Exhibit 10.1


 





AETHLON MEDICAL, INC.


 


2000 STOCK OPTION PLAN


I. PURPOSE


 


The Plan
is intended to provide incentive to key employees and directors of, and key consultants, vendors, customers, and others expected
to provide significant services to, the Corporation, to encourage proprietary interest in the Corporation, to encourage such key
employees to remain in the employ of the Corporation and its Subsidiaries, to attract new employees with outstanding qualifications,
and to afford additional incentive to consultants, vendors, customers, and others to increase their efforts in providing significant
services to the Corporation.


IL DEFINITIONS.


 


2.1     "Award"
shall mean an Option, which may be designated an Incentive Stock Option or a Nonstatutory Stock Option, in each case as granted
pursuant to the Plan.


 


2.2     "Award Agreement"
shall mean a Stock Option Agreement.


 


2.3     "Beneficiary"
shall mean the person, persons, trust or trusts entitled by will or the laws of descent and distribution to receive the benefits
specified under the Plan in the event of a Participant's death.


 


2.4     "Board"
shall mean the Board of Directors of the Corporation.


 


2.5     "Code"
shall mean the Internal Revenue Code of 1986, as amended.


 


2.6     "Committee"
shall mean the committee, if any, appointed by the Board in accordance with Section 4 of the Plan.


 


2.7     "Common Stock"
shall mean the Common Stock, par value $.001, of the Corporation.


 


2.8     "Corporation"
shall mean AETHLON MEDICAL, INC., a Nevada corporation, and its Subsidiaries.


 


2.9     "Disability"
shall mean the condition of a Participant who is unable to perform his or her substantial and material job duties due to injury
or sickness or such other condition as the Board or Committee may determine in its sole discretion/engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which
has lasted or can be expected to last for a continuous period of not less than twelve (12) months.


 


2.10     "Eligible
Employee" shall mean an individual who is employed (within the meaning of Code Section 3401 and the regulations thereunder)
by the Corporation.


 


2.11     "Event"
shall mean any of the following:


 


(a)     Any person or entity
(or group of affiliated persons or entities) acquires in one or more transactions, whether before or after the effective date
of the Plan, ownership of more than 50 percent of the outstanding shares of stock entitled to vote in the election of directors
of the Corporation; or


 






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(b)     The dissolution or
liquidation of the Corporation or a reorganization, merger or consolidation of the Corporation with one or more entities, as a
result of which the Corporation is not the surviving entity, or a sale of all or substantially all of the assets of the Corporation
as an entirety to another entity.


 


For purposes of this definition,
ownership does not include ownership (i) by a person owning such shares merely of record (such as a member of a securities exchange,
a nominee or a securities depository system), (ii) by a person as a bona fide pledgee of shares prior to a default and determination
to exercise powers as an owner of the shares, (iii) by a person who is not required to file statements on Schedule 13D by virtue
of Rule 13d-1(b) of the Securities and Exchange Commission under the Exchange Act, or (iv) by a person who owns or holds shares
as an underwriter acquired in connection with an underwritten offering pending and for purposes of resale.


 


2.12     "Exchange
Act" shall mean the Securities Exchange Act of 1934, as amended from time to time.


 


2.13     "Exercise
Price" shall mean the price per Share of Common Stock, determined by the Board or the Committee, at which an Award may be
exercised.


 


2.14     "Fair Market Value" shall mean the value of one (1) Share of Common Stock, determined as follows:


 


(i)     If
the Shares are traded on an exchange, the price at which Shares traded at the close of business on the date of valuation;
or


 


(ii)    If
the Shares are traded over-the-counter on the NASDAQ System, the closing price if one is available, or the mean between the
bid and asked prices on said System at the close of business on the date of valuation; or


 


(iii)   If
neither (i) nor (ii) above applies, the fair market value as determined by the Board or the Committee in good faith. Such
determination shall be conclusive and binding on all persons.


