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EXHIBIT 10.32
REGISTRATION RIGHTS AGREEMENT
This
REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into as
of
November 29, 2007, by and among AETHLON MEDICAL, INC., a Nevada
corporation (the
"Company"), and the parties who are signatories to this Agreement
(collectively
referred to as the "Holders").
WHEREAS,
the Company and the Holders entered into a certain Amended and
Restated 10% Series A Convertible Promissory Note (the "Note") in
exchange for
cancelling certain prior promissory notes ("Prior Notes") and
allonges
("Allonges");
WHEREAS,
in order to induce the Holders to amend the Prior Notes, the
Company has entered into this Agreement to register the shares of
Common Stock
issuable upon upon exercise of the Class A Principal Warrants
("Class A
Principal Warrants"), Class A Common Stock Purchase Warrants (the
"Class A
Warrants"), Class A-1 Common Stock Purchase Warrants (the "Class
A-1 Warrants"),
the Class B Common Stock Purchase Warrants (the "Class B Warrants")
and the
Class B-1 Common Stock Purchase Warrants (the "Class B-1 Warrants")
under the
Securities Act of 1933, as amended (the "Act") in accordance with
the provisions
of this Agreement.
NOW,
THEREFORE, in consideration of the mutual promises and
covenants
contained in this Agreement, the parties hereto agree as
follows:
1.
DEFINITIONS.
As used in
this Agreement, the following terms shall have the following
meanings. Other capitalized terms in this Agreement will have the
meanings set
forth in the Notes and the Warrants, as the case may be.
1.1 "BUSINESS
DAY" means any day except Saturday, Sunday and any
day which
shall be a legal holiday or a day on which banking institutions
in the
State of New York or the State of California are authorized or
required
by law or other government actions to close.
1.2
"EFFECTIVENESS DATE" means, with respect to the initial
Registration Statement required to be filed hereunder as to shares
of
Common
Stock underlying the Class A Principal Warrants, the Class A
Warrants
and the Class A-1 Warrants, the ninetieth (90th) calendar day
following
the Filing Date and, with respect to any additional
Registration
Statements
which may be required pursuant to Section 3.3, the ninetieth
(90th)
calendar day following the date on which the Company first
knows,
or
reasonably should have known, that such additional Registration
Statement
is required hereunder; PROVIDED, HOWEVER, if the Company is
notified
by the Commission that one of the above Registration Statements
will not
be reviewed or is no longer subject to further review and
comments,
the Effectiveness Date as to such Registration Statement shall
be the
tenth (10th) Trading Day following the date on which the Company
is
so
notified if such date precedes the dates required above.
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1.3
"EFFECTIVENESS PERIOD" shall have the meaning set forth in
Section
2.1.
1.4 "FILING
DATE" means, with respect to the initial Registration
Statement
required to be filed hereunder as to shares of Common Stock
underlying
the Class A Principal Warrants, Class A Warrants and Class A-1
Warrants,
March 31, 2008 and, with respect to any additional Registration
Statements
which may be required pursuant to Section 3.3, the thirtieth
(30th) day
following the issuance date of any of the other Warrants or
such other
date on which the Company first knows, or reasonably should
have known
that such additional Registration Statement is required
hereunder.
1.5 "HOLDER" or
"HOLDERS" means the holder or holders, as the case
may be,
from time to time of Registrable Securities.
1.6 "INDEMNIFIED
PARTY" shall have the meaning set forth in
Section
5.3.
1.7
"INDEMNIFYING PARTY" shall have the meaning set forth in
Section
5.3.
1.8 "PROSPECTUS"
means the prospectus included in a Registration
Statement
(including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of
an
effective
registration statement in reliance upon Rule 430A promulgated
under the
Securities Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any
portion of
the
Registrable Securities covered by a Registration Statement, and
all
other
amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by
reference or
deemed to
be incorporated by reference in such Prospectus.
1.9
"REGISTRABLE
SECURITIES" means all of the shares of Common
Stock
issuable upon the exercise of the Warrants together with any
securities
issued or issuable upon any stock split, dividend or other
distribution recapitalization or similar event with respect to
the
foregoing.
