<PAGE>

                                                                   Exhibit 10.56

                               LICENSE AGREEMENT
                               -----------------


          This Agreement is made by and between National Jewish Medical and
Research Center ("LICENSOR"), a nonprofit educational and research organization
organized under the laws of Colorado, and having its principal office at 1400
Jackson Street, Denver, Colorado 80206-2726, and  AEOLUS PHARMACEUTICALS, INC.
("LICENSEE"), a corporation organized under the laws of Delaware, and having its
principal place of business in Research Triangle Park, North Carolina.

          WHEREAS, LICENSOR and LICENSEE have previously entered a certain
Sponsored Research Agreement, dated July 1, 1997, as amended with respect to
certain anti-oxidant compounds (the "First Agreement"); and

          WHEREAS, Article 8(b) of the First Agreement provides that LICENSEE
shall pay a reasonable royalty of approximately [*] percent ([*]%) to [*]
percent ([*]%) on Net Sales of Licensed Products incorporating the valid claims
of any other issued patent (issued in the country giving rise to such Net Sales)
with the Patent Rights licensed thereunder; and

          WHEREAS, James Crapo, M.D. and other parties have invented the
Invention (as hereinafter defined), and LICENSOR owns certain rights, title, and
interest in and to such Invention, including related patents, patent
applications, and unpatented technology; and

          WHEREAS, the Invention, falls within the definition of results of
research as defined in Article 8 of the First Agreement and LICENSEE therefore
has an Option to the Invention under certain terms and conditions specified in
Article 8(b) of the First Agreement.

          WHEREAS, LICENSOR has the right to grant licenses to under its rights
in the foregoing Invention, and wishes to have the Invention utilized in the
public interest; and

          WHEREAS, LICENSOR is willing to grant an exclusive license to LICENSEE
to under its rights in the Invention and related patent rights and technology
subject to  the terms and conditions set forth herein;

          NOW, THEREFORE, in consideration of the terms and conditions set forth
herein, the parties agree as follows:

                            ARTICLE 1 - DEFINITIONS
                            -----------------------

1.01.     "Invention" shall mean the substituted porphyrin compounds and methods
of their use invented in part by James Crapo, M.D. and Brian Day, Ph.D., and
designated as National Jewish Technology ID No. 2000-15.

Portions of this exhibit marked [*] have been omitted pursuant to a request for
confidential treatment.
<PAGE>

1.02.     "Patent Rights" shall mean any and all United States and foreign
applications filed as of the Effective Date or thereafter with respect to  the
Invention, and any patent now issued or hereafter issuing on any such patent
applications, together with all substitutes, divisions, continuations,
extensions, continuations-in-part of such applications naming James Crapo, M.D.
or Brian Day, Ph.D. as inventors, or reissues of patents related thereto, to the
extent owned by LICENSEE.  As of the Effective Date of this Agreement, the
Patent Rights are include rights in those patent applications set forth in
Exhibit A attached hereto and made a part hereof.
---------

1.03      "Field" or "Field of Use" shall mean all applications of the Patent
Rights.

1.05.     "Licensed Product" shall mean any product which is produced or sold by
LICENSEE that, in the absence of this Agreement, would infringe one or more
valid claims within the Patent Rights, and which is intended for use in, or is
used in, the Field.

1.06.     "Net Sales" shall mean the gross sales of Licensed Products sold by
LICENSEE, its Affiliates and its sublicensees pursuant to  this Agreement, less
allowances to customers for spoiled, damaged, and returned goods; less quantity,
trade, and cash discounts customary in the trade; and less transportation costs,
use and sales taxes, and value added taxes.  Net Sales shall include commissions
paid to sales persons or agents and costs of collections.  Licensed Products
used by LICENSEE for its own use in the Field shall be considered to be "Net
Sales" for purposes of computing royalty obligations, except such Licensed
Products used for non-revenue producing activity such as promotional items or
samples, or field, pre-clinical or clinical trials.  Net Sales shall not include
sales between or among LICENSEE, its Affiliates or sublicensees.  Licensed
Products shall be considered sold when paid.

