<PAGE>

                                                                  Exhibit 10.73

                       MASTER LOAN AND SECURITY AGREEMENT

         THIS AGREEMENT dated as of October __, 2001, is made by Incara
Pharmaceuticals Corporation, a Delaware corporation, having its principal place
of business and chief executive office at P.O. Box 14287, 79 T.W. Alexander
Drive, 4401 Research Commons, Suite 200, Research Triangle Park, North Carolina
27709, Aeolus Pharmaceuticals, Inc., a Delaware corporation, having its
principal place of business and chief executive office at P.O. Box 14287, 79
T.W. Alexander Drive, 4401 Research Commons, Suite 200, Research Triangle Park,
North Carolina 27709, and Incara Cell Technologies, Inc., a Delaware
corporation, having its principal place of business and chief executive office
at P.O. Box 14287, 79 T.W. Alexander Drive, 4401 Research Commons, Suite 200,
Research Triangle Park, North Carolina 27709,, (each a "Borrower" and
collectively referred to herein as the "Borrower"), in favor of Transamerica
Technology Finance Corporation, a Delaware corporation (the "Lender"), having
its principal office at Riverway II, West Office Tower, 9399 West Higgins Road,
Rosemont, Illinois 60018.

         WHEREAS, the Borrower has requested that the Lender make Loans to it
from time to time; and

         WHEREAS, the Lender has agreed to make such Loans on the terms and
conditions of this Agreement.

         NOW, THEREFORE, in consideration of the premises and to induce the
Lender to extend credit, the Borrower hereby agrees with the Lender as follows:

         SECTION  1.   DEFINITIONS.
                       -----------

         As used herein, the following terms shall have the following meanings,
and shall be equally applicable to both the singular and plural forms of the
terms defined:

Agreement shall mean this Master Loan and Security Agreement together with all
---------
schedules and exhibits hereto, as amended, supplemented, or otherwise modified
from time to time.

Applicable Law shall mean the laws of the State of Illinois (or any other
--------------
jurisdiction whose laws are mandatorily applicable notwithstanding the parties'
choice of Illinois law) or the laws of the United States of America, whichever
laws allow the greater interest, as such laws now exist or may be changed or
amended or come into effect in the future.

Business Day shall mean any day other than a Saturday, Sunday, or public holiday
------------
or the equivalent for banks in New York City.

Cash Equivalents means (i) securities issued, guaranteed or insured by the
----------------
United States or any of its agencies with maturities of not more than one year
from the date acquired; (ii) certificates of deposit with maturities of not more
than one year from the date acquired, issued by any U.S. federal or state
chartered commercial bank of recognized standing which has capital and
unimpaired surplus in excess of $100,000,000; (iii) investments in money market
funds registered under the Investment Company Act of 1940; (iv) mutual funds, at
least 90% of the assets of which constitute Cash Equivalents of the kinds
described in clauses (i) - (iii) of this definition; and (v) other instruments,
commercial paper or investments acceptable to the Lender in its sole discretion.

Code shall have the meaning specified in Section 8(d).
----

Collateral shall have the meaning specified in Section 2.
----------

Collateral Access Agreement shall mean any landlord waiver, mortgagee waiver,
---------------------------
bailee letter, or similar acknowledgement of any warehouseman or processor in
possession of any Equipment.

                                       1

<PAGE>

Contingent Obligation means any direct, indirect, contingent or non-contingent
---------------------
guaranty or obligation for the indebtedness of another Person, except
endorsements in the ordinary course of business and the contingent liability for
debt and lease obligations related to the IRL facility in Cranbury, New Jersey,
as disclosed in the Borrower's September 30, 2001 financial statements.

Effective Date shall mean the date on which all of the conditions specified in
--------------
Section 3.3 shall have been satisfied.

Equipment shall have the meaning specified in Section 2.
---------

Event of Default shall mean any event specified in Section 7.
----------------

Financial Statements shall have the meaning specified in Section 6.1.
--------------------

GAAP shall mean generally accepted accounting principles in the United States of
----
America, as in effect from time to time.

Good Faith means "good faith" as defined in the Uniform Commercial Code, from
----------
time to time in effect in the State of Illinois.

Loans shall mean the loans and financial accommodations made by the Lender to
-----
the Borrower in accordance with the terms of this Agreement and the Notes.

Loan Documents shall mean, collectively, this Agreement, the Notes, and all
--------------
other present and future documents, agreements, certificates, instruments, and
opinions delivered by the Borrower under, in connection with or relating to this
Agreement, or any other present or future instrument or agreement between Lender
and Borrower, as each of the same may be amended, modified, extended, restated
or supplemented from time to time.

Material Adverse Change shall mean, with respect to any Person, a material
-----------------------
adverse change in the business, prospects, operations, results of operations,
executive management, assets, liabilities, or condition (financial or otherwise)
of such Person taken as a whole.

Material Adverse Effect shall mean, with respect to any Person, a material
-----------------------
adverse effect on the business, prospects, operations, results of operations,
executive management, assets, liabilities, or condition (financial or otherwise)
of such Person taken as a whole.

Note shall mean each Promissory Note made by the Borrower in favor of the
----
Lender, as amended, supplemented, or otherwise modified from time to time.

Obligations shall mean and include all loans (including the Loans), advances,
-----------
debts, liabilities, obligations, covenants and duties owing by Borrower to
Lender of any kind or nature, present or future, whether or not evidenced by the
Note or any note, guaranty or other instrument, whether or not arising under or
in connection with, this Agreement, any other Loan Document or any other present
or future instrument or agreement, whether or not for the payment of money,
whether arising by reason of an extension of credit, opening, guaranteeing or
confirming of a letter of credit, loan, guaranty, indemnification or in any
other manner, whether direct or indirect (including those acquired by
assignment, purchase, discount or otherwise), whether absolute or contingent,
due or to become due, now due or hereafter arising and however acquired
(including without limitation all loans previously made by Lender to Borrower).
The term includes, without limitation, all interest (including interest accruing
on or after a bankruptcy, whether or not an allowed claim), charges, expenses,
commitment, facility, closing and collateral management fees, letter of credit
fees, reasonable attorneys' fees, taxes and any other sum properly chargeable to
Borrower under this Agreement, the other Loan Documents or any other present or
future agreement between Lender and Borrower.

Permitted Liens shall mean such of the following as to which no enforcement,
---------------
collection, execution, levy, or

                                       2

<PAGE>

foreclosure proceeding shall have been commenced: (a) liens for taxes,
assessments, and other governmental charges or levies or the claims or demands
of landlords, carriers, warehousemen, mechanics, laborers, materialmen, and
other like Persons arising by operation of law in the ordinary course of
business for sums which are not yet due and payable, or liens which are being
contested in good faith by appropriate proceedings diligently conducted and with
respect to which adequate reserves are maintained to the extent required by
GAAP; (b) deposits or pledges to secure the payment of worker's compensation,
unemployment insurance, or other social security benefits or obligations, public
or statutory obligations, surety or appeal bonds, bid or performance bonds, or
other obligations of a like nature incurred in the ordinary course of business;
(c) licenses, restrictions, or covenants for or on the use of the Equipment
which do not materially impair either the use of the Equipment in the operation
of the business of the Borrower or the value of the Equipment; and (d)
attachment or judgment liens that do not constitute an Event of Default.

