Form Of Gyncor Stock Escrow Agreement

GYNCOR STOCK ESCROW AGREEMENT


THIS ESCROW AGREEMENT ("Agreement") is made and entered into this 26th day of April, 1996 by and among GynCor, Inc., a Delaware corporation ("GynCor"), Edward A. Zbella, M.D. ("Physician") and American National Bank and Trust Company of Chicago, as escrow agent ("Escrow Agent").


R E C I T A L S


WHEREAS, A Center for Gynecology, P.A., a professional corporation ("Old PC"), GynCor and Physician have entered into an Asset Transfer and Reorganization Agreement dated as of the 17th day of March, 1996 ("ATR Agreement");


WHEREAS, the ATR Agreement provides for the issuance of shares of the Common Stock of GynCor (the "Purchase Shares") to Old PC of which Physician was formerly an employee/owner, and for the immediate distribution of the Purchase Shares to the Physician by Old PC; and


WHEREAS, Physician has agreed that twenty-five percent (25%) of the number of Purchase Shares (the "Escrowed Shares") shall be deposited and held in, and disbursed from, an escrow account established pursuant to the terms of this Agreement.


NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the recipient and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:


1. ASSET TRANSFER AND REORGANIZATION AGREEMENT.


All of the terms and provisions of the ATR Agreement are incorporated herein. All defined terms in the ATR Agreement shall have the same meaning unless otherwise defined. Each provision of this Agreement shall be interpreted so as to give effect to the provisions and intent of the ATR Agreement.


2. PHYSICIAN'S ESCROW DEPOSIT.


(a) This Agreement has been executed and the deposit of the Escrowed Shares hereunder will be made pursuant to Section 1.05 of the ATR Agreement for the purpose of securing the benefits of the representations, warranties, covenants and indemnification obligations of Old PC and the Physician set forth in the ATR Agreement.


(b) Upon closing of the transactions contemplated by the ATR Agreement and execution of this Agreement, Physician shall deposit, or cause to be deposited, with the Escrow Agent the Escrowed Shares, along with the assignments in blank for each such stock certificate executed by


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Physician and a signature guaranteed with a Medallion Stamp with respect to the stock certificates issued in his name.


(c) In the event that any additional shares of GynCor's common stock are issued to Old PC, or Physician following dissolution of Old PC, pursuant to Section 1.04(b) of the ATR Agreement, Physician shall deposit, or cause to be deposited, with the Escrow Agent stock certificates representing 25% of such additional shares, along with assignments in blank for each such stock certificate executed by Physician and a signature guaranteed with a Medallion Stamp with respect to the stock certificates issued in his name, and any such additional shares shall thereafter be deemed to be "Purchased Shares" and Escrowed Shares for purposes of this Agreement.


3. RELEASE OF PURCHASED SHARES FROM ESCROW.


(a) On each anniversary of the date of this Agreement identified below (each, a "Release Date"), Escrow Agent will release to Physician a number of the Escrowed Shares along with the corresponding stock power deposited in escrow by or on behalf of Physician equal to (i) the corresponding percentage of Escrowed Shares set forth below for such date, minus (ii) the sum of (A) the number of Escrowed Shares previously delivered to GynCor pursuant to Section 4 below, plus (B) the number of Escrowed Shares subject to delivery to GynCor in accordance with Section 4 below with respect to any then pending but unresolved Claims (defined below), plus (C) the number of such Escrowed Shares released to Physician pursuant to this Section 3 prior to such date:


Applicable
Release Date Percentage
------------------ -------------

First Anniversary 20%
Second Anniversary 40%
Third Anniversary 60%
Fourth Anniversary 80%
Fifth Anniversary 100%


(b) The Escrowed Shares will be held by Escrow Agent until required to be released pursuant to Section 3(a) above or Section 4 below. Any delivery of Escrowed Shares to be made to Physician pursuant to Section 3(a) above will be in the form of stock certificates of GynCor issued in the name of Physician, and GynCor will take such action as may be necessary to cause stock certificates to be issued to Physician pursuant to this provision.


