Exhibit 10.2

 

ESCROW AGREEMENT

THIS ESCROW AGREEMENT (this “Agreement”), dated as of February 24, 2014, is made
by and among by and among Aethlon Medical, Inc., a Nevada corporation
(“Aethlon”), Gemini Master Fund Ltd. (“Gemini”) and Olshan Frome Wolosky LLP, a
New York limited liability partnership, as escrow agent (the “Escrow Agent”).

WHEREAS, Aethlon and Gemini have entered into a Settlement Agreement dated of
even date herewith (the “Settlement Agreement”) which, among other things,
provides for the delivery by Aethlon of the Warrant Shares, as that term is
defined in the Agreement, to the Escrow Agent; and

WHEREAS, the parties have requested that the Escrow Agent hold the Escrow
Property in accordance with the terms hereof.

NOW, THEREFORE, in consideration of the covenants and mutual promises contained
herein and other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the parties agree as follows:

Section 1.          Appointment of Escrow Agent; Establishment of Escrow.

(a)          The parties hereto hereby designate and appoint Olshan Frome
Wolosky LLP as the Escrow Agent for the purposes set forth herein, and the
Escrow Agent hereby accepts such appointment on the terms herein provided.

(b)          The “Escrow Property” shall consist of twenty certificates for
shares of Aethlon Common Stock in the amounts set forth in the Settlement
Agreement and any proceeds derived from any Escrow Property held by the Escrow
Agent, including shares received in any stock split or as a dividend.

(c)          Aethlon has delivered the Escrow Property to the Escrow Agent upon
execution hereof. The Escrow Property shall be held, administered and disposed
of by the Escrow Agent in accordance with the terms and conditions hereinafter
set forth.

Section 2.          Release of the Escrow Property.

(a)          Upon satisfaction of each Escrow Release Condition (as defined
below), Escrow Agent shall deliver to Gemini a single Certificate for Aethlon
Common Stock, accompanied by a release notice in the form attached hereto as
Exhibit A (a “Release Notice”).

(b)          An Escrow Release Condition shall occur on the first and fifteenth
day of each month after the date of this Agreement, until all certificates have
been delivered. If the release date is a Saturday, Sunday or holiday, the Escrow
Agent may release the shares the preceding business day. In the event that
Aethlon announces an agreement to sell, merge, or engage in any other
transaction involving a change of control, the Escrow Agent shall release to
Gemini all remaining shares that it holds.

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(c)          Following the delivery of all of the Escrow Property to Gemini in
accordance with the terms hereof, the Escrow Agent will have no further
obligation or liability under this Agreement.

Section 3.          Miscellaneous.

(a)          To induce the Escrow Agent to act hereunder, it is further agreed
by the other parties hereto that:

(i)          The Escrow Agent shall not be under any duty to give the Escrow
Property held by it hereunder any greater degree of care than it gives its own
similar property and shall not be required to invest any funds held hereunder.
Funds held hereunder shall not earn or accrue interest.

(ii)         This Escrow Agreement expressly sets forth all the duties of the
Escrow Agent with respect to any and all matters pertinent hereto. No implied
duties or obligations shall be read into this Escrow Agreement against the
Escrow Agent. The Escrow Agent shall not be bound by the provisions of any
agreement among the other parties hereto except this Escrow Agreement.

(iii)        The Escrow Agent shall not be liable for any action taken or
omitted hereunder, except for its own gross negligence or willful misconduct
and, except with respect to claims based upon such gross negligence or willful
misconduct that are successfully asserted against the Escrow Agent, the other
parties hereto shall jointly and severally indemnify and hold harmless the
Escrow Agent (and any successor Escrow Agent) from and against any and all
losses, liabilities, claims, actions, damages and expenses, including reasonable
attorneys’ fees and disbursements, arising out of and in connection with this
Escrow Agreement.

(iv)        The Escrow Agent shall be entitled to rely upon any order, judgment,
certification, demand, notice, instrument or other writing delivered to it
hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity or the
service thereof. The Escrow Agent may act in reliance upon any instrument or
signature reasonably believed by it to be genuine and may assume that any person
purporting to give receipt or advice or make any statement or execute any
document in connection with the provisions hereof has been duly authorized to do
so.

(v)          The Escrow Agent may act pursuant to the advice of counsel with
respect to any matter relating to this Escrow Agreement and shall not be liable
for any action taken or omitted in accordance with such advice.

(vi)         The Escrow Agent does not have any interest in the Escrow Property
deposited hereunder but is serving as escrow holder only and having only
possession thereof.

(vii)        The Escrow Agent makes no representation as to the validity, value,
genuineness or the collectability of any security or other document or
instrument held by or delivered to it.

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(viii)       The Escrow Agent shall not be called upon to advise any party as to
the wisdom in selling or retaining or taking or refraining from any action with
respect to any securities or other property deposited hereunder.

