may2007rra.htm


               EXHIBIT
      4.1

    


    REGISTRATION
      RIGHTS AGREEMENT

    


    This
      Registration Rights Agreement
      (this “Agreement”) is made and entered into as of May 22, 2007, between
      Aeolus Pharmaceuticals, Inc., a Delaware corporation (the “Company”) and
      each of the several purchasers signatory hereto (each such purchaser, a
“Purchaser” and, collectively, the “Purchasers”).

    


                   This
      Agreement is made pursuant to the Securities Purchase Agreement, dated as of
      the
      date hereof, between the Company and each Purchaser (the “Purchase
      Agreement”).

    


                   The
      Company and each Purchaser hereby agrees as follows:

    


    1.           Definitions.  Capitalized
      terms used and not otherwise defined herein that are defined in the Purchase
      Agreement shall have the meanings given such terms in the Purchase
      Agreement. As used in this Agreement, the following terms shall have
      the following meanings:

    


                “Advice”
      shall have the meaning set forth in Section 6(d).

    


    “Effectiveness
      Period” shall mean the Initial Effectiveness Period or Subsequent
      Effectiveness Period, as applicable.

    


    “Event”
      shall have the meaning set forth in Section 2(b).

    


    “Event
      Date” shall have the meaning set forth in Section 2(b).

    


    “Holder”
      or “Holders” means the holder or holders, as the case may be, from time
      to time of Registrable Securities.

    


    “Indemnified
      Party” shall have the meaning set forth in Section 5(c).

    


    “Indemnifying
      Party” shall have the meaning set forth in Section 5(c).

    


    “Initial
      Filing Date” means, with respect to the Initial Registration Statement
      required hereunder, the 30th calendar
      day
      following the date hereof.

    


    “Initial
      Registration Statement” shall have the meaning set forth in Section
      2(a).

    


    “Initial
      Registration Statement Effectiveness Date” means, with respect to the
      Initial Registration Statement required to be filed hereunder, the 60th calendar
      day
      following the Initial Filing Date (or, in the event of a “full review” by the
      Commission, the 90th calendar
      day
      following the Initial Filing Date).

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Initial
      Registration Statement Effectiveness Period” shall have the meaning set
      forth in Section 2(a).

    


    “Initial
      Shares” means a number of Registrable Securities equal to the lesser of (i)
      the total number of Registrable Securities and (ii) one-third of the number
      of
      issued and outstanding shares of Common Stock that are held by non-affiliates
      of
      the Company on the day immediately prior to the filing date of the Initial
      Registration Statement.

    


    “Losses”
      shall have the meaning set forth in Section 5(a).

    


    “Plan
      of Distribution” shall have the meaning set forth in Section
      2(a).

    


    “Prospectus”
      means the prospectus included in a Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated by the Commission pursuant to the Securities Act), as
      amended or supplemented by any prospectus supplement, with respect to the terms
      of the offering of any portion of the Registrable Securities covered by a
      Registration Statement, and all other amendments and supplements to the
      Prospectus, including post-effective amendments, and all material incorporated
      by reference or deemed to be incorporated by reference in such
      Prospectus.

    


    “Registrable
      Securities” means (i) all Shares, (ii) all Warrant Shares (assuming on the
      date of determination the Warrants are exercised in full without regard to
      any
      exercise limitations therein), (iii) any additional shares of Common Stock
      issuable in connection with any anti-dilution provisions in the Warrants (in
      each case, without giving effect to any limitations on exercise set forth in
      the
      Warrants) and (iv) any securities issued or issuable upon any stock split,
      dividend or other distribution,  recapitalization or similar event
      with respect to the foregoing.

    


    “Registration
      Statement” means a registration statement on Form S-3 (unless the Company is
      not then eligible to register for resale the Registrable Securities on Form
      S-3
      in which case such registration statement shall be on any form selected by
      the
      Company for which it then qualifies) which permits the sale thereunder of the
      number and type of Registrable Securities (and any other securities of the
      Company) to be included therein in accordance with this Agreement by the
      applicable sellers in the manner described therein, including the Prospectus,
      amendments and supplements to such registration statement or Prospectus,
      including pre- and post-effective amendments, all exhibits thereto, and all
      material incorporated by reference or deemed to be incorporated by reference
      in
      such registration statement.

    


     “Rule
      415” means Rule 415 promulgated by the Commission pursuant to the Securities
      Act, as such Rule may be amended or interpreted from time to time, or any
      similar rule or regulation hereafter adopted by the Commission having
      substantially the same purpose and effect as such Rule.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Rule
      424” means Rule 424 promulgated by the Commission pursuant to the Securities
      Act, as such Rule may be amended or interpreted from time to time, or any
      similar rule or regulation hereafter adopted by the Commission having
      substantially the same purpose and effect as such Rule.

    


    “Selling
      Shareholder Questionnaire” shall have the meaning set forth in Section
      3(a).

    


    “SEC
      Guidance” means (i) any publicly-available written guidance, comments,
      requirements or requests of the Commission staff and (ii) the Securities
      Act.

    


    “Subsequent
      Filing Date” means, with respect to the Subsequent Registration Statement
      required hereunder, November 21, 2007.

    


    “Subsequent
      Registration Statement” shall have the meaning set forth in
      Section 2(a).

    


    “Subsequent
      Registration Statement Effectiveness Date” means, with respect to the
      Subsequent Registration Statement required to be filed hereunder, the 60th calendar
      day
      following the Subsequent Filing Date (or, in the event of a “full review” by the
      Commission, the 90th calendar
      day
      following the Subsequent Filing Date).

    


    “Subsequent
      Registration Statement Effectiveness Period” shall have the meaning set
      forth in Section 2(b).

    


    2.           Shelf
      Registration.

    


