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EXHIBIT 10.26

                         COMMON STOCK PURCHASE AGREEMENT

       COMMON STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of March 21,
2007, by and between AETHLON MEDICAL, INC., a Nevada corporation (the
"Company"), and FUSION CAPITAL FUND II, LLC, an Illinois limited liability
company (the "Buyer"). Capitalized terms used herein and not otherwise defined
herein are defined in Section 10 hereof.

                                    WHEREAS:

         Subject to the terms and conditions set forth in this Agreement, the
Company wishes to sell to the Buyer, and the Buyer wishes to buy from the
Company, up to Eight Million Four Hundred Thousand Dollars ($8,400,000.00) of
the Company's common stock, par value $0.001 per share (the "Common Stock"). The
shares of Common Stock to be purchased hereunder are referred to herein as the
"Purchase Shares."

       NOW THEREFORE, the Company and the Buyer hereby agree as follows:

       1.     PURCHASE OF COMMON STOCK.

       Subject to the terms and conditions set forth in this Agreement, the
Company has the right to sell to the Buyer, and the Buyer has the obligation to
purchase from the Company, Purchase Shares as follows:

       (a)    Initial Purchase; Commencement of Base and Block Purchases of
Common Stock. On the Filing Date (as defined in Section 4(a) hereof), the Buyer
shall buy from the Company as of such date Four Hundred Thousand Dollars
($400,000.00) of Purchase Shares (the "Initial Purchase" and such Purchase
Shares are referred to herein as the "Initial Purchase Shares") at the lesser of
(i) the Purchase Price as of the Business Day prior to the Filing Date, or (ii)
$0.30. The Initial Purchase Shares shall be issued in certificated form and
(subject to Section 5 hereof) shall bear only the restrictive legend set forth
in Section 4(e) hereof. Thereafter, the purchase and sale of Purchase Shares
hereunder shall occur from time to time upon written notices by the Company to
the Buyer on the terms and conditions as set forth herein following the
satisfaction of the conditions (the "Commencement") as set forth in Sections 6
and 7 below (the date of satisfaction of such conditions, the "Commencement
Date").

       (b)    The Company's Right to Require Purchases. Any time on or after the
Commencement Date, the Company shall have the right but not the obligation to
direct the Buyer by its delivery to the Buyer of Base Purchase Notices from time
to time to buy Purchase Shares (each such purchase a "Base Purchase") in any
amount up to Thirty Two Thousand Dollars ($32,000.00) per Base Purchase Notice
(the "Base Purchase Amount") at the Purchase Price on the Purchase Date. The
Company may deliver multiple Base Purchase Notices to the Buyer so long as at
least two (2) Business Days have passed since the most recent Base Purchase was
completed. Notwithstanding the forgoing, any time on or after the Commencement
Date, the Company shall also have the right but not the obligation by its
delivery to the Buyer of Block Purchase Notices from time to time to direct the
Buyer to buy Purchase Shares (each such purchase a "Block Purchase") in any
amount up to One Million Dollars ($1,000,000.00) per Block Purchase Notice at
the Block Purchase Price on the Purchase Date as provided herein. For a Block
Purchase Notice to be valid the following conditions must be met: (1) the Block
Purchase Amount shall not exceed Fifty Thousand Dollars ($50,000.00) per Block
Purchase Notice, (2) the Company must deliver the Purchase Shares before 11:00

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a.m. eastern time on the Purchase Date and (3) the Sale Price of the Common
Stock must not be below $0.30 (subject to equitable adjustment for any
reorganization, recapitalization, non-cash dividend, stock split or other
similar transaction) during the Purchase Date, the date of the delivery of the
Block Purchase Notice and during the Business Day prior to the delivery of the
Block Purchase Notice. The Block Purchase Amount may be increased to up to One
Hundred Thousand Dollars ($100,000.00) per Block Purchase Notice if the Sale
Price of the Common Stock is not below $0.40 (subject to equitable adjustment
for any reorganization, recapitalization, non-cash dividend, stock split or
other similar transaction) during the Purchase Date, the date of the delivery of
the Block Purchase Notice and during the Business Day prior to the delivery of
the Block Purchase Notice. The Block Purchase Amount may be increased to up to
Two Hundred Thousand Dollars ($200,000.00) per Block Purchase Notice if the Sale
Price of the Common Stock is not below $0.55 (subject to equitable adjustment
for any reorganization, recapitalization, non-cash dividend, stock split or
other similar transaction) during the Purchase Date, the date of the delivery of
the Block Purchase Notice and during the Business Day prior to the delivery of
the Block Purchase Notice. The Block Purchase Amount may be increased to up to
Four Hundred Thousand Dollars ($400,000.00) per Block Purchase Notice if the
Sale Price of the Common Stock is not below $0.70 (subject to equitable
adjustment for any reorganization, recapitalization, non-cash dividend, stock
split or other similar transaction) during the Purchase Date, the date of the
delivery of the Block Purchase Notice and during the Business Day prior to the
delivery of the Block Purchase Notice. The Block Purchase Amount may be
increased to up to One Million Dollars ($1,000,000.00) per Block Purchase Notice
if the Sale Price of the Common Stock is not below $1.50 (subject to equitable
adjustment for any reorganization, recapitalization, non-cash dividend, stock
split or other similar transaction) during the Purchase Date, the date of the
delivery of the Block Purchase Notice and during the Business Day prior to the
delivery of the Block Purchase Notice. As used herein, the term "Block Purchase
Price" shall mean the lesser of (i) the lowest Sale Price of the Common Stock on
the Purchase Date or (ii) the lowest Purchase Price during the previous seven
(7) Business Days prior to the date that the valid Block Purchase Notice was
received by the Buyer. However, if at any time during the Purchase Date, the
date of the delivery of the Block Purchase Notice or during the Business Day
prior to the delivery of the Block Purchase Notice, the Sale Price of the Common
Stock is below the applicable Block Purchase threshold price, such Block
Purchase shall be void and the Buyer's obligations to buy Purchase Shares in
respect of that Block Purchase Notice shall be terminated. Thereafter, the
Company shall again have the right to submit a Block Purchase Notice as set
forth herein by delivery of a new Block Purchase Notice only if the Sale Price
of the Common Stock is above the applicable Block Purchase threshold price
during the date of the delivery of the Block Purchase Notice and during the
Business Day prior to the delivery of the Block Purchase Notice. The Company may
deliver multiple Block Purchase Notices to the Buyer so long as at least two (2)
Business Days have passed since the most recent Block Purchase was completed.

       (c)    Payment for Purchase Shares. The Buyer shall pay to the Company an
amount equal to the Purchase Amount with respect to such Purchase Shares as full
payment for such Purchase Shares via wire transfer of immediately available
funds on the same Business Day that the Buyer receives such Purchase Shares if
they are received by the Buyer before 11:00 a.m. eastern time or if received by
the Buyer after 11:00 a.m. eastern time, the next Business Day. The Company
shall not issue any fraction of a share of Common Stock upon any purchase. If
the issuance would result in the issuance of a fraction of a share of Common
Stock, the Company shall round such fraction of a share of Common Stock up or
down to the nearest whole share. All payments made under this Agreement shall be
made in lawful money of the United States of America or wire transfer of
immediately available funds to such account as the Company may from time to time
designate by written notice in accordance with the provisions of this Agreement.
Whenever any amount expressed to be due by the terms of this Agreement is due on
any day that is not a Business Day, the same shall instead be due on the next
succeeding day that is a Business Day.

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       (d)    Purchase Price Floor. The Company and the Buyer shall not effect
any sales under this Agreement on any Purchase Date where the Purchase Price for
any purchases of Purchase Shares would be less than the Floor Price. "Floor
Price" means $0.25, which shall be appropriately adjusted for any
reorganization, recapitalization, non-cash dividend, stock split or other
similar transaction.

       (e)    Records of Purchases. The Buyer and the Company shall each
maintain records showing the remaining Available Amount at any give time and the
dates and Purchase Amounts for each purchase or shall use such other method,
reasonably satisfactory to the Buyer and the Company.

       (f)    Taxes. The Company shall pay any and all transfer, stamp or
similar taxes that may be payable with respect to the issuance and delivery of
any shares of Common Stock to the Buyer made under this Agreement.

       2.     BUYER'S REPRESENTATIONS AND WARRANTIES.

       The Buyer represents and warrants to the Company that as of the date
hereof and as of the Commencement Date:

       (a)    Investment Purpose. The Buyer is entering into this Agreement and
acquiring the Commitment Shares, (as defined in Section 4(e) hereof) (this
Agreement, the Purchase Shares and the Commitment Shares are collectively
referred to herein as the "Securities"), for its own account for investment only
and not with a view towards, or for resale in connection with, the public sale
or distribution thereof; provided however, by making the representations herein,
the Buyer does not agree to hold any of the Securities for any minimum or other
specific term.

       (b)    Accredited Investor Status. The Buyer is an "accredited investor"
as that term is defined in Rule 501(a)(3) of Regulation D.

       (c)    Reliance on Exemptions. The Buyer understands that the Securities
are being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of, and the
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of the Buyer
to acquire the Securities.

       (d)    Information. The Buyer has been furnished with all materials
relating to the business, finances and operations of the Company and materials
relating to the offer and sale of the Securities that have been reasonably
requested by the Buyer, including, without limitation, the SEC Documents (as
defined in Section 3(f) hereof). The Buyer understands that its investment in
the Securities involves a high degree of risk. The Buyer (i) is able to bear the
economic risk of an investment in the Securities including a total loss, (ii)
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of the proposed investment in the
Securities and (iii) has had an opportunity to ask questions of and receive
answers from the officers of the Company concerning the financial condition and
business of the Company and others matters related to an investment in the
Securities. Neither such inquiries nor any other due diligence investigations
conducted by the Buyer or its representatives shall modify, amend or affect the
Buyer's right to rely on the Company's representations and warranties contained
in Section 3 below. The Buyer has sought such accounting, legal and tax advice
as it has considered necessary to make an informed investment decision with
respect to its acquisition of the Securities.

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       (e)    No Governmental Review. The Buyer understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.

       (f)    Transfer or Sale. The Buyer understands that except as provided in
the Registration Rights Agreement (as defined in Section 4(a) hereof): (i) the
Securities have not been and are not being registered under the 1933 Act or any
state securities laws, and may not be offered for sale, sold, assigned or
transferred unless (A) subsequently registered thereunder or (B) an exemption
exists permitting such Securities to be sold, assigned or transferred without
such registration; (ii) any sale of the Securities made in reliance on Rule 144
may be made only in accordance with the terms of Rule 144 and further, if Rule
144 is not applicable, any resale of the Securities under circumstances in which
the seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the 1933 Act) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC thereunder; and (iii) neither the Company nor any other person is under any
obligation to register the Securities under the 1933 Act or any state securities
laws or to comply with the terms and conditions of any exemption thereunder.

       (g)    Validity; Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Buyer and is a valid and
binding agreement of the Buyer enforceable against the Buyer in accordance with
its terms, subject as to enforceability to general principles of equity and to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.

       (h)    Residency. The Buyer is a resident of the State of Illinois.

       (i)    No Prior Short Selling. The Buyer represents and warrants to the
Company that at no time prior to the date of this Agreement has any of the
Buyer, its agents, representatives or affiliates engaged in or effected, in any
manner whatsoever, directly or indirectly, any (i) "short sale" (as such term is
defined in Section 242.200 of Regulation SHO of the Securities Exchange Act of
1934, as amended (the "1934 Act")) of the Common Stock or (ii) hedging
transaction, which establishes a net short position with respect to the Common
Stock.

       3.     REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

       The Company represents and warrants to the Buyer that as of the date
hereof and as of the Commencement Date:

       (a)    Organization and Qualification. The Company and its "Subsidiaries"
(which for purposes of this Agreement means any entity in which the Company,
directly or indirectly, owns 50% or more of the voting stock or capital stock or
other similar equity interests) are corporations duly organized and validly
existing in good standing under the laws of the jurisdiction in which they are
incorporated, and have the requisite corporate power and authority to own their
properties and to carry on their business as now being conducted. Each of the
Company and its Subsidiaries is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which its ownership of
property or the nature of the business conducted by it makes such qualification

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necessary, except to the extent that the failure to be so qualified or be in
good standing could not reasonably be expected to have a Material Adverse
Effect. As used in this Agreement, "Material Adverse Effect" means any material
adverse effect on any of: (i) the business, properties, assets, operations,
results of operations or financial condition of the Company and its
Subsidiaries, if any, taken as a whole, or (ii) the authority or ability of the
Company to perform its obligations under the Transaction Documents (as defined
in Section 3(b) hereof). The Company has no Subsidiaries except as set forth on
Schedule 3(a).

       (b)    Authorization; Enforcement; Validity. (i) The Company has the
requisite corporate power and authority to enter into and perform its
obligations under this Agreement, the Registration Rights Agreement and each of
the other agreements entered into by the parties on the Commencement Date and
attached hereto as exhibits to this Agreement (collectively, the "Transaction
Documents"), and to issue the Securities in accordance with the terms hereof and
thereof, (ii) the execution and delivery of the Transaction Documents by the
Company and the consummation by it of the transactions contemplated hereby and
thereby, including without limitation, the issuance of the Commitment Shares and
the reservation for issuance and the issuance of the Purchase Shares issuable
under this Agreement, have been duly authorized by the Company's Board of
Directors and no further consent or authorization is required by the Company,
its Board of Directors or its shareholders, (iii) this Agreement has been, and
each other Transaction Document shall be on the Commencement Date, duly executed
and delivered by the Company and (iv) this Agreement constitutes, and each other
Transaction Document upon its execution on behalf of the Company, shall
constitute, the valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies. The
Board of Directors of the Company has approved the resolutions (the "Signing
Resolutions") substantially in the form as set forth as Exhibit C-1 attached
hereto to authorize this Agreement and the transactions contemplated hereby. The
Signing Resolutions are valid, in full force and effect and have not been
modified or supplemented in any respect other than by the resolutions set forth
in Exhibit C-2 attached hereto regarding the registration statement referred to
in Section 4 hereof. The Company has delivered to the Buyer a true and correct
copy of a unanimous written consent adopting the Signing Resolutions executed by
all of the members of the Board of Directors of the Company. No other approvals
or consents of the Company's Board of Directors and/or shareholders is necessary
under applicable laws and the Company's Certificate of Incorporation and/or
Bylaws to authorize the execution and delivery of this Agreement or any of the
transactions contemplated hereby, including, but not limited to, the issuance of
the Commitment Shares and the issuance of the Purchase Shares.

