Document:

Exhibit 10.2

 

AETHLON MEDICAL, INC.

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

for

 

Timothy C. Rodell, M.D., FCCP

 

This Executive Employment
Agreement (this “Agreement”), is made and entered into as of December 10, 2018
(the “Effective Date”), by and between Timothy C. Rodell (“Employee”) and Aethlon Medical,
Inc. (the “Company”).

 

1.              
Employment by the Company. 

 

1.1               Position. Employee shall serve as the Company’s Interim
Chief Executive Officer, initially reporting to the Company’s Board of Directors (the “Board”). During
the term of Employee’s employment with the Company, Employee will devote Employee’s best efforts and substantially
all of Employee’s business time and attention to the business of the Company, except for as permitted in Section 7.1 below
and except for approved vacation periods and reasonable periods of illness or other incapacities permitted by the Company’s
general employment policies. Employee’s anticipated start date will be December 10, 2018 (the “Start Date”).

 

1.2               
Duties and Location. Employee shall perform such duties as
are customarily associated with the position of Interim Chief Executive Officer and such other duties as are assigned to Employee
by the Company. The Employee will be based in Aspen Colorado; provided, however, Employee will maintain an office at 9635 Granite
Ridge Drive, Suite 100, San Diego, California and is expected to spend a substantial amount of time there as necessary and appropriate.
Subject to the terms of this Agreement, the Company reserves the right to (i) reasonably require Employee to perform Employee’s
duties at places other than Employee’s primary office location from time to time and to require reasonable business travel,
and (ii) modify Employee’s job title and duties as it deems necessary and appropriate in light of the Company’s
needs and interests from time to time. 

 

1.3               
Policies and Procedures. The employment relationship between
the parties shall be governed by the general employment policies and practices of the Company, except that when the terms of this
Agreement differ from or are in conflict with the Company’s general employment policies or practices, this Agreement shall
control. 

 

2.              
Compensation.

 

2.1               
Base Salary. For services to be rendered hereunder, Employee
shall receive a base salary at the rate of $390,000 per year (the “Base Salary”), less standard payroll deductions
and withholdings and payable in accordance with the Company’s regular payroll schedule. 

 

2.2                Annual Bonus. Employee will be eligible for an annual discretionary
bonus (the “Annual Bonus”) approved by the Board. Whether Employee receives an Annual Bonus for any given year,
and the amount of any such Annual Bonus, will be determined in the sole discretion of the Board (or the Compensation Committee
thereof), based upon the Company’s and Employee’s achievement of objectives and milestones to be determined on an annual
basis by the Board (or Compensation Committee thereof). No Annual Bonus is guaranteed and, in addition to the other conditions
for earning such compensation, Employee must remain an employee in good standing of the Company on the scheduled Annual Bonus payment
date in order to be eligible for any Annual Bonus.

 

2.3               
Cash Bonus and Equity Grant Upon Strategic Transaction. Employee
shall also be entitled to a cash bonus equal to fifty percent (50%) of Employee’s annual base salary upon consummation of
a strategic transaction by the Company, within two years of Employee’s Start Date, resulting in (a) a sale of all
or substantially all of the Company’s assets or stock on terms acceptable to the Board, in its sole discretion; (b) the Company
remaining as a publicly listed company on Nasdaq or the NYSE, with a post money valuation of at least $50 million; or (c) completion
of a financing of the Company, resulting in an increase in the post money valuation of the Company to at least $50 million, with
retirement of the Company’s outstanding convertible debt. Following a strategic transaction set forth in (b) or (c), Employee
will also receive a stock option grant of a number of shares of common stock that will result in Employee’s total equity
in the Company following such strategic transaction being equal to three percent (3%) of the outstanding shares on a fully-diluted
basis, with an exercise price equal to the fair market value on the date of the grant (the “ Additional Option”). The
Additional Option, including vesting terms, will be subject to the terms and conditions of the Company’s 2010 Equity Incentive
Plan (the “Plan”) and your grant agreement. The Additional Option shall vest over four years of continuous service
to the Company, with twenty-five percent (25%) of the shares subject to the Additional Option grant becoming vested on the first
year anniversary of the vesting commencement date, and the remaining shares becoming vested in equal monthly installments over
the following thirty-six (36) months of continuous service. The exercise price of the Additional Option, as well as all other matters
related to the Additional Option, will be governed by and subject to the terms and conditions set forth in the Plan, and the stock
option agreement Employee will be required to execute. Notwithstanding the foregoing, in the event Employee’s service with
the Company is terminated as a result of such strategic transaction, then the Additional Option shall be fully vested on the date
of grant.

 

 

 

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3.                  
Standard Company Benefits. Employee shall, in accordance with
Company policy and the terms and conditions of the applicable Company benefit plan documents, be eligible to participate in the
benefit and fringe benefit programs provided by the Company to its employees from time to time. Any such benefits shall be subject
to the terms and conditions of the governing benefit plans and policies and may be changed by the Company in its discretion.
Executive is entitled to participate in personal time off, including vacation and holiday benefits in accordance with Company policy
from time to time for its senior executives. Executive shall initially be entitled to four weeks of vacation time per year.

 

4.                  
Expenses. The Company will reimburse Employee for reasonable
travel and other reasonable and documented expenses incurred by Employee in furtherance or in connection with the performance of
Employee’s duties hereunder, in accordance with the Company’s expense reimbursement policy as in effect from time to
time. Reimbursable expenses will include travel from Aspen, Colorado and Atlanta, Georgia to the Company’s office in San
Diego and lodging in San Diego. Airline travel shall be coach class for flight durations under four hours and business or first
class for flight times of four hours or longer.