 


2.15     "Incentive Stock Option" shall
mean an option described in Section 422A(b) of the Code.


 


2.16     "Nonstatutory
Stock Option" shall mean an option not described in Section 422(b), 422A(b), 423(b) or 424(b) of the Code.


 


2.17     "Option"
shall mean either an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant to the Plan.


 


2.18     "Participant"
shall mean an Eligible Employee or other person eligible under Section 5.1 herein who has received an Award under the
Plan.


 


2.19     "Plan" shall mean the AETHLON MEDICAL, INC. 2000 Omnibus Stock Option and Incentive Plan, as it may be amended from
time to time.


 


2.20     "Purchase
Price" shall mean the Exercise Price times the number of Shares with respect to which an Award is exercised.


 






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2.21     "Qualified
Retirement" shall mean the voluntary termination of employment by an Eligible Employee upon the attainment of age
fifty-five (55) and the completion of not less than five (5) years of service with the Corporation or a Subsidiary, or such
shorter period as the Committee may prescribe.


 


2.22     "Share"
shall mean one (1) share of Common Stock, adjusted in accordance with Section 9.4 of the Plan (if applicable).


 


2.23     "Securities Act" shall mean the
Securities Act of 1933, as amended from time to time.


 


2.24     "Subsidiary"
shall mean any corporation at least fifty percent (50%) of the total combined voting power of which is owned by the
Corporation or by another Subsidiary.


 


2.25     "Tax Date" shall have the meaning
set forth in Section 9.3 hereof.


 


III. EFFECTIVE DATE


 


The Plan was
adopted by the Board on August 21, 2000, subject to the approval by the Corporation's shareholders. The Plan is being submitted
to the shareholders of the Corporation for their approval at the Annual Meeting thereof scheduled for September 25, 2000. The
effective date of the Plan shall be August 21, 2000 (the "Effective Date"), provided that the Plan is approved by the
shareholders of the Corporation at the Annual Meeting.


 


IV. ADMINISTRATION


 


The Plan shall
be administered by the Board in compliance with Rule 16b-3 of the Securities Exchange Act of 1934 ("Rule 16b-3"), or
by a Committee appointed by the Board, which Committee shall be constituted to permit the Plan to comply with Rule 16b-3, and
which shall consist of not less than three (3) members. The Board shall appoint one of the members of the Committee, if there
be one, as Chairman of the Committee. If a Committee has been appointed, the Committee shall hold meetings at such times and places
as it may determine. Acts of a majority of the Committee at which a quorum is present, or acts reduced to or approved in writing
by a majority of the members of the Committee, shall be the valid acts of the Committee. The Board, or the Committee if there
be one, shall from time to time at its discretion select the Eligible Employees and consultants who are to be granted Awards,
determine the number of Shares to be applicable to such Award, and designate any Options as Incentive Stock Options or Nonstatutory
Stock Options, except that no Incentive Stock Option may be granted to a non-employee director or a non-employee consultant. A
member of the Board or a Committee member shall in no event participate in any determination relating to Awards held by or to
be granted to such Board or Committee member; however, a member of the Board or a Committee member shall be entitled to receive
Awards approved by the shareholders in accordance with the provisions of Rule 16b-3. The interpretation and construction by the
Board, or by the Committee if there be one, of any provision of the Plan or of any Award granted thereunder shall be final. No
member of the Board or of the Committee shall be liable for any action or determination made in good faith with respect to the
Plan or any Award granted thereunder. In addition to any right of indemnification provided by the Articles of Incorporation or
Bylaws of the Corporation, such person shall be indemnified and held harmless by the Corporation from any loss, cost, liability
or expense that may be imposed upon or reasonably incurred by him in connection with any claim, suit, action or proceeding to
which he may be a party by reason of any action or omission under the Plan.