       (c)    Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of (i) 100,000,000 shares of Common Stock, of
which as of the date hereof, 29,423,874 shares are issued and outstanding, none
are held as treasury shares, 500,000 shares are reserved for issuance pursuant
to the Company's stock option plans of which 467,500 shares remain available for
future grants and 20,021,809 shares are issuable and reserved for issuance
pursuant to securities (other than stock options issued pursuant to the
Company's stock option plans) exercisable or exchangeable for, or convertible
into, shares of Common Stock and (ii) no shares of Preferred Stock are issued
and outstanding. All of such outstanding shares have been, or upon issuance will
be, validly issued and are fully paid and nonassessable. Except as disclosed in
Schedule 3(c), (i) no shares of the Company's capital stock are subject to
preemptive rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Company, (ii) there are no outstanding debt
securities, (iii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its Subsidiaries, or contracts, commitments, understandings or

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arrangements by which the Company or any of its Subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of its
Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
Subsidiaries, (iv) there are no agreements or arrangements under which the
Company or any of its Subsidiaries is obligated to register the sale of any of
their securities under the 1933 Act (except the Registration Rights Agreement),
(v) there are no outstanding securities or instruments of the Company or any of
its Subsidiaries which contain any redemption or similar provisions, and there
are no contracts, commitments, understandings or arrangements by which the
Company or any of its Subsidiaries is or may become bound to redeem a security
of the Company or any of its Subsidiaries, (vi) there are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Securities as described in this Agreement and
(vii) the Company does not have any stock appreciation rights or "phantom stock"
plans or agreements or any similar plan or agreement. The Company has furnished
to the Buyer true and correct copies of the Company's Certificate of
Incorporation, as amended and as in effect on the date hereof (the "Certificate
of Incorporation"), and the Company's By-laws, as amended and as in effect on
the date hereof (the "By-laws"), and summaries of the terms of all securities
convertible into or exercisable for Common Stock, if any, and copies of any
documents containing the material rights of the holders thereof in respect
thereto.

       (d)    Issuance of Securities. The Commitment Shares and the Initial
Purchase Shares have been duly authorized and, upon issuance (and payment
therefor in the case of the Initial Purchase Shares) in accordance with the
terms hereof, the Commitment Shares and Initial Purchase Shares shall be (i)
validly issued, fully paid and non-assessable and (ii) free from all taxes,
liens and charges with respect to the issue thereof. 6,000,000 shares of Common
Stock have been duly authorized and reserved for issuance as Purchase Shares
under this Agreement after the Commencement. Upon issuance and payment therefor
in accordance with the terms and conditions of this Agreement, the Purchase
Shares shall be validly issued, fully paid and nonassessable and free from all
taxes, liens and charges with respect to the issue thereof, with the holders
being entitled to all rights accorded to a holder of Common Stock.

       (e)    No Conflicts. Except as disclosed in Schedule 3(e), the execution,
delivery and performance of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
(including, without limitation, the reservation for issuance and issuance of the
Purchase Shares) will not (i) result in a violation of the Certificate of
Incorporation, any Certificate of Designations, Preferences and Rights of any
outstanding series of preferred stock of the Company or the By-laws or (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its Subsidiaries is a
party, or result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws and regulations and the
rules and regulations of the Principal Market applicable to the Company or any
of its Subsidiaries) or by which any property or asset of the Company or any of
its Subsidiaries is bound or affected, except in the case of conflicts,
defaults, terminations, amendments, accelerations, cancellations and violations
under clause (ii), which could not reasonably be expected to result in a
Material Adverse Effect. Except as disclosed in Schedule 3(e), neither the
Company nor its Subsidiaries is in violation of any term of or in default under
its Certificate of Incorporation, any Certificate of Designation, Preferences
and Rights of any outstanding series of preferred stock of the Company or
By-laws or their organizational charter or by-laws, respectively. Except as
disclosed in Schedule 3(e), neither the Company nor any of its Subsidiaries is
in violation of any term of or is in default under any material contract,
agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or
order or any statute, rule or regulation applicable to the Company or its
Subsidiaries, except for possible conflicts, defaults, terminations or

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amendments which could not reasonably be expected to have a Material Adverse
Effect. The business of the Company and its Subsidiaries is not being conducted,
and shall not be conducted, in violation of any law, ordinance, regulation of
any governmental entity, except for possible violations, the sanctions for which
either individually or in the aggregate could not reasonably be expected to have
a Material Adverse Effect. Except as specifically contemplated by this Agreement
and as required under the 1933 Act or applicable state securities laws, the
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency or any
regulatory or self-regulatory agency in order for it to execute, deliver or
perform any of its obligations under or contemplated by the Transaction
Documents in accordance with the terms hereof or thereof. Except as disclosed in
Schedule 3(e), all consents, authorizations, orders, filings and registrations
which the Company is required to obtain pursuant to the preceding sentence shall
be obtained or effected on or prior to the Commencement Date. Except as listed
in Schedule 3(e), since January 1, 2006, the Company has not received nor
delivered any notices or correspondence from or to the Principal Market. The
Principal Market has not commenced any delisting proceedings against the
Company.

       (f)    SEC Documents; Financial Statements. Except as disclosed in
Schedule 3(f), since January 1, 2006,, the Company has timely filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the 1934 Act (all of the
foregoing filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein being hereinafter referred to as the "SEC Documents"). As of
their respective dates (except as they have been correctly amended), the SEC
Documents complied in all material respects with the requirements of the 1934
Act and the rules and regulations of the SEC promulgated thereunder applicable
to the SEC Documents, and none of the SEC Documents, at the time they were filed
with the SEC (except as they may have been properly amended), contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. As of
their respective dates (except as they have been properly amended), the
financial statements of the Company included in the SEC Documents complied as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes thereto or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as listed in Schedule 3(f), the Company has received no
notices or correspondence from the SEC since January 1, 2006. The SEC has not
commenced any enforcement proceedings against the Company or any of its
subsidiaries.

       (g)    Absence of Certain Changes. Except as disclosed in Schedule 3(g),
since January 1, 2007, there has been no material adverse change in the
business, properties, operations, financial condition or results of operations
of the Company or its Subsidiaries. The Company has not taken any steps, and
does not currently expect to take any steps, to seek protection pursuant to any
Bankruptcy Law nor does the Company or any of its Subsidiaries have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy or insolvency proceedings. The Company is financially solvent and is
generally able to pay its debts as they become due.

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       (h)    Absence of Litigation. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the
Company or any of its Subsidiaries, threatened against or affecting the Company,
the Common Stock or any of the Company's Subsidiaries or any of the Company's or
the Company's Subsidiaries' officers or directors in their capacities as such,
which could reasonably be expected to have a Material Adverse Effect. A
description of each action, suit, proceeding, inquiry or investigation before or
by any court, public board, government agency, self-regulatory organization or
body which, as of the date of this Agreement, is pending or threatened in
writing against or affecting the Company, the Common Stock or any of the
Company's Subsidiaries or any of the Company's or the Company's Subsidiaries'
officers or directors in their capacities as such, is set forth in Schedule
3(h).

       (i)    Acknowledgment Regarding Buyer's Status. The Company acknowledges
and agrees that the Buyer is acting solely in the capacity of arm's length
purchaser with respect to the Transaction Documents and the transactions
contemplated hereby and thereby. The Company further acknowledges that the Buyer
is not acting as a financial advisor or fiduciary of the Company (or in any
similar capacity) with respect to the Transaction Documents and the transactions
contemplated hereby and thereby and any advice given by the Buyer or any of its
representatives or agents in connection with the Transaction Documents and the
transactions contemplated hereby and thereby is merely incidental to the Buyer's
purchase of the Securities. The Company further represents to the Buyer that the
Company's decision to enter into the Transaction Documents has been based solely
on the independent evaluation by the Company and its representatives and
advisors.

       (j)    No General Solicitation. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the 1933 Act) in connection with the offer or sale of the
Securities.

       (k)    Intellectual Property Rights. The Company and its Subsidiaries own
or possess adequate rights or licenses to use all material trademarks, trade
names, service marks, service mark registrations, service names, patents, patent
rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted. Except as set forth on Schedule 3(k), none of the
Company's material trademarks, trade names, service marks, service mark
registrations, service names, patents, patent rights, copyrights, inventions,
licenses, approvals, government authorizations, trade secrets or other
intellectual property rights have expired or terminated, or, by the terms and
conditions thereof, could expire or terminate within two years from the date of
this Agreement. The Company and its Subsidiaries do not have any knowledge of
any infringement by the Company or its Subsidiaries of any material trademark,
trade name rights, patents, patent rights, copyrights, inventions, licenses,
service names, service marks, service mark registrations, trade secret or other
similar rights of others, or of any such development of similar or identical
trade secrets or technical information by others and, except as set forth on
Schedule 3(k), there is no claim, action or proceeding being made or brought
against, or to the Company's knowledge, being threatened against, the Company or
its Subsidiaries regarding trademark, trade name, patents, patent rights,
invention, copyright, license, service names, service marks, service mark
registrations, trade secret or other infringement, which could reasonably be
expected to have a Material Adverse Effect.

       (l)    Environmental Laws. The Company and its Subsidiaries (i) are in
compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where, in each of the
three foregoing clauses, the failure to so comply could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

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       (m)    Title. The Company and its Subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the Company
and its Subsidiaries, in each case free and clear of all liens, encumbrances and
defects except such as are described in Schedule 3(m) or such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and any of its
Subsidiaries. Any real property and facilities held under lease by the Company
and any of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and its Subsidiaries.

       (n)    Insurance. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for and neither the Company nor any such
Subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company
and its Subsidiaries, taken as a whole.

       (o)    Regulatory Permits. The Company and its Subsidiaries possess all
material certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, and neither the Company nor any such Subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit.

       (p)    Tax Status. The Company and each of its Subsidiaries has made or
filed all federal and state income and all other material tax returns, reports
and declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.

       (q)    Transactions With Affiliates. Except as set forth on Schedule 3(q)
and other than the grant or exercise of stock options disclosed on Schedule
3(c), none of the officers, directors, or employees of the Company is presently
a party to any transaction with the Company or any of its Subsidiaries (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any officer, director, or any such employee has an interest or is an
officer, director, trustee or partner.

                                       9
<PAGE>

       (r)    Application of Takeover Protections. The Company and its board of
directors have taken or will take prior to the Commencement Date all necessary
action, if any, in order to render inapplicable any control share acquisition,
business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the Certificate of
Incorporation or the laws of the state of its incorporation which is or could
become applicable to the Buyer as a result of the transactions contemplated by
this Agreement, including, without limitation, the Company's issuance of the
Securities and the Buyer's ownership of the Securities.

       (s)    Foreign Corrupt Practices. Neither the Company, nor any of its
Subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any of its Subsidiaries has, in the course of its
actions for, or on behalf of, the Company, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or made any unlawful bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.

       4.     COVENANTS.

       (a)    Filing of Form 8-K and Registration Statement. The Company agrees
that it shall, within the time required under the 1934 Act file a Report on Form
8-K disclosing this Agreement and the transaction contemplated hereby. The
Company shall also file within ten (10) Business Days from the date hereof a new
registration statement covering only the sale of the Commitment Shares and
7,333,333 Purchase Shares (which includes the 1,333,333 Initial Purchase Shares)
in accordance with the terms of the Registration Rights Agreement between the
Company and the Buyer, dated as of the date hereof ("Registration Rights
Agreement"). After such registration statement is declared effective by the SEC,
the Company agrees and acknowledges that any sales by the Company to the Buyer
pursuant to this Agreement are sales of the Company's equity securities in a
transaction that is registered under the 1933 Act.

       (b)    Blue Sky. The Company shall take such action, if any, as is
reasonably necessary in order to obtain an exemption for or to qualify (i) the
initial sale of the Commitment Shares and any Purchase Shares to the Buyer under
this Agreement and (ii) any subsequent sale of the Commitment Shares and any
Purchase Shares by the Buyer, in each case, under applicable securities or "Blue
Sky" laws of the states of the United States in such states as is reasonably
requested by the Buyer from time to time, and shall provide evidence of any such
action so taken to the Buyer.

       (c)    Listing. The Company shall promptly secure the listing of all of
the Purchase Shares and Commitment Shares upon each national securities exchange
and automated quotation system, if any, upon which shares of Common Stock are
then listed (subject to official notice of issuance) and shall maintain, so long
as any other shares of Common Stock shall be so listed, such listing of all such
securities from time to time issuable under the terms of the Transaction
Documents. The Company shall maintain the Common Stock's authorization for
quotation on the Principal Market. Neither the Company nor any of its
Subsidiaries shall take any action that would be reasonably expected to result
in the delisting or suspension of the Common Stock on the Principal Market. The
Company shall promptly, and in no event later than the following Business Day,
provide to the Buyer copies of any notices it receives from the Principal Market
regarding the continued eligibility of the Common Stock for listing on such
automated quotation system or securities exchange. The Company shall pay all
fees and expenses in connection with satisfying its obligations under this
Section.

