EXHIBIT 10.8

ESCROW AGREEMENT

ESCROW AGREEMENT (“Agreement”) dated [Closing Date] by and among KBL HEALTHCARE
ACQUISITION CORP. II, a Delaware corporation (“Parent”),
                                             , as the Target Stockholders’
Representative (the “Representative”), being the representative of the former
stockholders of each of SUMMER INFANT, INC., a Rhode Island corporation (“SII”),
SUMMER INFANT EUROPE, LTD., a United Kingdom limited company (“SIE”), and SUMMER
INFANT ASIA, LTD., a Hong Kong limited company (“SIA” and, collectively, with
SII and SIE, the “Targets”), and CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as
escrow agent (the “Escrow Agent”).

Parent, Parent’s wholly owned subsidiary, SII Acquisition Corp. (the “Merger
Sub”), each of the Targets and the stockholders of each of the Targets are the
parties to an Agreement and Plans of Reorganization dated as of September 1,
2006 (the “Reorganization Agreement”) pursuant to which SII has merged with and
into the Merger Sub and all of the Stockholders of SIE and SIA have sold and
transferred all of their capital stock of SIE and SIA to Parent. Pursuant to the
Reorganization Agreement, Parent (i) is to be indemnified in certain respects
and (ii) may be entitled to the return, for cancellation, of some or all of the
Net Worth Shares in certain circumstances. The parties desire to establish
escrow funds as collateral security for the indemnification obligations and to
effectuate the return to Parent of Net Worth Shares under the Reorganization
Agreement. The Representative has been designated pursuant to the Reorganization
Agreement to represent all of the former stockholders of the Targets (the
“Stockholders”) and each Permitted Transferee (as hereinafter defined) of the
Stockholders (the Stockholders and all such Permitted Transferees are
hereinafter referred to collectively as the “Owners”), and to act on their
behalf for purposes of this Agreement. Capitalized terms used herein that are
not otherwise defined herein shall have the meanings ascribed to them in the
Reorganization Agreement.

The parties agree as follows:

1. (a) Concurrently with the execution hereof, the Stockholders, as a group, are
delivering to the Escrow Agent, to be held in escrow pursuant to the terms of
this Agreement, stock certificates issued in the name of the Stockholders
representing an aggregate of (i) 1,000,000 Transaction Shares received by such
Stockholders pursuant to the Reorganization Agreement, together with ten
(10) assignments separate from certificate executed in blank by such Stockholder
to be held in escrow pursuant to this Agreement and Section 1.10(a) of the
Reorganization Agreement (the “Indemnity Escrow Fund”), and (ii) 391,667 Net
Worth Shares received by such Stockholders pursuant to the Reorganization
Agreement, together with ten (10) assignments separate from certificate,
executed in blank by such Stockholder, to be held in escrow pursuant to the
terms of this Agreement and Section 1.10(b) of the Reorganization Agreement (the
“Adjustment Escrow Fund” and, together with the Indemnity Escrow Fund, each an
“Escrow Fund” and, collectively, the “Escrow Funds”). The Escrow Agent shall
maintain a separate account for each Stockholder’s, and, subsequent to any
transfer permitted pursuant to Paragraph 1(e) hereof, each Owner’s, portion of
each Escrow Fund.

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(b) The Escrow Agent hereby agrees to act as escrow agent and to hold, safeguard
and disburse the Escrow Funds pursuant to the terms and conditions hereof. It
shall treat each Escrow Fund as a trust fund in accordance with the terms of
this Agreement and not as the property of Parent. The Escrow Agent’s duties
hereunder shall terminate upon its distribution of the entirety of both Escrow
Funds in accordance with this Agreement.

(c) Except as herein provided, the Owners shall retain all of their rights as
stockholders of Parent with respect to shares of Parent Common Stock
constituting (i) the Indemnity Escrow Fund during the period ending on the later
of (1) the date that is sixteen months after the Effective Time and (2) 30 days
after Parent has filed with the SEC its annual report on Form 10-KSB for the
year ending December 31, 2007 (such period, the “Escrow Period”), and for such
further period as may be required pursuant to this Agreement (the “Indemnity
Escrow Period”) and (ii) the Adjustment Escrow Fund during the period from the
date hereof until they are returned to the Owners in accordance with Section 4
of this Agreement (“Adjustment Escrow Period” and, together with the Indemnity
Escrow Period, the “Escrow Period”), including, in each case, without
limitation, the right to vote their shares of Parent Common Stock included in
the Escrow Funds.

