S-1/A

As filed with the Securities and Exchange Commission on December 8, 2004
Registration No. 333-119937

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Amendment No. 2
To
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

MILLSTREAM II ACQUISITION CORPORATION
(Exact name of registrant as specified in its charter)

	Delaware					6770				20-1665695
	(State or other jurisdiction of incorporation or organization)				(Primary Standard Industrial Classification Code Number)				(I.R.S. Employer Identification Number)

435 Devon Park Drive
Building 400
Wayne, Pennsylvania 19087
(610) 293-2511
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

Arthur Spector, Chairman of the Board, Chief Executive Officer and President
Millstream II Acquisition Corporation
435 Devon Park Drive
Building 400
Wayne, Pennsylvania 19087
(610) 293-2511

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

David Alan Miller, Esq. Graubard Miller 600 Third Avenue New York, New York 10016 (212) 818-8800 (212) 818-8881 – Facsimile				Floyd I. Wittlin, Esq. Bingham McCutchen LLP 399 Park Avenue New York, New York 10022 (212) 705-7000 (212) 752-5378 – Facsimile

Approximate date of commencement of proposed sale to the public:    As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box.   

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.   

CALCULATION OF REGISTRATION FEE

Title of each Class of Security being registered				Amount being Registered				Proposed Maximum Offering Price Per Security(1)				Proposed Maximum Aggregate Offering Price(1)				Amount of Registration Fee
Units, each consisting of one share of Common Stock, $.0001 par value, and two Warrants (2)				4,600,000 Units				$6.00				$27,600,000				$3,496.92
Shares of Common Stock included as part of the Units(2)				4,600,000 Shares				—				—				—(3)
Warrants included as part of the Units(2)				9,200,000 Warrants				—				—				—(3)
Shares of Common Stock underlying the Warrants included in the Units(4)				9,200,000 Shares				$5.00				$46,000,000				$5,828.20
Representative's Unit Purchase Option				1				$100				$100				—(3)
Units underlying the Representative's Unit Purchase Option ("Underwriter's Units")(4)				300,000 Units				$9.90				$2,970,000				$376.30
Shares of Common Stock included as part of the Underwriter's Units(4)				300,000 Shares				—				—				—(3)
Warrants included as part of the Representative's Units(4)				600,000 Warrants				—				—				—(3)
Shares of Common Stock underlying the Warrants included in the Representative's Units(4)				600,000 Shares				$6.25				$3,750,000				$475.13
Total												$80,320,100				$10,176.56(5)

(1)	Estimated solely for the purpose of calculating the registration fee.

(2)	Includes 600,000 Units and 600,000 shares of Common Stock and 1,200,000 Warrants underlying such Units which may be issued on exercise of a 45-day option granted to the Underwriters to cover over-allotments, if any.

(3)	No fee pursuant to Rule 457(g).

(4)	Pursuant to Rule 416, there are also being registered such indeterminable additional securities as may be issued as a result of the anti-dilution provisions contained in the Warrants.

(5)	$8,805.16 of the fee has been previously paid.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Preliminary Prospectus
Subject to Completion, December 8, 2004

PROSPECTUS

$24,000,000

MILLSTREAM II ACQUISITION CORPORATION

4,000,000 units

Millstream II Acquisition Corporation is a recently formed blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition or other similar business combination with an unidentified operating business. Our efforts in identifying a prospective target business will not be limited to a particular industry.

This is an initial public offering of our securities. Each unit consists of:

	•	one share of our common stock; and

	•	two warrants.

Each warrant entitles the holder to purchase one share of our common stock at a price of $5.00. Each warrant will become exercisable on the later of our completion of a business combination and                     , 2005 [one year from the date of this prospectus], and will expire on                               , 2008 [four years from the date of this prospectus], or earlier upon redemption.

We have granted the underwriters a 45-day option to purchase up to 600,000 additional units solely to cover over-allotments, if any (over and above the 4,000,000 units referred to above). The over-allotment will be used only to cover the net syndicate short position resulting from the initial distribution. We have also agreed to sell to EarlyBirdCapital, Inc., the representative of the underwriters, for $100, as additional compensation, an option to purchase up to a total of 300,000 units at a per-unit offering price of $9.90. The units issuable upon exercise of this option are identical to those offered by this prospectus except that the warrants included in the option have an exercise price of $6.25 (125% of the exercise price of the warrants included in the units sold in the offering). The purchase option and its underlying securities have been registered under the registration statement of which this prospectus forms a part.

There is presently no public market for our units, common stock or warrants. We anticipate that the units will be quoted on the OTC Bulletin Board under the symbol _______ on or promptly after the date of this prospectus. Once the securities comprising the units begin separate trading, the common stock and warrants will be traded on the OTC Bulletin Board under the symbols ______ and _____, respectively.

Investing in our securities involves a high degree of risk. See "Risk Factors" beginning on page 6 of this prospectus for a discussion of information that should be considered in connection with an investment in our securities.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

				Public offering price				Underwriting discount and commissions(1)				Proceeds, before expenses, to us
Per unit				$	6.00			$	0.57			$	5.43
Total				$	24,000,000			$	2,280,000			$	21,720,000

(1)	Includes a non-accountable expense allowance in the amount of 2% of the gross proceeds, or $0.12 per unit ($480,000 in total) payable to EarlyBirdCapital.

Of the net proceeds we receive from this offering, $20,640,000 ($5.16 per unit) will be deposited into a trust account at JPMorgan Chase NY Bank maintained by Continental Stock Transfer & Trust Company acting as trustee.

We are offering the units for sale on a firm-commitment basis. EarlyBirdCapital, acting as representative of the underwriters, expects to deliver our securities to investors in the offering on or about                                        , 2004.

EarlyBirdCapital, Inc.

                                             , 2004

TABLE OF CONTENTS

				Page
Prospectus Summary					1
Summary Financial Data					5
Risk Factors					6
Use of Proceeds					14
Dilution					16
Capitalization					17
Management's Discussion and Analysis of Financial Condition and Results of Operations					18
Proposed Business					20
Management					29
Principal Stockholders					35
Certain Transactions					37
Description of Securities					38
Underwriting					42
Legal Matters					45
Experts					45
Where You Can Find Additional Information					45
Index to Financial Statements					F-1

You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized anyone to provide you with different information. We are not making an offer of these securities in any jurisdiction where the offer is not permitted.

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PROSPECTUS SUMMARY

This summary highlights certain information appearing elsewhere in this prospectus. For a more complete understanding of this offering, you should read the entire prospectus carefully, including the risk factors and the financial statements. Unless otherwise stated in this prospectus, references to "we," "us" or "our company" refer to Millstream II Acquisition Corporation. Unless we tell you otherwise, the information in this prospectus assumes that the underwriters will not exercise their over-allotment option. Additionally, unless we tell you otherwise, the information in this prospectus has been adjusted to give retroactive effect to a stock dividend of 0.1428571 shares of common stock for each outstanding share of common stock on December 7, 2004.

We are a blank check company organized under the laws of the State of Delaware on September 24, 2004. We were formed to effect a merger, capital stock exchange, asset acquisition or other similar business combination with a currently unidentified operating business. To date, our efforts have been limited to organizational activities. Our efforts in identifying a prospective target business will not be limited to a particular industry, although we intend to focus on industrial businesses such as chemical and other material science companies, energy companies, medical product manufacturers and producers of manufacturing equipment.

While we may seek to effect business combinations with more than one target business, our initial business combination must be with a target business whose fair market value is at least equal to 80% of our net assets at the time of such acquisition. Consequently, it is likely that we will have the ability to effect only a single business combination.

Our offices are located at 435 Devon Park Drive, Building 400, Wayne, Pennsylvania 19087, and our telephone number is (610) 293-2511.

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The Offering

Securities offered:		4,000,000 units, at $6.00 per unit, each unit consisting of:

		•	one share of common stock; and

		•	two warrants.

		The units will begin trading on or promptly after the date of this prospectus. Each of the common stock and warrants may trade separately on the 90th day after the date of this prospectus unless EarlyBirdCapital determines that an earlier date is acceptable. In no event will EarlyBirdCapital allow separate trading of the common stock and warrants until we file an audited balance sheet reflecting our receipt of the gross proceeds of this offering. We will file a Current Report on Form 8-K, including an audited balance sheet, upon the consummation of this offering, which is anticipated to take place three business days from the date of this prospectus. The audited balance sheet will include proceeds we receive from the exercise of the over-allotment option if the over-allotment option is exercised prior to the filing of the Form 8-K.

Common stock:

Number outstanding before this offering		1,000,000 shares

Number to be outstanding after this offering		5,000,000 shares

Warrants:

Number outstanding before this offering		0

Number to be outstanding after this offering		8,000,000 warrants

Exercisability		Each warrant is exercisable for one share of common stock.

Exercise price		$5.00

Exercise period		The warrants will become exercisable on the later of:

		•	the completion of a business combination with a target business, and

		•	[                 ], 2005 [one year from the date of this prospectus].

		The warrants will expire at 5:00 p.m., New York City time, on [                 ], 2008 [four years from the date of this prospectus] or earlier upon redemption.

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Redemption		We may redeem the outstanding warrants:

		•	in whole and not in part,

		•	at a price of $.01 per warrant at any time after the warrants become exercisable,

		•	upon a minimum of 30 days' prior written notice of redemption, and

		•	if, and only if, the last sales price of our common stock equals or exceeds $8.50 per share for any 20 trading days within a 30 trading day period ending three business days before we send the notice of redemption.

Proposed OTC Bulletin Board symbols for our:

Units		[             ]

Common stock		[             ]

Warrants		[             ]

Offering proceeds to be held in trust:		$20,640,000 of the proceeds of this offering ($5.16 per unit) will be placed in a trust account at JPMorgan Chase NY Bank maintained by Continental Stock Transfer & Trust Company, pursuant to an agreement to be signed on the date of this prospectus. These proceeds will not be released until the earlier of the completion of a business combination and our liquidation. Therefore, unless and until a business combination is consummated, the proceeds held in the trust account will not be available for our use for any expenses related to this offering or expenses which we may incur related to the investigation and selection of a target business and the negotiation of an agreement to acquire a target business. These expenses may be paid prior to a business combination only from the net proceeds of this offering not held in the trust account (initially, approximately $655,000).

		None of the warrants may be exercised until after the consummation of a business combination and, thus, after the proceeds of the trust fund have been disbursed. Accordingly, the warrant exercise price will be paid directly to us and not placed in the trust account.

Stockholders must approve business combination:		We will seek stockholder approval before we effect any business combination, even if the nature of the acquisition would not ordinarily require stockholder approval under applicable state law. In connection with the vote required for any business combination, all of our existing stockholders, including all of our officers and directors,

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		have agreed to vote the shares of common stock owned by them immediately before this offering in accordance with the majority of the shares of common stock voted by the public stockholders. We will proceed with a business combination only if a majority of the shares of common stock voted by the public stockholders are voted in favor of the business combination and public stockholders owning less than 20% of the shares sold in this offering exercise their conversion rights described below.

Conversion rights for stockholders voting to reject a business combination:		Public stockholders voting against a business combination will be entitled to convert their stock into a pro rata share of the trust account, including any interest earned on their portion of the trust account, if the business combination is approved and completed.

Liquidation if no business combination:		We will dissolve and promptly distribute only to our public stockholders the amount in our trust account if we do not effect a business combination within 18 months after consummation of this offering (or within 24 months from the consummation of this offering if a letter of intent, agreement in principle or definitive agreement has been executed within 18 months after consummation of this offering and the business combination has not yet been consummated within such 18 month period).

Escrow of existing stockholders' shares:		On the date of this prospectus, all of our existing stockholders, including all of our officers and directors, will place the shares they owned before this offering into an escrow account maintained by Continental Stock Transfer & Trust Company, acting as escrow agent. Subject to certain limited exceptions, these shares will not be transferable during the escrow period and will not be released from escrow until [                 ], 2007 [three years from the date of this prospectus].

Risks

In making your decision on whether to invest in our securities, you should take into account not only the backgrounds of our management team, but also the special risks we face as a blank check company, as well as the fact that this offering is not being conducted in compliance with Rule 419 promulgated under the Securities Act of 1933, as amended, and, therefore, you will not be entitled to protections normally afforded to investors in Rule 419 blank check offerings. You should carefully consider these and the other risks set forth in the section entitled "Risk Factors" beginning on page 6 of this prospectus.

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SUMMARY FINANCIAL DATA

The following table summarizes the relevant financial data for our business and should be read with our financial statements, which are included in this prospectus. We have not had any significant operations to date, so only balance sheet data is presented.

				October 15, 2004
				Actual				As Adjusted
Balance Sheet Data:
Working capital				$	24,400			$	21,319,400
Total assets					60,000				21,319,400
Total liabilities					35,600				—
Value of common stock which may be converted to cash ($5.16 per share)					—				4,125,936
Stockholders' equity					24,400				17,193,464

The "as adjusted" information gives effect to the sale of the units we are offering including the application of the related gross proceeds and the payment of the estimated costs from such sale.

The working capital and total assets amounts include the $20,640,000 being held in the trust account, which will be available to us only upon the consummation of a business combination within the time period described in this prospectus. If a business combination is not so consummated, the trust account will be distributed solely to our public stockholders.

We will not proceed with a business combination if public stockholders owning 20% or more of the shares sold in this offering vote against the business combination and exercise their conversion rights. Accordingly, we may effect a business combination if public stockholders owning up to approximately 19.99% of the shares sold in this offering exercise their conversion rights. If this occurred, we would be required to convert to cash up to approximately 19.99% of the 4,000,000 shares sold in this offering, or 799,600 shares of common stock, at an initial per-share conversion price of $5.16, without taking into account interest earned on the trust account. The actual per-share conversion price will be equal to:

•	the amount in the trust account, including all accrued interest, as of two business days prior to the proposed consummation of the business combination,

•	divided by the number of shares of common stock sold in the offering.

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RISK FACTORS

An investment in our securities involves a high degree of risk. You should consider carefully all of the material risks described below, together with the other information contained in this prospectus before making a decision to invest in our units.

Risks associated with our business

We are a development stage company with no operating history and, accordingly, you will not have any basis on which to evaluate our ability to achieve our business objective.

We are a recently incorporated development stage company with no operating results to date. Therefore, our ability to begin operations is dependent upon obtaining financing through the public offering of our securities. Since we do not have an operating history, you will have no basis upon which to evaluate our ability to achieve our business objective, which is to acquire an operating business. We have not conducted any discussions and we have no plans, arrangements or understandings with any prospective acquisition candidates. We will not generate any revenues (other than interest income on the proceeds of this offering) until, at the earliest, after the consummation of a business combination.

If we are forced to liquidate before a business combination and distribute the trust account, our public stockholders will receive less than $6.00 per share and our warrants will expire worthless.

If we are unable to complete a business combination and are forced to liquidate our assets, the per-share liquidation will be less than $6.00 because of the expenses of this offering, our general and administrative expenses and the anticipated costs of seeking a business combination. Furthermore, there will be no distribution with respect to our outstanding warrants which will expire worthless if we liquidate before the completion of a business combination. For a more complete discussion of the effects on our stockholders if we are unable to complete a business combination, see the section below entitled "Effecting a business combination — Liquidation if no business combination."

You will not be entitled to protections normally afforded to investors of blank check companies.

Since the net proceeds of this offering are intended to be used to complete a business combination with a target business that has not been identified, we may be deemed to be a "blank check" company under the United States securities laws. However, since we will have net tangible assets in excess of $5,000,000 upon the successful consummation of this offering and will file a Current Report on Form 8-K with the SEC upon consummation of this offering including an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors of blank check companies such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules. Because we are not subject to Rule 419, our units will be immediately tradable and we have a longer period of time to complete a business combination in certain circumstances. For a more detailed comparison of our offering to offerings under Rule 419, see the section entitled "Comparison to offerings of blank check companies" below.

If third parties bring claims against us, the proceeds held in trust could be reduced and the per-share liquidation price received by stockholders will be less than $5.16 per share.

Our placing of funds in trust may not protect those funds from third party claims against us. Although we will seek to have all vendors, prospective target businesses or other entities we engage, execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, there is no guarantee that they will execute such agreements. Nor is there any guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Accordingly, the proceeds held in trust could be subject to claims which could take priority over the claims of our public

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stockholders and the per-share liquidation price could be less than $5.16, plus interest, due to claims of such creditors. If we liquidate before the completion of a business combination and distribute the proceeds held in trust to our public stockholders, Arthur Spector, our chairman of the board, chief executive officer and president, will be personally liable under certain circumstances to ensure that the proceeds in the trust account are not reduced by the claims of various vendors or other entities that are owed money by us for services rendered or products sold to us. However, we cannot assure you that Mr. Spector will be able to satisfy those obligations.

Since we have not yet selected a particular industry or target business with which to complete a business combination, we are unable to currently ascertain the merits or risks of the industry or business in which we may ultimately operate.

We may consummate a business combination with a company in any industry we choose and are not limited to any particular industry or type of business. Accordingly, there is no current basis for you to evaluate the possible merits or risks of the particular industry in which we may ultimately operate or the target business which we may ultimately acquire. To the extent we complete a business combination with a financially unstable company or an entity in its development stage, we may be affected by numerous risks inherent in the business operations of those entities. If we complete a business combination with an entity in an industry characterized by a high level of risk, we may be affected by the currently unascertainable risks of that industry. Although our management will endeavor to evaluate the risks inherent in a particular industry or target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors. We also cannot assure you that an investment in our units will not ultimately prove to be less favorable to investors in this offering than a direct investment, if an opportunity were available, in a target business. For a more complete discussion of our selection of a target business, see the section below entitled "Effecting a business combination — We have not identified a target business or target industry."

We may issue shares of our capital stock or debt securities to complete a business combination, which would reduce the equity interest of our stockholders and likely cause a change in control of our ownership.

Our certificate of incorporation authorizes the issuance of up to 15,000,000 shares of common stock, par value $.0001 per share, and 1,000,000 shares of preferred stock, par value $.0001 per share. Immediately after this offering (assuming no exercise of the underwriters' over-allotment option), there will be 1,100,000 authorized but unissued shares of our common stock available for issuance (after appropriate reservation for the issuance of shares upon full exercise of our outstanding warrants and the purchase option granted to EarlyBirdCapital, the representative of the underwriters) and all of the 1,000,000 shares of preferred stock available for issuance. Although we have no commitments as of the date of this offering to issue our securities, we will, in all likelihood, issue a substantial number of additional shares of our common stock or preferred stock, or a combination of common and preferred stock, to complete a business combination. The issuance of additional shares of our common stock or any number of shares of our preferred stock:

•	may significantly reduce the equity interest of investors in this offering;

•	will likely cause a change in control if a substantial number of our shares of common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and most likely also result in the resignation or removal of our present officers and directors; and

•	may adversely affect prevailing market prices for our common stock.

Similarly, if we issue debt securities, it could result in:

•	default and foreclosure on our assets if our operating revenues after a business combination were insufficient to pay our debt obligations;

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•	acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt security contains covenants that require the maintenance of certain financial ratios or reserves and any such covenant is breached without a waiver or renegotiation of that covenant;

•	our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; and

•	our inability to obtain additional financing, if necessary, if the debt security contains covenants restricting our ability to obtain additional financing while such security is outstanding.

For a more complete discussion of the possible structure of a business combination, see the section below entitled "Effecting a business combination — Selection of a target business and structuring of a business combination."

It is likely that our current officers and directors will resign upon consummation of a business combination and we will have only limited ability to evaluate the management of the target business.

Our ability to successfully effect a business combination will be totally dependent upon the efforts of our key personnel. The future role of our key personnel in the target business, however, cannot presently be ascertained. Although it is possible that some of our key personnel will remain associated in various capacities with the target business following a business combination, it is likely that the management of the target business at the time of the business combination will remain in place. Although we intend to closely scrutinize the management of a prospective target business in connection with evaluating the desirability of effecting a business combination, we cannot assure you that our assessment of management will prove to be correct.

Our officers and directors may allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This could have a negative impact on our ability to consummate a business combination.

Our officers and directors are not required to commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations and other businesses. We do not intend to have any full time employees prior to the consummation of a business combination. Arthur Spector, our sole executive officer, is engaged in several other business endeavors and is not obligated to contribute any specific number of hours to our affairs. If Mr. Spector's other business affairs require him to devote more substantial amounts of time to such affairs, it could limit his ability to devote time to our affairs and could have a negative impact on our ability to consummate a business combination. For a complete discussion of the potential conflicts of interest that you should be aware of, see the section below entitled "Management — Conflicts of Interest." We cannot assure you that these conflicts will be resolved in our favor.

Some of our officers and directors are now, and may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in determining which entity a particular business opportunity should be presented to.

Some of our officers and directors are now, and may in the future become, affiliated with entities, including other "blank check" companies, engaged in business activities similar to those intended to be conducted by us. Additionally, our officers and directors may become aware of business opportunities which may be appropriate for presentation to us as well as the other entities with which they have fiduciary obligations to. Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. For a complete discussion of our management's business affiliations and the potential conflicts of interest that you should be aware of, see the sections below entitled "Management — Directors and Executive Officers" and "Management — Conflicts of Interest." We cannot assure you that these conflicts will be resolved in our favor.

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All of our officers and directors own shares of our securities which will not participate in liquidation distributions and therefore they may have a conflict of interest in determining whether a particular target business is appropriate for a business combination.

All of our officers and directors own stock in our company, but have waived their right to receive distributions upon our liquidation upon our failure to consummate a business combination. Additionally, Arthur Spector has agreed with the representative of the underwriters that he and certain of his affiliates or designees will purchase warrants in the open market following this offering. The shares and warrants owned by our directors and officers will be worthless if we do not consummate a business combination. The personal and financial interests of our directors and officers may influence their motivation in identifying and selecting a target business and completing a business combination timely. Consequently, our directors' and officers' discretion in identifying and selecting a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of a particular business combination are appropriate and in our stockholders' best interest.

If our common stock becomes subject to the SEC's penny stock rules, broker-dealers may experience difficulty in completing customer transactions and trading activity in our securities may be adversely affected.

If at any time we have net tangible assets of $5,000,000 or less and our common stock has a market price per share of less than $5.00, transactions in our common stock may be subject to the "penny stock" rules promulgated under the Securities Exchange Act of 1934. Under these rules, broker-dealers who recommend such securities to persons other than institutional accredited investors must:

•	make a special written suitability determination for the purchaser;

•	receive the purchaser's written agreement to a transaction prior to sale;

•	provide the purchaser with risk disclosure documents which identify certain risks associated with investing in "penny stocks" and which describe the market for these "penny stocks" as well as a purchaser's legal remedies; and

•	obtain a signed and dated acknowledgment from the purchaser demonstrating that the purchaser has actually received the required risk disclosure document before a transaction in a "penny stock" can be completed.

If our common stock becomes subject to these rules, broker-dealers may find it difficult to effectuate customer transactions and trading activity in our securities may be adversely affected. As a result, the market price of our securities may be depressed, and you may find it more difficult to sell our securities.

It is probable that we will only be able to complete one business combination, which will cause us to be solely dependent on a single business and a limited number of products or services.

The net proceeds from this offering will provide us with only approximately $21,295,000 which we may use to complete a business combination. Our initial business combination must be with a business with a fair market value of at least 80% of our net assets at the time of such acquisition. Consequently, it is probable that we will have the ability to complete only a single business combination. Accordingly, the prospects for our success may be:

•	solely dependent upon the performance of a single business, or

•	dependent upon the development or market acceptance of a single or limited number of products, processes or services.

In this case, we will not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in different industries or different areas of a single industry.

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Because of our limited resources and the significant competition for business combination opportunities, we may not be able to consummate an attractive business combination.

We expect to encounter intense competition from other entities having a business objective similar to ours, including venture capital funds, leveraged buyout funds and operating businesses competing for acquisitions. Many of these entities are well established and have extensive experience in identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe that there are numerous potential target businesses that we could acquire with the net proceeds of this offering, our ability to compete in acquiring certain sizable target businesses will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Further, the obligation we have to seek stockholder approval of a business combination may delay the consummation of a transaction, and our obligation to convert into cash the shares of common stock held by public stockholders in certain instances may reduce the resources available for a business combination. Additionally, our outstanding warrants, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a business combination.

We may be unable to obtain additional financing, if required, to complete a business combination or to fund the operations and growth of the target business, which could compel us to restructure the transaction or abandon a particular business combination.

Although we believe that the net proceeds of this offering will be sufficient to allow us to consummate a business combination, in as much as we have not yet identified any prospective target business, we cannot ascertain the capital requirements for any particular transaction. If the net proceeds of this offering prove to be insufficient, either because of the size of the business combination or the depletion of the available net proceeds in search of a target business, or because we become obligated to convert into cash a significant number of shares from dissenting stockholders, we will be required to seek additional financing. We cannot assure you that such financing would be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to consummate a particular business combination, we would be compelled to restructure the transaction or abandon that particular business combination and seek an alternative target business candidate. In addition, if we consummate a business combination, we may require additional financing to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued development or growth of the target business. None of our officers, directors or stockholders is required to provide any financing to us in connection with or after a business combination.

Our existing stockholders, including our officers and directors, control a substantial interest in us and thus may influence certain actions requiring a stockholder vote.

Upon consummation of our offering, our existing stockholders (including all of our officers and directors) will collectively own 20% of our issued and outstanding shares of common stock (assuming they do not purchase units in this offering). None of our existing stockholders, officers and directors have indicated to us that they intend to purchase our securities in the offering. Our board of directors is divided into three classes, each of which will generally serve for a term of two years with only one class of directors being elected in each year. It is unlikely that there will be an annual meeting of stockholders to elect new directors prior to the consummation of a business combination, in which case all of the current directors will continue in office at least until the consummation of the business combination. If there is an annual meeting, as a consequence of our "staggered" board of directors, only a minority of the board of directors will be considered for election and our existing stockholders, because of their ownership position, will have considerable influence regarding the outcome. Accordingly, our existing stockholders will continue to exert control at least until the consummation of a business combination. In addition, our existing stockholders and their affiliates and relatives are not

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prohibited from purchasing units in this offering or shares in the aftermarket. If they do, we cannot assure you that our existing stockholders will not have considerable influence upon the vote in connection with a business combination.

Our existing stockholders paid an aggregate of $25,000, or $0.025 per share, for their shares and, accordingly, you will experience immediate and substantial dilution from the purchase of our common stock.

The difference between the public offering price per share of our common stock and the pro forma net tangible book value per share of our common stock after this offering constitutes the dilution to you and the other investors in this offering. The fact that our existing stockholders acquired their shares of common stock at a nominal price has significantly contributed to this dilution. Assuming the offering is completed, you and the other new investors will incur an immediate and substantial dilution of approximately 31.8% or $1.91 per share (the difference between the pro forma net tangible book value per share of $4.09, and the initial offering price of $6.00 per unit).

Our outstanding warrants may have an adverse effect on the market price of common stock and make it more difficult to effect a business combination.

In connection with this offering, as part of the units, we will be issuing warrants to purchase 8,000,000 shares of common stock. We will also issue an option to purchase 300,000 units to the representative of the underwriters which, if exercised, will result in the issuance of an additional 600,000 warrants. To the extent we issue shares of common stock to effect a business combination, the potential for the issuance of substantial numbers of additional shares upon exercise of these warrants and options could make us a less attractive acquisition vehicle in the eyes of a target business as such securities, when exercised, will increase the number of issued and outstanding shares of our common stock and reduce the value of the shares issued to complete the business combination. Accordingly, our warrants and options may make it more difficult to effectuate a business combination or increase the cost of the target business. Additionally, the sale, or even the possibility of sale, of the shares underlying the warrants and options could have an adverse effect on the market price for our securities or on our ability to obtain future public financing. If and to the extent these warrants and options are exercised, you may experience dilution to your holdings.

If our existing stockholders exercise their registration rights, it may have an adverse effect on the market price of our common stock and the existence of these rights may make it more difficult to effect a business combination.

Our existing stockholders are entitled to demand that we register the resale of their shares of common stock at any time after the date on which their shares are released from escrow. If our existing stockholders exercise their registration rights with respect to all of their shares of common stock, then there will be an additional 1,000,000 shares of common stock eligible for trading in the public market. The presence of this additional number of shares of common stock eligible for trading in the public market may have an adverse effect on the market price of our common stock. In addition, the existence of these rights may make it more difficult to effectuate a business combination or increase the cost of the target business, as the stockholders of the target business may be discouraged from entering into a business combination with us or will request a higher price for their securities as a result of these registration rights and the potential future effect their exercise may have on the trading market for our common stock.

If you are not an institutional investor, you may purchase our securities in this offering only if you reside within certain states and may engage in resale transactions only in those states and a limited number of other jurisdictions.

We have applied to register our securities, or have obtained or will seek to obtain an exemption from registration, in Colorado, Delaware, the District of Columbia, Florida, Hawaii, Illinois, Indiana, Maryland, New York and Rhode Island. If you are not an "institutional investor," you must be a

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resident of these jurisdictions to purchase our securities in the offering. The definition of an "institutional investor" varies from state to state but generally includes financial institutions, broker-dealers, banks, insurance companies and other qualified entities. In order to prevent resale transactions in violation of states' securities laws, you may engage in resale transactions only in these states and in a limited number of other jurisdictions in which an applicable exemption is available or a Blue Sky application has been filed and accepted. This restriction on resale may limit your ability to resell the securities purchased in this offering and may impact the price of our securities. For a more complete discussion of the Blue Sky state securities laws and registrations affecting this offering, please see the section entitled "State Blue Sky Information" below.

We intend to have our securities quoted on the OTC Bulletin Board, which will limit the liquidity and price of our securities more than if our securities were quoted or listed on the Nasdaq Stock Market or a national exchange.

Our securities will be traded in the over-the-counter market. It is anticipated that they will be quoted on the OTC Bulletin Board, an NASD-sponsored and operated inter-dealer automated quotation system for equity securities not included on The Nasdaq Stock Market. Quotation of our securities on the OTC Bulletin Board will limit the liquidity and price of our securities more than if our securities were quoted or listed on The Nasdaq Stock Market or a national exchange.

The representative of the underwriters in the offering will not make a market for our securities which could adversely affect the liquidity and price of our securities.

EarlyBirdCapital, the representative of the underwriters in this offering, does not make markets in securities and will not be making a market in our securities. EarlyBirdCapital not acting as a market maker for our securities may adversely impact the liquidity of our securities.

If we are deemed to be an investment company, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete a business combination.

If we are deemed to be an investment company under the Investment Company Act of 1940, our activities may be restricted, including:

•	restrictions on the nature of our investments; and

•	restrictions on the issuance of securities,

which may make it difficult for us to complete a business combination.

In addition, we may have imposed upon us burdensome requirements, including:

•	registration as an investment company;

•	adoption of a specific form of corporate structure; and

•	reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.

We do not believe that our anticipated principal activities will subject us to the Investment Company Act of 1940. To this end, the proceeds held in trust may only be invested by the trust agent in "government securities" with specific maturity dates. By restricting the investment of the proceeds to these instruments, we intend to meet the requirements for the exemption provided in Rule 3a-1 promulgated under the Investment Company Act of 1940. If we were deemed to be subject to the act, compliance with these additional regulatory burdens would require additional expense that we have not allotted for.

Because we may be deemed to have no "independent" directors, actions taken and expenses incurred by our officers and directors on our behalf will generally not be subject to "independent" review.

Each of our directors owns shares of our common stock and, although no compensation will be paid to them for services rendered prior to or in connection with a business combination, they may

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receive reimbursement for out-of-pocket expenses incurred by them in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. There is no limit on the amount of these out-of-pocket expenses and there will be no review of the reasonableness of the expenses by anyone other than our board of directors, which includes persons who may seek reimbursement, or a court of competent jurisdiction if such reimbursement is challenged. Because none of our directors will be deemed "independent," we will generally not have the benefit of independent directors examining the propriety of expenses incurred on our behalf and subject to reimbursement. Although we believe that all actions taken by our directors on our behalf will be in our best interests, we cannot assure you that this will be the case. If actions are taken, or expenses are incurred that are not in our best interests, it could have a material adverse effect on our business and operations and the price of our stock held by the public stockholders.

Because our initial stockholders' initial equity investment was only $25,000, our offering may be disallowed by state administrators that follow the North American Securities Administrators Association, Inc. Statement of Policy on development stage companies.

Pursuant to the Statement of Policy Regarding Promoter's Equity Investment promulgated by The North American Securities Administrators Association, Inc., an international organization devoted to investor protection, any state administrator may disallow an offering of a development stage company if the initial equity investment by a company's promoters does not equal a certain percentage of the aggregate public offering price. Our promoters' initial investment of $25,000 is less than the required $710,000 minimum amount pursuant to this policy. Accordingly, a state administrator would have the discretion to disallow our offering if it wanted to. We cannot assure you that our offering would not be disallowed pursuant to this policy. Additionally, the initial equity investment made by the initial stockholders may not adequately protect investors.

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USE OF PROCEEDS

We estimate that the net proceeds of this offering will be as set forth in the following table:

				Without Over- Allotment Option				Over-Allotment Option Exercised
Gross proceeds				$	24,000,000.00			$	27,600,000.00
Offering expenses(1)
Underwriting discount (7.5% of gross proceeds)					1,800,000.00				2,070,000.00
Underwriting non-accountable expense allowance (2% of gross proceeds)					480,000.00				480,000.00
Legal fees and expenses (including blue sky services and expenses)					290,000.00				326,000.00
Miscellaneous expenses					41,291.43				41,291.43
Printing and engraving expenses					50,000.00				50,000.00
Accounting fees and expenses					25,000.00				25,000.00
SEC registration fee					10,176.56				10,176.56
NASD registration fee					8,532.01				8,532.01
Net proceeds
Held in trust					20,640,000.00				23,736,000.00
Not held in trust					655,000.00				853,000.00
Total net proceeds				$	21,295,000.00			$	24,589,000.00

Use of net proceeds not held in trust
Legal, accounting and other expenses attendant to the due diligence investigations, structuring and negotiation of a business combination				$	180,000				(27.5	%)		$	180,000				(21.1	%)
Payment of administrative fee to 400 Building LLC ($7,500 per month for two years)					180,000				(27.5	%)			180,000				(21.1	%)
Due diligence of prospective target businesses					50,000				(7.6	%)			50,000				(5.9	%)
Legal and accounting fees relating to SEC reporting obligations					40,000				(6.1	%)			40,000				(4.7	%)
Working capital to cover miscellaneous expenses, D&O insurance and reserves					205,000				(31.3	%)			403,000				(47.2	%)
Total				$	655,000				(100.0	%)		$	853,000				(100.00	%)

(1)	A portion of the offering expenses have been paid from the funds we received from Mr. Spector described below. These funds will be repaid out of the proceeds of this offering not being placed in trust upon consummation of this offering.

$20,640,000, or $23,736,000 if the underwriters' over-allotment option is exercised in full, of net proceeds will be placed in a trust account at JPMorgan Chase NY Bank maintained by Continental Stock Transfer & Trust Company, New York, New York, as trustee. The proceeds will not be released from the trust account until the earlier of the completion of a business combination or our liquidation. The proceeds held in the trust account may be used as consideration to pay the sellers of a target business with which we complete a business combination. Any amounts not paid as consideration to the sellers of the target business may be used to finance operations of the target business or to effect other acquisitions, as determined by our board of directors at that time.

The payment to 400 Building LLC, an affiliate of Arthur Spector, our chairman, chief executive officer and president, of a monthly fee of $7,500 is for general and administrative services including office space, utilities and secretarial support. This arrangement is being agreed to by 400 Building LLC for our benefit and is not intended to provide Mr. Spector compensation in lieu of a salary. We

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believe, based on rents and fees for similar services in the Philadelphia metropolitan area, that the fee charged by 400 Building LLC is at least as favorable as we could have obtained from an unaffiliated person. Upon completion of a business combination or the distribution of the trust account to our public stockholders, we will no longer be required to pay this monthly fee.

We intend to use the excess working capital (approximately $205,000, or $403,000 if the over-allotment option is exercised in full) for director and officer liability insurance premiums (approximately $60,000), with the balance of $145,000, or $343,000 if the over-allotment option is exercised in full, being held in reserve in the event due diligence, legal, accounting and other expenses of structuring and negotiating business combinations exceed our estimates, as well as for reimbursement of any out-of-pocket expenses incurred by our existing stockholders in connection with activities on our behalf as described below. We believe that the excess working capital will be sufficient to cover the foregoing expenses and reimbursement costs.

To the extent that our capital stock is used in whole or in part as consideration to effect a business combination, the proceeds held in the trust account as well as any other net proceeds not expended will be used to finance the operations of the target business.

Arthur Spector, our chairman, chief executive officer and president, has advanced to us a total of $35,000 which was used to pay a portion of the expenses of this offering referenced in the line items above for SEC registration fee, NASD registration fee and legal fees and expenses. The loan will be payable without interest on the earlier of September 29, 2005 or the consummation of this offering. The loan will be repaid out of the proceeds of this offering not being placed in trust.

The net proceeds of this offering not held in the trust account and not immediately required for the purposes set forth above will be invested only in United States "government securities," defined as any Treasury Bill issued by the United States having a maturity of one hundred and eighty days or less so that we are not deemed to be an investment company under the Investment Company Act. The interest income derived from investment of these net proceeds during this period will be used to defray our general and administrative expenses, as well as costs relating to compliance with securities laws and regulations, including associated professional fees, until a business combination is completed.

We believe that, upon consummation of this offering, we will have sufficient available funds to operate for at least the next 24 months, assuming that a business combination is not consummated during that time.

Commencing on the effective date of this prospectus through the consummation of the acquisition of the target business, we will pay 400 Building LLC the fee described above. Other than this $7,500 per month administrative fee, no compensation of any kind (including finder's and consulting fees) will be paid to any of our existing stockholders, or any of their affiliates, for services rendered to us prior to or in connection with the consummation of the business combination. However, our existing stockholders will receive reimbursement for any out-of-pocket expenses incurred by them in connection with activities on our behalf, such as identifying potential target businesses and performing due diligence on suitable business combinations. Since the role of present management after a business combination is uncertain, we have no ability to determine what remuneration, if any, will be paid to those persons after a business combination.

A public stockholder will be entitled to receive funds from the trust account (including interest earned on his, her or its portion of the trust account) only in the event of our liquidation upon our failure to consummate a business combination within the allotted time or if that public stockholder were to seek to convert such shares into cash in connection with a business combination which the public stockholder voted against and which we consummate. In no other circumstances will a public stockholder have any right or interest of any kind to or in the trust account.

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DILUTION

The difference between the public offering price per share of common stock, assuming no value is attributed to the warrants included in the units, and the pro forma net tangible book value per share of our common stock after this offering constitutes the dilution to investors in this offering. Net tangible book value per share is determined by dividing our net tangible book value, which is our total tangible assets less total liabilities (including the value of common stock which may be converted into cash), by the number of outstanding shares of our common stock.