Person shall mean any individual, sole proprietorship, partnership, limited
------
liability partnership, joint venture, trust, unincorporated organization,
association, corporation, limited liability company, institution, entity, party,
or government (including any division, agency, or department thereof), and the
successors, heirs, and assigns of each.

Schedule shall mean each equipment Schedule delivered by the Borrower to the
--------
Lender from time to time setting forth the Collateral and such other information
as requested by Lender or as set forth herein.

Solvent means, with respect to any Person, that as of the date as to which such
-------
Person's solvency is measured:

         (a) the fair saleable value of its assets is in excess of the total
amount of its liabilities (including contingent liabilities as valued in
accordance with GAAP) as they become absolute and matured;

         (b) it has sufficient capital to conduct its business; and

         (c) it is able generally to meet its debts as they mature.

Subsidiary means, as to any Person, a corporation or other entity in which that
----------
Person directly or indirectly owns or controls shares of stock or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or appoint other managers of such corporation or other
entity.

Taxes shall have the meaning specified in Section 5.5.
-----

SECTION 2.  CREATION OF SECURITY INTEREST; COLLATERAL. The Borrower hereby
            -----------------------------------------
assigns and grants to the Lender a continuing general, first priority lien on,
and security interest in, all the Borrower's right, title, and interest in and
to the collateral described in the next sentence (the "Collateral") to secure
the payment and performance of all the Obligations. The Collateral consists of
all equipment set forth on all the Schedules delivered from time to time under
the terms of this Agreement (the "Equipment"), together with all present and
future additions, parts, accessories, attachments, substitutions, repairs,
improvements, and replacements thereof or thereto, and any and all proceeds
thereof, including, without limitation, proceeds of insurance and all manuals,
blueprints, know-how, warranties, and records in connection therewith, all
rights against suppliers, warrantors, manufacturers, sellers, or others in
connection therewith, and together with all substitutes for any of the
foregoing.

SECTION 3.  THE CREDIT FACILITY.
            -------------------

            SECTION  3.1.  Borrowings. The Lender, subject to the terms and
conditions of this Agreement, agrees to make Loans to Borrower in the aggregate
amount of $700,000. Each Loan shall be in an amount not less than $50,000, and
in no event shall the sum of the aggregate Loans made exceed $700,000. The
timing and financial scope of Lender's obligations to make Loans are limited as
set forth herein and on Exhibit A attached hereto and made a part hereof. Each
                        ---------
Note shall have a term and shall bear interest at a rate as determined in
accordance with Exhibit A and as more particularly described in each Note.
                ---------
Notwithstanding anything herein to the contrary, the Lender shall be obligated
to make the initial Loan and each other Loan only after the Lender, in its sole
discretion,

                                       3

<PAGE>

reasonably determines that the applicable conditions for borrowing contained in
Sections 3.3 and 3.4 are satisfied.

              SECTION 3.2.  Application of Proceeds. The Borrower shall not
directly or indirectly use any proceeds of the Loans, or cause, assist, suffer,
or permit the use of any proceeds of the Loans, for any purpose other than for
the purchase, acquisition, installation, or upgrading of Equipment or the
reimbursement of the Borrower for its purchase, acquisition, installation, or
upgrading of Equipment.

              SECTION 3.3.  Conditions to Initial Loan.

              (a)    The obligation of the Lender to make the initial Loan is
subject to the Lender's receipt of the following, each dated the date of the
initial Loan or as of an earlier date acceptable to the Lender, in form and
substance satisfactory to the Lender and its counsel:

              (i)    completed requests for information (Form UCC-11) listing
all effective Uniform Commercial Code financing statements naming the Borrower
as debtor and all tax lien, judgment, and litigation searches for the Borrower
as the Lender shall deem necessary or desirable;

              (ii)   Uniform Commercial Code financing statements (Form UCC-1)
duly executed by the Borrower (naming the Lender as secured party and the
Borrower as debtor and in form acceptable for filing in all jurisdictions that
the Lender deems necessary or desirable to perfect the security interests
granted to it hereunder) and, if applicable, termination statements or other
releases duly filed in all jurisdictions that the Lender deems necessary or
desirable to perfect and protect the priority of the security interests granted
to it hereunder in the Equipment related to such initial Loan;

              (iii)  a Note duly executed by the Borrower evidencing the amount
              of such Loan;

              (iv)   a Collateral Access Agreement duly executed by the lessor
              or mortgagee, as the case may be, of each premises where the
              Equipment is located;

              (v)    certificates of insurance required under Section 5.4 of
              this Agreement together with loss payee endorsements for all such
              policies naming the Lender as lender loss payee and as an
              additional insured;

              (vi)   a certificate of the Secretary or an Assistant Secretary of
              each Borrower ("Secretary's Certificate") certifying (A) that
              attached to the Secretary's Certificate is a true, complete, and
              accurate copy of the resolutions of the Board of Directors of the
              Borrower (or a unanimous consent of directors in lieu thereof)
              authorizing the execution, delivery, and performance of this
              Agreement, the other Loan Documents, and the transactions
              contemplated hereby and thereby, and that such resolutions have
              not been amended or modified since the date of such certification
              and are in full force and effect; (B) the incumbency, names, and
              true signatures of the officers of the Borrower authorized to sign
              the Loan Documents to which it is a party; (C) that attached to
              the Secretary's Certificate is a true and correct copy of the
              Articles or Certificate of Incorporation of the Company, as
              amended, which Articles or Certificate of Incorporation have not
              been further modified, repealed or rescinded and are in full force
              and effect; (D) that attached to the Secretary's Certificate of
              the Borrower is a true and correct copy of the Bylaws, as amended,
              which Bylaws of the Company have not been further modified,
              repealed or rescinded and are in full force and effect; and (E)
              that attached to the Secretary's Certificate is a valid
              Certificate of Good Standing issued by the Secretary of the State
              of the Borrower's state of incorporation and a valid Certificate
              of Good Standing from the Secretary of the State of the state of
              Borrower's principal place of business, if different from the
              Borrower's state of incorporation;

              (vii)  a Stock Subscription Warrant (the "Warrant") in form and
              substance reasonably

                                        4

<PAGE>

              satisfactory to Lender and Borrower, being issued to TBCC Funding
              Trust II for seventeen thousand five hundred eighty-eight (17,588)
              shares of Common Stock of Incara Pharmaceuticals Corporation at an
              exercise price per share equal to $1.99 (the "Exercise Price");

              (viii) satisfaction of any conditions set forth in Exhibit A
              attached hereto;

              (ix)   determination by the Lender, as reasonably determined in
              Lender's sole discretion, that no material adverse change has
              occurred in the financial condition, operations or prospects of
              the Borrower prior to funding. The Lender reserves the right to
              rescind any unused portion of its commitment in the event of a
              material adverse change in the financial condition, operation,
              senior management or prospects of the Borrower; and

              (x)    such other agreements and instruments as the Lender deems
              necessary in connection with the transactions contemplated hereby.

              (b)    There shall be no pending or, to the knowledge of the
Borrower after due inquiry, threatened litigation, proceeding, inquiry, or other
action (i) seeking an injunction or other restraining order, damages, or other
relief with respect to the transactions contemplated by this Agreement or the
other Loan Documents or thereby or (ii) which affects or could affect the
business, prospects, operations, assets, liabilities, or condition (financial or
otherwise) of the Borrower, except, in the case of clause (ii), where such
litigation, proceeding, inquiry, or other action could not be expected to have a
Material Adverse Effect in the judgment of the Lender, as determined in Lender's
good faith business judgment.

