Document:

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                                                                    EXHIBIT 10.3

                      INVESTMENT MANAGEMENT TRUST AGREEMENT

            This Agreement is made as of _________, 2005 by and between Stone
Arcade Acquisition Corp. (the "Company") and Continental Stock Transfer & Trust
Company ("Trustee").

            WHEREAS, the Company's Registration Statement on Form S-1, No. 333-
________ ("Registration Statement"), for its initial public offering of
securities ("IPO") has been declared effective as of the date hereof by the
Securities and Exchange Commission ("Effective Date"); and

            WHEREAS, Morgan Joseph & Co. Inc. ("Morgan Joseph") is acting as the
representative of the underwriters in the IPO; and

            WHEREAS, as described in the Company's Registration Statement, and
in accordance with the Company's Amended and Restated Certificate of
Incorporation, $164,150,000 of the net proceeds of the IPO ($189,260,000 if the
underwriters' over-allotment option is exercised in full) will be delivered to
the Trustee to be deposited and held in a trust account for the benefit of the
Company and the holders of the Company's Common Stock issued in the IPO and in
the event the Units are registered in Colorado, pursuant to Section 11-51-302(6)
of the Colorado Revised Statutes, a copy of which statute is attached hereto and
made a part hereof. The amount to be delivered to the Trustee will be referred
to herein as the "Property," the stockholders for whose benefit the Trustee
shall hold the Property will be referred to as the "Public Stockholders," and
the Public Stockholders and the Company will be referred to together as the
"Beneficiaries"); and

            WHEREAS, The Company and the Trustee desire to enter into this
Agreement to set forth the terms and conditions pursuant to which the Trustee
shall hold the Property;

            IT IS AGREED:

1.    Agreements and Covenants of Trustee. The Trustee hereby agrees and
covenants to:

            (a)   Hold the Property in trust for the Beneficiaries in accordance
with the terms of this Agreement, including the terms of Section 11-51-302(6) of
the Colorado Statute, in a segregated trust account ("Trust Account")
established by the Trustee at a branch of JPMorgan Chase NY Bank selected by the
Trustee;

            (b)   Manage, supervise and administer the Trust Account subject to
the terms and conditions set forth herein;

            (c)   In a timely manner, upon the instruction of the Company, to
invest and reinvest the Property in any "Government Security." As used herein,
Government Security means any Treasury Bill issued by the United States, having
a maturity of one hundred and eighty days or less;

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            (d)   Collect and receive, when due, all principal and income
arising from the Property, which shall become part of the "Property," as such
term is used herein;

            (e)   Notify the Company and Morgan Joseph of all communications
received by it with respect to any Property requiring action by the Company;

            (f)   Supply any necessary information or documents as may be
requested by the Company in connection with the Company's preparation of the tax
returns for the Trust Account;

            (g)   Participate in any plan or proceeding for protecting or
enforcing any right or interest arising from the Property if, as and when
instructed by the Company and/or Morgan Joseph to do so;

            (h)   Render to the Company and to Morgan Joseph, and to such other
person as the Company may instruct, monthly written statements of the activities
of and amounts in the Trust Account reflecting all receipts and disbursements of
the Trust Account; and

            (i)   Commence liquidation of the Trust Account only after receipt
of and only in accordance with the terms of a letter ("Termination Letter"), in
a form substantially similar to that attached hereto as either Exhibit A or
Exhibit B, signed on behalf of the Company by its Chief Executive Officer or
Chairman of the Board and Secretary, and complete the liquidation of the Trust
Account and distribute the Property in the Trust Account only as directed in the
Termination Letter and the other documents referred to therein.