    (a)  On
      or
      prior to the Initial Filing Date, the Company shall prepare and file with the
      Commission an initial Registration Statement (the “Initial Registration
      Statement”) covering the resale of all or such maximum portion of the
      Registrable Securities as permitted by SEC Guidance that are not then registered
      on an effective Registration Statement for an offering to be made on a
      continuous basis pursuant to Rule 415; provided, however, the
      Company shall use diligent efforts to advocate with the Commission for the
      registration of all of the Registrable Securities in accordance with the SEC
      Guidance, including without limitation, the Manual of Publicly Available
      Telephone Interpretations D.29.  Except as provided in the foregoing
      sentence, the Initial Registration Statement shall contain (unless otherwise
      directed by at least an 85% majority in interest of the Holders) substantially
      the “Plan of Distribution” attached hereto as Annex
      A.  Subject to the terms of this Agreement, the Company shall use
      its best efforts to cause the Initial Registration Statement to be declared
      effective under the Securities Act as promptly as possible after the filing
      thereof, but in any event prior to the Initial Registration Statement
      Effectiveness Date, and shall use its best efforts to keep such Initial
      Registration Statement continuously effective under the Securities Act until
      all
      Registrable Securities covered by such Initial Registration Statement have
      been
      sold, or may be sold without volume restrictions pursuant to Rule 144(k), as
      determined by the counsel to the Company pursuant to a written opinion letter
      to
      such effect, addressed and acceptable to the Company’s transfer agent and the
      affected Holders (the “Initial Registration Statement Effectiveness
      Period”).  The Company shall telephonically request effectiveness
      of the Initial Registration Statement, and the Company shall notify the Holders
      via facsimile or by e-mail of the effectiveness of the Initial Registration
      Statement within one (1) Trading Day of the date upon which the Company
      telephonically confirms effectiveness with the Commission which notice shall
      be
      made simultaneously with all selling shareholders on the Initial Registration
      Statement.  The Company shall, by 3:00 p.m. New York City time on the
      first Trading Day after the effective date of such Initial Registration
      Statement, file a final Prospectus with the Commission as required by Rule
      424.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)  On
      or
      prior to the Subsequent Filing Date, if any Registrable Securities are not
      then
      registered on an effective Registration Statement, the Company shall prepare
      and
      file with the Commission a subsequent Registration Statement (the “Subsequent
      Registration Statement”) covering the resale of all or such maximum portion
      of such Registrable Securities as permitted by SEC Guidance for an offering
      to
      be made on a continuous basis pursuant to Rule 415; provided,
however, provided that the Company shall use diligent efforts to advocate
      with the Commission for the registration of all of the Registrable Securities
      in
      accordance with the SEC Guidance, including without limitation, the Manual
      of
      Publicly Available Telephone Interpretations D.29 .  Except as
      provided in the foregoing sentence, the Subsequent Registration Statement shall
      contain (unless otherwise directed by at least an 85% majority in interest
      of
      the Holders) substantially the Plan of Distribution.  Subject to the
      terms of this Agreement, the Company shall use its best efforts to cause the
      Subsequent Registration Statement to be declared effective under the Securities
      Act as promptly as possible after the filing thereof, but in any event prior
      to
      the Subsequent Registration Statement Effectiveness Date, and shall use its
      best
      efforts to keep such Subsequent Registration Statement continuously effective
      under the Securities Act for the until all Registrable Securities covered by
      such Subsequent Registration Statement have been sold, or may be sold without
      volume restrictions pursuant to Rule 144(k), as determined by the counsel to
      the
      Company pursuant to a written opinion letter to such effect, addressed and
      acceptable to the Company’s transfer agent and the affected Holders (the
“Subsequent Registration Statement Effectiveness Period”).  The
      Company shall telephonically request effectiveness of the Initial Registration
      Statement, and the Company shall notify the Holders via facsimile or by e-mail
      of the effectiveness of the Initial Registration Statement within two (2)
      Trading Days of the date upon which the Company telephonically confirms
      effectiveness with the Commission.  The Company shall, by 3:00 p.m.
      New York City time on the second Trading Day after the effective date of such
      Initial Registration Statement, file a final Prospectus with the Commission
      as
      required by Rule 424.

    


    (c)  Notwithstanding
      any other provision of this Agreement, if any SEC Guidance sets forth a
      limitation on the number of Registrable Securities permitted to be registered
      on
      a particular Registration Statement, unless otherwise directed in writing by
      a
      Holder as to its Registrable Securities, the number of Registrable Securities
      to
      be registered on such Registration Statement will first be reduced by
      Registrable Securities represented by Warrant Shares (applied, in the case
      that
      some Warrant Shares may be registered, to the Holders on a pro rata basis based
      on the total number of unregistered Warrant Shares held by such Holders), and
      second by Registrable Securities represented by the Shares (applied, in the
      case
      that some Shares may be registered, to the Holders on a pro rata basis based
      on
      the total number of unregistered Shares held by such Holders); provided,
however, prior to any reduction as set forth in this sentence in the
      number of Registrable Securities included in a Registration Statement, the
      number of shares of Common Stock set forth on Schedule 6(b) hereto which shall
      have been included on such Registration Statement shall be reduced by up to
      100%.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d)  If:
      (i)
      the Initial Registration Statement is not filed on or prior to the Initial
      Filing Date or the Subsequent Registration Statement is not filed on or prior
      to
      the Subsequent Filing Date (if the Company files the Initial Registration
      Statement without affording the Holders the opportunity to review and comment
      on
      the same as required by Section 3(a) herein, the Company shall be deemed to
      have
      not satisfied this clause (i)), or (ii) the Company fails to file with the
      Commission a request for acceleration of a Registration Statement in accordance
      with Rule 461 promulgated by the Commission pursuant to the Securities Act,
      within five Trading Days of the date that the Company is notified (orally or
      in
      writing, whichever is earlier) by the Commission that such Registration
      Statement will not be “reviewed” or will not be subject to further review, or,
      or (iii) as to, in the aggregate among all Holders on a pro-rata basis based
      on
      their purchase of the Securities pursuant to the Purchase Agreement, a
      Registration Statement registering for resale all of the Initial Shares is
      not
      declared effective by the Commission by the Initial Effectiveness Date of the
      Initial Registration Statement, or (iv) all of the Registrable Securities are
      not registered for resale pursuant to one or more effective Registration
      Statements on or before February 28, 2008, or (v) after the effective date
      of a
      Registration Statement, such Registration Statement ceases for any reason to
      remain continuously effective as to all Registrable Securities included in
      such
      Registration Statement, or the Holders are otherwise not permitted to utilize
      the Prospectus therein to resell such Registrable Securities, for more than
      15
      consecutive calendar days or more than an aggregate of 25 calendar days (which
      need not be consecutive calendar days) during any 12-month period (any such
      failure or breach being referred to as an “Event”, and for purposes of
      clause (i), (iii) and (iv) the date on which such Event occurs, and for purpose
      of clause (ii) the date on which such five Trading Day period is exceeded,
      and
      for purpose of clause (v) the date on which such 15 or 25 calendar day period,
      as applicable, is exceeded being referred to as “Event Date”), then, in
      addition to any other rights the Holders may have hereunder or under applicable
      law, on each such Event Date and on each monthly anniversary of each such Event
      Date (if the applicable Event shall not have been cured by such date) until
      the
      applicable Event is cured, the Company shall pay to each Holder an amount in
      cash, as partial liquidated damages and not as a penalty, equal to 1.5% of
      the
      aggregate purchase price paid by such Holder pursuant to the Purchase Agreement
      for any unregistered Registrable Securities then held by such
      Holder.  The parties agree that the Company shall not be liable for
      liquidated damages under this Agreement with respect to any Warrants or Warrant
      Shares.  If the Company fails to pay any partial liquidated damages
      pursuant to this Section in full within seven days after the date payable,
      the
      Company will pay interest thereon at a rate of 18% per annum (or such lesser
      maximum amount that is permitted to be paid by applicable law) to the Holder,
      accruing daily from the date such partial liquidated damages are due until
      such
      amounts, plus all such interest thereon, are paid in full. The partial
      liquidated damages pursuant to the terms hereof shall apply on a daily pro
      rata
      basis for any portion of a month prior to the cure of an Event.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (e)  Subject
      to SEC Guidance, if during the Effectiveness Period and after the Subsequent
      Filing Date the number of Registrable Securities at any time exceeds 100% of
      the
      number of shares of Common Stock then registered in a Registration Statement,
      then the Company shall file as soon as reasonably practicable an additional
      Registration Statement covering the resale by the Holders of not less than
      the
      number of such Registrable Securities.