 

5.                  
Equity. Upon approval of the Compensation Committee of the
Board, Employee will be granted an option to purchase a number of shares of the Company’s common stock equal to three percent
(3%) of the outstanding shares, on a fully diluted basis, at an exercise price equal to the fair market value as determined by
the Compensation Committee as of the date of grant (the “Option”). The Option, including vesting terms, will
be subject to the terms and conditions of the Plan and your grant agreement. The Option shall vest over four years of continuous
service to the Company, with twenty-five percent (25%) of the shares subject to the Option grant becoming vested on the first year
anniversary of the vesting commencement date, and the remaining shares becoming vested in equal monthly installments over the following
thirty-six (36) months of continuous service. The exercise price of the Option, as well as all other matters related to the Option,
will be governed by and subject to the terms and conditions set forth in the Plan, and the stock option agreement Employee will
be required to execute.

 

6.              
Proprietary Information Obligations.

 

6.1               
Proprietary Information Agreement. As a condition of employment,
Employee shall execute and abide by the Company’s standard form of Proprietary Information and Invention Assignment Agreement
attached hereto as Appendix 1 (the “Proprietary Agreement”).

 

6.2               
Third-Party Agreements and Information. Employee represents
and warrants that Employee’s employment by the Company does not conflict with any prior employment or consulting agreement
or other agreement with any third party, and that Employee will perform Employee’s duties to the Company without violating
any such agreement. Employee represents and warrants that Employee does not possess confidential information arising out of prior
employment, consulting, or other third party relationships, that would be used in connection with Employee’s employment by
the Company, except as expressly authorized by that third party. During Employee’s employment by the Company, Employee will
use in the performance of Employee’s duties only information that is generally known and used by persons with training and
experience comparable to Employee’s own, common knowledge in the industry, otherwise legally in the public domain, or obtained
or developed by the Company or by Employee in the course of Employee’s work for the Company.

 

7.              
Outside Activities and Non-Competition During Employment.

 

7.1               
Outside Activities. Throughout Employee’s employment
with the Company, Employee may engage in civic and not-for-profit activities so long as such activities do not interfere with the
performance of Employee’s duties hereunder or present a conflict of interest with the Company or its affiliates. Subject
to the restrictions set forth herein, and only with prior written disclosure to and consent of the Board, Employee may engage in
other types of business or public activities. The activities listed in Appendix B attached hereto are acknowledged and approved
by the Board. The Board may rescind such consent, if the Board determines, in its sole discretion, that such activities compromise
or threaten to compromise the Company’s or its affiliates’ business interests or conflict with Employee’s duties
to the Company or its affiliates.

 

7.2                Non-Competition During Employment. During Employee’s
employment by the Company, Employee will not, without the express written consent of the Board, directly or indirectly serve as
an officer, director, stockholder, employee, partner, proprietor, investor, joint ventures, associate, representative or consultant
of any person or entity engaged in, or planning or preparing to engage in, business activity competitive with any line of business
engaged in (or planned to be engaged in) by the Company or its affiliates; provided, however, that Employee may purchase or otherwise
acquire up to (but not more than) one percent (1%) of any class of securities of any enterprise (without participating in the activities
of such enterprise) if such securities are listed on any national or regional securities exchange. In addition, Employee will be
subject to certain restrictions (including restrictions continuing after Employee’s employment ends) under the terms of the
Proprietary Agreement.

 

 

 

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8.              
Termination of Employment; Severance and Change in Control Benefits.

 

8.1                At-Will Employment. Employee’s employment relationship
is at-will. Either Employee or the Company may terminate the employment relationship at any time, with or without Cause (as defined
below) with 30 days advance written notice.

 

8.2                Equity Acceleration. Notwithstanding anything to the contrary
set forth in the Company’s 2010 Equity Incentive Plan, any prior equity incentive plans or any award agreement, effective
upon consummation of a Change in Control (as defined below), the vesting and exercisability of all unvested time-based vesting
equity awards then held by Employee shall accelerate such that all shares become immediately vested and exercisable, if applicable,
by Employee upon such Change in Control and shall remain exercisable, if applicable, following the Change in Control as set forth
in the applicable equity award documents. With respect to any performance-based vesting equity award, such award, if any, shall
continue to be governed in all respects by the terms of the applicable equity award documents.

 

8.3                Termination for Cause; Resignation Without Good Reason; Death or Disability. Employee
will not be eligible for, or entitled to any severance benefits, including (without limitation) the Equity Acceleration in Section
8.2 above, if the Company terminates Employee’s employment for Cause, Employee resigns Employee’s employment without
Good Reason, or Employee’s employment terminates due to Employee’s death or disability.

 

9.              
Section 280G; Limitations on Payment.

 

9.1                If any payment or benefit Employee will or may receive from
the Company or otherwise (a “280G Payment”) would (i) constitute a “parachute payment” within the
meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the
Code (the “Excise Tax”), then any such 280G Payment provided pursuant to this Agreement (a “Payment”)
shall be equal to the Reduced Amount. The “Reduced Amount” shall be either (x) the largest portion of the Payment
that would result in no portion of the Payment (after reduction) being subject to the Excise Tax or (y) the largest portion, up
to and including the total, of the Payment, whichever amount (i.e., the amount determined by clause (x) or by clause (y)), after
taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at
the highest applicable marginal rate), results in Employee’s receipt, on an after-tax basis, of the greater economic benefit
notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in a Payment is required
pursuant to the preceding sentence and the Reduced Amount is determined pursuant to clause (x) of the preceding sentence, the reduction
shall occur in the manner (the “Reduction Method”) that results in the greatest economic benefit for Employee.
If more than one method of reduction will result in the same economic benefit, the items so reduced will be reduced pro rata (the
“Pro Rata Reduction Method”).

