Exhibit 10.1
 
ESCROW AGREEMENT
 
This Agreement is dated as of the 3rd day of November, 2010 among Intellect
Neurosciences, Inc., a Delaware corporation (the “Company”), the subscribers
listed on Schedule I hereto (“Subscribers”), and Grushko & Mittman, P.C. (the
“Escrow Agent”):
 
WITNESSETH:
 
WHEREAS, on or about April 23, 2010, the Company and several of the Subscribers
entered into a Subscription Agreement calling for the sale by the Company to the
Subscribers of Notes, shares of the Company’s common stock, and Class A, B and C
Warrants (collectivley the “Warrants”) for an aggregate purchase price of
$2,320,000; and
 
WHEREAS, the Company is in need of additional funding and two of the Subscribers
have agreed to loan the Company an additional $150,000 (“Purchase Price”); and
 
WHEREAS, the Company has agreed to deliver Allonges against payment therefor,
with such Allonges and the Escrowed Funds to be delivered to the Escrow Agent,
along with the other documents, instruments and payments hereinafter described,
to be held in escrow and released by the Escrow Agent in accordance with the
terms and conditions of this Agreement; and
 
WHEREAS, the parties hereto require the purchase price to be released by the
Escrow Agent in accordance with the terms and conditions of this Agreement; and
 
WHEREAS, the Escrow Agent is willing to serve as escrow agent pursuant to the
terms and conditions of this Agreement;
 
NOW THEREFORE, the parties agree as follows:
 
ARTICLE I
 
INTERPRETATION
 
1.1.          Definitions.  Capitalized terms used and not otherwise defined
herein that are defined in the Subscription Agreement shall have the meanings
given to such terms in the Subscription Agreement.  Whenever used in this
Agreement, the following terms shall have the following respective meanings:
 
§           “Agreement” means this Agreement and all amendments made hereto and
thereto by written agreement between the parties;
 
§           “Allonges” shall mean the Allonges amending the terms of the Notes;
 
§           “Closing Date” shall be the date that the Purchase Price is
transmitted by wire transfer or otherwise credited to or for the benefit of the
Company;
 
§           “Escrowed Payment” means an aggregate cash payment of $150,000 which
is the Purchase Price;
 
§            “Majority in Interest” shall mean a majority in interest of the
Secured Parties as that term is defined in the Security Agreement dated April
23, 2010 consenting to this transaction and to the amendment of the Security
Agreement and Guaranty to include the Subscribers to this transaction as secured
pari pasu with each Secured Party to the April 23, 2010 transaction pursuant to
the “Consent of a Majority in Interest”;

 
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§           “Notes” Shall have the meaning set forth in the Subscription
Agreement;
 
§            “Subscriber Legal Fees” shall mean the sum of $5,000;
 
§           “Subscription Agreement” means the Subscription Agreement dated
April 23, 2010 (and the exhibits and schedules thereto) entered into by the
Company and Subscribers in reference to the sale and purchase of the
Notes, Common Stock, and Warrants;
 
§           Collectively, Allonges, this executed Agreement and Subscriber Legal
Fees are referred to as “Company Documents”; and
 
§           the Subscribers executed Agreement and Consent of a Majority in
Interest are referred to as “Subscriber Documents”.
 
1.2.         Entire Agreement.  This Agreement along with the Escrowed Payment,
Company Documents and the Subscriber Documents constitute the entire agreement
between the parties hereto pertaining to the Escrowed Payment, Company Documents
and Subscriber Documents and supersedes all prior agreements, understandings,
negotiations and discussions, whether oral or written, of the parties.  There
are no warranties, representations and other agreements made by the parties in
connection with the subject matter hereof, except as specifically set forth in
this Agreement, the Escrowed Payment, Company Documents and the Subscriber
Documents.
 
1.3.         Extended Meanings.  In this Agreement words importing the singular
number include the plural and vice versa; words importing the masculine gender
include the feminine and neuter genders.  The word "person" includes an
individual, body corporate, partnership, trustee or trust or unincorporated
association, executor, administrator or legal representative.
 
