SEC FORM 4

SEC Form 4

FORM 4

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP

Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934
or Section 30(h) of the Investment Company Act of 1940

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Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

1. Name and Address of Reporting Person^*

Cavalier David

(Last)

(First)

(Middle)

C/O AEOLUS PHARMACEUTICALS, INC.

26361 CROWN VALLEY PARKWAY, SUITE 150

(Street)

MISSION VIEJO

92691

(City)

(State)

(Zip)

2. Issuer Name and Ticker or Trading Symbol
AEOLUS PHARMACEUTICALS, INC. [ AOLS ]

5. Relationship of Reporting Person(s) to Issuer
(Check all applicable)

X	Director	X	10% Owner
	Officer (give title below)		Other (specify below)

3. Date of Earliest Transaction (Month/Day/Year)
04/02/2009

4. If Amendment, Date of Original Filed (Month/Day/Year)

6. Individual or Joint/Group Filing (Check Applicable Line)

X	Form filed by One Reporting Person
	Form filed by More than One Reporting Person

Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned
1. Title of Security (Instr. 3)	2. Transaction Date (Month/Day/Year)	2A. Deemed Execution Date, if any (Month/Day/Year)	3. Transaction Code (Instr. 8)		4. Securities Acquired (A) or Disposed Of (D) (Instr. 3, 4 and 5)			5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4)	6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	7. Nature of Indirect Beneficial Ownership (Instr. 4)
1. Title of Security (Instr. 3)	2. Transaction Date (Month/Day/Year)	2A. Deemed Execution Date, if any (Month/Day/Year)	Code	V	Amount	(A) or (D)	Price		6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	7. Nature of Indirect Beneficial Ownership (Instr. 4)
Common Stock, par value $0.01 per share	04/02/2009		P		20,000	A	$0.3925	16,336,203	I⁽¹⁴⁾	See Footnote⁽¹⁴⁾
Common Stock, par value $0.01 per share	04/22/2009		P		20,000	A	$0.39	16,356,203	I⁽¹⁴⁾	See Footnote⁽¹⁴⁾
Common Stock, par value $0.01 per share	07/31/2009		J		95,537⁽¹²⁾	A	$0.3633⁽¹²⁾	16,451,740	I⁽¹⁴⁾	See Footnote⁽¹⁴⁾
Common Stock, par value $0.01 per share	10/06/2009		P		5,892,857⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁸⁾⁽⁹⁾	A	$0.28⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁸⁾⁽⁹⁾	22,344,597	I⁽¹⁴⁾	See Footnote⁽¹⁴⁾
Common Stock, par value $0.01 per share	10/06/2009		C		2,857,143⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁸⁾⁽⁹⁾	A	$0.35⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁸⁾⁽⁹⁾	25,201,740	I⁽¹⁴⁾	See Footnote⁽¹⁴⁾
Common Stock, par value $0.01 per share	10/06/2009		J		36,993⁽¹²⁾	A	$0.3473⁽¹²⁾	25,238,733⁽¹⁾⁽²⁾⁽³⁾⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁸⁾⁽⁹⁾⁽¹⁰⁾⁽¹¹⁾⁽¹²⁾⁽¹³⁾⁽¹⁴⁾	I⁽¹⁾⁽²⁾⁽³⁾⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁸⁾⁽⁹⁾⁽¹⁰⁾⁽¹¹⁾⁽¹²⁾⁽¹³⁾⁽¹⁴⁾	See Footnotes⁽¹⁾⁽²⁾⁽³⁾⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁸⁾⁽⁹⁾⁽¹⁰⁾⁽¹¹⁾⁽¹²⁾⁽¹³⁾⁽¹⁴⁾

Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned (e.g., puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security (Instr. 3)	2. Conversion or Exercise Price of Derivative Security	3. Transaction Date (Month/Day/Year)	3A. Deemed Execution Date, if any (Month/Day/Year)	4. Transaction Code (Instr. 8)		5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5)		6. Date Exercisable and Expiration Date (Month/Day/Year)		7. Title and Amount of Securities Underlying Derivative Security (Instr. 3 and 4)		8. Price of Derivative Security (Instr. 5)	9. Number of derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4)	10. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	11. Nature of Indirect Beneficial Ownership (Instr. 4)
1. Title of Derivative Security (Instr. 3)	2. Conversion or Exercise Price of Derivative Security	3. Transaction Date (Month/Day/Year)	3A. Deemed Execution Date, if any (Month/Day/Year)	Code	V	(A)	(D)	Date Exercisable	Expiration Date	Title	Amount or Number of Shares	8. Price of Derivative Security (Instr. 5)		10. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	11. Nature of Indirect Beneficial Ownership (Instr. 4)
Senior Convertible Note	$0.35	10/06/2009		C			$1,000,000	⁽¹⁰⁾⁽¹¹⁾	⁽¹³⁾	Common Stock	2,857,143⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁸⁾⁽⁹⁾	⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁸⁾⁽⁹⁾	0	I⁽¹⁴⁾	See Footnote⁽¹⁴⁾
Warrants (right to buy)	$0.28	10/06/2009		J			2,150,000	⁽¹⁰⁾⁽¹¹⁾	11/21/2010	Common Stock	2,150,000⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁸⁾⁽⁹⁾	⁽⁸⁾⁽⁹⁾	0	I⁽¹⁴⁾	See Footnote⁽¹⁴⁾
Warrants (right to buy)	$0.5	10/06/2009		J			1,000,000	⁽¹⁰⁾⁽¹¹⁾	08/01/2013	Common Stock	1,000,000⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁸⁾⁽⁹⁾	⁽⁸⁾⁽⁹⁾	0	I⁽¹⁴⁾	See Footnote⁽¹⁴⁾
Warrants (right to buy)	$0.5	10/06/2009		J			250,000	⁽¹⁰⁾⁽¹¹⁾	09/04/2013	Common Stock	250,000⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁸⁾⁽⁹⁾	⁽⁸⁾⁽⁹⁾	0	I⁽¹⁴⁾	See Footnote⁽¹⁴⁾
Warrants (right to buy)	$0.5	10/06/2009		J			250,000	⁽¹⁰⁾⁽¹¹⁾	10/01/2013	Common Stock	250,000⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁸⁾⁽⁹⁾	⁽⁸⁾⁽⁹⁾	0	I⁽¹⁴⁾	See Footnote⁽¹⁴⁾
Warrants (right to buy)	$0.5	10/06/2009		J			250,000	⁽¹⁰⁾⁽¹¹⁾	11/03/2013	Common Stock	250,000⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁸⁾⁽⁹⁾	⁽⁸⁾⁽⁹⁾	0	I⁽¹⁴⁾	See Footnote⁽¹⁴⁾
Warrants (right to buy)	$0.5	10/06/2009		J			250,000	⁽¹⁰⁾⁽¹¹⁾	12/01/2013	Common Stock	250,000⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁸⁾⁽⁹⁾	⁽⁸⁾⁽⁹⁾	0	I⁽¹⁴⁾	See Footnote⁽¹⁴⁾
Warrants (right to buy)	$0.35	10/06/2009		J			13,392,857	⁽¹⁰⁾⁽¹¹⁾	03/27/2014	Common Stock	13,392,857⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁸⁾⁽⁹⁾	⁽⁸⁾⁽⁹⁾	0	I⁽¹⁴⁾	See Footnote⁽¹⁴⁾
Warrants (right to buy)	$0.28	10/06/2009		J		31,828,571		⁽¹⁰⁾⁽¹¹⁾	10/06/2016	Common Stock	31,828,571⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁸⁾⁽⁹⁾	⁽⁸⁾⁽⁹⁾	31,828,571	I⁽¹⁾⁽²⁾⁽³⁾⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁸⁾⁽⁹⁾⁽¹⁰⁾⁽¹¹⁾⁽¹²⁾⁽¹³⁾⁽¹⁴⁾	See Footnotes⁽¹⁾⁽²⁾⁽³⁾⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁸⁾⁽⁹⁾⁽¹⁰⁾⁽¹¹⁾⁽¹²⁾⁽¹³⁾⁽¹⁴⁾
Warrants (right to buy)	$0.28	10/06/2009		P		11,785,714		⁽¹⁰⁾⁽¹¹⁾	10/06/2016	Common Stock	11,785,714⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁸⁾⁽⁹⁾	⁽⁸⁾⁽⁹⁾	43,614,285	I⁽¹⁾⁽²⁾⁽³⁾⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁸⁾⁽⁹⁾⁽¹⁰⁾⁽¹¹⁾⁽¹²⁾⁽¹³⁾⁽¹⁴⁾	See Footnotes⁽¹⁾⁽²⁾⁽³⁾⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁸⁾⁽⁹⁾⁽¹⁰⁾⁽¹¹⁾⁽¹²⁾⁽¹³⁾⁽¹⁴⁾

