Exhibit 10.3
STOCK ESCROW AGREEMENT
STOCK ESCROW AGREEMENT, dated as of _________, 2005 ("Agreement"), by and
among CONFLUENCE ACQUISITION PARTNERS I, INC., a Delaware corporation
("Company"), the undersigned parties listed under the Initial Stockholder on
Exhibit A hereto (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
______, 2005 ("Underwriting Agreement"), with Dawson James Securities, Inc. (the
"Representative") acting as representative of the several underwriters
(collectively, the "Underwriters"), pursuant to which, among other matters, the
Underwriters will agree to purchase 8,000,000 units ("Units") of the Company.
Each Unit will consist of one share of the Company's Common Stock, par value
$.01 per share ("Common Stock"), 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
Registration Statement 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 the sale
of the Units to deposit their shares of Common Stock, 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 and; provided further,
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
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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, stating that such transaction is then
being consummated, 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, (iii) pursuant to a
qualified domestic relations order, or (iv) pursuant to a transfer of record
ownership whereby there is no change in beneficial ownership including a
transfer to the beneficial owners or partners of an Initial Stockholder for no
consideration if such Initial Stockholder is an entity; 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 the Representative 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
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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 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
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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 without giving effect to the conflicts of law principles
that would result in the application of the substantive laws of another
jurisdiction.
6.2 Third Party Beneficiary. Each of the Initial Stockholders
hereby acknowledges that the Representative is a third party beneficiary of this
Agreement and this Agreement may not be modified or changed without the prior
written consent of the Representative.
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 legal
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 when so delivered personally or, if mailed, two days after the date of
mailing, as follows:
If to the Company, to:
Confluence Acquisition Partners I, Inc.
12444 Powerscourt Drive
Suite 225
St. Louis, Missouri 63131
Attn: John J. Klobnak, President
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With a copy to:
Dilworth Paxson LLP
1818 N Street, NW; Suite 400
Washington, DC 20036
Attn: Kathleen L. Cerveny, Esq.
If to a Stockholder, to his address set forth in Exhibit A.
and if to the Escrow Agent, to:
Continental Stock Transfer & Trust Company
17 Battery Place
8th Floor
New York, New York 10004
Attn: Steven Nelson, President
A copy of any notice sent hereby shall also be sent to:
Blank Rome LLP
1200 N. Federal Highway, Suite 417
Boca Raton, FL 33432
Attn: Bruce C. Rosetto, Esq.
and
Dawson James Securities, Inc.
925 South Federal Highway, 6th Floor
Boca Raton, FL 33432
Attn: Robert Keyster, CEO
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 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.
6.8 Amendment. This Agreement contains the entire agreement
and understanding of the parties hereto with respect to the subject matter
hereof. This Agreement or any provision hereof may only be changed, amended or
modified by a writing signed by each of the parties hereto; provided, however,
that no such change, amendment or modification may be made without the prior
written consent of the Representative. As to any claim, cross-claim or
counterclaim in any way relating to this Agreement, each party waives the right
to trial by jury.
6.9 Assignment. This Agreement may not be assigned by the
Escrow Agent without the prior consent of the Company.
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WITNESS the execution of this Agreement as of the date first above written.
CONFLUENCE ACQUISITION PARTNERS I, INC.
______________________________________
John J. Klobnak
President
INITIAL STOCKHOLDERS:
______________________________________
John J. Klobnak
______________________________________
B. Charles Bono Revocable Living Trust
______________________________________
Robert W. May
SV Life Sciences Advisers, Inc.
By: __________________________________
Confluence Acquisition, LLC
By: __________________________________
John J. Klobnak, Manager
Pequot Scout Fund, L.P.
By: __________________________________
Pequot Mariner Master Fund, L.P.
By: __________________________________
______________________________________
John A. Stiles
______________________________________
Marc R. Sarni Revocable Trust
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______________________________________
Richard Lindstrom
______________________________________
George Sertl
______________________________________
James C. Wachtman
______________________________________
David L. Gearhart
______________________________________
Steven Oliveira
______________________________________
James P. Delsing
______________________________________
Todd Thomason
______________________________________
Frank J. Bono
______________________________________
Donald Strickland
______________________________________
Stephen Roy
______________________________________
Timothy Marlo
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
By: __________________________________
Name: ________________________________
Title: _______________________________
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EXHIBIT A
INITIAL STOCKHOLDER NUMBER OF SHARES STOCK CERTIFICATE NUMBER
- -------------------------------------- ---------------- ------------------------
John J. Klobnak 325,000 1
229 N. Spoede Road
St. Louis, MO 63141
B. Charles Bono Revocable Living Trust 325,000 2
1330 Dietrich Oaks Drive
Manchester, MO 63021
Robert W. May 325,000 3
2322 Picardy Place Drive
Chesterfield, MO 63017
SV Life Sciences Advisers, Inc. 300,000 4
60 State Street, Suite 3650
Boston, MA 02109
Confluence Acq. LLC 225,000 5
229 N. Spoede Road
St. Louis, MO 63141
Pequot Scout Fund, L.P. 169,900 6
c/o Pequot Capital Mgmt.
500 Nyala Farm Road
Westport, CT 06880
Pequot Mariner Master Fund, L.P. 105,100 21
c/o Pequot Capital Mgmt.
500 Nyala Farm Road
Westport, CT 06880
John A. Stiles 75,000 8
1242 Bardot Lane
St. Louis, MO 63146
Marc R. Sarni Revocable Trust 20,000 9
1032 Tidewater Peace Ct.
St. Louis, MO 63017
Richard Lindstrom 15,000 10
710 East 24th Street, Suite 106
Minneapolis, MN 55423
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George Sertl 15,000 11
10757 Forest Path
St. Louis, MO 63128
James C. Wachtman 15,000 12
330 Oakwood
St. Louis, MO 63319
David L. Gearhart 15,000 13
1220 S. Mason Road
Town & Country, MO 63131
Steven Oliveira 15,000 14
229 N. Spoede Road
St. Louis, MO 63141
James P. Delsing 10,000 15
229 N. Spoede Road
St. Louis, MO 63141
Todd Thomasson 10,000 16
8117 University Drive
Clayton, MO 63105
Frank J. Bono 10,000 17
14618 Oak Orchard Court
Chesterfield, MO 63017
Donald Strickland 10,000 18
4306 West Pine Blvd.
St. Louis, MO 63108
Stephen Roy 7,500 19
2 Berkshire Drive
St. Louis, MO 63117
Timothy Marlo 7,500 20
12444 Powerscourt Drive
Suite 225
St. Louis, MO 63131
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