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EXHIBIT 10.4
 
 
WHEN RECORDED, MAIL TO:
Aethlon Medical, Inc.
Attn: James Joyce
8910 University Center Lane, Suite 6600
San Diego, California 92122
 

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APN: 16-35-207-019-0000

TRUST DEED

(with Assignment of Rents)

THIS TRUST DEED, made this 15th day of July, 2010, is given by Tonaquint, Inc.,
a Utah corporation, whose address is________________, as “Trustor,” to Tyler
Turner, having a mailing address of 512 East 4500 South, Suite 150, Murray, Utah
84107, as “Trustee,” for the benefit of Aethlon Medical, Inc., a Nevada
corporation, whose address is 8910 University Center Lane, Suite 660, San Diego,
California 92122, as “Beneficiary.”
 
WITNESSETH: That Trustor hereby CONVEYS AND WARRANTS TO TRUSTEE IN TRUST, WITH
POWER OF SALE, the following described property, situated in Salt Lake County,
State of Utah:

See Exhibit A attached hereto.

Together with all of the following (all of which, together with such real
property described on Exhibit A, is referred to herein collectively as the
“Property”):

(a)           all buildings, structures, and improvements of every nature
whatsoever now or hereafter situated thereon;

(b)           all rights of way, easements, tenements, hereditaments, privileges
and appurtenances thereunto belonging, now or hereafter used or enjoyed with
such property or any part thereof; SUBJECT, HOWEVER, to the right, power and
authority hereinafter given to and conferred upon Beneficiary to collect and
apply rents, issues, and profits;
 
(c)           all present and future right, title, and interest of Trustor in
and to all fixtures (as that term is defined in the Utah Uniform Commercial Code
(the “UCC”), and whether existing now or in the future) now or in the future
located at, upon, or about or affixed or attached to or installed in the real
property described on Exhibit A; and
 
(d)           all insurance policies, insurance and condemnation awards and
proceeds, proceeds of the sale of promissory notes, and any other rights to the
payment of money with respect to the property; all advance payments of insurance
premiums made by Trustor with respect to such real property and improvements;
and all plans, drawings and specifications relating to such real property and
improvements, Trustor hereby granting to Beneficiary a security interest in and
to the same as a secured party under the UCC, in addition to and not in
limitation of Trustee’s rights and remedies hereunder.
 
 
 
 

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FOR THE PURPOSE OF SECURING:

For a period of six (6) months and three (3) days from the date hereof (the date
of the conclusion of such period shall be referred to herein as the
“Reconveyance Date”), except as set forth in that certain Escrow Agreement of
even date herewith entered into by and among Beneficiary, Trustor, and Griffiths
& Turner / GT Title Services, Inc., a Utah corporation (the “Escrow Agreement”),
(1) payment of (a) the indebtedness evidenced by the Buyer Trust Deed Note #1
dated of even date herewith in the original principal sum of Two Hundred
Thousand and No/100 Dollars ($200,000.00), together with interest thereon,
executed by Trustor in favor of Beneficiary, and any extensions, revisions,
modifications, substitutions, or renewals thereof (“Note #1”); and (b) the
indebtedness evidenced by the Buyer Trust Deed Note #2 dated of even date
herewith in the original principal sum of Two Hundred Thousand and No/100
Dollars ($200,000.00), together with interest thereon, executed by Trustor in
favor of Beneficiary, and any extensions, revisions, modifications,
substitutions, or renewals thereof (“Note #2,” and together with Note #1, the
“Notes”); (2) the performance of each agreement of Trustor herein contained; and
(3) the payment of all sums expended or advanced by Beneficiary under or
pursuant to the terms hereof, together with interest thereon as herein provided.
 
AND, Trustor hereby warrants, covenants and agrees that Trustor is the lawful
owner of the Property, with good and marketable title, free and clear of all
encumbrances, liens or charges, excepting only those matters currently of
record.

