aethlon_s8-ex1001.htm


    
      
        

      

    

    EXHIBIT 10.1

     

    THIS
NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAWS.  NEITHER THE NOTE NOR SUCH SHARES OF
COMMON STOCK MAY BE OFFERED FOR SALE, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND UNDER
ANY APPLICABLE STATE SECURITIES LAWS, OR

    AN
OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT AN

    EXEMPTION
FROM SUCH REGISTRATION IS AVAILABLE.

    


     

    AETHLON
MEDICAL, INC.

     

     

    10%
CONVERTIBLE NOTE

     

     $___,000

     

    FOR VALUE RECEIVED, Aethlon
Medical, Inc., a Nevada corporation (the "Company"), promises to pay to
______________________, whose address is _______________________________, or
registered assigns (the "Holder"), the sum of ___________________ Dollars
($___,000) in lawful money of the United States of America on or before the
Maturity Date as defined herein, with all Interest thereon as defined and
specified herein.

     

    1.   Interest.  This Note
shall bear interest ("Interest") equal to ten percent (10%) per annum on the
unpaid principal balance, computed on a three hundred sixty (360)-day year,
during the term of the Note. The Company shall pay all Interest on the Maturity
Date.  In no event shall the rate of Interest payable on this Note
exceed the maximum rate of Interest permitted to be charged under applicable
law.

     

    2.   Payments.  All
payments under this Note shall first be credited against the payment of accrued
and unpaid Interest, if any, and the remainder shall be credited against
principal.  All payments due hereunder shall be payable at the
Company's option in common stock of the Company sent  to the mailing
address provided below, or at such other place as the Holder shall designate in
writing for such purpose from time to time.  If a payment under this
Note otherwise would become due and payable on a Saturday, Sunday or legal
holiday (any other day being a "Business Day"), the due date of the payment
shall be extended to the next succeeding Business Day, and Interest, if any,
shall be payable thereon during such extension.

     

    3.   Pre-Payments and Maturity
Date.  This Note shall be due and payable in full, including
all accrued Interest thereon, on _______, 2011(the "Maturity Date") reflecting
the eighteen month term of this Note.  At any time on or prior to the
Maturity Date, the Company shall have the right to prepay this Note, in whole or
in part, on ten (10) days' advance notice to the Holder and subject to the right
of the Holder to convert in advance of such prepayment date and provided that on
such prepayment date, the Company will pay in respect of the redeemed Note cash
equal to the face amount plus accrued Interest on the Note (or portion thereof)
redeemed.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    4.   Conversion
of Note.

     

    4.1   Conversion of Note/Conversion
Price.  This Note, including principal and interest, is
convertible, at the option of the Holder, into shares of the Company's Common
Stock (the "Common Stock") at any time after the Issue Date prior to the close
of business on the Business Day prior to the Maturity Date at the rate of $0.25
per share (the "Conversion Price"), subject to adjustment as hereinafter
provided.  No fractional shares will be issued.  In lieu
thereof, the Company will pay cash for fractional share amounts equal to the
fair market value of the Common Stock as quoted as the closing bid price of the
Common Stock on the date of conversion.

     

    4.2   Adjustment Based Upon Stock
Dividends, Combination of Shares or Recapitalization.  The
Conversion Price shall be adjusted in the event that the Company shall at any
time (i) pay a stock dividend on the Common Stock; (ii) subdivide its
outstanding Common Stock into a greater number of shares; (iii) combine its
outstanding Common Stock into a smaller number of shares; (iv) issue by
reclassification of its Common Stock any other special capital stock of the
Company; or (v) distribute to all holders of Common Stock evidences of
indebtedness or assets (excluding cash dividends) or rights or warrants to
subscribe for Common Stock (other than those mentioned above).  Upon
the occurrence of an event requiring adjustment of the Conversion Price, and
thereafter, the Holder, upon surrender of this Note for conversion, shall be
entitled to receive the number of shares of Common Stock or other capital stock
of the Company that the Holder would have owned or have been entitled to receive
after the happening of any of the events described above had this Note been
converted immediately prior to the happening of such event.

