UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
Date
of
Report (Date of earliest event reported): July 10,
2006
AEOLUS
PHARMACEUTICALS, INC.
(Exact
name of registrant as specified in its charter)
Delaware
(State
or
other jurisdiction of incorporation)
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0-50481
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56-1953785
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(Commission
File Number)
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(IRS
Employer Identification No.)
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23811
Inverness Place
Laguna
Niguel, California 92677
(Address
of Principal Executive Offices, Including Zip Code)
949-481-9825
(Registrant’s
Telephone Number, Including Area Code)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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£
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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£
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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£
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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£
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Item
1.01 Entry into a Material Definitive Agreement.
On
July
14, 2006, Aeolus Pharmaceuticals, Inc. (“Aeolus”) entered into an Employment
Agreement with John L. McManus under which Mr. McManus was appointed President
and Chief Operating Officer of Aeolus and will perform services related to
duties and responsibilities commensurate with his titles. Pursuant to the
agreement, Mr. McManus will be paid $20,850 a month. Aeolus will also grant
John
McManus a stock option to purchase 250,000 shares of Aeolus common stock with
an
exercise price equal to the closing price of Aeolus’ common stock, as reported
on the Over the Counter Bulletin Board, on the day of the grant, July 14, 2006.
The options will vest at a rate of 20,833 per month from the grant date for
twelve months, provided that John McManus is an employee or consultant of Aeolus
on the applicable vesting date. In the event of a sale of Aeolus, through a
merger or otherwise, all of the options shall be fully vested and immediately
exercisable. In addition, the agreement provides that Mr. John McManus will
be
entitled to receive a cash bonus of not less than $100,000 if during the term
of
the agreement Aeolus enters into a definitive agreement for a development or
partnership with another life sciences company for the joint development or
commercialization of any of Aeolus’ owned or in-licensed patent rights or for a
change of control of Aeolus, including through an acquisition or merger. The
initial term of the agreement runs until June 30, 2007 unless terminated
earlier. The agreement will automatically renew for additional one-year periods,
unless either party gives written notice at least 90 days prior to the
commencement of the next year of the agreement term, of such party’s intent not
to renew the agreement. If the agreement is terminated by Aeolus for any reason
other than for cause, Aeolus shall pay John McManus all payments due and owing,
if any, under this agreement. On each July 14th during the term of the
employment agreement, John McManus shall receive an additional stock option
to
purchase 250,000 shares of Aeolus common stock with an exercise price equal
to
the closing price of Aeolus’ common stock, as reported on the Over the Counter
Bulletin Board, on the day of the grant. The additional options shall vest
on
the same terms set forth above. The
preceding description is not complete and is qualified in its entirety by
reference to the Employment Agreement, a copy of which is
attached as Exhibit 10.1 to this Current Report on Form 8-K.
On
July
10, 2006, Aeolus amended and restated its Consulting Agreement, dated June
16,
2005, with McManus & Company, Inc. (“M&C”) under which M&C provides
services on behalf of Aeolus in certain areas, including: audit coordination,
facilitation and administration; shareholder services; accounting; legal
coordination; and financial statement preparation and reporting. In connection
with the amendment and restatement of the agreement, Michael P. McManus,
Executive Vice President of M&C, was appointed Chief Financial Officer,
Treasurer and Secretary of Aeolus on July 10, 2006. Under the Consulting
Agreement, M&C will be paid $25,000 per month. Aeolus will also grant
Michael McManus a stock option to purchase 90,000 shares of Aeolus common stock
with an exercise price equal to the closing price of Aeolus’ common stock, as
reported on the Over the Counter Bulletin Board, on the day of the grant, July
10, 2006. The options will vest at a rate of 7,500 per month from the grant
date
for twelve months, provided that Michael McManus is an employee or consultant
of
Aeolus on the applicable vesting date. In the event of a sale of Aeolus, through
a merger or otherwise, all of the options shall be fully vested and immediately
exercisable. The agreement also provides for certain cash bonus payments to
McManus & Company, Inc. in connection with the occurrence of certain events
as set forth in the agreement, including a $50,000 bonus in the event of a
change of control of Aeolus. The initial term of the agreement runs until June
30, 2008 unless terminated earlier. The agreement will automatically renew
for
additional one-year periods, unless either party gives written notice at least
90 days prior to the commencement of the next year of the agreement term, of
such party’s intent not to renew the agreement. If the agreement is terminated
by Aeolus for any reason other than for cause, Aeolus shall pay M&C all
payments due and owing, if any, under this agreement. On each July 1st during
the term of the consulting agreement, Michael McManus shall receive an
additional stock option to purchase 90,000 shares of Aeolus common stock with
an
exercise price equal to the closing price of Aeolus’ common stock, as reported
on the Over the Counter Bulletin Board, on the day of the grant. The additional
options shall vest on the same terms set forth above. The
preceding description is not complete and is qualified in its entirety by
reference to the Consulting Agreement, a copy of which is
attached as Exhibit 10.2 to this Current Report on Form 8-K.
