Document:

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                                  EXHIBIT 10.7

                              EMPLOYMENT AGREEMENT
                          WITH JAMES JEFFERSON TORBERT

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                              EMPLOYMENT AGREEMENT

         AGREEMENT dated March 1, 1999, between Valley National Bank (the
"Employer"), and James Jefferson Torbert (the "Employee"). For and in
consideration of $100, the employment provisions described below, and good and
valuable other consideration, the parties agree as follows:

         1. Employment. The Employer employs the Employee and the Employee
accepts employment upon the terms and conditions of this Agreement.

         2. Term. The term of this Agreement shall begin on March 1, 1999 and
shall terminate on the same date in 2001. The term automatically shall extend
for additional periods of one (1) year at the end of each term unless written
notice has been given by either party to terminate within 30 days prior to the
end of the current term.

         3. Compensation. As compensation for the services to be rendered by
Employee during the period of his employment hereunder, and upon the condition
that Employee shall fully and faithfully keep and perform all of the terms and
conditions hereof, Employer shall pay Employee a salary of $65,000 ("Base
Salary") per year, less income tax withholdings and other normal employee
deductions, provided, that the rate of such Base Salary shall be reviewed by the
Board of Directors not less often than annually. Such Base Salary, or increased
rate of salary, if any, as the case may be, may be further increased (but not
decreased) from time to time in such amounts as the Board of Directors in its
discretion may decide. Such Base Salary shall be payable in accordance with the
customary payroll practices of Employer, but in no event less frequently than
monthly. This Agreement shall not be deemed terminated if the Board of Directors
or stockholders of Employer shall determine to increase the compensation of
Employee for any period of time.

         4. Duties. The Employee is engaged as Executive Vice President of the
Employer. The precise services of the Employee may be extended or curtailed by
the Employer from time to time. If the Employee is elected or appointed a
director or an officer of the Employer, the Employee will serve in such capacity
or capacities without further compensation; but nothing shall be construed as
requiring the election or appointment of the Employee as such director or
officer.

         5. Extent of Services. The Employee shall devote his entire time,
attention and energies to the Employer's business and shall not during the term
of this Agreement be engaged in any other business activity, whether or not such
business activity is pursued for gain, profit, or other pecuniary advantage.
However, the Employee may invest his assets in such form or manner as will not
require his services in the operation of the affairs of the companies in which
such investments are made.

         6. Working Facilities. The Employee shall have a private office and
such other facilities and services as are suitable to his position and
appropriate for the performance of his duties.

         7. Disclosure of Information. The Employee acknowledges that the list
of the Employer's customers as it may exist from time to time is a valuable,
special, and unique asset of the Employer's business. The Employee will not,
during or after the term of his employment, disclose the list of the Employer's
customers or any part thereof to any person, firm, corporation, association, or
other entity for any reason or purpose whatsoever. In the event of a breach or
threatened breach by the Employee of the provisions of this paragraph, the
Employer shall be entitled to an injunction restraining the Employee from
disclosing, in whole or in part, the list of the Employer's customers, or from
rendering any services to any person, firm, corporation, association, or other
entity to whom such list, in whole or in part, has been disclosed or is
threatened to be disclosed. Nothing herein shall be construed as prohibiting the

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Employer from pursuing any other remedies available to the Employer for such
breach or threatened breach, including the recovery of damages from the
Employee.

         8. Expenses. The Employee may incur reasonable expenses for promoting
the Employer's business, including expenses for entertainment, travel, and
similar items. The Employer will reimburse the Employee for all such expenses
upon the Employee's periodic presentation of an itemized account of such
expenditures. In addition, Employee shall have a $550 per month automobile
allowance.

         9. Vacations. The Employee shall be entitled each calendar year to a
vacation of three (3) weeks, during which time his compensation shall be paid in
full.

         10. Force Majeure and Disability. If Employer is unable to conduct its
business, or a substantial portion thereof, by virtue of governmental regulation
or order, or by strike, war, fire, earthquake, hurricane, or similar acts of
god, or other calamity (declared or undeclared), or because of other similar or
dissimilar cause beyond control of Employer (all of which events are hereinafter
sometimes referred to as "Force Majeure"), or in the event Employee suffers a
disability which prevents him from performing his services hereunder (herein
called a "Disability"), Employer shall, in the event the Force Majeure and/or
Disability continue for at least eight aggregate weeks during any four-month
period, have the right to suspend the operation of this Agreement for the
duration of said Force Majeure and/or Disability (except for any benefits
payable to Employee under such benefit plans generally available to all
executive employees), and Employer shall, at its option, have the right to add a
period equal to such suspension to the Term hereof.

