Exhibit
10.1

       

      

       

      September
1, 2010

      


      Russell
Skibsted

      15
Tranquility Place

      Ladera
Ranch, CA 92694

      


      Dear
Russ:

      


      This
letter confirms our previous conversations regarding the employment opportunity
available to you with Aeolus Pharmaceuticals, Inc. (the “Company”) and sets
forth the terms and conditions of that employment.

       

      The
Company hereby offers you full-time employment as Senior Vice President, Chief
Financial Officer and Secretary commencing upon the announcement of a contract
for development of AEOL 10150 as a medical countermeasure with the Biomedical
Advanced Research and Development Authority (BARDA) (currently expected on or
about October 16, 2010), with a monthly salary of $20,833.33, (which would be
equivalent to $250,000 on an annualized basis).  During the period of
your employment, you shall (a) report to John McManus, President & Chief
Executive Officer (b) devote your entire working time for or at the direction of
the Company or its affiliates, (c) use your best efforts to complete all
assignments, and (d) adhere to the Company’s procedures and policies in place
from time-to-time.  During your employment with the Company, you may
not engage in any other activities that inhibit or prohibit the performance of
your duties to the Company or inhibit or conflict in any way with the business
of the Company.

       

      During
your employment with the Company you will be entitled to participate in all of
our then current customary employee benefit plans and programs, subject to
eligibility requirements, enrollment criteria, and the other terms and
conditions of such plans and programs.  Currently, the Company offers
health insurance, dental insurance, disability insurance and life insurance
($500,000 term policy).  The Company reserves the right to change or
rescind its benefit plans and programs and alter employee contribution levels in
its discretion.

       

      After
commencement of employment, and subject to the approval of the Company’s Board
of Directors, you will be granted an option to purchase 360,000 shares of the
Company’s Common Stock (the “Option”), which will vest in equal amounts over 12
months.  The exercise price per share of the Option will be determined
by the Board of Directors or the Compensation Committee when the Option is
granted.  The Option will be subject to the terms and conditions
applicable to options granted under the Company’s Aeolus Employee Stock Option
Plan, as amended (the “Plan”), as described in the Plan and the applicable Stock
Option Agreement.


      
        
           


        

        
           


          
            

          

        

        
           


        

      

       

      By
executing this letter below, you agree that during the course of your employment
and thereafter that you shall not use or disclose, in whole or in part, any of
the Company’s or its customers’ or affiliates’ trade secrets, confidential and
proprietary information, including without limitation, license agreements,
government contracts, patents, customer lists and information, to any person,
firm, corporation, or other entity for any reason or purpose whatsoever other
than in the course of your employment with the Company or with the prior written
permission of the President and Chief Executive Officer of
Aeolus.  You also
will be required to execute the annexed employee non-disclosure and invention
assignment agreement (the “Covenants
Agreement”), the terms
of which are in addition to the terms of this offer letter.  By
executing this letter below, you also represent and warrant to the Company that
you are not a party to, or otherwise bound by, any confidentiality or similar
agreement that would prohibit, prevent, inhibit, limit, or conflict with the
performance of your duties to the Company.

       

      This
offer of employment with the Company is contingent upon proof of your
authorization to work in the United States.  If, based upon a unique
circumstance, you commence work before the Company has completed its inquiry,
you will be deemed a conditional employee.

       

      Although
we hope that your employment with us is mutually satisfactory, employment at the
Company is “at will.”  This means that, just as you may resign from
the Company at any time for any reason or no reason, the Company has the right
to terminate this employment relationship at any time with or without cause or
notice.  Neither this letter nor any other communication, either
written or oral, should be construed as a contract of employment, unless it is
signed by both you and the President and Chief Executive Officer of Aeolus, and
such agreement is expressly acknowledged as an employment contract.

       

      Russ, I
hope that you elect to accept this offer of employment.  Kindly sign
your name at the end of this letter to signify your understanding and acceptance
of these terms and that no one at the Company has made any other representation
to you.  The Company welcomes you as an employee and looks forward to
a successful relationship in which you will find your work both challenging and
rewarding.  This offer must be accepted on or before September 15,
2010, and will be deemed to have been withdrawn if your executed acceptance of
this offer, together with the
signed Covenants Agreement, is not received by the undersigned on or
before the above referenced date.

       

      
        
          	 
      	
                  Sincerely,

                
	 
      	 
      
	 
      	
                  /s/
      John L. McManus

                
	 
      	
                  John
      L. McManus

                
	 
      	
                  President
      & Chief Executive Officer

                


        

      

      Agreed to
and accepted by:

      


      /s/
Russell Skibsted

      Russell
Skibsted


      
        
           


        

        
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