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 Commission.
3.12 Notwithstanding anything herein to the contrary, if at any
time or from time to time during the Effectiveness Period, the Company
notifies the Holders in writing of the existence of a Potential Material
Event (as defined below), the Holders shall not offer or sell any
Securities from the time of the giving of notice with respect to a
Potential Material Event until the Holders receive written notice from the
Company that such Potential Material Event either has been disclosed to
the public or no longer constitutes a Potential Material Event; PROVIDED,
HOWEVER, that, subject to Subsections 3.12.1 and 3.12.2, the Company may
not so suspend the right to such holders of Securities for more than sixty
(60) calendar days in the aggregate during any twelve-month period, and if
such period is exceeded, such period shall be deemed an "Event" and the
Company shall be liable to the Holder for liquidated damages pursuant to
Section 2(c); PROVIDED, FURTHER, subject to Subsections 3.12.1 and 3.12.2,
the failure to maintain a Registration Statement for not more than sixty
(60) calendar days in the aggregate during any twelve (12) month period as
a result of a Potential Material Event shall not be deemed a breach of
this Agreement, provided the Company timely pays the Holder such
liquidated damages. The Company must give the Holders at least thirty (30)
calendar days' prior written notice that such a blackout period (without
indicating the nature of such blackout period) will occur and such notice
must be acknowledged in writing by the Holders. Failure to provide the
Holders with such notice shall constitute an Event during the entire
applicable period that the Registration Statement is suspended. "Potential
Material Event" means any of the following:
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3.12.1 The Board of Directors of the Company determines, in
its good faith judgment, that the use of any Prospectus would
require the disclosure of important information which the Company
has a bona fide business purpose for preserving as confidential or
the disclosure of which would impede the Company's ability to
consummate a significant transaction, in which event such period may
be extended for up to thirty (30) additional days in any twelve (12)
month period;
3.12.2 Company consummates any business combination for
purposes of Rule 3-05 or Article 11 of Regulation S-X under the
Securities Act, in which event such restricted period may be
extended until the date on which the Company has filed such reports
or obtained the financial information required by Rule 3-05 or
Article 11 of Regulation S-X to be included in the Registration
Statement, but in no event more sixty (60) additional days in any
twelve (12) month period;
3.12.3 After one year from the Closing Date, the Company
files or proposes to file a registration statement in an
underwritten primary equity offering initiated by the Company (other
than any registration by the Company on Form S-8), which
underwriters are reasonably acceptable to a majority in interest of
the Holders, or a successor or substantially similar form, of (i) an
employee stock option, stock purchase or compensation plan or of
securities issued or issuable pursuant to any such plan, or (ii) a
dividend reinvestment plan), in which event such restricted period
may be extended for thirty (30) days prior to the effective date of
the registration statement covering such underwritten primary equity
offering and ending on the date specified by such managing
underwriter in such written request to each Holder, which date shall
be no more than thirty (30) days after such effective date, during
which the Holder agrees, if requested in writing by the managing
underwriter or underwriters administering such offering, not to
effect any offer, sale or distribution of Company securities (or any
option or right to acquire Company securities;
4. REGISTRATION EXPENSES. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to
the Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with the Nasdaq OTC Bulletin Board and any Subsequent Market
on which the Common Stock is then listed for trading, and (B) in compliance with
applicable state securities or Blue Sky laws (including, without limitation,
fees and disbursements of counsel for the Company in connection with Blue Sky
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qualifications or exemptions of the Registrable Securities and determination of
the eligibility of the Registrable Securities for investment under the laws of
such jurisdictions as requested by the Holders)); (ii) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses requested by the Holders);
(iii) messenger, telephone and delivery expenses; (iv) fees and disbursements of
counsel for the Company; and (v) fees and expenses of all other Persons retained
by the Company in connection with the consummation of the transactions
contemplated by this Agreement; and (vi) and fees and expenses of the Special
Counsel up to $20,000. In addition, the Company shall be responsible for all of
its internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder.
