As filed with the Securities and Exchange Commission on _______________________
Registration No. 33-
================================================================================
Securities And Exchange Commission
Washington, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
PARAGON ACQUISITION COMPANY, INC.
---------------------------------
(Exact Name of registrant as specified in its charter)
Delaware 6770 (a blank check company)
-------- ----------------------------
(State or other jurisdiction of (Primary Standard
incorporation or organization) Industrial Classification
Code Number)
13-3895049
----------
(I.R.S. Employer Identification No.)
277 Park Avenue
New York, New York 10172
(212) 941-1400
(Address, including zip code, and telephone
number, including area code, of registrant's principal
executive offices)
Mitchell A. Kuflik, President
Paragon Acquisition Company, Inc.
277 Park Avenue
New York, New York 10017
(212) 941-1400
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies To:
Lane Altman & Owens LLP
101 Federal Street
Boston, Massachusetts 02110
Attn: Joseph F. Mazzella, Esq.
------------------------------
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. [X]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------ ------------- ------------ --------------- ------------
Proposed
Maximum
Title of Each Class of Offering Proposed
Securities to be Registered Price Per Maximum Amount of
Amount to Share Aggregate Registration
be (1) Offering Fee
Registered Price(2)
(1)
- ------------------------------------------------------ ------------- ------------ --------------- ------------
<S> <C> <C> <C> <C>
Shares of Common Stock, $.01 par value, to be
Distributed as a Dividend 514,191 $.04(2) $20,567.64 $ 7.09
- --------------------------------------------------------------------------------------------------------------
Shares of Common Stock, $.01 par value, issuable
upon the exercise of Subscription Rights 6,828,382 $1.00 $6,828,382.00 $2,354.61
- --------------------------------------------------------------------------------------------------------------
TOTAL.............................................. $6,848,949.60 $2,361.70
- ------------------------------------------------------ ------------- ------------ --------------- ------------
</TABLE>
(1) Based upon the maximum number of shares of Common Stock of Paragon estimated
to be distributed per share as a dividend. No consideration will be paid for
the securities.
(2) Estimated solely for the purpose of calculating the registration fee.
Represents the estimated book value of Paragon at the time of the
Distribution.
- ----------------------
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 SECTION 8(A), MAY
DETERMINE.
================================================================================
PARAGON ACQUISITION COMPANY, INC.
CROSS REFERENCE SHEET
Between Items in Form S-1 and Prospectus
Pursuant to Item 501(b) of Regulation S-K
<TABLE>
<CAPTION>
Form S-1 Item Number and Caption Location or Caption in Prospectus
-------------------------------- ---------------------------------
<S> <C> <C>
1. Forepart of The Registration Statement and
Outside Front Cover Page of Prospectus......................Facing Page of the Registration Statement;
Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus...............................................Inside Front Cover Page
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges................................Summary; Risk Factors; Not Applicable
4. Use of Proceeds.................................................Use of Proceeds
5. Determination of Offering Price.................................Not Applicable
6. Dilution .....................................................Dilution
7. Selling Security Holders........................................Not Applicable
8. Plan of Distribution............................................Outside Front Cover page; Summary;
Introduction; The Distribution
9. Description of Securities to be Registered......................Outside Front Cover Page; Summary; The
Distribution; Capitalization; Description of
Capital Stock
10. Interests of Named Experts and Counsel..........................Legal Counsel; Experts
11. Information with Respect to the Registrant Summary..............Introduction; Risk Factors; The Distribution;
Relationship Between St. Lawrence and
Paragon After the Distribution; Dividend
Policy; Capitalization; Selected Financial Data;
Unaudited Pro Forma Financial Statements;
Management's Discussion and Analysis of
Financial Condition and Results of Operations;
Business; Management
12. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities.................Not Applicable
</TABLE>
SUBJECT TO COMPLETION, dated __________, 1996
PARAGON ACQUISITION COMPANY, INC.
514,191 Shares of Common Stock and Subscription
Rights to Purchase 6,828,382 Shares of Common Stock
Issuable upon Exercise of Subscription Rights
PROSPECTUS
This Prospectus is being furnished to holders of Common Stock of The St.
Lawrence Seaway Corporation ("St. Lawrence") by Paragon Acquisition Company,
Inc. ("Paragon") in connection with the distribution (the "Distribution") to
them of (i) 514,191 shares of Common Stock, par value $.01 per share (the
"Shares") of Paragon Acquisition Company, Inc. ("Paragon"), and (ii) 514,191
non-transferable rights (the "Subscription Rights") to purchase two (2)
additional Shares of Paragon. See "The Distribution.". In the Distribution, each
St. Lawrence stockholder will receive one Paragon Share and one Subscription
Right for each share of St. Lawrence common stock owned, or which is subject to
exercisable options and warrants, as of _____________, 1996 (the "Record Date").
The Shares were purchased by St. Lawrence on July , 1996 for aggregate
consideration of $5,141. Neither St. Lawrence nor Paragon will receive any cash
or other proceeds from the Distribution, and St. Lawrence Stockholders will not
make any payment for the Shares and Subscription Rights. Paragon may receive
proceeds upon the exercise of Subscription Rights in the future. See "The
Distribution."
The balance of 2,900,000 (85%) of the currently outstanding Shares of
Paragon are owned by PAR Holding Company, LLC, a Delaware limited liability
company ("PAR Holding") and were acquired for a purchase price of $.05 per
share, or $150,000 (the "Initial Capital"). See "The Company" and "Certain
Transactions". The Initial Capital will be utilized for the costs of
organization of Paragon, the registration of the Shares and Subscription Rights,
and for general corporate purposes. This Prospectus, and the Registration
Statement of which it is a part, is also being used in connection with the
distribution to PAR Holding of one Subscription Right for each Share owned by
PAR Holding, or, a total of 2,900,000 Subscription Rights, exercisable on the
same terms and conditions as applicable to St. Lawrence stockholders. See "The
Distribution."
The Subscription Rights will not be exercisable, if not at all, until after
Paragon has identified and described a Business Combination (as defined herein)
in a post-effective amendment to this Prospectus (the "Post-Effective
Amendment"). See "Commencement of Subscription Period." If and when they become
exercisable, the Subscription Rights will entitle the holder thereof to purchase
from Paragon two (2) authorized but heretofore unissued Shares of Paragon for
each Subscription Right held. The purchase price under the Subscription Rights
will be established by Paragon at the time a Business Combination is identified
in the Post-Effective Amendment, and will be not more than $2.00 per
Subscription Right. See "Subscription Price." Stockholders who fully exercise
their Subscription Rights (other than PAR Holding) will be entitled to the
additional privilege of subscribing, subject to certain limitations, for any
Shares subject to unexercised Subscription Rights. See "Over-Subscription
Privilege."