    


    3.           Registration
      Procedures.

    


                   In
      connection with the Company’s registration obligations under Section 2, the
      Company shall:

    


    (a)  Not
      less
      than 3 Trading Days prior to the filing of each Registration Statement and
      not
      less than one Trading Day prior to the filing of any related Prospectus or
      any
      amendment or supplement thereto, the Company shall furnish to each Holder for
      review copies of all such documents proposed to be filed (other than those
      incorporated or deemed to be incorporated by reference) and consider in good
      faith any reasonable comments proposed by any such Holder. The Company shall
      not
      file a Registration Statement or any such Prospectus or any amendments or
      supplements thereto to which the Holders of a majority of the Registrable
      Securities covered by such Registration Statement shall reasonably object in
      good faith, provided that the Company is notified of such objection in writing
      no later than 3 Trading Days after the Holders have been so furnished copies
      of
      a Registration Statement or 1 Trading Day after the Holders have been so
      furnished copies of any related Prospectus or amendments or supplements thereto;
      provided, however, that if a Holder does not respond to the
      Company upon delivery of such documents within 3 or 1 Trading Day(s), as
      applicable, such Holder shall be deemed to have consented to the information
      included therein. Each Holder agrees to furnish to the Company a completed
      questionnaire in the form attached to this Agreement as Annex B (a
“Selling Shareholder Questionnaire”) not less than two Trading Days prior
      to the Filing Date or by the end of the second Trading Day following the date
      on
      which such Holder receives draft materials in accordance with this
      Section.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)  (i)
      Prepare and file with the Commission such amendments, including post-effective
      amendments, to a Registration Statement and the Prospectus used in connection
      therewith as may be necessary to keep a Registration Statement continuously
      effective as to the applicable Registrable Securities for the Effectiveness
      Period and prepare and file with the Commission such additional Registration
      Statements in order to register for resale under the Securities Act all of
      the
      Registrable Securities; (ii) cause the related Prospectus to be amended or
      supplemented by any required Prospectus supplement (subject to the terms of
      this
      Agreement), and, as so supplemented or amended, to be filed pursuant to Rule
      424; (iii) respond as promptly as reasonably possible to any comments received
      from the Commission with respect to a Registration Statement or any amendment
      thereto and provide as promptly as reasonably possible to the Holders via
      facsimile or e-mail true and complete copies of all correspondence from and
      to
      the Commission relating to a Registration Statement (provided that the Company
      may excise any information contained therein which would constitute material
      non-public information as to any Holder which has not executed a confidentiality
      agreement with the Company); and (iv) comply in all material respects with
      the
      provisions of the Securities Act and the Exchange Act with respect to the
      disposition of all Registrable Securities covered by a Registration Statement
      during the applicable period in accordance (subject to the terms of this
      Agreement) with the intended methods of disposition by the Holders thereof
      set
      forth in such Registration Statement as so amended or in such Prospectus as
      so
      supplemented.

    


    (c)  Notify
      the Holders of Registrable Securities to be sold (which notice shall, pursuant
      to clauses (iii) through (v) hereof, be accompanied by an instruction to suspend
      the use of the Prospectus until the requisite changes have been made) as
      promptly as reasonably possible (and, in the case of (i)(A) below, not less
      than
      one Trading Day prior to such filing) and (if requested by any such Person)
      confirm such notice in writing no later than one Trading Day following the
      day
      (i)(A) when a Prospectus or any Prospectus supplement or post-effective
      amendment to a Registration Statement is proposed to be filed; (B) when the
      Commission notifies the Company whether there will be a “review” of such
      Registration Statement and whenever the Commission comments in writing on such
      Registration Statement; and (C) with respect to a Registration Statement or
      any
      post-effective amendment, when the same has become effective; (ii) of any
      request by the Commission or any other federal or state governmental authority
      for amendments or supplements to a Registration Statement or Prospectus or
      for
      additional information; (iii) of the issuance by the Commission or any other
      federal or state governmental authority of any stop order suspending the
      effectiveness of a Registration Statement covering any or all of the Registrable
      Securities or the initiation of any Proceedings for that purpose; (iv) of the
      receipt by the Company of any notification with respect to the suspension of
      the
      qualification or exemption from qualification of any of the Registrable
      Securities for sale in any jurisdiction, or the initiation or threatening of
      any
      Proceeding for such purpose; and (v) of the occurrence of any event or passage
      of time that makes the financial statements included in a Registration Statement
      ineligible for inclusion therein or any statement made in a Registration
      Statement or Prospectus or any document incorporated or deemed to be
      incorporated therein by reference untrue in any material respect or that
      requires any revisions to a Registration Statement, Prospectus or other
      documents so that, in the case of a Registration Statement or the Prospectus,
      as
      the case may be, it will not contain any untrue statement of a material fact
      or
      omit to state any material fact required to be stated therein or necessary
      to
      make the statements therein, in light of the circumstances under which they
      were
      made, not misleading; provided, further, that notwithstanding each
      Holder’s agreement to keep such information confidential, each such Holder makes
      no acknowledgement that any such information is material, non-public
      information.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d)  Use
      its
      best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
      of
      (i) any order stopping or suspending the effectiveness of a Registration
      Statement, or (ii) any suspension of the qualification (or exemption from
      qualification) of any of the Registrable Securities for sale in any
      jurisdiction, at the earliest practicable moment.

    


    (e)  Furnish
      to each Holder, without charge, at least one conformed copy of each such
      Registration Statement and each amendment thereto, including financial
      statements and schedules, all documents incorporated or deemed to be
      incorporated therein by reference to the extent requested by such Person, and
      all exhibits to the extent requested by such Person (including those previously
      furnished or incorporated by reference) promptly after the filing of such
      documents with the Commission; provided, that any such item which is available
      on the EDGAR system need not be furnished in physical form.

    


    (f)  Subject
      to the terms of this Agreement, the Company hereby consents to the use of such
      Prospectus and each amendment or supplement thereto by each of the selling
      Holders in connection with the offering and sale of the Registrable Securities
      covered by such Prospectus and any amendment or supplement thereto, except
      after
      the giving of any notice pursuant to Section 3(c).

    


    (g)  The
      Company shall effect a filing with respect to the public offering contemplated
      by each Registration Statement (an “Issuer Filing”) with the National
      Association of Securities Dealers, Inc. (“NASD”) Corporate Financing
      Department pursuant to NASD Rule 2710 as described in proposed NASD Rule
      2710(b)(10)(A)(i) within one Trading Day of the date that the Registration
      Statement is first filed with the Commission and pay the filing fee required
      by
      such Issuer Filing.  The Company shall use commercially reasonable
      efforts to pursue the Issuer Filing until the NASD issues a letter confirming
      that it does not object to the terms of the offering contemplated by the
      Registration Statement as described in the Plan of Distribution attached hereto
      as Annex A.  A copy of the Issuer Filing and all related
      correspondence to or from the NASD with respect thereto shall be provided to
      FWS.

    


    (h)  Prior
      to
      any resale of Registrable Securities by a Holder, use its commercially
      reasonable efforts to register or qualify or cooperate with the selling Holders
      in connection with the registration or qualification (or exemption from the
      Registration or qualification) of such Registrable Securities for the resale
      by
      the Holder under the securities or Blue Sky laws of such jurisdictions within
      the United States as any Holder reasonably requests in writing, to keep each
      registration or qualification (or exemption therefrom) effective during the
      Effectiveness Period and to do any and all other acts or things reasonably
      necessary to enable the disposition in such jurisdictions of the Registrable
      Securities covered by each Registration Statement; provided, that the Company
      shall not be required to qualify generally to do business in any jurisdiction
      where it is not then so qualified, subject the Company to any material tax
      in
      any such jurisdiction where it is not then so subject or file a general consent
      to service of process in any such jurisdiction.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (i)  If
      requested by a Holder, cooperate with such Holders to facilitate the timely
      preparation and delivery of certificates representing Registrable Securities
      to
      be delivered to a transferee pursuant to a Registration Statement, which
      certificates shall be free, to the extent permitted by the Purchase Agreement,
      of all restrictive legends, and to enable such Registrable Securities to be
      in
      such denominations and registered in such names as any such Holder may
      request.

