Document:

Exhibit 10.18

 

AMENDMENT NO. 4 TO CREDIT AND SECURITY
AGREEMENT AND LIMITED CONSENT

THIS AMENDMENT
NO. 4 TO CREDIT AND SECURITY AGREEMENT AND LIMITED CONSENT (this “Amendment”) is made as of this 7th day
of February, 2013, by and among INTEGRATED HEALTHCARE HOLDINGS, INC., a Nevada corporation, WMC-SA, INC., a California
corporation, WMC-A, INC., a California corporation, CHAPMAN MEDICAL CENTER, INC., a California corporation, COASTAL
COMMUNITIES HOSPITAL, INC., a California corporation (each individually as a “Borrower”, and collectively
as “Borrowers”), and MIDCAP FUNDING IV, LLC, a Delaware limited liability company, as assigned to it
from MidCap Financial, LLC (as Agent for Lenders, “Agent”, and individually as a Lender), SILICON VALLEY
BANK, a California corporation, and the other financial institutions or other entities parties hereto, each as a Lender. Capitalized
terms used but not defined in this Amendment shall have the meanings that are set forth in the Credit Agreement (defined below).

RECITALS

Borrowers have requested
Agent and Lenders to amend the Credit and Security Agreement dated as of August 30, 2010 by and among Borrowers, other borrowers
party thereto, Agent and Lenders, as amended or otherwise modified to the date hereof (as so amended and modified, the “Credit
Agreement”), (i) to increase the maximum face amount of the Letter of Credit Liabilities permitted thereunder to $760,755.39
and to consent to the issuance of a Letter of Credit in the face amount of $760,755.39 by Wells Fargo Bank, National Association,
(ii) to extend the Commitment Expiry Date to January 31, 2014 at Agent’s and the Lenders’ sole option at anytime prior
to March 31, 2013, and (iii) to consent to the Borrowers’ entry into the Amendment and Restatement Agreement to the Credit
Agreement, dated as of the date hereof, among the Borrowers, Pacific Coast Holdings Investment, LLC and Ganesha Realty, LLC, as
amendment parties, SPCP Group IV, LLC and SPCP Group, LLC, as lenders, and Silver Point Finance LLC, as agent for lenders, and
the Restated Credit Agreement attached as Exhibit A thereto, both of which are attached to this Amendment as Annex A
(collectively, the “Silverpoint Amendment and Restatement”). Agent and Lenders have agreed to such amendments
and desire to consent to the Silverpoint Amendment and Restatement and such L/C Issuer, in accordance with and subject to the terms
and conditions set forth below.

NOW, THEREFORE,
in consideration of the foregoing, the terms and conditions set forth in this Amendment, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Agent, Lenders and Borrowers hereby agree as follows:

1.Amendments
to Credit Agreement.

(a)Definitions.
The definition of “Commitment Expiry Date” is hereby deleted in its entirety and the following is substituted therefor:

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“Commitment
Expiry Date” means August 30, 2013; unless, at Agent’s and the Lenders’ sole option, with prior written notice
to the Borrowers at any time prior to March 31, 2013, Agent and the Lenders elect to extend the Commitment Expiry Date to January
31, 2014.

(b)Section
2.2. Subsection 2.2(d) of the Credit Agreement is hereby amended and restated in its entirety as follows:

“(d)Prepayment Fee.
If, at any time prior to the Commitment Expiry Date, (i) except to the extent permitted in Section 2.1(b)(iii)(B), any portion
of the Revolving Loan is prepaid at any time, in whole or in part, for any reason other than pursuant to the mandatory repayment
provisions set forth in Section 2.1(b)(ii), and such prepayment is accompanied by a corresponding permanent reduction of the Revolving
Loan Commitment, whether by voluntary prepayment and/or termination by Borrowers, by reason of the occurrence of an Event of Default,
or otherwise, or (ii) the Revolving Loans shall become accelerated and due and payable in full, or (iii) except to the extent permitted
in Section 2.1(b)(iii)(B) and Section 2.11(d), the Lenders’ funding obligations in respect of any unfunded portion of the
Revolving Loan shall terminate, then in any such event, Borrowers shall pay to Agent, for the benefit of all Lenders committed
to make Revolving Loans, as compensation for the costs of such Lenders making funds available to Borrowers under this Agreement,
a prepayment fee (the “Prepayment Fee”) calculated in accordance with this subsection. The Prepayment Fee shall
be equal to the product of (y) $40,000,000, multiplied by (z) the following percentage: (i) two percent (2.0%) if
such prepayment occurs prior to the first anniversary of the Closing Date, (ii) one and one-half percent (1.5%) if such prepayment
occurs on or after the first anniversary of the Closing Date but prior to the second anniversary of the Closing Date, and (iii)
one percent (1.0%) if such prepayment occurs on or after the second anniversary of the Closing Date but prior to the Commitment
Expiry Date. All fees payable pursuant to this paragraph shall be deemed fully earned and non-refundable as of the Closing Date.”

