Document:

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                                                                   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
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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
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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
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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
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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<PAGE>

                                                                   Exhibit 10.57
                                 OFFICE LEASE

NORTH CAROLINA:
DURHAM COUNTY:

         THIS LEASE, made this the 25th day of January, 2001, by and between

HIGHWOODS REALTY LIMITED PARTNERSHIP, a North Carolina limited partnership,

hereinafter "Landlord" and INCARA PHARMACEUTICALS CORPORATION, a Delaware

corporation, hereinafter (whether one or more) "Tenant":

                             W I T N E S S E T H :

          Upon the terms and conditions hereinafter set forth, Landlord leases
to Tenant and Tenant leases from Landlord property referred to as the Premises,
all as follows:

          1.   PREMISES. The property hereby leased to Tenant is that area shown
on Exhibit A and A-1 hereto attached, which consists of approximately 18,258
rentable square feet (approximately, 5,207 rentable square feet for Suite 102
and 13,051 rentable square feet for Suite 200), which is located in what is
sometimes called the 4401 Research Commons Building, located at 79 T.W.
Alexander Drive, Suites 102 and 200, City of Research Triangle Park, County of
Durham, North Carolina (the "Premises").

          The usable area of the Premises, 15,915 square feet (4,539 square feet
for Suite 102 and 11,376 square feet for Suite 200), shall be multiplied by the
core area factor of 1.14724% to determine the rentable square footage as
referred to above.

          2.   TERM. This Lease Term for the lease of Suite 200 shall commence
on March 1, 2001 (the "Commencement Date") and for the lease of Suite 102 shall
commence on May 1, 2001 (the "Suite 102 Commencement Date"), and shall terminate
(unless extended as herein provided) for the lease of both Suite 200 and 102 at
noon on April 30, 2006 ("Termination Date"). In the event Landlord shall permit
Tenant to take possession of the Premises prior to the Commencement Date
referenced above, all the terms and conditions of this Lease shall apply.

          If Landlord, for any reason whatsoever, cannot deliver possession of
the Premises to Tenant on the Commencement Date, this Lease shall not be void or
voidable, no obligation of Tenant shall be affected thereby, and neither
Landlord nor Landlord's agents shall be liable to Tenant for any loss or damage
resulting from the delay in delivery of possession; provided, however, that in
such event, the Commencement Date and Termination Date of this Lease, and all
other dates that may be affected by their change, shall be revised to conform to
the date of Landlord's delivery of possession to Tenant. The above, however, is
subject to the provision that the period permitted for the delay of delivery of
possession of the Premises shall not exceed sixty (60) days from the
Commencement Date set forth in the first sentence of this Paragraph 2 (except
that those delays beyond Landlord's control or caused by Tenant ["Delays"] shall
be excluded in calculating such period). If possession exceeds the permitted
period, Tenant may terminate this Lease by written notice to Landlord; provided,
that written notice shall be ineffective if given after Tenant takes possession
of any part of the Premises, or if given more than seventy (70) days after the
original Commencement Date plus the time of any Delays. Unless expressly
otherwise provided herein, Rent shall commence on the earlier of: (a) the

                                       1
<PAGE>

Commencement Date; (b) occupancy of the Premises by Tenant; (c) the date
Landlord has the Premises ready for occupancy by Tenant, as such date is
adjusted under the Work Letter, if any, attached hereto; or (d) the date
Landlord could have had them ready had there been no Delays attributable to
Tenant.

          If the Termination Date, as determined herein, does not occur on the
last day of a calendar month, Landlord, at its option, may extend the Lease Term
by the number of days necessary to cause the Termination Date to occur on the
last day of the last calendar month of the Lease Term. Tenant shall pay Base
Rent and Additional Rent for such additional days at the same rate payable for
the portion of the last calendar month immediately preceding such extension. The
Commencement Date, Lease Term (including any extension by Landlord pursuant to
this Paragraph 2) and Termination Date shall be set forth in a Commencement
Letter or Commencement Agreement prepared by Landlord and executed by Tenant in
accordance with the provisions of this Paragraph 2 and as provided in Exhibit C
attached.

          3.   USE. Tenant may use Suite 200 of the Premises only for general
office purposes and Suite 102 for general office purposes and as a laboratory,
with no more than four (4) persons per one thousand (1,000) rentable square
feet, but for no other use without Landlord's prior written consent. Tenant
shall never make any use of the Premises which is in violation of any
governmental laws, rules or regulations, whether now existing or hereafter
enacted, nor may Tenant make any use of the Premises not permitted, or otherwise
prohibited, by any restrictive covenants which apply to the Premises. Tenant may
not make any use which is or may be a nuisance or trespass, which increases the
fire insurance premiums, or makes such insurance unavailable to Landlord on the
Building. In the event of an increase in Landlord's fire insurance premiums
which results from Tenant's use or occupancy of the Premises, if Tenant does not
pay Landlord, on demand, the amount of such increase, Landlord may treat such
use as a default hereunder. Tenant is not responsible for any existing
violations of any governmental laws, rules or regulations.

          4.   BASE RENT. All Rent payable by Tenant shall be without previous
demand or notice therefor by Landlord and without set off or deduction. The
Minimum Base Rent for the Term shall be the sum of $1,926,172.94, which Rent
shall be payable in equal monthly installments according to the rent schedule
provided below in Subsection 4.1, payable in advance on or before the first day
of each calendar month during the Term of this Lease, unless the Term commences
on a day other than the first day of a calendar month, in which event prorated
Rent at the above rate until the end of the month in which the Lease Term
commences shall be due and payable on the Commencement Date. In addition to such
remedies as may be provided under the Default provisions of this Lease, Landlord
shall be entitled to a late charge of five percent (5%) of the amount of each
monthly Rent payment not received by the fifth day of the month when due, and a
charge of the lower of a lawful bad check fee or five percent (5%) of the amount
of any check given by Tenant not paid when first presented by Landlord.

               4.1. Rent Schedule. During the initial term of the Lease, the
monthly base rent shall be paid in accordance with Section 4 and in accordance
with the following payment schedule:

<TABLE>
<CAPTION>
    -----------------------------------------------------------------------------------
                           Suite 102      Suite 200        Total          Cumulative
           Months        Monthly Rent   Monthly Rent    Monthly Rent         Rent
    -----------------------------------------------------------------------------------
     <S>                 <C>            <C>             <C>              <C>
     03/01/01-04/30/01        -0-        $21,479.77      $21,479.77      $  42,959.54
    -----------------------------------------------------------------------------------
     05/01/01-04/30/02     $8,079.53     $21,479.77      $29,559.30      $ 354,711.60
    -----------------------------------------------------------------------------------
     05/01/02-04/30/03     $8,322.52     $22,121.45      $30,443.97      $ 365,327.64
    -----------------------------------------------------------------------------------
     05/01/03-04/30/04     $8,574.19     $22,784.87      $31,359.06      $ 376,308.72
    -----------------------------------------------------------------------------------
     05/01/04-04/30/05     $8,830.20     $23,470.05      $32,300.25      $ 387,603.00
    -----------------------------------------------------------------------------------
     05/01/05-04/30/06     $9,094.89     $24,176.98      $33,271.87      $ 399,262.44
    -----------------------------------------------------------------------------------
                                                         Total Rent:     $1,926,172.94
    -----------------------------------------------------------------------------------
</TABLE>

         The above rent schedule does not include operating expense pass through
adjustments to be computed annually in accordance with Lease Addendum Number Two
attached hereto.

                                       2
<PAGE>

          5.   ADDITIONAL RENT.
          (a)  Cost of Living Increases: Tenant shall further pay as Additional
Rent any sales or use tax imposed on rents collected by Landlord or any tax on
rents in lieu of ad valorem taxes on the Building, even though laws imposing
such taxes attempt to require Landlord to pay the same. If any such sales or use
tax shall be imposed upon Landlord, and Landlord shall be prohibited by
applicable law from collecting the amount of such tax from Tenant as Additional
Rent, then Landlord, upon sixty (60) days prior written notice to Tenant, may
terminate this Lease, unless Tenant legally can and does in fact reimburse
Landlord for such tax.

          (b)  Tenant's Proportionate Share of Operating Expense Passthroughs:
Tenant further shall pay as Additional Rent, which Additional Rent shall be
payable at the same time as, and in addition to, the Base Rent, Tenant's
Proportionate Share (hereafter defined) of the increase in Landlord's expenses
as set forth on an Addendum to this Lease. Tenant's Proportionate Share of such
increase shall be determined by multiplying the total cost thereof by a
fraction, the numerator of which is the rentable square footage of the Premises,
and the denominator of which is the total rentable square footage in the
Building.