(d) During each Escrow Period, all dividends payable in cash with respect to the
shares of Parent Common Stock included in the respective Escrow Fund shall be
paid to the Owners, 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 Fund”
shall be deemed to include the Non-Cash Dividends distributed thereon, if any.

(e) During each Escrow Period, no sale, transfer or other disposition may be
made of any or all of the shares of Parent Common Stock in the respective Escrow
Fund except (i) to a “Permitted Transferee” (as hereinafter defined), (ii) by
virtue of the laws of descent and distribution upon death of any Owner, 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. As used in this Agreement, the term “Permitted Transferee” shall
include: (x) members of a Stockholder’s “Immediate Family” (as hereinafter
defined); (y) an entity in which (A) a Stockholder and/or members of a
Stockholder’s Immediate Family beneficially own 100% of such entity’s voting and
non-voting equity securities, or (B) a Stockholder and/or a member of such
Stockholder’s Immediate Family is a general partner and in which such
Stockholder and/or members of such Stockholder’s Immediate Family beneficially
own 100% of all capital accounts of such entity; and (z) a revocable trust
established by a Stockholder during his lifetime for the benefit of such
Stockholder or for the exclusive benefit of all or any of such Stockholder’s
Immediate Family. As used in this Agreement, the term “Immediate Family” means,
with respect to any Stockholder, a spouse, parents, lineal descendants, the
spouse of any lineal descendant, and brothers and sisters (or a trust, all of
whose current beneficiaries are members of an Immediate Family of the
Stockholder). In connection with and as a condition to each permitted transfer,
the Permitted Transferee shall deliver to the Escrow Agent an assignment
separate from certificate executed by the transferring Stockholder, or where
applicable, an order of a court of competent jurisdiction, evidencing the
transfer of shares to the Permitted Transferee, together with ten
(10) assignments separate from certificate executed in blank by the

 

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Permitted Transferee, with respect to the shares transferred to the Permitted
Transferee. Upon receipt of such documents, the Escrow Agent shall deliver to
Parent the original stock certificate out of which the assigned shares are to be
transferred, together with the executed assignment separate from certificate
executed by the transferring Stockholder, or a copy of the applicable court
order, and shall request that Parent issue new certificates representing (m) the
number of shares, if any, that continue to be owned by the transferring
Stockholder, and (n) the number of shares owned by the Permitted Transferee as
the result of such transfer. Parent, the transferring Stockholder and the
Permitted Transferee shall cooperate in all respects with the Escrow Agent in
documenting each such transfer and in effectuating the result intended to be
accomplished thereby. During each Escrow Period, no Owner shall pledge or grant
a security interest in such Owner’s shares of Parent Common Stock included in
the respective Escrow Fund or grant a security interest in such Owner’s rights
under this Agreement.

2. (a) Parent, acting through the current or former member or members of
Parent’s Board of Directors who has or have been appointed by Parent to take all
necessary actions and make all decisions on behalf of Parent with respect to its
and Targets’ rights to indemnification under Article VII of the Reorganization
Agreement (the “Committee”), may make a claim for indemnification pursuant to
the Reorganization Agreement (“Indemnity Claim”) against the Escrow Fund by
giving notice (an “Indemnity Notice”) to the Representative (with a copy to the
Escrow Agent) specifying (i) the covenant, representation, warranty, agreement,
undertaking or obligation contained in the Reorganization Agreement which it
asserts has been breached or otherwise entitles Parent or one or more of the
Targets to indemnification, (ii) in reasonable detail, the nature and dollar
amount of any Indemnity Claim, and (iii) whether the Indemnity Claim results
from a Third Party Claim against Parent or one or more of the Targets. The
Committee also shall deliver to the Escrow Agent (with a copy to the
Representative), concurrently with its delivery to the Escrow Agent of the
Indemnity Notice, a certification as to the date on which the Indemnity Notice
was delivered to the Representative.