 


V. PARTICIPATION


 


5.1     Eligibility.
Subject to the terms and conditions of Section 52 below, the Participants shall be such persons as the shareholders may
approve or as the Committee may select from among the following classes of persons: (i) Eligible Employees of the Corporation
or of a Subsidiary (who may be officers, whether or not they are directors); and (ii) Directors, consultants, vendors,
customers, and others expected to provide significant services to the Corporation or a Subsidiary.


 






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No Incentive Stock Option
may be granted to a non-employee director or non-employee consultant, vendor, customer, or other provider of significant services
to the Corporation or a Subsidiary, and except that no Nonstatutory Stock Option may be granted to a non-employee director or
non-employee consultant, vendor, customer, or other provider of significant services to the Corporation or a Subsidiary other
than upon a vote of a majority of disinterested directors finding that the value of the services rendered or to be rendered
to the Corporation or a Subsidiary by such non-employee director or non-employee consultant, vendor, customer, or other provider
of services is at least equal to the value of the Awards granted.


 


5.2     Ten-Percent
Shareholders. An Eligible Employee who owns more than ten percent (10%) of the total combined voting power of all classes of
outstanding stock of the Corporation, its parent or any of its Subsidiaries shall not be eligible to receive an Award for an
Incentive Stock Option unless (i) the Exercise Price of the Shares subject to such Award is at least one hundred ten percent
(110%) of the Fair Market Value of such Shares on the date of grant; and (ii) such Award by its terms is not exercisable
after the expiration of five (5) years from the date of grant.


 


5.3     Stock
Ownership. For purposes of Section 5.2 above, in determining stock ownership an Eligible Employee shall be considered as
owning the stock owned, directly or indirectly, by of for his brothers, sisters, spouses, ancestors and lineal descendants.
Stock owned, directly or indirectly, by or for a corporation, partnership, estate or trust shall be considered as being owned
proportionately by or for its shareholders, partners or beneficiaries. Stock with respect to which such Eligible Employee
holds an Award shall not be counted.


 


5.4     Outstanding
Stock. For purposes of Section 5.2 above, "outstanding stock" shall include all stock actually issued and
outstanding immediately after the grant of the Award to the Participant. "Outstanding stock" shall not include
shares authorized for issue under outstanding Options held by the Participant or by any other person.


 


VI. STOCK SUBJECT TO THE PLAN


 


The stock subject to Awards granted
under the Plan shall be Shares of the Corporation's authorized but unissued or reacquired Common Stock. The aggregate number of
Shares which may be issued as Awards or upon exercise of Awards under the Plan shall not exceed Five Hundred Thousand (500,000)
shares. The number of Shares subject to unexercised Options (plus the number of Shares previously issued under the Plan) shall
not at any time exceed the number of Shares available for issuance under the Plan. In the event that any unexercised Option, or
any portion thereof, for any reason expires or is terminated, the unexercised or unvested Shares allocable to such Option may
again be made subject to any Award. Any Shares withheld by the Corporation pursuant to Section 9.3 shall not be deemed to be issued.
The number of withheld Shares shall be deducted from the applicable Award and shall not entitle the Participant to receive additional
Shares. The limitations established by this Article VI shall be subject to adjustment in the manner provided in Section 8.5 hereof
upon the occurrence of an event specified therein.


 


VII. OPTIONS


 


7.1     Stock Option
Agreements. Options shall be evidenced by written stock option agreements in such form as the Committee shall from time to
time determine. Such agreements shall comply with and be subject to the terms and conditions set forth below.


 


7.2     Number of Shares.
Each Option shall state the number of Shares to which it pertains and shall provide for the adjustment thereof in accordance with
the provisions of Section 8.5 hereof.


