Document:

rim_8k-ex1004.htm

    EXHIBIT
      10.4

    

    LOCKUP
      AGREEMENT

    

    

    This
      AGREEMENT (the “Agreement”) is
      made as of the 5th day of December, 2007, by ______ (“Holder”), maintaining an
      address at c/o Rim Semiconductor Company, 305 NE 102nd Avenue,
      Suite 350,
      Portland, Oregon 97220, telecopier: (503) 257-6700, in connection with his
      ownership of shares of Rim Semiconductor Company, a Utah corporation (the
“Company”).

    

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

    

    1.           Background.

    

    a.           Holder
      is the beneficial owner of the amount of shares of the Common Stock, $.001
      par
      value, of the Company (“Common Stock”) designated on the signature page
      hereto.

    

    b.           Holder
      acknowledges that the Company has entered into or will enter into at or about
      the date hereof agreements with subscribers to the Company’s Notes, convertible
      into Common Stock and Warrants (the “Subscribers”).  Holder
      understands that, as a condition to proceeding with the Offering, the
      Subscribers have required, and the Company has agreed to obtain on behalf of
      the
      Subscribers an agreement from the Holder to refrain from selling any securities
      of the Company from the date of the Subscription Agreement until one year after
      the Actual Effective Date (as defined in the Subscription Agreement) (the
“Restriction Period”).

    

    2.           Sale
      Restriction.

    

    a.           Holder
      hereby agrees that during the Restriction Period, the Holder will not sell,
      transfer or otherwise dispose of any shares of Common Stock or any options,
      warrants or other rights to purchase shares of Common Stock or any other
      security of the Company which Holder owns or has a right to acquire as of the
      date hereof, other than in connection with an offer made to all shareholders
      of
      the Company in connection with merger, consolidation or similar transaction
      involving the Company.  Holder further agrees that the Company is
      authorized to and the Company agrees to place “stop orders” on its books to
      prevent any transfer of shares of Common Stock or other securities of the
      Company held by Holder in violation of this Agreement.  The Company
      agrees not to allow to occur any transaction inconsistent with this
      Agreement.

    

    b.           Any
      subsequent issuance to and/or acquisition by Holder of Common Stock or options
      or instruments convertible into Common Stock will be subject to the provisions
      of this Agreement.

    

    c.           Notwithstanding
      the foregoing restrictions on transfer, the Holder may, at any time and from
      time to time during the Restriction Period, exercise options, warrants or other
      rights to purchase securities of the Company, and may transfer the Common Stock
      (i) as bona fide gifts or transfers by will or intestacy, (ii) to any trust
      for
      the direct or indirect benefit of the undersigned or the immediate family of
      the
      Holder, provided that any such transfer shall not involve a disposition for
      value, (iii) to a partnership which is the general partner of a partnership
      of
      which the Holder is a general partner, provided, that, in the case of any gift
      or transfer described in clauses (i), (ii) or (iii), each donee or transferee
      agrees in writing to be bound by the terms and conditions contained herein
      in
      the same manner as such terms and conditions apply to the undersigned. For
      purposes hereof, “immediate family” means any relationship by blood, marriage or
      adoption, not more remote than first cousin.

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    3.           Miscellaneous.

    

    a.           At
      any time, and from time to time, after the signing of this Agreement Holder
      will
      execute such additional instruments and take such action as may be reasonably
      requested by the Subscribers to carry out the intent and purposes of this
      Agreement.

    

    b.           This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of New York without regard to principles of conflicts of
      laws.  Any action brought by either party against the other concerning
      the transactions contemplated by this Agreement shall be brought only in the
      state courts of New York or in the federal courts located in the state of New
      York.  The parties to this Agreement hereby irrevocably waive any
      objection to jurisdiction and venue of any action instituted hereunder and
      shall
      not assert any defense based on lack of jurisdiction or venue or based upon
      forum non conveniens.  The parties executing this
      Agreement and other agreements referred to herein or delivered in connection
      herewith agree to submit to the in personam jurisdiction of such courts and
      hereby irrevocably waive trial by jury.  The prevailing party
      shall be entitled to recover from the other party its reasonable attorney’s fees
      and costs.  In the event that any provision of this Agreement or any
      other agreement delivered in connection herewith is invalid or unenforceable
      under any applicable statute or rule of law, then such provision shall be deemed
      inoperative to the extent that it may conflict therewith and shall be deemed
      modified to conform with such statute or rule of law.  Any such
      provision which may prove invalid or unenforceable under any law shall not
      affect the validity or enforceability of any other provision of any
      agreement.  Notices hereunder shall be given in the same manner as set
      forth in the Subscription Agreement.  Each party hereby irrevocably
      waives personal service of process and consents to process being served in
      any
      suit, action or proceeding in connection with this Agreement or any other
      Transaction Document by mailing a copy thereof via registered or certified
      mail
      or overnight delivery (with evidence of delivery) to such party at the address
      in effect for notices to it under this Agreement 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 other manner permitted by
      law.  Holder irrevocably appoints Rim Semiconductor Company its true
      and lawful agent for service of process upon whom all processes of law and
      notices may be served and given in the manner described above; and such service
      and notice shall be deemed valid personal service and notice upon Holder with
      the same force and validity as if served upon Holder.