 

9.2               Notwithstanding any provision of Section 9.1 to the contrary,
if the Reduction Method or the Pro Rata Reduction Method would result in any portion of the Payment being subject to taxes pursuant
to Section 409A that would not otherwise be subject to taxes pursuant to Section 409A, then the Reduction Method and/or the Pro
Rata Reduction Method, as the case may be, shall be modified so as to avoid the imposition of taxes pursuant to Section409A
as follows: (A) as a first priority, the modification shall preserve to the greatest extent possible, the greatest economic benefit
for Employee as determined on an after-tax basis; (B) as a second priority, Payments that are contingent on future events (e.g.,
being terminated without Cause), shall be reduced (or eliminated) before Payments that are not contingent on future events; and
(C) as a third priority, Payments that are “deferred compensation” within the meaning of Section 409A shall be reduced
(or eliminated) before Payments that are not deferred compensation within the meaning of Section 409A.

 

9.3                Unless Employee and the Company agree on an alternative accounting
firm or law firm, the accounting firm engaged by the Company for general tax compliance purposes as of the day prior to the effective
date of the Change in Control transaction shall perform the foregoing calculations. If the accounting firm so engaged by the Company
is serving as accountant or auditor for the individual, entity or group effecting the Change in Control transaction, the Company
shall appoint a nationally recognized accounting or law firm to make the determinations required by this Section 9. The Company
shall bear all expenses with respect to the determinations by such accounting or law firm required to be made hereunder. The Company
shall use commercially reasonable efforts to cause the accounting or law firm engaged to make the determinations hereunder to provide
its calculations, together with detailed supporting documentation, to Employee and the Company within fifteen (15) calendar days
after the date on which Employee’s right to a 280G Payment becomes reasonably likely to occur (if requested at that time
by Employee or the Company) or such other time as requested by Employee or the Company.

 

 

 

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9.4                If Employee receives a Payment for which the Reduced Amount
was determined pursuant to clause (x) of Section 9.1 and the Internal Revenue Service determines thereafter that some portion of
the Payment is subject to the Excise Tax, Employee agrees to promptly return to the Company a sufficient amount of the Payment
(after reduction pursuant to clause (x) of Section 9.1) so that no portion of the remaining Payment is subject to the Excise Tax.
For the avoidance of doubt, if the Reduced Amount was determined pursuant to clause (y) of Section 9.1, Employee shall have no
obligation to return any portion of the Payment pursuant to the preceding sentence.

 

10.              
Section 409A. It is intended that all of the severance benefits
and other payments payable under this Agreement satisfy, to the greatest extent possible, the exemptions from the application of
Code Section 409A provided under Treasury Regulations 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9), and this Agreement will
be construed to the greatest extent possible as consistent with those provisions, and to the extent not so exempt, this Agreement
(and any definitions hereunder) will be construed in a manner that complies with Section 409A. Notwithstanding any provision to
the contrary in this Agreement, if Employee is deemed by the Company at the time of Employee’s Separation from Service to
be a “specified employee” for purposes of Code Section 409A(a)(2)(B)(i), and if any of the payments upon Separation
from Service set forth herein and/or under any other agreement with the Company are deemed to be “deferred compensation”,
then to the extent delayed commencement of any portion of such payments is required in order to avoid a prohibited distribution
under Code Section 409A(a)(2)(B)(i) and the related adverse taxation under Section 409A, such payments shall not be provided to
Employee prior to the earliest of (i) the expiration of the six-month and one day period measured from the date of Employee’s
Separation from Service with the Company, (ii) the date of Employee’s death or (iii) such earlier date as permitted
under Section 409A without the imposition of adverse taxation. Upon the first business day following the expiration of such applicable
Code Section 409A(a)(2)(B)(i) period, all payments deferred pursuant to this Paragraph shall be paid in a lump sum to Employee,
and any remaining payments due shall be paid as otherwise provided herein or in the applicable agreement. No interest shall be
due on any amounts so deferred. If the Company determines that any severance benefits provided under this Agreement constitutes
“deferred compensation” under Section 409A, for purposes of determining the schedule for payment of the severance benefits,
the effective date of the Release will not be deemed to have occurred any earlier than the sixtieth (60th) date following the Separation
From Service, regardless of when the Release actually becomes effective. In addition to the above, to the extent required to comply
with Section 409A and the applicable regulations and guidance issued thereunder, if the applicable deadline for Employee to execute
(and not revoke) the applicable Release spans two calendar years, payment of the applicable severance benefits shall not commence
until the beginning of the second calendar year. To the extent required to avoid accelerated taxation and/or tax penalties under
Code Section 409A, amounts reimbursable to Employee under this Agreement shall be paid to Employee on or before the last day of
the year following the year in which the expense was incurred and the amount of expenses eligible for reimbursement (and in-kind
benefits provided to Employee) during any one year may not effect amounts reimbursable or provided in any subsequent year. The
Company makes no representation that any or all of the payments described in this Agreement will be exempt from or comply with
Code Section 409A and makes no undertaking to preclude Code Section 409A from applying to any such payment.

 

11.           
Definitions.

 

11.1             
Cause. For purposes of this Agreement, “Cause”
means the occurrence of any one or more of the following: (i) Employee’s conviction of or plea of guilty or nolo contendere
to any felony or a crime of moral turpitude; (ii) Employee’s willful and continued failure or refusal to follow lawful
and reasonable instructions of the Company or lawful and reasonable policies and regulations of the Company or its affiliates;
(iii) Employee’s willful and continued failure to faithfully and diligently perform the assigned duties of Employee’s
employment with the Company or its affiliates; (iv) unprofessional, unethical, immoral or fraudulent conduct by Employee; (v) conduct
by Employee that materially discredits the Company or any affiliate or is materially detrimental to the reputation, character and
standing of the Company or any affiliate; or (vi) Employee’s material breach of this Agreement, the Proprietary Agreement,
or any applicable Company policies. An event described in Section 11.1(ii) through Section 11.1(vi) herein shall not be treated
as “Cause” until after Employee has been given written notice of such event, failure, conduct or breach and Employee
fails to cure such event, failure, conduct or breach within 30 calendar days from such written notice; provided, however, that
such 30-day cure period shall not be required if the event, failure, conduct or breach is incapable of being cured.

