AEOLUS PHARMACEUTICALS, INC.
LETTER DATED MAY 17, 2004
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<DESCRIPTION>LETTER DATED MAY 17, 2004
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2"><B>Exhibit 10.106 </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT
SIZE="1">&nbsp;</FONT></P>
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<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>WIL House, Shannon Business Park,</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>Shannon,
County Clare, Ireland</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>T (+353 61) 362533, (+353 1) 709 4040</B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT FACE="Times New Roman"
SIZE="2"><B>F (+353 61) 362097, (+353 1) 709 4083</B></FONT></P></TD></TR>
</TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">May 17, 2004 </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Incara Pharmaceuticals Corporation </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">P.O. Box 14287 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">79 T.W. Alexander Drive </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">4401 Research Commons, Suite 200 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Research Triangle Park, North Carolina
27709 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Attn: Richard Reichow, Secretary </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Fax: (919) 558-8686 </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2">Dear Mr. Reichow: </FONT></P> <P STYLE="margin-top:0px;margin-bottom:-6px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Under Section 5(b) of the
Securities Purchase Agreement dated as of December 21, 2000 among Incara Pharmaceuticals Corporation (&#147;Incara&#148;), Elan International Services, Ltd. (&#147;EIS&#148;) and Elan Pharma International Limited (&#147;EPIL&#148;), so long as EIS
or its affiliates, directly or indirectly, collectively own at least 5% of Incara on a fully diluted basis EIS shall be entitled to nominate one director for election to Incara&#146;s board of directors. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">EIS has not previously exercised such right and by this letter EIS and EPIL renounce the
right granted to EIS under Section 5(b) to nominate a director and covenant that EIS will not exercise such renounced right or attempt to assign or assign such renounced right to any person or entity. EIS and EPIL represent and warrant that no other
entity has been assigned such renounced right prior to the date of this letter and that, other than EIS, no person or entity, including any affiliate of EIS or EPIL, has any right, claim or interest in or to such renounced right. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Please file this letter in your corporate records. If you have any questions please call EIS
or EPIL. Thank you for your attention to this matter. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<TD VALIGN="top" COLSPAN="3"><FONT FACE="Times New Roman" SIZE="2"><B>Elan International Services, Limited</B></FONT></TD>
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<TD VALIGN="bottom" COLSPAN="3"><FONT FACE="Times New Roman" SIZE="2"><B>Elan Pharma International Limited</B></FONT></TD></TR>
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<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">By:</FONT></TD>
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<TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">/s/ D.M. Buryj</FONT></P><HR WIDTH="69%" SIZE="1" NOSHADE COLOR="#000000" ALIGN="left"></TD>
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<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">By:</FONT></TD>
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<TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">/s/ Liam Daniel</FONT></P><HR WIDTH="69%" SIZE="1" NOSHADE COLOR="#000000" ALIGN="left"></TD></TR>
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<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Name:</FONT></TD>
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<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">D.M. Buryj</FONT></TD>
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<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Name:</FONT></TD>
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<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Liam Daniel</FONT></TD></TR>
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<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Title:</FONT></TD>
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<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Vice President</FONT></TD>
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<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Director</FONT></TD></TR>
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<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2"><B>Elan Pharma International Limited</B></FONT></TD></TR>
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<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2"><B>a member of the Elan Group</B></FONT></TD></TR>
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<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2"><B>Directors: P. Breen, S. Cooke, W.F. Daniel,</B></FONT></TD></TR>
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<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>BIOPHARMACEUTICALS </B></FONT><FONT FACE="SYMBOL" SIZE="2" COLOR="#000000"><B>&#183;</B></FONT><FONT FACE="Times New Roman" SIZE="2"><B><B></B> DRUG DELIVERY</B></FONT></TD>
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<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2"><B>S. Mulligan, M. O&#146;Reilly.</B></FONT></TD></TR>
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<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2"><B>Registered Office: WIL House, Shannon Business Park, Shannon, Co. Claire</B></FONT></TD></TR>
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<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2"><B>Registered in Ireland, No. 222276</B></FONT></TD></TR>
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