TO PROTECT THE SECURITY OF THIS TRUST DEED, TRUSTOR AGREES:
 
1.   To keep the Property in good condition and repair; not to remove or
demolish any building thereon; to materially comply with all laws, covenants and
restrictions affecting the Property; and not to commit or permit waste thereof.

2.   To provide and maintain insurance, of such type or types and amounts as
Beneficiary may reasonably require in writing (but in any event not to exceed
the amount of the indebtedness secured hereby unless agreed to by Trustor) on
the improvements now existing or hereafter erected or placed on the Property.

Trustor or any subsequent owner or purchaser of the Property shall have the
right to substitute for a then existing policy of insurance, a policy of
insurance issued by another insurance carrier at any time, provided Trustor
provides notice to Beneficiary of such new insurance carrier within sixty (60)
days of the issuance of a substitute insurance policy.

3.   To deliver to and maintain with Beneficiary until the earlier of (a) the
indebtedness secured hereby is paid in full, or (b) the Reconveyance Date, such
evidence of title as Beneficiary may reasonably require, including abstracts of
title.
 
 
 
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4.   To pay at least ten (10) days before delinquency all taxes and assessments
affecting the Property; to pay, when due, all encumbrances, charges, and liens,
with interest, on the Property or any part thereof, which at any time appear to
be prior or superior hereto; and to pay all costs, fees, and expenses of this
trust.

5.   To pay immediately and without demand all sums expended hereunder by
Beneficiary or Trustee, with interest from date of expenditure at the rate of
ten percent (10%) per annum until paid, and the repayment thereof shall be
secured hereby.

IT IS MUTUALLY AGREED THAT:

6.   Should the Property or any part thereof be taken or damaged by reason of
any public improvement or condemnation proceeding, or damaged by fire, or
earthquake, or in any other manner, Beneficiary shall be entitled to all
compensation, awards, and other payments or relief therefor, up to the full
amount of the indebtedness secured hereby.

7.   As additional security, Trustor hereby assigns Beneficiary, during the
continuance of these trusts, all rents, issues, royalties, and profits of the
Property affected by this Trust Deed and of any personal property located
thereon.  Until Trustor shall default in the payment of any indebtedness secured
hereby or in the performance of any agreement hereunder, Trustor shall have the
right to collect all such rents, issues, royalties, and profits earned prior to
default as they become due and payable.  If Trustor shall default as aforesaid,
Trustor’s right to collect any of such moneys shall cease and Beneficiary shall
have the right, with or without taking possession of the Property affected
hereby, to collect all rents, royalties, issues, and profits.

8.   Except as otherwise noted herein, if any default by Trustor hereunder is
curable, then such default may be cured (and no default will have occurred) if
Trustor, after receiving written notice from Beneficiary demanding cure of such
default, either (a) cures such default within thirty (30) days, or (b) if the
cure requires more than thirty (30) days, immediately initiates steps that
Beneficiary deems in Beneficiary’s reasonable discretion to be sufficient to
cure such default and thereafter diligently continues and completes all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical.

9.   Upon any uncured default by Trustor hereunder (after the conclusion of any
cure period set forth in Section 8 above), Beneficiary may at any time upon not
less than ten (10) days’ written notice to Trustor, either in person, by agent,
or by a receiver to be appointed by a court (Trustor hereby consenting to the
appointment of Beneficiary as such receiver), and without regard to the adequacy
of any security for the indebtedness hereby secured, enter upon and take
possession of the Property or any part thereof, in its own name sue for or
otherwise collect the rents, issues, and profits, including those past due and
unpaid, and apply the same, less costs and expenses of operation and collection,
including reasonable attorneys’ fees, upon any indebtedness secured hereby, and
in such order as Beneficiary may determine.

10.   The failure on the part of Beneficiary to promptly enforce any right
hereunder shall not operate as a waiver of such right and the waiver by
Beneficiary of any default shall not constitute a waiver of any other or
subsequent default.

