Exhibit 10.64
AGREEMENT AND AMENDMENT (the "Agreement"), effective as of
January 22, 2001, by and among Incara Pharmaceuticals
Corporation, a Delaware corporation (the "Company"), Elan
International Services, Ltd. ("EIS"), a Bermuda exempted
limited liability company and a wholly owned subsidiary of
Elan Corporation, plc, an Irish public limited liability
company ("Elan"), and Elan Pharma International Limited, an
Irish private limited liability company and a wholly owned
subsidiary of Elan and an affiliate of EIS ("EPIL").
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RECITALS:
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WHEREAS, the Company, EIS and EPIL have entered into a Securities
Purchase Agreement dated as of December 21, 2000 (the "Purchase Agreement"),
pursuant to which the Company issued and sold to EIS, and EIS purchased from the
Company, (i) 12,015 shares of the Company's Series C Preferred Stock, par value
U.S.$0.01 per share (the "Series C Preferred Stock"), (ii) a warrant to purchase
up to 22,191 shares of the Company's Series B Preferred Stock, par value
U.S.$0.001 per share (the "Series B Preferred Stock"), (iii) 28,457 shares of
Series B Preferred Stock and (iv) 825,000 shares of common stock, par value
U.S.$0.001 per share of the Company (the "Incara Common Stock"). The Company
further issued and sold to EPIL, and EPIL purchased from the Company, a
convertible promissory note of the Company (the "Note"), amounts in respect of
which shall be disbursed from time to time in an aggregate amount of up to
U.S.$4,806,000 in accordance with its terms and subject to the conditions
contained therein. The rights, preferences and privileges of the Series B
Preferred Stock and Series C Preferred Stock are as set forth in the Company's
Certificate of Designations, Preferences and Rights, filed with the Secretary of
State of the State of Delaware on January 19, 2001 (the "Certificate of
Designations");
WHEREAS, the parties desire to amend the Certificate of Designations to
establish a minimum price at which the Series C Preferred Stock may be redeemed
for shares of Incara Common Stock or shares of Series B Preferred Stock on the
terms and conditions set forth therein; and
WHEREAS, the parties desire to amend the Note, pursuant to the terms of
Section 9(c) of the Note, to establish a minimum price at which the principal
amount of and accrued interest on the Note may be paid in shares of Series B
Preferred Stock as set forth therein.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants contained herein, the sufficiency of which is hereby
acknowledged, the parties hereby agree as follows:
1. Amendment to the Certificate of Designations. The parties
agree that Article II of the Certificate of Designations shall
be amended, by the filing of an amendment
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to the Certificate of Designations with the Secretary of State
of the State of Delaware, as follows:
1.1 Section 6(a) of Article II of the Certificate of
Designations shall be amended and restated in its
entirety to read as follows:
"(a) Mandatory Redemption. On the sixth
anniversary after the Issue Date (the "Redemption Date"), the
Corporation shall redeem all then issued and outstanding
shares of Series C Preferred Stock, including shares of Series
C Preferred Stock issuable as accrued and unpaid dividends
(the "Series C Mandatory Redemption") in accordance with this
Section 6. The Corporation shall effect the Series C Mandatory
Redemption on the Redemption Date, by paying, in the sole
discretion of the Corporation, either (the "Series C
Redemption Price"):
(i) cash in exchange for each share of
Series C Preferred Stock to be redeemed on the
Redemption Date in an amount equal to the Series C
Outstanding Amount (as defined below), or
(ii) shares of, at the option of a majority
of the holders of Series C Preferred Stock, (A)
Common Stock, (B) Series B Preferred Stock or (C) a
combination of Common Stock and Series B Preferred
Stock (collectively, the "Redemption Shares"), in
each case, having an aggregate then Fair Market Value
(as defined in Article IV below) equal to the Series
C Outstanding Amount;
provided that, in the event redemption is made in shares of
Common Stock or Series B Preferred Stock (or, at the option of
a majority of the holders of Series C Preferred Stock, a
combination of Common Stock and Series B Preferred Stock), (x)
the number of shares of Common Stock to be issued in
connection with the redemption shall not exceed the relevant
portion of the Series C Redemption Price attributable to the
Common Stock divided by U.S.$1.30 (subject to adjustment
pursuant to the immediately subsequent sentence, the "Share
Price Floor") and (x) the number of shares of Series B
Preferred Stock to be issued in connection with the redemption
shall not exceed a number of shares of Series B Preferred
Stock convertible, as of the date of issuance, into a number
of shares of Common Stock equal to the relevant portion of the
Series C Redemption Price attributable to the Series B
Preferred Stock divided by the applicable Share Price Floor.
