Document:

Exhibit 10.5

 

EXECUTION COPY

 

INDEMNIFICATION AND ESCROW AGREEMENT, dated as of August 30, 2004 (this
“Agreement”), among MILLSTREAM ACQUISITION CORPORATION (to be renamed
NationsHealth, Inc. at the Effective Time), a Delaware corporation (“Parent”),
CONTINENTAL STOCK TRANSFER & TRUST COMPANY, a New York corporation, as
Escrow Agent (the “Escrow Agent”), RGGPLS HOLDING, INC., a Florida
corporation (“RGGPLS”), and Arthur Spector (“Spector”).

 

WHEREAS,
Parent, N Merger L.L.C., a Florida limited liability company and a wholly owned
subsidiary of Parent (“Sub”), and NationsHealth Holdings, L.L.C., a
Florida limited liability company (the “Company”), propose to enter into
an Agreement and Plan of Merger, dated as of March 9, 2004 (as the same may be
amended or supplemented, the “Merger Agreement”), providing for the
merger of Sub with and into the Company (the “Merger”); and

 

WHEREAS,
Parent, RGGPLS and Spector desire to make the covenants and agreements set
forth herein.

 

NOW,
THEREFORE, in consideration of the premises and the representations, warranties
and agreements contained herein, the parties agree as follows:

 

ARTICLE I

 

Certain Definitions

 

SECTION
1.01.  Definitions.  (a) Capitalized terms used but not defined
herein shall have the meaning assigned to such terms in the Merger Agreement.

 

(b) In
addition, capitalized terms used herein shall have the meaning set forth in
this Article I or elsewhere in this Agreement.

 

“Business
Day” shall mean any day other than a Saturday, Sunday or other day on which
banks are not required or authorized by law or executive order to close in New
York, New York.

 

“Common
Stock” shall mean the common stock, par value $0.0001 per share, of Parent.

 

“Company
Members” shall mean RGGPLS, GRH Holdings, L.L.C., a Florida limited liability
company, and Becton, Dickinson and Company, a New Jersey corporation, and each
of their respective successors and assigns.

 

“Effective
Time” shall have the meaning assigned to such term in the Merger Agreement.

 

“Escrowed
Amount” shall mean an amount equal to $2,000,000.

 

 

“Escrowed
Funds” shall mean the Escrowed Amount, plus any interest or dividends
earned on the Escrowed Amount after transfer thereof to the Escrow Agent at the
Effective Time pursuant to Section 3.01.

 

“Losses”
of any person shall mean any and all losses, damages, liabilities, claims or
expenses (including reasonable attorneys’ fees) incurred by such person.

 

“Parent
Indemnified Stockholders” shall mean the stockholders of Parent who are or
were such as of the record date declared by Parent for the Parent Stockholders
Meeting (other than any such stockholders of Parent who are holders of IPO
Shares that have demanded that Parent convert their IPO Shares into cash
pursuant to Article Fifth, paragraph B of the Parent Charter and/or Section 8.8
of the Underwriting Agreement).

 

“Parent
Losses” shall mean Losses of Parent as determined pursuant to Section 2.02
hereof.

 

“Termination
Date” shall mean the close of business on the first anniversary of the
Effective Time.

 

“Trust
Agreement” shall mean the Investment Management Trust Agreement, dated as
of August 25, 2003, between Parent and the Escrow Agent.

 

ARTICLE II

 

Indemnification

 

SECTION 2.01.  Survival of Representations and Warranties
and Covenants.  Solely for purposes
of this Agreement, the representations and warranties of the Company contained
in Article III of the Merger Agreement, and the covenants of the Company in the
Merger Agreement, shall survive the Closing and shall remain in full force and
effect, until the Termination Date.

 

SECTION 2.02.  Indemnification.  (a) 
Subject to Section 2.01, Parent Losses shall be calculated as the
cumulative sum of any and all Losses suffered or incurred by Parent, up to the
amount of the Escrowed Amount, that arise out of:

 

(i)                                     any
breach of any representation or warranty of the Company that is contained in
Article III of the Merger Agreement; or

 

(ii)                                  the
breach of any covenant of the Company that is contained in the Merger Agreement
and that requires performance prior to the Closing Date.

