Document:

Warrant dated Jan 9, 2004

 Exhibit 4.9 
  

	 	 	THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY OTHER SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED
AFTER SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT COVERING THIS WARRANT UNDER THE ACT AND ANY OTHER APPLICABLE SECURITIES LAWS, OR (2) AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.	 	 

  
 INCARA
PHARMACEUTICALS CORPORATION 
  
 WARRANT TO PURCHASE 12,500,000
SHARES OF COMMON STOCK 
  

	 January 9, 2004
	 	 	 	Warrant No. CO-35

  
 For value received,
Incara Pharmaceuticals Corporation (f/k/a Incara, Inc.), a Delaware corporation (the “Company”), hereby certifies that Goodnow Capital, L.L.C., or its registered transferees, successors or assigns (each person or entity
holding all or part of this Warrant being referred to as a “Holder”), is the registered holder of warrants (the “Warrants”) to subscribe for and purchase Twelve Million Five Hundred Thousand
(12,500,000) shares (as adjusted pursuant to the next paragraph and Section 3 hereof, the “Warrant Shares”) of the fully paid and nonassessable common stock, par value $0.001 per share (the “Common
Stock”), of the Company at any time on or prior to the Expiration Date (as defined below) at a purchase price per share initially equal to Forty Cents ($0.40) (the “Warrant Price”), subject to the provisions and
upon the terms and conditions hereinafter set forth. For purposes of this Warrant, “Expiration Date” shall mean 5:00 P.M., Eastern Time, on January 9, 2006, unless the Company shall have consummated and received the cash
proceeds from a Qualified Financing (as defined below) on or prior to April 30, 2004, in which case the Expiration Date shall be the date of consummation of the Qualified Financing. For purposes of this Warrant, “Qualified
Financing” means the Company’s consummation of and receipt of all of the cash proceeds from a collaboration or partnership transaction or a private offering of equity of the Company in one or a series of related transactions at a
per share purchase price in excess of Twenty-Five Cents ($.25) (on a common stock equivalent basis) resulting in net cash proceeds (after deduction of any expenses incurred or commissions or concessions paid by the Company in connection with such
Qualified Financing) to the Company of at least Five Million Dollars ($5,000,000). 

 Section 1. Exercise; Termination of Warrant. 
  
 (a) Method of Exercise; Payment; Issuance of New Warrant.

  
 (i) Subject to the provisions hereof, the Holder may exercise
this Warrant, in whole or in part and from time to time, by the surrender of this Warrant (with the Notice of Exercise attached hereto as Appendix A duly executed) at the principal office of the Company, or such other office or agency
of the Company as it may reasonably designate by written notice to the Holder, during normal business hours on any Business Day (as defined below), and the payment by the Holder by cash, certified check payable to the Company or wire transfer of
immediately available funds to an account designated to the exercising Holder by the Company of an amount equal to the then applicable Warrant Price multiplied by the number of Warrant Shares then being purchased. On the date on which the Holder
shall have satisfied in full the Holder’s obligations set forth herein regarding an exercise of this Warrant (provided such date is prior to the Expiration Date), the Holder (or such other person or persons as directed by the Holder) shall be
treated for all purposes as the holder of record of such Warrant Shares as of the close of business on such date. For purposes of this Warrant, “Business Day” means a day, other than a Saturday or Sunday, on which banks in
New York City are open for the general transaction of business. 
  
 (ii) In the event of any exercise of the rights represented by this Warrant, certificates for the whole number of shares of Common Stock so purchased shall be delivered to the Holder (or such other person or persons as directed by the
Holder) as promptly as is reasonably practicable (but not later than three (3) Business Days) after such exercise at the Company’s expense, and, unless this Warrant has been fully exercised, a new Warrant representing the whole number of
Warrant Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be issued to the Holder as soon as reasonably practicable thereafter (but not later than three (3) Business Days) after such exercise.

  
 (b) Specific Performance. In the event the
Company refuses to honor its obligations to issue shares of Common Stock to the Holder upon exercise of this Warrant in accordance with the terms hereof, the Holder shall, in addition to any of its other remedies, be entitled to the remedy of
specific performance, in a summary proceeding before a court of competent jurisdiction. 
  
 (c) Termination of Exercise Rights. The right of the Holder to exercise this Warrant shall terminate on the Expiration Date. 
  
 (d) Restrictions on Exercise Rights. 
  
 (i) Notwithstanding anything herein to the contrary, in no event shall the Holder be entitled to exercise any portion of
this Warrant in excess of that portion of this Warrant upon exercise of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its Affiliates (other than shares of Common Stock which may be deemed beneficially
owned through the ownership of the unexercised portion of this Warrant or the unexercised or unconverted portion of any other security of the Holder subject to 

  

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a limitation on exercise or conversion analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon exercise of
the portion of this Warrant with respect to which the determination of this Section 1(d)(i) is being made, would result in beneficial ownership by the Holder and its Affiliates of more than 9.99% of the then outstanding shares of Common Stock. Due
to the restrictions set forth in the immediately preceding sentence, the Holder is not, as of the date of issuance of this Warrant, entitled to exercise any portion of this Warrant into shares of Common Stock by virtue of the fact that it
beneficially owns, as of the date of issuance of this Warrant, more than 9.99% of the outstanding shares of Common Stock. The Holder may waive the limitations set forth in this Section 1(d)(i) upon sixty-one (61) days written notice to the
Company. 
  
 (ii) Notwithstanding anything herein to the
contrary, in no event shall the Holder be entitled to exercise any portion of this Warrant in excess of that portion of this Warrant upon exercise of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its
Affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unexercised portion of the Warrant or the unexercised or unconverted portion of any other security of the Holder subject to a
limitation on exercise or conversion analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the exercise of the portion of this Warrant with respect to which the determination of this Section 1(d)
is being made, would result in beneficial ownership by the Holder and its Affiliates of more than 74.99% of the then outstanding shares of Common Stock. 
  
 (iii) For purposes of this Section 1(d), “beneficial ownership” shall be determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934, as amended, and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of Sections 1(d)(i) and (ii). As used in Section 1(d), the term “Affiliate” means any person or entity that, directly or
indirectly through one or more intermediaries, controls or is controlled by or is under common control with a person or entity, as such terms are used in and construed under Rule 144 under the Securities Act of 1933, as amended. 
  