         11. Termination With Cause. With cause, the Employer may terminate this
Agreement at any time upon written notice to the Employee. In such event, the
Employee, if requested by the Employer, shall continue to render his services,
and shall be paid his regular compensation up to the date of termination. As
used in Section, termination for "cause" shall be deemed to have occurred if
Employee has breached this Agreement and the Employer gives notice in writing,
delivered to the Employee and providing ten (10) calendar days, from the date of
delivery of the notice, within which the Employee has the opportunity to cure,
if possible, the breach. In addition, cause for termination shall exist if
Employee engages in any of the following conduct while an employee of the
Employer: (1) willful and knowing dishonesty in communication of any kind on any
material subject for any purpose either to the Employer or to any person or
entity for or on behalf of the Employer; (2) obtaining from any person or
entity, other than from the Employer, anything of value in return for or because
of rendering service or advice which, under the circumstances, might reasonably
be construed as part of the duties expected of an employee of the Employer; (3)
use of more than an insubstantial and quantitatively small amount of time during
normal business hours of the Employer for activities not calculated and
reasonably designed to produce profit for the Employer; (4) theft, embezzlement,
false entries on records, misapplication of funds or property, misappropriation
of any asset, any conduct resulting in conversion of any kind, or any actual or
constructive fraud; (5) at any time during or after employment at the Employer,
imparting confidential information, whether proprietary or non-proprietary, to
any person other than (i) an authorized employee of the Employer; or (ii) as
required by law, or (iii) as part of a privileged communication to an attorney;
(6) gross neglect of duty, including, but not limited to, failure or refusal to
attend to the duties of employment at the Employer; (7) participating in any
conduct involving moral turpitude or which results in public disgrace including,
but not limited to, conduct for which there is probable cause to believe that,
if criminally prosecuted, such conduct would be adjudged felonious; (8)
counseling, advising, assisting, procuring or aiding any employee of the
Employer in any above-recited conflict of interest; (9) knowing, believing or
having reason to know or believe that an employee of the Employer has, is, or is
about to engage in any above-recited conflict of interest and not revealing said
knowledge or belief and the reason for it to the Employer; (10) receiving,
during the term of this Agreement, compensation, income, anything of value, or a
future interest in or future entitlement to compensation, income or a thing of
value, from

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any person or entity who or which is engaged in the same or substantially the
same business as the Employer in the same product, service or geographical
market, except stock dividends and/or capital gains from passive investments in
financial institutions by Employee made in the ordinary course of business and
as part of Employee's investment portfolio. However, cause shall not be deemed
to exist merely because of a difference of opinion between Employee and the
Employer, or any employees, directors or officers of either, as to philosophy of
management or other personal beliefs.

         12. Termination upon Sale of Business. Notwithstanding anything to the
contrary, the Employer may terminate this Agreement upon ten (10) days' notice
to the Employee upon the happening of any of the following events:

                  (a) the sale by the Employer of substantially all of its
         assets to a single purchaser or to a group of associated purchasers;

                  (b) the sale, exchange, or other disposition, in one
         transaction, of at least two-thirds (2/3) of the outstanding corporate
         shares of the Employer;

                  (c) a decision by the Employer to terminate its business and
         liquidate its assets; or

                  (d) the merger or consolidation of the Employer in a
         transaction in which the shareholders of the Employer receive less than
         fifty percent (50%) of the outstanding voting shares of the new or
         continuing corporation.

         In order to protect Employee against the possible consequences of such
termination and thereby to induce Employee to continue to serve as an employee
of Employer, Employer agrees that if (a) this Agreement is terminated as stated
in this Section; or (b) one of the actions stated in this Section occurs and
Employee leaves the employment of Employer or the resulting entity for whatever
reason (other than discharge for cause) within six (6) months after such
occurrence:

                  (a) Employee shall be entitled to receive within ten (10)
         business days of Employee leaving such employment of lump-sum payment
         in cash in the amount of one year's Base Salary.

                  (b) To the extent Employee is eligible, he shall continue to
         be covered by all noncash benefit plans of Employer except for the
         retirement plans or retirement programs in which Employee participates
         or any successor plans or programs in effect on the date of such
         acquisition of control, for one year thereafter; provided, however,
         that if during such time period Employee should enter into the
         employment of a competitor of Employer, his participation in such
         noncash benefit plans would cease. In the event Employee is ineligible
         under the terms of such plans to continue to be so covered, Employer
         shall provide substantially equivalent coverage through other sources.

