UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 7)*
AEOLUS PHARMACEUTICALS, INC.
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(Name of Issuer)
Common Stock, par value $0.01 per share
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(Title of Class of Securities)
45325S-10-1
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(CUSIP Number)
with a copy to:
Mitchell D. Kaye Peter D. Greene, Esq.
Xmark Asset Management, LLC Lowenstein Sandler PC
301 Tresser Boulevard, Suite 1320 1251 Avenue of the Americas
Stamford, CT 06901 New York, NY 10020
(203) 653-2500 (973) 262-6700
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 5, 2006
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule l3G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box. [ ]
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Section 240.13d-7 for other
parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Cusip No. 45325S-10-1
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1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons
(entities only):
Xmark Asset Management, LLC
13-3954392
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2. Check the Appropriate Box if a Member of a Group (See Instructions):
(a)
(b) X
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3. SEC Use Only
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4. Source of Funds (See Instructions): WC
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d)
or 2(e): Not Applicable
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6. Citizenship or Place of Organization: New York, United States
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Number of 7. Sole Voting Power: 9,365,311*
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Shares Beneficially 8. Shared Voting Power: *
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Owned by
Each Reporting 9. Sole Dispositive Power: 8,365,311*
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Person With 10. Shared Dispositive Power: *
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11. Aggregate Amount Beneficially Owned by Each Reporting Person: 9,365,311*
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions): Not Applicable
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13. Percent of Class Represented by Amount in Row (11): 32.1%*
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14. Type of Reporting Person (See Instructions): IA
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* This is a joint filing by Xmark Asset Management, LLC, a New York limited
liability company ("XAM"), and Xmark Opportunity Partners, LLC, a Delaware
limited liability company ("Opportunity Partners" and together with XAM the
"Reporting Persons"). Mitchell D. Kaye, the Chief Executive Officer of XAM,
exercises sole voting and investment power with respect to all securities
beneficially owned by XAM, and Mr. Kaye and David C. Cavalier, the Chief
Executive Officer and Chief Operating Officer, respectively, of Opportunity
Partners, share voting and investment power with respect to all securities
beneficially owned by Opportunity Partners.
As of June 5, 2006, Xmark Fund, L.P., a Delaware limited partnership ("Xmark
LP"), held 143,354 shares of common stock, par value $0.01 per share ("Common
Stock"), of Aeolus Pharmaceuticals, Inc., a Delaware corporation, formerly known
as Incara Pharmaceuticals Corporation (the "Company"). As of June 5, 2006, Xmark
Fund, Ltd., a Cayman Islands exempted company ("Xmark Ltd"), held 114,898 shares
of Common Stock of the Company. XAM is the investment manager of Xmark LP and
Xmark Ltd and, as such, possesses sole power to vote and direct the disposition
of all securities of the Company held by Xmark LP and Xmark Ltd.
As of June 5, 2006, Goodnow Capital, L.L.C., a Delaware limited liability
company ("Goodnow"), held 8,107,059 shares of Common Stock of the Company. XAM
is the sole manager of Goodnow and, as such, possesses sole power to vote and
direct the disposition of all securities of the Company held by Goodnow.
As of June 5, 2006, Biomedical Value Fund, L.P., a Delaware limited partnership,
and Biomedical Offshore Value Fund, Ltd., a Cayman Islands exempted company
(together the "Biomedical Value Funds"), held 1,000,000 shares of Common Stock
of the Company (the "Biomedical Shares") that are subject to a Voting Trust
Agreement, dated April 19, 2004, by and among (i) the Biomedical Value Funds,
(ii) XAM and (iii) the Company. Pursuant to the Voting Trust Agreement, XAM is
the Voting Trustee and, as such, possesses sole power to vote the Biomedical
Shares. While XAM may be deemed to be the beneficial owner of the Biomedical
Shares pursuant to its power to vote the Biomedical Shares, XAM does not own,
and expressly disclaims any pecuniary interest in, the Biomedical Shares. XAM
does not exercise any investment authority with respect to the Biomedical
Shares. The Biomedical Value Funds, in their capacity as the holders of voting
and/or investment authority of more than 5% of the Common Stock of the Company,
separately and/or in the aggregate, pursuant to Reg. 13d-3 (jointly, together
with certain other reporting persons) file statements separately from the
Reporting Persons pursuant to Section 13 of the Securities Exchange Act of 1934,
as amended.