2.    Agreements and Covenants of the Company. The Company hereby agrees and
covenants to:

            (a)   Give all instructions to the Trustee hereunder in writing,
signed by the Company's Chief Executive Officer or Chairman of the Board. In
addition, except with respect to its duties under paragraph 1(i) above, the
Trustee shall be entitled to rely on, and shall be protected in relying on, any
verbal or telephonic advice or instruction which it in good faith believes to be
given by any one of the persons authorized above to give written instructions,
provided that the Company shall promptly confirm such instructions in writing;

            (b)   Hold the Trustee harmless and indemnify the Trustee from and
against any and all expenses, including reasonable counsel fees and
disbursements, or loss suffered by the Trustee in connection with any action,
suit or other proceeding brought against the Trustee involving any claim, or in
connection with any claim or demand which in any way arises out of or relates to
this Agreement, the services of the Trustee hereunder, or the Property or any
income earned from investment of the Property, except for expenses and losses
resulting from the Trustee's gross negligence or willful misconduct. Promptly
after the receipt by the Trustee of notice of demand or claim or the
commencement of any action, suit or proceeding, pursuant to which the Trustee
intends to seek indemnification under this paragraph, it shall notify the
Company in writing of such claim (hereinafter referred to as the "Indemnified
Claim"). The Trustee shall have the right to conduct and manage the defense
against such Indemnified Claim, provided, that the Trustee shall obtain the
consent of the Company with respect to the selection

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of counsel, which consent shall not be unreasonably withheld. The Company may
participate in such action with its own counsel; and

            (c)   Pay the Trustee an initial acceptance fee of $1,000 and an
annual fee of $3,000 (it being expressly understood that the Property shall not
be used to pay such fee). The Company shall pay the Trustee the initial
acceptance fee and first year's fee at the consummation of the IPO and
thereafter on the anniversary of the Effective Date. The Trustee shall refund to
the Company the fee (on a pro rata basis) with respect to any period after the
liquidation of the Trust Fund. The Company shall not be responsible for any
other fees or charges of the Trustee except as may be provided in paragraph 2(b)
hereof (it being expressly understood that the Property shall not be used to
make any payments to the Trustee under such paragraph).

3.    Limitations of Liability. The Trustee shall have no responsibility or
liability to:

            (a)   Take any action with respect to the Property, other than as
directed in paragraph 1 hereof and the Trustee shall have no liability to any
party except for liability arising out of its own gross negligence or willful
misconduct;

            (b)   Institute any proceeding for the collection of any principal
and income arising from, or institute, appear in or defend any proceeding of any
kind with respect to, any of the Property unless and until it shall have
received instructions from the Company given as provided herein to do so and the
Company shall have advanced or guaranteed to it funds sufficient to pay any
expenses incident thereto;

            (c)   Change the investment of any Property, other than in
compliance with paragraph 1(c);

            (d)   Refund any depreciation in principal of any Property;

            (e)   Assume that the authority of any person designated by the
Company to give instructions hereunder shall not be continuing unless provided
otherwise in such designation, or unless the Company shall have delivered a
written revocation of such authority to the Trustee;

            (f)   The other parties hereto or to anyone else for any action
taken or omitted by it, or any action suffered by it to be taken or omitted, in
good faith and in the exercise of its own best judgment, except for its gross
negligence or willful misconduct. The Trustee 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 Trustee), 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
Trustee, in good faith, to be genuine and to be signed or presented by the
proper person or persons. The Trustee shall not be bound by any notice or
demand, or any waiver, modification, termination or rescission of this agreement
or any of the terms hereof, unless evidenced by a written instrument delivered
to the Trustee signed by the proper party or parties and, if the duties or
rights of the Trustee are affected, unless it shall give its prior written
consent thereto;

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            (g)   Verify the correctness of the information set forth in the
Registration Statement or to confirm or assure that any acquisition made by the
Company or any other action taken by it is as contemplated by the Registration
Statement; and

            (h)   Pay any taxes on behalf of the Trust Account (it being
expressly understood that the Property shall not be used to pay any such taxes
and that such taxes, if any, shall be paid by the Company from funds not held in
the Trust Account).

