Document:

Exhibit 10.2

Exhibit 10.2

[MIMEDX LETTERHEAD]

Date: September 21, 2007

Thomas J. Graham, M.D.

705 West Timonium Road

Lutherville, Maryland 21903

Re: Consulting Agreement ( “Consulting Agreement”)

Dear Dr. Graham:

MiMedx, Inc., Inc. (the “Company”) hereby confirms its mutual agreement
with Thomas J. Graham, M.D. (“you” or “Consultant”) for you to serve as a consultant to the Company
(including your service on the Company’s Physician’s Advisory Board (“PAB”), upon the terms and
conditions set forth in this Consulting Agreement for services within the Field (as defined on
Exhibit A attached hereto) and with respect to the Company’s other research, development, and
business activities. It is agreed that the consulting agreement dated March 8, 2007 between you
and the Company (the “Original Agreement”) regarding your service on the PAB is hereby terminated
upon execution hereof by both parties, provided that you shall retain the consulting fees and
options already received under the Original Agreement.

The Field of this Consulting Agreement may be broadened by mutual consent. The Company
understands that you are currently an employee of the Curtis National Hand Institute (the
“Curtis Institute”) and that services to such employer may take precedence over your
consulting services to the Company as set out in Section 3 below. The Definitions attached hereto
as Exhibit A are expressly made a part of this Consulting Agreement by this reference thereto.

1. Your consulting service shall include full participation on the Company’s PAB, and
otherwise upon reasonable request by the Company, advising and informing the Company of activities
and developments within the Field, and providing the Company with the benefit of your knowledge,
experience, skill, and judgment in the Field and with respect to the Company’s other research,
development, and business activities.

 

 

 

2. Upon request by the Company from time to time, and at times mutually agreed upon by you and
the Company, you agree to participate in meetings with other members of the PAB, Company officers
and other representatives, and other parties, at the request of the Company, in person and/or by
telephonic conference calls, for the following compensation as full
consideration for all your consulting services and other obligations under this Consulting
Agreement (it is hereby acknowledged by both you and the Company that the following is in addition
to the 50,000 shares of common stock previously issued to you as a “founder” of the Company, and
50,000 options previously awarded to you under the Original Agreement):

a) Annual consulting payments in the amount of $125,000.00, to be paid in
quarterly installments. You will be responsible for all taxes in respect of these
consulting payments.

b) Stock Options for 200,000 shares of the Company’s Common Stock to be
awarded effective as of the date of this Consulting Agreement and vested one-third at each
anniversary of this agreement, so long as this Consulting Agreement has not been earlier
terminated by either party. The exercise price for the options shall be the fair market
value of the common stock of the Company as determined in good faith by the Board of
Directors. The options shall be governed by the Stock Incentive Plan and the individual
option Award Agreement to be entered into between you and the Company.

c) Royalties. The Company shall pay you continuing royalty fees in the
aggregate as follows (the “Royalties”):

(i) Seven percent (7%) of the Company’s Net Revenues derived from the sale of
Products embodying or utilizing any Valid Claim under a Company Patent in the
country from which the Net Revenues originated; or

(ii) Three and one-half percent (3.5%) of the Company’s Net Revenues derived
from the sale of Products embodying or utilizing any Valid Claim under a Company
Patent in the country from which the Net Revenues originated in the event (A) such
Products embody or utilize any material intellectual property rights of the Company
(other than the Contributed IP) or of any Third Party; or

(iii) Four percent (4%) of the Company’s Net Revenues derived from the sale of
Products embodying or utilizing any unpatented or unpatentable Contributed in the
country from which the Net Revenues originated; or

(iv) Two percent (2.0%) of the Company’s Net Revenues derived from the sale of
Products embodying or utilizing any unpatented or unpatentable Contributed IP
(other than any Valid Claim under a Company Patent) in the country from which the
Net Revenues originated in the event (A) such Products embody or utilize any
material intellectual property rights of the Company (other than the Contributed IP)
or of any Third Party; or

(v) One and one-half percent (1.5%) of Company’s (and not any of Company’s
affiliates, sublicensees, successors, or assigns’) Net Revenues from Company’s sale
of Products under any circumstances other than those described in above clauses (i)
through (iv).