As a result of the foregoing, for purposes of Reg. Section 240.13d-3, XAM is
deemed to beneficially own 9,365,311 shares of Common Stock of the Company as of
June 5, 2006, or 32.1% of the shares of Common Stock of the Company deemed
issued and outstanding as of such date.
Cusip No. 45325S-10-1
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1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons
(entities only):
Xmark Opportunity Partners, LLC
20-2052197
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2. Check the Appropriate Box if a Member of a Group (See Instructions):
(a)
(b) X
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3. SEC Use Only
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4. Source of Funds (See Instructions): WC
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d)
or 2(e): Not Applicable
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6. Citizenship or Place of Organization: Delaware, United States
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Number of 7. Sole Voting Power: 6,505,388*
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Shares Beneficially 8. Shared Voting Power: *
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Owned by
Each Reporting 9. Sole Dispositive Power: 6,505,388*
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Person With 10. Shared Dispositive Power: *
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11. Aggregate Amount Beneficially Owned by Each Reporting Person: 6,505,388*
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions): Not Applicable
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13. Percent of Class Represented by Amount in Row (11): 18.2%*
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14. Type of Reporting Person (See Instructions): IA
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* This is a joint filing by Xmark Asset Management, LLC, a New York limited
liability company ("XAM"), and Xmark Opportunity Partners, LLC, a Delaware
limited liability company ("Opportunity Partners" and together with XAM the
"Reporting Persons"). Mitchell D. Kaye, the Chief Executive Officer of XAM,
exercises sole voting and investment power with respect to all securities
beneficially owned by XAM, and Mr. Kaye and David C. Cavalier, the Chief
Executive Officer and Chief Operating Officer, respectively, of Opportunity
Partners, share voting and investment power with respect to all securities
beneficially owned by Opportunity Partners.
As of June 5, 2006, Xmark Opportunity Fund, L.P., a Delaware limited partnership
("Opportunity LP"), held 14,322 shares of common stock, par value $0.01 per
share ("Common Stock"), of Aeolus Pharmaceuticals, Inc., a Delaware corporation,
formerly known as Incara Pharmaceuticals Corporation (the "Company"). As of June
5, 2006, Xmark Opportunity Fund, Ltd., a Cayman Islands exempted company
("Opportunity Ltd"), held 21,482 shares of Common Stock of the Company. As of
June 5, 2006, Xmark JV Investment Partners, LLC, a Delaware limited liability
company ("JV Partners"), held 10,850 shares of Common Stock of the Company.
As of June 5, 2006, Opportunity LP held 330,000 shares of Series A Convertible
Preferred Stock (the "Series A Preferred") of the Company, which are convertible
into 1,320,000 shares of Common Stock of the Company at a conversion price of
$0.50 per share. As of June 5, 2006, Opportunity Ltd held 495,000 shares of
Series A Preferred, which are convertible into 1,980,000 shares of Common Stock
of the Company at a conversion price of $0.50 per share. As of June 5, 2006, JV
Partners held 250,000 shares of Series A Preferred, which are convertible into
1,000,000 shares of Common Stock of the Company at a conversion price of $0.50
per share.
As of June 5, 2006, Opportunity LP held warrants to purchase 660,000 shares of
Common Stock of the Company at an exercise price of $0.50 per share. As of June
5, 2006, Opportunity Ltd held warrants to purchase 990,000 shares of Common
Stock of the Company at an exercise price of $0.50 per share. As of June 5,
2006, JV Partners held warrants to purchase 500,000 shares of Common Stock of
the Company at an exercise price of $0.50 per share. All of the warrants held by
Opportunity LP, Opportunity Ltd and JV Partners are exercisable within 60 days
of the date of event which required the filing of this Amendment No. 7 to
Schedule 13D. Opportunity Partners is the sole member of the investment manager
of Opportunity LP and Opportunity Ltd and, as such, possesses sole power to vote
and direct the disposition of all securities of the Company held by Opportunity
LP and Opportunity Ltd. Opportunity Partners is the investment manager of JV
Partners and, as such, possesses sole power to vote and direct the disposition
of all securities of the Company held by JV Partners.
As a result of the foregoing, for purposes of Reg. Section 240.13d-3,
Opportunity Partners is deemed to beneficially own 6,505,388 shares of Common
Stock of the Company as of June 5, 2005, or 18.2% of the shares of Common Stock
of the Company deemed issued and outstanding as of such date.