4.    Termination. This Agreement shall terminate as follows:

            (a)   If the Trustee gives written notice to the Company that it
desires to resign under this Agreement, the Company shall use its reasonable
efforts to locate a successor trustee. At such time that the Company notifies
the Trustee that a successor trustee has been appointed by the Company and has
agreed to become subject to the terms of this Agreement, the Trustee shall
transfer the management of the Trust Account to the successor trustee, including
but not limited to the transfer of copies of the reports and statements relating
to the Trust Account, whereupon this Agreement shall terminate; provided,
however, that, in the event that the Company does not locate a successor trustee
within ninety days of receipt of the resignation notice from the Trustee, the
Trustee may submit an application to have the Property deposited with the United
States District Court for the Southern District of New York and upon such
deposit, the Trustee shall be immune from any liability whatsoever that arises
due to any actions or omissions to act by any party after such deposit;

            (b)   At such time that the Trustee has completed the liquidation of
the Trust Account in accordance with the provisions of paragraph 1(i) hereof,
and distributed the Property in accordance with the provisions of the
Termination Letter, this Agreement shall terminate except with respect to
Paragraph 2(b); or

            (c)   On such date after ________ __, 2007 when the Trustee deposits
the Property with the United States District Court for the Southern District of
New York in the event that, prior to such date, the Trustee has not received a
Termination Letter from the Company pursuant to paragraph 1(i).

5.    Miscellaneous.

            (a)   The Company and the Trustee each acknowledge that the Trustee
will follow the security procedures set forth below with respect to funds
transferred from the Trust Account. Upon receipt of written instructions, the
Trustee will confirm such instructions with an Authorized Individual at an
Authorized Telephone Number listed on the attached Exhibit C. The Company and
the Trustee will each restrict access to confidential information relating to
such security procedures to authorized persons. Each party must notify the other
party immediately if it has reason to believe unauthorized persons may have
obtained access to such information, or of any change in its authorized
personnel. In executing funds transfers, the Trustee will rely upon account
numbers or other identifying numbers of a beneficiary, beneficiary's bank or
intermediary bank, rather than names. The Trustee shall not be liable for any
loss, liability or expense resulting from any error in an account number or
other identifying number, provided it has accurately transmitted the numbers
provided.

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            (b)   This Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of New York, without giving effect to
conflict of laws. It may be executed in several counterparts, each one of which
shall constitute an original, and together shall constitute but one instrument.

            (c)   This Agreement contains the entire agreement and understanding
of the parties hereto with respect to the subject matter hereof. This Agreement
or any provision hereof may only be changed, amended or modified by a writing
signed by each of the parties hereto; provided, however, that no such change,
amendment or modification may be made without the prior written consent of
Morgan Joseph. As to any claim, cross-claim or counterclaim in any way relating
to this Agreement, each party waives the right to trial by jury.

            (d)   The parties hereto consent to the jurisdiction and venue of
any state or federal court located in the City of New York for purposes of
resolving any disputes hereunder.

            (e)   Any notice, consent or request to be given in connection with
any of the terms or provisions of this Agreement shall be in writing and shall
be sent by express mail or similar private courier service, by certified mail
(return receipt requested), by hand delivery or by facsimile transmission:

            if to the Trustee, to:

                  Continental Stock Transfer
                  & Trust Company
                  17 Battery Place
                  New York, New York 10004
                  Attn:  Steven G. Nelson, Chairman
                  Fax No.: (212) 509-5150

            if to the Company, to:

                  Stone Arcade Acquisition Corp.
                  c/o Stone-Kaplan Investments, LLC
                  One Northfield Plaza, Suite 480
                  Northfield, IL 60093
                  Attn: Roger W. Stone, Chief Executive Officer
                        Fax No.: (847) 441-8267

            in either case with a copy to:

                  Morgan Joseph & Co. Inc.
                  600 Fifth Avenue, 19th Floor
                  New York, New York 10020
                  Attn: Michael Powell
                  Fax No.: (212) 218-3719

                  and

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                  Greenberg Traurig, LLP
                  MetLife Building
                  200 Park Avenue
                  New York, New York 10166
                  Attn: Alan I. Annex, Esq.
                  Fax No.: (212) 801-6400

            (f)   This Agreement may not be assigned by the Trustee without the
prior written consent of the Company and Morgan Joseph.