1.07.     "Affiliate" or "Affiliates" shall mean any company which controls,
is controlled by or is under common control with LICENSEE.  A company shall be
regarded as in control of another if it owns or controls at least fifty (50)
percent of the stock entitled to vote in election of members of the Board of
Directors of the other company.

1.08.     "Major Non - U.S. Country" shall mean any of the following countries:
Canada, France, Germany, Italy, Japan, Spain, United Kingdom

1.09      "Effective Date" shall mean November 17, 2000.

                              ARTICLE 2 - LICENSE
                              -------------------

2.01.     Subject to the rights of the U.S. government under Title 35 United
States Code Sections 200 through 204, LICENSOR hereby grants to the LICENSEE and
LICENSEE  hereby  accepts from LICENSOR,  upon the terms and  conditions  herein
specified,  an exclusive  world-wide license under the Patent Rights in order to
develop, make, have made, use and sell Licensed Products, with the right to sub-
license as provided in Article 2.02 below.

2.02.     LICENSEE shall have the right to grant sub-licenses to third parties,
and to extend to its Affiliates any license granted herein to LICENSEE. Any such
sub-licenses  or extensions  shall be subject to the terms of this Agreement and
shall be no less  favorable  in any  respect to LICENSOR  than is this  license.
LICENSEE  agrees  to  be  responsible  for  the  performance

                                       2
<PAGE>

hereunder by its Affiliates and  sub-licensees,  if any.  Should LICENSEE cancel
the  Agreement,  LICENSEE  agrees to assign all such  sub-licenses  directly  to
LICENSOR.

2.03.     Within thirty (30) days following the execution of this Agreement and
thereafter during the period of this Agreement, LICENSOR agrees to provideand
LICENSEE with  each agree to share with the other: (a) copies of all physical
embodiments of information it each may have or later obtain relative to the
Patent Rights; and (b) copies of any and all patents or patent applications
owned or controlled by the LICENSOR or LICENSEE covering the Invention or the
use of the Invention or processes for the manufacture of the Invention,
including all Patent Office (U.S. and worldwide) actions received and amendments
filed, if any, relative thereto.

2.04.     LICENSEE shall not disclose any unpublished technology, know-how, and
data included within  or Patent Rights and furnished by LICENSOR pursuant to
Article 2.03 above to third parties during the term of this Agreement or at any
time thereafter; provided, however, that such disclosure may be made at any
time:  (a) with the prior written consent of LICENSOR, (b) after the same shall
have become public through no fault of LICENSEE, (c) to Affiliates, employees,
consultants or sublicensees of LICENSEE or other persons or entities with whom
LICENSEE proposes to enter into a business relationship, provided that such
sublicensee or third party enters into a confidentiality agreement maintaining
the confidentiality of such confidential information or (d) as required by
applicable law or regulation.

2.05.     LICENSEE agrees to use commercially reasonable efforts to diligently
pursue the development of Licensed Products, and to meet with representatives of
LICENSOR upon reasonable request (and no less than annually) to discuss such
development efforts.  Such development efforts will include LICENSEE's
commercially reasonable efforts to manufacture or produce a Licensed Product for
testing, development, and sale, and also to seek required governmental approvals
of such Licensed Product.   LICENSEE shall have sole discretion as to the timing
of development and commercialization of any Licensed Product on a country by
country basis, including discretion to delay development or commercialization
after beginning any such efforts, provided that such discretion is exercised in
a commercially reasonable manner.

2.06.     In the event LICENSEE fails to commence human clinical trials with
Licensed Product within [*] years from the Effective Date, the exclusive right
and license granted in this Agreement shall convert to a non-exclusive right and
license. LICENSEE shall have the right to preserve the exclusive right and
license granted in this Agreement for [*] additional years by paying an annual
extension fee of [*] dollars ($[*]) for each year of extension, due and payable
on the [*] anniversaries of the Effective Date. Subsequently, LICENSEE shall
have the right to one additional [*] extension upon paying [*] dollars ($[*])
upon the [*] anniversary of the Effective Date.

