or exchange any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is
issuable upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities (determined by dividing (A)
the sum (which sum shall constitute the applicable consideration) of
(x) the total amount, if any, received or receivable by the Maker as
consideration for the granting of such Options, plus (y) the aggregate
amount of additional consideration payable to the Maker upon the
exercise of all such Options, plus (z) in the case of such Options
which relate to Convertible Securities, the aggregate amount of
additional consideration, if any, payable upon the issue or sale of
such Convertible Securities and upon the conversion or exchange
thereof, by (B) the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon the conversion or
exchange of all such Convertible Securities issuable upon the exercise
of such Options) shall be less than the Conversion Price in effect
immediately prior to the time of the granting of such Options, then
the total number of shares of Common Stock issuable upon the exercise
of such Options or upon conversion or exchange of the total amount of
such Convertible Securities issuable upon the exercise of such Options
shall be deemed to have been issued for such price per share as of the
date of granting of such Options or the issuance of such Convertible
Securities and thereafter shall be deemed to be outstanding for
purposes of adjusting the Conversion Price. Except as otherwise
provided in Section 6(e)(iii), no adjustment of the Conversion Price
shall be made upon the actual issue of such Common Stock or of such
Convertible Securities upon exercise of such Options or upon the
actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities.
(ii) Issuance of Convertible Securities. In case the Maker shall
in any manner issue or sell (directly and not by assumption in the
Merger) any Convertible Securities, whether or not the rights to
exchange or convert any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is
issuable upon such conversion or exchange (determined by dividing (A)
the sum (which sum shall constitute the applicable consideration) of
(x) the total amount received or receivable by the Maker as
consideration for the issue or sale of such Convertible Securities,
plus (y) the aggregate amount of additional consideration, if any,
payable to the Maker upon the conversion or exchange thereof, by (B)
the total number of shares of Common Stock issuable upon the
conversion or exchange of all such Convertible Securities) shall be
less than the Conversion Price in effect immediately prior to the time
of such issue or sale, then the total maximum number of shares of
Common Stock issuable upon conversion or exchange of all such
Convertible Securities shall be deemed to have been issued for such
price per share as of the date of the issue or sale of such
Convertible Securities and thereafter shall be deemed to be
outstanding for purposes of adjusting the Conversion Price, provided
that except as otherwise provided in Section 6(e)(iii), no adjustment
of the Conversion Price shall be made upon the actual issuance of such
Common Stock upon conversion or exchange of such Convertible
Securities and no further adjustment of the Conversion Price shall be
made by reason of the issue or sale of Convertible Securities upon
exercise of any Options to purchase any such Convertible Securities
for which adjustments of the Conversion Price have been made pursuant
to the other provisions of Section 6(e).
(iii) Change in Option Price or Conversion Rate. Upon the
happening of any of the following events, namely, if (A) the purchase
price provided for in any Option referred to in Section 6(e)(i)
hereof, (B) the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities referred to in
Sections 6(e)(i) or 6(e)(ii), or (C) the rate at which Convertible
Securities referred to in Sections 6(e)(i) or 6(e)(ii) are convertible
into or exchangeable for Common Stock shall change at any time
(including, but not limited to, changes under or by reason of
provisions designed to protect against dilution), the Conversion Price
in effect at the time of such event shall forthwith be readjusted to
the Conversion Price which would have been in effect at such time had
such Options or Convertible Securities still outstanding provided for
such changed purchase price, additional consideration or conversion
rate, as the case may be, at the time initially granted, issued or
sold.
(iv) Consideration for Stock. In case any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for cash,
the consideration received therefor shall be deemed to be the net
amount received by the Maker therefor, after deduction therefrom of
any expenses incurred or any underwriting commissions or concessions
paid or allowed by the Company in connection therewith. In case any
shares of Common Stock, Options or Convertible Securities shall be
issued or sold for a consideration other than cash or for a
consideration including cash and such other consideration, the amount
of the consideration other than cash received by the Maker shall be
deemed to be the fair value of such consideration as determined in
good faith by the board of directors of the Maker, after deduction of
any expenses incurred or any underwriting commissions or concessions
paid or allowed by the Maker in connection therewith. In case any
Options shall be issued in connection with the issue and sale of other
securities of the Maker, together comprising one integral transaction
in which no specific consideration is allocated to such Options by the
parties thereto, such Options shall be deemed to have been issued for
such consideration as determined in good faith by the board of
directors of the Maker.