    

    c.           The
      restrictions on transfer described in this Agreement are in addition to and
      cumulative with any other restrictions on transfer otherwise agreed to by the
      Holder or to which the Holder is subject to by applicable law.

    

    d.           This
      Agreement shall be binding upon Holder, its legal representatives, successors
      and assigns.

    

    e.           This
      Agreement may be signed and delivered by facsimile and such facsimile signed
      and
      delivered shall be enforceable.

    

    f.           The
      Company agrees not to take any action or allow any act to be taken which would
      be inconsistent with this Agreement.

    

    g.           The
      Holder acknowledges that this Lockup Agreement is being entered into for the
      benefit of the Subscribers identified in the Subscription Agreement dated
      December 5, 2007 among the Company and the Subscribers, may be enforced by
      the
      Subscribers and may not be amended without the consent of the Subscribers (as
      the term “consent of the Subscribers” is defined in the Subscription Agreement),
      which may be withheld for any reason.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, and intending to be
      legally bound hereby, Holder has executed this Agreement as of the day and
      year
      first above written.

    

    
      	 	 
              
              HOLDER:

              

              

              
______________________________________________

                (Signature
                of Holder)

              

              
______________________________________________

                (Print
                Name of Holder)

              

              
______________________________________________

              Number
                of Shares of Common Stock

              Beneficially
                Owned

              

              COMPANY:

              

              RIM
                SEMICONDUCTOR COMPANY

              

              

              By: ___________________________________________

              Name:
                _________________________________________

              Title: __________________________________________

            

    

                                                   

                

     

    3<PAGE>

                                                                     EXHIBIT 4.1

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

                                      Right to Purchase ____________ shares of
                                      Common Stock of Aethlon Medical, Inc.
                                      (subject to adjustment as provided herein)

                      CLASS C COMMON STOCK PURCHASE WARRANT

No. 2007-C-00_                                      Issue Date: December 5, 2007

      AETHLON MEDICAL, INC., a corporation organized under the laws of the State
of Nevada (the "Company"), hereby certifies that, for value received,
___________________, or its assigns (the "Holder"), is entitled, subject to the
terms set forth below, to purchase from the Company at any time commencing after
the Issue Date until 5:00 p.m., E.S.T on the third anniversary of the Issue Date
(the "Expiration Date"), up to _________________ fully paid and nonassessable
shares of Common Stock at a per share purchase price of $0.50. The
aforedescribed purchase price per share, as adjusted from time to time as herein
provided, is referred to herein as the "Purchase Price." The number and
character of such shares of Common Stock and the Purchase Price are subject to
adjustment as provided herein. The Company may reduce the Purchase Price for
some or all of the Warrants, temporarily or permanently. Capitalized terms used
and not otherwise defined herein shall have the meanings set forth in that
certain Subscription Agreement (the "SUBSCRIPTION AGREEMENT"), dated as of
December 5, 2007, entered into by the Company and the Holder.

      As used herein the following terms, unless the context otherwise requires,
have the following respective meanings:

      (a)   The term "Company" shall include Aethlon Medical, Inc. and any
corporation which shall succeed or assume the obligations of Aethlon Medical,
Inc. hereunder.

      (b)   The term "Common Stock" includes (a) the Company's Common Stock,
$.001 par value per share, as authorized on the date of the Subscription
Agreement, and (b) any other securities into which or for which any of the
securities described in (a) may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or otherwise.

                                       1
<PAGE>

      (c)   The term "Other Securities" refers to any stock (other than Common
Stock) and other securities of the Company or any other person (corporate or
otherwise) which the holder of the Warrant at any time shall be entitled to
receive, or shall have received, on the exercise of the Warrant, in lieu of or
in addition to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 4 or otherwise.

      (d)   The term "Warrant Shares" shall mean the Common Stock issuable upon
exercise of this Warrant.

