STOCK ESCROW AGREEMENT
STOCK ESCROW AGREEMENT, dated as of ____________, 2004 ("Agreement"),
by and among MILLSTREAM II ACQUISITION CORPORATION, a Delaware corporation
("Company"), XXXXXX XXXXXXX, the XXXXXXX FAMILY TRUST, XXXXXX X. XXXXX, XX., XXX
X. XXXX and XX. XXXXX X. XXXXXXXXXXXXX (collectively "Initial Stockholders") and
CONTINENTAL STOCK TRANSFER & TRUST COMPANY, a New York corporation ("Escrow
Agent").
WHEREAS, the Company has entered into an Underwriting Agreement, dated
____, 2004 ("Underwriting Agreement"), with EarlyBirdCapital, Inc. ("EBC")
acting as representative of the several underwriters (collectively, the
"Underwriters"), pursuant to which, among other matters, the Underwriters have
agreed to purchase 4,000,000 units ("Units") of the Company. Each Unit consists
of one share of the Company's Common Stock, par value $.0001 per share, and two
Warrants, each Warrant to purchase one share of Common Stock, all as more fully
described in the Company's final Prospectus, dated ________, 2004 ("Prospectus")
comprising part of the Company's Registration Statement on Form S-1 (File No.
333-119937) under the Securities Act of 1933, as amended ("Registration
Statement"), declared effective on __________, 2004 ("Effective Date").
WHEREAS, the Initial Stockholders have agreed as a condition of the
sale of the Units to deposit their shares of Common Stock of the Company, as set
forth opposite their respective names in Exhibit A attached hereto (collectively
"Escrow Shares"), in escrow as hereinafter provided.
WHEREAS, the Company and the Initial Stockholders desire that the
Escrow Agent accept the Escrow Shares, in escrow, to be held and disbursed as
hereinafter provided.
IT IS AGREED:
1. Appointment of Escrow Agent. The Company and the Initial
Stockholders hereby appoint the Escrow Agent to act in accordance with and
subject to the terms of this Agreement and the Escrow Agent hereby accepts such
appointment and agrees to act in accordance with and subject to such terms.
2. Deposit of Escrow Shares. On or before the Effective Date, each of
the Initial Stockholders shall deliver to the Escrow Agent certificates
representing his respective Escrow Shares, to be held and disbursed subject to
the terms and conditions of this Agreement. Each Initial Stockholder
acknowledges that the certificate representing his Escrow Shares is legended to
reflect the deposit of such Escrow Shares under this Agreement.
3. Disbursement of the Escrow Shares. The Escrow Agent shall hold the
Escrow Shares until the third anniversary of the Effective Date ("Escrow
Period"), on which date it shall, upon written instructions from each Initial
Stockholder, disburse each of the Initial Stockholder's Escrow Shares to such
Initial Stockholder; provided, however, that if the Escrow Agent is notified by
the Company pursuant to Section 6.7 hereof that the Company is being liquidated
at any time during the Escrow Period, then the Escrow Agent shall promptly
destroy the certificates representing the Escrow Shares; provided further,
however, that if, after the Company consummates a Business Combination (as such
term is defined in the Registration Statement), it (or the surviving entity)
subsequently consummates a liquidation, merger, stock exchange or other similar
transaction which results in all of the stockholders of such entity having the
right to exchange their shares of Common Stock for cash, securities or other
property, then the Escrow Agent will, upon receipt of a certificate, executed by
the Chief Executive Officer or Chief Financial Officer of the Company, in form
reasonably acceptable to the Escrow Agent, that such transaction is then being
consummated, and release the Escrow Shares to the Initial Stockholders upon
consummation of the transaction so that they can similarly participate. The
Escrow Agent shall have no further duties hereunder after the disbursement or
destruction of the Escrow Shares in accordance with this Section 3.
4. Rights of Initial Stockholders in Escrow Shares.
4.1 Voting Rights as a Stockholder. Subject to the terms of the
Insider Letter
described in Section 4.4 hereof and except as herein provided, the
Initial Stockholders shall retain all of their rights as stockholders
of the Company during the Escrow Period, including, without
limitation, the right to vote such shares.
4.2 Dividends and Other Distributions in Respect of the Escrow
Shares. During the Escrow Period, all dividends payable in cash with
respect to the Escrow Shares shall be paid to the Initial
Stockholders, but all dividends payable in stock or other non-cash
property ("Non-Cash Dividends") shall be delivered to the Escrow Agent
to hold in accordance with the terms hereof. As used herein, the term
"Escrow Shares" shall be deemed to include the Non-Cash Dividends
distributed thereon, if any.