(c)Section
2.5(a)(ii). Section 2.5(a)(ii) of the Credit Agreement is hereby amended by deleting “$0” set forth therein and
substituting “$760,755.39” therefor.

2.Acknowledgment
and Limited Consent.

(a)The Agent and
each Lender acknowledges that each of them was provided with and reviewed the Silverpoint Amendment and Restatement. The Agent
and each Lender consents to the consummation of the transactions under the Silverpoint Amendment and Restatement, including, without
limitation, the increase in the aggregate principal amount of the loans thereunder and the extension of maturity thereof.

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(b)Notwithstanding
the last sentence of Section 2.5(a)(ii) of the Credit Agreement or anything else to the contrary set forth in the Credit Agreement
or any other Financing Documents, Borrowers acknowledge and agree that the Agent may issue, or cause to be issued any such Letters
of Credit, and each Lender consents that Wells Fargo Bank, National Association may be an LC Issuer under the Credit Agreement
in connection with any Letter of Credit Liabilities permitted pursuant to this Amendment.

Except as expressly set forth in this
Section 2, this consent shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect, the rights,
remedies, powers or privileges of the Agent or any Lender under the Credit Agreement or any other Financing Documents, and shall
not, except as otherwise set forth in this Amendment, alter, modify, amend or in any way affect any of the terms, conditions, obligations,
covenants or agreements contained in the Credit Agreement or any other Financing Documents, all of which are ratified and affirmed
in all respects and shall continue in full force and effect. Nothing contained in this Section 2 shall be deemed to entitle any
Borrower to a consent to, or a waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants
or agreements contained in the Credit Agreement or any other Financing Documents in similar or different circumstances.

3.Confirmation
of Representations and Warranties.  Each Borrower hereby confirms that all of the representations and warranties set forth
in Article 3 of the Credit Agreement are true and correct in all material respects with respect to such Borrower as of the date
hereof, except to the extent that such representation or warranty relates to a specific date, in which case such representation
and warranty was true as of such earlier date. 

4.Reaffirmation
of Security Interest in the Collateral.  Each Borrower confirms and agrees that (a) all security interest and Liens granted
to Agent continue in full force and effect, and (b) all Collateral remains free and clear of any Liens other than those granted
to Agent and Permitted Liens. Nothing herein is intended to impair or limit the validity, priority or extent of Agent’s security
interests in and Liens upon the Collateral.

5.Fees
and Expenses. Borrowers shall be responsible for the payment of all reasonable fees and expenses of Agent’s counsel
incurred in connection with the preparation of this Amendment and any related documents. If Agent uses in-house counsel for any
of these purposes, Borrowers further agree that the Obligations include reasonable allocated charges for such work performed. Borrowers
hereby authorize Agent to deduct all of such fees set forth in this Section 5 from the proceeds of one or more Revolving Loans
made under the Credit Agreement.

