Exhibit 10.6

 

Aethlon Medical, Inc.
Stock Unit Grant Notice (Directors)
(Amended 2010 Stock Incentive Plan)

 

Aethlon Medical, Inc. (the “Company”), pursuant to Section 9.2 of the Company’s
Amended 2010 Stock Incentive Plan (the “Plan”), hereby awards to Participant
Stock Units for the number of shares of the Company’s Common Stock (“Stock
Units” or the “Award”) set forth below. The Award is subject to all of the terms
and conditions as set forth in this grant notice (this “Stock Unit Grant
Notice”) and in the Plan and the Award Agreement (the “Stock Unit Agreement”),
both of which are attached hereto and incorporated herein in their entirety.
Capitalized terms not otherwise defined herein shall have the meanings set forth
in the Plan or the Award Agreement. In the event of any conflict between the
terms in the Award and the Plan, the terms of the Plan shall control.

 

  Participant:     Date of Grant:     Vesting Commencement Date:     Number of
Stock Units/Shares:  

 

Vesting Schedule: The Stock Units shall vest as follows:
[________________________].

 

Issuance Schedule: Subject to any change on an adjustment of shares pursuant to
Sections 3.2 and 20.1 of the Plan, one share of Common Stock will be issued for
each Stock Unit that vests at the time set forth in Section 6 of the Award
Agreement.

 

Change in Control Acceleration:See Section 2 of the Award Agreement.

 

Election Regarding Stock Sale Arrangement: At the time of executing this Grant
Notice, Participant must make an election whether to sell to the Company a
portion of the shares of Common Stock underlying the Stock Units on the
applicable vesting date, as described in 11(d) of the Agreement. If one of the
options below is not selected, then the Company will assume that the Participant
did not elect to participate in the stock sale arrangement described in Section
11(d) of the Agreement. Please chose one of the following options:

 

¨I DO NOT wish to participate in the stock sale arrangement described in Section
11(d) of the Agreement. (This will be the default choice if no box is checked.)

 

¨I DO wish to participate in the stock sale arrangement described in Section
11(d) of the Agreement with respect to ____ percent of the shares covered by the
Award. (The default percentage if no percentage is filled in will be 40%.)

 

Additional Terms/Acknowledgements: Participant acknowledges receipt of, and
understands and agrees to, this Stock Unit Grant Notice, the Award Agreement and
the Plan. Participant further acknowledges that as of the Date of Grant, this
Stock Unit Grant Notice, the Award Agreement and the Plan set forth the entire
understanding between Participant and the Company regarding the acquisition of
the Common Stock pursuant to the Award specified above and supersedes all prior
oral and written agreements on the terms of this Award.

 

 

 

 

 

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By accepting this Award, Participant acknowledges having received and read this
Stock Unit Grant Notice, the Award Agreement and the Plan and agrees to all of
the terms and conditions set forth in these documents. Participant consents to
receive Plan documents by electronic delivery and to participate in the Plan
through an on-line or electronic system established and maintained by the
Company or another third party designated by the Company.

 

Aethlon Medical, Inc.   Participant           By:         Signature   Signature
          Title:     Date:             Date:        

 

Attachments:Stock Unit Agreement and Amended 2010 Stock Incentive Plan

 

 

 

 

 

 

 

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Attachment I

 

Aethlon Medical, Inc.

Stock Unit Agreement

(Amended 2010 Stock Incentive Plan)

 

Pursuant to the Stock Unit Grant Notice (the “Grant Notice”) and this Stock Unit
Agreement (the “Agreement”), Aethlon Medical, Inc. (the “Company”) has awarded
you (“Participant”) Stock Units (“Stock Units” or the “Award”) pursuant to the
Company’s Amended 2010 Stock Incentive Plan (the “Plan”) for the number of Stock
Units indicated in the Grant Notice. Capitalized terms not explicitly defined in
this Agreement or the Grant Notice shall have the same meanings given to them in
the Plan. The terms of your Stock Units, in addition to those set forth in the
Grant Notice, are as follows.