(b) If the Representative shall give a notice to the Committee (with a copy to
the Escrow Agent) (a “Counter Indemnity Notice”), within 45 days following the
date of receipt (as specified in the Committee’s certification) by the
Representative of a copy of the Indemnity Notice, disputing whether the
Indemnity Claim is indemnifiable under the Reorganization Agreement, the
Committee and the Representative shall attempt to resolve such dispute by
voluntary settlement as provided in Section 2(c) below. If no Counter Indemnity
Notice with respect to an Indemnity Claim is received by the Escrow Agent from
the Representative within such 45-day period, the Indemnity Claim shall be
deemed to be an Established Claim (as hereinafter defined) for purposes of this
Agreement.

(c) If the Representative delivers a Counter Indemnity Notice to the Escrow
Agent, the Committee and the Representative shall, during the period of 60 days
following the delivery of such Counter Indemnity Notice or such greater period
of time as the parties may agree to in writing (with a copy to the Escrow
Agent), attempt to resolve the dispute with respect to which the Counter
Indemnity Notice was given. If the Committee and the Representative shall reach
a settlement with respect to any such dispute, they shall jointly deliver
written notice of such settlement to the Escrow Agent specifying the terms
thereof. If the Committee and the Representative shall be unable to reach a
settlement with respect to a dispute, such dispute shall be resolved by
arbitration pursuant to Section 2(d) below.

 

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(d) If the Committee and the Representative cannot resolve a dispute prior to
expiration of the 60-day period referred to in Section 2(c) above (or such
longer period as the parties may have agreed to in writing), then such dispute
shall be submitted (and either party may submit such dispute) for arbitration
before a single arbitrator in New York, New York, in accordance with the
commercial arbitration rules of the American Arbitration Association then in
effect and the provisions of Section 10.12 of the Reorganization Agreement to
the extent that such provisions do not conflict with the provisions of this
paragraph. The Committee and the Representative shall attempt to agree upon an
arbitrator; if they shall be unable to agree upon an arbitrator within 10 days
after the dispute is submitted for arbitration, then either the Committee or the
Representative, upon written notice to the other, may apply for appointment of
such arbitrator by the American Arbitration Association. Each party shall pay
the fees and expenses of counsel used by it and 50% of the fees and expenses of
the arbitrator and of other expenses of the arbitration. The arbitrator shall
render his decision within 90 days after his appointment and may award costs to
either the Committee or the Representative if, in his sole opinion reasonably
exercised, the claims made by any other party had no reasonable basis and were
arbitrary and capricious. Such decision and award shall be in writing and shall
be final and conclusive on the parties, and counterpart copies thereof shall be
delivered to each of the parties. Judgment may be obtained on the decision of
the arbitrator so rendered in any New York state court sitting in New York
County, or any federal court sitting in New York County, having jurisdiction,
and may be enforced in accordance with the law of the State of New York. If the
arbitrator shall fail to render his decision or award within such 90-day period,
either the Committee or the Representative may apply to any New York state court
sitting in New York County, or any federal court sitting in New York County,
then having jurisdiction, by action, proceeding or otherwise, as may be proper
to determine the matter in dispute consistently with the provisions of this
Agreement. The parties consent to the exclusive jurisdiction of the New York
state courts having jurisdiction and sitting in New York County, or any federal
court sitting in New York County, for this purpose. The prevailing party (or
either party, in the case of a decision or award rendered in part for each
party) shall send a copy of the arbitration decision or of any judgment of the
court to the Escrow Agent.

(e) As used in this Agreement, “Established Claim” means any (i) Indemnification
Claim deemed established pursuant to the last sentence of Section 2(b) above,
(ii) Indemnification Claim resolved in favor of Parent or Target by settlement
pursuant to Section 2(c) above, resulting in a dollar award to Parent or any
Target, (iii) Indemnification Claim established by the decision of an arbitrator
pursuant to Section 2(d) above, resulting in a dollar award to Parent,
(iv) Third Party Claim that has been sustained by a final determination (after
exhaustion of any appeals) of a court of competent jurisdiction, or (v) Third
Party Claim that the Committee and the Representative have jointly notified the
Escrow Agent has been settled in accordance with the provisions of the
Reorganization Agreement.