6.Conditions
to Effectiveness. Sections 1(c) and 2(b) of this Amendment shall become effective as of the date on which each of the following
conditions has been satisfied (the “Initial Effective Date”):

(a)Borrowers shall
have delivered to Agent this Amendment, duly executed by an authorized officer of each Borrower;

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(b)Borrowers shall
have Revolving Loan Availability of at at least $760,755.39;

(c)if there have
been any changes to the certificates of secretary or assistant secretary of any Borrower most recently delivered to the Agent,
the secretary or assistant secretary of each Borrower shall have delivered to Agent a duly executed secretary’s certificate
and incumbency certificate identifying the current officers of such Borrower who are duly authorized by such Borrower’s board
of directors to execute and deliver this Amendment and any related documents;

(d)all representations
and warranties of Borrowers contained herein shall be true and correct in all material respects as of the Initial Effective Date,
except to the extent that such representation or warranty relates to a specific date, in which case such representation and warranty
was true as of such earlier date, and such parties delivery of their respective signatures hereto shall be deemed to be its certification
thereof; and

(e)Agent shall
have received from Borrowers all of the fees, costs and expenses owing pursuant to this Amendment as set forth in Section 5 above
unless Agent elects to deduct such fees, costs and expenses from the Revolving Loan proceeds in accordance with Section 5 above.

Once the conditions to satisfy Sections
1(c) and 2(b) have been satisfied, all other Sections except for Sections 1(c) and 2(b) of this Amendment shall become effective
as of the date on which each of the following conditions has been satisfied (the “Effective Date”):

(a)Borrowers shall
have delivered to Agent final, execution copies of the Silverpoint Amendment and Restatement, along with all exhibits, attachments,
schedules and related documents thereto, each of which shall be in form and substance acceptable to Agent in its reasonable discretion.

7.Release.
Each Borrower, voluntarily, knowingly, unconditionally and irrevocably, with specific and express intent, for and on behalf of
itself and all of its respective parents, subsidiaries, affiliates, members, managers, predecessors, successors, and assigns, and
each of their respective current and former directors, officers, shareholders, agents, and employees (collectively, “Releasing
Parties”), does hereby fully and completely release, acquit and forever discharge each Indemnitee of and from any and
all actions, causes of action, suits, debts, disputes, damages, claims, obligations, liabilities, costs, expenses and demands of
any kind whatsoever, at law or in equity, whether matured or unmatured, liquidated or unliquidated, vested or contingent, choate
or inchoate, known or unknown that the Releasing Parties (or any of them) has against the Indemnitees or any of them (whether directly
or indirectly). Each Borrower acknowledges that the foregoing release is a material inducement to Agent’s and Lenders’
decision to enter into this Amendment and to agree to the modification made contemplated hereunder.

8.No Waiver
or Novation. The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided in this
Amendment, operate as a waiver of any right, power or remedy of Agent, nor constitute a waiver of any provision of the Credit Agreement,
the Financing Documents or any other documents, instruments and agreements executed or delivered in connection with any of the
foregoing. Nothing herein is intended or shall be construed as a waiver of any existing Defaults or Events of Default under the
Credit Agreement or other Financing Documents or any of Agent’s rights and remedies in respect of such Defaults or Events
of Default. This Amendment (together with any other document executed in connection herewith) is not intended to be, nor shall
it be construed as, a novation of the Credit Agreement.

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9.Miscellaneous.

(a)Reference
to the Effect on the Credit Agreement.  Upon the effectiveness of this Amendment, each reference in the Credit Agreement
to “this Agreement,” “hereunder,” “hereof,” “herein” or words of similar import
shall mean and be a reference to the Credit Agreement as amended by this Amendment. Except as specifically amended above, the Credit
Agreement, and all other Financing Documents (and all covenants, terms, conditions and agreements therein), shall remain in full
force and effect, and are hereby ratified and confirmed in all respects by Borrower.

(b)Governing
Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Maryland.

(c)Headings.
Section headings in this Amendment are included for convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.

(d)Counterparts.
This Amendment may be executed in counterparts, and both counterparts taken together shall be deemed to constitute one and the
same instrument.

[SIGNATURES APPEAR ON FOLLOWING PAGE(S)]

 

 

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IN WITNESS WHEREOF,
intending to be legally bound, and intending that this document constitute an agreement executed under seal, the undersigned have
executed this Amendment under seal as of the day and year first hereinabove set forth.