    


    (j)  Upon
      the
      occurrence of any event contemplated by Section 3(d), as promptly as reasonably
      possible under the circumstances taking into account the Company’s good faith
      assessment of any adverse consequences to the Company and its stockholders
      of
      the premature disclosure of such event, prepare a supplement or amendment,
      including a post-effective amendment, to a Registration Statement or a
      supplement to the related Prospectus or any document incorporated or deemed
      to
      be incorporated therein by reference, and file any other required document
      so
      that, as thereafter delivered, neither a Registration Statement nor such
      Prospectus will contain an untrue statement of a material fact or omit to state
      a material fact required to be stated therein or necessary to make the
      statements therein, in light of the circumstances under which they were made,
      not misleading. If the Company notifies the Holders in accordance with
      clauses (iii) through (v) of Section 3(c) above to suspend the use of any
      Prospectus until the requisite changes to such Prospectus have been made, then
      the Holders shall suspend use of such Prospectus.  The Company will
      use its best efforts to ensure that the use of the Prospectus may be resumed
      as
      promptly as is practicable.  The Company shall be entitled to exercise
      its right under this Section 3(k) to suspend the availability of a Registration
      Statement and Prospectus, subject to the payment of partial liquidated damages
      otherwise required pursuant to Section 2(b), for a period not to exceed 60
      calendar days (which need not be consecutive days) in any 12 month
      period.

    


    (k)  Comply
      with all applicable rules and regulations of the Commission.

    


    (l)  The
      Company may require each selling Holder to furnish to the Company a certified
      statement as to the number of shares of Common Stock beneficially owned by
      such
      Holder and the natural persons thereof that have voting and dispositive control
      over the shares. During any periods that the Company is unable to meet its
      obligations hereunder with respect to the registration of the Registrable
      Securities solely because any Holder fails to furnish such information within
      three Trading Days of the Company’s request, any liquidated damages that are
      accruing at such time as to such Holder only shall be tolled and any Event
      that
      may otherwise occur solely because of such delay shall be suspended, until
      such
      information is delivered to the Company and the Company may exclude such Holder
      from such Registration Statement until such time as the information is provided;
      provided, however, if the information is provided prior to 10 days
      prior to the Effective Date of such Registration Statement, the Company shall
      use commercially reasonable effort to include such Holder in such Registration
      Statement.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (m)  Notwithstanding
      anything in this Agreement to the contrary, the Company and the Holders
      expressly acknowledge and agree that in no event shall the Company be required
      to deliver to any Holder, prior to the filing thereof, any copies of any
      Registration Statement, Prospectus, Prospectus supplement or amendment,
      amendment to a Registration Statement or post-effective amendment to a
      Registration Statement unless such Registration Statement, Prospectus,
      Prospectus supplement or amendment, amendment to a Registration Statement or
      post-effective amendment to a Registration Statement contains a “Selling
      Stockholders” section, “Plan of Distribution” section or risk factor that
      addresses specifically this transaction or the Holders, in which case the
      Company shall only be required to deliver to the Holders, prior to the filing
      thereof and in accordance with the provisions of this Section 3, such portion
      of
      such Registration Statement, Prospectus, Prospectus supplement or amendment,
      amendment to a Registration Statement or post-effective amendment to a
      Registration Statement; provided, further, notwithstanding the
      above, the Company shall promptly notify the Holders via e-mail as soon as
      any
      such filings are made.

    


    4.           Registration
      Expenses. All fees and expenses incident to the performance of or compliance
      with this Agreement by the Company shall be borne by the Company whether or
      not
      any Registrable Securities are sold pursuant to a Registration Statement. The
      fees and expenses referred to in the foregoing sentence shall include, without
      limitation, (i) all registration and filing fees (including, without limitation,
      fees and expenses of the Company’s counsel and auditors) (A) with respect to
      filings made with the Commission, (B) with respect to filings required to be
      made with any Trading Market on which the Common Stock is then listed for
      trading, and (C) in compliance with applicable state securities or Blue Sky
      laws
      reasonably agreed to by the Company in writing (including, without limitation,
      fees and disbursements of counsel for the Company in connection with Blue Sky
      qualifications or exemptions of the Registrable Securities) and (D) if not
      previously paid by the Company in connection with an Issuer Filing, with respect
      to any filing that may be required to be made by any broker through which a
      Holder intends to make sales of Registrable Securities with the NASD pursuant
      to
      NASD Rule 2710, so long as the broker is receiving no more than a customary
      brokerage commission in connection with such sale, (ii) printing expenses
      (including, without limitation, expenses of printing certificates for
      Registrable Securities), (iii) messenger, telephone and delivery expenses
      incurred by the Company, (iv) fees and disbursements of counsel for the Company,
      (v) Securities Act liability insurance, if the Company so desires such
      insurance, and (vi) fees and expenses of all other Persons retained by the
      Company in connection with the consummation of the transactions contemplated
      by
      this Agreement.  In addition, the Company shall be responsible for all
      of its internal expenses incurred in connection with the consummation of the
      transactions contemplated by this Agreement (including, without limitation,
      all
      salaries and expenses of its officers and employees performing legal or
      accounting duties), the expense of any annual audit and the fees and expenses
      incurred in connection with the listing of the Registrable Securities on any
      securities exchange as required hereunder.  In no event shall the
      Company be responsible for any broker or similar commissions of any Holder
      or
      any legal fees or other costs of the Holders.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5.           Indemnification.

    