(v) Record Date. In case the Maker shall take a record of the
holders of its Common Stock for the purpose of entitling them (A) to
receive a dividend or other distribution payable in Common Stock,
Options or Convertible Securities or (B) to subscribe for or purchase
Common Stock, Options or Convertible Securities, then such record date
shall be deemed to be the date of the issue or sale of the shares of
Common Stock deemed to have been issued or sold upon the declaration
of such dividend or the making of such other distribution or the date
of the granting of such right of subscription or purchase, as the case
may be. If the Maker shall have taken a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend
or distribution or subscription or purchase rights and shall,
thereafter and before the distribution to stockholders thereof,
legally abandon its plan to pay or deliver such dividend,
distribution, subscription or purchase rights, then thereafter no
adjustment shall be required by reason of the taking of such record
and any such adjustment previously made in respect thereof shall be
rescinded and annulled.
(vi) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held
by or for the account of the Maker or any of its wholly-owned
subsidiaries, and the disposition of any such shares (other than the
cancellation or retirement thereof) shall be considered an issue or
sale of Common Stock for the purpose of this Section 6(e).
(f) Anything herein to the contrary notwithstanding, the Maker
shall not be required to make any adjustment of the Conversion Price in the case
of the issuance of (i) capital stock, Options or Convertible Securities issued
to directors, officers, employees or consultants of the Maker in connection with
their service as directors of the Maker, their employment by the Maker or their
retention as consultants by the Maker pursuant to any employee benefit plans or
programs approved by the board of directors of the Maker or any committee
thereof, (ii) shares of Common Stock upon the conversion or exercise of Options
or Convertible Securities outstanding as of September 12, 2003, and (iii) shares
of Common Stock issued or issuable by reason of a dividend, stock split or other
distribution payable pro rata to all holders of Common Stock (but only to the
extent that such a dividend, split or distribution results in an adjustment in
the Conversion Price pursuant to the other provisions of this Debenture).
(g) With each adjustment to the Conversion Price pursuant to
Section 6(e), the Maker shall deliver to the Holder a certificate signed by its
chief financial or executive officer setting forth, in reasonable detail, the
event requiring the adjustment to the Conversion Price, the method by which such
adjustment was calculated, and the Conversion Price after giving effect to such
adjustment, which shall be mailed by first class mail, postage prepaid to the
Holder.
7. Events of Default. Each of the following shall constitute an
"Event of Default" hereunder:
(a) The Maker shall fail to pay any amount under this Debenture
when due (whether at the Maturity Date, upon acceleration or otherwise);
(b) (i) the Maker shall fail to use the proceeds of any Advance
only for the specific purposes set forth in the Budget or the Plan or (ii) the
Maker or any other party thereto (other than the Holder) shall fail to observe
or perform or otherwise default or breach any of the covenants set forth herein
or in any of the Transaction Documents;
(c) Any representation or warranty made by the Maker in this
Debenture or any of the Transaction Documents shall have been untrue or
misleading in any material respect when made;
(d) The Maker fails to make a required payment or payments on
indebtedness for borrowed money of Twenty-Five Thousand Dollars ($25,000) or
more in aggregate principal amount;
(e) There shall have occurred an acceleration of the stated
maturity of any indebtedness for borrowed money of the Maker of Twenty-Five
Thousand Dollars ($25,000) or more in aggregate principal amount;
(f) Any covenant, agreement or obligation of the Maker in any of
the Security Documents (as defined in Section 8) shall cease to be enforceable,
or shall be determined to be unenforceable in any material respect; or any of
the security interests granted to the Holder in any of the Security Documents
shall be determined to be void, voidable, invalid or unperfected, are
subordinated or are ineffective to provide the Holder with a perfected, first
priority security interest in the collateral covered by any of the Security
Documents;
(g) Any Event of Default shall have occurred and be continuing
under any of the Security Documents or any Other Transaction Document;
(h) The Maker shall merge or consolidate with or into any other
person or entity, sell, transfer, lease or otherwise dispose of all or any
substantial portion of its assets in one transaction or a series of related
transactions, participate in any share exchange, consummate any
recapitalization, reclassification, reorganization or other business combination
transaction or adopt a plan of liquidation or dissolution or agree to do any of