 

(b)                                 For
the purposes of calculating the Parent Losses pursuant to this Section 2.02,
such Parent Losses shall be net of any amount recovered by Parent under
insurance policies with respect to such Parent Losses.  To the extent that Parent (or its subsidiaries)
has insurance coverage in respect of any Loss, it shall use commercially
reasonable efforts to claim against such insurance.

 

2

 

SECTION 2.03.  Third-Party Claims.  (a)  If
a claim by a third party (a “Third-Party Claim”) is made against Parent
arising out of a matter which will result in a Parent Loss pursuant to Section
2.02, Parent and Spector shall promptly notify RGGPLS in writing (in reasonable
detail) of such claim promptly after receipt of such claim.  The failure to promptly notify RGGPLS
hereunder shall not impair the payment by the Escrow Agent of Escrowed Funds to
the Parent Indemnified Stockholders pursuant to Article IV, except to the
extent that RGGPLS is actually and materially prejudiced by such failure
(except that Parent Losses shall not include any expenses that were incurred
during the period in which Parent or Spector failed to give such notice).  Thereafter, Parent shall deliver to RGGPLS,
within 5 Business Days’ time after receipt thereof, copies of all notices and
documents (including court papers) received relating to such Third Party Claim.

 

(b)                                 RGGPLS
shall be entitled to participate in the defense of a Third-Party Claim, through
its counsel, at its own expense; provided, however, that Parent
shall be liable for the reasonable fees and expenses of RGGPLS’ counsel if
RGGPLS reasonably determines that the defense of such Third-Party Claim will
involve a conflict of interest between Parent and RGGPLS.  If RGGPLS so chooses, it may assume the
defense of such Third Party Claim, and in such case Parent shall be liable for
the reasonable fees and expenses of RGGPLS’ counsel.

 

(c)                                  With
respect to any Third Party Claim, Parent shall cooperate with RGGPLS in the
defense and prosecution of such Third Party Claim, including by providing
records and information that RGGPLS reasonably determines is relevant to such
Third-Party Claim.  Parent shall not
settle or compromise any Third-Party Claim without the prior written consent of
RGGPLS.

 

SECTION 2.04.  Limitations on Indemnification.  Notwithstanding any other provision of this
Agreement:

 

(a)  No
Escrowed Funds shall be paid pursuant to Article IV by the Escrow Agent to the
Parent Indemnified Stockholders in respect of Parent Losses (i) until the
aggregate amount of Parent Losses exceeds on a cumulative basis $250,000, provided
that no Loss shall be included in the calculation of the aggregate Parent
Losses set forth in this clause (i) other than individual Losses in excess of
$1,000, or (ii) for individual or cumulative Parent Losses in excess of the
Escrowed Amount.  Notwithstanding any
provision herein, no Escrowed Funds shall be paid by the Escrow Agent to the
Parent Indemnified Stockholders pursuant to Article IV with respect to Parent Losses
resulting from any special or punitive damages or any Losses that are not
reasonably foreseeable or reasonably related to the breach giving rise to such
Loss.  Parent, RGGPLS and Spector shall
cooperate with each other with respect to resolving any claim or liability that
may lead to Parent Losses hereunder including by making commercially reasonable
efforts to mitigate or resolve any such claim or liability;

 

(b) Spector and Parent
further acknowledge and agree that, other than (i) the representations and
warranties of the Company contained in Article III of the Merger Agreement and
(ii) the covenants of the Company contained in the Merger Agreement,

 

3

 

there are no representations,
warranties or covenants of the Company either expressed or implied with respect
to the transactions contemplated by the Merger Agreement or this Agreement; and

 

(c) Parent and Spector
further agree that the Escrowed Funds shall not be paid by the Escrow Agent to
the Parent Indemnified Stockholders pursuant to Article IV in respect of any
Parent Losses if the fact, matter, event or occurrence giving rise to such
Parent Losses (i) was disclosed in the Merger Agreement, the Company Disclosure
Letter or any other Transaction Agreement, or (ii) is reserved against or
reflected in the Company Financial Statements.