              (c)    The Borrower shall have paid all fees and expenses required
to be paid by it to the Lender as of such date.

              (d)    The security interests in the Equipment related to the
initial Loan granted in favor of the Lender under this Agreement shall have been
duly perfected and shall constitute first priority liens.

              SECTION 3.4.  Conditions Precedent to Each Loan.  The obligation
of the Lender to make each Loan is subject to the satisfaction of the following
conditions precedent:

              (a)    the Lender shall have received the documents, agreements,
and instruments set forth in Section 3.3(a)(i) through (x) applicable to such
Loan, each in form and substance satisfactory to the Lender and its counsel and
each dated the date of such Loan or as of an earlier date acceptable to the
Lender;

              (b)    the Lender shall have received a Schedule of the Equipment
related to such Loan, in form and substance satisfactory to the Lender and its
counsel, and the security interests in such Equipment related to such Loan
granted in favor of the Lender under this Agreement shall have been duly
perfected and shall constitute first priority liens;

              (c)    all representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct on and as of
the date of such Loan as if then made, other than representations and warranties
that expressly relate solely to an earlier date, in which case they shall have
been true and correct as of such earlier date;

              (d)    no Event of Default or event which with the giving of
notice or the passage of time, or both, would constitute an Event of Default
shall have occurred and be continuing or would result from the making of the
requested Loan as of the date of such request;

              (e)    no Material Adverse Change or Material Adverse Effect shall
have occurred as

                                        5

<PAGE>

determined by Lender in its good faith business judgment; and

             (f) the Borrower shall be deemed to have hereby reaffirmed and
ratified all security interests, liens, and other encumbrances heretofore
granted by the Borrower to the Lender.

SECTION  4.  THE BORROWER'S REPRESENTATIONS AND WARRANTIES.
             ---------------------------------------------

             SECTION 4.1. Good Standing; Qualified to do Business. The Borrower
(a) is duly organized, validly existing, and in good standing under the laws of
the State of its organization, (b) has the power and authority to own its
properties and assets and to transact the businesses in which it is presently,
or proposes to be, engaged, and (c) is duly qualified and authorized to do
business and is in good standing in every jurisdiction in which the failure to
be so qualified could have a Material Adverse Effect on (i) the Borrower, (ii)
the Borrower's ability to perform its obligations under the Loan Documents, or
(iii) the rights of the Lender hereunder.

             SECTION 4.2. Due Execution, etc. The execution, delivery, and
performance by the Borrower of each of the Loan Documents to which it is a party
are within the powers of the Borrower, do not contravene the organizational
documents, if any, of the Borrower, and do not (a) violate any law or
regulation, or any order or decree of any court or governmental authority, (b)
conflict with or result in a breach of, or constitute a default under, any
material indenture, mortgage, or deed of trust or any material lease, agreement,
or other instrument binding on the Borrower or any of its properties, or (c)
require the consent, authorization by, or approval of or notice to or filing or
registration with any governmental authority or other Person. This Agreement is,
and each of the other Loan Documents to which the Borrower is or will be a
party, when delivered hereunder or thereunder, will be, the legal, valid, and
binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally
and by general principles of equity.

             SECTION 4.3. Solvency; No Liens. The Borrower is Solvent and will
be Solvent upon the completion of all transactions contemplated to occur
hereunder (including, without limitation, the Loan to be made on the Effective
Date); the security interests granted herein constitute and shall at all times
constitute the first and only liens on the Collateral other than Permitted
Liens; and the Borrower is, or will be at the time additional Collateral is
acquired by it, the absolute owner of the Collateral with full right to pledge,
sell, consign, transfer, and create a security interest therein, free and clear
of any and all claims or liens in favor of any other Person other than Permitted
Liens.

             SECTION 4.4. No Judgments, Litigation. No judgments are outstanding
against the Borrower nor is there now pending or, to the best of the Borrower's
knowledge after diligent inquiry, threatened any litigation, contested claim, or
governmental proceeding by or against the Borrower except judgments and pending
or threatened litigation, contested claims, and governmental proceedings which
would not, in the aggregate, have a Material Adverse Effect on the Borrower.

             SECTION 4.5. No Defaults. The Borrower is not in default or has not
received a notice of default under any material contract, lease, or commitment
to which it is a party or by which it is bound. The Borrower knows of no dispute
regarding any contract, lease, or commitment which could have a Material Adverse
Effect on the Borrower.

             SECTION 4.6. Collateral Locations. On the date hereof, each item of
the Collateral is located at the place of business specified in the applicable
Schedule.

             SECTION 4.7. Corporate and Trade Names; Federal Tax ID. During the
past five years, Borrower has not been known by or used any other corporate,
trade or fictitious name, other than Intercardia, Inc. (which was the previous
name of Incara Pharmaceuticals Corporation) and Renaissance Cell Technologies,
Inc. (which was the previous name of Incara Cell Technologies, Inc.) except for
its name as set forth on the signature

                                        6

<PAGE>

page of this Agreement and the other names specified in the Schedule. The
Borrower's Federal Tax ID number is as set forth in the Schedule.

             SECTION 4.8. No Events of Default. No Event of Default has occurred
and is continuing nor has any event occurred which, with the giving of notice or
the passage of time, or both, would constitute an Event of Default.

             SECTION 4.9. No Limitation on Lender's Rights. Except as permitted
herein, none of the Collateral is subject to contractual obligations that may
restrict or inhibit the Lender's rights or abilities to sell or dispose of the
Collateral or any part thereof after the occurrence of an Event of Default.

             SECTION 4.10. Perfection and Priority of Security Interest. This
Agreement creates a valid and, upon completion of all required filings of
financing statements, perfected first priority and exclusive security interest
in the Collateral, securing the payment of all the Obligations.

             SECTION 4.11. Model and Serial Numbers. The Schedules set forth the
true and correct model number and serial number of each item of Equipment that
constitutes Collateral.

             SECTION 4.12. Accuracy and Completeness of Information. All data,
reports, and information heretofore, contemporaneously, or hereafter furnished
by or on behalf of the Borrower in writing to the Lender or for purposes of or
in connection with this Agreement or any other Loan Document, or any transaction
contemplated hereby or thereby, are or will be true and accurate in all material
respects on the date as of which such data, reports, and information are dated
or certified and not incomplete by omitting to state any material fact necessary
to make such data, reports, and information not misleading at such time. There
are no facts now known to the Borrower which individually or in the aggregate
would reasonably be expected to have a Material Adverse Effect and which have
not been specified herein, in the Financial Statements, or in any certificate,
opinion, or other written statement previously furnished by the Borrower to the
Lender.

             SECTION 4.13. Price of Equipment. The cost of each item of
Equipment does not exceed the fair and usual price for such type of equipment
purchased in like quantity and reflects all discounts, rebates and allowances
for the Equipment (including, without limitation, discounts for advertising,
prompt payment, testing, or other services) given to the Borrower by the
manufacturer, supplier, or any other person.

