ex101.htm


    Exhibit
10.1

    AMENDMENT
AGREEMENT TO THE

    SECURITIES PURCHASE AND
EXCHANGE AGREEMENT

     

    THIS AMENDMENT AGREEMENT TO THE SECURITIES
PURCHASE AND EXCHANGE AGREEMENT (this "Amendment
Agreement"), dated as of December 24, 2009 (the "Effective Date"), is
made and entered into by and among Aeolus Pharmaceuticals, Inc. (the "Company"), Xmark
Opportunity Fund, L.P. ("XLP"), Xmark
Opportunity Fund, Ltd. ("XLTD") and Xmark JV
Investment Partners, LLC ("XJV" and, together
with XLP and XLTD, the "Buyers" and, each
individually, a "Buyer").  All
defined terms used in this Amendment Agreement but not defined herein shall have
the meaning set forth for such terms in that certain Securities Purchase and
Exchange Agreement, by and among the Company and the Buyers, dated as of October
6, 2009 (the "Original
Agreement").

    


    WITNESSETH
THAT:

    


    WHEREAS, the Buyers and the
Company are parties to the Original Agreement;

    


    WHEREAS, the Original
Agreement provided for, among other things, that as of October 6, 2009 (the
"Original Closing
Date"), the Company and the Buyers shall effect the Note
Conversion;

    


    WHEREAS, as of the Original
Closing Date, the Company and the Buyers effected the Note Conversion at the
conversion price set forth in the Notes, and, accordingly, the Company issued to
the Buyers, as of the Original Closing Date, collectively, 2,857,143 Shares of
its Common Stock, and, in exchange for such shares of Common Stock, the Buyers
surrendered the Notes to the Company;

    


    WHEREAS, the conversion price
set forth in the Notes was $0.35 per share of Common Stock (the "Old Conversion
Price");

    


    WHEREAS, in consideration of
the various agreements, covenants, undertakings and transactions to be
undertaken by and among the parties pursuant to the Original Agreement, the
Company and the Buyers agreed that the Notes would be converted at a conversion
price equal to $0.28 per share of Common Stock (the "New Conversion
Price");

    


    WHEREAS, because of a
misunderstanding, the Original Agreement provided that the Notes were to be
converted at the Old Conversion Price instead of the New Conversion
Price;

    


    WHEREAS, because of the
misunderstanding, the Buyers received 2,857,143 Shares of Common Stock upon the
conversion of the Notes instead of 3,571,429 Shares of Common Stock that was
agreed by and among the Company and the Buyers to be received by the Buyers in
conversion of their Notes;

    


    
      
         

      

      
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    WHEREAS, the Company and the
Buyers desire to (i) correct the Original Agreement such that the Original
Agreement will reflect the correct understanding and agreement by and among the
Company and the Buyers that the Notes should be converted at the New Conversion
Price instead of the Old Conversion Price and (ii) issue to the Buyers, in the
aggregate, 714,286 Shares of Common Stock that the Buyers would have received as
of the Original Closing Date by converting the Notes at the New Conversion Price
instead of the Old Conversion Price;

    


    WHEREAS, the parties believe
it is in their respective best interests to correct the misunderstanding with
respect to the Original Agreement by the consensual agreement as more fully set
forth in this Amendment Agreement as opposed to utilizing any other resolution
mechanism; and

    


    WHEREAS, the parties believe
it to be in their respective best interests to set forth herein the mutual
understandings and agreements reached by and among them with respect to the
subject matter hereof, as more particularly provided herein.

    


    NOW, THEREFORE, in
consideration of the foregoing premises, the mutual covenants herein contained
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:

    


    Section
1. Amendment of the Original
Agreement.

    


    (a)           Recital
C in the Original Agreement is hereby amended and restated in its entirety as
follows:

    


    C.           Buyers
and the Company are parties to a Securities Purchase Agreement, dated as of
August 1, 2008 (as amended as of the date hereof, the "Note Purchase
Agreement"), pursuant to which, among other things, Buyers acquired (i)
$1,000,000 in aggregate principal amount of the Company's Senior Convertible
Notes (the "Notes"), which are
convertible into shares (the "Conversion Shares")
of Common Stock at a conversion price of $0.35 per share (subject to
adjustment), (ii) warrants (the "Note Warrants") to
acquire up to an aggregate of 2,000,000 shares of Common Stock (the "Note Warrant Shares")
at an exercise price of $0.50 per share (subject to adjustment), and (iii) the
option (the "Purchase
Option") to acquire up to $4,000,000 in additional aggregate principal
amount of the Notes having the terms specified in the Note Purchase Agreement
and additional Note Warrants to acquire up to 8,000,000 additional Note Warrant
Shares at an exercise price of $0.35 per share (subject to
adjustment).