     

    4.3   Adjustment Based Upon Merger or
Consolidation.  In case of any consolidation or merger to which
the Company is a party (other than a merger in which the Company is the
surviving entity and which does not result in any reclassification of or change
in the outstanding Common Stock of the Company), or in case of any sale or
conveyance to another person, firm, or corporation of the property of the
Company as an entirety or substantially as an entirety, the Holder shall have
the right to convert this Note into the kind and amount of securities and
property (including cash) receivable upon such consolidation, merger, sale or
conveyance by the Holder of the number of shares of Common Stock into which such
Note might have been converted immediately prior thereto.

     

    4.4   Exercise of Conversion
Privilege.

     

    4.4.1   The
Conversion Privilege provided for in this Note shall be exercisable by the
Holder by written notice to the Company or its successor and the surrender of
this Note in exchange for the number of shares (or other securities and
property, including cash, in the event of an adjustment of the Conversion Price)
into which this Note is convertible based upon the Conversion
Price.

     

    4.4.2   The
Holder's conversion right may be exercised at any time and from time to time but
prior to payment in full of the principal amount of the accrued interest on this
Note.  Conversion rights will expire at the close of business on the
Business Day prior to the Maturity Date or redemption date of this
Note.

     

    
      
         

      

      
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    4.4.3   The
Holder may exercise the right to convert all or any portion of the principal
amount and accrued Interest on this Note by delivery of (i) this Note and (ii) a
completed Conversion Notice in the form attached as Exhibit
A on a Business Day to the Company's principal executive
offices.  Such conversion shall be deemed to have been made
immediately prior to the close of business on the Business Day of such delivery
a conversion notice (the "Conversion Date"), and the Holder shall be treated for
all purposes as the record holder of the shares of Common Stock into which this
Note is converted as of such date.

     

    4.4.4   Upon
conversion of the entire principal amount and accrued Interest of this Note and
the delivery of shares of Common Stock upon conversion of this Note, except as
otherwise provided in Paragraph 20, "Representations and Warranties to Survive
Closing," the Company shall be forever released from all of its obligations and
liabilities under this Note.

     

    4.5   Corporate Status of Common Stock to
be Issued.  All Common Stock (or other securities in the event
of an adjustment of the Conversion Price) which may be issued upon the
conversion of this Note shall, upon issuance, be fully paid and
nonassessable.

     

    4.6   Issuance of
Certificate.  Upon the conversion of this Note, the Company
shall, within five (5) Business Days of such conversion, issue to the Holder a
certificate or certificates representing the number of shares of the Common
Stock (or other securities in the event of an adjustment of the Conversion
Price) to which the conversion relates.

     

    5.   Status of Holder of
Note.  This Note shall not entitle the Holder to any voting
rights or other rights as a shareholder of the Company or to any rights
whatsoever except the rights herein expressed, and no dividends shall be payable
or accrue in respect of this Note or the securities issuable upon the conversion
hereof unless and until this Note shall be converted.  Upon the
conversion of this Note, the Holder shall, to the extent permitted by law, be
deemed to be the holder of record of the shares of Common Stock issuable upon
such conversion, notwithstanding that the stock transfer books of the Company
shall then be closed or that the certificates representing such shares of Common
Stock and Warrants shall not then be actually delivered.

     

    6.   Reservation of Shares of Common
Stock.  The Company shall reserve out of its authorized shares
of Common Stock, and other securities in the event of an adjustment of the
Conversion Price, a number of shares sufficient to enable it to comply with its
obligation to issue shares of Common Stock, and other securities in the event of
an adjustment of the Conversion Price, upon the conversion of this
Note.

     

    7.   Transfer Restrictions; Exemption from
Registration.

     

    7.1   The
Holder agrees that (i) this Note and the shares of Common Stock issuable upon
conversion have not been registered under the Act and may not be sold or
transferred without registration under the Act or unless an exemption from such
registration is available; (ii) the Holder has acquired this Note and will
acquire the Common Stock for its own account for investment purposes only and
not with a view toward resale or distribution; and (iii) if a registration
statement that includes the Common Stock is not effective at the time Common
Stock is issued to Holder upon conversion under this Note, and the Common Stock
is not exempt from registration under Rule 144, then the Common Stock shall be
inscribed with the following legend:

     

    
      
         

      

      
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    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS.  THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF HOLDER'S COUNSEL,
IN A CUSTOMARY FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
ACT.