The Shares, and any Shares issued upon exercise of Subscription Rights,
will be held in escrow and are non-transferable by the holder thereof until
after the completion of a Business Combination (as defined below). See "Escrow
of Shares and Subscription Rights." The Subscription Rights will also be held in
escrow and become exercisable only upon the filing by Paragon of a
Post-Effective Amendment to this Prospectus. The net proceeds from the exercise
of the Subscription Rights will remain in an escrow account subject to release
upon consummation of a Business Combination or, if a Business Combination has
been earlier consummated, until after said Business Combination has been
described in a Post-Effective Amendment. See "Escrow of Proceeds upon Exercise
of Subscription Rights."
The Distribution will be made as of the effective date of this Prospectus
(the "Distribution Date"). It is expected that certificates evidencing Shares
and Subscription Forms will be mailed to St. Lawrence stockholders on or about
__________, 1996. There is no current public trading market for the Shares and
none is expected to develop, if at all, until after the consummation of a
Business Combination and the release of the Shares from escrow.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. IN REVIEWING THIS
PROSPECTUS, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DESCRIBED UNDER THE
CAPTION "RISK FACTORS" ON PAGE ____ OF THIS PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- -------------------------------------- --------------------------- ------------------------ ------------------------
UNDERWRITING DISCOUNTS
MAXIMUM PRICE TO PUBLIC(1) AND COMMISSIONS PROCEEDS TO COMPANY
----------------------- --------------- -------------------
<S> <C> <C> <C>
PER SHARE $ 0.00 -0- $ 0.00
PER EXERCISE OF SUBSCRIPTION $ 2.00(2) -0- $ 6,828,382.00
RIGHT $ 6,828,382.00 -0- $ 6,828,382.00
- -------------------------------------- --------------------------- ------------------------ ------------------------
</TABLE>
(1) NO CONSIDERATION WILL BE PAID BY ST. LAWRENCE STOCKHOLDERS IN CONNECTION
WITH THE DISTRIBUTION OF THE SHARES AND THE SUBSCRIPTION RIGHTS.
(2) BASED UPON THE MAXIMUM EXERCISE PRICE PER SUBSCRIPTION RIGHT.
NO STOCKHOLDER APPROVAL OF THE DISTRIBUTION IS REQUIRED OR SOUGHT. WE ARE NOT
ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
-------------------------
The date of this Prospectus is __________, 1996.
AVAILABLE INFORMATION
Paragon has filed with the Securities and Exchange Commission (the "Commission")
a Registration Statement on Form S-1 (the "Registration Statement"), under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
securities offered hereby. This Prospectus does not contain all of the
information contained in the Registration Statement. For further information
regarding Paragon and the securities offered hereby, reference is made to the
Registration Statement, including all exhibits and schedules thereto, which may
be inspected without charge at the public reference facilities of the
Commission's Washington, D.C. office, 450 Fifth Street, N.W., Washington, D.C.
20549. Each statement contained in this Prospectus with respect to a document
filed as an exhibit to the Registration Statement is qualified by reference to
the exhibit for a complete statement of its terms and conditions.
Paragon intends to furnish its stockholders with annual reports containing
audited financial statements and such other reports as may be required by law.
ii
SUMMARY
The following is a summary of certain information contained elsewhere in
this Prospectus and is qualified in its entirety by reference to, and should be
read in conjunction with, the detailed information and financial statements
contained herein. Capitalized terms not defined in this Summary are defined
elsewhere in this Prospectus.
DISTRIBUTING COMPANY The St. Lawrence Seaway Corporation, an Indiana
corporation ("St. Lawrence").
DISTRIBUTED COMPANY Paragon Acquisition Company, Inc. ("Paragon") was
formed on June 19, 1996 to serve as a vehicle to seek
and effect a merger, exchange of capital stock, asset
acquisition or other business combination (a "Business
Combination") with an operating business (a "Target
Business"). PAR Holding Company, LLC ("PAR Holding")
has contributed $150,000 to Paragon in exchange for
2,900,000 shares of Common Stock (the "Shares") which
funds will be used for the costs of the organization of
Paragon, the Distribution, the Registration Statement
of which this Prospectus is a part, and for general
corporate purposes. The Managing Members of PAR Holding
are the principal officers and directors of Paragon,
and, therefore, will be principally responsible for
seeking, evaluating and consummating a Business
Combination with a Target Company. St. Lawrence
purchased the Shares of Paragon, and is participating
in the Distribution in order to provide St. Lawrence
shareholders with the opportunity to participate in
ownership of such Target Business.
BUSINESS PURPOSE OF
PARAGON Paragon was established to acquire a Target Business
primarily located in the United States, but its efforts
will not be limited to a particular industry. In
seeking a Target Business, Paragon will consider,
without limitation, businesses which (i) offer or
provide services or develop, manufacture or distribute
goods in the United States or abroad, including,
without limitation, in the following areas: health care
and health products, educational services,
environmental services, consumer related products and
services (including amusement, food service and/or
recreational services), personal care services, voice
and data information processing and transmission and
related technology development, (ii) is engaged in
wholesale or retail distribution, or (iii) engages in
the financial services or similar industries. Paragon
has not had any negotiations with any entity or
representatives of any entity regarding a Business
Combination. Paragon may, under certain circumstances,
seek to effect Business Combinations with more than one
Target Business.
PRINCIPAL STOCKHOLDERS After the Distribution St. Lawrence stockholders will
own 514,191 Shares of Paragon (15% of Paragon Shares),
and 514,191 Subscription Rights to purchase an
additional 1,028,382 Shares. PAR Holding currently will
own 2,900,000 Shares (85% of Paragon Shares) and
2,900,000 Subscription Rights to purchase an additional
5,800,000 Shares.
SECURITIES TO BE
DISTRIBUTED St. Lawrence will distribute to its shareholders
514,191 Shares of Paragon and 514,191 Subscription
Rights. The Subscription Rights entitle the holder to
purchase two (2) Shares of Paragon for each
Subscription Right held for a purchase price to be
established by Paragon's Board of Directors at the time
a Business Combination is described in a Post-Effective
Amendment, such price to be not more than $2.00 per
Subscription Right (the "Subscription Price"). St.
Lawrence will effect the Distribution of Shares and
Subscription Rights on the Distribution Date by
delivering the Shares and subscription forms
("Subscription
1
Forms") to the XXX Trust Company, as the distribution
agent (the "Distribution Agent"), for distribution to
Stockholders of St. Lawrence on the Record Date. The
Distribution Agent will provide each St. Lawrence
stockholder with a copy of this Prospectus and notice
of the number of Shares and Subscription Rights each is
entitled to receive but no certificates or other
physical rights will be issued or distributed with
respect to the Shares and Subscription Rights. All of
the Shares and Subscription Rights will be held in
escrow by the Escrow Agent. See "Escrow of Shares and
Subscription Rights." The actual total number of Shares
and Subscription Rights to be distributed will depend
on the number of shares of St. Lawrence common stock
outstanding on the Record Date. The Subscription Rights
are non-transferable.
No Stockholder of St. Lawrence will be required to pay
any cash or other consideration for the Shares or
Subscription Rights received in the Distribution or to
surrender or exchange shares of St. Lawrence Common
Stock or to take any other action in order to receive
the Shares and Subscription Rights. The Distribution
will not affect the number of, or the rights attaching
to, outstanding shares of St. Lawrence common stock. No
vote of St. Lawrence stockholders is required
DISTRIBUTION RATIO One Share and one Subscription Right for every one
share of St. Lawrence common stock, owned, or subject
to exercisable warrants on options, as of the Record
Date.
DISTRIBUTION AGENT,
TRANSFER AGENT AND
ESCROW AGENT XXX Trust Company
Telephone: _______________
FEDERAL INCOME TAX
CONSEQUENCES The receipt of Shares and Subscription Rights is
expected to be taxable for federal income tax purposes
to the St. Lawrence stockholders. The income tax
considerations applicable to the Distribution are
discussed under "Federal Income Tax Consequences of the
Distribution."
COMMENCEMENT OF
SUBSCRIPTION RIGHTS Paragon will file a Post-Effective Amendment to this
Prospectus upon agreement for the acquisition of a
Target Business, or assets that will constitute the
business or, if a Business Combination has already been
consummated, promptly after the consummation of each
Business Combination. See "Proposed Business". The
Post-Effective Amendment will contain information about
the Target Company and its business. If the Board of
Directors determines that sale of Shares pursuant to
the exercise of Subscription Rights is necessary or in
the interest of Paragon Stockholders within five
business days after the effective date of the
Post-Effective Amendment, the Distribution Agent will
send by first class mail or other equally prompt means,
to each holder of Subscription Rights, a copy of the
Prospectus contained in the Post-Effective Amendment
and any amendment or supplement thereto along with
Subscription Forms.
The Subscription Period will commence on the eighth
business day after the effective date of the
Post-Effective Amendment (the "Commencement Date"). The
Subscription Rights and the Over-Subscription Privilege
will expire on the Expiration Date and may not be
exercised after that date, unless extended by the Board
of Directors. All Subscription Forms must be received
by the Distribution Agent no later than the Expiration
Date, unless Subscription is effected through a notice
of guaranteed delivery, as described herein.
2
ESCROW OF SUBSCRIPTION
PROCEEDS UPON EXERCISE
OF RIGHTS Upon receipt of the Subscription Price, the net
proceeds received by Paragon will be placed in an
interest-bearing escrow account (the "Escrowed
Proceeds") maintained by the Distribution Agent, as
escrow agent, subject to release to Paragon upon
written notification by Paragon that certain
established conditions have been satisfied and the
Business Combination is to be consummated. or has been
consummated. If a Business Combination is not
consummated within 120 days after the Expiration Date
of the Subscription Period (as defined in this
Prospectus), the Escrowed Proceeds will be returned to
each subscribing stockholder within five (5) business
days by first class mail or other equally prompt means.
ESCROW OF SHARES AND
SUBSCRIPTION RIGHTS The Subscription Rights and the Shares to be
distributed hereunder and upon exercise of the
Subscription Rights, will be placed in escrow with the
Distribution Agent, as escrow agent, until completion
of a Business Combination and compliance with all terms
of the escrow agreement. The Shares and Subscription
Rights will be held in escrow and will not be
transferable except by will or the laws of descent and
distribution or pursuant to a qualified domestic
relations order. See "Escrow of Shares and Subscription
Rights."
RELATIONSHIP BETWEEN ST.
LAWRENCE AND PARAGON
AFTER THE DISTRIBUTION St. Lawrence will have no stock ownership in the
Company after the Distribution except to the extent
that certain Shares are not immediately distributable
to St. Lawrence stockholders because of regulatory or
other limitations. In such event, St. Lawrence will
continue to hold such Shares and will be treated, in
all respects, the same as any other stockholder of
Paragon. It is not expected that such ownership will be
material in amount, or will be material to St.
Lawrence.
RISK FACTORS The Shares and Subscription Rights distributed hereby
involve a high degree of risk. There is no public
market for the Shares and no public market is expected
to develop until such time, if ever, that a Business
Combination is completed and the Shares are released
from escrow. There can be no assurance that a public
market will develop or continue for any sustained
period of time after completion of a Business
Combination. Other risk factors include but are not
limited to: Paragon's lack of operating history and
limited resources and intense competition in selecting
a Target Business and effecting a Business Combination.
See "Risk Factors and "Use of Proceeds".
3
SUMMARY FINANCIAL INFORMATION
The summary financial information set forth below is derived from the
more detailed financial statements appearing elsewhere in this Prospectus. This
information should be read in conjunction with such financial statements,
including the notes thereto.
<TABLE>
<CAPTION>
June 30, 1996
------------------------------------------
Actual Pro Forma (1)
------------------------------------------
<S> <C> <C>
Balance Sheet Data:
Working capital ............................................ $ 50,000 $130,141(2)
Total assets ............................................... $ 95,000 $175,141
Total liabilities .......................................... $ 25,000 $ 25,000
Stockholders' equity........................................ $ 70,000 $150,141
</TABLE>
(1) The effect of the exercise of Subscription Rights will be reflected in a
Post-Effective Amendment which will establish the purchase price under the
Subscription Rights.
(2) Gives effect to payment of a Subscription Receivable of $75,000 by PAR
Holding Company, LLC on July ___, 1996, and the purchase by St. Lawrence of
514,191 shares of Common Stock, $.01 par value for $5,141 in cash on July ___,
1996.
4
THE COMPANY
ORGANIZATION AND BACKGROUND OF THE COMPANY
Paragon Acquisition Company, Inc. ("Paragon") was incorporated
under the laws of the State of Delaware on June 19, 1996 to seek a Business
Combination with a Target Business. The purchase of Shares and Subscription
Rights by St. Lawrence, and the Distribution, is intended to provide
stockholders of St. Lawrence with an opportunity to participate and benefit from
such a Business Combination through ownership of the Shares and possible
exercise of the Subscription Rights. The Board of Directors of St. Lawrence has
determined that such opportunity was offered by Paragon through agreement with
PAR Holding that St. Lawrence stockholders would acquire an immediate ownership
interest in Paragon, would receive Subscription Rights for additional shares of
Paragon stock on the same basis as those being issued to PAR Holding and that
PAR Holding would provide the funds necessary for the organization of Paragon
and the Distribution of the Shares and Subscription Rights. In connection with
the organization of Paragon, PAR Holding has been issued 2,900,000 Shares at a
purchase price of $.05 per Share. On July , 1996, St. Lawrence was issued
514,191 Shares at a price of $.01 per Share. Subscription Rights issued to St.
Lawrence stockholders and PAR Holding are exercisable, if at all, at the same
exercise price, and upon the same terms and conditions, except that PAR Holding
will not have the right to exercise any over-subscription privileges with
respect to unexercised Subscription Rights held by St. Lawrence stockholders.
See "Manner of Effecting the Distribution" and "Over-Subscription Privilege."
Following the Distribution of the Shares and Subscription Rights,
Paragon will be a public company whose shares will be owned by over 1,000
shareholders. The Shares to be distributed hereunder, the Subscription Rights
and any Shares issuable upon exercise of Subscription Rights shall be held in
escrow and may not be sold or transferred until Paragon has consummated a
Business Combination, or until the Company determines that release of Shares or
Subscription Rights is otherwise permitted by applicable law. After the Business
Combination is consummated, the Shares will be released from escrow, but there
is no assurance that a trading market therefor will develop.
The Board of Directors and principal officers of Paragon are the
Managing Members of PAR Holding, who will be principally responsible for
seeking, evaluating and consummating any Business Combination. PAR Holding has
invested $150,000 in Paragon in exchange for 2,900,000 Shares and PAR Holding
will receive 2,900,000 Subscription Rights exercisable upon the same terms and
under the same conditions as Subscription Rights being distributed to St.
Lawrence stockholders (except for limitations on PAR Holdings exercise of
over-subscription privileges). See "Over-Subscription Privilege." Neither St.
Lawrence, nor St. Lawrence stockholders, are obligated to make any payments to
Paragon or to PAR Holding in exchange for the Shares to be received and
distributed in the Distribution, nor are they obligated in the future to make
any payments under the Subscription Rights or otherwise, unless they elect to
exercise the Subscription Rights distributed to them.
BUSINESS OBJECTIVE
Paragon intends to utilize the net proceeds from the exercise of
the Subscription Rights, if any, and bank borrowings or a combination thereof,
if necessary, in effecting a Business Combination. See "Use of Proceeds".
Paragon may also seek to effect a Business Combination without investment of
funds by Paragon, through the issuance of stock as consideration for the Target
Business. Paragon will seek to acquire a Target Business primarily located in
the United States but its efforts will not be limited to a particular industry.
In seeking a Target Business, Paragon will consider, without limitation,
businesses which (i) offer or provide services or develop, manufacture or
distribute goods in the United States or abroad, including, without limitation,
in the following areas: health care and health products, educational services,
environmental services, consumer related products and services (including food
service, amusement and/or recreational services), personal care services, voice
and data information processing and transmission and related technology
development, (ii) is engaged in wholesale or retail distribution or, (iii)
engages in the financial services or similar industries. Paragon has not had any
negotiations with representatives of any entity regarding a Business
5
Combination. Paragon may, under certain circumstances, seek to effect Business
Combinations with more than one Target Business.
Paragon's principal executive offices are located at 277 Park
Avenue, New York, 10017 and its telephone number is (212) 941-1400.
BUSINESS EXPERIENCE OF PRINCIPALS
The executive officers and directors of Paragon have business
experience which has provided them with skills which Paragon believes will be
helpful in evaluating potential Target Businesses and negotiating a Business
Combination. These individuals have experience in evaluating investment
opportunities and certain directors and officers have served as managers of
private investment partnerships for several years. See "Management". Paragon
may, from time to time, retain other persons or representatives to assist in
locating or evaluating a Target Business or potential Business Combinations.
OPPORTUNITY FOR STOCKHOLDER EVALUATION OR APPROVAL OF BUSINESS COMBINATION
The stockholders of Paragon will, in all likelihood, neither
receive nor otherwise have the opportunity to evaluate any financial or other
information which will be made available to Paragon in connection with selecting
a potential Target Business, until after Paragon has entered into a definitive
agreement to effectuate a Business Combination, or until after a Business
Combination is consummated. As a result, stockholders of Paragon will be almost
entirely dependent on the judgment of management in connection with the
selection of a Target Business and the terms of any Business Combination.
Under the Delaware General Corporation Law, various forms of
Business Combinations can be effected without stockholder approval, such as
where shares of common stock are issued as consideration for the Target
Business. In addition, the form of Business Combination will have an impact upon
the availability of dissenters' rights (i.e., the right to receive fair payment
with respect to the Common Stock) to stockholders disapproving of the proposed
Business Combination. Under current Delaware law, only a merger or consolidation
may give rise to a stockholder vote and to dissenters' rights. The Delaware
General Corporation Law requires approval of certain mergers and consolidations
by a majority of the outstanding stock entitled to vote.
Even if stockholders of Paragon are afforded the right to approve a
Business Combination, no dissenters' rights to receive fair payment will be
available for stockholders if Paragon is to be the surviving corporation unless
the Certificate of Incorporation of Paragon is amended and as a result thereof:
(i) alters or abolishes any preferential right of such stock; (ii) creates,
alters or abolishes any provision or right in respect of the redemption of such
shares or any sinking fund for the redemption or purchase of such shares; (iii)
alters or abolishes any preemptive right of such holder to acquire shares or
other securities; or (iv) excludes or limits the right of such holder to vote on
any matter, except as such right may be limited by the voting rights given to
new shares then being authorized of any existing or new class.
RISK FACTORS
NO OPERATING HISTORY; LIMITED RESOURCES; NO PRESENT SOURCE OF REVENUES
Paragon, organized on June 19, 1996, is a development stage company
and has not, as of the date hereof, attempted to seek a Business Combination.
Paragon has no operating history and, accordingly, there is only a limited basis
upon which to evaluate Paragon's prospects for achieving its intended business
objectives. To date, Paragon's efforts have been limited to organizational
activities and the preparation of this Prospectus. Paragon has limited resources
and has had no revenues to date. In addition, Paragon will not achieve any
revenues until, at the earliest, the consummation of a Business Combination.
Moreover, there can be no assurance that any Target Business, at the time of
Paragon's consummation of a Business Combination, or at any time thereafter,
will derive any material revenues from its operations or operate on a profitable
basis. See "Proposed Business."
6
UNSPECIFIED BUSINESS
Stockholders of Paragon will not have an opportunity to evaluate
the specific merits or risks of any one or more Business Combinations. As a
result, investors will be entirely dependent on the judgment of management in
connection with the selection of a Target Business. There can be no assurance
that determinations ultimately made by Paragon will permit Paragon to achieve
its business objectives. See "Use of Proceeds" and "Proposed Business."
SEEKING TO ACHIEVE PUBLIC TRADING MARKET THROUGH BUSINESS COMBINATION
While a prospective Target Business may deem a Business Combination
with Paragon desirable for various reasons, 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, including time delays, significant
expense, loss of voting control and compliance with various Federal and state
securities laws. Nonetheless, there can be no assurance that there will be an
active trading market for Paragon's securities following the completion of a
Business Combination or, if a market does develop, as to the market price for
Paragon's securities.
UNCERTAIN STRUCTURE OF BUSINESS COMBINATION
The structure of a future transaction with a Target Business cannot
be determined at the present time and may take, for example, the form of a
merger, an exchange of stock or an asset acquisition. In such cases, Paragon may
issue stock as consideration for the Target Business and, in such event, the
Subscription Rights may not be exercisable at all, or may be exercisable only
after the Business Combination is consummated and descried in a Post-Effective
Amendment. Paragon may also form one or more subsidiary entities to effect a
Business Combination and may, under certain circumstances, distribute the
securities of subsidiaries to the stockholders of Paragon. There cannot be any
assurance that a market would develop for the securities of any subsidiary
distributed to stockholders or, if it did, the prices at which such securities
might trade. The structure of a Business Combination or the distribution of
securities to stockholders may result in taxation of Paragon, the Target
Business or stockholders. See "Proposed Business."
UNSPECIFIED INDUSTRY AND TARGET BUSINESS; UNASCERTAINABLE RISKS
While Paragon will target industries located in the United States,
Paragon has not selected any particular industry or Target Business in which to
concentrate its Business Combination efforts. None of Paragon's directors or its
executive officers have had any negotiations with any entity or representatives
of any entity regarding a Business Combination. To the extent that Paragon
effects 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 revenues or income), Paragon will become subject to
numerous risks inherent in the business and operations of financially unstable
and early stage or potential emerging growth companies. In addition, to the
extent that Paragon effects a Business Combination with an entity in an industry
characterized by a high level of risk, Paragon will become subject to the
currently unascertainable risks of that industry. An extremely high level of
risk frequently characterizes certain industries which experience rapid growth.
Although management will endeavor to evaluate the risks inherent in a particular
Target Business or industry, there can be no assurance that Paragon will
properly ascertain or assess all such risks. See "Proposed Business."
PROBABLE LACK OF BUSINESS DIVERSIFICATION
As a result of its limited resources, Paragon, in all likelihood,
may have the ability to effect only a single Business Combination. Accordingly,
the prospects for Paragon's success will be entirely dependent upon the future
performance of a single business. Unlike certain entities which have the
resources to consummate several Business Combinations of entities operating in
multiple industries or multiple segments of a single industry, it is highly
likely that Paragon will not have the resources to diversify its operations or
benefit from the possible spreading of risks or offsetting of losses. Paragon's
probable lack of diversification may subject Paragon to numerous economic,
competitive and regulatory developments, any or all of which may have a material
adverse impact upon the particular industry in which Paragon may operate
subsequent to a Business
7
Combination. The prospects for Paragon's success may become dependent upon the
development or market acceptance of a single or limited number of products,
processes or services. Accordingly, notwithstanding the possibility of capital
investment in and management assistance to the Target Business by Paragon, there
can be no assurance that the Target Business will prove to be commercially
viable. Paragon has no present intention of purchasing or acquiring a minority
interest in any Target Business. See "Use of Proceeds" and "Proposed Business."
DEPENDENCE UPON BOARD OF DIRECTORS
The ability of Paragon to successfully effect a Business
Combination will be largely dependent upon the efforts of its executive officers
and the Board of Directors. Notwithstanding the significance of such persons,
Paragon has not entered into employment agreements or other understandings with
any such personnel concerning compensation or obtained any "key man" life
insurance on their respective lives. The loss of the services of such key
personnel could have a material adverse effect on Paragon's ability to
successfully achieve its business objectives. None of Paragon's key personnel
are required to commit even a substantial amount of their time to the affairs of
Paragon and, accordingly, such personnel may have conflicts of interests in
allocating management time among various business activities. However, each
officer and director of Paragon will devote such time as he deems reasonably
necessary to carry out the business and affairs of Paragon, including the
evaluation of potential Target Businesses and the negotiation of a Business
Combination, and, as a result, the amount of time devoted to the business and
affairs of Paragon may vary significantly, depending upon, among other things,
whether Paragon has identified a Target Business or is engaged in active
negotiation of a Business Combination. Paragon will rely upon the expertise of
such executive officers, and the Board does not anticipate that it will hire
additional personnel. However, if additional personnel were required, there can
be no assurance that Paragon will be able to retain such necessary additional
personnel. See "Proposed Business" and "Conflicts of Interest."
LIMITED ABILITY TO EVALUATE TARGET BUSINESS MANAGEMENT
While Paragon's present management intends to scrutinize closely
the management of a prospective Target Business in connection with its
evaluation of the desirability of effecting a Business Combination with such
Target Business, there can be no assurance that Paragon's assessment of such
management will prove to be correct. While it is possible that certain of
Paragon's directors or its executive officers will remain associated in some
capacities with Paragon following a Business Combination, it is unlikely that
any of them will devote a substantial portion of their time to the affairs of
Paragon subsequent thereto. Moreover, there can be no assurance that such
personnel will have significant experience or knowledge relating to the
operations of the Target Business acquired by Paragon. Paragon may also seek to
recruit additional personnel to supplement the incumbent management of the
Target Business. There can be no assurance that Paragon will successfully
recruit additional personnel or that the additional personnel will have the
requisite skills, knowledge or experience necessary or desirable to enhance the
incumbent management. In addition, there can be no assurance that the future
management of Paragon will have the necessary skills, qualifications or
abilities to manage a public company embarking on a program of business
development. See "Proposed Business" and "Management."
CONFLICTS OF INTEREST
Certain of the persons associated with Paragon may be affiliated
with a Target Business which is evaluated by Paragon, or which is part of a
Business Combination with Paragon, or may in the future become affiliated with
entities engaged in business activities similar to those intended to be
conducted by Paragon. Such persons may have conflicts of interest in determining
to which entity a particular business opportunity should be presented. In
general, officers and directors of a corporation incorporated under the laws of
the State of Delaware are required to present certain business opportunities to
such corporation. Accordingly, as a result of multiple business affiliations,
certain of Paragon's directors and its executive officers may have similar legal
obligations to present certain business opportunities to multiple entities.
There can be no assurance that any of the foregoing conflicts will be resolved
in favor of Paragon. See "Management."
8
COMPETITION
Paragon expects to encounter intense competition from other
entities having business objectives similar to those of Paragon. Many of these
entities, including venture capital partnerships and corporations, blind pool
companies, large industrial and financial institutions, small business
investment companies and wealthy individuals, are well-established and have
extensive experience in connection with identifying and effecting Business
Combinations directly or through affiliates. Many of these competitors possess
greater financial, technical, human and other resources than Paragon and there
can be no assurance that Paragon will have the ability to compete successfully.
Paragon's financial resources will be limited in comparison to those of many of
its competitors. There can be no assurance that such prospects will permit
Paragon to achieve its stated business objectives. See "Proposed Business."
UNCERTAINTY OF COMPETITIVE ENVIRONMENT OF TARGET BUSINESS
In the event that Paragon succeeds in effecting a Business
Combination, Paragon will, in all likelihood, become subject to intense
competition from competitors of the Target Business. In particular, certain
industries which experience rapid growth frequently attract an increasingly
larger number of competitors, including competitors with greater financial,
marketing, technical, human and other resources than the initial competitors in
the industry. The degree of competition characterizing the industry of any
prospective Target Business cannot presently be ascertained. There can be no
assurance that, subsequent to a Business Combination, Paragon will have the
resources to compete in the industry of the Target Business effectively,
especially to the extent that the Target Business is in a high-growth industry.
See "Proposed Business."
POSSIBLE USE OF DEBT FINANCING; DEBT OF A TARGET BUSINESS
There currently are no limitations on Paragon's ability to borrow
or otherwise raise funds to increase the amount of capital available to Paragon
to effect a Business Combination. However, Paragon's limited resources and lack
of operating history will make it difficult to borrow funds. The amount and
nature of any borrowings by Paragon will depend on numerous considerations,
including Paragon's capital requirements, Paragon's perceived ability to meet
debt service on any such borrowings and the then prevailing conditions in the
financial markets, as well as general economic conditions. There can be no
assurance that debt financing, if required or sought would be available on terms
deemed to be commercially acceptable by and in the best interests of Paragon.
The inability of Paragon to borrow funds required to effect or facilitate a
Business Combination or to provide funds for an additional infusion of capital
into a Target Business, may have a material adverse effect on Paragon's
financial condition and future prospects. Additionally, to the extent that debt
financing ultimately proves to be available, any borrowings may subject Paragon
to various risks traditionally associated with indebtedness, including the risks
of interest rate fluctuations and insufficiency of cash flow to pay principal
and interest. Furthermore, a Target Business may have already incurred
borrowings and, therefore, all the risks inherent thereto. See "Use of Proceeds"
and "Proposed Business."
INVESTMENT COMPANY ACT CONSIDERATIONS
The regulatory scope of the Investment Company Act of 1940, as
amended (the "Investment Company Act"), which was enacted principally for the
purpose of regulating vehicles for pooled investments in securities, extends
generally to companies engaged primarily in the business of investing,
reinvesting, owning, holding or trading in securities. The Investment Company
Act may, however, also be deemed to be applicable to a company which does not
intend to be within the definitional scope of certain provisions of the
Investment Company Act. Paragon believes that its anticipated principal
activities, which will involve acquiring control of an operating company, will
not subject Paragon to regulation under the Investment Company Act.
Nevertheless, there can be no assurance that Paragon will not be deemed to be an
investment company, particularly during the period prior to a Business
Combination. If Paragon is deemed to be an investment company, Paragon may
become subject to certain restrictions relating to Paragon's activities,
including restrictions on the nature of its investments and the issuance of
securities. In addition, the Investment Company Act imposes certain requirements
on companies deemed to be within its regulatory scope including registration as
an investment company, adoption of a specific form of corporate structure and
compliance with certain burdensome reporting, record keeping, voting, proxy,
disclosure and other rules and regulations. In the event of the characterization
of Paragon as an investment company, the failure by Paragon to satisfy such
regulatory requirements, whether on a timely basis or at all, would, under
certain circumstances, have a material adverse effect on Paragon.
9
DIVIDENDS UNLIKELY
Paragon does not expect to pay dividends prior to the consummation
of a Business Combination. The payment of dividends after any such Business
Combination, if any, will be contingent upon Paragon's revenues and earnings, if
any, capital requirements and general financial condition subsequent to
consummation of a Business Combination. The payment of any dividends subsequent
to a Business Combination will be within the discretion of Paragon's then Board
of Directors. Paragon presently intends to retain all earnings, if any, for use
in Paragon's business operations and accordingly, the Board does not anticipate
declaring any dividends in the foreseeable future. See "Description of
Securities-Dividends."
CONTROL BY PRESENT STOCKHOLDERS
Upon consummation of this Distribution, St. Lawrence stockholders
will own approximately 15% of the issued and outstanding Shares of Paragon, and
PAR Holding will own approximately 85% of the issued and outstanding Shares of
Paragon. Accordingly, PAR Holding will be in a position to elect all of
Paragon's directors, approve amendments to Paragon's Certificate of
Incorporation, and otherwise direct the affairs of Paragon. See "Stockholders,"
and "Description of Securities."
RESTRICTED RESALES OF THE SECURITIES UNDER STATE SECURITIES OR "BLUE SKY" LAWS
Paragon will attempt to register or obtain an exemption from
registration for the Distribution of the Shares and the Subscription Rights in
states where stockholders currently reside. There can be no assurance as to
which or how many states the Distribution will be permitted. The sale of Shares
in the secondary trading market also is limited by many state securities or
"blue sky" laws or regulations. In addition, the Shares and Subscription Rights
will be held in escrow and the Shares will not be transferrable until such time
as a Business Combination is consummated. Based upon current "blue sky" or state
securities laws and regulations of which Paragon is aware, it is anticipated
that Paragon's securities will be immediately eligible for resale in the
secondary market upon release from escrow in each of the states in which the
offering is registered or exempt from registration. Purchasers of Paragon's
securities in any secondary trading market which may develop must be residents
of such states. In addition, several additional states currently will permit
secondary market sales of these securities, upon release from escrow, (i) if
certain financial and other information with respect to Paragon is published in
a recognized securities manual, (ii) after a certain period has elapsed from the
date of this Prospectus, or (iii) pursuant to exemptions applicable to certain
institutional investors. However, Paragon does not expect to be able to be
listed in any recognized securities manual until after the consummation of the
first Business Combination, if at all.
THE DISTRIBUTION
MANNER OF EFFECTING THE DISTRIBUTION
Based upon 514,191 Shares of Common Stock of St. Lawrence which are
issued and outstanding or subject to exercisable options and warrants as of
______________, 1996 (the "Record Date"), St. Lawrence will distribute to its
stockholders 514,191 Shares of Paragon and 514,191 Subscription Rights entitling
the holder thereof to subscribe for two (2) additional Shares at a price to be
determined by the Paragon Board of Directors, but in no event more than $2.00
per Subscription Right (the "Subscription Price"). Each Record Date stockholder
of St. Lawrence is being issued one (1) Share of Paragon and one (1)
Subscription Right for each share of common stock of St. Lawrence owned on the
Record Date. The number of Shares and Subscription Rights to be issued to each
stockholder will be rounded down to the nearest whole number of shares and no
fractional Shares or Subscription Rights will be distributed.
The Shares distributed to St. Lawrence shareholders will be fully
paid for and nonassessable, and the holders thereof will not be entitled to
preemptive rights. The Subscription Rights entitle a stockholder to acquire at
the Subscription Price, two (2) Shares for each Subscription Right held.
Subscription Rights will not be exercisable until after a Post-Effective
Amendment describing a proposed or completed Business Combination is delivered
to holders and then may be exercised at any time during the Subscription Period
(as defined herein).
10
In addition, any stockholder of Paragon who fully exercises all
Subscription Rights distributed to him (other than PAR Holding) is entitled to
subscribe for Shares which were not otherwise subscribed for by other holders
pursuant to the Subscription Rights (the "Over-Subscription Privilege"). Shares
acquired through such Over-Subscription Privilege are subject to allocation or
increase, which is more fully discussed below under "Over- Subscription
Privilege."
St. Lawrence will effect the Distribution of Shares and
Subscription Rights on the Distribution Date by delivering the Shares and
subscription forms ("Subscription Forms") to the XXX Trust Company, as the
distribution agent (the "Distribution Agent"), for distribution to Stockholders
of St. Lawrence on the Record Date. The Distribution Agent will provide each St.
Lawrence stockholder with a copy of this Prospectus and notice of the number of
Shares and Subscription Rights each is entitled to receive but no certificates
or other physical rights will be issued or distributed with respect to the
Shares and Subscription Rights. All of the Shares and Subscription Rights will
be held in escrow by the Escrow Agent. See "Escrow of Shares and Subscription
Rights." The actual total number of Shares and Subscription Rights to be
distributed will depend on the number of shares of St. Lawrence common stock
outstanding on the Record Date. The Subscription Rights are non-transferable.
No Stockholder of St. Lawrence will be required to pay any cash or
other consideration for the Shares or Subscription Rights received in the
Distribution or to surrender or exchange shares of St. Lawrence Common Stock or
to take any other action in order to receive the Shares and Subscription Rights.
The Distribution will not affect the number of, or the rights attaching to,
outstanding shares of St. Lawrence common stock. No vote of St. Lawrence
stockholders is required or sought in connection with the Distribution.
COMMENCEMENT OF SUBSCRIPTION PERIOD
In the event Paragon identifies a proposed Business Combination
which requires the investment of funds by the Company, Paragon will take steps
necessary to activate the Subscription Rights. In connection therewith, the
Board of Directors will determine a Subscription Price (as described below) and
Paragon will file a Post-Effective Amendment to this Prospectus describing a
Target Business, or assets that will constitute the business (or a line of
business). See "Proposed Business". The Post-Effective Amendment will contain
information about the Target Company and its business(es). Within five business
days after the effective date of the Post-Effective Amendment, the Distribution
Agent will send by first class mail or other equally prompt means, to each
holder of Subscription Rights, a copy of the Prospectus contained in the
Post-Effective Amendment and any amendment or supplement thereto along with
Subscription Forms. In the event a Business Combination can be effected without
significant investment of funds by Paragon, the Board of Directors may determine
that issuance of Shares under the Subscription Rights is not necessary. In such
case no Subscription Period will commence.
The Subscription Period will commence on the eighth business day
after the effective date of the Post-Effective Amendment (the "Commencement
Date"). The Subscription Period will expire twenty (20) business days from the
Commencement Date (the "Expiration Date"). The Subscription Rights and the
Over-Subscription Privilege will expire on the Expiration Date and may not be
exercised after that date, unless extended by the Board of Directors. All
Subscription Forms must be received by the Distribution Agent no later than the
Expiration Date, unless Subscription is effected through a notice of guaranteed
delivery, as described herein.
SUBSCRIPTION PRICE
The Subscription Price per Share will be determined by the Paragon
Board of Directors at the time a Business Combination is described in a
Post-Effective Amendment and will not in any event exceed $2.00 per Subscription
Right. Such price will be determined based on several factors, including funds
necessary to consummate the Business Combination, expenses of such transaction,
operating expenses and working capital needs of the Company after consummation
of the Business Combination. See "Confirmation of Purchase."
