AOLS Aeolus Pharmaceuticals Inc (CE)

 

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 10, 2015

(Exact name of registrant as specified in its charter)

(State or other jurisdiction of incorporation)

26361 Crown Valley Parkway, Suite 150

Mission Viejo, California 92691

(Address of Principal Executive Offices, Including Zip Code)

949-481-9825

(Registrant's Telephone Number, Including Area Code)

__________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

                                                                                                                                                                                        

Item 1.01. Entry into a Material Definitive Agreement.

On December 10, 2015, Aeolus Pharmaceuticals, Inc. (the "Company") entered into securities purchase agreements (the "Purchase Agreements") with certain accredited investors (the "Purchasers") to sell and issue to the Purchasers in reliance on Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"), and Rule 506 promulgated thereunder: (i) an aggregate of 10,215,274 common units (the "Common Units") issued at a purchase price of $0.22 per unit, and (ii) 4,500 preferred stock units (the "Preferred Units") issued to existing investors, Biotechnology Value Fund, L.P. and other affiliates of BVF Partners, L.P., for an aggregate purchase price of $4.5 million, resulting in aggregate gross proceeds to the Company of approximately $6.75 million (collectively, the "Private Placement").

In connection with the Private Placement, the Company entered into a Registration Rights Agreement with the Purchasers. Pursuant to the Registration Rights Agreement, the Company agreed to file a registration statement with the Securities and Exchange Commission (the "Commission") within 45 days from closing to register the resale of the Common Shares and shares of common stock issuable upon exercise of the Warrants or the conversion of the Series C Stock (collectively, the "Registrable Securities").  The Company also agreed to use its best efforts to have the registration statement declared effective as promptly as possible after the filing thereof, but in any event within 120 days (150 days if the Company receives comments from the Commission) from the filing date.

In the event (i) the registration statement has not been filed by the agreed upon filing date, (ii) an acceleration request has not been filed within five trading days of the date which the Company is notified that the registration statement will not be reviewed by the Commission staff or is not subject to further review and comment by the Commission staff, or (iii) the registration statement has not been declared effective by the required effectiveness date, in each case other than by reason of a permissible delay (each such event, a "Registration Default"), then the Company has agreed to pay each Purchaser as liquidated damages an amount equal to 0.5% of the purchase price paid by each such Purchaser with respect to any Registrable Securities then held and not registered pursuant to an effective registration statement, per each 30-day period or portion thereof during which the Registration Default remains uncured thereafter, subject to certain limitations.

In addition, the Company paid cash fees totaling an aggregate of $194,735 and issued warrants to purchase an aggregate of 1,214,027 Common Shares, in each case to registered broker-dealer placement agents for services rendered in the Private Placement.  The warrants issued to the placement agents are substantially similar to the Warrants.

The foregoing description of the Private Placement does not purport to be complete and is qualified in its entirety by reference to the form of Series C Stock, the form of Registration Rights Agreement and the form of Warrant entered into between the Company and each of the Purchasers, copies of which are attached hereto as Exhibits 10.1, 10.2 and 10.3, respectively, and are incorporated herein by reference.

Item 3.02. Unregistered Sale of Equity Securities.

The information contained in Item 1.01 above with respect to the Private Placement is incorporated by this reference into this Item 3.02.  The securities described in Item 1.01 were offered and sold in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act and Rule 506 promulgated thereunder.  The securities purchase agreements contain representations to support the Company's reasonable belief that, among other things, the Purchasers acquired the securities for their own account and not with a view to the distribution thereof, and that each Purchaser is an "accredited investor" as such term is defined in Regulation D promulgated under the Securities Act.  The securities described in Item 1.01 above are deemed to be restricted securities for purposes of the Securities Act and the certificates representing the securities sold in connection with the Private Placement shall bear legends to that effect.  Accordingly, the securities sold in connection with the Private Placement may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

Item 5.03.   Amendment to Certificate of Incorporation

In preparation for the issuance of Series C Stock in the Private Placement, the Company amended its certification of incorporation on December 1, 2015 (the effective date) by filing the Certificate of Designation for Series C Stock of the Company attached hereto as Exhibit 10.1.