At October 15, 2004, our net tangible book value was $24,400, or approximately $0.02 per share of common stock. After giving effect to the sale of 4,000,000 shares of common stock included in the units, and the deduction of underwriting discounts and estimated expenses of this offering, our pro forma net tangible book value at October 15, 2004 would have been $17,193,464 or $4.09 per share, representing an immediate increase in net tangible book value of $4.07 per share to the existing stockholders and an immediate dilution of $1.91 per share or 31.8% to new investors not exercising their conversion rights. For purposes of presentation, our pro forma net tangible book value after this offering is approximately $4,125,936 less than it otherwise would have been because if we effect a business combination, the conversion rights to the public stockholders may result in the conversion into cash of up to approximately 19.99% of the aggregate number of the shares sold in this offering at a per-share conversion price equal to the amount in the trust account as of the record date for the determination of stockholders entitled to vote on the business combination, inclusive of any interest, divided by the number of shares sold in this offering.

The following table illustrates the dilution to the new investors on a per-share basis, assuming no value is attributed to the warrants included in the units:

Public offering price								$	6.00
Net tangible book value before this offering					.02
Increase attributable to new investors					4.07
Pro forma net tangible book value after this offering									4.09
Dilution to new investors								$	1.91

The following table sets forth information with respect to our existing stockholders and the new investors:

				Shares Purchased								Total Consideration								Average Price Per Share
				Number				Percentage				Amount				Percentage
Existing stockholders					1,000,000				20.0	%		$	25,000				0.1	%		$	0.025
New investors					4,000,000				80.0	%		$	24,000,000				99.9	%		$	6.00
					5,000,000				100.0	%		$	24,025,000				100.0	%

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CAPITALIZATION

The following table sets forth our capitalization at October 15, 2004 and as adjusted to give effect to the sale of our units and the application of the estimated net proceeds derived from the sale of our units:

				October 15, 2004
				Actual				As Adjusted
Common stock, $.0001 par value, -0- and 799,600 shares which are subject to possible conversion, shares at conversion value				$	—			$	4,125,936
Stockholders' equity:
Preferred stock, $.0001 par value, 1,000,000 shares authorized; none issued or outstanding				$	—				—
Common stock, $.0001 par value, 15,000,000 shares authorized; 1,000,000 shares issued and outstanding; 4,200,400 shares issued and outstanding (excluding 799,600 shares subject to possible conversion), as adjusted					100				420
Additional paid-in capital					24,900				17,193,644
Deficit accumulated during the development stage					(600	)			(600	)
Total stockholders' equity:					24,400				17,193,464
Total capitalization				$	24,400			$	21,319,400

If we consummate a business combination, the conversion rights afforded to our public stockholders may result in the conversion into cash of up to approximately 19.99% of the aggregate number of shares sold in this offering at a per-share conversion price equal to the amount in the trust account, inclusive of any interest thereon, as of two business days prior to the proposed consummation of a business combination divided by the number of shares sold in this offering.

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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We were formed on September 24, 2004, to serve as a vehicle to effect a merger, capital stock exchange, asset acquisition or other similar business combination with an operating business which we believe has significant growth potential. We intend to utilize cash derived from the proceeds of this offering, our capital stock, debt or a combination of cash, capital stock and debt, in effecting a business combination. The issuance of additional shares of our capital stock:

•	may significantly reduce the equity interest of our stockholders;

•	will likely cause a change in control if a substantial number of our shares of common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and most likely will also result in the resignation or removal of our present officers and directors; and

•	may adversely affect prevailing market prices for our common stock.

Similarly, if we issue debt securities, it could result in:

•	default and foreclosure on our assets if our operating revenues after a business combination were insufficient to pay our debt obligations;

•	acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt security contains covenants that required the maintenance of certain financial ratios or reserves and any such covenant is breached without a waiver or renegotiation of that covenant;

•	our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; and

•	our inability to obtain additional financing, if necessary, if the debt security contains covenants restricting our ability to obtain additional financing while such security is outstanding.

We have neither engaged in any operations nor generated any revenues to date. Our entire activity since inception has been to prepare for our proposed fundraising through an offering of our equity securities.

We estimate that the net proceeds from the sale of the units, after deducting offering expenses of approximately $905,000, including $480,000 evidencing the underwriters' non-accountable expense allowance of 2% of the gross proceeds, and underwriting discounts of approximately $1,800,000, will be approximately $21,295,000, or $24,589,000 if the underwriters' over-allotment option is exercised in full. Of this amount, $20,640,000, or $23,736,000 if the underwriters' over-allotment option is exercised in full, will be held in trust and the remaining $655,000, or $853,000 if the underwriters' over-allotment option is exercised in full, will not be held in trust. We will use substantially all of the net proceeds of this offering to acquire a target business, including identifying and evaluating prospective acquisition candidates, selecting the target business, and structuring, negotiating and consummating the business combination. To the extent that our capital stock is used in whole or in part as consideration to effect a business combination, the proceeds held in the trust account as well as any other net proceeds not expended will be used to finance the operations of the target business. We believe that, upon consummation of this offering, the funds available to us outside of the trust account will be sufficient to allow us to operate for at least the next 24 months, assuming that a business combination is not consummated during that time. Over this time period, we anticipate approximately $180,000 of expenses for legal, accounting and other expenses attendant to the due diligence investigations, structuring and negotiating of a business combination, $180,000 for the administrative fee payable to 400 Building LLC ($7,500 per month for two years), $50,000 of expenses for the due diligence and investigation of a target business, $40,000 of expenses in legal and accounting fees relating to our SEC reporting obligations and $205,000, or $403,000 if the underwriters over-allotment option is exercised in full, for general working capital that will be used for miscellaneous expenses and reserves, including approximately $60,000 for director and officer liability insurance premiums. We do not believe we will

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need to raise additional funds following this offering in order to meet the expenditures required for operating our business. However, we may need to raise additional funds through a private offering of debt or equity securities if such funds are required to consummate a business combination that is presented to us. We would only consummate such a financing simultaneously with the consummation of a business combination.

We are obligated, commencing on the date of this prospectus, to pay to 400 Building LLC, an affiliate of Arthur Spector, a monthly fee of $7,500 for general and administrative services. In addition, on September 29, 2004, Mr. Spector advanced $35,000 to us, on a non-interest bearing basis, for payment of offering expenses on our behalf. The loan will be payable without interest on the earlier of September 29, 2005 or the consummation of this offering. The loan will be repaid out of the proceeds of this offering not being placed in trust.

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PROPOSED BUSINESS

Introduction

We are a Delaware blank check company incorporated on September 24, 2004 in order to serve as a vehicle for the acquisition of an operating business. Our efforts in identifying a prospective target business will not be limited to a particular industry, although we intend to focus on industrial businesses such as chemical and other material science companies, energy companies, medical product manufacturers and producers of manufacturing equipment.

Effecting a business combination

General

We are not presently engaged in, and we will not engage in, any substantive commercial business for an indefinite period of time following this offering. We intend to utilize cash derived from the proceeds of this offering, our capital stock, debt or a combination of these in effecting a business combination. Although substantially all of the net proceeds of this offering are intended to be generally applied toward effecting a business combination as described in this prospectus, the proceeds are not otherwise being designated for any more specific purposes. Accordingly, prospective investors will invest in us without an opportunity to evaluate the specific merits or risks of any one or more business combinations. A business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital but which desires to establish a public trading market for its shares, while avoiding what it may deem to be adverse consequences of undertaking a public offering itself. These include time delays, significant expense, loss of voting control and compliance with various Federal and state securities laws. In the alternative, we may seek to consummate a business combination with a company that may be financially unstable or in its early stages of development or growth. While we may seek to effect business combinations with more than one target business, we will probably have the ability, as a result of our limited resources, to effect only a single business combination.

We have not identified a target business or target industry

To date, we have not selected any target business or target industry on which to concentrate our search for a business combination. Subject to the limitations that a target business have a fair market value of at least 80% of our net assets at the time of the acquisition, as described below in more detail, we will have virtually unrestricted flexibility in identifying and selecting a prospective acquisition candidate. Accordingly, there is no basis for investors in this offering to evaluate the possible merits or risks of the target business with which we may ultimately complete a business combination. To the extent we effect a business combination with a financially unstable company or an entity in its early stage of development or growth, including entities without established records of sales or earnings, we may be affected by numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. Although our management will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant risk factors.

Sources of target businesses

We anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment bankers, venture capital funds, private equity funds, leveraged buyout funds, management buyout funds and other members of the financial community, who may present solicited or unsolicited proposals. Our officers and directors as well as their affiliates may also bring to our attention target business candidates. While we do not presently anticipate engaging the services of professional firms that specialize in business acquisitions on any formal basis, we may engage these firms in the future, in which event we may pay a finders fee or other compensation. In no event, however, will we pay any of our existing officers, directors or stockholders or any entity with which they are affiliated any finders fee or other compensation for services rendered to us prior to or in connection with the consummation of a business combination.

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Selection of a target business and structuring of a business combination

Subject to the requirement that our initial business combination must be with a target business with a fair market value that is at least 80% of our net assets at the time of such acquisition, our management will have virtually unrestricted flexibility in identifying and selecting a prospective target business. In evaluating a prospective target business, our management will consider, among other factors, the following:

•	financial condition and results of operation;

•	growth potential;

•	experience and skill of management and availability of additional personnel;

•	capital requirements;

•	competitive position;

•	barriers to entry into other industries;

•	stage of development of the products, processes or services;

•	degree of current or potential market acceptance of the products, processes or services;

•	proprietary features and degree of intellectual property or other protection of the products, processes or services;

•	regulatory environment of the industry; and

•	costs associated with effecting the business combination.

These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular business combination will be based, to the extent relevant, on the above factors as well as other considerations deemed relevant by our management in effecting a business combination consistent with our business objective. In evaluating a prospective target business, we will conduct an extensive due diligence review which will encompass, among other things, meetings with incumbent management and inspection of facilities, as well as review of financial and other information which will be made available to us.

The time and costs required to select and evaluate a target business and to structure and complete the business combination cannot presently be ascertained with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target business with which a business combination is not ultimately completed will result in a loss to us and reduce the amount of capital available to otherwise complete a business combination. However, we will not pay any finders or consulting fees to our existing stockholders, or any of their respective affiliates, for services rendered to or in connection with a business combination.

Fair Market Value of Target Business

The initial target business that we acquire must have a fair market value equal to at least 80% of our net assets at the time of such acquisition. The fair market value of such business will be determined by our board of directors based upon standards generally accepted by the financial community, such as actual and potential sales, earnings and cash flow and book value. If our board is not able to independently determine that the target business has a sufficient fair market value, we will obtain an opinion from an unaffiliated, independent investment banking firm which is a member of the National Association of Securities Dealers, Inc. with respect to the satisfaction of such criteria. Since any opinion, if obtained, would merely state that fair market value meets the 80% of net assets threshold, it is not anticipated that copies of such opinion would be distributed to our stockholders, although copies will be provided to stockholders who request it. We will not be required to obtain an opinion from an investment banking firm as to the fair market value if our board of directors independently determines that the target business has sufficient fair market value.

Probable lack of business diversification

While we may seek to effect business combinations with more than one target business, our initial business combination must be with a target business which satisfies the minimum valuation standard at

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the time of such acquisition, as discussed above. Consequently, it is probable that we will have the ability to effect only a single business combination. Accordingly, the prospects for our success may be entirely dependent upon the future performance of a single business. Unlike other entities which may have the resources to complete several business combinations of entities operating in multiple industries or multiple areas of a single industry, it is probable that we will not have the resources to diversify our operations or benefit from the possible spreading of risks or offsetting of losses. By consummating a business combination with only a single entity, our lack of diversification may:

•	subject us to numerous economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to a business combination, and

•	result in our dependency upon the development or market acceptance of a single or limited number of products, processes or services.

Limited ability to evaluate the target business' management

Although we intend to closely scrutinize the management of a prospective target business when evaluating the desirability of effecting a business combination, we cannot assure you that our assessment of the target business' management will prove to be correct. In addition, we cannot assure you that the future management will have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of our officers and directors, if any, in the target business cannot presently be stated with any certainty. While it is possible that one or more of our directors will remain associated in some capacity with us following a business combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to a business combination. Moreover, we cannot assure you that our officers and directors will have significant experience or knowledge relating to the operations of the particular target business.

Following a business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we will have the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.

Opportunity for stockholder approval of business combination

Prior to the completion of a business combination, we will submit the transaction to our stockholders for approval, even if the nature of the acquisition is such as would not ordinarily require stockholder approval under applicable state law. In connection with seeking stockholder approval of a business combination, we will furnish our stockholders with proxy solicitation materials prepared in accordance with the Securities Exchange Act of 1934, which, among other matters, will include a description of the operations of the target business and audited historical financial statements of the business.

In connection with the vote required for any business combination, all of our existing stockholders, including all of our officers and directors, have agreed to vote their respective shares of common stock owned by them immediately prior to this offering in accordance with the majority of the shares of common stock voted by the public stockholders. This voting arrangement shall not apply to shares included in units purchased in this offering or purchased following this offering in the open market by any of our existing stockholders, officers and directors. We will proceed with the business combination only if a majority of the shares of common stock voted by the public stockholders are voted in favor of the business combination and public stockholders owning less than 20% of the shares sold in this offering exercise their conversion rights.

Conversion rights

At the time we seek stockholder approval of any business combination, we will offer each public stockholder the right to have such stockholder's shares of common stock converted to cash if the stockholder votes against the business combination and the business combination is approved and

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completed. The actual per-share conversion price will be equal to the amount in the trust account, inclusive of any interest (calculated as of two business days prior to the consummation of the proposed business combination), divided by the number of shares sold in this offering. Without taking into any account interest earned on the trust account, the initial per-share conversion price would be $5.16, or $0.84 less than the per-unit offering price of $6.00. An eligible stockholder may request conversion at any time after the mailing to our stockholders of the proxy statement and prior to the vote taken with respect to a proposed business combination at a meeting held for that purpose, but the request will not be granted unless the stockholder votes against the business combination and the business combination is approved and completed. Any request for conversion, once made, may be withdrawn at any time up to the date of the meeting. It is anticipated that the funds to be distributed to stockholders entitled to convert their shares who elect conversion will be distributed promptly after completion of a business combination. Public stockholders who convert their stock into their share of the trust account still have the right to exercise the warrants that they received as part of the units. We will not complete any business combination if public stockholders, owning 20% or more of the shares sold in this offering, exercise their conversion rights.

Liquidation if no business combination

If we do not complete a business combination within 18 months after the consummation of this offering, or within 24 months if the extension criteria described below have been satisfied, we will be dissolved and will distribute to all of our public stockholders, in proportion to their respective equity interests, an aggregate sum equal to the amount in the trust account, inclusive of any interest, plus any remaining net assets. Our existing stockholders have waived their rights to participate in any liquidation distribution with respect to shares of common stock owned by them immediately prior to this offering. There will be no distribution from the trust account with respect to our warrants which will expire worthless.

If we were to expend all of the net proceeds of this offering, other than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account, the initial per-share liquidation price would be $5.16, or $0.84 less than the per-unit offering price of $6.00. The proceeds deposited in the trust account could, however, become subject to the claims of our creditors which could be prior to the claims of our public stockholders. We cannot assure you that the actual per-share liquidation price will not be less than $5.16, plus interest, due to claims of creditors. Arthur Spector, our chairman of the board, chief executive officer and president, has agreed pursuant to agreements with us and EarlyBirdCapital that, if we distribute the proceeds held in the trust account to our public stockholders, they will be personally liable to pay debts and obligations to vendors or other entities that are owed money by us for services rendered or products sold to us in excess of the net proceeds of this offering not held in the trust account. We cannot assure you, however, that Mr. Spector would be able to satisfy those obligations.

If we enter into either a letter of intent, an agreement in principle or a definitive agreement to complete a business combination prior to the expiration of 18 months after the consummation of this offering, but are unable to complete the business combination within the 18-month period, then we will have an additional six months in which to complete the business combination contemplated by the letter of intent, agreement in principle or definitive agreement. If we are unable to do so within 24 months following the consummation of this offering, we will then liquidate. Upon notice from us, the trustee of the trust account will commence liquidating the investments constituting the trust account and will turn over the proceeds to our transfer agent for distribution to our public stockholders. We anticipate that our instruction to the trustee would be given promptly after the expiration of the applicable 18-month or 24-month period.

Our public stockholders will be entitled to receive funds from the trust account only in the event of our liquidation upon our failure to consummate a business combination within the allotted time or if the stockholders seek to convert their respective shares into cash upon a business combination which the stockholder voted against and which is completed by us. In no other circumstances will a stockholder have any right or interest of any kind to or in the trust account.

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Competition

In identifying, evaluating and selecting a target business, we may encounter intense competition from other entities having a business objective similar to ours. Many of these entities are well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources than us and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe there may be numerous potential target businesses that we could acquire with the net proceeds of this offering, our ability to compete in acquiring certain sizable target businesses will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of a target business. Further:

•	our obligation to seek stockholder approval of a business combination may delay the completion of a transaction;

•	our obligation to convert into cash shares of common stock held by our public stockholders in certain instances may reduce the resources available to us for a business combination; and

•	our outstanding warrants and options, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses.

Any of these factors may place us at a competitive disadvantage in successfully negotiating a business combination. Our management believes, however, that our status as a public entity and potential access to the United States public equity markets may give us a competitive advantage over privately-held entities having a similar business objective as ours in acquiring a target business with significant growth potential on favorable terms.

If we succeed in effecting a business combination, there will be, in all likelihood, intense competition from competitors of the target business. We cannot assure you that, subsequent to a business combination, we will have the resources or ability to compete effectively.

Facilities

We maintain our executive offices at 435 Devon Park Drive, Building 400, Wayne, Pennsylvania 19087. The cost for this space is included in the $7,500 per-month fee 400 Building LLC charges us for general and administrative services pursuant to a letter agreement between us and 400 Building LLC. We believe, based on rents and fees for similar services in the Philadelphia metropolitan area, that the fee charged by 400 Building LLC is at least as favorable as we could have obtained from an unaffiliated person. We consider our current office space adequate for our current operations.

Employees

We have four directors and one officer. These individuals are not obligated to devote any specific number of hours to our matters and intend to devote only as much time as they deem necessary to our affairs. The amount of time they will devote in any time period will vary based on the availability of suitable target businesses to investigate, although we expect Mr. Spector to devote an average of approximately ten hours per week to our business. We do not intend to have any full time employees prior to the consummation of a business combination.

Periodic Reporting and Audited Financial Statements

We have registered our units, common stock and warrants under the Securities Exchange Act of 1934, as amended, and have reporting obligations, including the requirement that we file annual and quarterly reports with the SEC. In accordance with the requirements of the Securities Exchange Act of 1934, our annual reports will contain financial statements audited and reported on by our independent accountants.

We will not acquire a target business if audited financial statements based on United States generally accepted accounting principles cannot be obtained for the target business. Additionally, our

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management will provide stockholders with audited financial statements, prepared in accordance with generally accepted accounting principles, of the prospective target business as part of the proxy solicitation materials sent to stockholders to assist them in assessing the target business. Our management believes that the requirement of having available audited financial statements for the target business will not materially limit the pool of potential target businesses available for acquisition.

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Comparison to offerings of blank check companies

The following table compares and contrasts the terms of our offering and the terms of an offering of blank check companies under Rule 419 promulgated by the SEC assuming that the gross proceeds, underwriting discounts and underwriting expenses for the Rule 419 offering are the same as this offering and that the underwriters will not exercise their over-allotment option. None of the terms of a Rule 419 offering will apply to this offering.

				Terms of Our Offering				Terms Under a Rule 419 Offering
Escrow of offering proceeds				$20,640,000 of the net offering proceeds will be deposited into a trust account at JPMorgan Chase NY Bank maintained by Continental Stock Transfer & Trust Company.				$19,548,000 of the offering proceeds would be required to be deposited into either an escrow account with an insured depositary institution or in a separate bank account established by a broker-dealer in which the broker-dealer acts as trustee for persons having the beneficial interests in the account.
Investment of net proceeds				The $20,640,000 of net offering proceeds held in trust will only be invested in U.S. "government securities," defined as any Treasury Bill issued by the United States having a maturity of one hundred and eighty days or less.				Proceeds could be invested only in specified securities such as a money market fund meeting conditions of the Investment Company Act of 1940 or in securities that are direct obligations of, or obligations guaranteed as to principal or interest by, the United States.
Limitation on Fair Value or Net Assets of Target Business				The initial target business that we acquire must have a fair market value equal to at least 80% of our net assets at the time of such acquisition.				We would be restricted from acquiring a target business unless the fair value of such business or net assets to be acquired represent at least 80% of the maximum offering proceeds.

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				Terms of Our Offering				Terms Under a Rule 419 Offering
Trading of securities issued				The units may commence trading on or promptly after the date of this prospectus. The common stock and warrants comprising the units will begin to trade separately on the 90th day after the date of this prospectus unless EarlyBirdCapital informs us of its decision to allow earlier separate trading, provided we have filed with the SEC a Current Report on Form 8-K, which includes an audited balance sheet reflecting our receipt of the proceeds of this offering, including any proceeds we receive from the exercise of the over-allotment option, if such option is exercised prior to the filing of the Form 8-K.				No trading of the units or the underlying common stock and warrants would be permitted until the completion of a business combination. During this period, the securities would be held in the escrow or trust account.
Exercise of the warrants				The warrants cannot be exercised until the later of the completion of a business combination and one year from the date of this prospectus and, accordingly, will be exercised only after the trust account has been terminated and distributed.				The warrants could be exercised prior to the completion of a business combination, but securities received and cash paid in connection with the exercise would be deposited in the escrow or trust account.

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				Terms of Our Offering				Terms Under a Rule 419 Offering
Election to remain an investor				We will give our stockholders the opportunity to vote on the business combination. In connection with seeking stockholder approval, we will send each stockholder a proxy statement containing information required by the SEC. A stockholder following the procedures described in this prospectus is given the right to convert his or her shares into his or her pro rata share of the trust account. However, a stockholder who does not follow these procedures or a stockholder who does not take any action would not be entitled to the return of any funds.				A prospectus containing information required by the SEC would be sent to each investor. Each investor would be given the opportunity to notify the company, in writing, within a period of no less than 20 business days and no more than 45 business days from the effective date of the post-effective amendment, to decide whether he or she elects to remain a stockholder of the company or require the return of his or her investment. If the company has not received the notification by the end of the 45th business day, funds and interest or dividends, if any, held in the trust or escrow account would automatically be returned to the stockholder. Unless a sufficient number of investors elect to remain investors, all of the deposited funds in the escrow account must be returned to all investors and none of the securities will be issued.
Business combination deadline				A business combination must occur within 18 months after the consummation of this offering or within 24 months after the consummation of this offering if a letter of intent or definitive agreement relating to a prospective business combination was entered into prior to the end of the 18-month period.				If an acquisition has not been consummated within 18 months after the effective date of the initial registration statement, funds held in the trust or escrow account would be returned to investors.
Release of funds				The proceeds held in the trust account will not be released until the earlier of the completion of a business combination and our liquidation upon our failure to effect a business combination within the allotted time.				The proceeds held in the escrow account would not be released until the earlier of the completion of a business combination or the failure to effect a business combination within the allotted time.

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MANAGEMENT

Directors and Executive Officers

Our current directors and executive officers are as follows:

Name				Age				Position
Arthur Spector				64				Chairman of the Board, Chief Executive Officer and President
Robert E. Keith, Jr.				62				Director
Don K. Rice				56				Director
Dr. Heinz C. Schimmelbusch				60				Director

Arthur Spector has been our chairman of the board, chief executive officer and president since our inception. Mr. Spector has served as chairman of the board of NationsHealth, Inc., since its inception in August 2003 and served as its chief executive officer and president from August 2003 until August 2004. NationsHealth is a Nasdaq listed company that, through its wholly owned subsidiary, NationsHealth L.L.C., provides medical products and pharmacy benefits to Medicare participants and other senior citizens. NationsHealth, Inc. was originally known as Millstream Acquisition Corporation, a blank check company with an objective to acquire an operating business with significant growth potential. In his role with Millstream Acquisition Corporation, Mr. Spector directed the completion of a public offering which raised gross proceeds of approximately $24.2 million in August 2003. From March 1995 to October 2002, Mr. Spector served as chairman of the board of Neoware Systems, Inc., a manufacturer of sophisticated computer appliances and related software, and from May 1996 until June 1997, he also served as its president and chief executive officer. Neoware Systems was originally known as Information Systems Acquisition Corp., a blank check company with an objective to acquire an operating business in the information systems industry. Information Systems Acquisition Corp. was formed in 1992 and from its inception until it merged with Human Designed Systems, Inc., a subsidiary of Neoware Systems, Mr. Spector was its chairman of the board, president and chief executive officer. In this role, Mr. Spector directed the completion of a public offering which raised gross proceeds of approximately $13.8 million. Mr. Spector has served as a director of Docucorp International, a public document automation company, since May 1997. Mr. Spector has also been a director of Metallurg Holdings, Inc. and Metallurg, Inc. since July 1998 and has been executive vice president of Metallurg Holdings since July 1998 and treasurer since August 2000. He was elected vice chairman of the board of Metallurg Holdings and Metallurg, Inc. in November 2002. Metallurg Holdings is a holding company of Metallurg, Inc., a company that produces and sells specialty metals, alloys and chemicals. From 1998 to 2002, Mr. Spector served as a director of USDATA Corporation, a global supplier of component-based production software. Mr. Spector received a B.S. from the Wharton School of Finance at the University of Pennsylvania and a J.D. from The University of Pennsylvania Law School.

In addition to Mr. Spector's experience described above, he has had extensive experience in mergers and acquisitions and managing private equity funds. Since January 1997, he has served as managing director of the general partner and of the management company of Safeguard International Fund L.P., a private equity fund investing primarily in controlling positions in industrial companies in North America and Europe. From 1995 to 1996, Mr. Spector served as director of acquisitions of Safeguard Scientifics, Inc., a public company that owns controlling interests in and operates numerous private companies. From 1997 to 1998, Mr. Spector served as a managing director of TL Ventures LLC, whose present successor is TL Ventures L.P., a fund management company organized to manage the day-to-day operations of several of the TL Ventures funds which invest in companies in the internet, software, information technology, communications and life science industries.

Robert E. Keith, Jr. has been a member of our board of directors since our inception. Since May 1989, Mr. Keith has been a managing director of TL Ventures, its predecessor entity and related entities that serve as the management companies for several of the TL Ventures funds. He has served as president of TL Ventures Inc., a successor to Technology Leaders Management, Inc., a private

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equity capital management company, since December 1991 and as its chief executive officer since December 1996. Since October 2001, Mr. Keith has served as chairman of the board of directors of Safeguard Scientifics and served as its vice chairman from February 1999 through September 2001. Mr. Keith was appointed chairman of the board of Safeguard in October 2001, prior to which he served as vice chairman since February 1999. Mr. Keith also served as a member of the office of the chief executive of Safeguard from April 2001 to October 2001. Since August 1996 Mr. Keith has been the chairman of the management companies for, and a senior advisor to and co-founder of, EnerTech Capital Partners and EnerTech Capital Partners II, venture capital funds that invest in technology and service companies related to energy, communications and the broader utilities marketplace. Since March 1996, Mr. Keith has served as a director of Internet Capital Group, Inc., a public company that provides software solutions and related services to businesses, and served as its chairman of the board from March 1996 through December 2001. Mr. Keith also served as a member of the board of directors of NationsHealth from August 2003 to August 2004. Mr. Keith received a B.A. from Amherst College and J.D. from Temple University.

Don K. Rice has been a member of our board of directors since our inception. Mr. Rice is the managing partner of Rice Sangalis Toole & Wilson, a privately held firm that through limited partnerships invests primarily in the subordinated debt of middle market companies located throughout the United States, which he co-founded as Rice Capital in January 1991 before becoming Rice Sangalis Toole & Wilson in March 1997. Prior to forming Rice, Sangalis Toole & Wilson, from May 1988 to December 1988, Mr. Rice was president and chief executive officer of First Texas Merchant Banking Group, a firm which specialized in providing subordinated debt financing, and a vice president of PruCapital, Inc., an investment subsidiary of The Prudential Insurance Company of America from March 1984 to April 1986. Mr. Rice also served as a member of the board of directors of NationsHealth, Inc. from August 2003 to August 2004. Mr. Rice received a B.B.A. and M.B.A. from the University of Texas.

Dr. Heinz C. Schimmelbusch has been a member of our board of directors since our inception. Since January 1997, he has served as managing director of the general partner and of the management company of Safeguard International. Since April 2003, Dr. Schimmelbusch has served as chairman of the board and chief executive officer of Timminco Limited, a publicly held Canadian company that manufactures and supplies magnesium products. Since July 1998, Dr. Schimmelbusch has served as chairman of the board and a director of Metallurg, Inc. and has served as its chief executive officer since November 2002. He has also served as president, chief executive officer and a director of Metallurg Holdings, Inc. since July 1998. Dr. Schimmelbusch has also been chairman and chief executive officer of Allied Resource Corporation, a global technology based industrial services company, since January 1994. Since June 2003, Dr. Schimmelbusch has served as a member of the board of directors of MMC Norilsk Nickel, a producer of nickel, copper, cobalt, palladium, platinum and other precious metals (gold, silver), selenium, tellurium, technical sulfur, hard coal and other materials for industrial needs with its securities listed on the London, Moscow and Berlin Stock Exchanges and the Over The Counter Bulletin Board. Dr. Schimmelbusch also served as a member of the board of directors of NationsHealth, Inc. from August 2003 until August 2004. Dr. Schimmelbusch also served as a member of the Presidency of the German Industry Association in Cologne, Germany from January 1992 to January 1993 and chairman of its Environmental Committee and the vice president and member of the Executive Committee of the International Chamber of Commerce (ICC) in Paris, France from January 1992 to January 1993. He also chaired the International Advisory Committee of the Austrian Chancellor for which he was awarded the Golden Cross of Honor for services to the Republic of Austria. Dr. Schimmelbusch received a graduate degree and Ph.D. in economics from the University of Tübingen, Germany.

Our board of directors is divided into three classes with only one class of directors being elected in each year and each class serving a three-year term. The term of office of the first class of directors, consisting of Robert E. Keith, Jr., will expire at our first annual meeting of stockholders. The term of office of the second class of directors, consisting of Don K. Rice, will expire at the second annual meeting. The term of office of the third class of directors, consisting of Arthur Spector and Dr. Heinz C. Schimmelbusch, will expire at the third annual meeting.

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These individuals will play a key role in identifying and evaluating prospective acquisition candidates, selecting the target business, and structuring, negotiating and consummating its acquisition. Collectively, through their positions described above, our directors have extensive experience acting as managing directors of private equity funds that invested their funds in, or acquired control of, private companies.

Our board of directors established an audit committee comprised of Messrs. Keith and Rice, with Mr. Keith acting as the chairman. Our audit committee appoints, retains, sets compensation of, and supervises our independent accountants, reviews the results and scope of the audit and other accounting related services and reviews our accounting practices and systems of internal accounting and disclosure controls.

Executive Compensation

No executive officer has received any cash compensation for services rendered. Commencing on the effective date of this prospectus through the acquisition of a target business, we will pay 400 Building LLC, an affiliate of Arthur Spector, a fee of $7,500 per month for providing us with office space and certain office and secretarial services. However, this arrangement is solely for our benefit and is not intended to provide Mr. Spector compensation in lieu of a salary. No other executive officer or director has a relationship with or interest in 400 Building LLC. Other than this $7,500 per-month fee, no compensation of any kind, including finder's and consulting fees, will be paid to any of our existing stockholders, including our directors, or any of their respective affiliates, for services rendered prior to or in connection with a business combination. However, our existing stockholders will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. There is no limit on the amount of these out-of-pocket expenses and there will be no review of the reasonableness of the expenses by anyone other than our board of directors, which includes persons who may seek reimbursement, or a court of competent jurisdiction if such reimbursement is challenged. Because none of our directors will be deemed "independent," we will generally not have the benefit of independent directors examining the propriety of expenses incurred on our behalf and subject to reimbursement.

Conflicts of Interest

Potential investors should be aware of the following potential conflicts of interest:

	•	None of our officers and directors are required to commit their full time to our affairs and, accordingly, they may have conflicts of interest in allocating management time among various business activities.

	•	In the course of their other business activities, our officers and directors may become aware of investment and business opportunities which may be appropriate for presentation to us as well as the other entities with which they are affiliated. They may have conflicts of interest in determining to which entity a particular business opportunity should be presented. For a complete description of our management's other affiliations, see the previous section entitled "Directors and Executive Officers."

	•	Our officers and directors may in the future become affiliated with entities, including other blank check companies, engaged in business activities similar to those intended to be conducted by us.

	•	Since our directors own shares of our common stock which will be released from escrow only if a business combination is successfully completed, and may own warrants which will expire worthless if a business combination is not successfully consummated, our board may have a conflict of interest in determining whether a particular target business is appropriate to effect a business combination. The personal and financial interests of our directors and officers may influence their motivation in identifying and selecting a target business, completing a business combination timely and securing the release of their stock.

In general, officers and directors of a corporation incorporated under the laws of the State of Delaware are required to present business opportunities to a corporation if:

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	•	the corporation could financially undertake the opportunity;

	•	the opportunity is within the corporation's line of business; and

	•	it would not be fair to the corporation and its stockholders for the opportunity not to be brought to the attention of the corporation.

Accordingly, as a result of multiple business affiliations, our officers and directors may have similar legal obligations relating to presenting business opportunities meeting the above-listed criteria to multiple entities. In addition, conflicts of interest may arise when our board evaluates a particular business opportunity with respect to the above-listed criteria. We cannot assure you that any of the above mentioned conflicts will be resolved in our favor.

In order to minimize potential conflicts of interest which may arise from multiple corporate affiliations, each of our officers and directors has agreed in principle, until the earliest of a business combination, our liquidation or such time as he ceases to be an officer or director, to present to us for our consideration, prior to presentation to any other entity, any business opportunity which may reasonably be required to be presented to us under Delaware law, subject to any pre-existing fiduciary obligations he might have or new fiduciary obligations related to or affiliated with entities to whom he has pre-existing fiduciary obligations, including, but not limited to, fiduciary obligations to next generation, follow-on or successor entities to any entities to which the individual has pre-existing obligations.

Each of our directors have, to a certain degree, pre-existing fiduciary obligations. Dr. Schimmelbusch and Mr. Spector have pre-existing fiduciary obligations to Safeguard International Fund L.P., as they are each managing directors of the general partner and of the management company of the fund. To the extent that they identify business opportunities that may be suitable for Safeguard International Fund, they will honor their pre-existing fiduciary obligations to Safeguard International Fund and any of its successors. Accordingly, they may not present opportunities to us that otherwise may be attractive to us unless Safeguard International Fund or any of its successors has declined to accept such opportunities.

Mr. Rice has a pre-existing fiduciary obligation to Rice Sangalis Toole & Wilson, as he is the managing partner of this firm. Rice Sangalis Toole & Wilson does not presently have funds available for new loans and does not presently intend to consummate a fundraising or to establish successor limited partnerships during the next eighteen months. Furthermore, Rice Sangalis Toole & Wilson primarily makes minority ownership investments in subordinated debt of middle market companies, which is different from our plan to acquire a target business. Accordingly, although Mr. Rice has a pre-existing fiduciary obligation to Rice Sangalis Toole & Wilson, the potential for conflicts of interest due to this pre-existing obligation is minimal.

Mr. Keith has a pre-existing fiduciary obligation to the TL Ventures and EnerTech Capital Partners families of funds including Radnor Venture Partners, Technology Leaders, Technology Leaders II, TL Ventures III, TL Ventures IV, TL Ventures V, EnerTech Capital Partners and EnerTech Capital Partners II and related entities. To the extent that Mr. Keith identifies business opportunities that may be suitable for any of these entities, he will honor his pre-existing fiduciary obligations to these entities and any of their successors. Accordingly, he may not present opportunities to us that otherwise may be attractive to it unless each of these entities has declined to accept such opportunities.

In connection with the vote required for any business combination, all of our existing stockholders, including all of our officers and directors, have agreed to vote their respective shares of common stock which were owned prior to this offering in accordance with the vote of the public stockholders owning a majority of the shares of our common stock sold in this offering. In addition, they have agreed to waive their respective rights to participate in any liquidation distribution occurring upon our failure to consummate a business combination but only with respect to those shares of common stock acquired by them prior to this offering.

To further minimize potential conflicts of interest, we have agreed not to consummate a business combination with an entity which is affiliated with any of our existing stockholders unless we obtain

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an opinion from an independent investment banking firm that the business combination is fair to our stockholders from a financial point of view.

Prior Involvement of Principals in Blank Check Companies

Each of our directors has been a principal of another company that has completed an offering similar to this offering and executed a business plan similar to our business plan. Mr. Spector directed the completion of a public offering of Information Systems Acquisition Corp., a blank check company with an objective to acquire an operating business in the information systems industry, on March 25, 1993, which raised gross proceeds of $13.8 million at an offering price of $6.00 per unit.

From its inception until it merged with Human Designed Systems, Inc. (the predecessor of Neoware Systems, Inc.) on March 2, 1995, Mr. Spector was Information Systems' chairman of the board, president and chief executive officer. During this period, Mr. Spector did not receive any salary for his services to Information Systems. However, Safeguard Scientifics, Inc., an affiliate of Mr. Spector's, received a $5,000 per month fee from Information Systems for use of office space and administrative services. Pursuant to the merger agreement with Human Designed Systems, all of the outstanding shares of Human Designed were converted into the right to receive a total of 2,810,000 shares of Information Systems Acquisition Corp.'s common stock, 618,200 redeemable common stock purchase warrants and $5,500,000 in cash. Information System Acquisition Corp's remaining cash, by way of merger, became working capital of Neoware Systems. At the time of the acquisition, Mr. Spector held 90,000 shares of Neoware Systems which, based on the market price at the time of acquisition, was valued at $562,500. Neoware Systems is a manufacturer of sophisticated computer appliances and related software and is traded on the Nasdaq National Market under the symbol NWRE.

Mr. Spector remained as chairman of the board of Neoware Systems until December 2002, at which time he determined not to stand for re-election as a director at Neoware System's annual shareholders' meeting. Mr. Spector also acted as chief executive officer and president from May 1996 (after the then chief executive officer died) until June 1997. During the period following the consummation of Information Systems' initial public offering until the expiration of his term in December 2002, Mr. Spector received options to purchase an aggregate of 97,500 shares of Neoware common stock, all of which had exercise prices equal to the fair market value of the common stock on the date of grant. Additionally, from May 1996 until June 1997, Mr. Spector received a salary of approximately $60,000 per annum in connection with his acting as chief executive officer and president. Mr. Spector has sold all of the securities of Information Systems Acquisition Corp. he owned for aggregate gross proceeds of approximately $3,561,000 and taxable profits of approximately $1,675,000.

Mr. Spector also directed the completion of a public offering of Millstream Acquisition Corporation, a blank check company with an objective to acquire an operating business with significant growth potential, on September 25, 2003, which raised gross proceeds of approximately $24.2 million at an offering price of $6.00 per unit.