1.10 "REGISTRATION
STATEMENT" means the registration statements
required
to be filed hereunder and any additional registration
statements
contemplated by Section 3.3, including (in each case) the
Prospectus,
amendments
and supplements to such registration statement or Prospectus,
including
pre- and post-effective amendments, all exhibits thereto, and
all
material incorporated by reference or deemed to be incorporated
by
reference
in such registration statement.
1.11 "RULE 415" means
Rule 415 promulgated by the Commission
pursuant
to the Securities Act, as such Rule may be amended from time to
time, or
any similar rule or regulation hereafter adopted by the
Commission
having substantially the same effect as such Rule.
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1.12 "RULE 424" means
Rule 424 promulgated by the Commission
pursuant
to the Securities Act, as such Rule may be amended from time to
time, or
any similar rule or regulation hereafter adopted by the
Commission
having substantially the same effect as such Rule.
1.13 "SPECIAL COUNSEL"
means one special counsel for the Holders,
the cost
of whose services will be reimbursed by the Company pursuant to
Section
4.
1.14 "WARRANTS" shall
mean the Class A Principal Warrants, Class A
Warrants,
Class A-1 Warrants, Class B Warrants and Class B-1 Warrants
issued to
the Holders.
2.
SHELF
REGISTRATION.
2.1 On or prior
to each Filing Date, the Company shall prepare and
file with
the Commission a "Shelf" Registration Statement covering the
resale of
all Registrable Securities applicable to such Filing Date for
an
offering
to be made on a continuous basis pursuant to Rule 415. The
Registration Statement shall be on Form S-3 (except if the Company
is not
then
eligible to register for resale the Registrable Securities on
Form
S-3, in
which case such registration shall be on Form SB-2 or another
appropriate form in accordance herewith) and shall contain (except
if
otherwise
directed by the Holders) the "Plan of Distribution" in
substantially the form attached hereto as EXHIBIT A. The Company
shall use
its best
efforts to cause the Registration Statement to be declared
effective
under the Securities Act as promptly as possible after the
filing
thereof, but in any event prior to the applicable Effectiveness
Date, and
shall use its best efforts to keep such Registration Statement
continuously effective under the Securities Act until the date
which is
two years
after the expiration date of the Warrants or such earlier date
when all
Registrable Securities covered by such Registration Statement
have been
sold or may be sold without volume restrictions pursuant to
Rule
144(k), as
determined by the counsel to the Company pursuant to a written
opinion
letter to such effect, addressed and acceptable to the
Company's
transfer
agent and the affected Holders (the "EFFECTIVENESS PERIOD").
2.2 The
Registration Statements to be filed hereunder shall
include a
number of shares of Common Stock equal to no less than the sum
of 150% of
the number of shares of Common Stock issuable upon exercise in
full of
the Registrable Securities subject to such Registration
Statement.
2.3 The Company
shall be subject to the provisions of Sections 2.4
if
2.3.1 a
Registration Statement is not filed on or prior to
its respective Filing Date (if the Company files such
Registration
Statement without affording the Holder the opportunity to review
and
comment on the same as required by Section 3.1 hereof, the
Company
shall not be deemed to have satisfied this Subsection 2.3.1);
or
2.3.2 a
Registration Statement filed hereunder is not
declared effective by the Commission on or prior to its
Effectiveness Date; or
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2.3.3 after a
Registration Statement is filed with and
declared effective by the Commission, such Registration
Statement
ceases to be effective as to all Registrable Securities to which
it
is required to relate at any time prior to the expiration of
the
Effectiveness Period without being succeeded within ten (10)
Business Days by an amendment to such Registration Statement or by
a
subsequent Registration Statement filed with and declared
effective
by the Commission; or
2.3.4 the Common
Stock shall be delisted or suspended from
trading on the New York Stock Exchange, American Stock Exchange,
the
Nasdaq Stock Market or the Nasdaq OTC Bulletin Board (each, a
"SUBSEQUENT MARKET") for more than twenty (20) Business Days
(which
need not be consecutive Business Days); or
Any failure or breach set forth in this Section 2.3 is
referred to as an "EVENT." The following are referred to as
"Event
Date": for purposes of Subsections 2.3.1 and 2.3.2, the date on
which such Event occurs, or for purposes of Subsections 2.3.3
and
2.3.4, the date on which such ten (10) and twenty (20) Business
Day
periods are exceeded.
