Document:

Convertible Secured Promissory Note

 EXHIBIT 10.97 
  
 CONVERTIBLE SECURED PROMISSORY NOTE 
  

	 $3,000,000
	 	Maturity Date:

 December 24, 2003 
  
 FOR VALUE RECEIVED, Incara Cell Technologies, Inc. (the “Maker”) hereby promises to pay to the order of Goodnow
Capital, Inc. or its successors, assigns and legal representatives (the “Holder”), at 152 West 57th Street, 21st Floor, New York, New York 10019, or at such other location as the Holder may designate from time to time, the aggregate
principal sum of all advances (each, an “Advance” and, collectively, the Advances”) made by the Holder to the Maker, in lawful money of the United States of America, together with interest on each such Advance at a rate of 10% per
annum. 
  
 1. Advances. The Holder shall make Advances to
the Maker from time to time upon the request of the Maker, subject to a limit of Three Million Dollars ($3,000,000), only in accordance with the terms of the budget attached hereto as Exhibit A (the “Budget”) or any development plan
(the “Plan”) approved in writing by the Holder and Incara Pharmaceuticals Corporation (“Incara”), or as otherwise determined by the Holder in its sole discretion. The proceeds of any Advance shall be used by the Maker only for
the specific purposes set forth in the Budget or as otherwise approved in advance in writing by the Holder. For purposes of clarity, the reference in the preceding sentence to the Maker’s use of proceeds of any Advance shall be deemed to
include the making of advances to Incara for its payment of those payables specified in the Budget. The principal amount of each Advance made by the Holder and all payments made by the Maker shall be entered by the Holder on its books and records;
which books and records shall be conclusive evidence of the amounts outstanding hereunder absent manifest error. For as long as any amount payable under this Note remains unpaid, the Holder shall have full and complete access to the Maker’s
books and records (including the right to make copies thereof and take extracts therefrom) for purposes of ensuring that the proceeds of any Advance are being used for the specific purposes set forth in the Budget or the Plan or as otherwise
approved in advance in writing by the Holder. 
  
 2. Maturity
Date. The aggregate principal amount of the Advances and accrued interest thereon shall be due and payable on the earlier of (i) December 24, 2003 and (ii) the consummation of a merger (the “Merger”) of a wholly owned subsidiary of the
Maker with and into Incara (the “Maturity Date”). 
  
 3.
Interest on Overdue Amounts. If the Maker fails to pay any amount hereunder when due, whether on the Maturity Date, upon acceleration or otherwise, and such failure continues for a period of five (5) business days or more, interest shall
thereafter accrue on any overdue amounts at a rate of 15% per annum until paid in full. 

 4. Calculation of Interest. Interest hereunder shall be calculated on the basis of a 360-day year
for the actual number of days elapsed. 
  
 5. Prepayment.
The Maker may not prepay this Note at any time without the prior written consent of the Holder. Any permitted prepayments hereunder shall be applied first, to the payment of any expenses then owed to the Holder, second, to accrued interest on this
Note and third, to the payment of the principal outstanding under this Note. The Maker shall not have the right to set off or otherwise deduct from amounts payable by it hereunder any amounts whether liquidated or unliquidated, which the Holder or
any of its affiliates may owe to the Maker, which right is hereby expressly waived to the maximum extent permitted by applicable law. 
  
 6. Conversion. 
  
 (a) At any time on or prior to the Maturity Date, the Holder shall have the right to convert all, but not less than all, of the principal of and accrued
interest on this Note into a number (rounded down in the case of any fractional shares) of fully paid and non-assessable shares of Common Stock, par value $.001 per share, of the Maker (“Common Stock”) equal to the amount being converted
divided by $.10 per share (the “Conversion Price”), which Conversion Price assumes that the common stock of Incara will be converted into Common Stock on a one-for-one basis in the Merger. The Conversion Price shall be appropriately
adjusted for stock splits, reverse stock splits, reclassifications, recapitalizations, or other similar occurrences affecting the number of shares of Common Stock outstanding or the number of shares of Incara common stock outstanding. 
  
 (b) To effect the conversion of this Note, the Holder shall surrender this
Note to the Maker together with a written notice of conversion specifying the date on which such conversion is to be effected, which date may not be less than two business days after the date of such notice, unless the Maker consents to an earlier
date (such date, the “Conversion Date”) and a representation letter to the Maker containing customary private placement representations and warranties so that the issuance of the shares of Common Stock upon conversion of this Note shall be
exempt from registration under the Securities Act of 1933, as amended. Promptly following the Conversion Date, the Maker shall issue to the Holder the shares of Common Stock into which this Note has been converted, registered in the name of the
Holder or its nominee and shall mail the certificate(s) representing such shares to the Holder at the address specified by the Holder. From and after the Conversion Date, the Holder shall be treated for all purposes as the owner of the shares of
Common Stock into which this Note has been converted and the certificate(s) for such shares shall be issued as of the Conversion Date. As used herein, “business day” means a day, other than a Saturday or Sunday, on which commercial banks
in New York City are open for the general transaction of business. 
  
 (c) Notwithstanding the other provisions of this Section 6, the principal of and accrued interest on this Note shall automatically be converted into fully 
  

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 paid and non-assessable shares of Common Stock at the Conversion Price without any action on the part of the Holder upon
consummation of the Merger. 
  