6. SERVICES BY LANDLORD. Landlord shall cause to be furnished to the Premises,
in common with other tenants, during business hours of 8:00 A.M. to 6:00 P.M.,
Monday through Friday (excluding National and State holidays), the following
services; janitorial services (once per working day after normal working hours),
water (if available from city mains) for drinking, lavatory and toilet purposes,
operatorless elevator service and, to Suite 200, heating and air conditioning
for the reasonably comfortable use and occupancy of the Premises, provided
heating and cooling conforming to any governmental regulation prescribing
limitations thereon shall be deemed to comply with this service. Landlord shall
furnish Suite 200 of the Premises with electricity for the maintenance of
building standard fluorescent lighting composed of 2' x 4' fixtures.
Incandescent fixtures, table lamps, all lighting other than the aforesaid
building standard fluorescent light, dimmers and all lighting controls other
than controls for the aforesaid building standard fluorescent lighting shall be
serviced, replaced and maintained at Tenant's expense. Landlord shall also
furnish Suite 200 of the Premises with electricity for lighting for the
aforesaid building standard fluorescent lighting and for the operation of
general office machines, such as electric typewriters, desk top computers, word
processing equipment, dictating equipment, adding machines and calculators, and
general service non-production type office copy machines. Landlord shall have
the right to enter and inspect the Premises and all electrical devices therein
from time to time, provided that Landlord shall have no obligation to provide
more than fifty (50) circuits of electricity for convenience outlets serving
Suite 200 of the Premises. After hours heating and air conditioning is available
to Suite 200 at a charge of $25.00 per hour, per zone, with a minimum of two (2)
hours per occurrence. All additional costs resulting from Tenant's extraordinary
usage of heating, air conditioning or electricity shall be paid by Tenant upon
demand as Additional Rent for each month or portion thereof, and Tenant shall
not install equipment with unusual demands for any of the foregoing without
Landlord's prior written consent, which Landlord may withhold if it determines
that in its opinion such equipment may not be safely used in the Premises or
that electrical service is not adequate therefor. Provided however, Tenant may
install a supplemental HVAC unit to serve the Premises or other high demand
equipment at its own cost and expense. The supplemental HVAC unit or high demand
equipment shall be approved by Landlord and shall be installed in a location
approved by Landlord and, if installed in Suite 200, separately metered by an
E/mon D/mon, or equivalent, meter. Tenant shall pay all costs involved in
installing and maintaining the supplemental HVAC unit and/or equipment and
related meter, including purchase, installation, maintenance, removal and
restoration costs (if Landlord requires removal at the end of the Lease Term),
and monthly utility bills read from the meter in Suite 200 by Landlord. Monthly
utility bills from the meter shall be paid in the same manner as Rent under
Section Four of this Lease and subject to the same penalties for nonpayment or
late payment. At Landlord's option, upon expiration of the Lease the Tenant (at
Tenant's expense) shall remove from the Premises any separate panel, meter, and
all associated wiring related to the HVAC unit and high demand equipment, and
shall restore that portion of the Premises to Building standard conditions. If
heat generating machines or equipment shall be used in the Premises by Tenant
which affect the temperature otherwise maintained by the heating and air
conditioning

                                       3
<PAGE>

system, Landlord shall have the right to install supplemental air conditioning
units in the Premises and the cost thereof, including the cost of engineering
and installation, and the cost of operation and maintenance thereof, shall be
paid by Tenant upon demand by Landlord. Landlord shall further provide a
reasonable pro rata amount of unreserved free parking, (three (3) spaces for
each one thousand (1,000) square foot of the Premises) in common with the other
tenants, for Tenant's employees and visitors.

          Suite 102 of the Premises shall have a separate electrical meter and
Tenant shall be directly responsible for electrical charges to Suite 102.
Landlord shall provide up to twenty-two (22) circuits for convenience outlets
serving Suite 102.

          So long as Landlord acts reasonably and in good faith, there shall be
no abatement or reduction of Rent by reason of any of the foregoing services not
being continuously provided to Tenant.

          Tenant shall report immediately to Landlord any defective condition in
or about the Premises known to Tenant and if such defect is not so reported and
such failure to promptly report results in other damage, Tenant shall be liable
for same. Landlord shall not be liable to Tenant for any damage caused to Tenant
and its property due to the Building or any part or appurtenance thereof being
improperly constructed or being or becoming out of repair, or arising from the
leaking of gas, water, sewer or steam pipes, or from electricity; provided
however, Tenant does not waive its rights to specific performance or other
remedies if the foregoing services are not provided as set forth above.

          7.    TENANT'S ACCEPTANCE AND MAINTENANCE OF PREMISES; LANDLORD'S
DUTIES AND RIGHTS. Tenant on occupancy of the Premises represents to Landlord
that it has examined and inspected the same, finds the Premises to be as
represented by Landlord and satisfactory for Tenant's intended use, and
constitutes Tenant's acceptance "as is." Landlord makes no representation or
warranty as to the condition of said Premises. Tenant shall deliver at the end
of this Lease each and every part of the Premises in good repair and condition,
ordinary wear and tear and damage by casualty excepted. Tenant shall: (a) keep
the Premises and fixtures in good order; (b) make repairs and replacements to
the Premises or Building needed because of Tenant's misuse or primary
negligence; (c) repair and replace special equipment or decorative treatments
above Building Standard installed by or at Tenant's request and that serve the
Premises only, except (A) to the extent the repairs or replacements are needed
because of Landlord's misuse or primary negligence, which are not covered by
Tenant's insurance, or the insurance Tenant is required to carry under this
Lease, whichever coverage is greater, or (B) if this Lease is ended because of
casualty loss or condemnation; and (d) not commit waste. Tenant, however, shall
make no structural or interior alterations of the Premises. If Tenant requires
alterations, Tenant shall provide Landlord's managing agent with a complete set
of construction drawings, and such agent shall then determine the actual cost of
the work to be done (to include a construction supervision fee of 5% to be paid
to Landlord's managing agent). Tenant may then either agree to pay Landlord to
have the work done or withdraw its request for alterations. If requested by
Landlord on termination of this Lease or vacation of the Premises by Tenant,
Tenant shall restore the Premises, at Tenant's sole expense, to the same
condition as existed at the commencement of the term, subject to the provisions
of this Section Seven of the Lease, ordinary wear and tear and damage by insured
casualty only excepted. Landlord, however, may elect to require Tenant to leave
alterations performed for Tenant unless at the time of such alterations Landlord
agreed in writing they could be removed on expiration of this Lease. Upon the
termination of this Lease for any purpose or the vacating of Suite 102 of the
Premises by Tenant, Tenant shall, upon the written request of Landlord, remove
the lab equipment that has been installed in Suite 102 and restore the Suite so
that it can be used for standard office space. Items to be removed will include
specialized equipment and associated electrical, plumbing and mechanical items,
specialized ceiling tile, floor coverings and lighting, as well as, walls that
are not Building-standard or representative of standard office space. This
provision shall not require Tenant to add any walls, except as may be needed to
repair areas where walls are required to be removed.

                                       4
<PAGE>

          Except for repairs and replacements that Tenant must make under this
Paragraph 7, Landlord shall pay for and make all other repairs and replacements
to the Premises, common areas and Building (including Building fixtures and
equipment).

          Except for non-standard items installed for Tenant's sole use,
Landlord shall make the repairs and replacements to maintain the Building in a
condition comparable to other first class office buildings in the Metropolitan
area where the Premises are located. This maintenance shall include the roof,
foundation, exterior walls, interior structural walls, all structural
components, and all exterior (outside of walls) systems, such as mechanical,
electrical, HVAC, and plumbing. Repairs or replacements required under Paragraph
7 shall be made within a reasonable time (depending on the nature of the repair
or replacement needed) after receiving notice from Tenant or having actual
knowledge of the need for a repair or replacement.

          Notwithstanding anything to the contrary set forth above in this
Paragraph 7, if Tenant does not perform its maintenance obligations in a timely
manner as set forth in this Lease, commencing the same within five (5) days of
receipt of notice from Landlord specifying the work needed and thereafter
diligently and continuously pursuing completion of unfulfilled maintenance
obligations, Landlord shall have the right, but not the obligation, to perform
such maintenance, and any amounts so expended by Landlord shall be paid by
Tenant to Landlord within thirty (30) days after demand, with interest at the
maximum rate allowed by law (or the rate of fifteen percent (15%) per annum,
whichever is less) from the date of expenditure through the date paid.

          8.   DAMAGES TO PREMISES. If the Premises shall be partially damaged
by fire or other casualty, Landlord shall, except as otherwise provided herein,
promptly repair and restore the same (exclusive of improvements made by Tenant,
Tenant's trade fixtures, decorations, signs, and contents) substantially to the
condition thereof immediately prior to such damage or destruction. If by reason
of such occurrence: (a) the Premises are rendered wholly untenantable; (b); (c)
Landlord's lender does not permit a sufficient amount of the insurance proceeds
to be used for restoration purposes; (d) the Premises are damaged in whole or in
part during the last year of the Lease Term; or (e) the building containing the
Premises is damaged (whether or not the Premises are damaged) to an extent of
fifty percent (50%) or more of the fair market value thereof, Landlord may elect
either to repair the damage as aforesaid, or to cancel this Lease by written
notice of cancellation given to Tenant within sixty (60) days after the date of
such occurrence, and thereupon this Lease shall terminate. Tenant shall vacate
and surrender the Premises to Landlord within fifteen (15) days after receipt of
such notice of termination. In addition, Tenant may also terminate this Lease by
written notice given to Landlord at any time between the one hundred
eighty-first (181st) and one hundred ninety-sixth (196th) days after the
occurrence of any such casualty, if Landlord has failed to restore the damaged
portions of the Building (including the Premises) within one hundred eighty
(180) days of such casualty. However, if Landlord is prevented by causes beyond
its reasonable control (including, without limitation, those encompassed in the
meaning of the term force majeure) ["Delays"], from completing the restoration
                    ----- -------
within said one hundred eighty (180) day period, and if Landlord provides Tenant
with written notice of such cause for delay within fifteen (15) days of the
occurrence thereof, said notice to contain the reason for delay and a good faith
estimate of the period of the delay caused thereby, then Landlord shall have an
additional period beyond said one hundred eighty (180) days, equal to the Delays
in which to restore the damaged areas of the Building; and Tenant may not elect
to terminate this Lease until said additional period required for completion has
expired with the Building not having been substantially restored. In such case,
Tenant's fifteen (15) day notice of termination period shall begin to run upon
the expiration of Landlord's additional period for restoration set forth in the
preceding sentence. Upon the termination of this Lease as aforesaid, Tenant's
liability for the Rent and other charges reserved hereunder shall cease as of
the effective date of the termination of this Lease, subject, however, to the
provisions for abatement of Rent hereinafter set forth.

          Unless this Lease is terminated as aforesaid, this Lease shall remain
in full force and effect, and Tenant shall promptly repair, restore, or replace
Tenant's improvements, trade fixtures, decorations, signs, and contents in the
Premises in a manner and to at least a condition equal to that existing prior to
their damage or

                                       5
<PAGE>

destruction, and the proceeds of all insurance carried by Tenant on said
property shall be held in trust by Tenant for the purposes of such repair,
restoration, or replacement.