THIS AMENDMENT NO. 7 TO SCHEDULE 13D IS BEING FILED JOINTLY BY XMARK ASSET
MANAGEMENT, LLC, A NEW YORK LIMITED LIABILITY COMPANY ("XAM"), AND XMARK
OPPORTUNITY PARTNERS, LLC, A DELAWARE LIMITED LIABILITY COMPANY ("OPPORTUNITY
PARTNERS", AND TOGETHER WITH XAM, THE "REPORTING PERSONS"), PURSUANT TO RULE
13d-1(k) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE
ACT"). THIS STATEMENT CONSTITUTES AMENDMENT NO. 7 TO THE SCHEDULE 13D, AS
PREVIOUSLY AMENDED, FILED JOINTLY BY THE REPORTING PERSONS ON JANUARY 31, 2006.
NEITHER THE FILING OF THIS SCHEDULE 13D, AS AMENDED, NOR ANY OF ITS CONTENTS
SHALL BE DEEMED TO CONSTITUTE AN ADMISSION BY THE REPORTING PERSONS OR ANY OTHER
PERSON THAT IT IS THE BENEFICIAL OWNER OF THE SECURITIES OF THE COMPANY
BENEFICIALLY OWNED BY ANY OTHER PERSON (INCLUDING THE OTHER REPORTING PERSON)
FOR PURPOSES OF SECTION 13(d) OF THE EXCHANGE ACT OR FOR ANY OTHER PURPOSE, AND
SUCH BENEFICIAL OWNERSHIP IS EXPRESSLY DISCLAIMED.
Item 3. Source and Amount of Funds or Other Consideration.
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Item 3 of the Schedule 13D is hereby further amended by adding the
following at the end thereof:
According to the terms of the Certificate of Designations, Preferences
and Rights of the Series A Convertible Preferred Stock (the "Series A
Preferred"), on each of January 1, 2006 and April 1, 2006, the Company paid
certain dividends on the shares of Series A Preferred Stock, which were paid in
shares of Common Stock of the Company. As a result of these dividends,
Opportunity LP received, in the aggregate, 17,003 shares of Common Stock of the
Company, Opportunity Ltd received, in the aggregate, 25,504 shares of Common
Stock of the Company and JV Partners received, in the aggregate, 12,881 shares
of Common Stock of the Company.
On June 5, 2006, the Company entered into a private placement of
shares of Common Stock of the Company and warrants to purchase shares of Common
Stock of the Company. Pursuant to the terms of the Certificate of Designations,
Preferences and Rights of the Series A Preferred, the conversion price of the
Series A Preferred automatically was decreased from $1.00 to $0.50 per share,
effective as of June 5, 2006. As a result, as of June 5, 2006, the 330,000
shares of Series A Preferred held by Opportunity LP were convertible into
1,320,000 shares of Common Stock of the Company at a conversion price of $0.50
per share. In addition, as of June 5, 2006, the 495,000 shares of Series A
Preferred held by Opportunity Ltd were convertible into 1,980,000 shares of
Common Stock of the Company at a conversion price of $0.50 per share and the
250,000 shares of Series A Preferred held by JV Partners were convertible into
1,000,000 shares of Common Stock of the Company at a conversion price of $0.50
per share. The shares of Series A Preferred were immediately convertible as of
June 5, 2006.
As a result of the Company's private placement of shares of Common
Stock of the Company and warrants to purchase shares of Common Stock of the
Company on June 5, 2006, pursuant to the terms of the warrants held by each of
Opportunity LP, Opportunity Ltd and JV Partners, the exercise price of such
warrants automatically was decreased from $1.00 to $0.50, effective as of June
5, 2006. The warrants held by Opportunity LP, Opportunity Ltd and JV Partners
were exercisable immediately as of June 5, 2006 and expire on November 21, 2015
(i.e., 10 years from the date of purchase).
Item 4. Purpose of Transaction.
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Item 4 of the Schedule 13D is hereby further amended by deleting such
item in its entirety and substituting the following in lieu thereof:
Each of the Reporting Persons intends to separately evaluate the
performance of the shares of Common Stock of the Company as an investment. Each
of the Reporting Persons pursues an investment objective that seeks capital
appreciation. In pursuing this investment objective, each Reporting Person
separately analyzes the operations, capital structure and markets of companies
in which such Reporting Person's clients invest, including the Company, on a
continuous basis through, among other things, analysis of documentation and
discussions with knowledgeable industry and market observers and with
representatives of such companies.