 (d) The Maker shall, prior to any
conversion of this Note by the Holder or any automatic conversion of this Note pursuant to Section 6(c), have reserved a sufficient number of duly authorized shares of Common Stock to satisfy the conversion rights granted to the Holder hereunder.

  
 7. Representations and Warranties. The Maker hereby
represents and warrants to the Holder as follows: 
  
 (a) The
Maker is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, with full power and authority to own or lease its property and assets and to carry on its business as presently conducted.

  
 (b) The Maker has full corporate power and authority to
execute and deliver this Note, and the Security Agreement, dated of even date herewith (the “Security Agreement”), and to perform its obligations hereunder and thereunder, all of which have been duly authorized by all requisite corporate
action. Each of this Note and the Security Agreement have been duly authorized, executed and delivered by the Maker and constitute a valid and binding obligation of the Maker, enforceable against the Maker in accordance with its terms. 

 
 (c) Except as set forth in a schedule of exceptions of even date herewith
provided to the Holder (the “Schedule of Exceptions”), neither the execution and delivery of this Note or the Security Agreement nor the performance by the Maker of its obligations hereunder or thereunder will (i) contravene any provision
contained in the Maker’s Certificate of Incorporation or by-laws, (ii) violate or result in a breach (with or without the lapse of time, the giving of notice or both) of or constitute a default under (A) any contract, agreement, commitment,
indenture, mortgage, lease, pledge, note, license, permit or other instrument or obligation or (B) any judgment, order, decree, law, rule or regulation or other restriction of any governmental authority, in each case to which the Maker is a party or
by which it is bound or to which any of its assets or properties are subject, (iii) result in the creation or imposition of any Lien (as defined below) on any of the Maker’s assets or properties (except for the security interests created
pursuant to the Security Agreement), or (iv) result in the acceleration of, or permit any person or entity to accelerate or declare due and payable prior to its stated maturity, any obligation of the Maker. 
  
 (d) No notice to, filing with, or authorization, registration, consent or
approval of any governmental authority or other person or entity is necessary for the execution, delivery or performance of this Note or the Security Agreement or the consummation of the transactions contemplated hereby or thereby. 
  
 (e) The shares of Common Stock issuable upon conversion of this Note in
accordance with its terms have been duly authorized and reserved for issuance, 
  

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 and when issued upon the due conversion of this Note, shall be validly issued, fully paid and non-assessable. 

 
 8. Covenants. The Maker agrees that, so long as any amount payable
under this Note remains unpaid, it will not, without the prior written consent of the Holder: 
  
 (a) create, incur, guarantee, issue, assume or in any manner become liable in respect of, any obligation (i) for borrowed money, (ii) evidenced by bonds, debentures, notes, or other similar instruments, (iii) in
respect of letters of credit or other similar instruments (or reimbursement obligations with respect thereto), except letters of credit or other similar instruments issued to secure payment of trade payables arising in the ordinary course of
business consistent with past practices, (iv) to pay the deferred purchase price of property or services, except trade payables arising in the ordinary course of business consistent with past practices, (v) as lessee under capitalized leases, (vi)
secured by a Lien (as defined below) on any asset of the Maker, whether or not such obligation is assumed by the Maker and (vii) of any other person or entity, other than indebtedness for borrowed money existing on the date of this Note or other
obligations or other liabilities incurred in connection with Liens permitted to be incurred under Section 8(b)(vi) or 8(b)(vii) hereof; 
  
 (b) create, incur, assume or suffer to exist any lien, claim, pledge, charge, security interest or encumbrance of any kind (“Liens”) on any
asset now owned or hereafter acquired by it, except: 
  
 (i)
Liens existing on the date hereof; 
  
 (ii) Liens for taxes or
assessments and similar charges either (x) not delinquent or (y) contested in good faith by appropriate proceedings and as to which the Maker shall have set aside on its books adequate reserves; 
  
 (iii) Liens incurred or pledges and deposits in connection with
workers’ compensation, unemployment insurance and other social security benefits, or securing the performance bids, tenders, leases, contracts (other than for the repayment of borrowed money), statutory obligations, progress payments, surety
and appeal bonds and other obligations of like nature, incurred in the ordinary course of business; 
  
 (iv) Liens imposed by law, such as mechanics’, carriers’, warehousemen’s, materialmen’s and vendors’ Liens, incurred in good
faith in the ordinary course of business; 
  
 (v) zoning
restrictions, easements, licenses, covenants, reservations, restrictions on the use of real property or minor irregularities of title incident thereto which do not in the aggregate materially detract from the value of the property or assets of the
Maker taken as a whole or impair the use of such property in the operation of the Maker’s business; 
  

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 (vi) Liens incurred or assumed which are either purchase money Liens upon or in any property acquired or
Liens in connection with capital lease transactions in the ordinary course of business; and 
  
 (vii) other Liens incidental to the conduct of the Maker’s business or the ownership of its property and assets which were not incurred in connection with the borrowing of money, and which do not in the aggregate
materially detract from the value of its property or assets; 
  
 (c) declare or make any (i) any dividend, distribution or other payment on any capital stock of the Maker or (ii) any payment on account of the purchase, redemption, retirement or acquisition of (A) any capital stock or (B) any option,
warrant or other right to acquire capital stock of the Maker; or 
  
 (d) cease to be a wholly owned, direct subsidiary of Incara (other than as a result of the Merger). 
  