From its inception until it merged with NationsHealth, Mr. Spector was Millstream Acquisition Corporation's chairman of the board, president and chief executive officer and Mr. Spector has continued to serve as chairman of the board of the combined entity. During this period, Mr. Spector did not receive any salary for his services to Millstream Acquisition Corporation or NationsHealth. However, 400 Building LLC, an affiliate of Mr. Spector's, received a $7,500 per month fee from Millstream Acquisition Corporation for use of office space and administrative services from the effective date of Millstream Acquisition Corporation's initial public offering through the date of the merger with NationsHealth. Pursuant to the merger agreement with NationsHealth, all of the outstanding shares of NationsHealth were converted into the right to receive a total of 21,375,000 shares of Millstream Acquisition Corporation's common stock and $3,000,000 in cash. Millstream Acquisition Corporation's remaining cash, by way of merger, became working capital of NationsHealth. At the time of the merger, Mr. Spector held 360,000 shares of Millstream Acquisition Corporation common stock, all of which are held in escrow until August 25, 2006.

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Each of Messrs. Keith, Schimmelbusch and Rice served as members of the board of directors of Millstream Acquisition Corporation from its inception until its merger with NationsHealth. During this period, they did not receive any salary for their services to Millstream Acquisition Corporation. At the time of the merger, Messrs. Keith, Schimmelbusch and Rice held 20,000, 150,000 and 20,000 shares, respectively, of Millstream Acquisition Corporation common stock, all of which are held in escrow until August 25, 2006. Messrs. Keith and Rice also held warrants to purchase an aggregate of 150,000 and 100,000 shares, respectively, of Millstream Acquisition Corporation common stock, which warrants became exercisable upon consummation of the merger with NationsHealth.

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PRINCIPAL STOCKHOLDERS

The following table sets forth information regarding the beneficial ownership of our common stock as of December 8, 2004, and as adjusted to reflect the sale of our common stock included in the units offered by this prospectus (assuming they do not purchase units in this offering), by:

	•	each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;

	•	each of our officers and directors; and

	•	all our officers and directors as a group.

Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them.

				Amount and Nature of Beneficial Ownership				Approximate Percentage of Outstanding Common Stock
Name and Address of Beneficial Owner(1)								Before Offering				After Offering
Arthur Spector(2)(3)					397,142				39.7	%			7.9	%
Spector Family Trust(4)					397,142				39.7	%			7.9	%
Dr. Heinz C. Schimmelbusch(3)(5)					68,572				6.9	%			1.4	%
Robert E. Keith, Jr.(3)(6)					68,572				6.9	%			1.4	%
Don K. Rice(3)(7)					68,572				6.9	%			1.4	%
All directors and executive officers as a group (4 individuals)					602,858				60.3	%			12.1	%

(1)	Unless otherwise indicated, the business address of each of the individuals is 435 Devon Park Drive, Building 400, Wayne, Pennsylvania 19087.

(2)	Arthur Spector is our chairman of the board, chief executive officer and president.

(3)	Each of these individuals is a director.

(4)	The Spector Family Trust is a trust established by Mr. Spector and his wife for the benefit of his descendants. Adam B. Spector and Jeremy D. Spector, Mr. Spector's adult sons, are co-trustees of the trust.

(5)	The business address of Mr. Schimmelbusch is c/o Safeguard International Fund L.P., 435 Devon Park Drive, Building 400, Wayne, Pennsylvania 19087.

(6)	The business address of Mr. Keith is 435 Devon Park Drive, Building 700, Wayne, Pennsylvania 19087.

(7)	The business address of Mr. Rice is 517 Fishers Road, Bryn Mawr, Pennsylvania 19010.

Immediately after this offering, our existing stockholders, which include all of our officers and directors, collectively, will beneficially own 20% of the then issued and outstanding shares of our common stock. Because of this ownership block, these stockholders may be able to effectively exercise control over all matters requiring approval by our stockholders, including the election of directors and approval of significant corporate transactions other than approval of a business combination.

All of the shares of our common stock outstanding prior to the date of this prospectus will be placed in escrow with Continental Stock Transfer & Trust Company, as escrow agent, until the earliest of:

	•	three years following the date of this prospectus;

	•	our liquidation; and

	•	the consummation of a liquidation, merger, stock exchange or other similar transaction which results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property subsequent to our consummating a business combination with a target business.

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During the escrow period, the holders of these shares will not be able to sell or transfer their securities except to their spouses and children or trusts established for their benefit, but will retain all other rights as our stockholders, including, without limitation, the right to vote their shares of common stock and the right to receive cash dividends, if declared. If dividends are declared and payable in shares of common stock, such dividends will also be placed in escrow. If we are unable to effect a business combination and liquidate, none of our existing stockholders will receive any portion of the liquidation proceeds with respect to common stock owned by them prior to the date of this prospectus.

Arthur Spector has agreed with EarlyBirdCapital that after this offering is completed and within the first forty trading days after separate trading of the warrants has commenced, he or certain of his affiliates or designees will collectively purchase up to 1,000,000 warrants in the public marketplace at prices not to exceed $0.70 per warrant. He has further agreed that any warrants purchased by him or his affiliates or designees will not be sold or transferred until after we have completed a business combination. The warrants may trade separately on the 90^th day after the date of this prospectus unless EarlyBirdCapital determines that an earlier date is acceptable. In no event will EarlyBirdCapital allow separate trading of the common stock and warrants until we file a Current Report on Form 8-K which includes an audited balance sheet reflecting our receipt of the proceeds of this offering including any proceeds we receive from the exercise of the over-allotment option if such option is exercised prior to our filing of the Form 8-K. Purchases of warrants demonstrate confidence in our ultimate ability to effect a business combination because the warrants will expire worthless if we are unable to consummate a business combination.

Messrs. Arthur Spector and the Spector Family Trust may be deemed to be our "parent" and "promoter," as these terms are defined under the Federal securities laws.

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CERTAIN TRANSACTIONS

In September 2004, we issued 875,000 shares of our common stock to the individuals set forth below for $25,000 in cash, at an average purchase price of approximately $0.029 per share, as follows:

Name				Number of Shares				Relationship to Us
Arthur Spector					347,500			Chairman of the Board, Chief Executive Officer and President
Spector Family Trust					347,500			Stockholder
Dr. Heinz C. Schimmelbusch					60,000			Director
Robert E. Keith, Jr.					60,000			Director
Don K. Rice					60,000			Director

On Decmeber 7, 2004, our board of directors authorized a stock dividend of 0.1428571 shares of common stock for each outstanding share of common stock, effectively lowering the purchase price to $0.025 per share.

The holders of the majority of these shares will be entitled to make up to two demands that we register these shares pursuant to an agreement to be signed prior to or on the date of this prospectus. The holders of the majority of these shares may elect to exercise these registration rights at any time after the date on which these shares of common stock are released from escrow. In addition, these stockholders have certain "piggy-back" registration rights on registration statements filed subsequent to the date on which these shares of common stock are released from escrow. We will bear the expenses incurred in connection with the filing of any such registration statements.

400 Building LLC, an affiliate of Arthur Spector, has agreed that, commencing on the effective date of this prospectus through the acquisition of a target business, it will make available to us a small amount of office space and certain office and secretarial services, as we may require from time to time. We have agreed to pay 400 Building LLC $7,500 per month for these services. Mr. Spector is the sole member and sole manager of 400 Building LLC and, as a result, will benefit from the transaction to the extent of his interest in 400 Building LLC. However, this arrangement is solely for our benefit and is not intended to provide Mr. Spector compensation in lieu of a salary. We believe, based on rents and fees for similar services in the Philadelphia metropolitan area, that the fee charged by 400 Building LLC is at least as favorable as we could have obtained from an unaffiliated person. However, as our directors may not be deemed "independent," we did not have the benefit of disinterested directors approving this transaction.

Arthur Spector has advanced $35,000 to us as of the date of this prospectus to cover expenses related to this offering. The loan will be payable without interest on the earlier of September 29, 2005 or the consummation of this offering. We intend to repay this loan from the proceeds of this offering not being placed in trust.

We will reimburse our officers and directors for any reasonable out-of-pocket business expenses incurred by them in connection with certain activities on our behalf such as identifying and investigating possible target businesses and business combinations. There is no limit on the amount of accountable out-of-pocket expenses reimbursable by us, which will be reviewed only by our board or a court of competent jurisdiction if such reimbursement is challenged.

Other than the $7,500 per-month administrative fee and reimbursable out-of-pocket expenses payable to our officers and directors, no compensation or fees of any kind, including finders and consulting fees, will be paid to any of our existing stockholders, officers or directors who owned our common stock prior to this offering, or to any of their respective affiliates for services rendered to us prior to or with respect to the business combination.

All ongoing and future transactions between us and any of our officers and directors or their respective affiliates, including loans by our officers and directors, will be on terms believed by us to be no less favorable than are available from unaffiliated third parties and such transactions or loans, including any forgiveness of loans, will require prior approval in each instance by a majority of our uninterested "independent" directors (to the extent we have any) or the members of our board who do not have an interest in the transaction, in either case who had access, at our expense, to our attorneys or independent legal counsel.

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DESCRIPTION OF SECURITIES

General

We are authorized to issue 15,000,000 shares of common stock, par value $.0001, and 1,000,000 shares of preferred stock, par value $.0001. As of the date of this prospectus, 1,000,000 shares of common stock are outstanding, held by five recordholders. No shares of preferred stock are currently outstanding.

Units

Each unit consists of one share of common stock and two warrants. Each warrant entitles the holder to purchase one share of common stock. The common stock and warrants will begin to trade separately on the 90th day after the date of this prospectus unless EarlyBirdCapital informs us of its decision to allow earlier separate trading, provided that in no event may the common stock and warrants be traded separately until we have filed with the SEC a Current Report on Form 8-K which includes an audited balance sheet reflecting our receipt of the gross proceeds of this offering. We will file a Current Report on Form 8-K which includes this audited balance sheet upon the consummation of this offering. The audited balance sheet will reflect proceeds we receive from the exercise of the over-allotment option, if the over-allotment option is exercised prior to the filing of the Form 8-K.

Common stock

Our stockholders are entitled to one vote for each share held of record on all matters to be voted on by stockholders. In connection with the vote required for any business combination, all of our existing stockholders, including all of our officers and directors, have agreed to vote their respective shares of common stock owned by them immediately prior to this offering in accordance with the public stockholders. This voting arrangement shall not apply to shares included in units purchased in this offering or purchased following this offering in the open market by any of our existing stockholders, officers and directors. Additionally, our existing stockholders, officers and directors will vote all of their shares in any manner they determine, in their sole discretion, with respect to any other items that come before a vote of our stockholders.

We will proceed with the business combination only if a majority of the shares of common stock voted by the public stockholders are voted in favor of the business combination and public stockholders owning less than 20% of the shares sold in this offering exercise their conversion rights discussed below.

Our board of directors is divided into three classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year. There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voted for the election of directors can elect all of the directors.

If we are forced to liquidate prior to a business combination our public stockholders are entitled to share ratably in the trust account, inclusive of any interest, and any net assets remaining available for distribution after payment of liabilities. Our existing stockholders have agreed to waive their rights to share in any distribution with respect to common stock owned by them prior to the offering if we are forced to liquidate.

Our stockholders have no conversion, preemptive or other subscription rights and there are no sinking fund or redemption provisions applicable to the common stock, except that public stockholders have the right to have their shares of common stock converted to cash equal to their pro rata share of the trust account if they vote against the business combination and the business combination is approved and completed. Public stockholders who convert their stock into their share of the trust account still have the right to exercise the warrants that they received as part of the units.

Preferred stock

Our certificate of incorporation authorizes the issuance of 1,000,000 shares of blank check preferred stock with such designation, rights and preferences as may be determined from time to time

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by our board of directors. No shares of preferred stock are being issued or registered in this offering. Accordingly, our board of directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights which could adversely affect the voting power or other rights of the holders of common stock, although the underwriting agreement prohibits us, prior to a business combination, from issuing preferred stock which participates in any manner in the proceeds of the trust account, or which votes as a class with the common stock on a business combination. We may issue some or all of the preferred stock to effect a business combination. In addition, the preferred stock could be utilized as a method of discouraging, delaying or preventing a change in control of us. Although we do not currently intend to issue any shares of preferred stock, we cannot assure you that we will not do so in the future.

Warrants

No warrants are currently outstanding. Each warrant entitles the registered holder to purchase one share of our common stock at a price of $5.00 per share, subject to adjustment as discussed below, at any time commencing on the later of:

•	the completion of a business combination; and

•	one year from the date of this prospectus.

The warrants will expire four years from the date of this prospectus at 5:00 p.m., New York City time.

We may call the warrants for redemption,

•	in whole and not in part,

•	at a price of $.01 per warrant at any time after the warrants become exercisable,

•	upon not less than 30 days' prior written notice of redemption to each warrantholder, and

•	if, and only if, the reported last sale price of the common stock equals or exceeds $8.50 per share, for any 20 trading days within a 30 trading day period ending on the third business day prior to the notice of redemption to warrantholders.

The warrants will be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. You should review a copy of the warrant agreement, which has been filed as an exhibit to the registration statement of which this prospectus is a part, for a complete description of the terms and conditions applicable to the warrants.

The exercise price and number of shares of common stock issuable on exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or our recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of common stock at a price below their respective exercise prices.

The warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price, by certified check payable to us, for the number of warrants being exercised. The warrantholders do not have the rights or privileges of holders of common stock and any voting rights until they exercise their warrants and receive shares of common stock. After the issuance of shares of common stock upon exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders.

No warrants will be exercisable unless at the time of exercise a prospectus relating to common stock issuable upon exercise of the warrants is current and the common stock has been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants. Under the terms of the warrant agreement, we have agreed to meet these conditions and use our best efforts to maintain a current prospectus relating to common stock issuable upon exercise of the warrants until the expiration of the warrants. However, we cannot assure you that we will be able to do so. The warrants may be deprived of any value and the market for the warrants may be

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limited if the prospectus relating to the common stock issuable upon the exercise of the warrants is not current or if the common stock is not qualified or exempt from qualification in the jurisdictions in which the holders of the warrants reside.

No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round up to the nearest whole number the number of shares of common stock to be issued to the warrant holder.

Purchase Option

We have agreed to sell to the representative of the underwriters an option to purchase up to a total of 300,000 units at a per-unit price of $9.90. The units issuable upon exercise of this option are identical to those offered by this prospectus except that the warrants included in the option have an exercise price of $6.25 (125% of the exercise price of the warrants included in the units sold in the offering). For a more complete description of the purchase option, see the section below entitled "Underwriting — Purchase Option."

Dividends

We have not paid any dividends on our common stock to date and do not intend to pay dividends prior to the completion of a business combination. The payment of dividends in the future will be contingent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of a business combination. The payment of any dividends subsequent to a business combination will be within the discretion of our then board of directors. It is the present intention of our board of directors to retain all earnings, if any, for use in our business operations and, accordingly, our board does not anticipate declaring any dividends in the foreseeable future.

Our Transfer Agent and Warrant Agent

The transfer agent for our securities and warrant agent for our warrants is Continental Stock Transfer & Trust Company, 17 Battery Place, New York, New York 10004.

Shares Eligible for Future Sale

Immediately after this offering, we will have 5,000,000 shares of common stock outstanding, or 5,600,000 shares if the underwriters' over-allotment option is exercised in full. Of these shares, the 4,000,000 shares sold in this offering, or 4,600,000 shares if the over-allotment option is exercised, will be freely tradable without restriction or further registration under the Securities Act, except for any shares purchased by one of our affiliates within the meaning of Rule 144 under the Securities Act. All of the remaining 1,000,000 shares are restricted securities under Rule 144, in that they were issued in private transactions not involving a public offering. None of those will be eligible for sale under Rule 144 prior to September 24, 2005. Notwithstanding this, all of those shares have been placed in escrow and will not be transferable for a period of three years from the date of this prospectus and will only be released prior to that date subject to certain limited exceptions.

Rule 144

In general, under Rule 144 as currently in effect, a person who has beneficially owned restricted shares of our common stock for at least one year would be entitled to sell within any three-month period a number of shares that does not exceed the greater of either of the following:

•	1% of the number of shares of common stock then outstanding, which will equal 50,000 shares immediately after this offering (or 56,000 if the underwriters exercise their over-allotment option); and

•	the average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.

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Sales under Rule 144 are also limited by manner of sale provisions and notice requirements and to the availability of current public information about us.

Rule 144(k)

Under Rule 144(k), a person who is not deemed to have been one of our affiliates at the time of or at any time during the three months preceding a sale, and who has beneficially owned the restricted shares proposed to be sold for at least two years, including the holding period of any prior owner other than an affiliate, is entitled to sell their shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144.

SEC Position on Rule 144 Sales

The Securities and Exchange Commission has taken the position that promoters or affiliates of a blank check company and their transferees, both before and after a business combination, would act as an "underwriter" under the Securities Act when reselling the securities of a blank check company. Accordingly, the Securities and Exchange Commission believes that those securities can be resold only through a registered offering and that Rule 144 would not be available for those resale transactions despite technical compliance with the requirements of Rule 144.

Registration Rights

The holders of our 1,000,000 issued and outstanding shares of common stock on the date of this prospectus will be entitled to registration rights pursuant to an agreement to be signed prior to or on the effective date of this offering. The holders of the majority of these shares are entitled to make up to two demands that we register these shares. The holders of the majority of these shares can elect to exercise these registration rights at any time after the date on which these shares of common stock are released from escrow. In addition, these stockholders have certain "piggy-back" registration rights on registration statements filed subsequent to the date on which these shares of common stock are released from escrow. We will bear the expenses incurred in connection with the filing of any such registration statements.

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UNDERWRITING

In accordance with the terms and conditions contained in the underwriting agreement, we have agreed to sell to each of the underwriters named below, and each of the underwriters, for which EarlyBirdCapital is acting as representative, have severally, and not jointly, agreed to purchase on a firm commitment basis the number of units offered in this offering set forth opposite their respective names below:

Underwriters				Number of Units
EarlyBirdCapital, Inc.
Total

A copy of the underwriting agreement has been filed as an exhibit to the registration statement of which this prospectus forms a part.

State Blue Sky Information

We will offer and sell the units to retail customers only in Colorado, Delaware, the District of Columbia, Florida, Hawaii, Illinois, Indiana, Maryland, New York and Rhode Island. In New York and Hawaii, we have relied on exemptions from the state registration requirements for transactions between an issuer and an underwriter involving a firm-commitment underwritten offering. In the other states, we have applied to have the units registered for sale and will not sell the units in these states until such registration is effective (including in Colorado, pursuant to 11-51-302(6) of the Colorado Revised Statutes).

If you are not an institutional investor, you may purchase our securities in this offering only in the jurisdictions described directly above. Institutional investors in every state except in Idaho and South Dakota may purchase the units in this offering pursuant to exemptions provided to such entities under the Blue Sky laws of various states. The definition of an "institutional investor" varies from state to state but generally includes financial institutions, broker-dealers, banks, insurance companies and other qualified entities.

Under the National Securities Markets Improvement Act of 1996, the resale of the units, from and after the effective date, and the common stock and warrants comprising the units, once they become separately transferable, are exempt from state registration requirements because we will file periodic and annual reports under the Securities Exchange Act of 1934. However, states are permitted to require notice filings and collect fees with regard to these transactions and a state may suspend the offer and sale of securities within such state if any such required filing is not made or fee is not paid. The following states do not presently require any notice filings or fee payments and permit the resale of the units, and the common stock and warrants comprising the units, once they become separately transferable:

•	Alabama, Arizona, Colorado, Connecticut, Florida, Georgia, Hawaii, Indiana, Louisiana, Maine, Missouri, Nevada, New York, North Carolina, Ohio, Pennsylvania, Utah, Virginia, Washington, and Wisconsin.

Additionally, the following states permit the resale of the units, and the common stock and warrants comprising the units, once they become separately transferable, if the proper notice filings have been made and fees paid:

•	Delaware, the District of Columbia, Kansas, Maryland, Michigan, New Hampshire, Rhode Island, South Carolina, Texas and Vermont.

As of the date of this prospectus, we have not determined in which, if any, of these states we will submit the required filings or pay the required fee. Additionally, if any of these states that has not yet

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adopted a statute relating to the National Securities Markets Improvement Act adopts such a statute in the future requiring a filing or fee or if any state amends its existing statutes with respect to its requirements, we would need to comply with those new requirements in order for the securities to continue to be eligible for resale in those jurisdictions.

Despite the exemption from state registration provided by the National Securities Markets Improvement Act, described above, the following states, regardless of whether they require a filing to be made or fee to be paid, have advised us that they do not recognize this act as a basis for exempting the registration of resales in their states of securities issued in blank check offerings:

•	Alaska, Arkansas, California, Illinois, Iowa, Kentucky, Massachusetts, Minnesota, Mississippi, Montana, Nebraska, New Jersey, New Mexico, North Dakota, Oklahoma, Oregon, Puerto Rico, Tennessee, West Virginia and Wyoming.

We do not intend to register the resale of the securities sold in this offering in these states.

However, we believe that the units, from and after the effective date, and the common stock and warrants comprising the units, once they become separately transferable, will be eligible for sale on a secondary market basis in each of the following states, without any notice filings or fee payments, based upon the availability of another applicable exemption from the state's registration requirements:

•	immediately in Delaware, the District of Columbia, Illinois, Kentucky, Maryland and Rhode Island;

•	commencing 90 days after the date of this prospectus in Iowa and New Mexico; and

•	commencing 180 days from the date of this prospectus in Massachusetts.

Idaho and South Dakota have informed us that they do not permit the resale in their states of securities issued in blank check offerings, without exception. We will amend this prospectus for the purpose of disclosing additional states, if any, which advise us that our securities will be eligible for secondary trading without registration.

Pricing of Securities

We have been advised by the representative that the underwriters propose to offer the units to the public at the initial offering price set forth on the cover page of this prospectus. They may allow some dealers concessions not in excess of $       per unit and the dealers may reallow a concession not in excess of $         per unit to other dealers.

Prior to this offering there has been no public market for any of our securities. The public offering price of the units and the terms of the warrants were negotiated between us and the representative. Factors considered in determining the prices and terms of the units, including the common stock and warrants underlying the units, include:

•	the history and prospects of companies whose principal business is the acquisition of other companies;

•	prior offerings of those companies;

•	our prospects for acquiring an operating business at attractive values;

•	our capital structure;

•	an assessment of our management and their experience in identifying operating companies;

•	general conditions of the securities markets at the time of the offering; and

•	other factors as were deemed relevant.

However, although these factors were considered, the determination of our offering price is more arbitrary than the pricing of securities for an operating company in a particular industry since the underwriters are unable to compare our financial results and prospects with those of public companies operating in the same industry.

Over-Allotment Option

We have also granted to the underwriters an option, exercisable during the 45-day period commencing on the date of this prospectus, to purchase from us at the offering price, less

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underwriting discounts, up to an aggregate of 600,000 additional units for the sole purpose of covering over-allotments, if any. The over- allotment option will only be used to cover the net syndicate short position resulting from the initial distribution. The underwriters may exercise that option if the underwriters sell more units than the total number set forth in the table above. If any units underlying the option are purchased, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.

Commissions and Discounts

The following table shows the public offering price, underwriting discount to be paid by us to the underwriters and the proceeds, before expenses, to us. This information assumes either no exercise or full exercise by the underwriters of their over-allotment option.

				Per unit				Without option				With option
Public offering price				$	6.00			$	24,000,000			$	27,600,000
Discount				$	0.45			$	1,800,000			$	2,070,000
Non-accountable Expense Allowance(1)				$	0.12			$	480,000			$	480,000
Proceeds before expenses(2)				$	5.43			$	21,720,000			$	25,050,000

(1)	The non-accountable expense allowance is not payable with respect to the units sold upon exercise of the underwriters' over-allotment option.

(2)	The offering expenses are estimated at $425,000 (or $461,000 if the underwriters' over-allotment option is exercised).

Purchase Option

We have agreed to sell to the representative, for $100, an option to purchase up to a total of 300,000 units. The units issuable upon exercise of this option are identical to those offered by this prospectus except that the warrants included in the option have an exercise price of $6.25 (125% of the exercise price of the warrants included in the units sold in the offering). This option is exercisable at $9.90 per unit commencing on the later of the consummation of a business combination and one year from the date of this prospectus and expiring five years from the date of this prospectus. The option and the 300,000 units, the 300,000 shares of common stock and the 600,000 warrants underlying such units, and the 600,000 shares of common stock underlying such warrants, have been deemed compensation by the NASD and are therefore subject to a 180-day lock-up pursuant to Rule 2710(g)(1) of the NASD Conduct Rules. Additionally, the option may not be sold, transferred, assigned, pledged or hypothecated for a one-year period (including the foregoing 180-day period) following the date of this prospectus. However, the option may be transferred to any underwriter and selected dealer participating in the offering and their bona fide officers or partners. Although the purchase option and its underlying securities have been registered under the registration statement of which this prospectus forms a part of, the option grants to holders demand and "piggy back" rights for periods of five and seven years, respectively, from the date of this prospectus with respect to the registration under the Securities Act of the securities directly and indirectly issuable upon exercise of the option. We will bear all fees and expenses attendant to registering the securities, other than underwriting commissions which will be paid for by the holders themselves. The exercise price and number of units issuable upon exercise of the option may be adjusted in certain circumstances including in the event of a stock dividend, or our recapitalization, reorganization, merger or consolidation. However, the option will not be adjusted for issuances of common stock at a price below its exercise price.

Regulatory Restrictions on Purchase of Securities

Rules of the SEC may limit the ability of the underwriters to bid for or purchase our securities before the distribution of the securities is completed. However, the underwriters may engage in the following activities in accordance with the rules:

•	Stabilizing Transactions.    The underwriters may make bids or purchases for the purpose of pegging, fixing or maintaining the price of our securities, so long as stabilizing bids do not exceed a specified maximum.

44

•

Over-Allotments and Syndicate Coverage Transactions.    The underwriters may create a short position in our securities by selling more of our securities than are set forth on the cover page of this prospectus. If the underwriters create a short position during the offering, the representative may engage in syndicate covering transactions by purchasing our securities in the open market. The representative may also elect to reduce any short position by exercising all or part of the over-allotment option.

•	Penalty Bids.    The representative may reclaim a selling concession from a syndicate member when the common stock originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.

Stabilization and syndicate covering transactions may cause the price of the securities to be higher than they would be in the absence of these transactions. The imposition of a penalty bid might also have an effect on the prices of the securities if it discourages resales of the securities.

Neither we nor the underwriters makes any representation or prediction as to the effect that the transactions described above may have on the prices of the securities. These transactions may occur on the OTC Bulletin Board, in the over-the-counter market or on any trading market. If any of these transactions are commenced, they may be discontinued without notice at any time.

Other Terms

Although they are not obligated to do so, any of the underwriters may introduce us to potential target businesses or assist us in raising additional capital, as needs may arise in the future, but there are no preliminary agreements or understandings between any of the underwriters and any potential targets. We are not under any contractual obligation to engage any of the underwriters to provide any services for us after this offering, but if we do, we may pay the underwriters a finder's fee that would be determined at that time in an arm's length negotiation where the terms would be fair and reasonable to each of the interested parties; provided that no agreement will be entered into and no fee will be paid prior to the one year anniversary of the date of this prospectus.

Indemnification

We have agreed to indemnify the underwriters against some liabilities, including civil liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make in this respect.

LEGAL MATTERS

The validity of the securities offered in this prospectus are being passed upon for us by Graubard Miller, New York, New York. Bingham McCutchen LLP, New York, New York, is acting as counsel for the underwriters in this offering.

EXPERTS

The financial statements included in this prospectus and in the registration statement have been audited by Goldstein Golub Kessler LLP, independent registered public accounting firm, to the extent and for the period set forth in their report appearing elsewhere in this prospectus and in the registration statement. The financial statements and the report of Goldstein Golub Kessler LLP are included in reliance upon their report given upon the authority of Goldstein Golub Kessler LLP as experts in auditing and accounting.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the SEC a registration statement on Form S-1, which includes exhibits, schedules and amendments, under the Securities Act, with respect to this offering of our securities. Although this prospectus, which forms a part of the registration statement, contains all material information included in the registration statement, parts of the registration statement have been

45

omitted as permitted by rules and regulations of the SEC. We refer you to the registration statement and its exhibits for further information about us, our securities and this offering. The registration statement and its exhibits, as well as our other reports filed with the SEC, can be inspected and copied at the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549-1004. The public may obtain information about the operation of the public reference room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a web site at http://www.sec.gov which contains the Form S-1 and other reports, proxy and information statements and information regarding issuers that file electronically with the SEC.

46

Millstream II Acquisition Corporation
(a corporation in the development stage)

Index to Financial Statements

Report of Independent Registered Public Accounting Firm					F-2
Financial statements
Balance Sheet					F-3
Statement of Operations					F-4
Statement of Stockholders' Equity					F-5
Statement of Cash Flows					F-6
Notes to Financial Statements					F-7 – F-8

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors
Millstream II Acquisition Corporation

We have audited the accompanying balance sheet of Millstream II Acquisition Corporation (a corporation in the development stage) as of October 15, 2004, and the related statements of operations, stockholders' equity and cash flows for the period from September 24, 2004 (inception) to October 15, 2004. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Millstream II Acquisition Corporation as of October 15, 2004, and the results of its operations and its cash flows for the period from September 24, 2004 (inception) to October 15, 2004 in conformity with United States generally accepted accounting principles.

Goldstein Golub Kessler LLP
New York, New York

October 21, 2004, except for the fifth paragraph of Note 1, as to which the date is November 11, 2004, and Note 6 as to which the date is December 7, 2004

F-2

Millstream II Acquisition Corporation
(a corporation in the development stage)

Balance Sheet

				October 15, 2004
ASSETS
Current asset — Cash				$	60,000
Total assets				$	60,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accrued expenses				$	600
Note payable, stockholder					35,000
Total liabilities					35,600
Commitment
Stockholders' equity
Preferred stock, $.0001 par value Authorized 1,000,000 shares; none issued
Common stock, $.0001 par value
Authorized 15,000,000 shares
Issued and outstanding 1,000,000 shares					100
Additional paid-in capital					24,900
Deficit accumulated during the development stage					(600	)
Total stockholders' equity					24,400
Total liabilities and stockholders' equity				$	60,000

See Notes to Financial Statements.

F-3

Millstream II Acquisition Corporation
(a corporation in the development stage)

Statement of Operations

For the period from September 24, 2004 (inception) to October 15, 2004
Formation and operating costs				$	600
Net loss				$	(600	)
Weighted average shares outstanding					1,000,000
Net loss per share				$	.00

See Notes to Financial Statements.

F-4

Millstream II Acquisition Corporation
(a corporation in the development stage)

Statement of Stockholders' Equity

For the period from September 24, 2004 (inception) to October 15, 2004

				Common Stock								Addition paid-in capital				Deficit Accumulated During the Development Stage				Stockholders' Equity
				Shares				Amount
Common shares issued September 24, 2004 at $.0718 per share					347,500			$	35			$	24,912				—			$	24,947
Common shares issued September 24, 2004 at $.0001 per share					527,500				53				—				—				53
Effect of stock dividend (See Note 6)					125,000				12				(12	)			—				—
Net Loss					—				—				—			$	(600	)			(600	)
Balance at October 15, 2004					1,000,000			$	100			$	24,900			$	(600	)		$	24,400

See Notes to Financial Statements.

F-5

Millstream II Acquisition Corporation
(a corporation in the development stage)

Statement of Cash Flows

For the period from September 24, 2004 (inception) to October 15, 2004
Cash flow from operating activities
Net loss				$	(600	)
Increase in accrued expenses					600
Net cash used in operating activities					—
Cash flows from financing activities
Proceeds from note payable, stockholder					35,000
Proceeds from sale of shares of common stock					25,000
Net cash provided by financing activities					60,000
Net increase in cash and cash at end of period				$	60,000

See Notes to Financial Statements.

F-6

Millstream II Acquisition Corporation
(a corporation in the development stage)

Notes to Financial Statements

1.     Organization, Business Operations and Significant Accounting Policies

Mllstream II Acquisition Corporation (the "Company") was incorporated in Delaware on September 24, 2004 as a blank check company whose objective is to acquire an operating business.

At October 15, 2004, the Company had not yet commenced any operations. All activity through October 15, 2004 relates to the Company's formation and the proposed public offering described below. The Company has selected December 31 as its fiscal year-end.

The Company's ability to commence operations is contingent upon obtaining adequate financial resources through a proposed public offering ("Proposed Offering") which is discussed in Note 2. The Company's management has broad discretion with respect to the specific application of the net proceeds of this Proposed Offering, although substantially all of the net proceeds of this Proposed Offering are intended to be generally applied toward consummating a business combination with an operating business ("Business Combination"). Furthermore, there is no assurance that the Company will be able to successfully effect a Business Combination. Upon the closing of the Proposed Offering, at least ninety percent (90%) of the net proceeds, after payment of certain amounts to the underwriter, will be held in a trust account ("Trust Account") and invested in government securities until the earlier of (i) the consummation of its first Business Combination and (ii) liquidation of the Company. The remaining net proceeds (not held in trust) may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses. The Company, after signing a definitive agreement for the acquisition of a target business, will submit such transaction for stockholder approval. In the event that stockholders owning 20% or more of the shares sold in the Proposed Offering vote against the Business Combination and exercise their conversion rights described below, the Business Combination will not be consummated. All of the Company's stockholders prior to the Proposed Offering, including all of the officers and directors of the Company ("Initial Stockholders"), have agreed to vote their 1,000,000 founding shares of common stock in accordance with the vote of the majority in interest of all other stockholders of the Company ("Public Stockholders") with respect to any Business Combination. After consummation of the Company's Business Combination, all of these voting safeguards will no longer be applicable.

With respect to the first Business Combination which is approved and consummated, any Public Stockholder who voted against the Business Combination may demand that the Company convert his or her shares. The per share conversion price will equal the amount in the Trust Account, calculated as of two business days prior to the consummation of the proposed Business Combination, divided by the number of shares of common stock held by Public Stockholders at the consummation of the Proposed Offering. Accordingly, Public Stockholders holding 19.99% of the aggregate number of shares owned by all Public Stockholders may seek conversion of their shares in the event of a Business Combination. Such Public Stockholders are entitled to receive their per share interest in the Trust account computed without regard to the shares held by Initial Stockholders.

The Company's Certificate of Incorporation, as amended, provides for mandatory liquidation of the Company in the event that the Company does not consummate a Business Combination within 18 months from the date of the consummation of the Proposed Offering, or 24 months from the consummation of the Proposed Offering if certain extension criteria have been satisfied. In the event of liquidation, it is likely that the per share value of the residual assets ramaining available for distribution (including Trust Account assets) will be less than the initial public offering price per share in the Proposed Offering (assuming no value is attributed to the Warrants contained in the Units to be offered in the Proposed Offering discussed in Note 2).

Deferred income taxes are provided for the differences between the bases of assets and liabilities for financial reporting and income tax purposes. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

The Company recorded a deferred income tax asset for the tax effect of net operating loss carryforwards and temporary differences, aggregating approximately $200. In recognition of the uncertainty regarding the ultimate amount of income tax benefits to be derived, the Company has recorded a full valuation allowance at October 15, 2004.

F-7

Millstream II Acquisition Corporation
(a corporation in the development stage)

Notes to Financial Statements (Continued)

The effective tax rate differs from the statutory rate of 34% due to the increase in the valuation allowance.

Loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.

2.    Proposed Public Offering

The Proposed Offering calls for the Company to offer for public sale up to 4,000,000 units ("Units"). Each Unit consists of one share of the Company's common stock, $.0001 par value, and two Redeemable Common Stock Purchase Warrants ("Warrants"). Each Warrant will entitle the holder to purchase from the Company one share of common stock at an exercise price of $5.00 commencing the later of the completion of a business combination with a target business and one year from the effective date of the Proposed Offering and expiring four years from the effective date of the Proposed Offering. The Warrants will be redeemable, upon prior written consent of EarlyBirdCapital, Inc., at a price of $.01 per Warrant upon 30 days' notice after the Warrants become exercisable, only in the event that the last sale price of the common stock is at least $8.50 per share for any 20 trading days within a 30 trading day period ending on the third day prior to the date on which notice of redemption is given.

3.    Note Payable, Stockholder

The Company issued a $35,000 unsecured promissory note to an Initial Stockholder, who is also an officer, on September 29, 2004. The note is non-interest bearing and is payable on the earlier of September 29, 2005 or the consummation of the Proposed Offering. Due to the short-term nature of the note, the fair value of the note approximates its carrying amount.

4.    Commitment

The Company presently occupies office space provided by an affiliate of an Initial Stockholder. Such affiliate has agreed that, until the acquisition of a target business by the Company, it will make such office space, as well as certain office and secretarial services, available to the Company, as may be required by the Company from time to time. The Company has agreed to pay such affiliate $7,500 per month for such services commencing on the effective date of the Proposed Offering.

5.    Preferred Stock

The Company is authorized to issue 1,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may be determined from time to time by the Board of Directors.

6.    Subsequent Event

On December 7, 2004, the Company's Board of Directors authorized a stock dividend of 0.1428571 shares of common stock for each outstanding share of common stock outstanding. All references in the accompanying financial statements to the number of shares of stock have been retroactively restated to reflect this transaction.

F-8

Until _______________, 2004, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

No dealer, salesperson or any other person is authorized to give any information or make any representations in connection with this offering other than those contained in this prospectus and, if given or made, the information or representations must not be relied upon as having been authorized by us. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any security other than the securities offered by this prospectus, or an offer to sell or a solicitation of an offer to buy any securities by anyone in any jurisdiction in which the offer or solicitation is not authorized or is unlawful.

$24,000,000

Millstream II Acquisition Corporation

4,000,000 Units

PROSPECTUS

EarlyBirdCapital, Inc.

                                 , 2004

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.    Other Expenses of Issuance and Distribution.

The estimated expenses payable by us in connection with the offering described in this registration statement (other than the underwriting discount and commissions and the Representative's non-accountable expense allowance) will be as follows:

Initial Trustees' fee				$	1,000.00	(1)
SEC Registration Fee					10,176.56
NASD filing fee					8,532.01
Accounting fees and expenses					25,000.00
Printing and engraving expenses					50,000.00
Directors & Officers liability insurance premiums					60,000.00	(2)
Legal fees and expenses					240,000.00
Blue sky services and expenses					50,000.00
Miscellaneous					40,291.43	(3)
Total				$	485,000.00

(1)

In addition to the initial acceptance fee that is charged by Continental Stock Transfer & Trust Company, as trustee, the registrant will be required to pay to Continental Stock Transfer & Trust Company annual fees of $3,000 for acting as trustee, $4,800 for acting as transfer agent of the registrant's common stock, $2,400 for acting as warrant agent for the registrant's warrants and $1,800 for acting as escrow agent.

(2)	This amount represents the approximate amount of Director and Officer liability insurance premiums the registrant anticipates paying following the consummation of its initial public offering and until it consummates a business combination.

(3)	This amount represents additional expenses that may be incurred by the Company in connection with the offering over and above those specifically listed above, including distribution and mailing costs.

Item 14.    Indemnification of Directors and Officers.