 

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(vi) Any royalties or similar fees payable to any Third Party with respect to
any Products shall be offset and deducted from any Royalties due to Consultant
hereunder. Also, the Company shall pay only one Royalty, and the Consultant shall
not receive double or multiple Royalties, from the sale of the same Product,
regardless how much or many Valid Claims or other Contributed IP may cover or be
incorporated in such Product. Furthermore, by way of example and to avoid any
confusion, the following is an example of how the parties hereto anticipate that the
Royalties will be calculated:

If the Company’s Net Revenues were (A) $1,000,000 from the sale of a Product
embodying or utilizing a Valid Claim in the United States of America (i.e.,
Section 2(c)(i) above) and (B) $1,000,000 from the sale of a second Product
embodying or utilizing no Contributed IP in Canada) (i.e., Section 2(c)(v)),
and (C) $1,000,000 from a third Product embodying Contributed IP under a
Valid Patent as well as Intellectual Property of a Third Party (i.e.,
Section 2(c)(ii) above, then Consultant would receive Royalties of $70,000
($1,000,000 x 7%), plus $15,000 ($1,000,000 x 1.5%), plus $35,000
($1,000,000 x 3.5%) for an aggregate total of $120,000).

(vii) Term of Royalties. The Royalties shall be payable as follows:

(A) With respect to Royalties earned from the sale of Products
embodying or utilizing any Valid Claim under a Company Patent in the country
from which the Net Revenues originated, the expiration of the Life of the
Valid Claim in such; and

(B) With respect to Royalties earned from the sale of Products
embodying or utilizing any Contributed IP (other than any Valid Claim) in
the country from which the Net Revenues originated, the expiration of the
Life of the Product in such country.

(viii) Payment of Royalties. The Royalties shall be payable within forty-five
(45) days after the end of each calendar quarter during the term of this Agreement
with respect to the Net Revenues collected by the Company during such calendar
quarter. The Royalties shall be payable in U.S. dollars by check. Conversion from
any other currency shall be calculated at the exchange rate published by CitiBank on
the last day of the calendar quarter in respect of which the Royalty is due.

(ix) Combinations or bundling of Products. If any Products are combined or
“bundled” with any other product, device, equipment, or apparatus sold by the
Company as a combined product, device, equipment, system or apparatus, then the Net
Revenues for the purpose of calculating Royalties hereunder shall be that proportion
of the Net Revenues of that combined product, device, equipment, or apparatus which
is fairly attributable to such Products based on the extent of
functionality and performance contributed by such Products to that combined
product, device, equipment, or apparatus.

 

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(x) Records; Audit. Each Royalty payment shall be accompanied by a report
setting forth the total payments and the total Net Revenues received by the Company
for the sale of Products during the relevant time period. The Company shall keep
all usual and proper records and books of account relating to the sale and marketing
of the Products. From time to time during the term of this Consulting Agreement,
Consultant may cause an audit to be made, at his sole expense, of the applicable
books and records of the Company in order to verify the accuracy of the Royalty
payment reports. Any such audit shall be conducted solely by an independent
certified accountant and shall be conducted during regular business hours and in
such a manner as to not unreasonably interfere with the Company’s business
operations. The Company shall be provided with reasonable notice prior to any such
audit. If the audit reveals that Royalties due in respect of any time period under
audit have been underpaid by more than ten percent (10%), in addition to promptly
paying to the Consultant the amount of such underpayment, the Company shall
reimburse the Consultant for the cost of the audit.

