Exhibit
      10.2

    


    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE (i) NOT BEEN REGISTERED UNDER
      THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE,
      AND
      (ii) BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY. THESE SECURITIES MAY NOT BE
      SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
      THEREFROM UNDER SAID ACT OR LAWS.

    


    AEOLUS
      PHARMACEUTICALS, INC.

    


    WARRANT
      TO PURCHASE [•] SHARES OF COMMON STOCK

    


     

    
      	November
              21, 2005  	
               Warrant
                No. [•]

            


    

     

    


    


    For
      value
      received, Aeolus Pharmaceuticals, Inc., a Delaware corporation (the
“Company”),
      hereby certifies that [name
      of Investor],
      or
      its registered
      transferees, successors or assigns (each person or entity holding all or part
      of
      this Warrant being referred to as a “Holder”),
      is
      the registered holder of a warrant (the “Warrant”)
      to
      subscribe for and purchase [•] ([•]) shares (as adjusted pursuant to
Section
      3
      hereof,
      the “Warrant
      Shares”)
      of the
      fully paid and nonassessable common stock, par value $0.01 per share (the
“Common
      Stock”),
      of
      the Company, at a purchase price per share initially equal to One
      Dollar ($1.00) (the
      “Warrant
      Price”)
      on or
      before, 5:00 P.M., Eastern Time, on November 21, 2010 (the “Expiration
      Date”),
      subject to the provisions and upon the terms and conditions hereinafter set
      forth; provided,
      however,
      in the
      event that any portion of this Warrant is unexercised as of the Expiration
      Date,
      the terms of Section
      1(b)
      below
      shall apply. As used in this Warrant, the term “Business
      Day”
      means
      any day other than a Saturday or Sunday on which commercial banks located in
      New
      York, New York are open for the general transaction of business.

     

    This
      Warrant is one of a number of Warrants (collectively, the “Warrants”)
      being
      issued pursuant that certain Purchase Agreement dated as of November 21, 2005,
      by and among the Company and the Investors party thereto (the “Purchase
      Agreement”).
      Capitalized terms used but not defined herein shall have the respective meanings
      ascribed thereto in the Purchase Agreement).

     

    Section
      1. Exercise.

     

    (a) 
      Method of Exercise; Payment; Issuance of New
      Warrant.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (i) Subject
      to the provisions hereof, the Holder may exercise this Warrant, in whole or
      in
      part and from time to time, by the surrender of this Warrant (with the Notice
      of
      Exercise attached hereto as Appendix
      A
      duly
      executed) at the principal office of the Company, or such other office or agency
      of the Company as it may reasonably designate by written notice to the Holder,
      during normal business hours on any Business Day, and the payment by the Holder
      by cash, certified check payable to the Company or wire transfer of immediately
      available funds to an account designated to the exercising Holder by the Company
      of an amount equal to the then applicable Warrant Price multiplied by the number
      of Warrant Shares then being purchased, or in the event of a cashless exercise
      pursuant to Section
      1(c)
      below,
      with the Net Issue Election Notice attached hereto as Appendix
      B
      (the
“Net
      Issue Election Notice”)
      duly
      executed and completed. On the date on which the Holder shall have satisfied
      in
      full the Holder’s obligations set forth herein regarding an exercise of this
      Warrant (provided such date is prior to the Expiration Date), the Holder (or
      such other person or persons as directed by the Holder, subject to compliance
      with applicable securities laws) shall be treated for all purposes as the holder
      of record of such Warrant Shares as of the close of business on such
      date.

     

    (ii) In
      the
      event of any exercise of the rights represented by this Warrant, certificates
      for the whole number of shares of Common Stock so purchased shall be delivered
      to the Holder (or such other person or persons as directed by the Holder,
      subject to compliance with applicable securities laws) as promptly as is
      reasonably practicable (but not later than three
      (3) Business
      Days)
      after
      such exercise at the Company’s expense, and, unless this Warrant has been fully
      exercised, a new Warrant representing the whole number of Warrant Shares, if
      any, with respect to which this Warrant shall not then have been exercised
      shall
      also be issued to the Holder as soon as reasonably practicable thereafter (but
      not later than three
      (3) Business
      Days)
      after
      such exercise. When the Company is required to deliver certificates pursuant
      to
      this Section
      1,
      if any
      such certificates are not delivered to such Holder within three
      (3) Business
      Days
      after
      the applicable exercise of this Warrant, the Company shall be liable to the
      Holder for liquidated damages (and not as a penalty, as damages are impossible
      to forecast or predict and these amounts are deemed reasonable in all respects)
      equal to 1.5% of the Fair Market Value (as defined in Section
      1(c))
      of all
      shares of Common Stock subject to such exercise as of the date of such exercise,
      for each 10-day period (or portion thereof) beyond such three
      (3) Business
      Day-period
      that the certificates have not been so delivered. Such payments shall be in
      partial compensation to the Holder, and shall not constitute the Holder’s
      exclusive remedy for such late delivery. The amounts payable as liquidated
      damages pursuant to this Section
      1(a)(ii)
      shall be
      payable in lawful money of the United States, and amounts payable as liquidated
      damages shall be paid within two (2) Business Days of the last day of each
      such
      10-day period after which delivery should have been made.