 

SECTION 2.05.  Exclusive Remedy.  Parent’s right to receive the Escrowed Amount
for distribution to the Parent Indemnified Stockholders in connection with
Parent Losses calculated according to Article II constitutes Parent’s sole
remedy for Losses with respect to (i) any breach of any representation or
warranty of the Company contained in Article III of the Merger Agreement that
survives the Closing Date, (ii) the breach of any covenant of the Company that
is contained in the Merger Agreement and requires performance prior to the
Closing Date, or (iii) any claim arising out of the Merger Agreement, this
Agreement or the Transactions, and shall prevent the assertion by Parent of any
other rights or the seeking of any remedies with respect to the Merger
Agreement, this Agreement or the Transactions against RGGPLS or the other
Company Members (other than with respect to a cause of action arising from
fraud).  In furtherance of the foregoing,
each of Spector and Parent hereby waive, from and after the Effective Time, to
the fullest extent permitted under applicable Law, any and all rights, claims
and causes of action with respect to the Merger Agreement, this Agreement or
the Transactions, including rescinding the Merger Agreement or this Agreement,
that it may have against the Company, RGGPLS or the other Company Members
arising under or based upon any applicable Law or arising under or based upon
common Law or otherwise (except (i) pursuant to the provisions relating to the
Escrowed Funds set forth in this Agreement or (ii) with respect to a cause of
action arising from fraud).

 

SECTION 2.06.  Termination of Indemnification.  Parent’s rights under this Agreement for any
Parent Losses shall terminate upon the Termination Date; provided, however,
that Parent’s rights with respect to any Parent Loss shall not terminate if a
Claim has been made for such Parent Loss in accordance with the terms of
Article IV on or prior to the Termination Date.

 

ARTICLE III

 

Creation of Escrow;

Investment of Escrowed Funds

 

SECTION 3.01.  Creation of Escrow.  Parent hereby directs the Escrow Agent, at
the Effective Time, in its capacity as trustee under the Trust Agreement, to
transfer to the Escrow Agent, out of the Trust Funds otherwise payable to
Parent pursuant to the Trust Agreement, an amount equal to the Escrowed
Amount.  The Escrow Agent hereby agrees
to accept the Escrowed Amount and hold the same in escrow pursuant to

 

4

 

the terms of this
Agreement.  The Escrow Agent and the
other parties hereto agree that all Escrowed Funds held hereunder shall be held
for the account of the Parent Indemnified Stockholders for purposes of payment
to the Parent Indemnified Stockholders as required under Article IV hereunder
and, if not so paid, for the account of Parent to be used as Parent shall
determine.

 

SECTION 3.02.  Investment of Escrowed Funds.  The Escrow Agent, at the written direction of
RGGPLS, shall, to the extent practicable, invest and reinvest the Escrowed
Amount in any of the following as may be specified in writing by RGGPLS:
(i) readily marketable direct obligations of or obligations guaranteed by
the United States of America maturing within one year from their respective
dates of issuance, or (ii) certificates of deposit maturing within 30 days
from their respective dates of issuance and issued by state or national banking
institutions each of which shall have a capital and undivided surplus (as
reflected in its latest publicly available financial statements) aggregating at
least $50 million.

 

ARTICLE IV

 

Release of Escrowed Funds

 

SECTION 4.01.  Release of Escrowed Funds.  The Escrow Agent agrees not to release the
Escrowed Funds to Parent except in accordance with the procedures set forth in
this Article IV.

 

SECTION 4.02.  Payment to Parent Indemnified Stockholders.  (a) If at any time and from time to time on
or prior to the Termination Date Spector discovers that Parent Losses have been
suffered or incurred that would require the release of all or a portion of the
Escrowed Amount, Spector shall provide written notice of such Parent Losses to
the Escrow Agent on or prior to the Termination Date (such notice, a “Claim”)
and deliver at the same time a copy of such Claim to RGGPLS.  The Claim shall indicate the amount of Parent
Losses as calculated pursuant to Article II of this Agreement (the “Indemnity
Amount”) and shall with reasonable specificity state the facts or
circumstances giving rise to such Parent Losses.