the foregoing (other than the Merger in accordance with the Agreement and Plan
of Merger);
(i) The Merger shall not have been consummated in accordance
with the Agreement and Plan of Merger on or before December 24, 2003;
(j) The Merger shall not for any reason result in the automatic
conversion of Parent's outstanding Series C Preferred Stock, par value $0.01 per
share ("Series C Preferred Stock"), into shares of Common Stock immediately upon
consummation of the Merger at a conversion price of $6.490 per share or any
holder of the Series C Preferred Stock shall commence, prior to the consummation
of the Merger, an action, suit or proceeding to avoid or contest such
conversion;
(k) One or more judgments in an aggregate amount in excess of
Twenty-Five Thousand Dollars ($25,000) shall have been rendered against the
Maker or the Parent and such judgment or judgments remain undischarged or
unstayed for a period of sixty (60) days after such judgment or judgments become
or became, as the case may be, final and unappealable;
(l) The Maker shall have applied for or consented to the
appointment of a custodian, receiver, trustee or liquidator, or other
court-appointed fiduciary of all or a substantial part of its properties; or a
custodian, receiver, trustee or liquidator or other court appointed fiduciary
shall have been appointed with or without the consent of the Maker; or the Maker
is generally not paying its debts as they become due by means of available
assets or is insolvent, or has made a general assignment for the benefit of
creditors; or the Maker files a voluntary petition in bankruptcy, or a petition
or an answer seeking reorganization or an arrangement with creditors or seeking
to take advantage of any insolvency law, or an answer admitting the material
allegations of a petition in any bankruptcy, reorganization or insolvency
proceeding or has taken action for the purpose of effecting any of the
foregoing; or if, within sixty (60) days after the commencement of any
proceeding against the Maker seeking any reorganization, rehabilitation,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under the Federal bankruptcy code or similar order under future similar
legislation, the appointment of any trustee, receiver, custodian, liquidator, or
other court-appointed fiduciary of the Maker or of all or any substantial part
of its properties, such order or appointment shall not have been vacated or
stayed on appeal or otherwise or if, within sixty (60) days after the expiration
of any such stay, such order or appointment shall not have been vacated
(collectively, an "Insolvency Event"); or
(m) any Insolvency Event shall have occurred with respect to the
Parent.
Upon the occurrence of any Event of Default, the Holder may, at its
option, declare all amounts due hereunder to be due and payable immediately and,
upon any such declaration, the same shall become and be immediately due and
payable. If an Event of Default specified in clauses (l) or (m) occurs, then all
amounts due hereunder shall become immediately due and payable without any
declaration or other act on the part of the Holder. Upon the occurrence of any
Event of Default, the Holder may, in addition to declaring all amounts due
hereunder to be immediately due and payable, pursue any available remedy,
whether at law or in equity, including, without limitation, exercising its
rights under the Security Documents. If an Event of Default occurs, the Maker
shall pay to the Holder the reasonable attorneys' fees and disbursements and all
other out-of-pocket costs incurred by the Holder in order to collect amounts due
and owing under this Debenture or otherwise to enforce the Holder's rights and
remedies hereunder and under the Security Documents.
8. Secured Obligation; Affirmation of Collateral.
(a) This Debenture and the indebtedness evidenced hereby are
deemed future advances and are obligations secured by (i) the Amended Company
Security Agreement, (ii) the Amended and Restated Parent Guaranty, (iii) the
Amended Parent Security Agreement, (iv) the Amended and Restated Aeolus
Guaranty, and (v) the Amended Aeolus Security Agreement (collectively, as
amended or modified, the "Security Documents").
(b) The Maker hereby warrants and agrees that the liens granted
under the Security Documents are validly perfected liens securing all of the
existing and future Obligations (as defined in each of the Security Documents)
owing by the Maker to the Holder, whether direct or indirect.
(c) The Maker acknowledges and agrees that each of the Security
Documents remains in full force and effect and that the Holder's rights and
remedies thereunder are not intended to be limited by, and are not limited by,
this Debenture.
9. Reimbursement of Expenses. In addition to its other obligations
hereunder, not later than the close of business on the date hereof or one (1)
Business Day after receipt of an invoice therefor, the Maker shall reimburse the
Holder for the fees and disbursements incurred by the Holder's counsel in
connection with the preparation, negotiation, execution and enforcement of this
Debenture.
