Unassociated Document


    


    Exhibit
10.1

    


    

    


    CONSULTING
AGREEMENT

    


    This agreement (“Agreement”) made as of
this 1st day of December 2010 by and between Aeolus Pharmaceuticals, Inc. and
its subsidiary, Aeolus Sciences, Inc., both Delaware corporations (hereinafter
collectively referred to as the “Company”) and Brian J. Day (the “Consultant”)
of 6122 South Nome Ct., Englewood, CO 80111.

    


    The Company is engaged in research and
development in pharmaceutical and medical applications (the “Field”). The
Consultant has extensive experience in the Field, and the Company seeks to
benefit from the Consultant’s expertise by retaining the Consultant as a
consultant. The Consultant wishes to perform consulting services in the Field
for the Company. Accordingly, the Company and the Consultant agree as
follows:

    


    1.           Services.  The
Consultant shall provide consulting services to the Company with respect to
matters related to the Field.

    


    2.           Compensation.  As
full consideration for the consulting services provided by the Consultant, the
Company shall pay to the Consultant the amount of $11,500 per month commencing
December 1, 2010, payments to be made at the end of each month. Consultant’s
monthly compensation will increase to $12,500 when and if, during the term of
this Agreement the Company obtains funding through either a capital raising
transaction, partnership or contract award of at least five million dollars
($5,000,000).

    


    The
Consultant will also be granted a stock option to purchase 50,000 shares of the
Aeolus Pharmaceuticals, Inc. Common Stock, par value $0.01 per share, with an
exercise price equal to the closing stock price on the date of grant. The stock
option will vest on a monthly basis at a rate of 4,167 shares per month
following the date of grant as long as the Consultant continues to be an
employee of or consultant to the Company, except in the case of a Sale of the
Company, in which case, the options shall fully vest and be immediately
exercisable. The foregoing grants shall be subject to the Company’s standard
form of stock option grant agreement and the Company’s then existing stock
plan.

    


    At the
discretion of the Board of Directors, the Consultant may also be granted cash
bonuses for his contributions to the Company. The Board of Directors will
consider such bonuses at least on an annual basis and upon the achievement of
major accomplishments related to the Consultant’s areas of
responsibilities.

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    The
Company shall also reimburse the Consultant for all reasonable expenses incurred
by the Consultant in providing consulting services under this Agreement.
Consultant will also receive a bonus payment of $30,000 and be granted a stock
option to purchase 25,000 shares of the Company’s Common Stock with an exercise
price equal to the closing stock price on the date of grant when and if, during
the term of this Agreement: (1) the Company executes and delivers definitive and
enforceable agreements representing the earliest to occur of a Corporate
Partnership or a Sale of the Company (each defined below), or (2) for each
compound from the Aeolus Pipeline that is the subject of an Investigational New
Drug application. The foregoing options shall vest six (6) months following the
date of grant as long as Consultant continues to be a consultant to or employee
of the Company, except in the case of a Sale of the Company, in which case, the
options shall fully vest and be immediately exercisable. The foregoing grants
shall be subject to the Company’s standard form of stock option grant agreement
and the Company’s then existing stock plan.

    


    (a)           A
“Corporate Partnership” means a development or partnership with another life
sciences company for the joint development or commercialization of any of the
Company’s owned or in-licensed patent rights.

    


    (b)           A
“Sale of the Company” means a merger, business combination, reorganization,
recapitalization or other transaction, which results in the stockholders of the
Company who own at least fifty percent (50%) of the Company’s voting control
immediately prior to such transaction owning less than fifty percent (50%) of
the surviving entity’s voting control immediately after such transaction, and/or
sale, transfer, lease or other disposition in any transaction or series of
transactions of all or substantially all of the assets of the
Company.

    


    Notwithstanding the forgoing, it is
understood and agreed that the Board of Directors of the Company (the “Board”)
has the sole power, authority and discretion to approve or disapprove of any
proposed transaction regardless of the provisions of this Agreement, and if
the Board disapproves any proposed transaction for any or no reason you
will not be entitled to any options or bonus under this Agreement with respect
thereto.

    


    3.           Confidentiality.

    


    (a)           In
providing consulting services to the Company pursuant to this Agreement, the
Consultant may acquire information that pertains to the Company’s products,
processes, equipment, programs, developments, or plans and that is both (i)
disclosed or made known by the Company to the Consultant and (ii) identified as
“confidential” by the Company at any time (“Confidential Information”). The
Consultant agrees not to disclose any Confidential Information to third parties
or to use any Confidential Information for any purpose other than performance of
consulting services pursuant to this Agreement, without prior written consent of
the Company.