11.   Time is of the essence hereof.  Upon default by Trustor in the payment of
any indebtedness secured hereby or in the performance of any agreement
hereunder, all sums secured hereby shall immediately become due and payable at
the option of Beneficiary.  In the event of such default, Beneficiary may
execute or cause Trustee to execute a written notice of default and of election
to cause the Property to be sold to satisfy the obligations hereof, and Trustee
shall file such notice for record in each county wherein the Property or some
part or parcel thereof is situated.  Beneficiary also shall deposit with
Trustee, the Notes and all documents evidencing expenditures secured hereby.

 
 
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12.   After the lapse of such time as may then be required by law following the
recordation of such notice of default, and notice of default and notice of sale
having been given as then required by law, Trustee, without demand on Trustor,
shall sell the Property on the date and at the time and place designated in the
notice of sale, either as a whole or in separate parcels, and in such order as
it may determine (but subject to any statutory right of Trustor to direct the
order in which such Property, if consisting of several known lots or parcels,
shall be sold), at public auction to the highest bidder, the purchase price
payable in lawful money of the United States at the time of sale. The person
conducting the sale may, for any cause he deems expedient, postpone the sale
from time to time until it shall be completed and, in every case, notice of
postponement shall be given by public declaration thereof by such person at the
time and place last appointed for the sale; provided, if the sale is postponed
for longer than one day beyond the day designated in the notice of sale, notice
thereof shall be given in the same manner as the original notice of
sale.  Trustor agrees to surrender possession immediately after any such sale of
the Property, if possession has not previously been surrendered. Trustee shall
execute and deliver to the purchaser its Deed conveying said property so sold,
but without any covenant or warranty, express or implied.  Any person, including
Beneficiary, may bid at the sale.  Trustee shall apply the proceeds of the sale
to payment of (a) the costs and expenses of exercising the power of sale and of
the sale, including the payment of Trustee’s and attorneys’ fees; (b) cost of
any evidence of title procured in connection with such sale and revenue stamps
on Trustee’s Deed; (c) all sums expended under the terms hereof, not then
repaid, with accrued interest at ten percent (10%) per annum from date of
expenditure; (d) all other sums then secured hereby; and (e) the remainder, if
any, to the person or persons legally entitled thereto.

13.   From time to time, Beneficiary may require Trustee to reconvey, release
and discharge from the operation of this Trust Deed any part or parts of the
property described in this Trust Deed, given to secure payment of the
indebtedness evidence by the Notes.  Trustee shall execute and deliver unto
Beneficiary a written reconveyance and release upon receiving from Beneficiary a
written request therefor.  Such written request shall be in the form attached
hereto as Exhibit B and shall include a description of the Property to be
reconveyed or released, a statement of the consideration, if any, received by
Beneficiary for such reconveyance or release, and a declaration that Beneficiary
is the owner and holder of the debt mentioned in this Trust Deed and that the
same has never been assigned or transferred. The partial reconveyance or release
executed by Trustee shall identify this Trust Deed and describe the property to
be reconveyed or released.  A partial reconveyance or release executed and
delivered by Trustee under authority of this paragraph shall not affect or
impair the security remaining under this Trust Deed. This Trust Deed need not
accompany any request for a partial reconveyance or release, but upon demand of
Trustee, Beneficiary will exhibit to Trustee the Notes.  Successive partial
reconveyances or releases may be requested by Beneficiary.

14.   Subject to the terms and conditions of the Escrow Agreement and provided
Trustor is not in default under the Note as of such date, Beneficiary, by
recording this Trust Deed, covenants to deliver to Trustee a Request for
Reconveyance in the form attached hereto as Exhibit B on the Reconveyance Date.

15.   Each abstract of title, title insurance policy, or all other evidences of
title, and all insurance policies placed or deposited with Beneficiary shall be
deemed an incident to the title of the Property herein described and upon sale
or foreclosure or otherwise shall pass to the purchaser, and same are hereby
pledged as additional security for payment of the indebtedness secured hereby.

