Exhibit
10.3


 


SECURITIES ESCROW AGREEMENT


 


This SECURITIES ESCROW
AGREEMENT is made as of [    ], 2008 (the “Agreement”),
by and among iStar Acquisition Corp., a Delaware corporation (the “Company”),
each of the parties set forth in Exhibit A hereto (collectively the “Private
Investors”) and Continental Stock Transfer & Trust Company, a New
York corporation (the “Escrow Agent”).


 


WHEREAS, the Company has entered into an Underwriting
Agreement, dated [    ], 2008 (the “Underwriting
Agreement”), with Banc of America Securities LLC, acting as representative
of the underwriters (the “Underwriters”), relating to an underwritten
initial public offering (the “IPO”) of 50,000,000 units (the “Units”)
of the Company, each comprised of one share of the Company’s common stock, par
value $0.0001 per share (the “Common Stock”), and one warrant
exercisable for one share of Common Stock (the “Warrant”), all as more
fully described in the Company’s final Prospectus, dated [    ]
(the “Prospectus”), which forms a part of the Company’s Registration
Statement on Form S-1 (File No. 333-147305) filed under the
Securities Act of 1933, as amended (the “Registration Statement”), and declared
effective by the Securities and Exchange Commission on  [    ], 2008 (the “Effective
Date”).


 


WHEREAS, each of the Private Investors has agreed as a
condition of the Underwriters’ purchase of the Units to deposit its Units purchased
on the date set forth opposite each Private Investor’s name on Exhibit A
hereto (the “Initial Units”), in escrow as hereinafter provided;


 


WHEREAS, the Private Investors have agreed as a condition of
the Underwriters’ purchase of the Units in the IPO to purchase an aggregate of
10,000,000 Warrants for $1.00 per Warrant (the “Private Placement Warrants”)
and an aggregate of 2,500,000 Units for $10.00 per Unit (the “Private
Placement Units,” together with the Private Placement Warrants, the “Private
Placement Securities” and, collectively with the Initial Units and the
Private Placement Warrants, the “Escrow Securities”) immediately prior
to and subject to the completion of the IPO and to deposit the Private
Placement Securities in escrow as hereinafter provided; and


 


WHEREAS, the Company and the Private Investors desire that
the Escrow Agent accept the Escrow Securities, in escrow, to be held and
disbursed as hereinafter provided.


 


IT IS AGREED:


 


1.             Appointment of Escrow Agent. 
The Company and the Private Investors 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 Securities.  Promptly
following the completion of the IPO, the Private Investors shall deliver to the
Escrow Agent certificates representing their respective Escrow Securities as
set forth opposite their respective names on Exhibit A hereto, which
certificates shall remain in the name of such Private Investor or in the name
of such Private Investor’s Permitted Transferee (defined below), to be held and
disbursed subject to the terms and conditions of this Agreement.  Each Private Investor acknowledges that the
certificate representing such Private Investor’s Escrow Securities bears a
legend to reflect the deposit of such Escrow Securities under this Agreement.


 


3.             Disbursement of the Escrow Securities. 
The Escrow Agent shall hold the Initial Units until the first
anniversary of the consummation of a Business Combination (as such term is
defined in the Amended and Restated Articles of Incorporation of the Company
and as the same may be amended from time to time) and shall hold the Private
Placement Securities until the consummation of a Business Combination (each
such period, an “Escrow Period”); provided, however, that if the over-allotment



 

















 


option granted to the Underwriters pursuant to the
Underwriting Agreement is not exercised in full or in part prior to the
expiration of the over-allotment option, then the Escrow Agent shall release to
the Company such number of Initial Units as directed in writing by the
Company.  The Company shall promptly
provide notice of the consummation of a Business Combination to the Escrow
Agent.  Upon the completion of each
Escrow Period, the Escrow Agent shall automatically disburse the applicable
Escrow Securities to each Private Investor upon receipt of written request
therefor from the Company; 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 Securities and; provided  further, that if, after the Company consummates a Business Combination
and the Company or the surviving entity of such Business Combination
subsequently consummates a liquidation, merger, stock exchange or other similar
transaction which results in all of the security holders of the Company or such
entity having the right to exchange their securities for cash, securities or other
property, then the Escrow Agent will, upon receipt of a certificate, executed
by the Chief Executive Officer of the Company, in form reasonably acceptable to
the Escrow Agent, that such transaction is then being consummated, release the
Escrow Securities to the Private Investors immediately prior and subject to
consummation of the transaction so that they can similarly participate.  The Escrow Agent shall act as soon as
reasonably possible following the receipt of the certificate.  The Escrow Agent shall have no further duties
hereunder with respect to the Escrow Securities after the disbursement or
destruction of the Escrow Securities in accordance with this Section 3.