 

(b) The Escrow
Agent shall, between 11 and 15 Business Days after the date of receipt of the
Claim, or as soon as practicable thereafter, transfer and deliver an amount of
the Escrowed Amount equal to the Indemnity Amount to the Parent Indemnified
Stockholders in accordance with Section 4.02(c), unless the Escrow Agent shall
have received, within 10 Business Days after the date of the receipt of the
Claim, a written objection from RGGPLS to such transfer and delivery setting
forth the amount in dispute, in which case the Escrow Agent shall transfer and
deliver any undisputed amount to the Parent Indemnified Stockholders in
accordance with Section 4.02(c) and shall continue to hold the disputed amount
until either (A) receipt of a certificate signed by Spector and RGGPLS
directing the Escrow Agent to deliver an amount equal to the Indemnity Amount
set forth in such certificate to the Parent Indemnified Stockholders in
accordance with Section 4.02(c) or (B) receipt of a final order or judgment
of a court of competent jurisdiction directing the Escrow Agent to deliver an
amount equal to the

 

5

 

Indemnity Amount specified
therein to the Parent Indemnified Stockholders in accordance with Section 4.02(c).

 

(c) Subject to and
in accordance with the terms of Section 4.02(b), the Escrow Agent shall pay any
Indemnity Amount to each Parent Indemnified Stockholder in the proportion that
the number of shares of Common Stock then held by such stockholder bears to the
aggregate number of outstanding shares of Common Stock then held by the Parent
Indemnified Stockholders as a whole (it being understood that the number of
shares of Common Stock held by any Parent Indemnified Stockholder shall be
adjusted for any stock dividend, stock split, recapitalization, combination or
exchange of shares, merger or consolidation or other change or transaction by
Parent occurring after the Effective Time and prior to the date of such
dividend).

 

(d) Notwithstanding
anything to the contrary in this Agreement, it is understood and agreed that to
the extent any amounts are paid to the Parent Indemnified Stockholders pursuant
to this Section 4.02, such amounts shall continue to be counted as part of the
cumulative sum of Parent Losses.

 

SECTION 4.03.  Payment to Parent at the Termination Date.
Promptly after the Termination Date and upon written notice from Parent, the
Escrow Agent shall transfer and deliver any Escrowed Funds that have not
otherwise been paid by the Escrow Agent to the Parent Indemnified Stockholders
in accordance with Section 4.02, if any, to Parent, except to the extent of a
Claim having been made in accordance with Section 4.02(a) or a dispute with
respect to a Claim as set forth in Section 4.02(b).  Such remaining Escrowed Funds shall not be
paid to the Parent Indemnified Stockholders and shall be transferred and
delivered to Parent to be used as Parent shall determine.  Parent shall deliver the written notice
referred to above to the Escrow Agent after the Termination Date.

 

ARTICLE V

 

The Escrow Agent

 

SECTION 5.01.  General.  (a) 
The Escrow Agent shall not deal with the Escrowed Funds except in
accordance with (i) this Agreement, (ii) written instructions given
in conformity with this Agreement or (iii) instructions agreed to in
writing by Spector and RGGPLS.  The
Escrow Agent shall not be bound in any way by the Merger Agreement or by any
agreement or contract among RGGPLS, Spector or Parent (whether or not the
Escrow Agent has knowledge thereof), it being understood that the Escrow
Agent’s only duties and responsibilities shall be to invest, hold and
distribute the Escrowed Funds in accordance with the terms of this
Agreement.  The Escrow Agent shall not be
responsible for any loss resulting from investments of the Escrowed Funds in
accordance with the terms of this Agreement. 
The Escrow Agent makes no representations and has no responsibility as
to the validity, genuineness or sufficiency of any of the documents or instruments
included in the subject matter of the escrow. 
The Escrow Agent may rely and shall be protected in relying upon any
resolution, certificate, opinion, request, communication, demand, receipt or
other paper or document in good

 

6

 

faith believed by it to be
genuine and to have been signed or presented by the proper party or parties.

 

(b)                                 The
Escrow Agent shall not be liable for any action taken or omitted by it in good
faith unless a court of competent jurisdiction determines that the Escrow
Agent’s gross negligence or willful misconduct was the primary cause of any
loss to Parent, Spector, RGGPLS or the other Company Members.  In the administration of the escrow account
hereunder, the Escrow Agent may execute any of its powers and perform its
duties hereunder directly or through agents or attorneys and may consult with
counsel, accountants and other skilled persons to be selected and retained by
it.  The Escrow Agent shall not be liable
for anything done, suffered or omitted in good faith by it in accordance with
the advice or opinion of any such counsel, accountants or other skilled
persons.