3. The Company acknowledges that you are an employee of the Curtis Institute and are subject
to Curtis Institute’s policies, including policies concerning consulting, conflicts of interest,
and intellectual property, and that your obligations under Curtis Institute’s policies take
priority over any obligations you may have to the Company by reason of this Consulting Agreement.

4. The initial period of this Consulting Agreement shall be three (3) years from the date of
full execution of this Consulting Agreement provided that this Consulting Agreement may by
terminated by either party upon thirty (30) days written notice to the other party in the event of
a breach hereof by the other party, unless the allegedly breaching party cures the default during
the notice period. The nonbreaching party may cure or correct such breach during such notice
period, in which event this Consulting Agreement shall continue. If this Consulting Agreement is
terminated in accordance with the forgoing, compensation for services and travel expense incurred
in accordance with this Consulting Agreement prior to such termination will be paid by the Company.
For the avoidance of doubt, if this Consulting Agreement is terminated by the Company because of
Consultant’s breach, the obligations of Consultant under Section 7 below shall survive. If not
earlier terminated by notice given by either party not less than ninety (90) days prior to the
expiration of the initial three year term hereof (or any renewal term), then this Consulting
Agreement will be renewed automatically for additional one (1) year periods after from the end of
the initial three year period, and for additional one year renewal periods thereafter.

5. In addition to the compensation for your consulting services provided in paragraph 2, the
Company will reimburse you for necessary and reasonable out-of-pocket travel and living expenses
incurred by you at the Company’s request, within thirty (30) days of submission of a statement to
the Company documenting the expenses incurred, provided that the
Company’s prior approval shall be required with respect to such individual expenses in excess
of one thousand U.S. dollars ($1,000.00).

 

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6. You represent and warrant to the Company that, except for that certain PAB Consulting
Agreement between you and MiMedx, Inc., Inc. dated March 8, 2007, you do not have any
agreement to provide consulting services to any other party, firm, or company in the Field or whose
business would be directly or indirectly competitive with the business of the Company and will not
enter into any such agreement during the term of this Consulting Agreement without the Company’s
prior written consent.

7.

a) You hereby transfer and assign to the Company all rights, interests and ownership
in and to Contributed IP currently in existence, and you agree to transfer and assign all
rights, interests and ownership in and to the Company all Contributed IP hereafter created.
You agree that all Contributed IP shall be the sole and exclusive property of the Company or
its nominees. You will notify the Company of the creation of any new Intellectual Property
in the Field that is Contributed IP under this Consulting Agreement promptly and in writing,
and you will and hereby do assign to the Company all rights in and to such Contributed IP
upon the creation thereof. The Company and its nominees shall have the right to use and/or
to apply for statutory or common law protections for such Contributed IP in any and all
countries. You further agree (i) to assist the Company in every proper way to obtain and
from time to time to enforce its rights in such Company IP, at the Company’s expense, and
(ii) to execute and deliver to the Company or its nominee upon request all such documents as
the Company or its nominee may reasonably determine are necessary or appropriate. Such
contribution, transfer, and assignment constitutes all of the right, title, and interest in,
to, and under the Contributed IP held by Consultant at any time during the Contribution
Period.

b) In the event that any right, title, or interest in, to, or under any Contributed IP
does and will not vest automatically in and with the Company, you hereby agree to
contribute, transfer, and assign and do hereby irrevocably contribute, assign, convey, and
otherwise transfer to the Company all such right, title, and interest in, to, and under the
Contributed IP without further consideration from or action by you or the Company. You
hereby agree to assist the Company in every way reasonably necessary, at the Company’s
expense, to obtain, maintain, and enforce any Patents, copyrights, trademarks, or
proprietary rights relating to the Contributed IP and to execute all documents and
applications necessary to vest in the Company exclusive and full legal title in the
Contributed IP, and you agree to continue this assistance throughout the term of this
Consulting Agreement. Without limiting the foregoing, you shall, promptly on request of the
Company, do all acts and execute, acknowledge, and deliver all written instruments as may be
reasonably necessary to enable the Company to properly prepare, file, and prosecute
applications for, and to obtain, any Patent based on or embodying or utilizing the
Contributed IP in any and all countries selected by the Company, and to obtain the record
title to such applications and Patent, so that the Company shall be the sole and
absolute owner of the right, title, and interest in, to, and under the Contributed IP,
whether or not patented or patentable.