 

1.                  Grant of the Award. This Award represents the right to be
issued on a future date one (1) share of Common Stock for each Stock Unit that
vests on the applicable vesting date(s) (subject to any adjustment under Section
3 below) as indicated in the Grant Notice. This Award was granted in
consideration of your past or expected future services to the Company or its
affiliates.

 

2.                  Vesting and Acceleration.

 

(a)               Subject to the limitations contained herein, your Stock Units
will vest, if at all, in accordance with the vesting schedule provided in the
Grant Notice, provided that vesting will cease upon your Termination. Upon such
Termination, the Stock Units that were not vested on the date of such
termination will be forfeited at no cost to the Company and you will have no
further right, title or interest in or to the underlying shares of Common Stock
subject to the forfeited Stock Units.

 

(b)               Notwithstanding the foregoing, in the event that a successor
corporation refuses to assume or substitute Awards following a corporate
transaction (as described in Section 20.1 of the Plan), the vesting of any
then-unvested Stock Units shall accelerate in full such that 100% of the then
unvested Stock Units will become vested upon a corporate transaction described
in Section 20.1 of the Plan.

 

3.                  Number of Shares. The number of Stock Units/shares subject
to your Award may be adjusted from time to time pursuant to Sections 3 and 20 of
the Plan. Any additional Stock Units, shares, cash or other property that
becomes subject to the Award pursuant to this Section 3, if any, shall be
subject, in a manner determined by the Board, to the same forfeiture
restrictions, restrictions on transferability, and time and manner of delivery
as applicable to the other Stock Units and shares covered by your Award.
Notwithstanding the provisions of this Section 3, no fractional shares or rights
for fractional shares of Common Stock shall be created pursuant to this Section
3. Fractions of a share will not be issued but will either be replaced by a cash
payment equal to the Fair Market Value of such fraction of a share or will be
rounded up to the nearest whole share, as determined by the Committee.

 

 

 

 

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4.                  Securities Law Compliance. You may not be issued any Common
Stock under your Award unless the shares of Common Stock underlying the Stock
Units are either (i) then registered under the Securities Act, or (ii) the
Company has determined that such issuance would be exempt from the registration
requirements of the Securities Act. Your Award must also comply with other
applicable laws and regulations governing the Award, and you shall not receive
such Common Stock if the Company determines that such receipt would not be in
material compliance with such laws and regulations.

 

5.                  Non-Transferability. Prior to the time that shares of Common
Stock have been delivered to you, you may not transfer, pledge, sell or
otherwise dispose of the Stock Units or the shares issuable in respect of your
Stock Units, except as expressly provided in this Section 5. For example, you
may not use shares that may be issued in respect of your Stock Units as security
for a loan. The restrictions on transfer set forth herein will lapse upon
delivery to you of shares in respect of your vested Stock Units.

 

(a)               Death. Your Award is transferable by will and by the laws of
descent and distribution. At your death, vesting of your Stock Units will cease
and your executor or administrator of your estate shall be entitled to receive,
on behalf of your estate, any Common Stock or other consideration that vested
but was not issued before your death.

 

(b)               Domestic Relations Orders. Upon receiving written permission
from the Board or its duly authorized designee, and provided that you and the
designated transferee enter into transfer and other agreements required by the
Company, you may transfer your Stock Units or the shares of Common Stock issued
upon vesting of your Stock Units pursuant to a domestic relations order or
marital settlement agreement that contains the information required by the
Company to effectuate the transfer. You are encouraged to discuss the proposed
terms of any division of this Award with the Company prior to finalizing the
domestic relations order or marital settlement agreement to verify that you may
make such transfer, and if so, to help ensure the required information is
contained within the domestic relations order or marital settlement agreement.

 

6.                  Date of Issuance.

 

(a)               The issuance of shares in respect of the Stock Units is
intended to comply with Treasury Regulations Section 1.409A-1(b)(4) and will be
construed and administered in such a manner. Subject to the satisfaction of the
withholding obligations set forth in this Agreement, in the event one or more
Stock Units vests, the Company shall issue to you one (1) share of Common Stock
for each Stock Unit that vests on the applicable vesting date(s) (subject to any
adjustment under Section 3 above). The issuance date determined by this
paragraph is referred to as the “Original Issuance Date.”