SECTION  5.  COVENANTS OF THE BORROWER.
             -------------------------

             SECTION 5.1. Existence, etc. The Borrower shall: (a) retain its
existence and its current yearly accounting cycle, (b) maintain in full force
and effect all licenses, bonds, franchises, leases, trademarks, patents,
contracts, and other rights necessary or desirable to the profitable conduct of
its business unless the failure to do so could not reasonably be expected to
have a Material Adverse Effect on the Borrower, (c) continue in, and limit its
operations to, the same general lines of business as those presently conducted
by it, and (d) comply with all applicable laws and regulations of any federal,
state, or local governmental authority, except for such laws and regulations the
violations of which would not, in the aggregate, have a Material Adverse Effect
on the Borrower.

             SECTION 5.2. Notice to the Lender. As soon as possible, and in any
event within fifteen days after the Borrower learns of the following, the
Borrower will give written notice to the Lender of (a) any proceeding instituted
or threatened to be instituted by or against the Borrower in any federal, state,
local, or foreign court or before any commission or other regulatory body
(federal, state, local, or foreign) involving a sum, together with the sum
involved in all other similar proceedings, in excess of $100,000 in the
aggregate, (b) any contract that is terminated or amended and which has had or
could reasonably be expected to have a Material Adverse Effect on the Borrower,
(c) the occurrence of any Material Adverse Change with respectto the Borrower,
and (d) the occurrence of any Event of Default or event or condition which, with
notice or lapse of time or both, would constitute an Event of Default, together
with a statement of the action which the Borrower has taken or proposes to take
with respect

                                        7

<PAGE>

thereto.

             SECTION 5.3. Maintenance of Books and Records. The Borrower will
maintain books and records pertaining to the Collateral in such detail, form,
and scope as the Lender shall require in its commercially reasonable judgment.
The Borrower agrees that the Lender or its agents, upon appropriate notice, may
enter upon the Borrower's premises at any time and from time to time during
normal business hours, and at any time upon the occurrence and continuance of an
Event of Default, for the purpose of inspecting the Collateral and any and all
records (financial or otherwise) pertaining to the Collateral and the Borrower.

             SECTION 5.4. Insurance. The Borrower will maintain insurance on the
Collateral under such policies of insurance, with such insurance companies, in
such amounts, and covering such risks as are at all times reasonably
satisfactory to the Lender. All such policies shall be made payable to the
Lender, in case of loss, under a standard non-contributory "lender" or "secured
party" clause and are to contain such other provisions as the Lender may
reasonably require to protect the Lender's interests in the Collateral and to
any payments to be made under such policies. Certificates of insurance policies
are to be delivered to the Lender, premium prepaid, with the loss payable
endorsement in the Lender's favor, and shall provide for not less than thirty
days' prior written notice to the Lender, of any alteration or cancellation of
coverage. If the Borrower fails to maintain such insurance, the Lender may, upon
3 days prior written notice arrange for (at the Borrower's expense and without
any responsibility on the Lender's part for) obtaining the insurance. Unless the
Lender shall otherwise agree with the Borrower in writing, the Lender shall have
the sole right, in the name of the Lender or the Borrower, to file claims under
any insurance policies, to receive and give acquittance for any payments that
may be payable thereunder, and to execute any endorsements, receipts, releases,
assignments, reassignments, or other documents that may be necessary to effect
the collection, compromise, or settlement of any claims under any such insurance
policies with regard to the Collateral.

             SECTION 5.5. Taxes. The Borrower will pay, when due, all taxes,
assessments, claims, and other charges ("Taxes") lawfully levied or assessed
against the Borrower or the Collateral other than taxes that are being
diligently contested in good faith by the Borrower by appropriate proceedings
promptly instituted and for which an adequate reserve is being maintained by the
Borrower in accordance with GAAP. If any Taxes remain unpaid after the date
fixed for the payment thereof, or if any lien shall be claimed therefor, then,
without notice to the Borrower, but on the Borrower's behalf, the Lender may pay
such Taxes, and the amount thereof shall be included in the Obligations.

             SECTION 5.6. Borrower to Defend Collateral Against Claims; Fees on
Collateral. The Borrower will defend the Collateral against all claims and
demands of all Persons at any time claiming the same or any interest therein.
The Borrower will not permit any notice creating or otherwise relating to liens
on the Collateral or any portion thereof to exist or be on file in any public
office other than Permitted Liens. The Borrower shall promptly pay, when
payable, all transportation, storage, and warehousing charges and license fees,
registration fees, assessments, charges, permit fees, and taxes (municipal,
state, and federal) which may now or hereafter be imposed upon the ownership,
leasing, renting, possession, sale, or use of the Collateral, other than taxes
on or measured by the Lender's income and fees, assessments, charges, and taxes
which are being contested in good faith by appropriate proceedings diligently
conducted and with respect to which adequate reserves are maintained to the
extent required by GAAP.

             SECTION 5.7. No Change of Location, Structure, or Identity. The
Borrower will not (a) change the location of its chief executive office or
establish any place of business other than those specified herein or (b) move or
permit the movement of any item of Collateral from the location specified in the
applicable Schedule, except that the Borrower may change its chief executive
office and keep Collateral at other locations within the United States provided
that the Borrower has delivered to the Lender (i) prior written notice thereof
and (ii) duly executed financing statements and other agreements and instruments
(all in form and substance satisfactory to the Lender) necessary or, in the
opinion of the Lender, desirable to perfect and maintain in favor of the Lender
a first priority security interest in the Collateral. Notwithstanding anything
to the contrary in the immediately preceding sentence, the Borrower may keep any
Collateral consisting of motor vehicles or rolling stock at any location in the

                                        8

<PAGE>

United States provided that the Lender's security interest in any such
Collateral is conspicuously marked on the certificate of title thereof and the
Borrower has complied with the provisions of Section 5.9.

             SECTION 5.8.  Use of Collateral; Licenses; Repair. The Collateral
shall be operated by competent, qualified personnel in connection with the
Borrower's business purposes, for the purpose for which the Collateral was
designed and in accordance with applicable operating instructions, laws, and
government regulations, and the Borrower shall use every reasonable precaution
to prevent loss or damage to the Collateral from fire and other hazards. The
Collateral shall not be used or operated for personal, family, or household
purposes. The Borrower shall procure and maintain in effect all orders,
licenses, certificates, permits, approvals, and consents required by federal,
state, or local laws or by any governmental body, agency, or authority in
connection with the delivery, installation, use, and operation of the
Collateral. The Borrower shall keep all of the Equipment in a satisfactory state
of repair and satisfactory operating condition in accordance with industry
standards, and will make all repairs and replacements when and where necessary
and practical. The Borrower will not waste or destroy the Equipment or any part
thereof, and will not be negligent in the care or use thereof. The Equipment
shall not be annexed or affixed to or become part of any realty without the
Lender's prior written consent.

             SECTION 5.9.  Further Assurances. The Borrower will, promptly upon
request by the Lender, execute and deliver or use its best efforts to obtain any
document required by the Lender (including, without limitation, warehouseman or
processor disclaimers, mortgagee waivers, landlord disclaimers, or subordination
agreements with respect to the Obligations and the Collateral), give any
notices, execute and file any financing statements, mortgages, or other
documents (all in form and substance satisfactory to the Lender), mark any
chattel paper, deliver any chattel paper or instruments to the Lender, and take
any other actions that are necessary or, in the opinion of the Lender, desirable
to perfect or continue the perfection and the first priority of the Lender's
security interest in the Collateral, to protect the Collateral against the
rights, claims, or interests of any Persons, or to effect the purposes of this
Agreement. The Borrower hereby authorizes the Lender to file one or more
financing or continuation statements, and amendments thereto, relating to all or
any part of the Collateral without the signature of the Borrower where permitted
by law. A carbon, photographic, or other reproduction of this Agreement or any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law. To the extent
required under this Agreement, the Borrower will pay all costs incurred in
connection with any of the foregoing.

