UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 14)*
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)
00765G109
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(CUSIP Number)
Mary L. King
Xmark Opportunity Partners, LLC
90 Grove Street, Suite 201
Ridgefield, CT 06877
(203) 588-2808
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
August 1, 2008
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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. 00765G109
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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) Not
(b) Applicable
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3. SEC Use Only
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4. Source of Funds (See Instructions): AF, 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: United States
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Number of 7. Sole Voting Power: 17,239,803*
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Shares Beneficially 8. Shared Voting Power:
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Owned by
Each Reporting 9. Sole Dispositive Power: 16,239,803*
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Person With 10. Shared Dispositive Power:
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11. Aggregate Amount Beneficially Owned by Each Reporting Person: 17,239,803*
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions): [ x ]*
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13. Percent of Class Represented by Amount in Row (11): 50.6%*
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14. Type of Reporting Person (See Instructions): IA
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* Xmark Opportunity Partners, LLC ("Opportunity Partners") is the sole member of
the investment manager of Xmark Opportunity Fund, L.P., a Delaware limited
partnership ("Opportunity LP"), and Xmark Opportunity Fund, Ltd., a Cayman
Islands exempted company ("Opportunity Ltd"), and, as such, possesses sole power
to vote and direct the disposition of all securities of Aeolus Pharmaceuticals,
Inc., a Delaware corporation (the "Company"), held by Opportunity LP and
Opportunity Ltd. Opportunity Partners is the investment manager of Xmark JV
Investment Partners, LLC, a Delaware limited liability company ("JV Partners",
together with Opportunity LP and Opportunity Ltd, the "Funds"), and, as such,
possesses sole power to vote and direct the disposition of all securities of the
Company held by JV Partners. Mitchell D. Kaye and David C. Cavalier, the Chief
Executive Officer and Chief Operating Officer, respectively, of Xmark Capital
Partners, LLC, the Managing Member of Opportunity Partners, share voting and
investment power with respect to all securities beneficially owned by
Opportunity Partners. Opportunity LP and Opportunity Ltd, together, hold a
majority of the membership interests in Goodnow Capital, L.L.C., a Delaware
limited liability company ("Goodnow"), and, as such, Opportunity Partners
possesses sole power to vote and direct the disposition of all securities of the
Company held by Goodnow.
As of August 1, 2008, Opportunity LP held (i) 3,046,707 common shares, $0.01 par
value per share (the "Common Shares"), of the Company, which includes 1,276,435
Common Shares of the Company owned by Goodnow, (ii) warrants to purchase up to
660,000 Common Shares of the Company at an exercise price of $0.50 per share,
(iii) a 7% senior convertible note ("Note 1"), in the aggregate principal amount
of $75,000, which is convertible into 214,285 Common Shares of the Company at a
conversion price of $0.35 per share subject to certain adjustments, and (iv)
warrants ("Warrant 1") to purchase up to 150,000 Common Shares of the Company at
an exercise price of $0.50 per share subject to certain adjustments. As of
August 1, 2008, Opportunity Ltd held (i) 6,489,414 Common Shares of the Company,
which includes 3,300,653 Common Shares of the Company owned by Goodnow, (ii)
warrants to purchase up to 990,000 Common Shares of the Company at an exercise
price of $0.50 per share, (iii) a 7% senior convertible note ("Note 2"), in the
aggregate principal amount of $175,000, which is convertible into 500,000 Common
Shares of the Company at a conversion price of $0.35 per share subject to
certain adjustments, and (iv) warrants ("Warrant 2") to purchase up to 350,000
Common Shares of the Company at an exercise price of $0.50 per share subject to
certain adjustments. As of August 1, 2008, JV Partners held (i) 1,023,731 Common
Shares of the Company, (ii) warrants to purchase up to 500,000 Common Shares of
the Company at an exercise price of $0.50 per share, (iii) a 7% senior
convertible note ("Note 3", together with Note 1 and Note 2, the "Notes"), in
the aggregate principal amount of $250,000, which is convertible into 714,285
Common Shares of the Company at a conversion price of $0.35 per share subject to
certain adjustments, and (iv) warrants ("Warrant 3", together with Warrant 1 and
Warrant 2, the "Warrants") to purchase up to 500,000 Common Shares of the
Company at an exercise price of $0.50 per share subject to certain adjustments.
