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EXHIBIT 10.1
THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS
NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS
NOTE AND THE
COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE
SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION
STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL
REASONABLY
SATISFACTORY TO AETHLON MEDICAL, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED.
PRINCIPAL AMOUNT:
$
ISSUE DATE: AS OF JULY 10, 2009
PURCHASE PRICE: $
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CONVERTIBLE NOTE
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FOR VALUE
RECEIVED, AETHLON MEDICAL, INC., a Nevada corporation
(hereinafter called "Borrower"), hereby promises to pay to
________________________(the "Holder") or order, without demand,
the sum of
_________Thousand Dollars ($_________.00), with interest accruing
thereon, on
July 10, 2010 (the "Maturity Date"), if not retired sooner.
ARTICLE I
GENERAL PROVISIONS
1.1 INTEREST RATE.
Interest payable on this Note shall accrue at the
annual rate of ten percent (10%) and be payable on the last day of
each calendar
quarter and on the Maturity Date, accelerated or otherwise, when
the principal
and remaining accrued but unpaid interest shall be due and payable,
or sooner as
described below.
1.2 PAYMENT GRACE
PERIOD. The Borrower shall have a five (5) day grace
period to pay any monetary amounts due under this Note, after which
grace period
a default interest rate of fifteen percent (15%) per annum.
1.3 CONVERSION
PRIVILEGES. The Conversion Privileges set forth in
Article II shall remain in full force and effect immediately from
the date
hereof and until the Note is paid in full regardless of the
occurrence of an
Event of Default. The Note shall be payable in full on the Maturity
Date, unless
previously converted into Common Stock in accordance with Article
II hereof;
provided, that if an Event of Default has occurred, the Borrower
may not pay
this Note, without the consent of the Holder, until one year after
the later of
the date the Event of Default has been cured or one year after the
Maturity
Date.
1.4 WARRANT
ISSUANCE. In connection with this Note, the Borrower agrees
to issue the Holder a warrant to purchase ________shares of its
Common Stock,
$.001 par value per share ("Common Stock") with a strike price of
$0.50 per
share and an expiration date of July 9, 2012.
ARTICLE II
CONVERSION RIGHTS
The Holder shall
have the right to convert the principal and any
interest due under this Note into Shares of the Borrower's Common
Stock as set
forth below.
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2.1. CONVERSION
INTO THE BORROWER'S COMMON STOCK.
(a) The Holder shall have the right from and after the date of
the issuance of this Note and then at any time until this Note is
fully paid, to
convert any outstanding and unpaid principal portion of this Note,
and accrued
interest, at the election of the Holder (the date of giving of such
notice of
conversion being a "Conversion Date") into fully paid and
nonassessable shares
of Common Stock as such stock exists on the date of issuance of
this Note, or
any shares of capital stock of Borrower into which such Common
Stock shall
hereafter be changed or reclassified, at the conversion price as
defined in
Section 2.1(b) hereof (the "Conversion Price"), determined as
provided herein.
Upon delivery to the Borrower of a completed Notice of Conversion,
a form of
which is annexed hereto as Exhibit A, Borrower shall issue and
deliver to the
Holder within three (3) business days after the Conversion Date
(such third day
being the "Delivery Date") that number of shares of Common Stock
for the portion
of the Note converted in accordance with the foregoing. At the
election of the
Holder, the Borrower will deliver accrued but unpaid interest on
the Note, if
any, through the Conversion Date directly to the Holder on or
before the
Delivery Date. The number of shares of Common Stock to be issued
upon each
conversion of this Note shall be determined by dividing that
portion of the
principal of the Note and interest, if any, to be converted, by the
Conversion
Price.
(b) Subject to adjustment as provided in Section 2.1(c)
hereof, the Conversion Price per share shall be equal to the lesser
of (i) $0.25
("Maximum Conversion Price"), and (ii) eighty percent (80%) of the
three day
average of the closing bid prices of the Common Stock as reported
by Bloomberg
L.P. on the date preceding a Conversion Date ("Variable Conversion
Price"),
subject to a "Floor Price" of $0.15.