4.3 Restrictions on Transfer. During the Escrow Period, no sale,
transfer or other disposition may be made of any or all of the Escrow
Shares except (i) by gift to a member of Initial Stockholder's
immediate family or to a trust, the beneficiary of which is an Initial
Stockholder or a member of an Initial Stockholder's immediate family,
(ii) by virtue of the laws of descent and distribution upon death of
any Initial Stockholder, or (iii) pursuant to a qualified domestic
relations order; provided, however, that such permissive transfers may
be implemented only upon the respective transferee's written agreement
to be bound by the terms and conditions of this Agreement and of the
Insider Letter signed by the Initial Stockholder transferring the
Escrow Shares. During the Escrow Period, the Initial Stockholders
shall not pledge or grant a security interest in the Escrow Shares or
grant a security interest in their rights under this Agreement.
4.4 Insider Letters. Each of the Initial Stockholders has
executed a letter agreement with EBC and the Company, dated as
indicated on Exhibit A hereto, and which is filed as an exhibit to the
Registration Statement ("Insider Letter"), respecting the rights and
obligations of such Initial Stockholder in certain events, including
but not limited to the liquidation of the Company.
5. Concerning the Escrow Agent.
5.1 Good Faith Reliance. The Escrow Agent shall not be liable for
any action taken or omitted by it in good faith and in the exercise of
its own best judgment, and may rely conclusively and shall be
protected in acting upon any order, notice, demand, certificate,
opinion or advice of counsel (including counsel chosen by the Escrow
Agent), statement, instrument, report or other paper or document (not
only as to its due execution and the validity and effectiveness of its
provisions, but also as to the truth and acceptability of any
information therein contained) which is believed by the Escrow Agent
to be genuine and to be signed or presented by the proper person or
persons. The Escrow Agent shall not be bound by any notice or demand,
or any waiver, modification, termination or rescission of this
Agreement unless evidenced by a writing delivered to the Escrow Agent
signed by the proper party or parties and, if the duties or rights of
the Escrow Agent are affected, unless it shall have given its prior
written consent thereto.
5.2 Indemnification. The Escrow Agent shall be indemnified and
held harmless by the Company from and against any expenses, including
counsel fees and disbursements, or loss suffered by the Escrow Agent
in connection with any action, suit or other proceeding involving any
claim which in any way, directly or indirectly, arises out of or
relates to this Agreement, the services of the Escrow Agent hereunder,
or the Escrow Shares held by it hereunder, other than expenses or
losses arising from the gross negligence or willful misconduct of the
Escrow Agent. Promptly after the receipt by the Escrow Agent of notice
of any demand or claim or the commencement of any action, suit or
proceeding, the Escrow Agent shall notify the other parties hereto in
writing. In the event of the receipt of such notice, the Escrow Agent,
in its sole discretion, may commence an action in the nature of
interpleader in an appropriate court to determine ownership or
disposition of the Escrow Shares or it may deposit the Escrow Shares
with the clerk of any appropriate court or it may retain the Escrow
Shares pending receipt of a final, non-appealable order of a court
having jurisdiction over all of the parties hereto directing to whom
and under what circumstances the Escrow Shares are to be disbursed and
delivered. The provisions of this Section 5.2 shall survive in the
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event the Escrow Agent resigns or is discharged pursuant to Sections
5.5 or 5.6 below.
5.3 Compensation. The Escrow Agent shall be entitled to
reasonable compensation from the Company for all services rendered by
it hereunder. The Escrow Agent shall also be entitled to reimbursement
from the Company for all expenses paid or incurred by it in the
administration of its duties hereunder including, but not limited to,
all counsel, advisors' and agents' fees and disbursements and all
taxes or other governmental charges.
5.4 Further Assurances. From time to time on and after the date
hereof, the Company and the Initial Stockholders shall deliver or
cause to be delivered to the Escrow Agent such further documents and
instruments and shall do or cause to be done such further acts as the
Escrow Agent shall reasonably request to carry out more effectively
the provisions and purposes of this Agreement, to evidence compliance
herewith or to assure itself that it is protected in acting hereunder.
5.5 Resignation. The Escrow Agent may resign at any time and be
discharged from its duties as escrow agent hereunder by its giving the
other parties hereto written notice and such resignation shall become
effective as hereinafter provided. Such resignation shall become
effective at such time that the Escrow Agent shall turn over to a
successor escrow agent appointed by the Company, the Escrow Shares
held hereunder. If no new escrow agent is so appointed within the 60
day period following the giving of such notice of resignation, the
Escrow Agent may deposit the Escrow Shares with any court it
reasonably deems appropriate.
