ESCROW AGREEMENT
Published on July 16, 2010
EXHIBIT 10.5
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this “Agreement”) is made and entered into as of July 15, 2010 by and among (a) Tonaquint, Inc., a Utah corporation (“Borrower”), (b) Aethlon Medical, Inc., a Nevada corporation (“Lender”), and (c) Griffiths & Turner / GT Title Services, Inc., a Utah corporation (“Escrow Agent”).
RECITALS
A. Borrower has issued to Lender certain Buyer Trust Deed Notes dated July 15, 2010 (the “Notes”) pursuant to the terms and conditions of a Note and Warrant Purchase Agreement of the same date.
B. Borrower’s obligations under the Notes are secured by a Trust Deed (the “Trust Deed”) encumbering certain real property of Borrower, as more specifically set forth in the Trust Deed.
C. Lender has executed a Request for Full Reconveyance in the form attached hereto as Exhibit A (the “Request”), which instructs Escrow Agent to execute and record a Deed of Reconveaynce in substantially the form attached hereto as Exhibit B (the “Reconveyance”) reconvey the Trust Deed upon the satisfaction of the conditions set forth herein.
D. Pursuant to Section 5 of the Notes, Borrower and Lender have agreed to place the Request in escrow and Escrow Agent has agreed to hold the Request in escrow subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower, Lender and Escrow Agent agree as follows:
TERMS
1. Establishment of Escrow. Upon the execution of the Notes, Lender shall deliver to Escrow Agent the Request, in original form and duly executed by Lender, to have and to hold until satisfaction of the conditions set forth below (the “Escrow”). Borrower shall deliver to Escrow Agent an executed Trust Deed to be recorded by Escrow Agent.
2. Conditions for Reconveyance. Escrow Agent shall retain the Request until the earlier of (i) Escrow Agent’s receipt of written notice from Lender that the full amount of the Notes has been repaid, or (ii) the date that is six months and three days following the date the Trust Deed is recorded (the “Release Date”), at which time Escrow Agent shall execute and record the Reconveyance; provided, however, that in the event Escrow Agent receives written notice from Lender stating that a Payment Default (as defined in the Notes) has occurred and specifically identifying both the nature of the Payment Default and the Note under which the Payment Default occurred, Escrow Agent shall retain the Request until the later of the Release Date or the date on which Escrow Agent receives written notice from Lender that the Payment Default has been cured. Upon such a cure of a Payment Default, Lender hereby covenants and agrees to promptly send written notice to Escrow Agent (a) indicating the Payment Default has been cured, and (b) so long as six months and three days have elapsed since the date the Trust Deed was recorded, instructing Escrow Agent to execute and record the Reconveyance. In the event of a dispute between Borrower and Lender with respect to whether the full amount of the Notes has been paid, or whether a Payment Default has occurred, Escrow Agent is permitted to interplead the Request into the District Court of the State of Utah pursuant to Section 7.b. below.
3. Termination. This Agreement shall terminate after the Reconveyance has been recorded.
4. Notices. All communications, consents, and other notices provided for in this Agreement shall be in writing and shall be effective on the date hand delivered, sent by facsimile or email, or mailed by registered or certified mail, return receipt requested, postage prepaid, and addressed as follows:
a. If to Borrower, to:
________________________
With a copy to:
Bennett Tueller Johnson & Deere, P.C.
Attn: Jonathan K. Hansen
3165 East Millrock Drive, Suite 500
Salt Lake City, Utah 84121
or to such other address as Borrower may designate to Lender and Escrow Agent, in writing.
b. If to Lender, to:
Aethlon Medical, Inc.
Attn: James Joyce
8910 University Center Lane, Suite 660
San Diego, California 92122
With a copy to:
Law Office of Jennifer A. Post
Attn: Jennifer A. Post
340 North Camden Drive, Suite 302
Beverly Hills, California 90210
or to such other address as Lender may designate to Borrower and Escrow Agent, in writing.
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c. If to Escrow Agent, to:
Griffiths & Turner / GT Title Services, Inc.
Attn: Tyler Turner
512 East 4500 South, Suite 150
Murray, Utah 84107
or to such other address as Escrow Agent may designate to Borrower and Lender, in writing.