     

    (b) Automatic
      Exercise.
      If any
      portion of this Warrant remains unexercised (i) as of the Expiration Date and
      the Fair Market Value of one share of Common Stock as of the Expiration Date
      is
      greater than the applicable Warrant Price as of the Expiration Date, or (ii)
      on
      such date that the Company is merged or consolidated with or into another entity
      where the Company is not the survivor (a “Merger
      Date”)
      and
      the Fair Market Value of one share of Common Stock as of the Merger Date is
      greater than the applicable Warrant Price as of the Merger Date, then this
      Warrant shall be deemed to have been exercised automatically immediately prior
      to the close of business on the Expiration Date or Merger Date, as the case
      may
      be (or, in the event that the Expiration Date or Merger Date is not a Business
      Day, the immediately preceding Business Day) (the “Automatic
      Exercise Date”)
      in the
      manner provided in Section
      1(c)
      below,
      and the Holder (or such other person or persons as directed by the Holder,
      subject to compliance with applicable securities laws) shall be treated for
      all
      purposes as the holder of record of such Warrant Shares as of the close of
      business on such Automatic Exercise Date. This Warrant shall be deemed to be
      surrendered to the Company on the Automatic Exercise Date by virtue of this
      Section
      1(b)
      without
      any action by the Holder. As promptly as is reasonably practicable on or after
      the Automatic Exercise Date, the Company at its expense shall issue and deliver
      to the Holder (or such other person or persons as directed by the Holder,
      subject to compliance with applicable securities laws) a certificate or
      certificates for the number of Warrant Shares issuable upon such exercise,
      in
      accordance with Section
      1(c).

    


    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    (c) Cashless
      Right to Convert Warrant into Common Stock.
      In
      addition to and without limiting the rights of the Holder hereof under the
      terms
      of this Warrant, the Holder may elect to receive, without the payment by the
      Holder of the Warrant Price, Warrant Shares equal to the value of this Warrant
      or any portion hereof by the surrender of this Warrant (or such portion of
      this
      Warrant being so exercised) together with the Net Issue Election Notice annexed
      hereto as Appendix
      B
      duly
      executed and completed, at the office of the Company, or such other office
      or
      agency of the Company as it may reasonably designate by written notice to the
      Holder, during normal business hours on any Business Day. Thereupon, the Company
      shall issue to the Holder such number of fully paid, validly issued and
      nonassessable Warrant Shares, as is computed using the following
      formula:

    


    X=
      Y(A-B)

    A

    


    where 

    


    X
      = the
      number of shares of Common Stock to be issued to the Holder (or such other
      person or persons as directed by the Holder, subject to compliance with all
      applicable laws) upon such exercise of the rights under this Section
      1(c)

    


    Y
      = the
      total
      number of shares of Common Stock covered by this Warrant which the Holder has
      surrendered for cashless exercise or, if only a portion of the Warrant is being
      exercised, the portion of the Warrant being canceled on the date that the Holder
      delivers the Net Issue Election Notice to the Company as provided herein


    


    A
      = the
      Fair
      Market Value of one share of Common Stock on the date that the Holder delivers
      the Net Issue Election Notice to the Company as provided herein

    


    B
      = the
      Warrant Price in effect under this Warrant on the date that the Holder delivers
      the Net Issue Election Notice to the Company as provided herein

    


    The
      “Fair
      Market Value”
      of a
      share of Common Stock as of a particular date (the “Valuation
      Date”)
      shall
      mean the following:

    


    (i) if
      the
      Common Stock is then listed on a national securities exchange, the average
      of
      the closing sale prices of one share of Common Stock on such exchange on the
      ten
      (10) consecutive trading days ending on the last trading day prior to the
      Valuation Date; provided that if such stock has not traded in the ten (10)
      consecutive trading days prior to the Valuation Date, the Fair Market Value
      shall be the average of the closing sale prices of one share of Common Stock
      in
      the most recent ten (10) trading days during which the Common Stock has traded
      prior to the Valuation Date;

    


    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    (ii) if
      the
      Common Stock is then included in The Nasdaq Stock Market, Inc., including
      without limitation the NASDAQ Capital
      Market
      or the NASDAQ National Market (“Nasdaq”),
      the
      average of the closing sale prices of one share of Common Stock on Nasdaq on
      the
      ten (10) consecutive trading days ending on the last trading day prior to the
      Valuation Date or, if no closing sale price is available for any of such ten
      (10) trading days, the closing sale price for such day shall be determined
      as
      the average of the high bid and the low ask price quoted on Nasdaq as of the
      end
      of such trading day; provided that if the Common Stock has not traded in the
      ten
      (10) consecutive trading days prior to the Valuation Date, the Fair Market
      Value
      shall be the average of the closing sale prices of one share of Common Stock
      in
      the most recent ten (10) trading days during which the Common Stock has traded
      prior to the Valuation Date;

    