 Section 2. Reservation of Shares; Stock Fully Paid;
Listing. The Company shall keep reserved a sufficient number of shares of the authorized and unissued shares of Common Stock to provide for the exercise of the rights of purchase represented by this Warrant in compliance with its terms
(without regard to the restrictions in Section 1(d)). All Warrant Shares issued upon exercise of this Warrant shall be, at the time of delivery of the certificates for such Warrant Shares upon payment in full of the Warrant Price therefor in
accordance with the terms of this Warrant, duly authorized, validly issued, fully paid and non-assessable shares of Common Stock of the Company. The Company shall during all times prior to the Expiration Date when the shares of Common Stock issuable
upon the exercise of this Warrant (without regard to the restrictions in Section 1(d)) are authorized for listing or quotation on any national securities exchange (or the Over-the-Counter Bulletin Board or the “pink sheets”, as the
case may be), keep the shares of Common Stock issuable upon the exercise of this Warrant authorized for listing or quotation on such national securities exchange (or the Over-the-Counter Bulletin Board or the “pink sheets”, as the case may
be). 
  

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 Section 3. Adjustments and Distributions. The number and kind of securities
purchasable upon the exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time upon the occurrence of certain events, as follows: 
  
 (a) If the Company shall at any time or from time to time while this Warrant is outstanding, pay a dividend or make a
distribution on its Common Stock in shares of Common Stock, subdivide its outstanding shares of Common Stock into a greater number of shares or combine its outstanding shares of Common Stock into a smaller number of shares, then the number of
Warrant Shares purchasable upon exercise of this Warrant and the Warrant Price in effect immediately prior to the date upon which such change shall become effective shall be proportionally adjusted by the Company so that the Holder thereafter
exercising this Warrant shall be entitled to receive the number of shares of Common Stock or other capital stock which the Holder would have received if this Warrant had been exercised immediately prior to such event upon payment of a Warrant Price
that has been proportionally adjusted to reflect such event. Such adjustments shall be made successively whenever any event listed above shall occur. 
  
 (b) If any recapitalization, reclassification or reorganization of the capital stock of the Company (other than a change in par value or a subdivision or
combination as provided for in Section 3(a) above) shall be effected in such a manner (including, without limitation, in connection with a consolidation or merger in which the Company is the continuing corporation), that holders of Common
Stock shall be entitled to receive stock, securities, or other assets or property (a “Reorganization”), then, as a condition of such Reorganization, lawful and adequate provisions shall be made by the Company whereby the
Holder hereof shall thereafter have the right to purchase and receive (in lieu of the shares of the Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby) such shares of
stock, securities or other assets or property as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Common Stock equal to the number of shares of such Common Stock immediately theretofore purchasable
and receivable upon the exercise of the rights represented hereby. In the event of any Reorganization, appropriate provision shall be made by the Company with respect to the rights and interests of the Holder of this Warrant to the end that the
provisions hereof (including, without limitation, provisions for adjustments of the Warrant Price and of the number of Warrant Shares) shall thereafter be applicable, in relation to any shares of stock, securities or assets thereafter deliverable
upon the exercise hereof. The provisions of this Section 3(b) shall similarly apply to successive Reorganizations. 
  
 (c) If any consolidation or merger of the Company with another entity in which the Company is not the survivor, or sale, transfer or other disposition of
all or substantially all of the Company’s assets to another entity shall be effected, then, as a condition of such consolidation, merger, sale, transfer or other disposition, lawful and adequate provision shall be made whereby the Holder shall
thereafter have the right to purchase and receive upon the basis and upon the terms and conditions herein specified and in lieu of the Warrant Shares immediately theretofore issuable upon exercise of this Warrant, such shares of stock, securities or
assets as would have been issuable or payable with respect to or in exchange for a number of Warrant Shares equal to the number of Warrant Shares immediately theretofore issuable upon 

  

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exercise of this Warrant, had such consolidation, merger, sale, transfer or other disposition not taken place, and in any such case appropriate provision
shall be made with respect to the rights and interests of the Holder to the end that the provisions hereof (including, without limitation, provision for adjustment of the Warrant Price and of the number of Warrant Shares) shall thereafter be
applicable, as nearly equivalent as may be practicable, in relation to any shares of stock, securities or properties thereafter deliverable upon the exercise thereof. The Company shall not effect any such consolidation, merger, sale, transfer or
other disposition unless prior to or simultaneously with the consummation thereof the successor entity (if other than the Company) resulting from such consolidation or merger, or the entity purchasing or otherwise acquiring such assets or other
appropriate entity shall assume, in a valid, binding and enforceable writing, the obligation to deliver to the Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such Holder may be entitled to
purchase, and the other obligations under this Warrant. The provisions of this Section 3(c) shall similarly apply to successive consolidations, mergers, sales, transfers or other dispositions. 
  
 (d) In case the Company shall fix a payment date for the making of a
distribution to all holders of Common Stock of evidences of indebtedness or assets (other than dividends or distributions referred to in Section 3(a) hereof), or subscription rights or warrants, the Warrant Price to be in effect after such
payment date shall be determined by multiplying the Warrant Price in effect immediately prior to such payment date by a fraction, the numerator of which shall be the total number of shares of Common Stock outstanding multiplied by the Fair Market
Value per share of Common Stock immediately prior to such payment date, less the fair market value (as determined by the Board of Directors of the Company (the “Board”) in good faith) of said assets or evidences of
indebtedness so distributed, or of such subscription rights or warrants, and the denominator of which shall be the total number of shares of Common Stock outstanding multiplied by such Fair Market Value per share of Common Stock immediately prior to
such payment date. Such adjustment shall be made successively whenever such a payment date is fixed. For purposes of this Warrant, the “Fair Market Value” of a share of Common Stock as of a particular date (the
“Valuation Date”) shall mean the following: (v) if the Common Stock is then listed on a national stock exchange, the closing sale price of one share of Common Stock on such exchange on the last trading day prior to the
Valuation Date, provided that if such stock has not traded in the prior ten (10) trading sessions, the Fair Market Value shall be the average closing price of one share of Common Stock in the most recent ten (10) trading sessions during which the
Common Stock has traded; (w) if the Common Stock is then included in The Nasdaq Stock Market, Inc. (“Nasdaq”), the closing sale price of one share of Common Stock on Nasdaq on the last trading day prior to the Valuation Date
or, if no such closing sale price is available, the average of the high bid and the low ask price quoted on Nasdaq as of the end of the last trading day prior to the Valuation Date, provided that if such stock has not traded in the prior ten (10)
trading sessions, the Fair Market Value shall be the average closing price of one share of Common Stock in the most recent ten (10) trading sessions during which the Common Stock has traded; (x) if the Common Stock is then included in the
Over-the-Counter Bulletin Board, the closing sale price of one share of Common Stock on the Over-the-Counter Bulletin Board on the last trading day prior to the Valuation Date or, if no such closing sale price is available, the average of the high
bid and the low ask price quoted on the Over-the-Counter Bulletin Board as of the end of the last trading day prior to the Valuation Date, provided that if such stock has not traded in the prior ten (10) trading sessions, the Fair Market Value shall
be the 