5. Payment of Fees. Borrower shall bear the costs of the Escrow, which shall be equal to the sum of $500.00.
6. Tenure of Escrow Agent. Escrow Agent may resign from its duties hereunder at any time by giving written notice of such resignation to Borrower and Lender; provided, however, that Escrow Agent shall continue to serve until Borrower and Lender jointly appoint a successor and such successor accepts and agrees to perform the obligations of Escrow Agent hereunder and receives the Request. Borrower and Lender shall have the right at any time upon mutual agreement to substitute a new escrow agent by giving written notice thereof to Escrow Agent.
7. Liability; Indemnification. Escrow Agent shall perform such duties as are specifically set forth herein and, so long as it does so, shall have no liability to Borrower and Lender hereunder except to the extent a court of competent jurisdiction determines that Escrow Agent’s fraud, gross negligence or willful misconduct was the primary cause of any loss to Borrower or Lender. Anything in this Agreement to the contrary notwithstanding, in no event shall Escrow Agent be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if Escrow Agent has been advised of the likelihood of such loss or damage and regardless of the form of action. Escrow Agent undertakes to perform only such duties as are expressly set forth herein and no duties shall be implied. Escrow Agent may rely upon and shall not be liable for acting or refraining from acting upon any written notice, instruction or request furnished to it hereunder and reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties. Escrow Agent shall have no duty to solicit any payments which may be due it or the escrow account. Escrow Agent may execute any of its powers and perform any of its duties hereunder directly or through agents or attorneys and may consult with counsel, accountants and other skilled persons to be selected and retained by it. Escrow Agent shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of any such counsel, accountants or other skilled persons. In the event that Escrow Agent shall be uncertain as to its duties or rights hereunder or shall receive instructions, claims or demands from any party hereto which, in its opinion, conflict with any of the provisions of this Agreement, or with any instructions, claims or demands from any other party hereto, it shall be permitted to refrain from taking any action and its sole obligation shall be to keep safely all property held in Escrow until it shall be directed otherwise in writing by all of the parties hereto or by a final arbitration decision or a non-appealable order or judgment of a court of competent jurisdiction. Borrower and Lender agree that the following provisions shall control with respect to the rights, duties, liabilities, and immunities of Escrow Agent:
a. Escrow Agent is entitled to refrain from taking any action contemplated by this Agreement in the event that it becomes aware of any dispute between Borrower and Lender as to any facts or as to the happening of any contemplated event precedent to such action. Escrow Agent is hereby authorized to comply with and obey all final nonappealable orders, judgments, decrees or writs entered or issued by any court or final decision of any arbitrator, and in the event Escrow Agent obeys or complies with any such final nonappealable order, judgment, decree or writ of any court or final decision of any arbitrator, in whole or in part, after giving Borrower and Lender seven (7) days’ prior written notice, it shall not be liable to any of the parties hereto, nor to any other person or entity, by reason of such compliance, notwithstanding that it shall be determined that any such final nonappealable order, judgment, decree, writ, or final decision of a court or final decision of any arbitrator be entered without jurisdiction or be invalid for any reason or be subsequently reversed, modified, annulled or vacated.
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b. In the event any dispute shall arise between Borrower and Lender with respect to the disposition or delivery of the Request, or the occurrence of a Payment Default under a Note, Escrow Agent is permitted to interplead the Request into the District Court of the State of Utah, and thereafter shall be fully relieved from any and all liability or obligation with respect to the Request. Borrower and Lender further agree to pursue any redress or recourse in connection with such a dispute without making Escrow Agent a party to same.
c. Borrower and Lender shall each severally indemnify, defend and save harmless Escrow Agent and its directors, officers, agents and employees (the “Indemnified Parties”) from all loss, liability or expense (including the reasonable fees and expenses of outside counsel and the cost and expense of any interpleader action as authorized under Section 7.b. above) arising out of or in connection with (i) Escrow Agent’s execution and performance of this Agreement, except in the case of any Indemnified Party to the extent that such loss, liability or expense is due to the gross negligence or willful misconduct of such Indemnified Party, or (ii) its following any instructions or other directions executed by Borrower and Lender. Borrower and Lender acknowledge that the foregoing indemnities shall survive the resignation or removal of Escrow Agent or the termination of this Agreement.
d. In receiving the Escrow, Escrow Agent acts only as a depository for Borrower and Lender and assumes no responsibility except pursuant to the provisions of this Agreement. All of the terms and conditions in connection with Escrow Agent’s duties and responsibilities, and the rights of Borrower and Lender or anyone else with respect to Escrow Agent, are contained solely in this Agreement, and Escrow Agent is not expected or required to be familiar with the provisions of any other agreements, and shall not be charged with any responsibility or liability in connection with the observance of the provisions of any such other agreements.