                                       10
<PAGE>

       (d)    Limitation on Short Sales and Hedging Transactions. The Buyer
agrees that beginning on the date of this Agreement and ending on the date of
termination of this Agreement as provided in Section 11(k), the Buyer and its
agents, representatives and affiliates shall not in any manner whatsoever enter
into or effect, directly or indirectly, any (i) "short sale" (as such term is
defined in Section 242.200 of Regulation SHO of the 1934 Act) of the Common
Stock or (ii) hedging transaction, which establishes a net short position with
respect to the Common Stock.

       (e)    Issuance of Commitment Shares; Limitation on Sales of Commitment
Shares. Immediately upon the execution of this Agreement, the Company shall
issue to the Buyer as consideration for the Buyer entering into this Agreement
1,050,000 shares of Common Stock (the "Commitment Shares"). The Commitment
Shares shall be issued in certificated form and (subject to Section 5 hereof)
shall bear the following restrictive legend and no other restrictive legend:

       THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
       UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
       SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
       NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF
       AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
       SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS,
       UNLESS SOLD PURSUANT TO: (1) RULE 144 UNDER THE SECURITIES ACT OF 1933,
       AS AMENDED, OR (2) AN OPINION OF HOLDER'S COUNSEL, IN A CUSTOMARY FORM,
       THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
       SECURITIES LAWS.

       The Buyer agrees that the Buyer shall not transfer or sell the Commitment
Shares until the earlier of 500 Business Days (25 Monthly Periods) from the date
hereof or the date on which this Agreement has been terminated, provided,
however, that such restrictions shall not apply: (i) in connection with any
transfers to or among affiliates (as defined in the 1934 Act), (ii) in
connection with any pledge in connection with a bona fide loan or margin
account, (iii) in the event that the Commencement does not occur on or before
July 1, 2007, due to the failure of the Company to satisfy the conditions set
forth in Section 7 or (iv) if an Event of Default has occurred, or any event
which, after notice and/or lapse of time, would become an Event of Default,
including any failure by the Company to timely issue Purchase Shares under this
Agreement. Notwithstanding the forgoing, the Buyer may transfer Commitment
Shares to a third party in order to settle a sale made by the Buyer where the
Buyer reasonably expects the Company to deliver Purchase Shares to the Buyer
under this Agreement so long as the Buyer maintains ownership of the same
overall number of shares of Common Stock by "replacing" the Commitment Shares so
transferred with Purchase Shares when the Purchase Shares are actually issued by
the Company to the Buyer.

       (g)    Due Diligence. The Buyer shall have the right, from time to time
as the Buyer may reasonably deem appropriate, to perform reasonable due
diligence on the Company during normal business hours. The Company and its
officers and employees shall provide information and reasonably cooperate with
the Buyer in connection with any reasonable request by the Buyer related to the
Buyer's due diligence of the Company, including, but not limited to, any such
request made by the Buyer in connection with (i) the filing of the registration
statement described in Section 4(a) hereof and (ii) the Commencement. Each party
hereto agrees not to disclose any Confidential Information of the other party to
any third party and shall not use the Confidential Information for any purpose

                                       11
<PAGE>

other than in connection with, or in furtherance of, the transactions
contemplated hereby. Each party hereto acknowledges that the Confidential
Information shall remain the property of the disclosing party and agrees that it
shall take all reasonable measures to protect the secrecy of any Confidential
Information disclosed by the other party.

       5.     TRANSFER AGENT INSTRUCTIONS.

       Immediately upon the execution of this Agreement, the Company shall
deliver to the Transfer Agent a letter in the form as set forth as Exhibit E
attached hereto with respect to the issuance of the Commitment Shares. On the
Commencement Date, the Company shall cause any restrictive legend on the
Commitment Shares and the Initial Purchase Shares to be removed and all of the
remaining Purchase Shares to be issued under this Agreement shall be issued
without any restrictive legend unless the Buyer expressly consents otherwise.
The Company shall issue irrevocable instructions to the Transfer Agent, and any
subsequent transfer agent, to issue Purchase Shares in the name of the Buyer for
the Purchase Shares (the "Irrevocable Transfer Agent Instructions"). The Company
warrants to the Buyer that no instruction other than the Irrevocable Transfer
Agent Instructions expressly referred to in this Agreement, will be given by the
Company to the Transfer Agent with respect to the Purchase Shares and that the
Commitment Shares and the Purchase Shares shall otherwise be freely transferable
on the books and records of the Company as and to the extent provided in this
Agreement and the Registration Rights Agreement subject to the provisions of
Section 4(e) in the case of the Commitment Shares.

       6.     CONDITIONS TO THE COMPANY'S RIGHT TO COMMENCE SALES OF SHARES OF
              COMMON STOCK UNDER THIS AGREEMENT.

       The right of the Company hereunder to commence sales of the Purchase
Shares is subject to the satisfaction of each of the following conditions on or
before the Commencement Date (the date that the Company may begin sales):

       (a)    The Buyer shall have executed each of the Transaction Documents
and delivered the same to the Company;

       (b)    A registration statement covering the sale of all of the
Commitment Shares and Purchase Shares shall have been declared effective under
the 1933 Act by the SEC and no stop order with respect to the registration
statement shall be pending or threatened by the SEC.

       7.     CONDITIONS TO THE BUYER'S OBLIGATION TO MAKE PURCHASES OF SHARES
              OF COMMON STOCK.

       The obligation of the Buyer to buy Purchase Shares under this Agreement
is subject to the satisfaction of each of the following conditions on or before
the Commencement Date (the date that the Company may begin sales) and once such
conditions have been initially satisfied, there shall not be any ongoing
obligation to satisfy such conditions after the Commencement has occurred:

       (a)    The Company shall have executed each of the Transaction Documents
and delivered the same to the Buyer;

                                       12
<PAGE>

       (b)    The Company shall have issued to the Buyer the Commitment Shares
and the Initial Purchase Shares and shall have removed the restrictive transfer
legend from the certificate representing the Commitment Shares and the Initial
Purchase Shares;

       (c)    The Common Stock shall be authorized for quotation on the
Principal Market, trading in the Common Stock shall not have been within the
last 365 days suspended by the SEC or the Principal Market and the Purchase
Shares and the Commitment Shares shall be approved for listing upon the
Principal Market;

       (d)    The Buyer shall have received the opinions of the Company's legal
counsel dated as of the Commencement Date substantially in the form of EXHIBIT A
attached hereto;

       (e)    The representations and warranties of the Company shall be true
and correct in all material respects (except to the extent that any of such
representations and warranties is already qualified as to materiality in Section
3 above, in which case, such representations and warranties shall be true and
correct without further qualification) as of the date when made and as of the
Commencement Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied with the covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by the Company at or prior to the Commencement Date. The Buyer shall have
received a certificate, executed by the CEO, President or CFO of the Company,
dated as of the Commencement Date, to the foregoing effect in the form attached
hereto as EXHIBIT B;

       (f)    The Board of Directors of the Company shall have adopted
resolutions in the form attached hereto as EXHIBIT C which shall be in full
force and effect without any amendment or supplement thereto as of the
Commencement Date;

       (g)    As of the Commencement Date, the Company shall have reserved out
of its authorized and unissued Common Stock, solely for the purpose of effecting
purchases of Purchase Shares hereunder, 7,333,333 shares of Common Stock
including the Initial Purchase Shares;

       (h)    The Irrevocable Transfer Agent Instructions, in form acceptable to
the Buyer shall have been delivered to and acknowledged in writing by the
Company and the Company's Transfer Agent;

       (i)    The Company shall have delivered to the Buyer a certificate
evidencing the incorporation and good standing of the Company in the State of
Nevada issued by the Secretary of State of the State of Nevada as of a date
within ten (10) Business Days of the Commencement Date;

       (j)    The Company shall have delivered to the Buyer a certified copy of
the Certificate of Incorporation as certified by the Secretary of State of the
State of Nevada within ten (10) Business Days of the Commencement Date;

       (k)    The Company shall have delivered to the Buyer a secretary's
certificate executed by the Secretary of the Company, dated as of the
Commencement Date, in the form attached hereto as EXHIBIT D;

       (l)    A registration statement covering the sale of all of the
Commitment Shares and Purchase Shares shall have been declared effective under
the 1933 Act by the SEC and no stop order with respect to the registration
statement shall be pending or threatened by the SEC. The Company shall have

                                       13
<PAGE>

prepared and delivered to the Buyer a final and complete form of prospectus,
dated and current as of the Commencement Date, to be used by the Buyer in
connection with any sales of any Commitment Shares or any Purchase Shares, and
to be filed by the Company one Business Day after the Commencement Date. The
Company shall have made all filings under all applicable federal and state
securities laws necessary to consummate the issuance of the Commitment Shares
and the Purchase Shares pursuant to this Agreement in compliance with such laws;

       (m)    No Event of Default has occurred, or any event which, after notice
and/or lapse of time, would become an Event of Default has occurred;

       (n)    On or prior to the Commencement Date, the Company shall take all
necessary action, if any, and such actions as reasonably requested by the Buyer,
in order to render inapplicable any control share acquisition, business
combination, shareholder rights plan or poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under the
Certificate of Incorporation or the laws of the state of its incorporation which
is or could become applicable to the Buyer as a result of the transactions
contemplated by this Agreement, including, without limitation, the Company's
issuance of the Securities and the Buyer's ownership of the Securities; and

       (o)    The Company shall have provided the Buyer with the information
requested by the Buyer in connection with its due diligence requests made prior
to, or in connection with, the Commencement, in accordance with the terms of
Section 4(g) hereof.

       8.     INDEMNIFICATION.

       In consideration of the Buyer's execution and delivery of the Transaction
Documents and acquiring the Securities hereunder and in addition to all of the
Company's other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless the Buyer and all of its
affiliates, shareholders, officers, directors, employees and direct or indirect
investors and any of the foregoing person's agents or other representatives
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "Indemnitees")
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys' fees and disbursements (the "Indemnified Liabilities"), incurred by
any Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby, or
(c) any cause of action, suit or claim brought or made against such Indemnitee
and arising out of or resulting from the execution, delivery, performance or
enforcement of the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, other than with respect to Indemnified
Liabilities which directly and primarily result from the gross negligence or
willful misconduct of the Indemnitee. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law.

                                       14
<PAGE>

       9.     EVENTS OF DEFAULT.

       An "Event of Default" shall be deemed to have occurred at any time as any
of the following events occurs:

       (a)    while any registration statement is required to be maintained
effective pursuant to the terms of the Registration Rights Agreement, the
effectiveness of such registration statement lapses for any reason (including,
without limitation, the issuance of a stop order) or is unavailable to the Buyer
for sale of all of the Registrable Securities (as defined in the Registration
Rights Agreement) in accordance with the terms of the Registration Rights
Agreement, and such lapse or unavailability continues for a period of five (5)
consecutive Business Days or for more than an aggregate of twenty (20) Business
Days in any 365-day period;

       (b)    the suspension from trading or failure of the Common Stock to be
listed on the Principal Market for a period of three (3) consecutive Business
Days;

       (c)    the delisting of the Company's Common Stock from the Principal
Market, provided, however, that the Common Stock is not immediately thereafter
trading on the New York Stock Exchange, the Nasdaq Global Market, the Nasdaq
Capital Market, or the American Stock Exchange;

       (d)    the failure for any reason by the Transfer Agent to issue Purchase
Shares to the Buyer within five (5) Business Days after the applicable Purchase
Date which the Buyer is entitled to receive;

       (e)    the Company breaches any representation, warranty, covenant or
other term or condition under any Transaction Document if such breach could have
a Material Adverse Effect and except, in the case of a breach of a covenant
which is reasonably curable, only if such breach continues for a period of at
least five (5) Business Days;

       (f)    if any Person commences a proceeding against the Company pursuant
to or within the meaning of any Bankruptcy Law ;

       (g)    if the Company pursuant to or within the meaning of any Bankruptcy
Law; (A) commences a voluntary case, (B) consents to the entry of an order for
relief against it in an involuntary case, (C) consents to the appointment of a
Custodian of it or for all or substantially all of its property, (D) makes a
general assignment for the benefit of its creditors, (E) becomes insolvent, or
(F) is generally unable to pay its debts as the same become due; or

       (h)    a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that (A) is for relief against the Company in an involuntary
case, (B) appoints a Custodian of the Company or for all or substantially all of
its property, or (C) orders the liquidation of the Company or any Subsidiary.

In addition to any other rights and remedies under applicable law and this
Agreement, including the Buyer termination rights under Section 11(k) hereof, so
long as an Event of Default has occurred and is continuing, or if any event
which, after notice and/or lapse of time, would become an Event of Default, has
occurred and is continuing, or so long as the Purchase Price is below the
Purchase Price Floor, the Buyer shall not be obligated to purchase any shares of
Common Stock under this Agreement. If pursuant to or within the meaning of any
Bankruptcy Law, the Company commences a voluntary case or any Person commences a
proceeding against the Company, a Custodian is appointed for the Company or for
all or substantially all of its property, or the Company makes a general
assignment for the benefit of its creditors, (any of which would be an Event of

                                       15
<PAGE>

Default as described in Sections 9(f), 9(g) and 9(h) hereof) this Agreement
shall automatically terminate without any liability or payment to the Company
without further action or notice by any Person. No such termination of this
Agreement under Section 11(k)(i) shall affect the Company's or the Buyer's
obligations under this Agreement with respect to pending purchases and the
Company and the Buyer shall complete their respective obligations with respect
to any pending purchases under this Agreement.

       10.    CERTAIN DEFINED TERMS.

       For purposes of this Agreement, the following terms shall have the
following meanings:

       (a)    "1933 Act" means the Securities Act of 1933, as amended.

       (b)    "Available Amount" means initially Eight Million Four Hundred
Thousand Dollars ($8,400,000.00) in the aggregate which amount shall be reduced
by the Purchase Amount each time the Buyer purchases shares of Common Stock
pursuant to Section 1 hereof.