10. Waiver of Presentment, Demand and Dishonor. The Maker hereby
waives presentment for payment, protest, demand, notice of protest, notice of
non-payment and diligence with respect to this Debenture, and waives and
renounces all rights to the benefit of any statute of limitations or any
moratorium, appraisement, exemption or homestead now provided or that hereafter
may be provided by any federal or applicable state statute, including but not
limited to exemptions provided by or allowed under the Federal Bankruptcy Code,
both as to itself and as to all of its property, whether real or personal,
against the enforcement and collection of the obligations evidenced by this
Debenture and any and all extensions, renewals and modifications hereof.
No failure on the part of the Holder hereof to exercise any right or
remedy hereunder with respect to the Maker, whether before or after the
happening of an Event of Default, shall constitute a waiver of any future Event
of Default or of any other Event of Default. No failure to accelerate the debt
of the Maker evidenced hereby by reason of an Event of Default or indulgence
granted from time to time shall be construed to be a waiver of the right to
insist upon prompt payment thereafter; or shall be deemed to be a novation of
this Debenture or a reinstatement of such debt evidenced hereby or a waiver of
such right of acceleration or any other right, or be construed so as to preclude
the exercise of any right the Holder may have, whether by the laws of the state
governing this Debenture, by agreement or otherwise; and the Maker hereby
expressly waives the benefit of any statute or rule of law or equity that would
produce a result contrary to or in conflict with the foregoing.
11. Amendment; Waiver. No modification, alteration, waiver or change
of any of the provisions hereof shall be effective unless in writing and signed
by the Maker and the Holder and, then, only to the extent set forth in such
writing.
12. Governing Law; Consent to Jurisdiction. This Debenture shall be
binding upon the Maker and its successors, assigns and legal representatives.
The validity, construction and interpretation of this Debenture will be
governed, and construed in accordance with, the laws of the State of New York.
THE MAKER HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION
WITH RESPECT TO THIS DEBENTURE AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED
SPECIFICALLY AS TO THIS WAIVER.
The Maker irrevocably submits to the exclusive jurisdiction of the
courts of the State of New York located in New York County and the United States
District Court for the Southern District of New York for the purpose of any
suit, action, proceeding or judgment relating to or arising out of this
Debenture and the transactions contemplated hereby. Service of process in
connection with any such suit, action or proceeding may be served on the Maker
anywhere in the world by the same methods as are specified for the giving of
notices under the Purchase Agreement. The Maker irrevocably consents to the
jurisdiction of any such court in any such suit, action or proceeding and to the
laying of venue in such court. The Maker irrevocably waives any objection to the
laying of venue of any such suit, action or proceeding brought in such courts
and irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
[SIGNATURES ON NEXT PAGE]
IN WITNESS WHEREOF, the undersigned has duly executed this Debenture
on behalf of the Maker as of the date set forth below.
ATTEST: INCARA, INC.
_____________________ By:_________________________________
Name: Name:
Title:
Dated: __________ __, 2003
[Convertible Debenture - Signature Page]
EXHIBIT 10
VOTING AGREEMENT
THIS VOTING AGREEMENT, is made as of September 16, 2003 (this
"Agreement"), by and among Goodnow Capital, L.L.C., a Delaware limited liability
company ("Lender"), the persons listed on Exhibit A hereto (collectively, the
"Stockholders" and each a "Stockholder"), and Incara Pharmaceuticals
Corporation, a Delaware corporation ("Incara").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, as of the date hereof, each Stockholder owns (either
beneficially or of record) the number of shares of Incara common stock, par
value $0.001 per share (the "Incara Common Stock"), set forth opposite such
Stockholder's name on Exhibit A hereto (all such shares of Incara Common Stock
and any shares of capital stock of Incara hereafter acquired by the
Stockholders, including any shares of Incara Common Stock whether or not set
forth on Exhibit A hereto that are issued upon the exercise of options, warrants
or other rights to purchase or acquire Incara Common Stock (the "Incara
Options") held by such Stockholders, are collectively referred to herein as the
"Shares"); and
WHEREAS, affiliates of the Lender and Incara have entered into a
non-binding letter of intent, dated July 18, 2003 (the "LOI"), providing for (i)
the financing of up to an aggregate amount of $8,000,000 by the Lender in
Incara, Inc. (f/k/a Incara Cell Technologies, Inc.), a Delaware corporation and
a wholly-owned subsidiary of Incara ("ICT"), and (ii) the merger of Incara with
and into ICT (the "Merger"); and
WHEREAS, the Lender has agreed to make and has made certain advances
to ICT pursuant to the terms and conditions of a certain Convertible Secured
Promissory Note, dated as of July 28, 2003, in the maximum principal amount of
$3,000,000, made by ICT payable to the order of the Lender (the "$3M Note"); and
