Exhibit 10.3


 





RETENTION BONUS AGREEMENT


 


This Retention Bonus Agreement (this “Agreement”)
is made as of October 16, 2015 (the “Effective Date”) between Aethlon Medical, Inc., a Nevada corporation (the “Company”),
and James B. Frakes (“Executive”). The Company and Executive are sometimes referred to herein individually as a “Party”
and together as the “Parties.”


 


WHEREAS, Executive has served as Chief Financial
Officer of the Company since September 27, 2010; and


 


WHEREAS, the Company desires to ensure the
continued service of Executive and desires to maintain continuity in the management of the Company.


 


NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:


 


1.               
Defined Terms. Capitalized terms not otherwise defined in this Agreement shall have the meanings given such terms
below.


 


a.     
“Cause” shall mean the occurrence of any of the following:


 


                                              
i.          Executive’s gross and
willful misconduct which is injurious to the Company;


 


                                            
ii.          Executive’s engaging
in fraudulent conduct with respect to the Company’s business or in conduct of a criminal nature that may have an adverse
impact on the Company’s standing and reputation;


 


                                           
iii.          The continued and unjustified
failure or refusal by Executive to perform the duties required of him by the Board of Directors (the “Board”) of the
Company, which failure or refusal shall not be cured within fifteen (15) days following (A) receipt by Executive of written notice
from the Board specifying the factors or events constituting such failure or refusal, and (B) a reasonable opportunity for Executive
to correct such deficiencies;


 


                                           
iv.          Executive’s use of
drugs and/or alcohol in violation of then-current Company policy; or


 


                                             
v.          Executive’s failure
to devote, during the period of his employment with the Company, substantially all of his business time, attention, skill and efforts
to the faithful performance of the duties required of him by the Board, which failure shall not be cured within fifteen (15) days
after written notice thereof to Executive.


 


b.     
“Good Reason” shall mean the occurrence of any of the following:


 


                                              
i.          The Company’s failure
to elect or reelect or to appoint or reappoint Executive to offices, titles or positions carrying comparable authority, responsibilities,
dignity and importance to that of Executive’s offices and positions as of September 27, 2010; or


 


                                            
ii.          Material change by the Company
in Executive’s function, duties or responsibilities (including reporting responsibilities) which would cause Executive’s
position with the Company to become of less dignity, responsibility and importance than those associated with his functions, duties
or responsibilities as of September 27, 2010.


 


 






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2.               
Retention Bonus.


 


a.     
Subject to Section 2(c) below, the Company shall pay Executive a retention bonus of $50,000 (the “Retention Bonus”).
The full amount of the Retention Bonus (less applicable withholding taxes) shall be paid to Executive in a lump-sum payment within
five (5) days of the Effective Date.


 


b.     
Executive’s entitlement to the Retention Bonus hereunder is in addition to any other compensation and/or benefits
to which Executive otherwise is entitled pursuant to any other agreement between Executive and the Company.


 


c.     
Termination of Executive’s employment with the Company prior to the second anniversary of the Effective Date shall
result in the following with respect to the Retention Bonus:


 


                                    
i.                   
If such termination is by the Company for “Cause” or by Executive for other than “Good Reason,”
the Retention Bonus shall be deemed forfeit and unearned by Executive. In such event, Executive shall repay, within fifteen (15)
days of the termination date, the full amount of the Retention Bonus previously paid to Executive. Upon such repayment, the Company
shall issue to Executive an amended Form W-2 for the year that originally included the bonus payment as compensation in order to
reflect the reduction in compensation resulting from the repayment. The Company shall be entitled, in its discretion and to the
extent permitted by applicable law, to offset any amounts otherwise payable to Executive by the Company in connection with or following
Executive’s termination of employment by the repayment amount due to the Company from Executive hereunder.


 


                                  
ii.                   
If such termination is due to Executive’s death or disability or is by the Company other than for “Cause”
or by Executive for Good Reason, the Retention Bonus shall be deemed fully earned and Executive (or Executive’s estate) shall
not be required to repay any portion of the Retention Bonus previously paid to Executive.


 


3.               
At-Will Employment. Notwithstanding anything contained in this Agreement, the Parties acknowledge and agree that
Executive’s employment is at-will and either Party may terminate Executive’s employment at any time and for any reason.


 


4.               
Survival. Section 2 hereof shall survive and continue in full force in accordance with its terms notwithstanding
the termination of Executive’s employment with the Company.


 


 


[Signature page follows]


 


 


 






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IN WITNESS WHEREOF, the Parties have executed
this Retention Bonus Agreement as of the Effective Date.


 


 


 


 








	AETHLON MEDICAL, INC.	 	EXECUTIVE
	 	 	 
	By: /s/ James A. Joyce                        	 	/s/ James B. Frakes                     
	James A. Joyce	 	James B. Frakes
	Chief Executive Officer	 	 







 


 


 


 


 


 


 


 


 


 


 


 


 






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