1.4.          Waivers and Amendments.  This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and conditions hereof
may be waived, only by a written instrument signed by all parties, or, in the
case of a waiver, by the party waiving compliance.  Except as expressly stated
herein, no delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any right, power or privilege hereunder preclude any
other or future exercise of any other right, power or privilege hereunder.
 
1.5.          Headings.  The division of this Agreement into articles, sections,
subsections and paragraphs and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement.
 
1.6.          Law Governing this Agreement.  This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
regard to conflicts of laws principles that would result in the application of
the substantive laws of another jurisdiction.  Any action brought by any party
against the other concerning the transactions contemplated by this Agreement
shall be brought only in the state courts of New York or in the federal courts
located in the state of New York.  All parties and the individuals executing
this Agreement and other agreements on behalf of the Company, the Escrow Agent
and Subscribers agree to submit to the jurisdiction of such courts and waive
trial by jury.  The prevailing party (which shall be the party which receives an
award most closely resembling the remedy or action sought) shall be entitled to
recover from the other party its reasonable attorney's fees and costs.  In the
event that any provision of this Agreement or any other agreement delivered in
connection herewith is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law.  Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of any agreement.

 
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1.7.           Specific Enforcement, Consent to Jurisdiction.  The Company, the
Escrow Agent and Subscribers acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise
breached.  It is accordingly agreed that the parties shall be entitled to an
injuction or injunctions to prevent or cure breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof or
thereof, this being in addition to any other remedy to which any of them may be
entitled by law or equity.  Subject to Section 1.6 hereof, each of the Company,
the Escrow Agent and Subscribers hereby waives, and agrees not to assert in any
such suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of such court, that the suit, action or proceeding is brought
in an inconvenient forum or that the venue of the suit, action or proceeding is
improper.  Nothing in this Section shall affect or limit any right to serve
process in any other manner permitted by law.
 
ARTICLE II
 
DELIVERIES TO THE ESCROW AGENT
 
2.1.           Company Deliveries.  On or before the Closing Date, the Company
shall deliver the Company Documents to the Escrow Agent.
 
2.2.           Subscriber Deliveries.  On or before the Closing Date,
Subscribers shall deliver to the Escrow Agent the Purchase Price and the
Subscriber Documents.  The Escrowed Payment will be delivered pursuant to the
following wire transfer instructions:

Citibank, N.A.
1155 6th Avenue
New York, NY 10036
ABA Number: 0210-00089
For Credit to: Grushko & Mittman, IOLA Trust Account
Account Number: 45208884

2.3.           Intention to Create Escrow Over Escrowed Payment, Company
Documents and Subscriber Documents.  The Subscribers and Company intend that the
Escrowed Payment, Company Documents and Subscriber Documents shall be held in
escrow by the Escrow Agent pursuant to this Agreement for their benefit as set
forth herein.
 
2.4.           Escrow Agent to Deliver Escrowed Payment, Company Documents and
Subscriber Documents.  The Escrow Agent shall hold and release the Escrowed
Payment, Company Documents and Subscriber Documents only in accordance with the
terms and conditions of this Agreement.
 
ARTICLE III
 
RELEASE OF ESCROWED PAYMENT,
COMPANY DOCUMENTS AND SUBSCRIBER DOCUMENTS
 
3.1.           Release of Escrow.  Subject to the provisions of Section 4.2, the
Escrow Agent shall release the Escrowed Payment, Company Documents and
Subscriber Documents as follows:

 
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(a)          On the Closing Date, the Escrow Agent will simultaneously release
the Company Documents to the Subscribers, release the Subscriber Documents to
the Company and the Subscriber Legal Fees will be released directly to the
Subscriber’s attorneys.
 
(b)          Notwithstanding the above, upon receipt by the Escrow Agent of
joint written instructions (“Joint Instructions”) signed by the Company and the
Subscribers, it shall deliver the Escrowed Payment, Company Documents and
Subscriber Documents in accordance with the terms of the Joint Instructions.
 