 






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7.3     Exercise
Price. Each Option shall state the Exercise Price thereof. The Exercise Price in the
case of any Incentive Stock Option shall not be less than the
Fair Market Value on the date of grant and, in the case of any Option granted to an Optionee described in Section 5.2 hereof,
shall not be less than one hundred ten percent (110%) of the Fair Market Value on the date of grant. The Exercise Price in the
case of any Nonstatutory Stock Option shall not be less than seventy-five percent (75%) of the Fair Market Value on the date of
grant.


 


7.4     Medium and
Time of Payment. The Purchase Price shall be payable in full in United States dollars upon the exercise of the Option;
provided, however, that if the applicable Stock Option Agreement so provides the Purchase Price may be paid (i) by the
surrender of Shares in good form for transfer, owned by the Participant and having a Fair Market Value on the date of
exercise equal to the Purchase Price, or in any combination of cash and Shares, as long as the sum of the cash so paid and
the Fair Market Value of the Shares so surrendered equal the Purchase Price, (ii) by cancellation of indebtedness owed by the
Corporation to the Participant, or (iii) any combination of the foregoing.


 


7.5     Term and
Nontransferability of Options. Each Option shall state the time or times which all or part thereof becomes exercisable. No
Option shall be exercisable after the expiration of ten (10) years from the date it was granted, and no Option granted to a
Participant described in Section 5.2 hereof shall be exercisable after the expiration of five (5) years from the date it was
granted. During the lifetime of the Participant, the Option shall be exercisable only by the Participant and shall not be
assignable or transferable. In the event of the Participant's death, the Option shall not be transferable by the Participant
other than by will or the laws of descent and distribution.


 


7.6     Modification,
Extension and Renewal of Option. Within the limitations of the Plan, the Committee may modify, extend or renew outstanding
Options or accept the cancellation of outstanding Options (to the extent not previously exercised) for the granting of new
Options in substitution therefor. The foregoing notwithstanding, no modification of an Option shall, without the consent of
the Participant, alter or impair any rights or obligations under any Option previously granted.


 


7.7     Limitation on
Grant of Incentive Stock Options. In the case of Incentive Stock Options granted hereunder, the aggregate Fair Market Value
(determined as of the date of the grant thereof) of the Shares with respect to which Incentive Stock Options become
exercisable by any Participant for the first time during any calendar year (under this Plan and all other plans maintained by
the Corporation, its parent or its Subsidiaries) shall not exceed One Hundred Thousand Dollars ($100,000). The Board or
Committee may, however, with the Participant's consent authorize an amendment to the Incentive Stock Option which renders it
a Nonstatutory Stock Option.


 


7.8     Other
Provisions. The Stock Option Agreements authorized under the Plan may contain such other provisions not inconsistent with the
terms of the Plan (including, without limitation, restrictions upon the exercise of the Option) as the Committee shall deem
advisable.


 


7.9     Specific
Awards Approved by the Shareholders. Subject to the approval by the vote of the shareholders at the Annual Meeting of the
Shareholders on September 25, 2000, the individuals whose names are set forth in Exhibit "A," a copy of which is
attached hereto and incorporated herein by this reference, shall be deemed granted Nonstatutory Stock Options as of the
Effective Date, in the amounts and for the amount indicated opposite their respective names, and in accordance with the
vesting schedule set forth therein, all in accordance with the provisions set forth in this Article VII of the Plan. The
provisions of this Section 7.9 shall not be amended more than once every six (6) months, other than to comport with changes
in the Internal Revenue Code, the Employee Retirement Income Security Act, or the rules thereunder, and are intended to be
construed in accordance with the provisions pertaining to "formula awards" under Paragraph (c)(2)(ii) of Rule
16b-3.


 






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VIII. RIGHTS OF ELIGIBLE EMPLOYEES, PARTICIPANTS AND BENEFICIARIES


 


8.1     Eligible
Employee Status. Status as an Eligible Employee shall not be construed as a commitment that any Award will be made under the
Plan to an Eligible Employee or to Eligible Employees generally.