Each Reporting Person intends to continuously assess the Company's
business, financial condition, results of operations and prospects, general
economic conditions, the securities markets in general and those for the shares
of Common Stock of the Company in particular, other developments and other
investment opportunities. Depending on such assessments, each Reporting Person
may acquire additional securities of the Company or may determine to sell or
otherwise dispose of all or some of the securities of the Company presently held
by Xmark LP, Xmark Ltd, Goodnow, Opportunity LP, Opportunity Ltd and/or JV
Partners, as applicable, in the open market or in private transactions. Such
actions will depend upon a variety of factors, including, without limitation,
current and anticipated future trading prices for the shares of Common Stock of
the Company, the financial condition, results of operations and prospects of the
Company, alternative investment opportunities, general economic, financial
market and industry conditions and other factors that each Reporting Person may
deem material to its investment decision.
David C. Cavalier, the Chief Operating Officer of Opportunity
Partners, is currently a director and Chairman of the Board of the Company. In
addition, the Reporting Persons in the aggregate, through one or more
intermediate entities, possess the power to vote and direct the disposition of
more than fifty percent of the outstanding shares (and the shares deemed
outstanding for purposes of Reg. Section 240.13d-3) of Common Stock of the
Company. As such, the Reporting Persons can control the outcome of matters that
may be submitted to the vote of the Company's stockholders at annual or special
meetings of stockholders. The Reporting Persons also can initiate, through the
calling of a special meeting of stockholders or through action by written
consent in lieu of a stockholders' meeting, corporate actions that are subject
to the vote of the Company's stockholders. Such corporate actions may include,
without limitation, the approval of each of the types of events described in
clauses (a) through (j) under Item 4 of Schedule 13D. Except as otherwise
described herein, the Reporting Persons, separately or together, do not
presently have any plans or proposals which relate to, or would result in the
types of events described in, clauses (a) through (j) under Item 4 of Schedule
13D.
Item 5. Interest in Securities of the Issuer.
------------------------------------
Item 5 of the Schedule 13D is hereby further amended by deleting such
item in its entirety and substituting the following in lieu thereof:
As of June 5, 2006, Xmark LP held 143,354 shares of Common Stock of
the Company. As of June 5, 2006, Xmark Ltd held 114,898 shares of Common Stock
of the Company. XAM is the investment manager of Xmark LP and Xmark Ltd and, as
such, possesses sole power to vote and direct the disposition of all securities
of the Company held by Xmark LP and Xmark Ltd.
As of June 5, 2006, Goodnow held 8,107,059 shares of Common Stock of
the Company. XAM is the sole manager of Goodnow and, as such, possesses sole
power to vote and direct the disposition of all securities of the Company held
by Goodnow.
As of June 5, 2006, Biomedical Value Fund, L.P., a Delaware limited
partnership, and Biomedical Offshore Value Fund, Ltd., a Cayman Islands exempted
company (together the "Biomedical Value Funds"), held 1,000,000 shares of Common
Stock of the Company (the "Biomedical Shares") that are subject to a Voting
Trust Agreement, dated April 19, 2004, by and among (i) the Biomedical Value
Funds, (ii) XAM and (iii) the Company. Pursuant to the Voting Trust Agreement,
XAM is the Voting Trustee and, as such, possesses sole power to vote the
Biomedical Shares. While XAM may be deemed to be the beneficial owner of the
Biomedical Shares pursuant to its power to vote the Biomedical Shares, XAM does
not own, and expressly disclaims any pecuniary interest in, the Biomedical
Shares. XAM does not exercise any investment authority with respect to the
Biomedical Shares. The Biomedical Value Funds, in their capacity as the holders
of voting and/or investment authority of more than 5% of the Common Stock of the
Company, separately and/or in the aggregate, pursuant to Reg. 13d-3 (jointly,
together with certain other reporting persons) file statements separately from
the Reporting Persons pursuant to Section 13 of the Securities Exchange Act of
1934, as amended.
On June 5, 2006, Opportunity LP held 17,003 shares of Common Stock of
the Company, Opportunity Ltd held 25,504 shares of Common Stock of the Company
and JV Partners held 12,881 shares of Common Stock of the Company. As of June 5,
2006, Opportunity LP held 330,000 shares of Series A Preferred, which are
convertible into 1,320,000 shares of Common Stock of the Company at a conversion
price of $0.50 per share. As of June 5, 2006, Opportunity Ltd held 495,000
shares of Series A Preferred, which are convertible into 1,980,000 shares of
Common Stock of the Company. As of June 5, 2006, JV Partners held 250,000 shares
of Series A Preferred, which are convertible into 1,000,000 shares of Common
Stock of the Company at a conversion price of $0.50 per share. The shares of
Series A Preferred were immediately convertible as of June 5, 2006. As of June
5, 2006, Opportunity LP held warrants to purchase 660,000 shares of Common Stock
of the Company at a conversion price of $0.50 per share. As of June 5, 2006,
Opportunity Ltd held warrants to purchase 990,000 shares of Common Stock of the
Company at a conversion price of $0.50 per share. As of June 5, 2006, JV
Partners held warrants to purchase 500,000 shares of Common Stock of the Company
at an exercise price of $0.50 per share. All of the warrants held by Opportunity
LP, Opportunity Ltd and JV Partners are exercisable within 60 days of the date
of event which required the filing of this Amendment No. 7 to Schedule 13D.