  

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average closing price of one share of Common Stock in the most recent ten (10) trading sessions during which the Common Stock has traded; (y) if the Common
Stock is then included in the “pink sheets”, the closing sale price of one share of Common Stock on the “pink sheets” on the last trading day prior to the Valuation Date or, if no such closing sale price is available, the average
of the high bid and the low ask price quoted on the “pink sheets” as of the end of the last trading day prior to the Valuation Date, provided that if such stock has not traded in the prior ten (10) trading sessions, the Fair Market Value
shall be the average closing price of one share of Common Stock in the most recent ten (10) trading sessions during which the Common Stock has traded; or (z) if the Common Stock is not then listed on a national stock exchange or quoted on Nasdaq or
the Over-the-Counter Bulletin Board or the “pink sheets”, the Fair Market Value of one share of Common Stock as of the Valuation Date shall be determined in good faith by the Board and the Holder. 
  
 (i) In the event that any dividend or distribution for which this Section
3(d) would require an adjustment is not so paid or made, the Warrant Price shall be adjusted to be the Warrant Price which would then be in effect if such dividend or distribution had not been declared. 
  
 (ii) In the event that the Company implements a new shareholder rights plan,
such rights plan shall provide that upon exercise of this Warrant the Holder will receive, in addition to the Common Stock issuable upon such exercise, the rights issued under such rights plan (as if the Holder had exercised this Warrant prior to
implementing the rights plan and notwithstanding the occurrence of an event causing such rights to separate from the Common Stock at or prior to the time of exercise). Any distribution of rights or warrants pursuant to a shareholder rights plan
complying with the requirements set forth in the immediately preceding sentence of this paragraph shall not constitute a distribution of rights or warrants for the purposes of this Section 3(d). 
  
 (e) An adjustment to the Warrant Price shall become effective immediately
after the payment date in the case of each dividend or distribution and immediately after the effective date of each other event which requires an adjustment. 
  

(f) In the event that, as a result of an adjustment made pursuant to this Section 3, the Holder shall become entitled to receive any shares of
capital stock of the Company other than shares of Common Stock, the number of such other shares so receivable upon exercise of this Warrant shall be subject thereafter to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Warrant Shares contained in this Warrant. 
  
 (g) Except as provided in Section 3(h) hereof, if and whenever the Company shall issue or sell, or is, in accordance with any of Sections 3(g)(i) through 3(g)(vi) hereof, deemed to have issued or sold,
any shares of Common Stock for a consideration per share less than the Warrant Price in effect immediately prior to the time of such issue or sale, then and in each such case (a “Trigger Issuance”) the then-existing Warrant
Price shall be reduced, as of the close of business on the effective date of the Trigger Issuance, to a Warrant Price determined as follows: 
  

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 Adjusted Warrant Price = (A x B) + D 
 A+C 
  
 where 
  
 A = the number of shares of Common Stock outstanding (including any Additional Shares of Common Stock (as defined below) immediately preceding such
Trigger Issuance); 
  
 B = the Warrant Price in effect
immediately preceding such Trigger Issuance; 
  
 C = the number
of Additional Shares of Common Stock (as adjusted for stock splits, stock combinations, recapitalizations, and dividends and the like) outstanding or deemed outstanding hereunder as a result of such Trigger Issuance; and 
  
 D = the aggregate consideration, if any, received or deemed to be received
by the Company upon such Trigger Issuance. 
  
 For purposes of
this Section 3(g), “Additional Shares of Common Stock” shall mean all shares of Common Stock issued by the Company or deemed to be issued pursuant to this Section 3(g), other than issuances excluded by Section
3(h) hereof. 
  
 For purposes of this Section 3(g), the
following Sections 3(g)(i) to 3(g)(vi) shall also be applicable (subject, in each such case, to the provisions of Section 3(h) hereof): 
  
 (i) Issuance of Rights or Options. In case at any time the Company shall in any manner grant any warrants or other rights to
subscribe for or to purchase, or any options for the purchase of, Common Stock or any stock or security convertible into or exchangeable for Common Stock (such warrants, rights or options being called “Options” and such
convertible or exchangeable stock or securities being called “Convertible Securities”), whether or not such Options or the right to convert or exchange any such Convertible Securities are immediately exercisable, and the
price per share for which Common Stock is issuable upon the exercise of such Options or upon the conversion or exchange of such Convertible Securities (determined by dividing (A) the sum (which sum shall constitute the applicable consideration) of
(x) the total amount, if any, received or receivable by the Company as consideration for the granting of such Options, plus (y) the aggregate amount of additional consideration payable to the Company upon the exercise of all such Options, plus (z)
in the case of such Options which relate to Convertible Securities, the aggregate amount of additional consideration, if any, payable upon the issue or sale of such Convertible Securities and upon the conversion or exchange thereof, by (B) the total
maximum number of shares of Common Stock issuable upon the exercise of such Options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such 

  

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Options) shall be less than the Warrant Price in effect immediately prior to the time of the granting of such Options, then the total number of shares of
Common Stock issuable upon the exercise of such Options or upon conversion or exchange of the total amount of such Convertible Securities issuable upon the exercise of such Options shall be deemed to have been issued for such price per share as of
the date of granting of such Options or the issuance of such Convertible Securities and thereafter shall be deemed to be outstanding for purposes of adjusting the Warrant Price. Except as otherwise provided in Section 3(g)(iii), no adjustment
of the Warrant Price shall be made upon the actual issue of such Common Stock or of such Convertible Securities upon exercise of such Options or upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities.