 

11.2             Change in Control. For purposes of this Agreement, “Change
in Control” means: (a) a merger or consolidation in which the Company is not the surviving corporation (other than a
merger or consolidation with a wholly owned subsidiary, a reincorporation of the Company in a different jurisdiction, or another
transaction in which there is no substantial change in the stockholders of the Company or their relative stock holdings), (b) a
merger in which the Company is the surviving corporation but after which the stockholders of the Company immediately prior to such
merger (other than any stockholder that merges, or that owns or controls another corporation that merges, with the Company in such
merger) cease to own their shares or other equity interest in the Company, (c) the sale of substantially all of the assets of the
Company, or (d) the acquisition, sale, or transfer of more than 50% of the outstanding shares or the Company by tender offer or
similar transaction.

 

 

 

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11.3             
Good Reason. For purposes of this Agreement, Employee shall
have “Good Reason” for resignation from employment with the Company if any of the following actions are taken
by the Company without Employee’s prior written consent: (i) a material reduction in Employee’s Base Salary, unless
pursuant to a salary reduction program applicable generally to the Company’s senior executives; (ii) a material reduction
in Employee’s duties (including responsibilities and/or authorities), provided, however, that a change in job position
(including a change in title) or reporting line shall not be deemed a “material reduction” in and of itself unless
Employee’s new duties are materially reduced from the prior duties; or (iii) relocation of Employee’s principal place
of employment to a place that increases Employee’s one-way commute by more than fifty (50) miles as compared to Employee’s
then-current principal place of employment immediately prior to such relocation. In order for Employee to resign for Good Reason,
each of the following requirements must be met: (iv) Employee must provide written notice to the Board within 30 calendar days
after the first occurrence of the event giving rise to Good Reason setting forth the basis for Employee’s resignation, (v)
Employee must allow the Company at least 30 calendar days from receipt of such written notice to cure such event, (vi) such event
is not reasonably cured by the Company within such 30 calendar day period (the “Cure Period”), and (vii) Employee
must resign from all positions Employee then holds with the Company not later than 30 calendar days after the expiration of the
Cure Period.

 

12.              
Dispute Resolution. To ensure the rapid and economical resolution
of disputes that may arise in connection with Employee’s employment with the Company, Employee and the Company agree that
any and all disputes, claims, or causes of action, in law or equity, including but not limited to statutory claims, arising from
or relating to the enforcement, breach, performance, or interpretation of this Agreement, Employee’s employment with the
Company, or the termination of Employee’s employment from the Company, will be resolved pursuant to the Federal Arbitration
Act, 9 U.S.C. §1-16, and to the fullest extent permitted by law, by final, binding and confidential arbitration conducted
in San Diego, California by JAMS, Inc. (“JAMS”) or its successors before a single arbitrator, under JAMS’
then applicable rules and procedures for employment disputes (which will be provided to Employee upon request); provided that the
arbitrator shall: (i) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief
as would otherwise be permitted by law; and (ii) issue a written arbitration decision including the arbitrator’s essential
findings and conclusions and a statement of the award. Employee and the Company shall be entitled to all rights and remedies that
either would be entitled to pursue in a court of law. Both Employee and the Company acknowledge that by agreeing to this arbitration
procedure, they waive the right to resolve any such dispute through a trial by jury or judge or administrative proceeding.
The Company shall pay all filing fees in excess of those which would be required if the dispute were decided in a court of law,
and shall pay the arbitrator’s fee. Nothing in this Agreement is intended to prevent either the Company or Employee from
obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration.

 

13.           
General Provisions.

 

13.1             
Notices. Any notices provided must be in writing and will be
deemed effective upon the earlier of personal delivery (including personal delivery by fax) or the next day after sending by overnight
carrier, to the Company at its primary office location and to Employee at the address as listed on the Company payroll.

 

13.2             
Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is
held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed,
construed and enforced in such jurisdiction to the extent possible in keeping with the intent of the Parties.

 

13.3             
Waiver. Any waiver of any breach of any provisions of this
Agreement must be in writing to be effective, and it shall not thereby be deemed to have waived any preceding or succeeding breach
of the same or any other provision of this Agreement.

 

13.4             
Complete Agreement. This Agreement, together with the Proprietary
Agreement, constitutes the entire agreement between Employee and the Company with regard to the subject matter hereof and is the
complete, final, and exclusive embodiment of the Company’s and Employee’s agreement with regard to this subject matter.
This Agreement is entered into without reliance on any promise or representation, written or oral, other than those expressly contained
herein, and it supersedes any other such promises, warranties or representations. It cannot be modified or amended except in a
writing signed by a duly authorized officer of the Company, with the exception of those changes expressly reserved to the Company’s
discretion in this Agreement.

 

 

 

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13.5             
Counterparts. This Agreement may be executed in separate counterparts,
any one of which need not contain signatures of more than one party, but both of which taken together will constitute one and the
same Agreement.

 

13.6             
Headings. The headings of the paragraphs hereof are inserted
for convenience only and shall not be deemed to constitute a part hereof nor to affect the meaning thereof.