    (iii) If
      the
      Common Stock is then included in the Over-the-Counter Bulletin Board, the
      average of the closing sale prices of one share of Common Stock on the
      Over-the-Counter Bulletin Board over the ten (10) consecutive trading days
      ending on the last trading day prior to the Valuation Date or, if no closing
      sale price is available for any of such ten (10) trading days, the closing
      sale
      price for such day shall be determined as the average of the high bid and the
      low ask price quoted on the Over-the-Counter Bulletin Board as of the end of
      such trading day; provided that if the Common Stock has not traded in the ten
      (10) consecutive trading days prior to the Valuation Date, the Fair Market
      Value
      shall be the average of the closing sale prices of one share of Common Stock
      in
      the most recent ten (10) trading days during which the Common Stock has traded
      prior to the Valuation Date;

    


    (iv) if
      the
      Common Stock is then included in the “pink sheets,” the average of the closing
      sale prices of one share of Common Stock on the “pink sheets” over the ten (10)
      consecutive trading days ending on the last trading day prior to the Valuation
      Date or, if no closing sale price is available for any of such ten (10) trading
      days, the closing sale price for such day shall be determined as the average
      of
      the high bid and the low ask price quoted on the “pink sheets” as of the end of
      such trading day; provided that if the Common Stock has not traded in the ten
      (10) consecutive trading days prior to the Valuation Date, the Fair Market
      Value
      shall be the average of the closing sale prices
      of one
      share of Common Stock in the most recent ten (10) trading days during which
      the
      Common Stock has traded prior to the Valuation Date; or

    


    (v) if
      the
      Common Stock is not then listed on a national securities exchange or quoted
      on
      Nasdaq or the Over-the-Counter Bulletin Board or the “pink sheets,” the Fair
      Market Value of one share of Common Stock as of the Valuation Date shall be
      determined in good faith by mutual agreement of the Board of Directors of the
      Company (the “Board”)
      and
      the Holder; provided that if, in such case, the Board and the Holder are unable
      to agree as to the Fair Market Value of a share of Common Stock, such Fair
      Market Value shall be determined by an investment banker of national reputation
      selected by the Company and reasonably acceptable to the Holder, the fees and
      expenses of which shall be borne equally by the Company and the Holder. The
      Board shall respond promptly in writing to a written inquiry by the Holder
      prior
      to the exercise hereunder as to the Fair Market Value of a share of Common
      Stock.

    


    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

      Section
        2. Reservation of Shares; Stock Fully Paid;
        Listing.
        The
        Company shall keep reserved a sufficient number of shares of the authorized
        and
        unissued shares of Common Stock to provide for the exercise of the rights
        of
        purchase represented by this Warrant in compliance with its terms. All Warrant
        Shares issued upon exercise of this Warrant shall be, at the time of delivery
        of
        the certificates for such Warrant Shares upon payment in full of the Warrant
        Price therefor in accordance with the terms of this Warrant (or proper exercise
        of the cashless exercise rights contained in Section
        1(c)
        hereof),
        duly authorized, validly issued, fully paid and non-assessable shares of
        Common
        Stock of the Company. The Company shall during all times prior to the Expiration
        Date when the shares of Common Stock issuable upon the exercise of this Warrant
        are authorized for listing or quotation on any national securities exchange,
        Nasdaq or the Over-the-Counter Bulletin Board or the “pink sheets”, as the case
        may be, keep the shares of Common Stock issuable upon the exercise of this
        Warrant authorized for listing or quotation on such national securities
        exchange, Nasdaq or the Over-the-Counter Bulletin Board or the “pink sheets”, as
        the case may be.

       

      Section
        3. Adjustments and Distributions.
        The
        number and kind of securities purchasable upon the exercise of this Warrant
        and
        the Warrant Price shall be subject to adjustment from time to time upon the
        occurrence of certain events, as follows:

    

    


    (a) If
      the
      Company shall at any time or from time to time while this Warrant is
      outstanding, pay a dividend or make a distribution on its Common Stock in shares
      of Common Stock, subdivide its outstanding shares of Common Stock into a greater
      number of shares or combine its outstanding shares of Common Stock into a
      smaller number of shares, then the number of Warrant Shares purchasable upon
      exercise of this Warrant and the Warrant Price in effect immediately prior
      to
      the date upon which such change shall become effective shall be proportionally
      adjusted by the Company so that the Holder thereafter exercising this Warrant
      shall be entitled to receive the number of shares of Common Stock or other
      capital stock which the Holder would have received if this Warrant had been
      exercised immediately prior to such event upon payment of a Warrant Price that
      has been proportionally adjusted to reflect such event. Such adjustments shall
      be made successively whenever any event listed above shall occur.

    


    (b) If
      any
      recapitalization, reclassification or reorganization of the capital stock of
      the
      Company (other than a change in par value or a subdivision or combination as
      provided for in Section
      3(a)
      above)
      shall be effected in such a manner (including, without limitation, in connection
      with a consolidation or merger in which the Company is the continuing
      corporation), that holders of Common Stock shall be entitled to receive stock,
      securities, or other assets or property (a “Reorganization”),
      then,
      as a condition of such Reorganization, lawful and adequate provisions shall
      be
      made by the Company whereby the Holder hereof shall thereafter have the right
      to
      purchase and receive (in lieu of the shares of the Common Stock of the Company
      immediately theretofore purchasable and receivable upon the exercise of the
      rights represented hereby) such shares of stock, securities or other assets
      or
      property as may be issued or payable with respect to or in exchange for a number
      of outstanding shares of such Common Stock equal to the number of shares of
      such
      Common Stock immediately theretofore purchasable and receivable upon the
      exercise of the rights represented hereby. In the event of any Reorganization,
      appropriate provision shall be made by the Company with respect to the rights
      and interests of the Holder of this Warrant to the end that the provisions
      hereof (including, without limitation, provisions for adjustments of the Warrant
      Price and of the number of Warrant Shares) shall thereafter be applicable,
      in
      relation to any shares of stock, securities or assets thereafter deliverable
      upon the exercise hereof. The provisions of this Section
      3(b)
      shall
      similarly apply to successive Reorganizations.