 


8.2     No
Employment Contract. Nothing contained in the Plan (or in the Award Agreements or in any other documents related to the Plan
or to Awards) shall confer upon any Eligible Employee or any Participant any right to continue in the employee of the
Corporation or constitute any contract or agreement of employment, or interfere in any way with the right of the Corporation
to reduce such person's compensation or to terminate the employment of such Eligible Employee or Participant, with or without
cause, but nothing contained in the plan or any document related thereto shall affect any other contractual right of any
Eligible Employee or Participant. Nothing contained in the plan (or in the Award Agreements or in any other documents related
to the Plan or the Awards) shall confer upon any director of the Corporation any right to continue as a director of the
Corporation.


 


8.3     No
Transferability. Awards may be exercised only by, and amounts payable or shares issuable pursuant to an Award shall be paid
only to or registered only in the name of, the Participant or, in the event of the Participant's death, to the Participant's
Beneficiary or, in the event of the Participant's Disability, to the Participant's Personal Representative or, if there is
none, to the Participant. Other than by will or the laws of descent and distribution, no right or benefit under the Plan or
any Award, including, without limitation, any Option that has not vested, shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or charge and any such attempted action shall be void and no such
right or benefit shall be, in any manner, liable for, or subject to, debts, contract, liabilities, engagements or torts of
any Eligible Employee, Participant or Beneficiary, in any case except as may otherwise be expressly required by applicable
law. The Board or the Committee shall disregard any attempt at transfer, assignment or other alienation prohibited by the
preceding sentence and shall deliver such shares of Common Stock in accordance with the provisions of the Plan.
Notwithstanding the foregoing, the Board or the Committee may authorize exercise by or transfers or payments to a third party
in a specific case or more generally; provided, however, with respect to any option such discretion may only be exercised to
the extent that applicable rules under Section 16 of the Exchange Act would so permit without disqualifying the Plan from
certain benefits thereunder.


 


8.4     Plan Not
Funded. No Participant, Beneficiary or other person shall have any right, title or interest in any fund or in any specific
asset (including shares of Common Stock) of the Corporation by reason of any Award granted hereunder. There shall be no
funding of any benefits which may become payable hereunder. Neither the provisions of the Plan (or of any documents related
hereto), nor the creation or adoption of the plan, nor any action taken pursuant to the provisions of the Plan shall create,
or be construed to create, a trust of any kind or a fiduciary relationship between the Corporation and any Participant,
Beneficiary. To the extent that a Participant, a Beneficiary or other person acquires a right to receive an Award hereunder,
such right shall be no greater than the right of any unsecured general creditor of the Corporation.


 


8.5     Adjustment
Upon Recapitalizations and Corporate Changes. If the outstanding shares of Common Stock are changed into or exchanged for
cash or a different number or kind of shares or securities of the Corporation, or if the outstanding shares of the Common
Stock are increased, decreased, exchanged for, or otherwise changed, or if additional shares or new or different shares or
securities are distributed with respect to the outstanding shares of the Common Stock, through a reorganization or merger in
which the Corporation is the surviving entity or through a combination, consolidation, recapitalization, reclassification,
stock split, stock dividend, reverse stock split, stock consolidation or other capital change or adjustment, an appropriate
adjustment shall be made in the number and kind of shares of other consideration that is subject to or may be delivered under
the Plan and pursuant to outstanding Awards. In addition, the Board or the Committee may grant such additional rights in the
foregoing circumstances as the Board or the Committee deems to be in the best interest of any Participant and the Corporation
in order to preserve for the Participant the benefits of an Award.