       (c)    "Bankruptcy Law" means Title 11, U.S. Code, or any similar federal
or state law for the relief of debtors.

       (d)    "Base Purchase Notice" shall mean an irrevocable written notice
from the Company to the Buyer directing the Buyer to buy up to the Base Purchase
Amount in Purchase Shares as specified by the Company therein at the applicable
Purchase Price on the Purchase Date.

       (e)    "Block Purchase Amount" shall mean such Block Purchase Amount as
specified by the Company in a Block Purchase Notice subject to Section 1(b)
hereof.

       (f)    "Block Purchase Notice" shall mean an irrevocable written notice
from the Company to the Buyer directing the Buyer to buy the Block Purchase
Amount in Purchase Shares as specified by the Company therein at the Block
Purchase Price as of the Purchase Date subject to Section 1 hereof.

       (d)    "Business Day" means any day on which the Principal Market is open
for trading including any day on which the Principal Market is open for trading
for a period of time less than the customary time.

       (e)    "Closing Sale Price" means, for any security as of any date, the
last closing trade price for such security on the Principal Market as reported
by the Principal Market, or, if the Principal Market is not the principal
securities exchange or trading market for such security, the last closing trade
price of such security on the principal securities exchange or trading market
where such security is listed or traded as reported by the Principal Market.

       (f)    "Confidential Information" means any information disclosed by
either party to the other party, either directly or indirectly, in writing,
orally or by inspection of tangible objects (including, without limitation,
documents, prototypes, samples, plant and equipment), which is designated as
"Confidential," "Proprietary" or some similar designation. Information
communicated orally shall be considered Confidential Information if such
information is confirmed in writing as being Confidential Information within ten
(10) business days after the initial disclosure. Confidential Information may
also include information disclosed to a disclosing party by third parties.

                                       16
<PAGE>

Confidential Information shall not, however, include any information which (i)
was publicly known and made generally available in the public domain prior to
the time of disclosure by the disclosing party; (ii) becomes publicly known and
made generally available after disclosure by the disclosing party to the
receiving party through no action or inaction of the receiving party; (iii) is
already in the possession of the receiving party at the time of disclosure by
the disclosing party as shown by the receiving party's files and records
immediately prior to the time of disclosure; (iv) is obtained by the receiving
party from a third party without a breach of such third party's obligations of
confidentiality; (v) is independently developed by the receiving party without
use of or reference to the disclosing party's Confidential Information, as shown
by documents and other competent evidence in the receiving party's possession;
or (vi) is required by law to be disclosed by the receiving party, provided that
the receiving party gives the disclosing party prompt written notice of such
requirement prior to such disclosure and assistance in obtaining an order
protecting the information from public disclosure.

       (g)    "Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.

       (h)    "Maturity Date" means the date that is 500 Business Days (25
Monthly Periods) from the Commencement Date.

       (i)    "Monthly Period" means each successive 20 Business Day period
commencing with the Commencement Date.

       (j)    "Person" means an individual or entity including any limited
liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.

       (k)    "Principal Market" means the Nasdaq OTC Bulletin Board; provided
however, that in the event the Company's Common Stock is ever listed or traded
on the Nasdaq Global Market, the Nasdaq Capital Market, the New York Stock
Exchange or the American Stock Exchange, than the "Principal Market" shall mean
such other market or exchange on which the Company's Common Stock is then listed
or traded.

       (l)    "Purchase Amount" means, with respect to any particular purchase
made hereunder, the portion of the Available Amount to be purchased by the Buyer
pursuant to Section 1 hereof as set forth in a valid Base Purchase Notice or a
valid Block Purchase Notice which the Company delivers to the Buyer.

       (m)    "Purchase Date" means with respect to any particular purchase made
hereunder, the Business Day after receipt by the Buyer of a valid Base Purchase
Notice or a valid Block Purchase Notice that the Buyer is to buy Purchase Shares
pursuant to Section 1 hereof.

       (n)    "Purchase Price" means the lower of the (A) the lowest Sale Price
of the Common Stock on the Purchase Date and (B) the arithmetic average of the
three (3) lowest Closing Sale Prices for the Common Stock during the twelve (12)
consecutive Business Days ending on the Business Day immediately preceding such
Purchase Date (to be appropriately adjusted for any reorganization,
recapitalization, non-cash dividend, stock split or other similar transaction).

       (o)    "Sale Price" means, any trade price for the shares of Common Stock
on the Principal Market as reported by the Principal Market.

       (q)    "SEC" means the United States Securities and Exchange Commission.

                                       17
<PAGE>

       (r)    "Transfer Agent" means the transfer agent of the Company as set
forth in Section 11(f) hereof or such other person who is then serving as the
transfer agent for the Company in respect of the Common Stock.

       11.    MISCELLANEOUS.

       (a)    Governing Law; Jurisdiction; Jury Trial. The corporate laws of the
State of Nevada shall govern all issues concerning the relative rights of the
Company and its shareholders. All other questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the other
Transaction Documents shall be governed by the internal laws of the State of
Illinois, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Illinois or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of Illinois. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of Chicago, for
the adjudication of any dispute hereunder or under the other Transaction
Documents or in connection herewith or therewith, or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the
address for such 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 manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

       (b)    Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party; provided that a facsimile signature
shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original, not
a facsimile signature.

       (c)    Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.

       (d)    Severability. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement in
that jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.

       (e)    Entire Agreement. With the exception of the Mutual Nondisclosure
Agreement between the parties dated as of March 13, 2007, this Agreement
supersedes all other prior oral or written agreements between the Buyer, the
Company, their affiliates and persons acting on their behalf with respect to the
matters discussed herein, and this Agreement, the other Transaction Documents
and the instruments referenced herein contain the entire understanding of the
parties with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Buyer

                                       18
<PAGE>

makes any representation, warranty, covenant or undertaking with respect to such
matters. The Company acknowledges and agrees that is has not relied on, in any
manner whatsoever, any representations or statements, written or oral, other
than as expressly set forth in this Agreement.

       (f)    Notices. Any notices, consents or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (i) upon receipt when delivered
personally; (ii) upon receipt when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one Business Day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications shall be:

       If to the Company:
              Aethlon Medical, Inc.
              3030 Bunker Hill Street
              Suite 4000
              San Diego, CA 92109
              Telephone:    858-459-7800
              Facsimile:    858-332-1739
              Attention:    Chief Executive Officer

       With a copy to:
              Richardson & Patel, LLP
              10900 Wilshire Blvd., Suite 500
              Los Angeles, CA 90404
              Telephone:    310-208-1182
              Facsimile:    310-208-1154
              Attention:    Nimish Patel, Esq.

       If to the Buyer:
              Fusion Capital Fund II, LLC
              222 Merchandise Mart Plaza, Suite 9-112
              Chicago, IL 60654
              Telephone:    312-644-6644
              Facsimile:    312-644-6244
              Attention:    Steven G. Martin

       If to the Transfer Agent:
              Computershare Trust Company
              350 Indiana Street, #800
              Golden, CO 80401
              Telephone:    (303) 262-0600 ext. 4761
              Facsimile:    (303) 262-0700
              Attention:    Sue Barron

or at such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party three (3) Business Days prior to the effectiveness of such
change. Written confirmation of receipt (A) given by the recipient of such
notice, consent or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, and
recipient facsimile number or (C) provided by a nationally recognized overnight

                                       19
<PAGE>

delivery service, shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.

       (g)    Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns.
The Company shall not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Buyer, including by merger or
consolidation. The Buyer may not assign its rights or obligations under this
Agreement.

       (h)    No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

       (i)    Publicity. The Buyer shall have the right to approve before
issuance any press release, SEC filing or any other public disclosure made by or
on behalf of the Company whatsoever with respect to, in any manner, the Buyer,
its purchases hereunder or any aspect of this Agreement or the transactions
contemplated hereby; provided, however, that the Company shall be entitled,
without the prior approval of the Buyer, to make any press release or other
public disclosure (including any filings with the SEC) with respect to such
transactions as is required by applicable law and regulations so long as the
Company and its counsel consult with the Buyer in connection with any such press
release or other public disclosure at least two (2) Business Days prior to its
release. The Buyer must be provided with a copy thereof at least two (2)
Business Days prior to any release or use by the Company thereof. The Company
agrees and acknowledges that its failure to fully comply with this provision
constitutes a material adverse effect on its ability to perform its obligations
under this Agreement.

       (j)    Further Assurances. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

       (k)    Termination. This Agreement may be terminated only as follows:

              (i)    By the Buyer any time an Event of Default exists without
       any liability or payment to the Company. However, if pursuant to or
       within the meaning of any Bankruptcy Law, the Company commences a
       voluntary case or any Person commences a proceeding against the Company,
       a Custodian is appointed for the Company or for all or substantially all
       of its property, or the Company makes a general assignment for the
       benefit of its creditors, (any of which would be an Event of Default as
       described in Sections 9(f), 9(g) and 9(h) hereof) this Agreement shall
       automatically terminate without any liability or payment to the Company
       without further action or notice by any Person. No such termination of
       this Agreement under this Section 11(k)(i) shall affect the Company's or
       the Buyer's obligations under this Agreement with respect to pending
       purchases and the Company and the Buyer shall complete their respective
       obligations with respect to any pending purchases under this Agreement.

              (ii)   In the event that the Commencement shall not have occurred,
       the Company shall have the option to terminate this Agreement for any
       reason or for no reason without liability of any party to any other
       party.

                                       20
<PAGE>

              (iii)  In the event that the Commencement shall not have occurred
       on or before July 1, 2007, due to the failure to satisfy the conditions
       set forth in Sections 6 and 7 above with respect to the Commencement, the
       nonbreaching party shall have the option to terminate this Agreement at
       the close of business on such date or thereafter without liability of any
       party to any other party.

              (iv)   If by the Maturity Date for any reason or for no reason the
       full Available Amount under this Agreement has not been purchased as
       provided for in Section 1 of this Agreement, by the Buyer without any
       liability or payment to the Company.

              (v)    At any time after the Commencement Date, the Company shall
       have the option to terminate this Agreement for any reason or for no
       reason by delivering notice (a "Company Termination Notice") to the Buyer
       electing to terminate this Agreement without any liability or payment to
       the Buyer. The Company Termination Notice shall not be effective until
       one (1) Business Day after it has been received by the Buyer.

              (vi)   This Agreement shall automatically terminate on the date
       that the Company sells and the Buyer purchases the full Available Amount
       as provided herein, without any action or notice on the part of any
       party.

Except as set forth in Sections 11(k)(i) (in respect of an Event of Default
under Sections 9(f), 9(g) and 9(h)) and 11(k)(vi), any termination of this
Agreement pursuant to this Section 11(k) shall be effected by written notice
from the Company to the Buyer, or the Buyer to the Company, as the case may be,
setting forth the basis for the termination hereof. The representations and
warranties of the Company and the Buyer contained in Sections 2, 3 and 5 hereof,
the indemnification provisions set forth in Section 8 hereof and the agreements
and covenants set forth in Section 11, shall survive the Commencement and any
termination of this Agreement. No termination of this Agreement shall affect the
Company's or the Buyer's rights or obligations (i) under the Registration Rights
Agreement which shall survive any such termination or (ii) under this Agreement
with respect to pending purchases and the Company and the Buyer shall complete
their respective obligations with respect to any pending purchases under this
Agreement.

       (l)    No Financial Advisor, Placement Agent, Broker or Finder. The
Company represents and warrants to the Buyer that it has not engaged any
financial advisor, placement agent, broker or finder in connection with the
transactions contemplated hereby. The Buyer represents and warrants to the
Company that it has not engaged any financial advisor, placement agent, broker
or finder in connection with the transactions contemplated hereby. The Company
shall be responsible for the payment of any fees or commissions, if any, of any
financial advisor, placement agent, broker or finder relating to or arising out
of the transactions contemplated hereby. The Company shall pay, and hold the
Buyer harmless against, any liability, loss or expense (including, without
limitation, attorneys' fees and out of pocket expenses) arising in connection
with any such claim.

       (m)    No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.

       (n)    Remedies, Other Obligations, Breaches and Injunctive Relief. The
Buyer's remedies provided in this Agreement shall be cumulative and in addition
to all other remedies available to the Buyer under this Agreement, at law or in
equity (including a decree of specific performance and/or other injunctive
relief), no remedy of the Buyer contained herein shall be deemed a waiver of
compliance with the provisions giving rise to such remedy and nothing herein
shall limit the Buyer's right to pursue actual damages for any failure by the

                                       21
<PAGE>

Company to comply with the terms of this Agreement. The Company acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to
the Buyer and that the remedy at law for any such breach may be inadequate. The
Company therefore agrees that, in the event of any such breach or threatened
breach, the Buyer shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, without the necessity of
showing economic loss and without any bond or other security being required.

       (o)    Enforcement Costs. If: (i) this Agreement is placed by the Buyer
in the hands of an attorney for enforcement or is enforced by the Buyer through
any legal proceeding; or (ii) an attorney is retained to represent the Buyer in
any bankruptcy, reorganization, receivership or other proceedings affecting
creditors' rights and involving a claim under this Agreement; or (iii) an
attorney is retained to represent the Buyer in any other proceedings whatsoever
in connection with this Agreement, then the Company shall pay to the Buyer, as
incurred by the Buyer, all reasonable costs and expenses including attorneys'
fees incurred in connection therewith, in addition to all other amounts due
hereunder.

       (p)    Failure or Indulgence Not Waiver. No failure or delay in the
exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege.

                                    * * * * *

                                       22
<PAGE>

       IN WITNESS WHEREOF, the Buyer and the Company have caused this Common
Stock Purchase Agreement to be duly executed as of the date first written above.

                                               THE COMPANY:
                                               -----------

                                               AETHLON MEDICAL, INC.

