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Secured Convertible Promissory Note

This is an actual contract by Incara Pharmaceuticals.

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Sectors: Biotechnology / Pharmaceuticals
Governing Law: North Carolina, View North Carolina State Laws
Effective Date: July 11, 2003
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EXHIBIT 10.96

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR ANY APPLICABLE STATE SECURITIES LAWS COVERING SUCH SECURITIES OR THE SALE IS MADE IN ACCORDANCE WITH AN EXEMPTION UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, AND THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAWS.


SECURED CONVERTIBLE PROMISSORY NOTE


$35,000.00 July 11, 2003


Incara Pharmaceuticals Corporation, P.O. Box 14287, Research Triangle Park, NC 27709, a Delaware corporation (the "Company"), for value received, hereby promises to pay to W. Ruffin Woody, Jr., P.O. Drawer 381, Roxboro, NC 27573 (the "Holder"), the principal sum of Thirty-Five Thousand Dollars ($35,000.00) or so much thereof as may have been advanced, with interest on the unpaid amount thereof at the rate of six percent (6.0%) per annum based upon a 365 day year and compounded annually. The Company will use the proceeds of this Note solely for working capital purposes.


1. Payment and Warrants .


1.1 Subject to the provisions of Section 3 hereof relating to the conversion of this Note, all unpaid principal and interest shall be due and payable in full upon the earlier to occur of either one of the Events of Default described in Section 4 hereof, the closing of an Offering (as hereinafter defined), or October 11, 2003 (the "Maturity Date"). The unpaid principal and interest outstanding under this Note may be prepaid in full by the Company without premium or penalty at any time or from time to time without the consent of the Holder. If the Company offers to prepay the principal and interest outstanding under this Note in full before the Maturity Date or the closing of an Offering, the Holder, at its sole option, shall have the right to accept the prepayment in cash or convert the prepayment amount into Shares, as provided in Section 3 below. Payments hereunder shall be made by the Company to the Holder, at the address as provided to the Company by the Holder in writing, in lawful money of the United States of America.


1.2 If any payment on this Note shall become due on a Saturday, Sunday or a public holiday under the laws of the State of North Carolina, such payment shall be made on the next succeeding business day and such extension of time shall be included in computing interest in connection with such payment.


1.3 In addition, the Holder shall be entitled to receive warrants to purchase an additional number of shares of the Company's common stock, such number to be determined as provided in the warrant attached hereto and incorporated herein for all purposes.

2. Creation of a Security Interest .


2.1 As security for payment of all obligations and liabilities of the Company to Holder hereunder, including any extensions, modifications or renewals thereof when and as due, the Company hereby grants Holder a security interest in (a) all of the Company's laboratory equipment and furniture, and (b) all proceeds realized by the Company from the sale, lease or other disposition of any of the foregoing (the "Collateral").


2.2 The Company hereby represents and warrants to Creditor that, with respect to the Collateral, (i) the Company has good and marketable title to all of the Collateral, free and clear of all liens, encumbrances and other adverse claims or interests of any kind, (ii) until such time as the principal and interest outstanding under this Note, including any extensions, modifications or renewals thereof when and as due, has been paid in full, the Company shall not create any lien or encumbrance on the Collateral, and (iii) neither the grant of this security interest, nor Holder's foreclosure on such interest, violates, breaches or terminates any of the Collateral or related agreements.

3. Conversion .


3.1 Subject to and upon compliance with the provisions of this Section 3, in the event the Company shall issue and sell shares of the Company's or one of its subsidiary's common or preferred stock ("Stock") after the date hereof and on or before the Maturity Date which results in aggregate proceeds to the Company of at least One Million Dollars ($1,000,000) (an "Offering"), the principal and accrued interest due under the Note shall, at the election of the Holder, which election shall be delivered in writing to the Company, convert, at the closing of the Offering, on the same terms and conditions, with the same rights and preferences, into that number of shares of such Stock of the Company ("Shares") equal to the quotient obtained by dividing the then-outstanding principal and accrued interest under this Note by the price at which the Shares are issued in the Offering (the "Offering Price") (such amounts to be adjusted for stock splits, dividends, recapitalizations and the like).


3.2 As promptly as practicable after the date upon which the conversion described in Section 3.1 has occurred, the Company, at its expense, shall issue and deliver to the Holder, or as such Holder may direct, a certificate or certificates for the full number of Shares to which the Holder is entitled and a check or cash with respect to any fractional interest in a Share a
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