 

(c)                                  Parent
hereby agrees to indemnify the Escrow Agent for, and to hold it harmless
against, any loss, liability or expense arising out of or in connection with
this Agreement and the carrying out of its duties hereunder, including the
costs and expenses of defending itself against any claim of liability, except
in those cases where the Escrow Agent has been guilty of gross negligence or
willful misconduct.  Anything in this
Agreement to the contrary notwithstanding, in no event shall the Escrow Agent
be liable for special or punitive damages or any damages that are not
reasonably foreseeable or reasonably related to the breach giving rise to such
damages even if the Escrow Agent has been advised of the likelihood of such
loss or damage and regardless of the form of action.

 

(d)                                 In
the event that the Escrow Agent shall be uncertain as to its duties or rights
hereunder or shall receive instructions, claims, or demands from any party
hereto which, in its opinion, conflict with any of the provisions of this
Agreement, it shall be entitled to refrain from taking any action and its sole
obligation shall be to keep safely all property held in escrow until it shall
be directed otherwise in writing by all of the other parties hereto or by a
final order or judgment of a court of competent jurisdiction.

 

(e)                                  Any
corporation into which the Escrow Agent in its individual capacity may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the Escrow
Agent in its individual capacity shall be a party, or any corporation to which
substantially all the corporate trust business of the Escrow Agent in its
individual capacity may be transferred, shall be the Escrow Agent under this
Agreement without further act.

 

SECTION 5.02.  Resignation.  The Escrow Agent or any successor Escrow
Agent hereunder may resign by giving 30 days’ prior written notice of
resignation to Parent, Spector and RGGPLS, and such resignation shall be
effective from the date specified in such notice.  In case the office of Escrow Agent shall
become vacant for any reason, Spector and RGGPLS may jointly appoint a bank or
trust company having capital and undivided surplus (as reflected in its latest
publicly available certified financial statements) of not less than $25 million
and having an office in New York, New York, as successor Escrow Agent hereunder
by an instrument or instruments in writing

 

7

 

delivered to such successor
Escrow Agent, the retiring Escrow Agent, Spector and RGGPLS, whereupon such
successor Escrow Agent shall succeed to all the rights and obligations of the
retiring Escrow Agent as if this Agreement were originally executed by such
successor Escrow Agent, and the retiring Escrow Agent shall duly transfer and
deliver to such successor Escrow Agent the Escrowed Funds in the form held by
it hereunder at such time.

 

SECTION 5.03.  Communication.  The Escrow Agent may direct all
communications, notices and matters relating to the administration of the
escrow account hereunder to Spector and RGGPLS.

 

ARTICLE VI

 

SECTION 6.01.  Term of Agreement.  This Agreement shall become effective upon
the occurrence of the Effective Time; provided, however, that if
the Merger Agreement is terminated in accordance with its terms then this
Agreement shall terminate and be of no further force or effect as if this
Agreement were never executed and delivered.

 

ARTICLE VII

 

Miscellaneous

 

SECTION 7.01.  Expenses.  Each party shall pay its own costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby, provided, that the Escrow Agent’s fees and expenses
in acting hereunder (including the reasonable fees, expenses and disbursements
of its counsel), shall be paid by Parent.

 

SECTION 7.02.  Notices.  All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given upon receipt by the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):

 

(i)  if to the Company before the Effective Time:

 

Millstream
Acquisition Corporation

c/o Arthur
Spector

435 Devon Park
Drive

Building 400

Wayne, PA
14087

Attention:  Chairman, Chief Executive

Officer and President

Telecopy No.:
(610) 254-4367

 

8

 

with a copy
to:

 

Klehr,
Harrison, Harvey, Branzburg & Ellers LLP

260 South
Broad Street, Suite 400

Philadelphia,
PA  19102-5003

Attention:  Barry J. Siegel, Esq.

Telecopy No.:
(215) 568-6603

 

(ii)  if to the Company on or after the Effective
Time:

 

NationsHealth,
Inc.