  
 (ii) Issuance of Convertible
Securities. In case the Company shall in any manner issue or sell any Convertible Securities, whether or not the rights to exchange or convert any such Convertible Securities are immediately exercisable, and the price per share for which Common
Stock is issuable upon such conversion or exchange (determined by dividing (A) the sum (which sum shall constitute the applicable consideration) of (x) the total amount received or receivable by the Company as consideration for the issue or sale of
such Convertible Securities, plus (y) the aggregate amount of additional consideration, if any, payable to the Company upon the conversion or exchange thereof, by (B) the total number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities) shall be less than the Warrant Price in effect immediately prior to the time of such issue or sale, then the total maximum number of shares of Common Stock issuable upon conversion or exchange of all such
Convertible Securities shall be deemed to have been issued for such price per share as of the date of the issue or sale of such Convertible Securities and thereafter shall be deemed to be outstanding for purposes of adjusting the Warrant Price,
provided that (1) except as otherwise provided in Section 3(g)(iii), no adjustment of the Warrant Price shall be made upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities and (2) no further
adjustment of the Warrant Price shall be made by reason of the issue or sale of Convertible Securities upon exercise of any Options to purchase any such Convertible Securities for which adjustments of the Warrant Price have been made pursuant to the
other provisions of Section 3(g). 
  
 (iii) Change in Option Price or Conversion Rate. Upon the happening of any of the following events, namely, if (A) the purchase price provided for in any Option referred to in Section 3(g)(i) hereof, (B) the additional
consideration, if any, payable upon the conversion or exchange of any Convertible Securities referred to in Sections 3(g)(i) or 3(g)(ii), or (C) the rate at which Convertible Securities referred to in Sections 3(g)(i) or 3(g)(ii) are
convertible into or exchangeable for Common Stock shall change at any time (including, but not limited to, changes under or by reason of provisions designed to protect against dilution), the Warrant Price in effect at the time of such event shall
forthwith be 

  

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readjusted to the Warrant Price which would have been in effect at such time had such Options or Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or conversion rate, as the case may be, at the time initially granted, issued or sold. 
  
 (iv) Consideration for Stock. In case any shares of Common Stock, Options or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to be the net amount received by the Company therefor, after deduction therefrom of any expenses incurred or any underwriting commissions or concessions paid or allowed by the Company in
connection therewith. In case any shares of Common Stock, Options or Convertible Securities shall be issued or sold for a consideration other than cash or for a consideration including cash and such other consideration, the amount of the
consideration other than cash received by the Company shall be deemed to be the fair value of such consideration as determined in good faith by the Board, after deduction of any expenses incurred or any underwriting commissions or concessions paid
or allowed by the Company in connection therewith. In case any Options shall be issued in connection with the issue and sale of other securities of the Company, together comprising one integral transaction in which no specific consideration is
allocated to such Options by the parties thereto, such Options shall be deemed to have been issued for such consideration as determined in good faith by the Board. 
  
 (v) Record Date. In case the Company shall take a record of the holders of its Common Stock for the
purpose of entitling them (A) to receive a dividend or other distribution payable in Common Stock, Options or Convertible Securities or (B) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date shall be
deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or
purchase, as the case may be. If the Company shall have taken a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or distribution or subscription or purchase rights and shall, thereafter and before the
distribution to stockholders thereof, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights, then thereafter no adjustment shall be required by reason of the taking of such record and any such
adjustment previously made in respect thereof shall be rescinded and annulled. 
  
 (vi) Treasury Shares. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by
or for the account of the Company or any of its wholly-owned subsidiaries, and the disposition of any such shares (other than the cancellation or retirement thereof) shall be considered an issue or sale of Common Stock for the purpose of this
Section 3(g). 
  

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 (h) Anything herein to the contrary notwithstanding, the Company shall not be required to make any
adjustment of the Warrant Price in the case of the issuance of (i) capital stock, Options or Convertible Securities issued to directors, officers, employees or consultants of the Company in connection with their service as directors of the Company,
their employment by the Company or their retention as consultants by the Company pursuant to any employee benefit plans or programs approved by the Board or any committee thereof, (ii) shares of Common Stock upon the conversion or exercise of
Options or Convertible Securities outstanding on the date of issuance of this Warrant, and (iii) shares of Common Stock issued or issuable by reason of a dividend, stock split or other distribution payable pro rata to all holders of Common Stock
(but only to the extent that such a dividend, split or distribution results in an adjustment in the Warrant Price pursuant to the other provisions of this Warrant). 
  
 (i) Upon each adjustment in the Warrant Price pursuant to this Section 3, the number of Warrant Shares purchasable
hereunder shall be adjusted, to the nearest whole share, to the product obtained by multiplying the number of Warrant Shares purchasable immediately prior to such adjustment by a fraction, (i) the numerator of which shall be the Warrant Price
immediately prior to such adjustment, and (ii) the denominator of which shall be the Warrant Price immediately thereafter. 
  
 (j) With each adjustment pursuant to this Section 3, the Company shall deliver a certificate signed by its chief financial or executive officer
setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the Warrant Price and the number of Warrant Shares purchasable hereunder after giving
effect to such adjustment, which shall be mailed by first class mail, postage prepaid to the Holder. 
  
 Section 4. Transfer Taxes. The Company will pay any documentary stamp taxes attributable to the initial issuance of Warrant
Shares issuable upon the exercise of the Warrant; provided, however, that the Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issuance or delivery of
any certificates for Warrant Shares in a name other than that of the registered holder of this Warrant in respect of which such shares are issued, and in such case, the Company shall not be required to issue or deliver any certificate for Warrant
Shares or any Warrant until the person requesting the same has paid to the Company the amount of such tax or has established to the Company’s reasonable satisfaction that such tax has been paid. 
  
 Section 5. Mutilated or Missing Warrants. In case
this Warrant shall be mutilated, lost, stolen, or destroyed, the Company shall issue in exchange and substitution of and upon cancellation of the mutilated Warrant, or in lieu of and substitution for the Warrant lost, stolen or destroyed, a new
Warrant of like tenor and for the purchase of a like number of Warrant Shares, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction of the Warrant, and with respect to a lost, stolen or
destroyed Warrant, reasonable indemnity or bond with respect thereto, if requested by the Company. 
  
 Section 6. Fractional Shares. No fractional shares of Common Stock shall be issued in connection with any exercise hereunder,
and in lieu of any such fractional shares the Company 

  

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shall make a cash payment therefor to the Holder (or such other person or persons as directed by the Holder) based on the Fair Market Value of a share of
Common Stock on the date of exercise of this Warrant. 
  
 Section 7. Compliance with Securities Act and Legends. The Holder, by acceptance hereof, agrees not to offer, sell or otherwise dispose of this Warrant or any Warrant Shares except under circumstances which will
not result in a violation of the Securities Act of 1933, as amended (the “1933 Act”), or the rules and regulations promulgated thereunder, or any state’s securities laws. All Warrant Shares issued upon exercise of this
Warrant (unless registered under the 1933 Act or eligible for resale under Rule 144(d) of the 1933 Act) shall be stamped or imprinted with a legend as follows: 
  

	 	 	THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY OTHER SECURITIES LAWS AND MAY NOT
BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT COVERING THESE SECURITIES UNDER THE ACT AND ANY OTHER APPLICABLE SECURITIES LAWS, OR (2) AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.	 	 