                  (c) In addition to the benefits to which Employee is entitled
         under the retirement plans or programs in which Employee participates
         or any successor plans or programs in effect on the date of termination
         of his employment hereunder, Employee shall be paid in one sum in cash
         at his normal retirement age (or earlier retirement age should he so
         elect) as defined in the retirement plans or programs in which Employee
         participates or any successor plans or programs in effect on the date
         of such acquisition of control, an amount, as an additional retirement
         benefit, equal to the actuarial equivalent of the additional amount
         that he would have earned under such retirement plans or programs had
         he accumulated four additional years of continuous service (after any
         termination pursuant to this Section 1) under such retirement plans or
         programs both

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         for purposes of determining eligibility for a benefit and for purposes
         of calculating the amount of such benefit.

         Employee's benefits hereunder shall be considered severance pay in
consideration of his past service, and pay in consideration of his continued
service from the date hereof and his entitlement thereto shall not be governed
by any duty to mitigate his damages by seeking further employment nor offset by
any compensation which he may receive from future employment.

         13. Death During Employment. If the Employee dies during the term of
employment, the Employer shall pay to the estate of the Employee the
compensation which would otherwise be payable to the Employee up to the end of
the month in which his death occurs.

         14. Competition During and After Term. Employee agrees that during the
Term hereof, and for a period of one (1) year after the expiration of the Term,
he will not, either separately, jointly, or in association with others, directly
or indirectly, as an agent, employee, owner, partner, stockholder, or otherwise,
allow his name to be used by, or establish, engage in, or become interested in
any business, trade or occupation similar to the business being conducted by
Employer, in any county in any of the States of the United States in which
Employer's business is then being conducted or in any contiguous county, as long
as Employer, or any person, firm, or corporation deriving title to the goodwill
of, or shares from it, carries on a like business therein. Employer and Employee
acknowledge that during the Term of Employee's employment, Employee will acquire
special knowledge and/or skill that he can effectively utilize in competition
with Employer. Furthermore, although not a term or condition of this Agreement,
Employer and Employee acknowledge that, as of the date hereof, it is reasonably
contemplated that Employee's services will be utilized by Employer in executive,
managerial, and/or supervisory capacities throughout the areas in which Employer
conducts its business, and in the general operation of Employer's business
wherever it is being conducted, throughout the United States.

         Employee agrees that the remedy at law for any breach by him of the
covenants contained herein will be inadequate, and that in the event of a
violation of the covenants contained herein, in addition to any and all legal
and equitable remedies which may be available, the said covenants may be
enforced by an injunction in a suit in equity, without the necessity of proving
actual damage, and that a temporary injunction may be granted immediately upon
the commencement of any such suit, and without notice. The parties hereto intend
that the covenants contained in this Section shall be deemed to be a series of
separate covenants, one for each county of each state where Employer does
business. If, in any judicial proceeding, a court shall refuse to enforce any or
all of the separate covenants deemed included in such action, then such
unenforceable covenants shall be deemed eliminated from the provisions hereof
for the purposes of such proceeding to the extent necessary to permit the
remaining separate covenants to be enforced in such proceeding. Furthermore, if
in any judicial proceeding a court shall refuse to enforce any covenant by
reason of the duration or extent thereof, such covenant shall be construed to
have only the maximum duration or extent permitted by law.

         15. Notices. Any notice required or desired to be given under this
Agreement shall be deemed given if in writing sent by certified mail to his
residence, in the case of the Employee, or to its principal office, in the case
of the Employer.

         16. Waiver of Breach. The waiver by the Employer of a breach of any
provision of this Agreement by the Employee shall not operate or be construed as
a waiver of any subsequent breach by the Employee. No waiver shall be valid
unless in writing and signed by an authorized officer of the Employer.

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         17. Assignment. The Employee acknowledges that the services to be
rendered by him are unique and personal. Accordingly, the Employee may not
assign any of his rights or delegate any of his duties or obligations under this
Agreement. The rights and obligations of the Employer under this Agreement shall
inure to the benefit of and shall be binding upon the successors and assigns of
the Employer.

         18. Entire Agreement. This Agreement contains the entire understanding
of the parties. It may not be changed orally but only by an agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification, extension, or discharge is sought.

         19. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Alabama.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.

                                  EMPLOYER:

                                  VALLEY NATIONAL BANK

                                  By:     /s/ Steven R. Townson
                                      ------------------------------------

                                  Title:  President and Chief Executive Officer
                                        ----------------------------------------

                                  EMPLOYEE:

                                      /s/James Jefferson Torbert
                                  ------------------------------------
                                  James Jefferson TorbertEXHIBIT 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 Four Hundred Thousand (400,000) 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.

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

                           (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 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
<PAGE>

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.

                  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.
<PAGE>

                  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 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.
<PAGE>

                           (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.

                           (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.
<PAGE>

                           (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.

                           (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
<PAGE>

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.

                           (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;
<PAGE>

                           (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;

                           (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.
<PAGE>

                  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 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, 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
<PAGE>

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 20th day
of November 1995.

As amended by the Board of Directors through January 18, 2000.

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