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Exhibit 4.3
THIS WARRANT (THIS "WARRANT") HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAW. NEITHER THIS
WARRANT NOR ANY WARRANT SHARES ISSUABLE
UPON EXERCISE HEREOF NOR ANY INTEREST OR
PARTICIPATION HEREIN OR THEREIN MAY BE
SOLD, ASSIGNED, MORTGAGED, PLEDGED,
HYPOTHECATED, ENCUMBERED OR OTHERWISE
TRANSFERRED EXCEPT IN COMPLIANCE WITH THE
ACT AND APPLICABLE STATE SECURITIES
LAWS.
AETHLON MEDICAL, INC.
WARRANT
Original Issue Date: May 16, 2005
This Warrant is issued in connection with and pursuant to that
certain
Letter Agreement (the "LETTER AGREEMENT")
dated as of the date hereof, by and
between AETHLON MEDICAL, INC., a Nevada
corporation (the "Company") and FUSION
CAPITAL FUND II, LLC (the "Buyer").
FOR VALUE RECEIVED, the Buyer, the registered holder hereof, or
its
permitted assigns (the "Holder"), is
entitled to purchase from the Company,
during the period specified in this
Warrant, 300,000 fully paid and
non-assessable shares (subject to
adjustment as hereinafter provided) of Common
Stock (the "WARRANT SHARES"), of the
Company at the purchase price per share
provided in Section 1.2 of this Warrant
(the "WARRANT EXERCISE PRICE"), all
subject to the terms and conditions set
forth in this Warrant. Capitalized terms
used herein and not otherwise defined
herein shall have the respective meanings
set forth in the Common Stock Purchase
Agreement by and between the parties
hereto, dated as of May 20, 2004 (as
amended, restated, supplemented or
otherwise modified from time to time, the
"PURCHASE AGREEMENT").
SECTION 1.
PERIOD FOR EXERCISE AND EXERCISE PRICE.
1.1 PERIOD FOR EXERCISE. The right to purchase shares of Warrant
Shares
represented by this Warrant shall be
immediately exercisable, and shall expire
at 5:00 p.m., Chicago local time, May 16,
2010 (the "EXPIRATION DATE"). From and
after the Expiration Date this Warrant
shall be null and void and of no further
force or effect whatsoever.
1.2 WARRANT EXERCISE PRICE. The Warrant Exercise Price per share
of
Warrant Shares shall be $0.25 per share
(subject to adjustment as hereinafter
provided).
SECTION 2.
EXERCISE OF WARRANT.
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2.1 MANNER OF EXERCISE. The Holder may exercise this Warrant, in
whole
or in part, immediately, but not after the
Expiration Date, during normal
business hours on any Trading Day by
surrendering this Warrant to the Company at
the principal office of the Company,
accompanied by a Warrant Exercise Form in
substantially the form annexed hereto duly
executed by the Buyer and by payment
of the Warrant Exercise Price for the
number of shares of Warrant Shares for
which this Warrant is then exercisable,
either (i) in immediately available
funds, (ii) by delivery of an instrument
evidencing indebtedness owing by the
Company to the Holder in the appropriate
amount, (iii) by authorizing the
Company to retain shares of Common Stock
which would otherwise be issuable upon
exercise of this Warrant in accordance with
Section 2.4 hereof or (iv) in a
combination of (i), (ii) or (iii) above,
provided, however, that in no event
shall the Holder be entitled to exercise
this Warrant for a number of Warrant
Shares in excess of that number of Warrant
Shares which, upon giving effect to
such exercise, would cause the aggregate
number of shares of Common Stock
beneficially owned by the Holder to exceed
9.9% of the outstanding shares of the
Common Stock following such exercise. For
purposes of the foregoing proviso, the
aggregate number of shares of Common Stock
beneficially owned by the Holder
shall include the number of shares of
Common Stock issuable upon exercise of
this Warrant with respect to which
determination of such proviso is being made,
but shall exclude the shares of Common
Stock which would be issuable upon (i)
exercise of the remaining, unexercised
Warrants beneficially owned by the Holder
and (ii) exercise or conversion of the
unexercised or unconverted portion of any
other securities of the Company
beneficially owned by the Holder subject to a
limitation on conversion or exercise
analogous to the limitation contained
herein. Except as set forth in the
preceding sentence, for purposes of this
paragraph, beneficial ownership shall be
calculated in accordance with Section
13(d) of the Securities Exchange Act of
1934, as amended. The Holder may waive
the foregoing limitation by written notice
to the Company upon not less than 61
days prior written notice (with such waiver
taking effect only upon the
expiration of such 61 day notice
period).
2.2 WHEN EXERCISE EFFECTIVE. Each exercise of this Warrant shall
be
deemed to have been effected on the day on
which all requirements of Section 2.1
shall have been met with respect to such
exercise. At such time the person in
whose name any certificate for shares of
Warrant Shares shall be issuable upon
such exercise shall be deemed for all
corporate purposes to have become the
Holder of record of such shares, regardless
of the actual delivery of
certificates evidencing such shares.