2.4 On an Event
Date, the Company shall pay to each Holder, as
liquidated
damages and not as a penalty, an amount in cash equal to one
percent
(1.0%) of the original principal amount of the Notes of such
Holder. On
every month after the Event Date until the applicable Event is
cured, the
Company shall pay to each Holder, as liquidated damages and not
as a
penalty, an amount in cash equal to one and one-half percent
(1.5%)
of the
original principal amount of the Notes. If the Warrants have
been
issued and
are "in the money," the penalties shall be computed based on
the value
of any outstanding Warrants on an Event Date and on each month
following
an Event Date until the Event is cured. The value of the
Warrants
for such purposes shall be the difference between the closing
price of
the Common Stock on the Event Date (and after the Event Date,
the
average of
the closing sales prices during the applicable month) and the
exercise
price multiplied by the number of shares of Common Stock
issuable
upon
exercise of the Warrants. If the Company fails to pay any
liquidated
damages
pursuant to this Section in full within seven (7) days after
the
date
payable, the Company will pay interest thereon at a rate of
twelve
(12%) per
annum (or such lesser maximum amount that is permitted to be
paid by
applicable law) to the Holder, accruing daily from the date
such
liquidated
damages are due until such amounts, plus all such interest
thereon,
are paid in full. At the option of the Company, shares of
Common
Stock may
be issued to the Holder in lieu of a cash payment for such
liquidated
damages based upon the Conversion Price then in effect,
provided
that such shares have been registered for resale by such Holder
and the
Company provides the Holder with at least five (5) Business
Days'
irrevocable notice prior to the date such payment is due. The
liquidated
damages
pursuant to the terms hereof shall apply on a pro-rata basis
for
any
portion of a month prior to the cure of an Event.
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3.
REGISTRATION PROCEDURES. In connection with the Company's
registration obligations hereunder, the Company shall:
3.1 Not less
than five (5) Business Days prior to the filing of
each
Registration Statement or any related Prospectus or any amendment
or
supplement
thereto (including any document that would be incorporated or
deemed to
be incorporated therein by reference), the Company shall (i)
furnish to
the Holders and their Special Counsel copies of all such
documents
proposed to be filed, which documents (other than those
incorporated or deemed to be incorporated by reference) will be
subject to
the review
of such Holders and their Special Counsel, and (ii) cause its
officers
and directors, counsel and independent certified public
accountants to respond to such inquiries as shall be necessary, in
the
reasonable
opinion of respective counsel to conduct a reasonable
investigation within the meaning of the Securities Act. The Company
shall
not file
the Registration Statement or any such Prospectus or any
amendments
or supplements thereto to which the Holders of a majority of
the
Registrable Securities and their Special Counsel shall
reasonably
object,
provided the Company is notified of such objection no later
than
five (5)
Business Days after the Holders have been so furnished copies
of
such
documents and provided, further, that such objections relate to
the
selling
shareholder information, the plan of distribution, any
information
relating
to the Holders, either directly or indirectly, or the
compliance
under the
Securities Act of such Registration Statement or Prospectus as
to
form.
3.2 (i) Prepare
and file with the Commission such amendments,
including
post-effective amendments, to a Registration Statement and the
Prospectus
used in connection therewith as may be necessary to keep a
Registration Statement continuously effective as to the
applicable
Registrable Securities for the Effectiveness Period and prepare and
file
with the
Commission such additional Registration Statements in order to
register
for resale under the Securities Act all of the Registrable
Securities; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement, and as so
supplemented
or amended
to be filed pursuant to Rule 424; (iii) respond as promptly as
reasonably
possible, and in any event within ten (10) days, to any
comments
received from the Commission with respect to a Registration
Statement
or any amendment thereto and as promptly as reasonably possible
provide
the Holders true and complete copies of all correspondence from
and to the
Commission relating to a Registration Statement; and (iv)
comply in
all material respects with the provisions of the Securities Act
and the
Exchange Act with respect to the disposition of all Registrable
Securities
covered by a Registration Statement during the applicable
period in
accordance with the intended methods of disposition by the
Holders
thereof set forth in such Registration Statement as so amended
or
in such
Prospectus as so supplemented.