The Notes and the Warrants each contain an issuance limitation prohibiting the
holder from converting or exercising, as the case may be, those securities to
the extent that after giving effect to such conversion or exercise, the holder
would beneficially own more than 9.99% of the Common Shares of the Company then
issued and outstanding, which prohibition cannot be modified by the holder
before the 61st day after such holder's notice to the Company of its election to
modify such prohibition.
On August 1, 2008, the Company entered into a Securities Purchase Agreement (the
"SPA") with the Funds, pursuant to which, upon the satisfaction of certain
conditions, the Funds agreed to purchase for an aggregate purchase price of
$1,000,000, on the date of the SPA and at four subsequent monthly closings (the
"Additional Closings"), units comprised of 7% senior convertible notes and
warrants to purchase Common Shares from the Company, and pursuant to which the
Funds were given the option to purchase up to an additional $4,000,000 of units.
On August 1, 2008, the Company sold and issued to the Funds under the SPA an
aggregate of 500 units ("Units"), collectively comprised of (i) the Notes in the
aggregate principal amount of $500,000, and (ii) the Warrants, which entitle the
holders of the Warrants to purchase in the aggregate up to 1,000,000 Common
Shares of the Company at an exercise price of $0.50 per share subject to certain
adjustments. Each Unit consists of $1,000 in principal amount of 7% senior
convertible notes and warrants to purchase up to 2,000 Common Shares of the
Company at a purchase price of $1,000 per Unit. The Notes are convertible into
Common Shares of the Company at a conversion price of $0.35 per share subject to
certain adjustments, or up to approximately 1,428,570 Common Shares of the
Company upon the conversion of all $500,000 in principal amount of the Notes.
The Notes permit the Company, at its sole option, to pay interest in cash or in
Common Shares of the Company. The Notes and the Warrants each contain an
issuance limitation prohibiting the holder from converting or exercising, as the
case may be, those securities to the extent that after giving effect to such
conversion or exercise, the holder would beneficially own more than 9.99% of the
Common Shares of the Company then issued and outstanding, which prohibition
cannot be modified by the holder before the 61st day after such holder's notice
to the Company of its election to modify such prohibition.
Further, pursuant to the SPA, the Company agreed to sell and issue to the Funds
over the four-month period following the issuance of the Units, upon the
satisfaction of certain conditions, an additional 500 Units in the aggregate
(the "Additional Units") at the Additional Closings, comprised of (i) $75,000 in
aggregate principal amount of 7% senior convertible notes (collectively, "Note
4"), which is convertible into approximately 214,285 Common Shares of the
Company at a conversion price of $0.35 per share subject to certain adjustments,
and warrants (collectively, "Warrant 4") to purchase up to 150,000 Common Shares
of the Company at an exercise price of $0.50 per share subject to certain
adjustments, to be issued to Opportunity LP, (ii) $175,000 in aggregate
principal amount of 7% senior convertible notes (collectively, "Note 5"), which
is convertible into 500,000 Common Shares of the Company at a conversion price
of $0.35 per share subject to certain adjustments, and warrants (collectively,
"Warrant 5") to purchase up to 350,000 Common Shares of the Company at an
exercise price of $0.50 per share subject to certain adjustments, to be issued
to Opportunity Ltd, and (iii) $250,000 in aggregate principal amount of 7%
senior convertible notes (collectively, "Note 6", together with Note 4 and Note
5, the "Additional Notes") which is convertible into approximately 714,285
Common Shares of the Company at a conversion price of $0.35 per share subject to
certain adjustments, which conversion price is subject to certain adjustments,
and warrants (collectively, "Warrant 6", together with Warrant 4 and Warrant 5,
the "Additional Warrants") to purchase up to 500,000 Common Shares of the
Company at an exercise price of $0.50 per share subject to certain adjustments,
to be issued to JV Partners. Each Additional Unit consists of $1,000 in
principal amount of 7% senior convertible notes and warrants to purchase up to
2,000 Common Shares of the Company at a purchase price of $1,000 per Additional
Unit. The Additional Notes each permit the Company, at its sole option, to pay
interest in cash or in Common Shares of the Company. The Additional Notes and
the Additional Warrants each contain an issuance limitation prohibiting the
holder from converting or exercising, as the case may be, those securities to
the extent that after giving effect to such conversion or exercise, the holder
would beneficially own more than 9.99% of the Common Shares of the Company then
issued and outstanding, which prohibition cannot be modified by the holder
before the 61st day after such holder's notice to the Company of its election to
modify such prohibition.
