Silver Dragon Resources Inc.: Exhibit 10.5 - Filed by newsfilecorp.com






EXHIBIT 10.5 

ESCROW AGREEMENT 

THIS ESCROW AGREEMENT (this “Agreement”) is made
and entered into as of February 15, 2011 by and among (a) Tonaquint, Inc., a
Utah corporation (“Borrower”), (b) Silver Dragon Resources Inc., a
Delaware 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 February 15, 2011 (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”) to 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)
Escrow Agent’s receipt of written notice from the Borrower any time after the
date that is six months and three days following the date the Trust Deed is
recorded (or such longer period as indicated in a written notice from the
Borrower) (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 and provided the Borrower has given its
written consent, 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:



Tonaquint, Inc. 
Attn: John M. Fife

303 East Wacker Drive, Suite 1200 
Chicago, Illinois 60601 


With a copy to: 

Carman Lehnhof Israelsen LLP 
Attn:
Jonathan K. Hansen 
4626 North 300 West, Suite 160 
Provo, Utah 84604



or to such other address as Borrower
may designate to Lender and Escrow Agent, in writing. 

	 	b. 	
      If to Lender, to:



Silver Dragon Resources Inc. 
Attn:
Marc Hazout 
5160 Yonge Street, Suite 803 
Toronto, Ontario 
Canada M2N
6L9 


With a copy to: 

Dorsey & Whitney LLP 
Attn:
Chris Doerksen 
Columbia Center 
701 Fifth Avenue, Suite 6100 
Seattle,
Washington 98104 


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or to such other address as Lender may designate to Borrower
and Escrow Agent, in writing. 

	 	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: 

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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. 


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: 


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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. 


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.


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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. 


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. Subject to Section 7.c. above, 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: /s/ John M.
Fife                                        

John M. Fife, President 


LENDER: 

SILVER DRAGON RESOURCES INC. 

By: /s/ Marc
Hazout                                      

Name: Marc Hazout 
Title: Pres. and CEO 


ESCROW AGENT:

GRIFFITHS & TURNER / GT
TITLE SERVICES, INC. 

By:
/s/ Tyler J. Turner                                        

Name:
Tyler J. Turner
Title:
President



[Signature page to Escrow Agreement] 




EXHIBIT A 

REQUEST




EXHIBIT B 

RECONVEYANCE