 

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c) Except as authorized by your employer as designated above or as otherwise provided
in this Consulting Agreement, the Company shall have no rights by reason of this Consulting
Agreement in any Intellectual Property either (i) that is developed as a direct result of a
program of research financed, in whole or in part, by funds under the control of your
employer, or (ii) arises directly, in connection with, or as an extension of research
conducted by, in or under the laboratories of your employer or through the use of its
resources. Such intellectual property does not constitute Contributed IP for the purposes
of this Consulting Agreement. It is understood and agreed that your interest in such
intellectual property shall be assigned by you to your employer. However you represent and
warrant to the Company that the current and continued transfer and assignment of the
Contributed IP in the Field in no way conflicts with any obligation now in existence on your
part, and you will not undertake any employment with any Third Party which would conflict
with your obligations under this Consulting Agreement.

8.

a) Consultant represents and warrants to the Company as follows:

Consultant has all requisite power and authority or capacity to execute and deliver,
and to perform his obligations under, this Consulting Agreement.

This Consulting Agreement constitutes the valid and binding obligation of
Consultant, enforceable against each Consultant in accordance with its terms.

Consultant has created and conceived all the Contributed IP.

Consultant has the full right and power to transfer and convey the Contributed IP as
provided for in this Consulting Agreement, and such transfer and assignment does not
and shall not constitute a breach or default under any agreement or instrument
applicable to such Consultant or the Contributed IP.

The Contributed IP is free and clear of any lien, charge, or other encumbrance
whatsoever.

No use or practice of the Contributed IP by the Company infringes or misappropriates
or will infringe or misappropriate the Patents, copyrights, trademarks, or other
intellectual property rights of Nexa Orthopedics, Inc. or any of its affiliates,
shareholders, sublicensees, successors, or assigns.

To the best knowledge of Consultant, no use or practice of the Contributed IP by the
Company infringes or misappropriates or will infringe or misappropriate the Patents,
copyrights, trademarks, or other intellectual property rights of any Third Party.

Consultant has received no notice of any claims or suits pending and, to the best
knowledge of Consultant, there are no claims or suits threatened against Consultant
challenging such Consultant’s ownership of or right to use any of the Contributed
IP, nor, to the best knowledge of Consultant, does there exist any basis therefor.

 

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To the best knowledge of Consultant, no person has infringed or misappropriated or
is infringing or misappropriating the Contributed IP.

b) The Company represents and warrants to Consultant as follows:

The Company has all requisite power and authority to execute and deliver, and to
perform its obligations under, this Consulting Agreement. The execution and
delivery, and the performance of the obligations under, this Consulting Agreement
has been duly and validly authorized by all required action by or on behalf of the
Company.

This Consulting Agreement has been duly and validly executed and delivered by the
Company and constitutes the valid and binding obligation of the Company, enforceable
against it in accordance with its terms.

c) Indemnification. During the term of this Consulting Agreement and for a period of
three (3) years from the expiration of the Contribution Period, the Consultant shall
indemnify, defend, and hold harmless the Company, and each of the members, shareholders,
managers, directors, officers, employees, and agents thereof, from and against any Losses
arising out of, based upon, or resulting from any inaccuracy in or breach of any
representation or warranty or covenant, agreement, or obligation of the Consultant set forth
in this Consulting Agreement.

d) Remedies.

Notwithstanding anything herein to the contrary, Consultant’s right to Royalties
shall terminate and cease to exist upon such Consultant’s material breach of Section
7.