16.   In the event Beneficiary and Trustee or either of them shall determine to
foreclose this Trust Deed by court action, Trustor agrees to pay all costs and
expenses incurred therein and reasonable compensation for the attorneys
representing Beneficiary and Trustee, or either of them.

17.   This Trust Deed shall apply to, inure to the benefit of, and bind all
parties hereto, their heirs, legatees, devisees, administrators, executors,
successors and assigns.  In this Trust Deed, whenever the context requires, the
masculine gender includes the feminine and/or neuter, and the singular number
includes the plural.
 
 
 
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18.   Any option, election, notice or right granted to Beneficiary may be
exercised only by written approval of Beneficiary.

19.   If the loan secured by this Trust Deed is subject to a law which sets
maximum loan charges, and that law is finally interpreted so that the interest
or other loan charges collected or to be collected in connection with the loan
exceed the permitted limits, then: (a) any such loan charge shall be reduced by
the amount necessary to reduce the charge to the permitted limit; and (b) any
sums already collected from Trustor which exceed permitted limits will be
refunded to Trustor.  Beneficiary may choose to make this refund by reducing the
principal owed under the Notes or by making a direct payment to Trustor.

20.   If one or more riders are executed by Trustor and recorded together with
this Trust Deed, the covenants and agreements of each such rider shall be
incorporated into and shall amend and supplement the covenants and agreements of
this Trust Deed as if the rider(s) were part of this Trust Deed.

21.   If any provision of this Trust Deed is declared by a court of competent
jurisdiction to be invalid for any reason such invalidity shall not affect the
remaining provisions of this Trust Deed.  The remaining provisions shall be
fully severable, and this Trust Deed shall be construed and enforced as if the
invalid provision had never been included herein.

22.   Trustee accepts this trust when this Trust Deed, duly executed and
acknowledged, is made a public record as provided by law.  Trustee is not
obligated to notify any party hereto of pending sale under any other Trust Deed
or of any action or proceeding in which Trustor, Beneficiary, or Trustee shall
be a party, unless brought by Trustee.

23.   Trustee is authorized to reconvey or cause to be reconveyed this Trust
Deed without further action or consent by Beneficiary in accordance with the
terms of that certain Escrow Agreement of even date herewith by and among
Trustor, Beneficiary and Griffiths & Turner / GT Title Services, Inc., a Utah
corporation.

24.   This Trust Deed shall be construed according to the laws of the State of
Utah.

25.   The undersigned Trustor requests that a copy of any notice of default and
of any notice of sale hereunder be mailed to Trustor at the address hereinbefore
set forth.
 
 
 
 
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  TRUSTOR:       Tonaquint, Inc.,a Utah corporation          
By:  ______________________________   ___________________, President

 
       
STATE OF UTAH                     )
                                                     : ss.
COUNTY OF _________        )

On the ___ day of _____________ 2010, personally appeared before me John M.
Fife, the President of Trustor, the signer of the above instrument, who duly
acknowledged to me that he executed the same on behalf of such corporation.
 
 

  ________________________________   Notary Public

 
 
 
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EXHIBIT A

LEGAL DESCRIPTION OF THE PROPERTY

COM 976.8 FT N & S 73^30' E 217.8 FT & 458.04 FT N FR CEN SEC 35 T1S R1E SL MER
N 350.46 FT M OR L TO CEN OF MILL CREEK S 78^28' E 141.66 FT S 290.69 FT S
69^14' W 88.02 FT W56.5 FT TO BEG 1 AC.

Together with the non-exclusive right of way over the access easements as shown
on the recorded plats.
 
(Tax Serial No. 16-35-207-019-0000)
 
 
 
 
 
 
 
 

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EXHIBIT B
 
REQUEST FOR RECONVEYANCE
 
 
 
 
 
 
 
 
 
 
 

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