             SECTION 5.10. No Disposition of Collateral. The Borrower will not
in any way hypothecate or create or permit to exist any lien, security interest,
charge, or encumbrance on or other interest in any of the Collateral, except for
the lien and security interest granted hereby and Permitted Liens which are
junior to the lien and security interest of the Lender, and the Borrower will
not sell, transfer, assign, pledge, collaterally assign, exchange, or otherwise
dispose of any of the Collateral. In the event the Collateral, or any part
thereof, is sold, transferred, assigned, exchanged, or otherwise disposed of in
violation of these provisions, the security interest of the Lender shall
continue in such Collateral or part thereof notwithstanding such sale, transfer,
assignment, exchange, or other disposition, and the Borrower will hold the
proceeds thereof in a separate account for the benefit of the Lender. Following
such a sale, the Borrower will transfer such proceeds to the Lender in kind.

             SECTION 5.11. No Limitation on Lender's Rights. The Borrower will
not enter into any contractual obligations which may restrict or inhibit the
Lender's rights or ability to sell or otherwise dispose of the Collateral or any
part thereof.

             SECTION 5.12. Protection of Collateral. Upon notice to the Borrower
(provided that if an Event of Default has occurred and is continuing the Lender
need not give any notice), the Lender shall have the right at any time to make
any payments and do any other acts the Lender may deem necessary to protect its
security interests in the Collateral, including, without limitation, the rights
to satisfy, purchase, contest, or compromise any encumbrance, charge, or lien
which, in the reasonable judgment of the Lender, appears to be prior to or
superior to the security interests granted hereunder, and appear in, and defend
any action or proceeding purporting to affect its security interests in, or the
value of, any of the Collateral. The Borrower hereby agrees to reimburse the
Lender for

                                        9

<PAGE>

all payments made and expenses incurred under this Agreement including fees,
expenses, and disbursements of attorneys and paralegals (including the allocated
costs of in-house counsel) acting for the Lender, including any of the foregoing
payments under, or acts taken to protect its security interests in, any of the
Collateral, which amounts shall be secured under this Agreement, and agrees it
shall be bound by any payment made or act taken by the Lender hereunder absent
the Lender's gross negligence or willful misconduct. The Lender shall have no
obligation to make any of the foregoing payments or perform any of the foregoing
acts.

             SECTION 5.13. Delivery of Items. The Borrower will (a) promptly
(but in no event later than five Business Days) after its receipt thereof,
deliver to the Lender any documents or certificates of title issued with respect
to any property included in the Collateral, and any promissory notes, letters of
credit or instruments related to or otherwise in connection with any property
included in the Collateral, which in any such case come into the possession of
the Borrower, or shall cause the issuer thereof to deliver any of the same
directly to the Lender, in each case with any necessary endorsements in favor of
the Lender and (b) deliver to the Lender as soon as available copies of any and
all press releases and other similar communications issued by the Borrower.

             SECTION 5.14. Solvency. The Borrower shall be and remain Solvent at
all times.

             SECTION 5.15. Fundamental Changes. The Borrower shall not (a) amend
or modify its name, unless the Borrower delivers to the Lender thirty days prior
to any such proposed amendment or modification written notice of such amendment
or modification and within ten days before such amendment or modification
delivers executed Uniform Commercial Code financing statements (in form and
substance satisfactory to the Lender) or (b) merge or consolidate with any other
entity or make any material change in its capital structure, in each case
without the Lender's prior written consent which shall not be unreasonably
withheld.

             SECTION 5.16. Contingent Obligations. Borrower will not, directly
or indirectly, incur, assume, or suffer to exist any Contingent Obligation,
excluding indemnities given in connection with this Agreement or the other Loan
Documents in favor of the Lender or in connection with the sale of inventory or
other asset dispositions permitted hereunder, except Contingent Obligations and
other similar third party credit support relating to obligations of vendors and
suppliers of Borrower in respect of transactions entered into in the normal
course of business, provided that the aggregate amount of any such guarantees
and other similar third party credit support shall not exceed $100,000 at any
time outstanding, and provided further that no Default or Event of Default shall
exist either immediately prior to or after giving effect to the making of the
foregoing guarantees or the entering into any third party credit support
transactions.

             SECTION 5.17. Change in Nature of Business. Borrower will not at
any time make any material change in the lines of its business as carried on at
the date of this Agreement or enter into any new line of business; provided that
Borrower may enter businesses reasonably related or incidental to its current
lines of business.

             SECTION 5.18. Sales of Assets. Borrower will not, directly or
indirectly, in any fiscal year, sell, transfer or otherwise dispose of any
material assets to its business, or grant any option or other right to purchase
or otherwise acquire any material assets to its business other than (i)
equipment with an aggregate value of less than $150,000, provided such assets
are not any part of the Collateral of Lender, (ii) sales of inventory in the
ordinary course of business and (iii) licenses or sublicenses of intellectual
property to third parties in the ordinary course of Borrower's business and with
approval of the Board of Directors in arms length transactions.

             SECTION 5.19. Loans to Other Persons. Borrower will not at any time
make loans or advance any credit (except to trade debtors in the ordinary course
of business) to any Person in excess of $25,000 in the aggregate at any time for
all such loans, except that Borrower may make cashless advances of credit to
senior members of Borrower's management team to purchase restricted stock of
Borrower.

             SECTION 5.20  Dividends, Stock Redemptions. Borrower will not,
directly or indirectly, pay

                                       10

<PAGE>

any dividends or distributions on, purchase, redeem or retire any shares of any
class of its capital stock or any warrants, options or rights to purchase any
such capital stock, whether now or hereafter outstanding ("Stock"), or make any
payment on account of or set apart assets for a sinking or other analogous fund
for, the purchase, redemption, defeasance, retirement or other acquisition of
its Stock, or make any other distribution in respect thereof, either directly or
indirectly, whether in cash or property or in obligations of Borrower, except
for dividends paid solely in stock of the Borrower and repurchases of stock
owned by employees, directors and consultants of Borrower pursuant to terms of
employment, consulting or other stock restrictions agreements at such time as
any such employee, director or consultant terminates his or her affiliations
with the Borrower, provided that no Default or Event of Default shall exist
either immediately prior to or after giving effect to such repurchase, and
provided further that the total amount paid in connection therewith by Borrower
shall not exceed $100,000 in any consecutive 12-month period.

            SECTION 5.21. Investments in Other Persons. Borrower will not,
directly or indirectly, at any time make or hold any investment in any Person
(whether in cash, securities or other property of any kind) other than
investments in Cash Equivalents or in a Subsidiary.

            SECTION 5.22. Acquisition of Stock or Assets. Borrower will not
acquire or commit or agree to acquire all or any stock, securities or assets of
any other Person in a cash or cashless transaction other than inventory and
equipment acquired in the ordinary course of business without the Lender's prior
written consent, which shall not be unreasonably withheld.