3.3 File
additional Registration Statements (i) upon the issuance
of the
Class B Warrants or Class B-1 Warrants or (ii) if the number of
Registrable Securities at any time exceeds seventy-five percent
(75%) of
the number
of shares of Common Stock then registered for the account of
the
Holders in all existing Registration Statements hereunder.
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3.4 Notify the
Holders of Registrable Securities to be sold and
their
Special Counsel as promptly as reasonably possible (and, in the
case
of (i)(A)
below, not less than five (5) Business Days prior to such
filing)
and (if requested by any such Person) confirm such notice in
writing no
later than one Business Day following the day (i)(A) when a
Prospectus
or any Prospectus supplement or post-effective amendment to a
Registration Statement is proposed to be filed; and (B) with
respect to a
Registration Statement or any post-effective amendment, when the
same has
become
effective; (ii) of the issuance by the Commission of any stop
order
suspending
the effectiveness of a Registration Statement covering any or
all of the
Registrable Securities or the initiation of any Proceedings for
that
purpose; (iii) of the receipt by the Company of any notification
with
respect to
the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in
any
jurisdiction, or the initiation or threatening of any Proceeding
for such
purpose;
and (iv) of the occurrence of any event or passage of time that
makes the
financial statements included in a Registration Statement
ineligible
for inclusion therein or any statement made in a Registration
Statement
or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or
that
requires
any revisions to a Registration Statement, Prospectus or other
documents
so that, in the case of a Registration Statement or the
Prospectus, as the case may be, it will not contain any untrue
statement
of a
material fact or omit to state any material fact required to be
stated
therein or necessary to make the statements therein, in light
of
the
circumstances under which they were made, not misleading.
3.5 Promptly
deliver to each Holder and their Special Counsel,
without
charge, as many copies of the Prospectus or Prospectuses,
including
each form of Prospectus, and each amendment or supplement
thereto as
such Persons may reasonably request. The Company hereby
consents
to the use of such Prospectus and each amendment or supplement
thereto by
each of the selling Holders in connection with the offering and
sale of
the Registrable Securities covered by such Prospectus and any
amendment
or supplement thereto.
3.6 Prior to any
public offering of Registrable Securities, use
its best
efforts to register or qualify or cooperate with the selling
Holders
and their Special Counsel in connection with the registration
or
qualification (or exemption from such registration or
qualification) of
such
Registrable Securities for offer and sale under the securities
or
Blue Sky
laws of such jurisdictions within the United States as any
Holder
requests
in writing, to keep each such registration or qualification (or
exemption
therefrom) effective during the Effectiveness Period and to do
any and
all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities
covered by
a
Registration Statement; provided, that the Company shall not be
required
to qualify
generally to do business in any jurisdiction where it is not
then so
qualified or subject the Company to any material tax in any
such
jurisdiction where it is not then so subject.
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3.7 Cooperate
with the Holders to facilitate the timely
preparation and delivery of certificates representing
Registrable
Securities
to be delivered to a transferee pursuant to a Registration
Statement,
which certificates shall be free, to the extent permitted by
law, of
all restrictive legends, and to enable such Registrable
Securities
to be in
such denominations and registered in such names as any such
Holders
may request.
3.8 Upon the
occurrence of any event contemplated this Section 3,
as
promptly as reasonably possible, prepare a supplement or
amendment,
including
a post-effective amendment, to a Registration Statement or a
supplement
to the related Prospectus or any document incorporated or
deemed to
be incorporated therein by reference, and file any other
required
document so that, as thereafter delivered, neither a
Registration
Statement
nor such Prospectus will contain an untrue statement of a
material
fact or omit to state a material fact required to be stated
therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.9 Comply with
all applicable rules and regulations of the
Commission.
3.10 Use its best
efforts to avoid the issuance of, or, if issued,
obtain the
withdrawal of (i) any order suspending the effectiveness of a
Registration Statement, or (ii) any suspension of the qualification
(or
exemption from
qualification) of any of the Registrable Securities for
sale in
any jurisdiction, at the earliest practicable moment.
3.11 Furnish to each
Holder and their Special Counsel, without
charge, at
least one conformed copy of each Registration Statement and
each
amendment thereto, including financial statements and schedules,
all
documents
incorporated or deemed to be incorporated therein by reference,
and all
exhibits to the extent requested by such Person (including
those
previously
furnished or incorporated by reference) promptly after the
filing of
such documents with the Commissio