          If, by reason of such fire or other casualty, the Premises are
rendered wholly untenantable, the Rent and other charges payable by Tenant shall
be fully abated, or if only partially damaged, such Rent and other charges shall
be abated proportionately as to that portion of the Premises rendered
untenantable, in either event (unless the Lease is terminated, as aforesaid)
from the date of such casualty until fifteen (15) days after notice by Landlord
to Tenant that the Premises have been substantially repaired and restored, or
until Tenant's business operations are restored in the entire Premises,
whichever shall first occur. Tenant shall continue the operation of Tenant's
business in the Premises or any part thereof not so damaged during any such
period to the extent reasonably practicable from the standpoint of prudent
business management. Except for the abatement of the Rent and other charges
hereinabove set forth, Tenant shall not be entitled to, and hereby waives, all
claims against Landlord for any compensation or damage for loss of use of the
whole or any part of the Premises and/or for any inconvenience or annoyance
occasioned by any such damage, destruction, repair, or restoration.

          9.   ASSIGNMENT - SUBLEASE. Tenant may not assign or encumber this
Lease or its interest in the Premises arising under this Lease, and may not
sublet any part or all of the Premises without the written consent of Landlord
first had and obtained, which shall not be unreasonably withheld. Any assignment
or sublease to which Landlord may consent (one consent not being any basis that
Landlord should grant any further consent) shall not relieve Tenant of any or
all of its obligations hereunder. For the purpose of this Paragraph 9, the word
"assignment" shall be defined and deemed to include the following: (i) if Tenant
is a partnership, the withdrawal or change, whether voluntary, involuntary or by
operation of law of partners owning thirty percent (30%) or more of the
partnership, or the dissolution of the partnership; (ii) if Tenant consists of
more than one person, an assignment, whether voluntary, involuntary, or by
operation of law, by one person to one of the other persons that is a Tenant;
(iii) if Tenant is a corporation, any dissolution or reorganization of Tenant,
or the sale or other transfer of a controlling percentage (hereafter defined) of
capital stock of Tenant other than to an affiliate or subsidiary or the sale of
fifty-one percent (51%) in value of the assets of Tenant; (iv) if Tenant is a
Limited Liability Company, the change of members whose interest in the Company
is fifty percent (50%) or more. The phrase "controlling percentage" means the
ownership of, and the right to vote, stock possessing at least fifty-one percent
(51%) of the total combined voting power of all classes of Tenant's capital
stock issued, outstanding and entitled to vote for the election of directors, or
such lesser percentage as is required to provide actual control over the affairs
of the corporation. Acceptance of Rent by Landlord after any non-permitted
assignment shall not constitute approval thereof by Landlord. Notwithstanding
the foregoing provisions of this Paragraph 9, Tenant may assign or sublease part
or all of the Premises without Landlord's consent to: (i) any corporation or
partnership that controls, is controlled by, or is under common control with,
Tenant; or (ii) any corporation resulting from the merger or consolidation with
Tenant or to any entity that acquires all of Tenant's assets as a going concern
of the business that is being conducted on the Premises, as long as the assignee
or sublessee is a bona fide entity and assumes the obligations of Tenant, and
continues the same use as permitted under Paragraph 3. However, Landlord must be
given prior written notice of any such assignment or subletting, and failure to
do so shall be a default hereunder. Landlord will never consent to an assignment
or sublease that might result in a use that conflicts with the rights of an
existing tenant.

          In no event shall this Lease be assignable by operation of any law,
and Tenant's rights hereunder may not become, and shall not be listed by Tenant
as an asset under any bankruptcy, insolvency or reorganization proceedings.
Tenant is not, may not become, and shall never represent itself to be an agent
of Landlord, and Tenant acknowledges that Landlord's title is paramount, and
that it can do nothing to affect or impair Landlord's title.

          If this Lease shall be assigned or the Premises or any portion thereof
sublet by Tenant at a rental that exceeds the rentals to be paid to Landlord
hereunder, attributable to the Premises or portion thereof so assigned or
sublet, then any such excess shall be paid over to Landlord by Tenant.

                                       6
<PAGE>

          10.  TENANT'S COMPLIANCE-INSURANCE REQUIREMENTS. Tenant shall comply
with all applicable laws, ordinances and regulations affecting the Premises, now
existing or hereafter adopted, including general rules and regulations for
tenants (a copy of the present rules are attached as Exhibit B) as may be
developed from time to time by Landlord effective as of the date delivered to
Tenant or posted on the Premises providing such rules are uniformly applicable
to all tenants in the Building. Tenant shall not be responsible for any existing
violations of any applicable laws, ordinances and regulations affecting the
Premises or applicable laws, ordinances and regulations which require structural
modification to the Premises.

          Throughout the Term of this Lease, Tenant at its sole cost and expense
shall keep or cause to be kept for the mutual benefit of Landlord, Landlord's
managing agent (presently Practical Management, Inc.) and Tenant, public
liability and property damage insurance with combined single limit coverage of
at least $2,000,000 (with appropriate cross-liability endorsements so showing),
which policies insure against all liability of Tenant, Tenant's authorized
representatives, and anyone for whom Tenant is responsible, arising out of and
in connection with Tenant's use of the Premises, and which shall insure Tenant's
performance of the indemnity provisions contained herein. Not more frequently
than once every three (3) years, Landlord may require the limits to be increased
if in its reasonable judgment (or that of its mortgagee) the coverage is
insufficient. Tenant shall also insure its personal property and fixtures
located in the Premises and any improvements made by Tenant, and if installed,
the Generator installed pursuant to Subsection 25.5 of this Lease, for their
full reasonable insurable value, and Tenant shall neither have, nor make, any
claim against Landlord for any loss or damage to the same, regardless of the
cause thereof.

          Prior to taking possession of the Premises, and thereafter at least
ten (10) business days prior to the renewal dates thereof, Tenant shall deliver
to Landlord copies of original policies, or certificates thereof satisfactory to
Landlord. All such policies shall be non-assessable and shall contain language
to the extent obtainable that: (a) any loss shall be payable notwithstanding any
act or negligence of Landlord or Tenant that might otherwise result in
forfeiture of the insurance, (b) that the policies are primary and non-
contributing with any insurance that Landlord may carry, and (c) that the
policies cannot be canceled or changed except after thirty (30) days' prior
written notice to Landlord. If Tenant fails to provide Landlord with insurance
coverage as required after written notice to Tenant, Landlord may obtain such
coverage and Tenant shall reimburse the cost thereof on demand.

          Anything in this Lease to the contrary notwithstanding, Landlord
hereby releases and waives unto Tenant (including all partners, stockholders,
officers, directors, employees and agents thereof), its successors and assigns,
and Tenant hereby releases and waives unto Landlord (including all partners,
stockholders, officers, directors, employees and agents thereof), its successors
and assigns, all rights to claim damages for any injury, loss, cost or damage to
persons or to the Premises or any other casualty, as long as the amount of which
injury, loss, cost or damage has been paid either to Landlord, Tenant, or any
other person, firm or corporation, under the terms of any fire, extended
coverage, public liability or other policy of insurance, to the extent such
releases or waivers are permitted under applicable law. All policies of
insurance carried or maintained pursuant to this Lease shall contain, or be
endorsed to contain, a provision whereby the insurer waives all rights of
subrogation against either Tenant or Landlord.

          "Except as expressly provided in this Lease, Tenant or Landlord
respectively ("the Indemnitor") shall indemnify and hold the other harmless from
and against any and all claims arising out of: (a) Indemnitor's use of the
Premises or any part thereof; (b) any activity, work, or thing done, permitted
or suffered by Indemnitor in or about the Premises or the building, or any part
thereof; (c) any breach or default by Indemnitor in the performance of any of
its obligations under this Lease; or (d) any act or negligence of the
Indemnitor, or any officer, agent, employee, contractor, servant, invitee or
guest of Indemnitor (excluding other tenants in the building); and in each case
from and against any and all damages, losses, liabilities, lawsuits, costs and
expenses (including reasonable attorneys fees at all tribunal levels) arising in
connection with any such claim or claims as described in (a) through (d) above,
or any action brought thereon. If such action be brought against Landlord or
Tenant, the Indemnitor upon notice from the other shall defend the same through
counsel selected

                                       7
<PAGE>

by the Indemnitor's insurer, or other counsel reasonably acceptable to the
other. The provisions of this paragraph shall survive the termination of this
Lease."

          Landlord shall keep the Building, including the improvements, insured
against damage and destruction by fire, earthquake, vandalism, and other perils
in the amount of the full replacement value of the Building, as the value may
exist from time to time. The insurance shall include an extended coverage
endorsement of the kind required by institutional lenders.

          Each party shall keep its personal property and trade fixtures in the
Premises and Building insured with "all risks" insurance in an amount to cover
one hundred percent (100%) of the replacement cost of the property and fixtures.
Tenant shall also keep any non-Building-standard improvements made to the
Premises at Tenant's request insured to the same degree as Tenant's personal
property.

          Insurance policies required by this Lease shall: (a) be issued by
insurance companies licensed to do business in the state of North Carolina with
general policyholder's ratings of at least A and a financial rating of at least
XIII in the most current Best's Insurance Reports available on the commencement
                         ------------------------
date, or if the Best's ratings are changed or discontinued, the parties shall
                ------
agree to a comparable method of rating insurance companies; (b) name the
nonprocuring party as an additional insured as its interest may appear [other
landlords or tenants may be added as additional insureds in a blanket policy];
(c) provide that the insurance not be canceled or materially changed in the
scope or amount of coverage unless thirty (30) days advance notice is given to
the nonprocuring party; (d) be primary policies - not as contributing with, or
in excess of, the coverage that the other party may carry; (e) provide that any
loss shall be payable notwithstanding any act or negligence of Landlord or
Tenant which might result in a forfeiture thereunder of such insurance or the
amount of proceeds payable; (f) have no deductible unless Landlord accepts a
policy showing a reasonable deductible; (g) have contractual coverage
endorsements insuring indemnities under this Lease; and (h) be maintained during
the entire Lease Term and any extension terms.

