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.

23811 INVERNESS PLACE

(Street)

LAGUNA NIGUEL

92677

(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)
11/21/2008

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	11/21/2008		P		40,000	A	$0.3295	10,717,372⁽¹⁾⁽²⁾⁽³⁾⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁸⁾⁽⁹⁾	I⁽¹⁾⁽²⁾⁽³⁾⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁸⁾⁽⁹⁾	See Footnotes⁽¹⁾⁽²⁾⁽³⁾⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁹⁾

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 Notes	$0.35	12/01/2008		P		$125,000		⁽¹⁵⁾⁽¹⁶⁾	06/01/2011	Common Stock	357,142⁽⁹⁾⁽¹⁰⁾⁽¹¹⁾⁽¹²⁾⁽¹³⁾⁽¹⁴⁾⁽¹⁵⁾⁽¹⁶⁾	⁽¹⁵⁾	$125,000	I⁽¹⁾⁽²⁾⁽³⁾⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁸⁾⁽⁹⁾⁽¹⁰⁾⁽¹¹⁾⁽¹²⁾⁽¹³⁾⁽¹⁴⁾⁽¹⁵⁾⁽¹⁶⁾	See Footnotes⁽¹⁾⁽²⁾⁽³⁾⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁸⁾⁽⁹⁾⁽¹⁰⁾⁽¹¹⁾⁽¹²⁾⁽¹³⁾⁽¹⁴⁾⁽¹⁵⁾⁽¹⁶⁾
Warrants (right to buy)	$0.5	12/01/2008		P		250,000		⁽¹⁵⁾⁽¹⁶⁾	12/01/2013	Common Stock	250,000⁽⁹⁾⁽¹⁰⁾⁽¹¹⁾⁽¹²⁾⁽¹³⁾⁽¹⁴⁾⁽¹⁵⁾⁽¹⁶⁾	⁽¹⁵⁾	250,000	I⁽¹⁾⁽²⁾⁽³⁾⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁸⁾⁽⁹⁾⁽¹⁰⁾⁽¹¹⁾⁽¹²⁾⁽¹³⁾⁽¹⁴⁾⁽¹⁵⁾⁽¹⁶⁾	See Footnotes⁽¹⁾⁽²⁾⁽³⁾⁽⁴⁾⁽⁵⁾⁽⁶⁾⁽⁷⁾⁽⁸⁾⁽⁹⁾⁽¹⁰⁾⁽¹¹⁾⁽¹²⁾⁽¹³⁾⁽¹⁴⁾⁽¹⁵⁾⁽¹⁶⁾

Explanation of Responses:

1. As of December 1, 2008, Xmark Opportunity Fund, L.P., a Delaware limited partnership ("Opportunity LP"), held (i) 3,093,963 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 660,000 Common Shares of the Company at an exercise price of $0.35 per share, (iii) a 7% senior convertible note ("Note 1") maturing on February 1, 2011 in the aggregate principal amount of $150,000, which is convertible into 428,571 Common Shares at a conversion price of $0.35 per share subject to certain adjustments, (iv) warrants ("Warrant 1") to purchase 300,000 Common Shares at an exercise price of $0.50 per share subject to certain adjustments, (v) a 7% senior convertible note ("Note 3") maturing on March 4, 2011 in the aggregate principal amount of $37,500, which is convertible into 107,143 Common Shares at a conversion price of $0.35 per share subject to certain adjustments,

2. (vi) warrants ("Warrant 3") to purchase 75,000 Common Shares at an exercise price of $0.50 per share subject to certain adjustments, (vii) a 7% senior convertible note ("Note 5") maturing on April 1, 2011 in the aggregate principal amount of $37,500, which is convertible into 107,143 Common Shares at a conversion price of $0.35 per share subject to certain adjustments; (viii) warrants ("Warrant 5") to purchase 75,000 Common Shares at an exercise price of $0.50 per share subject to certain adjustments, (ix) a 7% senior convertible note ("Note 7") maturing on May 3, 2011 in the aggregate principal amount of $37,500, which is convertible into 107,143 Common Shares at a conversion price of $0.35 per share subject to certain adjustments, (x) warrants ("Warrant 7") to purchase 75,000 Common Shares at an exercise price of $0.50 per share subject to certain adjustments,

3. (xi) a 7% senior convertible note ("Note 9") maturing on June 1, 2011 in the aggregate principal amount of $37,500, which is convertible into 107,143 Common Shares at a conversion price of $0.35 per share subject to certain adjustments and (xii) warrants ("Warrant 9") to purchase 75,000 Common Shares at an exercise price of $0.50 per share subject to certain adjustments.

4. As of December 1, 2008, Xmark Opportunity Fund, Ltd., a Cayman Islands exempted company ("Opportunity Ltd"), held (i) 6,599,678 Common Shares of the Company, (ii) warrants to purchase up to 990,000 Common Shares of the Company at an exercise price of $0.35 per share, (iii) a 7% senior convertible note ("Note 2") maturing on February 1, 2011 in the aggregate principal amount of $350,000, which is convertible into 1,000,000 Common Shares at a conversion price of $0.35 per share subject to certain adjustments, (iv) warrants ("Warrant 2") to purchase 700,000 Common Shares at an exercise price of $0.50 per share subject to certain adjustments, (v) a 7% senior convertible note ("Note 4") maturing on March 4, 2011 in the aggregate principal amount of $87,500, which is convertible into 250,000 Common Shares at a conversion price of $0.35 per share subject to certain adjustments,

5. (vi) warrants ("Warrant 4") to purchase 175,000 Common Shares at an exercise price of $0.50 per share subject to certain adjustments, (vii) a 7% senior convertible note ("Note 6") maturing on April 1, 2011 in the aggregate principal amount of $87,500, which is convertible into 250,000 Common Shares at a conversion price of $0.35 per share subject to certain adjustments, (vii) warrants ("Warrant 6") to purchase 175,000 Common Shares at an exercise price of $0.50 per share subject to certain adjustments; (ix) a 7% senior convertible note ("Note 8") maturing on May 3, 2011 in the aggregate principal amount of $87,500, which is convertible into 250,000 Common Shares at a conversion price of $0.35 per share subject to certain adjustments, (x) warrants ("Warrant 8") to purchase 175,000 Common Shares at an exercise price of $0.50 per share subject to certain adjustments,

6. (xi) a 7% senior convertible note ("Note 10") maturing on June 1, 2011 in the aggregate principal amount of $87,500, which is convertible into 250,000 Common Shares at a conversion price of $0.35 per share subject to certain adjustments, and (xii) warrants ("Warrant 10") to purchase 175,000 Common Shares at an exercise price of $0.50 per share subject to certain adjustments.

7. As of December 1, 2008, 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 $0.35 per share.

8. All of the warrants may be exercised within 60 days of this filing.

9. 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.

10. On August 1, 2008, the Company entered into a Securities Purchase Agreement ("SPA") with Opportunity LP and Opportunity Ltd (collectively, the "Investors"), pursuant to which, upon the satisfaction of certain conditions the Investors agreed to purchase for an aggregate purchase price of $1,000,000, units comprised of 7% senior convertible notes and warrants to purchase Common Shares from the Company. On August 1, 2008, the Company sold and issued to the Investors under the SPA an aggregate of 500 units ("Units"), collectively comprised of (i) Note 1 and Note 2, in the aggregate principal amount of $500,000, and (ii) Warrant 1 and Warrant 2, which entitles the holder of Warrants to purchase in the aggregate up to 1,000,000 Common Shares at an exercise price of $0.50 per share subject to certain adjustments.

11. On September 4, 2008, the Company sold and issued to the Investors under the SPA an aggregate of 125 units ("Units"), collectively comprised of (i) Note 3 and Note 4, in the aggregate principal amount of $125,000, and (ii) Warrant 3 and Warrant 4, which entitles the holder of Warrants to purchase in the aggregate up to 250,000 Common Shares at an exercise price of $0.50 per share subject to certain adjustments.

12. On October 1, 2008, the Company sold and issued to the Investors under the SPA an aggregate of 125 units ("Units"), collectively comprised of (i) Note 5 and Note 6, in the aggregate principal amount of $125,000, and (ii) Warrant 5 and Warrant 6, which entitles the holder of Warrants to purchase in the aggregate up to 250,000 Common Shares at an exercise price of $0.50 per share subject to certain adjustments.

13. On November 3, 2008, the Company sold and issued to the Investors under the SPA an aggregate of 125 units ("Units"), collectively comprised of (i) Note 7 and Note 8, in the aggregate principal amount of $125,000, and (ii) Warrant 7 and Warrant 8, which entitles the holder of Warrants to purchase in the aggregate up to 250,000 Common Shares at an exercise price of $0.50 per share subject to certain adjustments.

14. On December 1, 2008, the Company sold and issued to the Investors under the SPA an aggregate of 125 units ("Units"), collectively comprised of (i) Note 9 and Note 10, in the aggregate principal amount of $125,000, and (ii) Warrant 9 and Warrant 10, which entitles the holder of Warrants to purchase in the aggregate up to 250,000 Common Shares at an exercise price of $0.50 per share subject to certain adjustments.

15. Each Unit consists of $1,000 in principal amount of 7% senior convertible notes and warrants to purchase up to 2,000 Common Shares at a purchase price of $1,000 per Unit. The Notes are convertible into Common Shares at a conversion price of $0.35 per share subject to certain adjustments. The Notes permit the Company, at its sole option, to pay interest in cash or Common Shares. The Notes and Warrants 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.

16. These securities are immediately convertible or exercisable into Common Shares.

	Michael P. McManus, by Power of Attorney	12/03/2008
	** Signature of Reporting Person	Date
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