Dividends on the Series C Stock shall be due whenever dividends are due on the Company's Common Stock on an as-if-converted basis, but shall be subordinate to any dividends due to holders of the Company's Series B Preferred Stock (the "Series B Stock") as a result of such Common Stock dividends.  The Series C Stock shall also be junior to the Series B Stock in the event of liquidation of the Company.  The stated value per share of the Series C Stock is $1,000 per share.  The initial conversion price of the Series C Stock is $0.22 (subject to adjustment).  The conversion ratio of the Series C Stock is the stated value per share divided by the conversion price, or 4,545 shares of Common Stock per share of Series C Stock as the initial conversion ratio as of the date of issuance.  The Series C Stock may not be converted until after 90 days following the date of issuance.

The summary description of the Series C Stock above does not purport to be complete and is qualified by reference to the full provisions in the Certificate of Designation thereof, which can be found in Exhibit 10.1 hereto, which is incorporated herein by reference.

                                                                                                                                                                          

(d)              Exhibits

                                                                                                                                                                                        

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

David C. Cavalier

Chief Financial Officer

                                                                                                                                                                                        

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                                                                                                                                                                                                                                                                                          Exhibit 10.1


AEOLUS PHARMACEUTICALS, INC.

CERTIFICATE OF DESIGNATION OF PREFERENCES,

RIGHTS AND LIMITATIONS

OF

SERIES C CONVERTIBLE PREFERRED STOCK

PURSUANT TO SECTION 151 OF THE

DELAWARE GENERAL CORPORATION LAW

AEOLUS PHARMACEUTICALS, INC., a Delaware corporation (the "Corporation"), in accordance with the provisions of Section 103 of the Delaware General Corporation Law (the "DGCL") does hereby certify that, in accordance with Sections 141(c) and 151 of the DGCL, the following resolution was duly adopted by  the Board of Directors of the Corporation:

RESOLVED, pursuant to authority expressly set forth in the Amended and Restated Certificate of Incorporation of the Corporation, as amended (the "Certificate of Incorporation"), the issuance of a series of Preferred Stock designated as the Series C Convertible Preferred Stock, par value $0.01 per share, of the Corporation is hereby authorized and the designation, number of shares, powers, preferences, rights, qualifications, limitations and restrictions thereof (in addition to any provisions set forth in the Certificate of Incorporation that are applicable to the Preferred Stock of all classes and series) are hereby fixed, and the Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock is hereby approved as follows:

SERIES C CONVERTIBLE PREFERRED STOCK

Section 1. Definitions. For the purposes hereof, the following terms shall have the following meanings:

"Affiliate" means any person or entity that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a person or entity, as such terms are used in and construed under Rule 144 under the Securities Act of 1933. With respect to a Holder, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as such Holder will be deemed to be an Affiliate of such Holder.

"Alternate Consideration" shall have the meaning set forth in Section 7(b).

"Beneficial Ownership Limitation" shall have the meaning set forth in Section 6(c).

"Business Day" means any day except Saturday, Sunday, any day which shall be a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

"Closing Sale Price" means, for any security as of any date, the last closing trade price for such security prior to 4:00 p.m., New York City time, on the principal securities exchange or trading market where such security is listed or traded, as reported by Bloomberg, L.P. (or an equivalent, reliable reporting service mutually acceptable to and hereafter designated by Holders of a majority of the then-outstanding Series C Preferred Stock and the Corporation), or if the foregoing do not apply, the last trade price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, L.P., or, if no last trade price is reported for such security by Bloomberg, L.P., the average of the bid prices of any market makers for such security as reported on the OTC Pink Market by OTC Markets Group, Inc. If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as determined in good faith by the Board of Directors of the Corporation.

"Commission" means the Securities and Exchange Commission.

"Common Stock" means the Corporation's common stock, par value $0.01 per share, and stock of any other class of securities into which such securities may hereafter be reclassified or changed into.

"Conversion Date" shall have the meaning set forth in Section 6(a).