          11.  SUBORDINATION-ATTORNMENT - LANDLORD FINANCING. Tenant agrees that
this Lease will be either subordinate or superior to any mortgage heretofore or
hereafter executed by Landlord covering the Premises, depending on the
requirements of such mortgagee. Tenant within ten (10) days of request to do so
from Landlord or its mortgagee will execute such agreement making this Lease
superior or subordinate and containing such other agreements and covenants on
Tenant's part as Landlord's mortgagee may request, and will agree to attorn to
said mortgagee providing the mortgagee agrees not to disturb Tenant's possession
hereunder so long as Tenant is in compliance with this Lease. Further, Tenant
agrees to execute within five (5) days of request therefor, and as often as
requested, estoppel certificates confirming any factual matter requested therein
which is true and is within Tenant's knowledge regarding this Lease, the
Premises, or Tenant's use thereof, including, but not limited to date of
occupancy, termination date of this Lease, the amount of Rent due and date to
which Rent is paid, whether or not Tenant has any defense or offsets to the
enforcement of this Lease or the Rent payable hereunder or knowledge of any
default or breach by Landlord, and that this Lease together with any
modifications or amendments is in full force and effect. Tenant shall attach to
such estoppel certificate copies of all modifications or amendments.

          Tenant agrees to give any mortgagee of Landlord which has provided a
non-disturbance agreement to Tenant, notice of, and a reasonable opportunity
(which shall in no event be less than thirty (30) days after written notice
thereof is delivered to mortgagee as herein provided) to cure any Landlord
default hereunder; and Tenant agrees to accept such cure if effected by such
mortgagee. No termination of this Lease by Tenant shall be effective until such
notice has been given and the cure period has expired without the default having
been cured. Further Tenant agrees to permit such mortgagee (or other purchaser
at any foreclosure sale), and its successors and assigns, on acquiring
Landlord's interest in the Premises and the Lease, to become substitute Landlord
hereunder, with liability only for such Landlord obligations as accrue after
Landlord's interest is so acquired. Tenant agrees to attorn to any successor
Landlord.

                                       8
<PAGE>

          12.  SIGNS. Tenant may not erect, install or display any sign or
advertising material upon the Building exterior, the exterior of the Premises,
or the exterior walls thereof, or in any window therein, without the prior
written consent of Landlord. Landlord shall furnish, install and maintain a
building standard directory at a location in or near the lobby and Building
standard suite signage, at Tenant's expense.

          13.  ACCESS TO PREMISES. Landlord shall have the right, either itself
or through its authorized agents, to enter the Premises at all reasonable times
for inspection to show prospective tenants if within one hundred eighty (180)
days of the termination date as extended by any exercised option, to allow
inspection, by mortgagees, and to make such repairs, alterations or changes as
Landlord deems necessary. Tenant, its agents, employees, invitees, and guests,
shall have the right of ingress and egress to common and public areas of the
Building, provided Landlord by reasonable regulation may control such access for
the comfort, convenience, safety and protection of all tenants in the Building,
or as needed for making repairs and alterations.

          14.  DEFAULT. If Tenant: (i) fails to pay when due any Rent, or any
other sum of money which Tenant is obligated to pay, as provided in this Lease;
or (ii) breaches any other agreement, covenant or obligation herein set forth
and such breach shall continue and not be remedied within fifteen (15) days
after Landlord shall have given Tenant written notice specifying the breach, or
if such breach cannot, with due diligence, be cured within said period of
fifteen (15) days and Tenant does not within said fifteen (15) day period
commence and thereafter with reasonable diligence completely cure the breach
within thirty (30) days after notice; or (iii) files (or has filed against it
and not stayed or vacated within sixty (60) days after filing) any petition or
action for relief under any creditor's law (including bankruptcy,
reorganization, or similar action), either in state or federal court; or (iv)
makes any transfer in fraud of creditors as defined in Section 548 of the United
States Bankruptcy Code (11 U.S.C. 548, as amended or replaced), has a receiver
appointed for its assets (and appointment shall not have been stayed or vacated
within thirty (30) days), or makes an assignment for benefit of creditors; then
Tenant shall be in default hereunder, and, in addition to any other lawful right
or remedy which it may have, Landlord may do the following: (i) terminate this
Lease; (ii) repossess the Premises, and with or without terminating, relet the
same at such amount as Landlord deems reasonable; and if the amount for which
the Premises is relet is less than Tenant's Rent and all other obligations of
Tenant to Landlord hereunder, Tenant shall immediately pay the difference on
demand to Landlord, but if in excess of Tenant's Rent, and all other obligations
of Tenant hereunder, the entire amount obtained from such reletting shall belong
to Landlord, free of any claim of Tenant thereto; (iii); or (iv) without
obtaining any court authorization, lock the Premises and deny Tenant access
thereto. All reasonable expenses of Landlord in repairing, restoring, or
altering the Premises for reletting as general office space, together with
leasing fees and all other expenses in seeking and obtaining a new Tenant, shall
be charged to and be a liability of Tenant. Landlord's reasonable attorneys'
fees in pursuing any of the foregoing remedies, or in collecting any Rent due by
Tenant hereunder, shall be paid by Tenant.

          Tenant further agrees that Landlord may obtain an order for summary
ejectment from any court of competent jurisdiction without prejudice to
Landlord's rights to otherwise collect rents from Tenant.

          All rights and remedies of Landlord are cumulative, and the exercise
of any one shall not be an election excluding Landlord at any other time from
exercise of a different or inconsistent remedy. No exercise by Landlord of any
right or remedy granted herein shall constitute or effect a termination of this
Lease unless Landlord shall so elect by written notice delivered to Tenant.

          No waiver by Landlord of any covenant or condition shall be deemed to
imply or constitute a further waiver of the same at a later time, and acceptance
of Rent by Landlord, even with knowledge of a default by Tenant, shall not
constitute a waiver of such default.

          15.  PROPERTY OF TENANT. Tenant shall timely pay any and all taxes
levied or assessed against or upon Tenant's equipment, fixtures, furniture,
leasehold improvements and personal property located

                                       9
<PAGE>

in the Premises. Tenant (if not in default hereunder), prior to the Termination
Date of this Lease may remove all fixtures and equipment which it has placed in
the Premises, providing Tenant repairs all damages caused by such removal. If
Tenant does not remove its property from the Premises upon termination (for
whatever cause) of this Lease, such property shall be deemed abandoned by
Tenant, and Landlord may dispose of the same in whatever manner Landlord may
elect without any liability to Tenant.

          16.  EMINENT DOMAIN. If all of the Premises, or such part thereof as
will make the same unusable for the purposes contemplated by this Lease, be
taken under the power of eminent domain (or a conveyance in lieu thereof), then
this Lease shall terminate as of the date possession is taken by the condemnor,
and Rent shall be adjusted between Landlord and Tenant as of such date. If only
a portion of the Premises is taken and Tenant can continue use of the remainder,
then this Lease will not terminate, but Rent shall abate in a just and
proportionate amount to the loss of use occasioned by the taking. Tenant shall
have no right or claim to any part of any award made to or received by Landlord
for any taking and no right or claim for any alleged value of the unexpired
portion of this Lease; provided, however, that Tenant shall not be prevented
from making a claim against the condemning party (but not against Landlord) for
any moving expenses, loss of profits, or taking of Tenant's personal property
(other than its leasehold estate) to which Tenant may be entitled.

          17.  QUIET ENJOYMENT. If Tenant promptly and punctually complies with
each of its obligations hereunder, it shall peacefully have and enjoy the
possession of the Premises during the Term hereof, provided that no action of
Landlord or other tenants working in other space in the Building, or in
repairing or restoring the Premises, shall be deemed a breach of this covenant,
or give to Tenant any right to modify this Lease either as to term, rent
payable, or other obligations to be performed, provided such actions or work do
not render the Premises untenantable.

          18.  SECURITY DEPOSIT. Landlord hereby acknowledges receipt from
Tenant of the sum of $354,711.60, which sum Landlord shall retain in trust in a
separate interest bearing account that earns interest at a reasonable market
rate as security for the performance by Tenant of each of its obligations
hereunder. Interest paid on the Security Deposit shall be paid to Tenant each
year on the anniversary date of the Commencement Date, or in the case of
interest earned during the final year of the Term, on the Termination Date.
Landlord shall provide Tenant with quarterly reports showing interest earned on
the Security Deposit. If Tenant fails at any time to perform its obligations,
Landlord may at its option apply said deposit, or so much thereof as is
required, to cure Tenant's default, but if prior to the termination of this
Lease Landlord depletes said deposit in whole or in part, Tenant shall
immediately restore the amount so used by Landlord. Unless Landlord uses the
same to cure a default of Tenant, or to restore the Premises to the condition
that Tenant is required to leave them at the conclusion of the term, Landlord
shall within thirty (30) days of the termination of this Lease refund to Tenant
so much of the deposit as it continues to hold. Tenant may not credit against or
deduct the Security Deposit from any month's Rent. as security for the
performance by Tenant of each of its obligations hereunder (the "Security
Deposit").

          Provided Tenant is not in default under this Lease the amount of the
Security Deposit shall be adjusted as follows:

           (i)      Effective January 1, 2003 and so long as Tenant is not in
                    default of this Lease and established that it has raised at
                    least $27,000,000.00, after December 1, 2000, through its
                    business activities (including stock offerings and joint
                    venture or partnership arrangements), the Security Deposit
                    may be decreased by an amount equal to six (6) months Base
                    Rent at the time of the decrease. If on January 1, 2003,
                    Tenant establishes that it has been profitable in the
                    previous four quarters (or in the previous year), the
                    Security Deposit may be further decreased to an amount equal
                    to three (3) months Base Rent at the time of the decrease
                    (the "Reduced Deposit").

                                       10
<PAGE>

           (ii)     Landlord shall hold the Reduced Deposit throughout the Term
                    and any Renewal Lease Term.