            (g)   Each of the Trustee and the Company hereby represents that it
has the full right and power and has been duly authorized to enter into this
Agreement and to perform its respective obligations as contemplated hereunder.
The Trustee acknowledges and agrees that it shall not make any claims or proceed
against the Trust Account, including by way of set-off, and shall not be
entitled to any funds in the Trust Account under any circumstance.

            IN WITNESS WHEREOF, the parties have duly executed this Investment
Management Trust Agreement as of the date first written above.

                                            CONTINENTAL STOCK TRANSFER & TRUST
                                            COMPANY, as Trustee

                                            By: ________________________________
                                                Name:  Steven G. Nelson
                                                Title: Chairman

                                            STONE ARCADE ACQUISITION CORP.

                                            By: ________________________________
                                                Name:  Roger W. Stone
                                                Title: Chief Executive Officer

                                        6
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EXHIBIT A

                             [LETTERHEAD OF COMPANY]

[INSERT DATE]

Continental Stock Transfer
  & Trust Company
17 Battery Place
New York, New York 10004
Attn:  Steven G. Nelson

            Re:   Trust Account No. [                    ] Termination Letter

Gentlemen:

            Pursuant to paragraph 1(i) of the Investment Management Trust
Agreement between Stone Arcade Acquisition Corp. ("Company") and Continental
Stock Transfer & Trust Company ("Trustee"), dated as of __________, 2005 ("Trust
Agreement"), this is to advise you that the Company has entered into an
agreement ("Business Agreement") with __________________ ("Target Business") to
consummate a business combination with Target Business ("Business Combination")
on or about [insert date]. The Company shall notify you at least 48 hours in
advance of the actual date of the consummation of the Business Combination
("Consummation Date").

            In accordance with the terms of the Trust Agreement, we hereby
authorize you to commence liquidation of the Trust Account to the effect that,
on the Consummation Date, all of funds held in the Trust Account will be
immediately available for transfer to the account or accounts that the Company
shall direct on the Consummation Date.

            On the Consummation Date (i) counsel for the Company shall deliver
to you written notification that (a) the Business Combination has been
consummated and (b) the provisions of Section 11-51-302(6) and Rule 51-3.4 of
the Colorado Statute have been met, and (ii) the Company shall deliver to you
written instructions with respect to the transfer of the funds held in the Trust
Account ("Instruction Letter"). You are hereby directed and authorized to
transfer the funds held in the Trust Account immediately upon your receipt of
the counsel's letter and the Instruction Letter, in accordance with the terms of
the Instruction Letter. In the event that certain deposits held in the Trust
Account may not be liquidated by the Consummation Date without penalty, you will
notify the Company of the same and the Company shall direct you as to whether
such funds should remain in the Trust Account and distributed after the
Consummation Date to the Company. Upon the distribution of all the funds in the
Trust Account pursuant to the terms hereof, the Trust Agreement shall be
terminated.

            In the event that the Business Combination is not consummated on the
Consummation Date described in the notice thereof and we have not notified you
on or before the original Consummation Date of a new Consummation Date, then the
funds held in the Trust Account shall be reinvested as provided in the Trust
Agreement on the business day immediately following the Consummation Date as set
forth in the notice.

                                   Very truly yours,

                                   STONE ARCADE ACQUISITION CORP.

