Form of Stock Escrow Agreement

STOCK ESCROW AGREEMENT STOCK ESCROW AGREEMENT, dated as of _________, 2005 ("Agreement"), byand among PARAMOUNT ACQUISITION CORP., a Delaware corporation ("Company"),LINDSAY A. ROSENWALD, LINDSAY A. ROSENWALD 2000 FAMILY TRUSTS, J. JAY LOBELL, I.KEITH MAHER, MICHAEL WEISER, ARIE BELLDEGRUN and ISAAC KIER (collectively"Initial Stockholders") and CONTINENTAL STOCK TRANSFER & TRUST COMPANY, a NewYork corporation ("Escrow Agent"). WHEREAS, the Company has entered into an Underwriting Agreement, dated_____________, 2005 ("Underwriting Agreement"), with EarlyBirdCapital, Inc.("EBC") acting as representative of the several underwriters (collectively, the"Underwriters"), pursuant to which, among other matters, the Underwriters haveagreed to purchase 8,500,000 units ("Units") of the Company. Each Unit consistsof one share of the Company's common stock, par value $.0001 per share ("CommonStock"), and two Warrants, each Warrant to purchase one share of Common Stock,all as more fully described in the Company's final Prospectus, dated_____________, 2005 ("Prospectus") comprising part of the Company's RegistrationStatement on Form S-1 (File No. 333-_______) under the Securities Act of 1933,as amended ("Registration Statement"), declared effective on _____________, 2005("Effective Date"). WHEREAS, the Initial Stockholders have agreed as a condition of thesale of the Units to deposit their shares of Common Stock of the Company, as setforth 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 theEscrow Agent accept the Escrow Shares, in escrow, to be held and disbursed ashereinafter provided. IT IS AGREED: 1. Appointment of Escrow Agent. The Company and the Initial Stockholdershereby appoint the Escrow Agent to act in accordance with and subject to theterms of this Agreement and the Escrow Agent hereby accepts such appointment andagrees to act in accordance with and subject to such terms. 2. Deposit of Escrow Shares. On or before the Effective Date, each of theInitial Stockholders shall deliver to the Escrow Agent certificates representinghis respective Escrow Shares, to be held and disbursed subject to the terms andconditions of this Agreement. Each Initial Stockholder acknowledges that thecertificate representing his Escrow Shares is legended to reflect the deposit ofsuch Escrow Shares under this Agreement. 3. Disbursement of the Escrow Shares. The Escrow Agent shall hold theEscrow Shares until the third anniversary of the Effective Date ("EscrowPeriod"), on which date it shall, upon written instructions from each InitialStockholder, disburse each of the Initial Stockholder's Escrow Shares (and anyapplicable stock power) to such Initial Stockholder; provided, however, that ifthe Escrow Agent is notified by the Company pursuant to Section 6.7 hereof thatthe Company is being liquidated at any time during the Escrow Period, then theEscrow Agent shall promptly destroy the certificates representing the EscrowShares; provided further, however, that if, after the Company consummates aBusiness 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 thestockholders of such entity having the right to exchange their shares of CommonStock for cash, securities or other property, then the Escrow Agent will, uponreceipt of a certificate, executed by the Chief Executive Officer or ChiefFinancial Officer of the Company, in form reasonably acceptable to the EscrowAgent, that such transaction is then being consummated, release the EscrowShares to the Initial Stockholders upon consummation of the transaction so thatthey can similarly participate. The Escrow Agent shall have no further dutieshereunder after the disbursement or destruction of the Escrow Shares inaccordance with this Section 3. 4. Rights of Initial Stockholders in Escrow Shares. 4.1 Voting Rights as a Stockholder. Subject to the terms of theInsider Letter described in Section 4.4 hereof and except as herein provided,the Initial Stockholders shall retain all of their rights as stockholders of theCompany during the Escrow Period, including, without limitation, the right tovote 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 theEscrow Shares shall be paid to the Initial Stockholders, but all dividendspayable in stock or other non-cash property ("Non-Cash Dividends") shall bedelivered to the Escrow Agent to hold in accordance with the terms hereof. Asused herein, the term "Escrow Shares" shall be deemed to include the Non-CashDividends 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 Sharesexcept (i) by gift to a member of Initial Stockholder's immediate family or to atrust, the beneficiary of which is an Initial Stockholder or a member of anInitial Stockholder's immediate family, (ii) by virtue of the laws of descentand distribution upon death of any Initial Stockholder, or (iii) pursuant to aqualified domestic relations order; provided, however, that such permissivetransfers may be implemented only upon the respective transferee's writtenagreement to be bound by the terms and conditions of this Agreement and of theInsider Letter signed by the Initial Stockholder transferring the Escrow Shares. 4.4 Insider Letters. Each of the Initial Stockholders has executed aletter agreement with EBC and the Company, dated as indicated on Exhibit Ahereto, and which is filed as an exhibit to the Registrati ...