           ARTICLE 3 - CONSIDERATION; ROYALTIES; RECORDS; AND REPORTS
           ----------------------------------------------------------

3.01.     Upon execution of this Agreement by LICENSOR and LICENSEE, LICENSEE
shall pay LICENSOR a licensing fee of [*] dollars ($[*]).

3.02.     For the use of valid outstanding patents contained within the Patent
Rights in all countries where such exist, LICENSEE shall pay a continuing
royalty of [*] percent ([*%]) of the Net

[*] Confidential Treatment Requested; Certain Information Omitted and Filed
          Separately with the SEC.

                                       3
<PAGE>

Sales of Licensed Products incorporating the Invention, covered by a valid claim
under the Patent Rights issued in the country giving rise to such Net Sales.

3.03.     LICENSEE shall pay milestone payments to LICENSOR as follows:

          3.03.01.  [*] dollars  ($[*]) due within thirty (30) days of receiving
          U.S. Food and Drug  Administration  ("FDA") marketing  approval in the
          U.S. or  comparable  regulatory  approval in Major Non - U.S.
          Country for the first Licensed  Product  licensed and developed  under
          this Agreement; and

3.04.     After the first commercial sale of a Licensed Product, LICENSEE shall
render to LICENSOR on an annual basis a written account of the Net Sales of
Licensed Products subject to royalties under Article 3.02.  LICENSEE and its
Affiliates shall keep full, true, and accurate books of accounts and other
records containing all particulars which may be necessary to ascertain and
verify properly such Net Sales.  Upon LICENSOR's request, LICENSEE and its
Affiliates shall permit an independent Certified Public Accountant selected by
LICENSOR (except one to whom LICENSEE has some reasonable objections) at
LICENSOR's expense to have access during ordinary business hours to such of
LICENSEE's or its Affiliates' records as may be necessary to determine, in
respect of any quarter ending not more than three (3) years prior to the date of
such request, the correctness of any report made under this Agreement.  Such
Certified Public Accountant shall be obliged to  treat as confidential all
relevant matters.  If any deficiencies in payments from LICENSEE to LICENSOR are
identified in the audit, LICENSEE shall pay LICENSOR the amount due within 30
days of completion of the audit.  If LICENSEE  has paid LICENSOR less than
ninety-percent (90%) of the amount determined to be due for a given time period,
then LICENSEE shall remit the amount due to LICENSOR and reimburse LICENSOR for
the reasonable cost of the audit.

          3.04.01. All royalties shall be ascertained as of June 30 and December
          31 of each calendar  year,  and shall be due and payable  within sixty
          (60) days following the end of each such accounting period.

3.05.     Interest on Past Due Amounts.  LICENSEE shall pay LICENSOR interest on
          ----------------------------
all payments and royalties past due, at an annual rate equal to the lesser of
ten eighteen (180) percent, or the highest rate permitted under applicable law.
Any such payments made by LICENSEE under this Section shall not be construed to
cure any breach of this Agreement.

3.06.     During the term of this Agreement, representatives of LICENSOR will
          meet with  representatives  of LICENSEE  at times and places  mutually
          agreed upon to discuss the progress  and  results,  as well as ongoing
          plans,  with respect to the evaluation  and  development of Inventions
          licensed to LICENSEE.

3.07.     Payments made to LICENSOR shall be made in Unites States dollars.  For
the purpose of calculating royalty payments due on any Net Sales by LICENSEE in
foreign currencies, the value of such Net Sales shall be converted to United
States dollars based on the applicable exchange rate published in the Wall
Street Journal  as of June 30 and December 31 for the Net Sales for the prior
six (6) months.

[*] Confidential Treatment Requested; Certain Information Omitted and Filed
          Separately with the SEC.