 






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8.6     Termination
of Employment, Except by Death, Disability or Qualified Retirement. If a Participant ceases to be an Eligible Employee for
any reason other than his or her death, Disability or Qualified Retirement, such Participant shall have the right, subject to
the restrictions of Section 8.3 above, to exercise any Award at any time within three (3) months after termination of
employment, but only to the extent that, at the date of termination of employment, the Participant's right to exercise such
Award had accrued pursuant to the terms of the applicable agreement and had not previously been exercised; provided, however,
that if the Participant was terminated for cause (as defined in the applicable agreement) any Award not exercised in full
prior to such termination shall be canceled. For this purpose, the employment relationship shall be treated as continuing
intact while the Participant is on military leave, sick leave or other bona fide leave of absence (to be determined in the
sole discretion of the Board or the Committee). The foregoing notwithstanding, in the case of an Incentive Stock Option,
employment shall not be deemed to continue beyond the ninetieth (90th) day after the Participant's reemployment rights are
guaranteed by statute or by contract.


 


8.7     Death of
Participant. If a Participant dies while an Eligible Employee, or after ceasing to be an Eligible Employee but during the
period while he or she could have exercised the Award under this Section 8.7, and has not fully exercised the Award, then the
Award may be exercised in full at any time within twelve (12) months after the Participant's death (but not later than the
date of termination fixed in the applicable agreement), by the executors or administrators of his or her estate or by any
person or persons who have acquired the Award directly from the Participant by bequest or inheritance, but only to the extent
that, at the date of death, the Participant's right to exercise such Award had accrued and had not been forfeited pursuant to
the terms of the applicable agreement and had not previously been exercised.


 


8.8     Disability
of Participant. If a Participant ceases to be an Eligible Employee by reason of Disability, such Participant shall have the
right to exercise the Award at any time within twelve (12) months after termination of employment (but not later than the
termination date fixed in the applicable agreement), but only to the extent that, at the date of termination of employment,
the Participant's right to exercise such Award had accrued pursuant to the terms of the applicable agreement and had not
previously been exercised.


 


8.9     Qualified
Retirement of Participant. If a Participant ceases to be an Eligible Employee by reason of Qualified Retirement, Awards will
continue to become exercisable and remain exercisable for a period of five (5) years after termination of employment (but not
later than the termination date fixed in the applicable agreement), but only to the extent that, at the date of termination
of employment, the Participant's right to such Award had not previously been exercised.


 


8.10    Rights as a
Stockholder. An Participant, or a transferee of an Participant, shall have no rights as a stockholder with respect to any
Shares covered by his or her Award until the date of the issuance of a stock certificate for such Shares. No adjustment shall
be made for dividends (ordinary or extraordinary, whether in cash, securities or other property), distributions or other
rights for which the record date is prior to the date such stock certificate is issued, except as provided in Section 8.5
hereof.


 


8.11     Acceleration
of Awards. Immediately prior to the occurrence of an Event, (i) each Option under the Plan shall become exercisable in full,
unless, prior to the Event, the Board or the Committee otherwise determines that there shall be no such acceleration or
vesting of an Award or otherwise determines those Awards which shall be accelerated or vested and to the extent to which they
shall be accelerated or vested, or that an Award shall terminate, or unless in connection with such Event the Board provides
(A) for the assumption of such Awards theretofore granted; or (B) for the substitution for such Awards of new awards covering
securities or obligations (or any combination thereof) of a successor corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to number and kind of shares and prices; or (C) for the payment of the fair market value of the
then outstanding Awards. In addition, the Board or the Committee may grant such additional rights in the foregoing
circumstances as the Board or the Committee deems to be in the best interest of the Participant and the Corporation in order
to preserve for the Participant the benefits of an Award. For purposes of this Section 8.11 only, Board shall mean the Board
of Directors of the Corporation as constituted immediately prior to the Event. In addition, the Board may in its sole
discretion accelerate the exercisability or vesting of any or all Awards outstanding under the Plan in circumstances under
which the Board or the Committee determines such acceleration appropriate.