Our certificate of incorporation provides that all directors, officers, employees and agents of the registrant shall be entitled to be indemnified by us to the fullest extent permitted by Section 145 of the Delaware General Corporation Law.

Section 145 of the Delaware General Corporation Law concerning indemnification of officers, directors, employees and agents is set forth below.

"Section 145. Indemnification of officers, directors, employees and agents; insurance.

(a) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to

II-1

believe the person's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person's conduct was unlawful.

(b) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

(c) To the extent that a present or former director or officer of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections (a) and (b) of this section, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith.

(d) Any indemnification under subsections (a) and (b) of this section (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because the person has met the applicable standard of conduct set forth in subsections (a) and (b) of this section. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (1) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (2) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (3) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (4) by the stockholders.

(e) Expenses (including attorneys' fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the corporation as authorized in this section. Such expenses (including attorneys' fees) incurred by former directors and officers or other employees and agents may be so paid upon such terms and conditions, if any, as the corporation deems appropriate.

(f) The indemnification and advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office.

(g) A corporation shall have power to purchase and maintain insurance on behalf of any person who is or was director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person

II-2

and incurred by such person in any such capacity, or arising out of such person's status as such, whether or not the corporation would have the power to indemnify such person against such liability under this section.

(h) For purposes of this section, references to "the corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under this section with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued.

(i) For purposes of this section, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to "serving at the request of the corporation" shall include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the corporation" as referred to in this section.

(j) The indemnification and advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

(k) The Court of Chancery is hereby vested with exclusive jurisdiction to hear and determine all actions for advancement of expenses or indemnification brought under this section or under any bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. The Court of Chancery may summarily determine a corporation's obligation to advance expenses (including attorneys' fees)."

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers, and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment of expenses incurred or paid by a director, officer or controlling person in a successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to the court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

Paragraph B of Article Eighth of our certificate of incorporation provides:

"The Corporation, to the full extent permitted by Section 145 of the GCL, as amended from time to time, shall indemnify all persons whom it may indemnify pursuant thereto. Expenses (including attorneys' fees) incurred by an officer or director in defending any civil, criminal, administrative, or investigative action, suit or proceeding for which such officer or director may be entitled to indemnification hereunder shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized hereby."

Pursuant to the Underwriting Agreement filed as Exhibit 1.1 to this Registration Statement, we have agreed to indemnify the Underwriter and the Underwriter has agreed to indemnify us against certain civil liabilities that may be incurred in connection with this offering, including certain liabilities under the Securities Act.

II-3

Item 15.    Recent Sales of Unregistered Securities.

(a) During the past three years, we sold the following shares of common stock without registration under the Securities Act:

Stockholders				Number of Shares
Arthur Spector					347,500
Spector Family Trust					347,500
Dr. Heinz C. Schimmelbusch					60,000
Robert E. Keith, Jr.					60,000
Don K. Rice					60,000

Such shares were issued on September 24, 2004 in connection with our organization pursuant to the exemption from registration contained in Section 4(2) of the Securities Act as they were sold to sophisticated, wealthy individuals. The shares issued to the individuals and entities above were sold for an aggregate offering price of $25,000 at an average purchase price of approximately $0.029 per share. In December 2004, we authorized a stock dividend of 0.1428571 shares of common stock for each outstanding share of common stock, effectively lowering the purchase price to $0.025 per share. No underwriting discounts or commissions were paid with respect to such sales.

Item 16.    Exhibits and Financial Statement Schedules.

(a) The following exhibits are filed as part of this Registration Statement:

Exhibit No.				Description
1.1				Form of Underwriting Agreement.
1.2				Form of Selected Dealers Agreement.
3.1				Amended and Restated Certificate of Incorporation.*
3.2				By-laws.*
4.1				Specimen Unit Certificate.*
4.2				Specimen Common Stock Certificate.*
4.3				Specimen Warrant Certificate.*
4.4				Form of Unit Purchase Option to be granted to Representative.
4.5				Form of Warrant Agreement between Continental Stock Transfer & Trust Company and the Registrant.
5.1				Opinion of Graubard Miller.
10.1				Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and Arthur Spector.*
10.2				Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and the Spector Family Trust.*
10.3				Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and Dr. Heinz C. Schimmelbusch.*
10.4				Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and Robert E. Keith, Jr.*
10.5				Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and Don K. Rice.*

II-4

Exhibit No.				Description
10.6				Form of Investment Management Trust Agreement between Continental Stock Transfer & Trust Company and the Registrant.
10.7				Form of Stock Escrow Agreement between the Registrant, Continental Stock Transfer & Trust Company and the Initial Stockholders.
10.8				Form of Letter Agreement between 400 Building LLC and Registrant regarding administrative support.*
10.9				Promissory Note, dated September 29, 2004, in the principal amount of $35,000 issued to Arthur Spector.*
10.10				Form of Registration Rights Agreement among the Registrant and the Initial Stockholders.*
10.11				Warrant Purchase Agreement among Arthur Spector and EarlyBirdCapital, Inc.*
23.1				Consent of Goldstein Golub Kessler LLP.
23.2				Consent of Graubard Miller (included in Exhibit 5.1).
24				Power of Attorney.*

*	Previously filed.

Item 17.    Undertakings.

(a) The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

i. To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

ii. To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement.

iii. To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(b) The undersigned hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing

II-5

provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(d) The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-6

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Philadelphia, State of Pennsylvania, on the 8^th day of December, 2004.

				MILLSTREAM II ACQUISITION CORPORATION
				By:				/s/ Arthur Spector
								Arthur Spector
								Chairman of the Board, Chief Executive Officer and President (Principal Executive Officer)

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Name				Position				Date
/s/ Arthur Spector Arthur Spector				Chairman of the Board, Chief Executive Officer and President (Principal financial and accounting officer)				December 8, 2004
/s/ Robert E. Keith, Jr.* Robert E. Keith, Jr.				Director				December 8, 2004
/s/ Don K. Rice* Don K. Rice				Director				December 8, 2004
/s/ Heinz C. Schimmelbusch* Dr. Heinz C. Schimmelbusch				Director				December 8, 2004

*	By Arthur Spector, Power of Attorney

II-7

EXHIBIT INDEX

Exhibit No.				Description
1.1				Form of Underwriting Agreement.
1.2				Form of Selected Dealers Agreement.
3.1				Amended and Restated Certificate of Incorporation.*
3.2				By-laws.*
4.1				Specimen Unit Certificate.*
4.2				Specimen Common Stock Certificate.*
4.3				Specimen Warrant Certificate.*
4.4				Form of Unit Purchase Option to be granted to Representative.
4.5				Form of Warrant Agreement between Continental Stock Transfer & Trust Company and the Registrant.
5.1				Opinion of Graubard Miller.
10.1				Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and Arthur Spector.*
10.2				Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and the Spector Family Trust.*
10.3				Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and Dr. Heinz C. Schimmelbusch.*
10.4				Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and Robert E. Keith, Jr.*
10.5				Letter Agreement among the Registrant, EarlyBirdCapital, Inc. and Don K. Rice.*
10.6				Form of Investment Management Trust Agreement between Continental Stock Transfer & Trust Company and the Registrant.
10.7				Form of Stock Escrow Agreement between the Registrant, Continental Stock Transfer & Trust Company and the Initial Stockholders.
10.8				Form of Letter Agreement between 400 Building LLC and Registrant regarding administrative support.*
10.9				Promissory Note, dated September 29, 2004, in the principal amount of $35,000 issued to Arthur Spector.*
10.10				Form of Registration Rights Agreement among the Registrant and the Initial Stockholders.*
10.11				Warrant Purchase Agreement among Arthur Spector and EarlyBirdCapital, Inc.*
23.1				Consent of Goldstein Golub Kessler LLP.
23.2				Consent of Graubard Miller (included in Exhibit 5.1).
24				Power of Attorney.*

*	Previously filed.

EX-1.1

                                                                     EXHIBIT 1.1

















                             UNDERWRITING AGREEMENT

                                     BETWEEN

                      MILLSTREAM II ACQUISITION CORPORATION

                                       AND

                             EARLYBIRDCAPITAL, INC.



















                       DATED: _____________________, 2004





                      MILLSTREAM II ACQUISITION CORPORATION


                             UNDERWRITING AGREEMENT



                                                              New York, New York
                                                                 _________, 2004



EarlyBirdCapital, Inc.
600 Third Avenue, 33rd Floor
New York, New York  10016

Dear Sirs:

                  The undersigned, Millstream II Acquisition Corporation, a
Delaware corporation ("Company"), hereby confirms its agreement with
EarlyBirdCapital, Inc. (being referred to herein variously as "you," "EBC" or
the "Representative") and with the other underwriters named on Schedule I hereto
for which EBC is acting as Representative (the Representative and the other
Underwriters being collectively called the "Underwriters" or, individually, an
"Underwriter") as follows:

1. Purchase and Sale of Securities.

         1.1      Firm Securities.

                  1.1.1 Purchase of Firm Units. On the basis of the
representations and warranties herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to issue and sell, severally and
not jointly, to the several Underwriters, an aggregate of 4,000,000 units ("Firm
Units") of the Company, at a purchase price (net of discounts and commissions)
of $5.55 per Firm Unit. The Underwriters, severally and not jointly, agree to
purchase from the Company the number of Firm Units set forth opposite their
respective names on Schedule I attached hereto and made a part hereof at a
purchase price (net of discounts and commissions) of $5.55 per Firm Unit. The
Firm Units are to be offered initially to the public ("Offering") at the
offering price of $6.00 per Firm Unit. Each Firm Unit consists of one share of
the Company's common stock, par value $.0001 per share ("Common Stock"), and two
warrants ("Warrant(s)"). The shares of Common Stock and the Warrants included in
the Firm Units will not be separately transferable until 90 days after the
effective date ("Effective Date") of the Registration Statement (as defined in
Section 2.1.1 hereof) unless EBC informs the Company of its decision to allow
earlier separate trading, but in no event will EBC allow separate trading until
the preparation of an audited balance sheet of the Company reflecting receipt by
the Company of the proceeds of the Offering and the filing of a Form 8-K by the
Company which includes such balance sheet. Each Warrant entitles its holder to
exercise it to purchase one share of Common Stock for $5.00 during the period
commencing on the later of the consummation by the Company of its "Business
Combination" or one year from the Effective Date of the Registration Statement
and terminating on the four-year anniversary of the Effective Date. "Business
Combination" shall mean any merger, capital stock exchange, asset acquisition or
other similar business combination consummated by the Company with an operating
business (as described more fully in the Registration Statement).

                  1.1.2 Payment and Delivery. Delivery and payment for the Firm
Units shall be made at 10:00 A.M., New York time, on the third business day
following the effective date of the Registration Statement (or the fourth
business day following the effective date, if the Registration Statement is
declared


                                       1


effective after 4:30 p.m.) or at such earlier time as shall be agreed upon by
the Representative and the Company at the offices of the Representative or at
such other place as shall be agreed upon by the Representative and the Company.
The hour and date of delivery and payment for the Firm Units are called "Closing
Date." Payment for the Firm Units shall be made on the Closing Date at the
Representative's election by wire transfer in Federal (same day) funds or by
certified or bank cashier's check(s) in New York Clearing House funds, payable
as follows: $20,640,000 of the proceeds received by the Company for the Firm
Units shall be deposited in the trust fund established by the Company for the
benefit of the Public Stockholders (defined in Section 8.8) as described in the
Registration Statement ("Trust Fund") pursuant to the terms of an Investment
Management Trust Agreement ("Trust Agreement") and the remaining proceeds shall
be paid to the order of the Company upon delivery to you of certificates (in
form and substance satisfactory to the Underwriters) representing the Firm Units
(or through the facilities of the Depository Trust Company ("DTC")) for the
account of the Underwriters. The Firm Units shall be registered in such name or
names and in such authorized denominations as the Representative may request in
writing at least two full business days prior to the Closing Date. The Company
will permit the Representative to examine and package the Firm Units for
delivery, at least one full business day prior to the Closing Date. The Company
shall not be obligated to sell or deliver the Firm Units except upon tender of
payment by the Representative for all the Firm Units.

         1.2      Over-Allotment Option.

                  1.2.1 Option Units. For the purposes of covering any
over-allotments in connection with the distribution and sale of the Firm Units,
the Underwriters are hereby granted, severally and not jointly, an option to
purchase up to an additional 600,000 units from the Company ("Over-allotment
Option"). Such additional 600,000 units are hereinafter referred to as "Option
Units." The Firm Units and the Option Units are hereinafter collectively
referred to as the "Units," and the Units, the shares of Common Stock and the
Warrants included in the Units and the shares of Common Stock issuable upon
exercise of the Warrants are hereinafter referred to collectively as the "Public
Securities." The purchase price to be paid for the Option Units will be the same
price per Option Unit as the price per Firm Unit set forth in Section 1.1.1
hereof.

                  1.2.2 Exercise of Option. The Over-allotment Option granted
pursuant to Section 1.2.1 hereof may be exercised by the Representative as to
all (at any time) or any part (from time to time) of the Option Units within 45
days after the Effective Date. The Underwriters will not be under any obligation
to purchase any Option Units prior to the exercise of the Over-allotment Option.
The Over-allotment Option granted hereby may be exercised by the giving of oral
notice to the Company by the Representative, which must be confirmed in writing
by overnight mail or facsimile transmission setting forth the number of Option
Units to be purchased and the date and time for delivery of and payment for the
Option Units (the "Option Closing Date"), which will not be later than five full
business days after the date of the notice or such other time as shall be agreed
upon by the Company and the Representative, at the offices of the Representative
or at such other place as shall be agreed upon by the Company and the
Representative. Upon exercise of the Over-allotment Option, the Company will
become obligated to convey to the Underwriters, and, subject to the terms and
conditions set forth herein, the Underwriters will become obligated to purchase,
the number of Option Units specified in such notice.

                  1.2.3 Payment and Delivery. Payment for the Option Units shall
be made on the Option Closing Date at the Representative's election by wire
transfer in Federal (same day) funds or by certified or bank cashier's check(s)
in New York Clearing House funds, payable as follows: $________ per Option Unit
shall be deposited in the Trust Fund pursuant to the Trust Agreement and the
remaining proceeds shall be paid to the order of the Company upon delivery to
you of certificates (in form and substance satisfactory to the Underwriters)
representing the Option Units (or through the facilities of DTC) for the account
of the Underwriters. The certificates representing the Option Units to be
delivered will be in such denominations and registered in such names as the
Representative requests not less than two full business days prior to the
Closing Date or the Option Closing Date, as the case may be, and will be made
available to the Representative for


                                       2


inspection, checking and packaging at the aforesaid office of the Company's
transfer agent or correspondent not less than one full business day prior to
such Closing Date.

         1.3      Representative's Purchase Option.

                  1.3.1 Purchase Option. The Company hereby agrees to issue and
sell to the Representative (and/or their designees) on the Effective Date an
option ("Representative's Purchase Option") for the purchase of an aggregate of
300,000 units ("Representative's Units") for an aggregate purchase price of
$100. Each of the Representative's Units is identical to the Firm Units except
that the Warrants included in the Representative's Units ("Representative's
Warrants") have an exercise price of $6.25 (125% of the exercise price of the
Warrants included in the Units sold to the public). The Representative's
Purchase Option shall be exercisable, in whole or in part, commencing on the
later of (i) one year from the Effective Date and (ii) the earlier of the
consummation of a Business Combination or the distribution of the Trust Fund to
the Public Stockholders and expiring on the five-year anniversary of the
Effective Date at an initial exercise price per Representative's Unit of $9.90,
which is equal to one hundred sixty five percent (165%) of the initial public
offering price of a Unit. The Representative's Purchase Option, the
Representative's Units, the Representative's Warrants and the shares of Common
Stock issuable upon exercise of the Representative's Warrants are hereinafter
referred to collectively as the "Representative's Securities." The Public
Securities and the Representative's Securities are hereinafter referred to
collectively as the "Securities." The Representative understands and agrees that
there are significant restrictions against transferring the Representative's
Purchase Option during the first year after the Effective Date, as set forth in
Section 3 of the Representative's Purchase Option.

                  1.3.2 Payment and Delivery. Delivery and payment for the
Representative's Purchase Option shall be made on the Closing Date. The Company
shall deliver to the Underwriters, upon payment therefor, certificates for the
Representative's Purchase Option in the name or names and in such authorized
denominations as the Representative may request.

2. Representations and Warranties of the Company. The Company represents and
warrants to the Underwriters as follows:

         2.1      Filing of Registration Statement.

                  2.1.1 Pursuant to the Act. The Company has filed with the
Securities and Exchange Commission ("Commission") a registration statement and
an amendment or amendments thereto, on Form S-1 (File No. 333-119937),
including any related preliminary prospectus ("Preliminary Prospectus"), for the
registration of the Public Securities under the Securities Act of 1933, as
amended ("Act"), which registration statement and amendment or amendments have
been prepared by the Company in conformity with the requirements of the Act, and
the rules and regulations ("Regulations") of the Commission under the Act.
Except as the context may otherwise require, such registration statement, as
amended, on file with the Commission at the time the registration statement
becomes effective (including the prospectus, financial statements, schedules,
exhibits and all other documents filed as a part thereof or incorporated therein
and all information deemed to be a part thereof as of such time pursuant to
paragraph (b) of Rule 430A of the Regulations), is hereinafter called the
"Registration Statement," and the form of the final prospectus dated the
Effective Date included in the Registration Statement (or, if applicable, the
form of final prospectus filed with the Commission pursuant to Rule 424 of the
Regulations), is hereinafter called the "Prospectus." The Registration Statement
has been declared effective by the Commission on the date hereof.


                                       3


                  2.1.2 Pursuant to the Exchange Act. The Company has filed with
the Commission a Form 8-A (File Number 000-_____) providing for the registration
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), of the
Units, the Common Stock and the Warrants. The registration of the Units, Common
Stock and Warrants under the Exchange Act has been declared effective by the
Commission on the date hereof.

         2.2 No Stop Orders, Etc. Neither the Commission nor, to the best of the
Company's knowledge, any state regulatory authority has issued any order or
threatened to issue any order preventing or suspending the use of any
Preliminary Prospectus or has instituted or, to the best of the Company's
knowledge, threatened to institute any proceedings with respect to such an
order.

         2.3      Disclosures in Registration Statement.

                  2.3.1 10b-5 Representation. At the time the Registration
Statement became effective and at all times subsequent thereto up to the Closing
Date and the Option Closing Date, if any, the Registration Statement and the
Prospectus will contain all material statements that are required to be stated
therein in accordance with the Act and the Regulations, and will in all material
respects conform to the requirements of the Act and the Regulations; neither the
Registration Statement nor the Prospectus, nor any amendment or supplement
thereto, on such dates, will contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. When any Preliminary Prospectus was first filed with the
Commission (whether filed as part of the Registration Statement for the
registration of the Securities or any amendment thereto or pursuant to Rule
424(a) of the Regulations) and when any amendment thereof or supplement thereto
was first filed with the Commission, such Preliminary Prospectus and any
amendments thereof and supplements thereto complied or will comply in all
material respects with the applicable provisions of the Act and the Regulations
and did not and will not contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The representation and warranty made in this Section
2.3.1 does not apply to statements made or statements omitted in reliance upon
and in conformity with written information furnished to the Company with respect
to the Underwriters by the Representative expressly for use in the Registration
Statement or Prospectus or any amendment thereof or supplement thereto.


                                       4


                  2.3.2 Disclosure of Agreements. The agreements and documents
described in the Registration Statement and the Prospectus conform to the
descriptions thereof contained therein and there are no agreements or other
documents required to be described in the Registration Statement or the
Prospectus or to be filed with the Commission as exhibits to the Registration
Statement, that have not been so described or filed. Each agreement or other
instrument (however characterized or described) to which the Company is a party
or by which its property or business is or may be bound or affected and (i) that
is referred to in the Prospectus, or (ii) is material to the Company's business,
has been duly and validly executed by the Company, is in full force and effect
and is enforceable against the Company and, to the Company's knowledge, the
other parties thereto, in accordance with its terms, except (x) as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally, (y) as enforceability of any
indemnification or contribution provision may be limited under the federal and
state securities laws, and (z) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought, and none of such agreements or instruments has been assigned by
the Company, and neither the Company nor, to the best of the Company's
knowledge, any other party is in breach or default thereunder and, to the best
of the Company's knowledge, no event has occurred that, with the lapse of time
or the giving of notice, or both, would constitute a breach or default
thereunder. To the best of the Company's knowledge, performance by the Company
of the material provisions of such agreements or instruments will not result in
a violation of any existing applicable law, rule, regulation, judgment, order or
decree of any governmental agency or court, domestic or foreign, having
jurisdiction over the Company or any of its assets or businesses, including,
without limitation, those relating to environmental laws and regulations.

                  2.3.3 Prior Securities Transactions. No securities of the
Company have been sold by the Company or by or on behalf of, or for the benefit
of, any person or persons controlling, controlled by, or under common control
with the Company within the three years prior to the date hereof, except as
disclosed in the Registration Statement.

                  2.3.4 Regulations. The disclosures in the Registration
Statement concerning the effects of Federal, State and local regulation on the
Company's business as currently contemplated are correct in all material
respects and do not omit to state a material fact.

         2.4      Changes After Dates in Registration Statement.

                  2.4.1 No Material Adverse Change. Since the respective dates
as of which information is given in the Registration Statement and the
Prospectus, except as otherwise specifically stated therein, (i) there has been
no material adverse change in the condition, financial or otherwise, or business
prospects of the Company, (ii) there have been no material transactions entered
into by the Company, other than as contemplated pursuant to this Agreement, and
(iii) no member of the Company's management has resigned from any position with
the Company.

                  2.4.2 Recent Securities Transactions, Etc. Subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, and except as may otherwise be indicated or contemplated
herein or therein, the Company has not (i) issued any securities or incurred any
liability or obligation, direct or contingent, for borrowed money; or (ii)
declared or paid any dividend or made any other distribution on or in respect to
its equity securities.

         2.5 Independent Accountants. Goldstein Golub Kessler LLP ("GGK"), whose
report is filed with the Commission as part of the Registration Statement, are
independent accountants as required by the Act and the Regulations. GGK has not,
during the periods covered by the financial statements included in the
Prospectus, provided to the Company any non-audit services, as such term is used
in Section 10A(g) of the Exchange Act.


                                       5


         2.6 Financial Statements. The financial statements, including the notes
thereto and supporting schedules included in the Registration Statement and
Prospectus fairly present the financial position, the results of operations and
the cash flows of the Company at the dates and for the periods to which they
apply; and such financial statements have been prepared in conformity with
generally accepted accounting principles, consistently applied throughout the
periods involved; and the supporting schedules included in the Registration
Statement present fairly the information required to be stated therein. The
Registration Statement discloses all material off-balance sheet transactions,
arrangements, obligations (including contingent obligations), and other
relationships of the Company with unconsolidated entities or other persons that
may have a material current or future effect on the Company's financial
condition, changes in financial condition, results of operations, liquidity,
capital expenditures, capital resources, or significant components of revenues
or expenses.

         2.7 Authorized Capital; Options; Etc. The Company had at the date or
dates indicated in the Prospectus duly authorized, issued and outstanding
capitalization as set forth in the Registration Statement and the Prospectus.
Based on the assumptions stated in the Registration Statement and the
Prospectus, the Company will have on the Closing Date the adjusted stock
capitalization set forth therein. Except as set forth in, or contemplated by,
the Registration Statement and the Prospectus, on the Effective Date and on the
Closing Date, there will be no options, warrants, or other rights to purchase or
otherwise acquire any authorized but unissued shares of Common Stock of the
Company or any security convertible into shares of Common Stock of the Company,
or any contracts or commitments to issue or sell shares of Common Stock or any
such options, warrants, rights or convertible securities.

         2.8      Valid Issuance of Securities; Etc.

                  2.8.1 Outstanding Securities. All issued and outstanding
securities of the Company have been duly authorized and validly issued and are
fully paid and non-assessable; the holders thereof have no rights of rescission
with respect thereto, and are not subject to personal liability by reason of
being such holders; and none of such securities were issued in violation of the
preemptive rights of any holders of any security of the Company or similar
contractual rights granted by the Company. The authorized Common Stock conforms
to all statements relating thereto contained in the Registration Statement and
the Prospectus. The offers and sales of the outstanding Common Stock were at all
relevant times either registered under the Act and the applicable state
securities or Blue Sky laws or, based in part on the representations and
warranties of the purchasers of such shares of Common Stock, exempt from such
registration requirements.

                  2.8.2 Securities Sold Pursuant to this Agreement. The
Securities have been duly authorized and, when issued and paid for, will be
validly issued, fully paid and non-assessable; the holders thereof are not and
will not be subject to personal liability by reason of being such holders; the
Securities are not and will not be subject to the preemptive rights of any
holders of any security of the Company or similar contractual rights granted by
the Company; and all corporate action required to be taken for the
authorization, issuance and sale of the Securities has been duly and validly
taken. The Securities conform in all material respects to all statements with
respect thereto contained in the Registration Statement. When issued, the
Representative's Purchase Option, the Representative's Warrants and the Warrants
will constitute valid and binding obligations of the Company to issue and sell,
upon exercise thereof and payment of the respective exercise prices therefor,
the number and type of securities of the Company called for thereby in
accordance with the terms thereof and such Representative's Purchase Option, the
Representative's Warrants and the Warrants are enforceable against the Company
in accordance with their respective terms, except (i) as such enforceability may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, (ii) as enforceability of any indemnification or
contribution provision may be limited under the federal and state securities
laws, and (iii) that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.


                                       6


         2.9 Registration Rights of Third Parties. Except as set forth in the
Prospectus, no holders of any securities of the Company or any rights
exercisable for or convertible or exchangeable into securities of the Company
have the right to require the Company to register any such securities of the
Company under the Act or to include any such securities in a registration
statement to be filed by the Company.

         2.10 Validity and Binding Effect of Agreements. This Agreement, the
Warrant Agreement (as defined in Section 2.21 hereof), the Trust Agreement, the
Services Agreement (as defined in Section 3.7.2 hereof) and the Escrow Agreement
(as defined in Section 2.22.2 hereof) have been duly and validly authorized by
the Company and constitute, and the Representative's Purchase Option, has been
duly and validly authorized by the Company and, when executed and delivered,
will constitute, the valid and binding agreements of the Company, enforceable
against the Company in accordance with their respective terms, except (i) as
such enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally, (ii) as enforceability of
any indemnification or contribution provision may be limited under the federal
and state securities laws, and (iii) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.

         2.11 No Conflicts, Etc. The execution, delivery, and performance by the
Company of this Agreement, the Warrant Agreement, the Representative's Purchase
Option, the Trust Agreement, the Services Agreement and the Escrow Agreement,
the consummation by the Company of the transactions herein and therein
contemplated and the compliance by the Company with the terms hereof and thereof
do not and will not, with or without the giving of notice or the lapse of time
or both (i) result in a breach of, or conflict with any of the terms and
provisions of, or constitute a default under, or result in the creation,
modification, termination or imposition of any lien, charge or encumbrance upon
any property or assets of the Company pursuant to the terms of any agreement or
instrument to which the Company is a party except pursuant to the Trust
Agreement referred to in Section 2.24 hereof; (ii) result in any violation of
the provisions of the Amended and Restated Certificate of Incorporation or the
Bylaws of the Company; or (iii) violate any existing applicable law, rule,
regulation, judgment, order or decree of any governmental agency or court,
domestic or foreign, having jurisdiction over the Company or any of its
properties or business.

         2.12 No Defaults; Violations. No material default exists in the due
performance and observance of any term, covenant or condition of any material
license, contract, indenture, mortgage, deed of trust, note, loan or credit
agreement, or any other agreement or instrument evidencing an obligation for
borrowed money, or any other material agreement or instrument to which the
Company is a party or by which the Company may be bound or to which any of the
properties or assets of the Company is subject. The Company is not in violation
of any term or provision of its Amended and Restated Certificate of
Incorporation or Bylaws or in violation of any material franchise, license,
permit, applicable law, rule, regulation, judgment or decree of any governmental
agency or court, domestic or foreign, having jurisdiction over the Company or
any of its properties or businesses.

         2.13     Corporate Power; Licenses; Consents.

                  2.13.1 Conduct of Business. The Company has all requisite
corporate power and authority, and has all necessary authorizations, approvals,
orders, licenses, certificates and permits of and from all governmental
regulatory officials and bodies that it needs as of the date hereof to conduct
its business purpose as described in the Prospectus. The disclosures in the
Registration Statement concerning the effects of federal, state and local
regulation on this offering and the Company's business purpose as currently
contemplated are correct in all material respects and do not omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

                  2.13.2 Transactions Contemplated Herein. The Company has all
corporate power and authority to enter into this Agreement and to carry out the
provisions and conditions hereof, and all consents,


                                       7


authorizations, approvals and orders required in connection therewith have been
obtained. No consent, authorization or order of, and no filing with, any court,
government agency or other body is required for the valid issuance, sale and
delivery, of the Securities and the consummation of the transactions and
agreements contemplated by this Agreement, the Warrant Agreement, the
Representative's Purchase Option, the Trust Agreement and the Escrow Agreement
and as contemplated by the Prospectus, except with respect to applicable federal
and state securities laws.

         2.14 D&O Questionnaires. To the best of the Company's knowledge, all
information contained in the questionnaires ("Questionnaires") completed by each
of the Company's stockholders immediately prior to the Offering ("Initial
Stockholders") and provided to the Underwriters as an exhibit to his or her
Insider Letter (as defined in Section 2.22.1) is true and correct and the
Company has not become aware of any information which would cause the
information disclosed in the questionnaires completed by each Initial
Stockholder to become inaccurate and incorrect.

         2.15 Litigation; Governmental Proceedings. There is no action, suit,
proceeding, inquiry, arbitration, investigation, litigation or governmental
proceeding pending or, to the best of the Company's knowledge, threatened
against, or involving the Company or, to the best of the Company's knowledge,
any Initial Stockholder, which has not been disclosed in the Registration
Statement or the Questionnaires.

         2.16 Good Standing. The Company has been duly organized and is validly
existing as a corporation and is in good standing under the laws of its state of
incorporation, and is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which its ownership or lease of
property or the conduct of business requires such qualification, except where
the failure to qualify would not have a material adverse effect on the Company.

         2.17 Stop Orders. The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus or any part
thereof.

         2.18 Transactions Affecting Disclosure to NASD.

                  2.18.1 Finder's Fees. Except as described in the Prospectus,
there are no claims, payments, arrangements, agreements or understandings
relating to the payment of a finder's, consulting or origination fee by the
Company or any Initial Stockholder with respect to the sale of the Securities
hereunder or any other arrangements, agreements or understandings of the Company
or, to the best of the Company's knowledge, any Initial Stockholder that may
affect the Underwriters' compensation, as determined by the National Association
of Securities Dealers, Inc. ("NASD").

                  2.18.2 Payments Within Twelve Months. The Company has not made
any direct or indirect payments (in cash, securities or otherwise) (i) to any
person, as a finder's fee, consulting fee or otherwise, in consideration of such
person raising capital for the Company or introducing to the Company persons who
raised or provided capital to the Company, (ii) to any NASD member or (iii) to
any person or entity that has any direct or indirect affiliation or association
with any NASD member, within the twelve months prior to the Effective Date,
other than payments to EBC.

                  2.18.3 Use of Proceeds. None of the net proceeds of the
Offering will be paid by the Company to any participating NASD member or its
affiliates, except as specifically authorized herein and except as may be paid
in connection with a Business Combination as contemplated by the Prospectus.


                                       8


                  2.18.4 Insiders' NASD Affiliation. Based on questionnaires
distributed to such persons, except as set forth on Schedule 2.18.4, no officer,
director or any beneficial owner of the Company's unregistered securities has
any direct or indirect affiliation or association with any NASD member. The
Company will advise the Representative and its counsel if it learns that any
officer, director or owner of at least 5% of the Company's outstanding Common
Shares is or becomes an affiliate or associated person of an NASD member
participating in the offering.

         2.19 Foreign Corrupt Practices Act. Neither the Company nor any of the
Initial Stockholders or any other person acting on behalf of the Company has,
directly or indirectly, given or agreed to give any money, gift or similar
benefit (other than legal price concessions to customers in the ordinary course
of business) to any customer, supplier, employee or agent of a customer or
supplier, or official or employee of any governmental agency or instrumentality
of any government (domestic or foreign) or any political party or candidate for
office (domestic or foreign) or any political party or candidate for office
(domestic or foreign) or other person who was, is, or may be in a position to
help or hinder the business of the Company (or assist it in connection with any
actual or proposed transaction) that (i) might subject the Company to any damage
or penalty in any civil, criminal or governmental litigation or proceeding, (ii)
if not given in the past, might have had a material adverse effect on the
assets, business or operations of the Company as reflected in any of the
financial statements contained in the Prospectus or (iii) if not continued in
the future, might adversely affect the assets, business, operations or prospects
of the Company. The Company's internal accounting controls and procedures are
sufficient to cause the Company to comply with the Foreign Corrupt Practices Act
of 1977, as amended.

         2.20. Officers' Certificate. Any certificate signed by any duly
authorized officer of the Company and delivered to you or to your counsel shall
be deemed a representation and warranty by the Company to the Underwriters as to
the matters covered thereby.

         2.21 Warrant Agreement. The Company has entered into a warrant
agreement with respect to the Warrants and the Representative's Warrants with
Continental Stock Transfer & Trust Company substantially in the form annexed as
Exhibit 4.5 to the Registration Statement ("Warrant Agreement").

         2.22     Agreements With Initial Stockholders.

                  2.22.1 Insider Letters. The Company has caused to be duly
executed legally binding and enforceable agreements (except (i) as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally, (ii) as enforceability of
any indemnification, contribution or noncompete provision may be limited under
the federal and state securities laws, and (iii) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
the equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought) annexed as Exhibits 10.1, 10.2, 10.3, 10.4
and 10.5 to the Registration Statement ("Insider Letter"), pursuant to which
each of the Initial Stockholders of the Company agrees to certain matters,
including but not limited to, certain matters described as being agreed to by
them under the "Proposed Business" section of the Prospectus.

                  2.22.2 Escrow Agreement. The Company has caused the Initial
Stockholders to enter into an escrow agreement ("Escrow Agreement") with
Continental Stock Transfer & Trust Company ("Escrow Agent") substantially in the
form annexed as Exhibit 10.7 to the Registration Statement, whereby the Common
Stock owned by the Initial Stockholders will be held in escrow by the Escrow
Agent, until the third anniversary of the Effective Date. During such escrow
period, the Initial Stockholders shall be prohibited from selling or otherwise
transferring such shares (except to spouses and children of Initial Stockholders
and trusts established for their benefit and as otherwise set forth in the
Escrow Agreement) but will retain the right to vote such shares. To the
Company's knowledge, the Escrow Agreement is enforceable against each of the
Initial Stockholders and will not, with or without the giving of notice or the
lapse of time or both, result in a breach of, or conflict with any of the terms
and provisions of, or constitute a default under, any agreement or


                                       9


instrument to which any of the Initial Stockholders is a party. The Escrow
Agreement shall not be amended, modified or otherwise changed without the prior
written consent of EBC.

         2.23     Intentionally Omitted.

         2.24     Investment Management Trust  Agreement. The Company has
entered into the Trust Agreement with respect to certain proceeds of the
Offering substantially in the form annexed as Exhibit 10.6 to the Registration
Statement.

         2.25 Covenants Not to Compete. No Initial Stockholder, employee,
officer or director of the Company is subject to any noncompetition agreement or
non-solicitation agreement with any employer or prior employer which could
materially affect his ability to be an Initial Stockholder, employee, officer
and/or director of the Company.

         2.26 Investments. No more than 45% of the "value" (as defined in
Section 2(a)(41) of the Investment Company Act of 1940 ("Investment Company
Act")) of the Company's total assets consist of, and no more than 45% of the
Company's net income after taxes is derived from, securities other than
"Government securities" (as defined in Section 2(a)(16) of the Investment
Company Act).

         2.27 Subsidiaries. The Company does not own an interest in any
corporation, partnership, limited liability company, joint venture, trust or
other business entity.

         2.28     Related Party Transactions.  There are no business
relationships or related party transactions involving the Company or any other
person required to be described in the Prospectus that have not been described
as required.

3. Covenants of the Company. The Company covenants and agrees as follows:

         3.1 Amendments to Registration Statement. The Company will deliver to
the Representative, prior to filing, any amendment or supplement to the
Registration Statement or Prospectus proposed to be filed after the Effective
Date and not file any such amendment or supplement to which the Representative
shall reasonably object in writing.

         3.2      Federal Securities Laws.

                  3.2.1 Compliance. During the time when a Prospectus is
required to be delivered under the Act, the Company will use all reasonable
efforts to comply with all requirements imposed upon it by the Act, the
Regulations and the Exchange Act and by the regulations under the Exchange Act,
as from time to time in force, so far as necessary to permit the continuance of
sales of or dealings in the Public Securities in accordance with the provisions
hereof and the Prospectus. If at any time when a Prospectus relating to the
Public Securities is required to be delivered under the Act, any event shall
have occurred as a result of which, in the opinion of counsel for the Company or
counsel for the Underwriters, the Prospectus, as then amended or supplemented,
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading, or if
it is necessary at any time to amend the Prospectus to comply with the Act, the
Company will notify the Representative promptly and prepare and file with the
Commission, subject to Section 3.1 hereof, an appropriate amendment or
supplement in accordance with Section 10 of the Act.

                  3.2.2 Filing of Final Prospectus. The Company will file the
Prospectus (in form and substance satisfactory to the Representative) with the
Commission pursuant to the requirements of Rule 424 of the Regulations.


                                       10


         3.2.3 Exchange Act Registration. Until the earlier of five years from
the Effective Date, or until such earlier time upon which the Company is
required to be liquidated, the Company will use its best efforts to maintain the
registration of the Units, Common Stock and Warrants under the provisions of the
Exchange Act. The Company will not deregister the Units under the Exchange Act
without the prior written consent of EBC.

         3.3 Blue Sky Filings. The Company will endeavor in good faith, in
cooperation with the Representative, at or prior to the time the Registration
Statement becomes effective, to qualify the Public Securities for offering and
sale under the securities laws of such jurisdictions as the Representative may
reasonably designate, provided that no such qualification shall be required in
any jurisdiction where, as a result thereof, the Company would be subject to
service of general process or to taxation as a foreign corporation doing
business in such jurisdiction. In each jurisdiction where such qualification
shall be effected, the Company will, unless the Representative agrees that such
action is not at the time necessary or advisable, use all reasonable efforts to
file and make such statements or reports at such times as are or may be required
by the laws of such jurisdiction.

         3.4 Delivery to Underwriters of Prospectuses. The Company will deliver
to each of the several Underwriters, without charge, from time to time during
the period when the Prospectus is required to be delivered under the Act or the
Exchange Act, such number of copies of each Preliminary Prospectus and the
Prospectus as such Underwriters may reasonably request and, as soon as the
Registration Statement or any amendment or supplement thereto becomes effective,
deliver to you two original executed Registration Statements, including
exhibits, and all post-effective amendments thereto and copies of all exhibits
filed therewith or incorporated therein by reference and all original executed
consents of certified experts.