 

13.7             
Successors and Assigns. This Agreement is intended to bind
and inure to the benefit of and be enforceable by Employee and the Company, and their respective successors, assigns, heirs, executors
and administrators, except that Employee may not assign any of Employee’s duties hereunder and Employee may not assign any
of Employee’s rights hereunder without the written consent of the Company, which shall not be withheld unreasonably.

 

13.8             
Tax Withholding. All payments and awards contemplated or made
pursuant to this Agreement will be subject to withholdings of applicable taxes in compliance with all relevant laws and regulations
of all appropriate government authorities. Employee acknowledges and agrees that the Company has neither made any assurances nor
any guarantees concerning the tax treatment of any payments or awards contemplated by or made pursuant to this Agreement.
Employee has had the opportunity to retain a tax and financial advisor and fully understands the tax and economic consequences
of all payments and awards made pursuant to this Agreement.

 

13.9             
Choice of Law. All questions concerning the construction, validity
and interpretation of this Agreement will be governed by the laws of the State of California.

 

[Signature page follows]

 

 

 

 

 

 

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IN WITNESS WHEREOF,
the Parties have executed this Agreement to become effective as of the Effective Date written above.

 

	 	Aethlon Medical, Inc. 
	 	 
	 	 
	 	By: /s/ Charles J. Fisher, Jr.
	 	Charles J. Fisher, Jr., M.D.
	 	Chairman of the Board 
	 	 
	 	 
	 	Employee
	 	 
	 	/s/ Timothy C. Rodell
	 	Timothy C. Rodell, M.D., FCCP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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APPENDIX 1

 

EMPLOYEE CONFIDENTIAL
INFORMATION AND 

INVENTION ASSIGNMENT
AGREEMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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APPENDIX 2

 

OUTSIDE ACTIVITIES
APPROVED BY THE BOARD

 

 

1.       Managing Director
and Chairman of SMG, Inc., Aspen, Colorado.

2.       Director, GlobeImmune,
Inc., Louisville, Colorado.

3.       Consultant, GlobeImmune,
Inc., Louisville, Colorado.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	9Exhibit 10.3

 

 

 

AETHLON
MEDICAL, INC.

 

EXECUTIVE
EMPLOYMENT AGREEMENT

 

for

 

JAMES B. FRAKES

 

This Executive Employment
Agreement (this “Agreement”) is made and entered into as of December 12, 2018 (the “Effective Date”),
by and between James B. Frakes (“Employee”) and Aethlon Medical, Inc. (the “Company”).

 

1.                 
Employment by the Company.

 

1.1             
Position. Employee shall serve as the Company’s Chief Financial Officer and Senior Vice President - Finance, reporting
to the Company’s Board of Directors (the “Board”) and the Chief Executive Officer. During the term of
Employee’s employment with the Company, Employee will devote Employee’s best efforts and substantially all of Employee’s
business time and attention to the business of the Company, except for as permitted in Section 7.1 below and except for approved
vacation periods and reasonable periods of illness or other incapacities permitted by the Company’s general employment policies.

 

1.2             
Duties and Location. Employee shall perform such duties as are customarily associated with the position of Chief Financial
Officer and Senior Vice President - Finance and such other duties as are assigned to Employee by the Company. Employee’s
primary office location shall be the Company’s office in San Diego, California. Subject to the terms of this Agreement, the
Company reserves the right to (i) reasonably require Employee to perform Employee’s duties at places other than Employee’s
primary office location from time to time and to require reasonable business travel, and (ii) modify Employee’s job title
and duties as it deems necessary and appropriate in light of the Company’s needs and interests from time to time.

 

1.3             
Policies and Procedures. The employment relationship between the parties shall be governed by the general employment
policies and practices of the Company, except that when the terms of this Agreement differ from or are in conflict with the Company’s
general employment policies or practices, this Agreement shall control.

 

2.                 
Compensation.

 

2.1             
Base Salary. For services to be rendered hereunder, Employee shall receive a base salary at the rate of $260,000 per
year, less standard payroll deductions and withholdings and payable in accordance with the Company’s regular payroll schedule.

 

2.2             
Annual Bonus. Employee will be eligible for an annual discretionary bonus (the “Annual Bonus”). Whether
Employee receives an Annual Bonus for any given year, and the amount of any such Annual Bonus, will be determined in the discretion
of the Board (or the Compensation Committee thereof), based upon the Company’s and Employee’s achievement of objectives
and milestones to be determined on an annual basis by the Board (or Compensation Committee thereof). No Annual Bonus is guaranteed
and, in addition to the other conditions for earning such compensation, Employee must remain an employee in good standing of the
Company on the scheduled Annual Bonus payment date in order to be eligible for any Annual Bonus.

 

 

 

 

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3.                 
Standard Company Benefits. Employee shall, in accordance with Company policy and the terms and conditions of the applicable
Company benefit plan documents, be eligible to participate in the benefit and fringe benefit programs provided by the Company to
its employees from time to time, including health insurance for Employee and eligible dependents. Any such benefits shall be subject
to the terms and conditions of the governing benefit plans and policies and may be changed by the Company in its discretion.

 

4.                 
Expenses. The Company will reimburse Employee for reasonable travel, entertainment or other expenses incurred by Employee
in furtherance or in connection with the performance of Employee’s duties hereunder, in accordance with the Company’s
expense reimbursement policy as in effect from time to time.

 

5.                 
Equity. Any stock, stock options, or other equity awards that Employee has previously been granted by the Company shall
continue to be governed in all respects by the terms of the applicable grant agreements, grant notices, and plan documents.

 

6.                 
 Confidential Information Obligations.

 

6.1             
Confidential Information Agreement. As a condition of employment, Employee shall execute and abide by the Company’s
standard form of Confidential Information and Invention Assignment Agreement (the “Confidential Information Agreement”).