           (iii)    After the deposit has been reduced, Tenant shall be required
                    to restore the Security Deposit to six (6) months Base Rent
                    at the time of the increase, if it is shown that Tenant was
                    not profitable for four consecutive quarters.

          Tenant shall be obligated to provide Landlord with financial
information necessary to determine profitability and funds raised. If Tenant
fails to provide the necessary financial information, Landlord shall have the
right to act as if Tenant has not been profitable for the previous four quarters
(whether or not true) and require an increased Security Deposit.

          19.  NOTICES. All notices, demands and requests which may be given or
which are required to be given by either party to the other must be in writing.
All notices, demands and requests by the Landlord or Tenant shall be sent by
express, registered or certified mail, return receipt requested, postage
prepaid, by overnight courier service such as Federal Express, by facsimile
transmission, or by personal delivery and addressed as follows (or to such other
address as a party may specify by duly given notice):

          RENT PAYMENT
          ADDRESS:          HIGHWOODS REALTY LIMITED PARTNERSHIP
                            c/o Practical Management, Inc.
                            Post Office Box 13645
                            RTP, North Carolina 27709

          LEGAL NOTICE
          ADDRESS FOR
          LANDLORD:         HIGHWOODS REALTY LIMITED PARTNERSHIP
                            c/o Highwoods Properties, Inc.
                            3100 Smoketree Court, Suite 600
                            Raleigh, North Carolina 27604
                            Attn: Manager, Lease Administration
                            Facsimile #: 919/876-2448

          TENANT:           INCARA PHARMACEUTICALS CORPORATION
                            79 T.W. Alexander Drive, Suite 200
                            Post Office Box 14287
                            Research Triangle Park, North Carolina  27709
                            Facsimile #: 919/544-1245

          Notices, demands or requests which Landlord or Tenant are required or
desire to give the other hereunder shall be deemed to have been properly given
for all purposes if (i) delivered against a written receipt of delivery, (ii)
mailed by express, registered or certified mail of the United States Postal
Service, return receipt requested, postage prepaid, or (iii) delivered to a
nationally recognized overnight courier service for next business day delivery,
to its addressee at such party's address as set forth above or (iv) delivered
via telecopier or facsimile transmission to the facsimile number listed above,
provided, however, that if such communication is given via telecopier or
facsimile transmission, an original counterpart of such communication shall
concurrently be sent in either the manner specified in section (ii) or (iii)
above. Each such notice, demand or request shall be deemed to have been received
upon the earlier of (i) actual receipt or refusal by the addressee or (ii) three
business days after deposit thereof at any main or branch United States post
office if sent in accordance with section (ii) above, and the next business day
after deposit thereof with the courier if sent pursuant to section (iii) above.
The parties shall notify the other of any change in address, which notification
must be at least fifteen (15) days in advance of it being effective.

                                       11
<PAGE>

         Notices may be given on behalf of any party by such party's legal
counsel.

         20. HOLDING OVER. If Tenant shall hold over after the expiration of the
Lease Term or other termination of this Lease, such holding over shall not be
deemed to be a renewal of this Lease but shall be deemed to create a
tenancy-at-sufferance and by such holding over Tenant shall continue to be bound
by all of the terms and conditions of this Lease except that during such
tenancy-at-sufferance, Tenant shall pay to Landlord (A) Rent at the rate equal
to two hundred percent (200%) of that provided for in the foregoing Paragraph 4,
as such rental amount may have been increased in accordance with the terms of
Paragraph 5 hereof, and (B) any and all operating expenses and other forms of
Additional Rent payable under the terms of this Lease. The increased Rent during
such holding over is intended to partially compensate Landlord for losses,
damages and expenses, including frustrating and delaying Landlord's ability to
secure a replacement tenant. If Landlord loses a prospective tenant because
Tenant fails to vacate the Premises on expiration of this Lease after notice to
do so, Tenant will be liable for such damages as Landlord can prove because of
Tenant's wrongful failure to vacate.

         21. RIGHT TO RELOCATE. Landlord, at its option, may substitute for
Suite 200 of the Premises other space (hereafter called "Substitute Premises")
within the 4401 Building at Research Commons Office Park before the Commencement
Date or at any time during the Term or any extension of this Lease. Landlord
shall not have the right to relocate Suite 102. Insofar as reasonably possible,
the Substitute Premises shall have a comparable square foot area and a
configuration substantially similar to the Premises. Landlord shall give Tenant
at least sixty (60) days written notice of its intention to relocate Tenant to
the Substitute Premises. This notice will be accompanied by a floor plan of the
Substitute Premises. After such notice, Tenant shall have ten (10) days within
which to agree with Landlord on the proposed new space and unless such agreement
is reached within such period of time, Landlord may terminate this Lease at the
end of the sixty (60) day period of time following the aforesaid notice.

         Landlord agrees to construct or alter, at its own expense, the
Substitute Premises as expeditiously as possible so that they are in
substantially the same condition that the Premises were in immediately prior to
the relocation. Landlord shall have the right to reuse the fixtures,
improvements and alterations used in the Premises. Tenant agrees to occupy the
Substitute Premises as soon as Landlord's work is substantially completed.

         If such relocation occurs after the Lease Term commences, Landlord
shall pay Tenant's reasonable cost of moving Tenant's furnishings, and other
property to the Substitute Premises.

         If such relocation occurs after the Commencement Date, then Landlord
shall pay Tenant's reasonable cost of moving Tenant's furnishings, telephone and
computer wiring, and other property to the Substitute Premises, and reasonable
printing costs associated with the change of address.

         Except as provided herein, Tenant agrees that all of the obligations of
this Lease, including the payment of Rent, will continue despite Tenant's
relocation to the Substitute Premises. Upon substantial completion of the
Substitute Premises, this Lease will apply to the Substitute Premises as if the
Substitute Premises had been the space originally described in this Lease.

         Except as provided above, Landlord shall not be liable or responsible
in any way for damages or injuries suffered by Tenant pursuant to the relocation
in accordance with this provision including, but not limited to, loss of
goodwill, business, or profits.

         22. BROKER'S COMMISSIONS. Tenant represents and warrants that it has
not dealt with any real estate broker, finder or other person, with respect to
this Lease in any manner. Landlord shall pay any commissions or fees that are
payable only to the above-named broker or finder with respect to this Lease.

                                       12
<PAGE>

Tenant shall indemnify and hold Landlord harmless from any and all damages
resulting from claims that may be asserted against Landlord by any other broker,
finder or other person (including, without limitation, any substitute or
replacement broker claiming to have been engaged by Tenant in the future),
claiming to have dealt with Tenant in connection with this Lease or any
amendment or extension hereto, or which may result in Tenant leasing other or
enlarged space from Landlord. The provisions of this paragraph shall survive the
termination of this Lease.

         23.  ENVIRONMENTAL COMPLIANCE.
         (a)   Tenant's Responsibility. Landlord acknowledges that Tenant shall
be operating a biotechnology and pharmaceutical laboratory in Suite 102 of the
Premises, and proper disposal of any substances in the Premises in accordance
with any applicable Environmental Laws, any license or permit issued to Tenant,
and the standards of protocol observed in the industry shall not be a breach of
this provision provided that (i) such disposal does not contaminate the
Building, Premises or real estate upon which they are located, and (ii) Tenant
does not acquire, dispose of or store any substances in a manner that makes the
Building, Premises or real estate upon which they are located any type of
regulated treatment, storage, disposal, or recycling facility (excluding
acquisition, use, short- term storage, and disposal of hazardous substances in
the ordinary course of Tenant's business as a laboratory for biotechnology and
pharmaceutical products in compliance with all Environmental Laws), or that
makes the Building, Premises or real estate upon which they are located an
illegal hazardous waste dump. Tenant shall not allow the storage or use of such
substances or materials in any manner not sanctioned by law or not in compliance
with the standards prevailing in the industry for the storage and use of such
substances or materials, nor allow to be brought onto the Property any such
materials or substances except to use in the ordinary course of Tenant's
business, and then only when written notice is given to Landlord, within a
reasonable time after the substances or materials have been stored, of the
identity of such substances or materials. For the purposes of this Section, the
written notice requirement shall be satisfied by providing Landlord periodically
with the Material Safety Data Sheets and typical quantities of all hazardous
substances used in Tenant's laboratory operations. No such notice shall be
required, however, for commercially reasonable amounts of ordinary office
supplies and janitorial supplies. Tenant shall execute affidavits,
representations and the like, from time to time, at Landlord's request,
concerning Tenant's best knowledge and belief regarding the presence of
hazardous substances or materials on the Premises. Tenant covenants and agrees
that the Premises will at all times during its use or occupancy thereof be kept
and maintained so as to comply with all now existing or hereafter enacted or
issued statutes, laws, rules, ordinances, orders, permits and regulations of all
state, federal, local and other governmental and regulatory authorities,
agencies and bodies applicable to the Premises, pertaining to environmental
matters or regulating, prohibiting or otherwise having to do with asbestos and
all other toxic, radioactive, or hazardous wastes or material including, but not
limited to, the Federal Clean Air Act, the Federal Water Pollution Control Act,
and the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as from time to time amended (all hereafter collectively called "Laws").

         (b)   Tenant's Liability. Tenant shall hold Landlord free, harmless,
and indemnified from any penalty, fine, claim, demand, liability, cost, or
charge whatsoever which Landlord shall incur, or which Landlord would otherwise
incur, by reason of Tenant's failure to comply with this Paragraph 23 including,
but not limited to: (1) the cost of bringing the Premises into compliance with
all Laws; (2) the reasonable cost of all appropriate tests and examinations of
the Premises to confirm that the Premises have been brought into compliance with
all Laws; and (3) the reasonable fees and expenses of Landlord's attorneys,
engineers, and consultants incurred by Landlord in enforcing and confirming
compliance with this Paragraph 23.

         (c)   Property. For the purposes of this Paragraph 23, the Premises
shall include the real estate covered by this Lease; all improvements thereon;
all personal property used in connection with the Premises (including that owned
by Tenant); and the soil, ground water, and surface water of the Premises, if
the Premises include any ground area.