 






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IX. MISCELLANEOUS


 


9.1     Termination,
Suspension and Amendment. The Board or the Committee may, at any time, suspend, amend, modify of terminate the Plan (or any
part thereof) and may, with the consent of a Participant, authorize such modifications of the terms and conditions of such
Participant's Award as it shall deem advisable; provided that, except as permitted under the provisions of Section 8.5
hereof, no amendment or modification of the plan may be adopted without approval by a majority of the shares of the Common
Stock represented (in person or by proxy) at a meeting of stockholders at which a quorum is present and entitled to vote
thereat, if such amendment or modification would:


 


(i)     materially
increase the benefits accruing to Participants under the plan within the meaning of Rule 16b-3 under the Exchange Act or any
successor provision;


 


(ii)    materially
increase the aggregate number of shares which may be delivered pursuant to Awards granted under the Plan; or


 


(iii)   materially
modify the requirements of eligibility for participation in the Plan.


 


Neither adoption of the plan
nor the provisions hereof shall limit the authority of the Board to adopt other plans or to authorize other payments of compensation
and benefits under applicable law. No Awards under the plan may be granted or amended during any suspension of the Plan or after
its termination. The amendment, suspension or termination of the Plan shall not, without the consent of the Participant, alter
or impair any rights or obligations pertaining to any Awards granted under the plan prior to such amendment, suspension or termination.


 


9.2     No Fractional
Shares. No Award or installment thereof shall be exercisable except in respect of whole shares, and fractional share
interests shall be disregarded.


 


9.3     Tax
Withholding and Tax Bonuses. As required by law, federal, state or local taxes that are subject to the withholding of tax at
the source shall be withheld by the Corporation as necessary to satisfy such requirements. The Corporation is entitled to
require deduction from other compensation payable to each Participant or, in the alternative: (i) the Corporation may require
the Participant to advance such sums; or (ii) if a Participant elects, the Corporation may withhold (or require the return
of) Shares having the Fair Market Value equal to the sums required to be withheld. If the Participant elects to advance such
sums directly, written notice of that election shall be delivered prior to such exercise and, whether pursuant to such
election or pursuant to a requirement imposed by the Corporation, payment in cash or by check of such sums for taxes shall be
delivered within ten (10) days after the exercise date. If the Participant elects to have the Corporation withhold Shares (or
be entitled to the return of Shares) having a Fair Market Value equal to the sums required to be withheld, the value of the
Shares to be withheld (or returned) will be equal to the Fair Market Value on the date the amount of tax to be withheld (or
subject to return) is to be determined (the "Tax Date").


 


9.4     Restrictions
on Elections Made by Participants. Elections by Participants to have Shares withheld (or subject to return) for this purpose
will be subject to the following restrictions: (i) the election must be made prior to the Tax Date; (ii) the election must be
irrevocable; (iii) the election will be subject to the Board's disapproval; and (iv) if the Participant is an
"officer" within the meaning of Section 16 of the Exchange Act, the election shall be subject to such additional
restrictions as the Board or the Committee may impose in an effort to secure the benefits of any regulations thereunder.


 






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9.5     Limitations on
the Corporation's Obligations. The Corporation shall not be obligated to issue shares to the Participant upon any Award
exercise until such payment has been received or Shares have been withheld, unless withholding (or offset against a cash
payment) as of or prior to the exercise date is sufficient to cover all such sums due or which may be due with respect to
such exercise.


 


9.6     Compliance
with Laws. The Plan, the granting of Awards under the Plan, the Stock Option Agreements and the delivery of Options, Shares
and Awards pursuant thereto are subject to such additional requirements as the Board or the Committee may impose to assure or
facilitate compliance with all applicable federal and state laws, rules and regulations (including, without limitation,
securities laws and margin requirements) and to such approvals by any regulatory or governmental agency which may be
necessary or advisable in connection therewith. In connection with the administration of the Plan or the grant of any Award,
the Board or the Committee may impose such further limitations or conditions as in its opinion may be required or advisable
to satisfy, or secure the benefits of, applicable regulatory requirements (including those rules promulgated under Section 16
of the Exchange Act or those rules that facilitate exemption from or compliance with the Securities Act or the Exchange Act),
the requirements of any stock exchange upon which such shares or shares of the same class are then listed, and any blue sky
or other securities laws applicable to such shares.