            SECTION 5.23. Partnerships; Subsidiaries; Joint Ventures; Management
Contracts. Borrower will not at any time create any direct or indirect
Subsidiary, enter into any joint venture or similar arrangement (other than
joint ventures or strategic partnerships consisting of licensing of technology,
collaborative research and development arrangements in the ordinary course of
business or the providing of technical support) or become a partner in any
general or limited partnership or enter into any management contract (other than
an employment contract for the employment of an officer or employee entered into
in the regular course of Borrower's business) permitting third party management
rights with respect to Borrower's business.

            SECTION 5.24. Additional Requirements. The Borrower shall take all
such further actions and execute all such further documents and instruments as
the Lender may reasonably request.

            SECTION 5.25. Transfers. Borrower shall not transfer any of the
Collateral financed hereunder in any transaction of any kind or nature
(collectively "Transfers") to Incara Development, Ltd.

SECTION 6.  FINANCIAL STATEMENTS. Until the payment and satisfaction in full of
            --------------------
all Obligations, the Borrower shall deliver to the Lender the following
financial information:

            SECTION 6.1. Annual Financial Statements. As soon as available, but
not later than 120 days after the end of each fiscal year of the Borrower and
its consolidated subsidiaries, the consolidated balance sheet, income statement,
and statements of cash flows and shareholders equity for the Borrower and its
consolidated subsidiaries (the "Financial Statements") for such year, reported
on by independent certified public accountants without an adverse qualification;
and

            SECTION 6.2. Quarterly Financial Statements. As soon as available,
but not later than 60 days after the end of each of the first three fiscal
quarters in any fiscal year of the Borrower and its consolidated subsidiaries,
the Financial Statements for such fiscal quarter, together with a certification
duly executed by a responsible officer of the Borrower that such Financial
Statements have been prepared in accordance with GAAP and are fairly stated in
all material respects (subject to normal year-end audit adjustments).

            SECTION 6.3. Monthly Financial Statements. As soon as available, but
not later than thirty (30) days after the end of each month, a company-prepared
balance sheet, income statement and cash flow statement

                                       11

<PAGE>

covering operations of the Borrower and its consolidated subsidiaries during
such period, certified by an officer of the Borrower.

SECTION 7.  EVENTS OF DEFAULT. The occurrence of any of the following events
            -----------------
shall constitute an Event of Default hereunder:

            (a)  the Borrower shall fail to pay when due any amount required to
be paid by the Borrower under or in connection with any Note and this Agreement;

            (b)  any representation or warranty made or deemed made by the
Borrower under or in connection with any Loan Document or any Financial
Statement shall prove to have been false or incorrect in any material respect
when made;

            (c)  the Borrower shall fail to perform or observe (i) any of the
terms, covenants or agreements contained in Sections 5.4, 5.7, 5.10, 5.14, or
5.15 through 5.25 hereof or (ii) any other term, covenant, or agreement
contained in any Loan Document (other than the other Events of Default specified
in this Section 7) and such failure remains unremedied for the earlier of
fifteen days from (A) the date on which the Lender has given the Borrower
written notice of such failure and (B) the date on which the Borrower knew or
should have known of such failure;

            (d)  any provision of any Loan Document to which the Borrower is a
party shall for any reason cease to be valid and binding on the Borrower, or the
Borrower shall so state;

            (e)  dissolution, liquidation, winding up, or cessation of the
Borrower's business, failure of the Borrower generally to pay its debts as they
mature, admission in writing by the Borrower of its inability generally to pay
its debts as they mature, or calling of a meeting of the Borrower's creditors
for purposes of compromising any of the Borrower's debts;

            (f)  the commencement by or against the Borrower of any bankruptcy,
insolvency, arrangement, reorganization, receivership, or similar proceedings
under any federal or state law and, in the case of any such involuntary
proceeding, such proceeding remains undismissed or unstayed for forty-five days
following the commencement thereof, or any action by the Borrower is taken
authorizing any such proceedings;

            (g)  an assignment for the benefit of creditors is made by the
Borrower, whether voluntary or involuntary, the appointment of a trustee,
custodian, receiver, or similar official for the Borrower or for any substantial
property of the Borrower, or any action by the Borrower authorizing any such
proceeding;

            (h)  the Borrower shall default in (i) the payment of principal or
interest on any indebtedness in excess of $50,000 (other than the Obligations)
beyond the period of grace, if any, provided in the instrument or agreement
under which such indebtedness was created; or (ii) the observance or performance
of any other agreement or condition relating to any such indebtedness or
contained in any instrument or agreement relating thereto, or any other event
shall occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such indebtedness
to cause, with the giving of notice if required, such indebtedness to become due
prior to its stated maturity;

            (i)  the Borrower suffers or sustains a Material Adverse Change or
Material Adverse Effect as reasonably determined by Lender in its sole
discretion;

            (j)  any tax lien, other than a Permitted Lien, is filed of record
against the Borrower and is not bonded or discharged within five Business Days;

            (k)  any judgment which has had or could reasonably be expected to
have a Material Adverse Effect on the Borrower and such judgment shall not be
stayed, vacated, bonded, or discharged within sixty days;

                                       12

<PAGE>

            (l)  any material covenant, agreement, or obligation, as reasonably
determined in the sole discretion of the Lender, made by the Borrower and
contained in or evidenced by any of the Loan Documents shall cease to be
enforceable, or shall be determined to be unenforceable, in accordance with its
terms; the Borrower shall deny or disaffirm the Obligations under any of the
Loan Documents or any liens granted in connection therewith; or any liens
granted on any of the Collateral in favor of the Lender shall be determined to
be void, voidable, or invalid, or shall not be given the priority contemplated
by this Agreement; or

            (m)  there is a change, which change results from a single
transaction or series of related transactions, but not from the sale of newly
issued securities to investors, in more than 50% of the ownership of any equity
interests of the Borrower on the date hereof or more than 50% of such interests
become subject to any contractual, judicial, or statutory lien, charge, security
interest, or encumbrance.


SECTION 8.  REMEDIES. If any Event of Default shall have occurred and be
            --------
continuing:

            (a)  The Lender may, without prejudice to any of its other rights
under any Loan Document or Applicable Law, declare all Obligations to be
immediately due and payable (except with respect to any Event of Default set
forth in Section 7(f) hereof, in which case all Obligations shall automatically
become immediately due and payable without necessity of any declaration) without
presentment, representation, demand of payment, or protest, which are hereby
expressly waived.

            (b)  The Lender may take possession of the Collateral and, for that
purpose may enter, with the aid and assistance of any person or persons, any
premises where the Collateral or any part hereof is, or may be placed, and
remove the same.

            (c)  The obligation of the Lender, if any, to make additional Loans
or financial accommodations of any kind to the Borrower shall immediately
terminate.

            (d)  The Lender may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein (or in any Loan
Document) or otherwise available to it, all the rights and remedies of a secured
party under the applicable Uniform Commercial Code (the "Code") whether or not
the Code applies to the affected Collateral and also may (i) require the
Borrower to, and the Borrower hereby agrees that it will at its expense and upon
request of the Lender forthwith, assemble all or part of the Collateral as
directed by the Lender and make it available to the Lender at a place to be
designated by the Lender that is reasonably convenient to both parties and (ii)
without notice except as specified below, sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of the Lender's
offices or elsewhere, for cash, on credit, or for future delivery, and upon such
other terms as the Lender may deem commercially reasonable. The Borrower agrees
that, to the extent notice of sale shall be required by law, at least ten days'
notice to the Borrower of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. The Lender shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Lender may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned.