                                       4
<PAGE>

                              ARTICLE 4 - PATENTS
                              -------------------

4.01.     LICENSEE shall have sole responsibility for the filing, prosecuting
and maintaining of the appropriate  United States patent  protection for patents
and  patent  applications  included  within the  Patent  Rights,  and all of the
expenses  of  such  protection   shall  be  paid  by  the  LICENSEE,   including
reimbursement of any reasonable  out-of-pocket expenses incurred by LICENSOR for
activities conducted under this Article at the LICENSEE'S request, provided that
such reimbursement shall not exceed $10,000 per year. Such filings,  prosecution
and  maintenance  shall be made at the  discretion  of  LICENSEE  by  counsel of
LICENSEE's  choosing,  and  shall be in the  name of  LICENSOR  and  such  other
inventors as are deemed appropriate.  LICENSEE shall make all reasonable efforts
to obtain broad patent  coverage as is reasonably  and  practicably  obtainable,
taking into account the need for,  likelihood of obtaining and enforceability of
such Patent Rights.  LICENSEE shall keep LICENSOR  advised as of the prosecution
of  such   applications  by  forwarding  to  LICENSOR  copies  of  all  official
correspondence  relating  thereto.  LICENSOR  shall  have the  right  to  advise
LICENSEE  as to such  prosecution,  and shall have the right to make  reasonable
requests  as  to  the  conduct  of  such   prosecution   and  to  have  official
correspondence  reviewed by counsel of LICENSOR's  choosing.  LICENSOR agrees to
cooperate with LICENSEE in the prosecution of such patent applications to insure
that such applications reflect, to the best of LICENSOR's  knowledge,  all items
of commercial and technical  interest and  importance.  All final decisions with
respect to the  prosecution  of such  application  shall be made with the mutual
agreement of both parties.

4.02.     LICENSEE shall designate the foreign countries, if any, in which
LICENSEE desires patent protection for patents and patent applications  included
within the Patent Rights,  and,  except as provided  below,  LICENSEE shall have
sole responsibility for filing, prosecuting and maintaining such foreign patents
and  patent  applications.  LICENSEE  agrees  to meet  with  representatives  of
LICENSOR to discuss a mutually  acceptable foreign patent prosecution  strategy.
LICENSEE shall pay all expenses with regard to such foreign  patent  protection,
and such designated foreign patent applications shall be in the name of LICENSOR
and such other  inventors  as are deemed  appropriate.  Upon notice to LICENSEE,
LICENSOR may elect to seek patent  protection  in countries not so designated by
LICENSEE, in which case LICENSOR shall be responsible for all expenses attendant
thereto.  In such  instances  LICENSEE  shall  forfeit  its  rights  under  this
Agreement  as to those  countries  unless  LICENSEE  shall  agree to pursue such
protection  (or  reimburse  LICENSOR's  expenses  incurred  in  the  filing  for
prosecution and maintenance of such patent or patent  application) within thirty
(30) days after  receiving  written  notice  thereof  from  LICENSOR.  All final
decisions  with  respect  to such  foreign  prosecutions  shall be made with the
mutual agreement of both parties, except that LICENSOR shall have no obligations
to consult with LICENSEE about foreign  prosecutions in countries where LICENSEE
has elected not to support further  prosecution.  LICENSEE shall provide written
notification to LICENSOR of its intent not to file,  prosecute,  or maintain any
application at least ninety (90) days before any final,  irrevocable deadline in
the relevant country.  If LICENSEE fails to provide such notification,  LICENSEE
shall  reimburse  LICENSOR  for any  reasonable  costs  expended  by LICENSOR to
preserve its rights in that country.

4.03.     LICENSEE and LICENSOR shall each give the other prompt notice of any
claim or allegation received by it that the manufacture, use, or sale of
Licensed Products constitutes an infringement of a third party patent or
patents.  LICENSEE shall have the primary right and responsibility at its own
expense to defend and control the defense of any such claim against LICENSEE, by
counsel of its choosing.  The settlement of any such actions must be approved by

                                       5
<PAGE>

LICENSOR, which approval shall not be unreasonably withheld.  LICENSOR agrees to
cooperate with LICENSEE in any reasonable manner deemed by LICENSEE to be
necessary in defending or prosecuting such action.  LICENSEE shall reimburse
LICENSOR for all expenses reasonably incurred by LICENSOR in providing such
assistance.  Notwithstanding the foregoing, LICENSOR shall, in its sole
discretion, be entitled to participate through counsel of its own choosing in
any such action.