The "Share Price Floor" shall be proportionately adjusted for
any stock split, stock combination or similar event affecting
the Common Stock. Any redemption effected pursuant to this
Section 6 shall be made pro rata on the basis of the number of
shares then held by each holder of Series C Preferred Stock.
If any date fixed for redemption of shares pursuant to this
paragraph is a Saturday, Sunday or legal holiday, then such
redemption shall occur on the first business day thereafter."
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2. Amendment to the Note. The Note is hereby amended as follows.
2.1 Section 2 of the Note is hereby amended and restated in
its entirety to read as follows:
"Unless earlier converted in accordance with the terms of
Section 4 below, or repaid in accordance with the terms hereof
or reduced pursuant to Section 3 below, the entire outstanding
principal amount of this Note, together with any accrued
interest thereon, shall be due and payable in full, at the
option of the Company, (x) in cash or (y) by the issuance of a
number of shares of Series B Convertible Preferred Stock, par
value U.S.$0.01 per share (the "Series B Preferred Stock"), of
the Company with an aggregate fair market value (based upon
the value of the underlying shares of Common Stock, par value
$.001 per share, of the Company ("Common Stock") into which
such shares of Series B Preferred Stock are convertible, as of
the Maturity Date) equal to the entire outstanding principal
amount of this Note, together with any accrued interest
thereon; provided, however, that if the Common Stock is no
longer traded on a securities exchange, the Nasdaq National
Market or the Nasdaq SmallCap Market, the fair market value
shall be reasonably determined by the Company's Board of
Directors in good faith and agreed to by the holder of this
Note; and provided further, that if payment is made in shares
of Series B Preferred Stock, the fair market value of the
Common Stock, for purposes of calculating the number of shares
of Series B Preferred Stock to be issued, shall not be less
than U.S.$1.30 per share of Common Stock. Accrued interest
hereon shall not be paid in cash, but shall be capitalized and
added to the principal amount outstanding hereunder on each
Compounding Date and on each date which is the 90th day
following each Compounding Date."
Except as specifically amended pursuant to this Agreement, the Note
remains in full force and effect in accordance with its terms.
3. Additional Warrant. In the event (a) the redemption of the Series C
Preferred Stock is effected by the Company using shares of Incara Common Stock
or Series B Preferred Stock or (b) any payment made pursuant to the Note is
effected by the Company by the issuance of shares of Series B Preferred Stock
and the fair market value of the underlying shares of Incara Common Stock is
less than U.S.$1.30, then, after the redemption of the Series C Preferred Stock
or such payment pursuant to the Note, as the case may be, is effected and the
appropriate number of shares of Incara Common Stock or Series B Preferred Stock
is issued by the Company, the Company shall issue to EIS on the business day
following the redemption or payment, as the case may be, a warrant in
substantially the form of Exhibit A attached hereto (the "Warrant") exercisable
for a number of shares of Incara Common Stock, Series B Preferred Stock or a
combination thereof, at the option of EIS, equal to the sum of:
(x) a number of shares obtained by dividing (I) the dollar
value of the difference between the number of shares of Incara Common
Stock or Series B Preferred Stock that would have been issued upon such
redemption or payment, as the case may be, had the fair market value of
the underlying shares of Incara Common Stock been
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calculated at the actual fair market value (as provided in Article IV,
Section 4 of the Certificate of Designations, in the case of the
redemption, and as provided in Section 2 of the Note, in the case of
payment of the Note), rather than at a price of U.S.$1.30, by (y) the
fair market value (as provided in Section 2 of the Note) of a share of
Incara Common Stock on the date of issuance of the Warrant, and
(y) a number of shares obtained by dividing (I) the aggregate
exercise price of the number of shares calculated in clause (x) above
by (y) the fair market value (as provided in Section 2 of the Note) of
a share of Incara Common Stock on the date of issuance of the Warrant.