      1.    Exercise of Warrant.

            1.1.  Number of Shares Issuable upon Exercise. From and after the
Issue Date through and including the Expiration Date, the Holder hereof shall be
entitled to receive, upon exercise of this Warrant in whole in accordance with
the terms of subsection 1.2 or upon exercise of this Warrant in part in
accordance with subsection 1.3, shares of Common Stock of the Company, subject
to adjustment pursuant to Section 4.

            1.2.  Full Exercise. This Warrant may be exercised in full by the
Holder hereof by delivery of an original or facsimile copy of the form of
subscription attached as Exhibit A hereto (the "Subscription Form") duly
executed by such Holder and delivery within two days thereafter of payment, in
cash, wire transfer or by certified or official bank check payable to the order
of the Company, in the amount obtained by multiplying the number of shares of
Common Stock for which this Warrant is then exercisable by the Purchase Price
then in effect. The original Warrant is not required to be surrendered to the
Company until it has been fully exercised.

            1.3.  Partial Exercise. This Warrant may be exercised in part (but
not for a fractional share) by delivery of a Subscription Form in the manner and
at the place provided in subsection 1.2 except that the amount payable by the
Holder on such partial exercise shall be the amount obtained by multiplying (a)
the number of whole shares of Common Stock designated by the Holder in the
Subscription Form by (b) the Purchase Price then in effect. On any such partial
exercise provided the Holder has surrendered the original Warrant, the Company,
at its expense, will forthwith issue and deliver to or upon the order of the
Holder hereof a new Warrant of like tenor, in the name of the Holder hereof or
as such Holder (upon payment by such Holder of any applicable transfer taxes)
may request, the whole number of shares of Common Stock for which such Warrant
may still be exercised.

            1.4.  Fair Market Value. Fair Market Value of a share of Common
Stock as of a particular date (the "Determination Date") shall mean:

                  (a)   If the Company's Common Stock is traded on an exchange
or is quoted on the NASDAQ Global Market, Nasdaq Global Select Market, the
NASDAQ Capital Market, the New York Stock Exchange, the American Stock Exchange,
LLC, or OTC Bulletin Board, then the average of the closing or last sale prices,
respectively, reported for the ten trading days immediately preceding the
Determination Date;

                  (b)   If the Company's Common Stock is not traded on an
exchange or on the NASDAQ Global Market, Nasdaq Global Select Market, the NASDAQ
Capital Market, the New York Stock Exchange, the American Stock Exchange, LLC,
or OTC Bulletin Board, but is traded in the over-the-counter market, then the
average of the closing bid and ask prices reported for the ten trading days
immediately preceding the Determination Date;

                  (c)   Except as provided in clause (d) below and Section 3.1,
if the Company's Common Stock is not publicly traded, then as the Holder and the
Company agree, or in the absence of such an agreement, by arbitration in
accordance with the rules then standing of the American Arbitration Association,
before a single arbitrator to be chosen from a panel of persons qualified by
education and training to pass on the matter to be decided with such arbitration
to be conducted in New York City, New York; or

                                       2
<PAGE>

                  (d)   If the Determination Date is the date of a liquidation,
dissolution or winding up, or any event deemed to be a liquidation, dissolution
or winding up pursuant to the Company's charter, then all amounts to be payable
per share to holders of the Common Stock pursuant to the charter in the event of
such liquidation, dissolution or winding up, plus all other amounts to be
payable per share in respect of the Common Stock in liquidation under the
charter, assuming for the purposes of this clause (d) that all of the shares of
Common Stock then issuable upon exercise of all of the Warrants are outstanding
at the Determination Date.

            1.5.  Company Acknowledgment. The Company will, at the time of the
exercise of the Warrant, upon the request of the Holder hereof acknowledge in
writing its continuing obligation to afford to such Holder any rights to which
such Holder shall continue to be entitled after such exercise in accordance with
the provisions of this Warrant. If the Holder shall fail to make any such
request, such failure shall not affect the continuing obligation of the Company
to afford to such Holder any such rights.

            1.6.  Trustee for Warrant Holders. In the event that a bank or trust
company shall have been appointed as trustee for the Holder of the Warrants
pursuant to Subsection 3.2, such bank or trust company shall have all the powers
and duties of a warrant agent (as hereinafter described) and shall accept, in
its own name for the account of the Company or such successor person as may be
entitled thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant to this
Section 1.

