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                                                                   EXHIBIT 10.63

                       INCARA PHARMACEUTICALS CORPORATION

                       1994 STOCK OPTION PLAN, AS AMENDED

1.       Purpose.

         The purpose of this plan (the "Plan") is to secure for INCARA
PHARMACEUTICALS CORPORATION (the "Company") and its shareholders the benefits
arising from capital stock ownership by employees, officers and directors of,
and consultants or advisors to, the Company and the Company's subsidiary
corporations who are expected to contribute to the Company's future growth and
success. Those provisions of the Plan which make express reference to Section
422 shall apply only to Incentive Stock Options (as that term is defined in the
Plan).

2.       Type of Options and Administration.

         (a) Types of Options. Options granted pursuant to the Plan shall be
authorized by action of the Board of Directors of the Company (or a Committee
designated by the Board of Directors) and may be either incentive stock options
("Incentive Stock Options") meeting the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended or replaced from time to time (the
"Code") or non-statutory options which are not intended to meet the requirements
of Section 422 of the Code.

         (b) Administration. The Plan will be administered by the Board of
Directors or a committee (the "Committee") appointed by the Board of Directors
of the Company, whose construction and interpretation of the terms and
provisions of the Plan shall be final and conclusive. The delegation of powers
to the Committee shall be consistent with applicable laws or regulations
(including, without limitation, applicable state law and Rule 16b-3 promulgated
under the Securities Exchange Act of 1934 (the "Exchange Act"), or any successor
rule ("Rule 16b-3")). The Committee may in its sole discretion grant options to
purchase shares of the Company's Common Stock, $.001 par value per share
("Common Stock"), and issue shares upon exercise of such options as provided in
the Plan. The Committee shall have authority, subject to the express provisions
of the Plan, to construe the respective option agreements and the Plan, to
prescribe, amend and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of the respective option agreements, which
need not be identical, and to make all other determinations in the judgment of
the Committee necessary or desirable for the administration of the Plan. The
Committee may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any option agreement in the manner and to the
extent it shall deem expedient to carry the Plan into effect and it shall be the
sole and final judge of such expediency. No director or person acting pursuant
to authority delegated by the Board of Directors shall be liable for any action
or determination under the Plan made in good faith. Subject to adjustment as
provided in Section 15 below, the aggregate number of shares of Common Stock
that may be subject to options granted to any person in a calendar year shall
not exceed 300,000 shares.

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         (c) Applicability of Rule 16b-3. Those provisions of the Plan which
make express reference to Rule 16b-3 shall apply to the Company only at such
time as the Company's Common Stock is registered under the Exchange Act, subject
to the last sentence of Section 3(b), and then only to such persons as are
required to file reports under Section 16(a) of the Exchange Act (a "Reporting
Person").

3.       Eligibility.

         (a) General. Options may be granted to persons who are, at the time of
grant, employees, officers or directors of, or consultants or advisors to, the
Company or any subsidiaries of the Company as defined in Sections 424(e) and
424(f) of the Code ("Participants") provided, that Incentive Stock Options may
only be granted to individuals who are employees of the Company (within the
meaning of Section 3401(c) of the Code). A person who has been granted an option
may, if he or she is otherwise eligible, be granted additional options if the
Committee shall so determine.

         (b) Grant of Options to Reporting Persons. The selection of a director
or an officer who is a Reporting Person (as the terms "director" and "officer"
are defined for purposes of Rule 16b-3) as a recipient of an option, the timing
of the option grant, the exercise price of the option and the number of shares
subject to the option shall be determined either (i) by the Board of Directors,
(ii) by a committee of the Board of Directors that is composed solely of two or
more Non-Employee Directors having full authority to act in the matter or (iii)
pursuant to provisions for automatic grants set forth in Section 3(c) below. For
the purposes of the Plan, a director shall be deemed to be a "Non-Employee
Director" only if such person is described in Rule 16b-3(b)(3) as interpreted
from time to time.

         (c) Fair Market Value. "Fair Market Value" of a share of Common Stock
of the Company as of a specified date for the purposes of the Plan shall mean
the closing price of a share of the Common Stock on the principal securities
exchange (including the Nasdaq National Market) on which such shares are traded
on the day as of which Fair Market Value is being determined, or on the next
preceding date on which such shares are traded if no shares were traded on such
day, or if the shares are not traded on a securities exchange, Fair Market Value
shall be deemed to be the average of the high bid and low asked prices of the
shares in the over-the-counter market on the day immediately preceding the date
as of which Fair Market Value is being determined or on the next preceding date
on which such high bid and low asked prices were recorded. If the shares are not
publicly traded, Fair Market Value of a share of Common Stock (including, in the
case of any repurchase of shares, any distributions with respect thereto which
would be repurchased with the shares) shall be determined in good faith by the
Board of Directors. In no case shall Fair Market Value be determined with regard
to restrictions other than restrictions which, by their terms, will never lapse.

         (d) Directors' Options. Directors of the Company who are not employees
("Eligible Directors") will receive an option ("Initial Director Option") to
purchase 10,000 shares of Common Stock on the date that such person first
becomes an Eligible Director. As long as an Eligible Director is a member of the
Board of Directors, such Eligible Director will automatically

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be granted a stock option ("Automatic Grant") to purchase 6,000 shares of Common
Stock on the day of each annual meeting of stockholders ("Stockholder Meeting"),
except for Eligible Directors who received an Initial Director Option since the
most recent Automatic Grant. The exercise price for each share subject to a
Director Option shall be equal to the Fair Market Value of the Common Stock on
the date of grant. Director Options shall become exercisable in 36 equal monthly
installments commencing one month from the date the option is granted and will
expire 10 years after the date of grant.

         (e) Directors' Compensation. On the date that each Eligible Director is
elected or re-elected to the Board of Directors, the Director will receive an
annual retainer ("Annual Retainer") of an amount to be determined by the Board
of Directors. Directors may elect to receive all or a portion of their Annual
Retainer as an option to purchase Common Stock ("Retainer Option"). Any
remainder will be paid in cash. Any Retainer Option elected will enable the
Director to purchase a number of shares equal to three times the number of
shares that could have been purchased with the portion of the Annual Retainer
elected to be received as a Retainer Option. The exercise price per share for
the Retainer Option will be the Fair Market Value of the Common Stock on the
date of the grant. The date of grant will be the date the Annual Retainer is
granted to the director. The Retainer Options will be fully vested and will be
exercisable for ten years from the date of the grant. This director compensation
program was adopted on January 18, 2000, subject to the following transition
rule. The date of the Annual Retainer and the grant date shall be January 18,
2000 for each Eligible Director who was a Director on the date the program was
adopted and the Director shall not receive any additional retainer at the
Stockholder Meeting to be held in 2000.

4.       Stock Subject to Plan.

         The stock subject to options granted under the Plan shall be shares of
authorized but unissued or reacquired Common Stock. Subject to adjustment as
provided in Section 15 below, the maximum number of shares of Common Stock of
the Company which may be issued and sold under the Plan is 4,500,000. If an
option granted under the Plan shall expire, terminate or is cancelled for any
reason without having been exercised in full, the unpurchased shares subject to
such option shall again be available for subsequent option grants under the
Plan.