 

 

 

 

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(b)               If the Original Issuance Date falls on a date that is not a
business day, delivery shall instead occur on the next following business day.
In addition, if:

 

(i)                 the Original Issuance Date does not occur (1) during an
“open window period” applicable to you, as determined by the Company in
accordance with the Company’s then-effective policy on trading in Company
securities, or (2) on a date when you are otherwise permitted to sell shares of
Common Stock on an established stock exchange or stock market, and

 

(ii)               either (1) Withholding Taxes do not apply, or (2) the Company
decides, prior to the Original Issuance Date, (A) not to satisfy the Withholding
Taxes by withholding shares of Common Stock from the shares otherwise due, on
the Original Issuance Date, to you under this Award, and (B) not to permit you
to pay your Withholding Taxes in cash,

 

then the shares that would otherwise be issued to you on the Original Issuance
Date will not be delivered on such Original Issuance Date and will instead be
delivered on the first business day when you are not prohibited from selling
shares of the Company’s Common Stock in the open public market, but in no event
later than December 31 of the calendar year in which the Original Issuance Date
occurs (that is, the last day of your taxable year in which the Original
Issuance Date occurs), or, if and only if permitted in a manner that complies
with Treasury Regulations Section 1.409A-1(b)(4), no later than the date that is
the 15th day of the third calendar month of the applicable year following the
year in which the shares of Common Stock under this Award are no longer subject
to a “substantial risk of forfeiture” within the meaning of Treasury Regulations
Section 1.409A-1(d).

 

(c)                The form of delivery (e.g., a stock certificate or electronic
entry evidencing such shares) shall be determined by the Company.

 

7.                  Dividends. You shall receive no benefit or adjustment to
your Award with respect to any cash dividend, stock dividend or other
distribution that does not result from an adjustment of shares as described in
Section 3 of the Plan.

 

8.                  Restrictive Legends. The shares of Common Stock issued under
your Award shall be endorsed with appropriate legends as determined by the
Company.

 

9.                  Execution of Documents. You hereby acknowledge and agree
that the manner selected by the Company by which you indicate your consent to
your Grant Notice is also deemed to be your execution of your Grant Notice and
of this Agreement. You further agree that such manner of indicating consent may
be relied upon as your signature for establishing your execution of any
documents to be executed in the future in connection with your Award.

 

10.               Award not a Service Contract.

 

(a)               Nothing in this Agreement (including, but not limited to, the
vesting of your Stock Units or the issuance of the shares subject to your Stock
Units), the Plan or any covenant of good faith and fair dealing that may be
found implicit in this Agreement or the Plan shall: (i) confer upon you any
right to continue in the employ of, or affiliation with, the Company or an
affiliate; (ii) constitute any promise or commitment by the Company or an
affiliate regarding the fact or nature of future positions, future work
assignments, future compensation or any other term or condition of employment or
affiliation; (iii) confer any right or benefit under this Agreement or the Plan
unless such right or benefit has specifically accrued under the terms of this
Agreement or Plan; or (iv) deprive the Company of the right to terminate you at
will and without regard to any future vesting opportunity that you may have.

 

 

 

 

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(b)               The Company has the right to reorganize, sell, spin-out or
otherwise restructure one or more of its businesses or affiliates at any time or
from time to time, as it deems appropriate (a “reorganization”). Such a
reorganization could result in your Termination, or the termination of affiliate
status of your employer and the loss of benefits available to you under this
Agreement, including but not limited to, the termination of the right to
continue vesting in the Award. This Agreement, the Plan, the transactions
contemplated hereunder and the vesting schedule set forth herein or any covenant
of good faith and fair dealing that may be found implicit in any of them do not
constitute an express or implied promise of continued engagement as an employee
or consultant for the term of this Agreement, for any period, or at all, and
shall not interfere in any way with the Company’s right to conduct a
reorganization.