4.04.     In the event that any Patent Rights licensed to LICENSEE are infringed
by a third party, LICENSEE shall have the primary right, but not the obligation,
to institute,  prosecute  and control any action or  proceeding  with respect to
such infringement,  by counsel of its choice, including any declaratory judgment
action arising from such  infringement.  Any amounts  recovered by LICENSEE from
third  parties  in  enforcing  such  Patent  Rights  shall be  applied  first to
reimburse  LICENSEE's  expenses of the action, and any remaining amount shall be
deemed Net Sales for purposes of this Agreement.  Notwithstanding the foregoing,
and in LICENSOR's  sole  discretion,  LICENSOR shall be entitled to participate,
through counsel of its own choosing,  in any legal action  involving third party
infringement of Patent Rights; provided that control of such action shall remain
with LICENSEE. LICENSEE agrees to reimburse all reasonable expenses incurred by
LICENSOR resulting from actions requested by LICENSEE under this Article.

4.05.     In the event LICENSEE decides not to pursue an action against the
alleged  infringer  under Article 4.04, it shall inform  LICENSOR in writing and
LICENSOR  may elect to do so at its own  expense.  LICENSEE  shall  provide  any
reasonable  assistance deemed necessary by LICENSOR in prosecuting such actions.
Any amounts  received by LICENSOR from third parties in enforcing  Patent Rights
under this Article 4.05 shall be retained by LICENSOR.



                    ARTICLE 5 - OPTION UNDER FIRST AGREEMENT
                    ----------------------------------------

5.01.     LICENSOR and LICENSEE acknowledge that the Invention is, in part, a
result of research covered under Section 8 of the First Agreement and that
LICENSEE shall continue to have an option to license technologies developed by
Dr. Crapo under the terms of the First Agreement, including but not limited to
the option to license technologies developed by Dr. Day in connection with Dr.
Crapo under the terms of the First Agreement.

        ARTICLE 6 - GOVERNMENT CLEARANCE, PUBLICATION, OTHER USE, EXPORT
        ----------------------------------------------------------------

6.01.     LICENSEE agrees to use its best efforts to have the  Licensed Product
cleared for marketing in those countries in which LICENSEE intends to sell
Licensed Products by the responsible government agencies requiring such
clearance.  To accomplish such clearances at the earliest possible date,
LICENSEE agrees to file, according to the usual practice of LICENSEE, any
necessary data with such government agencies.  Should LICENSEE cancel this
Agreement, LICENSEE agrees to assign its full interest and title in such market
clearance application, including all data relating thereto, to LICENSOR at no
cost to LICENSOR.

6.02.     LICENSEE further agrees that the right of publication of the Invention
shall reside in the inventor and other staff of LICENSOR.  LICENSOR shall use
its best efforts to provide a copy

                                       6
<PAGE>

of such  publications  forty-five  (45) days in advance of such  submission  for
review by  LICENSEE,  but such review will be in no way  construed as a right to
restrict such  publication;  provided  that  LICENSEE may request,  and LICENSOR
shall agree to, a delay of such proposed  publication for an additional  period,
not to exceed thirty (30) days, in order to protect the potential  patentability
of any invention  described  therein.  provided  further that LICENSOR shall not
unreasonably  withhold  permission  for an additional  delay of thirty (30) more
days to allow time for patent filing.  Subject to the foregoing,  LICENSEE shall
also have the right to publish and/or  co-author any  publication  regarding the
application of the Invention,  in accordance  with  traditional  standards of
academic authorship.

6.03.     It is agreed that, notwithstanding any provisions herein, LICENSOR is
free to practice under Patent Rights for its own educational, teaching and
research  purposes without restriction and without payment of royalties or other
fees.

6.04.     This Agreement is subject to all of the United States laws and
regulations controlling the export of technical data, computer software,
laboratory prototypes, and other commodities and technology.

                      ARTICLE 7 - DURATION AND TERMINATION
                      ------------------------------------

7.01.     This Agreement shall become effective upon the Effective Date, and,
unless sooner terminated as hereinafter provided, shall continue until the
expiration of the last to expire issued patent included in the Patent Rights
(or, if no such patent issues, then upon the abandonment of the last patent
application included within the Patent Rights).  Upon the expiration, but not
the earlier termination, of this Agreement, the license granted in Article 2.01
shall continue thereafter on a non-exclusive basis.