"Conversion Price" shall mean $0.22, as adjusted pursuant to paragraph 7 hereof.

"Conversion Ratio" shall have the meaning set forth in Section 6(b).

"Conversion Shares" means, collectively, the shares of Common Stock issuable upon conversion of the shares of Series C Preferred Stock in accordance with the terms hereof.

"DGCL" shall mean the Delaware General Corporation Law.

"Distributions" shall have the meaning set forth in Section 5(a).

"DTC" shall have the meaning set forth in Section 6(a).

"DWAC Delivery" shall have the meaning set forth in Section 6(a).

"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

"Fundamental Transaction" shall have the meaning set forth in Section 7(b).

"Holder" means any holder of Series C Preferred Stock.

"Issuance Date" means December 2, 2015.

"Junior Securities" shall have the meaning set forth in Section 5(a).

"Notice of Conversion" shall have the meaning set forth in Section 6(a).

"Parity Securities" shall have the meaning set forth in Section 5(a).

"Person" means any individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

"Senior Securities" shall have the meaning set forth in Section 5(a).

"Series B Preferred Stock" shall have the meaning set forth in Section 2(b).

"Series C Preferred Stock" shall have the meaning set forth in Section 2(a).

"Series C Preferred Stock Register" shall have the meaning set forth in Section 2(b).

"Share Delivery Date" shall have the meaning set forth in Section 6(d)(i).

"Stated Value" shall mean $1,000 per share.

 

 "Trading Day" means a day on which the Common Stock is traded for any period on the principal securities exchange or if the Common Stock is not traded on a principal securities exchange, on a day that the Common Stock is traded on another securities market on which the Common Stock is then being traded.

 

Section 2. Designation, Amount and Par Value; Assignment.

Section 5. Rank; Liquidation.

 

Section 6. Conversion.

 

 

 

 

Section 8. Miscellaneous.

 

 

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IN WITNESS WHEREOF, the undersigned has executed this Certificate of Designation this 1st day of December, 2015.

/s/ David Cavalier

Name: David Cavalier

Title: Chief Financial Officer

ANNEX A

NOTICE OF CONVERSION

(TO BE EXECUTED BY THE REGISTERED HOLDER
IN ORDER TO CONVERT SHARES OF SERIES C PREFERRED STOCK)

The undersigned Holder hereby irrevocably elects to convert the number of shares of Series C Preferred Stock indicated below[, represented by stock certificate No(s). (the "Preferred Stock Certificates")], into shares of common stock, par value $0.01 per share (the "Common Stock"), of Aeolus Pharmaceuticals, Inc., a Delaware corporation (the "Corporation"), as of the date written below. If securities are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Capitalized terms utilized but not defined herein shall have the meaning ascribed to such terms in that certain Certificate of Designation of Preferences, Rights and Limitations of Series C Convertible Preferred Stock (the "Certificate of Designation") filed by the Corporation with the Secretary of State of the State of Delaware on                  , 201[5].

As of the date hereof, the number of shares of Common Stock beneficially owned by the undersigned Holder (as the term "beneficially owned" is defined in Section 6(b) of the Certificate of Designation), including the number of shares of Common Stock issuable upon conversion of the Series C Preferred Stock subject to this Notice of Conversion, but excluding the number of shares of Common Stock which are issuable upon (A) conversion of the remaining, unconverted Series C Preferred Stock beneficially owned by such Holder, and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation (including any warrants) beneficially owned by such Holder that are subject to a limitation on conversion or exercise similar to the limitation contained in Section 6(c) of the Certificate of Designation, is not in excess of 9.99% of the number of shares of Common Stock outstanding after giving effect to the issuance of shares of Common Stock pursuant to this Notice of Conversion.

Conversion calculations:

 

 

 

 

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AEOLUS PHARMACEUTICALS, INC.
REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (the "Agreement") is made and entered into as of December 8, 2015 by and among Aeolus Pharmaceuticals, Inc., a Delaware corporation (the "Company"), and the "Purchasers" named in certain Securities Purchase Agreements by and among the Company and the Purchasers, dated as of an even date herewith (collectively, the "Purchase Agreement").  Capitalized terms used in this Agreement without definition have the respective meanings ascribed thereto in the Purchase Agreement.

