EXHIBIT 10.1
ESCROW AGREEMENT (PUBLIC OFFERING)
AGREEMENT made this ____ day of __________, 1996, by and between
Paragon Acquisition Company, Inc. (the "Issuer") and Continental Stock Transfer
& Trust Company, with offices at ▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Escrow
Agent").
W I T N E S S E T H:
WHEREAS, the Issuer has filed with the Securities and Exchange
Commission (the "Commission") a registration statement (the "Registration
Statement") covering a proposed public distribution of its securities
(collectively, the "Securities", and individually, a "Share" and a "Subscription
Right") as described on the Information Sheet (defined herein) attached to this
Agreement; 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 Issuer proposes to establish an escrow account with the
Escrow Agent in connection with the Distribution and the Escrow Agent is willing
to establish such escrow account on the terms and subject to the conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto hereby agree as follows:
1. Information Sheet. Each capitalized term not otherwise defined in
this Agreement shall have the meaning set forth for such term on the Information
Sheet which is attached to this Agreement and is incorporated by reference
herein and made a part hereof (the "Information Sheet").
2. Establishment of Escrow Account.
2.1 The parties hereto shall establish an interest-bearing escrow
account at the office of the Escrow Agent, and bearing the designation, set
forth on the Information Sheet (the "Escrow Account").
2.2 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
Securities for deposit in the Escrow Account prior to its receipt of such
notification.
2.3 The Subscription Period, which shall be deemed to commence on the
effective date of the Post-Effective Amendment, shall consist of the number of
calendar days or business days set forth on the Information Sheet. The last day
of the Subscription Period is referenced to herein as the "Expiration Date".
After the Expiration Date, the Issuer shall not deposit, and the Escrow Agent
shall not accept, any additional amounts representing payments by subscribing
stockholders.
3. Deposit of Securities and Subscription Proceeds into Escrow Account.
3.1 All Securities issued in connection with the Distribution,
including Shares issuable upon the exercise of Subscription Rights and Shares
issued with respect to stock splits, stock dividends or similar rights, shall be
deposited directly into the escrow account promptly upon issuance (the
"Deposited Securities"). The Deposited Securities held in the escrow account are
to remain as issued and deposited and are to be held for the sole benefit of the
stockholders who retain the voting rights, if any, with respect to the Deposited
Securities held in their name. No transfer or other disposition of Deposited
Securities held in the Escrow Account or any interest related to such Securities
shall be permitted, other than by will or the laws of descent and distribution,
or pursuant to a qualified domestic relations order as defined by the Internal
Revenue Code of 1986, as amended, or Title I of the Employee Retirement Income
Security Act, or the rules thereunder, without an opinion of counsel to Paragon
that all of the conditions of this Escrow Agreement have been satisfied.
3.2 Stockholders of Paragon who exercise their Subscription Rights will
be required to send payment to the Escrow Agent, acting as Subscription Agent
pursuant to that certain Subscription Agency Agreement dated ________, 1996,
between the Issuer and Continental Stock Transfer & Trust Company. Upon receipt,
the Subscription Proceeds shall promptly be deposited with the Escrow Agent (the
"Deposited Proceeds"). Stockholders of Paragon who exercise their Subscription
Rights may choose between the following methods of payment:
(i) Stockholders whose Shares are held by a Nominee must
exercise their Subscription Rights by contacting their Nominees, who can
arrange, on a Stockholder's behalf, to guarantee delivery of a properly
completed and executed Subscription Form and full payment to the Escrow Agent by
the close of business on the third (3rd) business day after the Expiration Date;
or
(ii) Stockholders whose Shares of Paragon are held in their
own name ("Record Owners") may send payment for the Shares acquired pursuant to
the exercise of Subscription Rights, together with a completed Subscription Form
directly to the Escrow Agent. To be accepted, such payment, together with the
completed Subscription Form must be received by the Escrow Agent prior to 5:00
p.m. Eastern Standard Time on the Expiration Date. All payments by a stockholder
must be made in United States dollars by money order or check drawn on a bank
located in the United States of America.
The Deposited Proceeds and interest or dividends thereon, if
any, shall be held for the sole benefit of the Paragon Stockholders.
3.3 The Deposited Proceeds shall be invested in either:
(a) an obligation that constitutes a "deposit" as that term is
defined in Section (3)(1) of the Federal Deposit Insurance Act;
(b) securities of any open-end investment company registered
under the Investment Company Act of 1940 that holds itself out as a money market
fund meeting the conditions of paragraphs (c)(2), (c)(3), and (c)(4) of Rule
2a-7 under the Investment Company Act; or
(c) securities that are direct obligations of, or obligations
guaranteed as to principal or interest by, the United States.