 

	AGENT:	
        MIDCAP FUNDING IV, LLC, as Agent

        By: /s/ Brett Robinson

        Name: Brett Robinson

        Title: Managing Director

	 	 

 

 

	LENDERS:	
        MIDCAP FUNDING IV, LLC, as a Lender

        By: /s/ Brett Robinson

        Name: Brett Robinson

        Title: Managing Director

         

	 	
        SILICON VALLEY BANK, as a Lender

        By: /s/ Tim Walsh

        Name: Tim Walsh

        Title: Head of Structured Products

	 	 

 

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        BORROWERS:

         
	
        INTEGRATED HEALTHCARE HOLDINGS, INC., a Nevada corporation

        

        

        By: /s/ Kenneth K. Westbrook

        Name: Kenneth K. Westbrook

        Title: CEO

         

        WMC-SA, INC., a California corporation

        

        

        By: /s/ Kenneth K. Westbrook

        Name: Kenneth K. Westbrook

        Title: CEO

         

        WMC-A, INC., a California corporation

        

        

        By: /s/ Kenneth K. Westbrook

        Name: Kenneth K. Westbrook

        Title: CEO

         

        CHAPMAN MEDICAL CENTER, INC., a California corporation

        

        

        By: /s/ Kenneth K. Westbrook

        Name: Kenneth K. Westbrook

        Title: CEO

         

        COASTAL COMMUNITIES HOSPITAL, INC., a California corporation

        

        

        By: /s/ Kenneth K. Westbrook

        Name: Kenneth K. Westbrook

        Title: CEO

 

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Annex A to Credit Agreement

Silverpoint Amendment and Restatement

See attached.

 

 

    	8Exhibit 4.1

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS
OF ANY STATE OR OTHER JURISDICTION AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND SUCH LAWS. THESE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED UNLESS PURSUANT TO (i) AN EFFECTIVE
REGISTRATION STATEMENT OR (ii) AN EXEMPTION FROM APPLICABLE SECURITIES LAWS, IN WHICH CASE THE COMPANY MAY REQUIRE AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED.

 

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

 

COMMON STOCK PURCHASE WARRANT

 

	No. ___________	Issue Date: _____________, 2012          

 

AETHLON MEDICAL, INC.,
a corporation organized under the laws of the State of Nevada (the “Company”), hereby certifies that, for value received,
________ or his assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company
at any time after the Issue Date until 5:00 p.m., P.S.T. on the seventh anniversary of the Issue Date (the “Expiration Date”)
or such sooner time as this warrant is terminated pursuant to Section 6 herein, up to ________ fully paid and nonassessable shares
of the common stock of the Company (the “Common Stock”), at a per share purchase price of $______. The aforedescribed
purchase price per share, as adjusted from time to time as herein provided, is referred to herein as the “Purchase Price.”
The number and character of such shares of Common Stock and the Purchase Price are subject to adjustment as provided herein. The
Company may reduce the Purchase Price without the consent of the Holder.

 

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

 

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

 

(b)The term “Common
Stock” includes (a) the Company's Common Stock and (b) any other securities into which or for which any of the securities
described in (a) may be converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets
or otherwise.

 

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

 

1.Exercise
of Warrant.

 

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

 

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1.2.Full Exercise.
This Warrant may be exercised in full by the Holder hereof by delivery of an original or facsimile copy of the form of subscription
attached as Exhibit A hereto (the “Subscription Form”) duly executed by such Holder and surrender of the original
Warrant within seven (7) days of exercise to the Company at its principal office or at the office of its Warrant Agent (as provided
hereinafter), accompanied by payment, in cash, wire transfer or by certified or official bank check payable to the order of the
Company, if applicable, in the amount obtained by multiplying the number of shares of Common Stock for which this Warrant is then
exercisable by the Purchase Price then in effect. This Warrant may only be exercised for a whole number of shares.

 

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

 

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

 

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

 

1.6Delivery
of Stock Certificates, etc. on Exercise. The Company agrees that the shares of Common Stock purchased upon exercise of this
Warrant shall be deemed to be issued to the Holder hereof as the record owner of such shares as of the close of business on the
date on which this Warrant shall have been surrendered and payment made for such shares as aforesaid. As soon as practicable after
the exercise of this Warrant in full or in part, and in any event within five (5) days thereafter, the Company at its expense (including
the payment by it of any applicable issue taxes) will cause to be issued in the name of and delivered to the Holder hereof, or
as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct in compliance with applicable securities
laws, a certificate or certificates for the number of duly and validly issued, fully paid and nonassessable shares of Common Stock
(or Other Securities) to which such Holder shall be entitled on such exercise, plus, in lieu of any fractional share to which such
Holder would otherwise be entitled, cash equal to such fraction.