Explanation of Responses:

1. As of October 6, 2009, Xmark Opportunity Fund, L.P., a Delaware limited partnership ("Opportunity LP"), held (i) 7,712,228 common shares, $0.01 par value per share (the "Common Shares"), of Aeolus Pharmaceuticals, Inc., a Delaware corporation (the "Company"), (ii) warrants to purchase up to 13,768,928 Common Shares of the Company at an exercise price of $0.28 per share subject to certain adjustments (the "LP Warrant"), (iii) a put option to acquire up to an additional 1,767,857 additional Units (the "Additional Units "), comprised of an aggregate of 1,767,857 shares of common stock of the Company and warrants to purchase up to an aggregate of 3,535,714 additional shares of common stock at the per Additional Unit purchase price of $0.28 (the "LP Call Option") and (iv) a call option to require Opportunity LP to acquire up to 1,767,857 Additional Units, less any Additional Units acquired under the LP Call Option, at the per Additional Unit purchase price of $0.28 (the "LP Put Option").

2. As of October 6, 2009, Xmark Opportunity Fund, Ltd., a Cayman Islands exempted company ("Opportunity Ltd"), held (i) 16,482,774 Common Shares of the Company, (ii) warrants to purchase up to 29,345,357 Common Shares of the Company at an exercise price of $0.28 per share subject to certain adjustments (the "Ltd Warrant"), (iii) a put option to acquire up to an additional 4,125,000 Additional Units, comprised of an aggregate of 4,125,000 shares of common stock of the Company and warrants to purchase up to an aggregate of 8,250,000 additional shares of common stock at the per Additional Unit purchase price of $0.28 (the "Ltd Call Option") and (iv) a call option to require Opportunity LP to acquire up to 1,767,857 Additional Units, less any Additional Units acquired under the Ltd Call Option, at the per Additional Unit purchase price of $0.28 (the "Ltd Put Option").

3. As of October 6, 2009, Xmark JV Investment Partners, LLC, a Delaware limited liability company ("JV Partners"), held 1,023,731 Common Shares of the Company and warrants to purchase up to 500,000 Common Shares of the Company at an exercise price of $0.28 per share subject to certain adjustments (the "JV Warrant").

4. On October 6, 2009, the Company entered into a Securities Purchase and Exchange Agreement (the "Agreement") with Opportunity LP, Opportunity Ltd and JV Partners (the "Investors") pursuant to which the Company sold and issued to the Investors in a private placement an aggregate of 5,892,857 units (the "Units"), comprised of an aggregate of 5,892,857 shares Common Shares and warrants to purchase up to an aggregate of 11,785,714 additional shares of Common Shares (the "Warrants"), with an initial exercise price of $0.28 per share, subject to adjustment pursuant to the Warrants, with each Unit representing one share of Common Stock and a Warrant to purchase two shares of Common Shares, at a purchase price of $0.28 per Unit for aggregate gross proceeds of $1,650,000 (collectively, the "Financing").

5. The Warrants are exercisable for a seven year period from their date of issuance; contain a "cashless exercise" feature that allows the holder to exercise the Warrants without a cash payment to the Company under certain circumstances; contain a dividend participation right which allows the holder to receive any cash dividends paid on the Common Stock without exercising the Warrant and contain a provision that provides for the reduction of the exercise price to $0.01 in the event of any such payment of cash dividends by the Company or a change of control; and contain standard anti-dilution provisions that provide for the adjustment of the exercise price and the number of shares of common stock that can be purchased in the event of a stock dividend or split, dividend payment or other issuance, reorganization, recapitalization or similar event.