3.4 Simultaneously with the receipt and deposit of Deposited Proceeds
into the Escrow Account, the Escrow Agent shall inform the Issuer by
confirmation slip or other writing of the name and address of the prospective
subscriber, the number of Shares subscribed for by such Stockholder, and the
aggregate dollar amount of such subscription (collectively, the "Subscription
Information").
3.5 Interest or dividends earned on the Deposited Proceeds, if any,
shall be held in the Escrow Account until the Deposited Proceeds are released in
accordance with the provisions of Section 4 of the Escrow Agreement. If the
Deposited Proceeds are released to a Stockholder, the Stockholder shall receive
interest or dividends earned, if any, on such Deposited Proceeds up to the date
of release. If the Deposited Proceeds held in the Escrow Account are released to
the Issuer, any interest or dividends earned on such funds up to the date of
release may be released to the Issuer.
3.6 The Subscription Rights may be exercised in accordance with their
terms, provided, however, that the Common Stock received upon exercise, together
with any cash or other consideration paid in connection with the exercise, is
promptly deposited into the Escrow Account.
3.7 The Escrow Agent shall refund any portion of the Deposited Proceeds
prior to disbursement of the Deposited Proceeds in accordance with Section 4
hereof upon instructions in writing signed by the Issuer.
4. Disbursement from the Escrow Account.
4.1 The Deposited Proceeds may be released to the Company and the
Shares delivered to the Stockholders only at the same time as or after:
(a) the Escrow Agent has received a signed representation from
the Issuer, together with an opinion of counsel that the following requirements
have already been met:
(1) Execution of an agreement(s) for the acquisition(s)
of a business(es) or
assets that will constitute the business (or a line of business) of the Company
and for which the fair value of the business(es) or net assets to be acquired
represents at least 80 percent of the maximum Deposited Proceeds received from
the exercise or conversion of the Subscription Rights; and
(2) the Issuer shall have filed a post-effective
amendment that discloses information about the proposed acquisition and
candidate(s) and its business(es), including audited financial statements of the
Issuer and the Target Business, the terms upon which the Subscription Rights can
be exercised, including the Subscription Price which cannot exceed $2.00 per
Subscription Right, and use of Funds disbursed from the Escrow Account.
(3) Within five business days after the effective date
of the post-effective amendment, the Issuer shall have sent by first class mail
or other equally prompt means, to each Stockholder whose Shares are held in
escrow, a copy of the prospectus contained in the post-effective amendment and
any amendment or supplement thereto;
(4) Each Stockholder shall have had no fewer than 20
business days and no more than 45 business days from the effective date of the
post-effective amendment to notify the Company in writing that the Stockholder
elected to exercise his or her Subscription Rights. If the Company has not
received such written notification by the 45th business day following the
effective date of the post-effective amendment, the Stockholder's right to elect
to subscribe shall terminate;
(b) The acquisition(s) meeting the criteria set forth in this
paragraph will be consummated only if a minimum number of Stockholders
representing 80% of the maximum proceeds to be received from the exercise of
Subscription Rights elects to subscribe.
If a consummated acquisition(s) meeting the requirements of
this section has not occurred by a date 6 months after the Expiration Date, the
Deposited Funds shall be returned by first class mail or equally prompt means to
the subscribing Stockholders within five business days following that date.
4.2 In the event that at the close of regular banking hours on the 5th
day following the Expiration Date less than 80% of the maximum Subscription
Proceeds shall have been received by the Escrow Agent, the Escrow Agent shall
promptly refund to each prospective subscribing Stockholder the amount of
payment received from such Stockholder held in escrow without interest thereon
or deduction therefrom, and the Escrow Agent shall notify the Issuer of its
distribution of the Deposited Proceeds.
4.3 In the event that at any time up to the close of banking hours on
the 5th business day following the Expiration Date, 80% or more of the maximum
Subscription Proceeds shall have been received by the Escrow Agent, the Escrow
Agent shall notify the Issuer of such fact in writing within a reasonable time
thereafter. The Escrow Agent shall hold the Deposited Proceeds until the events
described in Section 4.1 of this Escrow Agreement take place.
4.4 Upon disbursement of the Deposited Proceeds and the Shares held in
escrow pursuant to the terms of this Section 4, the Escrow Agent shall be
relieved of all further obligations and released from all liability under this
Agreement. It is expressly agreed and understood that in no event shall the
aggregate amount of payments made by the Escrow Agent exceed the amount of the
Deposited Proceeds.
5. 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:
5.1 The Escrow Agent shall not be responsible for the performance by
the Issuer of its obligations under this Agreement.
5.2 The Escrow Agent shall not be required to accept from the Issuer or
any subscribing Stockholder any Subscription Information unless such
Subscription Information is accompanied by checks or money orders, Notices of
Guaranteed Delivery, nor shall the Escrow Agent be required to keep records of
any information with respect to payments deposited by the Issuer, except as to
the amount of such payments; however, the Escrow Agent shall notify the Issuer
within a reasonable time of any discrepancy between the amount delivered to the
Escrow Agent therewith. Such amount need not be accepted for deposit in the
Escrow Account until such discrepancy has been resolved.
