Exhibit 10.1
UNIT SUBSCRIPTION AGREEMENT
The undersigned (hereinafter the "SUBSCRIBER") hereby confirms the
Subscriber's subscription for the purchase of Units consisting of (i) one share
of Common Stock, par value $0.001 per share (the "COMMON STOCK"), of AETHLON
MEDICAL, INC., a Nevada corporation (the "COMPANY"), and (ii) a three-year
warrant to purchase one share of Common Stock of the Company at an exercise
price of $0.25 per share, in the form attached hereto as EXHIBIT A (each, a
"WARRANT" and collectively, the "WARRANTS") on the terms described below.
The Units are sometimes referred to herein as the "SECURITIES."
In connection with this subscription, the Subscriber and the Company
agree as follows:
A. SUBSCRIPTION OF THE SUBSCRIBER.
1. PURCHASE OF UNITS. The Subscriber hereby irrevocably agrees,
represents and warrants with, to and for the benefit of the Company, that the
Subscriber is executing this Agreement in connection with the subscription by
the Subscriber for Units of the Company, resulting in the aggregate purchase
price set forth on the Subscriber's signature page hereto based upon the Issue
Price (as defined herein). The Subscriber understands that the Company is
relying upon the accuracy and completeness of the information contained herein
in complying with its obligations under federal and state securities and other
applicable laws. Subject to the terms and conditions of this Agreement, upon
execution and delivery hereof by the Subscriber, the Subscriber hereby agrees to
purchase the Units pursuant to the transaction hereof, and against concurrent
delivery of the purchase price for such shares. The date upon which the final
subscription is accepted by the Company and the full Issue Price has been
tendered to the Company, shall be known as the "CLOSING DATE."
2. OFFERING. This offering of the Units (the "OFFERING") is being made
to a limited group of investors, all of whom shall represent to the Company
pursuant to this Agreement that they are "ACCREDITED INVESTORS," as that term is
defined in Regulation D promulgated under the Securities Act of 1933, as amended
(the "SECURITIES ACT") or who have otherwise been qualified as investors by the
Company. All of the Units offered hereby are being sold by the Company. The
Company is offering the Units for the consideration set forth herein. The
Company may sell less than all of the Units offered hereby, and shall be
entitled to accept subscriptions and receive the Issue Price for each
subscription prior to the entire Offering being subscribed for. The Offering is
being made on a "best efforts" basis. The minimum subscription amount per
investor is $20,000. The maximum offering by the Company is $1,000,000 worth of
Units.
3. ISSUE PRICE. The "ISSUE PRICE" of the Units shall be equal to $0.25.
B. REPRESENTATIONS AND WARRANTIES OF THE SUBSCRIBER. The Subscriber hereby
represents and warrants to the Company as of the date hereof:
1. PLACE OF BUSINESS. The principal place of business address (or
residence) set forth below is the Subscriber's true and correct principal place
of business and is the only jurisdiction in which an offer to sell the Units was
made to the Subscriber, and the Subscriber has no present intention of moving
the Subscriber's principal place of business to or of becoming a resident of any
other state or jurisdiction.
2. SALE OR TRANSFER OF THE COMMON STOCK . The Subscriber understands
that the Common Stock and the shares underlying the Warrants have not been
registered under the Securities Act, or under the laws of any other
jurisdiction. The Subscriber understands and agrees that transfer or sale of the
Common Stock and the shares underlying the Warrants may be restricted or
prohibited unless they are subsequently registered under the Securities Act and,
where required, under the laws of other jurisdictions or an exemption from
registration is available. The Subscriber will not offer, sell, transfer or
assign the Subscriber's Common Stock or any interest therein and the shares
underlying the Warrants in contravention of this Agreement, the Securities Act
or any state or federal law. The Subscriber understands and acknowledges that,
because of the substantial restrictions on the transferability of the Common
Stock and the shares underlying the Warrants, it may not be possible for the
Subscriber to liquidate the Subscriber's investment in the Company readily, even
in the case of an emergency.
3. REPRESENTATION OF ACCREDITED INVESTOR STATUS, INVESTMENT EXPERIENCE
AND ABILITY TO BEAR RISK. The Subscriber acknowledges that the Offering has not
been registered with the Securities and Exchange Commission (or any other
securities commission or authority of any other jurisdiction) because the
Company is relying on an exemption from registration under Section 4(2) of the
Securities Act and Regulation D promulgated thereunder. THE SUBSCRIBER BELIEVES
THAT AT THE TIME OF THE SALE OF THE UNITS TO THE SUBSCRIBER, THE SUBSCRIBER
QUALIFIES AS AN "ACCREDITED INVESTOR" (AS DEFINED UNDER RULE 501 OF REGULATION D
PROMULGATED UNDER THE SECURITIES ACT) USING THE FOLLOWING QUALIFICATION FACTORS
(CHECK ALL APPROPRIATE ITEMS):
(__) $1,000,000 NET WORTH TEST:
I, the Subscriber, am a natural person, and my individual net worth, or
joint net worth with my spouse (if any), INCLUSIVE of home, furnishings
and automobiles, at the time of this purchase is in excess of
$1,000,000.