 


4.             Rights of Private Investors in Escrow Securities.


 


4.1           Voting Rights as a Stockholder.  Subject
to the terms of their respective Letter Agreements as described in Section 4.4
hereof and except as herein provided, each Private Investor shall retain all of
its rights as a stockholder of the Company with respect to shares of Common
Stock included in the Escrow Securities during the Escrow Period, including,
without limitation, the right to vote Common Stock.


 


4.2           Dividends and Other Distributions in Respect of the
Escrow Securities.  During the Escrow Period, all dividends
payable in cash with respect to the Escrow Securities shall be paid to the Private
Investors, but all dividends payable in stock or other non-cash property (the “Non-Cash
Dividends”) shall be delivered to the Escrow Agent to hold in accordance
with the terms hereof.  As used herein,
the term “Escrow Securities” 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 Securities except (i) to a member of the
undersigned’s immediate family, (ii) to an affiliate of the undersigned, (iii) to
a charitable organization, (iv) to a trust, the beneficiary of which is a
member of the undersigned’s immediate family, (v) by virtue of the laws of
descent and distribution upon death of the undersigned, (vi) to officers
or directors of the Company, (vii) to current and former directors,
officers and employees of the undersigned, or (vii) pursuant to a
qualified domestic relations order (each such transferee, a “Permitted
Transferee”), provided, however,
that the permissive transfers described in clauses (i) through (vi) may
be implemented only upon the respective Permitted Transferee’s written
agreement to be bound by the terms and conditions of this Agreement and of the
Letter Agreement signed by such Private Investor transferring such Escrow
Securities and such other documents as the Company or Banc of America
Securities LLC may reasonably require. 
During the Escrow Period, no Private Investor shall pledge or grant a
security interest in such Private Investor’s Escrow Securities or grant a
security interest in such Private Investor’s rights under this Agreement.


 


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4.4           Letter Agreements.  Each of the Private
Investors has executed a letter agreement with the Underwriters and the
Company, which has been filed as an exhibit to the Registration Statement (the “Letter
Agreement”), with respect to the rights and obligations of such Private
Investor 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 best judgment, and may rely conclusively and may act
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 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 reasonable 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 Securities 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 Securities or it may deposit the Escrow
Securities with the clerk of any appropriate court or it may retain the Escrow
Securities 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 Securities 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 receive two hundred dollars ($200) per month for all
services rendered by it hereunder.  The
Escrow Agent shall also be entitled to reimbursement from the Company for all
reasonable out-of-pocket 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 Private Investors 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 Securities held hereunder.  If no
successor escrow agent is so appointed within the 60 day period following
the giving of such notice of resignation, the Escrow Agent may submit an
application to deposit 


 


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the Escrow Securities with the United States District
Court for the Southern District of New York, provided
the Escrow Agent provides notice of such deposit to the Company and the Private
Investors in accordance with Section 6.7 hereof.


 


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.


 


5.8           Waiver.  The Escrow Agent
hereby waives any and all right, title, interest or claim of any kind (each, a “Claim”)
in or to any distribution of the Trust Account (as defined in that certain
Investment Management Trust Agreement, dated as of the date hereof, by and
between the Company and the Escrow Agent as trustee thereunder), and hereby
agrees not to seek recourse, reimbursement, payment or satisfaction for any
Claim against the Trust Account for any reason whatsoever.


 


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.  Each party hereto agrees that any action,
proceeding or claim against it arising out of or relating in any way to this
Agreement shall be brought and enforced in the courts of the State of New York
or the United States District Court for the Southern District of New York, and
the parties hereto irrevocably submit to such jurisdictions, which jurisdiction
shall be exclusive.  The parties hereto
hereby waive any objection to such exclusive jurisdiction and that such courts
represent an inconvenient forum.