                                   By: ________________________________________
                                       Roger W. Stone, Chief Executive Officer

                                   By: ________________________________________
                                       Matthew Kaplan, President and Secretary

                                        7
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EXHIBIT B

                             [LETTERHEAD OF COMPANY]

[INSERT DATE]

Continental Stock Transfer
  & Trust Company
17 Battery Place
New York, New York 10004
Attn:  Steven G. Nelson

            Re:   Trust Account No. [             ] Termination Letter

Gentlemen:

            Pursuant to paragraph 1(i) of the Investment Management Trust
Agreement between Stone Arcade Acquisition Corporation ("Company") and
Continental Stock Transfer & Trust Company ("Trustee"), dated as of
_____________, 2005 ("Trust Agreement"), this is to advise you that the Board of
Directors of the Company has voted to dissolve and liquidate the Company.
Attached hereto is a copy of the minutes of the meeting of the Board of
Directors of the Company relating thereto, certified by the Secretary of the
Company as true and correct and in full force and effect.

            In accordance with the terms of the Trust Agreement, we hereby (a)
certify to you that the provisions of Section 11-51-302(6) and Rule 51-3.4 of
the Colorado Statute have been met and (b) authorize you, to commence
liquidation of the Trust Account. You will notify the Company and JPMorgan Chase
NY Bank ("Designated Paying Agent") in writing as to when all of the funds in
the Trust Account will be available for immediate transfer ("Transfer Date").
The Designated Paying Agent shall thereafter notify you as to the account or
accounts of the Designated Paying Agent that the funds in the Trust Account
should be transferred to on the Transfer Date so that the Designated Paying
Agent may commence distribution of such funds in accordance with the Company's
instructions. You shall have no obligation to oversee the Designated Paying
Agent's distribution of the funds. Upon the payment to the Designated Paying
Agent of all the funds in the Trust Account, the Trust Agreement shall be
terminated.

                                   Very truly yours,

                                   STONE ARCADE ACQUISITION CORP.

                                   By: _________________________________________
                                       Roger W. Stone, Chief Executive Officer

                                   By: _________________________________________
                                       Matthew Kaplan, President and Secretary

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EXHIBIT C

<TABLE>
<CAPTION>
AUTHORIZED INDIVIDUAL(S)                        AUTHORIZED
FOR TELEPHONE CALL BACK                         TELEPHONE NUMBER(S)
-----------------------                         -------------------
<S>                                             <C>
COMPANY:

Stone Arcade Acquisition Corp.
c/o Stone-Kaplan Investments, LLC
One Northfield Plaza, Suite 480
Northfield, IL 60093
Attn: Roger W. Stone, Chairman and CEO          (847) 441-0929

TRUSTEE:

Continental Stock Transfer & Trust Company
17 Battery Place
New York, New York 10004
Attn:  Steven G. Nelson                         (212) 845-3200
</TABLE>

                                       9<PAGE>

                                                                    EXHIBIT 10.4

                             STOCK ESCROW AGREEMENT

            STOCK ESCROW AGREEMENT, dated as of ___________ ___, 2005
("Agreement") by and among Stone Arcade Acquisition Corporation, a Delaware
corporation ("Company"), the undersigned parties listed as Initial Stockholders
on the signature page hereto (collectively, the "Initial Stockholders") and
Continental Stock Transfer & Trust Company, a New York corporation ("Escrow
Agent").

            WHEREAS, the Company has entered into an Underwriting Agreement,
dated _______ __, 2005 ("Underwriting Agreement") with Morgan Joseph & Co., Inc.
("Morgan Joseph") acting as representative of the several underwriters
(collectively, the "Underwriters"), pursuant to which, among other matters, the
Underwriters have agreed to purchase 30,000,000 units ("Units") of the Company.
Each Unit consists of one share of the Company's Common Stock, par value $.0001
per share, and two Warrants, each Warrant to purchase one share of Common Stock,
all as more fully described in the Company's definitive Prospectus, dated
________ __, 2005 ("Prospectus") comprising part of the Company's Registration
Statement on Form S-1 (File No. 333-________) under the Securities Act of 1933,
as amended ("Registration Statement"), declared effective on ________ __, 2005
("Effective Date").