         3.5 Effectiveness and Events Requiring Notice to the Representative.
The Company will use its best efforts to cause the Registration Statement to
remain effective and will notify the Representative immediately and confirm the
notice in writing (i) of the effectiveness of the Registration Statement and any
amendment thereto, (ii) of the issuance by the Commission of any stop order or
of the initiation, or the threatening, of any proceeding for that purpose, (iii)
of the issuance by any state securities commission of any proceedings for the
suspension of the qualification of the Public Securities for offering or sale in
any jurisdiction or of the initiation, or the threatening, of any proceeding for
that purpose, (iv) of the mailing and delivery to the Commission for filing of
any amendment or supplement to the Registration Statement or Prospectus, (v) of
the receipt of any comments or request for any additional information from the
Commission, and (vi) of the happening of any event during the period described
in Section 3.4 hereof that, in the judgment of the Company, makes any statement
of a material fact made in the Registration Statement or the Prospectus untrue
or that requires the making of any changes in the Registration Statement or the
Prospectus in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. If the Commission or
any state securities commission shall enter a stop order or suspend such
qualification at any time, the Company will make every reasonable effort to
obtain promptly the lifting of such order.

         3.6 Review of Financial Statements. Until the earlier of five years
from the Effective Date, or until such earlier time upon which the Company is
required to be liquidated, the Company, at its expense, shall cause its
regularly engaged independent certified public accountants to review (but not
audit) the Company's financial statements for each of the first three fiscal
quarters prior to the announcement of quarterly financial information, the
filing of the Company's Form 10-Q quarterly report and the mailing of quarterly
financial information to stockholders.

         3.7      Affiliated Transactions.

3.7.1 Business Combinations. The Company will not consummate a Business
Combination with any entity which is affiliated with any Initial Stockholder
unless the Company obtains an opinion from an independent investment banking
firm that the Business Combination is fair to the Company's stockholders from a
financial perspective.


                                       11


         3.7.2 Administrative Services. The Company has entered into an
agreement ("Services Agreement") with 400 Building LLC ("Affiliate")
substantially in the form annexed as Exhibit 10.8 to the Registration Statement
pursuant to which the Affiliate will make available to the Company general and
administrative services including office space, utilities and secretarial
support for the Company's use for $7,500 per month.

         3.7.3 Compensation. Except as set forth above in this Section 3.7, the
Company shall not pay any Initial Stockholder or any of their affiliates any
fees or compensation from the Company, for services rendered to the Company
prior to, or in connection with, the consummation of a Business Combination;
provided that the Initial Stockholders shall be entitled to reimbursement from
the Company for their reasonable out-of-pocket expenses incurred in connection
with seeking and consummating a Business Combination.

         3.8 Secondary Market Trading and Standard & Poor's. The Company will
apply to be included in Standard & Poor's Daily News and Corporation Records
Corporate Descriptions for a period of five years from the consummation of a
Business Combination. Promptly after the consummation of the Offering, the
Company shall take such steps as may be necessary to obtain a secondary market
trading exemption for the Company's securities in the State of California. The
Company shall also take such other action as may be reasonably requested by the
Representative to obtain a secondary market trading exemption in such other
states as may be requested by the Representative.

         3.9      Intentionally Omitted.

         3.10     Financial Public Relations Firm. Promptly after the execution
of a definitive agreement for a Business Combination, the Company shall retain a
financial public relations firm.

         3.11     Reports to the Representative.

                  3.11.1 Periodic Reports, Etc. For a period of five years from
the Effective Date, the Company will furnish to the Representative (Attn: Steven
Levine, President and Managing Director of Investment Banking) and its counsel
copies of such financial statements and other periodic and special reports as
the Company from time to time furnishes generally to holders of any class of its
securities, and promptly furnish to the Representative (i) a copy of each
periodic report the Company shall be required to file with the Commission, (ii)
a copy of every press release and every news item and article with respect to
the Company or its affairs which was released by the Company, (iii) a copy of
each Form 8-K or Schedules 13D, 13G, 14D-1 or 13E-4 received or prepared by the
Company, (iv) five copies of each registration statement filed by the Company
with the Commission under the Securities Act, (v) a copy of monthly statements,
if any, setting forth such information regarding the Company's results of
operations and financial position (including balance sheet, profit and loss
statements and data regarding outstanding purchase orders) as is regularly
prepared by management of the Company and (vi) such additional documents and
information with respect to the Company and the affairs of any future
subsidiaries of the Company as the Representative may from time to time
reasonably request.

                  3.11.2   Intentionally Omitted.

                  3.11.3 Secondary Market Trading Survey. Until such time as the
Public Securities are listed or quoted, as the case may be, on the New York
Stock Exchange, the American Stock Exchange or quoted on the Nasdaq National
Market, or until such earlier time upon which the Company is required to be
liquidated, the Company shall engage Graubard Miller ("GM"), for a one-time fee
of $5,000 payable on the Closing Date , to deliver and update to the
Underwriters on a timely basis, but in any event on the Effective Date and at
the beginning of each fiscal quarter, a written report detailing those states in
which the Public Securities may be traded in non-issuer transactions under the
Blue Sky laws of the fifty States ("Secondary Market Trading Survey").


                                       12


                  3.11.4   Intentionally Omitted.

         3.12 Disqualification of Form S-1. For a period equal to seven years
from the date hereof, the Company will not take any action or actions which may
prevent or disqualify the Company's use of Form S-1 (or other appropriate form)
for the registration of the Warrants and the Representative's Warrants under the
Act.

                  3.13     Payment of Expenses.

                  3.13.1 General Expenses Related to the Offering. The Company
hereby agrees to pay on each of the Closing Date and the Option Closing Date, if
any, to the extent not paid at Closing Date, all expenses incident to the
performance of the obligations of the Company under this Agreement, including
but not limited to (i) the preparation, printing, filing and mailing (including
the payment of postage with respect to such mailing) of the Registration
Statement, the Preliminary and Final Prospectuses and the printing and mailing
of this Agreement and related documents, including the cost of all copies
thereof and any amendments thereof or supplements thereto supplied to the
Underwriters in quantities as may be required by the Underwriters, (ii) the
printing, engraving, issuance and delivery of the Units, the shares of Common
Stock and the Warrants included in the Units and the Representative's Purchase
Option, including any transfer or other taxes payable thereon, (iii) the
qualification of the Public Securities under state or foreign securities or Blue
Sky laws, including the costs of printing and mailing the "Preliminary Blue Sky
Memorandum," and all amendments and supplements thereto, fees and disbursements
of GM retained for such purpose (such fees shall be capped at $35,000 in the
aggregate (of which $15,000 has previously been paid)), and a one-time fee of
$5,000 payable to GM for the preparation of the Secondary Market Trading Survey,
(iv) filing fees, costs and expenses (including disbursements for the
Representative's counsel) incurred in registering the Offering with the NASD,
(v) fees and disbursements of the transfer and warrant agent, (vi) the Company's
expenses associated with "due diligence" meetings arranged by the
Representative, (vii) the preparation, binding and delivery of transaction
"bibles," in form and style reasonably satisfactory to the Representative and
transaction lucite cubes or similar commemorative items in a style and quantity
as reasonably requested by the Representative and (viii) all other costs and
expenses customarily borne by an issuer incident to the performance of its
obligations hereunder which are not otherwise specifically provided for in this
Section 3.13.1. The Company also agrees that, if requested by the
Representative, it will engage and pay for an investigative search firm of the
Representative's choice to conduct an investigation of the principals of the
Company as shall be mutually selected by the Representative and the Company. If
the Offering is successfully consummated, any such amounts paid by the Company
shall be credited against the Representative's nonaccountable expense allowance
(described below in Section 3.13.2). The Representative may deduct from the net
proceeds of the Offering payable to the Company on the Closing Date, or the
Option Closing Date, if any, the expenses set forth in this Agreement to be paid
by the Company to the Representative and others. If the Offering contemplated by
this Agreement is not consummated for any reason whatsoever then the Company
shall reimburse the Underwriters in full for their out of pocket expenses,
including, without limitation, its legal fees (up to a maximum of $50,000) and
disbursements and "road show" and due diligence expenses. The Representative
shall retain such part of the nonaccountable expense allowance (described below
in Section 3.13.2) previously paid as shall equal its actual out-of-pocket
expenses and refund the balance. If the amount previously paid is insufficient
to cover such actual out-of-pocket expenses, the Company shall remain liable for
and promptly pay any other actual out-of-pocket expenses.

                  3.13.2 Nonaccountable Expenses. The Company further agrees
that, in addition to the expenses payable pursuant to Section 3.13.1, on the
Closing Date, it will pay to the Representative a nonaccountable expense
allowance equal to two percent (2%) of the gross proceeds received by the
Company from the sale of the Firm Units, by deduction from the proceeds of the
Offering contemplated herein.


                                       13


                  3.13.3 Expenses Related to Business Combination. The Company
further agrees that, in the event the Representative assists the Company in
trying to obtain stockholder approval of a proposed Business Combination, the
Company agrees to reimburse the Representative for all out-of-pocket expenses,
including, but not limited to, "road-show" and due diligence expenses.

         3.14 Application of Net Proceeds. The Company will apply the net
proceeds from the Offering received by it in a manner consistent with the
application described under the caption "Use Of Proceeds" in the Prospectus.

         3.15 Delivery of Earnings Statements to Security Holders. The Company
will make generally available to its security holders as soon as practicable,
but not later than the first day of the fifteenth full calendar month following
the Effective Date, an earnings statement (which need not be certified by
independent public or independent certified public accountants unless required
by the Act or the Regulations, but which shall satisfy the provisions of Rule
158(a) under Section 11(a) of the Act) covering a period of at least twelve
consecutive months beginning after the Effective Date.

         3.16 Notice to NASD. In the event any person or entity (regardless of
any NASD affiliation or association) is engaged to assist the Company in its
search for a merger candidate or to provide any other merger and acquisition
services, the Company will provide the following to the NASD and EBC prior to
the consummation of the Business Combination: (i) complete details of all
services and copies of agreements governing such services; and (ii)
justification as to why the person or entity providing the merger and
acquisition services should not be considered an "underwriter and related
person" with respect to the Company's initial public offering, as such term is
defined in Rule 2710 of the NASD's Conduct Rules. The Company also agrees that
proper disclosure of such arrangement or potential arrangement will be made in
the proxy statement which the Company will file for purposes of soliciting
stockholder approval for the Business Combination.

         3.17 Stabilization. Except with respect to the agreement between the
Company and Arthur Spector annexed as Exhibit 10.11 to the Registration
Statement, neither the Company, nor, to its knowledge, any of its employees,
directors or stockholders (without the consent of EBC) has taken or will take,
directly or indirectly, any action designed to or that has constituted or that
might reasonably be expected to cause or result in, under the Exchange Act, or
otherwise, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Units.

         3.18 Internal Controls. The Company will maintain a system of internal
accounting controls sufficient to provide reasonable assurances that: (i)
transactions are executed in accordance with management's general or specific
authorization, (ii) transactions are recorded as necessary in order to permit
preparation of financial statements in accordance with generally accepted
accounting principles and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

         3.19 Accountants. Until the earlier of five years from the Effective
Date or the distribution of the Trust Fund referred to in Section 8.8 hereof,
the Company shall retain GGK or another independent public accountant.

         3.20 Form 8-K. The Company shall, on the date hereof, retain its
independent public accountants to audit the financial statements of the Company
as of the Closing Date ("Audited Financial Statements") reflecting the receipt
by the Company of the proceeds of the initial public offering. As soon as the
Audited Financial Statements become available, the Company shall immediately
file a Current Report on Form 8-K with the Commission, which Report shall
contain the Company's Audited Financial Statements.


                                       14


         3.21 NASD. The Company shall advise the NASD if it is aware that any 5%
or greater stockholder of the Company becomes an affiliate or associated person
of an NASD member participating in the distribution of the Company's Public
Securities.

         3.22 Corporate Proceedings. All corporate proceedings and other legal
matters necessary to carry out the provisions of this Agreement and the
transactions contemplated hereby shall have been done to the reasonable
satisfaction to counsel for the Underwriters.

         3.23 Investment Company. The Company shall cause the proceeds of the
Offering to be held in the Trust Fund to be invested only in "government
securities" with specific maturity dates as set forth in the Trust Agreement and
disclosed in the Prospectus. The Company will otherwise conduct its business in
a manner so that it will not become subject to the Investment Company Act.
Furthermore, once the Company consummates a Business Combination, it will be
engaged in a business other than that of investing, reinvesting, owning, holding
or trading securities.

         3.24 Business Combination Announcement. Within five business days
following the consummation by the Company of a Business Combination, the Company
shall cause an announcement ("Business Combination Announcement") to be placed,
at its cost, in The Wall Street Journal, The New York Times and a third
publication to be selected by the Representative announcing the consummation of
the Business Combination and indicating that the Representative was the managing
underwriter in the Offering. The Company shall supply the Representative with a
draft of the Business Combination Announcement and provide the Representative
with a reasonable opportunity to comment thereon. The Company will not place the
Business Combination Announcement without the final approval of the
Representative, which such approval will not be unreasonably withheld.

         3.25 Colorado Trust Filing. In the event the Securities are registered
in the State of Colorado, the Company will cause a Colorado Form ES to be filed
with the Commissioner of the State of Colorado no less than 10 days prior to the
distribution of the Trust Fund in connection with a Business Combination and
will do all things necessary to comply with Section 11-51-302 and Rule 51-3.4 of
the Colorado Securities Act.

4   Conditions of Underwriters' Obligations. The obligations of the several
Underwriters to purchase and pay for the Units, as provided herein, shall be
subject to the continuing accuracy of the representations and warranties of the
Company as of the date hereof and as of each of the Closing Date and the Option
Closing Date, if any, to the accuracy of the statements of officers of the
Company made pursuant to the provisions hereof and to the performance by the
Company of its obligations hereunder and to the following conditions:

         4.1      Regulatory Matters.

                  4.1.1 Effectiveness of Registration Statement. The
Registration Statement shall have become effective not later than 5:00 P.M., New
York time, on the date of this Agreement or such later date and time as shall be
consented to in writing by you, and, at each of the Closing Date and the Option
Closing Date, no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for the purpose shall have
been instituted or shall be pending or contemplated by the Commission and any
request on the part of the Commission for additional information shall have been
complied with to the reasonable satisfaction of Bingham McCutchen LLP, counsel
to the Underwriters ("BM").

                  4.1.2 NASD Clearance. By the Effective Date, the
Representative shall have received clearance from the NASD as to the amount of
compensation allowable or payable to the Underwriters as described in the
Registration Statement.

                  4.1.3 No Blue Sky Stop Orders. No order suspending the sale of
the Units in any jurisdiction designated by you pursuant to Section 3.3 hereof
shall have been issued on either on the Closing


                                       15


Date or the Option Closing Date, and no proceedings for that purpose shall have
been instituted or shall be contemplated.

         4.2      Company Counsel Matters.

                  4.2.1 Effective Date Opinion of Counsel. On the Effective
Date, the Representative shall have received the favorable opinion of GM,
counsel to the Company, dated the Effective Date, addressed to the
Representative and in form and substance satisfactory to BM to the effect that:

                           (i) The Company has been duly organized and is
validly existing as a corporation and is in good standing under the laws of its
state of incorporation. The Company is duly qualified and licensed and in good
standing as a foreign corporation in each jurisdiction in which its ownership or
leasing of any properties or the character of its operations requires such
qualification or licensing, except where the failure to qualify would not have a
material adverse effect on the Company.

                           (ii) All issued and outstanding securities of the
Company have been duly authorized and validly issued and are fully paid and non-
assessable; the holders thereof are not subject to personal liability by reason
of being such holders; and none of such securities were issued in violation of
the preemptive rights of any stockholder of the Company arising by operation of
law or under the Amended and Restated Certificate of Incorporation or Bylaws of
the Company. The offers and sales of the outstanding Common Stock were at all
relevant times either registered under the Act and the applicable state
securities or Blue Sky Laws or exempt from such registration requirements. The
authorized and outstanding capital stock of the Company is as set forth in the
Prospectus.

                           (iii) The Securities have been duly authorized and,
when issued and paid for, will be validly issued, fully paid and non-assessable;
the holders thereof are not and will not be subject to personal liability by
reason of being such holders. The Securities are not and will not be subject to
the preemptive rights of any holders of any security of the Company arising by
operation of law or under the Certificate of Incorporation or Bylaws of the
Company. When issued, the Representative's Purchase Option, the Representative's
Warrants and the Warrants will constitute valid and binding obligations of the
Company to issue and sell, upon exercise thereof and payment therefor, the
number and type of securities of the Company called for thereby and such
Warrants, the Representative's Purchase Option, and the Representative's
Warrants, when issued, in each case, are enforceable against the Company in
accordance with their respective terms, except (a) as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, (b) as enforceability of any indemnification or
contribution provision may be limited under the federal and state securities
laws, and (c) that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought. The
certificates representing the Securities are in due and proper form.

                           (iv) This Agreement, the Warrant Agreement, the
Services Agreement, the Trust Agreement and the Escrow Agreement have each been
duly and validly authorized and, when executed and delivered by the Company,
constitute, and the Representative's Purchase Option has been duly and validly
authorized by the Company and, when executed and delivered, will constitute, the
valid and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except (a) as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, (b) as enforceability of any indemnification or
contribution provisions may be limited under the federal and state securities
laws, and (c) that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.


                                       16


                           (v) The execution, delivery and performance of this
Agreement, the Warrant Agreement, the Representative's Purchase Option, the
Escrow Agreement, the Trust Agreement and the Services Agreement, the issuance
and sale of the Securities, the consummation of the transactions contemplated
hereby and thereby, and compliance by the Company with the terms and provisions
hereof and thereof, do not and will not, with or without the giving of notice or
the lapse of time, or both, (a) to such counsel's knowledge, conflict with, or
result in a breach of, any of the terms or provisions of, or constitute a
default under, or result in the creation or modification of any lien, security
interest, charge or encumbrance upon any of the properties or assets of the
Company pursuant to the terms of, any mortgage, deed of trust, note, indenture,
loan, contract, commitment or other agreement or instrument filed as an exhibit
to the Registration Statement, (b) result in any violation of the provisions of
the Amended and Restated Certificate of Incorporation or the Bylaws of the
Company, or (c) to such counsel's knowledge, violate any statute or any
judgment, order or decree, rule or regulation applicable to the Company of any
court, domestic or foreign, or of any federal, state or other regulatory
authority or other governmental body having jurisdiction over the Company, its
properties or assets.

                           (vi) The Registration Statement, each Preliminary
Prospectus and the Prospectus and any post-effective amendments or supplements
thereto (other than the financial statements included therein, as to which no
opinion need be rendered) each as of their respective dates complied as to form
in all material respects with the requirements of the Act and Regulations. The
Securities and each agreement filed as an exhibit to the Registration Statement
conform in all material respects to the description thereof contained in the
Registration Statement and the Prospectus. No statute or regulation required to
be described in the Prospectus is not described as required, nor are any
contracts or documents of a character required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement not so described or filed as required.

                           (vii) Counsel has participated in conferences with
officers and other representatives of the Company, representatives of the
independent public accountants for the Company and representatives of the
Underwriters at which the contents of the Registration Statement, the Prospectus
and related matters were discussed and although such counsel is not passing upon
and does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement and
Prospectus (except as otherwise set forth in this opinion), no facts have come
to the attention of such counsel which should lead them to believe that either
the Registration Statement or the Prospectus or any amendment or supplement
thereto, as of the date of such opinion contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (it being understood that such counsel need
express no opinion with respect to the financial statements and schedules and
other financial and statistical data included in the Registration Statement or
Prospectus).

                           (viii) The Registration Statement is effective under
the Act. To such counsel's knowledge, no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or threatened under the Act or
applicable state securities laws.

                           (ix) To such counsel's knowledge, there is no action,
suit or proceeding before or by any court of governmental agency or body,
domestic or foreign, now pending, or threatened against the Company that is
required to be described in the Registration Statement.

                  4.2.2 Closing Date and Option Closing Date Opinion of Counsel.
On each of the Closing Date and the Option Closing Date, if any, the
Representative shall have received the favorable opinion of GM, dated the
Closing Date or the Option Closing Date, as the case may be, addressed to the
Representative and in form and substance reasonably satisfactory to BM,
confirming as of the Closing Date and, if applicable, the Option Closing Date,
the statements made by GM in their opinion delivered on the Effective Date.


                                       17


                  4.2.3 Reliance. In rendering such opinion, such counsel may
rely (i) as to matters involving the application of laws other than the laws of
the United States and jurisdictions in which they are admitted, to the extent
such counsel deems proper and to the extent specified in such opinion, if at
all, upon an opinion or opinions (in form and substance reasonably satisfactory
to BM) of other counsel reasonably acceptable to BM, familiar with the
applicable laws, and (ii) as to matters of fact, to the extent they deem proper,
on certificates or other written statements of officers of the Company and
officers of departments of various jurisdictions having custody of documents
respecting the corporate existence or good standing of the Company, provided
that copies of any such statements or certificates shall be delivered to the
Underwriters' counsel if requested. The opinion of counsel for the Company and
any opinion relied upon by such counsel for the Company shall include a
statement to the effect that it may be relied upon by counsel for the
Underwriters in its opinion delivered to the Underwriters.

         4.3 Cold Comfort Letter. At the time this Agreement is executed, and at
each of the Closing Date and the Option Closing Date, if any, you shall have
received a letter, addressed to the Representative and in form and substance
satisfactory in all respects (including the non-material nature of the changes
or decreases, if any, referred to in clause (iii) below) to you and to BM from
GGK dated, respectively, as of the date of this Agreement and as of the Closing
Date and the Option Closing Date, if any:

                  (i) Confirming that they are independent accountants with
respect to the Company within the meaning of the Act and the applicable
Regulations and that they have not, during the periods covered by the financial
statements included in the Prospectus, provided to the Company any non-audit
services, as such term is used in Section 10A(g) of the Exchange Act;

                  (ii) Stating that in their opinion the financial statements of
the Company included in the Registration Statement and Prospectus comply as to
form in all material respects with the applicable accounting requirements of the
Act and the published Regulations thereunder;

                  (iii) Stating that, on the basis of a limited review which
included a reading of the latest available unaudited interim financial
statements of the Company (with an indication of the date of the latest
available unaudited interim financial statements), a reading of the latest
available minutes of the stockholders and board of directors and the various
committees of the board of directors, consultations with officers and other
employees of the Company responsible for financial and accounting matters and
other specified procedures and inquiries, nothing has come to their attention
which would lead them to believe that (a) the unaudited financial statements of
the Company included in the Registration Statement do not comply as to form in
all material respects with the applicable accounting requirements of the Act and
the Regulations or are not fairly presented in conformity with generally
accepted accounting principles applied on a basis substantially consistent with
that of the audited financial statements of the Company included in the
Registration Statement, (b) at a date not later than five days prior to the
Effective Date, Closing Date or Option Closing Date, as the case may be, there
was any change in the capital stock or long-term debt of the Company, or any
decrease in the stockholders' equity of the Company as compared with amounts
shown in the October 15, 2004 balance sheet included in the Registration
Statement, other than as set forth in or contemplated by the Registration
Statement, or, if there was any decrease, setting forth the amount of such
decrease, and (c) during the period from October 15, 2004 to a specified date
not later than five days prior to the Effective Date, Closing Date or Option
Closing Date, as the case may be, there was any decrease in revenues, net
earnings or net earnings per share of Common Stock, in each case as compared
with the corresponding period in the preceding year and as compared with the
corresponding period in the preceding quarter, other than as set forth in or
contemplated by the Registration Statement, or, if there was any such decrease,
setting forth the amount of such decrease;

                  (iv) Setting forth, at a date not later than five days prior
to the Effective Date, the amount of liabilities of the Company (including a
break-down of commercial papers and notes payable to banks);


                                       18


                  (v) Stating that they have compared specific dollar amounts,
numbers of shares, percentages of revenues and earnings, statements and other
financial information pertaining to the Company set forth in the Prospectus in
each case to the extent that such amounts, numbers, percentages, statements and
information may be derived from the general accounting records, including work
sheets, of the Company and excluding any questions requiring an interpretation
by legal counsel, with the results obtained from the application of specified
readings, inquiries and other appropriate procedures (which procedures do not
constitute an examination in accordance with generally accepted auditing
standards) set forth in the letter and found them to be in agreement;

                  (vi) Stating that they have not during the immediately
preceding five year period brought to the attention of the Company's management
any reportable condition related to internal structure, design or operation as
defined in the Statement on Auditing Standards No. 60 "Communication of Internal
Control Structure Related Matters Noted in an Audit," in the Company's internal
controls; and

                  (vii)    Statements as to such other matters  incident to the
transaction contemplated hereby as you may reasonably request.

         4.4      Officers' Certificates.

                  4.4.1 Officers' Certificate. At each of the Closing Date and
the Option Closing Date, if any, the Representative shall have received a
certificate of the Company signed by the Chairman of the Board or the President
and the Secretary or Assistant Secretary of the Company, dated the Closing Date
or the Option Closing Date, as the case may be, respectively, to the effect that
the Company has performed all covenants and complied with all conditions
required by this Agreement to be performed or complied with by the Company prior
to and as of the Closing Date, or the Option Closing Date, as the case may be,
and that the conditions set forth in Section 4.5 hereof have been satisfied as
of such date and that, as of Closing Date and the Option Closing Date, as the
case may be, the representations and warranties of the Company set forth in
Section 2 hereof are true and correct. In addition, the Representative will have
received such other and further certificates of officers of the Company as the
Representative may reasonably request.

                  4.4.2 Secretary's Certificate. At each of the Closing Date and
the Option Closing Date, if any, the Representative shall have received a
certificate of the Company signed by the Secretary or Assistant Secretary of the
Company, dated the Closing Date or the Option Date, as the case may be,
respectively, certifying (i) that the Bylaws and Amended and Restated
Certificate of Incorporation of the Company are true and complete, have not been
modified and are in full force and effect, (ii) that the resolutions relating to
the public offering contemplated by this Agreement are in full force and effect
and have not been modified, (iii) all correspondence between the Company or its
counsel and the Commission, and (iv) as to the incumbency of the officers of the
Company. The documents referred to in such certificate shall be attached to such
certificate.

         4.5 No Material Changes. Prior to and on each of the Closing Date and
the Option Closing Date, if any, (i) there shall have been no material adverse
change or development involving a prospective material adverse change in the
condition or prospects or the business activities, financial or otherwise, of
the Company from the latest dates as of which such condition is set forth in the
Registration Statement and Prospectus, (ii) no action suit or proceeding, at law
or in equity, shall have been pending or threatened against the Company or any
Initial Stockholder before or by any court or federal or state commission, board
or other administrative agency wherein an unfavorable decision, ruling or
finding may materially adversely affect the business, operations, prospects or
financial condition or income of the Company, except as set forth in the
Registration Statement and Prospectus, (iii) no stop order shall have been
issued under the Act and no proceedings therefor shall have been initiated or
threatened by the Commission, and (iv) the Registration Statement and the
Prospectus and any amendments or supplements thereto shall contain all material
statements which are required to be stated therein in accordance with the Act
and the Regulations and shall conform in all material respects to the
requirements of the Act and the Regulations, and neither the Registration
Statement nor the


                                       19


Prospectus nor any amendment or supplement thereto shall contain any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

         4.6      Delivery of Agreements.

                  4.6.1 Effective Date Deliveries. On the Effective Date, the
Company shall have delivered to the Representative executed copies of the Escrow
Agreement, the Trust Agreement, the Warrant Agreement, the Services Agreement
and all of the Insider Letters.

                  4.6.2 Closing Date Deliveries. On the Closing Date, the
Company shall have delivered to the Representative executed copies of the
Representative's Purchase Option.

         4.7 Opinion of Counsel for the Underwriters. All proceedings taken in
connection with the authorization, issuance or sale of the Securities as herein
contemplated shall be reasonably satisfactory in form and substance to you and
to BM and you shall have received from such counsel a favorable opinion, dated
the Closing Date and the Option Closing Date, if any, with respect to such of
these proceedings as you may reasonably require. On or prior to the Effective
Date, the Closing Date and the Option Closing Date, as the case may be, counsel
for the Underwriters shall have been furnished such documents, certificates and
opinions as they may reasonably require for the purpose of enabling them to
review or pass upon the matters referred to in this Section 4.7, or in order to
evidence the accuracy, completeness or satisfaction of any of the
representations, warranties or conditions herein contained.

         4.8 Secondary Market Trading Survey. On the Closing Date, the
Representative shall have received the Secondary Market Trading Survey from GM.

5        Indemnification.

         5.1      Indemnification of Underwriters.

                  5.1.1 General. Subject to the conditions set forth below, the
Company agrees to indemnify and hold harmless each of the Underwriters, and each
dealer selected by you that participates in the offer and sale of the Securities
(each a "Selected Dealer") and each of their respective directors, officers and
employees and each person, if any, who controls any such Underwriter
("controlling person") within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, against any and all loss, liability, claim, damage
and expense whatsoever (including but not limited to any and all legal or other
expenses reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, whether
arising out of any action between any of the Underwriters and the Company or
between any of the Underwriters and any third party or otherwise) to which they
or any of them may become subject under the Act, the Exchange Act or any other
statute or at common law or otherwise or under the laws of foreign countries,
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in (i) any Preliminary Prospectus, the Registration
Statement or the Prospectus (as from time to time each may be amended and
supplemented); (ii) in any post-effective amendment or amendments or any new
registration statement and prospectus in which is included securities of the
Company issued or issuable upon exercise of the Representative's Purchase
Option; or (iii) any application or other document or written communication (in
this Section 5 collectively called "application") executed by the Company or
based upon written information furnished by the Company in any jurisdiction in
order to qualify the Securities under the securities laws thereof or filed with
the Commission, any state securities commission or agency, Nasdaq or any
securities exchange; or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
unless such statement or omission was made in reliance upon and in conformity
with written information furnished to the Company with respect to an Underwriter
by or on behalf of such


                                       20


Underwriter expressly for use in any Preliminary Prospectus, the Registration
Statement or Prospectus, or any amendment or supplement thereof, or in any
application, as the case may be. With respect to any untrue statement or
omission or alleged untrue statement or omission made in the Preliminary
Prospectus, the indemnity agreement contained in this paragraph shall not inure
to the benefit of any Underwriter to the extent that any loss, liability, claim,
damage or expense of such Underwriter results from the fact that a copy of the
Prospectus was not given or sent to the person asserting any such loss,
liability, claim or damage at or prior to the written confirmation of sale of
the Securities to such person as required by the Act and the Regulations, and if
the untrue statement or omission has been corrected in the Prospectus, unless
such failure to deliver the Prospectus was a result of non-compliance by the
Company with its obligations under Section 3.4 hereof. The Company agrees
promptly to notify the Representative of the commencement of any litigation or
proceedings against the Company or any of its officers, directors or controlling
persons in connection with the issue and sale of the Securities or in connection
with the Registration Statement or Prospectus.

                  5.1.2 Procedure. If any action is brought against an
Underwriter , a Selected Dealer or a controlling person in respect of which
indemnity may be sought against the Company pursuant to Section 5.1.1, such
Underwriter or Selected Dealer shall promptly notify the Company in writing of
the institution of such action and the Company shall assume the defense of such
action, including the employment and fees of counsel (subject to the reasonable
approval of such Underwriter or Selected Dealer, as the case may be)} and
payment of actual expenses. Such Underwriter , Selected Dealer or controlling
person shall have the right to employ its or their own counsel in any such case,
but the fees and expenses of such counsel shall be at the expense of such
Underwriter , Selected Dealer or controlling person unless (i) the employment of
such counsel at the expense of the Company shall have been authorized in writing
by the Company in connection with the defense of such action, or (ii) the
Company shall not have employed counsel to have charge of the defense of such
action, or (iii) such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are different
from or additional to those available to the Company (in which case the Company
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events the reasonable fees and
expenses of not more than one additional firm of attorneys selected by the
Underwriter , Selected Dealer and/or controlling person shall be borne by the
Company. Notwithstanding anything to the contrary contained herein, if the
Underwriter, Selected Dealer or controlling person shall assume the defense of
such action as provided above, the Company shall have the right to approve the
terms of any settlement of such action which approval shall not be unreasonably
withheld.

         5.2 Indemnification of the Company. Each Underwriter, severally and not
jointly, agrees to indemnify and hold harmless the Company, its directors,
officers and employees and agents who control the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act against any and all
loss, liability, claim, damage and expense described in the foregoing indemnity
from the Company to the several Underwriters, as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or omissions
made in any Preliminary Prospectus, the Registration Statement or Prospectus or
any amendment or supplement thereto or in any application, in reliance upon, and
in strict conformity with, written information furnished to the Company with
respect to such Underwriter by or on behalf of the Underwriter expressly for use
in such Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment or supplement thereto or in any such application. In case any action
shall be brought against the Company or any other person so indemnified based on
any Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment or supplement thereto or any application, and in respect of which
indemnity may be sought against any Underwriter, such Underwriter shall have the
rights and duties given to the Company, and the Company and each other person so
indemnified shall have the rights and duties given to the several Underwriters
by the provisions of Section 5.1.2.

         5.3      Contribution.

                  5.3.1 Contribution Rights. In order to provide for just and
equitable contribution under the


                                       21


Act in any case in which (i) any person entitled to indemnification under this
Section 5 makes claim for indemnification pursuant hereto but it is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 5 provides for indemnification in
such case, or (ii) contribution under the Act, the Exchange Act or otherwise may
be required on the part of any such person in circumstances for which
indemnification is provided under this Section 5, then, and in each such case,
the Company and the Underwriters shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by said
indemnity agreement incurred by the Company and the Underwriters, as incurred,
in such proportions that the Underwriters are responsible for that portion
represented by the percentage that the underwriting discount appearing on the
cover page of the Prospectus bears to the initial offering price appearing
thereon and the Company is responsible for the balance; provided, that, no
person guilty of a fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Notwithstanding the provisions of
this Section 5.3.1, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Public Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay in respect of such losses, liabilities, claims, damages and
expenses. For purposes of this Section, each director, officer and employee of
an Underwriter or the Company, as applicable, and each person, if any, who
controls an Underwriter or the Company, as applicable, within the meaning of
Section 15 of the Act shall have the same rights to contribution as the
Underwriters or the Company, as applicable.

                  5.3.2 Contribution Procedure. Within fifteen days after
receipt by any party to this Agreement (or its representative) of notice of the
commencement of any action, suit or proceeding, such party will, if a claim for
contribution in respect thereof is to be made against another party
("contributing party"), notify the contributing party of the commencement
thereof, but the omission to so notify the contributing party will not relieve
it from any liability which it may have to any other party other than for
contribution hereunder. In case any such action, suit or proceeding is brought
against any party, and such party notifies a contributing party or its
representative of the commencement thereof within the aforesaid fifteen days,
the contributing party will be entitled to participate therein with the
notifying party and any other contributing party similarly notified. Any such
contributing party shall not be liable to any party seeking contribution on
account of any settlement of any claim, action or proceeding effected by such
party seeking contribution on account of any settlement of any claim, action or
proceeding effected by such party seeking contribution without the written
consent of such contributing party. The contribution provisions contained in
this Section are intended to supersede, to the extent permitted by law, any
right to contribution under the Act, the Exchange Act or otherwise available.
The Underwriters' obligations to contribute pursuant to this Section 5.3 are
several and not joint.

6        Default by an Underwriter.

         6.1 Default Not Exceeding 10% of Firm Units or Option Units. If any
Underwriter or Underwriters shall default in its or their obligations to
purchase the Firm Units or the Option Units, if the over-allotment option is
exercised, hereunder, and if the number of the Firm Units or Option Units with
respect to which such default relates does not exceed in the aggregate 10% of
the number of Firm Units or Option Units that all Underwriters have agreed to
purchase hereunder, then such Firm Units or Option Units to which the default
relates shall be purchased by the non-defaulting Underwriters in proportion to
their respective commitments hereunder.

         6.2 Default Exceeding 10% of Firm Units or Option Units. In the event
that the default addressed in Section 6.1 above relates to more than 10% of the
Firm Units or Option Units, you may in your discretion arrange for yourself or
for another party or parties to purchase such Firm Units or Option Units to
which such default relates on the terms contained herein. If within one business
day after such default relating to more


                                       22


than 10% of the Firm Units or Option Units you do not arrange for the purchase
of such Firm Units or Option Units, then the Company shall be entitled to a
further period of one business day within which to procure another party or
parties satisfactory to you to purchase said Firm Units or Option Units on such
terms. In the event that neither you nor the Company arrange for the purchase of
the Firm Units or Option Units to which a default relates as provided in this
Section 6, this Agreement may be terminated by you or the Company without
liability on the part of the Company (except as provided in Sections 3.15 and 5
hereof) or the several Underwriters (except as provided in Section 5 hereof);
provided, however, that if such default occurs with respect to the Option Units,
this Agreement will not terminate as to the Firm Units; and provided further
that nothing herein shall relieve a defaulting Underwriter of its liability, if
any, to the other several Underwriters and to the Company for damages occasioned
by its default hereunder.

         6.3 Postponement of Closing Date. In the event that the Firm Units or
Option Units to which the default relates are to be purchased by the
non-defaulting Underwriters, or are to be purchased by another party or parties
as aforesaid, you or the Company shall have the right to postpone the Closing
Date or Option Closing Date for a reasonable period, but not in any event
exceeding five business days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus or in any other
documents and arrangements, and the Company agrees to file promptly any
amendment to the Registration Statement or the Prospectus that in the opinion of
counsel for the Underwriters may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any party substituted
under this Section 6 with like effect as if it had originally been a party to
this Agreement with respect to such Securities.

7        Intentionally Omitted.

8        Additional Covenants.

         8.1      Intentionally Omitted.

         8.2 Additional Shares or Options. The Company hereby agrees that until
the consummation of a Business Combination, it shall not issue any shares of
Common Stock or any options or other securities convertible into Common Stock,
or any shares of Preferred Stock which participate in any manner in the Trust
Fund or which vote as a class with the Common Stock on a Business Combination.

         8.3 Trust Fund Waiver Acknowledgment. The Company hereby agrees that it
will not commence its due diligence investigation of any operating business
which the Company seeks to acquire ("Target Business") or obtain the services of
any vendor unless and until such Target Business or vendor acknowledges in
writing, whether through a letter of intent, memorandum of understanding or
other similar document (and subsequently acknowledges the same in any definitive
document replacing any of the foregoing), that (a) it has read the Prospectus
and understands that the Company has established the Trust Fund, initially in an
amount of $17,850,000 for the benefit of the Public Stockholders and that the
Company may disburse monies from the Trust Fund only (i) to the Public
Stockholders in the event they elect to convert their IPO Shares (as defined
below in Section 8.8) or the liquidation of the Company or (ii) to the Company
after it consummates a Business Combination and (b) for and in consideration of
the Company (1) agreeing to evaluate such Target Business for purposes of
consummating a Business Combination with it or (2) agreeing to engage the
services of the vendor, as the case may be, such Target Business or vendor
agrees that it does not have any right, title, interest or claim of any kind in
or to any monies in the Trust Fund ("Claim") and waives any Claim it may have in
the future as a result of, or arising out of, any negotiations, contracts or
agreements with the Company and will not seek recourse against the Trust Fund
for any reason whatsoever.


