Escrow Agreement

EXHIBIT 10.19

ESCROW AGREEMENT

THIS ESCROW AGREEMENT (this "Agreement") dated November 25, 2002 is entered into by and among Advanced Neuromodulation Systems, Inc., a Texas corporation ("Parent"), Thomas E. Brust, as a duly appointed representative (the "Representative") of all of the shareholders of MicroNet Medical, Inc., a Minnesota corporation ("Company") and Computershare Trust Company, Inc. as escrow agent (the "Escrow Agent"). Parent, the Representative and the Escrow Agent are collectively referred to in this Agreement as the "parties."

RECITALS

Pursuant to that certain Agreement and Plan of Merger dated as of November 4, 2002, by and among Parent, MicroNet Acquisition, Inc., a Delaware corporation and wholly-owned subsidiary of Parent ("Merger Sub"), Company and certain shareholders of Company (the "Merger Agreement"), Merger Sub is merging with and into Company (the "Merger"), with Company being the Surviving Corporation and wholly-owned subsidiary of Parent. In accordance with the terms of the Merger Agreement, the issued and outstanding shares of common stock, $0.01 par value per share, of Company, other than those constituting Dissenting Shares will be converted into the right to receive shares of common stock, $0.05 par value, of Parent, all as set forth in the Merger Agreement.

The Merger Agreement provides that an escrow fund comprised of shares of Parent Common Stock to be issued to the shareholders of the Company as of the Effective Time of the Merger (the "Company Shareholders") will be established to provide payment to the Company Shareholders if and when certain Milestones are achieved as set forth in Article II of the Merger Agreement and (b) security to Parent with respect to the potential indemnification obligations of the Company Shareholders.

NOW, THEREFORE, for good, valid and binding consideration, the receipt and adequacy of which is hereby acknowledged, the parties, intending to be legally bound by this Agreement, agree as follows:

1. Except as otherwise defined in this Agreement, the capitalized terms used in this Agreement have the meanings ascribed to them in the Merger Agreement.

2. Pursuant to the terms and conditions of the Merger Agreement, 89,606 Shares (having an aggregate value of $3,000,000, based on the Average Trading Price on the Closing Date) have been issued as part of the Merger Consideration in the names of the respective Company Shareholders, in accordance with their pro rata ownership of Company, and have been delivered to the Escrow Agent (together with any shares of capital stock, cash or other property, such Shares as may be converted or exchanged after the date hereof, by stock split or otherwise, the "Escrowed Shares"). The Escrowed Shares will be held by the Escrow Agent upon the terms and conditions contained in this Agreement and will be released by the Escrow Agent in accordance with this Agreement. The Escrowed Shares and all dividends or other economic benefits (but no other benefits, including but not limited to voting or transfer rights) associated with the Escrowed Shares will accrue to the Escrowed Shares for the benefit of the applicable Company Shareholders from the Closing Date, will be deposited into the Escrow Account and will be subject to forfeiture in the

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event the Milestones are not timely achieved, as provided in Section 2.01 of the Merger Agreement. The Escrow Agent agrees that it does not and will not have any right of setoff or other rights or claims with respect to the Escrowed Shares.

3. In accordance with Article II of the Merger Agreement, if and when each Milestone is achieved, Parent will promptly instruct the Escrow Agent in substantially the form of Exhibit A attached to this Agreement (a "Certificate of Instruction") that the applicable number of the Escrowed Shares, as set forth in Exhibit B attached to this Agreement, plus any accrued dividends or other economic benefits thereon, are to be released to the respective Company Shareholders. The Escrow Agent, upon receipt of the Certificate of Instruction from Parent, will, not later than ten business days following its receipt of such Certificate of Instruction, release to the applicable Company Shareholders such number of Escrowed Shares, plus any accrued dividends or other economic benefits thereon.

4. In accordance with and subject to the limitations of Article VIII of the Merger Agreement, Parent and the Surviving Corporation are authorized to setoff and apply Claims of any Indemnified Party against Parent's obligation to release any or all of the Escrowed Shares from the Escrow Account. If Parent notifies the Escrow Agent by a Certificate of Instruction of its intention to apply the Escrowed Shares against any such Claim, the Escrow Agent will, not later than three business days following its receipt thereof give written notice to the Representative of its receipt, together with a copy of such Certificate of Instruction. Concurrently with the delivery of the Certificate of Instruction to the Escrow Agent, Parent will deliver to the Representative written notice setting forth in reasonable detail the facts giving rise to Parent's right of setoff contained in the Certificate of Instruction.

(a) If the Escrow Agent (i) has not, within 30 days after it has given such notice to the Representative, received from the Representative a certificate in substantially the form of Exhibit C attached to this Agreement (an "Objection Certificate") in respect of the Certificate of Instruction to which such notice relates, or (ii) has received such an Objection Certificate within such 30 days but thereafter receives a copy of a joint notice signed by the Representative and by Parent, or a final award of an arbitrator pursuant to Section 11.01 of the Merger Agreement to the effect that the Owed Amount (as defined in the Certificate of Instruction) referred to in such Certificate of Instruction or a specified portion thereof constitutes a Claim which may be setoff and against which Parent may apply all or a portion of the Escrowed Shares, such shares being valued for this purpose at the Average Trading Price prior to the date of setoff, then the Escrow Agent will, on the business day following the expiration of ten days or the receipt by the Escrow Agent of such joint notice or award, as applicable, release to Parent a number of Escrowed Shares valued at the Average Trading Share Price before the date of setoff.

(b) Upon receipt of an Objection Certificate, the Escrow Agent will, not later than three business days following receipt thereof, give written notice to Parent of its receipt together with a copy of the Objection Certificate. The Representative and Parent will resolve any Dispute with respect to all or a specified portion of an Owed Amount in accordance with Section 11.01 of the Merger Agreement. If Parent and the Representative engage in mediation and/or arbitration, the Escrow Agent will have no duty or obligation with respect to such mediation and/or arbitration other than to retain the Escrowed Shares in safekeeping until it receives a copy of the arbitration award or a joint notice as described in Section 4(a) of this Agreement. Each of the

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Parent (on the one hand) and the Representative (on the other) agrees to pay 50% of such reasonable fees and expenses incurred, if any, in connection with such dispute resolution process.

(c) Upon receipt by the Escrow Agent of a copy of a joint notice from Parent and the Representative, or an arbitration award to the effect that the Owed Amount (or a specified portion thereof) referred to in a Certificate of Instruction in respect of which the Escrow Agent had received an Objection Certificate is not an amount properly payable as a Claim against which the Escrowed Shares may be applied, such Certificate of Instruction (or such specified portion of the Owed Amount set forth therein) will be deemed canceled. The Escrow Agent will have no duty to determine if the arbitration award is final or binding, but may act in accordance therewith.

(d) Upon determining that it has no right of setoff with respect to an Owed Amount referred to in a Certificate of Instruction or a specified portion of the Owed Amount set forth therein, Parent will p ...