 9. Events of Default. Each of the following shall constitute an “Event of Default” hereunder: 
  
 (a) The Maker shall fail to pay any amount under this Note when due (whether
at the Maturity Date, upon acceleration or otherwise); 
  
 (b) The
Maker shall (i) fail to use the proceeds of any Advance only for the specific purposes set forth in the Budget or the Plan or as otherwise approved in advance in writing by the Holder, (ii) fail to afford the Holder full and complete access to its
books and records as specified in Section 1, or (iii) shall fail to observe or perform any of the covenants set forth in Section 8. 
  
 (c) The Maker shall fail to observe or perform any other covenant or agreement contained in this Note or the Security Agreement and such failure shall
continue for a period of thirty (30) days; 
  
 (d) Any
representation or warranty made by the Maker in this Note or the Security Agreement shall have been untrue or misleading in any material respect when made; 
  
 (e) The Maker fails to make a required payment or payments on indebtedness for borrowed money of Twenty-Five Thousand Dollars ($25,000) or more in
aggregate principal amount; 
  
 (f) There shall have occurred an
acceleration of the stated maturity of any indebtedness for borrowed money of the Maker of Twenty-Five Thousand Dollars ($25,000) or more in aggregate principal amount (which acceleration is not rescinded, annulled or otherwise cured within ten (10)
days of receipt by the Maker of notice of such acceleration); 
  

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 (g) Any covenant, agreement or obligation of the Maker in the Security Agreement shall cease to be
enforceable, or shall be determined to be unenforceable in any material respect; or any of the security interests granted to the Holder in the Security Agreement shall be determined to be void, voidable, invalid or unperfected, are subordinated or
are ineffective to provide the Holder with a perfected, first priority security interest in the collateral covered by the Security Agreement; 
  
 (h) Any Event of Default shall have occurred and be continuing under the Guaranty, dated of even date herewith (the “Guaranty”), made by Incara;

  
 (i) Any Event of Default shall have occurred and be continuing
under the Security Agreement, dated of even date herewith, made by Incara in favor of the Holder; 
  
 (j) The Maker shall merge or consolidate with or into any other person or entity, sell, transfer, lease or otherwise dispose of all or any substantial
portion of its assets in one transaction or a series of related transactions, participate in any share exchange, consummate any recapitalization, reclassification, reorganization or other business combination transaction or adopt a plan of
liquidation or dissolution or agree to do any of the foregoing (other than the Merger); 
  
 (k) The Holder, the Maker and Incara shall not have entered into a definitive agreement for the Merger on or before September 15, 2003; 
  
 (l) The Merger shall not have been consummated on or before December 24, 2003; 
  
 (m) The Merger shall not for any reason result in the automatic conversion of
Incara’s outstanding Series C Preferred Stock, par value $0.01 per share (“Series C Preferred Stock”), into shares of the Maker’s Series B Preferred Stock at a conversion price of $64.90 per share immediately upon consummation of
the Merger or any holder of the Series C Preferred Stock shall commence, prior to the consummation of the Merger, an action, suit or proceeding to avoid or contest such conversion; 
  
 (n) One or more judgments in an aggregate amount in excess of Twenty-Five Thousand Dollars ($25,000) shall have been
rendered against the Maker and such judgment or judgments remain undischarged or unstayed for a period of sixty (60) days after such judgment or judgments become or became, as the case may be, final and unappealable; 
  
 (o) The Maker shall have applied for or consented to the appointment of a
custodian, receiver, trustee or liquidator, or other court-appointed fiduciary of all or a substantial part of its properties; or a custodian, receiver, trustee or liquidator or other court appointed fiduciary shall have been appointed with or
without the consent of the Maker; or the Maker is generally not paying its debts as they become due by means of 
  

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 available assets or is insolvent, or has made a general assignment for the benefit of creditors; or the Maker files a
voluntary petition in bankruptcy, or a petition or an answer seeking reorganization or an arrangement with creditors or seeking to take advantage of any insolvency law, or an answer admitting the material allegations of a petition in any bankruptcy,
reorganization or insolvency proceeding or has taken action for the purpose of effecting any of the foregoing; or if, within sixty (60) days after the commencement of any proceeding against the Maker seeking any reorganization, rehabilitation,
arrangement, composition, readjustment, liquidation, dissolution or similar relief under the Federal bankruptcy code or similar order under future similar legislation, the appointment of any trustee, receiver, custodian, liquidator, or other
court-appointed fiduciary of the Maker or of all or any substantial part of its properties, such order or appointment shall not have been vacated or stayed on appeal or otherwise or if, within sixty (60) days after the expiration of any such stay,
such order or appointment shall not have been vacated (collectively, an “Insolvency Event”); or 
  
 (p) any Insolvency Event shall have occurred with respect to Incara. 
  