                                       23


         8.4 Insider Letters. The Company shall not take any action or omit to
take any action which would cause a breach of any of the Insider Letters
executed between each Initial Stockholder and EBC and will not allow any
amendments to, or waivers of, such Insider Letters without the prior written
consent of EBC.

         8.5 Certificate of Incorporation and Bylaws. The Company shall not take
any action or omit to take any action that would cause the Company to be in
breach or violation of its Amended and Restated Certificate of Incorporation or
Bylaws. Prior to the consummation of a Business Combination, the Company will
not amend its Certificate of Incorporation without the prior written consent of
EBC.

         8.6 Blue Sky Requirements. The Company shall provide counsel to the
Representative with ten copies of all proxy information and all related material
filed with the Commission in connection with a Business Combination concurrently
with such filing with the Commission. In addition, the Company shall furnish any
other state in which its initial public offering was registered, such
information as may be requested by such state.

         8.7      Intentionally Omitted.

         8.8 Acquisition/Liquidation Procedure. The Company agrees: (i) that,
prior to the consummation of any Business Combination, it will submit such
transaction to the Company's stockholders for their approval ("Business
Combination Vote") even if the nature of the acquisition is such as would not
ordinarily require stockholder approval under applicable state law; and (ii)
that, in the event that the Company does not effect a Business Combination
within 18 months from the consummation of this Offering (subject to extension
for an additional six-month period, as described in the Prospectus), the Company
will be liquidated and will distribute to all holders of IPO Shares (defined
below) an aggregate sum equal to the Company's "Liquidation Value." With respect
to the Business Combination Vote, the Company shall cause all of the Initial
Stockholders to vote the shares of Common Stock owned by them immediately prior
to this Offering in accordance with the vote of the holders of a majority of the
IPO Shares. At the time the Company seeks approval of any potential Business
Combination, the Company will offer each of holders of the Company's Common
Stock issued in this Offering ("IPO Shares") the right to convert their IPO
Shares at a per share price equal to the amount in the Trust Fund (inclusive of
any interest income therein) on the record date ("Conversion Price") for
determination of stockholders entitled to vote upon the proposal to approve such
Business Combination divided by the total number of IPO Shares. The Company's
"Liquidation Value" shall mean the Company's book value, as determined by the
Company and audited by GGK. In no event, however, will the Company's Liquidation
Value be less than the Trust Fund, inclusive of any net interest income thereon.
If holders of less than 20% in interest of the Company's IPO Shares vote against
such approval of a Business Combination, the Company may, but will not be
required to, proceed with such Business Combination. If the Company elects to so
proceed, it will convert shares, based upon the Conversion Price, from those
holders of IPO Shares who affirmatively requested such conversion and who voted
against the Business Combination. Only holders of IPO Shares shall be entitled
to receive liquidating distributions and the Company shall pay no liquidating
distributions with respect to any other shares of capital stock of the Company.
If holders of 20% or more in interest of the IPO Shares vote against approval of
any potential Business Combination, the Company will not proceed with such
Business Combination and will not convert such shares.

         8.9 Rule 419. The Company agrees that it will use its best efforts to
prevent the Company from becoming subject to Rule 419 under the Act prior to the
consummation of any Business Combination, including but not limited to using its
best efforts to prevent any of the Company's outstanding securities from being
deemed to be a "penny stock" as defined in Rule 3a-51-1 under the Exchange Act
during such period.

         8.10 Affiliated Transactions. The Company shall cause each of the
Initial Stockholders to agree that, in order to minimize potential conflicts of
interest which may arise from multiple affiliations, the Initial Stockholders
will present to the Company for its consideration, prior to presentation to any
other person or company, any suitable opportunity to acquire an operating
business, until the earlier of the consummation by the Company of a Business
Combination, the liquidation of the Company or until such time as the
Initial


                                       24


Stockholders cease to be an officer or director of the Company, subject to any
pre-existing fiduciary obligations the Initial Stockholders might have.

         8.11 Target Net Assets. The Company agrees that the initial Target
Business that it acquires must have a fair market value equal to at least 80% of
the Company's net assets at the time of such acquisition. The fair market value
of such business must be determined by the Board of Directors of the Company
based upon standards generally accepted by the financial community, such as
actual and potential sales, earnings and cash flow and book value. If the Board
of Directors of the Company is not able to independently determine that the
target business has a fair market value of at least 80% of the Company's fair
market value at the time of such acquisition, the Company will obtain an opinion
from an unaffiliated, independent investment banking firm which is a member of
the NASD with respect to the satisfaction of such criteria. The Company is not
required to obtain an opinion from an investment banking firm as to the fair
market value if the Company's Board of Directors independently determines that
the Target Business does have sufficient fair market value.

9     Representations and Agreements to Survive Delivery. Except as the context
otherwise requires, all representations, warranties and agreements contained in
this Agreement shall be deemed to be representations, warranties and agreements
at the Closing Dates and such representations, warranties and agreements of the
Underwriters and Company, including the indemnity agreements contained in
Section 5 hereof, shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any Underwriter, the Company or any
controlling person, and shall survive termination of this Agreement or the
issuance and delivery of the Securities to the several Underwriters until the
earlier of the expiration of any applicable statute of limitations and the
seventh anniversary of the later of the Closing Date or the Option Closing Date,
if any, at which time the representations, warranties and agreements shall
terminate and be of no further force and effect.

10       Effective Date of This Agreement and Termination Thereof.

         10.1     Effective Date. This Agreement shall become  effective on the
Effective Date at the time the Registration Statement is declared effective by
the Commission.

         10.2 Termination. You shall have the right to terminate this Agreement
at any time prior to any Closing Date, (i) if any domestic or international
event or act or occurrence has materially disrupted, or in your opinion will in
the immediate future materially disrupt, general securities markets in the
United States; or (ii) if trading on the New York Stock Exchange, the American
Stock Exchange, the Boston Stock Exchange or on the NASD OTC Bulletin Board (or
successor trading market) shall have been suspended, or minimum or maximum
prices for trading shall have been fixed, or maximum ranges for prices for
securities shall have been fixed, or maximum ranges for prices for securities
shall have been required on the NASD OTC Bulletin Board or by order of the
Commission or any other government authority having jurisdiction, or (iii) if
the United States shall have become involved in a new war or an increase in
major hostilities, or (iv) if a banking moratorium has been declared by a New
York State or federal authority, or (v) if a moratorium on foreign exchange
trading has been declared which materially adversely impacts the United States
securities market, or (vi) if the Company shall have sustained a material loss
by fire, flood, accident, hurricane, earthquake, theft, sabotage or other
calamity or malicious act which, whether or not such loss shall have been
insured, will, in your opinion, make it inadvisable to proceed with the delivery
of the Units, or (vii) if any of the Company's representations, warranties or
covenants hereunder are breached, or (viii) if the Representative shall have
become aware after the date hereof of such a material adverse change in the
conditions or prospects of the Company, or such adverse material change in
general market conditions, including without limitation as a result of terrorist
activities after the date hereof, as in the Representative's judgment would make
it impracticable to proceed with the offering, sale and/or delivery of the Units
or to enforce contracts made by the Underwriters for the sale of the Securities.

         10.3 Expenses. In the event that this Agreement shall not be carried
out for any reason whatsoever, within the time specified herein or any
extensions thereof pursuant to the terms herein, the obligations of the


                                       25


Company to pay the out of pocket expenses related to the transactions
contemplated herein shall be governed by Section 3.13.1 hereof.

         10.4 Indemnification. Notwithstanding any contrary provision contained
in this Agreement, any election hereunder or any termination of this Agreement,
and whether or not this Agreement is otherwise carried out, the provisions of
Section 5 shall not be in any way effected by, such election or termination or
failure to carry out the terms of this Agreement or any part hereof.

117      Miscellaneous.

         11.1 Notices. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and shall be mailed, delivered or
telecopied and confirmed and shall be deemed given when so delivered or
telecopied and confirmed or if mailed, two days after such mailing

If to the Representative:

                  EarlyBirdCapital, Inc.
                  600 Third Avenue, 33rd Floor
                  New York, New York 10016
                  Attn: David M. Nussbaum, Chairman

   Copy to:

                  Bingham McCutchen LLP
                  399 Park Avenue
                  New York, New York 10022
                  Attn: Floyd I. Wittlin, Esq.

If to the Company:

                  Millstream II Acquisition Corporation
                  435 Devon Park Drive
                  Building 400
                  Wayne, Pennsylvania 19087
                  Attn: Arthur Spector

   Copy to:

                  Graubard Miller
                  600 Third Avenue
                  New York, New York 10016
                  Attn: David Alan Miller, Esq.

         11.2 Headings. The headings contained herein are for the sole purpose
of convenience of reference, and shall not in any way limit or affect the
meaning or interpretation of any of the terms or provisions of this Agreement.

         11.3 Amendment. This Agreement may only be amended by a written
instrument executed by each of the parties hereto.

         11.4 Entire Agreement. This Agreement (together with the other
agreements and documents being delivered pursuant to or in connection with this
Agreement) constitute the entire agreement of the parties


                                       26


hereto with respect to the subject matter hereof and thereof, and supersede all
prior agreements and understandings of the parties, oral and written, with
respect to the subject matter hereof.

         11.5 Binding Effect. This Agreement shall inure solely to the benefit
of and shall be binding upon the Representative, the Underwriters, the Company
and the controlling persons, directors and officers referred to in Section 5
hereof, and their respective successors, legal representatives and assigns, and
no other person shall have or be construed to have any legal or equitable right,
remedy or claim under or in respect of or by virtue of this Agreement or any
provisions herein contained.

         11.6 Governing Law. 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. The Company hereby agrees that any action,
proceeding or claim against it arising out of, relating in any way to this
Agreement shall be brought and enforced in the courts of the State of New York
of the United States of America for the Southern District of New York, and
irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive.
The Company hereby waives any objection to such exclusive jurisdiction and that
such courts represent an inconvenient forum. Any such process or summons to be
served upon the Company may be served by transmitting a copy thereof by
registered or certified mail, return receipt requested, postage prepaid,
addressed to it at the address set forth in Section 10 hereof. Such mailing
shall be deemed personal service and shall be legal and binding upon the Company
in any action, proceeding or claim. The Company agrees that the prevailing
party(ies) in any such action shall be entitled to recover from the other
party(ies) all of its reasonable attorneys' fees and expenses relating to such
action or proceeding and/or incurred in connection with the preparation
therefor.

         11.7 Execution in Counterparts. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement, and shall become
effective when one or more counterparts has been signed by each of the parties
hereto and delivered to each of the other parties hereto.

         11.8 Waiver, Etc. The failure of any of the parties hereto to at any
time enforce any of the provisions of this Agreement shall not be deemed or
construed to be a waiver of any such provision, nor to in any way effect the
validity of this Agreement or any provision hereof or the right of any of the
parties hereto to thereafter enforce each and every provision of this Agreement.
No waiver of any breach, non-compliance or non-fulfillment of any of the
provisions of this Agreement shall be effective unless set forth in a written
instrument executed by the party or parties against whom or which enforcement of
such waiver is sought; and no waiver of any such breach, non-compliance or
non-fulfillment shall be construed or deemed to be a waiver of any other or
subsequent breach, non-compliance or non-fulfillment.


                                       27



                  If the foregoing correctly sets forth the understanding
between the Underwriters and the Company, please so indicate in the space
provided below for that purpose, whereupon this letter shall constitute a
binding agreement between us.

                                    Very truly yours,

                                    MILLSTREAM II ACQUISITION CORPORATION



                                    By:    _____________________________________
                                             Name:  Arthur Spector
                                             Title:    Chairman


Accepted on the date first
above written.

EARLYBIRDCAPITAL, INC.



By: ______________________________
     Name:  Steven Levine
     Title: Managing Director


                                       28





                                                                      SCHEDULE I


                      MILLSTREAM II ACQUISITION CORPORATION

                                 4,000,000 UNITS

                                                        Number of Firm Units
          Underwriter                                      to be Purchased
          -----------                                      ---------------

EarlyBirdCapital, Inc.






                                                                  4,000,000

EX-1.2

                             EARLYBIRDCAPITAL, INC.
                                600 THIRD AVENUE
                                   33RD FLOOR
                            NEW YORK, NEW YORK 10016
                ------------------------------------------------

                           SELECTED DEALERS AGREEMENT
                ------------------------------------------------


Dear Sirs:

                  1. Registration under the Securities Act of 1933, as amended
("Act"), of the 4,000,000 Units* of Millstream II Acquisition Corporation
("Company"), as more fully described in the Preliminary Prospectus, dated
November 12, 2004, and in the final prospectus ("Prospectus") which will be
forwarded to you, will become effective in the near future. We, as the
Underwriters, are offering certain of the Units for purchase by a selected group
of dealers ("Selected Dealers") on the terms and conditions stated herein.

Authorized Public Offering Price:   $6.00 per Unit.

Dealers' Selling Concession:        Not to exceed $0.__ per Unit payable upon
                                    termination of this Agreement, except as
                                    provided below. We reserve the right not to
                                    pay such concession on any of the Units
                                    purchased by any of the Selected Dealers
                                    from us and repurchased by us at or below
                                    the price stated above prior to such
                                    termination.

Reallowance:                        You may reallow not in excess of $0.__ per
                                    Unit as a selling concession to dealers who
                                    are members in good standing of the National
                                    Association of Securities Dealers, Inc.
                                    ("NASD") or to foreign dealers who are not
                                    eligible for membership in the NASD and who
                                    have agreed (i) not to sell the Units within
                                    the United States of America, its
                                    territories or possessions or to persons who
                                    are citizens thereof or residents therein,
                                    and (ii) to abide by the applicable Conduct
                                    Rules of the NASD.


- -------------------------
*    Plus the over-allotment option available to the Underwriters to purchase up
     to an additional 600,000 Units.

                                       1



Delivery and Payment:               Delivery of the Units shall be made on or
                                    about ________, 2004 or such later date as
                                    we may advise on not less than one day's
                                    notice to you, at the office of
                                    EarlyBirdCapital, Inc., 600 Third Avenue,
                                    33rd Floor, New York, New York 10016 or at
                                    such other place as we shall specify on not
                                    less than one day's notice to you. Payment
                                    for the Units is to be made, against
                                    delivery, at the authorized public offering
                                    price stated above, or, if we shall so
                                    advise you, at the authorized public
                                    offering price less the dealers' selling
                                    concession stated above, by a certified or
                                    official bank check in New York Clearing
                                    House Funds payable to the order of
                                    EarlyBirdCapital, Inc.

Termination:                        This Agreement shall terminate at the close
                                    of business on the 45th day following the
                                    effective date of the Registration Statement
                                    (of which the enclosed Prospectus forms a
                                    part), unless extended at our discretion for
                                    a period or periods not to exceed in the
                                    aggregate 30 additional days. We may
                                    terminate this Agreement, whether or not
                                    extended, at any time without notice.

                  2. Any of the Units purchased by you hereunder are to be
offered by you to the public at the public offering price, except as herein
otherwise provided and except that a reallowance from such public offering price
not in excess of the amount set forth on the first page of this Agreement may be
allowed as consideration for services rendered in distribution to dealers that
(a) are actually engaged in the investment banking or securities business; (b)
execute the written agreement prescribed by Rule 2740 of the NASD Conduct Rules;
and (c) are either members in good standing of the NASD or foreign banks,
dealers or institutions not eligible for membership in the NASD that represent
to you that they will promptly reoffer such Units at the public offering price
and will abide by the conditions with respect to foreign banks, dealers and
institutions set forth in paragraph 9 below.

                  3. You, by becoming a member of the Selected Dealers, agree
(a) upon effectiveness of the Registration Statement and your receipt of the
Prospectus, to take up and pay for the number of Units allotted and confirmed to
you, (b) not to use any of the Units to reduce or cover any short position you
may have and (c) to make available a copy of the Prospectus to all persons who
on your behalf will solicit orders for the Units prior to the making of such
solicitations by such persons. You are not authorized to give any information or
to make any representations other than those contained in the Prospectus or any
supplements or amendments thereto.

                  4. As contemplated by Rule 15c2-8 under the Securities
Exchange Act of 1934, as amended, we agree to mail a copy of the Prospectus to
any person making a written request therefor during the period referred to in
the rules and regulations adopted under such Act, the mailing to be made to the
address given in the request. You confirm that you have delivered all
preliminary prospectuses and revised preliminary prospectuses, if any, required
to be delivered under the provisions of Rule 15c2-8 and agree to deliver all
copies of the Prospectus required to be delivered thereunder. We have heretofore
delivered to you such preliminary prospectuses as have been required by you,
receipt of which is hereby acknowledged, and will deliver such further
prospectuses as may be requested by you.

                  5. You agree that until termination of this Agreement you will
not make purchases or sales of the Units except (a) pursuant to this Agreement,
(b) pursuant to authorization received from us, or (c) in the ordinary course of
business as broker or agent for a customer pursuant to any unsolicited order.


                                       2



                  6. Additional copies of the Prospectus and any supplements or
amendments thereto shall be supplied in reasonable quantity upon request.

                  7. The Units are offered by us for delivery when, as and if
sold to, and accepted by, us and subject to the terms herein and in the
Prospectus or any supplements or amendments thereto, to our right to vary the
concessions and terms of offering after their release for public sale, to
approval of counsel as to legal matters and to withdrawal, cancellation or
modification of the offer without notice.

                  8. Upon written application to us, you shall be informed as to
the jurisdictions under the securities or blue sky laws of which we believe the
Units are eligible for sale, but we assume no responsibility as to such
eligibility or the right of any member of the Selected Dealers to sell any of
the Units in any jurisdiction. We acknowledge that you have advised us that
sales of the Company's securities cannot be made from the state of New Jersey.
We represent to you that all sales by us of the Company's securities will be
made by our offices outside the state of New Jersey. We have caused to be filed
a Further State Notice relating to such of the Units to be offered to the public
in New York in the form required by, and pursuant to, the provisions of Article
23A of the General Business Law of the State of New York. Upon the completion of
the public offering contemplated herein, each member of the Selected Dealers
agrees to promptly furnish to us, upon our request, territorial distribution
reports setting forth each jurisdiction in which sales of the Units were made by
such member, the number of Units sold in such jurisdiction, and any further
information as we may request, in order to permit us to file on a timely basis
any report that we as the Underwriters of the offering or manager of the
Selected Dealers may be required to file pursuant to the securities or blue sky
laws of any jurisdiction.

                  9. You, by becoming a member of the Selected Dealers,
represent that you are actually engaged in the investment banking or securities
business and that you are (a) a member in good standing of the NASD and will
comply with NASD Conduct Rule 2740, or (b) a foreign dealer or institution that
is not eligible for membership in the NASD and that has agreed (i) not to sell
Units within the United States of America, its territories or possessions or to
persons who are citizens thereof or residents therein; (ii) that any and all
sales shall be in compliance with Rule 2110-01 of the NASD's Conduct Rules;
(iii) to comply, as though it were a member of the NASD, with Rules 2730, 2740
and 2750 of the NASD's Conduct Rules, and to comply with Rule 2420 thereof as
that Rule applies to a non-member broker or dealer in a foreign country.

                  10. Nothing herein shall constitute any members of the
Selected Dealers partners with us or with each other, but you agree,
notwithstanding any prior settlement of accounts or termination of this
Agreement, to bear your proper proportion of any tax or other liability based
upon the claim that the Selected Dealers constitute a partnership, association,
unincorporated business or other separate entity and a like share of any
expenses of resisting any such claim.

                  11. EarlyBirdCapital, Inc. shall be the Managing Underwriter
of the offering and manager of the Selected Dealers and shall have full
authority to take such action as we may deem advisable in respect of all matters
pertaining to the offering or the Selected Dealers or any members of them.
Except as expressly stated herein, or as may arise under the Act, we shall be
under no liability to any member of the Selected Dealers as such for, or in
respect of (i) the validity or value of the Units (ii) the form of, or the
statements contained in, the Prospectus, the Registration Statement of which the
Prospectus forms a part, any supplements or amendments to the Prospectus or such
Registration Statement, any preliminary prospectus, any instruments executed by,
or obtained or any supplemental sales data or other letters from, the Company,
or others, (iii) the form or validity of the Underwriting Agreement or this
Agreement, (iv) the eligibility of any of the Units for sale under the laws of
any jurisdiction, (v) the delivery of the Units, (vi) the performance by the
Company, or others of any agreement on its or their part, or (vii) any matter in


                                       3



connection with any of the foregoing, except our own want of good faith.

                  12. If for federal income tax purposes the Selected Dealers,
among themselves or with the Underwriters, should be deemed to constitute a
partnership, then we elect to be excluded from the application of Subchapter K,
Chapter 1, Subtitle A of the Internal Revenue Code of 1986, as amended, and we
agree not to take any position inconsistent with such selection. We authorize
you, in your discretion, to execute and file on our behalf such evidence of such
election as may be required by the Internal Revenue Service.

                  13. All communications from you shall be addressed to
EarlyBirdCapital, Inc. at 600 Third Avenue, 33rd Floor, New York, New York
10016, Attention: David M. Nussbaum, Chairman. Any notice from us to you shall
be deemed to have been fully authorized by the Underwriters and to have been
duly given if mailed, telegraphed or sent by confirmed facsimile transmittal to
you at the address to which this letter is mailed. This Agreement shall be
construed in accordance with the laws of the State of New York without giving
effect to conflict of laws. Time is of the essence in this Agreement.

                  If you desire to become a member of the Selected Dealers,
please advise us to that effect immediately by facsimile transmission and sign
and return to us the enclosed counterpart of this letter.

                                      Very truly yours,

                                      EARLYBIRDCAPITAL, INC.


                                      By:________________________________
                                           Steven Levine
                                           Managing Director




                  We accept membership in the Selected Dealers on the terms
specified above.

Dated:  ___________ __, 2004


         (Selected Dealer)


         ------------------------------------------





By:_______________________________________
         Name:
         Title:


                                       4

EX-4.4

THE REGISTERED HOLDER OF THIS PURCHASE OPTION BY ITS ACCEPTANCE HEREOF, AGREES
THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE OPTION EXCEPT AS HEREIN
PROVIDED AND THE REGISTERED HOLDER OF THIS PURCHASE OPTION AGREES THAT IT WILL
NOT SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS PURCHASE OPTION FOR A
PERIOD OF ONE YEAR FOLLOWING THE EFFECTIVE DATE (DEFINED BELOW) TO ANYONE OTHER
THAN (I) EARLYBIRDCAPITAL, INC. ("EBC") OR AN UNDERWRITER OR A SELECTED DEALER
IN CONNECTION WITH THE OFFERING, OR (II) A BONA FIDE OFFICER OR PARTNER OF EBC
OR OF ANY SUCH UNDERWRITER OR SELECTED DEALER.

THIS PURCHASE OPTION IS NOT EXERCISABLE PRIOR TO THE LATER OF (I)
______________, 2005 AND (II) THE CONSUMMATION BY MILLSTREAM II ACQUISITION
CORPORATION ("COMPANY") OF A MERGER, CAPITAL STOCK EXCHANGE, ASSET ACQUISITION
OR OTHER SIMILAR BUSINESS COMBINATION ("BUSINESS COMBINATION") (AS DESCRIBED
MORE FULLY IN THE COMPANY'S REGISTRATION STATEMENT (DEFINED HEREIN)). VOID
AFTER 5:00 P.M. EASTERN TIME, _____________, 2009.



                              UNIT PURCHASE OPTION


                               FOR THE PURCHASE OF

                                  300,000 UNITS

                                       OF

                      MILLSTREAM II ACQUISITION CORPORATION


1. Purchase Option.

                  THIS CERTIFIES THAT, in consideration of $_____ duly paid by
or on behalf of ____________________ ("Holder"), as registered owner of this
Purchase Option, to Millstream II Acquisition Corporation ("Company"), Holder is
entitled, at any time or from time to time upon the later of (i) ___________,
2005 and (ii) the consummation of a Business Combination ("Commencement Date"),
and at or before 5:00 p.m., Eastern Time, _____________, 2009 ("Expiration
Date"), but not thereafter, to subscribe for, purchase and receive, in whole or
in part, up to Three Hundred Thousand (300,000) units ("Units") of the Company,
each Unit consisting of one share of common stock of the Company, par value
$.0001 per share ("Common Stock"), and two warrants ("Warrant(s)") expiring four
years from the effective date ("Effective Date") of the registration statement
("Registration Statement") pursuant to which Units are offered for sale to the
public ("Offering"). Each Warrant is the same as the warrants included in the
Units being registered for sale to the public by way of the

                                       1


Registration Statement ("Public Warrants") except that the Warrants have an
exercise price of $6.25 per share. If the Expiration Date is a day on which
banking institutions are authorized by law to close, then this Purchase Option
may be exercised on the next succeeding day which is not such a day in
accordance with the terms herein. During the period ending on the Expiration
Date, the Company agrees not to take any action that would terminate the
Purchase Option. This Purchase Option is initially exercisable at $9.90 per Unit
so purchased; provided, however, that upon the occurrence of any of the events
specified in Section 6 hereof, the rights granted by this Purchase Option,
including the exercise price per Unit and the number of Units (and shares of
Common Stock and Warrants) to be received upon such exercise, shall be adjusted
as therein specified. The term "Exercise Price" shall mean the initial exercise
price or the adjusted exercise price, depending on the context.

2.       Exercise.

         2.1 Exercise Form. In order to exercise this Purchase Option, the
exercise form attached hereto must be duly executed and completed and delivered
to the Company, together with this Purchase Option and payment of the Exercise
Price for the Units being purchased payable in cash or by certified check or
official bank check. If the subscription rights represented hereby shall not be
exercised at or before 5:00 p.m., Eastern time, on the Expiration Date this
Purchase Option shall become and be void without further force or effect, and
all rights represented hereby shall cease and expire.

         2.2 Legend. Each certificate for the securities purchased under this
Purchase Option shall bear a legend as follows unless such securities have been
registered under the Securities Act of 1933, as amended ("Act"):

                  "The securities represented by this certificate have not been
                  registered under the Securities Act of 1933, as amended
                  ("Act") or applicable state law. The securities may not be
                  offered for sale, sold or otherwise transferred except
                  pursuant to an effective registration statement under the Act,
                  or pursuant to an exemption from registration under the Act
                  and applicable state law."

         2.3      Cashless Exercise.

                  2.3.1 Determination of Amount. In lieu of the payment of the
Exercise Price multiplied by the number of Units for which this Purchase Option
is exercisable (and in lieu of being entitled to receive Common Stock and
Warrants) in the manner required by Section 2.1, the Holder shall have the right
(but not the obligation) to convert any exercisable but unexercised portion of
this Purchase Option into Units ("Conversion Right") as follows: upon exercise
of the Conversion Right, the Company shall deliver to the Holder (without
payment by the Holder of any of the Exercise Price in cash) that number of
shares of Common Stock and Warrants comprising that number of Units equal to the
quotient obtained by dividing (x) the "Value" (as defined below) of the portion
of the Purchase Option being converted by (y) the Current Market Value (as
defined below). The "Value" of the portion of the Purchase Option being
converted shall equal the remainder derived from subtracting (a) (i) the
Exercise Price multiplied by (ii) the number of Units underlying the portion of
this Purchase Option being converted from (b) the Current Market Value of a Unit
multiplied by the number of Units underlying the portion of the Purchase Option
being converted. As used herein, the term "Current Market Value" per Unit at any
date means the remainder derived from subtracting (x) the exercise price of the
Warrants multiplied by the number of shares of Common Stock issuable upon
exercise of the Warrants underlying one Unit from (y) (i) the Current Market
Price of the Common Stock multiplied by (ii) the number of

                                       2


shares of Common Stock underlying one Unit, which shall include the shares of
Common Stock underlying the Warrants included in such Unit. The "Current Market
Price" of a share of Common Stock shall mean (i) if the Common Stock is listed
on a national securities exchange or quoted on the Nasdaq National Market,
Nasdaq SmallCap Market or NASD OTC Bulletin Board (or successor such as the
Bulletin Board Exchange), the last sale price of the Common Stock in the
principal trading market for the Common Stock as reported by the exchange,
Nasdaq or the NASD, as the case may be; (ii) if the Common Stock is not listed
on a national securities exchange or quoted on the Nasdaq National Market,
Nasdaq SmallCap Market or the NASD OTC Bulletin Board (or successor such as the
Bulletin Board Exchange), but is traded in the residual over-the-counter market,
the closing bid price for the Common Stock on the last trading day preceding the
date in question for which such quotations are reported by the Pink Sheets, LLC
or similar publisher of such quotations; and (iii) if the fair market value of
the Common Stock cannot be determined pursuant to clause (i) or (ii) above, such
price as the Board of Directors of the Company shall determine, in good faith.

                  2.3.2 Mechanics of Cashless Exercise. The Cashless Exercise
Right may be exercised by the Holder on any business day on or after the
Commencement Date and not later than the Expiration Date by delivering the
Purchase Option with the duly executed exercise form attached hereto with the
cashless exercise section completed to the Company, exercising the Cashless
Exercise Right and specifying the total number of Units the Holder will purchase
pursuant to such Cashless Exercise Right.

3.       Transfer.

         3.1 General Restrictions. The registered Holder of this Purchase
Option, by its acceptance hereof, agrees that it will not sell, transfer,
assign, pledge or hypothecate this Purchase Option for a period of one year
following the Effective Date to anyone other than (i) EBC or an underwriter or a
selected dealer in connection with the Offering, or (ii) a bona fide officer or
partner of EBC or of any such underwriter or selected dealer. On and after the
second anniversary of the Effective Date, transfers to others may be made
subject to compliance with or exemptions from applicable securities laws. In
order to make any permitted assignment, the Holder must deliver to the Company
the assignment form attached hereto duly executed and completed, together with
the Purchase Option and payment of all transfer taxes, if any, payable in
connection therewith. The Company shall within five business days transfer this
Purchase Option on the books of the Company and shall execute and deliver a new
Purchase Option or Purchase Options of like tenor to the appropriate assignee(s)
expressly evidencing the right to purchase the aggregate number of Units
purchasable hereunder or such portion of such number as shall be contemplated by
any such assignment.

         3.2 Restrictions Imposed by the Act. The securities evidenced by this
Purchase Option shall not be transferred unless and until (i) the Company has
received the opinion of counsel for the Holder that the securities may be
transferred pursuant to an exemption from registration under the Act and
applicable state securities laws, the availability of which is established to
the reasonable satisfaction of the Company (the Company hereby agreeing that the
opinion of Graubard Miller shall be deemed satisfactory evidence of the
availability of an exemption), or (ii) a registration statement or a
post-effective amendment to the Registration Statement relating to such
securities has been filed by the Company and declared effective by the
Securities and Exchange Commission and compliance with applicable state
securities law has been established.

                                       3


4.       New Purchase Options to be Issued.

         4.1 Partial Exercise or Transfer. Subject to the restrictions in
Section 3 hereof, this Purchase Option may be exercised or assigned in whole or
in part. In the event of the exercise or assignment hereof in part only, upon
surrender of this Purchase Option for cancellation, together with the duly
executed exercise or assignment form and funds sufficient to pay any Exercise
Price and/or transfer tax, the Company shall cause to be delivered to the Holder
without charge a new Purchase Option of like tenor to this Purchase Option in
the name of the Holder evidencing the right of the Holder to purchase the number
of Units purchasable hereunder as to which this Purchase Option has not been
exercised or assigned.

         4.2 Lost Certificate. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Purchase Option and of reasonably satisfactory indemnification or the posting of
a bond, the Company shall execute and deliver a new Purchase Option of like
tenor and date. Any such new Purchase Option executed and delivered as a result
of such loss, theft, mutilation or destruction shall constitute a substitute
contractual obligation on the part of the Company.

5.       Registration Rights.

         5.1      Demand Registration.

                  5.1.1 Grant of Right. The Company, upon written demand
("Initial Demand Notice") of the Holder(s) of at least 51% of the Purchase
Options and/or the underlying Units and/or the underlying securities ("Majority
Holders"), agrees to register on one occasion, all or any portion of the
Purchase Options requested by the Majority Holders in the Initial Demand Notice
and all of the securities underlying such Purchase Options, including the Units,
Common Stock, the Warrants and the Common Stock underlying the Warrants
(collectively, the "Registrable Securities"). On such occasion, the Company will
file a registration statement or a post-effective amendment to the Registration
Statement covering the Registrable Securities within sixty days after receipt of
the Initial Demand Notice and use its best efforts to have such registration
statement or post-effective amendment declared effective as soon as possible
thereafter. The demand for registration may be made at any time during a period
of five years beginning on the Effective Date. The Company covenants and agrees
to give written notice of its receipt of any Initial Demand Notice by any
Holder(s) to all other registered Holders of the Purchase Options and/or the
Registrable Securities within ten days from the date of the receipt of any such
Initial Demand Notice.

                  5.1.2 Terms. The Company shall bear all fees and expenses
attendant to registering the Registrable Securities, including the expenses of
any legal counsel selected by the Holders to represent them in connection with
the sale of the Registrable Securities, but the Holders shall pay any and all
underwriting commissions. The Company agrees to use its reasonable best efforts
to qualify or register the Registrable Securities in such States as are
reasonably requested by the Majority Holder(s); provided, however, that in no
event shall the Company be required to register the Registrable Securities in a
State in which such registration would cause (i) the Company to be obligated to
qualify to do business in such State, or would subject the Company to taxation
as a foreign corporation doing business in such jurisdiction or (ii) the
principal stockholders of the Company to be obligated to escrow their shares of
capital stock of the Company. The Company shall cause any registration statement
or post-effective amendment filed pursuant to the demand rights granted under
Section 5.1.1 to remain effective

                                       4


for a period of nine consecutive months from the effective date of such
registration statement or post-effective amendment.

         5.2      "Piggy-Back" Registration.

                  5.2.1 Grant of Right. In addition to the demand right of
registration, the Holders of the Purchase Options shall have the right for a
period of seven years commencing on the Effective Date, to include the
Registrable Securities as part of any other registration of securities filed by
the Company (other than in connection with a transaction contemplated by Rule
145(a) promulgated under the Act or pursuant to Form S-8); provided, however,
that if, in the written opinion of the Company's managing underwriter or
underwriters, if any, for such offering, the inclusion of the Registrable
Securities, when added to the securities being registered by the Company or the
selling stockholder(s), will exceed the maximum amount of the Company's
securities which can be marketed (i) at a price reasonably related to their then
current market value, and (ii) without materially and adversely affecting the
entire offering, then the Company will still be required to include the
Registrable Securities, but may require the Holders to agree, in writing, to
delay the sale of all or any portion of the Registrable Securities for a period
of 90 days from the effective date of the offering, provided, further, that if
the sale of any Registrable Securities is so delayed, then the number of
securities to be sold by all stockholders in such public offering during such 90
day period shall be apportioned pro rata among all such selling stockholders,
including all holders of the Registrable Securities, according to the total
amount of securities of the Company owned by said selling stockholders,
including all holders of the Registrable Securities.

                  5.2.2 Terms. The Company shall bear all fees and expenses
attendant to registering the Registrable Securities, including the expenses of
any legal counsel selected by the Holders to represent them in connection with
the sale of the Registrable Securities but the Holders shall pay any and all
underwriting commissions related to the Registrable Securities. In the event of
such a proposed registration, the Company shall furnish the then Holders of
outstanding Registrable Securities with not less than fifteen days written
notice prior to the proposed date of filing of such registration statement. Such
notice to the Holders shall continue to be given for each applicable
registration statement filed (during the period in which the Purchase Option is
exercisable) by the Company until such time as all of the Registrable Securities
have been registered and sold. The holders of the Registrable Securities shall
exercise the "piggy-back" rights provided for herein by giving written notice,
within ten days of the receipt of the Company's notice of its intention to file
a registration statement. The Company shall cause any registration statement
filed pursuant to the above "piggyback" rights to remain effective for at least
nine months from the date that the Holders of the Registrable Securities are
first given the opportunity to sell all of such securities.

         5.3 Damages. Should the registration or the effectiveness thereof
required by Sections 5.1 and 5.2 hereof be delayed by the Company or the Company
otherwise fails to comply with such provisions, the Company shall, in addition
to any other equitable or other relief available to the Holder(s), be liable for
any and all incidental, special and consequential damages sustained by the
Holder(s), including, but not limited to, the loss of any profits that might
have been received by the holder upon the sale of shares of Common Stock or
Warrants (and shares of Common Stock underlying the Warrants) underlying this
Purchase Option.

         5.4      General Terms.

                  5.4.1 Indemnification. The Company shall indemnify the
Holder(s) of the Registrable

                                       5


Securities to be sold pursuant to any registration statement hereunder and each
person, if any, who controls such Holders within the meaning of Section 15 of
the Act or Section 20(a) of the Securities Exchange Act of 1934, as amended
("Exchange Act"), against all loss, claim, damage, expense or liability
(including all reasonable attorneys' fees and other expenses reasonably incurred
in investigating, preparing or defending against litigation, commenced or
threatened, or any claim whatsoever whether arising out of any action between
the underwriter and the Company or between the underwriter and any third party
or otherwise) to which any of them may become subject under the Act, the
Exchange Act or otherwise, arising from such registration statement but only to
the same extent and with the same effect as the provisions pursuant to which the
Company has agreed to indemnify the underwriters contained in Section 5 of the
Underwriting Agreement between the Company, EBC and the other underwriters named
therein dated the Effective Date. The Holder(s) of the Registrable Securities to
be sold pursuant to such registration statement, and their successors and
assigns, shall severally, and not jointly, indemnify the Company, its officers
and directors and each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against
all loss, claim, damage, expense or liability (including all reasonable
attorneys' fees and other expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which they may become
subject under the Act, the Exchange Act or otherwise, arising from information
furnished by or on behalf of such Holders, or their successors or assigns, in
writing, for specific inclusion in such registration statement to the same
extent and with the same effect as the provisions contained in Section 5 of the
Underwriting Agreement pursuant to which the underwriters have agreed to
indemnify the Company.

                  5.4.2 Exercise of Purchase Options. Nothing contained in this
Purchase Option shall be construed as requiring the Holder(s) to exercise their
Purchase Options or Warrants underlying such Purchase Options prior to or after
the initial filing of any registration statement or the effectiveness thereof.