    


    (b)           Confidential
Information subject to paragraph 3(a) does not include information that: (i) is
or later becomes available to the public through no breach of this Agreement by
the Consultant; (ii) is obtained by the Consultant from a third party who had
the legal right to disclose the information to the Consultant; (iii) is already
in the possession of the Consultant on the date this Agreement becomes
effective, and which is not covered by prior confidentiality provisions; or (iv)
is required to be disclosed by law, government regulation, or court order,
provided, however, that Consultant gives Company sufficient advance written
notice to permit it to seek a protection order or other similar order with
respect to such Confidential Information and consultant gives only the minimum
Confidential Information required to be  disclosed in order to comply,
whether or not a protective order or other similar order is obtained by
Company.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    4.           Return of
Materials.  The Consultant agrees to promptly return, following
the termination of this Agreement or upon earlier request by the Company, all
drawings, written or other materials in the Consultant’s possession and (i)
supplied by the Company in conjunction with the Consultant’s consulting services
under this Agreement or (ii) generated by the Consultant in the performance of
consulting services under this Agreement.

    


    5.           Intellectual
Property.  The Consultant hereby assigns to the Company any
right, title, and interest he may have in any invention, discovery, improvement,
or other intellectual property which the Consultant develops solely as a direct
result of performing consulting services for the Company under this Agreement.
Any intellectual property assignable to the Company pursuant to the preceding
sentence is hereinafter referred to as “Company Intellectual Property”. Upon the
request of the Company, the Consultant shall execute such further assignments,
documents, and other instruments as may be necessary to assign Company
Intellectual Property to the Company and to assist the Company in applying for,
obtaining and enforcing patents or other rights in the United States and in any
foreign country with respect to any Company Intellectual Property. The Company
will bear the cost of preparation of all patent or other applications and
assignments, and the cost of obtaining and enforcing all patents and other
rights to Company Intellectual Property.

    


    6.           Term and
Termination.

    


    (a)           Unless
terminated earlier under paragraph 6(b) below, this Agreement shall be for an
initial term of one year expiring on November 30, 2011, which may be extended
upon mutual agreement of the parties.

    


    (b)           Without
limiting any rights which either party to this Agreement may have by reason of
any default by the other party, each party reserves the right to terminate this
Agreement at its convenience by written notice given to the other party. Such
termination shall be effective upon the date not earlier than 30 days following
the date of such notice as shall be specified in said notice. No additional
compensation shall be due to Consultant after the effective date of
termination.

    


    (c)           Termination
of this Agreement under paragraph 6(a) or 6(b), above, shall not affect the
Company’s obligation to pay for services previously performed by the Consultant
or expenses reasonably incurred by the Consultant for which the Consultant is
entitled to reimbursement under paragraph 2, above, or the Consultant’s
continuing obligations to the Company under paragraphs 3 and 5
above.

    


    7.           No Conflicting
Agreements.  Consultant represents that Consultant is not a
party to any existing agreements that would prevent Consultant from entering
into and performing this Agreement. Company acknowledges that Consultant’s
primary employment responsibility is to National Jewish Medical and Research
Center (“NJM”) and that Consultant is bound by NJM policies including those
relating to consulting and extramural activities (“NJM Policies”). The Company
will work with Consultant to assist in compliance with applicable NJM Policies
of which it is aware.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    8.           Miscellaneous.

    


    (a)           This
Agreement shall inure to the benefit of and be binding upon the respective
heirs, executors, successors, representatives, and assigns of the parties, as
the case may be; provided, however, the obligations hereunder of each party to
the other are personal and may not be assigned without the express written
consent of such other party.

    


    (b)           The
relationship created by this Agreement shall be that of independent contractor,
and the Consultant shall have no authority to bind or act as agent for the
Company or its employees for any purpose.

    


    (c)           Notice
or payments given by one party to the other hereunder shall be in writing and
deemed to have been properly given or paid if deposited with the United States
Postal Service, registered or certified mail, addressed as follows:

    


    Company:            Aeolus
Pharmaceuticals, Inc.

    26361 Crown Valley Parkway, Suite
150

    Mission Viejo, California
92694

    Attn: John McManus

    


    
      Consultant:          Brian J.
Day

    

    6122
South Nome Ct.

    Englewood,
CO 80111

    


    (d)           This
Agreement replaces all previous agreements and the discussions relating to the
subject matters hereof and constitutes the entire agreement between the Company
and the Consultant with respect to the subject matters of this Agreement. This
Agreement may not be modified in any respect by any verbal statement,
representation, or agreement made by any employee, officer, or representative of
the Company, or by any written documents unless it is signed by an officer or
the Company and by the Consultant.

    


    IN WITNESS WHEREOF, the parties have
executed this Agreement effective the date first stated above.

     

    
      
        
          
            
              	
                      AEOLUS
      PHARMACEUTICALS, INC.

                    	 
      	
                      CONSULTANT

                    
	 
      	 
      	 
      	 
      	 
      
	
                      By:

                    	
                      /s/ John L. McManus

                    	 
      	
                      By:

                    	
                      /s/ Brian J. Day

                    
	 
      	
                      John
      L. McManus

                    	 
      	 
      	
                      Brian
      J. Day

                    
	 
      	
                      President
      and Chief Executive Officer