5. INDEMNIFICATION.
5.1 INDEMNIFICATION BY THE COMPANY. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold
harmless each Holder, the officers, directors, agents, brokers (including
brokers who offer and sell Registrable Securities as principal as a result
of a pledge or any failure to perform under a margin call of Common
Stock), investment advisors and employees of each of them, each Person who
controls any such Holder (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling Person, to the
fullest extent permitted by applicable law, from and against any and all
losses, claims, damages, liabilities, costs (including, without
limitation, costs of preparation and attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or relating to any
untrue or alleged untrue statement of a material fact contained in a
Registration Statement, any Prospectus or any form of prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or
arising out of or relating to any omission or alleged omission of a
material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in light of the circumstances under which they were
made) not misleading, except to the extent, but only to the extent, that
(i) such untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein, or to the extent that such information relates
to such Holder or such Holder's proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in writing
by such Holder expressly for use in a Registration Statement, such
Prospectus or such form of Prospectus or in any amendment or supplement
thereto or (ii) in the case of an occurrence of an event of the type
specified in Section 3.4(ii)-(vi), the use by such Holder of an outdated
or defective Prospectus after the Company has notified such Holder in
writing that the Prospectus is outdated or defective and prior to the
receipt by such Holder of the Advice contemplated in Section 6.5. The
Company shall notify the Holders promptly of the institution, threat or
assertion of any Proceeding of which the Company is aware in connection
with the transactions contemplated by this Agreement.
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5.2 INDEMNIFICATION BY HOLDERS. Each Holder shall, severally and
not jointly, indemnify and hold harmless the Company, its directors,
officers, agents and employees, each Person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20 of
the Exchange Act), and the directors, officers, agents or employees of
such controlling Persons, to the fullest extent permitted by applicable
law, from and against all Losses (as determined by a court of competent
jurisdiction in a final judgment not subject to appeal or review) arising
out of or based upon any untrue statement of a material fact contained in
any Registration Statement, any Prospectus, or any form of prospectus, or
in any amendment or supplement thereto, or arising solely out of or based
solely upon any omission of a material fact required to be stated therein
or necessary to make the statements therein not misleading to the extent,
but only to the extent, that such untrue statement or omission is
contained in any information so furnished in writing by such Holder to the
Company specifically for inclusion in such Registration Statement or such
Prospectus or to the extent that (i) such untrue statements or omissions
are based solely upon information regarding such Holder furnished in
writing to the Company by such Holder expressly for use therein, or to the
extent that such information relates to such Holder or such Holder's
proposed method of distribution of Registrable Securities and was reviewed
and expressly approved in writing by such Holder expressly for use in the
Registration Statement, such Prospectus or such form of Prospectus or in
any amendment or supplement thereto or (ii) in the case of an occurrence
of an event of the type specified in Section 3(d)(ii)-(vi), the use by
such Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or
defective and prior to the receipt by such Holder of the Advice
contemplated in Section 6(e). In no event shall the liability of any
selling Holder hereunder be greater in amount than the dollar amount of
the net proceeds received by such Holder upon the sale of the Registrable
Securities giving rise to such indemnification obligation.
5.3 CONDUCT OF INDEMNIFICATION PROCEEDINGS.
5.3.1 If any Proceeding shall be brought or asserted against
any Person entitled to indemnity hereunder (an "INDEMNIFIED PArty"),
such Indemnified Party shall promptly notify the Person from whom
indemnity is sought (the "Indemnifying Party") in writing, and the
Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any
Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be
finally determined by a court of competent jurisdiction (which
determination is not subject to appeal or further review) that such
failure shall have proximately and materially adversely prejudiced
the Indemnifying Party.
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5.3.2 An Indemnified Party shall have the right to employ
separate counsel in any such Proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel shall be
at the expense of such Indemnified Party or Parties unless: (i) the
Indemnifying Party has agreed in writing to pay such fees and
expenses; or (ii) the Indemnifying Party shall have failed promptly
to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such
Proceeding; or (iii) the named parties to any such Proceeding
(including any impleaded parties) include both such Indemnified
Party and the Indemnifying Party, and such Indemnified Party shall
have been advised by counsel that a conflict of interest is likely
to exist if the same counsel were to represent such Indemnified
Party and the Indemnifying Party (in which case, if such Indemnified
Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party,
the Indemnifying Party shall not have the right to assume the
defense thereof and such counsel shall be at the expense of the
Indemnifying Party). The Indemnifying Party shall not be liable for
any settlement of any such Proceeding effected without its written
consent, which consent shall not be unreasonably withheld. No
Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of any pending Proceeding
in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified
Party from all liability on claims that are the subject matter of
such Proceeding.