    (a)  Indemnification
      by the Company. The Company shall, notwithstanding any termination of this
      Agreement, indemnify and hold harmless each Holder, the officers, directors,
      members, partners, agents, investment advisors and employees (and any other
      Persons with a functionally equivalent role of a Person holding such titles,
      notwithstanding a lack of such title or any other title) of each of them, each
      Person who controls any such Holder (within the meaning of Section 15 of the
      Securities Act or Section 20 of the Exchange Act) and the officers, directors,
      members, shareholders, partners, agents and employees (and any other Persons
      with a functionally equivalent role of a Person holding such titles,
      notwithstanding a lack of such title or any other title) of each such
      controlling Person, to the fullest extent permitted by applicable law, from
      and
      against any and all losses, claims, damages, liabilities, costs (including,
      without limitation, reasonable attorneys’ fees) and expenses (collectively,
“Losses”), as incurred, arising out of or relating to (1) any untrue or
      alleged untrue statement of a material fact contained in a Registration
      Statement, any Prospectus or any form of prospectus or in any amendment or
      supplement thereto or in any preliminary prospectus, or arising out of or
      relating to any omission or alleged omission of a material fact required to
      be
      stated therein or necessary to make the statements therein (in the case of
      any
      Prospectus or supplement thereto, in light of the circumstances under which
      they
      were made) not misleading or (2) any violation or alleged violation by the
      Company of the Securities Act, the Exchange Act or any state securities law,
      or
      any rule or regulation thereunder, in connection with the performance of its
      obligations under this Agreement, except to the extent, but only to the extent,
      that (i) such untrue statements or omissions are based solely upon information
      regarding such Holder furnished in writing to the Company by such Holder
      expressly for use therein, or to the extent that such information relates to
      such Holder or such Holder’s proposed method of distribution of Registrable
      Securities and was reviewed and expressly approved in writing by such Holder
      expressly for use in a Registration Statement, such Prospectus or in any
      amendment or supplement thereto (it being understood that the Holder has
      approved Annex A hereto for this purpose) or (ii) in the case of an occurrence
      of an event of the type specified in Section 3(c), the use by such Holder of
      an
      outdated or defective Prospectus after the Company has notified such Holder
      in
      writing that the Prospectus is outdated or defective and prior to the receipt
      by
      such Holder of the Advice contemplated in Section 6(d).  The Company
      shall notify the Holders promptly of the institution, threat or assertion of
      any
      Proceeding arising from or in connection with the transactions contemplated
      by
      this Agreement of which the Company is aware.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)  Indemnification
      by Holders. Each Holder shall, severally and not jointly, indemnify and hold
      harmless the Company, its directors, officers, agents and employees, each Person
      who controls the Company (within the meaning of Section 15 of the Securities
      Act
      and Section 20 of the Exchange Act), and the directors, officers, agents or
      employees of such controlling Persons, to the fullest extent permitted by
      applicable law, from and against all Losses, as incurred, to the extent arising
      out of or based solely upon: (x) such Holder’s failure to comply with the
      prospectus delivery requirements of the Securities Act, including, without
      limitation, such Holder’s use of an outdated or defective Prospectus after the
      Company has notified such Holder in writing that the Prospectus is outdated
      or
      defective and prior to the receipt by such Holder of the Advice contemplated
      in
      Section 6(d), (y) following the removal of the legend specified in Section
      4.1(b) of the Purchase Agreement, such Holder’s sale or transfer of any
      Registrable Securities other than (1) pursuant to an effective registration
      statement covering the resale of such Registrable Securities and in accordance
      with the plan of distribution set forth therein or (2) otherwise in accordance
      with all applicable federal and state securities laws or (z) any untrue or
      alleged untrue statement of a material fact contained in any Registration
      Statement, any Prospectus, or in any amendment or supplement thereto or in
      any
      preliminary prospectus, or arising out of or relating to any omission or alleged
      omission of a material fact required to be stated therein or necessary to make
      the statements therein not misleading.  The indemnification provided
      for in the foregoing clause (z) shall be only to the extent, that (i) such
      untrue statement or omission is contained in any information so furnished in
      writing by such Holder to the Company specifically for inclusion in such
      Registration Statement or such Prospectus or (ii) such information relates
      to
      such Holder’s proposed method of distribution of Registrable Securities and was
      reviewed and expressly approved in writing by such Holder expressly for use
      in a
      Registration Statement (it being understood that the Holder has approved Annex
      A
      hereto for this purpose), such Prospectus or in any amendment or supplement
      thereto.  In no event shall the liability of any selling Holder
      hereunder be greater in amount than the dollar amount of the net proceeds
      received by such Holder upon the sale of the Registrable Securities giving
      rise
      to such indemnification obligation. Notwithstanding anything herein to the
      contrary, in no event shall a Holder be required to indemnify the Company
      hereunder in connection with the delivery of an outdated or defective Prospectus
      if the Company failed to notify such Holder in writing that the Prospectus
      is
      outdated or defective at such time.

    


    (c)  Conduct
      of Indemnification Proceedings. If any Proceeding shall be brought or
      asserted against any Person entitled to indemnity hereunder (an “Indemnified
      Party”), such Indemnified Party shall promptly notify the Person from whom
      indemnity is sought (the “Indemnifying Party”) in writing, and the
      Indemnifying Party shall have the right to assume the defense thereof, including
      the employment of counsel reasonably satisfactory to the Indemnified Party
      and
      the payment of all fees and expenses incurred in connection with defense
      thereof; provided, that the failure of any Indemnified Party to give such notice
      shall not relieve the Indemnifying Party of its obligations or liabilities
      pursuant to this Agreement, except (and only) to the extent that such failure
      shall have materially prejudiced the Indemnifying Party.

    


                   An
      Indemnified Party shall have the right to employ separate counsel in any such
      Proceeding and to participate in the defense thereof, but the fees and expenses
      of such counsel shall be at the expense of such Indemnified Party or Parties
      unless:  (1) the Indemnifying Party has agreed in writing to pay such
      fees and expenses; (2) the Indemnifying Party shall have failed promptly to
      assume the defense of such Proceeding and to employ counsel reasonably
      satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
      parties to any such Proceeding (including any impleaded parties) include both
      such Indemnified Party and the Indemnifying Party, and counsel to the
      Indemnified Party shall reasonably believe that a material conflict of interest
      is likely to exist if the same counsel were to represent such Indemnified Party
      and the Indemnifying Party (in which case, if such Indemnified Party notifies
      the Indemnifying Party in writing that it elects to employ separate counsel
      at
      the expense of the Indemnifying Party, the Indemnifying Party shall not have
      the
      right to assume the defense thereof and the reasonable fees and expenses of
      no
      more than one separate counsel shall be at the expense of the Indemnifying
      Party).  The Indemnifying Party shall not be liable for any settlement
      of any such Proceeding effected without its written consent, which consent
      shall
      not be unreasonably withheld or delayed.  No Indemnifying Party shall,
      without the prior written consent of the Indemnified Party, effect any
      settlement of any pending Proceeding in respect of which any Indemnified Party
      is a party, unless such settlement includes an unconditional release of such
      Indemnified Party from all liability on claims that are the subject matter
      of
      such Proceeding.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

                   Subject
      to the terms of this Agreement, all reasonable fees and expenses of the
      Indemnified Party (including reasonable fees and expenses to the extent incurred
      in connection with investigating or preparing to defend such Proceeding in
      a
      manner not inconsistent with this Section) shall be paid to the Indemnified
      Party, as incurred, within ten Trading Days of written notice thereof to the
      Indemnifying Party; provided, that the Indemnified Party shall promptly
      reimburse the Indemnifying Party for that portion of such fees and expenses
      applicable to such actions for which such Indemnified Party is judicially
      determined to be not entitled to indemnification hereunder.

    


    (d)  Contribution.
      If the indemnification under Section 5(a) or 5(b) is unavailable to an
      Indemnified Party, then each Indemnifying Party shall contribute to the amount
      paid or payable by such Indemnified Party, in such proportion as is appropriate
      to reflect the relative fault of the Indemnifying Party and Indemnified Party
      in
      connection with the actions, statements or omissions that resulted in such
      Losses as well as any other relevant equitable considerations. The relative
      fault of such Indemnifying Party and Indemnified Party shall be determined
      by
      reference to, among other things, whether any action in question, including
      any
      untrue or alleged untrue statement of a material fact or omission or alleged
      omission of a material fact, has been taken or made by, or relates to
      information supplied by, such Indemnifying Party or Indemnified Party, and
      the
      parties’ relative intent, knowledge, access to information and opportunity to
      correct or prevent such action, statement or omission.  The amount
      paid or payable by a party as a result of any Losses shall be deemed to include,
      subject to the limitations set forth in this Agreement, any reasonable
      attorneys’ or other fees or expenses incurred by such party in connection with
      any Proceeding to the extent such party would have been indemnified for such
      fees or expenses if the indemnification provided for in this Section was
      available to such party in accordance with its terms.