 

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1.7Exercise Limitations.
The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this
Warrant, pursuant to this Section 1 or otherwise, to the extent that after giving effect to such issuance after exercise as set
forth on the applicable Subscription Form, the Holder (together with the Holder’s “Affiliates” (as that term
is defined by Rule 144 promulgated under the Securities Act), and any other person or entity acting as a group together with the
Holder or any of the Holder’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as defined
below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates
shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination
is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining,
unexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (B) exercise or conversion of
the unexercised or unconverted portion of any other securities of the Company (including, without limitation, any other Common
Stock equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially
owned by the Holder or any of its affiliates. Except as set forth in the preceding sentence, for purposes of this Section 1.7,
beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the
Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the
Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation
contained in this Section 1.7 applies, the determination of whether this Warrant is exercisable (in relation to other securities
owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion
of the Holder, and the submission of a Subscription Form shall be deemed to be the Holder’s determination of whether this
Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion
of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation
to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above
shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
For purposes of this Section 1.7, in determining the number of outstanding shares of Common Stock, a Holder may rely on the number
of outstanding shares of Common Stock as reflected in (x) the Company’s most recent periodic or annual report, as the case
may be, (y) a more recent public announcement by the Company or (z) a more recent notice by the Company or the Company’s
transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the
Company shall confirm to the Holder within two business days orally and in writing the number of shares of Common Stock then outstanding.
In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise
of securities of the Company, including this Warrant, by the Holder or its Affiliates since the date as of which such number of
outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 9.99% of the number
of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon
exercise of this Warrant. The Holder, upon not less than 61 days’ prior notice to the Company, may increase or decrease the
Beneficial Ownership Limitation provisions of this Section 1.7, provided that the Beneficial Ownership Limitation in no event exceeds
9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common
Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 1.7 shall continue to apply. Any such
increase or decrease will not be effective until the 61st day after such notice is delivered to the Company and shall only apply
to such Holder and no other Holder. The provisions of this paragraph shall be construed and implemented in a manner otherwise than
in strict conformity with the terms of this Section 1.7 to correct this paragraph (or any portion hereof) to the extent defective
or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary
or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor
holder of this Warrant.

 

2.Exercise in
the Absence of Registration Statement. If, at any time while this Warrant is outstanding, the Company shall fail to maintain
an effective registration statement covering all of the shares of Common Stock underlying this Warrant (the “Warrant Shares”)
for resale by the Holder, and the Holder has not declined to be included as a selling shareholder in such registration statement,
then and only then the Holder may exercise this Warrant on a "cashless" basis as follows:

 

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(a)Payment upon exercise
may be made at the option of the Holder either in (i) cash, wire transfer or by certified or official bank check payable to the
order of the Company equal to the applicable aggregate Purchase Price, (ii) by delivery of Common Stock issuable upon exercise
of the Warrant in accordance with Section (b) below or (iii) by a combination of any of the foregoing methods, for
the number of Common Stock specified in such form (as such exercise number shall be adjusted to reflect any adjustment in the total
number of shares of Common Stock issuable to the holder per the terms of this Warrant) and the Holder shall thereupon be entitled
to receive the number of duly authorized, validly issued, fully-paid and non-assessable shares of Common Stock determined as provided
herein.

