rodmanagmt.htm


    
      Exhibit
        10.3

    

    

 

    April
      30, 2007

    


    STRICTLY
      CONFIDENTIAL

    


    Mr.
      John
      McManus

    President/Chief
      Executive Officer

    Aeolus
      Pharmaceuticals, Inc.

    23811
      Inverness Place

    Laguna
      Niguel, CA 92677

    


    Dear
      Mr.
      McManus:

    


    This
      letter (the “Agreement”) constitutes the agreement between Aeolus
      Pharmaceuticals, Inc. (“Company”) and Rodman & Renshaw, LLC (“Rodman”) that
      Rodman shall serve as the exclusive placement agent (the “Services”) for the
      Company, on a “best efforts” basis, in connection with the proposed offer and
      placement (the Offering”) by the Company of securities of the Company (the
“Securities”). The terms of the Offering and the Securities shall be mutually
      agreed upon by the Company and the investors and nothing herein implies that
      Rodman would have the power or authority to bind the Company or an obligation
      for the Company to issue any Securities or complete the Offering.  The
      Company expressly acknowledges and agrees that Rodman’s obligations hereunder
      are on a reasonable best efforts basis only and that the execution of this
      Agreement does not constitute a commitment by Rodman to purchase the Securities
      and does not ensure the successful placement of the Securities or any portion
      thereof or the success of Rodman with respect to securing any other financing
      on
      behalf of the Company.

    


    A.           Fees
      and Expenses.  In connection with the Services described above,
      the Company shall pay to Rodman the following compensation:

    


    1.      Placement
      Agent’s Fee.  The Company shall pay to Rodman a cash placement fee
      (the “Placement Agent’s Fee”) equal to 7% of the aggregate purchase price paid
      by each purchaser of Securities that are placed in the Offering.

    


    2.      Warrants.  As
      additional compensation for the Services, the Company shall issue to Rodman
      or
      its designees (provided that such designee is an “accredited investor” under
      Regulation D of the Securities Act of 1933) at the closing of the Offering
      (the
“Closing”), warrants (the “Rodman Warrants”) to purchase that number of shares
      of common stock of the Company (“Shares”) equal to 7% of the aggregate number of
      Shares placed in the Offering. The Rodman Warrants shall have the same terms,
      including exercise price and registration rights as the warrants issued to
      investors (“Investors”) in the Offering.  If no warrants are issued to
      Investors, the Rodman Warrants shall have an exercise price equal to 120% of
      the
      price at which Shares are issued to Investors, an exercise period of five years
      and registration rights for the Shares underlying the Rodman Warrants equivalent
      to those granted with respect to the Shares.

    


    3.      Expenses.  In
      addition to any fees payable to Rodman hereunder, but only if an Offering is
      consummated, the Company hereby agrees to reimburse Rodman for all actual,
      reasonable and documented travel and other out-of-pocket expenses incurred
      in
      connection with Rodman’s engagement, including the reasonable fees and expenses
      of Rodman’s counsel.   Such reimbursement shall be limited to
      $25,000 without prior written approval by the Company.

    
      
        
           

          1270
            Avenue of the Americas, 28th Floor

          New
            York,
            NY 10020

        

      

      
        
        

        
          

        

      

      
        
        

      

    

    B.           Term
      and Termination of Engagement.  The term (the “Term”) of Rodman’s
      engagement will begin on the date hereof and end on the earlier of the
      consummation of the Offering or 15 days after the receipt by either party hereto
      of written notice of termination; provided that no such notice may be given
      by
      the Company for a period of 30 days after the date hereof. Notwithstanding
      anything to the contrary contained herein, the provisions concerning
      confidentiality, indemnification, contribution and the Company’s obligations to
      pay fees and reimburse expenses (provided such fees and expenses are earned
      and
      incurred by Rodman during the Term) contained herein will survive any expiration
      or termination of this Agreement.

    