The Warrant shall have (i) an exercise price per share equal to the par value of
class or series of security that is the issuable upon exercise of the Warrant;
(ii) a term of five years from the date of issuance, (iii) a cash-less exercise
provision and (iv) customary anti-dilution adjustments in the event of stock
splits, stock combination, reorganizations and similar events.
The parties hereby agree (a) that the Registration Rights Agreement,
dated December 21, 2000, among the Company, EIS and EPIL, is hereby amended such
that the definition of the term "Securities" shall include the shares of Common
Stock issuable upon exercise of the Warrant and the shares of Common Stock
issuable upon conversion of any shares of Series B Preferred Stock issuable upon
exercise of the Warrant and (b) to execute, prior to or simultaneously with the
issuance of the Warrant, any reasonable and customary investment representations
or similar document to make the issuance of the Warrant comply with or qualify
for an exemption under federal, state and any other applicable jurisdiction's
securities laws.
EIS and EPIL acknowledge that, because the number of shares to be
covered by the Warrant cannot be determined at the time of this Agreement, the
Company might not have sufficient authorized shares of Incara Common Stock or
Series B Preferred Stock to enable the Company to issue the shares of Common
Stock and/or Series B Preferred Stock issuable upon exercise of the Warrant or
the shares of Common Stock issuable upon conversion of any shares of Series B
Preferred Stock issued upon exercise of the Warrant and, accordingly, the
Company might need to obtain stockholder approval for the issuance of the
Warrant to comply with Nasdaq or other exchange rules or other governmental or
regulatory regulations, and EIS and EPIL agree that such lack of approval or
sufficient shares shall not be a breach by the Company of this Agreement or any
other Transaction Document (as that term is defined in the Purchase Agreement).
In such event, Incara agrees to obtain the necessary approval of its
stockholders and any governmental entity within 90 days of the exercise of the
Warrant.
4. Existing Representations, Warrants and Covenants. The Company hereby
represents and warrants that all representations and warranties contained in the
Purchase Agreement and the Note are true and correct, in all material respects,
and the Company has complied, and is presently in compliance, in all material
respects, with all agreements and covenants set forth in the Transaction
Documents, as of the date of this Agreement.
5. Notices. All notices, demands and requests of any kind to be
delivered to any party hereunder shall be made in accordance with Section 8 of
the Purchase Agreement.
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6. Amendment and Waiver. This Agreement may not be modified or amended,
or any of the provisions hereof waived, except by written agreement of the
Company, EIS and EPIL dated after the date hereof.
7. Headings. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of the Agreement.
8. Entire Agreement. This Agreement and the Transaction Documents
contain the entire understanding of the parties with respect to the subject
matter hereof and thereof and supersede all prior agreements and understandings
among the parties with respect thereto.
9. Governing Law. This Agreement shall be governed in all respects by
the laws of the State of New York, without giving effect to principles of
conflicts of laws, and in accordance with the terms of Section 13 of the
Purchase Agreement.
10. Counterparts. This Amendment may be executed in any number of
counterparts, including by facsimile signature, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
11. Expenses. Each of the parties shall be responsible for its own
costs and expenses incurred in connection with the transactions contemplated
hereby.
12. Successors and Assigns. The provisions hereof shall inure to the
benefit of, and be binding upon, the successors and assigns of the parties
hereto.
13. Severability. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not be in any way affected or impaired thereby.
[The next page is the signature page.]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written.
Incara Pharmaceuticals Corporation
By:
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Name:
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Title:
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Elan International Services, Ltd.
(sole shareholder of Series C Preferred Stock)
By:
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Name:
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Title:
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Elan Pharma International Limited
By:
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Name:
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Title:
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