5.3 The Escrow Agent shall be under no duty or responsibility to
enforce collection of any check delivered to it hereunder. The Escrow Agent,
within a reasonable time, shall return to the Issuer any check received which is
dishonored, together with the Subscription Information, if any, which
accompanied such check.
5.4 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 funds in the Escrow Account have been met.
5.5 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 Deposited Securities or the Deposited Proceeds 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 Deposited Securities and the Deposited Proceeds (and any
other amounts that thereafter become part of the Deposited Proceeds) 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
Deposited Securities and the Deposited Proceeds with the
registry of any court, the Escrow Agent shall be relieved of all further
obligations and released from all liability hereunder.
5.6 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.
5.7 The Escrow Agent shall have no responsibility at any time to
ascertain whether or not any security interest exists in the Deposited
Securities or the Deposited Proceeds or any part thereof or to file any
financing statement under the Uniform Commercial Code with respect to the
Deposited Securities or the Deposited Proceeds or any part thereof.
6. Amendment; Resignation. This Agreement may be altered or amended
only with the written consent of the Issuer and the Escrow Agent. The Escrow
Agent may resign for any reason upon seven (7) business days written notice to
the Issuer. Should the Escrow Agent resign as herein provided, it shall not be
required to accept any deposit, make any disbursement or otherwise dispose of
the Deposited Securities or the Deposited Proceeds, but its only duty shall be
to hold the Deposited Securities or the Deposited Proceeds for a period of not
more than ten (10) business days following the effective date of such
resignation, at which time (a) if a successor escrow agent shall have been
appointed and written notice thereof (including the name and address of such
successor escrow agent) shall have been given to the resigning Escrow Agent by
the Issuer and such successor escrow agent, the resigning Escrow Agent shall pay
over to the successor escrow agent the Deposited Securities and Deposited
Proceeds, less any portion thereof previously paid out in accordance with this
Agreement, or (b) if the resigning Escrow Agent shall not have received written
notice signed by the Issuer and a successor escrow agent, then the resigning
Escrow Agent shall promptly refund the Deposited Proceeds to each subscribing
Stockholder without interest thereon or deduction therefrom, shall promptly
forward the Deposited Securities to Issuer and shall notify the Issuer in
writing of its liquidation and distribution of the Deposited Proceeds;
whereupon, in either case, the Escrow Agent shall be relieved of all further
obligations and released from all liability under this Agreement. Without
limiting the provisions of Section 8 hereof, the resigning Escrow Agent shall be
entitled to be reimbursed by the Issuer for any expenses incurred in connection
with its resignation, transfer of the Deposited Securities and Deposited
Proceeds to a successor Escrow Agent or distribution of the Deposited Securities
and Deposited Proceeds pursuant to this Section 6.
7. Representations and Warranties. The Issuer hereby represents and
warrants to the Escrow Agent that:
7.1 No party other than the Issuer hereto and any subscribing
Stockholders have, or shall have any lien, claim or security interest in the
Deposited Securities or the Deposited Proceeds or any part thereof.
7.2 No financing statement under the Uniform Commercial Code is on file
in any
jurisdiction claiming a security interest in or describing (whether specifically
or generally) the Deposited Securities or the Deposited Proceeds or any part
thereof.
7.3 The Subscription Information submitted with each deposit shall, at
the time of submission and at the time of the disbursement of the Deposited
Proceeds, be deemed a representation and warranty that such deposit represents a
bona fide sale to the subscribing Stockholder described therein of the amount of
Shares set forth in such Subscription Information.
7.4 All of the information contained in the Information Sheet is, as of
the date hereof and will be, at the time of any disbursement of the Deposited
Securities or the Deposited Proceeds, true and correct.
8. Fees and Expenses. The Escrow Agent shall be entitled to the Escrow
Agent Fee set forth in the Information Sheet, payable upon execution of this
Agreement. In addition, the Issuer agrees to reimburse the Escrow Agent for any
reasonable expenses incurred in connection with this Agreement, including, but
not limited to, reasonable counsel fees, but not including the review of this
Agreement.
9. Indemnification and Contribution.
9.1 The Issuer (the "Indemnitor") agrees to indemnify the Escrow Agent
and its officers, directors ,employees, agents and shareholders (jointly and
severally the "Indemnitees") against, and hold them harmless of and from, any
and all loss, liability, cost, damage and expense, including, without
limitation, reasonable counsel fees, which the Indemnitees may suffer or incur
by reason of any action, claim or proceeding brought against the Indemnitees
arising out of or relating in any way to this Agreement or any transaction to
which this Agreement relates, unless such action, claim or proceeding is the
result of the gross negligence or willful misconduct of the Indemnitees.