            1.7   Delivery of Stock Certificates, etc. on Exercise. The Company
agrees that the shares of Common Stock purchased upon exercise of this Warrant
shall be deemed to be issued to the Holder hereof as the record owner of such
shares as of the close of business on the date on which delivery of a
Subscription Form shall have occurred and payment made for such shares as
aforesaid. As soon as practicable after the exercise of this Warrant in full or
in part, and in any event within seven (7) business days thereafter ("Warrant
Share Delivery Date"), the Company at its expense (including the payment by it
of any applicable issue taxes) will cause to be issued in the name of and
delivered to the Holder hereof, or as such Holder (upon payment by such Holder
of any applicable transfer taxes) may direct in compliance with applicable
securities laws, a certificate or certificates for the number of duly and
validly issued, fully paid and non-assessable shares of Common Stock (or Other
Securities) to which such Holder shall be entitled on such exercise, plus, in
lieu of any fractional share to which such Holder would otherwise be entitled,
cash equal to such fraction multiplied by the then Fair Market Value of one full
share of Common Stock, together with any other stock or other securities and
property (including cash, where applicable) to which such Holder is entitled
upon such exercise pursuant to Section 1 or otherwise. The Company understands
that a delay in the delivery of the Warrant Shares after the Warrant Share
Delivery Date could result in economic loss to the Holder. As compensation to
the Holder for such loss, the Company agrees to pay (as liquidated damages and
not as a penalty) to the Holder for late issuance of Warrant Shares upon
exercise of this Warrant the proportionate amount of $100 per business day after
the Warrant Share Delivery Date for each $10,000 of Purchase Price of Warrant
Shares for which this Warrant is exercised which are not timely delivered. The
Company shall pay any payments incurred under this Section in immediately
available funds within thirty (30) business days after demand. Furthermore, in
addition to any other remedies which may be available to the Holder, in the
event that the Company fails for any reason to effect delivery of the Warrant
Shares by the Warrant Share Delivery Date, the Holder may revoke all or part of
the relevant Warrant exercise by delivery of a notice to such effect to the
Company, whereupon the Company and the Holder shall each be restored to their
respective positions immediately prior to the exercise of the relevant portion
of this Warrant, except that the liquidated damages described above shall be
payable through the date notice of revocation or rescission is given to the
Company.

                                       3
<PAGE>

            1.8   Buy-In. In addition to any other rights available to the
Holder, if the Company fails to deliver to a Holder the Warrant Shares as
required pursuant to this Warrant, within seven (7) business days after the
Warrant Share Delivery Date and the Holder or a broker on the Holder's behalf,
purchases (in an open market transaction or otherwise) shares of common stock to
deliver in satisfaction of a sale by such Holder of the Warrant Shares which the
Holder was entitled to receive from the Company (a "BUY-IN"), then the Company
shall pay in cash to the Holder (in addition to any remedies available to or
elected by the Holder) on demand, the amount by which (A) the Holder's total
purchase price (including brokerage commissions, if any) for the shares of
common stock so purchased exceeds (B) the aggregate Purchase Price of the
Warrant Shares required to have been delivered together with interest thereon at
a rate of 15% per annum, accruing until such amount and any accrued interest
thereon is paid in full (which amount shall be paid as liquidated damages and
not as a penalty). For example, if a Holder purchases shares of Common Stock
having a total purchase price of $11,000 to cover a Buy-In with respect to
$10,000 of Purchase Price of Warrant Shares to have been received upon exercise
of this Warrant, the Company shall be required to pay the Holder $1,000, plus
interest. The Holder shall provide the Company written notice indicating the
amounts payable to the Holder in respect of the Buy-In.

            1.9   The Company agrees and acknowledges that despite the pendency
of a not yet effective Registration Statement which includes for registration
the Registrable Securities (as defined in Section 11.1(iv) of the Subscription
Agreement), a Holder is permitted to and the Company will issue to such Holder
Warrant Shares upon exercise of the Warrants.

      2.    Cashless Exercise.

            (a)   If a registration statement (as described in Section 11 of the
Subscription Agreement) ("Registration Statement") is effective and the Holder
may sell all of its shares of Common Stock upon exercise of all of the Warrants
issued to the Holder on the Issue Date pursuant to such Registration Statement,
this Warrant may be exercised in whole or in part for cash only as set forth in
Section 1 above. If such Registration Statement is not available, the payment
upon exercise may be made at the option of the Holder either in (i) cash, wire
transfer or by certified or official bank check payable to the order of the
Company equal to the applicable aggregate Purchase Price, (ii) by delivery of
Common Stock issuable upon exercise of the Warrants in accordance with Section
(b) below or (iii) by a combination of any of the foregoing methods, for the
number of Common Stock specified in such form (as such exercise number shall be
adjusted to reflect any adjustment in the total number of shares of Common Stock
issuable to the holder per the terms of this Warrant) and the holder shall
thereupon be entitled to receive the number of duly authorized, validly issued,
fully-paid and non-assessable shares of Common Stock (or Other Securities)
determined as provided herein.