7.02.     LICENSEE may terminate this Agreement (with respect to a given country
or  countries,  or entirely) at any time by giving  LICENSOR  written  notice at
least ninety (90) days prior to such  termination,  and thereupon  terminate its
development  efforts  or the  manufacture,  use,  or sale of  Licensed  Products
covered by such patent  application  or patent,  in each case with  respect to a
given  country or countries or entirely,  subject to the  provisions  of Article
7.04.  If,  however,  LICENSEE fails to provide such notice at least ninety (90)
days  before  a  final  patent  office  deadline  with  respect  to  any  patent
application  or  issued  patent,  LICENSEE  shall  reimburse  LICENSOR  for  any
reasonable  out-of-pocket  expenses  required  to  preserve  its  rights in such
application past such deadline.

7.03.     Except as provided above, if either party fails to fulfill any of its
obligations under this Agreement in any material respect, the non-breaching
party may terminate this Agreement, upon written notice to the breaching party,
as provided below.  Such notice must contain a full description of the event or
occurrence constituting a breach of the Agreement.  The party receiving such
notice will have the opportunity to cure that breach within forty-five (45) days
of receipt of notice.  If the breach is not cured within that time, the
termination will be effective as of the sixtieth (60th) day after receipt of
notice. A party's ability to cure a breach will apply only to the first two
breaches properly noticed under the terms of this Agreement, regardless of the
nature of those breaches.  Any subsequent breach by that party will entitle the
other party to terminate this Agreement upon proper notice.

                                       7
<PAGE>

7.04.     Upon the termination of this Agreement, LICENSEE may notify LICENSOR
of the amount of Licensed Products that LICENSEE  (including its Affiliates) has
on hand and LICENSEE and its  Affiliates  shall then have a license to sell that
amount  of  Licensed  Products,  but no more,  provided  LICENSEE  shall pay the
royalty thereon at the rate and at the times required herein.

7.05.     If during the term of this Agreement, LICENSEE shall become bankrupt
or insolvent  or if the  business of LICENSEE  shall be placed in the hands of a
receiver  or trustee,  whether by the  voluntary  act of  LICENSEE or  otherwise
(which  proceeding,  in the case of an involuntary  act, is not dismissed within
sixty (60) days), or if LICENSEE ceases to actively  conduct its business,  this
Agreement shall immediately terminate upon notice to LICENSEE.

                           ARTICLE 8 - GOVERNING LAW
                           -------------------------

8.01.     This Agreement shall be construed as having been entered into in the
State of Delaware and shall be interpreted in accordance with and its
performance governed by the laws of the State of  Delaware.

                         ARTICLE 9 - NON-ASSIGNABILITY
                         -----------------------------

9.01.     This Agreement shall be binding upon and inure to the benefit of the
respective successors and assigns of the parties hereto.  However, except as
specifically provided herein, LICENSEE may not assign its rights in this
Agreement (except to an Affiliate in which case no consent is required) without
approval of LICENSOR, such approval not to be unreasonably withheld.

                              ARTICLE 10 - NOTICES
                              --------------------

10.01.    It shall be a sufficient giving of any notice, request, report,
statement, disclosure or other communication hereunder, if the party giving the
same shall deposit a copy thereof in the Post Office in certified mail, postage
prepaid, addressed to the other party at its address hereinafter set forth or at
such other address as the other party shall have theretofore in writing
designated:

          LICENSOR

          Brad Brockbank
          Manager of Intellectual Property and
          Technology Commercialization
          National Jewish Medical and Research Center
          1400 Jackson Street
          Denver, Colorado 80206-2726, USA
          Fax:  303-270-2168
                ------------

                                       8
<PAGE>

          LICENSEE

          AEOLUS PHARMACEUTICALS, INC.