In
addition, on July 10, 2006, the board of directors of Aeolus awarded Richard
P.
Burgoon, Jr., our Chief Executive Officer, a bonus of $5,719 to be used
exclusively for the higher level of federal and state income and Medicare taxes
payable by Mr. Burgoon for the bonus paid to Mr. Burgoon on March 31, 2006.
The
board of directors of Aeolus also increased the quarterly bonus payable to
Mr.
Burgoon by $5,282 to reflect the higher level of federal and state income and
Medicare taxes payable by Mr. Burgoon. The gross quarterly bonus amount of
$37,707 is used exclusively to exercise a portion of a stock option granted
to
Mr. Burgoon on July 12, 2005 by Aeolus ($20,833 to purchase 20,833 shares of
Aeolus Common stock) and for the federal, state and Medicare taxes due on such
bonus.
Item
1.02 Termination of a Material Definitive Agreement.
On
July
10, 2006, in connection with the execution of the employment agreement between
Aeolus and John McManus described under Item 1.01 of this Current Report on
Form
8-K, Aeolus and John McManus terminated their Consulting Agreement dated June
20, 2005, under which Mr. McManus was appointed President of Aeolus and
performed services related to duties and responsibilities commensurate with
this
title. Pursuant to the consulting agreement, John McManus was paid $10,000
per
month and Aeolus granted John McManus stock options. In addition, under the
consulting agreement, Aeolus awarded John McManus a cash bonus of $75,000 upon
Aeolus’ execution of the definitive agreement for the equity financing completed
by Aeolus in June 2006. The
preceding description is not complete and is qualified in its entirety by
reference to the Consulting Agreement, a copy of which is attached as Exhibit
10.119 to the Current Report on Form 8-K filed by Aeolus on June 21,
2005.
Item
5.02. Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers.
As
described under Item 1.01 above, John McManus was appointed President and Chief
Operating Officer of Aeolus on July 14, 2006. Mr. McManus, age 40, has served
as
President of Aeolus since June 2005. In addition, Mr. John McManus has served
as
the President of M&C and McManus Financial Consultants, Inc. (“MFC”), which
provide strategic, financial and investor relations advice to senior managements
and boards of directors of public companies. He has acted as President of
M&C and MFC since 1989. From 2001 to 2003, Mr. John McManus also served as
Vice President, Finance and Strategic Planning of Spectrum Pharmaceuticals,
Inc., where he had primary responsibility for restructuring Spectrum’s
operations and finances, including the design and implementation of strategic
and financial plans. Mr. John McManus received his degree in Business
Administration from the University of Southern California. He is the brother
of
Michael McManus, Aeolus’ Chief Financial Officer, Treasurer and Secretary. A
summary of the terms Mr. John McManus’ Employment Agreement with Aeolus is
included under Item 1.01 above.
As
set
forth under Item 1.01 above, Michael McManus was appointed Chief Financial
Officer, Treasurer and Secretary of Aeolus on July 10, 2006. Mr. Michael
McManus, age 37, has served as Chief Accounting Officer, Treasurer and Secretary
of Aeolus since June 2005. In addition, Mr. Michael McManus has served as the
Executive Vice President of M&C and MFC since 1995. Prior to joining
M&C, from 1991 to 1995, he worked at PricewaterhouseCoopers LLP as an audit
manager for healthcare and financial services companies. Mr. Michael McManus
is
a retired Certified Public Accountant and holds a B.S. in Accounting from the
University of Southern California. He is the brother of John McManus, Aeolus’
President and Chief Operating Officer. A summary of the terms of the Consulting
Agreement between M&C and Aeolus is included under Item 1.01
above.
Item
9.01. Financial Statements and Exhibits.
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Exhibit
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Description
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10.1
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Employment
Agreement dated July 14, 2006 between Aeolus Pharmaceuticals, Inc.
and
John L. McManus
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10.2
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Consulting
Agreement dated July 10, 2006 between Aeolus Pharmaceuticals, Inc.
and
McManus & Company, Inc.
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this Report to be signed on its behalf by the undersigned hereunto
duly authorized.
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AEOLUS
PHARMACEUTICALS, INC. |
Date:
July 14, 2006 |
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By: |
/s/ Michael
P. McManus |
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Michael
P. McManus |
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Chief
Financial Officer, Treasurer and
Secretary |
Exhibit
Index
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Exhibit
#
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Description
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10.1
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Employment
Agreement dated July 14, 2006 between Aeolus Pharmaceuticals, Inc.
and
John L. McManus
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10.2
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Consulting
Agreement dated July 10, 2006 between Aeolus Pharmaceuticals, Inc.
and
McManus & Company, Inc.
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