    


    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    (c) If
      any
      consolidation or merger of the Company with another entity in which the Company
      is not the survivor, or sale, transfer or other disposition of all or
      substantially all of the Company’s assets to another entity shall be effected,
      then, as a condition of such consolidation, merger, sale, transfer or other
      disposition, lawful and adequate provision shall be made whereby the Holder
      shall thereafter have the right to purchase and receive upon the basis and
      upon
      the terms and conditions herein specified and in lieu of the Warrant Shares
      immediately theretofore issuable upon exercise of this Warrant, such shares
      of
      stock, securities or assets as would have been issuable or payable with respect
      to or in exchange for a number of Warrant Shares equal to the number of Warrant
      Shares immediately theretofore issuable upon exercise of this Warrant, had
      such
      consolidation, merger, sale, transfer or other disposition not taken place,
      and
      in any such case appropriate provision shall be made with respect to the rights
      and interests of the Holder to the end that the provisions hereof (including,
      without limitation, provision for adjustment of the Warrant Price and of the
      number of Warrant Shares) shall thereafter be applicable, as nearly equivalent
      as may be practicable, in relation to any shares of stock, securities or
      properties thereafter deliverable upon the exercise thereof. The Company shall
      not effect any such consolidation, merger, sale, transfer or other disposition
      unless prior to or simultaneously with the consummation thereof the successor
      entity (if other than the Company) resulting from such consolidation or merger,
      or the entity purchasing or otherwise acquiring such assets or other appropriate
      entity shall assume the obligation to deliver to the Holder such shares of
      stock, securities or assets as, in accordance with the foregoing provisions,
      such Holder may be entitled to purchase, and the other obligations under this
      Warrant. The provisions of this Section
      3(c)
      shall
      similarly apply to successive consolidations, mergers, sales, transfers or
      other
      dispositions.

    


    (d) In
      case
      the Company shall fix a payment date for the making of a distribution to all
      holders of Common Stock of evidences of indebtedness or assets (other than
      dividends or distributions referred to in Section
      3(a)
      hereof),
      or subscription rights or warrants, the Warrant Price to be in effect after
      such
      payment date shall be determined by multiplying the Warrant Price in effect
      immediately prior to such payment date by a fraction, the numerator of which
      shall be the total number of shares of Common Stock outstanding multiplied
      by
      the Fair Market Value per share of Common Stock immediately prior to such
      payment date, less the fair market value (as determined by the Board in good
      faith) of said assets or evidences of indebtedness so distributed, or of such
      subscription rights or warrants, and the denominator of which shall be the
      total
      number of shares of Common Stock outstanding multiplied by such Fair Market
      Value per share of Common Stock immediately prior to such payment date. Such
      adjustment shall be made successively whenever such a payment date is
      fixed.

    


    (i) In
      the
      event that any dividend or distribution for which this Section
      3(d)
      would
      require an adjustment is not so paid or made, the Warrant Price shall be
      adjusted to be the Warrant Price which would then be in effect if such dividend
      or distribution had not been declared.

    


    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    (ii) In
      the
      event that the Company implements a new shareholder rights plan, such rights
      plan shall provide that upon exercise of this Warrant the Holder will receive,
      in addition to the Common Stock issuable upon such exercise, the rights issued
      under such rights plan (as if the Holder had exercised this Warrant prior to
      implementing the rights plan and notwithstanding the occurrence of an event
      causing such rights to separate from the Common Stock at or prior to the time
      of
      exercise). Any distribution of rights or warrants pursuant to a shareholder
      rights plan complying with the requirements set forth in the immediately
      preceding sentence of this paragraph shall not constitute a distribution of
      rights or warrants for the purposes of this Section
      3(d).

    


    (e) For
      the
      term of this Warrant, in addition to the provisions contained above, the Warrant
      Price shall be subject to adjustment as provided below. An adjustment to the
      Warrant Price shall become effective immediately after the payment date in
      the
      case of each dividend or distribution and immediately after the effective date
      of each other event which requires an adjustment. No adjustment to the Warrant
      Price shall be made in an amount less than $0.01, but any such lesser amount
      shall be carried forward and shall be given effect in the next Warrant Price
      adjustment, if any.

    


    (f) In
      the
      event that, as a result of an adjustment made pursuant to this Section
      3,
      the
      Holder shall become entitled to receive any shares of capital stock of the
      Company other than shares of Common Stock, the number of such other shares
      so
      receivable upon exercise of this Warrant shall be subject thereafter to
      adjustment from time to time in a manner and on terms as nearly equivalent
      as
      practicable to the provisions with respect to the Warrant Shares contained
      in
      this Warrant.