(c)          Anything herein to the contrary notwithstanding, upon receipt by
the Escrow Agent of a final and non-appealable judgment, order, decree or award
of a court of competent jurisdiction (a "Court Order"), the Escrow Agent shall
deliver the Escrowed Payment, Company Documents and Subscriber Documents in
accordance with the Court Order.  Any Court Order shall be accompanied by an
opinion of counsel for the party presenting the Court Order to the Escrow Agent
(which opinion shall be satisfactory to the Escrow Agent) to the effect that the
court issuing the Court Order has competent jurisdiction and that the Court
Order is final and non-appealable.
 
3.2.           Acknowledgement of Company and Subscriber; Disputes.  The Company
and the Subscribers acknowledge that the only terms and conditions upon which
the Escrowed Payment, Company Documents and Subscriber Documents are to be
released are set forth in Sections 3 and 4 of this Agreement.  The Company and
the Subscribers reaffirm their agreement to abide by the terms and conditions of
this Agreement with respect to the release of the Escrowed Payment, Company
Documents and Subscriber Documents.  Any dispute with respect to the release of
the Escrowed Payment, Company Documents and Subscriber Documents shall be
resolved pursuant to Section 4.2 or by agreement between the Company and
Subscribers.
 
3.3.           Form 8-K.   The Company agrees to file a Form 8-K disclosing the
terms of this transaction within one day of the Closing Date.
 
ARTICLE IV
 
CONCERNING THE ESCROW AGENT
 
4.1.          Duties and Responsibilities of the Escrow Agent.  The Escrow
Agent's duties and responsibilities shall be subject to the following terms and
conditions:
 
(a)           The Subscribers and Company acknowledge and agree that the Escrow
Agent (i) shall not be responsible for or bound by, and shall not be required to
inquire into whether either the Subscribers or Company is entitled to receipt of
the Escrowed Payment, Company Documents and Subscriber Documents pursuant to any
other agreement or otherwise; (ii) shall be obligated only for the performance
of such duties as are specifically assumed by the Escrow Agent pursuant to this
Agreement; (iii) may rely on and shall be protected in acting or refraining from
acting upon any written notice, instruction, instrument, statement, request or
document furnished to it hereunder and believed by the Escrow Agent in good
faith to be genuine and to have been signed or presented by the proper person or
party, without being required to determine the authenticity or correctness of
any fact stated therein or the propriety or validity or the service thereof;
(iv) may assume that any person believed by the Escrow Agent in good faith to be
authorized to give notice or make any statement or execute any document in
connection with the provisions hereof is so authorized; (v) shall not be under
any duty to give the property held by Escrow Agent hereunder any greater degree
of care than Escrow Agent gives its own similar property; and (vi) may consult
counsel satisfactory to Escrow Agent, the opinion of such counsel to be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by Escrow Agent hereunder in good faith and in accordance with the
opinion of such counsel.

 
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(b)           The Subscribers and Company acknowledge that the Escrow Agent is
acting solely as a stakeholder at their request and that the Escrow Agent shall
not be liable for any action taken by Escrow Agent in good faith and believed by
Escrow Agent to be authorized or within the rights or powers conferred upon
Escrow Agent by this Agreement.  The Subscribers and Company, jointly and
severally, agree to indemnify and hold harmless the Escrow Agent and any of
Escrow Agent's partners, employees, agents and representatives for any action
taken or omitted to be taken by Escrow Agent or any of them hereunder, including
the fees of outside counsel and other costs and expenses of defending itself
against any claim or liability under this Agreement, except in the case of gross
negligence or willful misconduct on Escrow Agent's part committed in its
capacity as Escrow Agent under this Agreement.  The Escrow Agent shall owe a
duty only to the Subscribers and Company under this Agreement and to no other
person.
 
(c)           The Subscribers and Company jointly and severally agree to
reimburse the Escrow Agent for outside counsel fees, to the extent authorized
hereunder and incurred in connection with the performance of its duties and
responsibilities hereunder.
 