Additionally, pursuant to the SPA, the Funds (and one or more additional
accredited investors) have the option to purchase up to an additional 4,000
units in one or more closings (each, an "Election Closing") at their sole option
at any time on or before February 1, 2010. The additional units sold at an
Election Closing also would be sold by the Company at a purchase price of $1,000
per unit and would be issued on the same terms as the other units sold pursuant
to the SPA, except that the initial conversion price of the 7% senior
convertible notes issued in an Election Closing would equal the volume weighted
average closing sale price for the Common Shares of the Company for the sixty
(60) consecutive trading day period ending on the trading day immediately
preceding such Election Closing, provided that such initial conversion price may
not be less than $0.20 per share or greater than $0.75 per share, in each case
subject to adjustment pursuant to the terms of the 7% senior convertible notes.
The 7% senior convertible notes and warrants to purchase Common Shares of the
Company in an Election Closing would contain an issuance limitation prohibiting
the holder from converting or exercising, as the case may be, those securities
to the extent that after giving effect to such conversion or exercise, the
holder would beneficially own more than 9.99% of the Common Shares of the
Company then issued and outstanding, which prohibition could not be modified by
the holder before the 61st day after such holder's notice to the Company of its
election to modify such prohibition.
As of August 1, 2008, Goodnow held 3,529,951 Common Shares of the Company in
addition to the Common Shares of the Company referenced above. As of August 1,
2008, Opportunity Partners had the right to vote 1,000,000 Common Shares of the
Company pursuant to a voting trust agreement between Opportunity Partners and
the holders of record of those shares. As of August 1, 2008, Mr. Cavalier held
options to purchase 100,000 Common Shares of the Company.
Based upon information set forth in the Company's most recent Quarterly Report
on Form 10-Q for the period ended June 30, 2008, as filed with the Securities
and Exchange Commission on August 4, 2008, there were 31,952,749 Common Shares
of the Company issued and outstanding as of July 31, 2008. As a result of the
foregoing, for purposes of Reg. Section 240.13d-3, Opportunity Partners is
deemed to beneficially own 17,239,803 Common Shares of the Company, or 50.6% of
the Common Shares of the Company deemed issued and outstanding as of August 1,
2008.
Item 3. Source and Amount of Funds or Other Consideration.
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This Item 3 is hereby amended by adding the following at the end
thereof:
All funds used to purchase the securities of the Company held by the
Funds described in this Schedule 13D, as amended, have come directly from the
assets of the Funds. See Item 5, as amended, for further information.
Item 5. Interest in Securities of the Issuer.
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This Item 5 is hereby amended and restated to read in its entirety as
follows:
Based upon information set forth in the Company's most recent
Quarterly Report on Form 10-Q for the period ended June 30, 2008, as filed with
the Securities and Exchange Commission on August 4, 2008, there were 31,952,749
Common Shares of the Company issued and outstanding as of July 31, 2008.
As of August 1, 2008, Opportunity LP held (i) 3,046,707 Common Shares
of the Company, which includes 1,276,435 Common Shares of the Company owned by
Goodnow Capital, L.L.C., a Delaware limited liability company ("Goodnow"), (ii)
warrants to purchase up to 660,000 Common Shares of the Company at an exercise
price of $0.50 per share, (iii) a 7% senior convertible note ("Note 1"), in the
aggregate principal amount of $75,000, which is convertible into 214,285 Common
Shares of the Company at a conversion price of $0.35 per share subject to
certain adjustments, and (iv) warrants ("Warrant 1") to purchase up to 150,000
Common Shares of the Company at an exercise price of $0.50 per share subject to
certain adjustments. As of August 1, 2008, Opportunity Ltd held (i) 6,489,414
Common Shares of the Company, which includes 3,300,653 Common Shares of the
Company owned by Goodnow, (ii) warrants to purchase up to 990,000 Common Shares
of the Company at an exercise price of $0.50 per share, (iii) a 7% senior
convertible note ("Note 2"), in the aggregate principal amount of $175,000,
which is convertible into 500,000 Common Shares of the Company at a conversion
price of $0.35 per share subject to certain adjustments, and (iv) warrants
("Warrant 2") to purchase up to 350,000 Common Shares of the Company at an
exercise price of $0.50 per share subject to certain adjustments. As of August
1, 2008, JV Partners held (i) 1,023,731 Common Shares of the Company, (ii)
warrants to purchase up to 500,000 Common Shares of the Company at an exercise
price of $0.50 per share, (iii) a 7% senior convertible note ("Note 3", together
with Note 1 and Note 2, the "Notes"), in the aggregate principal amount of
$250,000, which is convertible into 714,285 Common Shares of the Company at a
conversion price of $0.35 per share subject to certain adjustments, and (iv)
warrants ("Warrant 3", together with Warrant 1 and Warrant 2, the "Warrants") to
purchase up to 500,000 Common Shares of the Company at an exercise price of
$0.50 per share subject to certain adjustments.
