EXHIBIT 10.4
BLUE SKY LOCK-UP ESCROW AGREEMENT
AGREEMENT made this ____ day of February, 1997, by and among The St.
▇▇▇▇▇▇▇▇ Seaway Corporation ("St. ▇▇▇▇▇▇▇▇"), Paragon Acquisition Company, Inc.
("Paragon") and Continental Stock Transfer & Trust Company, with offices at ▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, Paragon, a company in which St. ▇▇▇▇▇▇▇▇ owns 514,191 shares,
has filed a registration statement with the Securities and Exchange Commission
(the "Commission") registering the distribution (the "Distribution") of one
share of Paragon, $.01 par value Common Stock (the "Shares") and one right to
subscribe for two (2) additional Shares of Paragon (the "Subscription Rights")
to St. ▇▇▇▇▇▇▇▇ stockholders for each share of St. ▇▇▇▇▇▇▇▇ stock owned on
_____, 1997; and
WHEREAS, the Distribution is being conducted in accordance with Rule
419 promulgated under the Securities Act of 1933, as amended (the "Securities
Act"); and
WHEREAS, the securities division of the States listed on Annex A
hereto, as amended (collectively, the "States" and individually, a "State") will
not presently approve the registration or an exemption from registration for the
Distribution to St. ▇▇▇▇▇▇▇▇ stockholders located within the States; and
WHEREAS, St. ▇▇▇▇▇▇▇▇ agrees to hold the Shares and Subscription Rights
(the "LockUp Securities") to which such stockholders would have been entitled in
a separate account maintained by the Escrow Agent in accordance with the terms
and conditions of Rule 419, and upon the terms and conditions set forth herein;
and
WHEREAS, Paragon agrees to undertake reasonable efforts to obtain an
exemption from registration of the distribution of the Lock-Up Securities to St.
▇▇▇▇▇▇▇▇ stockholders within the States; and
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto hereby agree as follows:
1. Establishment of Escrow Account. The parties hereto shall establish
an escrow account at the office of the Escrow Agent (the "Escrow Account"). On
or before the date of the initial deposit of Securities into the Escrow Account
pursuant to this Agreement, the Issuer shall notify the Escrow Agent in writing
of the effective date of the Registration Statement (the "Effective Date") and
the Escrow Agent shall not be required to accept any Lock-Up Securities for
deposit in the Escrow Account prior to its receipt of such notification.
2. Deposit of Lock-Up Securities into Escrow Account. All Lock-Up
Securities issued to St. ▇▇▇▇▇▇▇▇, including any securities issued with respect
to stock splits, stock dividends or similar rights, shall be deposited directly
into the Escrow Account promptly upon issuance, together with the name, address
and number of St. ▇▇▇▇▇▇▇▇ shares owned by the St. ▇▇▇▇▇▇▇▇ stockholder who
would have received the Lock-Up Securities if the Distribution had been approved
(the "St. ▇▇▇▇▇▇▇▇ Stockholder"). The Lock-Up Securities held in the Escrow
Account are to remain as issued and deposited. Neither St. ▇▇▇▇▇▇▇▇ nor the St.
▇▇▇▇▇▇▇▇ Stockholders shall have any voting or dispositive power with respect to
the Lock-Up Securities while held in the Escrow Account. St. ▇▇▇▇▇▇▇▇ shall not
exercise any Subscription Rights that are held in the Escrow Account, and such
Subscription Rights shall expire while held therein.
3. Legend. While held in the Escrow Account, the Lock-Up Securities
shall contain the following legend:
"The interest in the securities represented by this certificate is
subject to restrictions contained in a certain Blue Sky Lock-Up Escrow Agreement
and cannot be transferred or otherwise disposed of without an opinion of counsel
satisfactory to Paragon's transfer agent that the conditions contained therein
and all applicable federal and state securities laws, including Rule 419 of the
Securities Act of 1933, have been satisfied."
6. Disbursement of Securities from the Escrow Account.
The Lock-Up Securities may be delivered to the St. ▇▇▇▇▇▇▇▇
Stockholders only at the same time as or after:
(a) the Escrow Agent has received a signed representation from
Paragon, together with an opinion of counsel that the requirements of Rule 419
have been satisfied, and
(b) Paragon has registered or obtained an exemption from
registration for the Distribution of the Lock-Up Securities to St. ▇▇▇▇▇▇▇▇
Stockholders.
If a consummated acquisition meeting the requirements of Rule 419 has
not occurred within 18 months from the date the Shares are deposited into the
Escrow Account, then the LockUp Securities shall be returned to Paragon and this
Escrow Agreement shall be terminated.
Paragon hereby agrees that in the event a consummated acquisition
meeting the requirements of Rule 419 has occurred, but, at such time, Paragon
has not been successful in registering or obtaining an exemption from
registration for the distribution of the Lock-Up Securities, then (i) Paragon
shall continue reasonable efforts to obtain a registration or exemption from
registration for the Distribution of the Lock-Up Securities to the St. ▇▇▇▇▇▇▇▇
Stockholders until registration or an exemption is available; and (ii) the
Escrow Agent shall hold the Lock-Up Securities in the Escrow Account until
Paragon has obtained such registration or exemption.
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Upon written notification from St. ▇▇▇▇▇▇▇▇ and Paragon that the
requirements of Rule 419 have been satisfied and registration or an exemption
has been obtained for the Distribution of the Lock-Up Securities to St. ▇▇▇▇▇▇▇▇
Stockholders within a State(s), the Escrow Agent shall prepare and replace the
Lock-Up Securities held by St. ▇▇▇▇▇▇▇▇ with Paragon securities recorded in the
Stockholder's name and those securities shall be released from the Escrow
Account and delivered to the St. ▇▇▇▇▇▇▇▇ Stockholders located within such
State(s).