 

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

 

X=Y (A-B)

       A

 

WhereX=the number of shares of
Common Stock to be issued to the Holder

 

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

 

		A=	Fair Market Value

 

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

 

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

 

For purposes of this
Warrant, the "Fair Market Value" of a share of Common Stock as of a particular date (the "Determination Date")
shall mean:

 

(a)If the Company's
Common Stock is traded on an exchange or is quoted on the NASDAQ Global Market, NASDAQ Global Select Market, the NASDAQ Capital
Market, the New York Stock Exchange or the American Stock Exchange, LLC, then the average of the closing
sale prices of the Common Stock for the five (5) Trading Days immediately prior to (but not including) the Determination
Date;

 

(b)If the Company's
Common Stock is not traded on an exchange or on the NASDAQ Global Market, NASDAQ Global Select Market, the NASDAQ Capital Market,
the New York Stock Exchange or the American Stock Exchange, Inc., but is traded on the OTC Bulletin Board or in the over-the-counter
market or Pink Sheets, then the average of the closing bid and ask prices reported for the five (5)
Trading Days immediately prior to (but not including) the Determination Date;

 

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

 

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

 

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

 

3.1.Reorganization,
Consolidation, Merger, etc. In case at any time or from time to time the Company shall (a) effect a reorganization, (b) consolidate
with or merge into any other person or (c) transfer all or substantially all of its properties or assets to any other person
under any plan or arrangement contemplating the dissolution of the Company, then, in each such case, as a condition to the consummation
of such a transaction, proper and adequate provision shall be made by the Company whereby the Holder of this Warrant, on the exercise
hereof as provided in Section 1, at any time after the consummation of such reorganization, consolidation or merger or the
effective date of such dissolution, as the case may be, shall receive, in lieu of the Common Stock (or Other Securities) issuable
on such exercise prior to such consummation or such effective date, the stock and other securities and property (including cash)
to which such Holder would have been entitled upon such consummation or in connection with such dissolution, as the case may be,
if such Holder had so exercised this Warrant, immediately prior thereto, all subject to further adjustment thereafter as provided
in Section 4.

 

3.2.Dissolution.
In the event of any dissolution of the Company following the transfer of all or substantially all of its properties or assets,
the Company, prior to such dissolution, shall at its expense deliver or cause to be delivered the stock and other securities and
property (including cash, where applicable) receivable by the Holder of the Warrants after the effective date of such dissolution
pursuant to this Section 3 to a bank or trust company (a “Trustee”) having its principal office in Los Angeles,
California, as trustee for the Holder of the Warrants.

 

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

 

4.Extraordinary
Events Regarding Common Stock. In the event that the Company shall (a) issue additional shares of the Common Stock as
a dividend or other distribution on outstanding Common Stock, (b) subdivide its outstanding shares of Common Stock, or (c) combine
its outstanding shares of the Common Stock into a smaller number of shares of the Common Stock, then, in each such event, the Purchase
Price shall be adjusted, simultaneously with the happening of such event, by multiplying the then Purchase Price by a fraction,
the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator
of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall
thereafter be the Purchase Price then in effect. The Purchase Price, as so adjusted, shall be readjusted in the same manner upon
the happening of any successive event or events described in this Section 4. The number of shares of Common Stock that the
Holder of this Warrant thereafter shall be entitled to receive, on the exercise hereof as provided in Section 1, shall be
adjusted to a number determined by multiplying the number of shares of Common Stock that would otherwise (but for the provisions
of this Section 4) be issuable on such exercise by a fraction of which (a) the numerator is the Purchase Price that would
otherwise (but for the provisions of this Section 4) be in effect, and (b) the denominator is the Purchase Price in effect
on the date of such exercise.

 

    	5

    	 

    

5.Certificate
as to Adjustments. In each case of any adjustment or readjustment in the shares of Common Stock (or Other Securities) issuable
on the exercise of the Warrants, the Company at its expense will promptly cause its Chief Financial Officer or other appropriate
designee to compute such adjustment or readjustment in accordance with the terms of the Warrant and prepare a certificate setting
forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including
a statement of (a) the consideration received or receivable by the Company for any additional shares of Common Stock (or Other
Securities) issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock (or Other Securities)
outstanding or deemed to be outstanding, and (c) the Purchase Price and the number of shares of Common Stock to be received
upon exercise of this Warrant, in effect immediately prior to such adjustment or readjustment and as adjusted or readjusted as
provided in this Warrant. The Company will forthwith mail a copy of each such certificate to the Holder of the Warrant and any
Warrant Agent of the Company (appointed pursuant to Section 10 hereof).

 

6.No Registration
Rights. The Holder of this Warrant has not been granted any registration rights by the Company.

