UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
INCARA, INC.
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(Name of Issuer)
Common Stock, par value $0.001 per share
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(Title of Class of Securities)
45325S-10-1
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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)
November 21, 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. 45325S-10-1
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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:
30,601,644*
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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): 64.6%*
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14. Type of Reporting Person (See Instructions): IA
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* The reporting person is Brown Simpson Asset Management, LLC, a New York
limited liability company ("BSAM"), which is the sole manager of Goodnow
Capital, L.L.C., a Delaware limited liability company ("Goodnow"). Goodnow is
the holder of 30,601,644 shares of common stock, par value $0.001 per share (the
"Common Stock"), of Incara, Inc., 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, BSAM
possesses the sole power to vote and direct the disposition of all securities of
the Company owned by Goodnow. Thus, as of November 20, 2003, for the purposes of
Reg. Section 240.13d-3, BSAM may be deemed to beneficially own 30,601,644 shares
of Common Stock, or 64.6% of the Shares deemed issued and outstanding as of that
date.
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, Inc., 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
27709-4287.
Item 2. Identity and Background.
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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.
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On July 28, 2003, the Company issued a certain Convertible Secured
Promissory Note (the "Note") to Goodnow in the aggregate principal amount of
$3,000,000 in connection with certain bridge financing provided to the Company
by Goodnow. Pursuant to the terms of the Note, upon consummation of the merger
(the "Merger") of Incara Pharmaceuticals Corporation, which, prior to the
Merger, was the sole stockholder of the Company (the "Former Parent"), with and
into the Company, the outstanding principal amount of the Note, together with
all accrued but unpaid interest, automatically converted into Common Stock at a
conversion price of $0.10 per share. The Merger was consummated on November 20,
2003, and, as a result, the Note was automatically converted into 30,601,444
shares of Common Stock of the Company.
Pursuant to a Debenture and Warrant Agreement, dated as of September
16, 2003, among the Former Parent, the Company 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
the Company 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
the Company 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 Former Parent in favor of Goodnow was amended to permit Goodnow, at its
election, to convert any cash payments made in satisfaction of the Former
Parent's obligations thereunder into common stock of the Former Parent (the
"Former Parent Common Stock") at a price of $0.10 per share, (ii) the Company
issued Goodnow a warrant (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 "Company Warrant Shares") at an exercise price of
$0.10 per share (the "Company Warrant Exercise Price"), which Company Warrant
expired upon consummation of the Merger and the number of shares issuable
thereunder would be reduced, share for share, by the number of shares of Parent
Common Stock actually issued under the Former Parent Warrant (as defined below)
and the number of shares of Common Stock actually issued under the Debenture (as
defined below), (iii) the Former Parent issued Goodnow a warrant (the "Former
Parent Warrant" and together with the Company Warrant, the "Warrants"), subject
to certain exercise restrictions contained therein, to purchase up to an
aggregate of 50,000,000 shares of Former Parent Common Stock (the "Former Parent
Warrant Shares") at an exercise price of $0.10 per share (the "Former Parent
Warrant Exercise Price"), which Former Parent Warrant expired upon consummation
of the Merger, and (iv) the Company issued, upon closing of the transactions
contemplated by the Debenture and Warrant Purchase Agreement, a Secured
Convertible Debenture (the "Debenture" and together with 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 at a conversion price of
$0.10 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 or Former
Parent Common Stock that are actually issued upon exercise of the Warrants
following the issuance of the Debenture. No shares of Common Stock or Former
Parent Common Stock were issued under the Warrants.
Prior to the Merger, Goodnow had been the holder of 200 shares (the
"Initial Shares") of Former Parent Common Stock. The Debenture provides that in
no event shall the Debenture be convertible, 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 Former Parent or the Company (the "Issuance Limitation"). The
Issuance Limitation may not be waived by Goodnow.
The Guaranty expired upon the conversion of the Note in connection
with the Merger consummated on November 20, 2003. In addition, each of the
Warrants expired by its terms upon consummation of the Merger.
All funds to be advanced by Goodnow under the Debenture will come
directly from the assets of Goodnow. There have been no advances under the
Debenture as of the date hereof. All funds paid by Goodnow for the Note came
from the assets of Goodnow.
Item 4. Purpose of Transaction.
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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, 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, subject to the satisfaction of certain conditions, to
provide up to an additional $5,000,000 in financing to the Company in
consideration for, among other things, the issuance of the Warrants and the
Debenture and the shares of Common Stock and/or Former Parent Common Stock
issuable upon exercise or conversion thereof. As set forth in the Debenture and
Warrant Purchase Agreement, the Merger was 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 Former Parent and the Company entered into an Agreement
and Plan of Merger and Reorganization. As noted above, the Merger was
consummated on November 20, 2003. The following events took place as part of the
Merger:
o each share of Former Parent Common Stock outstanding immediately
prior to the Merger was exchanged for the right to receive one
share of Common Stock of the Company;
o each share of the Former Parent's Series B Preferred Stock
outstanding immediately prior to the Merger was exchanged for the
right to receive one share of Series B Preferred Stock of the
Company, with the same rights and privileges as the Former
Parent's Series B Preferred Stock; and,
o each share of the Former Parent's Series C Preferred Stock
outstanding immediately prior to the Merger was converted into
the right to receive 154.08320493 shares of Common Stock of the
Company.
Pursuant to the Debenture and Warrant Purchase Agreement, Goodnow has
the right to designate one director to the board of directors of the Company
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 the Company, the surviving entity, consists of seven (7) directors.
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.
Other than as set forth herein, BSAM has not effected any transactions
in the Company's Common Stock, or securities convertible into, exercisable for
or exchangeable for Common Stock, during the sixty days prior to November 20,
2003.
Item 5. Interest in Securities of the Issuer.
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Based upon information provided by the Company on November 20, 2003,
there were 47,340,602 shares of Common Stock issued and outstanding. As of
November 20, 2003, Goodnow owned 30,601,644 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 November 20, 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 30,601,644 shares of Common Stock, or
64.6% of the shares of Common Stock deemed issued and outstanding as of that
date.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to
Securities of the Issuer.
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In connection with the financing transactions described herein, (i)
the Former Parent, the Company and Goodnow entered into a Registration Rights
Agreement, dated September 16, 2003, requiring the Former Parent and the Company
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 Former
Parent, Goodnow and certain stockholders of the Former Parent 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
Former Parent 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.
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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., incorporated by
reference to Exhibit 3 to the Schedule 13-D with respect to Incara
Pharmaceuticals Corporation filed by the reporting person on September 26, 2003.
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, incorporated by reference to Exhibit 8
to the Schedule 13-D with respect to Incara Pharmaceuticals Corporation filed by
the reporting person on September 26, 2003.
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, incorporated by reference to Exhibit 11 to
the Schedule 13-D with respect to Incara Pharmaceuticals Corporation filed by
the reporting person on September 26, 2003.
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.
December 1, 2003
BROWN SIMPSON 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).