2.3 DELIVERY OF STOCK CERTIFICATES. As soon as practicable after
each
exercise of this Warrant, and in any event
no later than 3 days after such
exercise, the Company at its expense will
issue Warrant Shares via credit to the
Buyer's account with DTC for the number of
Warrant Shares to which such Buyer is
entitled upon such Buyer's submission of
the applicable Warrant Exercise Form
or, if the Transfer Agent is not
participating in The DTC Fast Automated
Securities Transfer Program and DWAC
system, issue and surrender to the address
as specified in the Warrant Exercise Form,
a certificate, registered in the name
of the Buyer or its designee, for the
number of shares of Common Stock to which
the Buyer shall be entitled to upon such
exercise.
2
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2.4 CASHLESS EXERCISE. At any such time as the Warrant Shares are
not
registered for sale pursuant to a
registration statement that is effective and
current and available for resale pursuant
to the Securities Act of 1933, as
amended, the Holder may, by providing
notice thereof to the Company along with
the Warrant Exercise Form, elect to
exercise the Warrant for a number of Warrant
Shares determined in accordance with the
following formula:
X = Y(A-B)
------
A
Where:
X = The number of Warrant Shares to be issued to the Holder.
Y = The number of Warrant Shares purchasable under this Warrant
(at the date of such exercise).
A = The fair market value of one share of Common Stock (or
other security for which the Warrant is then exercisable at
the date of such exercise).
B = Exercise Price (as adjusted to the date of such exercise).
For purposes of this Section 2.4, the "fair
market value" per share shall be the
closing sale price of the Common Stock for
the three Trading Days immediately
prior to the notice of exercise of the
Warrant.
SECTION 3. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES.
The
Warrant Exercise Price and the kind of
securities issuable upon exercise of the
Warrant shall be adjusted from time to time
as follows:
3.1 SUBDIVISION OR COMBINATION OF SHARES (STOCK SPLITS). If the
Company
at any time effects a subdivision or
combination of the outstanding Common Stock
(through a stock split or otherwise), the
number of shares of Warrant Shares
shall be increased, in the case of a
subdivision, or the number of shares of
Warrant Shares shall be decreased, in the
case of a combination, in the same
proportions as the Common Stock is
subdivided or combined, in each case
effective automatically upon, and
simultaneously with, the effectiveness of the
subdivision or combination which gives rise
to the adjustment.
3.2 STOCK DIVIDENDS. If the Company at any time pays a dividend,
or
makes any other distribution, to holders of
Common Stock payable in shares of
Common Stock, or fixes a record date for
the determination of holders of Common
Stock entitled to receive a dividend or
other distribution payable in shares of
Common Stock, then the number of shares of
Warrant Shares in effect immediately
prior to such action shall be
proportionately increased so that the Holder
hereof may receive upon exercise of the
Warrant the aggregate number of shares
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of Common Stock which he or it would have
owned immediately following such
action if the Warrant had been exercised
immediately prior to such action. The
adjustment shall become effective
immediately as of the date the Company shall
take a record of the holders of its Common
Stock for the purpose of receiving
such dividend or distribution (or if no
such record is taken, as of the
effectiveness of such dividend or
distribution).
3.3 RECLASSIFICATION, CONSOLIDATION OR MERGER. If at any time, as
a
result of:
(a) a capital reorganization or reclassification (other than a
subdivision, combination or dividend provided for elsewhere in
this
Section 3), or
(b) a merger or consolidation of the Company with another
corporation (whether or not the Company is the surviving
corporation),
the Common Stock issuable upon exercise of
the Warrants shall be changed into or
exchanged for the same or a different
number of shares of any class or classes
of stock of the Company or any other
corporation, or other securities
convertible into such shares, then, as a
part of such reorganization,
reclassification, merger or consolidation,
appropriate adjustments shall be made
in the terms of the Warrants (or of any
securities into which the Warrants are
exercised or for which the Warrants are
exchanged), so that:
(y) the Holders of Warrants or of such substitute securities
shall
thereafter be entitled to receive, upon
exercise of the Warrants or of such
substitute securities, the kind and amount
of shares of stock, other securities,
money and property which such Holders would
have received at the time of such
capital reorganization, reclassification,
merger, or consolidation, if such
Holders had exercised their Warrants
immediately prior to such capital
reorganization, reclassification, merger,
or consolidation, and
(z) the Warrants or such substitute securities shall thereafter
be
adjusted on terms as nearly equivalent as
may be practicable to the adjustments
theretofore provided in this Section
3.3.
No consolidation or merger in which the
Company is not the surviving corporation
shall be consummated unless the surviving
corporation shall agree, in writing,
to the provisions of this Section 3.3. The
provisions of this Section 3.3 shall
similarly apply to successive capital
reorganizations, reclassifications,
mergers and consolidations.
3.4 OTHER ACTION AFFECTING COMMON STOCK. If at any time the
Company
takes any action affecting its Common
Stock, other than an action described in
any of Sections 3.1 - 3.3 which, in the
opinion of the Board of Directors of the
Company (the "BOARD"), would have an
adverse effect upon the exercise rights of
the Warrants, the Warrant Exercise Price or
the kind of securities issuable upon
ex