6. In addition, the Company also granted to the Investors the option to acquire, collectively, up to an additional 5,892,857 Additional Units, comprised of an aggregate of 5,892,857 shares of common stock of the Company and warrants to purchase up to an aggregate of 11,785,714 additional shares of common stock at the per Additional Unit purchase price of $0.28 (the "Call Option"). In addition, the Investors granted to the Company the option to require these Investors, severally and not jointly, to acquire up to 5,892,857 Additional Units, less any Additional Units acquired under the Call Option, at the per Additional Unit purchase price of $0.28 (the "Put Option"). The Call Option is exercisable at any time, and from time to time, on or prior to June 30, 2010.

7. The Put Option is exercisable at any time from June 30, 2010 to July 30, 2010. However, the Investors shall have the right to terminate the Put Option if they reasonably determine that a material adverse event, condition or circumstance has occurred with respect to the prospects of the Company's AEOL 10150 drug candidate for acute radiation syndrome; provided that the Company's failure to receive a grant or financing shall not, by itself, constitute a material adverse event, condition or circumstance with respect thereto.

8. In addition, the Investors agreed to convert all $1,000,000 of the Company's Senior Convertible Notes issued in 2008 (the "Notes") into Common Stock at a conversion rate of $0.35 per share and to exchange their remaining option to purchase an additional $4,000,000 in Senior Convertible Notes for warrants to purchase up to 14,285,714 shares of Common Stock in substantially the same form and terms of the Warrants issued in the Financing, including an initial exercise price of $0.28 per share, subject to adjustment pursuant to the warrants.

9. As consideration for the Investors to convert the Notes, the Company agreed to exchange warrants to purchase up to 2,000,000 shares of Common Stock issued to the Investors in connection with the sale of the Notes, warrants to purchase up to 2,150,000 shares of Common Stock issued to the Investors and one of their affiliates in connection with a financing completed in November 2005 and warrants to purchase up to 13,392,857 shares of Common Stock issued to the Investors in connection with a financing completed in March 2009 for warrants to purchase up to 17,542,857 shares of Common Stock in substantially the same form and terms of the Warrants issued in the Financing, including an initial exercise price of $0.28 per share, subject to adjustment pursuant to the warrants.

10. All of the warrants and Notes may be exercised within 60 days of this filing.

11. The Notes, LP Warrant, Ltd Warrant and JV Warrant each contain an issuance limitation prohibiting the Investors from exercising those securities to the extent that such exercise would result in beneficial ownership by the Investors of more than 9.99% of the Common Shares then issued and outstanding, which prohibition cannot be removed by the holder before the 61st day after such holder's notice to the Company of its election to remove such prohibition.

12. The transaction represents payment of interest on Senior Convertible Notes in form of Common Stock.

13. The maturity dates of the Senior Convertible Notes were $500,000 on January 31, 2011, $125,000 on March 4, 2011, $125,000 on April 1, 2011, $125,000 on May 3, 2011 and $125,000 on June 1, 2011.

14. The reporting person, David Cavalier, is Chief Operating Officer of Xmark Capital Partners, LLC, the Managing Member of Opportunity Partners, LLC, a Delaware limited liability company ("Opportunity Partners"). Opportunity Partners is the sole member of the investment manager of Opportunity LP and Opportunity Ltd, and the investment manager of JV Partners, and, as such, possesses sole power to vote and direct the disposition of all securities of the Company held by Opportunity LP, Opportunity Ltd and JV Partners. Opportunity Partners' interest in the securities reported herein is limited to the extent of its pecuniary interest in Opportunity LP, Opportunity Ltd and JV Partners, if any. Mitchell D. Kaye, the Chief Executive Officer of Xmark Capital Partners, LLC and David C. Cavalier share voting and investment power with respect to all securities beneficially owned by Opportunity Partners.

	Michael P. McManus, by Power of Attorney	10/21/2009
	** Signature of Reporting Person	Date
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