 


9.7     Governing
Laws. The Plan and all Awards granted under the Plan and the documents evidencing Awards shall be governed by, and construed
in accordance with, the laws of the State of California, except as to those matters governed by the laws of the State of
Nevada as the state of incorporation of the Corporation.


 


9.8     Securities Law Requirements.


 


(a)     Legality of
Issuance. The issuance of any Shares upon the exercise of any Option and the grant of any Option shall be contingent upon the
following:


 


(i)     the
Corporation and the Participant shall have taken all actions required to register the Shares under the Securities Act of
1933, as amended (the "Securities Act"), and to qualify the Option and the Shares under any and all applicable
state securities or "blue sky" laws or regulations, or to perfect an exemption from the respective registration and
qualification requirements thereof;


 


(ii)    any
applicable listing requirement of any stock exchange on which the Common Stock is listed shall have been
satisfied; and any other applicable provision of state of Federal law shall have been satisfied.


 


(b)     Restrictions on
Transfer. Regardless of whether the offering and sale of Shares under the plan has been registered under the Securities Act
or has been registered or qualified under the securities laws of any state, the Corporation may impose restrictions on the
sale, pledge or other transfer of such Shares (including the placement of appropriate legends on stock certificates) if, in
the judgment of the Corporation and its counsel, such restrictions are necessary or desirable in order to achieve compliance
with the provisions of the Securities Act, the securities laws of any state or any other law. In the event that the sale of
Shares under the Plan is not registered under the Securities Act but an exemption is available which required an investment
representation or other representation, each Participant shall be required to represent that such Shares are being acquired
for investment, and not with a view to the sale or distribution thereof, and to make such other representations as are deemed
necessary or appropriate by the Corporation and its counsel. Any determination by the Corporation and its counsel in
connection with any of the matters set forth in this Section 9.6(b) shall be conclusive and binding on all persons. Stock
certificates evidencing Shares acquired under the Plan pursuant to an unregistered transaction shall bear the following
restrictive legend and such other restrictive legends as are required or deemed advisable under the provisions of any
applicable law:


 






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"THE SALE OF THE
SECURITIES REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT"). ANY TRANSFER
OF SUCH SECURITIES WILL BE INVALID UNLESS A REGISTRATION STATEMENT UNDER THE SECURITIES ACT IS IN EFFECT AS TO SUCH TRANSFER OR
IN THE OPINION OF COUNSEL FOR THE ISSUER SUCH REGISTRATION IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE SECURITIES
ACT."


 


(c)     Registration
or Qualification of Securities. The Corporation may, but shall not be obligated to register or qualify the issuance of Awards
and/or the sale of Shares under the Securities Act or any other applicable law. The Corporation shall not be obligated to
take any affirmative action in order to cause the issuance of Awards or the sale of Shares under the plan to comply with any
law.


 


(d)     Exchange
of Certificates. If, in the opinion of the Corporation and its counsel, any legend placed on a stock certificate representing
shares issued under the Plan is no longer required, the holder of such certificate shall be entitled to exchange such
certificate for a certificate representing the same number of Shares but lacking such legend.


 


9.9     Execution. To
record the adoption of the Plan in the form set forth above by the Board effective as of August 21, 2000, the Corporation has
caused this Plan to be executed in the name and on behalf of the Corporation where provided below by an officer of the
Corporation thereunto duly authorized.


 


AETHLON MEDICAL, INC


 


 


By: /s/  Franklyn
S. Barry, Tr. 


Franklyn
S. Barry, Jr., President


 


ATTEST:


 


 


/s/  Tames A. Joyce


James A. Joyce, Secretary


 


 


 






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