13650 N.W. 8th
St., Suite 109

Sunrise,
FL  33325

Attention:  Glenn M. Parker M.D.,

Robert Gregg,

Lewis Stone and

Michael Gusky

Telecopy No.:
(954) 903-5005

 

with a copy
to:

 

McDermott,
Will & Emery

201 S.
Biscayne Blvd., Suite 2200

Miami, FL  33131

Attention: Ira
J. Coleman, Esq.

Telecopy No.:  (305)
347-6500

 

 (iii) 
if to RGGPLS:

 

RGGPLS Holding, Inc.

13650 N.W. 8th Street, Suite 109

Sunrise, FL  33325

Attention:       Glenn M. Parker,
M.D.,

Robert Gregg and

Lewis Stone

Telecopy No.:  (954) 903-5005

 

9

 

with a copy to:

 

McDermott, Will & Emery

201 S. Biscayne Blvd., Suite 2200

Miami, FL  33131

Attention:       Ira J. Coleman,
Esq.

Telecopy No.:  (305) 347-6500

 

(iv)  if to
Spector:

 

Arthur Spector

435 Devon Park Drive

Building 400

Wayne, PA 14087

 

with a copy to:

 

Klehr, Harrison, Harvey, Branzburg & Ellers LLP

260 South Broad Street

Philadelphia, PA 19102

Attention:  Barry J. Siegel, Esq.

Telecopy No.:  (215) 568-6603

 

(v) if to the Escrow Agent:

 

Continental Stock Transfer & Trust Company

17 Battery Place

New York, NY 10004

Attn:  Compliance Department

Telecopy No.: 
[      ]

 

SECTION 7.03.  Assignability.  Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties. 
Notwithstanding anything in this Agreement to the contrary, the parties
hereto agree that RGGPLS shall be permitted to merge with or into, consolidate
with, liquidate and recontribute its assets and liabilities to, convert into,
exchange its capital stock for equity interests in, or otherwise change its
form or status to, in each case a limited liability company the equity
interests of which are beneficially owned in the same proportion and by the
same persons as the capital stock of RGGPLS was beneficially owned (each of
such actions, a “Conversion” and, RGGPLS as so Converted into a limited
liability company, “Newco”), and, that from and after such Conversion
(i) Newco shall succeed to all of the rights and obligations of RGGPLS under
this Agreement without the consent of or any action of any of the parties
hereto or any written amendment hereto, (ii) Newco shall be entitled to enforce
all of the rights, and perform all of the obligations, hereunder as if Newco
was a signatory hereto and (iii) all references in this Agreement to RGGPLS
shall be deemed references to Newco.  Any
purported assignment without such consent shall be void.  Subject to the preceding

 

10

 

sentences, this Agreement will
be binding upon, inure to the benefit of, and be enforceable by, the parties
and their respective successors and assigns.

 

SECTION 7.04.  Entire Agreement.  This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, written and oral.

 

SECTION 7.05.  Applicable Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such State.

 

SECTION 7.06.  Interpretation.  The article, section and other headings
contained in this Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Agreement.  Whenever the words “include”, “includes” or
“including” are used in this Agreement, they shall be deemed to be followed by
the words “without limitation”.

 

SECTION 7.07.  Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original and all of
which together shall be deemed to be a single agreement.

 

SECTION 7.08.  Amendment; No Waivers.  This Agreement may not be amended, waived or
modified except by an instrument in writing signed by RGGPLS, Spector, Parent
and the Escrow Agent.  Any waiver of any
term or condition shall not be construed as a waiver of any subsequent breach
or a subsequent waiver of the same term or condition, or a waiver of any other
term or condition, of this Agreement. 
The failure of any party at any time to require performance of any
provision hereof shall in no manner affect its right at a later time to enforce
the same.  No waiver by any party of any
breach of any term contained in this Agreement shall be deemed to be or
construed as a further or continuing waiver of any such breach in any
subsequent instance or waiver of any breach of any other term contained in this
Agreement.