(__) $200,000 INDIVIDUAL/$300,000 JOINT ANNUAL INCOME TEST:
I, the Subscriber, am a natural person, and my individual annual gross
income (exclusive of my spouse's income) has been in excess of $200,000
in each of the two most recent tax years, and I reasonably expect
individual annual gross income (exclusive of my spouse's income) to be
in excess of $200,000 for the current tax year; or I am a natural
person, and my joint annual gross income (including my spouse's annual
gross income) has been in excess of $300,000 in each of the two most
recent tax years, and I reasonably expect our joint annual gross
incomes to be in excess of $300,000 for the current tax year.
("INCOME" under this test is defined as adjusted gross income for
federal income tax purposes PLUS (i) deductions for long-term capital
gains under the Internal Revenue Code of 1986, as amended (the "Code");
(ii) deductions for depletion under section 611 et seq. of the Code;
(iii) any exclusion for interest received on tax-exempt securities; and
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(iv) any losses of a company allocated to the individual limited
partners of the company as reported on Form 1040).
(__) BANK OR INVESTMENT COMPANY TEST:
The Subscriber is a bank as defined in section 3(a)(2) of the
Securities Act, or any savings and loan association or other
institution as defined in section 3(a)(5)(A) of the Securities Act,
whether acting in its individual or fiduciary capacity; or is a broker
or dealer registered pursuant to section 15 of the Securities Exchange
Act of 1934; or is an insurance company as defined in section 2(13) of
the Securities Act; or is any investment company registered under the
Investment Company Act of 1940, or a business development company as
defined in section 2(a)(48) of that Act; or is a Small Business
Investment Company licensed by the U.S. Small Business Administration
under section 301(c) or (d) of the Small Business Investment Act of
1958; or is a plan established and maintained by a state, its political
subdivision, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, if such plan
has total assets in excess of $5,000,000; or is an employee benefit
plan within the meaning of the Employee Retirement Income Security Act
of 1974, if the investment decision is made by a plan fiduciary, as
defined in section 3(21) of such Act, which is either a bank, savings
and loan association, insurance company, or registered investment
adviser, or if the employee benefit plan has total assets in excess of
$5,000,000, or, if a self-directed plan, with investment decisions made
solely by persons that are accredited investors.
(__) PRIVATE BUSINESS DEVELOPMENT CORPORATION TEST:
The Subscriber is a private business development company as defined in
section 202(a)(22) of the Investment Advisors Act of 1940.
(__) IRC SECTION 501(C)(3) ORGANIZATION TEST:
The Subscriber is an organization described in section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of acquiring
the securities being offered, with total assets in excess of
$5,000,000.
(__) DIRECT RELATIONSHIP TO ISSUER TEST:
The Subscriber is a director, executive officer, partner or manager of
the issuer of the securities being offered or sold, or any director,
executive officer or manager of a partner or partner of that issuer.
(__) $5,000,000 NONINVESTMENT TRUST TEST:
The Subscriber is a trust with total assets in excess of $5,000,000 not
formed for the specific purpose of acquiring the securities being
offered, whose purchase is directed by a "SOPHISTICATED person" as
described in section 230.506(b)(2)(ii).
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(__) EQUITY ENTITY COMPRISED OF ACCREDITED INVESTORS TEST:
The Subscriber is any entity in which all of the equity owners are
accredited investors as defined above.
In addition, the Subscriber is knowledgeable and experienced with respect to the
financial and business activities contemplated by the Company and is capable of
evaluating the risks and merits of investing in the Units and, in making a
decision to proceed with this investment, has not relied upon any
representations, warranties or agreements, other than those set forth in this
Agreement and can bear the economic risk of an investment in the Company for an
indefinite period of time, and can afford to suffer the complete loss thereof.
4. OWN ADVICE. In connection with the Subscriber's investment in the
Company, the Subscriber has carefully considered and has discussed, to the
extent the Subscriber believes such discussion necessary, with the Subscriber's
professional legal, tax and financial advisers (the "INVESTMENT ADVISORS") the
suitability of an investment in the Units for the Subscriber's particular tax
and financial situation and the Subscriber has determined that the Units are a
suitable investment for the Subscriber.