The parties hereby agree as follows:

As used in this Agreement, the following terms shall have the following meanings:

"Purchasers" means the Purchasers who purchased securities of the Company pursuant to the Purchase Agreement and any Affiliate or permitted transferee of any Purchaser who is a subsequent holder of any Registrable Securities.

"Prospectus" means the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus.

"Register," "registered" and "registration" refer to a registration made by preparing and filing a Registration Statement or similar document in compliance with the Securities Act (as defined below), and the declaration or ordering of effectiveness of such Registration Statement or document.

"Registrable Securities" means (i) the Common Shares issued under the Purchase Agreement, (ii) the Warrant Shares, (iii) Common Shares issuable pursuant to the conversion of Preferred Shares, and (iv) any other securities issued or issuable with respect to or in exchange for Registrable Securities, whether by agreement, conversion, exercise, merger, charter amendment or otherwise; provided, that a security shall cease to be a Registrable Security upon (A) sale pursuant to a Registration Statement or Rule 144 under the 1933 Act, or (B) such security becoming eligible for sale by any Purchaser without restriction by the Purchasers pursuant to Rule 144.

"Registration Statement" means any registration statement of the Company filed under the Securities Act that covers the resale of any of the Registrable Securities pursuant to the provisions of this Agreement, amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement.

"Required Purchasers" means the Purchasers holding a majority of the outstanding Registrable Securities.

 

                                              (i)            The Company shall use commercially reasonable efforts to have the Registration Statement declared effective within one hundred twenty (120) days of the date hereof (one hundred fifty (150) days in the event the Commission shall provide any comments to the Registration Statement) (the "Effectiveness Deadline").  The Company shall notify the Purchasers by facsimile or e-mail as promptly as practicable, and in any event, within two (2) Trading Days, after any Registration Statement is declared effective and, if requested, shall provide the Purchasers with copies of any related Prospectus to be used in connection with the sale or other disposition of the securities covered thereby.  If (A) a Registration Statement covering the Registrable Securities is not declared effective by the Commission prior to the earlier of (i) five (5) Trading Days after the Commission shall have informed the Company that no review of the Registration Statement will be made or that the Commission has no further comments on the Registration Statement or (ii) the Effectiveness Deadline date, or (B) after a Registration Statement has been declared effective by the Commission, sales cannot be made pursuant to such Registration Statement for any reason (including without limitation by reason of a stop order, or the Company's failure to update the Registration Statement), but excluding any Allowed Delay (as defined below), then the Company will make pro rata payments to each Purchaser, as liquidated damages and not as a penalty, in an amount equal to 0.5% of the aggregate amount invested by such Purchaser for each 30-day period or pro rata for any portion thereof following the date by which such Registration Statement should have been effective (the "Blackout Period").  Such payments shall constitute the Purchasers' exclusive monetary remedy for such events, but shall not affect the right of the Purchasers to seek equitable relief limited to injunctive relief or specific performance.  The amounts payable as liquidated damages pursuant to this paragraph shall be paid monthly within ten (10) days of the last day of each month following the commencement of the Blackout Period until the termination of the Blackout Period. The Blackout Period shall expire upon the declaration of effectiveness by the Commission of the Registration Statement (if the Blackout Period is covered by clause (A) of this Section 2(c)(i)) or the date on which sales pursuant to the Registration Statement may resume (if the Blackout Period is covered by clause (B) of this Section 2(c)(i)). Such payments shall be made to each Purchaser in cash no later than ten (10) days after the end of each 30-day period.  Notwithstanding anything else to the contrary contained herein, liquidated damages, if any, payable pursuant to this Section 2(c) shall cease to accrue after the date that is six (6) months after the Closing Date.