    


    (g) Except
      as
      provided in Section
      3(h)
      hereof,
      if and whenever the Company shall issue or sell, or is, in accordance with
      any
      of Sections
      3(g)(i) through 3(g)(v)
      hereof,
      deemed to have issued or sold, any shares of Common Stock for a consideration
      per share less than the Warrant Price in effect immediately prior to the time
      of
      such issue or sale, then and in each such case (a “Trigger
      Issuance”)
      the
      then-existing Warrant Price shall be reduced, as of the close of business on
      the
      effective date of the Trigger Issuance, to a Warrant Price equal to the lowest
      price per share at which any share of Common Stock was issued or sold or deemed
      to be issued or sold in such Trigger Issuance. 

    


    For
      purposes of this Section
      3(g),
      the
      following Sections
      3(g)(i) to 3(g)(v)
      shall
      also be applicable (subject, in each such case, to the provisions of
Section
      3(h)
      hereof):

    


    (i) Issuance
      of Options or Convertible Securities.
      In case
      at any time after the date hereof the Company shall in any manner grant, issue
      or sell any stock or security convertible into or exchangeable for Common Stock
      (“Convertible
      Securities”)
      or any
      warrants or other rights to subscribe for or to purchase, or any options for
      the
      purchase of, Common Stock or any Convertible Securities (such warrants, rights
      or options being called “Options”),
      whether or not the right to convert, exchange or exercise any such Convertible
      Securities or such Options are immediately exercisable, and the price per share
      for which Common Stock is issuable upon the conversion or exchange of such
      Convertible Securities or upon the exercise of such Options (determined by
      dividing (i) the sum of (x) the total amount, if any, received or receivable
      by
      the Company as consideration for the issue or sale of such Convertible
      Securities or the granting of such Options, plus (y) the aggregate amount of
      additional consideration, if any, payable to the Company upon the conversion
      or
      exchange of all such Convertible Securities or the exercise of all such Options,
      plus (z), in the case of such Options to purchase Convertible Securities, the
      aggregate amount of additional consideration, if any, payable upon the
      conversion or exchange of such Convertible Securities, by (ii) the maximum
      number of shares of Common Stock issuable upon the conversion or exchange of
      all
      such Convertible Securities, or upon the exercise of such Options, or upon
      the
      conversion or exchange of all such Convertible Securities issuable upon the
      exercise of such Options), shall be less than the Warrant Price in effect
      immediately prior to the time of the issue or sale of such Convertible
      Securities or the granting of such Options, then the total number of shares
      of
      Common Stock issuable upon the conversion or exchange of such Convertible
      Securities, or the exercise of such Options, or upon the conversion or exchange
      of the maximum amount of such Convertible Securities issuable upon the exercise
      of such Options shall be deemed to have been issued for such price per share
      as
      of the date of the issuance or sale of such Convertible Securities or the
      granting of such Options (including Options to purchase Convertible Securities)
      and thereafter shall be deemed to be outstanding for purposes of adjusting
      the
      Warrant Price. Except as otherwise provided in Section
      3(g)(ii),
      no
      additional adjustment of the Warrant Price shall be made upon the actual issue
      of such Common Stock upon conversion or exchange of such Convertible Securities
      or upon exercise of such Options.

    


    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    (ii) Change
      in Option Price or Conversion Rate.
      Upon
      the happening of any of the following events, namely, if (A) the purchase price
      provided for in any Option referred to in Section
      3(g)(i)
      hereof,
      (B) the additional consideration, if any, payable upon the conversion or
      exchange of any Convertible Securities referred to in Section
      3(g)(i),
      or (C)
      the rate at which Convertible Securities referred to in Section
      3(g)(i)
      are
      convertible into or exchangeable for Common Stock shall increase or decrease
      at
      any time (including, but not limited to, changes under or by reason of
      provisions designed to protect against dilution), the Warrant Price in effect
      at
      the time of such event shall forthwith be readjusted to the Warrant Price which
      would have been in effect at such time had such Options or Convertible
      Securities still outstanding provided for such changed purchase price,
      additional consideration or conversion rate, as the case may be, at the time
      initially granted, issued or sold, but only if as a result of such adjustment
      the Warrant Price then in effect hereunder is thereby reduced. 

    


    (iii) Consideration
      for Stock.
      In case
      any shares of Common Stock, Options or Convertible Securities shall be issued
      or
      sold for cash, the consideration received therefor shall be deemed to be the
      amount received by the Company therefor, without deduction therefrom of any
      expenses incurred or any underwriting commissions or concessions paid or allowed
      by the Company in connection therewith. In case any shares of Common Stock,
      Options or Convertible Securities shall be issued or sold for a consideration
      other than cash or for a consideration including cash and such other
      consideration, the amount of the consideration other than cash received by
      the
      Company shall be deemed to be the fair value of such consideration as determined
      in good faith by the Board, after deduction of any expenses incurred or any
      underwriting commissions or concessions paid or allowed by the Company in
      connection therewith. 

