ESCROW AGREEMENT
----------------
THIS ESCROW AGREEMENT ("Agreement") is entered into by and between NEOSURG
TECHNOLOGIES, INC., LTD. ("Customer") and FIRST COMMUNITY BANK ("Bank").
WHEREAS, the Customer is in the process of effecting an S-B2 public
offering of its shares common stock (the "Shares"); and
WHEREAS, prospective purchasers of the Shares ("Investors") will be
tendering funds to the Customer, subject to certain conditions; and
WHEREAS, the Customer desires that such funds be deposited at the Bank in
an interest bearing escrow account for safekeeping pending the results of the
offering of the Shares; and
WHEREAS, the parties desire to enter into certain agreements regarding said
escrow account;
NOW, THEREFORE, for Ten Dollars ($10) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties do hereby agree as follows:
1. Appointment, Acceptance, and Compensation
--------------------------------------------
(a) The Customer hereby appoints the Bank, a state banking association,
as its escrow agent under this Agreement and the Bank hereby
accepts such appointment. This Agreement will govern the
relationship between the Bank and the Customer with respect to the
Escrowed Funds (as defined in Section 3 below).
(b) The Bank shall receive no compensation for its services hereunder.
However, the Bank shall be reimbursed for all out-of-pocket
expenses, including, but not limited to, reasonable attorney's
fees, incurred in connection with the services rendered by the
Bank pursuant to this Agreement. Customer shall pay all expenses
of the Bank under this Agreement directly, and none of such
expenses shall be charged against or paid from the Escrowed
Funds.
2. Establishment of Escrow Account. The Bank shall establish a bank
--------------------------------
account under the name "NeoSurg Technologies, Inc., Escrow Account" (the "Escrow
Account"). The Escrow Account shall be separate from any account of the
Customer. The Escrow Account shall bear interest at the prevailing rate.
3. Deposits to Escrow Account. The Customer may, from time to time,
---------------------------
deliver, or cause to be delivered, to the Bank, for deposit into the Escrow
Account, funds received from Investors. Such funds may be delivered by check or
other instrument, or may be effected by wire transfer. Funds shall be drawn on
domestic branches of United States banks, shall be payable in United States
dollars, and shall be made payable to the order of "NeoSurg Technologies, Inc.,
Escrow Account." All funds delivered by the Customer to the Bank, when cleared
and collected, shall be referred to herein as the "Escrowed Funds." The Bank is
hereby authorized, on behalf of the Customer, to endorse and forward for
presentment and collection all checks received on account of subscriptions for
Shares. If, after the receipt and deposit by the Bank of any check tendered in
connection with any subscription, such check shall be returned as uncollectable,
the Bank shall immediately return such check to the Customer for disposition.
4. Safekeeping of Funds. The Bank shall hold all funds deposited in
---------------------
the Escrow Account in safekeeping until (i) the release of the Escrowed Funds to
Customer pursuant to Section 5 below, or (ii) the return of the Escrowed Funds
to the Investors pursuant to Sections 7 and 8 below. Additionally, the Bank
will:
(a) allow the administrators of the states listed in Schedule A the
right to inspect and make copies of the records of the Bank at any reasonable
time wherever the records are located;
(b) notify the administrators of such states in writing upon the
release of the Escrowed Funds pursuant to Sections 5 and 8 below;
(c) release and return the Escrowed Funds to the Investors with
interest and without any deductions for expenses, including expenses of the
Bank, in the event that the subscriptions for the Shares are insufficient to
meet the minimum offering amount within the time specified in this Agreement
5. Escrow Release
---------------
(a) At such time as the conditions for the release of the Escrowed
Funds shall have been met, as described in Section (b) below
(the "Escrow Release"), the Bank shall immediately release and
deliver the Escrowed Funds to Customer.
(b) As a condition to the release of the Escrowed Funds to Customer,
(i) the total amount of the Escrowed Funds must equal or exceed One
Million Six Hundred Twenty Thousand Dollars ($1,620,000); and (ii)
Customer must provide the Bank with a certificate, executed by the
Customer under penalties of perjury, that it has received
subscriptions for the minimum number of Shares as set forth in its
prospectus dated June 15, 2000.
6. Additional Deposits. From and after the Escrow Release, Customer may
--------------------
continue to deposit funds from Investors into the Escrow Account, but shall be
entitled to immediately withdraw said funds upon written request.
7. Rejected Subscriptions. In the event that the Customer rejects any
-----------------------
subscription for any reason, the Bank shall, upon receipt of written
instructions from the Customer, return and deliver the Escrowed Funds
attributable thereto, with interest, if any, and without deduction, to the
Investor from whom the Escrowed Funds were received at the address provided to
the Bank by the Customer . Such funds shall be returned by certified mail,
return receipt requested, and the Bank may complete the return receipt to such
certified mail so that such receipts are returned to the Customer.
8. Failure to Achieve Escrow Release. In the event that Escrow Release
-----------------------------------
does not occur on or before May 31, 2001, the Bank shall, not earlier than
thirty (30) days after such date (unless agreed to the contrary by the Customer)
nor more than sixty (60) days after such date, deliver to each Investor, at the
addresses provided by the Customer to the Bank, the Escrowed Funds held on
behalf of each Investor.