                                       13
<PAGE>

         (d)   Inspections by Landlord. Landlord and its engineers, technicians,
and consultants (collectively the "Auditors") may, from time to time as Landlord
deems appropriate, conduct periodic tests and examinations ("Audits") of the
Premises to confirm and monitor Tenant's compliance with this Paragraph 23. Such
Audits shall be conducted in such a manner as to minimize the interference with
Tenant's permitted activities on the Premises and, except in the event that the
Audit is being conducted due to reasonable suspicions that this Paragraph 23 is
being violated, with at least two (2) days prior oral, written or electronic
notice to Tenant; however in all cases, the Audits shall be of such nature and
scope as shall be reasonably required by then existing technology to confirm
Tenant's compliance with this Paragraph 23. Tenant shall fully cooperate with
Landlord and its Auditors in the conduct of such Audits. The cost of such Audits
shall be paid by Landlord unless an Audit shall disclose a material failure of
Tenant to comply with this Paragraph 23, in which case, the cost of such Audit,
and the cost of all subsequent Audits made during the Lease Term and within
thirty (30) days thereafter (not to exceed two [2] such Audits per calendar
year), shall be paid for on demand by Tenant.

         (e)   Landlord's Liability. Provided, however, the foregoing covenants
and undertakings of Tenant contained in this Paragraph 23 shall not apply to any
condition or matter constituting a violation of any Law: (1) which existed prior
to the commencement of Tenant's use or occupancy of the Premises; (2) which was
not caused, in whole or in part, by Tenant or Tenant's agents, employees,
officers, partners, contractors or invitees; or (3) to the extent such violation
is caused by, or results from the acts or neglects of Landlord or Landlord's
agents, employees, officers, partners, contractors, guests, or invitees.

         (f)   Tenant's Liability After Termination of Lease. The covenants
contained in this Paragraph 23 shall survive the expiration or termination of
this Lease, and shall continue for so long as Landlord and its successors and
assigns may be subject to any expense, liability, charge, penalty, or obligation
against which Tenant has agreed to indemnify Landlord under this Paragraph 23.

         24.  MISCELLANEOUS. Headings of paragraphs are for convenience only and
shall not be considered in construing the meaning of the contents of such
paragraph. The invalidity of any portion of this Lease shall not have any effect
on the balance hereof. Should Landlord institute any legal proceedings against
Tenant for breach of any provision herein contained, and prevail in such action,
Tenant shall in addition be liable for the costs and expenses of Landlord,
including its reasonable attorneys' fees (at all tribunal levels). This
agreement shall be binding upon the respective parties hereto, and upon their
heirs, executors, successors and assigns. This agreement supersedes and cancels
all prior negotiations between the parties, and no changes shall be effective
unless in writing signed by both parties. Landlord may sell the Premises or the
Building without affecting the obligations of Tenant hereunder; upon the sale of
the Premises or the Building, Landlord shall be relieved of all responsibility
for the Premises and shall be released from any liability thereafter accruing
under this Lease. If any security deposit or prepaid Rent has been paid by
Tenant, Landlord may transfer the security deposit or prepaid Rent to Landlord's
successor. This Lease may not be recorded without Landlord's prior written
consent, but Tenant agrees on request of Landlord to execute a memorandum hereof
for recording purposes. The singular shall include the plural, and the
masculine, feminine or neuter includes the other. If Landlord, or its employees,
officers, directors, stockholders or partners are ordered to pay Tenant a money
judgment because of Landlord's default under this Lease, said money judgment may
only be enforced against and satisfied out of: (i) Landlord's interest in the
Building in which the Premises are located including the rental income and
proceeds from sale; and (ii) any insurance or condemnation proceeds received
because of damage or condemnation to, or of, said Building that are available
for use by Landlord. No other assets of Landlord or said other parties
exculpated by the preceding sentence shall be liable for, or subject to, any
such money judgment.

         25.  SPECIAL CONDITIONS OR ADDENDUMS. The following special conditions,
if any, shall apply, and where in conflict with earlier provisions in this Lease
shall control. If any addendums are noted below, such addendums are incorporated
herein and made a part of this Lease. If there are no special conditions or
addendums, the word NONE shall be written in the blank below.

                                       14
<PAGE>

     25.1.   Tenant Improvements. Landlord shall make improvements to the
          Premises prior to the Commencement Date, as provided in Lease Addendum
          Number One attached hereto and incorporated here through reference.

     25.2.   Operating Expense Pass Throughs. Tenant shall pay for operating
          expenses as provided in Lease Addendum Number Two attached hereto and
          incorporated here through reference.

     25.3.   Option to Extend Lease. Tenant shall have the right to extend this
          Lease as provided in Lease Addendum Number Three attached hereto.

     25.4.   ADA Provisions. The Americans with Disabilities Act provisions
          attached as Lease Addendum Number Four are incorporated here through
          reference.

     25.5.   Generator. Tenant shall have the right to install a generator to
          serve the Premises (the "Generator"). Tenant's right to install the
          Generator is subject to the following terms and conditions:

             (a)   Tenant shall be fully responsible for all costs related to
                   the purchase, installation and maintenance of the Generator;

             (b)   Tenant shall be responsible for obtaining any and all permits
                   or licenses required for installing the Generator and operate
                   the Generator in compliance with any and all applicable laws
                   or regulations;

             (c)   Prior to installation, Tenant shall provide Landlord with a
                   cut sheet of the Generator and a copy or copies of
                   certificates of insurance showing that the Generator has been
                   insured according to this Lease and Landlord shall not have
                   any responsibilities related to insuring the Generator;

             (d)   Tenant shall provide Landlord with written proof that all gas
                   and electrical meters associated with the Generator have been
                   placed in Tenant's name;

             (e)   Tenant shall be fully responsible for maintaining the
                   Generator. The Generator shall, at all times, be maintained
                   and operated in accordance with applicable safety
                   regulations;

             (f)   The Generator must be installed on the Building grounds at a
                   location determined by Landlord;

             (g)   If needed, Landlord will screen the Generator by landscaping
                   it at Tenant's reasonable expense and as determined by
                   Landlord. Any costs of Landlord in maintaining the
                   landscaping screen shall be paid by Tenant;

             (h)   Landlord shall have the right to approve the contractor hired
                   by Tenant to install the Generator. The installation shall be
                   completed in a manner that causes a minimum amount of
                   interference with the operations of the Building;

             (i)   Tenant shall be responsible for removing the Generator upon
                   vacating the Premises and restoring the location site to its
                   original state and any related costs, including the removal
                   of any concrete pad (other than any concrete pad existing at
                   the time that the Generator is installed) and providing for
                   the appropriate capping or abandonment of any natural gas
                   feed lines.

                                       15
<PAGE>

             (j)   Tenant shall be responsible for any environmental clean-up
                   costs and other environmental costs related to the
                   installation and use of the Generator.

       25.6. Right to Cancel Existing Lease. Landlord agrees that it will cancel
       Tenant's existing lease with Landlord in the Cape Fear Building, Research
       Triangle Park, Durham County, North Carolina, once Tenant has signed this
       Lease and five (5) calendar days after Tenant has occupied Suite 200. If
       requested by Landlord, Tenant shall be required to enter a Termination
       Agreement documenting the cancellation.

                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
                        [SIGNATURE BLOCKS ON NEXT PAGE]

                                       16
<PAGE>

IN WITNESS WHEREOF, Landlord and Tenant have executed this lease in duplicate
originals, all as of the day and year first above written.

TENANT:

INCARA PHARMACEUTICALS CORPORATION
a Delaware corporation

          By:_________________________________________________________
          Name:_______________________________________________________
          Title:______________________________________________________

          Date:_______________________________________________________

          Attest:_____________________________________________________
                  ___________________________________________ Secretary

          Affix Corporate Seal:

LANDLORD:

HIGHWOODS REALTY LIMITED PARTNERSHIP
a North Carolina limited partnership
     By: Highwoods Properties, Inc., its general partner
     a Maryland corporation

          By:_________________________________________________________
                Marcus H. Jackson, Senior Vice President

          Date:_______________________________________________________

          Attest:_____________________________________________________
                   Kathleen E. Kowalski, Assistant Secretary

         Affix Corporate Seal:

                                       17
<PAGE>

                                ACKNOWLEDGMENTS

STATE OF _______________________                     (Corporation)
COUNTY OF ______________________

         I, the undersigned Notary Public, certify that_____________________
personally came before me this day and acknowledged that ____he is
_____________________ Secretary of Incara Pharmaceuticals Corporation, a
Delaware corporation, and that by authority duly given and as the act of the
corporation, the foregoing instrument was signed in its name by
_______________________, as its _________________ President, attested by
________________________________ as its ____________________ Secretary, and
sealed with its common corporate seal.

         WITNESS my hand and notarial seal, this ____ day of __________________,
20 ______.

Notary Public: ______________________________
My Commission Expires: _____________________

                                       18
<PAGE>

                     LEASE ADDENDUM NUMBER ONE [ALLOWANCE]

     WORKLETTER. This Lease Addendum Number One (the "First Addendum") shall set
forth the rights and obligations of Landlord and Tenant with respect to space
planning, engineering, final workshop drawings, and the construction and
installation of any improvements to the Premises to be completed before the
Commencement Date ("Tenant Improvements"). This Firt Addendum contemplates that
the performance of this work will proceed in four stages in accordance with the
following schedule: (i) preparation of a space plan; (ii) final design and
engineering and preparation of final plans and working drawings; (iii)
preparation by the Contractor (as hereinafter defined) of an estimate of the
additional cost of the initial Tenant Improvements; (iv) submission and approval
of plans by appropriate governmental authorities and construction and
installation of the Tenant Improvements by the Commencement Date.

