Stock Escrow Agreement

STOCK ESCROW AGREEMENT STOCK ESCROW AGREEMENT, dated as of ____________, 2004 ("Agreement"),by and among MILLSTREAM II ACQUISITION CORPORATION, a Delaware corporation("Company"), ARTHUR SPECTOR, the SPECTOR FAMILY TRUST, ROBERT E. KEITH, JR., DONK. RICE and DR. HEINZ C. SCHIMMELBUSCH (collectively "Initial Stockholders") andCONTINENTAL STOCK TRANSFER & TRUST COMPANY, a New York corporation ("EscrowAgent"). 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 haveagreed to purchase 3,500,000 units ("Units") of the Company. Each Unit consistsof one share of the Company's Common Stock, par value $.0001 per share, and twoWarrants, each Warrant to purchase one share of Common Stock, all as more fullydescribed in the Company's final Prospectus, dated ________, 2004 ("Prospectus")comprising part of the Company's Registration Statement on Form S-1 (File No.333-________) under the Securities Act of 1933, as amended ("RegistrationStatement"), declared effective on __________, 2004 ("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 InitialStockholders hereby appoint the Escrow Agent to act in accordance with andsubject to the terms of this Agreement and the Escrow Agent hereby accepts suchappointment and agrees to act in accordance with and subject to such terms. 2. Deposit of Escrow Shares. On or before the Effective Date, each ofthe Initial Stockholders shall deliver to the Escrow Agent certificatesrepresenting his respective Escrow Shares, to be held and disbursed subject tothe terms and conditions of this Agreement. Each Initial Stockholderacknowledges that the certificate representing his Escrow Shares is legended toreflect the deposit of such 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 to suchInitial Stockholder; provided, 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, stockexchange or other similar transaction which results in all of the stockholdersof such entity having the right to exchange their shares of Common Stock forcash, securities or other property, then the Escrow Agent will, upon receipt ofa certificate, executed by the Chief Executive Officer or Chief FinancialOfficer of the Company, in form reasonably acceptable to the Escrow Agent, thatsuch transaction is then being consummated, and release the Escrow Shares to theInitial Stockholders upon consummation of the transaction so that they cansimilarly participate. The Escrow Agent shall have no further duties hereunderafter the disbursement or destruction of the Escrow Shares in accordance withthis 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 gra ...