          3200 East Highway 54
          Cape Fear Building, Suite 300
          P.O. Box 14287
          RTP, NC 27709


10.02.    The date of giving any such notice, request, report, statement,
disclosure or other communications, and the date of making any payment hereunder
required (provided such payment is received), shall be the earlier of (i) three
(3) days following the date of the U.S. postmark of such envelope if marked or
(ii) the actual date of receipt.

           ARTICLE 11 - INDEMNITY, INSURANCE, REPRESENTATIONS, STATUS
           ----------------------------------------------------------

11.01.    LICENSEE agrees to indemnify, hold harmless, and defend LICENSOR, its
trustees, officers, employees, and agents, against any and all claims, suits,
losses, damages, costs, fees, and expenses, including reasonable attorneys fees,
resulting from or arising out of the exercise of this license.  LICENSEE shall
not be responsible for the negligence or intentional wrongdoing of LICENSOR, nor
shall LICENSEE be responsible for amounts paid in settlement of any claim
without its approval.

11.02.    LICENSEE shall maintain in force at its sole cost and expense with
reputable insurance companies, general liability insurance and products
liability insurance coverage in an amount LICENSEE deems to be reasonably
sufficient, to protect against liability under Article 11.01 above.  LICENSEE
shall provide evidence of such coverage to LICENSOR upon request.  LICENSOR
shall  have the right to ascertain from time to time that such coverage exists,
such right to be exercised in a reasonable manner.

11.03.    Nothing in this Agreement shall be deemed to be a representation or
warranty by LICENSOR of the validity of any of the patents or the accuracy,
safety, efficacy, or usefulness for any purpose of Patent Rights.  LICENSOR
shall have no obligation, express or implied, to supervise, monitor, review, or
otherwise assume responsibility for the production, manufacture, testing,
marketing, or sale of any Licensed Product, and LICENSOR shall have no liability
whatsoever to LICENSEE or any third parties for or on account of any injury,
loss, or damage, of any kind or nature, sustained by, or any damage assessed or
asserted against, or any other liability incurred by or imposed upon LICENSEE or
any other person or entity, arising out of or in connection with or resulting
from this Agreement, including:

          11.03.02.   the production, use, or sale of any Licensed Product;

          11.03.02.   the use of Patent Rights; or

          11.03.03.   any advertising or other promotional activities with
respect to any of the foregoing.

                                       9
<PAGE>

11.04.    LICENSOR represents and warrants to LICENSEE as follows:

          11.04.01.   LICENSOR has the lawful right to grant the license
          provided  in this  Agreement  and that it has not  granted  rights  or
          licenses in derogation of this Agreement. LICENSOR agrees that, during
          the  term of this  Agreement,  it  shall  not  enter  into  any  other
          agreements   that  conflict  with  rights  or   obligations   provided
          hereunder,   including  any  rights  and   obligations   that  survive
          termination hereof.

          11.04.02.   To the best of LICENSOR's knowledge, except for rights
          owned by LICENSEE,  LICENSOR owns all right, title and interest in and
          to the Invention,  and the Patent Rights, free and clear of all liens,
          claims and encumbrances of any inventor other than Drs. Crapo and Day,
          or any third party other than the federal government.

11.05.    Neither party hereto is an agent of the other party for any purpose
whatsoever.

                       ARTICLE 12 - USE OF A PARTY'S NAME
                       ----------------------------------

12.01.    Neither party will, without the prior written consent of the other
party:

          12.01.01.   use in advertising or publicity any trade-name, trademark,
          trade device,  service mark, symbol, or any abbreviation  contraction,
          or simulation thereof owned by the other party;

          12.01.02.   use the name of any employee or agent of the other party
          in any publication, publicity or advertising; or

          12.01.03.   represent, either directly or indirectly, that any product
          or  service  of  the  other  party  is a  product  or  service  of the
          representing  party or that it is made in accordance  with or utilizes
          the information or documents of the other party.

12.02     Notwithstanding Article 12.01, above, it is the intent of the parties
that LICENSEE may, without the prior approval of LICENSOR, use the names of Drs.
Crapo and Day in materials related to LICENSEE and its products that are
intended for the purpose of seeking investors, sublicensees, or development
partners for Licensed Products, or that are required to be submitted by any
authoritative governmental agency.