 Upon the occurrence of any Event of Default, the Holder may, at its option, declare all amounts due hereunder to be due and
payable immediately and, upon any such declaration, the same shall become and be immediately due and payable. If an Event of Default specified in clauses (o) or (p) occurs, then all amounts due hereunder shall become immediately due and payable
without any declaration or other act on the part of the Holder. Upon the occurrence of any Event of Default, the Holder may, in addition to declaring all amounts due hereunder to be immediately due and payable, pursue any available remedy, whether
at law or in equity, including, without limitation, exercising its rights under the Guaranty and the Security Agreement. If an Event of Default occurs, the Maker shall pay to the Holder the reasonable attorneys’ fees and disbursements and all
other out-of-pocket costs incurred by the Holder in order to collect amounts due and owing under this Note or otherwise to enforce the Holder’s rights and remedies hereunder and under the Security Agreement. 
  
 10. Secured Obligation. This Note is the Note referred to in the
Security Agreement and is secured by the collateral described therein (collectively, the “Collateral”). The Security Agreement grants the Holder certain rights with respect to the Collateral upon an Event of Default. 
  
 11. Reimbursement of Expenses. In addition to its other obligations
hereunder, not later than the close of business on the date hereof or one (1) business day after receipt of an invoice therefor, the Maker shall reimburse the Holder for the fees and disbursements incurred by the Holder’s counsel in connection
with the preparation, negotiation and execution of this Note. 
  
 12. Waiver of Presentment, Demand and Dishonor. The Maker hereby waives presentment for payment, protest, demand, notice of protest, notice of non-payment and diligence with respect to this Note, and waives and renounces all rights
to the benefit of any statute of limitations or any moratorium, appraisement, exemption or homestead now 
  

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 provided or that hereafter may be provided by any federal or applicable state statute, including but not limited to
exemptions provided by or allowed under the Federal Bankruptcy Code, both as to itself and as to all of its property, whether real or personal, against the enforcement and collection of the obligations evidenced by this Note and any and all
extensions, renewals and modifications hereof. 
  
 No failure on
the part of the Holder hereof to exercise any right or remedy hereunder with respect to the Maker, whether before or after the happening of an Event of Default, shall constitute a waiver of any future Event of Default or of any other Event of
Default. No failure to accelerate the debt of the Maker evidenced hereby by reason of an Event of Default or indulgence granted from time to time shall be construed to be a waiver of the right to insist upon prompt payment thereafter; or shall be
deemed to be a novation of this Note or a reinstatement of such debt evidenced hereby or a waiver of such right of acceleration or any other right, or be construed so as to preclude the exercise of any right the Holder may have, whether by the laws
of the state governing this Note, by agreement or otherwise; and the Maker hereby expressly waives the benefit of any statute or rule of law or equity that would produce a result contrary to or in conflict with the foregoing. 
  
 13. Amendment; Waiver. No modification, alteration, waiver or change
of any of the provisions hereof shall be effective unless in writing and signed by the Maker and the Holder and, then, only to the extent set forth in such writing. 
  
 14. Governing Law; Consent to Jurisdiction. This Note shall be binding upon the Maker and its successors, assigns and
legal representatives. The validity, construction and interpretation of this Note will be governed, and construed in accordance with, the laws of the State of New York. THE MAKER HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
LITIGATION WITH RESPECT TO THIS NOTE AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER. 
  
 The Maker irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in New York County and the United States
District Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Note and the transactions contemplated hereby. Service of process in connection with any such suit,
action or proceeding may be served on the Maker anywhere in the world by the same methods as are specified for the giving of notices under the Security Agreement. The Maker irrevocably consents to the jurisdiction of any such court in any such suit,
action or proceeding and to the laying of venue in such court. The Maker irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit,
action or proceeding brought in any such court has been brought in an inconvenient forum. 
  

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	 ATTEST:
	 	 	 	 INCARA CELL TECHNOLOGIES, INC.

				
	  

	 	 	 	 By:
	 	  

	 Name:
	 	 	 	 	 	 Name:
	 	 
	 	 	 	 	 	 	 Title:
	 	 

  
 Dated: July 28, 2003 
  

 9Guaranty dated July 28, 2003

 EXHIBIT 10.98 
  
 GUARANTY 
  
 GUARANTY, dated July 28, 2003 (the “Guaranty”), made by Incara Pharmaceuticals Corporation (the “Guarantor”) in favor of Goodnow
Capital, Inc. (the “Beneficiary”). 
  
 W
I T N E S S E T H: 
  
 WHEREAS, the Guarantor owns 100% of the outstanding capital stock of Incara Cell Technologies, Inc. (the “Borrower”); and 
  
 WHEREAS, the Beneficiary has agreed to make certain advances (the “Advances”) to the Borrower from time to time
pursuant to the terms of a Convertible Secured Promissory Note, dated of even date herewith (the “Note”); and 
  
 WHEREAS, the obligations of the Borrower under the Note are secured pursuant to the terms of a Security Agreement, dated of even date herewith (the
“Borrower Security Agreement”), made by the Borrower in favor of the Beneficiary; and 
  
 WHEREAS, the Guarantor will benefit substantially from the Advances; and 
  
 WHEREAS, it is a condition precedent to the Beneficiary’s obligation to make Advances to the Borrower that the
Guarantor provide this Guaranty; and 
  
 WHEREAS, in order to
induce the Beneficiary to make the Advances, the Guarantor has agreed to guarantee the payment obligations of the Borrower under the Note on the terms and subject to the conditions hereof; and 
  
 WHEREAS, the obligations of the Guarantor under this Guaranty are secured
pursuant to the terms of a Security Agreement, dated of even date herewith (the “Security Agreement”), made by the Borrower in favor of the Beneficiary; and 
  
 WHEREAS, a subsidiary of the Borrower intends to merge with and into the Guarantor (the “Merger”) following the
date hereof with the result that the Guarantor will become a wholly owned subsidiary of the Borrower. 
  
