form8kdated10609.htm
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): October 6, 2009
AEOLUS PHARMACEUTICALS,
INC.
(Exact
name of registrant as specified in its charter)
Delaware
(State or
other jurisdiction of incorporation)
0-50481 56-1953785
(Commission
File
Number) (IRS
Employer Identification No.)
26361
Crown Valley Parkway, Suite 150
Mission
Viejo, California 92691
(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:
£ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
£ 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
October 6, 2009, Aeolus Pharmaceuticals, Inc. (the “Company”) entered into a
Securities Purchase and Exchange Agreement (the "Purchase Agreement") with
several accredited institutional investors (the "Investors") pursuant
to which the Company sold and issued to the Investors in a private
placement an aggregate of 5,892,857 units (the “Units”), comprised of an
aggregate of 5,892,857 shares of common stock (the “Common Stock”) of the
Company (the “Shares”) and warrants to purchase up to an aggregate of 11,785,714
additional shares of Common Stock (the “Warrants”), with an initial exercise
price of $0.28 per share, subject to adjustment pursuant to the Warrants, with
each Unit representing one share of Common Stock and a Warrant to purchase two
shares of Common Stock, at a purchase price of $0.28 per Unit for aggregate
gross proceeds of $1,650,000 (collectively, the “Financing”). The
Warrants are exercisable for a seven year period from their date of issuance;
contain a “cashless exercise” feature that allows the holder to exercise the
Warrants without a cash payment to the Company under certain circumstances;
contain a dividend participation right which allows the holder to receive any
cash dividends paid on the Common Stock without exercising the Warrant and
contain a provision that provides for the reduction of the exercise price to
$0.01 in the event of any such payment of cash dividends by the Company or upon
a change of control and contain anti-dilution provisions in the event of a stock
dividend or split, dividend payment or other issuance, reorganization,
recapitalization or similar event. The Purchase Agreement and the
form of Warrant are filed as Exhibit 10.1 and Exhibit 10.2, respectively, to
this Current Report on Form 8-K and incorporated herein by this
reference.
The
Company also granted to the Investors the option to acquire, collectively, up to
an additional 5,892,857 additional Units (the “Additional Units”), comprised of
an aggregate of 5,892,857 shares of common stock of the Company and warrants to
purchase up to an aggregate of 11,785,714 additional shares of common stock at
the per Additional Unit purchase price of $0.28 (the “Call Option”). In
addition, the Investors granted to the Company the option to require these
Investors, severally and not jointly, to acquire up to 5,892,857 Additional
Units, less any Additional Units acquired under the Call Option, at the per
Additional Unit purchase price of $0.28 (the “Put Option”). The Call
Option is exercisable at any time, and from time to time, on or prior to June
30, 2010. The Put Option is exercisable at any time from June 30,
2010 to July 30, 2010. However, the Investors shall have the right to
terminate the Put Option if they reasonably determine that a material adverse
event, condition or circumstance has occurred with respect to the prospects of
the Company’s AEOL 10150 drug candidate for acute radiation syndrome; provided
that the Company’s failure to receive a grant or financing shall not, by itself,
constitute a material adverse event, condition or circumstance with respect
thereto.
In
addition, the Investors agreed to convert all $1,000,000 of the Company’s Senior
Convertible Notes issued in 2008 (the “Notes”) into Common Stock at a conversion
rate of $0.35 per share (the “Conversion Shares”) and to exchange their
remaining option to purchase an additional $4,000,000 in Senior Convertible
Notes for warrants to purchase up to 14,285,714 shares of Common Stock in
substantially the same of form and terms of the Warrants issued in the
Financing, including an initial exercise price of $0.28 per share, subject to
adjustment pursuant to the warrants (the “Note Warrants”). As
consideration for the Investors to convert the Notes, the Company agreed to
exchange warrants to purchase up to 2,000,000 shares of Common Stock issued to
the Investors in connection with the sale of the Notes, warrants to purchase up
to 2,150,000 shares of Common Stock issued to the Investors and one of their
affiliates in connection with a financing completed in November 2005 and
warrants to purchase up to 13,392,857 shares of Common Stock issued to the
Investors in connection with a financing completed in March 2009 (collectively,
the “Prior Warrants”) for warrants to purchase up to 17,542,857 shares of Common
Stock in substantially the same form and terms of the Warrants issued in the
Financing, including an initial exercise price of $0.28 per share, subject to
adjustment pursuant to the warrants (the “Exchange Warrants”) (collectively, the
“Conversion”).
In
connection with the Financing and the Conversion, the Company also entered into
a Registration Rights Agreement (the “Rights Agreement”) with the
Investors. In addition, the Investors agreed to terminate the
Company’s Registration Rights Agreements dated November 21, 2005 and March 30,
2009. Pursuant to the Rights Agreement, the Company agreed to file
one or more registration statements (collectively, the “Registration
Statements”) with the Securities and Exchange Commission (the “SEC”) covering
the resale of the Shares, the Conversion Shares and all shares of common stock
issuable upon exercise of the Warrants, the Note Warrants and the Exchange
Warrants (collectively, the “Registrable Securities”) upon demand of the holders
of a majority of the Registrable Securities (a “Demand
Registration”). Such holders have the right to two Demand
Registrations, subject to certain exceptions. In the event the
holders exercise their right to a Demand Registration, the Company has agreed to
file a Registration Statement to
register
the resale of the Registrable Securities within a certain number of days after
the request and to use commercially reasonable efforts to cause the Registration
Statement to be declared effective by the SEC as soon as practicable after the
filing thereof. The Company also agreed to use its commercially
reasonable efforts to keep the Registration Statements effective for a specified
period. Pursuant to the Rights Agreement, the Company also granted
the Investors certain piggyback registration rights. The Rights
Agreement is filed as Exhibit 4.1 to this Current Report on Form 8-K and
incorporated herein by this reference.