WHEREAS, concurrently herewith, Incara, ICT and the Lender are
entering into a Debenture and Warrant Purchase Agreement (the "Purchase
Agreement") pursuant to which, among other things, (i) the Lender will loan ICT
the balance of the $8,000,000 contemplated by the LOI, on and subject to the
terms and conditions stated therein, (ii) Incara will issue to the Lender a
warrant (the "Incara Warrant") to purchase 50,000,000 shares of Incara Common
Stock, subject to adjustment in accordance with the terms of the Incara Warrant
and (iii) the Guaranty, dated July 28, 2003, made by Incara in favor of the
Lender will be amended (the "Amendment") to provide Lender with the right to
convert any cash payments made under the $3M Note into shares of Incara Common
Stock; and
WHEREAS, concurrently herewith, Incara and ICT are entering into an
Agreement and Plan of Merger (the "Merger Agreement") which provides, upon the
terms and subject to the conditions thereof, for the Merger; and
WHEREAS, as a condition to the willingness of the Lender to enter into
the Purchase Agreement and provide ICT with the balance of the $8,000,000
contemplated by the LOI, Incara has requested that each Stockholder agree, and,
in order to induce Lender to enter into the Purchase Agreement and provide such
financing, each such Stockholder is willing to agree, to vote and to grant
Lender an irrevocable proxy to vote the Shares pursuant to the terns and
conditions hereof;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants set forth herein and in the Purchase Agreement, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I.
REPRESENTATIONS AND WARRANTIES
Each Stockholder hereby represents and warrants to the Lender as
follows:
Section 1.01. Due Authority. (a) Such Stockholder has full power,
corporate or otherwise, and authority to execute and deliver this Agreement and
to perform such Stockholder's obligations hereunder. This Agreement has been
duly executed and delivered by or on behalf of such Stockholder and, assuming
its due authorization, execution and delivery by Incara and the Lender,
constitutes a legal, valid and binding obligation of such Stockholder,
enforceable against such Stockholder in accordance with its terms, except to the
extent that enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization and other laws affecting the enforcement of creditors' rights
generally and by general principles of equity.
(b) There is no beneficiary or holder of a voting trust
certificate or other interest of any trust of which such Stockholder is a
trustee whose consent is required for the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
Section 1.02. No Conflict; Consents. (a) The execution and delivery
of this Agreement by such Stockholder do not, and the performance by such
Stockholder of such Stockholder's obligations under this Agreement and the
compliance by such Stockholder with any provisions hereof do not and will not,
(i) conflict with or violate any law, statute, rule, regulation, order, writ,
judgment or decree applicable to such Stockholder or such Stockholder's Shares,
(ii) conflict with or violate the Stockholder's charter, bylaws, partnership
agreement or other organizational documents, if applicable, or (iii) result in
any breach of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of such Stockholder's Shares pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which such Stockholder is
a party or by which such Stockholder or such Stockholder's Shares are bound.
(b) The execution and delivery of this Agreement by such
Stockholder do not, and the performance of this Agreement by such Stockholder
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority except for
applicable requirements, if any, of the Securities Exchange Act of 1934, as
amended, and except where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, could not
prevent or delay the performance by such Stockholder of his, her or its
obligations under this Agreement in any material respect.
Section 1.03. Title to Shares. (a) Such Stockholder is the record or
beneficial owner of such Stockholder's Shares free and clear of any proxy or
voting restriction. The Shares set forth opposite such Stockholder's name on
Exhibit A hereto constitute all of the shares of Incara Common Stock owned of
record or beneficially by such Stockholder (except as noted on Exhibit A with
respect to Clayton I. Duncan) or issuable upon the exercise of Incara Options
held by such Stockholder.
(b) Such Stockholder has, and during the Proxy Term (as defined
below) will have, the sole voting power with respect to the matters set forth in
Article II hereof with respect to all of the Shares held by the Stockholder,
with no restrictions on such rights, subject to applicable laws and the terms of
this Agreement.
Section 1.04. No Encumbrances. Such Stockholder's Shares and the
certificates representing such Shares are now, and at all times during the Proxy
Term hereof (except as noted on Exhibit A) will be, held by such Stockholder, or
by a nominee or custodian for the benefit of such Stockholder, free and clear of
all claims, liens, charges, pledges, encumbrances, proxies, voting trusts and
voting agreements, understandings or arrangements providing for any right on the
part of any Person (as defined in the Purchase Agreement) other than such
Stockholder to vote such Shares except any such encumbrances or proxies arising
under this Agreement.