            (b)   Subject to the provisions herein to the contrary, if the Fair
Market Value of one share of Common Stock is greater than the Purchase Price (at
the date of calculation as set forth below), in lieu of exercising this Warrant
for cash, the holder may elect to receive shares equal to the value (as
determined below) of this Warrant (or the portion thereof being cancelled) by
surrender of this Warrant at the principal office of the Company together with
the properly endorsed Subscription Form in which event the Company shall issue
to the holder a number of shares of Common Stock computed using the following
formula:

                  X= Y (A-B)
                     -------
                        A

            Where X =   the number of shares of Common Stock to be issued to the
                        holder

                  Y =   the number of shares of Common Stock purchasable under
                        the Warrant or, if only a portion of the Warrant is
                        being exercised, the portion of the Warrant being
                        exercised (at the date of such calculation)

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<PAGE>

                  A =   the average of the closing sale prices of the Common
                        Stock for the five (5) Trading Days immediately prior to
                        (but not including) the Exercise Date, or Fair Market
                        Value, whichever is less

                  B =   Purchase Price (as adjusted to the date of such
                        calculation)

      For purposes of Rule 144 promulgated under the 1933 Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have commenced, on
the date this Warrant was originally issued pursuant to the Subscription
Agreement.

      3.    Adjustment for Reorganization, Consolidation, Merger, etc.

            3.1.  Fundamental Transaction. If, at any time while this Warrant is
outstanding, (A) the Company effects any merger or consolidation of the Company
with or into another entity, (B) the Company effects any sale of all or
substantially all of its assets in one or a series of related transactions, (C)
any tender offer or exchange offer (whether by the Company or another entity) is
completed pursuant to which holders of Common Stock are permitted to tender or
exchange their shares for other securities, cash or property, (D) the Company
consummates a stock purchase agreement or other business combination (including,
without limitation, a reorganization, recapitalization, spin-off or scheme of
arrangement) with one or more persons or entities whereby such other persons or
entities acquire more than the 50% of the outstanding shares of Common Stock
(not including any shares of Common Stock held by such other persons or entities
making or party to, or associated or affiliated with the other persons or
entities making or party to, such stock purchase agreement or other business
combination), (E) any "person" or "group" (as these terms are used for purposes
of Sections 13(d) and 14(d) of the 1934 Act) is or shall become the "beneficial
owner" (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of
50% of the aggregate Common Stock of the Company, or (F) the Company effects any
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property (in any such case, a "Fundamental Transaction"),
then, upon any subsequent exercise of this Warrant, the Holder shall have the
right to receive, for each Warrant Share that would have been issuable upon such
exercise immediately prior to the occurrence of such Fundamental Transaction, at
the option of the Holder, (a) upon exercise of this Warrant, the number of
shares of Common Stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and any additional consideration
(the "Alternate Consideration") receivable upon or as a result of such
reorganization, reclassification, merger, consolidation or disposition of assets
by a Holder of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such event or (b) if the Company is acquired in
(1) a transaction where the consideration paid to the holders of the Common
Stock consists solely of cash, (2) a "Rule 13e-3 transaction" as defined in Rule
13e-3 under the 1934 Act, or (3) a transaction involving a person or entity not
traded on a national securities exchange, the Nasdaq Global Select Market, the
Nasdaq Global Market or the Nasdaq Capital Market, cash equal to the
Black-Scholes Value. For purposes of any such exercise, the determination of the
Purchase Price shall be appropriately adjusted to apply to such Alternate
Consideration based on the amount of Alternate Consideration issuable in respect
of one share of Common Stock in such Fundamental Transaction, and the Company
shall apportion the Purchase Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of any different components of
the Alternate Consideration. If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental
Transaction. To the extent necessary to effectuate the foregoing provisions, any
successor to the Company or surviving entity in such Fundamental Transaction
shall issue to the Holder a new warrant consistent with the foregoing provisions
and evidencing the Holder's right to exercise such warrant into Alternate
Consideration. The terms of any agreement pursuant to which a Fundamental