                             ARTICLE 13 - SEVERANCE
                             ----------------------

13.01.    This Agreement, including any schedules or other attachments which are
incorporated herein by reference, contain the entire agreement between the
parties as to its subject matter.  This Agreement merges all prior discussions
between the parties and neither party shall be bound by conditions, definitions,
warranties, understandings, or representations concerning such subject matter
except as provided in this Agreement or as may be specified later in writing and
signed by the properly authorized representatives of the parties.  This
Agreement can be modified or amended only by written agreement duly signed by
persons authorized to sign agreements on behalf of the parties.

                                       10
<PAGE>

                              ARTICLE 14 - WAIVER
                              -------------------

14.01.    The failure of a party in any instance to insist upon the strict
performance of the terms of this Agreement shall not be construed to be a waiver
or relinquishment of any of the terms of this Agreement, either at the time of
the party's failure to insist upon strict performance or at any time in the
future, and such term or terms shall continue in full force and effect.

                         ARTICLE 15 - ENTIRE AGREEMENT
                         -----------------------------

15.01     This Agreement, including any schedules or other attachments which are
incorporated herein by reference, contain the entire agreement between the
parties as to its subject matter.  This Agreement merges all prior discussions
between the parties and neither party shall be bound by conditions, definitions,
warranties, understandings, or representations concerning such subject matter
except as provided in this Agreement or as may be specified later in writing and
signed by the properly authorized representatives of the parties.  This
Agreement can be modified or amended only by written agreement duly signed by
persons authorized to sign agreements on behalf of the parties.

                              ARTICLE 16 - TITLES
                              -------------------

16.01     All titles and article headings contained in this Agreement are
inserted  only as a matter of  convenience  and  reference.  They do not define,
limit,  extend,  or describe the scope of this Agreement or the intent of any of
its provisions.

                          ARTICLE 17 - CONFIDENTIALITY
                          ----------------------------

17.01.    This Agreement and the terms and conditions thereof are confidential
and may not be released or published by either party without the express written
consent of the other party; provided,  however, that such disclosure may be made
at any time:  (a) to  Affiliates  or  sub-licensees  of  LICENSEE  or  potential
investors or other persons or entities with whom LICENSEE proposes to enter into
a business  relationship,  provided that such  sublicensee or third party enters
into  a  confidentiality  agreement  maintaining  the  confidentiality  of  such
confidential  information  or (b) as required by applicable law or regulation or
(c) either party,  including any Affiliate,  may make  reasonable  disclosure of
this Agreement, at its own discretion,  and the financial and other terms hereof
in any filings required by the Securities and Exchange Commision (the "SEC"), or
(d) in connection  with and subsequent to any offering of LICENSEE's  securities
to the public, on Form S-1 (or other applicable  registration  form), Form 10-K,
Form 10-Q,  Form 8-K or other  applicable  SEC form, and in the footnotes to any
financial statement or (d) LICENSEE may file this Agreement as an exhibit to any
Form S-1, Form 10-K,  Form 10-Q,  Form 8-K or other  applicable  SEC form or (e)
either party may describe this  Agreement in the  "Management's  Discussion  and
Analysis of Financial Conditions and Results of Operations" section or any other
applicable section of any filing with the SEC or other governing bodies.

                          - EXECUTION PAGE FOLLOWING -

                                       11
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
dates set forth below.

LICENSOR:           NATIONAL JEWISH MEDICAL AND RESEARCH CENTER
--------


                              By: /s/ [ILLEGIBLE]
                                 ------------------------------------
                              Title: Executive Vice President and CAO
[SEAL]                              ---------------------------------
                              Date: 11/9/00
                                   ----------------------------------

ATTEST:

By: /s/ Heidi H. Huddleston
   ------------------------
   Notary Public



LICENSEE:                AEOLUS PHARMACEUTICALS, INC.
--------



                              By: /s/ Clayton I. Duncan
                                 ----------------------
                              Title: President and CEO
                                    -------------------
[SEAL]                        Date: 11/17/00
                                   --------------------


ATTEST:

By: /s/ Amelia Wright Frazier
   --------------------------
   Notary Public

                                       12