(e)            prior to any public offering of Registrable Securities, use commercially reasonable efforts to register or qualify or cooperate with the Purchasers and their counsel in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions requested by the Purchasers and do any and all other commercially reasonable acts or things necessary or advisable to enable the distribution in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (i) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(e), (ii) subject itself to general taxation in any jurisdiction where it would not otherwise be so subject but for this Section 3(e), or (iii) file a general consent to service of process in any such jurisdiction;

 

 

 

 

Subject to the terms of this Agreement, all reasonable fees and expenses of an indemnified party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such proceeding in a manner not inconsistent with this Section 5) shall be paid to the indemnified party, as incurred; provided, that the indemnified party shall promptly reimburse the indemnifying party for that portion of such fees and expenses applicable to such actions for which it is finally judicially determined (not subject to appeal) such indemnified party is not entitled to indemnification hereunder.

 

IN WITNESS WHEREOF, the undersigned has caused this Registration Rights Agreement to be duly executed by its authorized signatory as of the date first indicated above

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SIGNATURE PAGE FOR PURCHASER FOLLOWS]

IN WITNESS WHEREOF, the undersigned has caused this Registration Rights Agreement to be duly executed by its authorized signatories as of the date first indicated above.

Name of Purchaser:
Signature of Authorized Signatory of Purchaser:
Name of Authorized Signatory:
Title of Authorized Signatory:
Email Address of Authorized Signatory:
Facsimile Number of Authorized Signatory:
Address for Notices to Purchaser:

PLAN OF DISTRIBUTION

The selling stockholders, which as used herein includes donees, pledgees, transferees or other successors-in-interest selling shares of common stock or interests in shares of common stock received after the date of this prospectus from a selling stockholder as a gift, pledge, partnership distribution or other transfer, may, from time to time, sell, transfer or otherwise dispose of any or all of their shares of common stock or interests in shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions.  These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices.

The selling stockholders may use any one or more of the following methods when disposing of shares or interests therein:

- ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

- block trades in which the broker-dealer will attempt to sell the shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction;

- purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

- an exchange distribution in accordance with the rules of the applicable exchange;

- privately negotiated transactions;

- short sales effected after the date the registration statement of which this Prospectus is a part is declared effective by the Commission;

- through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

- broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;

- a combination of any such methods of sale; and

- any other method permitted by applicable law.

The selling stockholders may, from time to time, pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock, from time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.  The selling stockholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

In connection with the sale of our common stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume.  The selling stockholders may also sell shares of our common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities.  The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

The aggregate proceeds to the selling stockholders from the sale of the common stock offered by them will be the purchase price of the common stock less discounts or commissions, if any.  Each of the selling stockholders reserves the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents.  We will not receive any of the proceeds from this offering. Upon any exercise of the warrants by payment of cash, however, we will receive the exercise price of the warrants.

The selling stockholders also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act of 1933, provided that they meet the criteria and conform to the requirements of that rule.

The selling stockholders and any underwriters, broker-dealers or agents that participate in the sale of the common stock or interests therein may be "underwriters" within the meaning of Section 2(11) of the Securities Act.  Any discounts, commissions, concessions or profit they earn on any resale of the shares may be underwriting discounts and commissions under the Securities Act.  Selling stockholders who are "underwriters" within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act.

Each selling stockholder has advised us that they have not entered into any written or oral agreements, understandings or arrangements with any underwriter or broker-dealer regarding the sale of the resale shares. There is no underwriter or coordinating broker acting in connection with the proposed sale of the resale shares by the selling stockholders.

To the extent required, the shares of our common stock to be sold, the names of the selling stockholders, the respective purchase prices and public offering prices, the names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus.

 

 

In order to comply with the securities laws of some states, if applicable, the common stock may be sold in these jurisdictions only through registered or licensed brokers or dealers.  In addition, in some states the common stock may not be sold unless it has been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.

We have advised the selling stockholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the selling stockholders and their affiliates.  In addition, to the extent applicable we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling stockholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act.  The selling stockholders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act.

We have agreed to indemnify the selling stockholders against certain liabilities, including liabilities under the Securities Act and state securities laws, relating to the registration of the shares offered by this prospectus.