    


    (iv) Record
      Date.
      In case
      the Company shall take a record of the holders of its Common Stock for the
      purpose of entitling them (A) to receive a dividend or other distribution
      payable in Common Stock, Options or Convertible Securities or (B) to subscribe
      for or purchase Common Stock, Options or Convertible Securities, then such
      record date shall be deemed to be the date of the issue or sale of the shares
      of
      Common Stock deemed to have been issued or sold upon the declaration of such
      dividend or the making of such other distribution or the date of the granting
      of
      such right of subscription or purchase, as the case may be. If the Company
      shall
      have taken a record of the holders of its Common Stock for the purpose of
      entitling them to receive a dividend or distribution or subscription or purchase
      rights and shall, thereafter and before the distribution to stockholders
      thereof, legally abandon its plan to pay or deliver such dividend, distribution,
      subscription or purchase rights, then thereafter no adjustment shall be required
      by reason of the taking of such record and any such adjustment previously made
      in respect thereof shall be automatically rescinded and annulled.

    


    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    (v) Treasury
      Shares.
      The
      number of shares of Common Stock outstanding at any given time shall not include
      shares owned or held by or for the account of the Company or any of its
      wholly-owned subsidiaries, and the disposition of any such shares (other than
      the cancellation or retirement thereof) shall be considered an issue or sale
      of
      Common Stock for the purpose of this Section
      3(g).

    


    (h) Excluded
      Issuances.
      Anything herein to the contrary notwithstanding, the Company shall not be
      required to make any adjustment of the Warrant Price in the case of the
      following issuances or deemed issuances of Common Stock from and after the
      date
      hereof: (i)issuances upon the exercise or conversion of any Options or
      Convertible Securities granted, issued and outstanding on or prior to the date
      hereof; (ii) issuances upon the grant or exercise of any stock or options which
      have been or may hereafter be granted or exercised under any employee benefit
      plan, stock option plan or restricted stock plan of the Company, so long as
      such
      agreement, arrangement or plan was or is approved by a majority of the
      independent members of the Board or a majority of the members of a committee
      of
      independent directors established for such purpose; (iii) issuances of
      securities as consideration for a merger or consolidation with, or purchase
      of
      assets from, a non-Affiliated third party or in connection with any strategic
      partnership or joint venture with a non-Affiliated third party with which the
      Company will enter into one or more technology agreements (where the primary
      purpose of any such action is not to raise equity capital); (iv) shares of
      Common Stock issuable upon the conversion of the Company’s Series A Preferred
      Stock (including shares of Series A Preferred Stock issued after the date hereof
      pursuant to the Purchase Agreement); (v) shares of Common Stock issued or
      issuable upon conversion of the Company’s Series B Preferred Stock (“Series B
      Preferred”), including Series B Preferred issuable upon exercise of warrants to
      purchase Series B Preferred or promissory notes convertible into Series B
      Preferred outstanding as of the date hereof; (vi) shares of Common Stock
      issuable as payment-in-kind dividends on the Series A Preferred Stock pursuant
      to Section 3(a) of the Certificate of Designations; (vii) shares of Common
      Stock
      issuable upon exercise of the Warrants; (viii) shares of Common Stock issued
      or
      issuable as a result of any stock split, combination, dividend, distribution,
      reclassification, exchange or substitution (but only to the extent that such
      a
      stock split, combination, dividend, distribution, reclassification, exchange
      or
      substitution results in an adjustment to the Warrant Price pursuant to the
      provisions of this Warrant); and
      (ix)
      shares of Common Stock issued (or issuable upon exercise, exchange or conversion
      of rights, options or warrants outstanding from time to time) which the
      Requisite Holders (as defined in the Certificate of Designations) elect to
      treat
      as an excluded issuance hereunder.

    


    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    (i) Notice
      of Adjustments.
      With
      each adjustment pursuant to this Section
      3,
      the
      Company shall deliver a certificate signed by its chief financial or executive
      officer setting forth, in reasonable detail, the event requiring the adjustment,
      the amount of the adjustment, the method by which such adjustment was
      calculated, and the Warrant Price and the number of Warrant Shares purchasable
      hereunder after giving effect to such adjustment, which shall be mailed by
      first
      class mail, postage prepaid to the Holder.

     

    Section
      4. Transfer Taxes.
      The
      Company will pay any documentary stamp taxes attributable to the initial
      issuance of Warrant Shares issuable upon the exercise of the Warrant;
provided,
      however,
      that
      the Company shall not be required to pay any tax or taxes which may be payable
      in respect of any transfer involved in the issuance or delivery of any
      certificates for Warrant Shares in a name other than that of the registered
      Holder of this Warrant in respect of which such shares are issued, and in such
      case, the Company shall not be required to issue or deliver any certificate
      for
      Warrant Shares or any Warrant until the person requesting the same has paid
      to
      the Company the amount of such tax or has established to the Company’s
      reasonable satisfaction that such tax has been paid.