Opportunity Partners is the sole member of the investment manager of Opportunity
LP and Opportunity Ltd and, as such, possesses sole power to vote and direct the
disposition of all securities of the Company held by Opportunity LP and
Opportunity Ltd. Opportunity Partners is the investment manager of JV Partners
and, as such, possesses sole power to vote and direct the disposition of all
securities of the Company held by JV Partners.
Based upon information provided by the Company, as of June 5, 2006,
there were 29,223,583 shares of Common Stock of the Company issued and
outstanding. As a result of the foregoing, for purposes of Reg. Section
240.13d-3, XAM is deemed to beneficially own 9,365,311 shares of Common Stock of
the Company as of June 5, 2006, or 32.1% of the shares of Common Stock of the
Company deemed issued and outstanding as of such date, and Opportunity Partners
is deemed to beneficially own 6,505,388 shares of Common Stock of the Company as
of June 5, 2006, or 18.2% of the shares of Common Stock of the Company deemed
issued and outstanding as of such date.
Except as described in Item 3 of this statement on Schedule 13D, as
amended, during the 60 days prior to and including June 5, 2006, there were no
purchases or sales of Common Stock of the Company, or securities convertible
into, exercisable for or exchangeable for Common Stock of the Company, by the
Reporting Persons, or any person or entity controlled by the Reporting Persons
or any person or entity for which the Reporting Persons possess voting or
investment control over the securities thereof. In addition, except as described
in this Schedule 13D, as amended, to the knowledge of the Reporting Persons, no
other securities of the Company are owned, beneficially or otherwise, by any
other person named in Item 2 of this Schedule 13D, as amended. Except as
described in this Schedule 13D, as amended, to the knowledge of the Reporting
Persons, no other person named in Item 2 has effected any transactions in shares
of Common Stock of the Company, or securities convertible into, exercisable for
or exchangeable for shares of Common Stock of the Company, during the 60 days on
or prior to June 5, 2006.
Neither the filing of this Schedule 13D, as amended, nor any of its
contents shall be deemed to constitute an admission by the Reporting Persons or
any other person that it is the beneficial owner of the securities of the
Company beneficially owned by any other person (including the other Reporting
Person) for purposes of Section 13(d) of the Exchange Act or for any other
purpose, and such beneficial ownership is expressly disclaimed.
Item 7. Material to be Filed as Exhibits.
--------------------------------
Item 7 of the Schedule 13D is hereby further amended by adding the
following at the end thereof:
A. Joint filing agreement, dated as of July 18, 2006, by and among
Xmark Asset Management, LLC and Xmark Opportunity Partners, LLC.
Signature
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After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
July 18, 2006 XMARK ASSET MANAGEMENT, LLC
/s/ Mitchell D. Kaye
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Name: Mitchell D. Kaye
Title: Chief Executive Officer
July 18, 2006 XMARK OPPORTUNITY PARTNERS, LLC
/s/ Mitchell D. Kaye
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Name: Mitchell D. Kaye
Title: Chief Executive Officer
Attention: Intentional misstatements or omissions of fact constitute Federal
criminal violations (See 18 U.S.C. 1001).
Exhibit A
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JOINT FILING AGREEMENT
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The undersigned agree that this Schedule 13D Amendment No. 7 relating
to the shares of common stock of Aeolus Pharmaceuticals, Inc. is filed jointly
on behalf of each of the undersigned pursuant to Rule 13d-1(k).
Dated: July 18, 2006
XMARK ASSET MANAGEMENT, LLC
By:/s/ Mitchell D. Kaye
---------------------------------
Name: Mitchell D. Kaye
Title: Chief Executive Officer
XMARK OPPORTUNITY PARTNERS, LLC
By:/s/ Mitchell D. Kaye
---------------------------------
Name: Mitchell D. Kaye
Title: Chief Executive Officer