                                               By: /s/ James A. Joyce
                                                  ------------------------------
                                               Name: James A. Joyce
                                               Title: Chief Executive Officer

                                               BUYER:
                                               -----

                                               FUSION CAPITAL FUND II, LLC
                                               BY: FUSION CAPITAL PARTNERS, LLC
                                               BY: ROCKLEDGE CAPITAL CORPORATION

                                               By: /s/ Joshua B. Scheinfeld
                                                  ------------------------------
                                               Name: Joshua B. Scheinfeld
                                               Title: President

                                       23
<PAGE>

                                    SCHEDULES
                                    ---------

Schedule 3(a)           Subsidiaries
Schedule 3(c)           Capitalization
Schedule 3(e)           Conflicts
Schedule 3(f)           1934 Act Filings
Schedule 3(g)           Material Changes
Schedule 3(h)           Litigation
Schedule 3(k)           Intellectual Property
Schedule 3(m)           Liens
Schedule 3(q)           Certain Transactions

                                    EXHIBITS
                                    --------

Exhibit A               Form of Company Counsel Opinion
Exhibit B               Form of Officer's Certificate
Exhibit C               Form of Resolutions of Board of Directors of the Company
Exhibit D               Form of Secretary's Certificate
Exhibit E               Form of Letter to Transfer Agent

                                       24
<PAGE>

                              DISCLOSURE SCHEDULES
                              --------------------

Schedule 3(a) - Subsidiaries:
The company has four wholly-owned dormant subsidiaries; Aethlon, Inc.; Hemex,
Inc.; Syngen Research, Inc. and Cell Activation, Inc.

Schedule 3(c) - Capitalization:

Outstanding debt:

                                       25
<PAGE>

Warrants:

                                       26
<PAGE>

Stock Options:

Agreements to register the sale of securities:

Under the terms of the Company's 10% Series A Convertible Notes, associated
Registration Rights Agreements and Allonges (dated March 5, 2007; signed by the
Company but, yet to be executed by the Noteholders) the Company is obligated to
amend/or file a new registration statement with the SEC for the shares
underlying the original SB-2 filing (January 2006) and Allonge shares by March
31, 2007.

Schedule 3(e) - No Conflicts:
None

Schedule 3(f) - 1934 Act Filings:
On August 1, 2006, the Company received a letter from the SEC questioning the
treatment of its accounting for warrants issued with our 10% Series A
Convertible Notes under EITF 00-19 within the Company's Form 10-KSB filed for
the fiscal year ending March 31, 2006. Management and our auditors immediately
responded and on August 29, 2006 we were notified by the Commission that their
review was complete, and that we apparently had properly valued and disclosed
the warrant obligation.

Schedule 3(g) - Absence of Certain Changes:
None

Schedule 3(h) - Litigation:
None

                                       27
<PAGE>

Schedule 3(k) - Intellectual Property Rights:
No material intellectual property rights have expired over the prior two years,
nor are any slated to run to term within the next two years.

Schedule 3(m) - Title:
None

Schedule 3(q) - Transactions with Affiliates:
None

                                       28
<PAGE>

                                    EXHIBIT A
                                    ---------

                         FORM OF COMPANY COUNSEL OPINION

       Capitalized terms used herein but not defined herein, have the meaning
set forth in the Common Stock Purchase Agreement. Based on the foregoing, and
subject to the assumptions and qualifications set forth herein, we are of the
opinion that:

       1.     The Company is a corporation existing and in good standing under
the laws of the State of Nevada. The Company is qualified to do business as a
foreign corporation and is in good standing in the States of California.

       2.     The Company has the corporate power to execute and deliver, and
perform its obligations under, each Transaction Document to which it is a party.
The Company has the corporate power to conduct its business as, to the best of
our knowledge, it is now conducted, and to own and use the properties owned and
used by it.

       3.     The execution, delivery and performance by the Company of the
Transaction Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of the Company. The execution and
delivery of the Transaction Documents by the Company, the performance of the
obligations of the Company thereunder and the consummation by it of the
transactions contemplated therein have been duly authorized and approved by the
Company's Board of Directors and no further consent, approval or authorization
of the Company, its Board of Directors or its stockholders is required. The
Transaction Documents to which the Company is a party have been duly executed
and delivered by the Company and are the valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms except
as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, liquidation or similar laws relating to, or
affecting creditor's rights and remedies.

       4.     The execution, delivery and performance by the Company of the
Transaction Documents, the consummation by the Company of the transactions
contemplated thereby including the offering, sale and issuance of the Commitment
Shares, and the Purchase Shares in accordance with the terms and conditions of
the Common Stock Purchase Agreement, and fulfillment and compliance with terms
of the Transaction Documents, does not and shall not: (i) conflict with,
constitute a breach of or default (or an event which, with the giving of notice
or lapse of time or both, constitutes or could constitute a breach or a
default), under (a) the Certificate of Incorporation or the Bylaws of the
Company, (b) any material agreement, note, lease, mortgage, deed or other
material instrument to which to our knowledge the Company is a party or by which
the Company or any of its assets are bound, (ii) result in any violation of any
statute, law, rule or regulation applicable to the Company, or (iii) to our
knowledge, violate any order, writ, injunction or decree applicable to the
Company or any of its subsidiaries.

       5.     The issuance of the Purchase Shares and Commitment Shares pursuant
to the terms and conditions of the Transaction Documents has been duly
authorized and the Commitment Shares and the Initial Purchase Shares have been
validly issued, fully paid and non-assessable, to our knowledge, free of all
taxes, liens, charges, restrictions, rights of first refusal and preemptive
rights. 6,000,000 shares of Common Stock have been properly reserved for
issuance under the Common Stock Purchase Agreement. When issued and paid for in
accordance with the Common Stock Purchase Agreement, the Purchase Shares shall
be validly issued, fully paid and non-assessable, to our knowledge, free of all
taxes, liens, charges, restrictions, rights of first refusal and preemptive
rights. To our knowledge, the execution and delivery of the Registration Rights
Agreement do not, and the performance by the Company of its obligations
thereunder shall not, give rise to any rights of any other person for the
registration under the 1933 Act of any shares of Common Stock or other
securities of the Company which have not been waived.

                                       29
<PAGE>

       6.     As of the date hereof, the authorized capital stock of the Company
consists of _______ shares of common stock, par value $______ per share, of
which to our knowledge __________ shares are issued and outstanding. Except as
set forth on Schedule 3(c) of the Common Stock Purchase Agreement, to our
knowledge, there are no outstanding shares of capital stock or other securities
convertible into or exchangeable or exercisable for shares of the capital stock
of the Company.

       7.     Assuming the accuracy of the representations and your compliance
with the covenants made by you in the Transaction Documents, the offering, sale
and issuance of the Commitment Shares and the Initial Purchase Shares to you
pursuant to the Transaction Documents is exempt from registration under the 1933
Act and the securities laws and regulations of the State of California.

       8.     Other than that which has been obtained and completed prior to the
date hereof, no authorization, approval, consent, filing or other order of any
federal or state governmental body, regulatory agency, or stock exchange or
market, or any court, or, to our knowledge, any third party is required to be
obtained by the Company to enter into and perform its obligations under the
Transaction Documents or for the Company to issue and sell the Purchase Shares
as contemplated by the Transaction Documents.

       9.     The Common Stock is registered pursuant to Section 12(g) of the
1934 Act. To our knowledge, since, January 1, 2006, the Company has been in
compliance with the reporting requirements of the 1934 Act applicable to it. To
our knowledge, since January 1, 2006, the Company has not received any written
notice from the Principal Market stating that the Company has not been in
compliance with any of the rules and regulations (including the requirements for
continued listing) of the Principal Market.

       We further advise you that to our knowledge, except as disclosed on
Schedule 3(h) in the Common Stock Purchase Agreement, there is no action, suit,
proceeding, inquiry or investigation before or by any court, public board or
body, any governmental agency, any stock exchange or market, or self-regulatory
organization, which has been threatened in writing or which is currently pending
against the Company, any of its subsidiaries, any officers or directors of the
Company or any of its subsidiaries or any of the properties of the Company or
any of its subsidiaries.

       In addition, we have participated in the preparation of the Registration
Statement (SEC File #________) covering the sale of the Purchase Shares, the
Commitment Shares including the prospectus dated ____________, contained therein
and in conferences with officers and other representatives of the Company
(including the Company's independent auditors) during which the contents of the
Registration Statement and related matters were discussed and reviewed and,
although we are not passing upon and do not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement, on the basis of the information that was developed in
the course of the performance of the services referred to above, considered in
the light of our understanding of the applicable law, nothing came to our
attention that caused us to believe that the Registration Statement (other than
the financial statements and schedules and the other financial and statistical
data included therein, as to which we express no belief), as of their dates,
contained any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.

                                       30
<PAGE>

                                    EXHIBIT B
                                    ---------

                          FORM OF OFFICER'S CERTIFICATE

       This Officer's Certificate ("CERTIFICATE") is being delivered pursuant to
Section 7(e) of that certain Common Stock Purchase Agreement dated as of March
21, 2007, ("COMMON STOCK PURCHASE AGREEMENT"), by and between AETHLON MEDICAL,
INC., a Nevada corporation (the "COMPANY"), and FUSION CAPITAL FUND II, LLC (the
"BUYER"). Terms used herein and not otherwise defined shall have the meanings
ascribed to them in the Common Stock Purchase Agreement.

       The undersigned, James W. Dorst, Chief Financial Officer of the Company,
hereby certifies as follows:

              1.     I am the Chief financial Officer of the Company and make
       the statements contained in this Certificate;

              2.     The representations and warranties of the Company are true
       and correct in all material respects (except to the extent that any of
       such representations and warranties is already qualified as to
       materiality in Section 3 of the Common Stock Purchase Agreement, in which
       case, such representations and warranties are true and correct without
       further qualification) as of the date when made and as of the
       Commencement Date as though made at that time (except for representations
       and warranties that speak as of a specific date);

              3.     The Company has performed, satisfied and complied in all
       material respects with covenants, agreements and conditions required by
       the Transaction Documents to be performed, satisfied or complied with by
       the Company at or prior to the Commencement Date.

              4.     The Company has not taken any steps, and does not currently
       expect to take any steps, to seek protection pursuant to any Bankruptcy
       Law nor does the Company or any of its Subsidiaries have any knowledge or
       reason to believe that its creditors intend to initiate involuntary
       bankruptcy or insolvency proceedings. The Company is financially solvent
       and is generally able to pay its debts as they become due.

       IN WITNESS WHEREOF, I have hereunder signed my name on this ___ day of
___________.

                                                  /s/ James W. Dorst
                                                  ------------------------------
                                                  James W. Dorst:
                                                  Chief Financial Officer

       The undersigned as Secretary of AETHLON MEDICAL, INC., a Nevada
corporation, hereby certifies that James A. Joyce is the duly elected,
appointed, qualified and acting Secretary of Aethlon Medical, Inc. and that the
signature appearing above is his genuine signature.

                                                  /s/ James A. Joyce
                                                  ------------------------------
                                                  James A. Joyce

                                       31
<PAGE>

                                   EXHIBIT C-1
                                   -----------

                           FORM OF COMPANY RESOLUTIONS
                         FOR SIGNING PURCHASE AGREEMENT

                          UNANIMOUS WRITTEN CONSENT OF
                              AETHLON MEDICAL, INC.

       The undersigned, being all of the members of the Board of Directors of
Aethlon Medical, Inc., a Nevada corporation (the "Corporation"), acting pursuant
to the autority Granted by Section 78.315 of the Nevada General Corporation Law,
do hereby adopt the following resolutions by written consent as of March 21,
2007:

       WHEREAS, there has been presented to the Board of Directors of the
Corporation a draft of the Common Stock Purchase Agreement (the "Purchase
Agreement") by and between the Corporation and Fusion Capital Fund II, LLC
("Fusion"), providing for the purchase by Fusion of up to Eight Million Four
Hundred Thousand Dollars ($8,400,000) of the Corporation's common stock, par
value $0.001 (the "Common Stock"); and

       WHEREAS, after careful consideration of the Purchase Agreement, the
documents incident thereto and other factors deemed relevant by the Board of
Directors, the Board of Directors has determined that it is advisable and in the
best interests of the Corporation to engage in the transactions contemplated by
the Purchase Agreement, including, but not limited to, the issuance of 1,050,000
shares of Common Stock to Fusion as a commitment fee (the "Commitment Shares")
and the sale of shares of Common Stock to Fusion up to the available amount
under the Purchase Agreement (the "Purchase Shares").