            (e)  All cash proceeds received by the Lender in respect of any sale
of, collection from, or other realization upon all or any part of the Collateral
may, in the discretion of the Lender, be held by the Lender as collateral for,
or then or at any time thereafter applied in whole or in part by the Lender
against, all or any part of the Obligations in such order as the Lender shall
elect. Any surplus of such cash or cash proceeds held by the Lender and
remaining after the full and final payment of all the Obligations shall be paid
over to the Borrower or to such other Person to which the Lender may be required
under applicable law, or directed by a court of competent jurisdiction, to make
payment of such surplus.

                                       13

<PAGE>

SECTION 9.  MISCELLANEOUS PROVISIONS.
            ------------------------

            SECTION 9.1. Notices. Except as otherwise provided herein, all
notices, approvals, consents, correspondence, or other communications required
or desired to be given hereunder shall be given in writing and shall be
delivered by overnight courier, hand delivery, or certified or registered mail,
postage prepaid, if to the Lender, then to Transamerica Commercial Finance
Corporation, 76 Batterson Park Road, Farmington, Connecticut 06032, Attention:
Legal Department, and if to the Borrower, then to each Borrower c/o Richard W.
Reichow, Executive Vice President and Chief Financial Officer, Incara
Pharmaceuticals Corporation, P.O. Box 14287, 79 T.W. Alexander Drive, 4401
Research Commons, Suite 200, Research Triangle Park, North Carolina 27709, or
such other address as shall be designated by the Borrower or the Lender to the
other party in accordance herewith. All such notices and correspondence shall be
effective when received.

            SECTION 9.2. Headings. The headings in this Agreement are for
purposes of reference only and shall not affect the meaning or construction of
any provision of this Agreement.

            SECTION 9.3. Assignments. The Borrower shall not have the right to
assign any Note or this Agreement or any interest therein, other than by
operation of law, unless the Lender shall have given the Borrower prior written
consent and the Borrower and its assignee shall have delivered assignment
documentation in form and substance satisfactory to the Lender in its sole
discretion. The Lender may assign its rights and delegate its obligations under
any Note or this Agreement.

            SECTION 9.4. Amendments, Waivers, and Consents. Any amendment or
waiver of any provision of this Agreement and any consent to any departure by
the Borrower from any provision of this Agreement shall be effective only by a
writing signed by the Lender and shall bind and benefit the Borrower and the
Lender and their respective successors and assigns, subject, in the case of the
Borrower, to the first sentence of Section 9.3.

            SECTION 9.5. Interpretation of Agreement. Time is of the essence in
each provision of this Agreement of which time is an element. All terms not
defined herein or in a Note shall have the meaning set forth in the applicable
Code, except where the context otherwise requires. To the extent a term or
provision of this Agreement conflicts with any Note, or any term or provision
thereof, and is not dealt with herein with more specificity, this Agreement
shall control with respect to the subject matter of such term or provision.
Acceptance of or acquiescence in a course of performance rendered under this
Agreement shall not be relevant in determining the meaning of this Agreement
even though the accepting or acquiescing party had knowledge of the nature of
the performance and opportunity for objection.

            SECTION 9.6. Continuing Security Interest. This Agreement shall
create a continuing security interest in the Collateral and shall (i) remain in
full force and effect until the indefeasible payment in full of the Obligations,
(ii) be binding upon the Borrower and its successors and assigns and (iii)
inure, together with the rights and remedies of the Lender hereunder, to the
benefit of the Lender and its successors, transferees, and assigns.

            SECTION 9.7. Reinstatement. To the extent permitted by law, this
Agreement and the rights and powers granted to the Lender hereunder and under
the Loan Documents shall continue to be effective or be reinstated if at any
time any amount received by the Lender in respect of the Obligations is
rescinded or must otherwise be restored or returned by the Lender upon the
insolvency, bankruptcy, dissolution, liquidation, or reorganization of the
Borrower or upon the appointment of any receiver, intervenor, conservator,
trustee, or similar official for the Borrower or any substantial part of its
assets, or otherwise, all as though such payments had not been made.

            SECTION 9.8. Survival of Provisions. All representations,
warranties, and covenants of the Borrower contained herein shall survive the
execution and delivery of this Agreement, and shall terminate only upon the full
and final payment and performance by the Borrower of the Obligations secured
hereby.

            SECTION 9.9. Indemnification. The Borrower agrees to indemnify and
hold harmless the

                                       14

<PAGE>

Lender and its directors, officers, agents, employees, and counsel from and
against any and all costs, expenses, claims, or liability incurred by the Lender
or such Person hereunder and under any other Loan Document or in connection
herewith or therewith, unless such claim or liability shall be due to willful
misconduct or gross negligence on the part of the Lender or such Person.

            SECTION 9.10. Power of Attorney and Authorization. Borrower hereby
irrevocably authorizes and appoints Lender, or any person TBCC may designate, as
its attorney-in-fact and/or authorized representative, at Borrower's sole cost
and expense, to exercise all of the following powers, which are coupled with an
interest and all of which are irrevocable: (A) to give or sign Borrower's name
to any UCC financing statement, or any notices or other document necessary or
desirable to create, perfect or continue Lender's security interest in any
Collateral, and to make any payment or take any act necessary or desirable to
protect or preserve any Collateral or Lender security interest therein or the
priority thereof, or in order to fully consummate all the transactions
contemplated under this Agreement or any other Loan Document; (B) to receive,
take, endorse, sign, assign and deliver, all in the name of Lender or Borrower,
any and all checks, notes, drafts, and other documents or instruments relating
to the Collateral; and (C) to take or bring, in the name of Lender or Borrower,
all steps, actions, suits or proceedings, and execute all documents, deemed by
Lender necessary or desirable to enforce or effect collection of any Collateral
or to convey any item of Collateral to any purchaser thereof.

            SECTION 9.11. Counterparts; Telecopied Signatures. This Agreement
may be executed in counterparts, each of which when so executed and delivered
shall be an original, but both of which shall together constitute one and the
same instrument. This Agreement and each of the other Loan Documents and any
notices given in connection herewith or therewith may be executed and delivered
by telecopier or other facsimile transmission all with the same force and effect
as if the same was a fully executed and delivered original manual counterpart.

            SECTION 9.12. Severability. In case any provision in or obligation
under this Agreement or any Note or any other Loan Document shall be invalid,
illegal, or unenforceable in any jurisdiction, the validity, legality, and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.

            SECTION 9.13. Delays; Partial Exercise of Remedies. No delay or
omission of the Lender to exercise any right or remedy hereunder, whether before
or after the happening of any Event of Default, shall impair any such right or
shall operate as a waiver thereof or as a waiver of any such Event of Default.
No single or partial exercise by the Lender of any right or remedy shall
preclude any other or further exercise thereof, or preclude any other right or
remedy.

            SECTION 9.14. Entire Agreement. The Borrower and the Lender agree
that this Agreement, and the Note(s), Schedule(s) and Exhibit(s) hereto, are the
complete and exclusive statement and agreement between the parties with respect
to the subject matter hereof, superseding all proposals and prior agreements,
oral or written, and all other communications between the parties with respect
to the subject matter hereof.

