SEC FORM 4

SEC Form 4

FORM 4

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP

Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934
or Section 30(h) of the Investment Company Act of 1940

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Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

1. Name and Address of Reporting Person^*

XMARK ASSET MANAGEMENT LLC

(Last)

(First)

(Middle)

152 W 57TH STREET, 21ST FLOOR

(Street)

NEW YORK

10019

(City)

(State)

(Zip)

2. Issuer Name and Ticker or Trading Symbol
INCARA PHARMACEUTICALS CORP [ ICRA.OB ]

5. Relationship of Reporting Person(s) to Issuer
(Check all applicable)

Director	X	10% Owner
Officer (give title below)		Other (specify below)

3. Date of Earliest Transaction (Month/Day/Year)
04/19/2004

4. If Amendment, Date of Original Filed (Month/Day/Year)

6. Individual or Joint/Group Filing (Check Applicable Line)

X	Form filed by One Reporting Person
	Form filed by More than One Reporting Person

Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned
1. Title of Security (Instr. 3)	2. Transaction Date (Month/Day/Year)	2A. Deemed Execution Date, if any (Month/Day/Year)	3. Transaction Code (Instr. 8)		4. Securities Acquired (A) or Disposed Of (D) (Instr. 3, 4 and 5)			5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4)	6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	7. Nature of Indirect Beneficial Ownership (Instr. 4)
1. Title of Security (Instr. 3)	2. Transaction Date (Month/Day/Year)	2A. Deemed Execution Date, if any (Month/Day/Year)	Code	V	Amount	(A) or (D)	Price		6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	7. Nature of Indirect Beneficial Ownership (Instr. 4)
Common Stock, par value $0.001 per share⁽⁹⁾	04/19/2004		C		50,468,750	A	$0.1	81,070,394	I	See footnote number 8⁽⁸⁾

Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned (e.g., puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security (Instr. 3)	2. Conversion or Exercise Price of Derivative Security	3. Transaction Date (Month/Day/Year)	3A. Deemed Execution Date, if any (Month/Day/Year)	4. Transaction Code (Instr. 8)		5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5)		6. Date Exercisable and Expiration Date (Month/Day/Year)		7. Title and Amount of Securities Underlying Derivative Security (Instr. 3 and 4)		8. Price of Derivative Security (Instr. 5)	9. Number of derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4)	10. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	11. Nature of Indirect Beneficial Ownership (Instr. 4)
1. Title of Derivative Security (Instr. 3)	2. Conversion or Exercise Price of Derivative Security	3. Transaction Date (Month/Day/Year)	3A. Deemed Execution Date, if any (Month/Day/Year)	Code	V	(A)	(D)	Date Exercisable	Expiration Date	Title	Amount or Number of Shares	8. Price of Derivative Security (Instr. 5)		10. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	11. Nature of Indirect Beneficial Ownership (Instr. 4)
Secured Convertible Debenture (right to buy Common Stock)⁽⁹⁾	$0.1	04/19/2004		C		19,588,458		⁽⁴⁾⁽⁵⁾	⁽⁶⁾	Common Stock	50,468,750	⁽¹⁾⁽²⁾⁽³⁾	0	I	See footnote 8⁽⁸⁾
Warrants (right to buy Common Stock)⁽⁹⁾	$0.4	04/19/2004		J		19,588,458		⁽⁴⁾⁽⁵⁾	04/19/2004⁽⁷⁾	Common Stock	12,500,000	⁽¹⁾⁽²⁾⁽³⁾	0	I	See footnote 8⁽⁸⁾

Explanation of Responses:

1. Goodnow Capital, L.L.C., a Delaware limited liability company ("Goodnow"), is the holder of 81,070,394 shares of Common Stock, par value $0.001 per share (the "Common Stock"), of Incara Pharmaceuticals Corporation, a Delaware corporation (the "Company"). On September 16, 2003, Goodnow and the Company entered into a Debenture and Warrant Purchase Agreement (the "Purchase Agreement") pursuant to which, among other things, Goodnow agreed to provide an aggregate of $5,000,000 of financing to the Company through the purchase of a Secured Convertible Debenture in the principal amount of $5,000,000 (the "Debenture") on the terms and subject to the conditions set forth in the Purchase Agreement, including without limitation the various conditions to Goodnow's obligation to purchase the Debenture.