Dividends earned on the Lock-Up Securities, if any, shall be held in
the Escrow Account until the Lock-Up Securities are released in accordance with
the provisions of this Paragraph 6. Once the Lock-Up Securities are released
from the Escrow Account, the St. ▇▇▇▇▇▇▇▇ Stockholders shall receive any
dividends earned on the Lock-Up Securities up to the date of release.
7. Rights, Duties and Responsibilities of Escrow Agent. It is
understood and agreed that the duties of the Escrow Agent are purely ministerial
in nature, and that:
(a) The Escrow Agent shall not be responsible for the performance by
St. ▇▇▇▇▇▇▇▇ or Paragon of its obligations under this Agreement.
(b) The Escrow Agent shall be entitled to rely upon the accuracy, act
in reliance upon the contents, and assume the genuineness of any notice,
instruction, certificate, signature instrument or other document which is given
to the Escrow Agent pursuant to this Agreement without the necessity of the
Escrow Agent verifying the truth or accuracy thereof. The Escrow Agent shall not
be obligated to make any inquiry as to the authority, capacity, existence or
identity of any person purporting to give any such notice or instructions or to
execute any such certificate, instrument or other document. The Escrow Agent
must, however, determine for itself whether the conditions permitting the
release of the Lock-Up Securities in the Escrow Account have been met.
(c) In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions with respect to the
Escrow Account, the Lock-Up Securities which, in its sole determination, are in
conflict either with other instructions received by it or with any provision of
this Agreement, the Escrow Agent, at its sole option, may deposit the Lock-Up
Securities with the registry of a court of competent jurisdiction in a
proceeding to which all parties in interest are joined. Upon the deposit by the
Escrow Agent of the Lock-Up Securities with the registry of any court, the
Escrow Agent shall be relieved of all further obligations and released from all
liability hereunder.
(d) The Escrow Agent shall not be liable for any action taken or
omitted hereunder, or for the misconduct of any employee, agent or attorney
appointed by it, except in the case of willful misconduct. The Escrow Agent
shall be entitled to consult with counsel of its own choosing and shall not be
liable for any action taken, suffered or omitted by it in accordance with the
advice of such counsel.
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(e) The Escrow Agent shall have no responsibility at any time to
ascertain whether or not any security interest exists in the Lock-Up Securities
or any part thereof or to file any financing statement under the Uniform
Commercial Code with respect to the Lock-Up Securities or any part thereof.
(f) The Escrow Agent may resign hereunder: (i)(A) at any time with the
unanimous consent of St. ▇▇▇▇▇▇▇▇ and Paragon and upon the appointment of a
substitute escrow agent by St. ▇▇▇▇▇▇▇▇ or Paragon, or (B) upon thirty (30)
days' written notice to St. ▇▇▇▇▇▇▇▇ and Paragon, or (ii) upon petitioning of a
court of competent jurisdiction seeking the appointment by such court of a
substitute escrow agent and the acceptance by the substitute escrow agent of
such appointment;
(g) Should any conflict or controversy arise between or among St.
▇▇▇▇▇▇▇▇ and/or Paragon and the Escrow Agent with respect to (i) this Agreement,
or (ii) the Lock-Up Securities held hereunder, and a substitute escrow agent is
not appointed pursuant to clause (g) above within 30 days of written request to
resign from the Escrow Agent, the Escrow Agent shall have the right to institute
a ▇▇▇▇ of Interpleader in any court of competent jurisdiction to determine the
rights of the parties hereto. Should a ▇▇▇▇ of Interpleader be instituted in any
manner whatsoever on account of this Agreement, the non-prevailing party shall
pay the Escrow Agent its reasonable attorneys' fees and any other disbursements,
expenses, losses, costs or damages in connection with or resulting from such
litigation; and
(h) St. ▇▇▇▇▇▇▇▇ and Paragon, jointly and severally, agree to indemnify
and hold the Escrow Agent harmless from all claims, losses, costs, damages, and
expenses including, reasonable attorneys' fees that are incurred by the Escrow
Agent arising from acts or omissions of the Escrow Agent in performance of or
pursuant to this Agreement; provided, however, the Escrow Agent shall not be
entitled to indemnification for gross negligence or willful misconduct.
8. Governing Law and Assignment. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York and shall be
binding upon the parties hereto and their respective successors and assigns.
9. Notices. All notices required to be given in connection with this
Agreement shall be sent by registered or certified mail, return receipt
requested, or by hand delivery with receipt acknowledged, or by the Express Mail
service offered by the United States Post Office, and addressed:
If to the Escrow Agent:
Continental Stock Transfer & Trust Company
▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Compliance Department.
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If to St. ▇▇▇▇▇▇▇▇:
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇
If to Paragon:
Paragon Acquisition Company, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
10. Severability. If any provision of this Agreement or the application
thereof to any person or circumstance shall be determined to be invalid or
unenforceable, the remaining provisions of this Agreement or the application of
such provision to persons or circumstances other than those to which it is held
invalid or unenforceable shall not be affected thereby and shall be valid and
enforceable to the fullest extent permitted by law.
11. Captions. All captions are for convenience only and shall not limit
or define the term thereof.
12. Execution in Several Counterparts. This Agreement may be executed
in several counterparts or by separate instruments and all of such counterparts
and instruments shall constitute one agreement, binding on all of the parties
herein.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
PARAGON ACQUISITION COMPANY, INC.:
By:
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Name:
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Title:
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THE ST. ▇▇▇▇▇▇▇▇ SEAWAY
CORPORATION
By:
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Name:
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Title:
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CONTINENTAL STOCK TRANSFER &
TRUST CO.:
By:
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Name:
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Title:
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