5.3.3 All fees and expenses of the Indemnified Party
(including reasonable fees and expenses to the extent incurred in
connection with investigating or preparing to defend such Proceeding
in a manner not inconsistent with this Section) shall be paid to the
Indemnified Party, as incurred, within ten (10) Business Days of
written notice thereof to the Indemnifying Party (regardless of
whether it is ultimately determined that an Indemnified Party is not
entitled to indemnification hereunder; provided, that the
Indemnifying Party may require such Indemnified Party to undertake
to reimburse all such fees and expenses to the extent it is finally
judicially determined that such Indemnified Party is not entitled to
indemnification hereunder).
5.4 CONTRIBUTION.
5.4.1 If a claim for indemnification under Section 5.1 or
5.2 is unavailable to an Indemnified Party (by reason of public
policy or otherwise), then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such
Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection
with the actions, statements or omissions that resulted in such
Losses as well as any other relevant equitable considerations. The
relative fault of such Indemnifying Party and Indemnified Party
shall be determined by reference to, among other things, whether any
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action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission of a material
fact, has been taken or made by, or relates to information supplied
by, such Indemnifying Party or Indemnified Party, and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount
paid or payable by a party as a result of any Losses shall be deemed
to include, subject to the limitations set forth in Section 5.3, any
reasonable attorneys' or other reasonable fees or expenses incurred
by such party in connection with any Proceeding to the extent such
party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such
party in accordance with its terms.
5.4.2 The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5.4 were
determined by pro rata allocation or by any other method of
allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5.4, no Holder shall
be required to contribute, in the aggregate, any amount in excess of
the amount by which the proceeds actually received by such Holder
from the sale of the Registrable Securities subject to the
Proceeding exceeds the amount of any damages that such Holder has
otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission.
5.4.3 The indemnity and contribution agreements contained in
this Section are in addition to any liability that the Indemnifying
Parties may have to the Indemnified Parties.
6. MISCELLANEOUS.
6.1 AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given, unless the same shall be in writing and signed by
the Company and the Holders of at least two-thirds of the then outstanding
Registrable Securities. Notwithstanding the foregoing, a waiver or consent
to depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders and that does not directly or
indirectly affect the rights of other Holders may be given by Holders of
at least a majority of the Registrable Securities to which such waiver or
consent relates; PROVIDED, HOWEVER, that the provisions of this sentence
may not be amended, modified, or supplemented except in accordance with
the provisions of the immediately preceding sentence.
6.2 NO INCONSISTENT AGREEMENTS. Neither the Company nor any of its
subsidiaries has entered, as of the date hereof, nor shall the Company or
any of its subsidiaries, on or after the date of this Agreement, enter
into any agreement with respect to its securities, that would have the
effect of impairing the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. Except as and to the
extent specified in Schedule 6.2 hereto, neither the Company nor any of
its subsidiaries has previously entered into any agreement granting any
registration rights with respect to any of its securities to any Person
that have not been satisfied in full.
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6.3 NO PIGGYBACK ON REGISTRATIONS. Except as and to the extent
specified in Schedule 6.3 hereto, neither the Company nor any of its
security holders (other than the Holders in such capacity pursuant hereto)
may include securities of the Company in the Registration Statement other
than the Registrable Securities, and the Company shall not after the date
hereof enter into any agreement providing any such right to any of its
security holders.
6.4 COMPLIANCE. Each Holder covenants and agrees that it will
comply with the prospectus delivery requirements of the Securities Act as
applicable to it in connection with sales of Registrable Securities
pursuant to the Registration Statement.
6.5 DISCONTINUED DISPOSITION. Each Holder agrees by its
acquisition of such Registrable Securities that, upon receipt of a notice
from the Company of the occurrence of any event of the kind described in
Sections 3.4, such Holder will forthwith discontinue disposition of such
Registrable Securities under a Registration Statement until such Holder's
receipt of the copies of the supplemented Prospectus and/or amended
Registration Statement contemplated by Section 3.8, or until it is advised
in writing (the "Advice") by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement.