Subject to the immediately preceding sentence, the Company hereby acknowledges that
its sole and exclusive remedy with respect to any indemnification claims for Losses
under Section 8(c) shall be as follows:

The Company shall satisfy any indemnification obligation for Losses against any
amounts otherwise coming due to Consultant from the Company in form of Royalties
under this Consulting Agreement from the time a notice of claim for Losses made by
the Company is given to Consultant and until all such Losses have been satisfied
(collectively, the “Indemnification Source”).

In the event the Company’s Losses have not been fully recovered after applying all
amounts under the Indemnification Source against such Losses within two (2)
years of the date of the Company’s giving a notice of claim to the Indemnifying
Consultant the Company shall have the right to redeem for one dollar ($1.00) and
cancel the Consultant’s capital stock in the Company, and to cancel any unexercised
stock options to purchase stock in the Company, to the extent necessary to fully
recover the Company’s Losses; provided, however, that such redemption and
cancellation shall be based on the Fair Market Value of the Consultant’s capital
stock or options in the Company.

 

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In the event the Company’s Losses have not been fully recovered after applying the
Indemnification Source and redeeming and cancelling the Indemnifying Consultant’s
capital stock or cancelling unexercised options in the Company as described above,
the Company shall have the right to satisfy any remaining indemnification obligation
for Losses against the Indemnification Source until the Losses have been fully
recovered.

Notwithstanding anything in this Section 8 to the contrary, in the event of the
occurrence of a Change-In-Control, the Company shall satisfy any indemnification
obligation for Losses of Consultant against any amounts coming due to Consultant
because of or in connection with such Change-In-Control; provided, however, that in
the event the Company’s Losses have not been fully recovered after applying such
amounts, the Company shall have the right to satisfy any remaining indemnification
obligation for Losses of the Consultant in accordance with the preceding clauses of
this Section 8.

9. You agree that, in the course of your services hereunder, you will receive proprietary
information of the Company relating to its business operations, research and development,
equipment, or products, and if such information is marked or otherwise designated confidential, you
will retain all such information in confidence and will not use it, or disclose it, or cause its
use or disclosure except in the necessary course of the performance of your services under this
Consulting Agreement or with the written consent of the Company. Nothing contained in this
Consulting Agreement, however, shall prevent the disclosure by you of any information after it is
available to the general public, or of any information which was already available to you at the
time such information was acquired by you from the Company or any disclosure of any information
furnished to you without obligation of confidentiality by a third party who is not then in default
of any obligation to the Company regarding the confidentiality of such information, or of any
information ordered to be disclosed by a court or governmental body, provided that you (i) provide
written advance notice to the Company of such disclosure, (ii) assist the Company, as reasonably
requested thereby and at the expense of the Company, in obtaining confidential treatment of such
information, and (iii) take reasonable steps to minimize the extent of such disclosure. This
Section 9 shall be effective during the term of this Consulting Agreement and for a period of two
(2) years after termination or expiration hereof for any reason.

10. It is acknowledged and agreed that you may not disclose or publish data, results,
procedures, or other information relating to the consulting undertaken pursuant to this Consulting
Agreement, without the Company’s advance written approval.

 

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11. The Company agrees to defend and indemnify you for the cost of defense and for damages
awarded, if any, as a result of any third party claims, liabilities, suits or judgments arising out
of this Consulting Agreement, so long as such claims, liabilities, suits, or judgments are not
attributable to grossly negligent or intentionally wrongful acts or omissions by you or a material
breach by you of this Consulting Agreement. You shall promptly notify the Company of any such
claim and shall cooperate with the Company in the defense of such claim; you shall not agree to any
settlement with regards to such claim without prior written approval of the Company, and the
Company shall not have any indemnification obligation hereunder with respect to any such settlement
reached without its prior written consent.