     

    Section
      5. Mutilated or Missing Warrants.
      In case
      this Warrant shall be mutilated, lost, stolen, or destroyed, the Company shall
      issue in exchange and substitution of and upon cancellation of the mutilated
      Warrant, or in lieu of and substitution for the Warrant lost, stolen or
      destroyed, a new Warrant of like tenor and for the purchase of a like number
      of
      Warrant Shares, but only upon receipt of evidence reasonably satisfactory to
      the
      Company of such loss, theft or destruction of the Warrant, and with respect
      to a
      lost, stolen or destroyed Warrant, reasonable indemnity or bond with respect
      thereto, if requested by the Company.

     

    Section
      6. Fractional Shares.
      No
      fractional shares of Common Stock shall be issued in connection with any
      exercise or cashless exercise hereunder, and in lieu of any such fractional
      shares the Company shall make a cash payment therefor to the Holder (or such
      other person or persons as directed by the Holder, subject to compliance with
      all applicable laws) based on the Fair Market Value of a share of Common Stock
      on the date of exercise or cashless exercise of this Warrant.

     

    Section
      7. Compliance with Securities Act and Legends.
The
      Holder, by acceptance hereof, agrees that it will not offer, sell or otherwise
      dispose of this Warrant, or any shares of Common Stock to be issued upon
      exercise hereof except under circumstances which will not result in a violation
      of the Securities Act of 1933, as amended, or the rules and regulations
      promulgated thereunder, as amended (the “Act”),
      or
      any state’s securities laws. All shares of Common Stock issued upon exercise of
      this Warrant (unless registered under the Act) shall be stamped or imprinted
      with a legend as follows:

    


    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    “THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE (i) NOT BEEN REGISTERED UNDER
      THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE,
      AND
      (ii) BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY. THESE SECURITIES MAY NOT BE
      SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
      THEREFROM UNDER SAID ACT OR LAWS.”

     

    Section
      8. Rights as a Stockholder.
      Except
      as expressly provided in this Warrant, no Holder, as such, shall be entitled
      to
      vote or receive dividends or be deemed the holder of Common Stock or any other
      securities of the Company which may at any time be issuable on the exercise
      hereof for any purpose, nor shall anything contained herein be construed to
      confer upon the Holder, as such, any of the rights of a stockholder of the
      Company or any right to vote for the election of the directors or upon any
      matter submitted to stockholders at any meeting thereof, or to receive notice
      of
      meetings, or to receive dividends or subscription rights or otherwise, until
      this Warrant shall have been exercised and the Warrant Shares purchasable upon
      the exercise hereof shall have become deliverable, as provided
      herein.

     

    Section
      9. Early Termination. In
      the event of a Change of Control (as defined below) at any time prior the
      Expiration Date, the Company shall provide to the Holder written notice thereof
      at least thirty (30) days before consummation of such Change of Control, and
      this Warrant shall terminate on the 31st day after the Holder's receipt of
      such
      notice, unless exercised prior to the date on which such Change of Control
      is
      consummated.  For purposes of this paragraph, “Change
      of Control”
      shall
      mean (i) the consolidation or merger of the Company with or into another
      corporation, in which the holders of the Company's common stock immediately
      before such consolidation or merger do not, immediately after such consolidation
      or merger, own at least 50% of the outstanding common stock of the surviving
      corporation, (ii) the sale or other disposition of all or substantially all
      the
      properties and assets of the Company in its entirety to any other person, or
      (iii) the acquisition by any individual, entity or group (within the meaning
      of
      Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended)
      of beneficial ownership (within the meaning of Rule 13d-3 of the Securities
      Exchange Act of 1934, as amended) of more than 50% of either (x) the then
      outstanding shares of common stock of the Company or (y) the combined voting
      power of the then outstanding voting securities of the Company entitled to
      vote
      generally in the election of directors.

     

    Section
      10. Modification and
      Waiver. This Warrant and any provision hereof may be changed,
      waived, discharged or terminated only by an instrument in writing signed by
      the
      Company and the then current Holder, and such change, waiver, discharge or
      termination shall be binding on any future Holder.

     

    Section
      11. Notices.
      Unless
      otherwise specifically provided herein, all communications under this Warrant
      shall be in writing and shall be deemed to have been duly given (a) on the
      date
      personally delivered to the party to whom notice is to be given, (b) on the
      day
      of transmission if sent by facsimile transmission to, in the case of the
      registered Holder, the facsimile number shown on the books of the Company and,
      in the case of the Company, the facsimile number set forth in Section 8.4 of
      the
      Purchase Agreement, if sent during normal business hours; if not, then at the
      commencement of the next Business Day, in each case provided that the sending
      party receives confirmation of the completion of such transmission, (c) on
      the
      Business Day after submitted for next day delivery to Federal Express or similar
      overnight courier which utilizes a written form of receipt, or (d) on the fifth
      day after mailing, if mailed to the party to whom notice is to be given, by
      first class mail, registered or certified, postage prepaid, and properly
      addressed, return receipt requested, to the registered Holder at its address
      as
      shown on the books of the Company or to the Company at the address indicated
      in
      Section 8.4 of the Purchase Agreement. Any party hereto may change its address
      for purposes of this Section
      11
      by
      giving the other party written notice of the new address in the manner set
      forth
      herein.

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    Section
      12. Descriptive Headings.
      The
      descriptive headings contained in this Warrant are inserted for convenience
      only
      and do not constitute a part of this Warrant.