2. Subject to the Issuance Limitation, as defined below, the principal and interest due and owing under the Debenture were convertible into shares of Common Stock at a per share conversion price of $0.10. On January 14, 2004, Goodnow consummated its purchase of the Debenture from the Company and made its first advance to the Company under the Debenture in the amount of $1,000,000. Goodnow subsequently advanced $750,000, $750,000 and $2,500,000 on February 18, 2004, March 24, 2004 and April 16, 2004, respectively. Prior to the conversion of the Debenture described below, the Debenture had accrued interest at the rate of 10% per annum, which rate was subject to increase upon the occurrence of an Event of Default (as defined in the Debenture).

3. In order to induce Goodnow to waive certain of its conditions to closing the purchase of the Debenture under the Purchase Agreement, the Company issued to Goodnow, simultaneously with Goodnow's purchase of the Debenture, a warrant (the "Warrant") to purchase 12,500,000 shares of Common Stock at an exercise price of $0.40 per share. The Warrant has expired in accordance with its terms, as described below. Each of the conversion price for the Debenture and the exercise price for the Warrant were subject to certain anti-dilution adjustments in accordance with the terms of the Debenture and the Warrant, respectively.

4. Each of the Debenture and the Warrant provided that in no event would the Debenture or the Warrant be convertible or exercisable, respectively, to the extent that the issuance of shares of Common Stock upon conversion or exercise thereof, after taking into account the shares of Common Stock then owned by Goodnow and its affiliates, would result in the beneficial ownership by Goodnow and its affiliates of more than 9.99% of the outstanding Common Stock (the "Issuance Limitation"). Goodnow had the express right to waive the Issuance Limitation upon sixty-one (61) days' written notice to the Company. On January 21, 2004, Goodnow waived the Issuance Limitation. Moreover, subject to the Further Limitation, as defined below, the Debenture allowed Goodnow to convert the maximum principal amount thereof (i.e. $5,000,000)

5. into shares of Common Stock at the then-existing per share conversion price at any time prior to repayment of the Debenture in accordance with its terms; provided that, prior to any such conversion, Goodnow advanced the principal amount of the Debenture not previously advanced to the Company. Each of the Debenture and Warrant had a second further limitation on its conversion or exercise, as the case may be, which provided that in no event would the Debenture or Warrant be convertible or exercisable, respectively, to the extent that the issuance of shares of Common Stock upon conversion or exercise thereof, after taking into account the shares of Common Stock then owned by Goodnow and its affiliates, would result in the beneficial ownership by Goodnow and its affiliates of more than 74.99% of the outstanding Common Stock (the "Further Limitation").

6. The original maturity date of the Debenture on which all sums outstanding thereunder were due and payable in full was December 24, 2004. However, the Debenture was fully converted (based on all of the advances made) into 50,468,750 shares of Common Stock on April 19, 2004, in connection with the Qualified Financing (as defined below). Thus, as of April 19, 2004, for the purposes of Reg. Section 240.13d-3, the reporting person may be deemed to beneficially own 81,070,394 shares of Common Stock, or 58.4% of the Common Stock deemed issued and outstanding as of that date.

7. The expiration date of the Warrant was 5:00 P.M., Eastern Time, on January 9, 2006, unless the Company had consummated and received the cash proceeds from a Qualified Financing (as defined in the Warrant) on or prior to April 30, 2004, in which case the expiration date of the Warrant would become the date of consummation of the Qualified Financing. The Company consummated a Qualified Financing on April 19, 2004. As such, the Warrant expired on that day, in accordance with its terms.

8. The reporting person is Xmark Asset Management, LLC, a New York limited liability company, formerly known as Brown Simpson Asset Management, LLC ("XAM"), which 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, XAM possesses the sole power to vote and direct the disposition of all securities of the Company owned by Goodnow.

9. XAM's interest in the securities reported herein is limited to its pecuniary interest in Goodnow, if any.

	/s/ Mitchell D. Kaye, Manager of Xmark Asset Management, LLC	04/21/2004
	** Signature of Reporting Person	Date
Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.
* If the form is filed by more than one reporting person, see Instruction 4 (b)(v).
** Intentional misstatements or omissions of facts constitute Federal Criminal Violations See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
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