9. Ownership of Funds. The Bank does hereby acknowledge and agree that
--------------------
all Escrowed Funds held in the Escrow Account shall, until disbursed to Customer
in accordance with the provisions of this Agreement, be held for the benefit of
each Investor and each Investor shall be considered the owner of its respective
Escrowed Funds for all purposes.
10. Successor Escrow Agents. The Bank, or any successor escrow agent,
-------------------------
may resign from its duties under this Agreement at any time by giving
notice in writing to the Customer and shall be discharged from its
duties under this Agreement on the first to occur of the appointment
of a successor escrow agent as provided in this Section , or the
expiration of thirty (30) calendar days after such notice is given,
and may be discharged from its duties under this Agreement upon
receipt from the Customer of five (5) days prior written notice of
such discharge. In the event of any resignation or discharge of the
Bank, a successor escrow agent shall be appointed by the Customer. A
successor escrow agent shall be selected from among those state or
national banks possessing trust powers whose principal office is
located in the United States of America. Any successor escrow agent
shall deliver to the Customer and the Bank a written instrument
accepting appointment under this Agreement, and thereupon it shall
succeed to all of the rights and duties of the Bank hereunder, and
shall be entitled to receive the Escrowed Funds. Upon the resignation
or discharge of the Bank, the Bank shall deliver all Escrowed Funds
in its possession pursuant to the terms of this Agreement to such
person or persons as the Customer shall designate in writing.
11. Rights, Privileges, Immunities and Liabilities of the Bank: The
----------------------------------------------------------------
following shall govern the rights, privileges, immunities and
liabilities of the Bank:
(a) Not Party to Other Agreements. The Bank is not a party to, and is
------------------------------
not bound by, any agreements involving the Customer other than this
Agreement.
(b) Indemnification. In the event the Bank becomes involved in any
---------------
suit, litigation, or other investigative or legal proceeding in
connection with this Agreement, the Escrowed Funds, or any matter
related thereto, the Customer agrees to indemnify and save the
Bank harmless from all loss, costs, damage, expense, liability, and
attorney's fees suffered or incurred by the Bank as a result
thereof, except any such loss, cost, damage, expense, liability, or
attorney's fees that arise as a result, directly or indirectly, of
the Bank's gross negligence or willful misconduct.
(c) Acting on Notices. The Bank shall have no responsibility for the
-------------------
genuineness or validity of any document or other item deposited
with it, and shall be protected in acting in accordance with any
written notice, request, waiver, consent, certificate, receipt,
authorization, power of attorney, or other document or instrument
that the Bank, in good faith, believes to be genuine and signed
by the proper parties.
(d) Standard of Care. The Bank shall not be liable for anything that
------------------
it may do or refrain from doing in connection herewith provided
that it acts in good faith.
(e) Consultation with Counsel. The Bank may consult with legal counsel
-------------------------
in the event of any dispute or question as to the construction of
any of the provisions of this Agreement or its duties hereunder,
and it shall incur no liability and shall be fully protected in
acting in accordance with the opinion and instructions of such
counsel.
(f) Discharge of Obligations. The Bank, having transferred the
--------------------------
Escrowed Funds to the Customer or the Investors in accordance
with the provisions of this Agreement, shall be discharged from any
further obligations hereunder.
12. Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed to have been duly given if delivered or mailed,
first class, certified or registered, postage prepaid, return receipt requested,
addressed to the party for whom they are intended at the following addresses:
A. If to Bank: 0000 Xxx Xxxx Xxxx.
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, President
B. If to Customer: 00000 Xx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Such names and addresses may be changed by written notice.
13. Entire Agreement and Amendments. This Agreement contains the entire
---------------------------------
understanding of the parties hereto with respect to the subject matter contained
herein and may be amended or terminated (except as expressly provided herein)
only by a written instrument executed by all parties, or their respective
successors or assigns. There are no restrictions, promises, warranties,
covenants, or undertakings other than those expressly set forth herein.
14. Headings. The section and paragraph headings contained in this
--------
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
15. Applicable Law. This Agreement shall be construed and enforced in
---------------
accordance with the laws of the state of Texas without regard to its conflict of
law rules.
16. Parties in Interest. This Agreement shall inure to the benefit of and
-------------------
be binding upon the Bank, the Customer, the Investors, and their successors and
assigns.
17. Provisions Severable. If any one or more covenants, agreements, or
---------------------
provisions herein shall be held for any reason whatsoever invalid or
unenforceable, then such covenants, agreements, or provisions shall be null and
void and shall be deemed severable from the remainder of this Agreement and in
no way affect the validity of any such remainder.
18. Number and Gender. Whenever required by the context, any reference
-------------------
herein to the singular shall include the plural, any reference to the plural
shall include the singular, and the gender of any pronoun shall mean and include
the appropriate gender, whether masculine, feminine, or neuter.
19. Counterparts. This Agreement may be executed simultaneously in
------------
multiple counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
EXECUTED this the 15th day of June , 2000.
NEOSURG TECHNOLOGIES, INC.
BY: /s/ Xxxxx X. O'Heeron
--------------------------
XXXXX X. O'HEERON, President
FIRST COMMUNITY BANK
BY: /s/ Xxxxxxx X. Xxxxxxx
---------------------------
XXXXXXX X. XXXXXXX, President