     

    Section
      13. Governing Law.
      The
      validity, interpretation and performance of this Warrant shall be governed
      by,
      and construed in accordance with, the laws of the State of New York applicable
      to contracts made and to be performed entirely within such State, regardless
      of
      the law that might be applied under principles of conflicts of law. The Company
      and, by accepting this Warrant, the Holder, each irrevocably submits to the
      exclusive jurisdiction of the state and federal courts located in New York
      for
      the purpose of any suit, action, proceeding or judgment relating to or arising
      out of this Warrant and the transactions contemplated hereby. Service of process
      in connection with any such suit, action or proceeding may be served on each
      party hereto anywhere in the world by the same methods as are specified for
      the
      giving of notices under this Warrant. The Company and, by accepting this
      Warrant, the Holder, each irrevocably consents to the jurisdiction of any such
      court in any such suit, action or proceeding and to the laying of venue in
      such
      court. The Company and, by accepting this Warrant, the Holder, each irrevocably
      waives any objection to the laying of venue of any such suit, action or
      proceeding brought in such courts and irrevocably waives any claim that any
      such
      suit, action or proceeding brought in any such court has been brought in an
      inconvenient forum.

     

    Section
      14. Acceptance.
      Receipt
      and execution of this Warrant by the Holder hereof shall constitute acceptance
      of and agreement to the foregoing terms and conditions.

     

    Section
      15. Identity of Transfer Agent.
      The
      transfer agent for the Common Stock is American Stock Transfer and Trust
      Company. Upon the appointment of any subsequent transfer agent for the Common
      Stock or other shares of the Company’s capital stock issuable upon the exercise
      of the rights of purchase represented by this Warrant, the Company will mail
      to
      the Holder a statement setting forth the name and address of such transfer
      agent.

     

    Section
      16. No Impairment of Rights.
      The
      Company will not, by amendment of its Certificate of Incorporation or through
      any other voluntary action, avoid or seek to avoid the observance or performance
      of any of the terms of this Warrant, but will at all times in good faith assist
      in the carrying out of all such terms and in the taking of all such action
      as
      may be necessary or appropriate in order to protect the rights of the holder
      of
      this Warrant against material impairment.

     

    Section
      17. Transferability.
      Subject
      to compliance with applicable federal and state securities laws, this Warrant
      may be transferred by the Holder with respect to any or all of the Warrant
      Shares then purchasable hereunder. Upon surrender of this Warrant to the
      Company, together with a properly endorsed notice of transfer, for transfer
      of
      this Warrant in its entirety by the Holder, the Company shall issue a new
      warrant of the same denomination to the designated transferee. Upon surrender
      of
      this Warrant to the Company, together with a properly endorsed notice of
      transfer, by the Holder for transfer with respect to a portion of the Warrant
      Shares then purchasable hereunder, the Company shall issue a new warrant to
      the
      designated transferee, in such denomination as shall be requested by the Holder
      hereof, and shall issue to such Holder a new warrant covering the number of
      Warrant Shares in respect of which this Warrant shall not have been
      transferred.


    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be executed on its
      behalf by one of its officers thereunto duly authorized.

     

    
      	 	 	 
	 	AEOLUS
              PHARMACEUTICALS, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Michael
              P. McManus 
	 	
              
Name:
              Michael P. McManus
	 	Title:  
              Chief Accounting Officer 


    

      

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    APPENDIX
      A

    


    NOTICE
      OF EXERCISE

    


    


    


    To: AEOLUS
      PHARMACEUTICALS, INC.

    


    1. The
      undersigned hereby irrevocably elects to purchase ________ shares of Common
      Stock of Aeolus Pharmaceuticals, Inc. pursuant to the terms of the attached
      Warrant, and tenders herewith payment of the purchase price of such shares
      in
      full, by [cash,
      certified check/wire transfer, or surrender of the originally executed
      Warrant]
      [select the applicable method of payment].

    


    2. Please
      issue a certificate or certificates representing said shares in the name of
      the
      undersigned or in such other name or names as are specified below:

    


    ______________________________

     

    ______________________________

    (Name)

    


    ______________________________

    (Address)

    


    _________________________
      (Signature)

    __________________(Date)

    


    3. Please
      issue a new Warrant of equivalent form and tenor for the unexercised portion
      of
      the attached Warrant in the name of the undersigned or in such other name as
      is
      specified below:

    


    ______________________________________

    


    Date:
      __________________________________

    


    (Warrantholder)
      _________________________

    


    Name:
      (Print) ___________________________

    


    By:____________________________________

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    APPENDIX
      B

     

    Net
      Issue Election Notice

    


    


    To:
      Aeolus Pharmaceuticals, Inc.

    


    Date:
      [_________________________]

    


    


    The
      undersigned hereby elects under Section
      1(c)
      of this
      Warrant to surrender the right to purchase [____________] shares of Common
      Stock
      pursuant to this Warrant and hereby requests the issuance of [_____________]
      shares of Common Stock. The certificate(s) for the shares issuable upon such
      net
      issue election shall be issued in the name of the undersigned or as otherwise
      indicated below.

    


    


    _________________________________________

    Signature

    


    _________________________________________

    Name
      for
      Registration

    


    _________________________________________

    Mailing
      Address