5. COMPANY HISTORY; RISKS. The Subscriber represents and warrants that
the Subscriber is aware (i) that the Company has limited or no revenues; (ii)
that the Units involve a substantial degree of risk of loss of the Subscriber's
entire investment and that there is no assurance of any income from the
Subscriber's investment; and (iii) that any federal and/or state income tax
benefits that may be available to the Subscriber, if any, may be lost through
the adoption of new laws or regulations, to changes to existing laws and
regulations and to changes in the interpretation of existing laws and
regulations. The Subscriber further represents that the Subscriber is relying
solely on the Subscriber's own conclusions or the advice of the Subscriber's
Investment Advisors with respect to tax aspects of any investment in the Units.
The Subscriber further represents that it has read and reviewed the Company's
filings made with the Securities and Exchange Commission.
6. INQUIRIES. The Subscriber and its Investment Advisors have been
given access to, and prior to the execution of this Agreement, have been
provided with an opportunity to ask questions of, and receive answers from, the
Company's officers concerning the Company and the terms and conditions of the
Offering and the Units, and to obtain any other information that the Subscriber
and the Subscriber's Investment Advisors required with respect to the Company
and an investment in the Company in order to evaluate such investment and verify
the accuracy of all information furnished to the Subscriber and its Investment
Advisors regarding the Company. All such questions, if asked, were answered
satisfactorily and all information or documents provided were found to be
satisfactory. Neither the Subscriber nor its Investment Advisors have been
furnished any offering literature on which they have relied other this
Agreement, and the Subscriber and its Investment Advisors have relied only on
this Agreement. At no time was the Subscriber presented with or solicited by any
leaflet, public promotion meeting, newspaper or magazine article, radio or
television advertisement or any other form of general advertising or general
solicitation.
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7. AUTHORITY. The Subscriber is authorized and has full right and power
to subscribe for the Units and to perform the Subscriber's obligations pursuant
to the provisions of this Agreement; the person signing this Agreement and any
other instrument executed and delivered herewith on behalf of the Subscriber has
been duly authorized by the Subscriber and has full power and authority to do
so. If the Subscriber is a corporation, partnership, unincorporated association
or other entity, the person signing this agreement has the legal capacity to
authorize, deliver and be bound by this Agreement and to take all actions
required pursuant hereto and further certifies that all necessary approvals of
directors, shareholders or otherwise have been given and obtained; and if the
Subscriber is an individual, the Subscriber is of the full age of majority in
the jurisdiction in which the Subscriber is resident and is legally competent to
execute, deliver and be bound by this Agreement and take all action pursuant
hereto.
8. NO DEFAULT. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and thereby will not
conflict with, or result in any violation of or default pursuant to, any
provision of any governing instrument applicable to the Subscriber, or any
agreement or other instrument to which the Subscriber is a party or by which the
Subscriber or any of the Subscriber's properties are bound or any permit,
franchise, judgment, decree, statute, rule or regulation applicable to the
Subscriber or any of the Subscriber's business or properties.
9. ERISA. If the Subscriber is an employee benefit plan subject to
ERISA, then the Subscriber acknowledges that the Subscriber has been informed of
and understands the operations and business of the Company, and represents that
the Subscriber's investment in the Company (i) is permissible under the
documents and instruments governing such plan; (ii) satisfies the
diversification requirements of ERISA; (iii) is prudent considering all the
facts and circumstances; and (iv) is not a "PROHIBITED TRANSACTION" within the
meaning of Section 406 of ERISA.
10. PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with the
Subscriber in reliance upon the Subscriber's representations to the Company,
which by the Subscriber's execution of this Agreement, the Subscriber hereby
confirms, that the Common Stock and the shares underlying the Warrants issuable
to the Subscriber will be acquired for investment for the Subscriber's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that the Subscriber has no present
intention of selling, granting any participation in, or otherwise distributing
the same. The Subscriber represents and warrants that the Subscriber has no
contract, understanding, agreement or arrangement with any person to sell or
transfer or pledge to such person or anyone else any of the Common Stock or the
shares underlying the Warrants for which the Subscriber hereby subscribes (in
whole or in part) or any interest therein; and the Subscriber represents and
warrants that the Subscriber has no present plans to enter into any such
contract, undertaking, agreement or arrangement.