(f) (i) Promptly after an Indemnity Claim becomes an Established Claim, the
Committee and the Representative shall jointly deliver a notice to the Escrow
Agent (a “Joint Indemnity Notice”) directing the Escrow Agent to pay to Parent,
and the Escrow Agent promptly shall pay to Parent, an amount equal to the
aggregate dollar amount of the Established Claim (or, if at such time there
remains in the Indemnity Escrow Fund less than the full amount so payable, the
full amount remaining in the Indemnity Escrow Fund).

 

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(ii) Payment of an Established Claim shall be made in shares of Parent Common
Stock, pro rata from the account maintained on behalf of each Owner. For
purposes of each payment, such shares shall be valued at the “Fair Market Value”
(as defined below). However, in no event shall the Escrow Agent be required to
calculate Fair Market Value or make a determination of the number of shares to
be delivered to Parent in satisfaction of any Established Claim; rather, such
calculation shall be included in and made part of the Joint Indemnity Notice.
The Escrow Agent shall transfer to Parent out of the Indemnity Escrow Fund that
number of shares of Parent Common Stock necessary to satisfy each Established
Claim, as set out in the Joint Indemnity Notice. Any dispute between the
Committee and the Representative concerning the calculation of Fair Market Value
or the number of shares necessary to satisfy any Established Claim, or any other
dispute regarding a Joint Indemnity Notice, shall be resolved between the
Committee and the Representative in accordance with the procedures specified in
Section 2(d) above, and shall not involve the Escrow Agent. Each transfer of
shares in satisfaction of an Established Claim shall be made by the Escrow Agent
delivering to Parent one or more stock certificates held in each Owner’s account
evidencing not less than such Owner’s pro rata portion of the aggregate number
of shares specified in the Joint Indemnity Notice, together with assignments
separate from certificate executed in blank by such Owner and completed by the
Escrow Agent in accordance with instructions included in the Joint Indemnity
Notice. Upon receipt of the stock certificates and assignments, Parent shall
deliver to the Escrow Agent new certificates representing the number of shares
owned by each Owner after such payment. The parties hereto (other than the
Escrow Agent) agree that the foregoing right to make payments of Established
Claims in shares of Parent Common Stock may be made notwithstanding any other
agreements restricting or limiting the ability of any Owner to sell any shares
of Parent stock or otherwise. The Committee and the Representative shall be
required to exercise utmost good faith in all matters relating to the
preparation and delivery of each Joint Indemnity Notice. As used herein, “Fair
Market Value” means the average reported closing price for the Parent Common
Stock for the ten trading days ending on the last trading day prior to the day
the Established Claim is paid.

(iii) Notwithstanding anything herein to the contrary, at such time as an
Indemnification Claim has become an Established Claim, the Representative shall
have the right to substitute for the Escrow Shares that otherwise would be paid
in satisfaction of such claim (the “Claim Shares”), cash in an amount equal to
the Fair Market Value of the Claim Shares (“Substituted Cash”). In such event
(i) the Joint Indemnity Notice shall include a statement describing the
substitution of Substituted Cash for the Claim Shares, and (ii) substantially
contemporaneously with the delivery of such Joint Indemnity Notice, the
Representative shall cause currently available funds to be delivered to the
Escrow Agent in an amount equal to the Substituted Cash. Upon receipt of such
Joint Indemnity Notice and Substituted Cash, the Escrow Agent shall (y) in
payment of the Established Claim described in the Joint Indemnity Notice,
deliver the Substituted Cash to Parent in lieu of the Claim Shares, and
(z) cause the Claim Shares to be returned to the Representative.

3. On the first Business Day after the expiration of the Indemnity Escrow
Period, upon receipt of a Joint Indemnity Notice, the Escrow Agent shall
distribute and deliver to each Owner certificates representing the shares of
Parent Common Stock then in such Owner’s account in the Indemnity Escrow Fund,
unless at such time there are any Indemnity Claims with respect to which
Indemnity Notices have been received but which have not been resolved

 