 

SECTION 7.09.  Consent to Jurisdiction. 
Each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any New York state court or any Federal court located
in the State of New York in the event any dispute arises out of this Agreement,
(b) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court,
(c) agrees that it will not bring any action relating to this Agreement in
any court other than any New York state court or any Federal court sitting in
the State of New York, and (d) waives any right to trial by jury with
respect to any action related to or arising out of this Agreement.

 

SECTION 7.10.  Severability.  If any term or provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nonetheless
remain in full force and effect so long as the economic and legal substance of
the transactions contemplated by this Agreement is not affected in any manner
materially adverse to any party.  Upon
such determination that any term or other provision is invalid, illegal or
incapable of

 

11

 

being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated by this Agreement be
consummated as originally contemplated to the fullest extent possible.

 

SECTION 7.11.  Further Assurances.  Each of RGGPLS, Spector, and Parent agree to
execute and deliver, upon the written request of any party hereto, any and all
such further instruments and documents as reasonably appropriate for the
purpose of obtaining the full benefits of this Agreement.

 

12

 

IN WITNESS
WHEREOF, the parties to this Agreement have caused chic Agreement to be duly
executed as of the date first written above.

 

	
   

  	
  MILLSTREAM ACQUISITION

  CORPORATION

  
	
   

  
	
   

  	
  by

  	
  /s/ ARTHUR SPECTOR

  
	
   

  	
   

  	
  Name:

  	
  Arthur Spector

  
	
   

  	
   

  	
  Title:

  	
  Chairman,
  Chief Executive

  Officer and President

  
	
   

  
	
   

  
	
   

  	
  CONTINENTAL STOCK TRANSFER

  AND TRUST COMPANY,

  
	
   

  	
  as Escrow Agent

  
	
   

  
	
   

  	
  by

  	
  /s/ STEVEN MELSON

  
	
   

  	
   

  	
  Name:

  	
  Steven
  Melson

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  
	
   

  
	
   

  	
  RGGPLS HOLDING, INC.

  
	
   

  
	
   

  
	
   

  	
  by

  	
  /s/ GLENN M. PARKER

  
	
   

  	
   

  	
  Name:

  	
  Glenn M.
  Parker

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  
	
   

  
	
   

  	
  /s/ ARTHUR SPECTOR

  
	
   

  	
  Arthur Spector

  
								

 

13Exhibit
10.6

 

August 27, 2004

 

 

RGGPLS Holding, Inc.

13650 N.W. 8th Street, Suite 109

Sunrise, FL 33325

 

Reference is made to the Amended and Restated
Agreement and Plan of Merger dated as of August 10, 2004, among Parent, Sub,
and the Company (the “Merger Agreement”).  Capitalized terms used herein without
definitions have the meanings assigned to them in the Merger Agreement.

 

The parties hereto agree as follows:

 

1.             In
the event that Parent shall, on or after the Effective Time, adopt a stock
option plan, phantom stock plan or other equity based compensation plan, for
the benefit of the employees of the Company or other key individuals (in
addition to that certain Stock Option Plan referenced in the Definitive Proxy
Statement on Schedule 14A of Parent) (the “Incentive Plan”) and covering
or determined with reference to such number of shares of Parent Common Stock
not in excess of the amount such that, if such stock were treated as not
outstanding, RGGPLS Holding, Inc. (“RGGPLS”), GRH Holdings, LLC (“GRH”), and
Becton, Dickinson and Company (“BD”) would continue to collectively own at
least eighty percent (80%) of the Parent Common Stock (measured as of the
Effective Time), then after written notice by Parent of such adoption (i) GRH
shall irrevocably surrender to Parent or to a person designated by Parent
(Parent or such person designated by Parent, the “Custodian”) a number
of shares of Parent Common Stock that it received as part of the Merger
Consideration that shall equal twelve percent (12%) of such Parent Common Stock
received by GRH, and (ii) RGGPLS shall irrevocably surrender to Custodian a
number of shares of Parent Common Stock that it received as part of the Merger
Consideration that shall equal the excess of (A) eight and four-tenths percent
(8.4%) of the Parent Common Stock that was received in aggregate by RGGPLS,
GRH, and BD as part of the Merger Consideration less (B) the number of shares
of Parent Common Stock required to be transferred by GRH pursuant to the
immediately preceding clause (i), less (C) the number of shares of Parent
Common Stock required to be transferred by BD, if any, in connection with the
Incentive Plan.  Upon such surrender to
the Custodian, such shares of Parent Common Stock shall be held and
administered by the Custodian to fund the Company’s obligations under the
Incentive Plan or the general operating needs of the Company, or such shares
may be delivered by the Custodian to Parent to be cancelled or held in treasury
by Parent.  The parties acknowledge that
the Custodian may be required to act at the direction of RGGPLS, its officers,
or any other person designated by Parent. 
GRH’s and RGGPLS’s obligations hereunder are subject (i) to RGGPLS’s
certification that the Company will adopt an Incentive Plan as contemplated by this
letter, and (ii) the
receipt by each of RGGPLS and GRH (each, an “indemnitee”) of a valid,
enforceable (except as such enforceability may be limited by the Securities and
Exchange Commission or by a court of competent