     In consideration of the mutual covenants hereinafter contained, Landlord
and Tenant do mutually agree to the following:

1.   Space Planning, Design and Working Drawings. The Space Plan for Suite 200
     -------------------------------------------
     has been approved by Landlord. In regards to Suite 102 Tenant shall,
     subject to Landlord's approval, designate architects and engineers, who, at
     Tenant's expense, which expense shall be deducted from the Allowance (as
     hereinafter defined), will do the following:

     a.   Attend a reasonable number of meetings with Tenant and Landlord's
          agent to define Tenant's requirements. One complete space plan for
          each Suite shall be provided by the architect. Landlord shall approve
          or reject with written reason the space plan in writing, within two
          (2) business days after receipt of the space plan. The designated
          architect shall then revise the space plan and provide the revised
          space plan to Landlord within two (2) business days of its receipt
          from Landlord. Landlord shall then approve such space plan within two
          (2) business days of its receipt.

     b.   Complete construction drawings for Tenant's partition layout,
          reflected ceiling grid, telephone and electrical outlets, keying, and
          finish schedule (subject to the limitation expressed in Section 2
          below).

     c.   Complete building standard mechanical plans where necessary (for
          installation of air conditioning system and duct work, and heating and
          electrical facilities) for the work to be done in the Premises.

     d.   All plans and working drawings for the construction and completion of
          the Premises (the "Plans") shall be subject to Landlord's prior
          written approval. Any changes or modifications Tenant desires to make
          to the Plans shall also be subject to Landlord's prior approval.
          Landlord agrees that it will not unreasonably withhold its approval of
          the Plans, or of any changes or modifications thereof; provided,
          however, Landlord shall have sole and absolute discretion to approve
          or disapprove any improvements that will be visible to the exterior of
          the Premises, or which may affect the structural integrity of the
          Building. Any approval of the Plans by Landlord shall not constitute
          approval of any Delays caused by Tenant and shall not be deemed a
          waiver of any rights or remedies that may arise as a result of such
          Delays. Landlord may condition its approval of the Plans if: (i) the
          Plans require design elements or materials that would cause Landlord
          to deliver the Premises to Tenant after the scheduled Commencement
          Date, or (ii) the estimated cost for any improvements under the Plan
          is more than the Allowance.

2.   Allowance. Landlord agrees, at its sole cost and expense to provide an
     ---------
     allowance of up to $191,130.00 (or approximately $36.70 per rentable square
     foot), to design, engineer, install, supply and otherwise to construct the
     Tenant Improvements in Suite 102 of the Premises that will become a part of
     the Building and to provide an allowance of up to $130,510.00 (or $10.00
     per rentable square foot), to design, engineer, install, supply and
     otherwise to construct the Tenant Improvements in Suite 200 of the

                                       1
<PAGE>

     Premises that will become a part of the Building (the allowances for Suite
     102 and Suite 200 shall be referred to as the "Allowance"); otherwise,
     Tenant is fully responsible for the payment of all costs in connection with
     the Tenant Improvements. While the Allowance has been allocated between the
     two Suites, the Allowance may be used to make improvements throughout the
     Premises, even if the costs of improvements to one Suite exceed the
     allocated Allowance to that Suite.

3.   Signage and Keying. Door and/or directory signage and suite keying in
     accordance with building standards shall be provided and installed by
     Landlord and deducted from the Allowance. Tenant shall have the right to
     install its own security system in the Premises provided that: (a) Landlord
     approves the system and the location of its installation; (b) Landlord is
     provided with keys, code information and any other necessary information or
     item needed to access the Premises by the system; (c) the system is
     installed with the least amount of interference to other tenants in the
     Building; and (d) at Landlord's direction the system is removed at the end
     of the Term or upon Tenant vacating the Premises and any restoration costs
     incurred by the removal are paid by Tenant.

4.   Work and Materials at Tenant's Expense.
     ---------------------------------------

     a.   Prior to commencing and providing any such work or materials to the
          Premises, Landlord shall select a licensed general contractor or
          contractors (the "Contractor") to construct and install the Tenant
          Improvements. The Tenant Improvements work consists of two components:
          Office Improvements and Laboratory Improvements.

          (i)  Landlord has already provided Tenant the written estimates for
          the cost of the Office Improvements.

          (ii)  The contractor shall seek at least 3 competitive bids for all
          subcontract work in connection with the Laboratory Improvements.
          Tenant may, subject to Landlord's approval, select subcontractors to
          submit bids for the subcontract work. Such subcontractors must be
          licensed in North Carolina and have proper credentials and bonding and
          insurance qualifications to be considered for the work. Landlord shall
          submit to Tenant written estimates of the cost of the Laboratory
          Improvements work and materials.

          (iii) Tenant shall have five (5) business days to review and approve
          the written estimates for the Tenant Improvement work. In the event
          Tenant does not approve the written estimates, then Tenant shall have
          three (3) additional business days to verify or negotiate pricing with
          the general contractor or subcontractors, modify the Plans, or take
          other similar action with respect to the pricing.. Landlord shall not
          be authorized to proceed with construction of the Tenant Improvements
          until such estimate is mutually agreed upon and approved in writing
          and delivered to Landlord; provided, however, any delays in approval
          of the pricing beyond the eight (8) business days referenced above
          shall constitute a Tenant Delay pursuant to paragraph 6b(ii), below.

     b.   Tenant agrees to pay to Landlord, promptly upon being billed therefor,
          all costs and expenses in excess of the Allowance incurred in
          connection with the Tenant Improvements. Such costs and expenses shall
          include all amounts charged by the Contractor for performing such work
          and providing such materials (including the Contractor's general
          conditions, overhead and profit). Tenant will be billed for such costs
          and expenses in relation to Suite 102 as follows: (i) twenty-five
          percent (25%) of such costs and expenses shall be due and payable upon
          Tenant's approval of the cost estimates for the Tenant Improvements;
          (ii) fifty percent (50%) of such costs and expenses shall be due and
          payable when such work is substantially completed as defined in
          Section 6 below; (iii) twenty-five percent (25%) of such costs and
          expenses shall be due and payable upon final completion of such work.
          If unpaid within ten (10) days after receipt of invoice, then the
          outstanding balance shall accrue at the rate of one percent (1%) per
          month until paid in full.

                                       2
<PAGE>

5.   Tenant Plan Delivery Date.
     -------------------------

     a.   Tenant covenants and agrees that, Tenant shall be solely responsible
          for the timely completion of the Plans and it is hereby understood
          time is of the essence. The parties acknowledge that the Tenant Plans
          have been completed for Suite 200.

     b.   Tenant covenants and agrees to deliver to Landlord the final Plans for
          the Tenant Improvements to Suite 102 on or before January 31, 2001
          (the "Tenant Plan Delivery Date"). It is vital that the final Plans be
          delivered to Landlord by the Tenant Plan Delivery Date in order to
          allow Landlord sufficient time to review such Plans, to discuss with
          Tenant any changes therein which Landlord believes to be necessary or
          desirable, to enable the Contractor to prepare an estimate of the cost
          of the initial Tenant Improvements, and to substantially complete the
          Premises within the time frame provided in the Lease.

6.   Substantial Completion.
     ----------------------

     a.   The Premises shall be deemed to be substantially complete when the
          work to be performed pursuant to the Plans approved by Landlord and
          Tenant has been completed and approved by the appropriate governmental
          authorities, as certified by Landlord and the architect, except for
          items of work and adjustment of equipment and fixtures that can be
          completed after the Premises are occupied without causing material
          interference with Tenant's use of the Premises (i.e., "punch list
          items").

     b.   Notwithstanding the foregoing, if Landlord shall be delayed in
          substantially completing the Premises as a result of:

          (i)   Tenant's failure to furnish to Landlord the final Plans on or
                before the Tenant Plan Delivery Date; or

          (ii)  Tenant's failure to furnish the Plans and/or Tenant's failure to
                approve Landlord's cost estimates within the time specified in
                Section 4 herein and/or Tenant's failure to approve the space
                plan within the time specified in Section 1 herein; and/or
                Tenant's failure to respond to a change order within the time
                stated in the change order; or

          (iii) Tenant's changes in the Tenant Improvements or the Plans
                (notwithstanding Landlord's approval of any such changes); or

          (iv)  Tenant's request for changes in or modifications to the Plans
                subsequent to the Tenant Plan Delivery Date; or

          (v)   Inability to obtain non-building standard materials, finishes or
                installations requested by Tenant; or

          (vi)  The performance of any work by any person, firm or corporation
                employed or retained by Tenant; or

          (vii) Any other act or omission by Tenant or its agents,
                representatives, and/or employees;

          then, in any such event, for purposes of determining the Commencement
          Date, the Premises shall be deemed to have been substantially
          completed on the date that Landlord and architect determine that the
          Premises would have been substantially completed if such Delay or
          Delays had not occurred.

                                       3
<PAGE>

7.   Materials and Workmanship. Landlord covenants and agrees that all work
     -------------------------
     performed in connection with the construction of the Premises shall be
     performed in a good and workmanlike manner and in accordance with all
     applicable laws and regulations and with the final approved Plans. Landlord
     agrees to exercise due diligence in completing the construction of the
     Premises.

8.   Repairs and Corrections. Landlord agrees to repair and correct any work or
     -----------------------
     materials installed by Landlord or the Contractor in the Premises that
     prove defective as a result of faulty materials, equipment, or workmanship
     and that first appear within ninety (90) days after the date of occupancy
     of the Premises. Notwithstanding the foregoing, Landlord shall not be
     responsible to repair or correct any defective work or materials installed
     by Tenant or any contractor other than the designated Contractor, or any
     work or materials that prove defective as a result of any act or omission
     of Tenant or any of its employees, agents, invitees, licensees, subtenants,
     customers, clients, or guests.

9.   Possession by Tenant. The taking of possession of the Premises by Tenant
     --------------------
     shall constitute an acknowledgment by Tenant that the Premises are in good
     condition and that all work and materials provided are satisfactory as of
     such date of occupancy, except as to any defects or incomplete work that
     are described in a written notice given by Tenant to Landlord no later than
     thirty (30) days after Tenant commences occupancy of the Premises, and
     except for any equipment that is used seasonally if Tenant takes possession
     of the Premises during a season when such equipment is not in use.