    


                   The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section 5(d) were determined by pro rata allocation or by
      any
      other method of allocation that does not take into account the equitable
      considerations referred to in the immediately preceding
      paragraph.  Notwithstanding the provisions of this Section 5(d), no
      Holder shall be required to contribute, in the aggregate, any amount in excess
      of the amount by which the net proceeds actually received by such Holder from
      the sale of the Registrable Securities subject to the Proceeding exceeds the
      amount of any damages that such Holder has otherwise been required to pay by
      reason of such untrue or alleged untrue statement or omission or alleged
      omission.

    


    The
      indemnity and contribution agreements contained in this Section are in addition
      to any liability that the Indemnifying Parties may have to the Indemnified
      Parties.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

               6.           Miscellaneous.

    


    (a)  Remedies.  In
      the event of a breach by the Company or by a Holder of any of their respective
      obligations under this Agreement, each Holder or the Company, as the case may
      be, in addition to being entitled to exercise all rights granted by law and
      under this Agreement, including recovery of damages, shall be entitled to
      specific performance of its rights under this Agreement.  The Company
      and each Holder agree that monetary damages would not provide adequate
      compensation for any losses incurred by reason of a breach by it of any of
      the
      provisions of this Agreement and hereby further agrees that, in the event of
      any
      action for specific performance in respect of such breach, it shall not assert
      or shall waive the defense that a remedy at law would be adequate.

    


    (b)  No
      Piggyback on Registrations; Prohibition on Filing Other Registration
      Statements. Except as set forth on Schedule 6(b) attached hereto,
      neither the Company nor any of its security holders (other than the Holders
      in
      such capacity pursuant hereto) may include securities of the Company in any
      Registration Statements other than the Registrable Securities.  The
      Company shall not file any other registration statements until all Registrable
      Securities are registered pursuant to a Registration Statement that is declared
      effective by the Commission, provided that this Section 6(b) shall not prohibit
      the Company from filing amendments to registration statements filed prior to
      the
      date of this Agreement.  Any such rights shall be subject to customary
      underwriter cutbacks at the discretion of the underwriter.

    


    (c)  Compliance.
      Each Holder covenants and agrees that it will comply with the prospectus
      delivery requirements of the Securities Act as applicable to it in connection
      with sales of Registrable Securities pursuant to a Registration
      Statement.

    


    (d)  Discontinued
      Disposition.  By its acquisition of Registrable Securities, each
      Holder agrees that, upon receipt of a notice from the Company of the occurrence
      of any event of the kind described in Section 3(c), such Holder will forthwith
      discontinue disposition of such Registrable Securities under a Registration
      Statement until it is advised in writing (the “Advice”) by the Company
      that the use of the applicable Prospectus (as it may have been supplemented
      or
      amended) may be resumed.  The Company will use its best efforts to
      ensure that the use of the Prospectus may be resumed as promptly as it
      practicable.  The Company agrees and acknowledges that any periods
      during which the Holder is required to discontinue the disposition of the
      Registrable Securities hereunder shall be subject to the provisions of Section
      2(b).

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (e)  Piggy-Back
      Registrations. If, at any time during the Effectiveness Period, there is not
      an effective Registration Statement covering all of the Registrable Securities
      and the Company shall determine to prepare and file with the Commission a
      registration statement relating to an offering for its own account or the
      account of others under the Securities Act of any of its equity securities,
      other than on Form S-4 or Form S-8 (each as promulgated under the Securities
      Act) or their then equivalents relating to equity securities to be issued solely
      in connection with any acquisition of any entity or business or equity
      securities issuable in connection with the Company’s stock option or other
      employee benefit plans, then the Company shall deliver to each Holder a written
      notice of such determination and, if within five days after the date of the
      delivery of such notice, any such Holder shall so request in writing, the
      Company shall include in such registration statement all or any part of such
      Registrable Securities such Holder requests to be registered; provided,
however, that the Company shall not be required to register any
      Registrable Securities pursuant to this Section 6(e) that are eligible for
      resale pursuant to Rule 144(k) promulgated by the Commission pursuant to the
      Securities Act or that are the subject of a then effective Registration
      Statement

    


    (f)  Amendments
      and Waivers. The provisions of this Agreement, including the provisions of
      this sentence, may not be amended, modified or supplemented, and waivers or
      consents to departures from the provisions hereof may not be given, unless
      the
      same shall be in writing and signed by the Company and the Holders of a majority
      of the then outstanding Registrable Securities (including, for this purpose
      any
      Registrable Securities issuable upon exercise or conversion of any
      Security).  If a Registration Statement does not register all of the
      Registrable Securities pursuant to a waiver or amendment done in compliance
      with
      the previous sentence, then the number of Registrable Securities to be
      registered for each Holder shall be reduced pro rata among all Holders and
      each
      Holder shall have the right to designate which of its Registrable Securities
      shall be omitted from such Registration Statement. Notwithstanding the
      foregoing, a waiver or consent to depart from the provisions hereof with respect
      to a matter that relates exclusively to the rights of a Holder or some Holders
      and that does not directly or indirectly affect the rights of other Holders
      may
      be given by such Holder or Holders of all of the Registrable Securities to
      which
      such waiver or consent relates; provided, however, that the
      provisions of this sentence may not be amended, modified, or supplemented except
      in accordance with the provisions of the first  sentence of this
      Section 6(f).

    


    (g)  Notices.
      Any and all notices or other communications or deliveries required or permitted
      to be provided hereunder shall be delivered as set forth in the Purchase
      Agreement.

    


    (h)  Successors
      and Assigns. This Agreement shall inure to the benefit of and be binding
      upon the successors and permitted assigns of each of the parties and shall
      inure
      to the benefit of each Holder. The Company may not assign (except by merger)
      its
      rights or obligations hereunder without the prior written consent of all of
      the
      Holders of the then outstanding Registrable Securities. Each Holder may assign
      their respective rights hereunder in the manner and to the Persons as permitted
      under the Purchase Agreement.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (i)  No
      Inconsistent Agreements. Neither the Company nor any of its Subsidiaries has
      entered, as of the date hereof, nor shall the Company or any of its
      Subsidiaries, on or after the date of this Agreement, enter into any agreement
      with respect to its securities, that would have the effect of impairing the
      rights granted to the Holders in this Agreement or otherwise conflicts with
      the
      provisions hereof.  Except as set forth on Schedule 6(i),
      neither the Company nor any of its Subsidiaries has previously entered into
      any
      agreement granting any registration rights with respect to any of its securities
      to any Person that have not been satisfied in full.

    


    (j)  Execution
      and Counterparts. This Agreement may be executed in two or more
      counterparts, all of which when taken together shall be considered one and
      the
      same agreement and shall become effective when counterparts have been signed
      by
      each party and delivered to the other party, it being understood that both
      parties need not sign the same counterpart.  In the event that any
      signature is delivered by facsimile transmission or by e-mail delivery of a
      “.pdf” format data file, such signature shall create a valid and binding
      obligation of the party executing (or on whose behalf such signature is
      executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.