    


    
      
         

      

      
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    (b)           Recital
H in the Original Agreement is hereby amended and restated in its entirety as
follows:

    


    H.           Simultaneous
with the consummation of the Financing, the Company and the Buyers wish to
effect the following transactions (collectively, the "Conversion"):  (i)
the conversion of the Notes into the Conversion Shares at $0.28 per share (the
"Note
Conversion"); (ii) the exchange (the "Warrant Exchange") of
the outstanding 2005 Warrants, the Note Warrants and the March Warrants for new
warrants (the "Exchange Warrants"),
each in substantially the form of the New Warrants, to purchase an aggregate of
17,542,857 shares of Common Stock (the "Exchange Warrant
Shares") at an exercise price equal to the Exercise Price; and (iii) the
exchange (the "Purchase Option
Exchange") of the Purchase Option for new warrants (the "Option Exchange
Warrants"), each in substantially the form of the New Warrants to
purchase an aggregate of 14,285,714 shares of Common Stock (the "Option Exchange Warrant
Shares") at an exercise price equal to the Exercise Price.

    


    (c)           Column
(3) of the Conversion Schedule annexed to the Original Agreement is hereby
amended and restated as follows:

    


    
      	
              (3)

            
	
              Number
      of Shares to be issued upon conversion of Notes

            
	
              1,071,429

            
	
              2,500,000

            
	
              0

            
	
              3,571,429

            
	
              (3)

            


    

    


    Section
2. Transfer of Additional
Common Stock.

    


    (a)           As
of the Effective Date, the Company shall deliver to XLP one or more stock
certificates evidencing 214,286 Shares of Common Stock that would have been
delivered to XLP on the Original Closing Date but for the misunderstanding of
the parties as more fully set forth herein.

    


    
      
         

      

      
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    (b)           As
of the Effective Date, the Company shall deliver to XLTD one or more stock
certificates evidencing 500,000 Shares of Common Stock that would have been
delivered to XLTD on the Original Closing Date but for the misunderstanding of
the parties as more fully set forth herein.

    


    Section
3. Representations and
Warranties.

    


    (a)           The
Company represents and warrants that to the best of its knowledge the
representations and warranties of the Company as set forth in the Original
Agreement, as such representations and warranties may be effected by the terms
and provisions set forth in this Amendment Agreement, are true and correct in
all material respects as of the Original Closing Date.

    


    (b)           The
Company represents and warrants that the Company has the requisite corporate
power and authority to enter into, deliver and perform its obligations under
this Amendment Agreement and each of the other agreements entered into by the
Company and any Buyer pursuant to this Amendment Agreement (collectively, the
"Transaction
Documents"), and to issue the Shares in accordance with the terms hereof
and thereof.  The execution and delivery of this Amendment Agreement
and the other Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby, including, without
limitation, the issuance of the Shares, have been duly authorized by the
Company's Board of Directors, and no further filing, consent or authorization is
required by the Company, its Board of Directors or its
stockholders.  This Amendment Agreement and the other Transaction
Documents of even date herewith have been duly executed and delivered by the
Company as of the Effective Date, and constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, except (i) as may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of applicable creditors' rights generally, and (ii) as limited by laws relating
to specific performance, injunctive relief or other equitable
remedies.

    


    (c)           Each of the Buyers
represents and warrants, severally and not jointly, that to the best of their
respective knowledge the representations and warranties as set forth in the
Original Agreement, as such representations
and warranties may be effected by the terms and provisions set forth in this
Amendment Agreement, are true and correct in all material respects as of the
Original Closing Date.

    


    (d)           Each
of the Buyers represents and warrants, severally and not jointly, that the
execution, delivery and performance by such Buyer of this Amendment Agreement
and each of the Transaction Documents to which such Buyer is a party have been
duly and validly authorized, executed and delivered on behalf of such Buyer and
shall constitute the legal, valid and binding obligations of such Buyer
enforceable against such Buyer in accordance with their respective terms, except
(i) as may be limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or other similar laws
relating to, or affecting generally, the enforcement of applicable creditors'
rights generally, and (ii) as limited by laws relating to specific performance,
injunctive relief or other equitable remedies.

    


    
      
         

      

      
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    Section
4. Releases.

    


    (a)           Upon
the consummation of the transactions set forth herein, the Company hereby
releases, acquits and forever discharges the Buyers of and from all manner of
actions, causes of action, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, controversies, promises, damages, judgments,
executions, claims, liabilities and demands, whether in law or equity, resulting
from the misunderstanding as more fully set forth herein.

    


    (b)           Upon
the consummation of the transactions set forth herein, the Buyers hereby
release, acquit and forever discharge the Company of and from all manner of
actions, causes of action, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, controversies, promises, damages, judgments,
executions, claims, liabilities and demands, whether in law or equity, resulting
from the misunderstanding as more fully set forth herein.

    


    Section
5. Acknowledgment.

    


    The
parties acknowledge and agree that the transactions contemplated under this
Amendment Agreement and the Transaction Documents shall not modify or be deemed
to modify the terms of the Warrants in any respect.