10.  Access During Construction. During construction of the Tenant Improvements
     --------------------------
     in the Premises with the approval of Landlord, Tenant shall be permitted
     reasonable access to the Premises, as long as such access does not
     interfere with or delay construction work on the Premises for the purposes
     of taking measurements, making plans, installing trade fixtures, and doing
     such other work as may be appropriate or desirable to enable Tenant
     eventually to assume possession of and operate in the Premises. Tenant
     agrees that any entry prior to the Commencement Date shall be deemed to be
     under the terms and conditions of this Lease, except as to the covenant to
     pay rent, and further agrees that Landlord shall not be liable in any way
     for any injury, loss or damage that may occur to any of Tenant's work or
     installations made in the Premises or to property placed therein, and
     Tenant agrees to protect, defend, indemnify and save harmless Landlord and
     Landlord's agents and employees from any liabilities, costs, damages, fees
     and expenses arising out of or in connection with the activities of Tenant
     or its agents, contractors, suppliers or workers in or about the Premises
     and Building.

                                       4
<PAGE>

              LEASE ADDENDUM NUMBER TWO [BASE YEAR calendar year]

         ADDITIONAL RENT - OPERATING EXPENSE PASS THROUGHS. For the calendar
year commencing on January 1, 2002 and for each calendar year thereafter, Tenant
shall pay to Landlord as Additional Rent, in a lump sum, Tenant's Proportionate
Share of any increase in Operating Expenses (as hereinafter defined) incurred by
Landlord's operation or maintenance of the Building above the Operating Expenses
Landlord incurred during the Base Year (as hereinafter defined). For purposes of
calculating Tenant's Proportionate Share of real and personal property taxes,
Landlord shall use the Base Year or the year in which the Building and
improvements are completed and are fully assessed, whichever shall be later.
Tenant's Proportionate Share shall be calculated by dividing the approximately
18,258 rentable square feet of the Demised Premises by the approximately 115,000
net rentable square feet of the Building, which equals 15.8765%. If during any
calendar year the occupancy of the rentable area of the Building is less than
full, then Operating Expenses (as hereinafter defined) will be adjusted for such
calendar year at a rate of 95% occupancy.

         For the calendar year commencing on January 1, 2002 and for each
calendar year thereafter during the Term, Landlord shall estimate the amount the
Operating Expenses shall increase for such calendar year above the Operating
Expenses incurred during the Base Year. Landlord shall send to Tenant a written
statement of the amount of Tenant's Proportionate Share of any estimated
increase in Operating Expenses and Tenant shall pay to Landlord, monthly or
annually, Tenant's Proportionate Share of such increase in Operating Expenses.
Within ninety (90) days after the end of each calendar year or as soon as
possible thereafter, Landlord shall send a copy of the Annual Statement to
Tenant. Pursuant to the Annual Statement, Tenant shall pay to Landlord
Additional Rent as owed or Landlord shall adjust Tenant's Rent payments if
Landlord owes Tenant a credit, such payment or adjustment to be made within
thirty (30) days after the Annual Statement is received by Tenant. After the
Termination Date, Landlord shall send Tenant the final Annual Statement for the
Term, and Tenant shall pay to Landlord Additional Rent as owed or if Landlord
owes Tenant a credit, then Landlord shall pay Tenant a refund. If this Lease
expires or terminates on a day other than December 31, then Additional Rent
shall be prorated on a 365-day calendar year (or 366 if a leap year). During the
Term, Landlord shall provide Tenant with a detailed statement of Operating
Expenses for the previous year, within thirty (30) days of Tenant's written
request for the same.

         If Tenant disputes the amount of Operating Expenses as set forth in the
Annual Statement from the Landlord, then Tenant may have Landlord's books and
records relating to Operating Expenses audited by a qualified professional
selected by Tenant or by Tenant itself, provided (i) Tenant gives written notice
of the audit within forty-five (45) days of Tenant's receipt of the Annual
Statement, and (ii) Tenant is not in default under the Lease after the passage
of any applicable cure period. No subtenant shall have any right to conduct an
audit and no assigns shall conduct an audit for any period during which such
assignee was not in possession of the Premises.

         Books and records necessary to accomplish any audit permitted under
this Section shall be retained for twelve months after the end of each calendar
year, and on receipt of notice of Tenant's dispute of the operating expenses
shall be made available to Tenant to conduct the audit, which (at Landlord's
option) may be either at the Premises, or at Landlord's office in Raleigh, North
Carolina. If Tenant and Landlord dispute the amount of operating expenses after
Tenant's Audit, then Landlord's independent certified public accountant shall
consult with Tenant's professional to reconcile any discrepancies.

         In the event that the Tenant elects to have a professional audit
Landlord's Operating Expenses as provided in this Lease, such audit must be
conducted by an independent nationally or regionally recognized accounting firm
that is not being compensated by Tenant on a contingency fee basis. All
information obtained through such audit as well as any compromise, settlement or
adjustment reached as a result of such audit shall be held in strict confidence
by Tenant and its officers, agents, and employees and as a condition to such
audit, Tenant's auditor shall execute a written agreement agreeing that the
auditor is not being compensated on a

                                       1
<PAGE>

contingency fee basis and that all information obtained through such audit as
well as any compromise, settlement or adjustment reached as a result of such
audit, shall be held in strict confidence and shall not be revealed in any
manner to any person except upon the prior written consent of the Landlord,
which consent may be withheld in Landlord's sole discretion, or if required
pursuant to any litigation between Landlord and Tenant materially related to the
facts disclosed by such audit, or if required by law.

         If Operating Expenses were overstated by ten percent (10%) or more,
then Landlord shall reimburse Tenant for its reasonable audit costs; otherwise,
Tenant shall pay its own costs and shall reimburse Landlord for the reasonable
costs of Landlord's certified public accountant.

         As used herein, the following terms shall have the following meanings
ascribed to them:

         "Base Year" shall mean the twelve month period beginning on the January
1, 2001 and ending on December 31, 2001.

         "Operating Expenses" shall mean direct costs of operation, repair and
maintenance as determined by standard accounting practices, including, but not
limited to ad valorem real and personal property taxes, hazard and liability
insurance premiums, utilities, heat, air conditioning, janitorial service,
labor, materials, supplies, equipment and tools, permits, licenses, inspection
fees, management fees, and common area expenses; provided, however, the term
"Operating Expenses" shall not include depreciation on the Building or equipment
therein, interest, executive salaries, real estate brokers' commissions, or
other expenses that do not relate to the operation of the Building. The annual
statement of Operating Expenses shall be accounted for and reported in
accordance with generally accepted accounting principles (the "Annual
Statement").

                                       2
<PAGE>

                          LEASE ADDENDUM NUMBER THREE
                          OPTION TO EXTEND LEASE TERM

1.   Option to Extend. Tenant shall have the right and option to extend the
Lease (the "Renewal Option") for an additional period of three (3) years (the
"Renewal Lease Terms") (a separate notice is required for each Renewal Lease
Term); provided, however, such Renewal Option is contingent upon the following
(i) Tenant is not in default at the time Tenant gives Landlord written notice of
Tenant's intention to exercise the Renewal Option; (ii) upon the Termination
Date, Tenant has no outstanding default; (iii) no event has occurred that upon
notice or the passage of time would constitute a default; (iv) Tenant has not
been in default of the Lease more than two times in any twelve (12) month
period; and (v) Tenant is occupying the Demised Premises. Tenant shall exercise
the Renewal Option by giving Landlord written notice at least two hundred and
seventy (270) days prior to the Termination Date or the last day of any Renewal
Lease Term. If Tenant fails to give such notice to Landlord prior to said two
hundred and seventy (270) day period, then Tenant shall forfeit the Renewal
Option. If Tenant exercises the Renewal Option, then during any such Renewal
Lease Term, Landlord and Tenant's respective rights, duties and obligations
shall be governed by the terms and conditions of the Lease.

2.   Term. If Tenant exercises the Renewal Option, then during any such Renewal
Lease Term, all references to the term "Term", as used in the Lease, shall mean
the "Renewal Lease Term".

3.   Termination of Renewal Option on Transfer by Tenant. In the event Landlord
consents to an assignment or sublease by Tenant, then the Renewal Option shall
automatically terminate unless otherwise agreed in writing by Landlord.

4.   Base Rent for Renewal Lease Term. If Tenant exercises the Renewal Option,
then Base Rent for the Renewal Lease Term shall be the lesser of: (a) the
then-existing market rate; or (b) Five percent (5%) over Base Rent at the time
that the Renewal Option is exercised (to be escalated annually by three percent
(3%) within the Renewal Lease Term).

                                       1
<PAGE>

                          LEASE ADDENDUM NUMBER FOUR
                   AMERICANS WITH DISABILITIES ACT LANGUAGE

     Landlord and Tenant agree to the following with regards to The Americans
with Disabilities Act and related laws:

     Tenant, at Tenant's sole expense, shall comply with all laws, rules,
orders, ordinances, directions, regulations and requirements of federal, state,
county and municipal authorities now in force, which shall impose any duty upon
Landlord or Tenant with respect to the use, occupation or alteration of the
Demised Premises, and Tenant shall use all reasonable efforts to fully comply
with The Americans With Disabilities Act of 1990 (the "ADA"). Landlord's
responsibility for compliance with ADA shall include the common areas and
restrooms of the Building, but not the Demised Premises.

     If Tenant receives any notices alleging violation of ADA relating to any
portion of the Building or of the Demised Premises; any written claims or
threats regarding non-compliance with ADA and relating to any portion of the
Building or of the Demised Premises; or any governmental or regulatory actions
or investigations instituted or threatened regarding non-compliance with ADA and
relating to any portion of the Building or of the Demised Premises, then Tenant
shall, within ten (10) days after receipt of such, advise Landlord in writing,
and provide Landlord with copies of any such claim, threat, action or
investigation (as applicable).

                                       1

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