5.       Forms of Option Agreements.

         As a condition to the grant of an option under the Plan, each recipient
of an option shall execute an option agreement in such form not inconsistent
with the Plan as may be approved by the Board of Directors. Such option
agreements may differ among recipients.

6.       Purchase Price.

         (a) General. The purchase price per share of stock deliverable upon the
exercise of an option shall be determined by the Board of Directors or the
Committee at the time of grant of such option; provided, however, that in the
case of an Incentive Stock Option, the exercise price shall not be less than
100% of the Fair Market Value of such stock, at the time of grant of such
option, or less than 110% of such Fair Market Value in the case of options

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described in Section 11(b).

         (b) Payment of Purchase Price. Options granted under the Plan may
provide for the payment of the exercise price by delivery of cash or a check to
the order of the Company in an amount equal to the exercise price of such
options, or by any other means which the Board of Directors in its discretion
determines are consistent with the purpose of the Plan and with applicable laws
and regulations (including, without limitation, the provisions of Rule 16b-3 and
Regulation T promulgated by the Federal Reserve Board).

7.       Option Period.

         Subject to earlier termination as provided in the Plan, each option and
all rights thereunder shall expire on such date as determined by the Board of
Directors or the Committee and set forth in the applicable option agreement,
provided, that such date shall not be later than (10) ten years after the date
on which the option is granted.

8.       Exercise of Options.

         Each option granted under the Plan shall be exercisable either in full
or in installments at such time or times and during such period as shall be set
forth in the option agreement evidencing such option, subject to the provisions
of the Plan. If an option is not at the time of grant immediately exercisable,
the Board of Directors may (i) in the agreement evidencing such option, provide
for the acceleration of the exercise date or dates of the subject option upon
the occurrence of specified events, and/or (ii) at any time prior to the
complete termination of an option, accelerate the exercise date or dates of such
option.

9.       Transferability of Options.

         (a) No Incentive Stock Option granted under this Plan shall be
assignable or otherwise transferable by the optionee except by will or by the
laws of descent and distribution. An Incentive Stock Option may be exercised
during the lifetime of the optionee only by the optionee.

         (b) Any option granted under the Plan other than an Incentive Stock
Option shall be transferable by the optionee to members of his or her family or
otherwise by will or by the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined in the Code or Title I of the
Employee Retirement Income Security Act, or the rules thereunder. For purposes
of the Plan, an optionee's "family members" shall be deemed to consist of his or
her spouse, parents, children, grandparents, grandchildren and any trusts
created for the benefit of such individuals. A family member to whom an option
has been transferred pursuant to this Section 9(b) shall be hereinafter referred
to as a "Permitted Transferee". An option shall be transferred to a Permitted
Transferee in accordance with the foregoing provisions by the optionee's
execution of an assignment in writing in such form approved by the Board of
Directors or the Committee. The Company shall not be required to recognize the
rights of a Permitted Transferee until such time as it receives a copy of the
assignment from the optionee.

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         (c) In the event an optionee dies during his employment by the Company
or any of its subsidiaries, or during the three-month period following the date
of termination of such employment, his options shall thereafter be exercisable,
during the period specified in the option agreement, by his executors,
administrators or Permitted Transferees to the full extent to which such options
were exercisable by the optionee at the time of his death during the periods set
forth in Section 10 or 11(d).

10.      Effect of Termination of Employment or Other Relationship.

         Except as provided in Section 11(d) with respect to Incentive Stock
Options and except as otherwise determined by the Committee at the date of grant
of an option, and subject to the provisions of the Plan, an optionee or his
Permitted Transferee may exercise an option at any time within three (3) months
following the termination of the optionee's employment or other relationship
with the Company or within one (1) year if such termination was due to the death
or disability of the optionee but, except in the case of the optionee's death,
in no event later than the expiration date of the option. If the termination of
the optionee's employment or other relationship with the Company is for cause or
is otherwise attributable to a breach by the optionee of an employment,
consulting, confidentiality or non-disclosure agreement, the option shall expire
immediately upon such termination. The Board or Directors shall have the power
to determine what constitutes a termination for cause or a breach of an
employment, consulting, confidentiality or non-disclosure agreement, whether an
optionee has been terminated for cause or has breached such an agreement, and
the date upon such termination for cause or breach occurs. Any such
determinations shall be final and conclusive and binding upon the optionee.

11.      Incentive Stock Options

         Options granted under the Plan which are intended to be Incentive Stock
Options shall be subject to the following additional terms and conditions:

         (a) Express Designation. All Incentive Stock Options granted under the
Plan shall, at the time of grant, be specifically designated as such in the
option agreement covering such Incentive Stock Options.

         (b) 10% Stockholder. If any employee to whom an Incentive Stock Option
is to be granted under the Plan is, at the time of the grant of such option, the
owner of stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company (after taking into account the attribution
of stock ownership rules of Section 424(d) of the Code), then the following
special provisions shall be applicable to the Incentive Stock Option granted to
such individual:

             (i) the purchase price per share of the Common Stock subject to
         such Incentive Stock Option shall not be less than 110% of the Fair
         Market Value of one share of Common Stock at the time of grant; and

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               (ii)  the option exercise period shall not exceed five years from
     the date of grant.

          (c)  Dollar Limitation. For so long as the Code shall so provide,
options granted to any employee under the Plan (and any other incentive stock
option plans of the Company) which are intended to constitute Incentive Stock
Options shall not constitute Incentive Stock Options to the extent that such
options, in the aggregate, become exercisable for the first time in any one
calendar year for shares of Common Stock with an aggregate Fair Market Value, as
of the respective date or dates of grant, of more than $100,000.

          (d)  Termination of Employment, Death or Disability. No Incentive
Stock Option may be exercised unless, at the time of such exercise, the optionee
is, and has been continuously since the date of grant of his or her option,
employed by the Company, except that:

               (i)   an Incentive Stock Option may be exercised within the
     period of three months after the date the optionee ceases to be an employee
     of the Company (or within such lesser period as may be specified in the
     applicable option agreement), provided, that the agreement with respect to
     such option may designate a longer exercise period and that the exercise
     after such three-month period shall be treated as the exercise of a
     non-statutory option under the Plan;

               (ii)  if the optionee dies while in the employ of the Company, or
     within three months after the optionee ceases to be such an employee, the
     Incentive Stock Option may be exercised by the person to whom it is
     transferred by will or the laws of descent and distribution within the
     period of one year after the date of death (or within such lesser period as
     may be specified in the applicable option agreement); and

               (iii) if the optionee becomes disabled (within the meaning of
     Section 22(e)(3) of the Code or any successor provisions thereto) while in
     the employ of the Company, the Incentive Stock Option may be exercised
     within the period of one year after the date the optionee ceases to be such
     an employee because of such disability (or within such lesser period as may
     be specified in the applicable option agreement).

For all purposes of the Plan and any option granted hereunder, "employment"
shall be defined in accordance with the provisions of Section 1.421-7(h) of the
Income Tax Regulations (or any successor regulations). Notwithstanding the
foregoing provisions, no Incentive Stock Option may be exercised after its
expiration date.