            WHEREAS, the Initial Stockholders have agreed as a condition of the
sale of the Units to deposit their shares of Common Stock of the Company, as set
forth opposite their respective names in Exhibit A attached hereto (collectively
"Escrow Shares"), in escrow as hereinafter provided.

            WHEREAS, the Company and the Initial Stockholders desire that the
Escrow Agent accept the Escrow Shares, in escrow, to be held and disbursed as
hereinafter provided.

            IT IS AGREED:

      1. Appointment of Escrow Agent. The Company and the Initial Stockholders
hereby appoint the Escrow Agent to act in accordance with and subject to the
terms of this Agreement and the Escrow Agent hereby accepts such appointment and
agrees to act in accordance with and subject to such terms.

      2. Deposit of Escrow Shares. On or before the Effective Date, each of the
Initial Stockholders shall deliver to the Escrow Agent certificates representing
his or her respective Escrow Shares, to be held and disbursed subject to the
terms and conditions of this Agreement. Each Initial Stockholder acknowledges
that the certificate representing his or her Escrow Shares is legended to
reflect the deposit of such Escrow Shares under this Agreement.

      3. Disbursement of the Escrow Shares. The Escrow Agent shall hold the
Escrow Shares until the first anniversary of the completion by the Company of a
business combination ("Escrow Period"), on which date it shall, upon written
instructions from each Initial Stockholder, disburse each of the Initial
Stockholder's Escrow Shares to such Initial Stockholder; provided, however, that
if the Escrow Agent is notified by the Company pursuant to Section 6.7 hereof
that the Company is being liquidated at any time during the Escrow Period, then
the Escrow Agent shall promptly destroy the certificates representing the Escrow
Shares; provided further, that if, after the Company

<PAGE>

consummates a Business Combination (as such term is defined in the Registration
Statement), it (or the surviving entity) subsequently consummates a liquidation,
merger, stock exchange or other similar transaction which results in all of its
stockholders of such entity having the right to exchange their shares of Common
Stock for cash, securities or other property, then the Escrow Agent will, upon
consummation of such transaction, release the Escrow Shares to the Initial
Stockholders so that they can similarly participate. The Escrow Agent shall have
no further duties hereunder after the disbursement or destruction of the Escrow
Shares in accordance with this Section 3.

      4. Rights of Initial Stockholders in Escrow Shares.

            4.1. Voting Rights as a Stockholder. Subject to the terms of the
Insider Letter described in Section 4.4 hereof and except as herein provided,
the Initial Stockholders shall retain all of their rights as stockholders of the
Company during the Escrow Period, including, without limitation, the right to
vote such shares.

            4.2. Dividends and Other Distributions in Respect of the Escrow
Shares. During the Escrow Period, all dividends payable in cash with respect to
the Escrow Shares shall be paid to the Initial Stockholders, but all dividends
payable in stock or other non-cash property ("Non-Cash Dividends") shall be
delivered to the Escrow Agent to hold in accordance with the terms hereof. As
used herein, the term "Escrow Shares" shall be deemed to include the Non-Cash
Dividends distributed thereon, if any.

            4.3. Restrictions on Transfer. During the Escrow Period, no sale,
transfer or other disposition may be made of any or all of the Escrow Shares
except (i) by gift to a member of Initial Stockholder's immediate family or to a
trust or other entity, the beneficiary of which is an Initial Stockholder or a
member of an Initial Stockholder's immediate family, (ii) by virtue of the laws
of descent and distribution upon death of any Initial Stockholder, or (iii)
pursuant to a qualified domestic relations order; provided, however, that such
permissive transfers may be implemented only upon the respective transferee's
written agreement to be bound by the terms and conditions of this Agreement and
of the Insider Letter signed by the Initial Stockholder transferring the Escrow
Shares. During the Escrow Period, the Initial Stockholders shall not pledge or
grant a security interest in the Escrow Shares or grant a security interest in
their rights under this Agreement.