                                       5
<PAGE>

Transaction is effected shall include terms requiring any such successor or
surviving entity to comply with the provisions of this Section 3.1 and insuring
that this Warrant (or any such replacement security) will be similarly adjusted
upon any subsequent transaction analogous to a Fundamental Transaction.
"Black-Scholes Value" shall be determined in accordance with the Black-Scholes
Option Pricing Model obtained from the "OV" function on Bloomberg L.P. using (i)
a price per share of Common Stock equal to the VWAP of the Common Stock for the
Trading Day immediately preceding the date of consummation of the applicable
Fundamental Transaction, (ii) a risk-free interest rate corresponding to the
U.S. Treasury rate for a period equal to the remaining term of this Warrant as
of the date of such request and (iii) an expected volatility equal to the 100
day volatility obtained from the HVT function on Bloomberg L.P. determined as of
the Trading Day immediately following the public announcement of the applicable
Fundamental Transaction.

            3.2.  Dissolution. In the event of any dissolution of the Company
following the transfer of all or substantially all of its properties or assets,
the Company, prior to such dissolution, shall at its expense deliver or cause to
be delivered the stock and other securities and property (including cash, where
applicable) receivable by the Holder of the Warrants after the effective date of
such dissolution pursuant to this Section 3 to a bank or trust company (a
"Trustee") having its principal office in New York, NY, as trustee for the
Holder of the Warrants. Such property shall be delivered only upon payment of
the Warrant exercise price.

            3.3.  Continuation of Terms. Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer) referred to in
this Section 3, this Warrant shall continue in full force and effect and the
terms hereof shall be applicable to the Other Securities and property receivable
on the exercise of this Warrant after the consummation of such reorganization,
consolidation or merger or the effective date of dissolution following any such
transfer, as the case may be, and shall be binding upon the issuer of any Other
Securities, including, in the case of any such transfer, the person acquiring
all or substantially all of the properties or assets of the Company, whether or
not such person shall have expressly assumed the terms of this Warrant as
provided in Section 4. In the event this Warrant does not continue in full force
and effect after the consummation of the transaction described in this Section
3, then only in such event will the Company's securities and property (including
cash, where applicable) receivable by the Holder of the Warrants be delivered to
the Trustee as contemplated by Section 3.2.

            3.4   Share Issuance. Until the Expiration Date, if the Company
shall issue any Common Stock except for the Excepted Issuances (as defined in
the Subscription Agreement), prior to the complete exercise of this Warrant for
a consideration less than the Purchase Price that would be in effect at the time
of such issue, then, and thereafter successively upon each such issue, the
Purchase Price shall be reduced to such other lower price for then outstanding
Warrants. For purposes of this adjustment, the issuance of any security or debt
instrument of the Company carrying the right to convert such security or debt
instrument into Common Stock or of any warrant, right or option to purchase
Common Stock shall result in an adjustment to the Purchase Price upon the
issuance of the above-described security, debt instrument, warrant, right, or
option if such issuance is at a price lower than the Purchase Price in effect
upon such issuance and again at any time upon any subsequent issuances of shares
of Common Stock upon exercise of such conversion or purchase rights if such
issuance is at a price lower than the Purchase Price in effect upon such
issuance. Common Stock issued or issuable by the Company for no consideration
will be deemed issuable or to have been issued for $0.0001 per share of Common
Stock. The reduction of the Purchase Price described in this Section 3.4 is
subject to the provisions of, and in addition to the other rights of the Holder
described in, the Subscription Agreement.

      4.    Extraordinary Events Regarding Common Stock. In the event that the
Company shall (a) issue additional shares of the Common Stock as a dividend or
other distribution on outstanding Common Stock, (b) subdivide its outstanding
shares of Common Stock, or (c) combine its outstanding shares of the Common
Stock into a smaller number of shares of the Common Stock, then, in each such
event, the Purchase Price shall, simultaneously with the happening of such
event, be adjusted by multiplying the then Purchase Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding

                                       6
<PAGE>

immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Purchase Price then in effect. The
Purchase Price, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described herein in this Section 4.
The number of shares of Common Stock that the Holder of this Warrant shall
thereafter, on the exercise hereof, be entitled to receive shall be adjusted to
a number determined by multiplying the number of shares of Common Stock that
would otherwise (but for the provisions of this Section 4 be issuable on such
exercise by a fraction of which (a) the numerator is the Purchase Price that
would otherwise (but for the provisions of this Section 4 be in effect, and (b)
the denominator is the Purchase Price in effect on the date of such exercise.