     

    7.2   If an
opinion of counsel of Holder provides that registration is not required for the
proposed conversion or transfer of this Note or the proposed transfer of the
shares of Common Stock issuable upon conversion and that the proposed conversion
or transfer in the absence of registration would require the Company to take any
action including executing and filing forms or other documents with the
Securities and Exchange Commission (the "SEC") or any state securities agency,
or delivering to the Holder any form or document in order to establish the right
of the Holder to effectuate the proposed conversion or transfer, the Company
agrees promptly, at its expense, to take any such action; and provided, further,
that the Company will reimburse the Holder in full for any expenses (including
but not limited to the fees and disbursements of such counsel, but excluding
brokers' commissions) incurred by the Holder or owner of shares of Common Stock
on his, her or its behalf in connection with such conversion or transfer of the
Note or transfer of the shares of Common Stock.

     

    8.   Information on Company. Holder has been furnished with
or has had access at the EDGAR Website of the SEC to the Company's Form 10-K
filed on July 2, 200 for the fiscal year ended March 31, 2000, and the financial
statements included therein, together with all subsequent filings made with the
SEC available at the EDGAR website (hereinafter referred to collectively as the
"Reports").  In
addition, Holder may have received in writing from the Company such other
information concerning its operations, financial condition and other matters as
Holder has requested in writing, identified thereon as OTHER WRITTEN INFORMATION
(such other information is collectively, the "Other Written Information"),
and considered all factors Holder deems material in deciding on the advisability
of investing in this Note (and underlying shares of Common Stock).

     

    8.   Information on
Subscriber.  Holder is, and will be at the time of the exercise
of the Warrants, an "accredited
investor", as such term is defined in Regulation D promulgated by the SEC
under the 1933 Act, is experienced in investments and business matters, has made
investments of a speculative nature and has purchased securities of United
States publicly-owned companies in private placements in the past and, with its
representatives, has such knowledge and experience in financial, tax and other
business matters as to enable Holder to utilize the information made available
by the Company to evaluate the merits and risks of and to make an informed
investment decision with respect to the proposed purchase, which represents a
speculative investment.  Holder has the authority and is duly and
legally qualified to purchase and own the Note and underlying shares of Common
Stock.  Holder is able to bear the risk of such investment for an
indefinite period and to afford a complete loss thereof.  The
information set forth on the signature page hereto regarding Holder is
accurate.

     

    
      
         

      

      
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    9.   Rule
144.

     

    If the
Company (a) has or registers a class of securities under Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") or (b) has or
commences to file reports under Section 13 or 15(d) of the Exchange Act, then,
at the request of any Holder who proposes to sell securities in compliance with
Rule 144 of the SEC, the Company will (i) forthwith furnish to such holder a
written statement of compliance with the filing requirements of the SEC as set
forth in Rule 144, as such rules may be amended from time to time and (ii) make
available to the public and such Holder such information and take such other
action as is requested by the Holder to enable the Holder to make sales pursuant
to Rule 144.

     

    10.   Default.  The
Company shall perform its obligations and covenants hereunder and in each and
every other agreement between the Company and Holder pertaining to the
Indebtedness evidenced hereby. The following provisions shall apply upon failure
of the Company so to perform.

     

    10.1   Event of
Default.  Any of the following events shall constitute an
"Event of Default" hereunder:

     

    10.1.1   Failure
by the Company to pay principal when due and payable hereunder on the Maturity
Date;

     

    10.1.2   Failure
of the Company to pay Interest when due hereunder, which failure continues for a
period of thirty (30) days after the due date of the amount involved;
or

     

    10.1.3   The entry
of an order for relief under Federal Bankruptcy Code as to the Company or entry
of any order appointing a receiver or trustee for the Company or approving a
petition in reorganization or other similar relief under bankruptcy or similar
laws in the United States of America or any other competent jurisdiction, and if
such order, if involuntary, is not satisfied or withdrawn within sixty (60) days
after entry thereof; or the filing of a petition by the Company seeking any of
the foregoing, or consenting thereto; or the filing of a petition to take
advantage of any debtor's act; or making a general assignment for the benefit of
creditors; or admitting in writing inability to pay debts as they
mature.

     

    10.2   Acceleration.  Upon
any Event of Default (in addition to any other rights or remedies provided for
under this Note), at the option of the Holder, all sums evidenced hereby,
including all principal, Interest, fees and all other amounts due hereunder,
shall become immediately due and payable.