 NOW, THEREFORE, the Guarantor, intending to be legally bound, hereby agrees as follows: 
  
 1 Guaranty. The Guarantor hereby irrevocably and unconditionally guarantees to the Beneficiary, irrespective of the
validity and enforceability of the Notes, the Borrower Security Agreement or the obligations of the Borrower thereunder, that: (a) the principal and interest on the Note will be duly and punctually paid in full when due, whether at maturity, by
acceleration or otherwise, and interest on the overdue principal and (to the 

 extent permitted by law) interest on any interest, if any, on the Note and all other payment obligations of the Borrower
to the Beneficiary thereunder or under the Borrower Security Agreement will be promptly paid in full or performed, all in accordance with the terms thereof; and (b) in case of any extension of time of payment or renewal of the Note or any of such
other obligations, the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment when due of any amount so guaranteed,
for whatever reason, the Guarantor will be obligated to pay, or to perform or cause the performance of, the same immediately. An Event of Default under the Note or the Borrower Security Agreement shall constitute an event of default under this
Guaranty and shall entitle the Beneficiary to accelerate the obligations of the Guarantor hereunder in the same manner and to the same extent as the obligations of the Borrower. 
  
 2. Obligations Absolute. The Guarantor hereby agrees that its obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Note or the Borrower Security Agreement, the absence of any action to enforce the same, any waiver or consent by the Beneficiary with respect to any provisions of the Note or the
Borrower Security Agreement, any release of any other guarantor of such obligations, the recovery of any judgment against the Borrower, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a guarantor. 
  
 3. Waiver of Defenses;
Notices. The Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Borrower, protest, notice and all demands whatsoever and covenants that this Guaranty
will not be discharged except by complete performance of the obligations contained in the Note, the Borrower Security Agreement and this Guaranty. If the Beneficiary is required by any court or otherwise to return to the Borrower or to the
Guarantor, or any custodian, trustee, liquidator or other similar official acting in relation to the Borrower or the Guarantor, any amount paid by the Borrower or the Guarantor to the Beneficiary, this Guaranty, to the extent theretofore discharged,
shall be reinstated in full force and effect. 
  
 4.
Acceleration of Obligations. The Guarantor agrees that, as between it, on the one hand, and the Beneficiary, on the other hand, the maturity of the obligations guaranteed hereby may be accelerated as provided in the Note, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (ii) in the event of any acceleration of such obligations as provided in the Note, such obligations (whether or not due and
payable) shall forthwith become due and payable by the Guarantor for purposes of this Guaranty. 
  
 5. Expenses of Collection. If the Guarantor fails to pay any amount hereunder when due, the Guarantor shall be obligated to pay to the Beneficiary
on demand the reasonable attorneys’ fees and disbursements and all other reasonable out-of-pocket costs incurred by the Beneficiary in order to collect amounts due and owing hereunder or otherwise to enforce the Beneficiary’s rights and
remedies hereunder. 
  

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 6. No Subrogation. Notwithstanding any payment or payments made by the Guarantor hereunder, the
Guarantor shall not be entitled to be subrogated to any of the rights of the Beneficiary against the Borrower or any collateral security or guarantee or right of offset held by the Beneficiary for the payment of the obligations guaranteed hereby,
nor shall the Guarantor seek or be entitled to seek any contribution or reimbursement from the Borrower in respect of payments made by the Guarantor hereunder, until all amounts owing to the Beneficiary by the Borrower on account of the obligations
guaranteed hereby are paid in full. If any amount shall be paid to the Guarantor on account of such subrogation rights at any time when all of such obligations shall not have been paid in full, such amount shall be held by the Guarantor in trust for
the Beneficiary, segregated from other funds of the Guarantor, and shall, forthwith upon receipt by the Guarantor, be turned over to the Beneficiary in the exact form received by the Guarantor (duly indorsed by the Guarantor to the Beneficiary, if
required), to be applied against the obligations guaranteed hereby, whether matured or unmatured, in such order as the Beneficiary may determine. 
  
 7. Representations and Warranties. The Guarantor hereby represents and warrants to the Beneficiary as follows: 
  
 (a) The Guarantor is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, with full power and authority to own or lease its property and assets and to carry on its business as presently conducted. 
  
 (b) The Guarantor has full corporate power and authority to execute and deliver this Guaranty and the Security Agreement
and to perform its obligations hereunder and thereunder, all of which have been duly authorized by all requisite corporate action. Each of this Guaranty and the Security Agreement have been duly authorized, executed and delivered by the Guarantor
and constitute a valid and binding obligation of the Guarantor, enforceable against the Guarantor in accordance with its terms. 
  