12. The Company and you agree that, in the event of a breach by you of this Consulting
Agreement, the Company shall, in addition to any other rights and remedies available to the
Company, be entitled to enforcement by specific performance of your obligations hereunder. If any
provision of this Consulting Agreement shall be declared invalid or unenforceable, such provision
shall be enforced to the fullest extent allowed by law, and all remaining provisions hereof shall
continue in full force and effect. This Consulting Agreement shall be governed for all purposes by
the laws of the State of Florida, and shall be subject to the exclusive jurisdiction of the State
and Federal courts located in Hillsborough County, Florida.

13. Your relationship with the Company shall be that of an independent contractor, and you
will not be an employee of the Company for any purpose whatsoever. You do not and shall not have
any right or authority to assume or to create any obligation or responsibility, express or implied,
on behalf of or in the name of the Company or to bind the Company in any manner.

14. The Company may not use your name in any commercial advertisement or similar material that
is used to promote or sell products, unless the Company obtains in advance the written consent of
you to such use, provided that, for purposes of clarification but not limitation, the Company shall
be entitled to name you as a consultant and describe your role in consulting for the Company in
discussions, materials, and submissions (i) regarding the seeking and/or maintaining of regulatory
approvals or securities filings or other disclosure materials, such as prospectuses, or (ii) for
presentations to, or discussions and negotiations with, or in materials provided to, potential
investors, lenders, financial advisors or strategic partners, or as may otherwise be required by
law or regulation.

15. Any notice or communications under this Consulting Agreement shall be in writing,
addressed as follows, and may be delivered by delivered by hand, by certified mail, return receipt
requested, or by nationally recognized overnight courier, and shall be effective upon receipt:

To Consultant:

Dr. Thomas J. Graham, M.D.

705 West Timonium Road

Lutherville, Maryland 21903

To Company:

MiMedx, Inc.

1234 Airport Road

Suite 105

Destin, Florida 32541

Attn: Paul Nichols, President

 

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16. This Consulting Agreement may not be assigned by either party without the prior written
consent of the other; provided, however, that the Company may assign this Consulting Agreement to
any subsidiary or parent of the Company or successor to the Company’s business by merger, purchase
of assets, or otherwise. This Consulting Agreement shall be binding upon the assigns, executors,
administrators and other legal representatives of the parties hereto, and shall inure to the
benefit of the Company, its successors and assigns.

17. Only the provisions of paragraphs 7, 8, 9, and 11 of this Consulting Agreement shall
survive termination or expiration hereof.

IN WITNESS WHEREOF, the parties hereto have duly executed this Consulting Agreement as of the
date set forth on the first page hereof.

	 	 	 	 	 	 	 	 	 
	WITNESS	 	CONSULTANT
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	/s/ Thomas J. Graham, M.D.
	 	 	 	 	 
	Name:	 	 	 	 	 	Thomas J. Graham, M.D.
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	ATTEST:	 	MIMEDX, Inc.
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:
	 	/s/ Paul Nichols
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	 	 	 	 	 	 	Paul Nichols, President
	 

	 	 	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

 

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EXHIBIT A

Definitions.

“Company” has the meaning given such term in the preamble.

“Company Patent” means any Patent that (a) names Consultant an inventor of such
Patent, (b) embodies or utilizes the Contributed IP, and (c) has been contributed, transferred, and
assigned to the Company under this Consulting Agreement

“Contributed IP” means all of Consultant’s right, title, and interest in, to, and
under the Intellectual Property in the Field existing as of the date of this Consulting Agreement
and at any time during the Contribution Period including all Intellectual Property listed on
Schedule 1 hereto.

“Contribution Period” means the period that shall commence on the date of this
Consulting Agreement and shall expire on the third (3rd) anniversary hereof, even if
this Consulting Agreement has been terminated by the Company due to Consultant’s breach hereof;
provided that that Contribution Period shall continue for the term of this Consulting Agreement if
the term is renewed for additional period(s) beyond the initial three year period.