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pursuant to Section 2 hereof or in respect of which the Escrow Agent has not
been notified of, and received a copy of, a final determination (after
exhaustion of any appeals) by a court of competent jurisdiction, as the case may
be (in either case, “Pending Claims”), and which, if resolved or finally
determined in favor of Parent, would result in a payment to Parent, in which
case the Escrow Agent shall retain, and the total amount of such distributions
to such Owner shall be reduced by, the “Pending Claims Reserve” (as hereafter
defined). The Committee shall certify to the Escrow Agent the Fair Market Value
to be used in calculating the Pending Claims Reserve and the number of shares of
Parent Common Stock to be retained therefor. Thereafter, if any Pending Claim
becomes an Established Claim, the Committee and the Representative shall deliver
to the Escrow Agent a Joint Indemnity Notice directing the Escrow Agent to pay
to Parent an amount in respect thereof determined in accordance with
Section 2(f) above, and to deliver to each Owner shares of Parent Common Stock
then in such owner’s account in the Escrow Fund having a Fair Market Value equal
to the amount by which the remaining portion of his account in the Indemnity
Escrow Fund exceeds the then Pending Claims Reserve (determined as set forth
below), all as specified in a Joint Indemnity Notice. If any Pending Claim is
resolved against Parent, the Committee and the Representative shall deliver to
the Escrow Agent a Joint Indemnity Notice directing the Escrow Agent to pay to
each Owner the amount by which the remaining portion of his account in the
Indemnity Escrow Fund exceeds the then Pending Claims Reserve. Upon resolution
of all Pending Claims, the Committee and the Representative shall deliver to the
Escrow Agent a Joint Indemnity Notice directing the Escrow Agent shall pay to
such Owner the remaining portion of his or her account in the Indemnity Escrow
Fund.

As used herein, the “Pending Claims Reserve” shall mean, at the time any such
determination is made, that number of shares of Parent Common Stock in the
Indemnity Escrow Fund having a Fair Market Value equal to the sum of the
aggregate dollar amounts claimed to be due with respect to all Pending Claims
(as shown in the Indemnity Notices of such Claims).

4. (a) (i) If Summer’s Net Worth (as defined) at the Closing Date (“Closing Date
Net Worth”) is less than Summer’s Net Worth at June 30, 2006 (“June 30 Net
Worth”), as finally determined in accordance with the Reorganization Agreement
and this Agreement, the Escrow Agent shall return to Parent, for cancellation,
that number of Transaction Shares equal to the Transaction Share Reduction
Number.

(ii) The term “Transaction Share Reduction Number” shall mean the quotient
derived by dividing (i) the difference between the June 30 Net Worth and Closing
Date Net Worth by (ii) $6.00 (rounded up to the nearest share); provided,
however, that if Closing Date Net Worth is equal to or greater than June 30 Net
Worth, the Transaction Share Reduction Number shall be zero.

(iii) Notwithstanding anything to the contrary in this Agreement, if the
Transaction Share Reduction Number is greater than 391,667 shares (such greater
number being the “Shortfall”), each of the Stockholders shall return to Parent
on demand, for cancellation, that number of Transaction Shares received by him
or it determined by multiplying the Shortfall by such Stockholder’s fraction,
the numerator of which is the total number of shares issued to such Stockholder
at Closing in the Transaction and the denominator of which is 3,916,667.

 

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(iv) The term “Net Worth” shall mean, on the date in question, the assets of
Summer (on a consolidated basis) at such date, less all liabilities of Summer
(on a consolidated basis) at such date, adjusted to (A) give effect to the
payment of dividend distributions by SII for the payment of taxes in such fiscal
year or prior years, and (B) exclude direct costs and expenses through the
applicable date related to the Transactions and related to litigation and
settlement of the dispute with Springs Global US, Inc. (“Springs”) described on
Schedule 2.10 of the Reorganization Agreement, including, without limitation,
legal accounting, investment bankers, road show, expert witness and broker fees
and expenses.

(v) As soon as practicable following the Closing Date, Goldstein Golub and
Kessler LLP shall calculate and deliver to Parent a statement of Summer’s
June 30 Net Worth (“June 30 Net Worth Statement”) and Summer’s Closing Date Net
Worth (“Closing Date Net Worth Statement”), which shall be derived utilizing
generally accepted accounting principles, and which Statements shall be
certified by each of Summer’s Chief Executive Officer and Chief Financial
Officer. At the same time, such PCOAB audit firm shall deliver a written
calculation of the difference between Summer’s Closing Date Net Worth and
June 30 Net Worth (“Auditor’s Net Worth Difference Calculation”), which shall be
utilized to determine the Transaction Share Reduction Number and Shortfall, if
any.