 

11.              Withholding Obligations.

 

(a)               On each vesting date, and on or before the time you receive a
distribution of the shares underlying your Stock Units, and at any other time as
reasonably requested by the Company in accordance with applicable tax laws, you
hereby authorize any required withholding from the Common Stock issuable to you
and/or otherwise agree to make adequate provision in cash for any sums required
to satisfy the federal, state, local and foreign tax withholding obligations of
the Company or any affiliate that arise in connection with your Award (the
“Withholding Taxes”). Additionally, the Company or any affiliate may, in its
sole discretion, satisfy all or any portion of the Withholding Taxes obligation
relating to your Stock Units by any of the following means or by a combination
of such means: (i) withholding from any compensation otherwise payable to you by
the Company; (ii) causing you to tender a cash payment; (iii) permitting or
requiring you to enter into a “same day sale” commitment, if applicable, with a
broker-dealer that is a member of the Financial Industry Regulatory Authority (a
“FINRA Dealer”) whereby you irrevocably elect to sell a portion of the shares to
be delivered in connection with your Stock Units to satisfy the Withholding
Taxes and whereby the FINRA Dealer irrevocably commits to forward the proceeds
necessary to satisfy the Withholding Taxes directly to the Company and/or its
affiliates; or (iv) withholding shares of Common Stock from the shares of Common
Stock issued or otherwise issuable to you in connection with the Award with a
Fair Market Value (measured as of the date shares of Common Stock are issued to
pursuant to Section 6) equal to the amount of such Withholding Taxes; provided,
however, that the number of such shares of Common Stock so withheld will not
exceed the amount necessary to satisfy the Company’s required tax withholding
obligations using the minimum statutory withholding rates for federal, state,
local and foreign tax purposes, including payroll taxes, that are applicable to
supplemental taxable income; and provided, further, that to the extent necessary
to qualify for an exemption from application of Section 16(b) of the Exchange
Act, if applicable, such share withholding procedure will be subject to the
express prior approval of the Committee.

 

(b)               Unless the tax withholding obligations of the Company and/or
any affiliate are satisfied, the Company shall have no obligation to deliver to
you any Common Stock.

 

 

 

 

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(c)                In the event the Company’s obligation to withhold arises
prior to the delivery to you of Common Stock or it is determined after the
delivery of Common Stock to you that the amount of the Company’s withholding
obligation was greater than the amount withheld by the Company, you agree to
indemnify and hold the Company harmless from any failure by the Company to
withhold the proper amount.

 

(d)               Because the vesting of Stock Units creates tax obligations to
you and the Company has no authority to withhold otherwise deliverable shares
from, or to make tax payments on behalf of, members of the Company’s Board of
Directors who are not employees of the Company, the Company is hereby offering
you the opportunity at the time of executing this Agreement to elect to sell to
the Company, on the vesting date, a whole number of shares of Common Stock
underlying your Stock Units equal as nearly as possible to such percentage of
the shares covered by the Award (as is reflected in the Grant Notice) that vest
on such vesting date, at a price per share equal to the Fair Market Value of a
share of the Common Stock on the vesting date. If you elect to participate in
this stock sale arrangement, the Company will remit promptly to you the
aggregate purchase price for the shares of Common Stock so purchased at the
address on file with the Company and will distribute the balance of the shares
underlying the Stock Units in the manner provided in Section 6 of this
Agreement.

 

12.              Tax Consequences. The Company has no duty or obligation to
minimize the tax consequences to you of this Award and shall not be liable to
you for any adverse tax consequences to you arising in connection with this
Award. You are hereby advised to consult with your own personal tax, financial
and/or legal advisors regarding the tax consequences of this Award and by
signing the Grant Notice, you have agreed that you have done so or knowingly and
voluntarily declined to do so. You understand that you (and not the Company)
shall be responsible for your own tax liability that may arise as a result of
this investment or the transactions contemplated by this Agreement.