    


    Section
6. Governing Law; Jurisdiction;
Jury Trial.

    


    All
questions concerning the construction, validity, enforcement and interpretation
of this Amendment Agreement shall be governed by the internal laws of the State
of New York, without giving effect to any choice of law or conflict of laws
provision or rule (whether of the State of New York or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of New York.  Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City of
New York, the borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper.  Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to such party at the address for such
notices to it under the Original Agreement and agrees that such service shall
constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law.  EACH PARTY HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

    


    
      
         

      

      
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    Section
7. Entire
Agreement.

    


    This
Amendment Agreement, together with the Original Agreement (as such Original
Agreement is amended by this Amendment Agreement), constitutes the full and
entire understanding and agreement by and among the parties with regard to the
subjects hereof and thereof.  The Original Agreement shall continue in
full force and effect, and nothing contained herein shall be construed as a
waiver or modification of any existing rights pursuant to the Original
Agreement, except as such rights are expressly modified in accordance with the
terms and provisions of this Amendment Agreement.

    


    Section
8. Severability.

    


    If any
provision of this Amendment Agreement becomes, or is declared by a court of
competent jurisdiction to be, illegal, unenforceable or void, portions of such
provision, or such provision in its entirety, to the extent necessary, shall be
severed from this Amendment Agreement, and such court will replace such illegal,
void or unenforceable provision of this Amendment Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the same
economic, business and other purposes of the illegal, void or unenforceable
provision.  The balance of this Amendment Agreement shall be
enforceable in accordance with its terms.

    


    Section
9. Further
Assurances.

    


    Each
party hereto agrees to execute and deliver, by the proper exercise of its
corporate, partnership, limited liability or other powers, all such other and
additional instruments and documents and do all such other acts and things as
may be necessary to more fully effectuate the terms and provisions set forth in
this Amendment Agreement.

    


    Section
10. Counterparts; Facsimile
Execution and Delivery.

    


    (a)           This
Amendment Agreement may be executed in any number of counterparts, each of which
shall be enforceable against the parties actually executing such counterparts,
and all of which together shall constitute one instrument.

    


    (b)           A
facsimile, telecopy, pdf or other reproduction of this Amendment Agreement may
be executed by one or more parties hereto and delivered by such party by
facsimile or any similar electronic transmission device pursuant to which the
signature of, or on behalf of, such party can be seen.  Such execution
and delivery shall be considered valid, binding and effective for all
purposes.  At the request of any party hereto, all parties hereto
agree to execute and deliver an original of this Amendment Agreement as well as
any facsimile, telecopy, pdf or other reproduction hereof.

    


    
      
         

      

      
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    Section
11. Inconsistency and Strict
Construction.

    


    (a)           In
the event of any inconsistencies between the terms this Amendment Agreement and
the terms of the Original Agreement, the terms of this Amendment Agreement shall
control.

    


    (b)          The
language used in this Amendment Agreement shall be deemed the language chosen by
the parties to express their mutual intent; no rule of strict construction shall
be applied against any party.

    


    


    


    


    


    


    


    [Signatures follow on the next
page.]


    
      
        
           

        

         


      

      
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    IN WITNESS WHEREOF, the
parties have caused this Amendment Agreement to be executed by their respective
authorized signatories as of the Effective Date.

    


    


    COMPANY:

    


    AEOLUS
PHARMACEUTICALS, INC.

    


    


    By:             /s/ Michael P.
McManus                                                                         

    Name:             Michael
P. McManus

    Title:             Chief
Financial Officer

    


    


    BUYERS:

    


    XMARK
OPPORTUNITY FUND, L.P.

    By:           XMARK
OPPORTUNITY GP, LLC, its General Partner

    By:           XMARK
OPPORTUNITY PARTNERS, LLC, its Sole Member

    By:           XMARK
CAPITAL PARTNERS, LLC, its Managing Member

    


    


    By:           /s/ Mitchell D.
Kaye                                                                                     

    Name:           Mitchell
D. Kaye

    Title:           Co-Managing
Member

    


    


    XMARK
OPPORTUNITY FUND, LTD.

    By:           XMARK
OPPORTUNITY MANAGER, LLC, its Investment Manager

    By:           XMARK
OPPORTUNITY PARTNERS, LLC, its Sole Member

    By:           XMARK
CAPITAL PARTNERS, LLC, its Managing Member

    


    


    By:           /s/ Mitchell D.
Kaye                                                                                     

    Name:           Mitchell
D. Kaye

    Title:           Co-Managing
Member

    


    


    XMARK
JV INVESTMENT PARTNERS, LLC

    By:           XMARK
OPPORTUNITY PARTNERS, LLC, its Investment Manager

    By:           XMARK
CAPITAL PARTNERS, LLC, its Managing Member

    


    


    By:           /s/ Mitchell D.
Kaye                                                                                     

    Name:           Mitchell
D. Kaye

    Title:           Co-Managing
Member

     

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