Section 1.05. Acknowledgment of Reliance. Such Stockholder understands
and acknowledges that Lender is entering into the Purchase Agreement in reliance
upon such Stockholder's execution and delivery of this Agreement.
ARTICLE II.
COVENANTS OF STOCKHOLDERS
Each Stockholder hereby covenants and agrees with Lender as follows:
Section 2.01. Transfer of Shares. Other than in connection with the
Merger, during the Proxy Term each Stockholder shall not (a) sell, tender,
transfer, pledge, encumber, assign or otherwise dispose of any of such
Stockholder's Shares, (b) deposit such Stockholder's Shares into a voting trust
or enter into a voting agreement or arrangement with respect to such Shares or
grant any proxy or power of attorney with respect thereto, or (c) take any
action that would make any representation or warranty of such Stockholder
contained herein untrue or incorrect in any material respect or have the effect
of preventing or disabling such Stockholder from performing such Stockholder's
obligations under this Agreement.
Section 2.02. Voting of Shares; Further Assurances. (a) Each
Stockholder, by this Agreement, with respect to those Shares that such
Stockholder owns of record, does hereby constitute and appoint Lender, or any
nominee of Lender, with full power of substitution, during and for the Proxy
Term, as such Stockholder's true and lawful attorney and irrevocable proxy, for
and in such Stockholder's name, place and stead, to vote each of such Shares as
such Stockholder's proxy, at every meeting of the stockholders of Incara or any
adjournment thereof or in connection with any written consent of Incara's
stockholders, (i) in favor of (A) the execution and delivery of the Purchase
Agreement and the consummation of the transactions contemplated thereby
(including, without limitation, the issuance of the Incara Warrant and the
execution and delivery of the Amendment) and (B) the adoption of the Merger
Agreement and approval of the Merger and the other transactions contemplated by
the Merger Agreement, (ii) against any Alternative Transaction (as defined in
the Purchase Agreement) and any proposal for any action or agreement that would
result in a breach of any covenant, representation or warranty or any other
obligation or agreement of Incara or ICT under the Purchase Agreement or any
Other Transaction Document (as defined in the Purchase Agreement), and (iii) in
favor of any other matter necessary for consummation of the transactions
contemplated by the Purchase Agreement and the Merger Agreement which is
considered at any such meeting of stockholders or in such consent, and in
connection therewith to execute any documents that are necessary or appropriate
in order to effectuate the foregoing or, at the request of Lender, to permit
Lender to vote such Shares directly. Each Stockholder further agrees to cause
the Shares beneficially owned by such Stockholder to be voted in accordance with
the foregoing. Each Stockholder intends this proxy to be irrevocable and coupled
with an interest during the Proxy Term and hereby revokes any proxy previously
granted by such Stockholder with respect to such Stockholder's Shares.
(b) Each Stockholder hereby further agrees, with respect to any
Shares not voted by Lender pursuant to paragraph (a) above, that during the
Proxy Term, at any meeting of stockholders of Incara, however called, or in
connection with any written consent of Incara's stockholders, such Stockholder
shall vote (or cause to be voted) the Shares held of record or beneficially by
such Stockholder, except as specifically requested in writing by Lender in
advance, (i) in favor of (A) the execution and delivery of the Purchase
Agreement and the consummation of the transactions contemplated thereby
(including, without limitation, the issuance of the Incara Warrant and the
execution and delivery of the Amendment) and (B) the adoption of the Merger
Agreement and approval of the Merger and the other transactions contemplated by
the Merger Agreement, (ii) against any Alternative Transaction and any proposal
for any action or agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of Incara or ICT
under the Purchase Agreement or any Other Transaction Document, and (iii) in
favor of any other matter necessary for consummation of the transactions
contemplated by the Purchase Agreement and the Merger Agreement which is
considered at any such meeting of stockholders or in such consent, and in
connection therewith to execute any documents that are necessary or appropriate
in order to effectuate the foregoing.
(c) For the purposes of this Agreement, "Proxy Term" shall mean
the period from the execution of this Agreement until the earlier to occur of
(i) the consummation of the Merger in accordance with the Merger Agreement or
(ii) January 31, 2004.