 

6.2             
Third-Party Agreements and Information. Employee represents and warrants that Employee’s employment by the Company
does not conflict with any prior employment or consulting agreement or other agreement with any third party, and that Employee
will perform Employee’s duties to the Company without violating any such agreement. Employee represents and warrants that
Employee does not possess confidential information arising out of prior employment, consulting, or other third party relationships,
that would be used in connection with Employee’s employment by the Company, except as expressly authorized by that third
party. During Employee’s employment by the Company, Employee will use in the performance of Employee’s duties only
information that is generally known and used by persons with training and experience comparable to Employee’s own, common
knowledge in the industry, otherwise legally in the public domain, or obtained or developed by the Company or by Employee in the
course of Employee’s work for the Company.

 

7.                 
Outside Activities and Non-Competition During Employment.

 

7.1             
Outside Activities. During Employee’s employment with the Company, Employee may engage in civic and not-for-profit
activities so long as such activities do not interfere with the performance of Employee’s duties hereunder or present a conflict
of interest with the Company or its affiliates. Subject to the restrictions set forth herein, and only with prior written disclosure
to and consent of the Board, Employee may engage in other types of business or public activities. The Board may rescind such consent,
if the Board determines, in its sole discretion, that such activities compromise or threaten to compromise the Company’s
or its affiliates’ business interests or conflict with Employee’s duties to the Company or its affiliates.

 

 

 

 

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7.2             
Non-Competition During Employment. During Employee’s employment with the Company, Employee will not, without the
express written consent of the Board, directly or indirectly serve as an officer, director, stockholder, employee, partner, proprietor,
investor, joint ventures, associate, representative or consultant of any person or entity engaged in, or planning or preparing
to engage in, business activity competitive with any line of business engaged in (or planned to be engaged in) by the Company or
its affiliates; provided, however, that Employee may purchase or otherwise acquire up to (but not more than) one percent (1%) of
any class of securities of any enterprise (without participating in the activities of such enterprise) if such securities are listed
on any national or regional securities exchange. In addition, Employee will be subject to certain restrictions (including restrictions
continuing after Employee’s employment ends) under the terms of the Confidential Information Agreement.

 

8.                 
Termination of Employment; Severance Benefits.

 

8.1             
At-Will Employment. Employee’s employment relationship is at-will. Either Employee or the Company may terminate
the employment relationship at any time, with or without Cause (as defined below) or advance notice.

 

8.2             
Termination Without Cause or Resignation for Good Reason. In the event Employee’s employment with the Company
is terminated by the Company without Cause (and other than as a result of Employee’s death or disability) or Employee resigns
for Good Reason, then provided such termination constitutes a “separation from service” (as defined under Treasury
Regulation Section 1.409A-1(h), without regard to any alternative definition thereunder, a “Separation from Service”),
and provided that Employee satisfies the Release Requirement in Section 9 below, and remains in compliance with the terms of this
Agreement and the Confidential Information Agreement, the Company shall provide Employee with the following “Severance
Benefits”:

 

8.2.1       Severance
Payments. Severance pay in the form of continuation of Employee’s final monthly base salary for a period of twelve (12)
months following termination, subject to required payroll deductions and tax withholdings (the “Severance Payments”).
Subject to Section 10 below, the Severance Payments shall be made on the Company’s regular payroll schedule in effect following
Employee’s termination date; provided, however that any such payments that are otherwise scheduled to be made prior to the
Release Effective Date (as defined below) shall instead accrue and be made on the first regular payroll date following the Release
Effective Date. For such purposes, Employee’s final base salary will be calculated prior to giving effect to any reduction
in base salary that would give rise to Employee’s right to resign for Good Reason.

 

8.2.2       Health
Care Continuation Coverage Payments.

 

(i)       COBRA
Premiums. If Employee timely elects continued coverage under COBRA, the Company will pay Employee’s COBRA premiums to
continue Employee’s coverage (including coverage for Employee’s eligible dependents, if applicable) (“COBRA
Premiums”) through the period starting on the termination date and ending twelve (12) months after the termination date
(the “COBRA Premium Period”); provided, however, that the Company’s provision of such COBRA Premium benefits
will immediately cease if during the COBRA Premium Period Employee becomes eligible for group health insurance coverage through
a new employer or Employee ceases to be eligible for COBRA continuation coverage for any reason, including plan termination. In
the event Employee becomes covered under another employer’s group health plan or otherwise ceases to be eligible for COBRA
during the COBRA Premium Period, Employee must immediately notify the Company of such event.

 

 

 

 

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(ii)       Special
Cash Payments in Lieu of COBRA Premiums. Notwithstanding the foregoing, if the Company determines, in its sole discretion,
that it cannot pay the COBRA Premiums without potentially incurring financial costs or penalties under applicable law (including,
without limitation, Section 2716 of the Public Health Service Act), regardless of whether Employee or Employee’s dependents
elect or are eligible for COBRA coverage, the Company instead shall pay to Employee, on the first day of each calendar month following
the termination date, a fully taxable cash payment equal to the applicable COBRA premiums for that month (including the amount
of COBRA premiums for Employee’s eligible dependents), subject to applicable tax withholdings (such amount, the “Special
Cash Payment”), for the remainder of the COBRA Premium Period. Employee may, but is not obligated to, use such Special
Cash Payments toward the cost of COBRA premiums or toward premium costs under an individual health plan.

 

8.3       Termination
for Cause; Resignation Without Good Reason; Death or Disability. Employee will not be eligible for, or entitled to any severance
benefits, including (without limitation) the Severance Benefits listed in Section 8.2 above, if the Company terminates Employee’s
employment for Cause, Employee resigns Employee’s employment without Good Reason, or Employee’s employment terminates
due to Employee’s death or disability.