(d)           The Escrow Agent may at any time resign as Escrow Agent hereunder
by giving five (5) days prior written notice of resignation to the Subscribers
and the Company.  Prior to the effective date of the resignation as specified in
such notice, the Subscribers and Company will issue to the Escrow Agent a Joint
Instruction authorizing delivery of the Escrowed Payment, Company Documents and
Subscriber Documents to a substitute Escrow Agent selected by the Subscribers
and Company.  If no successor Escrow Agent is named by the Subscribers and
Company, the Escrow Agent may apply to a court of competent jurisdiction in the
State of New York for appointment of a successor Escrow Agent, and to deposit
the Escrowed Payment, Company Documents and Subscriber Documents with the clerk
of any such court.
 
(e)           Other than in connection with the Subscriber Legal Fees, the
Escrow Agent does not have and will not have any interest in the Escrowed
Payment, Company Documents and Subscriber Documents, but is serving only as
escrow agent, having only possession thereof.  The Escrow Agent shall not be
liable for any loss resulting from the making or retention of any investment in
accordance with this Escrow Agreement.
 
(f)           This Agreement sets forth exclusively the duties of the Escrow
Agent with respect to any and all matters pertinent thereto and no implied
duties or obligations shall be read into this Agreement.
 
(g)            Escrow Agent may generally engage in any kind of business with
either Company or Subscribers or any subsidiary or affiliate thereof as if it
had not entered into this Agreement or any other agreement with them. Escrow
Agent and its affiliates and their officers, directors, employees, and agents
(including legal counsel) may now or hereafter be engaged in one or more
transactions with either the Company or Subscribers or may act as trustee, agent
or representative of either the Company or Subscribers, or otherwise be engaged
in other transactions with such parties (collectively, the “Other
Activities”).  Without limiting the forgoing, Escrow Agent and its affiliates
and their officers, directors, employees, and agents (including legal counsel)
shall not be responsible to account to the Company or Subscribers for such Other
Activities.
 
(h)           The provisions of this Section 4.1 shall survive the resignation
of the Escrow Agent or the termination of this Agreement.
 
4.2.         Dispute Resolution: Judgments.  Resolution of disputes arising
under this Agreement shall be subject to the following terms and conditions:

 
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(a)           If any dispute shall arise with respect to the delivery,
ownership, right of possession or disposition of the Escrowed Payment, Company
Documents and Subscriber Documents, or if the Escrow Agent shall in good faith
be uncertain as to its duties or rights hereunder, the Escrow Agent shall be
authorized, without liability to anyone, to (i) refrain from taking any action
other than to continue to hold the Escrowed Payment, Company Documents and
Subscriber Documents pending receipt of a Joint Instruction from the Subscribers
and Company, or (ii) deposit the Escrowed Payment, Company Documents and
Subscriber Documents with any court of competent jurisdiction in the State of
New York, in which event the Escrow Agent shall give written notice thereof to
the Subscribers and the Company and shall thereupon be relieved and discharged
from all further obligations pursuant to this Agreement.  The Escrow Agent may,
but shall be under no duty to, institute or defend any legal proceedings which
relate to the Escrowed Payment, Company Documents and Subscriber Documents.  The
Escrow Agent shall have the right to retain counsel if it becomes involved in
any disagreement, dispute or litigation on account of this Agreement or
otherwise determines that it is necessary to consult counsel.
 
(b)           The Escrow Agent is hereby expressly authorized to comply with and
obey any Court Order.  In case the Escrow Agent obeys or complies with a Court
Order, the Escrow Agent shall not be liable to the Subscribers and Company or to
any other person, firm, corporation or entity by reason of such compliance.
 
ARTICLE V
 
GENERAL MATTERS
 
5.1.           Termination.  This escrow shall terminate upon the release of all
of the Escrowed Payment, Company Documents and Subscriber Documents or at any
time upon the agreement in writing of the Subscribers and Company.
 