5.6 Discharge of Escrow Agent. The Escrow Agent shall resign and
be discharged from its duties as escrow agent hereunder if so
requested in writing at any time by the other parties hereto, jointly,
provided, however, that such resignation shall become effective only
upon acceptance of appointment by a successor escrow agent as provided
in Section 5.5.
5.7 Liability. Notwithstanding anything herein to the contrary,
the Escrow Agent shall not be relieved from liability hereunder for
its own gross negligence or its own willful misconduct.
6. Miscellaneous.
6.1 Governing Law. This Agreement shall for all purposes be
deemed to be made under and shall be construed in accordance with the
laws of the State of New York.
6.2 Third Party Beneficiaries. Each of the Initial Stockholders
hereby acknowledges that the Underwriters are third party
beneficiaries of this Agreement and this Agreement may not be modified
or changed without the prior written consent of EBC.
6.3 Entire Agreement. This Agreement contains the entire
agreement of the parties hereto with respect to the subject matter
hereof and, except as expressly provided herein, may not be changed or
modified except by an instrument in writing signed by the party to the
charged.
6.4 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation thereof.
6.5 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the respective parties hereto and their egal
representatives, successors and assigns.
6.6 Notices. Any notice or other communication required or which
may be given hereunder shall be in writing and either be delivered
personally or be mailed, certified or registered mail, or by private
national courier service, return receipt requested, postage prepaid,
and shall be deemed given
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when so delivered personally or, if mailed, two days after the date of
mailing, as follows:
If to the Company, to:
Millstream II Acquisition Corporation
000 Xxxxx Xxxx Xxxxx, Xxxxxxxx 000
Xxxxx, Xxxxxxxxxxxx 00000
Attn: Chairman
If to a Stockholder, to his address set forth in Exhibit A.
and if to the Escrow Agent, to:
Continental Stock Transfer & Trust Company
00 Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Chairman
A copy of any notice sent hereunder shall be sent to:
Xxxxxxx XxXxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
and:
EarlyBirdCapital, Inc.
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxxx, Chairman
and:
Xxxxxxxx Xxxxxx
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxx Xxxxxx, Esq.
The parties may change the persons and addresses to which the notices
or other communications are to be sent by giving written notice to any such
change in the manner provided herein for giving notice.
6.7 Liquidation of the Company. The Company shall give the Escrow
Agent written notification of the liquidation and dissolution of the Company in
the event that the Company fails to consummate a Business Combination within the
time period(s) specified in the Prospectus.
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WITNESS the execution of this Agreement as of the date first above
written.
MILLSTREAM II ACQUISITION CORPORATION
By: _________________________________
Xxxxxx Xxxxxxx, Chairman, Chief Executive
Officer and President
INITIAL STOCKHOLDERS:
---------------------------
XXXXXX XXXXXXX
---------------------------
XXXXXXX FAMILY TRUST
---------------------------
XXXXXX X. XXXXX, XX.
---------------------------
XXX X. XXXX
---------------------------
XXXXX X. XXXXXXXXXXXXX
CONTINENTAL STOCK TRANSFER
& TRUST COMPANY
By: ________________________________
Name:
Title:
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EXHIBIT A
Name and Address of Number Stock Date of
Initial Stockholder of Shares Certificate Number Insider Letter
------------------- ---------- ------------------ --------------
Xxxxxx Xxxxxxx 397,142 1, 6 October 4, 2004
000 Xxxxx Xxxx Xxxxx
Xxxxxxxx 000
Xxxxx, Xxxxxxxxxxxx 00000
Xxxxxxx Family Trust 397,142 2, 7 October 4, 2004
000 Xxxxx Xxxx Xxxxx
Xxxxxxxx 000
Xxxxx, Xxxxxxxxxxxx 00000
Xxxxxx X. Xxxxx, Xx. 68,572 3, 8 October 4, 2004
000 Xxxxx Xxxx Xxxxx
Xxxxxxxx 000
Xxxxx, Xxxxxxxxxxxx 00000
Xxx X. Xxxx 68,572 4, 9 October 4, 2004
000 Xxxxxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxxxx 00000
Xx. Xxxxx X. Xxxxxxxxxxxxx 68,572 5, 10 October 4, 2004
000 Xxxxx Xxxx Xxxxx
Xxxxxxxx 000
Xxxxx, Xxxxxxxxxxxx 00000