“Field” means all uses related to: (a) the human hand and upper extremity, including,
without limitation, the arm, elbow, forearm, wrist, and hand, including, without limitation, uses
for reconstructive microsurgery in other parts of the body; (b) the human foot and ankle,
including, without limitation, all human anatomy distal to the distal tibia and fibula articular
surfaces; (c) dental implants for reconstructive and cosmetic dentistry and oral surgery uses; and
(d) soft goods and durable medical equipment, including, without limitation, braces, splints,
thermal devices, and other implements used in rehabilitation/therapy for the uses described in
above clauses (a) and (b).

“Indemnification Source” has the meaning given such term in Section 8 (d).

“Intellectual Property” means any or all of the following and all rights arising out
of or associated therewith, solely in the Field (including, without limitation, all intellectual
property rights listed on attached Schedule 1): (a) all Patents; (b) all inventions
(whether patentable or not), invention disclosures, discoveries, improvements, ideas, methods,
systems or plans relating to any process, designs, trade secrets, proprietary information,
know-how, technology, technical data, and customer lists, and all documentation relating to any of
the foregoing throughout the world; (c) all copyrights, copyright registrations, and applications
therefor, and all other rights corresponding thereto throughout the world; (d) all industrial
designs and any registrations and applications therefor throughout the world; (e) all Internet
uniform resource locators, domain names, trade names, logos, slogans, designs, common law
trademarks and service marks, trademark and service mark registrations, and applications therefor
throughout the world; (f) all databases and data collections and all rights therein throughout the
world; (g) all moral and economic rights of authors and inventors, however denominated, throughout
the world; (h) any
similar or equivalent rights to any of the foregoing anywhere in the world; and (i) all
tangible items, including, without limitation, documents, embodying the foregoing.

 

Exhibit A

 

“Life of the Product” means, with respect to a Product embodying or utilizing any
Contributed IP (other than any Valid Claim), the period during which such Product is being
manufactured for commercial sales and Net Revenues are being generated by sales thereof.

“Life of the Valid Claim” means, with respect to a Product embodying or utilizing any
Valid Claim, the period during which such Product is embodying or utilizing at least one (1) Valid
Claim.

“Losses” shall mean any losses, damages, liabilities, diminution in value,
obligations, actions, claims, suits, proceedings, demands, assessments, judgments, recoveries,
fees, costs, and expenses (including, without limitation, all reasonable out-of-pocket expenses,
reasonable investigation expenses, and reasonable fees and disbursements of accountants and
attorneys) of any nature whatsoever, excluding, however, any indirect, consequential, or punitive
losses.

“Net Revenues” means all payments received by the Company from the sale of Products,
less: (a) sales, use, turnover, excise, value added, and all other foreign, federal, state, or
local taxes (except income tax); (b) custom duties or consular fees; (c) transportation, freight,
and handling charges and insurance on shipments to customers; (d) ordinary and reasonable trade,
cash, or quantity discounts or rebates to the extent actually granted; and (e) refunds and credits
for any damaged, spoiled, rejected, or returned Products or because of retroactive price
reductions, rebates, or charge backs; in each case as determined under generally accepted
accounting principles in effect from time to time in the United States of America.

“Patent” means any United States of America, international, or foreign patent and any
application therefor and all reissues, divisions, renewals, extensions, provisionals,
continuations, and continuations-in-part thereof.

“Product(s)” means any product, device, equipment, or apparatus that is developed,
manufactured, produced, expressed, used, or licensed for use by the Company, or its contract
manufacturers, using, exercising, or exploiting any Intellectual Property utilizing or embodying
Contributed IP.

“Third Party” means any person, firm, organization, association, or entity other than
the parties hereto.

“Valid Claim” means a claim of an issued and unexpired Patent, that has not been
revoked or held invalid or unenforceable by a decision of a court or other governmental agency of
competent jurisdiction from which no appeal can be or is taken within the time allowed for such
appeal, and that has not been disclaimed, denied, or admitted to be invalid or unenforceable
through reissue, disclaimer, or otherwise by the Consultant.<PAGE>

Exhibit 4.1

(Warrant)

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)

                          COMMON STOCK PURCHASE WARRANT

No.2009-A-001                                      Issue Date: August 24, 2009

         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 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 non-assessable 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, provided such reduction is made as to all
outstanding Warrants for all Holders of such Warrants. 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
August 24, 2009, entered into by the Company, the Holder and the other
signatories thereto.