    


    (k)  Governing
      Law.  All questions concerning the construction, validity,
      enforcement and interpretation of this Agreement shall be determined in
      accordance with the provisions of the Purchase Agreement.

    


    (l)  Cumulative
      Remedies. The remedies provided herein are cumulative and not exclusive of
      any other remedies provided by law.

    


    (m)  Severability.
      If any term, provision, covenant or restriction of this Agreement is held by
      a
      court of competent jurisdiction to be invalid, illegal, void or unenforceable,
      the remainder of the terms, provisions, covenants and restrictions set forth
      herein shall remain in full force and effect and shall in no way be affected,
      impaired or invalidated, and the parties hereto shall use their commercially
      reasonable efforts to find and employ an alternative means to achieve the same
      or substantially the same result as that contemplated by such term, provision,
      covenant or restriction. It is hereby stipulated and declared to be the
      intention of the parties that they would have executed the remaining terms,
      provisions, covenants and restrictions without including any of such that may
      be
      hereafter declared invalid, illegal, void or unenforceable.

    


    (n)  Headings.
      The headings in this Agreement are for convenience only, do not constitute
      a
      part of the Agreement and shall not be deemed to limit or affect any of the
      provisions hereof.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (o)  Independent
      Nature of Holders’ Obligations and Rights. The obligations of each Holder
      hereunder are several and not joint with the obligations of any other Holder
      hereunder, and no Holder shall be responsible in any way for the performance
      of
      the obligations of any other Holder hereunder. Nothing contained herein or
      in
      any other agreement or document delivered at any closing, and no action taken
      by
      any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders
      as a partnership, an association, a joint venture or any other kind of entity,
      or create a presumption that the Holders are in any way acting in concert with
      respect to such obligations or the transactions contemplated by this Agreement.
      Each Holder shall be entitled to protect and enforce its rights, including
      without limitation the rights arising out of this Agreement, and it shall not
      be
      necessary for any other Holder to be joined as an additional party in any
      proceeding for such purpose.

    


    ********************


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


                   IN
      WITNESS WHEREOF, the parties have executed this Registration Rights Agreement
      as
      of the date first written above.

    


    
      	
              AEOLUS
                PHARMECEUTICALS, INC.

               

               

            
	
              By:____/s/
                Michael P. McManus___________________

                   Name:    Michael
                P. McManus

                   Title:      Chief
                Financial Officer

               

            


    

    


    


    


    


    


    


    


    


    


    [SIGNATURE
      PAGE OF HOLDERS FOLLOWS]

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    [SIGNATURE
      PAGE OF HOLDERS TO AOLS RRA]

    


    


    Name
      of
      Holder: __________________________

    


    Signature
      of Authorized Signatory of Holder: __________________________

    


    Name
      of
      Authorized Signatory: _________________________

    


    Title
      of
      Authorized Signatory: __________________________

    


    


    


    [SIGNATURE
      PAGES CONTINUE]

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Annex
      A

    


    Plan
      of Distribution

    


    Each
      Selling Stockholder (the “Selling Stockholders”) of the common stock and
      any of their pledgees, assignees and successors-in-interest may, from time
      to
      time, sell any or all of their shares of common stock on the OTC Bulletin Board
      or any other stock exchange, market or trading facility on which the shares
      are
      traded or in private transactions.  These sales may be at fixed or
      negotiated prices.  A Selling Stockholder may use any one or more of
      the following methods when selling shares:

     

    
      	
              ·  

            	
              ordinary
                brokerage transactions and transactions in which the broker-dealer
                solicits purchasers;

            


    

     

    
      	
              ·  

            	
              block
                trades in which the broker-dealer will attempt to sell the shares
                as agent
                but may position and resell a portion of the block as principal to
                facilitate the transaction;

            


    

     

    
      	
              ·  

            	
              purchases
                by a broker-dealer as principal and resale by the broker-dealer for
                its
                account;

            


    

     

    
      	
              ·  

            	
              an
                exchange distribution in accordance with the rules of the applicable
                exchange;

            


    

     

    
      	
              ·  

            	
              privately
                negotiated transactions;

            


    

     

    
      	
              ·  

            	
              settlement
                of short sales entered into after the effective date of the registration
                statement of which this prospectus is a
                part;

            


    

     

    
      	
              ·  

            	
              broker-dealers
                may agree with the Selling Stockholders to sell a specified number
                of such
                shares at a stipulated price per
                share;

            


    

     

    
      	
              ·  

            	
              through
                the writing or settlement of options or other hedging transactions,
                whether through an options exchange or
                otherwise;

            


    

     

    
      	
              ·  

            	
              a
                combination of any such methods of sale;
                or

            


    

     

    
      	
              ·  

            	
              any
                other method permitted pursuant to applicable
                law.

            


    

     

    The
      Selling Stockholders may also sell shares under Rule 144 under the Securities
      Act of 1933, as amended (the “Securities Act”), if available, rather than
      under this prospectus.

     

    Broker-dealers
      engaged by the Selling Stockholders may arrange for other brokers-dealers to
      participate in sales.  Broker-dealers may receive commissions or
      discounts from the Selling Stockholders (or, if any broker-dealer acts as agent
      for the purchaser of shares, from the purchaser) in amounts to be negotiated,
      but, except as set forth in a supplement to this Prospectus, in the case of
      an
      agency transaction not in excess of a customary brokerage commission in
      compliance with NASDR Rule 2440; and in the case of a principal transaction
      a
      markup or markdown in compliance with NASDR IM-2440.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    In
      connection with the sale of the common stock or interests therein, the Selling
      Stockholders may enter into hedging transactions with broker-dealers or other
      financial institutions, which may in turn engage in short sales of the common
      stock in the course of hedging the positions they assume.  The Selling
      Stockholders may also sell shares of the common stock short and deliver these
      securities to close out their short positions, or loan or pledge the common
      stock to broker-dealers that in turn may sell these securities.  The
      Selling Stockholders may also enter into option or other transactions with
      broker-dealers or other financial institutions or the creation of one or more
      derivative securities which require the delivery to such broker-dealer or other
      financial institution of shares offered by this prospectus, which shares such
      broker-dealer or other financial institution may resell pursuant to this
      prospectus (as supplemented or amended to reflect such
      transaction).

     

    The
      Selling Stockholders and any broker-dealers or agents that are involved in
      selling the shares may be deemed to be “underwriters” within the meaning of the
      Securities Act in connection with such sales.  In such event, any
      commissions received by such broker-dealers or agents and any profit on the
      resale of the shares purchased by them may be deemed to be underwriting
      commissions or discounts under the Securities Act.  Each Selling
      Stockholder has informed the Company that it does not have any written or oral
      agreement or understanding, directly or indirectly, with any person to
      distribute the Common Stock. In no event shall any broker-dealer receive fees,
      commissions and markups which, in the aggregate, would exceed eight percent
      (8%).

     

    The
      Company is required to pay certain fees and expenses incurred by the Company
      incident to the registration of the shares.  The Company has agreed to
      indemnify the Selling Stockholders against certain losses, claims, damages
      and
      liabilities, including liabilities under the Securities Act.

     

    Because
      Selling Stockholders may be deemed to be “underwriters” within the meaning of
      the Securities Act, they will be subject to the prospectus delivery requirements
      of the Securities Act including Rule 172 thereunder.  In addition, any
      securities covered by this prospectus which qualify for sale pursuant to Rule
      144 under the Securities Act may be sold under Rule 144 rather than under this
      prospectus.  There is no underwriter or coordinating broker acting in
      connection with the proposed sale of the resale shares by the Selling
      Stockholders.