      5.    Certificate as to Adjustments. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable on the
exercise of the Warrants, the Company at its expense will promptly cause its
Chief Financial Officer or other appropriate designee to compute such adjustment
or readjustment in accordance with the terms of the Warrant and prepare a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based, including a
statement of (a) the consideration received or receivable by the Company for any
additional shares of Common Stock (or Other Securities) issued or sold or deemed
to have been issued or sold, (b) the number of shares of Common Stock (or Other
Securities) outstanding or deemed to be outstanding, and (c) the Purchase Price
and the number of shares of Common Stock to be received upon exercise of this
Warrant, in effect immediately prior to such adjustment or readjustment and as
adjusted or readjusted as provided in this Warrant. The Company will forthwith
mail a copy of each such certificate to the Holder of the Warrant and any
Warrant Agent of the Company (appointed pursuant to Section 11 hereof).

      6.    Reservation of Stock, etc. Issuable on Exercise of Warrant;
Financial Statements. The Company will at all times reserve and keep available,
solely for issuance and delivery on the exercise of the Warrants, all shares of
Common Stock (or Other Securities) from time to time issuable on the exercise of
the Warrant. This Warrant entitles the Holder hereof to receive copies of all
financial and other information distributed or required to be distributed to the
holders of the Company's Common Stock.

      7.    Assignment; Exchange of Warrant. Subject to compliance with
applicable securities laws, this Warrant, and the rights evidenced hereby, may
be transferred by any registered holder hereof (a "Transferor"). On the
surrender for exchange of this Warrant, with the Transferor's endorsement in the
form of Exhibit B attached hereto (the "Transferor Endorsement Form") and
together with an opinion of counsel reasonably satisfactory to the Company that
the transfer of this Warrant will be in compliance with applicable securities
laws, the Company will issue and deliver to or on the order of the Transferor
thereof a new Warrant or Warrants of like tenor, in the name of the Transferor
and/or the transferee(s) specified in such Transferor Endorsement Form (each a
"Transferee"), calling in the aggregate on the face or faces thereof for the
number of shares of Common Stock called for on the face or faces of the Warrant
so surrendered by the Transferor.

      8.    Replacement of Warrant. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of this Warrant, the Company at its
expense, twice only, will execute and deliver, in lieu thereof, a new Warrant of
like tenor.

      9.    Registration Rights. The Holder of this Warrant has been granted
certain registration rights by the Company. These registration rights are set
forth in the Subscription Agreement. The terms of the Subscription Agreement are
incorporated herein by this reference.

                                       7
<PAGE>

      10.   Maximum Exercise. The Holder shall not be entitled to exercise this
Warrant on an exercise date, in connection with that number of shares of Common
Stock which would be in excess of the sum of (i) the number of shares of Common
Stock beneficially owned by the Holder and its affiliates on an exercise date,
and (ii) the number of shares of Common Stock issuable upon the exercise of this
Warrant with respect to which the determination of this limitation is being made
on an exercise date, which would result in beneficial ownership by the Holder
and its affiliates of more than 4.99% of the outstanding shares of Common Stock
on such date. For the purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
1934 Act , and Rule 13d-3 thereunder. Subject to the foregoing, the Holder shall
not be limited to aggregate exercises which would result in the issuance of more
than 4.99%. The restriction described in this paragraph may be waived, in whole
or in part, upon sixty-one (61) days prior notice from the Holder to the Company
to increase such percentage to up to 9.99%, but not in excess of 9.99%. The
Holder may decide whether to convert a Convertible Note or exercise this Warrant
to achieve an actual 4.99% or up to 9.99% ownership position as described above,
but not in excess of 9.99%.

      11.   Warrant Agent. The Company may, by written notice to the Holder of
the Warrant, appoint an agent (a "Warrant Agent") for the purpose of issuing
Common Stock (or Other Securities) on the exercise of this Warrant pursuant to
Section 1, exchanging this Warrant pursuant to Section 7, and replacing this
Warrant pursuant to Section 8, or any of the foregoing, and thereafter any such
issuance, exchange or replacement, as the case may be, shall be made at such
office by such Warrant Agent.

      12.   Transfer on the Company's Books. Until this Warrant is transferred
on the books of the Company, the Company may treat the registered holder hereof
as the absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.

      13.   Notices. All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be: if to the Company, to: Aethlon Medical, Inc., 3030
Bunker Hill Street, Suite 4000, San Diego, CA 92109, Attn: James A. Joyce, CEO,
telecopier: (858) 272-2738, with a copy by telecopier only to: Richardson &
Patel LLP, 10900 Wilshire Boulevard, Suite 500, Los Angeles, CA 90024, Attn:
Jennifer Post, Esq., telecopier: (310) 208-1154, and (ii) if to the Holder, to
the address and telecopier number listed on the first paragraph of this Warrant,
with a copy by telecopier only to: Grushko & Mittman, P.C., 551 Fifth Avenue,
Suite 1601, New York, New York 10176, telecopier number: (212) 697-3575.