(c) The Conversion Price and number and kind of shares or
other securities to be issued upon conversion determined pursuant
to Section
2.1(a), shall be subject to adjustment from time to time upon the
happening of
certain events while this conversion right remains outstanding, as
follows:
A. Merger, Sale of Assets, etc. If the Borrower at
any time shall consolidate with or merge into or sell or convey all
or
substantially all its assets to any other corporation, this Note,
as to the
unpaid principal portion thereof and accrued interest thereon,
shall thereafter
be deemed to evidence the right to purchase such number and kind of
shares or
other securities and property as would have been issuable or
distributable on
account of such consolidation, merger, sale or conveyance, upon or
with respect
to the securities subject to the conversion or purchase right
immediately prior
to such consolidation, merger, sale or conveyance. The foregoing
provision shall
similarly apply to successive transactions of a similar nature by
any such
successor or purchaser. Without limiting the generality of the
foregoing, the
anti-dilution provisions of this Section shall apply to such
securities of such
successor or purchaser after any such consolidation, merger, sale
or conveyance.
B. Reclassification, etc. If the Borrower at any time
shall, by reclassification or otherwise, change the Common Stock
into the same
or a different number of securities of any class or classes that
may be issued
or outstanding, this Note, as to the unpaid principal portion
thereof and
accrued interest thereon, shall thereafter be deemed to evidence
the right to
purchase an adjusted number of such securities and kind of
securities as would
have been issuable as the result of such change with respect to the
Common Stock
immediately prior to such reclassification or other change.
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C.
Stock Splits, Combinations and Dividends. If the
shares of Common Stock are subdivided or combined into a greater or
smaller
number of shares of Common Stock, or if a dividend is paid on the
Common Stock
in shares of Common Stock, the Conversion Price shall be
proportionately reduced
in case of subdivision of shares or stock dividend or
proportionately increased
in the case of combination of shares, in each such case by the
ratio which the
total number of shares of Common Stock outstanding immediately
after such event
bears to the total number of shares of Common Stock outstanding
immediately
prior to such event..
D. Share Issuance. Other than in connection with the
Excepted Issuances (as defined in the Subscription Agreement dated
December 5,
2007 ("Subscription Agreement")), if at any time while this Note is
outstanding,
the Borrower shall agree to or issue (the "Lower Price Issuance")
any shares of
Common Stock or securities convertible into or exercisable directly
or
indirectly for shares of Common Stock (or modify any of the
foregoing which may
be outstanding) to any person or entity at a price per share or
conversion or
exercise price per share which shall be less than the Floor Price,
then the
Conversion Price shall automatically be reduced to such other Lower
Price
Issuance. For purposes of the adjustment described in this
paragraph, the
issuance of any security of the Company carrying the right to
convert such
security into shares of Common Stock or of any warrant, right or
option to
purchase Common Stock (other than Excepted Issuances) shall result
in the
adjustment of the Conversion Price where such right to convert is
at a price
lower than the Floor Price. The reduction of the Conversion Price
described in
this paragraph is in addition to other rights of the Holder
described in this
Note. For the avoidance of doubt, if for example, the Lower Price
Issuance is
$0.10, then the Conversion Price shall be reduced to $0.10.
(d) Whenever the Conversion Price is adjusted pursuant to
Section 2.1(c) above, the Borrower shall promptly mail to the
Holder a notice
setting forth the Conversion Price after such adjustment and
setting forth a
statement of the facts requiring such adjustment.
(e) During the period the
conversion right exists, Borrower
will reserve from its authorized and unissued Common Stock not less
than an
amount of Common Stock equal to 150% of the amount of shares of
Common Stock
issuable upon the full conversion of this Note. Borrower represents
that upon
issuance, such shares will be duly and validly issued, fully paid
and
non-assessable. Borrower agrees that its issuance of this Note
shall constitute
full authority to its officers, agents, and transfer agents who are
charged with
the duty of executing and issuing stock certificates to execute and
issue the
necessary certificates for shares of Common Stock upon the
conversion of this
No