 

9.                 
Conditions to Receipt of Severance Benefits. To be eligible for the Severance Benefits pursuant to Section 8.2 above,
Employee must satisfy the following release requirement (the “Release Requirement”): return to the Company a
signed and dated general release of all known and unknown claims in a termination agreement acceptable to the Company (the “Release”)
within the applicable deadline set forth therein, but in no event later than forty-five (45) calendar days following Employee’s
termination date, and permit the Release to become effective and irrevocable in accordance with its terms (such effective date
of the Release, the “Release Effective Date”). No Severance Benefits will be paid hereunder prior to the Release
Effective Date. Accordingly, if Employee breaches the preceding sentence and/or refuses to sign and deliver to the Company an executed
Release or signs and delivers to the Company the Release but exercises Employee’s right, if any, under applicable law to
revoke the Release (or any portion thereof), then Employee will not be entitled to any severance, payment or benefit under this
Agreement.

 

10.             
Section 409A. It is intended that all of the severance benefits and other payments payable under this Agreement satisfy,
to the greatest extent possible, the exemptions from the application of Code Section 409A provided under Treasury Regulations 1.409A-1(b)(4),
1.409A-1(b)(5) and 1.409A-1(b)(9), and this Agreement will be construed to the greatest extent possible as consistent with those
provisions, and to the extent not so exempt, this Agreement (and any definitions hereunder) will be construed in a manner that
complies with Section 409A. For purposes of Code Section 409A (including, without limitation, for purposes of Treasury Regulation
Section 1.409A-2(b)(2)(iii)), Employee’s right to receive any installment payments under this Agreement (whether severance
payments, reimbursements or otherwise) shall be treated as a right to receive a series of separate payments and, accordingly, each
installment payment hereunder shall at all times be considered a separate and distinct payment. Notwithstanding any provision to
the contrary in this Agreement, if Employee is deemed by the Company at the time of Employee’s Separation from Service to
be a “specified employee” for purposes of Code Section 409A(a)(2)(B)(i), and if any of the payments upon Separation
from Service set forth herein and/or under any other agreement with the Company are deemed to be “deferred compensation”,
then to the extent delayed commencement of any portion of such payments is required in order to avoid a prohibited distribution
under Code Section 409A(a)(2)(B)(i) and the related adverse taxation under Section 409A, such payments shall not be provided to
Employee prior to the earliest of (i) the expiration of the six-month and one day period measured from the date of Employee’s
Separation from Service with the Company, (ii) the date of Employee’s death or (iii) such earlier date as permitted under
Section 409A without the imposition of adverse taxation. Upon the first business day following the expiration of such applicable
Code Section 409A(a)(2)(B)(i) period, all payments deferred pursuant to this Paragraph shall be paid in a lump sum to Employee,
and any remaining payments due shall be paid as otherwise provided herein or in the applicable agreement. No interest shall be
due on any amounts so deferred. If the Company determines that any severance benefits provided under this Agreement constitutes
“deferred compensation” under Section 409A, for purposes of determining the schedule for payment of the severance benefits,
the effective date of the Release will not be deemed to have occurred any earlier than the sixtieth (60th) date following the Separation
From Service, regardless of when the Release actually becomes effective. In addition to the above, to the extent required to comply
with Section 409A and the applicable regulations and guidance issued thereunder, if the applicable deadline for Employee to execute
(and not revoke) the applicable Release spans two calendar years, payment of the applicable severance benefits shall not commence
until the beginning of the second calendar year. To the extent required to avoid accelerated taxation and/or tax penalties under
Code Section 409A, amounts reimbursable to Employee under this Agreement shall be paid to Employee on or before the last day of
the year following the year in which the expense was incurred and the amount of expenses eligible for reimbursement (and in-kind
benefits provided to Employee) during any one year may not effect amounts reimbursable or provided in any subsequent year. The
Company makes no representation that any or all of the payments described in this Agreement will be exempt from or comply with
Code Section 409A and makes no undertaking to preclude Code Section 409A from applying to any such payment.

 

 

 

 

    	 	4	 

     

    

 

 

11.             
Definitions.

 

11.1         
Cause. For purposes of this Agreement, “Cause”
means the occurrence of any one or more of the following: (i) Employee’s conviction of or plea of guilty or nolo contendere
to any felony or a crime of moral turpitude; (ii) Employee’s willful and continued failure or refusal to follow lawful and
reasonable instructions of the Board and/or the Company or lawful and reasonable policies and regulations of the Company or its
affiliates; (iii) Employee’s willful and continued failure to faithfully and diligently perform the assigned duties of Employee’s
employment with the Company or its affiliates; (iv) unprofessional, unethical, immoral or fraudulent conduct by Employee; (v) conduct
by Employee that materially discredits the Company or any affiliate or is materially detrimental to the reputation, character and
standing of the Company or any affiliate; or (vi) Employee’s material breach of this Agreement, the Confidential Information
Agreement, or any applicable Company policies. An event described in Section 11.1(ii) through Section 11.1(vi) herein shall not
be treated as “Cause” until after Employee has been given written notice of such event, failure, conduct or breach
and Employee fails to cure such event, failure, conduct or breach within 30 calendar days from such written notice; provided, however,
that such 30-day cure period shall not be required if the event, failure, conduct or breach is incapable of being cured.