5.2.           Notices.   All notices, demands, requests, consents, approvals,
and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice.  Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, 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) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur.  The addresses for
such communications shall be:
 
(a)           If to the Company, to:

Intellect Neurosciences, Inc.
45West 36th Street, 3rd Floor
New York, NY 10018
Attn: Elliot Maza, CFO
Fax: (212) 448-9600

With a copy by fax only to:

Sichenzia Ross Friedman Ference LLP

 
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61 Broadway
New York, NY 10006
Attn: Harvey Kersner, Esq.
Facsimile: (212) 930-9725

(b)
If to the Subscribers: to the addresses set forth on Schedule I

With a copy by facsimile only to:
 
Grushko & Mittman, P.C.
515 Rockaway Avenue
Valley Stream, New York 11581
Fax: 212-697-3575
 
(c)
If to the Escrow Agent, to:

 
Grushko & Mittman, P.C.
515 Rockaway Avenue
Valley Stream, New York 11581
Fax: 212-697-3575
 
or to such other address as any of them shall give to the others by notice made
pursuant to this Section 5.2.  In the sole and absolute discretion of the Escrow
Agent, the Escrow Agent may accept and rely on any other non-oral method of
giving of notice including by email.
 
5.3.           Interest.  The Escrowed Payment shall not be held in an interest
bearing account nor will interest be payable in connection therewith.  In the
event the Escrowed Payment is deposited in an interest bearing account, the
Subscribers shall be entitled to receive any accrued interest thereon, but only
if the Escrow Agent receives from the Subscriber the Subscribers’ United States
taxpayer identification number and other requested information and forms.
 
5.4.           Assignment; Binding Agreement.  Neither this Agreement nor any
right or obligation hereunder shall be assignable by any party without the prior
written consent of the other parties hereto.  This Agreement shall enure to the
benefit of and be binding upon the parties hereto and their respective legal
representatives, successors and assigns.
 
5.5.           Invalidity.  In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal, or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be in any way impaired
thereby, it being intended that all of the rights and privileges of the parties
hereto shall be enforceable to the fullest extent permitted by law.
 
5.6.           Counterparts/Execution.  This Agreement may be executed in any
number of counterparts and by different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument.  This
Agreement may be executed by facsimile transmission and delivered by facsimile
transmission.
 
5.7.           Agreement.  Each of the undersigned states that he has read the
foregoing Escrow Agreement and understands and agrees to it.

 
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5.8           Compensation of Escrow Agent. The Escrow Agent shall be entitled
to payment in the amount of $5,000 for the services rendered hereunder. It is
understood by all parties that the fee may be deducted from the Escrowed Funds
when it becomes due. The Company and the Subscribers shall jointly and
severally, reimburse the Escrow Agent on demand for all loss, liability, damage,
disbursements, advances, costs, fees or expenses paid or incurred by it in the
administration of its duties hereunder, including, but not limited to, all wire
fees, packaging and postal fees and expenses (including federal express), all
reasonable counsel fees and disbursements and all taxes or other governmental
charges.  At all times, the Escrow Agent will have a right of set off and first
lien on the funds in the Escrowed Funds for payment of such fees and expenses
and all such loss, liability, damage or expenses.
 
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IN WITNESS WHEREOF, the undersigned have executed and delivered this Escrow
Agreement, as of the date first written above.

“COMPANY”
INTELLECT NEUROSCIENCES, INC.
a Delaware corporation

 
By:
/s/ Elliot Maza
   
  Name: Elliot Maza
 
  Title: President and CFO

“SUBSCRIBERS”

ALPHA CAPITAL ANSTALT
MARLIN CAPITAL MARKETING, LLC
           
By:
By:
Its:
Its:

 

  ESCROW AGENT:       
GRUSHKO & MITTMAN, P.C.
     
By:
       
Name:

 
Intellect Neurosciences, Inc., by Elliot Maza, its President and CFO
acknowledges, agrees and consents to all of the terms of the foregoing Agreement
and agrees to undertake to cooperate with Subscribers in fulfilling the purposes
and intent of this Agreement and not take any action or suffer inaction
inconsistant with Subscribers’ lawful rights under this Agreement, including the
amendment of any of the agreements, if necessary, including but not limited to
the Security Agreement and Guaranty in order to include the aggregate $150,000
Purchase Price as part of the secured debt.

 
INTELLECT NEUROSCIENCES, INC.
     
By:
/s/ Elliot Maza
   
 Name: Elliot Maza
 
 Title: President and CFO

 
 
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