            4.4. Insider Letters. Each of the Initial Stockholders has executed
a letter agreement with Morgan Joseph and the Company, dated as indicated on
Exhibit A hereto, and which is filed as an exhibit to the Registration Statement
("Insider Letter"), respecting the rights and obligations of such Initial
Stockholder in certain events, including but not limited to the liquidation of
the Company.

      5. Concerning the Escrow Agent.

            5.1. Good Faith Reliance. The Escrow Agent shall not be liable for
any action taken or omitted by it in good faith and in the exercise of its own
best judgment, and may 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

                                       2

<PAGE>

effectiveness of its provisions, but also as to the truth and acceptability of
any information therein contained) which is believed by the Escrow Agent to be
genuine and to be signed or presented by the proper person or persons. The
Escrow Agent shall not be bound by any notice or demand, or any waiver,
modification, termination or rescission of this Agreement unless evidenced by a
writing delivered to the Escrow Agent signed by the proper party or parties and,
if the duties or rights of the Escrow Agent are affected, unless it shall have
given its prior written consent thereto.

            5.2. Indemnification. The Escrow Agent shall be indemnified and held
harmless by the Company from and against any expenses, including counsel fees
and disbursements, or loss suffered by the Escrow Agent in connection with any
action, suit or other proceeding involving any claim which in any way, directly
or indirectly, arises out of or relates to this Agreement, the services of the
Escrow Agent hereunder, or the Escrow Shares held by it hereunder, other than
expenses or losses arising from the gross negligence or willful misconduct of
the Escrow Agent. Promptly after the receipt by the Escrow Agent of notice of
any demand or claim or the commencement of any action, suit or proceeding, the
Escrow Agent shall notify the other parties hereto in writing. In the event of
the receipt of such notice, the Escrow Agent, in its sole discretion, may
commence an action in the nature of interpleader in an appropriate court to
determine ownership or disposition of the Escrow Shares or it may deposit the
Escrow Shares with the clerk of any appropriate court or it may retain the
Escrow Shares pending receipt of a final, non appealable order of a court having
jurisdiction over all of the parties hereto directing to whom and under what
circumstances the Escrow Shares are to be disbursed and delivered. The
provisions of this Section 5.2 shall survive in the event the Escrow Agent
resigns or is discharged pursuant to Sections 5.5 or 5.6 below.

            5.3. Compensation. The Escrow Agent shall be entitled to reasonable
compensation from the Company for all services rendered by it hereunder. The
Escrow Agent shall also be entitled to reimbursement from the Company for all
expenses paid or incurred by it in the administration of its duties hereunder
including, but not limited to, all counsel, advisors' and agents' fees and
disbursements and all taxes or other governmental charges.

            5.4. Further Assurances. From time to time on and after the date
hereof, the Company and the Initial Stockholders shall deliver or cause to be
delivered to the Escrow Agent such further documents and instruments and shall
do or cause to be done such further acts as the Escrow Agent shall reasonably
request to carry out more effectively the provisions and purposes of this
Agreement, to evidence compliance herewith or to assure itself that it is
protected in acting hereunder.

            5.5. Resignation. The Escrow Agent may resign at any time and be
discharged from its duties as escrow agent hereunder by its giving the other
parties hereto written notice and such resignation shall become effective as
hereinafter provided. Such resignation shall become effective at such time that
the Escrow Agent shall turn over to a successor escrow agent appointed by the
Company, the Escrow Shares held hereunder. If no new escrow agent is so
appointed within the 60 day period following the giving of such notice of
resignation, the Escrow Agent may deposit the Escrow Shares with any court it
deems appropriate.