     

    10.3   Notice by
Company.  Upon the happening of any Event of Default specified
in this paragraph that is not cured within the respective periods prescribed
above, the Company will give prompt written notice thereof to the Holder of this
Note.

     

    
      
         

      

      
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    10.4   No Waiver.  Failure
of the Holder to exercise any option hereunder shall not constitute a waiver of
the right to exercise the same in the event of any subsequent Event of Default,
or in the event of continuance of any existing Event of Default after demand or
performance thereof.

     

    10.5   Default
Interest.  Default Interest will accrue on an unpaid principal
or Interest due hereunder at the rate of fifteen percent (15%) per annum upon
the occurrence of any Event of Default until the Event of Default is
cured.

     

    10.6   Pursuit of any
Remedy.  Holder may not pursue any remedy under the Note unless
(i) the Company shall have received written notice of a continuing Event of
Default from the Holder and (ii) the Company shall have received a request from
Holder to pursue such remedy.

     

    11.   Assignment,
Transfer or Loss of the Note.

     

    11.1   No Holder
of this Note may assign, transfer, hypothecate or sell all or any part of this
Note or in any way alienate or encumber the Note without the express written
consent of the Company, the granting or denial of which shall be within the
absolute discretion of the Company.  Any attempt to effect such
transfer without the consent of the Company shall be null and
void.  The Company has not registered this Note under the Act or the
applicable securities laws of any state in reliance on exemptions from
registration.  Such exemptions depend upon the investment intent of
the Holder at the time he acquires his Note.  The Holder is acquiring
this Note for his own account for investment purposes only and not with a view
toward distribution or resale of such Note within the meaning of the Act and the
applicable securities laws of any state.  The Company shall be under
no duty to register the Note or to comply with an exemption in connection with
the sale, transfer or other disposition under the applicable laws and
regulations of the Act or the applicable securities laws of any
state.  The Company may require the Holder to provide, at his expense,
an opinion of counsel satisfactory to the Company to the effect that any
proposed transfer or other assignment of the Note will not result in a violation
of the applicable federal or state securities laws or any other applicable
federal or state laws or regulations.

     

    11.2   All
expenses, including reasonable legal fees incurred by the Company in connection
with any permitted transfer, assignment or pledge of this Note will be paid by
the Holder requesting such transfer, assignment or pledge.

     

    11.3   Upon
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of any Note and, in the case of any such loss, theft
or destruction of any Note, upon delivery of an indemnity bond in such
reasonable amount as the Company may determine (or, in the case of any Note held
by the original Noteholder, of an indemnity agreement reasonably satisfactory to
the Company), or, in the case of any such mutilation, upon the surrender of such
Note to the Company at is principal office for cancellation, the Company at its
expense will execute and deliver, in lieu thereof, a new Note of like tenor,
dated the date to which interest hereunder shall have been paid on such lost,
stolen, destroyed or mutilated Note.

     

    
      
         

      

      
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    12.   Notices.  All
notices provided for herein shall be validly given if in writing and delivered
personally or sent by certified mail, postage prepaid, to the office of the
Company or such other address as the Company may from time to time designate in
writing sent by certified mail, postage prepaid, to the Holder at his address
set forth below or such other address as the Holder may from time to time
designate in writing to the Company by certified mail, postage
prepaid.

     

    13.   Usury.  All
Interest, Default Interest, fees, charges, goods, things in action or any other
sums or things of value, or other contractual obligations (collectively, the
"Additional Sums") paid by the Company hereunder, whether pursuant to this Note
or otherwise, with respect to the Indebtedness evidenced hereby, or any other
document or instrument in any way pertaining to the Indebtedness, which, under
the laws of the State of California may be deemed to be Interest with respect to
such loan or Indebtedness, shall, for the purpose of any laws of the State of
California, which may limit the maximum amount of Interest to be charged with
respect to such loan or Indebtedness, be payable by the Company as, and shall be
deemed to be, Interest and for such purposes only, the agreed upon and
contracted rate of Interest shall be deemed to be increased by the Additional
Sums.  Notwithstanding any provision of this Note to the contrary, the
total liability for payments in the nature of Interest under this Note shall not
exceed the limits imposed by applicable law.  The Company shall not
assert a claim, and shall actively resist any attempts to compel it to assert a
claim, respecting a benefit under any present or future usury laws against any
Holder of this Note.