                  5.4.3 Documents Delivered to Holders. The Company shall
furnish EBC, as representative of the Holders participating in any of the
foregoing offerings, a signed counterpart, addressed to the participating
Holders, of (i) an opinion of counsel to the Company, dated the effective date
of such registration statement (and, if such registration includes an
underwritten public offering, an opinion dated the date of the closing under any
underwriting agreement related thereto), and (ii) a "cold comfort" letter dated
the effective date of such registration statement (and, if such registration
includes an underwritten public offering, a letter dated the date of the closing
under the underwriting agreement) signed by the independent public accountants
who have issued a report on the Company's financial statements included in such
registration statement, in each case covering substantially the same matters
with respect to such registration statement (and the prospectus included
therein) and, in the case of such accountants' letter, with respect to events
subsequent to the date of such financial statements, as are customarily covered
in opinions of issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of securities. The Company shall
also deliver promptly to EBC, as representative of the Holders participating in
the offering, the correspondence and memoranda described below and copies of all
correspondence between the Commission and the Company, its counsel or auditors
and all memoranda relating to discussions with the Commission or its staff with
respect to the registration statement and permit EBC, as representative of the
Holders, to do such investigation, upon reasonable advance notice, with respect
to information contained in or omitted from the registration statement as it
deems reasonably necessary to comply with applicable securities laws or rules of
the National Association of Securities Dealers, Inc. ("NASD"). Such
investigation shall include access to books, records and properties and
opportunities to discuss the business of the Company with its officers and
independent auditors, all to such reasonable extent and at such reasonable times
and as often as EBC, as

                                       6


representative of the Holders, shall reasonably request. The Company shall not
be required to disclose any confidential information or other records to EBC, as
representative of the Holders, or to any other person, until and unless such
persons shall have entered into reasonable confidentiality agreements (in form
and substance reasonably satisfactory to the Company), with the Company with
respect thereto.

                  5.4.4 Underwriting Agreement. The Company shall enter into an
underwriting agreement with the managing underwriter(s), if any, selected by any
Holders whose Registrable Securities are being registered pursuant to this
Section 5, which managing underwriter shall be reasonably acceptable to the
Company. Such agreement shall be reasonably satisfactory in form and substance
to the Company, each Holder and such managing underwriters, and shall contain
such representations, warranties and covenants by the Company and such other
terms as are customarily contained in agreements of that type used by the
managing underwriter. The Holders shall be parties to any underwriting agreement
relating to an underwritten sale of their Registrable Securities and may, at
their option, require that any or all the representations, warranties and
covenants of the Company to or for the benefit of such underwriters shall also
be made to and for the benefit of such Holders. Such Holders shall not be
required to make any representations or warranties to or agreements with the
Company or the underwriters except as they may relate to such Holders and their
intended methods of distribution. Such Holders, however, shall agree to such
covenants and indemnification and contribution obligations for selling
stockholders as are customarily contained in agreements of that type used by the
managing underwriter. Further, such Holders shall execute appropriate custody
agreements and otherwise cooperate fully in the preparation of the registration
statement and other documents relating to any offering in which they include
securities pursuant to this Section 5. Each Holder shall also furnish to the
Company such information regarding itself, the Registrable Securities held by
it, and the intended method of disposition of such securities as shall be
reasonably required to effect the registration of the Registrable Securities.

                  5.4.5 Rule 144 Sale. Notwithstanding anything contained in
this Section 5 to the contrary, the Company shall have no obligation pursuant to
Sections 5.1 or 5.2 for the registration of Registrable Securities held by any
Holder (i) where such Holder would then be entitled to sell under Rule 144
within any three-month period (or such other period prescribed under Rule 144 as
may be provided by amendment thereof) all of the Registrable Securities then
held by such Holder, and (ii) where the number of Registrable Securities held by
such Holder is within the volume limitations under paragraph (e) of Rule 144
(calculated as if such Holder were an affiliate within the meaning of Rule 144).

                  5.4.6 Supplemental Prospectus. Each Holder agrees, that upon
receipt of any notice from the Company of the happening of any event as a result
of which the prospectus included in the Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, such Holder
will immediately discontinue disposition of Registrable Securities pursuant to
the Registration Statement covering such Registrable Securities until such
Holder's receipt of the copies of a supplemental or amended prospectus, and, if
so desired by the Company, such Holder shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate of
such destruction) all copies, other than permanent file copies then in such
Holder's possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice.

                                       7


6. Adjustments.

         6.1 Adjustments to Exercise Price and Number of Securities. The
Exercise Price and the number of Units underlying the Purchase Option shall be
subject to adjustment from time to time as hereinafter set forth:

                  6.1.1 Stock Dividends - Split-Ups. If after the date hereof,
and subject to the provisions of Section 6.4 below, the number of outstanding
shares of Common Stock is increased by a stock dividend payable in shares of
Common Stock or by a split-up of shares of Common Stock or other similar event,
then, on the effective date thereof, the number of shares of Common Stock
underlying each of the Units purchasable hereunder shall be increased in
proportion to such increase in outstanding shares. In such case, the number of
shares of Common Stock, and the exercise price applicable thereto, underlying
the Warrants underlying each of the Units purchasable hereunder shall be
adjusted in accordance with the terms of the Warrants. For example, if the
Company declares a two-for-one stock dividend and at the time of such dividend
this Purchase Option is for the purchase of one Unit at $6.60 per whole Unit
(each Warrant underlying the Units is exercisable for $5.00 per share), upon
effectiveness of the dividend, this Purchase Option will be adjusted to allow
for the purchase of one Unit at $6.60 per Unit, each Unit entitling the holder
to receive two shares of Common Stock and four Warrants (each Warrant
exercisable for $2.50 per share).

                  6.1.2 Aggregation of Shares. If after the date hereof, and
subject to the provisions of Section 6.4, the number of outstanding shares of
Common Stock is decreased by a consolidation, combination or reclassification of
shares of Common Stock or other similar event, then, on the effective date
thereof, the number of shares of Common Stock underlying each of the Units
purchasable hereunder shall be decreased in proportion to such decrease in
outstanding shares. In such case, the number of shares of Common Stock, and the
exercise price applicable thereto, underlying the Warrants underlying each of
the Units purchasable hereunder shall be adjusted in accordance with the terms
of the Warrants.

                  6.1.3 Replacement of Securities upon Reorganization, etc. In
case of any reclassification or reorganization of the outstanding shares of
Common Stock other than a change covered by Section 6.1.1 or 6.1.2 hereof or
that solely affects the par value of such shares of Common Stock, or in the case
of any merger or consolidation of the Company with or into another corporation
(other than a consolidation or merger in which the Company is the continuing
corporation and that does not result in any reclassification or reorganization
of the outstanding shares of Common Stock), or in the case of any sale or
conveyance to another corporation or entity of the property of the Company as an
entirety or substantially as an entirety in connection with which the Company is
dissolved, the Holder of this Purchase Option shall have the right thereafter
(until the expiration of the right of exercise of this Purchase Option) to
receive upon the exercise hereof, for the same aggregate Exercise Price payable
hereunder immediately prior to such event, the kind and amount of shares of
stock or other securities or property (including cash) receivable upon such
reclassification, reorganization, merger or consolidation, or upon a dissolution
following any such sale or transfer, by a Holder of the number of shares of
Common Stock of the Company obtainable upon exercise of this Purchase Option and
the underlying Warrants immediately prior to such event; and if any
reclassification also results in a change in shares of Common Stock covered by
Section 6.1.1 or 6.1.2, then such adjustment shall be made pursuant to Sections
6.1.1, 6.1.2 and this Section 6.1.3. The provisions of this Section 6.1.3 shall
similarly apply to successive reclassifications, reorganizations, mergers or
consolidations, sales or other transfers.

                                       8


                 6.1.4 Changes in Form of Purchase Option. This form of
Purchase Option need not be changed because of any change pursuant to this
Section, and Purchase Options issued after such change may state the same
Exercise Price and the same number of Units as are stated in the Purchase
Options initially issued pursuant to this Agreement. The acceptance by any
Holder of the issuance of new Purchase Options reflecting a required or
permissive change shall not be deemed to waive any rights to an adjustment
occurring after the Commencement Date or the computation thereof.

         6.2      [Intentionally Omitted]

         6.3 Substitute Purchase Option. In case of any consolidation of the
Company with, or merger of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger which does not result
in any reclassification or change of the outstanding Common Stock), the
corporation formed by such consolidation or merger shall execute and deliver to
the Holder a supplemental Purchase Option providing that the holder of each
Purchase Option then outstanding or to be outstanding shall have the right
thereafter (until the stated expiration of such Purchase Option) to receive,
upon exercise of such Purchase Option, the kind and amount of shares of stock
and other securities and property receivable upon such consolidation or merger,
by a holder of the number of shares of Common Stock of the Company for which
such Purchase Option might have been exercised immediately prior to such
consolidation, merger, sale or transfer. Such supplemental Purchase Option shall
provide for adjustments which shall be identical to the adjustments provided in
Section 6. The above provision of this Section shall similarly apply to
successive consolidations or mergers.

         6.4 Elimination of Fractional Interests. The Company shall not be
required to issue certificates representing fractions of shares of Common Stock
or Warrants upon the exercise of the Purchase Option, nor shall it be required
to issue scrip or pay cash in lieu of any fractional interests, it being the
intent of the parties that all fractional interests shall be eliminated by
rounding any fraction up to the nearest whole number of Warrants, shares of
Common Stock or other securities, properties or rights.

7. Reservation and Listing. The Company shall at all times reserve and keep
available out of its authorized shares of Common Stock, solely for the purpose
of issuance upon exercise of the Purchase Options or the Warrants underlying the
Purchase Option, such number of shares of Common Stock or other securities,
properties or rights as shall be issuable upon the exercise thereof. The Company
covenants and agrees that, upon exercise of the Purchase Options and payment of
the Exercise Price therefor, all shares of Common Stock and other securities
issuable upon such exercise shall be duly and validly issued, fully paid and
non-assessable and not subject to preemptive rights of any stockholder. The
Company further covenants and agrees that upon exercise of the Warrants
underlying the Purchase Options and payment of the respective Warrant exercise
price therefor, all shares of Common Stock and other securities issuable upon
such exercise shall be duly and validly issued, fully paid and non-assessable
and not subject to preemptive rights of any stockholder. As long as the Purchase
Options shall be outstanding, the Company shall use its best efforts to cause
all (i) Units and shares of Common Stock issuable upon exercise of the Purchase
Options, (iii) Warrants issuable upon exercise of the Purchase Options and (iv)
shares of Common Stock issuable upon exercise of the Warrants included in the
Units issuable upon exercise of the Purchase Option to be listed (subject to
official notice of issuance) on all securities exchanges (or, if applicable on
the Nasdaq National Market, SmallCap Market, OTC Bulletin Board or any successor
trading market) on which the Units, the Common Stock or the Public Warrants
issued to the public in connection herewith may then be listed and/or quoted.

                                       9


8.       Certain Notice Requirements.

         8.1 Holder's Right to Receive Notice. Nothing herein shall be construed
as conferring upon the Holders the right to vote or consent as a stockholder for
the election of directors or any other matter, or as having any rights
whatsoever as a stockholder of the Company. If, however, at any time prior to
the expiration of the Purchase Options and their exercise, any of the events
described in Section 8.2 shall occur, then, in one or more of said events, the
Company shall give written notice of such event at least fifteen days prior to
the date fixed as a record date or the date of closing the transfer books for
the determination of the stockholders entitled to such dividend, distribution,
conversion or exchange of securities or subscription rights, or entitled to vote
on such proposed dissolution, liquidation, winding up or sale. Such notice shall
specify such record date or the date of the closing of the transfer books, as
the case may be. Notwithstanding the foregoing, the Company shall deliver to
each Holder a copy of each notice given to the other stockholders of the Company
at the same time and in the same manner that such notice is given to the
stockholders.

         8.2 Events Requiring Notice. The Company shall be required to give the
notice described in this Section 8 upon one or more of the following events: (i)
if the Company shall take a record of the holders of its shares of Common Stock
for the purpose of entitling them to receive a dividend or distribution payable
otherwise than in cash, or a cash dividend or distribution payable otherwise
than out of retained earnings, as indicated by the accounting treatment of such
dividend or distribution on the books of the Company, or (ii) the Company shall
offer to all the holders of its Common Stock any additional shares of capital
stock of the Company or securities convertible into or exchangeable for shares
of capital stock of the Company, or any option, right or warrant to subscribe
therefor, or (iii) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business shall be proposed.

         8.3 Notice of Change in Exercise Price. The Company shall, promptly
after an event requiring a change in the Exercise Price pursuant to Section 6
hereof, send notice to the Holders of such event and change ("Price Notice").
The Price Notice shall describe the event causing the change and the method of
calculating same and shall be certified as being true and accurate by the
Company's President and Chief Financial Officer.

         8.4 Transmittal of Notices. All notices, requests, consents and other
communications under this Purchase Option shall be in writing and shall be
deemed to have been duly made when hand delivered, or mailed by express mail or
private courier service: (i) If to the registered Holder of the Purchase Option,
to the address of such Holder as shown on the books of the Company, or (ii) if
to the Company, to the following address or to such other address as the Company
may designate by notice to the Holders:

                                    Millstream II Acquisition Corporation
                                    435 DEVON PARK DRIVE
                                    BUILDING 400
                                    WAYNE, PENNSYLVANIA 19087
                                    Attn:   Arthur Spector, Chairman

                                       10


9. Miscellaneous.

         9.1 Amendments. The Company and EBC may from time to time supplement or
amend this Purchase Option without the approval of any of the Holders in order
to cure any ambiguity, to correct or supplement any provision contained herein
that may be defective or inconsistent with any other provisions herein, or to
make any other provisions in regard to matters or questions arising hereunder
that the Company and EBC may deem necessary or desirable and that the Company
and EBC deem shall not adversely affect the interest of the Holders. All other
modifications or amendments shall require the written consent of and be signed
by the party against whom enforcement of the modification or amendment is
sought.

         9.2 Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Purchase Option.

10. Entire Agreement. This Purchase Option (together with the other agreements
and documents being delivered pursuant to or in connection with this Purchase
Option) constitutes the entire agreement of the parties hereto with respect to
the subject matter hereof, and supersedes all prior agreements and
understandings of the parties, oral and written, with respect to the subject
matter hereof.

         10.1 Binding Effect. This Purchase Option shall inure solely to the
benefit of and shall be binding upon, the Holder and the Company and their
permitted assignees, respective successors, legal representative and assigns,
and no other person shall have or be construed to have any legal or equitable
right, remedy or claim under or in respect of or by virtue of this Purchase
Option or any provisions herein contained.

         10.2 Governing Law; Submission to Jurisdiction. This Purchase Option
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. The Company
hereby agrees that any action, proceeding or claim against it arising out of, or
relating in any way to this Purchase Option shall be brought and enforced in the
courts of the State of New York or of the United States of America for the
Southern District of New York, and irrevocably submits to such jurisdiction,
which jurisdiction shall be exclusive. The Company hereby waives any objection
to such exclusive jurisdiction and that such courts represent an inconvenient
forum. Any process or summons to be served upon the Company may be served by
transmitting a copy thereof by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address set forth in Section
8 hereof. Such mailing shall be deemed personal service and shall be legal and
binding upon the Company in any action, proceeding or claim. The Company and the
Holder agree that the prevailing party(ies) in any such action shall be entitled
to recover from the other party(ies) all of its reasonable attorneys' fees and
expenses relating to such action or proceeding and/or incurred in connection
with the preparation therefor.

         10.3 Waiver, Etc. The failure of the Company or the Holder to at any
time enforce any of the provisions of this Purchase Option shall not be deemed
or construed to be a waiver of any such provision, nor to in any way affect the
validity of this Purchase Option or any provision hereof or the right of the
Company or any Holder to thereafter enforce each and every provision of this
Purchase Option. No waiver of any breach, non-compliance or non-fulfillment of
any of the provisions of this Purchase Option shall be effective unless set
forth in a written instrument executed by the party or parties against whom or
which enforcement of such waiver is sought; and no waiver of any such breach,
non-

                                       11


compliance or non-fulfillment shall be construed or deemed to be a waiver of any
other or subsequent breach, non-compliance or non-fulfillment.

         10.4 Execution in Counterparts. This Purchase Option may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement, and shall become
effective when one or more counterparts has been signed by each of the parties
hereto and delivered to each of the other parties hereto.

         10.5 Exchange Agreement. As a condition of the Holder's receipt and
acceptance of this Purchase Option, Holder agrees that, at any time prior to the
complete exercise of this Purchase Option by Holder, if the Company and EBC
enter into an agreement ("Exchange Agreement") pursuant to which they agree that
all outstanding Purchase Options will be exchanged for securities or cash or a
combination of both, then Holder shall agree to such exchange and become a party
to the Exchange Agreement.

         10.6 Underlying Warrants. At any time after exercise by the Holder of
this Purchase Option, the Holder may exchange his Warrants (with a $6.25
exercise price) for Public Warrants (with a $5.00 exercise price) upon payment
to the Company of the difference between the exercise price of his Warrant and
the exercise price of the Public Warrants.

                                       12




                  IN WITNESS WHEREOF, the Company has caused this Purchase
Option to be signed by its duly authorized officer as of the ____ day of
__________, 2004.


                                           MILLSTREAM II ACQUISITION CORPORATION


                                           By:_________________________________
                                              Name:        Arthur Spector
                                              Title:       Chairman of the Board

                                       13


Form to be used to exercise Purchase Option:

Millstream II Acquisition Corporation
435 DEVON PARK DRIVE
BUILDING 400
WAYNE, PENNSYLVANIA 19087


Date:_________________, 200__

                  The undersigned hereby elects irrevocably to exercise all or a
portion of the within Purchase Option and to purchase ____ Units of Millstream
II Acquisition Corporation and hereby makes payment of $____________ (at the
rate of $_________ per Unit) in payment of the Exercise Price pursuant thereto.
Please issue the Common Stock and Warrants as to which this Purchase Option is
exercised in accordance with the instructions given below.

                                       or

                  The undersigned hereby elects irrevocably to convert its right
to purchase _________ Units purchasable under the within Purchase Option by
surrender of the unexercised portion of the attached Purchase Option (with a
"Value" based of $_______ based on a "Market Price" of $_______). Please issue
the securities comprising the Units as to which this Purchase Option is
exercised in accordance with the instructions given below.



                                    ------------------------------
                                    Signature


                                    ------------------------------
                                    Signature Guaranteed



                   INSTRUCTIONS FOR REGISTRATION OF SECURITIES


Name_____________________________________________________________
                     (Print in Block Letters)

Address__________________________________________________________


                  NOTICE: THE SIGNATURE TO THIS FORM MUST CORRESPOND WITH THE
NAME AS WRITTEN UPON THE FACE OF THE WITHIN PURCHASE OPTION IN EVERY PARTICULAR
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE
GUARANTEED BY A BANK, OTHER THAN A SAVINGS BANK, OR BY A TRUST COMPANY OR BY A
FIRM HAVING MEMBERSHIP ON A REGISTERED NATIONAL SECURITIES EXCHANGE.

                                       14


Form to be used to assign Purchase Option:


                                   ASSIGNMENT


                  (To be executed by the registered Holder to effect a transfer
of the within Purchase Option):

                  FOR VALUE RECEIVED,___________________________________________
does hereby sell, assign and transfer unto______________________________________
the right to purchase __________ Units of Millstream II Acquisition Corporation
("Company") evidenced by the within Purchase Option and does hereby authorize
the Company to transfer such right on the books of the Company.

Dated:___________________, 200_


                                    ------------------------------
                                    Signature


                                    ------------------------------
                                    Signature Guaranteed



                  NOTICE: THE SIGNATURE TO THIS FORM MUST CORRESPOND WITH THE
NAME AS WRITTEN UPON THE FACE OF THE WITHIN PURCHASE OPTION IN EVERY PARTICULAR
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE
GUARANTEED BY A BANK, OTHER THAN A SAVINGS BANK, OR BY A TRUST COMPANY OR BY A
FIRM HAVING MEMBERSHIP ON A REGISTERED NATIONAL SECURITIES EXCHANGE.

                                       15

EX-4.5

                                WARRANT AGREEMENT

     Agreement made as of __________ ___, 2004 between Millstream II Acquisition
Corporation, a Delaware corporation, with offices at 435 Devon Park Drive,
Building 400, Wayne, Pennsylvania 19087 ("Company"), and Continental Stock
Transfer & Trust Company, a New York corporation, with offices at 17 Battery
Place, New York, New York 10004 ("Warrant Agent").

     WHEREAS, the Company is engaged in a public offering ("Public Offering") of
Units ("Units") and, in connection therewith, has determined to issue and
deliver up to (i) 9,200,000 Warrants ("Public Warrants") to the public
investors, and (ii) 600,000 Warrants to EarlyBirdCapital, Inc. ("EBC") or its
designees ("Representative's Warrants" and, together with the Public Warrants,
the "Warrants"), each of such Public Warrants evidencing the right of the holder
thereof to purchase one share of common stock, par value $.0001 per share, of
the Company's Common Stock ("Common Stock") for $5.00, subject to adjustment as
described herein; and

     WHEREAS, the Company has filed with the Securities and Exchange Commission
a Registration Statement, No. 333-119937 on Form S-1 ("Registration
Statement") for the registration, under the Securities Act of 1933, as amended
("Act") of, among other securities, the Warrants and the Common Stock issuable
upon exercise of the Warrants; and

     WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer, exchange, redemption and exercise of the
Warrants; and

     WHEREAS, the Company desires to provide for the form and provisions of the
Warrants, the terms upon which they shall be issued and exercised, and the
respective rights, limitation of rights, and immunities of the Company, the
Warrant Agent, and the holders of the Warrants; and

     WHEREAS, all acts and things have been done and performed which are
necessary to make the Warrants, when executed on behalf of the Company and
countersigned by or on behalf of the Warrant Agent, as provided herein, the
valid, binding and legal obligations of the Company, and to authorize the
execution and delivery of this Agreement.

     NOW, THEREFORE, in consideration of the mutual agreements herein contained,
the parties hereto agree as follows:



1. Appointment of Warrant Agent. The Company hereby appoints the Warrant Agent
to act as agent for the Company for the Warrants, and the Warrant Agent hereby
accepts such appointment and agrees to perform the same in accordance with the
terms and conditions set forth in this Agreement.

2. Warrants.

     2.1. Form of Warrant. Each Warrant shall be issued in registered form only,
shall be in substantially the form of Exhibit A hereto, the provisions of which
are incorporated herein and shall be signed by, or bear the facsimile signature
of, the Chairman of the Board or President and Treasurer, Secretary or Assistant
Secretary of the Company and shall bear a facsimile of the Company's seal. In
the event the person whose facsimile signature has been placed upon any Warrant
shall have ceased to serve in the capacity in which such person signed the
Warrant before such Warrant is issued, it may be issued with the same effect as
if he or she had not ceased to be such at the date of issuance.

     2.2. Effect of Countersignature. Unless and until countersigned by the
Warrant Agent pursuant to this Agreement, a Warrant shall be invalid and of no
effect and may not be exercised by the holder thereof.

     2.3. Registration.

          2.3.1. Warrant Register. The Warrant Agent shall maintain books
("Warrant Register"), for the registration of original issuance and the
registration of transfer of the Warrants. Upon the initial issuance of the
Warrants, the Warrant Agent shall issue and register the Warrants in the names
of the respective holders thereof in such denominations and otherwise in
accordance with instructions delivered to the Warrant Agent by the Company.

          2.3.2. Registered Holder. Prior to due presentment for registration of
transfer of any Warrant, the Company and the Warrant Agent may deem and treat
the person in whose name such Warrant shall be registered upon the Warrant
Register ("registered holder"), as the absolute owner of such Warrant and of
each Warrant represented thereby (notwithstanding any notation of ownership or
other writing on the Warrant Certificate made by anyone other than the Company
or the Warrant Agent), for the purpose of any exercise thereof, and for all
other purposes, and neither the Company nor the Warrant Agent shall be affected
by any notice to the contrary.

                                       2


          2.4. Detachability of Warrants. The securities comprising the Units
will not be separately transferable until 90 days after the date hereof unless
EBC informs the Company of its decision to allow earlier separate trading, but
in no event will EBC allow separate trading of the securities comprising the
Units until the Company files a Current Report on Form 8-K which includes an
audited balance sheet reflecting the receipt by the Company of the gross
proceeds of the Public Offering including the proceeds received by the Company
from the exercise of the Underwriter's over-allotment option, if the
over-allotment option is exercised prior to the filing of the Form 8-K.

          2.5 Warrants and Representative's Warrants. The Representative's
Warrants shall have the same terms and be in the same form as the Public
Warrants except with respect to the Warrant Price as set forth below in Section
3.1.

3. Terms and Exercise of Warrants

     3.1. Warrant Price. Each Public Warrant shall, when countersigned by the
Warrant Agent, entitle the registered holder thereof, subject to the provisions
of such Public Warrant and of this Warrant Agreement, to purchase from the
Company the number of shares of Common Stock stated therein, at the price of
$5.00 per whole share, subject to the adjustments provided in Section 4 hereof
and in the last sentence of this Section 3.1. Each Representative's Warrant
shall, when countersigned by the Warrant Agent, entitle the registered holder
thereof, subject to the provisions of such Representative's Warrant and of this
Warrant Agreement, to purchase from the Company the number of shares of Common
Stock stated therein, at the price of $6.25 per whole share, subject to the
adjustments provided in Section 4 hereof. The term "Warrant Price" as used in
this Warrant Agreement refers to the price per share at which Common Stock may
be purchased at the time a Warrant is exercised. The Company in its sole
discretion may lower the Warrant Price at any time prior to the Expiration Date.

     3.2. Duration of Warrants. A Warrant may be exercised only during the
period ("Exercise Period") commencing on the later of the consummation by the
Company of a merger, capital stock exchange, asset acquisition or other similar
business combination ("Business Combination") (as described more fully in the
Company's Registration Statement) and _____________, 2005, and terminating at
5:00 p.m., New York City time on the earlier to occur of (i) _________ ___, 2008
or (ii) the date fixed for redemption of the Warrants as provided in Section 6
of this Agreement ("Expiration Date"). Except with respect to the right to
receive the Redemption Price (as set forth in Section 6 hereunder), each Warrant
not exercised on or before the Expiration Date shall become


                                       3


void, and all rights thereunder and all rights in respect thereof under this
Agreement shall cease at the close of business on the Expiration Date. The
Company in its sole discretion may extend the duration of the Warrants by
delaying the Expiration Date.

     3.3. Exercise of Warrants.

          3.3.1. Payment. Subject to the provisions of the Warrant and this
Warrant Agreement, a Warrant, when countersigned by the Warrant Agent, may be
exercised by the registered holder thereof by surrendering it, at the office of
the Warrant Agent, or at the office of its successor as Warrant Agent, in the
Borough of Manhattan, City and State of New York, with the subscription form, as
set forth in the Warrant, duly executed, and by paying in full, in lawful money
of the United States, in cash, good certified check or good bank draft payable
to the order of the Company (or as otherwise agreed to by the Company), the
Warrant Price for each full share of Common Stock as to which the Warrant is
exercised and any and all applicable taxes due in connection with the exercise
of the Warrant, the exchange of the Warrant for the Common Stock, and the
issuance of the Common Stock.

          3.3.2. Issuance of Certificates. As soon as practicable after the
exercise of any Warrant and the clearance of the funds in payment of the Warrant
Price, the Company shall issue to the registered holder of such Warrant a
certificate or certificates for the number of full shares of Common Stock to
which he is entitled, registered in such name or names as may be directed by
him, her or it, and if such Warrant shall not have been exercised in full, a new
countersigned Warrant for the number of shares as to which such Warrant shall
not have been exercised. Notwithstanding the foregoing, the Company shall not be
obligated to deliver any securities pursuant to the exercise of a Warrant unless
a registration statement under the Act with respect to the Common Stock is
effective. Warrants may not be exercised by, or securities issued to, any
registered holder in any state in which such exercise would be unlawful.

          3.3.3. Valid Issuance. All shares of Common Stock issued upon the
proper exercise of a Warrant in conformity with this Agreement shall be validly
issued, fully paid and nonassessable.

          3.3.4. Date of Issuance. Each person in whose name any such
certificate for shares of Common Stock is issued shall for all purposes be
deemed to have become the holder of record of such shares on the date on which
the Warrant was surrendered and payment of the Warrant Price was made,
irrespective of the date of delivery of such certificate, except that, if the
date of such surrender and payment is a date when the stock transfer books of
the Company are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock


                                       4


transfer books are open.

          3.3.5. Intentionally Omitted.

4. Adjustments.

     4.1. Stock Dividends - Split-Ups. If after the date hereof, and subject to
the provisions of Section 4.6 below, the number of outstanding shares of Common
Stock is increased by a stock dividend payable in shares of Common Stock, or by
a split-up of shares of Common Stock, or other similar event, then, on the
effective date of such stock dividend, split-up or similar event, the number of
shares of Common Stock issuable on exercise of each Warrant shall be increased
in proportion to such increase in outstanding shares of Common Stock.

     4.2. Aggregation of Shares. If after the date hereof, and subject to the
provisions of Section 4.6, the number of outstanding shares of Common Stock is
decreased by a consolidation, combination, reverse stock split or
reclassification of shares of Common Stock or other similar event, then, on the
effective date of such consolidation, combination, reverse stock split,
reclassification or similar event, the number of shares of Common Stock issuable
on exercise of each Warrant shall be decreased in proportion to such decrease in
outstanding shares of Common Stock.

     4.3 Adjustments in Exercise Price. Whenever the number of shares of Common
Stock purchasable upon the exercise of the Warrants is adjusted, as provided in
Section 4.1 and 4.2 above, the Warrant Price shall be adjusted (to the nearest
cent) by multiplying such Warrant Price immediately prior to such adjustment by
a fraction (x) the numerator of which shall be the number of shares of Common
Stock purchasable upon the exercise of the Warrants immediately prior to such
adjustment, and (y) the denominator of which shall be the number of shares of
Common Stock so purchasable immediately thereafter.

     4.4. Replacement of Securities upon Reorganization, etc. In case of any
reclassification or reorganization of the outstanding shares of Common Stock
(other than a change covered by Section 4.1 or 4.2 hereof or that solely affects
the par value of such shares of Common Stock), or in the case of any merger or
consolidation of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the continuing corporation and
that does not result in any reclassification or reorganization of the
outstanding shares of Common Stock), or in the case of any sale or conveyance to
another corporation or entity of the assets or other property of the Company as
an
                                       5


entirety or substantially as an entirety in connection with which the Company is
dissolved, the Warrant holders shall thereafter have the right to purchase and
receive, upon the basis and upon the terms and conditions specified in the
Warrants and in lieu of the shares of Common Stock of the Company immediately
theretofore purchasable and receivable upon the exercise of the rights
represented thereby, the kind and amount of shares of stock or other securities
or property (including cash) receivable upon such reclassification,
reorganization, merger or consolidation, or upon a dissolution following any
such sale or transfer, that the Warrant holder would have received if such
Warrant holder had exercised his, her or its Warrant(s) immediately prior to
such event; and if any reclassification also results in a change in shares of
Common Stock covered by Section 4.1 or 4.2, then such adjustment shall be made
pursuant to Sections 4.1, 4.2, 4.3 and this Section 4.4. The provisions of this
Section 4.4 shall similarly apply to successive reclassifications,
reorganizations, mergers or consolidations, sales or other transfers.

     4.5. Notices of Changes in Warrant. Upon every adjustment of the Warrant
Price or the number of shares issuable upon exercise of a Warrant, the Company
shall give written notice thereof to the Warrant Agent, which notice shall state
the Warrant Price resulting from such adjustment and the increase or decrease,
if any, in the number of shares purchasable at such price upon the exercise of a
Warrant, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based. Upon the occurrence of any event
specified in Sections 4.1, 4.2, 4.3 or 4.4, then, in any such event, the Company
shall give written notice to the Warrant holder, at the last address set forth
for such holder in the warrant register, of the record date or the effective
date of the event. Failure to give such notice, or any defect therein, shall not
affect the legality or validity of such event.

     4.6. No Fractional Shares. Notwithstanding any provision contained in this
Warrant Agreement to the contrary, the Company shall not issue fractional shares
upon exercise of Warrants. If, by reason of any adjustment made pursuant to this
Section 4, the holder of any Warrant would be entitled, upon the exercise of
such Warrant, to receive a fractional interest in a share, the Company shall,
upon such exercise, round up to the nearest whole number the number of the
shares of Common Stock to be issued to the Warrant holder.

     4.7. Form of Warrant. The form of Warrant need not be changed because of
any adjustment pursuant to this Section 4, and Warrants issued after such
adjustment may state the same Warrant Price and the same number of shares as is
stated in the Warrants initially issued pursuant to this Agreement. However, the
Company may at any time in its sole discretion make any change in the form of
Warrant that the Company may deem appropriate and that does not affect the
substance thereof, and any Warrant thereafter issued or countersigned, whether
in exchange or substitution for an outstanding Warrant or


                                       6


otherwise, may be in the form as so changed.

5. Transfer and Exchange of Warrants.

     5.1. Registration of Transfer. The Warrant Agent shall register the
transfer, from time to time, of any outstanding Warrant upon the Warrant
Register, upon surrender of such Warrant for transfer, properly endorsed with
signatures properly guaranteed and accompanied by appropriate instructions for
transfer. Upon any such transfer, a new Warrant representing an equal aggregate
number of Warrants shall be issued and the old Warrant shall be cancelled by the
Warrant Agent. The Warrants so cancelled shall be delivered by the Warrant Agent
to the Company from time to time upon request.

     5.2. Procedure for Surrender of Warrants. Warrants may be surrendered to
the Warrant Agent, together with a written request for exchange or transfer, and
thereupon the Warrant Agent shall issue in exchange therefor one or more new
Warrants as requested by the registered holder of the Warrants so surrendered,
representing an equal aggregate number of Warrants; provided, however, that in
the event that a Warrant surrendered for transfer bears a restrictive legend,
the Warrant Agent shall not cancel such Warrant and issue new Warrants in
exchange therefor until the Warrant Agent has received an opinion of counsel for
the Company stating that such transfer may be made and indicating whether the
new Warrants must also bear a restrictive legend.

     5.3. Fractional Warrants. The Warrant Agent shall not be required to effect
any registration of transfer or exchange which will result in the issuance of a
warrant certificate for a fraction of a warrant.

     5.4. Service Charges. No service charge shall be made for any exchange or
registration of transfer of Warrants.

     5.5. Warrant Execution and Countersignature. The Warrant Agent is hereby
authorized to countersign and to deliver, in accordance with the terms of this
Agreement, the Warrants required to be issued pursuant to the provisions of this
Section 5, and the Company, whenever required by the Warrant Agent, will supply
the Warrant Agent with Warrants duly executed on behalf of the Company for such
purpose.


                                       7


6. Redemption.

     6.1. Redemption. Subject to Section 6.4 hereof, not less than all of the
outstanding Warrants may be redeemed, at the option of the Company, at any time
after they become exercisable and prior to their expiration, at the office of
the Warrant Agent, upon the notice referred to in Section 6.2., at the price of
$.01 per Warrant ("Redemption Price"), provided that the last sales price of the
Common Stock has been at least $8.50 per share, on each of twenty (20) trading
days within any thirty (30) trading day period ending on the third business day
prior to the date on which notice of redemption is given. The provisions of this
Section 6.1 may not be modified, amended or deleted without the prior written
consent of EBC.

     6.2. Date Fixed for, and Notice of, Redemption. In the event the Company
shall elect to redeem all of the Warrants, the Company shall fix a date for the
redemption. Notice of redemption shall be mailed by first class mail, postage
prepaid, by the Company not less than 30 days prior to the date fixed for
redemption to the registered holders of the Warrants to be redeemed at their
last addresses as they shall appear on the registration books. Any notice mailed
in the manner herein provided shall be conclusively presumed to have been duly
given whether or not the registered holder received such notice.

     6.3. Exercise After Notice of Redemption. The Warrants may be exercised in
accordance with Section 3 of this Agreement at any time after notice of
redemption shall have been given by the Company pursuant to Section 6.2. hereof
and prior to the time and date fixed for redemption. On and after the redemption
date, the record holder of the Warrants shall have no further rights except to
receive, upon surrender of the Warrants, the Redemption Price.

     6.4 Outstanding Warrants Only. The Company understands that the redemption
rights provided for by this Section 6 apply only to outstanding Warrants. To the
extent a person holds rights to purchase Warrants, such purchase rights shall
not be extinguished by redemption. However, once such purchase rights are
exercised, the Company may redeem the Warrants issued upon such exercise
provided that the criteria for redemption is met. The provisions of this Section
6.4 may not be modified, amended or deleted without the prior written consent of
EBC.

                                       8


7. Other Provisions Relating to Rights of Holders of Warrants.

     7.1. No Rights as Stockholder. A Warrant does not entitle the registered
holder thereof to any of the rights of a stockholder of the Company, including,
without limitation, the right to receive dividends, or other distributions,
exercise any preemptive rights to vote or to consent or to receive notice as
stockholders in respect of the meetings of stockholders or the election of
directors of the Company or any other matter.

     7.2. Lost, Stolen, Mutilated, or Destroyed Warrants. If any Warrant is
lost, stolen, mutilated, or destroyed, the Company and the Warrant Agent may on
such terms as to indemnity or otherwise as they may in their discretion impose
(which shall, in the case of a mutilated Warrant, include the surrender
thereof), issue a new Warrant of like denomination, tenor, and date as the
Warrant so lost, stolen, mutilated, or destroyed. Any such new Warrant shall
constitute a substitute contractual obligation of the Company, whether or not
the allegedly lost, stolen, mutilated, or destroyed Warrant shall be at any time
enforceable by anyone.

     7.3. Reservation of Common Stock. The Company shall at all times reserve
and keep available a number of its authorized but unissued shares of Common
Stock that will be sufficient to permit the exercise in full of all outstanding
Warrants issued pursuant to this Agreement.

     7.4. Registration of Common Stock. The Company agrees that prior to the
commencement of the Exercise Period, it shall file with the Securities and
Exchange Commission a post-effective amendment to the Registration Statement, or
a new registration statement, for the registration, under the Act, of, and it
shall take such action as is necessary to qualify for sale, in those states in
which the Warrants were initially offered by the Company, the Common Stock
issuable upon exercise of the Warrants. In either case, the Company will use its
best efforts to cause the same to become effective and to maintain the
effectiveness of such registration statement until the expiration of the
Warrants in accordance with the provisions of this Agreement. The provisions of
this Section 7.4 may not be modified, amended or deleted without the prior
written consent of EBC.


                                       9


8. Concerning the Warrant Agent and Other Matters.

     8.1. Payment of Taxes. The Company will from time to time promptly pay all
taxes and charges that may be imposed upon the Company or the Warrant Agent in
respect of the issuance or delivery of shares of Common Stock upon the exercise
of Warrants, but the Company shall not be obligated to pay any transfer taxes in
respect of the Warrants or such shares.