                              TRANSACTION DOCUMENTS

       NOW, THEREFORE, BE IT RESOLVED, that the transactions described in the
Purchase Agreement are hereby approved and James A. Joyce and James W. Dorst
(the "Authorized Officers") are severally authorized to execute and deliver the
Purchase Agreement, and any other agreements or documents contemplated thereby
including, without limitation, a registration rights agreement (the
"Registration Rights Agreement") providing for the registration of the shares of
the Company's Common Stock issuable in respect of the Purchase Agreement on
behalf of the Corporation, with such amendments, changes, additions and
deletions as the Authorized Officers may deem to be appropriate and approve on
behalf of, the Corporation, such approval to be conclusively evidenced by the
signature of an Authorized Officer thereon; and

       FURTHER RESOLVED, that the terms and provisions of the Registration
Rights Agreement by and among the Corporation and Fusion are hereby approved and
the Authorized Officers are authorized to execute and deliver the Registration
Rights Agreement (pursuant to the terms of the Purchase Agreement), with such
amendments, changes, additions and deletions as the Authorized Officer may deem
appropriate and approve on behalf of, the Corporation, such approval to be
conclusively evidenced by the signature of an Authorized Officer thereon; and

       FURTHER RESOLVED, that the terms and provisions of the Form of Transfer
Agent Instructions (the "Instructions") are hereby approved and the Authorized
Officers are authorized to execute and deliver the Instructions (pursuant to the
terms of the Purchase Agreement), with such amendments, changes, additions and
deletions as the Authorized Officers may deem appropriate and approve on behalf
of, the Corporation, such approval to be conclusively evidenced by the signature
of an Authorized Officer thereon; and

                                       32
<PAGE>

                         EXECUTION OF PURCHASE AGREEMENT

       FURTHER RESOLVED, that the Corporation be and it hereby is authorized to
execute the Purchase Agreement providing for the purchase of common stock of the
Corporation having an aggregate value of up to $8,400,000.00; and

                            ISSUANCE OF COMMON STOCK

       FURTHER RESOLVED, that the Corporation is hereby authorized to issue
1,050,000 shares of Common Stock to Fusion Capital Fund II, LLC as Commitment
Shares and that upon issuance of the Commitment Shares pursuant to the Purchase
Agreement, the Commitment Shares shall be duly authorized, validly issued, fully
paid and nonassessable with no personal liability attaching to the ownership
thereof; and

       FURTHER RESOLVED, that the Corporation is hereby authorized to issue
shares of Common Stock upon the purchase of Purchase Shares up to the available
amount under the Purchase Agreement in accordance with the terms of the Purchase
Agreement and that, upon issuance of the Purchase Shares pursuant to the
Purchase Agreement, the Purchase Shares will be duly authorized, validly issued,
fully paid and nonassessable with no personal liability attaching to the
ownership thereof; and

       FURTHER RESOLVED, THAT THE CORPORATION SHALL INITIALLY RESERVE 7,333,333
SHARES OF COMMON STOCK FOR ISSUANCE AS PURCHASE SHARES UNDER THE PURCHASE
AGREEMENT.

                               APPROVAL OF ACTIONS

       FURTHER RESOLVED, that, without limiting the foregoing, the Authorized
Officers are, and each of them hereby is, authorized and directed to proceed on
behalf of the Corporation and to take all such steps as deemed necessary or
appropriate, with the advice and assistance of counsel, to cause the Corporation
to consummate the agreements referred to herein and to perform its obligations
under such agreements; and

       FURTHER RESOLVED, that the Authorized Officers be, and each of them
hereby is, authorized, empowered and directed on behalf of and in the name of
the Corporation, to take or cause to be taken all such further actions and to
execute and deliver or cause to be executed and delivered all such further
agreements, amendments, documents, certificates, reports, schedules,
applications, notices, letters and undertakings and to incur and pay all such
fees and expenses as in their judgment shall be necessary, proper or desirable
to carry into effect the purpose and intent of any and all of the foregoing
resolutions, and that all actions heretofore taken by any officer or director of
the Corporation in connection with the transactions contemplated by the
agreements described herein are hereby approved, ratified and confirmed in all
respects.

                                       33
<PAGE>

       IN WITNESS WHEREOF, the Board of Directors has executed and delivered
this Consent effective as of March 21, 2007. This Written Consent may be
executed in counterparts and with facsimile signatures with the effect as if all
parties hereto had executed the same document. All counterparts shall be
construed together and shall constitute a single Written Consent.

       Dated as of March 21, 2007

                        DIRECTORS:

                                                /s/ James A. Joyce
                                                --------------------------------
                                                James A. Joyce

                                                /s/ Franklyn S. Barry, Jr.
                                                --------------------------------
                                                Franklyn S. Barry, Jr.

                                                /s/ Edward G. Broenniman
                                                --------------------------------
                                                Edward G. Broenniman

                                                /s/ Richard H. Tullis
                                                --------------------------------
                                                Richard H. Tullis

being all of the directors of AETHLON MEDICAL, INC., a Nevada corporation.

                                       34
<PAGE>

                                   EXHIBIT C-2
                                   -----------

          FORM OF COMPANY RESOLUTIONS APPROVING REGISTRATION STATEMENT

                          UNANIMOUS WRITTEN CONSENT OF
                              AETHLON MEDICAL, INC.

       The undersigned, being all of the members of the Board of Directors of
Aethlon Medical, Inc., a Nevada corporation (the "Corporation"), acting pursuant
to the authority Granted by Section 78.315 of the Nevada General Corporation
Law, do hereby adopt the following resolutions by written consent as of March
21, 2007:

       WHEREAS, there has been presented to the Board of Directors of the
Corporation Common Stock Purchase Agreement (the "Purchase Agreement") by and
among the Corporation and Fusion Capital Fund II, LLC ("Fusion"), providing for
the purchase by Fusion of up to Eight Million Four Hundred Thousand Dollars
($8,400,000) of the Corporation's common stock, par value $0.001 (the "Common
Stock"); and

       WHEREAS, after careful consideration of the Purchase Agreement, the
documents incident thereto and other factors deemed relevant by the Board of
Directors, the Board of Directors has approved the Purchase Agreement and the
transactions contemplated thereby and the Company has executed and delivered the
Purchase Agreement to Fusion; and

       WHEREAS, the management of the Corporation has prepared an initial draft
of a Registration Statement on Form SB-2 (the "Registration Statement") in order
to register the sale of the Purchase Shares and the Commitment Shares
(collectively, the "Shares"); and

       WHEREAS, the Board of Directors has determined to approve the
Registration Statement and to authorize the appropriate officers of the
Corporation to take all such actions as they may deem appropriate to effect the
offering.

       NOW, THEREFORE, BE IT RESOLVED, that the officers and directors of the
Corporation be, and each of them hereby is, authorized and directed, with the
assistance of counsel and accountants for the Corporation, to prepare, execute
and file with the Commission the Registration Statement, which Registration
Statement shall be filed substantially in the form presented to the Board of
Directors, with such changes therein as the Chief Executive Officer of the
Corporation or any Vice President of the Corporation shall deem desirable and in
the best interest of the Corporation and its shareholders (such officer's
execution thereof including such changes shall be deemed to evidence
conclusively such determination); and

       FURTHER RESOLVED, that the officers of the Corporation be, and each of
them hereby is, authorized and directed, with the assistance of counsel and
accountants for the Corporation, to prepare, execute and file with the
Commission all amendments, including post-effective amendments, and supplements
to the Registration Statement, and all certificates, exhibits, schedules,
documents and other instruments relating to the Registration Statement, as such
officers shall deem necessary or appropriate (such officer's execution and
filing thereof shall be deemed to evidence conclusively such determination); and

                                       35
<PAGE>

       FURTHER RESOLVED, that the execution of the Registration Statement and of
any amendments and supplements thereto by the officers and directors of the
Corporation be, and the same hereby is, specifically authorized either
personally or by the Authorized Officers as such officer's or director's true
and lawful attorneys-in-fact and agents; and

       FURTHER RESOLVED, that the Authorized Officers are hereby designated as
"Agent for Service" of the Corporation in connection with the Registration
Statement and the filing thereof with the Commission, and the Authorized
Officers hereby are authorized to receive communications and notices from the
Commission with respect to the Registration Statement; and

       FURTHER RESOLVED, that the officers of the Corporation be, and each of
them hereby is, authorized and directed to pay all fees, costs and expenses that
may be incurred by the Corporation in connection with the Registration
Statement; and

       FURTHER RESOLVED, that it is desirable and in the best interest of the
Corporation that the Shares be qualified or registered for sale in various
states; that the officers of the Corporation be, and each of them hereby is,
authorized to determine the states in which appropriate action shall be taken to
qualify or register for sale all or such part of the Shares as they may deem
advisable; that said officers be, and each of them hereby is, authorized to
perform on behalf of the Corporation any and all such acts as they may deem
necessary or advisable in order to comply with the applicable laws of any such
states, and in connection therewith to execute and file all requisite papers and
documents, including, but not limited to, applications, reports, surety bonds,
irrevocable consents, appointments of attorneys for service of process and
resolutions; and the execution by such officers of any such paper or document or
the doing by them of any act in connection with the foregoing matters shall
conclusively establish their authority therefor from the Corporation and the
approval and ratification by the Corporation of the papers and documents so
executed and the actions so taken; and

       FURTHER RESOLVED, that if, in any state where the securities to be
registered or qualified for sale to the public, or where the Corporation is to
be registered in connection with the public offering of the Shares, a prescribed
form of resolution or resolutions is required to be adopted by the Board of
Directors, each such resolution shall be deemed to have been and hereby is
adopted, and the Secretary is hereby authorized to certify the adoption of all
such resolutions as though such resolutions were now presented to and adopted by
the Board of Directors; and

       FURTHER RESOLVED, that the officers of the Corporation with the
assistance of counsel be, and each of them hereby is, authorized and directed to
take all necessary steps and do all other things necessary and appropriate to
effect the listing of the Shares on the OTC Bulletin Board.

                               APPROVAL OF ACTIONS

       FURTHER RESOLVED, that, without limiting the foregoing, the Authorized
Officers are, and each of them hereby is, authorized and directed to proceed on
behalf of the Corporation and to take all such steps as are deemed necessary or
appropriate, with the advice and assistance of counsel, to cause the Corporation
to take all such action referred to herein and to perform its obligations
incident to the registration, listing and sale of the Shares; and

       FURTHER RESOLVED, that the Authorized Officers be, and each of them
hereby is, authorized, empowered and directed on behalf of and in the name of
the Corporation, to take or cause to be taken all such further actions and to
execute and deliver or cause to be executed and delivered all such further
agreements, amendments, documents, certificates, reports, schedules,
applications, notices, letters and undertakings and to incur and pay all such

                                       36
<PAGE>

fees and expenses as in their judgment shall be necessary, proper or desirable
to carry into effect the purpose and intent of any and all of the foregoing
resolutions, and that all actions heretofore taken by any officer or director of
the Corporation in connection with the transactions contemplated by the
agreements described herein are hereby approved, ratified and confirmed in all
respects.

       IN WITNESS WHEREOF, the Board of Directors has executed and delivered
this Consent effective as of March 21, 2007. This Written Consent may be
executed in counterparts and with facsimile signatures with the effect as if all
parties hereto had executed the same document. All counterparts shall be
construed together and shall constitute a single Written Consent.

       Dated as of March 21, 2007

                DIRECTORS:

                                                /s/ James A. Joyce
                                                --------------------------------
                                                James A. Joyce

                                                /s/ Franklyn S. Barry, Jr.
                                                --------------------------------
                                                Franklyn S. Barry, Jr.

                                                /s/ Edward G. Broenniman
                                                --------------------------------
                                                Edward G. Broenniman

                                                /s/ Richard H. Tullis
                                                --------------------------------
                                                Richard H. Tullis

being all of the directors of AETHLON MEDICAL, INC., a Nevada corporation.

                                       37
<PAGE>

                                    EXHIBIT D
                                    ---------

                         FORM OF SECRETARY'S CERTIFICATE

       This Secretary's Certificate ("Certificate") is being delivered pursuant
to Section 7(k) of that certain Common Stock Purchase Agreement dated as of
March 21, 2007, ("Common Stock Purchase Agreement"), by and between AETHLON
MEDICAL, INC., a Nevada corporation (the "Company") and FUSION CAPITAL FUND II,
LLC (the "Buyer"), pursuant to which the Company may sell to the Buyer up to
Eight Million Four Hundred Thousand Dollars ($8,400,000) of the Company's Common
Stock, par value $0.001 per share (the "Common Stock"). Terms used herein and
not otherwise defined shall have the meanings ascribed to them in the Common
Stock Purchase Agreement.

       The undersigned, James A. Joyce, Secretary of the Company, hereby
certifies as follows:

              1.     I am the Secretary of the Company and make the statements
       contained in this Secretary's Certificate.

              2.     Attached hereto as Exhibit A and Exhibit B are true,
       correct and complete copies of the Company's bylaws ("Bylaws") and
       Certificate of Incorporation ("Articles"), in each case, as amended
       through the date hereof, and no action has been taken by the Company, its
       directors, officers or shareholders, in contemplation of the filing of
       any further amendment relating to or affecting the Bylaws or Articles.

              3.     Attached hereto as Exhibit C are true, correct and complete
       copies of the resolutions duly adopted by the Board of Directors of the
       Company on March 21, 2007, at which a quorum was present and acting
       throughout. Such resolutions have not been amended, modified or rescinded
       and remain in full force and effect and such resolutions are the only
       resolutions adopted by the Company's Board of Directors, or any committee
       thereof, or the shareholders of the Company relating to or affecting (i)
       the entering into and performance of the Common Stock Purchase Agreement,
       or the issuance, offering and sale of the Purchase Shares and the
       Commitment Shares and (ii) and the performance of the Company of its
       obligation under the Transaction Documents as contemplated therein.

              4.     As of the date hereof, the authorized, issued and reserved
       capital stock of the Company is as set forth on Exhibit D hereto.

       IN WITNESS WHEREOF, I have hereunder signed my name on this ___ day of
____________.

                                        _________________________
                                                Secretary

       The undersigned as ___________ of __________, a ________ corporation,
       hereby certifies that ____________ is the duly elected, appointed,
       qualified and acting Secretary of _________, and that the signature
       appearing above is his genuine signature.

                                        _________________________

                                       38
<PAGE>

                                    EXHIBIT E
                                    ---------

          FORM OF LETTER TO THE TRANSFER AGENT FOR THE ISSUANCE OF THE
            COMMITMENTS SHARES AT SIGNING OF THE PURCHASE AGREEMENT

                              [COMPANY LETTERHEAD]

[DATE]

[TRANSFER AGENT]
__________________
__________________
__________________

Re: Issuance of Common Shares to Fusion Capital Fund II, LLC

Dear ________,

On behalf of AETHLON MEDICAL, INC., a Nevada corporation (the "Company"), you
are hereby instructed to issue AS SOON AS POSSIBLE 1,050,000 shares of our
common stock in the name of FUSION CAPITAL FUND II, LLC. The share certificate
should be dated [DATE OF THE COMMON STOCK PURCHASE AGREEMENT]. I have included a
true and correct copy of a unanimous written consent executed by all of the
members of the Board of Directors of the Company adopting resolutions approving
the issuance of these shares. The shares should be issued subject to the
following restrictive legend and NO OTHER LEGEND WHATSOEVER:

       THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
       UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
       SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
       NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF
       AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
       SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS,
       UNLESS SOLD PURSUANT TO: (1) RULE 144 UNDER THE SECURITIES ACT OF 1933,
       AS AMENDED, OR (2) AN OPINION OF HOLDER'S COUNSEL, IN A CUSTOMARY FORM,
       THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
       SECURITIES LAWS.