     

    We
      agreed
      to keep this prospectus effective until the earlier of (i) the date on which
      the
      shares may be resold by the Selling Stockholders without registration and
      without regard to any volume limitations by reason of Rule 144(k) under the
      Securities Act or any other rule of similar effect or (ii) all of the shares
      have been sold pursuant to this prospectus or Rule 144 under the Securities
      Act
      or any other rule of similar effect.  The resale shares will be sold
      only through registered or licensed brokers or dealers if required under
      applicable state securities laws. In addition, in certain states, the resale
      shares may not be sold unless they have been registered or qualified for sale
      in
      the applicable state or an exemption from the registration or qualification
      requirement is available and is complied with.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Under
      applicable rules and regulations under the Exchange Act, any person engaged
      in
      the distribution of the resale shares may not simultaneously engage in market
      making activities with respect to the common stock for the applicable restricted
      period, as defined in Regulation M, prior to the commencement of the
      distribution.  In addition, the Selling Stockholders will be subject
      to applicable provisions of the Exchange Act and the rules and regulations
      thereunder, including Regulation M, which may limit the timing of purchases
      and
      sales of shares of the common stock by the Selling Stockholders or any other
      person.  We will make copies of this prospectus available to the
      Selling Stockholders and have informed them of the need to deliver a copy of
      this prospectus to each purchaser at or prior to the time of the sale (including
      by compliance with Rule 172 under the Securities Act).

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Annex
      B

     

    AEOLUS
      PHARMACEUTICALS, INC.

     

    Selling
      Securityholder Notice and Questionnaire

     

    The
      undersigned beneficial owner of common stock (the “Registrable
      Securities”) of Aeolus Pharmaceuticals, Inc., a Delaware corporation (the
“Company”), understands that the Company has filed or intends to file
      with the Securities and Exchange Commission (the “Commission”) a
      registration statement (the “Registration Statement”) for the
      registration and resale under Rule 415 of the Securities Act of 1933, as amended
      (the “Securities Act”), of the Registrable Securities, in accordance with
      the terms of the Registration Rights Agreement (the “Registration Rights
      Agreement”) to which this document is annexed.  A copy of the
      Registration Rights Agreement is available from the Company upon request at
      the
      address set forth below.  All capitalized terms not otherwise defined
      herein shall have the meanings ascribed thereto in the Registration Rights
      Agreement.

     

    Certain
      legal consequences arise from being named as a selling securityholder in the
      Registration Statement and the related prospectus.  Accordingly,
      holders and beneficial owners of Registrable Securities are advised to consult
      their own securities law counsel regarding the consequences of being named
      or
      not being named as a selling securityholder in the Registration Statement and
      the related prospectus.

     

    NOTICE

     

    The
      undersigned beneficial owner (the “Selling Securityholder”) of
      Registrable Securities hereby elects to include the Registrable Securities
      owned
      by it in the Registration Statement.

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    The
      undersigned hereby provides the following information to the Company and
      represents and warrants that such information is accurate:

     

    QUESTIONNAIRE

     

    
      	
               

            	
              1.

            	
              Name.

            


    

     

    
      	
               

            	
              (a)

            	
              Full
                Legal Name of Selling
                Securityholder

            


    

     

    
      	 
	 


    

    


    
      	
               

            	
              (b)

            	
              Full
                Legal Name of Registered Holder (if not the same as (a) above) through
                which Registrable Securities are
                held:

            


    

    
       

      
        	 
	 


      

      


    

    
      	
               

            	
              (c)

            	
              Full
                Legal Name of Natural Control Person (which means a natural person
                who
                directly or indirectly alone or with others has power to vote or
                dispose
                of the securities covered by this
                Questionnaire):

            


    

    
       

      
        	 
	 


      

      
 

    

    
      	
               

            	
              2.  Address
                for Notices to Selling
                Securityholder:

            


    

     

    
      	 
	 
	 
	
              Telephone: 
                ___________________________________________

            
	
              Fax: 
                ________________________________________________

            
	
              Contact
                Person: 
                _______________________________________

            


    

    


    
      	
               

            	
              3.  Broker-Dealer
                Status:

            


    

     

    
      	
               

            	
              (a)

            	
              Are
                you a broker-dealer?

            


    

     

    Yes                         No   

     

    
      	
               

            	
              (b)

            	
              If
                “yes” to Section 3(a), did you receive your Registrable Securities as
                compensation for investment banking services to the
                Company?

            


    

     

    Yes                         No   

     

    
      	
              Note:

            	
              If
                “no” to Section 3(b), the Commission’s staff has indicated that you should
                be identified as an underwriter in the Registration
                Statement.

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              (c)

            	
              Are
                you an affiliate of a
                broker-dealer?

            


    

     

    Yes                         No   

     

    
      	
               

            	
              (d)

            	
              If
                you are an affiliate of a broker-dealer, do you certify that you
                purchased
                the Registrable Securities in the ordinary course of business, and
                at the
                time of the purchase of the Registrable Securities to be resold,
                you had
                no agreements or understandings, directly or indirectly, with any
                person
                to distribute the Registrable
                Securities?

            


    

     

    Yes                         No   

     

    
      	
              Note:

            	
              If
                “no” to Section 3(d), the Commission’s staff has indicated that you should
                be identified as an underwriter in the Registration
                Statement.

            


    

     

    
      	
               

            	
              4.  Beneficial
                Ownership of Securities of the Company Owned by the Selling
                Securityholder.

            


    

     

    Except
      as set forth below in this Item 4, the undersigned is not the beneficial or
      registered owner of any securities of the Company other than the securities
      issuable pursuant to the Purchase Agreement.

     

    
      	
               

            	
              (a)

            	
              Type
                and Amount of other securities beneficially owned by the Selling
                Securityholder:

            


    

     

    
      	 
	 
	 


    

    


    


     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    
      	
               

            	
              5.  Relationships
                with the Company:

            


    

     

    Except
      as set forth below, neither the undersigned nor any of its affiliates, officers,
      directors or principal equity holders (owners of 5% of more of the equity
      securities of the undersigned) has held any position or office or has had any
      other material relationship with the Company (or its predecessors or affiliates)
      during the past three years.

     

    
      	
               

            	
              State
                any exceptions here:

            


    

     

    
      	 
	 
	 


    

    


     

    The
      undersigned agrees to promptly notify the Company of any inaccuracies or changes
      in the information provided herein that may occur subsequent to the date hereof
      at any time while the Registration Statement remains effective.

     

    By
      signing below, the undersigned consents to the disclosure of the information
      contained herein in its answers to Items 1 through 5 and the inclusion of such
      information in the Registration Statement and the related prospectus and any amendments or supplements
      thereto.  The undersigned understands that such information
      will be relied upon by the Company in connection with the preparation or
      amendment of the Registration Statement and the related prospectus.

     

    IN
      WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice
      and Questionnaire to be executed and delivered either in person or by its duly
      authorized agent.

     

    Date:                                                      Beneficial
      Owner:                                                                         

    


    By:                                                                         

    Name:

    Title:

    


    PLEASE
      FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
      THE ORIGINAL BY OVERNIGHT MAIL, TO: