EXHIBIT 10.4
LOCK-UP ESCROW AGREEMENT
AGREEMENT made this ____ day of __________, 1996, by and among The St.
Xxxxxxxx Seaway Corporation ("St. Xxxxxxxx"), Paragon Acquisition Company, Inc.
("Paragon") and Continental Stock Transfer & Trust Company, with offices at 0
Xxxxxxxx, Xxx Xxxx, XX 00000 (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, Paragon, a company in which St. Xxxxxxxx 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. Xxxxxxxx stockholders for each share of St. Xxxxxxxx stock owned on
_____, 1996; 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 amend (collectively, the "States" and individually, the "State") will
not approve the registration or an exemption from registration of the
Distribution to St. Xxxxxxxx stockholders located within the States; and
WHEREAS, St. Xxxxxxxx agrees to hold the Shares with Subscription
Rights (the "Lock-up Securities") to which you would have been entitled in a
separate account maintained by the Escrow Agent upon the terms and conditions
set forth herein and in the Blue Sky Lock-up Letter Agreements it has entered
into with certain stockholders located within the States (collectively referred
to as the "Lock-up Agreement"); and
WHEREAS, In accordance with the terms of the Lock-up Agreement, Paragon
agrees to undertake reasonable efforts to obtain an exemption from registration
of the distribution of the Shares to St. Xxxxxxxx stockholders within the
States; and
WHEREAS, St. Xxxxxxxx proposes to establish a lock-up escrow account
with the Escrow Agent in connection with the Lock-up Agreement 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. Establishment of Escrow Account. The parties hereto shall establish
an escrow account at the office of the Escrow Agent Escrow Account.
3. Deposit of Lock-up Securities into Escrow Account. All Lock-up
Securities issued to St. Xxxxxxxx, 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 and
address of the St. Xxxxxxxx stockholder who would have received the Lock-up
Securities if the Distribution had been approved (the "St. Xxxxxxxx
Stockholder"). The Lock-up Securities held in the escrow account are to remain
as issued and deposited and St. Xxxxxxxx shall have the sole voting power and,
subject to Paragraph 4 hereof, sole dispositive power with respect to such
securities. The St. Xxxxxxxx Stockholder shall have no voting or dispositive
power over the Lock-up Securities while held in the escrow account.
4. Lock-up Period. Except as provided in Paragraph __ hereof, the
Lock-up Securities shall remain in the escrow account, and St. Xxxxxxxx agrees
not to sell, pledge, hypothecate or otherwise dispose of the Lock-up Securities
for a period of two (2) years from the date the Lock-up Securities are placed
into the escrow account.
5. Legend. During the term of the Lock-up Agreement and 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 Letter 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 have been satisfied."
6. Disbursement of Securities from the Escrow Account.
(a) Upon written notification from St. Xxxxxxxx and Paragon that
registration or an exemption has been obtained for the distribution of the
Lock-up Securities to stockholders within a State, the Escrow Agent shall
prepare and replace the Lock-up Securities held by St. Xxxxxxxx with Paragon
securities recorded in the stockholders' name and those securities shall be
released from the escrow account and delivered to the stockholders.
(b) In the event Paragon cannot obtain registration or an exemption
from registration of the distribution of any of the Lock-up Securities within 2
years from the date the Lock-up Securities are placed into the escrow account,
then St. Xxxxxxxx shall have the right, in its sole discretion and subject to
applicable federal and state securities laws, to sell or otherwise dispose of
such securities free from any restrictions contained in the Lock-up Agreement;
provided however, that any proceeds to be received from the sale or disposition
of such securities shall be sent to the Escrow Agent (the "Proceeds"). Upon
receipt, the Escrow Agent shall promptly deliver the Proceeds to the St.
Xxxxxxxx Stockholder.
-2-
(c) 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 pursuant to either Sub-Paragraph (a) or (b)
hereof, the St. Xxxxxxxx Stockholder 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. Xxxxxxxx or Paragon of its obligations under this Agreement.
(b) 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 St. Xxxxxxxx any check received which
is dishonored.
(c) 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 and/or Proceeds in the escrow account have
been met.
(d) 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 or the 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 Lock-up Securities and/or the Proceeds (and any other amounts that
thereafter become part of the 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 Lock-up Securities and the
Proceeds with the registry of any court, the Escrow Agent shall be relieved of
all further obligations and released from all liability hereunder.
(e) 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.
(f) 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 the Proceeds or any part thereof or to
-3-
file any financing statement under the Uniform Commercial Code with respect to
the Lock-up Securities or the Proceeds or any part thereof.
(g) The Escrow Agent may resign hereunder: (i)(A) at any time with the
unanimous consent of St. Xxxxxxxx and Paragon and upon the appointment of a
substitute escrow agent by St. Xxxxxxxx or Paragon, or (B) upon fourteen (14)
days' written notice to St. Xxxxxxxx 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;
(h) Should any conflict or controversy arise between or among St.
Xxxxxxxx and/or Paragon and the Escrow Agent with respect to (i) this Agreement,
or (ii) the Lock-up Securities and/or the Proceeds held hereunder, and a
substitute escrow agent is not appointed pursuant to clause (g) above within 14
days of written request to resign from the Escrow Agent, the Escrow Agent shall
have the right to institute a Xxxx of Interpleader in any court of competent
jurisdiction to determine the rights of the parties hereto. Should a Xxxx 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
(i) St. Xxxxxxxx and Paragon, jointly and severally, agree to indemnify
and hold the Escrow Agent harmless from all claims, losses, costs, damages,
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, that 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
0 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Compliance Department.
-4-
If to St. Xxxxxxxx:
000 X. Xxxxxxxx Xx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxx
If to Paragon:
Paragon Acquisition Company, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx X. Xxxxxx, 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.
-5-
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:____________________________
THE ST. XXXXXXXX SEAWAY CORPORATION
By:_______________________________
Name:_____________________________
Title:____________________________
CONTINENTAL STOCK TRANSFER & TRUST CO.:
By:_______________________________
Name:_____________________________
Title:____________________________
Name: ____________________________
Title:____________________________
-6-