 

13.              Unsecured Obligation. Your Award is unfunded, and as a holder
of vested Stock Units, you shall be considered an unsecured creditor of the
Company with respect to the Company’s obligation, if any, to issue shares or
other property pursuant to this Agreement. You shall not have voting or any
other rights as a stockholder of the Company with respect to the shares to be
issued pursuant to this Agreement until such shares are issued to you pursuant
to Section 6 of this Agreement. Upon such issuance, you will obtain full voting
and other rights as a stockholder of the Company. Nothing contained in this
Agreement, and no action taken pursuant to its provisions, shall create or be
construed to create a trust of any kind or a fiduciary relationship between you
and the Company or any other person.

 

 

 

 

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14.              Notices. Any notice or request required or permitted hereunder
shall be given in writing to each of the other parties hereto and shall be
deemed effectively given on the earlier of (i) the date of personal delivery,
including delivery by express courier, or delivery via electronic means, or (ii)
the date that is five (5) days after deposit in the United States Post Office
(whether or not actually received by the addressee), by registered or certified
mail with postage and fees prepaid, addressed at the following addresses, or at
such other address(es) as a party may designate by ten (10) days’ advance
written notice to each of the other parties hereto:

 

  Company:

Aethlon Medical, Inc.

Attn: Stock Administrator

9635 Granite Ridge Drive, Suite 100

San Diego, CA 92123

        Participant: Your address as on file with the Company at the time notice
is given

 

15.              Headings. The headings of the Sections in this Agreement are
inserted for convenience only and shall not be deemed to constitute a part of
this Agreement or to affect the meaning of this Agreement.

 

16.              Miscellaneous.

 

(a)               The rights and obligations of the Company under your Award
shall be transferable by the Company to any one or more persons or entities, and
all covenants and agreements hereunder shall inure to the benefit of, and be
enforceable by, the Company’s successors and assigns.

 

(b)               You agree upon request to execute any further documents or
instruments necessary or desirable in the sole determination of the Company to
carry out the purposes or intent of your Award.

 

(c)                You agree that you will not sell, dispose of, transfer, make
any short sale of, grant any option for the purchase of, or enter into any
hedging or similar transaction with the same economic effect as a sale with
respect to any shares of Common Stock or other securities of the Company held by
you, for a period of 180 days following the effective date of a registration
statement of the Company filed under the Securities Act or such longer period as
the underwriters or the Company will request to facilitate compliance with FINRA
Rule 2711 or NYSE Member Rule 472 or any successor or similar rules or
regulation (the “Lock-Up Period”). You further agree to execute and deliver such
other agreements as may be reasonably requested by the Company or the
underwriters that are consistent with the foregoing or that are necessary to
give further effect thereto. In order to enforce the foregoing covenant, the
Company may impose stop-transfer instructions with respect to your shares of
Common Stock until the end of such Lock-Up Period. You also agree that any
transferee of any shares of Common Stock (or other securities) of the Company
held by you will be bound by this Section 16(c). The underwriters of the
Company’s stock are intended third party beneficiaries of this Section 16(c) and
will have the right, power and authority to enforce the provisions hereof as
though they were a party hereto.

 

 

 

 

 

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(d)               You acknowledge and agree that you have reviewed your Award in
its entirety, have had an opportunity to obtain the advice of counsel prior to
executing and accepting your Award and fully understand all provisions of your
Award.

 

(e)                This Agreement shall be subject to all applicable laws,
rules, and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required.

 

(f)                All obligations of the Company under the Plan and this
Agreement shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.

 

17.              Governing Plan Document. Your Award is subject to all the
provisions of the Plan, the provisions of which are hereby made a part of your
Award, and is further subject to all interpretations, amendments, rules and
regulations which may from time to time be promulgated and adopted pursuant to
the Plan. Your Award (and any compensation paid or shares issued under your
Award) is subject to recoupment in accordance with The Dodd–Frank Wall Street
Reform and Consumer Protection Act and any implementing regulations thereunder,
any clawback policy adopted by the Company and any compensation recovery policy
otherwise required by applicable law. No recovery of compensation under such a
clawback policy will be an event giving rise to a right to voluntarily terminate
employment upon a resignation for “good reason,” or for a “constructive
termination” or any similar term under any plan of or agreement with the
Company.