  
 Section
8. Rights as a Stockholder. Except as expressly provided in this Warrant, no Holder, as such, shall be entitled to vote or receive dividends or be deemed the holder of Common Stock or any other securities of the Company which
may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote for the election of the
directors or upon any matter submitted to stockholders at any meeting thereof, or to receive notice of meetings, or to receive dividends or subscription rights or otherwise, until this Warrant shall have been exercised and the Warrant Shares
purchasable upon the exercise hereof shall have become deliverable, as provided herein. 
  
 Section 9. Modification and Waiver. This Warrant and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the Company and the
then current Holder, and such change, waiver, discharge or termination shall be binding on any future Holder. 
  
 Section 10. Notices. Unless otherwise specifically provided herein, all communications under this Warrant shall be in writing
and shall be deemed to have been duly given (a) on the date personally delivered to the party to whom notice is to be given, (b) on the day of transmission if sent by facsimile transmission to a number provided to a party specifically for such
purposes and the sending party receives confirmation of the completion of such transmission, (c) on the Business Day after delivery to Federal Express or similar overnight courier which utilizes a written form of receipt, or (d) on the fifth day
after mailing, if mailed to 

  

 -11- 

 
the party to whom notice is to be given, by first class mail, registered or certified, postage prepaid, and properly addressed, return receipt requested, to
the Holder at its address or facsimile number, as the case may be, as shown on the books of the Company or to the Company at P.O. Box 14287 (if by U.S. mail), 79 T.W. Alexander Drive, 4401 Research Commons, Suite 200, Research Triangle Park, North
Carolina 27709, Attn: Clayton I. Duncan, facsimile (919) 544-1245. Any party hereto may change its address for purposes of this Section 10 by giving the other party written notice of the new address in the manner set forth herein. 

 
 Section 11. Descriptive Headings. The
descriptive headings contained in this Warrant are inserted for convenience only and do not constitute a part of this Warrant. 
  
 Section 12. Governing Law. The validity, interpretation and performance of this Warrant shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to contracts made and to be performed entirely within such State, regardless of the law that might be applied under principles of conflicts of law. The Company and, by accepting this
Warrant, the Holder, each irrevocably submits to the co-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 Warrant and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by
the same methods as are specified for the giving of notices under this Warrant. The Company and, by accepting this Warrant, the Holder, each 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 Company and, by accepting this Warrant, the Holder, each 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. 
  
 Section 13. Acceptance. Receipt of this Warrant by the Holder hereof shall constitute acceptance of and agreement to the
foregoing terms and conditions. 
  
 Section
14. No Impairment of Rights. The Company will not, by amendment of its Certificate of Incorporation or through any other means, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will
at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holder of this Warrant against material impairment. 
  
 Section 15. Assignment. A Holder may transfer its
rights hereunder, in whole or in part, to any other person provided that written notice is given to the Company of any such transfer and such transfer is in accordance with applicable law. Upon receipt by the Company of notice by a Holder of a
transfer of any portion of this Warrant and satisfaction of the requirements contained in the restrictive legend appearing on the first page of this Warrant, the Company shall promptly deliver to a transferee a Warrant in the form hereof exercisable
for the number of Warrant Shares the right of which to purchase has been transferred. In addition to, and not in limitation of, the foregoing, a Holder that is a corporation, a partnership or a limited 

  

 -12- 

 
liability company, may distribute any portion of this Warrant or any warrant issued pursuant to the terms hereof to its respective shareholders, partners or
members. 
  
 [Signature on Next Page] 
  

 -13- 

 IN WITNESS WHEREOF, the Company has caused this Warrant to be executed on its behalf by one of its
officers thereunto duly authorized. 
  

	 INCARA PHARMACEUTICALS CORPORATION

		
	 By:
	 	  

	 Name:
	 	  

	 Title:Secured Convertible Debenture dated Jan 9, 2004

 Exhibit 10.102 
  
 SECURED CONVERTIBLE DEBENTURE 
  

	 $5,000,000
	 	Maturity Date:       
	 	 	December 24, 2004

  
 FOR VALUE RECEIVED,
Incara Pharmaceuticals Corporation (f/k/a Incara, Inc.), a Delaware corporation (the “Maker”) and the successor-by-merger to Incara Pharmaceuticals Corporation, the Maker’s former parent (the “Parent”), hereby
promises to pay to the order of Goodnow Capital, L.L.C., a Delaware limited liability company and the successor-by-merger to 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. This Secured Convertible Debenture (this
“Debenture”) is the Debenture of the Maker referred to in that certain Debenture and Warrant Purchase Agreement (the “Purchase Agreement”), dated as of September 16, 2003, by and among the Holder, the Maker and the
Parent. This Debenture is subject to the terms and conditions of the Purchase Agreement. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Purchase Agreement. 
  
 1. Advances. Subject to the terms and conditions contained herein and
in the Purchase Agreement, the Holder shall make Advances to the Maker from time to time upon 10 Business Days written request of the Maker, subject to an aggregate limit of Five Million Dollars ($5,000,000) (the “Maximum Principal
Amount”), and 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. The proceeds of any
Advance shall be used by the Maker only for the specific purposes set forth in the Budget or the Plan. 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. 
  