 


6.2           Waiver of Trial by Jury.  Each party
hereto hereby irrevocably and unconditionally waives the right to a trial by
jury in any action, suit, counterclaim or other proceeding (whether based on
contract, tort or otherwise) arising out of, connected with or relating to this
Agreement, the transactions contemplated hereby, or the actions of the parties
in the negotiations, administration, performance or enforcement hereof.


 


6.3           Third Party Beneficiary.  Each of the Private
Investors 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 Banc of America Securities LLC.


 


6.4           Entire Agreement.  This
Agreement and the Letter Agreement as referenced herein contain the entire
agreement of the parties hereto with respect to the subject matter hereof, and
this Agreement contains the entire agreement as it pertains to the Escrow Agent
and the other parties hereto and, except as expressly provided herein, may not
be changed or modified except by an instrument in writing signed by all parties
to this Agreement.  This Agreement may be
executed in several original or facsimile counterparts, each one of which shall
constitute an original, and together shall constitute but one instrument.


 


6.5           Headings.  The headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation thereof.


 


6.6           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.  Any corporation or 


 


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association into which the Escrow Agent may be
converted or merged, or with which it may be consolidated, or to which it may
sell or transfer all or substantially all of its corporate trust business and assets
as a whole or substantially as a whole, or any corporation or association
resulting from any such conversion, sale, merger, consolidation or transfer to
which the Escrow Agent is a party, shall be and become the successor escrow
agent under this Escrow Agreement and shall have and succeed to the rights,
powers, duties, obligations, immunities and privileges of the Escrow Agent,
without the execution or filing of any instrument or paper or the performance
of any further act.


 


6.7           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, by private national courier service, return receipt requested,
postage prepaid, or by facsimile transmission. 
Such notice or communication shall be deemed given (a) if delivered
personally, when so delivered, (b) if mailed, two days after the date of
mailing, (c) if sent by private national courier service, one business day
after being sent, or (d) if sent by facsimile transmission, on the second
business day after such facsimile is transmitted, in each case as follows:


 


If to the Company, to:


 


iStar Acquisition
Corp.

1114 Avenue of the Americas, 39th Floor

New York, New York 10036

Attn: Jay Nydick, Chief Executive Officer and President

Fax:  (212) 930-9449


 


If to a Private Investor,
to his address set forth in Exhibit A.


 


If to the Escrow Agent,
to:


 


Continental Stock
Transfer & Trust Company

17 Battery Place

New York, New York 10004

Attn:  Chairman

Fax:  (212) 616-7620


 


A copy of any notice sent
hereunder shall be sent to:


 


Clifford Chance US
LLP

31 West 52nd Street

New York, New York 10019 

Attn: Kathleen L. Werner, Esq.

Fax:  (212) 878-8375


 


Sidley Austin LLP

787 Seventh Avenue

New York, New York 10019

Fax:  (212) 839-5599


 


Banc of America Securities LLC


9 West 57th Street


New York, New York 10019


 


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Attn:  Managing Director (iStar Acquisition Corp.)

Fax:  (212) 933-2217


 


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.


 


6.8           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 specified in the Registration
Statement.


 


6.9           Counterparts.  This
Agreement may be executed in several counterparts, each one of which shall
constitute an original, and together shall constitute one instrument.  This agreement or any counterpart may be
executed via facsimile transmission, and any such executed facsimile copy shall
be treated as an original.


 


6.10         Termination.  This
Agreement shall terminate on the final distribution or destruction of all of
the Escrow Securities in accordance with the terms of this Agreement.


 


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IN WITNESS WHEREOF, the parties have duly executed this
Security Escrow Agreement as of the date first above written.


 


	
   

  	
  iSTAR ACQUISITION CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  CONTINENTAL STOCK TRANSFER & TRUST

  COMPANY, AS ESCROW AGENT

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PRIVATE INVESTORS:

  
	
   

  	
   

  
	
   

  	
  iSTAR ACQUISITION
  INVESTOR LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  iSTAR FINANCIAL INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Jay Sugarman

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Jay S. Nydick

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Nina Matis

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Catherine D. Rice

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Daniel Abrams

  
				



 


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  By:

  	
   

  
	
   

  	
   

  	
  Michael Dorsch

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Michelle MacKay

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Barclay Jones

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Steven Blomquist

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  James Burns

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Barbara Rubin

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Chase Curtis

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Vernon Schwartz

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Robin Josephs

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Jeffrey Lynford

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Jeffrey Tarrant

  



 


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