 (c) Except as set forth in a schedule of exceptions, dated of even date herewith, provided to the Beneficiary, neither the execution and delivery of this
Guaranty or the Security Agreement nor the performance by the Guarantor of its obligations hereunder or thereunder will (i) contravene any provision contained in the Guarantor’s Certificate of Incorporation or by-laws, (ii) violate or result in
a breach (with or without the lapse of time, the giving of notice or both) of or constitute a default under (A) any contract, agreement, commitment, indenture, mortgage, lease, pledge, note, license, permit or other instrument or obligation or (B)
any judgment, order, decree, law, rule or regulation or other restriction of any governmental authority, in each case to which the Guarantor is a party or by which it is bound or to which any of its assets or properties are subject, (iii) result in
the creation or imposition of any Lien (as defined below) on any of the Guarantor’s assets or properties (except for the security interests created pursuant to the Security Agreement), or (iv) result in the acceleration of, or permit any person
or entity to accelerate or declare due and payable prior to its stated maturity, any obligation of the Guarantor. 
  

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 (d) No notice to, filing with, or authorization, registration, consent or approval of any governmental
authority or other person or entity is necessary for the execution, delivery or performance of this Guaranty or the Security Agreement or the consummation of the transactions contemplated hereby or thereby. 
  
 8. Covenants. The Guarantor agrees that, so long as any amount payable
under the Note remains unpaid, it will not, without the prior written consent of the Beneficiary: 
  
 (a) create, incur, guarantee, issue, assume or in any manner become liable in respect of, any obligation (i) for borrowed money, (ii) evidenced by bonds,
debentures, notes, or other similar instruments, (iii) in respect of letters of credit or other similar instruments (or reimbursement obligations with respect thereto), except letters of credit or other similar instruments issued to secure payment
of trade payables arising in the ordinary course of business consistent with past practices, (iv) to pay the deferred purchase price of property or services, except trade payables arising in the ordinary course of business consistent with past
practices, (v) as lessee under capitalized leases, (vi) secured by a Lien (as defined below) on any asset of the Guarantor, whether or not such obligation is assumed by the Guarantor and (vii) of any other person or entity, other than indebtedness
for borrowed money existing on the date of this Guaranty or other obligations or other liabilities incurred in connection with Liens permitted to be incurred under Section 8(b)(vi) or 8(b)(vii) hereof; 
  
 (b) create, incur, assume or suffer to exist any lien, claim, pledge,
charge, security interest or encumbrance of any kind (“Liens”) on any asset now owned or hereafter acquired by it, except: 
  
 (i) Liens existing on the date hereof; 
  
 (ii) Liens for taxes or assessments and similar charges either (x) not delinquent or (y) contested in good faith by appropriate proceedings and as to
which the Guarantor shall have set aside on its books adequate reserves; 
  
 (iii) Liens incurred or pledges and deposits in connection with workers’ compensation, unemployment insurance and other social security benefits, or securing the performance bids, tenders, leases, contracts
(other than for the repayment of borrowed money), statutory obligations, progress payments, surety and appeal bonds and other obligations of like nature, incurred in the ordinary course of business; 
  
 (iv) Liens imposed by law, such as mechanics’, carriers’,
warehousemen’s, materialmen’s and vendors’ Liens, incurred in good faith in the ordinary course of business; 
  
 (v) zoning restrictions, easements, licenses, covenants, reservations, restrictions on the use of real property or minor irregularities of title incident
thereto which do not in the aggregate materially detract from the value of the property or assets of the Guarantor taken as a whole or impair the use of such property in the operation of the Guarantor’s business; 
  

 4 

 (vi) Liens incurred or assumed which are either purchase money Liens upon or in any property acquired or
Liens in connection with capital lease transactions in the ordinary course of business; and 
  
 (vii) other Liens incidental to the conduct of the Guarantor’s business or the ownership of its property and assets which were not incurred in connection with the borrowing of money, and which do not in the
aggregate materially detract from the value of its property or assets; 
  
 (c) except for the accrual or payment of dividends on the Guarantor’s Series C Preferred Stock as required by the terms of the Series C Preferred Stock, declare or make any (i) any dividend, distribution or other payment on any capital
stock of the Guarantor or (ii) any payment on account of the purchase, redemption, retirement or acquisition of (A) any capital stock or (B) any option, warrant or other right to acquire capital stock of the Guarantor; 
  
 (d) issue or sell any shares of its capital stock or any securities
convertible into or exchangeable for shares of its capital stock or any options, warrants or rights to acquire or to subscribe for any shares of its capital stock; provided, however, that this Section 8(d) shall not apply to the issuance of shares
of capital stock upon (i) the exercise or conversion of rights outstanding on the date hereof, (ii) the exercise of options granted to directors, officers or consultants of the Guarantor or its subsidiaries, or the regularly scheduled purchase of
shares at a discount by employees pursuant to the Guarantor’ 1995 Employee Stock Purchase Plan (the next regularly scheduled purchase of which is scheduled for September 30, 2003), each pursuant to a plan approved by the Board of Directors of
the Guarantor (the “Board”) or the compensation committee thereof, and (iii) the repayment of the secured convertible promissory note dated July 11, 2003 in the principal amount of $35,000 issued by the Guarantor to W. Ruffin Woody, Jr.;
or 
  
 (e) take or refrain from taking any action that results in
Incara Cell Technologies (“ICT”) ceasing to be a wholly owned, direct subsidiary of the Guarantor, other than as a result of the Merger. 
  