 2. Maturity Date. Subject to acceleration as provided herein, the aggregate principal amount of the Advances and accrued interest thereon shall be
due and payable on December 24, 2004 (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 Debenture 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 Debenture and third, to the payment of the principal outstanding under this Debenture. 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)(i) At any time on or prior to the Maturity Date or, if the Debenture has not been paid in full on the Maturity Date, at any time following the
Maturity Date until the Debenture has been paid in full but in no event after eighteen (18) months following the Maturity Date (the “Conversion Expiration Date”), the Holder shall have the right to convert all or any portion of the
principal of and accrued interest on this Debenture 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 (the “Common
Stock”) equal to the amount being converted divided by $0.10 (the “Conversion Price”); provided, however, if this Debenture is being converted after the Maturity Date, the Conversion Price shall be the lower of (i) $.10 or
(ii) the Fair Market Value (as defined below) of a share of Common Stock on such Conversion Date (as defined in Section 6(b) below). 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. For purposes of this Debenture, the “Fair Market Value” of a share of Common Stock as of a particular Conversion Date
(the “Valuation Date”) shall mean the following: (v) if the Common Stock is then listed on a national stock exchange, the closing sale price of one share of Common Stock on such exchange on the last trading day prior to the
Valuation Date, provided that if such stock has not traded in the prior ten (10) trading sessions, the Fair Market Value shall be the average closing price of one share of Common Stock in the most recent ten (10) trading sessions during which the
Common Stock has traded; (w) if the Common Stock is then included in The Nasdaq Stock Market, Inc. (“Nasdaq”), the closing sale price of one share of Common Stock on Nasdaq on the last trading day prior to the Valuation Date
or, if no such closing sale price is available, the average of the high bid and the low ask price quoted on Nasdaq as of the end of the last trading day prior to the Valuation Date, provided that if such stock has not traded in the prior ten (10)
trading sessions, the Fair Market Value shall be the average closing price of one share of Common Stock in the most recent ten (10) trading sessions during which the Common Stock has traded; (x) if the Common Stock is then included in the
Over-the-Counter 

  

 -2- 

 
Bulletin Board, the closing sale price of one share of Common Stock on the Over-the-Counter Bulletin Board on the last trading day prior to the Valuation
Date or, if no such closing sale price is available, the average of the high bid and the low ask price quoted on the Over-the-Counter Bulletin Board as of the end of the last trading day prior to the Valuation Date, provided that if such stock has
not traded in the prior ten (10) trading sessions, the Fair Market Value shall be the average closing price of one share of Common Stock in the most recent ten (10) trading sessions during which the Common Stock has traded; (y) if the Common Stock
is then included in the “pink sheets”, the closing sale price of one share of Common Stock on the “pink sheets” on the last trading day prior to the Valuation Date or, if no such closing sale price is available, the average of
the high bid and the low ask price quoted on the “pink sheets” as of the end of the last trading day prior to the Valuation Date, provided that if such stock has not traded in the prior ten (10) trading sessions, the Fair Market Value
shall be the average closing price of one share of Common Stock in the most recent ten (10) trading sessions during which the Common Stock has traded; or (z) if the Common Stock is not then listed on a national stock exchange or quoted on Nasdaq or
the Over-the-Counter Bulletin Board or the “pink sheets”, the Fair Market Value of one share of Common Stock as of the Valuation Date shall be determined in good faith by the Board of Directors of the Maker and the Holder. 
  
 (ii) Notwithstanding anything contained in this Debenture to the contrary,
subject to Sections 6(c)(i) and (ii) below, the Holder shall, at any time while this Debenture is outstanding but in no event following the Conversion Expiration Date, have the right, at its option, to convert the Maximum Principal Amount of this
Debenture into Common Stock in accordance with Section 6(a)(i) hereof (regardless of whether the Holder has, as of such Conversion Date, advanced the Maximum Principal Amount of this Debenture); provided, that, the Holder advances to the Maker the
balance of the Maximum Principal Amount which has not previously been advanced to the Maker.  
  
 (b) To effect the conversion of this Debenture, the Holder shall surrender this Debenture to the Maker together with a written notice of conversion
specifying the date on which such conversion is to be effected (such date, the “Conversion Date”) and, unless the shares to be issued upon such conversion are then subject to an effective registration statement, 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 Debenture shall be exempt from registration under the 1933 Act. Promptly following
the Conversion Date (but in no event more than three (3) Business Days thereafter), the Maker shall issue to the Holder the shares of Common Stock into which this Debenture has been converted, registered in the name of the Holder or its nominee and
shall deliver the certificate(s) representing such shares to the Holder at the address specified by the Holder, and, unless the Holder has converted all of the principal and accrued interest on this Debenture into Common Stock, a new Debenture
representing the principal and accrued interest which the Holder did not convert into Common Stock (which new Debenture shall be in the form of this Debenture and shall continue to be convertible into shares of Common Stock at the Holder’s
election). 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 Debenture has been converted and the certificate(s) for such shares shall be issued as of the
Conversion Date. 
  

 -3- 

 (c)(i) Notwithstanding anything herein to the contrary, in no event shall the Holder be entitled to
convert any portion of this Debenture in excess of that portion of this Debenture upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its Affiliates (other than shares of Common Stock
which may be deemed beneficially owned through the ownership of the unconverted portion of this Debenture or the unexercised or unconverted portion of any other security of the Holder subject to a limitation on exercise or conversion analogous to
the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Debenture with respect to which the determination of this Section 6(c)(i) is being made, would result in beneficial
ownership by the Holder and its Affiliates of more than 9.99% of the then outstanding shares of Common Stock. Due to the restrictions set forth in the immediately preceding sentence, the Holder is not, as of the date of issuance of this Debenture,
entitled to convert any portion of this Debenture into shares of Common Stock by virtue of the fact that it beneficially owns, as of the date of issuance of this Debenture, more than 9.99% of the outstanding shares of Common Stock. The Holder
of this Debenture may waive the limitations set forth in this Section 6(c)(i) upon sixty-one (61) days written notice to the Maker. 
  
 (ii) Notwithstanding anything herein to the contrary, in no event shall the Holder be entitled to convert any portion of this Debenture in excess of that
portion of this Debenture upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its Affiliates (other than shares of Common Stock which may be deemed beneficially owned through the
ownership of the unconverted portion of this Debenture or the unexercised or unconverted portion of any other security of the Holder subject to a limitation on exercise or conversion analogous to the limitations contained herein) and (2) the number
of shares of Common Stock issuable upon the conversion of the portion of this Debenture with respect to which the determination of this Section 6(c)(ii) is being made, would result in beneficial ownership by the Holder and its Affiliates of more
than 74.99% of the then outstanding shares of Common Stock. 
  
 (iii) For purposes of Sections 6(c)(i) and (ii), “beneficial ownership” shall be determined in accordance with Section 13(d) of the 1934 Act and Regulation 13D-G thereunder, except as otherwise provided in clause (1) of such
sentence. As used in Section 6(c)(i) and (ii), the term “Affiliate” means any person or entity that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a person or
entity, as such terms are used in and construed under Rule 144 under the 1933 Act. 
  