 

 

jurisdiction) undertaking by Parent to indemnify such indemnitee
against any losses incurred by such indemnitee in the event that the surrender
of shares by such indemnitee as contemplated hereunder violates any
registration requirement of a federal, state or foreign securities law, provided
that the obligations of RGGPLS or GRH hereunder shall not be subject to this
clause (ii) unless such indemnitee provides customary representations and
warranties and covenants to Parent as are reasonably satisfactory to Parent
that such indemnitee (and its members and affiliates) has not undertaken and
will not undertake any act or omission which could cause a violation of such
securities registration requirements (other than the surrender of shares
contemplated hereunder).  Each of RGGPLS
and GRH covenants and agrees that it shall not sell, assign, transfer or
dispose of, directly or indirectly, an amount of shares of Parent Common Stock
received by it as part of the Merger Consideration such that it would not be
able to comply with the terms and conditions of this paragraph (1).

 

2.             Each
of RGGPLS and GRH acknowledge and agree that RGGPLS, as controlling shareholder
of Parent, shall cause
Parent to (a) to the extent not prohibited under the securities laws, the
Certificate of Incorporation, By-Laws, or other constitutional documents of
Parent, to pay to RGGPLS and GRH all reasonable costs incurred by RGGPLS and
GRH in connection with the preparation of the undertaking described in the last
clause (ii) of paragraph (1) hereof and costs that are necessary to effect the
transfer of title of Parent Common Stock to the Custodian contemplated in
paragraph (1) hereof; and (b) arrange for Parent’s counsel (at Parent’s
expense) to prepare (i) the initial Statement on Schedule 13D for each of
RGGPLS and GRH, (ii) the initial Form 3 filing for each of RGGPLS, the
directors of Parent designated by RGGPLS, and GRH, and their respective
controlling persons, and (iii) any amendment thereto or Form 4 filings required
solely by reason of any surrender of shares required by paragraph (1) hereof;
in each of case (i), (ii) and (iii) that will be required under Section 13 or
Section 16, as applicable, of the Securities Exchange Act of 1934 after the
Effective Time.  Parent’s obligation to
pay costs of any party under this paragraph (2) are subject (in the case of
paragraph 2(a)) to the Parent’s receipt of documentation reasonably acceptable
to it that such expenses were actually incurred.

 

3.             Each
of RGGPLS and GRH acknowledge and agree that the covenants and agreements contained
herein shall be binding upon its respective Newco, if applicable.

 

This letter agreement shall be governed by, and
construed and interpreted in accordance with, the internal laws of the State of
New York, applicable to contracts made and to be performed entirely within the
State of New York.

 

 

If you are in agreement with the foregoing, please
sign and return a copy of this letter to the undersigned.

 

	
   

  	
  Very truly yours,

  
	
   

  	
  RGGPLS HOLDING, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Glenn M. Parker

  	
   

  
	
   

  	
   

  	
  Name: Glenn M. Parker

  	
   

  
	
   

  	
   

  	
  Title: President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Acknowledged and agreed to
  as

  of the date first written above:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  GRH HOLDINGS, LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  Viaura Holdings, Ltd.

  	
   

  	
   

  
	
   

  	
   its managing member

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Viaura, Inc.,

  	
   

  	
   

  
	
   

  	
   

  	
  its general partner

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Michael Gusky

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Michael Gusky

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