The Subscriber represents and warrants that the funds representing the aggregate
subscription price that will be advanced by the Subscriber hereunder will not
represent proceeds of crime and the Subscriber acknowledges that the Company may
in the future be required by law to disclose the Subscriber's name and other
information relating to this Subscription Agreement and the Subscriber's
subscription hereunder, on a confidential basis, and (i) to the best of the
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Subscriber's knowledge, none of the subscription funds to be provided by the
Subscriber (a) have been or will be derived from or related to any activity that
is deemed criminal under the laws of the United States of America, or any other
jurisdiction, or (b) are being tendered on behalf of a person or entity who has
not been identified to the Subscriber, and (ii) the Subscriber shall promptly
notify the Company if the Subscriber discovers that any of such representations
ceases to be true, and shall provide the Company with appropriate information in
connection therewith.
The Subscriber represents and warrants that the current structure of this
transaction and all transactions and activities contemplated hereunder is not a
plan or scheme to evade the registration provisions of the Securities Act.
The Subscriber acknowledges that:
(i) no securities commission or similar regulatory authority has
reviewed or passed on the merits of the Units; and
(ii) there is no government or other insurance covering the Units;
and
(iii) there are risks associated with the purchase of the Units; and
(iv) there are restrictions on the Subscriber's ability to resell
the Common Stock and the shares underlying the Warrants and it
is the responsibility of the Subscriber to find out what those
restrictions are and to comply with them before selling the
Common Stock or the shares underlying the Warrants.
The Subscriber represents and warrants that the Subscriber has not received nor
does the Subscriber expect to receive any financial assistance from the Company,
directly or indirectly, in respect of the Subscriber's purchase of the Units.
The Subscriber represents and warrants that neither the Company, nor any of its
directors, officers, employees or representatives, have made any representations
(oral or written) to the Subscriber regarding the future value of the Common
Stock.
The Subscriber acknowledges that (i) the Company may complete secured or
unsecured debt financings or equity financings in the future in order to develop
the Company's business and to fund its ongoing development, (ii) there is no
assurance that such financings will be available and, if available, on
reasonable terms, (iii) any such future financings may have a dilutive effect on
current security holders, including the Subscriber, and (iv) if such future
financings are not available, the Company may be unable to fund its ongoing
development and the lack of capital resources may result in the failure of its
business.
The Subscriber will not, directly or indirectly, except in compliance with (that
is, only to the extent required to comply with) the Securities Act and such
other securities or "BLUE SKY" laws as may be applicable, (i) offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the Securities, (ii) engage in
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any short sale that results in a disposition of any of the Securities by the
Subscriber, or (iii) hedge the economic risk of the Subscriber's investment in
the Securities.
C. Representations and Warranties of the Company.
1. ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Nevada and has all requisite corporate power and corporate authority to
carry on its business as now conducted and as proposed to be conducted. The
Company is duly qualified to transact business and is in good standing in each
jurisdiction in which such qualification is required, except where the failure
to be so qualified would not have a material adverse effect on the Company.
2. CAPITALIZATION. As of December 11, 2008, the authorized capital
stock of the Company consists of 100,000,000 shares of Common Stock, of which
(i) 44,146,414 shares are issued and outstanding, and (ii) 29,639,868 shares are
reserved for issuance upon exercise of outstanding warrants, options and other
convertible securities. All such issued and outstanding shares have been duly
authorized and validly issued and have been offered, issued, sold, and delivered
by the Company in compliance with applicable federal and state securities laws.
3. AUTHORIZATION. The Company has all requisite corporate power to
execute, deliver and perform its obligations under this Agreement and all other
agreements contemplated hereby and thereby and to issue the Common Stock and the
shares underlying the Warrants in accordance with the terms hereof. All
corporate action on the part of the Company and its officers, directors and
shareholders necessary for the authorization, execution and delivery of this
Agreement and all other agreements and obligations contemplated hereby and
thereby, the performance of all obligations of the Company hereunder and
thereunder, and the authorization, issuance (or reservation for issuance), sale
and delivery of the Common Stock to be issued hereunder has been taken. This
Agreement constitutes valid and legally binding obligation of the Company,
enforceable in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally, (ii) as
limited by general principles of equity, including concepts of materiality,
reasonableness, good faith and fair dealing and by the possible unavailability
of specific performance, injunctive relief or other equitable remedies.
4. NO VIOLATION. The Company's execution, delivery and performance of
this Agreement and all other agreements contemplated hereby and thereby and the
consummation of the transactions contemplated hereby and thereby will not with
or without the giving of notice or the lapse of time or both (A) violate any
provision of law, statute, rule or regulation to which the Company is subject,
(B) violate any order, judgment or decree applicable to it, or (C) conflict with
or result in a breach or default under any term or condition of its applicable
governing instruments or any agreement or other instrument to which it is a
party or by which it is bound.