(d) Each Stockholder agrees that such Stockholder will not enter
into any agreement or understanding with any Person or take any action during
the Proxy Term that will permit any Person to vote or give instructions to vote
the Shares in any manner inconsistent with the terms of this Section 2.02. Each
Stockholder further agrees to take such further action and execute such other
instruments as may be reasonably necessary to effectuate the intent of this
Agreement, including without limitation, any number of proxies and other
documents permitting Lender to vote the Shares or to direct the record owners
thereof to vote the Shares in accordance with this Agreement.
Section 2.03. Certain Events. Each Stockholder agrees that, during the
Proxy Term, this Agreement and the obligations hereunder shall attach to such
Stockholder's Shares and shall be binding upon any Person to which legal or
beneficial ownership of such Shares shall pass, whether by operation of law or
otherwise, including without limitation, if applicable, such Stockholder's
heirs, guardians, administrators or successors.
Section 2.04. Stop Transfer. (a) Each Stockholder agrees with, and
covenants to, Lender that such Stockholder shall not request during the Proxy
Term that Incara register the transfer (book-entry or otherwise) of any
certificate or uncertificated interest representing any of such Stockholder's
Shares, unless such transfer is made in compliance with this Agreement. With
respect to any Shares in certificated form, Incara shall issue stop transfer
instructions to its transfer agent regarding each Stockholder's Shares within
ten (10) Business Days (as defined in the Purchase Agreement) after the date
hereof, in such form as is acceptable to the Lender.
ARTICLE III.
GENERAL PROVISIONS
Section 3.01. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof but shall be interpreted as if it
were written so as to be enforceable to the maximum extent permitted by
applicable law, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereby
waive any provision of law which renders any provision hereof prohibited or
unenforceable in any respect.
Section 3.02. Entire Agreement. This Agreement and those documents
expressly referred to herein (including the Purchase Agreement, the Other
Transaction Documents and the Merger Agreement), contain the sole and entire
agreement among the parties hereto with respect to the subject matter hereof and
supersede all prior discussions and agreements between the parties with respect
to the subject matter hereof.
Section 3.03. Amendments. This Agreement may not be modified, amended,
waived, altered or supplemented, except upon the execution and delivery of a
written agreement executed by all of the parties hereto; provided, however, that
Lender may in writing waive or consent to a modification of any provision of
this Agreement with respect to any Stockholder without the agreement of any
other party hereto.
Section 3.04. Assignment. This Agreement shall not be assigned by
operation of law or otherwise by any Stockholder without the prior written
consent of the Lender.
Section 3.05. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto and its heirs,
successors and assigns and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement.
Section 3.06. Specific Performance. The parties hereto agree that the
Lender would suffer irreparable damage and harm in the event that any provision
of this Agreement is not performed by any Stockholder in accordance with the
terms hereof or is otherwise breached. It is accordingly agreed that the Lender
shall be entitled to specific relief hereunder, including, without limitation,
an injunction or injunctions to prevent and enjoin breaches of the provisions of
this Agreement by any Stockholder and to enforce specifically the terms and
provisions hereof, in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which the Lender may
be entitled at law or in equity. Any requirements for the securing or posting of
any bond with respect to any such remedy are hereby waived.
Section 3.07. Choice of Law; Consent to Jurisdiction; Waiver of Jury
Trial. This Agreement and any and all matters arising directly or indirectly
herefrom ("Agreement Matters") shall be governed by and construed and enforced
in accordance with the internal laws of the State of Delaware applicable to
agreements made and to be performed entirely in such state, without giving
effect to the conflict of law principles thereof. Each of the parties hereto
hereby (i) irrevocably consents and submits to the co-exclusive jurisdiction of
the state and federal courts located in the Southern District of New York, New
York County (and of the appropriate appellate courts from any of the foregoing)
in connection with any suit, arbitration, mediation, action or other proceeding
(each a "Proceeding") directly or indirectly arising out of or relating to any
Agreement Matter; provided that a party to this Agreement shall be entitled to
enforce an order or judgment of such a court in any United States or foreign
court having jurisdiction over the other party hereto, (ii) irrevocably waives,
to the fullest extent permitted by law, any objection that it may now or
hereafter have to the laying of the venue of any such Proceeding in any such
court or that any such Proceeding which is brought in any such court has been
brought in an inconvenient forum, (iii) waives, to the fullest extent permitted
by law, any immunity from jurisdiction of any such court or from any legal
process therein, and (iv) agrees that service of any summons, complaint, notice
or other process relating to such Proceeding may be effected in the manner
provided for the giving of notice hereunder. EACH PARTY TO THIS AGREEMENT
(INCLUDING ANY PERSON WHO SUBSEQUENTLY BECOME A PARTY TO THIS AGREEMENT AFTER
THE DATE HEREOF) hereby KNOWINGLY, VOLUNTARILY AND INTENTIONALLY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
Section 3.08. Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original, but all of which
will constitute one and the same instrument and shall become effective when one
or more counterparts have been signed by each of the parties and delivered to
the other parties.