 

11.2         
Good
Reason. For purposes of this Agreement, Employee shall have “Good Reason” for resignation from employment
with the Company if any of the following actions are taken by the Company without Employee’s prior written consent: (i)
a material reduction in Employee’s base salary, unless pursuant to a salary reduction program applicable generally to the
Company’s senior executives of not more than 10%; (ii) a material reduction in Employee’s duties (including responsibilities
and/or authorities), provided, however, that a change in job position (including a change in title) or reporting line shall
not be deemed a “material reduction” in and of itself unless Employee’s new duties are materially reduced from
the prior duties; or (iii) relocation of Employee’s principal place of employment to a place that increases Employee’s
one-way commute by more than twenty-five (25) miles as compared to Employee’s then-current principal place of employment
immediately prior to such relocation. In order for Employee to resign for Good Reason, each of the following requirements must
be met: (iv) Employee must provide written notice to the Board within 30 calendar days after the first occurrence of the event
giving rise to Good Reason setting forth the basis for Employee’s resignation, (v) Employee must allow the Company at least
30 calendar days from receipt of such written notice to cure such event, (vi) such event is not reasonably cured by the Company
within such 30 calendar day period (the “Cure Period”), and (vii) Employee must resign from all positions Employee
then holds with the Company not later than 30 calendar days after the expiration of the Cure Period.

 

12.       Dispute
Resolution. To ensure the rapid and economical resolution of disputes that may arise in connection with Employee’s employment
with the Company, Employee and the Company agree that any and all disputes, claims, or causes of action, in law or equity, including
but not limited to statutory claims, arising from or relating to the enforcement, breach, performance, or interpretation of this
Agreement, Employee’s employment with the Company, or the termination of Employee’s employment from the Company, will
be resolved pursuant to the Federal Arbitration Act, 9 U.S.C. §1-16, and to the fullest extent permitted by law, by final,
binding and confidential arbitration conducted in San Diego, California by JAMS, Inc. (“JAMS”) or its successors
before a single arbitrator, under JAMS’ then applicable rules and procedures for employment disputes (which will be provided
to Employee upon request); provided that the arbitrator shall: (i) have the authority to compel adequate discovery for the resolution
of the dispute and to award such relief as would otherwise be permitted by law; and (ii) issue a written arbitration decision including
the arbitrator’s essential findings and conclusions and a statement of the award. Employee and the Company shall be entitled
to all rights and remedies that either would be entitled to pursue in a court of law. Questions of whether a claim is subject to
arbitration under this Agreement shall be decided by the arbitrator. Likewise, procedural questions which grow out of the dispute
and bear on the final disposition are also matters for the arbitrator. Both Employee and the Company acknowledge that by agreeing
to this arbitration procedure, they waive the right to resolve any such dispute through a trial by jury or judge or administrative
proceeding. The Company shall pay all filing fees in excess of those that would be required if the dispute were decided in
a court of law, and shall pay the arbitrator’s fee and any other fees or costs unique to arbitration. Nothing in this Agreement
is intended to prevent either the Company or Employee from obtaining injunctive relief in court to prevent irreparable harm pending
the conclusion of any such arbitration.

 

 

 

    	 	5	 

     

    

 

 

13.       General
Provisions.

 

13.1       Notices.
Any notices provided must be in writing and will be deemed effective upon the earlier of personal delivery (including personal
delivery by fax) or the next day after sending by overnight carrier, to the Company at its primary office location and to Employee
at the address as listed on the Company payroll.

 

13.2       Severability.
Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable
law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other
jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction to the extent possible in keeping
with the intent of the Parties.

 

13.3       Waiver.
Any waiver of any breach of any provisions of this Agreement must be in writing to be effective, and it shall not thereby be deemed
to have waived any preceding or succeeding breach of the same or any other provision of this Agreement.

 

13.4       Complete
Agreement. This Agreement, together with the Confidential Information Agreement, constitutes the entire agreement between Employee
and the Company with regard to the subject matter hereof and is the complete, final, and exclusive embodiment of the Company’s
and Employee’s agreement with regard to this subject matter. This Agreement is entered into without reliance on any promise
or representation, written or oral, other than those expressly contained herein, and it supersedes, extinguishes, and replaces
in their entirety all other or prior agreements, whether oral or written, with respect to Employee’s employment compensation,
benefits, and terms with the Company or its affiliates or predecessors. It cannot be modified or amended except in a writing signed
by a duly authorized member of the Board, with the exception of those changes expressly reserved to the Company’s discretion
in this Agreement.

 

13.5       Counterparts.
This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, but
both of which taken together will constitute one and the same Agreement.

 

13.6       Headings.
The headings of the sections hereof are inserted for convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning thereof.

 

 

 

 

    	 	6	 

     

    

 

 

13.7       Successors
and Assigns. This Agreement is intended to bind and inure to the benefit of and be enforceable by Employee and the Company, and
their respective successors, assigns, heirs, executors and administrators, except that Employee may not assign any of Employee’s
duties hereunder and Employee may not assign any of Employee’s rights hereunder without the written consent of the Company,
which shall not be withheld unreasonably.

13.8       Tax
Withholding. All payments and awards contemplated or made pursuant to this Agreement will be subject to withholdings of applicable
taxes in compliance with all relevant laws and regulations of all appropriate government authorities. Employee acknowledges and
agrees that the Company has neither made any assurances nor any guarantees concerning the tax treatment of any payments or awards
contemplated by or made pursuant to this Agreement. Employee has had the opportunity to retain a tax and financial advisor and
fully understands the tax and economic consequences of all payments and awards made pursuant to this Agreement.

13.9       Choice
of Law. All questions concerning the construction, validity and interpretation of this Agreement will be governed by the laws
of the State of California.

 

 

 

 

[Signature Page
to Follow]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    	 	7	 

     

    

 

 

In
Witness Whereof, the Parties have executed this Agreement to become effective as of the Effective Date written above.

 

 

	 	AETHLON MEDICAL, INC.

	 	 
	 	 
	 	 
	 	By:	 	 
	 	Print Name: 	 	 
	 	Title:	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	EMPLOYEE 

	 	 
	 	Signature:	 	 
	 	 	 	James B. Frakes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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