On August 1, 2008, the Company entered into a Securities Purchase
Agreement (the "SPA") with the Funds, pursuant to which, upon the satisfaction
of certain conditions, the Funds agreed to purchase for an aggregate purchase
price of $1,000,000, on the date of the SPA and at four subsequent monthly
closings (the "Additional Closings"), units comprised of 7% senior convertible
notes and warrants to purchase Common Shares from the Company, and pursuant to
which the Funds were given the option to purchase up to an additional $4,000,000
of units.
On August 1, 2008, the Company sold and issued to the Funds under the
SPA an aggregate of 500 units ("Units"), collectively comprised of (i) the Notes
in the aggregate principal amount of $500,000, and (ii) the Warrants, which
entitle the holders of the Warrants to purchase in the aggregate up to 1,000,000
Common Shares of the Company at an exercise price of $0.50 per share subject to
certain adjustments. Each Unit consists of $1,000 in principal amount of 7%
senior convertible notes and warrants to purchase up to 2,000 Common Shares of
the Company at a purchase price of $1,000 per Unit. The Notes are convertible
into Common Shares of the Company at a conversion price of $0.35 per share
subject to certain adjustments, or up to approximately 1,428,570 Common Shares
of the Company upon the conversion of all $500,000 in principal amount of the
Notes. The Notes permit the Company, at its sole option, to pay interest in cash
or in Common Shares of the Company. The Notes and the Warrants each contain an
issuance limitation prohibiting the holder from converting or exercising, as the
case may be, those securities to the extent that after giving effect to such
conversion or exercise, the holder would beneficially own more than 9.99% of the
Common Shares of the Company then issued and outstanding, which prohibition
cannot be modified by the holder before the 61st day after such holder's notice
to the Company of its election to modify such prohibition.
Further, pursuant to the SPA, the Company agreed to sell and issue to
the Funds over the four-month period following the issuance of the Units, upon
the satisfaction of certain conditions, an additional 500 Units in the aggregate
(the "Additional Units") at the Additional Closings, comprised of (i) $75,000 in
aggregate principal amount of 7% senior convertible notes (collectively, "Note
4"), which is convertible into approximately 214,285 Common Shares of the
Company at a conversion price of $0.35 per share subject to certain adjustments,
and warrants (collectively, "Warrant 4") to purchase up to 150,000 Common Shares
of the Company at an exercise price of $0.50 per share subject to certain
adjustments, to be issued to Opportunity LP, (ii) $175,000 in aggregate
principal amount of 7% senior convertible notes (collectively, "Note 5"), which
is convertible into 500,000 Common Shares of the Company at a conversion price
of $0.35 per share subject to certain adjustments, and warrants (collectively,
"Warrant 5") to purchase up to 350,000 Common Shares of the Company at an
exercise price of $0.50 per share subject to certain adjustments, to be issued
to Opportunity Ltd, and (iii) $250,000 in aggregate principal amount of 7%
senior convertible notes (collectively, "Note 6", together with Note 4 and Note
5, the "Additional Notes") which is convertible into approximately 714,285
Common Shares of the Company at a conversion price of $0.35 per share subject to
certain adjustments, which conversion price is subject to certain adjustments,
and warrants (collectively, "Warrant 6", together with Warrant 4 and Warrant 5,
the "Additional Warrants") to purchase up to 500,000 Common Shares of the
Company at an exercise price of $0.50 per share subject to certain adjustments,
to be issued to JV Partners. Each Additional Unit consists of $1,000 in
principal amount of 7% senior convertible notes and warrants to purchase up to
2,000 Common Shares of the Company at a purchase price of $1,000 per Additional
Unit. The Additional Notes each permit the Company, at its sole option, to pay
interest in cash or in Common Shares of the Company. The Additional Notes and
the Additional Warrants each contain an issuance limitation prohibiting the
holder from converting or exercising, as the case may be, those securities to
the extent that after giving effect to such conversion or exercise, the holder
would beneficially own more than 9.99% of the Common Shares of the Company then
issued and outstanding, which prohibition cannot be modified by the holder
before the 61st day after such holder's notice to the Company of its election to
modify such prohibition.