(b) Parent shall deliver a notice (“Adjustment Notice”) to the Representative,
with a copy to the Escrow Agent, setting forth the Auditor’s Net Worth
Difference Calculation and stating the number of shares in the Adjustment Escrow
Fund to be returned to Parent for cancellation pursuant to Section 1.5(c)(ii) of
the Reorganization Agreement. If requested by Representative in writing,
Representative shall be provided access to all working papers utilized in the
calculations at the premises of Parent during regular business hours.

(c) If the Representative shall give a notice to Parent (with a copy to the
Escrow Agent) (a “Counter Adjustment Notice”), within 45 days following the date
of receipt (as specified in the Committee’s certification) by the Representative
of a copy of the Adjustment Notice, disputing Parent’s calculation of the
Auditor’s Net Worth Difference Calculation, the Committee and Parent shall
attempt to resolve such dispute by voluntary settlement in the manner provided
in Section 2(c) or, if the dispute is not so resolved, by arbitration in the
manner provided in Section 2(d). If no Counter Adjustment Notice is received by
the Escrow Agent from the Representative within such 45-day period, the
calculation of the Auditor’s Net Worth Difference Calculation shall be deemed to
be established as set forth in the Adjustment Notice for all purposes of this
Agreement.

(d) Promptly upon the Auditor’s Net Worth Difference Calculation becoming
established either as set forth in the Adjustment Notice, by resolution of
Parent and the Representative or by arbitration, as the case may be, upon
receipt of notice from either Parent or the Representative (with a copy to the
other), the Escrow Agent shall deliver to Parent, for cancellation, that number
of shares from the Adjustment Escrow Fund required under Section 4(a)(i) as so
established and shall distribute and deliver certificates representing the
remaining shares in the Adjustment Escrow Fund, if any, to the Owners, in each
case in proportion to each such Owner’s Allocation Factor.

 

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5. The Escrow Agent, the Committee, Parent and the Representative shall
cooperate in all respects with one another in the calculation of any amounts
determined to be payable to Parent and the Owners in accordance with this
Agreement and in implementing the procedures necessary to effect such payments.

6. (a) The Escrow Agent undertakes to perform only such duties as are expressly
set forth herein. It is understood that the Escrow Agent is not a trustee or
fiduciary and is acting hereunder merely in a ministerial capacity.

(b) 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.

(c) The Escrow Agent’s sole responsibility upon receipt of any notice requiring
any payment to Parent pursuant to the terms of this Agreement or, if such notice
is disputed by the Committee or the Representative, the settlement with respect
to any such dispute, whether by virtue of joint resolution, arbitration or
determination of a court of competent jurisdiction, is to pay to Parent the
amount specified in such notice, and the Escrow Agent shall have no duty to
determine the validity, authenticity or enforceability of any specification or
certification made in such notice.

(d) The Escrow Agent shall not be liable for any action taken by it in good
faith and believed by it to be authorized or within the rights or powers
conferred upon it by this Agreement, and may consult with counsel of its own
choice and shall have full and complete authorization and indemnification under
Section 6(g), below, for any action taken or suffered by it hereunder in good
faith and in accordance with the opinion of such counsel.

(e) 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 the Escrow Funds to a successor escrow agent appointed jointly by the
Committee and the Representative. 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 Funds with any court it reasonably deems
appropriate.

(f) In the event of a dispute between the parties as to the proper disposition
of an Escrow Fund, the Escrow Agent shall be entitled (but not required) to
deliver such Escrow Fund into the United States District Court for the Southern
District of New York and, upon giving notice to the Committee and the
Representative of such action, shall thereupon be relieved of all further
responsibility and liability.

 

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(g) The Escrow Agent shall be indemnified and held harmless by Parent 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 Funds 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 Fund in question or it may deposit such Escrow Fund with the clerk of
any appropriate court and be relieved of any liability with respect thereto or
it may retain the Escrow Fund 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 Fund in question is to be disbursed and
delivered.