    C.           Fee
      Tail.  Rodman shall be entitled to a Placement Agent’s Fee and
      Rodman Warrants, calculated in the manner provided in Paragraph A, with respect
      to any subsequent public or private offering or other financing or
      capital-raising transaction of any kind, excluding any capital-raising
      transaction pursuant to the Company’s equity benefit programs for its employees,
      directors and consultants (“Subsequent Financing”), to the extent that such
      financing or capital is provided to the Company by investors whom Rodman had
      introduced to the Company during the Term, if such Subsequent Financing is
      consummated at any time within the 18-month period following the expiration
      or
      termination of this Agreement (the “Tail Period”). Notwithstanding the
      foregoing, in no event shall Rodman be entitled to a Placement Agent’s Fee,
      Rodman Warrants or any other compensation from the Company pursuant to Paragraph
      A or this Paragraph C for any investment made during the Tail Period by Efficacy
      Biotech Master Fund, Ltd. (“Efficacy”), Xmark Opportunity Partners, LLC
      (“Xmark”), or any entity or individual affiliated with or otherwise related to
      the foregoing. For further clarity, the Company shall pay Rodman the Placement
      Agent’s Fee and Rodman Warrants with respect to any investment by Efficacy or
      Xmark (or any of their affiliates) in the Offering itself.  Within 30
      days of the termination of the engagement, Rodman shall provide the Company
      with
      a list of such investors whom Rodman introduced to the Company, provided that
      such list shall not be binding on the Company with respect to any investor
      as to
      which the Company makes reasonable objection within 5 business days of its
      receipt of the list from Rodman.

    


    D.           Use
      of Information.  The Company will furnish Rodman such written
      information as Rodman reasonably requests in connection with the performance
      of
      its services hereunder.  The Company understands, acknowledges and
      agrees that, in performing its services hereunder, Rodman will use and rely
      entirely upon such information as well as publicly available information
      regarding the Company and other potential parties to an Offering and that Rodman
      does not assume responsibility for independent verification of the accuracy
      or
      completeness of any information, whether publicly available or otherwise
      furnished to it, concerning the Company or otherwise relevant to an Offering,
      including, without limitation, any financial information, forecasts or
      projections considered by Rodman in connection with the provision of its
      services.

    


    E.           Confidentiality.  In
      the event of the consummation or public announcement of any Offering, Rodman
      shall have the right to disclose its participation in such Offering, including,
      without limitation, the placement at its cost of “tombstone” advertisements in
      financial and other newspapers and journals. Rodman agrees not to use any
      confidential information concerning the Company provided to Rodman by the
      Company for any purposes other than those contemplated under this
      Agreement.

    


    
      
        
           

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    F.           Securities
      Matters.  The Company shall be responsible for any and all
      compliance with the securities laws applicable to it, including Regulation
      D and
      the Securities Act of 1933, and Rule 506 promulgated thereunder, and unless
      otherwise agreed in writing, all state securities (“blue sky”) laws. Rodman
      agrees to cooperate with counsel to the Company in that regard.

    


    G.           Indemnity.

    


    1.      In
      connection with the Company’s engagement of Rodman as placement agent, the
      Company hereby agrees to indemnify and hold harmless Rodman and its Affiliates,
      and the respective controlling persons, directors, officers, shareholders,
      agents and employees of any of the foregoing (collectively the “Indemnified
      Persons”), from and against any and all claims, actions, suits, proceedings
      (including those of shareholders), damages, liabilities and expenses incurred
      by
      any of them (including the reasonable fees and expenses of counsel),
      (collectively a “Claim”), which are (A) related to or arise out of (i) any
      actions taken or omitted to be taken (including any untrue statements made
      or
      any statements omitted to be made) by the Company, or (ii) any actions taken
      or
      omitted to be taken by any Indemnified Person in connection with the Company’s
      engagement of Rodman, or (B) otherwise relate to or arise out of Rodman’s
      activities on the Company’s behalf under Rodman’s engagement, and the Company
      shall reimburse any Indemnified Person for all expenses (including the
      reasonable fees and expenses of counsel) incurred by such Indemnified Person
      in
      connection with investigating, preparing or defending any such claim, action,
      suit or proceeding, whether or not in connection with pending or threatened
      litigation in which any Indemnified Person is a party.  The Company
      will not, however, be responsible for any Claim, which is finally judicially
      determined to have resulted from the gross negligence or willful misconduct
      of
      any person seeking indemnification for such Claim.  The Company
      further agrees that no Indemnified Person shall have any liability to the
      Company for or in connection with the Company’s engagement of Rodman except for
      any Claim incurred by the Company as a result of such Indemnified Person’s gross
      negligence or willful misconduct.

    


    2.      The
      Company further agrees that it will not, without the prior written consent
      of
      Rodman, settle, compromise or consent to the entry of any judgment in any
      pending or threatened Claim in respect of which indemnification may be sought
      hereunder (whether or not any Indemnified Person is an actual or potential
      party
      to such Claim), unless such settlement, compromise or consent includes an
      unconditional, irrevocable release of each Indemnified Person from any and
      all
      liability arising out of such Claim.

