<Page>
EXHIBIT 10.1
THIS NOTE AND THE
SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTE
HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE
SECURITIES LAWS. NEITHER THE NOTE NOR SUCH SHARES OF COMMON
STOCK MAY BE
OFFERED FOR SALE, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED
WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND UNDER
ANY APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL,
SATISFACTORY TO
THE
COMPANY, THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
AETHLON MEDICAL, INC.
10% CONVERTIBLE NOTE
$___,000
FOR VALUE
RECEIVED, Aethlon Medical, Inc., a Nevada corporation (the
"Company"), promises to pay to ______________________, whose
address is
_______________________________, or registered assigns (the
"Holder"), the sum
of ___________________ Dollars ($___,000) in lawful money of the
United States
of America on or before the Maturity Date as defined herein, with
all Interest
thereon as defined and specified herein.
1.
INTEREST.
This Note shall bear interest ("Interest") equal to ten
percent (10%) per annum on the unpaid principal balance, computed
on a three
hundred sixty (360)-day year, during the term of the Note. The
Company shall pay
all Interest on or before the Maturity Date. In no event shall the
rate of
Interest payable on this Note exceed the maximum rate of Interest
permitted to
be charged under applicable law.
2.
PAYMENTS.
All payments under this Note shall first be credited
against the payment of accrued and unpaid Interest, if any, and the
remainder
shall be credited against principal. All payments due hereunder
shall be payable
in legal tender of the United States of America, and in same day
funds delivered
to Holder by cashier's check, certified check, bank wire transfer
or any other
means of guaranteed funds to the mailing address provided below, or
at such
other place as the Holder shall designate in writing for such
purpose from time
to time. If a payment under this Note otherwise would become due
and payable on
a Saturday, Sunday or legal holiday (any other day being a
"Business Day"), the
due date of the payment shall be extended to the next succeeding
Business Day,
and Interest, if any, shall be payable thereon during such
extension.
3.
PRE-PAYMENTS AND MATURITY DATE. This Note shall be due and
payable
in full, including all accrued Interest thereon, on _______, 2010
(the "Maturity
Date") reflecting the eighteen month term of this Note. At any time
on or prior
to the Maturity Date, the Company shall have the right to prepay
this Note, in
whole or in part, on ten (10) days' advance notice to the Holder
and subject to
the right of the Holder to convert in advance of such prepayment
date and
provided that on such prepayment date, the Company will pay in
respect of the
redeemed Note cash equal to the face amount plus accrued Interest
on the Note
(or portion thereof) redeemed. At any time after the Maturity Date,
the Company
shall have the right to repay this Note, in whole or in part, on
ten (10) days'
advance notice to the Holder and subject to the right of the Holder
to convert
in advance of such repayment date. The Company may prepay this Note
at any time
after issuance without penalty.
<Page>
4.
CONVERSION
OF NOTE.
4.1 CONVERSION
OF NOTE/CONVERSION PRICE. This Note is convertible,
at the option of the Holder, into shares of the Company's Common
Stock (the
"Common Stock") at any time after the Issue Date prior to the close
of business
on the Business Day prior to the Maturity Date at the rate of $0.50
per share
(the "Conversion Price"), subject to adjustment as hereinafter
provided. No
fractional shares will be issued. In lieu thereof, the Company will
pay cash for
fractional share amounts equal to the fair market value of the
Common Stock as
quoted as the closing bid price of the Common Stock on the date of
conversion.
4.2 ADJUSTMENT
BASED UPON STOCK DIVIDENDS, COMBINATION OF SHARES
OR RECAPITALIZATION. The Conversion Price shall be adjusted in the
event that
the Company shall at any time (i) pay a stock dividend on the
Common Stock; (ii)
subdivide its outstanding Common Stock into a greater number of
shares; (iii)
combine its outstanding Common Stock into a smaller number of
shares; (iv) issue
by reclassification of its Common Stock any other special capital
stock of the
Company; or (v) distribute to all holders of Common Stock evidences
of
indebtedness or assets (excluding cash dividends) or rights or
warrants to
subscribe for Common Stock (other than those mentioned above). Upon
the
occurrence of an event requiring adjustment of the Conversion
Price, and
thereafter, the Holder, upon surrender of this Note for conversion,
shall be
entitled to receive the number of shares of Common Stock or other
capital stock
of the Company that the Holder would have owned or have been
entitled to receive
after the happening of any of the events described above had this
Note been
converted immediately prior to the happening of such event.
4.3 ADJUSTMENT
BASED UPON MERGER OR CONSOLIDATION. In case of any
consolidation or merger to which the Company is a party (other than
a merger in
which the Company is the surviving entity and which does not result
in any
reclassification of or change in the outstanding Common Stock of
the Company),
or in case of any sale or conveyance to another person, firm, or
corporation of
the property of the Company as an entirety or substantially as an
entirety, the
Holder shall have the right to convert this Note into the kind and
amount of
securities and property (including cash) receivable upon such
consolidation,
merger, sale or conveyance by the Holder of the number of shares of
Common Stock
into which such Note might have been converted immediately prior
thereto.
4.4 EXERCISE OF
CONVERSION PRIVILEGE.
4.4.1 The
Conversion Privilege provided for in this Note
shall be exercisable by the Holder by written notice to the Company
or its
successor and the surrender of this Note in exchange for the number
of shares
(or other securities and property, including cash, in the event of
an adjustment
of the Conversion Price) into which this Note is convertible based
upon the
Conversion Price.