We have agreed with the selling stockholders to keep the registration statement of which this prospectus constitutes a part effective until the earlier of (1) such time as all of the shares covered by this prospectus have been disposed of pursuant to and in accordance with the registration statement or (2) the date on which the shares may be sold without volume restrictions pursuant to Rule 144 of the Securities Act.

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Exhibit 10.3

NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE HEREUNDER HAVE BEEN REGISTERED UNDER THE SECURITIES ACT (AS DEFINED BELOW), OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT, OR (B) AN OPINION OF COUNSEL, IN A REASONABLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT, (II) UNLESS SOLD OR TRANSFERRED TO A "QUALIFIED INSTITUTIONAL BUYER" WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT OR (III) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED WITH A REGISTERED BROKER-DEALER IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR WITH A FINANCIAL INSTITUTION THAT IS AN ACCREDITED INVESTOR UNDER THE SECURITIES ACT PURSUANT TO A LOAN OR FINANCING ARRANGEMENT SECURED BY THESE SECURITIES.

AEOLUS PHARMACEUTICALS, INC.

COMMON STOCK WARRANT

THIS CERTIFIES THAT, for value received, the Holder is entitled to purchase, and Aeolus Pharmaceuticals, Inc., a Delaware corporation (the "Company"), promises and agrees to sell and issue to the Holder, at any time, or from time to time subject to the restrictions and limitations set forth herein, during the Exercise Period (as defined in Section 2 herein), up to  the number of shares of Common Stock, par value $0.01 per share, of the Company (the "Common Stock"), as set forth on the signature page hereof (or such less amount, to the extent that this Warrant has been partially exercised without tendering the Warrant for surrender and reissuance) that may be acquired on a per share basis at the Exercise Price, subject to the provisions and upon the terms and conditions hereinafter set forth.  This Warrant is one of the Warrants issued in the Private Securities Offering.

 

The date on which the Company receives the Notice of Exercise, this Warrant (as applicable), and the Exercise Price payable with respect to the Warrant Shares being purchased shall be deemed to be the date of exercise (the "Date of Exercise").  Execution and delivery of a Notice of Exercise with respect to less than all of the Warrant Shares shall have the same effect as cancellation of the original of this Warrant certificate and issuance of a new Warrant certificate evidencing the right to purchase the remaining number of Warrant Shares.  Execution and delivery of a Notice of Exercise for all of the then-remaining Warrant Shares shall have the same effect as cancellation of the original of this Warrant certificate after delivery of the Warrant Shares in accordance with the terms hereof.

X = Y (A - B)
  A

Where:

X = The number of Warrant Shares to be issued to the Holder pursuant to this cashless exercise;

Y =  The number of Warrant Shares in respect of which the net issue election is made;

A =  The Fair Market Value  (as defined below) of one Warrant Share at the time the cashless exercise election is made; and

B =  The Exercise Price then in effect at the time of such exercise.

The term "Fair Market Value" shall mean, on any given day: (A) if the class of Warrant Shares is exchange-traded, the average of the closing sales prices per share of the class of Warrant Shares for the trading day prior to the applicable date of determination of Fair Market Value; or (B) if the class of Warrant Shares is not listed or admitted to trading on any securities exchange but is regularly traded in any over-the-counter market, then the average of the bid and ask prices per share of the class of Warrant Shares for trading day prior to the applicable date of determination of Fair Market Value; or (C) if the class of Warrant Shares is not traded as described in clauses (A) or (B), then the per share fair market value of the class of Warrant Shares as determined in good faith by the Company's Board of Directors.

8.            Governing Law.  This Warrant shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of law principles, and notwithstanding the fact that one or more counterparts hereof may be executed outside of the state, or one or more of the obligations of the parties hereunder are to be performed outside of the state.

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IN WITNESS WHEREOF, each of the Company and Holder have caused this Warrant to be executed and delivered as of the Issue Date by an officer thereunto duly authorized.

AEOLUS PHARMACEUTICALS, INC.