 8A. AEOL-10150 Development. The Guarantor agrees that, so long as any amount payable under the Note remains unpaid, the Beneficiary or its
representative shall have the right to consult with the Guarantor from time to time during regular business hours regarding the regulatory and clinical development of AEOL-10150, through the completion and analysis of Phase I human clinical studies
or any foreign equivalent (each, an “AEOL-10150 Development Decision”) and, in connection therewith to meet with the Guarantor’s management and technical personnel involved in the AEOL-10150 Development Decision and to receive copies
of all materials relevant thereto; provided, however, that the Beneficiary and its representative shall agree to keep confidential all non-public information provided to it pursuant to this Section 8A. The Guarantor shall consider in good faith any
suggestions or input provided to it by the Beneficiary or its representative; provided, however, that the Guarantor shall have the right to make the AEOL-10150 Development Decision as it determines in the good faith exercise of its business
judgment. 
  

 5 

 9. Observer Rights. So long as any amount payable under the Note remains unpaid, the Beneficiary
shall have the right to designate one individual (the “Representative”) who shall be entitled to attend all meetings of the Board and all meetings of committees of the Board and to participate therein but who shall not have the right to
vote on any matter submitted to the Board or any committee of the Board for action. The Representative shall be entitled to receive, and the Guarantor shall be obligated to furnish to the Representative, a copy of all materials furnished to the
Board or any committee thereof; provided the Representative treats such materials confidentially. The Beneficiary shall have the right, from time to time, to designate a new Representative. 
  
 10. Events of Default. Each of the following shall constitute an
“Event of Default” hereunder: 
  
 (a) The Guarantor
shall fail to pay any amount under this Guaranty when due; 
  
 (b) The Guarantor shall fail to observe or perform any of the covenants set forth in Section 8. 
  
 (c) The Guarantor shall fail to observe or perform any other covenant or agreement contained in this Guaranty or the Security Agreement and such failure
shall continue for a period of thirty (30) days; 
  
 (d) Any
representation or warranty made by the Guarantor in this Guaranty or the Security Agreement shall have been untrue or misleading in any material respect when made; 
  
 (e) The Guarantor fails to make a required payment or payments on indebtedness for borrowed money of Twenty-Five Thousand
Dollars ($25,000) or more in aggregate principal amount; 
  
 (f)
There shall have occurred an acceleration of the stated maturity of any indebtedness for borrowed money of the Guarantor of Twenty-Five Thousand Dollars ($25,000) or more in aggregate principal amount (which acceleration is not rescinded, annulled
or otherwise cured within ten (10) days of receipt by the Guarantor of notice of such acceleration); 
  
 (g) Any covenant, agreement or obligation of the Guarantor in the Security Agreement shall cease to be enforceable, or shall be determined to be
unenforceable in any material respect; or any of the security interests granted to the Beneficiary in the Security Agreement shall be determined to be void, voidable, invalid or unperfected, are subordinated or are ineffective to provide the
Beneficiary with a perfected, first priority security interest in the collateral covered by the Security Agreement; 
  
 (h) Any Event of Default shall have occurred and be continuing under the Note; 
  

 6 

 (i) Any Event of Default shall have occurred and be continuing under the Borrower Security Agreement;

  
 (j) The Guarantor shall merge or consolidate with or into any
other person or entity, sell, transfer, lease or otherwise dispose of all or any substantial portion of its assets in one transaction or a series of related transactions, participate in any share exchange, consummate any recapitalization,
reclassification, reorganization or other business combination transaction or adopt a plan of liquidation or dissolution or agree to do any of the foregoing, other than the Merger; 
  
 (k) The Borrower, the Guarantor and the Beneficiary shall not have entered into a definitive agreement for the Merger on or
before September 15, 2003; 
  
 (l) The Merger shall not have been
consummated on or before December 24, 2003; 
  
 (m) The Merger
shall not for any reason result in the automatic conversion of the Guarantor’s outstanding Series C Preferred Stock, par value $0.01 per share (“Series C Preferred Stock”), into shares of the Borrower’s Series B Preferred Stock
at a conversion price of $64.90 per share immediately upon consummation of the Merger or any holder of the Series C Preferred Stock shall commence, prior to the consummation of the Merger, an action, suit or proceeding to avoid or contest such
conversion; 
  
 (n) One or more judgments in an aggregate amount
in excess of Twenty-Five Thousand Dollars ($25,000) shall have been rendered against the Guarantor and such judgment or judgments remain undischarged or unstayed for a period of sixty (60) days after such judgment or judgments become or became, as
the case may be, final and unappealable; 
  