The share certificate should be sent AS SOON AS POSSIBLE VIA OVERNIGHT MAIL to
the following address:

                                Fusion Capital Fund II, LLC
                                222 Merchandise Mart Plaza, Suite 9-112
                                Chicago, IL 60654
                                Attention: Steven Martin

Thank you very much for your help. Please call me at ______________ if you have
any questions or need anything further.

AETHLON MEDICAL, INC., a Nevada corporation

BY:_____________________________
         [name]
         [title]

                                       39<PAGE>

EXHIBIT 10.27

                          REGISTRATION RIGHTS AGREEMENT

      REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of March 21,
2007, by and between AETHLON MEDICAL, INC., a Nevada corporation, (the
"COMPANY"), and FUSION CAPITAL FUND II, LLC (together with it permitted assigns,
the "BUYER"). Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Common Stock Purchase
Agreement by and between the parties hereto, dated as of the date hereof (as
amended, restated, supplemented or otherwise modified from time to time, the
"PURCHASE AGREEMENT").

                                    WHEREAS:

      A.    The Company has agreed, upon the terms and subject to the conditions
of the Purchase Agreement, to issue to the Buyer (i) up to Eight Million Four
Hundred Thousand Dollars ($8,400,000) of the Company's common stock, par value
$0.001 per share (the "COMMON STOCK") (the "PURCHASE SHARES"), and (ii) such
number of shares of Common Stock as is required pursuant to Section 4(e) of the
Purchase Agreement (the "COMMITMENT SHARES"); and

      B.    To induce the Buyer to enter into the Purchase Agreement, the
Company has agreed to provide certain registration rights under the Securities
Act of 1933, as amended, and the rules and regulations thereunder, or any
similar successor statute (collectively, the "1933 ACT"), and applicable state
securities laws.

      NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Buyer hereby
agree as follows:

      1.    DEFINITIONS.

            As used in this Agreement, the following terms shall have the
following meanings:

            a.    "INVESTOR" means the Buyer, any transferee or assignee thereof
to whom a Buyer assigns its rights under this Agreement and who agrees to become
bound by the provisions of this Agreement in accordance with Section 9 and any
transferee or assignee thereof to whom a transferee or assignee assigns its
rights under this Agreement and who agrees to become bound by the provisions of
this Agreement in accordance with Section 9.

            b.    "PERSON" means any person or entity including any corporation,
a limited liability company, an association, a partnership, an organization, a
business, an individual, a governmental or political subdivision thereof or a
governmental agency.

            c.    "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing one or more registration
statements of the Company in compliance with the 1933 Act and pursuant to Rule
415 under the 1933 Act or any successor rule providing for offering securities
on a continuous basis ("RULE 415"), and the declaration or ordering of
effectiveness of such registration statement(s) by the United States Securities
and Exchange Commission (the "SEC").

<PAGE>

            d.    "REGISTRABLE SECURITIES" means the Purchase Shares which have
been, or which may from time to time be, issued or issuable upon purchases of
the Available Amount under the Purchase Agreement (without regard to any
limitation or restriction on purchases) and the Commitment Shares issued or
issuable to the Investor and any shares of capital stock issued or issuable with
respect to the Purchase Shares, the Commitment Shares or the Purchase Agreement
as a result of any stock split, stock dividend, recapitalization, exchange or
similar event or otherwise, without regard to any limitation on purchases under
the Purchase Agreement.

            e.    "REGISTRATION STATEMENT" means the registration statement of
the Company covering only the sale of the Registrable Securities.

      2.    REGISTRATION.

            a.    Mandatory Registration. The Company shall within ten (10)
Business Days from the date hereof file with the SEC the Registration Statement.
The Registration Statement shall register only the Registrable Securities and no
other securities of the Company. The Investor and its counsel shall have a
reasonable opportunity to review and comment upon such registration statement or
amendment to such registration statement and any related prospectus prior to its
filing with the SEC. Investor shall furnish all information reasonably requested
by the Company for inclusion therein. The Company shall use its best efforts to
have the Registration Statement or amendment declared effective by the SEC at
the earliest possible date. The Company shall use reasonable best efforts to
keep the Registration Statement effective pursuant to Rule 415 promulgated under
the 1933 Act and available for sales of all of the Registrable Securities at all
times until the earlier of (i) the date as of which the Investor may sell all of
the Registrable Securities without restriction pursuant to Rule 144(k)
promulgated under the 1933 Act (or successor thereto) or (ii) the date on which
(A) the Investor shall have sold all the Registrable Securities and no Available
Amount remains under the Purchase Agreement (the "REGISTRATION PERIOD"). The
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading.

            b.    Rule 424 Prospectus. The Company shall, as required by
applicable securities regulations, from time to time file with the SEC, pursuant
to Rule 424 promulgated under the 1933 Act, the prospectus and prospectus
supplements, if any, to be used in connection with sales of the Registrable
Securities under the Registration Statement. The Investor and its counsel shall
have a reasonable opportunity to review and comment upon such prospectus prior
to its filing with the SEC. The Investor shall use its reasonable best efforts
to comment upon such prospectus within one (1) Business Day from the date the
Investor receives the final version of such prospectus.

            c.    Sufficient Number of Shares Registered. In the event the
number of shares available under the Registration Statement is insufficient to
cover all of the Registrable Securities, the Company shall amend the
Registration Statement or file a new registration statement (a "NEW REGISTRATION
STATEMENT"), so as to cover all of such Registrable Securities as soon as
practicable, but in any event not later than ten (10) Business Days after the
necessity therefor arises. The Company shall use it reasonable best efforts to
cause such amendment and/or New Registration Statement to become effective as
soon as practicable following the filing thereof.

                                       2
<PAGE>

      3.    RELATED OBLIGATIONS.

            With respect to the Registration Statement and whenever any
Registrable Securities are to be registered pursuant to Section 2(b) including
on any New Registration Statement, the Company shall use its reasonable best
efforts to effect the registration of the Registrable Securities in accordance
with the intended method of disposition thereof and, pursuant thereto, the
Company shall have the following obligations:

            a.    The Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to any
registration statement and the prospectus used in connection with such
registration statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the 1933 Act, as may be necessary to keep the Registration
Statement or any New Registration Statement effective at all times during the
Registration Period, and, during such period, comply with the provisions of the
1933 Act with respect to the disposition of all Registrable Securities of the
Company covered by the Registration Statement or any New Registration Statement
until such time as all of such Registrable Securities shall have been disposed
of in accordance with the intended methods of disposition by the seller or
sellers thereof as set forth in such registration statement.

            b.    The Company shall permit the Investor to review and comment
upon the Registration Statement or any New Registration Statement and all
amendments and supplements thereto at least two (2) Business Days prior to their
filing with the SEC, and not file any document in a form to which Investor
reasonably objects. The Investor shall use its reasonable best efforts to
comment upon the Registration Statement or any New Registration Statement and
any amendments or supplements thereto within two (2) Business Days from the date
the Investor receives the final version thereof. The Company shall furnish to
the Investor, without charge any correspondence from the SEC or the staff of the
SEC to the Company or its representatives relating to the Registration Statement
or any New Registration Statement.

            c.    Upon request of the Investor, the Company shall furnish to the
Investor, (i) promptly after the same is prepared and filed with the SEC, at
least one copy of such registration statement and any amendment(s) thereto,
including financial statements and schedules, all documents incorporated therein
by reference and all exhibits, (ii) upon the effectiveness of any registration
statement, a copy of the prospectus included in such registration statement and
all amendments and supplements thereto (or such other number of copies as the
Investor may reasonably request) and (iii) such other documents, including
copies of any preliminary or final prospectus, as the Investor may reasonably
request from time to time in order to facilitate the disposition of the
Registrable Securities owned by the Investor.

            d.    The Company shall use reasonable best efforts to (i) register
and qualify the Registrable Securities covered by a registration statement under
such other securities or "blue sky" laws of such jurisdictions in the United
States as the Investor reasonably requests, (ii) prepare and file in those
jurisdictions, such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (x) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), (y) subject itself
to general taxation in any such jurisdiction, or (z) file a general consent to
service of process in any such jurisdiction. The Company shall promptly notify

                                       3
<PAGE>

the Investor who holds Registrable Securities of the receipt by the Company of
any notification with respect to the suspension of the registration or
qualification of any of the Registrable Securities for sale under the securities
or "blue sky" laws of any jurisdiction in the United States or its receipt of
actual notice of the initiation or threatening of any proceeding for such
purpose.

            e.    As promptly as practicable after becoming aware of such event
or facts, the Company shall notify the Investor in writing of the happening of
any event or existence of such facts as a result of which the prospectus
included in any registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and promptly prepare a
supplement or amendment to such registration statement to correct such untrue
statement or omission, and deliver a copy of such supplement or amendment to the
Investor (or such other number of copies as the Investor may reasonably
request). The Company shall also promptly notify the Investor in writing (i)
when a prospectus or any prospectus supplement or post-effective amendment has
been filed, and when a registration statement or any post-effective amendment
has become effective (notification of such effectiveness shall be delivered to
the Investor by facsimile on the same day of such effectiveness and by overnight
mail), (ii) of any request by the SEC for amendments or supplements to any
registration statement or related prospectus or related information, and (iii)
of the Company's reasonable determination that a post-effective amendment to a
registration statement would be appropriate.

            f.    The Company shall use its reasonable best efforts to prevent
the issuance of any stop order or other suspension of effectiveness of any
registration statement, or the suspension of the qualification of any
Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify the Investor of the issuance of such
order and the resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding for such purpose.

            g.    The Company shall (i) cause all the Registrable Securities to
be listed on each securities exchange on which securities of the same class or
series issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange, or
(ii) secure designation and quotation of all the Registrable Securities on the
Principal Market. The Company shall pay all fees and expenses in connection with
satisfying its obligation under this Section.

            h.    The Company shall cooperate with the Investor to facilitate
the timely preparation and delivery of certificates (not bearing any restrictive
legend) representing the Registrable Securities to be offered pursuant to any
registration statement and enable such certificates to be in such denominations
or amounts as the Investor may reasonably request and registered in such names
as the Investor may request.

            i.    The Company shall at all times provide a transfer agent and
registrar with respect to its Common Stock.

            j.    If reasonably requested by the Investor, the Company shall (i)
immediately incorporate in a prospectus supplement or post-effective amendment
such information as the Investor believes should be included therein relating to
the sale and distribution of Registrable Securities, including, without
limitation, information with respect to the number of Registrable Securities
being sold, the purchase price being paid therefor and any other terms of the
offering of the Registrable Securities; (ii) make all required filings of such
prospectus supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such prospectus supplement or post-effective
amendment; and (iii) supplement or make amendments to any registration
statement.

                                       4
<PAGE>

            k.    The Company shall use its reasonable best efforts to cause the
Registrable Securities covered by the any registration statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to consummate the disposition of such Registrable
Securities.

            l.    Within one (1) Business Day after any registration statement
which includes the Registrable Securities is ordered effective by the SEC, the
Company shall deliver, and shall cause legal counsel for the Company to deliver,
to the transfer agent for such Registrable Securities (with copies to the
Investor) confirmation that such registration statement has been declared
effective by the SEC in the form attached hereto as Exhibit A. Thereafter, if
requested by the Buyer at any time, the Company shall require its counsel to
deliver to the Buyer a written confirmation whether or not the effectiveness of
such registration statement has lapsed at any time for any reason (including,
without limitation, the issuance of a stop order) and whether or not the
registration statement is current and available to the Buyer for sale of all of
the Registrable Securities.

            m.    The Company shall take all other reasonable actions necessary
to expedite and facilitate disposition by the Investor of Registrable Securities
pursuant to any registration statement.

      4.    OBLIGATIONS OF THE INVESTOR.

            a.    The Company shall notify the Investor in writing of the
information the Company reasonably requires from the Investor in connection with
any registration statement hereunder. The Investor shall furnish to the Company
such information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it as shall
be reasonably required to effect the registration of such Registrable Securities
and shall execute such documents in connection with such registration as the
Company may reasonably request.

            b.    The Investor agrees to cooperate with the Company as
reasonably requested by the Company in connection with the preparation and
filing of any registration statement hereunder.

            c.    The Investor agrees that, upon receipt of any notice from the
Company of the happening of any event or existence of facts of the kind
described in Section 3(f) or the first sentence of 3(e), the Investor will
immediately discontinue disposition of Registrable Securities pursuant to any
registration statement(s) covering such Registrable Securities until the
Investor's receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(f) or the first sentence of 3(e). Notwithstanding
anything to the contrary, the Company shall cause its transfer agent to promptly
deliver shares of Common Stock without any restrictive legend in accordance with
the terms of the Purchase Agreement in connection with any sale of Registrable
Securities with respect to which an Investor has entered into a contract for
sale prior to the Investor's receipt of a notice from the Company of the
happening of any event of the kind described in Section 3(f) or the first
sentence of 3(e) and for which the Investor has not yet settled.

                                       5
<PAGE>

      5.    EXPENSES OF REGISTRATION.

            All reasonable expenses, other than sales or brokerage commissions,
incurred in connection with registrations, filings or qualifications pursuant to
Sections 2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements of
counsel for the Company, shall be paid by the Company.