 

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

 

8.Assignment;
Exchange of Warrant. Subject to compliance with applicable securities laws, this Warrant, and the rights evidenced hereby,
may be transferred by any registered holder hereof (a “Transferor”). On the surrender for exchange of this Warrant,
with the Transferor’s endorsement in the form of Exhibit B attached hereto (the “Transferor Endorsement Form”)
and together with an opinion of counsel reasonably satisfactory to the Company that the transfer of this Warrant will be in compliance
with applicable securities laws, the Company at its expense, but with payment by the Transferor of any applicable transfer taxes,
will issue and deliver to or on the order of the Transferor thereof a new Warrant or Warrants of like tenor, in the name of the
Transferor and/or the transferee(s) specified in such Transferor Endorsement Form (each a “Transferee”), calling in
the aggregate on the face or faces thereof for the number of shares of Common Stock called for on the face or faces of the Warrant
so surrendered by the Transferor. No such transfers shall result in a public distribution of the Warrant.

 

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

 

    	6

    	 

    

10.Warrant Agent.
The Company may, by written notice to the Holder of the Warrant, appoint an agent (a “Warrant Agent”) for the purpose
of issuing Common Stock (or Other Securities) on the exercise of this Warrant pursuant to Section 1, exchanging this Warrant
pursuant to Section 8, and replacing this Warrant pursuant to Section 9, or any of the foregoing, and thereafter any
such issuance, exchange or replacement, as the case may be, shall be made at such office by such Warrant Agent.

 

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

 

12.Notices.
All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted
by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine,
at the address or number designated below (if delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be: (i) if to the Company to: Aethlon Medical, Inc., 8910 University Center
Lane, Suite 660, San Diego, California 92122, Fax (858) 332-1739, with a copy by facsimile only to: Law Office of Jennifer
A. Post, Attn: Jennifer A. Post, Esq., Fax (800) 783-2983, (ii) if to the Holder to: __________, __________________________
..

 

13.Miscellaneous.
This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination is sought. This Warrant shall be construed and
enforced in accordance with and governed by the laws of the State of California. Any dispute relating to this Warrant shall be
adjudicated in the City of San Diego in the State of California. The headings in this Warrant are for purposes of reference only
and shall not limit or otherwise affect any of the terms hereof. The invalidity or unenforceability of any provision hereof shall
in no way affect the validity or enforceability of any other provision.

 

 

 

REMAINDER OF PAGE INTENTIALLY
LEFT BLANK

 

    	7

    	 

    

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

 

	 	AETHLON MEDICAL, INC. 
	 	 
	 	 
	 	 
	 	By: ____________________
	 	Name:    James B. Frakes
	 	Title:     Chief Financial Officer

 

 

Witness:

 

 

 

____________________

 

    	8

    	 

    

Exhibit A

 

FORM OF SUBSCRIPTION

(to be signed only on exercise of Warrant)

TO: AETHLON MEDICAL, INC.

The undersigned, pursuant to the provisions
set forth in the attached Warrant (No.____), hereby irrevocably elects to purchase (check applicable box):

 

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

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

 

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

 

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

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

 

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

 

After application of the cashless exercise
feature as described above, _____________ shares of Common Stock are required to be delivered pursuant to the instructions below.

 

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

 

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

 

	Dated:___________________	 
	
         

         

        Signature:____________________

        (Signature must conform to name of holder as specified on the
        face of the Warrant)

         

        Address:____________________

        ____________________

        ____________________

         
	 

 

    	9

    	 

    

 

Exhibit B

 

 

FORM OF TRANSFEROR ENDORSEMENT

(To be signed only on transfer of Warrant)

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

 

 

	Transferees	Percentage Transferred	Number Transferred
	 	 	 
	 	 	 
	 	 	 

 

 

	
        Dated: ______________, ___________

         

         

         

        Signed in the presence of:

         

        _________________________

             (Name)

         

         

        ACCEPTED AND AGREED:

        [TRANSFEREE]

         

         

        _________________________

             (Name)

         
	
        ______________________________________________________________

        (Signature must conform to name of holder as specified on the
        face of the warrant)

         

         

         

        __________________________________

        __________________________________

        (address)

         

         

        _________________________________

        _________________________________

        (address)

 

 

 

 

    	10

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