5. VALID ISSUANCE OF COMMON STOCK AND WARRANTS. The Common Stock and
Warrants being issued hereunder, when issued, sold and delivered in accordance
with the terms of this Agreement for the consideration expressed herein, will be
duly and validly issued, fully paid and non-assessable and will be free of
preemptive rights and restrictions on transfer other than restrictions on
transfer under this Agreement and applicable state and federal securities laws.
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Assuming the truth and accuracy of the representations and warranties of the
Subscriber for the Company's capital stock under this Agreement, the issuance of
the Common Stock hereunder shall be exempt from registration under the
Securities Act and any applicable state securities laws.
6. GOVERNMENTAL CONSENTS. No consent, approval, order or authorization
of, or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of the Company is
required in connection with the valid execution of this Agreement and the
consummation of the transactions contemplated by this Agreement except for
filings pursuant to applicable state and federal securities laws which allow
filings to be made following the Closing but in no event later than 15 days
after the consummation of the transactions contemplated hereby. The Company is
in compliance, in all material respects, with the USA Patriot Act.
7. USE OF PROCEEDS. The proceeds from the sale of the Units will be
made available for general working capital purposes.
D. LEGEND. The certificates representing the Common Stock and Warrants issued by
the Company hereunder shall bear the following (or similar) legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND ARE BEING
OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THESE SECURITIES MAY
NOT BE SOLD, TRANSFERRED OR ASSIGNED UNLESS PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT OR (ii) AN EXEMPTION FROM APPLICABLE
SECURITIES LAWS, IN WHICH CASE THE COMPANY MAY REQUIRE AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT
REQUIRED.
E. INDEMNIFICATION. The Subscriber agrees to indemnify and hold harmless the
Company and its officers, managers, members, employees, agents and affiliates
against any and all loss, liability, claim, damage and expense whatsoever
(including without limitation any and all expenses reasonably incurred in
investigating, preparing or defending against any litigation commenced or
threatened or any claim whatsoever) arising out of or based upon any false
representation or warranty or breach or failure by the Subscriber to comply with
any covenant agreement made by the Subscriber herein. The Company agrees to
indemnify and hold harmless the Subscriber and its officers, managers, members,
employees, agents and affiliates against any and all loss, liability, claim,
damage and expense whatsoever (including without limitation any and all expenses
reasonably incurred in investigating, preparing or defending against any
litigation commenced or threatened or any claim whatsoever) arising out of or
based upon any false representation or warranty or breach or failure to comply
with any covenant agreement made by the Company herein.
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F. MODIFICATION. Neither this Agreement nor any provision hereof shall be
waived, modified, discharged or terminated except by an instrument in writing
signed by the party against whom any such waiver, modification, discharge or
termination is sought.
G. ASSIGNABILITY. This Agreement and the rights and obligations hereunder are
not transferable or assignable by the Subscriber.
H. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada, without regard to principles of
conflicts of law.
I. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made by the Subscriber in this Agreement shall survive the execution
and delivery of this Agreement, as well as any investigation at any time made by
or on behalf of the Company and the issue and sale of the Units.
J. RELIANCE. The Subscriber understands and acknowledges that the Subscriber's
representations, warranties, acknowledgements and agreements in this Agreement
will be relied upon by the Company in determining the Subscriber's suitability
as a purchaser of Units.
K. FURTHER ASSURANCES. The Subscriber agrees to provide, if requested, any
additional information that may be requested or required to determine the
Subscriber's eligibility to purchase the Units.
L. ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subject
matter hereof and no party shall be liable or bound to any other in any manner
by any representations, warranties, covenants and agreements except as
specifically set forth herein.
M. SEVERABILITY. In the event one or more of the provisions of this Agreement
should be held, for any reason, to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect any
other provisions of this Agreement, and this Agreement shall be construed as if
such invalid, illegal or unenforceable provision had never been contained
herein.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the undersigned has executed this Agreement as of
the date set forth on this signature page.
Number of shares of Units Subscribed for:
Aggregate Purchase Price: $
___________________________ _________________________
(insert number) Print Name of Authorized
Representative
By:____________________________ _______________________
Signature of Subscriber or Capacity of Authorized
Authorized Representative Representative
Date: ________, 200_
Address:
Social Security Number or U.S. Tax Identification No: _________________
SUBSCRIPTION ACCEPTED:
AETHLON MEDICAL, INC., a Nevada corporation
By:___________________________ Date: ____________, 2008
Name: Xxxxx X. Xxxxx
Title: Chairman and Chief Executive Officer
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EXHIBIT A
FORM OF WARRANT