8. Miscellaneous. In addition to the foregoing, the parties to this Agreement, including Escrow Agent, agree as follows:
a. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter contained in it and supersedes all prior and contemporaneous agreements, representations and understandings of the parties with respect thereto. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by all parties. No waiver of any of the provisions of this Agreement shall be deemed, or shall constitute, a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless executed, in writing, by the party making the waiver.
b. Recitals. The recitals stated above shall be and hereby are incorporated in and made a part of this Agreement by this reference.
c. Successors and Assigns. This Agreement shall be binding upon, and shall inure to the benefit of the parties to it and their respective successors and assigns; provided that no party hereto shall be entitled to assign or transfer this Agreement or any rights or obligations hereunder, voluntarily, involuntarily, by operation of law or otherwise, without the written consent of Lender and Borrower.
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d. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such provision shall be modified to achieve the objective of the parties to the fullest extent permitted and such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement or the validity or enforceability of this Agreement in any other jurisdiction.
e. Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Utah for contracts to be wholly performed in such state and without giving effect to the principles thereof regarding the conflict of laws. Each of the parties (except Escrow Agent with respect to an interpleader pursuant to Section 7.b. above) consents to the exclusive jurisdiction of the federal courts whose districts encompass any part of the County of Salt Lake or the state courts of the State of Utah sitting in the County of Salt Lake in connection with any dispute arising under this Agreement or any of the other agreements between Lender and Borrower related hereto and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens, to the bringing of any such proceeding in such jurisdictions or to any claim that such venue of the suit, action or proceeding is improper. Nothing in this subsection shall affect or limit any right to serve process in any other manner permitted by law.
f. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The parties hereto confirm that any telecopy or electronic copy of another party’s executed counterpart of this Agreement (or its signature page thereof) will be deemed to be an executed original thereof.
g. Confidentiality. Except as may be reasonably necessary to effect the transaction contemplated hereunder, (including disclosure to third-party legal counsel and consultants, accountants, and/or advisors of Borrower or Lender, as the case may be), and except as may be otherwise required by law, rule or regulation, the terms and conditions of this Agreement shall be kept confidential and shall not be disclosed to any person or entity without the advance consent of the other party; provided that any inadvertent disclosure by a party shall not subject any such party to liability hereunder, so long as reasonable steps are taken to advise the recipient of any such disclosure of the confidential nature thereof.
h. Third Parties. Nothing in this Agreement is or shall be intended to provide or convey any actionable right or benefit to or upon any person or persons other than the parties to this Agreement. Except as otherwise specifically provided herein, each party shall bear its own costs and expenses (including legal and consulting fees) in connection with this Agreement and the negotiation of all agreements and preparation of documents contemplated by this Agreement.
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i. Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT IRREVOCABLY WAIVES ANY AND ALL RIGHTS IT MAY HAVE TO DEMAND THAT ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE RELATIONSHIPS OF THE PARTIES HERETO BE TRIED BY JURY. THIS WAIVER EXTENDS TO ANY AND ALL RIGHTS TO DEMAND A TRIAL BY JURY ARISING UNDER COMMON LAW OR ANY APPLICABLE STATUTE, LAW, RULE OR REGULATION. FURTHER, EACH PARTY HERETO ACKNOWLEDGES THAT IT IS KNOWINGLY AND VOLUNTARILY WAIVING ITS RIGHT TO DEMAND TRIAL BY JURY.
j. Attorneys’ Fees. In the event of any action at law or in equity to enforce or interpret the terms of this Agreement, the Prevailing Party (as defined hereafter) shall be entitled to reasonable attorneys’ fees, court costs and collection costs in addition to any other relief to which such party may be entitled. “Prevailing Party” shall mean the party in any litigation or enforcement action that prevails in the highest number of final rulings, counts or judgments adjudicated by a court of competent jurisdiction.
[Signatures on Following Page]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
| BORROWER: | |
| TONAQUINT, INC. | |
| By: ____________________________ | |
| _______________, President | |
| LENDER: | |
| AETHLON MEDICAL, INC. | |
|
By: /s/ James Joyce
|
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| James Joyce, Chief Executive Officer | |
| ESCROW AGENT: | |
|
GRIFFITHS & TURNER / GT TITLE SERVICES, INC.
|
|
|
By: ____________________________
|
|
| Name: __________________________ | |
| Title: ___________________________ |
[Signature page to Escrow Agreement]
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EXHIBIT A
REQUEST
A-1
EXHIBIT B
RECONVEYANCE
B-1