Additionally, pursuant to the SPA, the Funds (and one or more
additional accredited investors) have the option to purchase up to an additional
4,000 units in one or more closings (each, an "Election Closing") at their sole
option at any time on or before February 1, 2010. The additional units sold at
an Election Closing also would be sold by the Company at a purchase price of
$1,000 per unit and would be issued on the same terms as the other units sold
pursuant to the SPA, except that the initial conversion price of the 7% senior
convertible notes issued in an Election Closing would equal the volume weighted
average closing sale price for the Common Shares of the Company for the sixty
(60) consecutive trading day period ending on the trading day immediately
preceding such Election Closing, provided that such initial conversion price may
not be less than $0.20 per share or greater than $0.75 per share, in each case
subject to adjustment pursuant to the terms of the 7% senior convertible notes.
The 7% senior convertible notes and warrants to purchase Common Shares of the
Company in an Election Closing would contain an issuance limitation prohibiting
the holder from converting or exercising, as the case may be, those securities
to the extent that after giving effect to such conversion or exercise, the
holder would beneficially own more than 9.99% of the Common Shares of the
Company then issued and outstanding, which prohibition could not be modified by
the holder before the 61st day after such holder's notice to the Company of its
election to modify such prohibition.
As of August 1, 2008, Goodnow held 3,529,951 Common Shares of the
Company in addition to the Common Shares of the Company referenced above. As of
August 1, 2008, Opportunity Partners had the right to vote 1,000,000 Common
Shares of the Company pursuant to a voting trust agreement between Opportunity
Partners and the holders of record of those shares.
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. Mitchell D. Kaye and David
C. Cavalier, the Chief Executive Officer and Chief Operating Officer,
respectively, of Xmark Capital Partners, LLC, the Managing Member of Opportunity
Partners, share voting and investment power with respect to all securities
beneficially owned by Opportunity Partners. Opportunity LP and Opportunity Ltd,
together, hold a majority of the membership interests in Goodnow and, as such,
Opportunity Partners possesses sole power to vote and direct the disposition of
all securities of the Company held by Goodnow.
As a result of the foregoing, for purposes of Reg. Section 240.13d-3,
Opportunity Partners is deemed to beneficially own 17,239,803 Common Shares of
the Company, or 50.6% of the Common Shares of the Company deemed issued and
outstanding as of August 1, 2008.
None of the persons referenced in Item 2 traded securities of the
Company during the sixty (60) day period on or prior to August 1, 2008 except
for those securities purchased pursuant to the SPA as described above.
This Schedule 13D Amendment No. 14 includes warrants to purchase up to
660,000 Common Shares of the Company at an exercise price of $0.50 per share
held by Opportunity LP and warrants to purchase up to 990,000 Common Shares of
the Company at an exercise price of $0.50 per share held by Opportunity Ltd in
the Percent of Class (represented by the beneficial ownership set forth on the
cover page). Such securities were described in prior amendments to this Schedule
13D but not included in the Percent of Class (represented by the beneficial
ownership set forth on the cover page).
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
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Item 6 is hereby further amended by adding the following at the end
thereof:
As described in Item 5 above, on August 1, 2008, the Company entered
into the SPA with the Funds. The description of the SPA in Item 5 above and this
Item 6 is subject to, and qualified in its entirety by, the full text of the
SPA, a copy of which is incorporated by reference to this Schedule 13D Amendment
No. 14 as an exhibit pursuant to Item 7 hereof.
Item 7. Material to be Filed as Exhibits.
--------------------------------
Item 7 is hereby further amended by adding the following at the end
thereof:
1. Securities Purchase Agreement, dated as of August 1, 2008, by and
among the Company and the Funds, incorporated by reference to Exhibit 10.1 to
the Current Report on Form 8-K, dated August 1, 2008, filed by the Company with
the Securities and Exchange Commission on August 1, 2008.
2. Form of Senior Convertible Note, incorporated by reference to
Exhibit 10.2 to the Current Report on Form 8-K, dated August 1, 2008, filed by
the Company with the Securities and Exchange Commission on August 1, 2008.
3. Form of Warrant, incorporated by reference to Exhibit 10.3 to the
Current Report on Form 8-K, dated August 1, 2008, filed by the Company with the
Securities and Exchange Commission on August 1, 2008.
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.
August 15, 2008 XMARK OPPORTUNITY PARTNERS, LLC
By: XMARK CAPITAL PARTNERS, LLC
its Managing Member
By: /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).