(c) The number of Escrowed Shares to be released to Physician on any given Release Date shall be rounded to the next lowest whole number except on the last Release Date, in which case, cash will be paid in lieu of fractions of the Escrowed Shares otherwise issuable to Physician on such date in an amount equal to the product determined by multiplying such fraction by the Fair Market Value (defined below) of the GynCor common stock as of such date. Within thirty business days after written notice from the Escrow Agent of any cash payable in lieu of fractional shares on


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the last Release Date, GynCor will deposit with Escrow Agent sufficient funds to pay such cash amounts for fractional shares.


(d) The Escrow Agent is hereby granted the power to effect any transfer of Escrowed Shares contemplated by this Agreement. GynCor will cooperate with the Escrow Agent in promptly issuing stock certificates to effect such transfers.


4. NOTICE AND RESOLUTION OF CLAIMS.


(a) In the even that GynCor desires to seek recovery against the Escrowed Shares for any breach by Old PC or Physician of any of the representations, warranties, covenants or indemnification obligations of such parties set forth in the ATR Agreement (in each case, a "Breach"), then promptly after receipt by GynCor of notice or discovery of any claim, damage or legal action or proceeding (a "Claim") arising from or relating to a Breach, GynCor will give Physician and the Escrow Agent written notice of such Claim. Each notice of a Claim by GynCor (a "Notice of Claim") will contain the following information to the extent it is reasonably available to GynCor:


(i) GynCor's good faith estimate of the reasonably foreseeable
maximum amount of alleged damages (which amount may be revised by GynCor
at any time prior to the release of Escrowed Shares to GynCor with
respect to such Claim); and


(ii) A brief description in reasonable detail of the facts,
circumstances or events giving rise to the alleged damages based on
GynCor's good faith belief thereof, including, without limitation, the
identity and address of a third-party claimant (to the extent reasonably
available to GynCor) and copies of any formal demand or complaint.


(b) The Escrow Agent will not transfer any of the Escrowed Shares held in the Escrow Account to GynCor pursuant to a Notice of Claim until such Notice of Claim has been resolved in accordance with the following provisions:


(i) If within thirty (30) calendar days after a Notice of Claim is
delivered to the Escrow Agent and Physician, Physician does not contest
the Notice of Claim in writing to the Escrow Agent and GynCor, or
Physician does not pay the amount demanded, then the Escrow Agent will
promptly transfer to GynCor for cancellation that number of Escrowed
Shares having a Fair Market Value as of the date of transfer equal to the
amount of damages specified in the Notice of Claim and will notify
Physician of such transfer.


(ii) In the event that Physician gives written notice (a "Notice of
a Contested Claim") contesting all or a portion of a Notice of Claim to
GynCor and the Escrow Agent (a "Contested Claim") within the 30-day
period provided above, matters that are subject to third party claims
asserted against GynCor, Old PC or Physician will await the final
decision, award or settlement of such claim and any related litigation,
arbitration or other proceeding; provided that any such asserted claim
will be deemed resolved in favor of Physician (and


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therefore subject to release in accordance with Section 3 hereof) with
respect to Escrowed Shares retained by Escrow Agent pursuant to clause
(B) of Section 3(a)(ii) if, within six (6) months following the
corresponding Release Date, such asserted claim does not result in the
actual commencement of, or written correspondence threatening the
commencement of, any litigation, arbitration or other proceedings.
Alternatively, Claims by GynCor against the Escrowed Shares for any
Breach by Old PC or Physician under the ATR Agreement that are wholly
between GynCor and Old PC or Physician (i.e., that do not include claims
asserted by third parties) ("Arbitrable Claims"), will be settled by
binding arbitration to the extent contested by Physician pursuant to this
Section 4(b)(ii). However, nothing in this Agreement shall preclude
GynCor from pursuing any other remedies under the ATR Agreement
including, without li ...