-2-
<Page>
4.4.2 The
Holder's conversion right may be exercised at any
time and from time to time but prior to payment in full of the
principal amount
of the accrued interest on this Note. Conversion rights will expire
at the close
of business on the Business Day prior to the Maturity Date or
redemption date of
this Note.
4.4.3
The Holder may
exercise the right to convert all or
any portion of the principal amount and accrued Interest on this
Note by
delivery of (i) this Note and (ii) a completed Conversion Notice in
the form
attached as EXHIBIT A on a Business Day to the Company's principal
executive
offices. Such conversion shall be deemed to have been made
immediately prior to
the close of business on the Business Day of such delivery a
conversion notice
(the "Conversion Date"), and the Holder shall be treated for all
purposes as the
record holder of the shares of Common Stock into which this Note is
converted as
of such date.
4.4.4 Upon
conversion of the entire principal amount and
accrued Interest of this Note and the delivery of shares of Common
Stock upon
conversion of this Note, except as otherwise provided in Paragraph
20,
"Representations and Warranties to Survive Closing," the Company
shall be
forever released from all of its obligations and liabilities under
this Note.
4.5 CORPORATE
STATUS OF COMMON STOCK TO BE ISSUED. All Common
Stock (or other securities in the event of an adjustment of the
Conversion
Price) which may be issued upon the conversion of this Note shall,
upon
issuance, be fully paid and nonassessable.
4.6
ISSUANCE OF
CERTIFICATE. Upon the conversion of this Note, the
Company shall, within five (5) Business Days of such conversion,
issue to the
Holder a certificate or certificates representing the number of
shares of the
Common Stock (or other securities in the event of an adjustment of
the
Conversion Price) to which the conversion relates.
5.
STATUS OF
HOLDER OF NOTE. This Note shall not entitle the Holder to
any voting rights or other rights as a shareholder of the Company
or to any
rights whatsoever except the rights herein expressed, and no
dividends shall be
payable or accrue in respect of this Note or the securities
issuable upon the
conversion hereof unless and until this Note shall be converted.
Upon the
conversion of this Note, the Holder shall, to the extent permitted
by law, be
deemed to be the holder of record of the shares of Common Stock
issuable upon
such conversion, notwithstanding that the stock transfer books of
the Company
shall then be closed or that the certificates representing such
shares of Common
Stock and Warrants shall not then be actually delivered.
6.
RESERVATION OF SHARES OF COMMON STOCK. The Company shall reserve
out
of its authorized shares of Common Stock, and other securities in
the event of
an adjustment of the Conversion Price, a number of shares
sufficient to enable
it to comply with its obligation to issue shares of Common Stock,
and other
securities in the event of an adjustment of the Conversion Price,
upon the
conversion of this Note.
7.
TRANSFER
RESTRICTIONS; EXEMPTION FROM REGISTRATION.
7.1 The Holder
agrees that (i) this Note and the shares of Common
Stock issuable upon conversion have not been registered under the
Act and may
not be sold or transferred without registration under the Act or
unless an
-3-
<Page>
exemption from such registration is available; (ii) the Holder has
acquired this
Note and will acquire the Common Stock for its own account for
investment
purposes only and not with a view toward resale or distribution;
and (iii) if a
registration statement that includes the Common Stock is not
effective at the
time Common Stock is issued to Holder upon conversion under this
Note, and the
Common Stock is not exempt from registration under Rule 144, then
the Common
Stock shall be inscribed with the following legend:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES
LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT
BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF
HOLDER'S COUNSEL,
IN A CUSTOMARY FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT OR
APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE
144 UNDER SAID
ACT.
7.2 If an
opinion of counsel of Holder provides that registration
is not required for the proposed conversion or transfer of this
Note or the
proposed transfer of the shares of Common Stock issuable upon
conversion and
that the proposed conversion or transfer in the absence of
registration would
require the Company to take any action including executing and
filing forms or
other documents with the Securities and Exchange Commission (the
"SEC") or any
state securities agency, or delivering to the Holder any form or
document in
order to establish the right of the Holder to effectuate the
proposed conversion
or transfer, the Company agrees promptly, at its expense, to take
any such
action; and provided, further, that the Company will reimburse the
Holder in
full for any expenses (including but not limited to the fees and
disbursements
of such counsel, but excluding brokers' commissions) incurred by
the Holder or
owner of shares of Common Stock on his, her or its behalf in
connection with
such conversion or transfer of the Note or transfer of the shares
of Common
Stock.
8.
INFORMATION ON COMPANY. Holder has been furnished with or has
had
access at the EDGAR Website of the SEC to the Company's Form 10-KSB
filed on
July 15, 2008 for the fiscal year ended March 31, 2008, and the
financial
statements included therein, together with all subsequent filings
made with the
SEC available at the EDGAR website (hereinafter referred to
collectively as the
"REPORTS"). In addition, Holder may have received in writing from
the Company
such other information concerning its operations, financial
condition and other
matters as Holder has requested in writing, identified thereon as
OTHER WRITTEN
INFORMATION (such other information is collectively, the "OTHER
WRITTEN
INFORMATION"), and considered all factors Holder deems material in
deciding on
the advisability of investing in this Note (and underlying shares
of Common
Stock).
8.
INFORMATION ON SUBSCRIBER. Holder is, and will be at the time of
the
exercise of the Warrants, an "ACCREDITED INVESTOR", as such term is
defined in
Regulation D promulgated by the SEC under the 1933 Act, is
experienced in
investments and business matters, has made investments of a
speculative nature
and has purchased securities of United States publicly-owned
companies in
private placements in the past and, with its representatives, has
such knowl