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

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

         (b) The term "COMMON STOCK" includes (i) the Company's Common Stock,
$0.001 par value per share, as authorized on the date of the Subscription
Agreement, and (ii) any other securities into which or for which any of the
securities described in (i) may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or otherwise.

<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 SECTION 1.2 or upon exercise of this Warrant in
part in accordance with SECTION 1.3, shares of Common Stock of the Company,
subject to adjustment pursuant to SECTION 4 below and SECTIONS 11.4 and 12(B) of
the Subscription Agreement.

            1.2. FULL EXERCISE. This Warrant may be exercised in full by the
Holder hereof by delivery to the Company 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 SECTION 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. For purposes of this Warrant, the 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 or the American Stock
Exchange, LLC, then the average of the closing sale prices of the Common Stock
for the five (5) Trading Days immediately prior to (but not including) 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 or the American Stock Exchange,
Inc., but is traded on the OTC Bulletin Board or in the over-the-counter market
or Pink Sheets, then the average of the closing bid and ask prices reported for
the five (5) Trading Days immediately prior to (but not including) 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; or

<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. DELIVERY OF STOCK CERTIFICATES, ETC. ON EXERCISE. The Company
agrees that, provided the full purchase price listed in the Subscription Form is
received as specified in SECTION 1.2, 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 three (3) 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 upon 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.

            1.7. 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, 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) 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%

<PAGE>

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.

         2. CASHLESS EXERCISE.

                 (a) 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. Notwithstanding the
immediately preceding sentence, payment upon exercise may be made in the manner
described in Section 2(b) below, only with respect to Warrant Shares NOT
included for unrestricted public resale in an effective Registration Statement
on the date notice of exercise is given by the Holder.

                 (b) 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 delivery of a properly endorsed Subscription Form
delivered to the Company by any means described in SECTION 13, 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)

                         A =       Fair Market Value

                         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 in the manner described above 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)

<PAGE>

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, or spin-off) 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
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. 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,

<PAGE>

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.

            3.3 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 issuance, then, and thereafter successively upon each such issuance, 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 actual, permitted, optional,
or allowed issuances of shares of Common Stock upon any actual, permitted,
optional, or allowed exercise of such conversion or purchase rights if such
issuance is at a price lower than the Purchase Price in effect upon any actual,
permitted, optional, or allowed such issuance. Common Stock issued or issuable
by the Company for no consideration will be deemed issuable or to have been
issued for $0.001 per share of Common Stock.

         4. EXTRAORDINARY EVENTS REGARDING COMMON STOCK. In the event that the
Company shall (a) issue additional shares of 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 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 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, upon written request, to

<PAGE>

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.

         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 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

<PAGE>

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,
facsimile: (858) 272-2738, with a copy by telecopier only to: Law Office of
Jennifer A. Post, 340 North Camden Drive, Suite 302, Beverly Hills, California
90210, Attn: Jennifer A. Post, Esq., facsimile: (800) 783-2983, and (ii) if to
the Holder, to the address and facsimile number listed on the first paragraph of
this Warrant, with a copy by fax only to: Grushko & Mittman, P.C., 551 Fifth
Avenue, Suite 1601, New York, New York 10176, facsimile: (212) 697-3575.

         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.

                            [SIGNATURE PAGE FOLLOWS]

<PAGE>

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

                                           AETHLON MEDICAL, INC.

                                           By: _________________________
                                               Name:
                                               Title:

<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 of
         the Warrant.

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 of the
         Warrant, 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]

________________________________            ___________________________________
         (Name)                             ___________________________________
                                            (address)

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