The Company may provide appropriate stop orders to enforce the provisions
of this paragraph.
6.6 PIGGY-BACK REGISTRATIONS. If at any time during the
Effectiveness Period there is not an effective Registration Statement
covering all of the Registrable Securities and the Company shall determine
to prepare and file with the Commission a registration statement relating
to an offering for its own account or the account of others under the
Securities Act of any of its equity securities, other than on Form S-4 or
Form S-8 (each as promulgated under the Securities Act) or their then
equivalents relating to equity securities to be issued solely in
connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Holder written notice
of such determination and, if within fifteen (15) days after receipt of
such notice, any such Holder shall so request in writing, the Company
shall include in such registration statement all or any part of such
Registrable Securities such holder requests to be registered, subject to
customary underwriter cutbacks applicable to all Holders of registration
rights; provided, that, the Company shall not be required to register any
Registrable Securities pursuant to this Section 6.6 that are eligible for
resale pursuant to Rule 144(k) promulgated under the Securities Act.
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6.7 NOTICES. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be
delivered as set forth in the Purchase Agreement.
6.8 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of
each of the parties and shall inure to the benefit of each Holder. The
Company may not assign its rights or obligations hereunder without the
prior written consent of each Holder. Each Holder may assign their
respective rights hereunder in the manner and to the Persons as permitted
under the Purchase Agreement.
6.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the
same Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of
the party executing (or on whose behalf such signature is executed) the
same with the same force and effect as if such facsimile signature were
the original thereof.
6.10 GOVERNING LAW. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be
governed by and construed and enforced in accordance with the internal
laws of the State of California, without regard to the principles of
conflicts of law thereof. Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the City
of San Diego, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit,
action or proceeding by mailing a copy thereof to such party at the
address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law. Each party
hereto hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions
contemplated hereby. If either party shall commence a Proceeding to
enforce any provisions of this Agreement, then the prevailing party in
such Proceeding shall be reimbursed by the other party for its attorney's
fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such Proceeding.
6.11 CUMULATIVE REMEDIES. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
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6.12 SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their reasonable efforts to
find and employ an alternative means to achieve the same or substantially
the same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of
the parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
6.13 HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning
hereof.
6.14 INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS. The
obligations of each Purchaser hereunder is several and not joint with the
obligations of any other Purchaser hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any Purchaser
pursuant hereto or thereto, shall be deemed to constitute the Purchasers
as a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Purchasers are in any way acting
in concert with respect to such obligations or the transactions
contemplated by this Agreement. Each Purchaser shall be entitled to
protect and enforce its rights, including without limitation the rights
arising out of this Agreement, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose.
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
AETHLON MEDICAL, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: President and Chief Executive
Officer
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HOLDER SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
________________________________
Signature of Holder
$_________________
Outstanding Principal Amount of Notes
________________________________
Name of Holder
16
EXHIBIT A
PLAN OF DISTRIBUTION
The Selling Stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of Common Stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately negotiated transactions;
o short sales;
o broker-dealers may agree with the Selling Stockholders to sell a
specified number of such shares at a stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, if available, rather than under this prospectus.
Broker-dealers engaged by the Selling Stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The Selling Stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The Selling Stockholders may from time to time pledge or grant a security
interest in some or all of the Shares or Common Stock or Warrant owned by them
and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the shares of common stock from
time to time under this prospectus, or under an amendment to this prospectus
under Rule 424(b)(3) or other applicable provision of the Securities Act
amending the list of Selling Stockholders to include the pledgee, transferee or
other successors in interest as Selling Stockholders under this prospectus.
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The Selling Stockholders also may transfer the shares of Common Stock in
other circumstances, in which case the transferees, pledgees or other successors
in interest will be the selling beneficial owners for purposes of this
prospectus.
The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. The Selling Stockholders have
informed the Company that it does not have any agreement or understanding,
directly or indirectly, with any person to distribute the Common Stock.
The Company is required to pay all fees and expenses incident to the
registration of the shares. The Company has agreed to indemnify the Selling
Stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
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