    


    3.      Promptly
      upon receipt by an Indemnified Person of notice of any complaint or the
      assertion or institution of any Claim with respect to which indemnification
      is
      being sought hereunder, such Indemnified Person shall notify the Company in
      writing of such complaint or of such assertion or institution but failure to
      so
      notify the Company shall not relieve the Company from any obligation it may
      have
      hereunder, except and only to the extent such failure results in the forfeiture
      by the Company of substantial rights and defenses.  If the Company so
      elects or is requested by such Indemnified Person, the Company will assume
      the
      defense of such Claim, including the employment of counsel reasonably
      satisfactory to such Indemnified Person and the payment of the fees and expenses
      of such counsel. In the event, however, that legal counsel to such Indemnified
      Person reasonably determines that having common counsel would present such
      counsel with a conflict of interest or if the defendant in, or target of, any
      such Claim, includes an Indemnified Person and the Company, and legal counsel
      to
      such Indemnified Person reasonably concludes that there may be legal defenses
      available to it or other Indemnified Persons different from or in addition
      to
      those available to the Company, then such Indemnified Person may employ its
      own
      separate counsel to represent or defend him, her or it in any such Claim and
      the
      Company shall pay the reasonable fees and expenses of such
      counsel.  Notwithstanding anything herein to the contrary, if the
      Company fails timely or diligently to defend, contest, or otherwise protect
      against any Claim, the relevant Indemnified Party shall have the right, but
      not
      the obligation, to defend, contest, compromise, settle, assert crossclaims,
      or
      counterclaims or otherwise protect against the same, and shall be fully
      indemnified by the Company therefor, including without limitation, for the
      reasonable fees and expenses of its counsel and all amounts paid as a result
      of
      such Claim or the compromise or settlement thereof.  In addition, with
      respect to any Claim in which the Company assumes the defense, the Indemnified
      Person shall have the right to participate in such Claim and to retain his,
      her
      or its own counsel therefor at his, her or its own expense.

    


    
      
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    4.      The
      Company agrees that if any indemnity sought by an Indemnified Person hereunder
      is held by a court to be unavailable for any reason then (whether or not Rodman
      is the Indemnified Person), the Company and Rodman shall contribute to the
      Claim
      for which such indemnity is held unavailable in such proportion as is
      appropriate to reflect the relative benefits to the Company, on the one hand,
      and Rodman on the other, in connection with Rodman’s engagement referred to
      above, subject to the limitation that in no event shall the amount of Rodman’s
      contribution to such Claim exceed the amount of fees actually received by Rodman
      from the Company pursuant to Rodman’s engagement.  The Company hereby
      agrees that the relative benefits to the Company, on the one hand, and Rodman
      on
      the other, with respect to Rodman’s engagement shall be deemed to be in the same
      proportion as (a) the total value paid or proposed to be paid or received by
      the
      Company or its stockholders as the case may be, pursuant to the Offering
      (whether or not consummated) for which Rodman is engaged to render services
      bears to (b) the fee paid or proposed to be paid to Rodman in connection with
      such engagement.

    


    5.      The
      Company’s indemnity, reimbursement and contribution obligations under this
      Agreement (a) shall be in addition to, and shall in no way limit or otherwise
      adversely affect any rights that any Indemnified Party may have at law or at
      equity and (b) shall be effective whether or not the Company is at fault in
      any
      way.

    


    H.           Limitation
      of Engagement to the Company.  The Company acknowledges that
      Rodman has been retained only by the Company, that Rodman is providing services
      hereunder as an independent contractor (and not in any fiduciary or agency
      capacity) and that the Company’s engagement of Rodman is not deemed to be on
      behalf of, and is not intended to confer rights upon, any shareholder, owner
      or
      partner of the Company or any other person not a party hereto as against Rodman
      or any of its affiliates, or any of its or their respective officers, directors,
      controlling persons (within the meaning of Section 15 of the Act or Section
      20
      of the Securities Exchange Act of 1934), employees or agents.  Unless
      otherwise expressly agreed in writing by Rodman, no one other than the Company
      is authorized to rely upon this Agreement or any other statements or conduct
      of
      Rodman, and no one other than the Company is intended to be a beneficiary of
      this Agreement.  The Company acknowledges that any recommendation or
      advice, written or oral, given by Rodman to the Company in connection with
      Rodman’s engagement is intended solely for the benefit and use of the Company’s
      management and directors in considering a possible Offering, and any such
      recommendation or advice is not on behalf of, and shall not confer any rights
      or
      remedies upon, any other person or be used or relied upon for any other
      purpose.  Rodman shall not have the authority to make any commitment
      binding on the Company.  The Company, in its sole discretion, shall
      have the right to reject any investor introduced to it by Rodman.  The
      Company agrees that it will perform and comply with the covenants and other
      obligations set forth in the purchase agreement and related transaction
      documents between the Company and the investors in the Offering, and that Rodman
      will be entitled to rely on the representations, warranties, agreements and
      covenants of the Company contained in such purchase agreement and related
      transaction documents as if such representations, warranties, agreements and
      covenants were made directly to Rodman by the Company.

