Exhibit 10.1
 
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September 1, 2010

Russell Skibsted
15 Tranquility Place
Ladera Ranch, CA 92694

Dear Russ:

This letter confirms our previous conversations regarding the employment
opportunity available to you with Aeolus Pharmaceuticals, Inc. (the “Company”)
and sets forth the terms and conditions of that employment.
 
The Company hereby offers you full-time employment as Senior Vice President,
Chief Financial Officer and Secretary commencing upon the announcement of a
contract for development of AEOL 10150 as a medical countermeasure with the
Biomedical Advanced Research and Development Authority (BARDA) (currently
expected on or about October 16, 2010), with a monthly salary of $20,833.33,
(which would be equivalent to $250,000 on an annualized basis).  During the
period of your employment, you shall (a) report to John McManus, President &
Chief Executive Officer (b) devote your entire working time for or at the
direction of the Company or its affiliates, (c) use your best efforts to
complete all assignments, and (d) adhere to the Company’s procedures and
policies in place from time-to-time.  During your employment with the Company,
you may not engage in any other activities that inhibit or prohibit the
performance of your duties to the Company or inhibit or conflict in any way with
the business of the Company.
 
During your employment with the Company you will be entitled to participate in
all of our then current customary employee benefit plans and programs, subject
to eligibility requirements, enrollment criteria, and the other terms and
conditions of such plans and programs.  Currently, the Company offers health
insurance, dental insurance, disability insurance and life insurance ($500,000
term policy).  The Company reserves the right to change or rescind its benefit
plans and programs and alter employee contribution levels in its discretion.
 
After commencement of employment, and subject to the approval of the Company’s
Board of Directors, you will be granted an option to purchase 360,000 shares of
the Company’s Common Stock (the “Option”), which will vest in equal amounts over
12 months.  The exercise price per share of the Option will be determined by the
Board of Directors or the Compensation Committee when the Option is
granted.  The Option will be subject to the terms and conditions applicable to
options granted under the Company’s Aeolus Employee Stock Option Plan, as
amended (the “Plan”), as described in the Plan and the applicable Stock Option
Agreement.

 
 

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By executing this letter below, you agree that during the course of your
employment and thereafter that you shall not use or disclose, in whole or in
part, any of the Company’s or its customers’ or affiliates’ trade secrets,
confidential and proprietary information, including without limitation, license
agreements, government contracts, patents, customer lists and information, to
any person, firm, corporation, or other entity for any reason or purpose
whatsoever other than in the course of your employment with the Company or with
the prior written permission of the President and Chief Executive Officer of
Aeolus.  You also will be required to execute the annexed employee
non-disclosure and invention assignment agreement (the “Covenants Agreement”),
the terms of which are in addition to the terms of this offer letter.  By
executing this letter below, you also represent and warrant to the Company that
you are not a party to, or otherwise bound by, any confidentiality or similar
agreement that would prohibit, prevent, inhibit, limit, or conflict with the
performance of your duties to the Company.
 
This offer of employment with the Company is contingent upon proof of your
authorization to work in the United States.  If, based upon a unique
circumstance, you commence work before the Company has completed its inquiry,
you will be deemed a conditional employee.
 
Although we hope that your employment with us is mutually satisfactory,
employment at the Company is “at will.”  This means that, just as you may resign
from the Company at any time for any reason or no reason, the Company has the
right to terminate this employment relationship at any time with or without
cause or notice.  Neither this letter nor any other communication, either
written or oral, should be construed as a contract of employment, unless it is
signed by both you and the President and Chief Executive Officer of Aeolus, and
such agreement is expressly acknowledged as an employment contract.
 
Russ, I hope that you elect to accept this offer of employment.  Kindly sign
your name at the end of this letter to signify your understanding and acceptance
of these terms and that no one at the Company has made any other representation
to you.  The Company welcomes you as an employee and looks forward to a
successful relationship in which you will find your work both challenging and
rewarding.  This offer must be accepted on or before September 15, 2010, and
will be deemed to have been withdrawn if your executed acceptance of this offer,
together with the signed Covenants Agreement, is not received by the undersigned
on or before the above referenced date.
 

 
Sincerely,
     
/s/ John L. McManus
 
John L. McManus
 
President & Chief Executive Officer

Agreed to and accepted by:

/s/ Russell Skibsted
Russell Skibsted

 
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