            5.6. Discharge of Escrow Agent. The Escrow Agent shall resign and be
discharged from its duties as escrow agent hereunder if so requested in writing
at any time by the

                                       3

<PAGE>

other parties hereto, jointly, provided, however, that such resignation shall
become effective only upon acceptance of appointment by a successor escrow agent
as provided in Section 5.5.

            5.7. Liability. Notwithstanding anything herein to the contrary, the
Escrow Agent shall not be relieved from liability hereunder for its own gross
negligence or its own willful misconduct.

      6. Miscellaneous.

            6.1. Governing Law. This Agreement shall for all purposes be deemed
to be made under and shall be construed in accordance with the laws of the State
of New York. Each of the parties hereby 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 irrevocably
submits to such jurisdiction, which jurisdiction shall be exclusive. Each of the
parties hereby waives any objection to such exclusive jurisdiction and that such
courts represent an inconvenient forum.

            6.2. Third Party Beneficiaries. Each of the Initial Stockholders
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 Morgan Joseph.

            6.3. Entire Agreement. This Agreement contains the entire agreement
of the parties hereto with respect to the subject matter hereof and, except as
expressly provided herein, may not be changed or modified except by an
instrument in writing signed by the party to the charged.

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

            6.5. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the respective parties hereto and their legal representatives,
successors and assigns.

            6.6. Notices. Any notice or other communication required or which
may be given hereunder shall be in writing and either be delivered personally or
be mailed, certified or registered mail, or by private national courier service,
return receipt requested, postage prepaid, and shall be deemed given when so
delivered personally or, if mailed, two days after the date of mailing, as
follows:

            If to the Company, to:

                    Stone Arcade Acquisition Corporation
                    c/o Stone-Kaplan Investments, LLC
                    One Northfield Plaza, Suite 480
                    Northfield, IL 60093
                    Attn: Roger W. Stone, Chief Executive Officer

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

                                       4

<PAGE>

            and if to the Escrow Agent, to:

                    Continental Stock Transfer & Trust Company
                    17 Battery Place
                    New York, New York  10004
                    Attn: Chairman

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

                    Greenberg Traurig LLP
                    MetLife Building
                    200 Park Avenue
                    New York, New York 10166
                    Attn: Alan I. Annex, Esq.

            and:

                    Morgan Joseph & Co. Inc.
                    600 Fifth Avenue,19th Floor
                    New York, New York 10020
                    Attn: Michael Powell

            and:

                    Loeb & Loeb LLP
                    345 Park Avenue
                    New York, New York 10154
                    Attn: Fran Stoller, Esq.

            The parties may change the persons and addresses to which the
notices or other communications are to be sent by giving written notice to any
such change in the manner provided herein for giving notice.

            6.7. Liquidation of Company. The Company shall give the Escrow Agent
written notification of the liquidation and dissolution of the Company in the
event that the Company fails to consummate a Business Combination within the
time period(s) specified in the Prospectus.

                                       5

<PAGE>

            WITNESS the execution of this Agreement as of the date first above
written.

                    STONE ARCADE ACQUISITION CORPORATION

                    By: _______________________________________
                        Roger W. Stone, Chief Executive Officer

                    INITIAL STOCKHOLDERS:

                    ___________________________________________
                    Roger W. Stone

                    ___________________________________________
                    Matthew Kaplan

                    ___________________________________________
                    Jonathan R. Furer

                    ___________________________________________
                    John M. Chapman

                    ___________________________________________
                    Muhit Rahman

                    CONTINENTAL STOCK TRANSFER
                    & TRUST COMPANY

                    By:________________________________
                            Name:  Steven G. Nelson
                            Title: Chairman

                                       6

<PAGE>

                                    EXHIBIT A

<TABLE>
<CAPTION>
Name and Address of           Number               Stock                 Date of
Initial Stockholder         of Shares        Certificate Number      Insider Letter
-------------------         ---------        ------------------      --------------
<S>                         <C>              <C>                     <C>
</TABLE>

                                       7

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