            SECTION 9.15. Setoff. In addition to and not in limitation of all
rights of offset that the Lender may have under Applicable Law, and whether or
not the Lender has made any demand or the Obligations of the Borrower have
matured, the Lender shall have the right to appropriate and apply to the payment
of the Obligations of the Borrower all deposits and other obligations then or
thereafter owing by the Lender to or for the credit or the account of the
Borrower.

            SECTION 9.16. WAIVER OF JURY TRIAL. THE BORROWER AND THE LENDER
IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

                                       15

<PAGE>

         SECTION 9.17. GOVERNING LAW. THE VALIDITY, INTERPRETATION, AND
ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAW PRINCIPLES THEREOF.

         SECTION 9.18. Venue; Service of Process. ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE
COURTS OF THE STATE OF ILLINOIS SITUATED IN COOK COUNTY, OR OF THE UNITED STATES
OF AMERICA FOR THE NORTHERN DISTRICT OF ILLINOIS, AND, BY EXECUTION AND DELIVERY
OF THIS AGREEMENT, THE BORROWER HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. THE BORROWER HEREBY IRREVOCABLY WAIVES, IN CONNECTION WITH ANY SUCH
ACTION OR PROCEEDING, (a) ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, THAT IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION
OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND (b) THE RIGHT TO INTERPOSE
ANY NONCOMPULSORY SETOFF, COUNTERCLAIM, OR CROSS-CLAIM. THE BORROWER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER AT THE ADDRESS FOR IT SPECIFIED
IN SECTION 9.1 HEREOF. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE LENDER TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE BORROWER IN ANY OTHER JURISDICTION,
SUBJECT IN EACH INSTANCE TO THE PROVISIONS HEREOF WITH RESPECT TO RIGHTS AND
REMEDIES.

Signature page to follow.
------------------------

                                       16

<PAGE>

Signature page to Master Loan and Security Agreement.
----------------------------------------------------


IN WITNESS WHEREOF, the undersigned Borrower has caused this Agreement to be
duly executed and delivered by its proper and duly authorized officer as of the
date first set forth above.

Incara Pharmaceuticals Corporation

By:________________________________________________
   Name:
   Title:
   Federal Tax ID No.:

Aeolus Pharmaceuticals, Inc.

By:________________________________________________
   Name:
   Title:
   Federal Tax ID No.:

Incara Cell Technologies, Inc.

By:________________________________________________
   Name:
   Title:
   Federal Tax ID No.:





Accepted as of the
____ day of ________, 2001

TRANSAMERICA TECHNOLOGY FINANCE CORPORATION

By:________________________________________________
   Name:
   Title:

                                       17

<PAGE>

                                  Exhibit A to

                       Master Loan and Security Agreement

Borrower:      Incara Pharmaceuticals Corporation
               Aeolus Pharmaceuticals, Inc.
               Incara Cell Technologies, Inc.

Date:          October __, 2001

This Schedule is an integral part of the Master Loan and Security Agreement
between TRANSAMERICA TECHNOLOGY FINANCE CORPORATION ("Lender") and Borrower of
even date ("Agreement").

1. Amount of Loans: Subject to the terms and conditions of the Agreement, an
   ---------------
amount not to exceed the sum of $700,000 in the aggregate.

2. Use of Proceeds: Laboratory, computer and related equipment, software and
   ---------------
other soft costs. Notwithstanding anything contained above to the contrary,
software and other soft costs, as determined by Lender in its sole discretion
(collectively "Soft Costs") shall not exceed 20% in the aggregate of any Loan
and shall not exceed 20% of all Loans. Only equipment or soft costs 90 days old
or less will be financed at cost. Equipment and Soft Costs older than 90 days
old and less than 180 days old at the time of funding will be financed at 80% of
the original equipment cost. Any equipment older than 180 days old at the time
of funding will be financed at the sole discretion of the Lender.

3. Draw Down Expiration: All Loans under this Agreement must be drawn down by
   --------------------
Borrower on or before January 1, 2002 ("Draw-Down Expiration Date"). A minimum
of $150,000 shall be drawn down by Borrower on or before November 15, 2001, or
Lender shall have the right to reduce its commitment by such amount.

 .  Term, Interest Rate, Monthly Payment Factor, Balloon Payment, Change in
   -----------------------------------------------------------------------
Monthly Payments. Each Note evidencing a Loan shall have a term of 42 months,
----------------
contain a balloon payment as described below and shall bear interest at an
interest rate as determined below and more particularly described in the Note or
Notes related hereto. Monthly payments equal to 2.854% of the principal amount
of each Loan will be payable monthly in advance ("Monthly Payment"). The first
Monthly Payment will be due and payable on or before commencement of each Loan
Term. In addition to the above payments, at the end of each loan term, in
addition to the final Monthly Payments due under each Note, the Borrower shall
be obligated to pay to Lender and shall pay Lender a final balloon payment equal
to 5% of the original principal amount of each Loan, plus any other payments
then due and owing to Lender. An interim payment will accrue from the date each
loan term commences until the next following first day of a month (unless the
loan term commences on the first day of a month). The interim payment will be
calculated at the daily equivalent of the currently adjusted Monthly Payment.
Notwithstanding anything contained above to the contrary, Lender reserves the
right to increase or decrease the rate set forth above as of the date each loan
term commences commensurate to the change in the weekly average of the interest
rates of like-term U.S. Treasury Securities (as published in the Wall Street
Journal) from the week ending March 23, 2001 (4.42%) to the week preceding the
commencement of that loan term. As of the date each loan term commences, the
Monthly Payment will be fixed for that entire loan term.

                                       18

<PAGE>

5. Fees: Application Fee: The $10,000 application fee previously paid by
   ----  ---------------
Borrower shall be retained by the Lender and applied pro rata (based on the
amount of each funding to the total $700,000 facility) to the second month's
payment due under the loan.

6. Expenses: All costs and expenses incurred by the Lender in connection with
   --------
the underwriting and closing of the Loans will be paid by the Borrower whether
or not any Loans are consummated and funds are advanced by the Lender. Such
expenses shall not exceed $2,500 without the prior consent of the Borrower.
Borrower will be billed separately for Expenses.

7. Location of Collateral: 79 T.W. Alexander Drive, 4401 Research Commons, Suite
   ----------------------
102 and 200, Research Triangle Park, NC 27709

8. Conditions to Initial Loan: In addition to the conditions and requirements
   --------------------------
set forth in Section 3.3 of the Agreement, the following conditions and/or
requirements are also required in connection with the Initial Loan:

     (a) Stock Subscription Warrant (the "Warrant") in form and substance
     reasonably satisfactory to Lender and Borrower , being issued to TBCC
     Funding Trust II for seventeen thousand five hundred eighty-eight (17,588)
     shares of Common Stock of Incara Pharmaceuticals Corporation at an exercise
     price per share equal to $1.99 (the "Exercise Price");



Signature page to follow.
-------------------------

                                       19

<PAGE>

Signature page to Exhibit A to Master Loan and Security Agreement.
-----------------------------------------------------------------

Borrower:                                    Lender:
--------                                     ------

INCARA PHARMACEUTICALS CORPORATION           TRANSAMERICA TECHNOLOGY FINANCE
                                             CORPORATION

By_______________________________            By_______________________________
Title____________________________            Title____________________________

AEOLUS PHARMACEUTICALS, INC.

By_______________________________
Title____________________________

INCARA CELL TECHNOLOGIES, INC.

By_______________________________
Title____________________________

                                       20