      6.    INDEMNIFICATION.

            a.    To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend the Investor, each Person, if
any, who controls the Investor, the members, the directors, officers, partners,
employees, agents, representatives of the Investor and each Person, if any, who
controls the Investor within the meaning of the 1933 Act or the Securities
Exchange Act of 1934, as amended (the "1934 ACT") (each, an "INDEMNIFIED
PERSON"), against any losses, claims, damages, liabilities, judgments, fines,
penalties, charges, costs, attorneys' fees, amounts paid in settlement or
expenses, joint or several, (collectively, "CLAIMS") incurred in investigating,
preparing or defending any action, claim, suit, inquiry, proceeding,
investigation or appeal taken from the foregoing by or before any court or
governmental, administrative or other regulatory agency, body or the SEC,
whether pending or threatened, whether or not an indemnified party is or may be
a party thereto ("INDEMNIFIED DAMAGES"), to which any of them may become subject
insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in the Registration
Statement, any New Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the
offering under the securities or other "blue sky" laws of any jurisdiction in
which Registrable Securities are offered ("BLUE SKY FILING"), or the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in the final
prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC) or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading, (iii) any violation or alleged violation by the Company of
the 1933 Act, the 1934 Act, any other law, including, without limitation, any
state securities law, or any rule or regulation thereunder relating to the offer
or sale of the Registrable Securities pursuant to the Registration Statement or
any New Registration Statement or (iv) any material violation by the Company of
this Agreement (the matters in the foregoing clauses (i) through (iv) being,
collectively, "VIOLATIONS"). The Company shall reimburse each Indemnified Person
promptly as such expenses are incurred and are due and payable, for any legal
fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a): (i) shall not apply to a Claim by an Indemnified Person arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by such Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement, any New Registration Statement or any such amendment thereof or
supplement thereto, if such prospectus was timely made available by the Company
pursuant to Section 3(c) or Section 3(e); (ii) with respect to any superceded
prospectus, shall not inure to the benefit of any such person from whom the
person asserting any such Claim purchased the Registrable Securities that are
the subject thereof (or to the benefit of any person controlling such person) if
the untrue statement or omission of material fact contained in the superceded
prospectus was corrected in the revised prospectus, as then amended or
supplemented, if such revised prospectus was timely made available by the
Company pursuant to Section 3(c) or Section 3(e), and the Indemnified Person was

                                       6
<PAGE>

promptly advised in writing not to use the incorrect prospectus prior to the use
giving rise to a violation and such Indemnified Person, notwithstanding such
advice, used it; (iii) shall not be available to the extent such Claim is based
on a failure of the Investor to deliver or to cause to be delivered the
prospectus made available by the Company, if such prospectus was timely made
available by the Company pursuant to Section 3(c) or Section 3(e); and (iv)
shall not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Company, which consent shall
not be unreasonably withheld. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Person and shall survive the transfer of the Registrable Securities by the
Investor pursuant to Section 9.

            b.    In connection with the Registration Statement or any New
Registration Statement, the Investor agrees to severally and not jointly
indemnify, hold harmless and defend, to the same extent and in the same manner
as is set forth in Section 6(a), the Company, each of its directors, each of its
officers who signs the Registration Statement or any New Registration Statement,
each Person, if any, who controls the Company within the meaning of the 1933 Act
or the 1934 Act (collectively and together with an Indemnified Person, an
"INDEMNIFIED PARTY"), against any Claim or Indemnified Damages to which any of
them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar
as such Claim or Indemnified Damages arise out of or are based upon any
Violation, in each case to the extent, and only to the extent, that such
Violation occurs in reliance upon and in conformity with written information
about the Investor set forth on Exhibit B attached hereto and furnished to the
Company by the Investor expressly for use in connection with such registration
statement; and, subject to Section 6(d), the Investor will reimburse any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such Claim; provided, however, that the indemnity agreement
contained in this Section 6(b) and the agreement with respect to contribution
contained in Section 7 shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of the
Investor, which consent shall not be unreasonably withheld; provided, further,
however, that the Investor shall be liable under this Section 6(b) for only that
amount of a Claim or Indemnified Damages as does not exceed the net proceeds to
the Investor as a result of the sale of Registrable Securities pursuant to such
registration statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified Party
and shall survive the transfer of the Registrable Securities by the Investor
pursuant to Section 9.

            c.    Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action or
proceeding (including any governmental action or proceeding) involving a Claim,
such Indemnified Person or Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses to be paid by the indemnifying party, if, in
the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding. The Indemnified
Party or Indemnified Person shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all information

                                       7
<PAGE>

reasonably available to the Indemnified Party or Indemnified Person which
relates to such action or claim. The indemnifying party shall keep the
Indemnified Party or Indemnified Person fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action, claim or
proceeding effected without its written consent, provided, however, that the
indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the consent of the Indemnified
Party or Indemnified Person, consent to entry of any judgment or enter into any
settlement or other compromise which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party or
Indemnified Person of a release from all liability in respect to such claim or
litigation. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnified Party or
Indemnified Person with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action.

            d.    The indemnification required by this Section 6 shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or Indemnified Damages
are incurred.

            e.    The indemnity agreements contained herein shall be in addition
to (i) any cause of action or similar right of the Indemnified Party or
Indemnified Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to the law.

      7.    CONTRIBUTION.

            To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no seller of Registrable Securities guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received by
such seller from the sale of such Registrable Securities.

      8.    REPORTS AND DISCLOSURE UNDER THE SECURITIES ACTS.

            With a view to making available to the Investor the benefits of Rule
144 promulgated under the 1933 Act or any other similar rule or regulation of
the SEC that may at any time permit the Investor to sell securities of the
Company to the public without registration ("RULE 144"), the Company agrees, at
the Company's sole expense, to:

            a.    make and keep public information available, as those terms are
understood and defined in Rule 144;

            b.    file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements and the filing of such reports
and other documents is required for the applicable provisions of Rule 144; and

                                       8
<PAGE>

            c.    furnish to the Investor so long as the Investor owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting and or disclosure provisions of
Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents so filed
by the Company, and (iii) such other information as may be reasonably requested
to permit the Investor to sell such securities pursuant to Rule 144 without
registration.

            d.    take such additional action as is requested by the Investor to
enable the Investor to sell the Registrable Securities pursuant to Rule 144,
including, without limitation, delivering all such legal opinions, consents,
certificates, resolutions and instructions to the Company's Transfer Agent as
may be requested from time to time by the Investor and otherwise fully cooperate
with Investor and Investor's broker to effect such sale of securities pursuant
to Rule 144.

            The Company agrees that damages may be an inadequate remedy for any
breach of the terms and provisions of this Section 8 and that Investor shall,
whether or not it is pursuing any remedies at law, be entitled to equitable
relief in the form of a preliminary or permanent injunctions, without having to
post any bond or other security, upon any breach or threatened breach of any
such terms or provisions.

      9.    ASSIGNMENT OF REGISTRATION RIGHTS.

            The Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Investor,
including by merger or consolidation. The Investor may not assign its rights
under this Agreement without the written consent of the Company, other than to
an affiliate of the Investor controlled by Steven G. Martin or Joshua B.
Scheinfeld.

      10.   AMENDMENT OF REGISTRATION RIGHTS.

            Provisions of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the Investor.

      11.   MISCELLANEOUS.

            a.    A Person is deemed to be a holder of Registrable Securities
whenever such Person owns or is deemed to own of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more Persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or
election received from the registered owner of such Registrable Securities.

            b.    Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) Business Day after deposit
with a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:

                                       9
<PAGE>

      If to the Company:
            Aethlon Medical, Inc.
            3030 Bunker Hill Street
            Suite 4000
            San Diego, CA 92109
            Telephone:    858-459-7800
            Facsimile:    858-332-1739
            Attention:    Chief Executive Officer

      With a copy to:
            Richardson & Patel, LLP
            10900 Wilshire Blvd., Suite 500
            Los Angeles, CA 90404
            Telephone:    310-208-1182
            Facsimile:    310-208-1154
            Attention:    Nimish Patel, Esq.

      If to the Investor:
            Fusion Capital Fund II, LLC
            222 Merchandise Mart Plaza, Suite 9-112
            Chicago, IL 60654
            Telephone:    312-644-6644
            Facsimile:    312-644-6244
            Attention:    Steven G. Martin

or at such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party three (3) Business Days prior to the effectiveness of such
change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender's facsimile machine containing the time,
date, recipient facsimile number and an image of the first page of such
transmission or (C) provided by a nationally recognized overnight delivery
service, shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

            c.    Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.

            d.    The corporate laws of the State of Nevada shall govern all
issues concerning the relative rights of the Company and its stockholders. All
other questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the
State of Illinois, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Illinois or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of Illinois. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting the City of Chicago, for
the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the

                                       10
<PAGE>

venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such 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 manner permitted by law. If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.

            e.    This Agreement, and the Purchase Agreement constitute the
entire agreement among the parties hereto with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and therein. This
Agreement and the Purchase Agreement supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.

            f.    Subject to the requirements of Section 9, this Agreement shall
inure to the benefit of and be binding upon the permitted successors and assigns
of each of the parties hereto.

            g.    The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

            h.    This Agreement may be executed in identical counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

            i.    Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all
such other agreements, certificates, instruments and documents, as the other
party may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.

            j.    The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent and no rules of
strict construction will be applied against any party.

            k.    This Agreement is intended for the benefit of the parties
hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.

                                   * * * * * *

                                       11
<PAGE>

      IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of day and year first above written.

                                               THE COMPANY:
                                               -----------

                                               AETHLON MEDICAL, INC.

                                               By: /s/ James A. Joyce
                                                  ------------------------------
                                               Name: James A. Joyce
                                               Title: Chief Executive Officer

                                               BUYER:
                                               -----

                                               FUSION CAPITAL FUND II, LLC
                                               BY: FUSION CAPITAL PARTNERS, LLC
                                               BY: ROCKLEDGE CAPITAL CORPORATION

                                               By: /s/ Joshua B. Scheinfeld
                                                  ------------------------------
                                               Name: Joshua B. Scheinfeld
                                               Title: President

                                       12
<PAGE>

                                    EXHIBIT A
                                    ---------

                        TO REGISTRATION RIGHTS AGREEMENT
                        --------------------------------

                         FORM OF NOTICE OF EFFECTIVENESS
                            OF REGISTRATION STATEMENT

[Date]

[TRANSFER AGENT]
___________________
___________________

Re: AETHLON MEDICAL:, INC.

Ladies and Gentlemen:

      We are counsel to AETHLON MEDICAL, INC., a Nevada corporation (the
"COMPANY"), and have represented the Company in connection with that certain
Common Stock Purchase Agreement, dated as of _________, 2007 (the "PURCHASE
AGREEMENT"), entered into by and between the Company and Fusion Capital Fund II,
LLC (the "BUYER") pursuant to which the Company has agreed to issue to the Buyer
shares of the Company's Common Stock, par value $0.001 per share (the "COMMON
STOCK"), in an amount up to Eight Million Four Hundred Dollars ($8,400,000) (the
"PURCHASE SHARES"), in accordance with the terms of the Purchase Agreement. In
connection with the transactions contemplated by the Purchase Agreement, the
Company has registered with the U.S. Securities & Exchange Commission the
following shares of Common Stock:

      (1)   6,000,000 shares of Common Stock to be issued upon purchase from the
            Company by the Buyer from time to time (the "PURCHASE SHARES.").

      (2)   1,050,000 shares of Common Stock which have been issued to the Buyer
            as a commitment fee (the "COMMITMENT SHARES").

      (3)   1,333,333 Purchase Shares of Common Stock previously issued to the
            Buyer (the "INITIAL PURCHASE Shares.").

Pursuant to the Purchase Agreement, the Company also has entered into a
Registration Rights Agreement, dated as of ______, with the Buyer (the
"Registration Rights Agreement") pursuant to which the Company agreed, among
other things, to register the Purchase Shares, the Initial Purchase Shares and
the Commitment Shares under the Securities Act of 1933, as amended (the "1933
Act"). In connection with the Company's obligations under the Purchase Agreement
and the Registration Rights Agreement, on _______, the Company filed a
Registration Statement (File No. 333-_________) (the "Registration Statement")
with the Securities and Exchange Commission (the "SEC") relating to the sale of
the Purchase Shares, the Initial Purchase Shares and the Commitment Shares.

In connection with the foregoing, we advise you that: (1) a member of the SEC's
staff has advised us by telephone that the SEC has entered an order declaring
the Registration Statement effective under the 1933 Act at _____ P.M. on
__________, 2007, (2) we have no knowledge, after telephonic inquiry of a member
of the SEC's staff, that any stop order suspending its effectiveness has been
issued or that any proceedings for that purpose are pending before, or
threatened by, the SEC, (3) the Commitment Shares and the Initial Purchase
Shares are available for sale under the 1933 Act pursuant to the Registration
Statement and the restrictive legend on the Commitment Shares and the Initial
Purchase Shares may be removed and (4) the Purchase Shares are available for
sale under the 1933 Act pursuant to the Registration Statement and may be issued
without any restrictive legend.

                                                Very truly yours,

                                                [Company Counsel]

                                                By:____________________

CC:       Fusion Capital Fund II, LLC

                                       13
<PAGE>

                                    EXHIBIT B
                                    ---------

                        TO REGISTRATION RIGHTS AGREEMENT
                        --------------------------------

     Information About The Investor Furnished To The Company By The Investor
         Expressly For Use In Connection With The Registration Statement

As of the date of the Purchase Agreement, Fusion Capital beneficially owned
767,191 shares of common stock of the Company. Steven G. Martin and Joshua B.
Scheinfeld, the principals of Fusion Capital, are deemed to be beneficial owners
of all of the shares of common stock owned by Fusion Capital. Messrs. Martin and
Scheinfeld have shared voting and investment power over the shares being offered
under the prospectus filed with the SEC in connection with the transactions
contemplated under the Purchase Agreement. Fusion Capital is not a licensed
broker dealer or an affiliate of a licensed broker dealer.

                                       14

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