 (o) The Guarantor
shall have applied for or consented to the appointment of a custodian, receiver, trustee or liquidator, or other court-appointed fiduciary of all or a substantial part of its properties; or a custodian, receiver, trustee or liquidator or other court
appointed fiduciary shall have been appointed with or without the consent of the Guarantor; or the Guarantor is generally not paying its debts as they become due by means of available assets or is insolvent, or has made a general assignment for the
benefit of creditors; or the Guarantor files a voluntary petition in bankruptcy, or a petition or an answer seeking reorganization or an arrangement with creditors or seeking to take advantage of any insolvency law, or an answer admitting the
material allegations of a petition in any bankruptcy, reorganization or insolvency proceeding or has taken action for the purpose of effecting any of the foregoing; or if, within sixty (60) days after the commencement of any proceeding against the
Guarantor seeking any reorganization, rehabilitation, arrangement, composition, readjustment, liquidation, dissolution or similar relief under the Federal bankruptcy code or similar order under future similar legislation, the appointment of any
trustee, receiver, custodian, liquidator, or other court-appointed fiduciary of the Guarantor or of all or any substantial part of its properties, such order or appointment shall not have been vacated or stayed on appeal or otherwise or if, within

  

 7 

 sixty (60) days after the expiration of any such stay, such order or appointment shall not have been vacated
(collectively, an “Insolvency Event”); or 
  
 (p) any
Insolvency Event shall have occurred with respect to ICT. 
  
 Upon
the occurrence of any Event of Default, the Beneficiary may, at its option, declare all amounts due hereunder to be due and payable immediately and, upon any such declaration, the same shall become and be immediately due and payable. If an Event of
Default specified in clauses (o) or (p) occurs, then all amounts due hereunder shall become immediately due and payable without any declaration or other act on the part of the Beneficiary. Upon the occurrence of any Event of Default, the Beneficiary
may, in addition to declaring all amounts due hereunder to be immediately due and payable, pursue any available remedy, whether at law or in equity, including, without limitation, exercising its rights under the Guaranty and the Security Agreement.
If an Event of Default occurs, the Guarantor shall pay to the Beneficiary the reasonable attorneys’ fees and disbursements and all other out-of-pocket costs incurred by the Beneficiary in order to collect amounts due and owing under this
Guaranty or otherwise to enforce the Beneficiary’s rights and remedies hereunder and under the Security Agreement. 
  
 10A. Secured Obligation. This Guaranty is the Guaranty referred to in the Security Agreement and is secured by the collateral described therein
(collectively, the “Collateral”). The Security Agreement grants the Beneficiary certain rights with respect to the Collateral upon an Event of Default. 
  
 11. Waiver; Cumulative Remedies. The Beneficiary shall not by any act (except by a written instrument pursuant to
paragraph 12 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any default or event of default or in any breach of any of the terms and conditions hereof. No failure to
exercise, nor any delay in exercising, on the part of the Beneficiary, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Beneficiary of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which the Beneficiary would
otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law. 
  
 12. Amendments; Successors and Assigns. None of the terms or
provisions of this Guaranty may be waived, amended or supplemented or otherwise modified except by a written instrument executed by the Guarantor and the Beneficiary, provided that any provision of this Guaranty may be waived by the Beneficiary in a
letter or agreement executed by the Beneficiary or by telex or facsimile transmission from the Beneficiary. This Guaranty shall be binding upon the successors and assigns of the Guarantor and shall inure to the benefit of the Beneficiary and its
respective successors and assigns. 
  

 8 

 13. Notices. All notices to the Guarantor under this Guaranty shall be in writing and shall be
effective: (i) upon delivery by hand; (ii) one day after being deposited with a recognized overnight delivery service; (iii) five days after being deposited in the United States mail, first-class, postage prepaid, registered or certified, return
receipt requested; or (iv) if sent by facsimile, upon receipt of a clear transmission report—in each case addressed to the Guarantor at its address set forth on the signature page of this Guaranty (or to such other address as hereafter may be
designated in writing by the Guarantor to the Beneficiary). 
  
 14. Integration. This Guaranty represents the entire agreement of the Guarantor with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Beneficiary relative to subject
matter hereof not expressly set forth or referred to herein or in the Note. 
  
 15. GOVERNING LAW. THIS GUARANTY, AND THE RIGHTS AND OBLIGATIONS OF GUARANTOR HEREUNDER, SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CHOICE OF LAW PRINCIPLES THEREOF. THE GUARANTOR HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS GUARANTY AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

  
 The Guarantor irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York located in New York County and the United States District Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment relating to or arising out of this
Guaranty and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on the Guarantor anywhere in the world by the same methods as are specified for the giving of notices under
this Guaranty. The Guarantor irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. The Guarantor irrevocably waives any objection to the laying of venue of any
such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. 
  

 9 

 IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be executed by the undersigned, thereunto
duly authorized, as of the date first written above. 
  

	 ATTEST:
	 	 	 	 INCARA PHARMACEUTICALS
 CORPORATION

				
	  

	 	 	 	 By:
	 	  

	Secretary	 	 	 	 Name:
	 	 
	 	 	 	 	 	 	 Title:
	 	 

  
 Address for Notice: 
  
 79 T. W.
Alexander Drive 
 4401 Research Commons 
 Suite 200 
 Research Triangle Park, North Carolina 27709 
 Fax: (919) 544-1245 
  

 10

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