     

    14.   Binding
Effect.  This Note shall be binding upon the parties hereto and
their respective heirs, executors, administrators, representatives, successors
and permitted assigns.

     

    15.   Collection
Fees.  Except as otherwise provided herein, the Company shall
pay all costs of collection, including reasonable attorneys' fees and all costs
of suit and preparation for such suit (and whether at trial or appellate level),
in the event the unpaid principal amount of this Note, or any payment of
Interest is not paid when due, or in the event Holder is made party to any
litigation because of the existence of the Indebtedness evidenced by this Note,
or if at any time Holder should incur any attorneys' fees in any proceeding
under the Federal Bankruptcy Code (or other similar laws for the protection of
debtors generally) in order to collect any Indebtedness hereunder or to
preserve, protect or realize upon any security for, or guarantee or surety of,
such Indebtedness whether suit be brought or not, and whether through courts of
original jurisdiction, as well as in courts of appellate jurisdiction, or
through a bankruptcy court or other legal proceedings.

     

    16.   Construction.  This
Note shall be governed as to its validity, interpretation, construction, effect
and in all other respects by and in accordance with the laws and interpretations
thereof of the State of California.  Unless the context otherwise
requires, the use of terms in singular and masculine form shall include in all
instances singular and plural number and masculine, feminine and neuter
gender.

     

    17.   Severability.  In
the event any one or more of the provisions contained in this Note or any future
amendment hereto shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Note or such other agreement, and
in lieu of each such invalid, illegal or unenforceable provision there shall be
added automatically as a part of this Note a provision as similar in terms to
such invalid, illegal or unenforceable provision as may be possible and be
valid, legal and enforceable.

     

    
      
         

      

      
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    18.   Entire
Agreement.  This Note Agreement represents the entire agreement
and understanding between the parties concerning the subject matter hereof and
supersede all prior and contemporaneous agreements, understandings,
representations and warranties with respect thereto.

     

    19.   Governing Law; Jurisdiction; Jury
Trial.  The corporate laws of the State of Nevada shall govern
all issues concerning the relative rights of the Company and its
shareholders.  All other questions concerning the construction,
validity, enforcement and interpretation of this Note shall be governed by the
internal laws of the State of California, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of California or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of California.  Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of San Diego for the adjudication of any dispute
hereunder or in connection herewith or therewith, or with any transaction
contemplated hereby or discussed herein, or in any manner arising in connection
with or related to the transactions contemplated hereby or involving the parties
hereto whether at law or equity and under any contract, tort or any other claim
whatsoever and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper.  Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing or faxing a copy thereof to such party at the address for
such notices as listed in this Note and agrees that such service shall
constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law.  EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
HEREWITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED
HEREBY.

     

    20.   Headings.  The
headings used in this Note are used for convenience only and are not to be
considered in construing or interpreting this Note.

     

    21.   Definitions.

     

    "Affiliate" of any specified
Person means any other Person directly or indirectly controlling or controlled
by or under direct or indirect common control with such specified
Person.  For the purposes of this definition, "control" when used with
respect to any specified Person means the power to direct the management and
policies of such Person directly or indirectly, whether through the ownership of
Voting Stock, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

     

    
      
         

      

      
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    "Board of Directors" means,
with respect to any Person, the Board of Directors of such Person or any
committee of the Board of Directors of such Person duly authorized to act on
behalf of the Board of Directors of such Person.

     

    "Capital Stock" means, with
respect to any Person, any and all shares, interests, equity participations or
other equivalents (however designated) of corporate stock or partnership
interests and any and all warrants, options and rights with respect thereto
(whether or not currently exercisable), including each class of common stock and
preferred stock of such Person.

     

    "GAAP" means generally
accepted accounting principles as in effect in the United States of America as
of the Issue Date.

     

    "Holder" means a Person in
whose name a Note is registered on the Company's books.