(h) The Escrow Agent shall be entitled to reasonable compensation from Parent
for all services rendered by it hereunder. The Escrow Agent shall also be
entitled to reimbursement from Parent for all reasonable documented 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.

(i) From time to time on and after the date hereof, the Committee and the
Representative 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.

(j) 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.

7. This Agreement expressly sets forth all the duties of the Escrow Agent with
respect to any and all matters pertinent hereto. No implied duties or
obligations shall be read into this Agreement against the Escrow Agent. The
Escrow Agent shall not be bound by the provisions of any agreement among the
parties hereto except this Agreement and shall have no duty to inquire into the
terms and conditions of any agreement made or entered into in connection with
this Agreement, including, without limitation, the Reorganization Agreement.

8. This Agreement shall inure to the benefit of and be binding upon the parties
and their respective heirs, successors, assigns and legal representatives, shall
be governed by and construed in accordance with the law of New York applicable
to contracts made and to be performed therein except that issues relating to the
rights and obligations of the Escrow Agent shall be governed by and construed in
accordance with the law of New York applicable to contracts made and to be
performed therein. This Agreement cannot be changed or terminated except by a
writing signed by the Committee, the Representative and the Escrow Agent.

 

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9. The Committee, Parent and the Representative each hereby consents to the
exclusive jurisdiction of the New York state courts sitting in New York County,
New York, and federal courts sitting in New York County with respect to any
claim or controversy arising out of this Agreement. Service of process in any
action or proceeding brought against the Committee, Parent or the Representative
in respect of any such claim or controversy may be made upon it by registered
mail, postage prepaid, return receipt requested, at the address specified in
Section 10, with a copy delivered by nationally recognized overnight carrier to
Graubard Miller, The Chrysler Building, 405 Lexington Avenue, New York, N.Y.
10174-1901, Attention: David Alan Miller, Esq.

10. All notices and other communications under this Agreement shall be in
writing and shall be deemed given if given by hand or delivered by nationally
recognized overnight carrier, or if given by telecopier and confirmed by mail
(registered or certified mail, postage prepaid, return receipt requested), to
the respective parties as follows:

A. If to the Committee, to it at:

Telecopier No.:

with a copy to:

Graubard Miller

The Chrysler Building

405 Lexington Avenue

New York, New York 10174-1901

Attention: David Alan Miller, Esq.

Telecopier No.: 212-818-8881

B. If to the Representative, to him at:

Telecopier No.:

with a copy to:

Steven Rosenbaum, Esq.

Poore & Rosenbaum

The Commerce Center

30 Exchange Terrace

Providence, Rhode Island 02901-1117

Telephone: 401-831-2600

Facsimile: 401-831-2220

 

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and

James Redding, Esq.

Greenberg Traurig

One International Place

Boston, MA 02110

Telephone: (617) 310-6000

Facsimile: (617) 310-6001

C. If to the Escrow Agent, to it at:

Continental Stock Transfer & Trust Company

17 Battery Place, 8th Floor

New York, New York 10004

Attention: Steven G. Nelson

Telecopier No.: 212-509-5150

D. If to Parent, to it at the addresses listed above for the Committee and the
Representative or to such other person or address as any of the parties hereto
shall specify by notice in writing to all the other parties hereto.

11. (a) If this Agreement requires a party to deliver any notice or other
document, and such party refuses to do so, the matter shall be submitted to
arbitration pursuant to Section 2(d) of this Agreement.

(b) All notices delivered to the Escrow Agent shall refer to the provision of
this Agreement under which such notice is being delivered and, if applicable,
shall clearly specify the aggregate dollar amount due and payable to Parent and
the number of shares of Parent Common Stock to be returned to Parent.

(c) This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original instrument and all of which together shall
constitute a single agreement.

IN WITNESS WHEREOF, each of the parties hereto has duly executed this Agreement
on the date first above written.

[Signatures are on following page]

 

11

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[Signature Page to Escrow Agreement dated Closing Date]

 

KBL HEALTHCARE ACQUISITION CORP. II

By:

 

 

Name:

 

Title:

 

THE REPRESENTATIVE

 

ESCROW AGENT

CONTINENTAL STOCK TRANSFER &
TRUST COMPANY

By:

 

 

Name:

 

Steven G. Nelson

Title:

 

Chairman

 

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