(ix)         The Escrow Agent (and any successor Escrow Agent) may at any time
resign such position by delivering the Escrow Property to any successor Escrow
Agent jointly designated by the other parties hereto in writing, or to any court
of competent jurisdiction, whereupon the Escrow Agent shall be discharged of and
from any and all further obligations arising in connection with this Escrow
Agreement. The resignation of the Escrow Agent will take effect on the earlier
of (a) the appointment of a successor (including a court of competent
jurisdiction) or (b) the day that is 30 days after the date of delivery of its
written notice of resignation to the other parties hereto. If the Escrow Agent
has not received a designation of a successor Escrow Agent, the Escrow Agent’s
sole responsibility after that time shall be to safekeep the Escrow Property
until receipt of a designation of successor Escrow Agent or a joint written
disposition instruction by the other parties hereto or a final, non-appealable
order of a court of competent jurisdiction.

(x)          In the event (i) of any disagreement between the other parties
hereto resulting in adverse claims or demands being made in connection with the
Escrow Property, or (ii) the Escrow Agent in good faith is in doubt as to what
action it should take hereunder, the Escrow Agent shall be entitled to retain
the Escrow Property until the Escrow Agent shall have received (A) a final,
non-appealable order of a court of competent jurisdiction directing delivery of
the Escrow Property or (B) a written agreement executed by the other parties
hereto directing delivery of the Escrow Property, in which event the Escrow
Agent shall disburse the Escrow Property in accordance with such order or
agreement. Any court order shall be accompanied by a legal opinion by counsel
for the presenting party satisfactory to the Escrow Agent to the effect that
said opinion is final and non-appealable. The Escrow Agent shall act on such
court order and legal opinions without further question. Notwithstanding the
foregoing, if requested by Aethlon, in the event of a dispute or disagreement
between Aethlon and Gemini with respect to the Escrow Property disbursement that
is not resolved within a reasonable time, the Escrow Agent shall deposit the
Escrow Property with a court of competent jurisdiction and interplead the other
parties hereto in accordance with applicable rules of legal procedure.

(xi)         The other parties hereto hereby irrevocably submit to the
jurisdiction of any New York state or federal court sitting in the State of New
York, County of New York in any action or proceeding arising out of or relating
to this Escrow Agreement, and the parties hereby irrevocably agree that all
claims in respect of such action or proceeding arising out of or relating to
this Escrow Agreement shall be heard and determined in such a New York state or
federal court. The other parties hereby consent to and grant to any such courts
exclusive jurisdiction over the persons of such parties, and waive any claims of
forum non conveniens, and over the subject matter of any such dispute and agree
that delivery or mailing of any process or other papers in the manner provided
herein above, or in such other manner as may be permitted by law, shall be valid
and sufficient service thereof. In any suit arising under this Escrow Agreement,
the parties hereby consent to service of process by mail as proper and waive any
and all defenses related to service of process otherwise available under law.

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(xii)          No printed or other matter in any language (including without
limitation prospectuses, notices, reports and promotional material) that
mentions the Escrow Agent’s name or the rights, powers, or duties of the Escrow
Agent shall be issued by the other parties hereto or on such parties’ behalf
unless the Escrow Agent shall first have given its specific written consent
thereto.

(xiii)         This Escrow Agreement shall be binding upon and inure solely to
the benefit of the parties hereto and their respective successors and assigns,
heirs, administrators and representatives and shall not be enforceable by or
inure to the benefit of any third party except as provided in paragraph (i) with
respect to a resignation by the Escrow Agent. No party may assign any of its
rights or obligations under this Escrow Agreement without the written consent of
the other parties.

(xiv)         This Escrow Agreement shall be construed in accordance with and
governed by the internal laws of the State of New York (without reference to its
rule as to conflicts of law to the extent that the general application of the
laws of another jurisdiction would be required thereby).

(b)          No waiver or any breach of any covenant or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach
thereof, or of any other covenant or provision herein contained. No extension of
time for performance of any obligation or act shall be deemed an extension of
the time for performance of any other obligation or act.

(c)          This Escrow Agreement is the final expression of, and contains the
entire agreement between, the parties with respect to the subject matter hereof
and supersedes all prior understandings with respect thereto. This Escrow
Agreement may not be modified, changed, supplemented or terminated, nor may any
obligations hereunder be waived, except by written instrument signed by the
parties to be charged or by its agent duly authorized in writing or as otherwise
expressly permitted herein.

(d)          Whenever required by the context of this Escrow Agreement, the
singular shall include the plural and masculine shall include the feminine. This
Escrow Agreement shall not be construed as if it had been prepared by one of the
parties, but rather as if both parties had prepared the same.

(e)          The Escrow Agent shall be obligated only for the performance of
such duties as are specifically set forth herein and may rely and shall be
protected in relying or refraining from acting on any instrument reasonably
believed by the Escrow Agent to be genuine and to have been signed or presented
by the proper party or parties. The Escrow Agent shall not be personally liable
for any act the Escrow Agent may do or omit to do hereunder as the Escrow Agent
while acting in good faith and in the absence of gross negligence or willful
misconduct, and any act done or omitted by the Escrow Agent pursuant to the
advice of the Escrow Agent’s attorneys-at-law shall be conclusive evidence of
such good faith, in the absence of gross negligence or willful misconduct.