     

    "Indebtedness" means, without
duplication, with respect to any Person, (a) all obligations of such Person (i)
in respect of borrowed money (whether or not the recourse of the lender is to
the whole of the assets of such person or only to a portion thereof); (ii)
evidenced by bonds, notes, debentures or similar instruments; (iii) representing
the balance deferred and unpaid of the purchase price of any property or
services (other than accounts payable or other obligations arising in the
ordinary course of business); (iv) evidenced by bankers' acceptances or similar
instruments issued or accepted by banks, (v) for the payment of money relating
to a capitalized lease obligation under GAAP; or (vi) evidenced by a letter of
credit or a reimbursement obligation of such Person with respect to any letter
of credit; (b) all net obligations of such Person under interest rate swap
obligations and foreign currency hedges; (c) all liabilities of others of the
kind described in the preceding clauses (a) or (b) that such Person has
guaranteed or that are otherwise its legal liability; (d) Indebtedness (as
otherwise defined in this definition) of another Person secured by lien on any
asset of such Person, whether or not such Indebtedness is assumed by such
Person, the amount of such obligations being deemed to be the lesser of (1) the
full amount of such obligations so secured, and (2) the fair market value of
such asset, as determined in good faith by the Board of Directors of such
Person, which determination shall be evidenced by a board resolution; and (e)
any and all deferrals, renewals, extensions, refinancings and refundings
(whether direct or indirect) of, or amendments, modifications or supplements to,
any liability of the kind described in any of the preceding clauses (a), (b),
(c), (d) or this clause (e), whether or not between or among the same
parties.

     

    "Issue Date" means the date
on which the Note is originally issued.

     

    "Maturity Date" means
_________, 2011.

     

    "Person" means any
individual, corporation, partnership, joint venture, trust, estate,
unincorporated organization or government or any agency or political subdivision
thereof.

     

    A "subsidiary" of any Person
means (i) a corporation a majority of whose Voting Stock is at the time,
directly or indirectly, owned by such Person, by one or more subsidiaries of
such Person or by such Person and one or more subsidiaries of such Person, (ii)
a partnership in which such Person or a subsidiary of such Person is, at the
date of determination, a general or limited partner of such partnership, but
only if such Person or its subsidiary is entitled to receive more than fifty
percent (50%) of the assets of such partnership upon its dissolution, or (iii)
any other Person (other than a corporation or partnership) in which such Person,
directly or indirectly, at the date of determination thereof, has (x) at least a
majority ownership interest or (y) the power to elect or direct the election of
a majority of directors or other governing body of such Person.

     

    
      
         

      

      
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    "Subsidiary" means any
subsidiary of the Company.

     

    "Voting Stock" means, with
respect to any Person, securities of any class or classes of Capital Stock in
such Person entitling the holders thereof, whether at all times or only so long
as no senior class of stock has voting power by reason of any contingency to
vote in the election of members of the Board of Directors or other governing
body of such Person.

     

    22.   Miscellaneous.  Except
as otherwise provided herein, the Company waives demand, diligence, presentment
for payment and protest, notice of extension, dishonor, maturity and
protest.  Time is of the essence with respect to the performance of
each and every covenant, condition, term and provision hereof.

     

    IN WITNESS WHEREOF, this Note
has been issued on the _______ day of _________________ 2009.

     

     

    
      
        	 	AETHLON
      MEDICAL, INC.	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ James
      Joyce	 
	 	 	James
      Joyce	 
	 	 	Chief
      Executive Officer	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	      
                [HOLDER:]

                 

                By:

                Name:

                Title:

              	 


      

    

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

    


    EXHIBIT
A

     

     

    FORM OF WARRANT

     

    See
Attached

     

     

     

     

     

     

     

    
 

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

    


    EXHIBIT
B

     

     

    CONVERSION
NOTICE

     

    (To be
signed only upon conversion of this Note)

    


    


    TO:   AETHLON MEDICAL,
INC.

    


    The
undersigned, the registered holder of the 10 % Convertible Note (the "Note") of
AETHLON MEDICAL, INC.
(the "Company"), hereby surrenders the Note for conversion into shares of Common
Stock of the Company (the "Common Stock") to the extent of $_______ unpaid
principal amount of the Note and $_______ unpaid accrued Interest due under the
Note, all in accordance with the provisions of such Note.  The
undersigned requests (i) that a certificate representing shares of Common Stock,
bearing the appropriate legends, be issued to the undersigned, and (ii) if the
unpaid principal amount so converted is less than the entire unpaid principal
amount of the Note, that a new substitute note representing the portion of said
unpaid principal amount that is not so converted be issued in accordance with
the provisions of the Note.

    


    


    


    ________________________________________

    (Signature
and name of the registered holder)

    


    ________________________________________

    Print
Name

    


    Dated:___________________________________

     

     

    
      
         

      

      
        -12-