Section 3.09. Exculpation. No Stockholder shall have any liability or
obligation whatsoever under or by reason of this Agreement because of a breach
by any other Stockholder of its obligations, representations or warranties
hereunder or thereunder.
Section 3.10. Notices. All notices and other communications required
or permitted to be given pursuant to this Agreement shall be in writing signed
by the sender, and shall be deemed duly given (i) on the date delivered if
personally delivered, (ii) on the date sent by telecopier with automatic
confirmation by the transmitting machine showing the date of such transmission
and the proper number of pages were transmitted without error, (iii) on the
Business Day after being sent by Federal Express or another recognized overnight
mail service which utilizes a written form of receipt for next day or next
Business Day delivery, or (iv) three (3) Business Days after mailing, if mailed
by United States postage-prepaid certified or registered mail, return receipt
requested, in each case addressed to the applicable party at the address set
forth below; provided that a party hereto may change its address for receiving
notice by the proper giving of notice hereunder:
If to Lender, to:
c/o Xmark Fund, Ltd. and Xmark Fund, L.P.
152 West 57th Street. 21st Floor
New York, New York 10019
Attn: Mitchell D. Kaye and David Cavalier
Telephone: 212.247.8200
Facsimile: 212.247.1329
with a copy to (which shall not constitute notice):
Lowenstein Sandler PC
65 Livingston Avenue
Roseland, New Jersey 07068-1791
Attention: John D. Hogoboom, Esq.
Telephone: 973.597.2500
Facsimile: 973.597.2400
If to Incara, to:
Post Office Box 14287 (if by U.S. Mail)
79 T.W. Alexander Drive
4401 Research Commons, Suite 200
Research Triangle Park, North Carolina 27709
Attn: Clayton I. Duncan
Telephone: 919.558.8688
Facsimile: 919.544.1245
with a copy to (which shall not constitute notice):
Wyrick Robbins Yates & Ponton LLP
4101 Lake Boone Trail, Suite 300
Raleigh, North Carolina 27607
Attn: Larry E. Robbins, Esq.
Telephone: 919.781.4000
Facsimile: 919.781.4865
and if to any of the Stockholders, at the address or facsimile transmission
number specified below its name on the signature pages hereto (or, in the case
of Persons who become parties hereto subsequently, at their last addresses or
facsimile transmission numbers shown on the record books of Incara). Any Person
who becomes a Stockholder shall provide its address and facsimile number to
Incara, which shall promptly provide such information to Lender and each of the
other Stockholders.
(Remainder of page intentionally left blank; signature pages follow)
IN WITNESS WHEREOF, the parties have duly executed this Voting
Agreement as of the date first written above.
INCARA PHARMACEUTICALS CORPORATION
By:
-----------------------------------------
Name:
Title:
GOODNOW CAPITAL, L.L.C.
By:
-----------------------------------------
Name:
Title:
"STOCKHOLDERS"
--------------------------------------------
Clayton I. Duncan
--------------------------------------------
Richard W. Reichow
--------------------------------------------
James D. Crapo
Address for
Notice for each Stockholder:
c/o Incara Pharmaceuticals Corporation
P.O. Box 14287 (if by US Mail)
79 T.W. Alexander Drive
4401 Research Commons, Suite 200
Research Triangle Park, North Carolina 27709
Facsimile: 919-544-1245
(Signature Page to Voting Agreement)
EXHIBIT A
---------
Number of Shares of
Number of Shares of Incara Common Stock
Incara Common Stock Issuable Upon
Name of Stockholder Owned by Stockholder Exercise of Options
------------------- -------------------- -------------------
Clayton I. Duncan 729,170+* 3,362,786
Richard W. Reichow 393,886 2,265,530
James D. Crapo 791,955 1,941,000
+ Includes 144,190 shares pledged to a financial institution as security for a
loan.
* Excluded 48,000 shares of Incara Common Stock beneficially owned by one of
Clayton I. Duncan's children.