 

18.              Effect on Other Employee Benefit Plans. The value of the Stock
Units subject to this Agreement or the stock underlying the Stock Units upon
issuance to you shall not be included as compensation, earnings, salaries, or
other similar terms used when calculating benefits under any employee benefit
plan (other than the Plan) sponsored by the Company or any affiliate except as
such plan otherwise expressly provides. The Company expressly reserves its
rights to amend, modify, or terminate any or all of the employee benefit plans
of the Company or any affiliate.

 

19.              Choice of Law. The interpretation, performance and enforcement
of this Agreement shall be governed by the law of the State of California
without regard to that state’s conflicts of laws rules.

 

20.              Severability. If all or any part of this Agreement or the Plan
is declared by any court or governmental authority to be unlawful or invalid,
such unlawfulness or invalidity shall not invalidate any portion of this
Agreement or the Plan not declared to be unlawful or invalid. Any Section of
this Agreement (or part of such a Section) so declared to be unlawful or invalid
shall, if possible, be construed in a manner which will give effect to the terms
of such Section or part of a Section to the fullest extent possible while
remaining lawful and valid.

 

21.              Other Documents. You acknowledge receipt of and the right to
receive a document providing the information required by Rule 428(b)(1)
promulgated under the Securities Act, which includes the Plan prospectus. In
addition, you acknowledge receipt of the Company’s insider trading policy.

 

 

 

 

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22.              Amendment. This Agreement may not be modified, amended or
terminated except by an instrument in writing, signed by you and by a duly
authorized representative of the Company. Notwithstanding the foregoing, this
Agreement may be amended solely by the Board by a writing which specifically
states that it is amending this Agreement, so long as a copy of such amendment
is delivered to you, and provided that, except as otherwise expressly provided
in the Plan, no such amendment materially adversely affecting your rights
hereunder may be made without your written consent. Without limiting the
foregoing, the Board reserves the right to change, by written notice to you, the
provisions of this Agreement in any way it may deem necessary or advisable to
carry out the purpose of the Award as a result of any change in applicable laws
or regulations or any future law, regulation, ruling, or judicial decision,
provided that any such change shall be applicable only to rights relating to
that portion of the Award which is then subject to restrictions as provided
herein.

 

23.              Compliance with Section 409A of the Code. This Award is
intended to comply with the “short-term deferral” rule set forth in Treasury
Regulation Section 1.409A-1(b)(4). Notwithstanding the foregoing, if it is
determined that the Award fails to satisfy the requirements of the short-term
deferral rule and is otherwise deferred compensation subject to Section 409A,
and if you are a “Specified Employee” (within the meaning set forth in Section
409A(a)(2)(B)(i) of the Code) as of the date of your “separation from service”
(within the meaning of Treasury Regulation Section 1.409A-1(h) and without
regard to any alternative definition thereunder), then the issuance of any
shares that would otherwise be made upon the date of the separation from service
or within the first six (6) months thereafter will not be made on the originally
scheduled date(s) and will instead be issued in a lump sum on the date that is
six (6) months and one day after the date of the separation from service, with
the balance of the shares issued thereafter in accordance with the original
vesting and issuance schedule set forth above, but if and only if such delay in
the issuance of the shares is necessary to avoid the imposition of adverse
taxation on you in respect of the shares under Section 409A of the Code. Each
installment of shares that vests is intended to constitute a “separate payment”
for purposes of Treasury Regulation Section 1.409A-2(b)(2).

 

* * * * *

 

This Stock Unit Agreement shall be deemed to be signed by the Company and the
Participant upon the signing by the Participant of the Stock Unit Grant Notice
to which it is attached.

 

 

 

 

 

 

 

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Attachment II

 

2010 Amended Stock Incentive Plan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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