The net
proceeds to the Company from the Financing, after deducting for expenses, were
approximately $1.5 million. The Company intends to use the net proceeds from the
Financing to finance animal efficacy studies in Acute Radiation Syndrome, the
development of AEOL 10150 and ongoing operations of the Company.
The
Company did not use any form of advertising or general solicitation in
connection with the Financing.
The
securities described in this Item 1.01 above were offered and sold in reliance
upon exemptions from registration pursuant to Section 4(2) under the Securities
Act, and Rule 506 promulgated thereunder, and thus have not been registered
under the Securities Act. The securities may not be offered or sold in the
United States absent registration or an applicable exemption from the
registration requirements of the Securities Act.
Affiliates
of Xmark Opportunity Partners, LLC are the sole investors in the Financing and,
together with the Company, are the sole participants in the Conversion. Together
with its affiliates, Xmark Opportunity Partners, LLC beneficially owned
approximately 55% of the Company's outstanding common stock prior to the
Financing and the Conversion. Xmark Opportunity Partners, LLC is the
sole manager of Goodnow Capital, L.L.C. and possesses sole power to vote and
direct the disposition of all securities of the Company held by Goodnow. Goodnow
has the right to designate up to two directors for election to the Company's
Board of Directors pursuant to the terms of a purchase agreement between Goodnow
and the Company. David C. Cavalier, a current director of the Company, is
President of Goodnow.
Item
1.02 Termination of a Material Definitive Agreement.
Effective
October 6, 2009, the following agreements were terminated pursuant to the
Purchase Agreement in connection with the Financing and the Conversion: the
Company’s Registration Rights Agreement, dated November 21, 2005, by and among
the Company, the Investors and certain other parties; and the Company’s
Registration Rights Agreement, dated March 30, 2009, by and among the Company
and the Investors. In addition, as noted under Item 1.01 above, the Prior
Warrants were exchanged for the Exchange Warrants. Upon exchange, the Prior
Warrants were deemed cancelled.
Under the
Registration Rights Agreements dated November 21, 2005 and March 30, 2009, the
Company agreed to register for resale the common stock issued or issuable to the
Investors pursuant to the 2005 Purchase Agreement and the March 2009 Purchase
Agreement. The Company agreed to resale registration obligations that are
equivalent to those set forth under these two Registration Rights Agreements by
entering into the Rights Agreement.
Affiliates
of Xmark Opportunity Partners, LLC are the sole investors in the Financing and,
together with the Company, are the sole participants in the Conversion. Together
with its affiliates, Xmark Opportunity Partners, LLC beneficially owned
approximately 55% of the Company's outstanding common stock prior to the
Financing and the Conversion. Xmark Opportunity Partners, LLC is the
sole manager of Goodnow Capital, L.L.C. and possesses sole power to vote and
direct the disposition of all securities of the Company held by Goodnow. Goodnow
has the right to designate up to two directors for election to the Company's
Board of Directors pursuant to the terms of a purchase agreement between Goodnow
and the Company. David C. Cavalier, a current director of the Company, is
President of Goodnow.
The
securities described in Item 1.01 above were offered and sold in reliance upon
exemptions from registration pursuant to Section 4(2) under the Securities Act,
and Rule 506 promulgated thereunder. The agreements executed in connection with
the Financing and the Conversion contain representations to support the
Company’s reasonable belief that each purchaser of the securities had access to
information concerning the Company’s operations and financial condition, each
purchaser of the securities acquired the securities for its own account and not
with a view to the distribution thereof in the absence of an effective
registration statement or an applicable exemption from registration, and that
each purchaser of the securities is sophisticated within the meaning of Section
4(2) of the Securities Act and an "accredited investor" (as defined by Rule 501
under the Securities Act). In addition, the issuances did not involve any public
offering; the Company made no solicitation in connection with the Financing and
the Conversion other than communications with the purchasers; the Company
obtained representations from each purchaser regarding its investment intent,
experience and sophistication; and each purchaser either received or had access
to adequate information about the Company in order to make informed investment
decisions.
At the
time of their issuance, the securities were deemed to be restricted securities
for purposes of the Securities Act, and the certificates representing the
securities bear legends to that effect.
The
information set forth in Item 1.01 of this Form 8-K is incorporated into this
Item 3.02 by reference.
Item 8.01 Other
Events.
On
October 6, 2009, the Company issued a press release announcing the completion of
the Financing and the Conversion. The text of the press release is set forth in
Exhibit 99.1 attached to this Form 8-K and incorporated herein by this
reference.
Item
9.01. Financial Statements and Exhibits.
Exhibit
#
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Description
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4.1
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Registration
Rights Agreement dated October 6, 2009 by and among the Company and the
investors whose names appear on the signature pages
thereof
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10.1
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Securities
Purchase and Exchange Agreement dated October 6, 2009 by and among the
Company and the investors whose names appear on the signature pages
thereof
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10.2
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Form
of Warrant to Purchase Common Stock
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99.1
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Press
Release dated October 6, 2009
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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.
AEOLUS PHARMACEUTICALS,
INC.
Date: October
6, 2009
/s/ Michael P.
McManus___________________
Michael
P. McManus
Chief
Financial Officer, Treasurer and Secretary