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(f)          The Escrow Agent is hereby expressly authorized to disregard any
and all warnings given by any of the parties hereto or by any other person or
corporation, excepting only orders or process of courts of law and is hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case the Escrow Agent obeys or complies with any such order, judgment
or decree, the Escrow Agent shall not be liable to any of the parties hereto or
to any other person, firm or corporation by reason of such decree being
subsequently reversed, modified, annulled, set aside, vacated or found to have
been entered without jurisdiction.

(g)          The Escrow Agent shall not be liable in any respect on account of
the identity, authorization or rights of the parties executing or delivering or
purporting to execute or deliver a Subscription Agreement or any documents or
papers deposited or called for thereunder in the absence of gross negligence,
fraud and willful misconduct.

(h)          The Escrow Agent shall be entitled to employ such legal counsel and
other experts as the Escrow Agent may deem necessary properly to advise the
Escrow Agent in connection with the Escrow Agent’s duties hereunder, may rely
upon the advice of such counsel, and may pay such counsel reasonable
compensation therefor which shall be paid by the Escrow Agreement unless
otherwise provided therefore elsewhere in this Agreement. The Escrow Agent has
acted as legal counsel for and may continue to act as legal counsel for Gemini
from time to time, notwithstanding its duties as the Escrow Agent hereunder.
Aethlon consents to the Escrow Agent also serving as legal counsel for Gemini
and waives any claim that such representation represents a conflict of interest
on the part of the Escrow Agent. Gemini and Aethlon understand that the Escrow
Agent is relying explicitly on the foregoing provision in entering into this
Escrow Agreement.

(i)          If the Escrow Agent reasonably requires other or further
instruments in connection with this Escrow Agreement or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.

(j)          Aethlon and Gemini agree jointly and severally to indemnify and
hold harmless the Escrow Agent and its partners, employees, agents and
representatives from any and all claims, liabilities, costs or expenses in any
way arising from or relating to the duties or performance of the Escrow Agent
hereunder or the transactions contemplated hereby or by the Subscription
Agreements other than any such claim, liability, cost or expense to the extent
the same shall have been determined by final, unappealable judgment of a court
of competent jurisdiction to have resulted from the gross negligence, fraud or
willful misconduct of the Escrow Agent.

Section 4.          Notices. Any notice, request, demand or other communication
permitted or required to be given hereunder shall be in writing, shall be sent
by one of the following means to the addressee at the address set forth below
(or at such other address as shall be designated hereunder by notice to the
other parties and persons receiving copies, effective upon actual receipt) and
shall be deemed conclusively to have been given: (a) upon hand delivery or upon
delivery by telecopy, or facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received), (b) on the business day following the date of mailing by
overnight courier service, fully prepaid, addressed to such address, or (c) upon
actual receipt of such mailing, whichever shall first occur.

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If to Aethlon: James Joyce
Aethlon Medical, Inc.
8910 University Center Lane
San Diego, CA 92122
jjoyce@aethlonmedical.com     with a copy to: Mark A. Robertson
Fulbright & Jaworski LLP
666 Fifth Avenue
New York, NY 10103
(212) 318-3304
mark.robertson@nortonrosefulbright.com     If to Gemini: Steven Winters
Managing Partner
Gemini Master Fund, LLC
619 South Vulcan, Suite 203
Encinitas, CA 92024
steve@geministrategies.com     with a copy to: Thomas J. Fleming
Olshan Frome Wolosky LLP
Park Avenue Tower
65 East 55th Street
New York, NY 10022
(212) 451-2300
tfleming@olshanlaw.com    

 

 

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties have executed this Escrow Agreement as of the
date set forth above.

  AETHLON MEDICAL, INC.     Dated:  February 24, 2014 By:

/s/ James Joyce

    James Joyce   Its: Chief Executive Officer

 

 

  GEMINI MASTER FUND, LTD.     Dated:  February 24, 2014 By:

/s/ Steven Winters

    Steven Winters   Its: Managing Partner

 

 

Agreed and Accepted as of the date first written above:   OLSHAN FROME WOLOSKY
LLP,
as Escrow Agent     By:

/s/ Thomas J. Fleming

  Name: Thomas J. Fleming   Title: Partner

 

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EXHIBIT A

Gemini Master Fund
Aethlon Medical, Inc.

Release Notice

[DATE]

Dear Sirs:

This letter serves to inform you that an Escrow Release Condition (as defined
and set forth in the Escrow Agreement, dated as of February __, 2014 (the
“Escrow Agreement”), by and among Aethlon Medical, Inc., Gemini Master Fund Ltd.
and Olshan Frome Wolosky LLP, as escrow agent, has occurred, and that a
certificate for _________ shares (“Released Escrow Property”) of Common Stock of
Aethlon Medical, Inc. has been delivered to Gemini Master Fund Ltd. or its
designee.

 

 

 

 

 

 

 

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