     8.2. Resignation, Consolidation, or Merger of Warrant Agent.

          8.2.1. Appointment of Successor Warrant Agent. The Warrant Agent, or
any successor to it hereafter appointed, may resign its duties and be discharged
from all further duties and liabilities hereunder after giving sixty (60) days'
notice in writing to the Company. If the office of the Warrant Agent becomes
vacant by resignation or incapacity to act or otherwise, the Company shall
appoint in writing a successor Warrant Agent in place of the Warrant Agent. If
the Company shall fail to make such appointment within a period of 30 days after
it has been notified in writing of such resignation or incapacity by the Warrant
Agent or by the holder of the Warrant (who shall, with such notice, submit his
Warrant for inspection by the Company), then the holder of any Warrant may apply
to the Supreme Court of the State of New York for the County of New York for the
appointment of a successor Warrant Agent at the Company's cost. Any successor
Warrant Agent, whether appointed by the Company or by such court, shall be a
corporation organized and existing under the laws of the State of New York, in
good standing and having its principal office in the Borough of Manhattan, City
and State of New York, and authorized under such laws to exercise corporate
trust powers and subject to supervision or examination by federal or state
authority. After appointment, any successor Warrant Agent shall be vested with
all the authority, powers, rights, immunities, duties, and obligations of its
predecessor Warrant Agent with like effect as if originally named as Warrant
Agent hereunder, without any further act or deed; but if for any reason it
becomes necessary or appropriate, the predecessor Warrant Agent shall execute
and deliver, at the expense of the Company, an instrument transferring to such
successor Warrant Agent all the authority, powers, and rights of such
predecessor Warrant Agent hereunder; and upon request of any successor Warrant
Agent the Company shall make, execute, acknowledge, and deliver any and all
instruments in writing for more fully and effectually vesting in and confirming
to such successor Warrant Agent all such authority, powers, rights, immunities,
duties, and obligations.

          8.2.2. Notice of Successor Warrant Agent. In the event a successor
Warrant Agent shall be appointed, the Company shall give notice thereof to the
predecessor Warrant Agent and the transfer agent for the Common Stock not later
than the effective date of any such appointment.


                                       10


          8.2.3. Merger or Consolidation of Warrant Agent. Any corporation into
which the Warrant Agent may be merged or with which it may be consolidated or
any corporation resulting from any merger or consolidation to which the Warrant
Agent shall be a party shall be the successor Warrant Agent under this Agreement
without any further act.

    8.3. Fees and Expenses of Warrant Agent.

          8.3.1. Remuneration. The Company agrees to pay the Warrant Agent
reasonable remuneration for its services as such Warrant Agent hereunder and
will reimburse the Warrant Agent upon demand for all expenditures that the
Warrant Agent may reasonably incur in the execution of its duties hereunder.

          8.3.2. Further Assurances. The Company agrees to perform, execute,
acknowledge, and deliver or cause to be performed, executed, acknowledged, and
delivered all such further and other acts, instruments, and assurances as may
reasonably be required by the Warrant Agent for the carrying out or performing
of the provisions of this Agreement.

    8.4. Liability of Warrant Agent.

          8.4.1. Reliance on Company Statement. Whenever in the performance of
its duties under this Warrant Agreement, the Warrant Agent shall deem it
necessary or desirable that any fact or matter be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a statement signed by the
President or Chairman of the Board of the Company and delivered to the Warrant
Agent. The Warrant Agent may rely upon such statement for any action taken or
suffered in good faith by it pursuant to the provisions of this Agreement.

          8.4.2. Indemnity. The Warrant Agent shall be liable hereunder only for
its own negligence, willful misconduct or bad faith. The Company agrees to
indemnify the Warrant Agent and save it harmless against any and all
liabilities, including judgments, costs and reasonable counsel fees, for
anything done or omitted by the Warrant Agent in the execution of this Agreement
except as a result of the Warrant Agent's negligence, willful misconduct, or bad
faith.


                                       11


          8.4.3. Exclusions. The Warrant Agent shall have no responsibility with
respect to the validity of this Agreement or with respect to the validity or
execution of any Warrant (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition contained
in this Agreement or in any Warrant; nor shall it be responsible to make any
adjustments required under the provisions of Section 4 hereof or responsible for
the manner, method, or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment; nor shall it by any
act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock to be issued pursuant
to this Agreement or any Warrant or as to whether any shares of Common Stock
will when issued be valid and fully paid and nonassessable.

     8.5. Acceptance of Agency. The Warrant Agent hereby accepts the agency
established by this Agreement and agrees to perform the same upon the terms and
conditions herein set forth and among other things, shall account promptly to
the Company with respect to Warrants exercised and concurrently account for, and
pay to the Company, all moneys received by the Warrant Agent for the purchase of
shares of the Company's Common Stock through the exercise of Warrants.

9. Miscellaneous Provisions.

     9.1. Successors. All the covenants and provisions of this Agreement by or
for the benefit of the Company or the Warrant Agent shall bind and inure to the
benefit of their respective successors and assigns.

     9.2. Notices. Any notice, statement or demand authorized by this Warrant
Agreement to be given or made by the Warrant Agent or by the holder of any
Warrant to or on the Company shall be sufficiently given when so delivered if by
hand or overnight delivery or if sent by certified mail or private courier
service within five days after deposit of such notice, postage prepaid,
addressed (until another address is filed in writing by the Company with the
Warrant Agent), as follows:

               Millstream II Acquisition Corporation
               435 Devon Park Drive
               Building 400
               Wayne, Pennsylvania 19087
               Attn:    Chairman

Any notice, statement or demand authorized by this Agreement to be given or made
by the holder of any Warrant or by the Company to or on the Warrant Agent shall
be sufficiently given when so delivered if by hand or overnight delivery or if
sent by certified mail or private courier service within five days after deposit

                                       12


of such notice, postage prepaid, addressed (until another address is filed in
writing by the Warrant Agent with the Company), as follows:

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

with a copy in each case to:


               Bingham McCutchen LLP
               399 Park Avenue
               New York, New York 10022
               Attn: Floyd I. Wittlin, Esq.

and

               Graubard Miller
               600 Third Avenue
               New York, New York 10016
               Attn:    David Alan Miller, Esq.

and

               EarlyBirdCapital, Inc.
               600 Third Avenue, 33rd Floor
               New York, New York 10016
               Attn:    Steven Levine

     9.3. Applicable law. The validity, interpretation, and performance of this
Agreement and of the Warrants shall be governed in all respects by the laws of
the State of New York, without giving effect to conflict of laws. The Company
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. The Company hereby waives any objection
to such exclusive jurisdiction and that such courts represent an inconvenience
forum. Any such process or summons to be served upon the Company may be served
by transmitting a copy thereof by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address set forth in Section
9.2 hereof. Such mailing shall be deemed personal service and shall be legal and
binding upon the Company in any action, proceeding or claim.



                                       13


         9.4. Persons Having Rights under this Agreement. Nothing in this
Agreement expressed and nothing that may be implied from any of the provisions
hereof is intended, or shall be construed, to confer upon, or give to, any
person or corporation other than the parties hereto and the registered holders
of the Warrants and, for the purposes of Sections 6.1, 6.4, 7.4 and 9.2 hereof,
EBC, any right, remedy, or claim under or by reason of this Warrant Agreement or
of any covenant, condition, stipulation, promise, or agreement hereof. EBC shall
be deemed to be a third-party beneficiary of this Agreement with respect to
Sections 6.1, 6.4, 7.4 and 9.2 hereof. All covenants, conditions, stipulations,
promises, and agreements contained in this Warrant Agreement shall be for the
sole and exclusive benefit of the parties hereto (and EBC with respect to the
Sections 6.1, 6.4, 7.4 and 9.2 hereof) and their successors and assigns and of
the registered holders of the Warrants.

     9.5. Examination of the Warrant Agreement. A copy of this Agreement shall
be available at all reasonable times at the office of the Warrant Agent in the
Borough of Manhattan, City and State of New York, for inspection by the
registered holder of any Warrant. The Warrant Agent may require any such holder
to submit his Warrant for inspection by it.

     9.6. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.

     9.7. Effect of Headings. The Section headings herein are for convenience
only and are not part of this Warrant Agreement and shall not affect the
interpretation thereof.



                                       14



         IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the day and year first above written.


Attest:                           MILLSTREAM II ACQUISITION CORPORATION


                                  By:  ____________________________________
                                       Name:  Arthur Spector
                                       Title: Chairman


- ----------

Attest:                           CONTINENTAL STOCK TRANSFER
                                    & TRUST COMPANY


                                  By:  ____________________________________
                                       Name:  Steven Nelson
                                       Title: Chairman

- ----------





                                       15

EX-5.1

                                 GRAUBARD MILLER
                                600 THIRD AVENUE
                          NEW YORK, NEW YORK 10016-2097

                                                                December 8, 2004

Millstream II Acquisition Corporation
435 Devon Park Drive
Building 400
Wayne, Pennsylvania 19087

Dear Sirs:

         Reference is made to the Registration Statement on Form S-1
("Registration Statement") filed by Millstream II Acquisition Corporation
("Company"), a Delaware corporation, under the Securities Act of 1933, as
amended ("Act"), covering (i) 4,000,000 Units, with each Unit consisting of one
share of the Company's common stock, par value $.0001 per share (the "Common
Stock"), and warrants to purchase two shares of the Company's Common Stock (the
"Warrants") to the underwriters for whom EarlyBirdCapital, Inc. is acting as
representative (collectively, the "Underwriters"), (ii) up to 600,000 Units (the
"Over-Allotment Units") which the Underwriters will have a right to purchase
from the Company to cover over-allotments, if any, (iii) up to 300,000 Units
(the "Purchase Option Units") which EarlyBirdCapital, Inc. will have the right
to purchase ("Purchase Option") for its own account or that of its designees,
(iv) all shares of Common Stock and all Warrants issued as part of the Units,
Over-Allotment Units and the Purchase Option Units and (v) all shares of Common
Stock issuable upon exercise of the Warrants included in the Units,
Over-Allotment Units and Purchase Option Units.

         We have examined such documents and considered such legal matters as we
have deemed necessary and relevant as the basis for the opinion set forth below.
With respect to such examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as reproduced
or certified copies, and the authenticity of the originals of those latter
documents. As to questions of fact material to this opinion, we have, to the
extent deemed appropriate, relied upon certain representations of certain
officers and employees of the Company.

         Based upon the foregoing, we are of the opinion that:

         1. The Units, the Over-Allotment Units, the Purchase Option Units, the
Warrants and the Common Stock to be sold to the Underwriters, when issued and
sold in accordance with and in the manner described in the plan of distribution
set forth in the Registration Statement, will be duly authorized, validly
issued, fully paid and non assessable.

         2. Each of the Purchase Option and Warrants constitutes legal, valid
and binding obligations of the Company, enforceable against it in accordance
with its terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief, or other equitable
remedies, and (iii) to the extent indemnification provisions contained such
documents, if any, may be limited by applicable federal or state law and
consideration of public policy.

         We are opining solely on all applicable statutory provisions of
Delaware corporate law, including the rules and regulations underlying those
provisions, all applicable provisions of the Delaware Constitution and all
applicable judicial and regulatory determinations. We hereby consent to the use
of this opinion as an exhibit to the Registration Statement, to the use of our
name as your counsel and to all



references made to us in the Registration Statement and in the Prospectus
forming a part thereof. In giving this consent, we do not hereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Act, or the rules and regulations promulgated thereunder.

                                              Very truly yours,


                                              /s/ Graubard Miller
                                              GRAUBARD MILLER

EX-10.6

                      INVESTMENT MANAGEMENT TRUST AGREEMENT

         This Agreement is made as of ___________, 2004 by and between
Millstream II Acquisition Corporation (the "Company") and Continental Stock
Transfer & Trust Company ("Trustee").

         WHEREAS, the Company's Registration Statement on Form S-1, No.
333-119937 ("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, EarlyBirdCapital, Inc. ("EBC") 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 Certificate of Incorporation, $20,640,000 of the
gross proceeds of the IPO ($23,736,000 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, par value $.0001 per share, issued in the IPO as
hereinafter provided 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 the
Colorado 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;

         (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 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 to do so;

         (h) Render to the Company and to EBC, 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 President or Chairman of the Board and
Secretary or Assistant 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 President 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 of counsel, which consent
shall not


                                       2



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;


                                       3



         (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;

         (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 ____________, 2006 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


                                       4



the numbers provided.

         (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 EBC.
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
                   Fax No.:  (212) 509-5150

         if to the Company, to:

                   Millstream II Acquisition Corporation
                   435 Devon Park Drive, Building 400
                   Wayne, Pennsylvania 19087
                   Attn:    Arthur Spector, Chairman
                   Fax No.: (610) 254-4367

         in either case with a copy to:

                   EarlyBirdCapital, Inc.
                   600 Third Avenue, 33rd Floor
                   New York, New York 10016
                   Attn:    David M. Nussbaum, Chairman
                   Fax No.: (212) 269-3796


                                       5



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

         (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.













                                       6



         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:
                               Title:



                           MILLSTREAM II ACQUISITION CORPORATION


                           By:
                               ---------------------------------
                                Name:  Arthur Spector
                                Title: Chairman, Chief Executive Officer
                                       and President






                                       7




                                                                       EXHIBIT A

                             [LETTERHEAD OF COMPANY]

                                       [INSERT DATE]


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

                  Re:  Trust Account No. _______ Termination Letter
                       --------------------------------------------


Gentlemen:

         Pursuant to paragraph 1(i) of the Investment Management Trust Agreement
between Millstream II Acquisition Corporation ("Company") and Continental Stock
Transfer & Trust Company ("Trustee"), dated as of ___________, 2004 ("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,

                                     MILLSTREAM II ACQUISITION CORPORATION



                                       8




                                            By:
                                               --------------------------------
                                               Arthur Spector, Chairman


                                            By:
                                               --------------------------------
                                               Laura James, Assistant Secretary








                                       9



                                                                       EXHIBIT B


                             [LETTERHEAD OF COMPANY]

                                       [INSERT DATE]

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



                  Re:   Trust Account No. _________ Termination Letter
                        ----------------------------------------------

Gentlemen:

         Pursuant to paragraph 1(i) of the Investment Management Trust Agreement
between Millstream II Acquisition Corporation ("Company") and Continental Stock
Transfer & Trust Company ("Trustee"), dated as of ___________, 2004 ("Trust
Agreement"), this is to advise you that the Company has been unable to effect a
Business Combination with a Target Company within the time frame specified in
the Company's prospectus relating to its IPO.

         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,

                                     MILLSTREAM II ACQUISITION CORPORATION

                                     By:
                                        ----------------------------------
                                        Arthur Spector, Chairman


                                     By:
                                        ----------------------------------
                                        Laura James, Assistant Secretary



                                       10



                                    EXHIBIT C




AUTHORIZED INDIVIDUAL(S)                    AUTHORIZED
FOR TELEPHONE CALL BACK                     TELEPHONE NUMBER(S)
- -----------------------                     -------------------


COMPANY:

Millstream II Acquisition Corporation
[435 Devon Park Drive
Building 400
Wayne, Pennsylvania 19087
Attn:  Arthur Sepctor, Chairman             (610) 293-2511


TRUSTEE:

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






                                       11

EX-10.7

                             STOCK ESCROW AGREEMENT

         STOCK ESCROW AGREEMENT, dated as of ____________, 2004 ("Agreement"),
by and among MILLSTREAM II ACQUISITION CORPORATION, a Delaware corporation
("Company"), ARTHUR SPECTOR, the SPECTOR FAMILY TRUST, ROBERT E. KEITH, JR., DON
K. RICE and DR. HEINZ C. SCHIMMELBUSCH (collectively "Initial Stockholders") and
CONTINENTAL STOCK TRANSFER & TRUST COMPANY, a New York corporation ("Escrow
Agent").

         WHEREAS, the Company has entered into an Underwriting Agreement, dated
____, 2004 ("Underwriting Agreement"), with EarlyBirdCapital, Inc. ("EBC")
acting as representative of the several underwriters (collectively, the
"Underwriters"), pursuant to which, among other matters, the Underwriters have
agreed to purchase 4,000,000 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 final Prospectus, dated ________, 2004 ("Prospectus")
comprising part of the Company's Registration Statement on Form S-1 (File No.
333-119937) under the Securities Act of 1933, as amended ("Registration
Statement"), declared effective on __________, 2004 ("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 respective Escrow Shares, to be held and disbursed subject to
the terms and conditions of this Agreement. Each Initial Stockholder
acknowledges that the certificate representing his Escrow Shares is legended to
reflect the deposit of such Escrow Shares under this Agreement.

     3. Disbursement of the Escrow Shares. The Escrow Agent shall hold the
Escrow Shares until the third anniversary of the Effective Date ("Escrow
Period"), on which date it shall, upon written instructions from each Initial
Stockholder, disburse each of the Initial Stockholder's Escrow Shares to such
Initial Stockholder; provided, however, that if the Escrow Agent is notified by
the Company pursuant to Section 6.7 hereof that the Company is being liquidated
at any time during the Escrow Period, then the Escrow Agent shall promptly
destroy the certificates representing the Escrow Shares; provided further,
however, that if, after the Company consummates a Business Combination (as such
term is defined in the Registration Statement), it (or the surviving entity)
subsequently consummates a liquidation, merger, stock exchange or other similar
transaction which results in all of the stockholders of such entity having the
right to exchange their shares of Common Stock for cash, securities or other
property, then the Escrow Agent will, upon receipt of a certificate, executed by
the Chief Executive Officer or Chief Financial Officer of the Company, in form
reasonably acceptable to the Escrow Agent, that such transaction is then being
consummated, and release the Escrow Shares to the Initial Stockholders upon
consummation of the transaction so that they can similarly participate. The
Escrow Agent shall have no further duties hereunder after the disbursement or
destruction of the Escrow Shares in accordance with this Section 3.

         4. Rights of Initial Stockholders in Escrow Shares.

               4.1 Voting Rights as a Stockholder. Subject to the terms of the
          Insider Letter




          described in Section 4.4 hereof and except as herein provided, the
          Initial Stockholders shall retain all of their rights as stockholders
          of the Company during the Escrow Period, including, without
          limitation, the right to vote such shares.

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

               4.3 Restrictions on Transfer. During the Escrow Period, no sale,
          transfer or other disposition may be made of any or all of the Escrow
          Shares except (i) by gift to a member of Initial Stockholder's
          immediate family or to a trust, the beneficiary of which is an Initial
          Stockholder or a member of an Initial Stockholder's immediate family,
          (ii) by virtue of the laws of descent and distribution upon death of
          any Initial Stockholder, 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 EBC 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 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

                                       2



          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
          reasonably deems appropriate.

               5.6 Discharge of Escrow Agent. The Escrow Agent shall resign and
          be discharged from its duties as escrow agent hereunder if so
          requested in writing at any time by the other parties hereto, jointly,
          provided, however, that such resignation shall become effective only
          upon acceptance of appointment by a successor escrow agent as provided
          in Section 5.5.

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

         6. Miscellaneous.

               6.1 Governing Law. This Agreement shall for all purposes be
          deemed to be made under and shall be construed in accordance with the
          laws of the State of New York.

               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 EBC.

               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 egal
          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

                                       3



          when so delivered personally or, if mailed, two days after the date of
          mailing, as follows:

                  If to the Company, to:

                           Millstream II Acquisition Corporation
                           435 Devon Park Drive, Building 400
                           Wayne, Pennsylvania 19087
                           Attn:  Chairman

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

                  and if to the Escrow Agent, to:

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

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

                           Bingham McCutchen LLP
                           399 Park Avenue
                           New York, New York 10022
                           Attn: Floyd I. Wittlin, Esq.

                  and:

                           EarlyBirdCapital, Inc.
                           600 Third Avenue
                           33rd Floor
                           New York, New York 10016
                           Attn:  David M. Nussbaum, Chairman

                  and:

                           Graubard Miller
                           600 Third Avenue
                           32nd Floor
                           New York, New York 10016
                           Attn:  David Alan Miller, 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 the 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.



                                       4




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


                                 MILLSTREAM II ACQUISITION CORPORATION


                                 By: _________________________________
                                      Arthur Spector, Chairman, Chief Executive
                                             Officer and President


                                 INITIAL STOCKHOLDERS:



                                 ---------------------------
                                 ARTHUR SPECTOR


                                 ---------------------------
                                 SPECTOR FAMILY TRUST


                                 ---------------------------
                                 ROBERT E. KEITH, JR.


                                 ---------------------------
                                 DON K. RICE


                                 ---------------------------
                                 HEINZ C. SCHIMMELBUSCH


                                 CONTINENTAL STOCK TRANSFER
                                   & TRUST COMPANY


                                 By: ________________________________
                                     Name:
                                     Title:

                                       5







                                              EXHIBIT A

Name and Address of                            Number           Stock                    Date of
Initial Stockholder                         of Shares     Certificate Number          Insider Letter
- -------------------                         ----------    ------------------          --------------


Arthur Spector                                397,142            1, 6                October 4, 2004
435 Devon Park Drive
Building 400
Wayne, Pennsylvania 19087

Spector Family Trust                          397,142            2, 7                October 4, 2004
435 Devon Park Drive
Building 400
Wayne, Pennsylvania 19087

Robert E. Keith, Jr.                           68,572            3, 8                October 4, 2004
435 Devon Park Drive
Building 700
Wayne, Pennsylvania 19087

Don K. Rice                                    68,572            4, 9                October 4, 2004
517 Fishers Road
Bryn Mawr, Pennsylvania 19010

Dr. Heinz C. Schimmelbusch                     68,572            5, 10               October 4, 2004
435 Devon Park Drive
Building 400
Wayne, Pennsylvania 19087

EX-23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors
Millstream II Acquisition Corporation


We hereby consent to the use in the Prospectus constituting part of Amendment
No. 2 to the Registration Statement on Form S-1 of our report dated October 21,
2004, except for the fifth paragraph of Note 1, as to which the date is November
11, 2004, and Note 6, as to which the date is December 7, 2004, on the financial
statements of Millstream II Acquisition Corporation as of October 15, 2004 and
for the period from September 24, 2004 (date of inception) to October 15, 2004,
which appears in such Prospectus. We also consent to the reference to our Firm
under the caption "Experts" in such Prospectus.



/s/ GOLDSTEIN GOLUB KESSLER LLP
- -------------------------------
GOLDSTEIN GOLUB KESSLER LLP
New York, New York

December 8, 2004

CORRESP

                                 GRAUBARD MILLER
                                600 THIRD AVENUE
                            NEW YORK, NEW YORK 10016

FACSIMILE:                                                        DIRECT DIAL:
(212) 818-8881                                                    (212) 818-8638


                                                    December 8, 2004

VIA EDGAR AND FEDERAL EXPRESS
- -----------------------------

Mr. John Reynolds
Assistant Director
Office of Emerging Growth Companies
Division of Corporation Finance
Mail Stop 0511
United States Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

            Re: Millstream II Acquisition Corporation
                Registration Statement on Form S-1
                Amendment 1 filed November 12, 2004
                File No. 333-119937
                -------------------


Dear Mr. Reynolds:

         On behalf of Millstream II Acquisition Corporation ("Company"), we
respond as follows to the Staff's comments received on December 7, 2004 relating
to the above-captioned Registration Statement. Please be advised that in
addition to responding to the Staff's comments, the Company has increased the
number of Units being offered under the Registration Statement from 3,500,000
Units to 4,000,000 Units, and the underwriters' overallotment option has been
correspondingly increased from 525,000 Units to 600,000 Units. Further, all
corresponding references to shares of common stock and the warrants comprising
the Units have also been changed to reflect the increase in the offering amount.
Captions and page references herein correspond to those set forth in Amendment
No. 2 to the Registration Statement, a copy of which has been marked with the
changes from the initial filing. Please note that for the Staff's convenience,
we have recited each of the Staff's comments and provided the Company's response
to each comment immediately thereafter.


GENERAL
- -------

     1.   WE NOTE YOUR REFERENCE TO THE TERM "SPECIAL PURPOSE ACQUISITION
          COMPANY" OR "SPAC" THROUGHOUT THIS REGISTRATION STATEMENT. WE FURTHER
          NOTE THAT THE TERM



United States Securities and Exchange Commission
December 8, 2004
Page 2

          SPAC WAS USED BY AFFILIATES IN PREVIOUS REGISTRATION STATEMENTS BUT
          WAS DEFINED AS "SPECIFIED PURPOSE ACQUISITION COMPANY." THE STAFF AT
          THIS TIME BELIEVES THAT THERE COULD BE CONFUSION IN THE USE OF THE
          TERM SPAC IN THE CURRENT OFFERING FROM EARLIER REFERENCES TO THE TERM
          WHICH HAD A DIFFERENT MEANING. FURTHER, THE STAFF IS CONCERNED THAT
          THE USE OF THE TERN SPECIAL PURPOSE ACQUISITION COMPANY MAY BE
          CONFUSING TO INVESTORS BECAUSE THE PURPOSE OF THE COMPANY APPEARS TO
          BE THE SAME AS MOST OTHER BLANK CHECK COMPANIES.

          IN ORDER FOR THE STAFF TO FURTHER EVALUATE THE USE OF THE TERM SPAC IN
          THE CURRENT OFFERING, PLEASE PROVIDE THE FOLLOWING: 1) A HISTORICAL
          CHRONOLOGY OF THE USE OF THE TERM SPAC; 2) THE LAST TIME IT WAS USED
          AND ITS MEANING AT THAT TIME; 3) THE PREVIOUS DEFINITION OF A SPECIFIC
          PURPOSE ACQUISITION COMPANY, 4) THE DEFINITION OF A SPECIAL PURPOSE
          ACQUISITION COMPANY; AND 5) HOW THE COMPANY HAS A "SPECIAL PURPOSE"
          THAT IS DISTINCT FROM THE ORDINARY DEFINITION OF A BLANK CHECK
          COMPANY.

     The Company has revised the disclosure to delete the terms "SPAC" and
"Special Purpose Acquisition Company" from the Registration Statement.

2.   PRIOR TO THE EFFECTIVENESS OF THE COMPANY'S REGISTRATION STATEMENT, THE
     STAFF REQUESTS THAT WE BE PROVIDED WITH A COPY OF THE LETTER OR CALL FROM
     THE NASD THAT THE NASD HAS NO ADDITIONAL CONCERNS.


     We will provide you with a copy of the NASD letter or arrange for a call to
you from the NASD once the NASD has no additional concerns.

3.   PRIOR TO EFFECTIVENESS PLEASE PROVIDE AN UPDATE WITH RESPECT TO THOSE
     STATES IN WHICH THE OFFERING WILL BE CONDUCTED.

     To date, we have only received comments from the State of Maryland. We
responded to comments from the State of Maryland on November 23, 2004. We have
included certain changes in Amendment No. 2 in connection with the foregoing
response. We hereby confirm that we will resolve all outstanding comments from
state regulatory agencies in which we have applied to have the units registered
for sale prior to the effectiveness of the registration statement.

PROSPECTUS SUMMARY
- ------------------

4.   WE NOTE THE REPRESENTATION THAT THE SPECIAL PURPOSE ACQUISITION COMPANY
     "WILL BE ABLE TO ACQUIRE AN OPERATING BUSINESS IN ANY INDUSTRY WHICH WE
     BELIEVE HAS SIGNIFICANT GROWTH POTENTIAL." (EMPHASIS ADDED). THIS
     DISCLOSURE APPEARS TO BE PROMOTIONAL AND VAGUE. CONSIDER REVISING THE
     DISCLOSURE TO NOTE, FOR EXAMPLE, OUR SEARCH IS NOT LIMITED TO A PARTICULAR
     INDUSTRY AND OUR OBJECTIVE IS TO ACQUIRE AN OPERATING BUSINESS WHICH CAN
     MARKET AND DISTRIBUTE, ON A WORLDWIDE BASIS, COST-EFFECTIVE AND INNOVATIVE
     PRODUCTS AND HAS AN EXISTING REVENUE STREAM.


United States Securities and Exchange Commission
December 8, 2004
Page 3

     We have removed the above-reference disclosure in the Registration
Statement.

5.   THE STAFF IS CONFUSED WITH THE DISCLOSURE IN THE FOURTH PARAGRAPH THAT "WE
     INTEND TO FOCUS ON VARIOUS INDUSTRIES WHERE CHANGES IN INDUSTRIAL
     TECHNOLOGY PROVIDE PARTICULAR OPPORTUNITIES FOR GROWTH." (EMPHASIS ADDED).
     PLEASE CLARIFY OR DELETE.

     We have revised the above referenced disclosure to indicate that the
Company intends to focus on industrial businesses such as chemical and other
material science companies, energy companies, medical product manufacturers
and producers of manufacturing equipment.

6.   IN THIS SECTION, YOU MAKE SEVERAL ASSERTIONS REGARDING MARKET CONDITIONS.
     SUPPLEMENTALLY, PLEASE PROVIDE US WITH REASONABLE SUPPORT FOR THE FOLLOWING
     ASSERTIONS AND SUMMARIZE THE SUPPORT LATER IN THE PROSPECTUS. IF A THIRD
     PARTY IS THE SOURCE OF THE INFORMATION, PLEASE NAME THE THIRD PARTY AND THE
     PUBLICATION WHERE THE INFORMATION CAN BE FOUND. IF THE INFORMATION IS NOT
     READILY AVAILABLE TO THE PUBLIC, PLEASE FILE THE THIRD PARTY'S CONSENT TO
     BEING NAMED IN THE PROSPECTUS AND TO THE SUMMARY CONTAINED IN THE
     DISCLOSURE.

     o    "INNOVATIVE INDUSTRIAL TECHNOLOGIES HAVE GIVEN SMALL AND MEDIUM-SIZED
          COMPANIES THE ABILITY NOT ONLY TO COMPETE WITH LARGER ORGANIZATIONS,
          BUT TO LEAPFROG EXISTING PRODUCTS, PROCESSES AND SERVICES AND
          ESTABLISH NEW MARKET LEADERSHIP."

     o    "WE BELIEVE THAT COMPANIES WITH THESE TYPES OF INNOVATIONS OBTAIN A
          COMPETITIVE EDGE AND THE OPPORTUNITY FOR RAPID AND SUSTAINABLE
          GROWTH."

     o    "INNOVATIONS OF THIS NATURE OCCUR FREQUENTLY IN CHEMICALS AND OTHER
          MATERIAL SCIENCES, ENERGY, MEDICAL PRODUCTS AND MANUFACTURING
          PROCESSES."

         IF YOU CANNOT PROVIDE US WITH ADEQUATE SUPPORT FOR THESE ASSERTIONS,
         YOU SHOULD DELETE THEM. ALSO PLEASE CLARIFY VAGUE TERMS SUCH AS
         "INNOVATIVE INDUSTRIAL TECHNOLOGIES," "NEW MARKET LEADERSHIP,"
         "COMPETITIVE EDGE" AND "RAPID AND SUSTAINABLE GROWTH." FURTHER NOTE
         THAT THE SUMMARY SECTION SHOULD BE FACTUAL RATHER THAN PROMOTIONAL AND
         SHOULD BE REVISED TO REMOVE ALL PROMOTIONAL STATEMENTS. NO SPECULATIVE
         INFORMATION SHOULD BE INCLUDED, UNLESS CLEARLY LABELED AS THE OPINION
         OF MANAGEMENT OF THE COMPANY ALONG WITH DISCLOSURE OF THE REASONABLE
         BASIS FOR SUCH OPINIONS OR BELIEFS.

     We have revised the disclosure in the Registration Statement to remove the
above referenced statements.

USE OF PROCEEDS
- ---------------

     7.   WE NOTE THE DISCLOSURE IN THE PENULTIMATE PARAGRAPH ON PAGE 14, THAT
          "ANY AMOUNTS NOT PAID AS CONSIDERATION TO THE SELLERS OF THE TARGET
          BUSINESS MAY BE USED TO FINANCE



United States Securities and Exchange Commission
December 8, 2004
Page 4

          OPERATIONS OF TARGET BUSINESS OR TO EFFECT OTHER ACQUISITIONS, AS
          DETERMINED BY OUR BOARD OF DIRECTORS AT THAT TIME." GIVEN THE TERMS OF
          THE OFFERING (FAIR MARKET VALUE OF THE TARGET BUSINESS), THAT THE
          INITIAL TARGET BUSINESS MUST HAVE A MARKET VALUE EQUAL TO AT LEAST 80%
          OF THE COMPANY'S ASSETS AT THE TIME OF SUCH ACQUISITION, IT WOULD
          APPEAR THAT THE COMPANY WOULD HAVE A MINIMAL AMOUNT OF FUNDS AND A
          POSSIBLE CHANGE IN CONTROL. IT IS UNCLEAR HOW THE COMPANY COULD EFFECT
          OTHER ACQUISITIONS. PLEASE CLARIFY OR DELETE.

     The Company has the ability to utilize cash derived from the proceeds of
this offering, its capital stock, debt or a combination of cash, capital stock
and debt, in effecting a business combination. This is indicated in the sixth
risk factor on page 7 of the Registration Statement as well as in the first
paragraph under the section entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations." The fourth paragraph of the
section entitled "Use of Proceeds" also explains that "[t]o the extent that our
capital stock is used in whole or in part as consideration to effect a business
combination, the proceeds held in the trust account as well as any other net
proceeds not expended will be used to finance the operations of the target
business." Therefore, it is possible that the Company could consummate a
business combination using primarily capital stock and/or debt and have
substantial funds remaining from the offering available to it following such a
business combination in order to effectuate additional acquisitions.
Accordingly, we believe the above-referenced statement is adequately disclosed
in the Registration Statement and that no revision to the disclosure is
necessary.

8.   PLEASE RECONCILE THE AMOUNT OF MISCELLANEOUS EXPENSES OF $48,695.22 WITH
     THE AMOUNT IN PART II, OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION IN THE
     AMOUNT OF $47,695.22.

     In previous offerings of this type reviewed by the Commission, the issuers
of such offerings were required by the Commission to include a separate line
item in the "Other Expenses of Issuance and Distribution" table of Part II of
the Registration Statement for the $1,000 initial acceptance fee charged by
Continental Stock Transfer & Trust Company to act as trustee for the Company's
trust account. Such issuers were then required to include in a footnote to the
table disclosure relating to the annual fees that were to be charged by
Continental to such issuers. Accordingly, we have followed this previous
practice and done so in this offering. We therefore do not believe any revision
to the disclosure in the Registration Statement is necessary.

PROPOSED BUSINESS
- -----------------

INTRODUCTION
- ------------

9.   WE NOTE THE FOLLOWING STATEMENTS:

     o    "WE BELIEVE THAT AS A RESULT OF THE DECLINE IN THE UNITED STATES
          EQUITY, MARKETS OVER THE PAST SEVERAL YEARS, MANY PRIVATELY HELD
          COMPANIES HAVE BEEN SHUT OFF FROM THE PUBLIC MARKETPLACE."

     o    "ADDITIONALLY, WE FEEL THAT AS THE ECONOMY HAS SLOWED, MANY COMPANIES
          ARE ATTEMPTING TO DIVEST NON-CORE ASSETS AND DIVISIONS AND VALUATIONS
          OF THESE ASSETS AND DIVISIONS HAVE DECREASED SIGNIFICANTLY."


United States Securities and Exchange Commission
December 8, 2004
Page 5

          SUPPLEMENTALLY, PLEASE PROVIDE US WITH REASONABLE SUPPORT FOR THE
          ASSERTIONS AND SUMMARIZE THE SUPPORT IN YOUR PROSPECTUS. IF YOUR
          SUPPORT COMES FROM THIRD PARTIES, PLEASE NAME THEM IN THE PROSPECTUS
          AND FILE AS EXHIBITS THEIR CONSENTS TO BEING NAMED IN THE PROSPECTUS
          AND TO THE SUMMARY OF THEIR REPORTS. IF YOU CANNOT PROVIDE US WITH
          SUPPORT FOR THESE ASSERTIONS, YOU SHOULD DELETE THEM.



     We have revised the disclosure in the Registration Statement to remove the
above-referenced assertions.

10.      WE NOTE THAT BUSINESS SECTION APPEARS PROMOTIONAL, RATHER THAN FACTUAL,
         AND SHOULD BE REVISED TO REMOVE ALL PROMOTIONAL STATEMENTS. NO
         SPECULATIVE INFORMATION SHOULD BE INCLUDED, UNLESS CLEARLY LABELED AS
         THE OPINION OF MANAGEMENT OF THE COMPANY ALONG WITH DISCLOSURE OF THE
         REASONABLE BASIS FOR SUCH OPINIONS OR BELIEFS. FOR EXAMPLE WE NOTE THE
         STATEMENT "[D]UE TO THESE FACTORS, WE BELIEVE THAT THERE ARE
         SUBSTANTIAL OPPORTUNITIES TO EFFECT ATTRACTIVE ACQUISITIONS AND THAT,
         AS A PUBLIC ENTITY POSSESSING BROAD INVESTMENT AND ACQUISITION
         EXPERTISE, WE ARE WELL POSITIONED TO IDENTIFY TARGET ACQUISITIONS AND
         TO EFFECT A BUSINESS COMBINATION TO TAKE ADVANTAGE OF THESE CURRENT
         TRENDS." PLEASE REVISE THE BUSINESS SECTION TO REMOVE ALL PROMOTIONAL
         STATEMENTS.

         We have revised the business section to remove all promotional
statements.

FACILITIES
- ----------

11.  PLEASE SPECIFY THE COST OF RENT EACH MONTH FOR THE OFFICE SPACE.

     As previously stated in the Registration Statement under the section
entitled "Facilities," the cost of rent for the Company's executive offices is
included in the $7,500 per-month fee 400 Building LLC charges the Company for
general and administrative services pursuant to a letter agreement between the
Company and 400 Building LLC. Accordingly, we do not believe any revision to the
disclosure in this section is necessary.

LEGAL PROCEEDINGS
- -----------------

12.  PLEASE DISCLOSE WHETHER THERE ARE ANY PENDING OR CONTEMPLATED LEGAL
     PROCEEDINGS AGAINST YOU OR YOUR OFFICERS AND DIRECTORS IN THEIR CAPACITY AS
     SUCH.

     We have been advised that there are no legal proceedings of any kind
involving the Company or any of the Company's officers and directors in their
capacities as such. Accordingly, no disclosure is necessary.


United States Securities and Exchange Commission
December 8, 2004
Page 6

FINANCIAL STATEMENTS
- --------------------

GENERAL
- -------

13.  YOUR ATTENTION IS DIRECTED TO SECTION 210.3-12 OF REGULATION S-X AND THE
     POSSIBLE NEED FOR UPDATED FINANCIAL STATEMENTS AND RELATED DISCLOSURES.

     Duly noted.

14.  YOU ARE REMINDED THAT A CURRENTLY DATED CONSENT OF THE INDEPENDENT
     ACCOUNTANTS WITH TYPED SIGNATURE SHOULD BE INCLUDED IN ANY AMENDMENT TO THE
     REGISTRATION STATEMENT.

     Duly noted. A currently dated consent of the independent accountants with
typed signature has been included as Exhibit 23.1 to Amendment No. 2 to the
Registration Statement.

PART II
- -------

OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
- -------------------------------------------

15.  BECAUSE YOUR MISCELLANEOUS EXPENSES ACCOUNT FOR AT LEAST 10% OF THE
     OFFERING EXPENSES, PLEASE LIST THESE MISCELLANEOUS EXPENSES WITH MORE
     SPECIFICITY.

     As a result of the increase in the size of the offering, and the
corresponding increase in registration fees, miscellaneous expenses no longer
exceed 10% of the offering expenses, and therefore we believe a listing of such
miscellaneous expenses should no longer be necessary.

     If you have any questions, please do not hesitate to contact me at the
above telephone and facsimile numbers.

                                                  Very truly yours,

                                                  /s/ Jeffrey M. Gallant

                                                  Jeffrey M. Gallant

cc:  Arthur Spector
     David M. Nussbaum
     Steven Levine
     Floyd Wittlin