David Cavalier

Chief Financial Officer

Acknowledged and Agreed to as of the Issue Date:

Name of Purchaser: ________________________________________________________

Signature of Authorized Signatory of Purchaser: _________________________________

Name of Authorized Signatory: _______________________________________________

Title of Authorized Signatory: ________________________________________________

Initial Number of Warrant Shares: _____________________________________________

[Signature Page to Common Stock Warrant]

ATTACHMENT I

AEOLUS PHARMACEUTICALS, INC.

Attention:  Chief Financial Officer

The undersigned hereby elects to purchase, pursuant to the provisions of the Common Stock Warrant issued by Aeolus Pharmaceuticals, Inc. as of December 8, 2015, and held by the undersigned, the original of which is attached hereto, and (check the applicable box):

Information for Delivery of uncertificated shares by DWAC:

HOLDER:

                                                                                                                             

Signature                                         

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Contact:

John McManus

President and Chief Executive Officer

Aeolus Pharmaceuticals, Inc.

1-(949) 481-9820

AEOLUS ANNOUNCES $6.75 MILLION PRIVATE PLACEMENT FINANCING

Mission Viejo, CA – December 15, 2015 -- Aeolus Pharmaceuticals, Inc. (OTCQB: AOLS), a biotechnology company developing compounds to protect against fibrosis, inflammation, nerve damage and infection announced today that it has entered into definitive agreements with certain institutional and other accredited investors to raise gross proceeds of $6.75 million in a private placement financing. The investors comprised both new and existing investors in the Company, including entities associated with BVF Partners L.P., a leading life sciences investment firm, which manages the Biotechnology Value Fund family of funds ("BVF").

Net proceeds from this offering will be used for general corporate and working capital purposes, including the development of AEOL10150 as a medical countermeasure for the pulmonary effects of acute radiation syndrome, under the Company's development contract with the Biomedical Advanced Research and Development Authority ("BARDA").  In addition, the Company intends to use the proceeds to pursue

human clinical trials with AEOL 10150 in Idiopathic Pulmonary Fibrosis and radiation oncology and the completion of pre-clinical development of AEOL 20415 for infectious diseases and AEOL 11114B for Parkinson's disease.

Pursuant to the purchase agreement, BVF will purchase $4.5 million of Preferred Units consisting of (i) 4,500 shares of Series C Convertible Preferred Stock of the Company (the "Series C Stock") that are collectively convertible into an aggregate of 20,454,546 Common Shares and (ii) Warrants to purchase an aggregate of 20,454,546 Common Shares, in each case subject to adjustment.  The Warrants have an exercise price of $0.22 per share.

Aeolus has also agreed to issue to a group of non-BVF investors an aggregate of 10,215,271 shares of the Company's common stock at a price per share of $0.22, as well as five-year warrants to purchase up to an aggregate of 10,215,271 shares of common stock with an exercise price of $0.22 per share.

Laidlaw & Company served as the placement agent for the offering.

The securities offered in this private placement transaction have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or applicable state securities laws. Accordingly, the securities may not be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and such applicable state securities laws. Pursuant to the terms of a registration rights agreement entered into with the investors, Aeolus has agreed to file a registration statement with the Securities and Exchange Commission registering the resale of the shares of common stock sold in the offering and issuable upon exercise of the warrants. Any offering of Aeolus' securities under the resale registration statement referred to above will be made only by means of a prospectus.

This press release does not constitute an offer to sell or the solicitation of an offer to buy the securities, nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of such jurisdiction.

 

About Aeolus Pharmaceuticals

Aeolus Pharmaceuticals is developing compounds with demonstrated anti-fibrotic, anti-inflammatory, anti-infective and neuro-protective properties.   Its first compound, AEOL 10150, is being developed with funding from the U.S. Department of Health and Human Services as a medical countermeasure against nuclear and chemical weapons, as well as a treatment for pulmonary fibrosis.  Aeolus' strategy is to leverage the substantial investment in toxicology, manufacturing and preclinical and clinical studies of AEOL 10150 made by U.S. government agencies, including the contract with BARDA valued, with options, at up to $118.4 million, to efficiently develop the compound for use in idiopathic pulmonary fibrosis, oncology, infectious diseases and Parkinson's disease. For more information, please visit Aeolus's corporate website at www.aolsrx.com.

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