 (d) The Maker shall, at all times prior to full conversion or satisfaction of this Debenture, reserve a sufficient number of duly authorized shares of Common Stock to satisfy the conversion rights granted to the
Holder hereunder without regard to 

  

 -4- 

 
the limitations specified in Sections 6(c)(i) and (ii). When the shares of Common Stock issuable upon the conversion of this Debenture are authorized for
quotation on Nasdaq or listing on the New York Stock Exchange (or authorized for listing or quotation on any other national securities exchange or the Over-the-Counter Bulletin Board or the “pink sheets”, as the case may be), the Maker
shall keep the shares of Common Stock issuable upon the conversion of this Debenture authorized for quotation on Nasdaq or listing on the New York Stock Exchange (or authorized for listing or quotation on any other national securities exchange or
the Over-the-Counter Bulletin Board or the “pink sheets”, as the case may be). 
  
 (e) Except as provided in Section 6(f) below, if and whenever the Maker shall issue or sell, or is, in accordance with any of Sections 6(e)(i) through (vi) hereof, deemed to have issued or sold, any shares of Common
Stock for a consideration per share less than the Conversion Price in effect immediately prior to the time of such issue or sale, then and in each such case (a “Trigger Issuance”) the then-existing Conversion Price shall be reduced,
as of the close of business on the effective date of the Trigger Issuance, to a Conversion Price determined as follows: 
  
 Adjusted Conversion Price = (A x B) + D 
 A+C 
  
 where 
  
 A = the number of shares of Common Stock outstanding (including any Additional Shares of Common Stock (as defined below) immediately
preceding such Trigger Issuance); 
  
 B = the
Conversion Price in effect immediately preceding such Trigger Issuance; 
  
 C = the number of Additional Shares of Common Stock (as adjusted for stock splits, stock combinations, recapitalizations, and dividends and the like) outstanding or deemed outstanding hereunder as a result of such
Trigger Issuance; and 
  
 D = the aggregate
consideration, if any, received or deemed to be received by the Maker upon such Trigger Issuance. 
  
 For purposes of this Section 6(e), “Additional Shares of Common Stock” shall mean all shares of Common Stock issued by the Maker or
deemed to be issued pursuant to the provisions of this Section 6(e), except for those issuances covered by Section 6(f) below. 
  
 For purposes of this Section 6(e), the following Sections 6(e)(i) to 6(e)(vi) shall also be applicable (subject, in each such case, to the provisions of
Section 6(f) below): 
  

 -5- 

 (i) Issuance of Rights or Options. In case at any time the Maker shall in any
manner grant any warrants or other rights to subscribe for or to purchase, or any options for the purchase of, Common Stock or any stock or security convertible into or exchangeable for Common Stock (such warrants, rights or options being called
“Options” and such convertible or exchangeable stock or securities being called “Convertible Securities”), whether or not such Options or the right to convert or exchange any such Convertible Securities are
immediately exercisable, and the price per share for which Common Stock is issuable upon the exercise of such Options or upon the conversion or exchange of such Convertible Securities (determined by dividing (A) the sum (which sum shall constitute
the applicable consideration) of (x) the total amount, if any, received or receivable by the Maker as consideration for the granting of such Options, plus (y) the aggregate amount of additional consideration payable to the Maker upon the exercise of
all such Options, plus (z) in the case of such Options which relate to Convertible Securities, the aggregate amount of additional consideration, if any, payable upon the issue or sale of such Convertible Securities and upon the conversion or
exchange thereof, by (B) the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such Options) shall be less
than the Conversion Price in effect immediately prior to the time of the granting of such Options, then the total number of shares of Common Stock issuable upon the exercise of such Options or upon conversion or exchange of the total amount of such
Convertible Securities issuable upon the exercise of such Options shall be deemed to have been issued for such price per share as of the date of granting of such Options or the issuance of such Convertible Securities and thereafter shall be deemed
to be outstanding for purposes of adjusting the Conversion Price. Except as otherwise provided in Section 6(e)(iii), no adjustment of the Conversion Price shall be made upon the actual issue of such Common Stock or of such Convertible Securities
upon exercise of such Options or upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities. 
  
 (ii) Issuance of Convertible Securities. In case the Maker shall in any manner issue or sell any Convertible Securities, whether or
not the rights to exchange or convert any such Convertible Securities are immediately exercisable, and the price per share for which Common Stock is issuable upon such conversion or exchange (determined by dividing (A) the sum (which sum shall
constitute the applicable consideration) of (x) the total amount received or receivable by the Maker as consideration for the issue or sale of such Convertible Securities, plus (y) the aggregate amount of additional consideration, if any, payable to
the Maker upon the conversion or exchange thereof, by (B) the total number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities) shall be less than the Conversion Price in effect immediately prior to
the time of such issue or sale, then the total maximum number of shares of Common Stock issuable upon conversion or exchange of all 

  

 -6- 

 
such Convertible Securities shall be deemed to have been issued for such price per share as of the date of the issue or sale of such Convertible Securities
and thereafter shall be deemed to be outstanding for purposes of adjusting the Conversion Price, provided that except as otherwise provided in Section 6(e)(iii), no adjustment of the Conversion Price shall be made upon the actual issuance of such
Common Stock upon conversion or exchange of such Convertible Securities and no further adjustment of the Conversion Price shall be made by reason of the issue or sale of Convertible Securities upon exercise of any Options to purchase any such
Convertible Securities for which adjustments of the Conversion Price have been made pursuant to the other provisions of Section 6(e). 
  
 (iii) Change in Option Price or Conversion Rate. Upon the happening of any of the following events, namely, if (A) the purchase
price provided for in any Option referred to in Section 6(e)(i) hereof, (B) the additional consideration, if any, payable upon the conversion or exchange of any Convertible Securities referred to in Sections 6(e)(i) or 6(e)(ii), or (C) the rate at
which Convertible Securities referred to in Sections 6(e)(i) or 6(e)(ii) are convertible into or exchangeable for Common Stock shall change at any time (including, but not limited to, changes under or by reason of provisions designed to protect
against dilution), the Conversion Price in effect at the time of such event shall forthwith be readjusted to the Conversion Price which would have been in effect at such time had such Options or Convertible Securities still outstanding provided for
such changed purchase price, additional consideration or conversion rate, as the case may be, at the time initially granted, issued or sold. 
  
 (iv) Consideration for Stock. In case any shares of Common Stock, Options or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to be the net amount received by the Maker therefor, after deduction therefrom of any expenses incurred or any underwriting commissions or concessions paid or allowed by the Company in
connection therewith. In case any shares of Common Stock, Options or Convertible Securities shall be issued or sold for a consideration other than cash or for a consideration including cash and such other consideration, the amount of the
consideration other than cash received by the Maker shall be deemed to be the fair value of such consideration as determined in good faith by the board of directors of the Maker, after deduction of any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Maker in connection therewith. In case any Options shall be issued in connection with the issue and sale of other securities of the Maker, together comprising one integral transaction in which no
specific consideration is allocated to such Options by the parties thereto, such Options shall be deemed to have been issued for such consideration as determined in good faith by the board of directors of the Maker. 
  