9.2 If the indemnification provided for in this Section 9 is
applicable, but for any reason held to be unavailable, the Indemnitor shall
contribute such amounts as are just and equitable to pay, or to reimburse the
Indemnitees for, the aggregate of any and all losses, liabilities, costs,
damages and expenses, including counsel fees, actually incurred by the
Indemnitees as a result of or in connection with, and any amount paid in
settlement of any action, claim or proceeding arising out of or relating in any
way to any actions or omissions of the Indemnitor.
9.3 Any Indemnitee which proposes to assert the right to be indemnified
under this Section 9, promptly after receipt of notice of commencement of any
action, suit or proceeding against such Indemnitee in respect of which a claim
is to be made against the Indemnitor under this Section 9, will notify the
Indemnitor of the commencement of such action, suit or proceeding, enclosing a
copy of all papers served, but the omission so to notify the Indemnitor of any
such action, suit or proceeding shall not relieve the Indemnitor from any
liability which they may have to any Indemnitee otherwise than under this
Section 9. In case any such action, suit or proceeding shall be brought against
any Indemnitee and it shall notify the Indemnitor of the
commencement thereof, the Indemnitor shall be entitled to participate in and, to
the extent that they shall wish, to assume the defense thereof, with counsel
satisfactory to such Indemnitee. The Indemnitee shall have the right to employ
its counsel in any such action, but the fees and expenses of such counsel shall
be at the expense of such Indemnitee unless (i) the employment of counsel by
such Indemnitee has been authorized by the Indemnitor, (ii) the Indemnitee shall
have concluded reasonably that there may be a conflict of interest between the
Indemnitor and the Indemnitee in the conduct of the defense of such action (in
which case the Indemnitor shall not have the right to direct the defense of such
action on behalf of the Indemnitee) or (iii) the Indemnitor in fact shall not
have employed counsel to assume the defense of such action , in each of which
cases the fees and expenses of counsel shall be borne by the Indemnitor.
9.4 The Indemnitor agrees to provide the Indemnitees with copies of all
registration statements pre- and post-effective amendments to such registration
statements including exhibits, whether filed with the SEC prior to or subsequent
to the disbursement of the Deposited Securities and the Deposited Proceeds.
9.5 The provisions of this Section 9 shall survive any termination of
this Agreement, whether by disbursement of the Deposited Securities and the
Deposited Proceeds, resignation of the Escrow Agent or otherwise.
10. 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;
provided, however, that any assignment or transfer by any party of its rights
under this Agreement or with respect to the Deposited Securities and the
Deposited Proceeds shall be void as against the Escrow Agent unless:
(a) written notice thereof shall be given to the Escrow Agent;
and
(b) the Escrow Agent shall have consented in writing to such
assignment or transfer.
11. 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
Issuer, at its address set forth on the Information Sheet, and if to the Escrow
Agent, Continental Stock Transfer & Trust Company, ▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: Compliance Department.
12. 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.
13. Pronouns. All pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine, neuter, singular, or plural as the context
may require.
14. Captions. All captions are for convenience only and shall not limit
or define the term thereof.
15. 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.
16. Entire Account. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings (written or oral) of the
parties in connection herewith.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
PARAGON ACQUISITION COMPANY, INC.:
By:________________________________
Name:______________________________
Title:_____________________________
CONTINENTAL STOCK TRANSFER &
TRUST CO.:
By:________________________________
Name:______________________________
Title:_____________________________
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
ESCROW AGREEMENT INFORMATION SHEET
1. The Issuer
Name: Paragon Acquisition Company, Inc.
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
State of incorporation or organization: Delaware
2. The Securities
(a) Common Stock, $.01 par value of Paragon.
(b) Non-transferable Subscription Rights, entitling registered
holder to acquire two shares of Common Stock for each
Subscription Right at a price to be set and determined by the
Issuer at the time the Subscription Rights become available.
3. Plan of Distribution of the Securities
Distribution of Common Stock and Subscription Rights to occur upon
effectiveness of Registration Statement. Subscription Period to
commence upon distribution to registered holders of Subscription Rights
of Prospectus contained in Post-Effective Amendment to Registration
Statement. Subscription Period shall not be less than 20 nor more than
45 days from the date of the effectiveness of the Post-Effective
Amendment.
4. Escrow Agent Fees
The Escrow Agent shall receive a base fee of $1500.00 for establishing
the Escrow Account. The Escrow Agent shall receive a fee of $.10 plus
$.03 per enclosure, exclusive of postage and stationary, for a mailing
to Stockholders notifying them of the Distribution. The Escrow Agent
shall receive $2.50 for each certificate printed and distributed.