                                       8
<PAGE>

      14.   Law Governing This Warrant. This Warrant shall be governed by and
construed in accordance with the laws of the State of New York without regard to
principles of conflicts of laws. Any action brought by either party against the
other concerning the transactions contemplated by this Warrant shall be brought
only in the state courts of New York or in the federal courts located in the
state and county of New York. The parties to this Warrant hereby irrevocably
waive any objection to jurisdiction and venue of any action instituted hereunder
and shall not assert any defense based on lack of jurisdiction or venue or based
upon forum non conveniens. The Company and Holder waive trial by jury. The
prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs. In the event that any provision of this
Warrant or any other agreement delivered in connection herewith is invalid or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of any agreement.
Each party hereby irrevocably waives personal service of process and consents to
process being served in any suit, action or proceeding in connection with this
Agreement or any other Transaction Document by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement
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 other manner permitted by law.

      IN WITNESS WHEREOF, the Company has executed this Warrant as of the date
first written above.

                                        AETHLON MEDICAL, INC.

                                        By: _______________________________
                                            Name:

                                       9
<PAGE>

                                    EXHIBIT A

                              FORM OF SUBSCRIPTION
                   (to be signed only on exercise of Warrant)
TO:  AETHLON MEDICAL, INC.
The undersigned, pursuant to the provisions set forth in the attached Warrant
(No.____), hereby irrevocably elects to purchase (check applicable box):

___     ________ shares of the Common Stock covered by such Warrant; or

___     the maximum number of shares of Common Stock covered by such Warrant
pursuant to the cashless exercise procedure set forth in Section 2.

The undersigned herewith makes payment of the full purchase price for such
shares at the price per share provided for in such Warrant, which is
$___________. Such payment takes the form of (check applicable box or boxes):

___     $__________ in lawful money of the United States; and/or

___     the cancellation of such portion of the attached Warrant as is
exercisable for a total of _______ shares of Common Stock (using a Fair Market
Value of $_______ per share for purposes of this calculation); and/or

___     the cancellation of such number of shares of Common Stock as is
necessary, in accordance with the formula set forth in Section 2, to exercise
this Warrant with respect to the maximum number of shares of Common Stock
purchasable pursuant to the cashless exercise procedure set forth in Section 2.

The undersigned requests that the certificates for such shares be issued in the
name of, and delivered to _____________________________________________________
whose address is _________________________________________________
______________________________________ .

The undersigned represents and warrants that all offers and sales by the
undersigned of the securities issuable upon exercise of the within Warrant shall
be made pursuant to registration of the Common Stock under the Securities Act of
1933, as amended (the "Securities Act"), or pursuant to an exemption from
registration under the Securities Act.

Dated:___________________               ________________________________________
                                        (Signature must conform to name of
                                        holder as specified on the face of the
                                        Warrant)

                                        ________________________________________
                                        ________________________________________
                                        (Address)

<PAGE>

                                    EXHIBIT B

                         FORM OF TRANSFEROR ENDORSEMENT
                   (To be signed only on transfer of Warrant)

      For value received, the undersigned hereby sells, assigns, and transfers
unto the person(s) named below under the heading "Transferees" the right
represented by the within Warrant to purchase the percentage and number of
shares of Common Stock of AETHLON MEDICAL, INC. to which the within Warrant
relates specified under the headings "Percentage Transferred" and "Number
Transferred," respectively, opposite the name(s) of such person(s) and appoints
each such person Attorney to transfer its respective right on the books of
AETHLON MEDICAL, INC. with full power of substitution in the premises.

-------------------------- -------------------------- --------------------------
Transferees                Percentage Transferred     Number Transferred
-------------------------- -------------------------- --------------------------

-------------------------- -------------------------- --------------------------

-------------------------- -------------------------- --------------------------

-------------------------- -------------------------- --------------------------

Dated: ______________, _______          ________________________________________
                                        (Signature must conform to name of
                                        holder as specified on the face of the
                                        warrant)

Signed in the presence of:

______________________________          ________________________________________
           (Name)                       ________________________________________
                                                (address)

ACCEPTED AND AGREED:                    ________________________________________
[TRANSFEREE] (address)                  ________________________________________
                                                (address)

______________________________
           (Name)

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