 (v) Record Date. In case the Maker shall take a
record of the holders of its Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Stock, Options or Convertible 

  

 -7- 

 
Securities or (B) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date shall be deemed to be the date of the
issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.
If the Maker shall have taken a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or distribution or subscription or purchase rights and shall, thereafter and before the distribution to stockholders
thereof, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights, then thereafter no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in
respect thereof shall be rescinded and annulled. 
  
 (vi) Treasury Shares. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Maker or any of its wholly-owned subsidiaries, and the disposition of any
such shares (other than the cancellation or retirement thereof) shall be considered an issue or sale of Common Stock for the purpose of this Section 6(e). 
  
 (f) Anything herein to the contrary notwithstanding, the Maker shall not be required to make any adjustment of the Conversion Price in the case of the
issuance of (i) capital stock, Options or Convertible Securities issued to directors, officers, employees or consultants of the Maker in connection with their service as directors of the Maker, their employment by the Maker or their retention as
consultants by the Maker pursuant to any employee benefit plans or programs approved by the board of directors of the Maker or any committee thereof, (ii) shares of Common Stock upon the conversion or exercise of Options or Convertible Securities
outstanding as of September 12, 2003, and (iii) shares of Common Stock issued or issuable by reason of a dividend, stock split or other distribution payable pro rata to all holders of Common Stock (but only to the extent that such a dividend, split
or distribution results in an adjustment in the Conversion Price pursuant to the other provisions of this Debenture). 
  
 (g) With each adjustment to the Conversion Price pursuant to Section 6(e), the Maker shall deliver to the Holder a certificate signed by its chief
financial or executive officer setting forth, in reasonable detail, the event requiring the adjustment to the Conversion Price, the method by which such adjustment was calculated, and the Conversion Price after giving effect to such adjustment,
which shall be mailed by first class mail, postage prepaid to the Holder. 
  
 7. 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 Debenture when due (whether at the Maturity Date, upon acceleration or otherwise); 
  

 -8- 

 (b) (i) the Maker shall fail to use the proceeds of any Advance only for the specific purposes set forth
in the Budget or the Plan or (ii) the Maker or any other party thereto (other than the Holder) shall fail to observe or perform or otherwise default or breach any of the covenants set forth herein or in any of the Other Transaction Documents;

  
 (c) Any representation or warranty made by the Maker in this
Debenture or any of the Transaction Documents shall have been untrue or misleading in any material respect when made; 
  
 (d) The Maker fails to make a required payment or payments on indebtedness for borrowed money, if any, of Twenty-Five Thousand Dollars ($25,000) or more
in aggregate principal amount; 
  
 (e) 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; 
  
 (f) Any covenant, agreement or obligation of the Maker in any of the Security Documents (as defined in Section 8) 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 any of the Security Documents 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 any of the Security Documents; 
  
 (g) if the Maker fails to observe or perform any of its covenants contained in Section 8 of the Purchase Agreement;

  
 (h) if the Maker fails to observe or perform any of its
covenants contained in the Purchase Agreement, the Amended Company Security Agreement or in any Other Transaction Document (other than any failure which is covered by Section 7(a) of this Debenture and other than any failure which is covered by
Section 7(g) of this Debenture), and such failure continues for thirty (30) days after receipt by the Maker of notice thereof; 
  
 (i) Any Event of Default, or other breach or default, shall have occurred and be continuing under any of the Security Documents, any Other Transaction
Document or any other agreement, instrument or document now or hereafter existing between the Lender or any of its Affiliates, on the one hand, and the Maker or any of its Affiliates, on the other hand; 
  
 (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; 
  

 -9- 

 (k) 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; 
  
 (l) The failure of Aeolus to file an Investigational New Drug Application
(IND) with the Food and Drug Administration for the compound AEOL-10150 by May 31, 2004; 
  
 (m) The failure of Aeolus to initiate Phase I human clinical studies for the compound AEOL-10150 in accordance with applicable law, rules and regulations, by July 31, 2004; 
  
 (n) 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 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; 
  
 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
clause (n) 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 Security Documents. If an Event of Default occurs, the Maker shall pay

  

 -10- 

 
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 Debenture or otherwise to enforce the Holder’s rights and remedies hereunder and under the Security Documents. 
  
 8. Secured Obligation; Affirmation of Collateral. 
  
 (a) This Debenture and the indebtedness evidenced hereby are deemed future advances and are obligations secured by (i) the Amended Company Security
Agreement, (ii) the Amended and Restated Aeolus Guaranty, and (iii) the Amended Aeolus Security Agreement (collectively, as amended or modified, the “Security Documents”). 
  
 (b) The Maker hereby warrants and agrees that the liens granted under the
Security Documents are validly perfected liens securing all of the existing and future Obligations (as defined in each of the Security Documents) owing by the Maker to the Holder, whether direct or indirect. 
  
 (c) The Maker acknowledges and agrees that each of the Security Documents
remains in full force and effect and that the Holder’s rights and remedies thereunder are not intended to be limited by, and are not limited by, this Debenture. 
  
 9. 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, execution and
enforcement of this Debenture. 
  
 10. 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 Debenture, and waives and renounces all rights to the benefit of any statute of
limitations or any moratorium, appraisement, exemption or homestead now 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 Debenture 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 Debenture 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 

  

 -11- 

 
exercise of any right the Holder may have, whether by the laws of the state governing this Debenture, 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. 
  
 11. 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. 
  
 12. Governing Law; Consent to Jurisdiction. This Debenture shall be binding upon the Maker and its successors, assigns and legal representatives. The validity, construction and interpretation of this Debenture
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 DEBENTURE 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 Debenture 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 Purchase 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. 
  
 [SIGNATURES ON NEXT PAGE] 
  

 -12- 

 IN WITNESS WHEREOF, the undersigned has duly executed this Debenture on behalf of the Maker as of the
date set forth below. 
  

	 ATTEST:
	 	 	 	INCARA PHARMACEUTICALS CORPORATION
				
	  

	 	 	 	 By:
	 	  

	 Name:
	 	 	 	 Name:

	 	 	 	 	 Title:

				
	 Dated: January 9, 2004
	 	 	 	 	 	 

  
 [Convertible Debenture
- Signature Page]

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