12.       Additional Provisions.

          (a)  Additional Option Provisions. The Board of Directors or the
Committee may, in its sole discretion, include additional provisions in option
agreements covering options granted under the Plan, including without limitation
restrictions on transfer, repurchase rights, rights of first refusal,
commitments to pay cash bonuses, to make, arrange for or guaranty loans or to
transfer other property to optionees upon exercise of options, or such other
provisions as shall be determined by the Board of Directors; provided, that such
additional provisions shall not

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be inconsistent with any other term or condition of the Plan and such additional
provisions shall not cause any Incentive Stock Option granted under the Plan to
fail to qualify as an Incentive Stock Option within the meaning of Section 422
of the Code.

          (b)  Acceleration, Extension, Etc. The Board of Directors may, in its
sole discretion, (i) accelerate the date or dates on which all or any particular
option or options granted under the Plan may be exercised or (ii) extend the
dates during which all, or any particular, option or options granted under the
Plan may be exercised; provided, however, that no such extension shall be
permitted if it would cause the Plan to fail to comply with Section 422 of the
Code or with Rule 16b-3 (if applicable).

13.       General Restrictions.

          (a)  Investment Representations. The Company may require any person to
whom an option is granted, as a condition of exercising such option or award, to
give written assurances in substance and form satisfactory to the Company to the
effect that such person is acquiring the Common Stock subject to the option or
award, for his or her own account for investment and not with any present
intention of selling or otherwise distributing the same, and to such other
effects as the Company deems necessary or appropriate in order to comply with
federal and applicable state securities laws, or with covenants or
representations made by the Company in connection with any public offering of
its Common Stock, including any "lock-up" or other restriction on
transferability.

          (b)  Compliance With Securities Law. Each option shall be subject to
the requirement that if, at any time, counsel to the Company shall determine
that the listing, registration or qualification of the shares subject to such
option or award upon any securities exchange or automated quotation system or
under any state or federal law, or the consent or approval of any governmental
or regulatory body, or that the disclosure of non-public information or the
satisfaction of any other condition is necessary as a condition of, or in
connection with the issuance or purchase of shares thereunder, such option or
award may not be exercised, in whole or in part, unless such listing,
registration, qualification, consent or approval, or satisfaction of such
condition shall have been effected or obtained on conditions acceptable to the
Board of Directors or the Committee. Nothing herein shall be deemed to require
the Company to apply for or to obtain such listing, registration or
qualification, or to satisfy such condition.

14.       Rights as a Stockholder.

          The holder of an option shall have no rights as a stockholder with
respect to any shares covered by the option (including, without limitation, any
rights to receive dividends or non-cash distributions with respect to such
shares) until the date of issue of a stock certificate to him or her for such
shares. No adjustment shall be made for dividends or other rights for which the
record date is prior to the date such stock certificate is issued.

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15.       Adjustment Provisions for Recapitalizations, Reorganizations and
          Related Transactions.

          (a)  Recapitalizations and Related Transactions. If, through or as a
result of any recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar transaction, (i) the outstanding shares of
Common Stock are increased, decreased or exchanged for a different number or
kind of shares or other securities of the Company, or (ii) additional shares or
new or different shares or other non-cash assets are distributed with respect to
such shares of Common Stock or other securities, an appropriate and
proportionate adjustment shall be made in (x) the maximum number and kind of
shares reserved for issuance under or otherwise referred to in the Plan, (y) the
number and kind of shares or other securities subject to any then outstanding
options under the Plan, and (z) the price for each share subject to any then
outstanding options under the Plan, without changing the aggregate purchase
price as to which such options remain exercisable. Notwithstanding the
foregoing, no adjustment shall be made pursuant to this Section 15 if such
adjustment (i) would cause the Plan to fail to comply with Section 422 of the
Code or with Rule 16b-3 or (ii) would be considered as the adoption of a new
plan requiring stockholder approval.

          (b)  Reorganization, Merger and Related Transactions. All outstanding
options under the Plan shall become fully exercisable for a period of sixty (60)
days following the occurrence of any Trigger Event, whether or not such options
are then exercisable under the provisions of the applicable agreements relating
thereto. For purposes of the Plan, a "Trigger Event" is any one of the following
events:

               (i)  the date on which shares of Common Stock are first purchased
     pursuant to a tender offer or exchange offer (other than such an offer by
     the Company, any Subsidiary, any employee benefit plan of the Company or of
     any Subsidiary or any entity holding shares or other securities of the
     Company for or pursuant to the terms of such plan), whether or not such
     offer is approved or opposed by the Company and regardless of the number of
     shares purchased pursuant to such offer;

               (ii) the date the Company acquires knowledge that any person or
     group deemed a person under Section 13(d)-3 of the Exchange Act (other than
     the Company, any Subsidiary, any employee benefit plan of the Company or of
     any Subsidiary or any entity holding shares of Common Stock or other
     securities of the Company for or pursuant to the terms of any such plan or
     any individual or entity or group or affiliate thereof which acquired its
     beneficial ownership interest prior to the date the Plan was adopted by the
     Board), in a transaction or series of transactions, has become the
     beneficial owner, directly or indirectly (with beneficial ownership
     determined as provided in Rule 13d-3, or any successor rule, under the
     Exchange Act), of securities of the Company entitling the person or group
     to 30% or more of all votes (without consideration of the rights of any
     class or stock to elect directors by a separate class vote) to which all
     stockholders of the Company would be entitled in the election of the Board
     of Directors were an election held on such date;

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               (iii) the date, during any period of two consecutive years, when
     individuals who at the beginning of such period constitute the Board of
     Directors of the Company cease for any reason to constitute at least a
     majority thereof, unless the election, or the nomination for election by
     the stockholders of the Company, of each new director was approved by a
     vote of at least two-thirds of the directors then still in office who were
     directors at the beginning of such period; and

               (iv)  the date of approval by the stockholders of the Company of
     an agreement (a "reorganization agreement") providing for:

                     (A) the merger or consolidation of the Company with another
          corporation where the stockholders of the Company, immediately prior
          to the merger or consolidation, do not beneficially own, immediately
          after the merger or consolidation, shares of the corporation issuing
          cash or securities in the merger or consolidation entitling such
          stockholders to more than 50% of all votes (without consideration of
          the rights of any class of stock to elect directors by a separate
          class vote) to which all stockholders of such corporation would be
          entitled in the election of directors or where the members of the
          Board of Directors of the Company, immediately prior to the merger or
          consolidation, do not, immediately after the merger or consolidation,
          constitute a majority of the Board of Directors of the corporation
          issuing cash or securities in the merger or consolidation; or

                     (B) the sale or other disposition of all or substantially
          all the assets of the Company.

         (c)   Board Authority to Make Adjustments. Any adjustments under this
Section 15 will be made by the Board of Directors or the Committee, whose
determination as to what adjustments, if any, will be made and the extent
thereof will be final, binding and conclusive. No fractional shares will be
issued under the Plan on account of any such adjustments.

16.      Merger, Consolidation, Asset Sale, Liquidation, Etc.

         (a)   General. In the event of any sale, merger, transfer or
acquisition of the Company or substantially all of the assets of the Company in
which the Company is not the surviving corporation, and provided that after the
Company shall have requested the acquiring or succeeding corporation (or an
affiliate thereof), that equivalent options shall be substituted and such
successor corporation shall have refused or failed to assume all options
outstanding under the Plan or issue substantially equivalent options, then any
or all outstanding options under the Plan shall accelerate and become
exercisable in full immediately prior to such event. The Committee will notify
holders of options under the Plan that any such options shall be fully
exercisable for a period of fifteen (15) days from the date of such notice, and
the options will terminate upon expiration of such notice.

          (b)  Substitute Options. The Company may grant options under the Plan
in substitution for options held by employees of another corporation who become
employees of the

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Company, or a subsidiary of the Company, as the result of a merger or
consolidation of the employing corporation with the Company or a subsidiary of
the Company, or as a result of the acquisition by the Company, or one of its
subsidiaries, of property or stock of the employing corporation. The Company may
direct that substitute options be granted on such terms and conditions as the
Board of Directors considers appropriate in the circumstances.

17.       No Special Employment Rights.

          Nothing contained in the Plan or in any option shall confer upon any
optionee any right with respect to the continuation of his or her employment by
the Company or interfere in any way with the right of the Company at any time to
terminate such employment or to increase or decrease the compensation of the
optionee.

18.       Other Employee Benefits.

          Except as to plans which by their terms include such amounts as
compensation, the amount of any compensation deemed to be received by an
employee as a result of the exercise of an option or the sale of shares received
upon such exercise will not constitute compensation with respect to which any
other employee benefits of such employee are determined, including, without
limitation, benefits under any bonus, pension, profit-sharing, life insurance or
salary continuation plan, except as otherwise specifically determined by the
Board of Directors.

19.       Amendment of the Plan.

          (a)  The Board of Directors may at any time, and from time to time,
modify or amend the Plan in any respect; provided, however, that if at any time
the approval of the stockholders of the Company is required under Section 422 of
the Code or any successor provision with respect to Incentive Stock Options, or
under Rule 16b-3, the Board of Directors may not effect such modification or
amendment without such approval; and provided, further, that the provisions of
Section 3(d) hereof shall not be amended more than once every six months, other
than to comport with changes in the Code, the Employer Retirement Income
Security Act of 1974, as amended, or the rules thereunder.

          (b)  The modification or amendment of the Plan shall not, without the
consent of an optionee, affect his or her rights under an option previously
granted to him or her. With the consent of the optionee affected, the Board of
Directors or the Committee may amend outstanding option agreements in a manner
not inconsistent with the Plan. The Board of Directors shall have the right to
amend or modify (i) the terms and provisions of the Plan and of any outstanding
Incentive Stock Options granted under the Plan to the extent necessary to
qualify any or all such options for such favorable federal income tax treatment
(including deferral of taxation upon exercise) as may be afforded incentive
stock options under Section 422 of the Code and (ii) the terms and provisions of
the Plan and of any outstanding option to the extent necessary to ensure the
qualification of the Plan under Rule 16b-3.

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20.       Withholding.

          (a)  The Company shall have the right to deduct from payments of any
kind otherwise due to the optionee any federal, state or local taxes of any kind
required by law to be withheld with respect to any options or shares issued upon
exercise of options under the Plan. Subject to the prior approval of the
Company, which may be withheld by the Company in its sole discretion, the
optionee may elect to satisfy such obligations, in whole or in part, (i) by
causing the Company to withhold shares of Common Stock otherwise issuable
pursuant to the exercise of an option or (ii) by delivering to the Company
shares of Common Stock already owned by the optionee. The shares so delivered or
withheld shall have a Fair Market Value equal to such withholding obligation as
of the date that the amount of tax to be withheld is to be determined. An
optionee who has made an election pursuant to this Section 20(a) may only
satisfy his or her withholding obligation with shares of Common Stock which are
not subject to any repurchase, forfeiture, unfulfilled vesting or other similar
requirements.

          (b)  The acceptance of shares of Common Stock upon exercise of an
Incentive Stock Option shall constitute an agreement by the optionee (i) to
notify the Company if any or all of such shares are disposed of by the optionee
within two years from the date the option was granted or within one year from
the date the shares were issued to the optionee pursuant to the exercise of the
option, and (ii) if required by law, to remit to the Company, at the time of and
in the case of any such disposition, an amount sufficient to satisfy the
Company's federal, state and local employment and withholding tax obligations
with respect to such disposition, whether or not, as to both (i) and (ii), the
optionee is in the employ of the Company at the time of such disposition.

          (c)  Notwithstanding the foregoing, in the case of a Reporting Person
whose options have been granted in accordance with the provisions of Section
3(b) herein, no election to use shares for the payment of withholding taxes
shall be effective unless made in compliance with any applicable requirements of
Rule 16b-3.

21.       Cancellation and New Grant of Options, Etc.

          The Board of Directors or the Committee shall have the authority to
effect, at any time and from time to time, with the consent of the affected
optionees, (i) the cancellation of any or all outstanding options under the Plan
and the grant in substitution therefor of new options under the Plan covering
the same or different numbers of shares of Common Stock and having an option
exercise price per share which may be lower or higher than the exercise price
per share of the cancelled options or (ii) the amendment of the terms of any and
all outstanding options under the Plan to provide an option exercise price per
share which is higher or lower than the then-current exercise price per share of
such outstanding options.

22.       Effective Date and Duration of the Plan.

          (a)  Effective Date. The Plan was adopted by the Board of Directors on
October 31, 1994 and was approved by the Company's stockholders on October 31,
1994. Amendments to the Plan not requiring stockholder approval shall become
effective when adopted

                                       11

<PAGE>

by the Board of Directors; amendments requiring stockholder approval (as
provided in Section 19) shall become effective when adopted by the Board of
Directors, but no Incentive Stock Option granted after the date of such
amendment shall become exercisable (to the extent that such amendment to the
Plan was required to enable the Company to grant such Incentive Stock Option to
a particular optionee) unless and until such amendment shall have been approved
by the Company's stockholders. If such stockholder approval is not obtained
within twelve months of the Board's adoption of such amendment, any Incentive
Stock Options granted on or after the date of such amendment shall terminate to
the extent that such amendment to the Plan was required to enable the Company to
grant such option to a particular optionee. Subject to this limitation, options
may be granted under the Plan at any time after the effective date and before
the date fixed for termination of the Plan.

         (b)   Termination. Unless sooner terminated in accordance with Section
16, the Plan shall terminate upon the earlier of (i) October 30, 2004, which is
the close of business on the day next preceding the tenth anniversary of the
date of its adoption by the Board of Directors, or (ii) the date on which all
shares available for issuance under the Plan shall have been issued pursuant to
the exercise or cancellation of options granted under the Plan. If the date of
termination is determined under (i) above, then options outstanding on such date
shall continue to have force and effect in accordance with the provisions of the
instruments evidencing such options.

23.       Governing Law.

          The provisions of this Plan shall be governed and construed in
accordance with the laws of the State of Delaware without regard to the
principles of conflicts of laws.

As amended by the Board of Directors through March 7, 2002, and as approved by
the stockholders on March 7, 2002.

                                       12<PAGE>

                                                                   EXHIBIT 10.12

                       INCARA PHARMACEUTICALS CORPORATION

                  1995 EMPLOYEE STOCK PURCHASE PLAN, AS AMENDED

          1.   Purpose. The Incara Pharmaceuticals Corporation 1995 Employee
Stock Purchase Plan (the "Plan") is established to provide eligible employees of
Incara Pharmaceuticals Corporation, a Delaware corporation, and any successor
corporation thereto (collectively, "Incara" or the "Company"), and any current
or future parent corporation or subsidiary corporations of Incara as the Board
of Directors of Incara (the "Board") shall from time to time designate
(collectively referred to as the "Company" and individually referred to as a
"Participating Company"), with an opportunity to acquire a proprietary interest
in the Company by the purchase of common stock of Incara. For purposes of the
Plan, a parent corporation and a subsidiary corporation shall be as defined in
sections 424(e) and 424(f), respectively, of the Internal Revenue Code of 1986,
as amended (the "Code").

          Incara intends that the Plan shall qualify as an "employee stock
purchase plan" under section 423 of the Code (including any amendments or
replacements of such section), and the Plan shall be so construed. Any term not
expressly defined in the Plan but defined for purposes of section 423 of the
Code shall have the same definition herein.

          An employee participating in the Plan (a "Participant") may withdraw
such Participant's accumulated payroll deductions (if any) and terminate
participation in the Plan or any Offering (as defined below) therein at any time
during a Purchase Period (as defined below). Accordingly, each Participant is,
in effect, granted an option pursuant to the Plan (a "Purchase Right") which may
or may not be exercised at the end of a Purchase Period.

          2.   Administration. The Plan shall be administered by the Board
and/or by a duly appointed committee of the Board having such powers as shall be
specified by the Board. Any subsequent references to the Board shall also mean
the committee if a committee has been appointed. All questions of interpretation
of the Plan or of any Purchase Right shall be determined by the Board and shall
be final and binding upon all persons having an interest in the Plan and/or any
Purchase Right. Subject to the provisions of the Plan, the Board shall determine
all of the relevant terms and conditions of Purchase Rights granted pursuant to
the Plan; provided, however, that all Participants granted Purchase Rights
pursuant to the Plan shall have the same rights and privileges within the
meaning of section 423(b)(5) of the Code. All expenses incurred in connection
with the administration of the Plan shall be paid by the Company.

          3.   Share Reserve. The maximum number of shares which may be issued
under the Plan shall be Six Hundred Thousand (600,000) shares of Incara's
authorized but unissued common stock, $.001 par value (the "Shares"). In the
event that any Purchase Right for any reason expires or is canceled or
terminated, the Shares allocable to the unexercised portion of such Purchase
Right may again be subjected to a Purchase Right.

<PAGE>

          4.   Eligibility. Any employee of a Participating Company is eligible
to participate in the Plan except employees who:

               (a)  customarily work less than 20 hours per week;

               (b)  customarily work not more than five months in any calendar
year; or

               (c)  as of the start of an Offering, own stock of Incara (or its
parent or subsidiary corporations) and/or own or hold options to purchase or
who, as a result of participation in the Plan, would own or hold options to
purchase, stock of Incara (or its parent or subsidiary corporations), possessing
five percent (5%) or more of the total combined voting power or value of all
classes of stock of Incara (or its parent or subsidiary corporations) within the
meaning of section 423(b)(3) of the Code.

          Notwithstanding anything herein contained to the contrary, any
individual performing services for a Participating Company solely through a
leasing agency or employment agency shall not be deemed an "employee" of such
Participating Company.

          5.   Offering Dates.

               (a)  Offering Periods. Except as otherwise set forth below, the
Plan shall be implemented by offerings ("Offerings", individually, an
"Offering") of approximately twelve (12) months duration (an "Offering Period").
The "Initial Offering Date" is the date immediately preceding the effective date
of a registration statement filed with the Securities and Exchange Commission
relating to an initial public offering of Incara's securities. The Initial
Offering Period shall commence on the Initial Offering Date and shall end on the
first September 30 following the Initial Offering Date which is at least six
months after the Initial Offering Date (the "Initial Offering Termination
Date"). Subsequent Offerings shall commence on October 1 and end on the
September 30 occurring thereafter. Notwithstanding the foregoing, the Board may
establish a different term for one or more Offerings and/or different commencing
and/or ending dates for such Offerings. An employee who becomes eligible to
participate in the Plan after an Offering Period has commenced shall not be
eligible to participate in such Offering but may participate in any subsequent
Offering provided such employee is still eligible to participate in the Plan as
of the commencement of any such subsequent Offering. Eligible employees may not
participate in more than one Offering at a time. The first day of an Offering
Period shall be the "Offering Date" for such Offering Period. In the event the
first and/or last day of an Offering Period is not a business day, Incara shall
specify the business day that will be deemed the first or last day, as the case
may be, of the Offering Period.

               (b)  Purchase Periods. Each Offering Period, except for the
Initial Offering Period, shall consist of two (2) consecutive purchase periods
of six (6) months duration (individually, a "Purchase Period"). The last day of
each Purchase Period shall be the "Purchase Date" for such Purchase Period. The
Initial Offering Period shall consist of one Purchase Period, commencing on the
Initial Offering Date and ending on the Initial Offering Termination Date. Each
Purchase Period commencing on April 1 shall end on the next September 30 and
each

                                        2

<PAGE>

Purchase Period commencing on October 1 shall end on the next March 31.
Notwithstanding the foregoing, the Board may establish a different term for one
or more Purchase Periods and/or different commencing dates and/or Purchase Dates
for such Purchase Periods. In the event the first and/or last day of a Purchase
Period is not a business day, Incara shall specify the business day that will be
deemed the first or last day, as the case may be, of the Purchase Period.

               (c)  Governmental Approval; Stockholder Approval. Notwithstanding
any other provision of the Plan to the contrary, any Purchase Right granted
pursuant to the Plan shall be subject to (i) obtaining all necessary
governmental approvals and/or qualifications of the sale and/or issuance of the
Purchase Rights and/or the Shares, and (ii) obtaining stockholder approval of
the Plan. Notwithstanding the foregoing, stockholder approval shall not be
necessary in order to grant any Purchase Right granted in the Plan's Initial
Offering Period; provided, however, that the exercise of any such Purchase Right
shall be subject to obtaining stockholder approval of the Plan.

          6.   Participation in the Plan.

               (a)  Initial Participation. An eligible employee shall become a
Participant on the first Offering Date after satisfying the eligibility
requirements and delivering to the Company's payroll office not later than the
close of business for such payroll office on the last business day before such
Offering Date (the "Subscription Date") a subscription agreement indicating the
employee's election to participate in the Plan and authorizing payroll
deductions. An eligible employee who does not deliver a subscription agreement
to the Company's payroll office on or before the Subscription Date shall not
participate in the Plan for that Offering Period or for any subsequent Offering
Period unless such employee subsequently enrolls in the Plan by filing a
subscription agreement with the Company by the Subscription Date for such
subsequent Offering Period. The Company may, from time to time, change the
Subscription Date as deemed advisable by the Company in its sole discretion for
proper administration of the Plan.

               (b)  Continued Participation. A Participant shall automatically
participate in the Offering Period commencing immediately after the final
Purchase Date of each Offering Period in which the Participant participates
until such time as such Participant (i) ceases to be eligible as provided in
paragraph 4, (ii) withdraws from the Plan pursuant to paragraph 11(b) or (iii)
terminates employment as provided in paragraph 12. If a Participant is
automatically withdrawn from an Offering at the end of a Purchase Period of such
Offering pursuant to paragraph 11(d), then the Participant shall automatically
participate in the next Offering Period. If a Participant automatically may
participate in a subsequent Offering Period pursuant to this paragraph 6(b),
then the Participant is not required to file any additional subscription
agreement for such subsequent Offering Period in order to continue participation
in the Plan. However, a Participant may file a subscription agreement with
respect to a subsequent Offering Period if the Participant desires to change any
of the Participant's elections contained in the Participant's then effective
subscription agreement.

                                        3

<PAGE>

          7.   Right to Purchase Shares. Except as set forth below, during an
Offering Period each Participant in such Offering Period shall have a Purchase
Right consisting of the right to purchase the lesser of:

               (a)  that number of whole Shares arrived at by dividing Fifty
Thousand Dollars ($50,000.00) by the fair market value of a share of the common
stock of Incara on the Offering Date of such Offering Period; or

               (b)  30,000 Shares.

               The fair market value of Shares shall be determined in accordance
with paragraph 8 below. Shares may only be purchased through a Participant's
payroll withholding pursuant to paragraph 9 below. In no event shall a
Participant's Purchase Right permit such Participant to acquire more Shares in
any calendar year than is permitted under Section 10(a) hereof.

          8.   Purchase Price. The purchase price at which Shares may be
acquired in a given Purchase Period pursuant to the exercise of all or any
portion of a Purchase Right granted under the Plan (the "Offering Exercise
Price") shall be set by the Board; provided, however, that the Offering Exercise
Price shall not be less than eighty-five percent (85%) of the lesser of (i) the
fair market value of the Shares on the Offering Date of the Offering Period of
which the Purchase Period is a part, or (ii) the fair market value of the Shares
on the Purchase Date for such Purchase Period; provided, however that the fair
market value of the Shares on the Initial Offering Date shall be deemed to be
the initial public offering price of Incara's Common Stock. Unless otherwise
provided by the Board prior to the commencement of an Offering Period, the
Offering Exercise Price for each Purchase Period in that Offering Period shall
be eighty-five percent (85%) of the lesser of (i) the fair market value of the
Shares on the Offering Date of such Offering Period or (ii) the fair market
value of the Shares on the given Purchase Date. The fair market value of the
Shares on the applicable dates shall be the closing sales price on the Nasdaq
National Market (or the average of the closing bid and asked prices if the
Shares are so quoted instead) or as reported on such other national or regional
securities exchange or market system if the Shares are traded on such other
exchange or system instead, or as determined by the Board if the Shares are not
so reported. If the relevant date does not fall on a day on which the common
stock of Incara is quoted on the Nasdaq National Market or such other national
or regional securities exchange or market, the date on which the fair market
value per Share shall be established shall be the last day on which the common
stock of Incara was so quoted to such relevant date.

          9.   Payment of Purchase Price. Shares which are acquired pursuant to
the exercise of all or any portion of a Purchase Right may be paid for only by
means of payroll deductions from the Participant's Compensation during the
Offering Period. For purposes of the Plan, a Participant's "Compensation" with
respect to an Offering (i) shall include the Participant's base salary before
deduction for any contributions to any plan maintained by a Participating
Company and described in section 401(k) or section 125 of the Code, commissions,
overtime and bonuses and (ii) shall not include annual awards, other incentive
payments, shift premiums, long-term disability, worker's compensation or any
other payments not specifically

                                       4

<PAGE>

referenced in (i). Except as set forth below, the amount of Compensation to be
withheld from a Participant's Compensation during each pay period shall be
determined by the Participant's subscription agreement.

               (a)  Election to Decrease, Increase or Stop Withholding. During
an Offering Period, a Participant may elect to decrease the amount withheld, or
stop withholding, from his or her Compensation by filing as amended subscription
agreement with the Company on or before the "Change Notice Date." The "Change
Notice Date" shall initially be the seventh (7th) day prior to the end of the
first pay period for which such election is to be effective; however, the
Company may change such Change Notice Date from time to time. A Participant may
elect to increase the amount withheld from the Participant's Compensation once
during any Purchase Period.

               (b)  Limitations on Payroll Withholding. The amount of payroll
withholding with respect to the Plan for any Participant during any pay period
shall be in one percent (1%) increments not to exceed ten percent (10%) of the
Participant's Compensation for such pay period. Notwithstanding the foregoing,
the Board may change the limits on payroll withholding effective as of a future
Offering Date, as determined by the Board. Amounts withheld shall be reduced by
any amounts contributed by the Participant and applied to the purchase of
Company stock pursuant to any other employee stock purchase plan qualifying
under section 423 of the Code.

               (c)  Payroll Withholding. Payroll deductions shall commence on
the first payday following the Offering Date and shall continue to the end of
the Offering Period unless sooner altered or terminated as provided in the Plan.

               (d)  Participant Accounts. Individual accounts shall be
maintained for each Participant. All payroll deductions from a Participant's
Compensation shall be credited to such account and shall be deposited with the
general funds of the Company. All payroll deductions received or held by the
Company may be used by the Company for any corporate purpose.

               (e)  No Interest Paid. Interest shall not be paid on sums
withheld from a Participant's Compensation, unless the Board elects to make such
payments to all Participants on a non-discriminatory basis.

               (f)  Exercise of Purchase Right. On each Purchase Date of an
Offering Period, each Participant who has not withdrawn from the Offering or
whose participation in the Offering has not terminated on or before such
Purchase Date shall automatically acquire pursuant to the exercise of the
Participant's Purchase Right the number of whole Shares arrived at by dividing
the total amount of the Participant's accumulated payroll deductions for the
Purchase Period by the Offering Exercise Price; provided, however, in no event
shall the number of Shares purchased by the Participant exceed the number of
Shares subject to the Participant's Purchase Right or the limitations imposed by
Section 10(a) hereof. No Shares shall be purchased on a Purchase Date on behalf
of a Participant whose participation in the Offering or the Plan has terminated
on or before such Purchase Date.

                                        5

<PAGE>

         (g) Return of Cash Balance. Any cash balance remaining in the
Participant's account shall be refunded to the Participant as soon as
practicable after the Purchase Date. In the event the cash to be returned to a
Participant pursuant to the preceding sentence is an amount less than the amount
necessary to purchase a whole Share, the Company may establish procedures
whereby such cash is maintained in the Participant's account and applied toward
the purchase of Shares in the subsequent Purchase Period or Offering Period.

         (h) Tax Withholding. At the time the Purchase Right is exercised, in
whole or in part, or at the time some or all of the Shares are disposed of, the
Participant shall make adequate provision for the foreign, federal, state and
local employment and withholding tax obligations of the Company, if any, which
arise upon exercise of the Purchase Right and/or upon disposition of Shares,
respectively. The Company may, but shall not be obligated to, withhold from the
Participant's Compensation the amount necessary to meet such withholding
obligations.

         (i) Company Established Procedures. The Company may, from time to time,
establish or change (i) a minimum required withholding amount for participation
in an Offering, (ii) limitations on the frequency and/or number of changes in
the amount withheld during an Offering, (iii) an exchange ratio applicable to
amounts withheld in a currency other than U.S. dollars, (iv) payroll withholding
in excess of or less than the amount designated by a Participant in order to
adjust for delays or mistakes in the Company's processing of subscription
agreements, (v) the date(s) and manner by which the fair market value of the
Shares is determined for purposes of administration of the Plan and/or (vi) such
other limitations or procedures as deemed advisable by the Company in the
Company's sole discretion which are consistent with the Plan and in accordance
with the requirements of section 423 of the Code.

         (j) Expiration of Purchase Right. Any portion of a Participant's
Purchase Right remaining unexercised after the end of the Offering Period to
which such Purchase Right relates shall expire immediately upon the end of such
Offering Period.

     10. Limitations on Purchase of Shares; Rights as a Stockholder.

         (a) Fair Market Value Limitation. Notwithstanding any other provision
of the Plan, no Participant shall be entitled to purchase Shares under the Plan
(and under all other employee stock purchase plans which are intended to meet
the requirements of section 423 of the Code sponsored by the Company or a parent
or subsidiary corporation of the Company) at a rate which exceeds $25,000 in
fair market value, which fair market value is determined for Shares purchased
during a given Offering Period as of the Offering Date for such Offering Period
(or such other limit as may be imposed by the Code), for each calendar year in
which such Participant's Purchase Right with respect to such Offering Period
remains outstanding under the Plan (and under all other employee stock purchase
plans described in this sentence).

         (b) Pro Rata Allocation. In the event the number of Shares which might
be purchased by all Participants in the Plan exceeds the number of Shares
available in the Plan, the Company shall make a pro rata allocation of the
remaining Shares in as uniform a manner as shall be practicable and as the
Company shall determine to be equitable.

                                        6

<PAGE>

             (c) Rights as a Stockholder and Employee. A Participant shall have
no rights as a stockholder by virtue of the Participant's participation in the
Plan until the date of the issuance of a stock certificate(s) for the Shares
being purchased pursuant to the exercise of the Participant's Purchase Right. No
adjustment shall be made for cash dividends or distributions or other rights for
which the record date is prior to the date such stock certificate(s) are issued.
Nothing herein shall confer upon a Participant any right to continue in the
employ of the Company or interfere in any way with any right of the Company to
terminate the Participant's employment at any time.

         11. Withdrawal.

             (a) Withdrawal From an Offering. A Participant may withdraw from an
Offering by signing and delivering to the Company's payroll office, a written
notice of withdrawal on form provide by the Company for such purpose. Such
withdrawal may be elected at any time prior to the end of an Offering Period;
provided, however, if a Participant withdraws after the Purchase Date for a
Purchase Period of an Offering, the withdrawal shall not affect Shares acquired
by the Participant in such Purchase Period. Unless otherwise indicated,
withdrawal from an Offering shall not result in a withdrawal from the Plan or
any succeeding Offering therein. By withdrawing from an Offering effective as of
the close of a given Purchase Date, a Participant may have Shares purchased on
such Purchase Date and commence participation in the next Offering commencing
after such Purchase Date. A Participant is prohibited from again participating
in an Offering at any time upon withdrawal from such Offering. The Company may
impose, from time to time, a requirement that the notice of withdrawal be on
file with the Company's payroll office for a reasonable period prior to the
effectiveness of the Participant's withdrawal from an Offering.

             (b) Withdrawal from the Plan. A Participant may withdraw from the
Plan by signing a written notice of withdrawal on a form provided by the Company
for such purpose and delivering such notice to the Company's payroll office.
Withdrawals made after a Purchase Date for a Purchase Period shall not affect
Shares acquired by the Participant on such Purchase Date. In the event a
Participant voluntarily elects to withdraw from the Plan, the Participant may
not resume participation in the Plan during the same Offering Period, but may
participate in any subsequent Offering under the Plan by again satisfying the
requirements of paragraphs 4 and 6(a) above. The Company may impose, from time
to time, a requirement that the notice of withdrawal be on file with the
Company's payroll office for a reasonable period prior to the effectiveness of
the Participant's withdrawal from the Plan.

             (c) Return of Payroll Deductions. Upon withdrawal from an Offering
or the Plan pursuant to paragraphs 11(a) or 11(b), respectively, the withdrawn
Participant's accumulated payroll deductions which have not been applied toward
the purchase of Shares shall be returned as soon as practicable after the
withdrawal, without the payment of any interest (unless the Board decides
otherwise pursuant to paragraph 9(e) above), to the Participant, and the
Participant's interest in the Offering and/or the Plan, as applicable, shall
terminate. Such accumulated payroll deductions may not be applied to any other
Offering under the Plan.

                                        7

<PAGE>

             (d) Automatic Withdrawal From an Offering. If the fair market value
of the Shares on a Purchase Date of an Offering (other than the final Purchase
Date of such Offering) is less than the fair market value of the Shares on the
Offering Date for such Offering, then every Participant shall automatically (i)
be withdrawn from such Offering at the close of such Purchase Date and after the
acquisition of Shares for such Purchase Period and (ii) be enrolled in the next
Offering commencing subsequent to such Purchase Period. A Participant may elect
not to be automatically withdrawn from an Offering Period pursuant to this
paragraph 11(d) by delivering to the Company not later than the close of
business on the last day before the Purchase Date a written notice indicating
such election.

             (e) Waiver of Withdrawal Right. The Company may, from time to time,
establish a procedure pursuant to which a Participant may elect (an "Irrevocable
Election"), at least six (6) months prior to a Purchase Date, to have all
payroll deductions accumulated in his or her Plan account as of such Purchase
Date applied to purchase Shares under the Plan, and (i) to waive his or her
right to withdraw from the Offering or the Plan and (ii) to waive his or her
right to increase, decrease, or cease payroll deductions under the Plan from his
or her Compensation during the Purchase Period ending on such Purchase Date.
Such election shall be made in writing on a form provided by the Company for
such purpose and must be delivered to the Company not later than the close of
business on the day preceding the date which is six (6) months before the
Purchase Date for which such election is to first be effective.

         12. Termination of Employment. Termination of a Participant's
employment with the Company for any reason, including retirement, disability or
death or the failure of a Participant to remain an employee eligible to
participate in the Plan, shall terminate the Participant's participation in the
Plan immediately. In such event, the payroll deductions credited to the
Participant's account since the last Purchase Date shall, as soon as
practicable, be returned to the Participant or, in the case of the Participant's
death, to the Participant's legal representative, and all of the Participant's
right under the Plan shall terminate. Interest shall not be paid on sums
returned to a Participant pursuant to this paragraph 12 unless the Board elects
otherwise pursuant to paragraph 9(e) above. A Participant whose participation
has been so terminated may again become eligible to participate in the Plan by
again satisfying the requirements of paragraphs 4 and 6(a) above.

         13. Transfer of Control. A "Transfer of Control" shall be deemed to
have occurred in the event any of the following occurs with respect to Incara.

             (a) a merger or consolidation in which Incara is not the surviving
corporation;

             (b) a merger or consolidation in which Incara is the surviving
corporation where the stockholders of Incara before such merger or consolidation
do not retain, directly or indirectly, at least a majority of the beneficial
interest in the voting stock of Incara;

             (c) the sale, exchange, or transfer of all or substantially all of
Incara's assets other than a sale, exchange, or transfer to one (1) or more
subsidiary corporations (as defined in section 1, above) of Incara;

                                        8

<PAGE>

             (d) the direct or indirect sale or exchange by the stockholders of
Incara of all or substantially all of the stock of Incara where the stockholders
of Incara before such sale or exchange do not retain, directly or indirectly, at
least a majority of the beneficial interest in the voting stock of Incara after
such sale or exchange; or

             (e) the liquidation or dissolution of Incara;

             In the event of a Transfer of Control, the Board, in its sole
discretion, may arrange with the surviving, continuing, successor, or purchasing
corporation, as the case may be (the "Acquiring Corporation"), for the Acquiring
Corporation to assume Incara's rights and obligations under the Plan. All
Purchase Rights shall terminate effective as of the date of the Transfer of
Control to the extent that the Purchase Right is neither exercised as of the
date of the Transfer of Control nor assumed by the Acquiring Corporation.

         14. Capital Changes. In the event of changes in the common stock of
Incara due to a stock split, reverse stock split, stock dividend,
recapitalization, combination, reclassification, or like change in Incara's
capitalization, or in the event of any merger (including a merger effected for
the purpose of changing Incara's domicile), sale or other reorganization,
appropriate adjustments shall be made by Incara in the securities subject to
purchase under a Purchase Right, the Plan's share reserve, the number of Shares
subject to a Purchase Right, and in the purchase price per Share.

         15. Transferability. A Purchase Right may not be transferred in any
manner otherwise than by will or the laws of descent and distribution and shall
be exercisable during the lifetime of the Participant only by the Participant.
Incara, in its absolute discretion, may impose such restrictions on the
transferability of the Shares purchasable upon the exercise of a Purchase Right
as it deems appropriate, and any such restriction shall be set forth in the
respective subscription agreement and may be referred to on the certificates
evidencing such Shares.

         16. Reports. Each Participant who exercised all or part of his or her
Purchase Right for a Purchase Period shall receive, as soon as practicable after
the Purchase Date of such Purchase Period, a report of such Participant's
account setting forth the total payroll deductions accumulated, the number of
Shares purchased, the fair market value of such Shares, the date of purchase and
the remaining cash balance to be refunded or retained in the Participant's
account pursuant to paragraph 9(g) above, if any. In addition, each Participant
shall be provided information concerning Incara equivalent to that information
generally made available to Incara's common stockholders.

         17. Plan Term. This Plan shall continue until terminated by the Board
or until all of the Shares reserved for issuance under the Plan have been
issued.

         18. Restriction on Issuance of Shares. The issuance of Shares under the
Plan shall be subject to compliance with all applicable requirements of foreign,
federal or state law with respect to such securities. A Purchase Right may not
be exercised if the issuance of Shares upon such exercise would constitute a
violation of any applicable foreign, federal or state

                                        9

<PAGE>

securities laws or other law or regulations. In addition, no Purchase Right may
be exercised unless (i) a registration statement under the Securities Act of
1933, as amended, shall at the time of exercise of the Purchase Right be in
effect with respect to the Shares issuable upon exercise of the Purchase Right,
or (ii) in the opinion of legal counsel to Incara, the Shares issuable upon
exercise of the Purchase Right may be issued in accordance with the terms of an
applicable exemption from the registration requirements of said Act. As a
condition to the exercise of a Purchase Right, Incara may require the
Participant to satisfy any qualifications that may be necessary or appropriate,
to evidence compliance with any applicable law or regulation, and to make any
representation or warranty with respect thereto as may be requested by the
Company.

         19. Legends. The Company may at any time place legends or other
identifying symbols referencing any applicable foreign, federal and/or state
securities restrictions or any provision convenient in the administration of the
Plan on some or all of the certificates representing Shares issued under the
Plan. The Participant shall, at the request of Incara, promptly present to
Incara any and all certificates representing Shares acquired pursuant to a
Purchase Right in the possession of the Participant in order to carry out the
provisions of this subparagraph. Unless otherwise specified by Incara, legends
placed on such certificates may include but shall not be limited to the
following:

         "THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE
CORPORATION TO THE REGISTERED HOLDER UPON THE PURCHASE OF SHARES UNDER THE
EMPLOYEE STOCK PURCHASE PLAN AS DEFINED IN SECTION 423 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, THE TRANSFER AGENT FOR THE SHARES EVIDENCED HEREBY
SHALL NOTIFY THE CORPORATION IMMEDIATELY OF ANY TRANSFER OF THE SHARES BY THE
REGISTERED HOLDER HEREOF MADE ON OR BEFORE ______________. THE REGISTERED HOLDER
SHALL HOLD ALL SHARES PURCHASED UNDER THE PLAN IN THE REGISTERED HOLDER'S NAME
(AND NOT IN THE NAME OF ANY NOMINEE) PRIOR TO THIS DATE."

         20. Notification of Sale of Shares. Incara may require the Participant
to give Incara prompt notice of any disposition of Shares acquired by exercise
of a Purchase Right within two years from the date of granting such Purchase
Right or one year from the date of exercise of such Purchase Right. Incara may
require that until such time as a Participant disposes of Shares acquired upon
exercise of a Purchase Right, the Participant shall hold all such Shares in the
Participant's name (and not in the name of any nominee) until the lapse of the
time periods with respect to such Purchase Right referred to in the preceding
sentence. Incara may direct that the certificates evidencing Shares acquired by
exercise of a Purchase Right refer to such requirement to give prompt notice of
disposition.

         21. Amendment or Termination of the Plan. The Board may at any time
amend or terminate the Plan, except that such termination shall not affect
Purchase Rights previously granted under the Plan, nor may any amendment make
any change in a Purchase Right previously granted under the Plan which would
adversely affect the right of any Participant (except to the extent permitted by
the Plan or as may be necessary to qualify the Plan as an employee stock
purchase plan pursuant to section 423 of the Code or to obtain qualification or
registration of the Shares under applicable foreign, federal or state securities
laws). In addition,

                                       10

<PAGE>

an amendment to the Plan must be approved by the stockholders of the Company
within twelve (12) months of the adoption of such amendment if such amendment
would change the number of Shares authorized for issuance under the Plan or
would change the definition of the employees (or class of employees) eligible to
participate in the Plan, including the corporations that may be designated by
the Board as Participating Companies. Furthermore, the approval of the Company's
stockholders shall be sought for any amendment to the Plan for which the Board
deems stockholder approval necessary in order to comply with Rule 16b-3
promulgated under section 16 of the Securities Exchange Act of 1934.

             The foregoing Incara Pharmaceuticals Corporation 1995 Employee
Stock Purchase Plan was duly adopted by the Board of Directors of Incara on the
27th day of October, 1995, and was approved by the stockholders on the 20/th/
day of November 1995.

As amended by the Board of Directors through March 7, 2002, and as approved by
stockholders on March 7, 2002.

                                       11

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