    


    
      
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    I.           Limitation
      of Rodman’s Liability to the Company.  Rodman and the Company
      further agree that neither Rodman nor any of its affiliates or any of its their
      respective officers, directors, controlling persons (within the meaning of
      Section 15 of the Act or Section 20 of the Exchange Act of 1934), employees
      or
      agents shall have any liability to the Company, its security holders or
      creditors, or any person asserting claims on behalf of or in the right of the
      Company (whether direct or indirect, in contract, tort, for an act of negligence
      or otherwise) for any losses, fees, damages, liabilities, costs, expenses or
      equitable relief arising out of or relating to this Agreement or the Services
      rendered hereunder, except for losses, fees, damages, liabilities, costs or
      expenses that arise out of or are based on any action of or failure to act
      by
      Rodman and that are finally judicially determined to have resulted solely from
      the gross negligence or willful misconduct of Rodman.

    


    J.           Governing
      Law.  This Agreement shall be governed by and construed in
      accordance with the laws of the State of New York applicable to agreements
      made
      and to be fully performed therein.  Any disputes which arise under
      this Agreement, even after the termination of this Agreement, will be heard
      only
      in the state or federal courts located in the City of New York, State of New
      York.  The parties hereto expressly agree to submit themselves to the
      jurisdiction of the foregoing courts in the City of New York, State of New
      York.
      The parties hereto expressly waive any rights they may have to contest the
      jurisdiction, venue or authority of any court sitting in the City and State
      of
      New York.  In the event of the bringing of any action, or suit by a
      party hereto against the other party hereto, arising out of or relating to
      this
      Agreement, the party in whose favor the final judgment or award shall be entered
      shall be entitled to have and recover from the other party the costs and
      expenses incurred in connection therewith, including its reasonable attorneys’
fees.  Any rights to trial by jury with respect to any such action,
      proceeding or suit are hereby waived by Rodman and the Company.

    


    K.           Notices.  All
      notices hereunder will be in writing and sent by certified mail, hand delivery,
      overnight delivery or telefax, if sent to Rodman, to Rodman & Renshaw, LLC,
      1270 Avenue of the Americas, 16th Floor, New York, NY  10020, Telefax
      number (212) 356-0536, Attention: Thomas Pinou, and if sent to the Company,
      to
      23811 Inverness Place Laguna Niguel, California 92677, Telefax number (949)
      481-9829, Attention: Chief Executive Officer.  Notices sent by
      certified mail shall be deemed received five days thereafter, notices sent
      by
      hand delivery or overnight delivery shall be deemed received on the date of
      the
      relevant written record of receipt, and notices delivered by telefax shall
      be
      deemed received as of the date and time printed thereon by the telefax
      machine.

    


    L.           Miscellaneous.  This
      Agreement shall not be modified or amended except in writing signed by Rodman
      and the Company.  This Agreement shall be binding upon and inure to
      the benefit of both Rodman and the Company and their respective assigns,
      successors, and legal representatives.  This Agreement constitutes the
      entire agreement of Rodman and the Company with respect to the subject matter
      hereof and supersedes any prior agreements. If any provision of this Agreement
      is determined to be invalid or unenforceable in any respect, such determination
      will not affect such provision in any other respect, and the remainder of the
      Agreement shall remain in full force and effect.  This Agreement may
      be executed in counterparts (including facsimile counterparts), each of which
      shall be deemed an original but all of which together shall constitute one
      and
      the same instrument.

    



    
      
        
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    In
      acknowledgment that the foregoing correctly sets forth the understanding reached
      by Rodman and the Company, please sign in the space provided below, whereupon
      this letter shall constitute a binding Agreement as of the date indicated
      above.

    


    Very
      truly yours,

    


    RODMAN
&
RENSHAW,
      LLC

    


    


    By
      __/s/ John
      Borer_______________

    Name:   John
      Borer

    Title:     CEO

    


    Accepted
      and Agreed:

    


    AEOLUS
      PHARMACEUTICALS, INC.

    


    


    By
      ___/s/ Michael P. McManus________

    Name:   Michael
      P. McManus

    Title:    Chief
      Financial Officer