11
DISTRIBUTION AGENT
The Distribution Agent for Paragon is XXX Trust Company, which will
receive, for its administrative, processing, invoicing and other services as
Subscription Agent, a fee of $__________ and reimbursement for all out-of-pocket
expenses related to the subscription for Shares. The Distribution Agent is also
Paragon's transfer agent, subscription agent and escrow agent. Stockholders may
contact the Distribution Agent at _____________.
OVER-SUBSCRIPTION PRIVILEGE
If some stockholders of Paragon do not exercise all of the
Subscription Rights issued to them, then any Shares for which Subscriptions have
not been received from stockholders will be offered by means of the Over-
Subscription Privilege to those stockholders of Paragon who have exercised all
of the Subscription Rights issued to them and who wish to acquire additional
Shares. Stockholders who exercise all of the Subscription Rights issued to them
will be asked to indicate on the Subscription Form how many Shares they wish to
acquire through the Over-Subscription Privilege. There is no limit to the number
of Shares that may be requested through the Over-Subscription Privilege. If
sufficient Shares remain in excess of those for which Subscription Rights are
exercised, then all requests for additional Shares will be honored in full. PAR
Holding was not granted an Over-Subscription privilege in its Subscription
Rights.
All requests to purchase Shares pursuant to the Over- Subscription
Privilege are subject to allocation. To the extent that there are not sufficient
Shares to honor all over- subscriptions, the available Shares will be allocated
pro-rata among those stockholders of Paragon (other than PAR Holding) who over-
subscribe based on the number of Subscription Rights originally issued to them
by St. Lawrence, so that the number of Shares issued to stockholders who
subscribe through the Over-Subscription Privilege will be generally in
proportion to the number of shares of St. Lawrence's common stock owned by them
on the Record Date. The percentage of remaining Shares each over-subscribing
stockholder may acquire may be rounded up or down to result in delivery of whole
Shares. The allocation process may involve a series of allocations in order to
ensure that the total number of Shares available for over-subscriptions are
distributed on a pro rata basis.
HOW TO SUBSCRIBE
Stockholders should mail or deliver Subscription Forms and acceptable
forms of payment for shares to the Distribution Agent in time to be received by
5:00 p.m. Eastern Standard Time on the Expiration Date by one of the following
methods at the following address:
BY FIRST CLASS MAIL
BY EXPRESS MAIL OR OVERNIGHT COURIER
BY HAND
XXXXXXXXXXXX
XXXXXXX
XXXXXXXXX
DELIVERY TO AN ADDRESS OTHER THAN THE ABOVE WILL NOT CONSTITUTE DELIVERY
FOR PURPOSES OF THE SUBSCRIPTION.
IT IS STRONGLY SUGGESTED THAT STOCKHOLDERS USE A DELIVERY METHOD WHICH
WILL GUARANTEE DELIVERY BY THE EXPIRATION DATE AND WHICH WILL PROVIDE A RETURN
RECEIPT TO THE SENDER. NEITHER THE DISTRIBUTION AGENT NOR PARAGON WILL BE
RESPONSIBLE FOR SUBSCRIPTION FORMS OR PAYMENTS THAT ARE NOT SO DELIVERED.
12
Subscription Rights may be exercised by stockholders whose Shares of
Paragon are held in their own name ("Record Owners") by completing the
Subscription Form to be forwarded to each Stockholder and delivering it to the
Distribution Agent, together with any required payment for the Shares, as
described below under "Payment for Shares." 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 payment for the Shares. A
fee may be charged for this service. Subscription Forms must be received by the
Subscription Agent prior to 5:00 p.m. Eastern Standard Time on the Expiration
Date unless the Subscription Period is extended. If Subscription is to be
effected by means of a Notice of Guaranteed Delivery, then Subscription Forms
are due not later than three (3) business days following the Expiration Date,
and full payment for the Shares is due not later than ten (10) business days
following the Confirmation Date. See "Payment for Shares," below.
PAYMENT FOR SHARES
Stockholders of Paragon who acquire Shares pursuant to the Subscription
or the Over-Subscription Privilege may choose between the following methods of
payment:
(1) If, prior to 5:00 p.m. Eastern Standard Time on the Expiration Date,
unless extended, the Distribution Agent has received a Notice of
Guaranteed Delivery, by telegram or otherwise, from a Nominee
guaranteeing delivery of (a) payment of the full Subscription Price for
the Shares subscribed for pursuant to the Subscription and any
additional Shares subscribed for through the Over-Subscription Privilege
and (b) a properly completed and executed Subscription Form, the
subscription will be accepted by the Distribution Agent. The
Distribution Agent will not honor a Notice of Guaranteed Delivery if a
properly completed and executed Subscription Form is not received by the
Distribution Agent by the close of business on the third (3rd) business
day after the Expiration Date, unless the Offer is extended, and full
payment for the Shares is not received by it by the close of business on
the tenth (10th) business day after the Confirmation Date (as defined
below).
(2) Alternatively, a Record Owner may send payment for the Shares
acquired pursuant to the Subscription, together with the Subscription
Form, to the Distribution Agent based on the Subscription Price. To be
accepted, such payment, together with the Subscription Form, must be
made payable to Paragon and received by the Distribution Agent prior to
5:00 p.m. Eastern Standard Time on the Expiration Date, unless the Offer
is extended. All payments by a stockholder must be made in United States
dollars by money order or check and drawn on a bank located in the
United States of America.
CONFIRMATION OF PURCHASE
Within eight business days following the expiration of the Subscription
Period (the "Confirmation Date"), a confirmation will be sent by the
Distribution Agent to each stockholder of Paragon (or, if shares are held by a
Nominee, on the Record Date, to such Nominee) showing: (i) the number of Shares
acquired through the Subscription Rights; (ii) the number of Shares, if any,
acquired through the Over-Subscription Privilege; (iii) the per Share and total
Subscription Price for the Shares; and (iv) the amount payable by the
stockholder to Paragon or any excess to be refunded by Paragon to the
stockholder, in each case based on the Subscription Price.
In the case of any stockholder who exercises a right to acquire Shares
through the Over-Subscription Privilege, any excess payment which would
otherwise be refunded to the Stockholder will be applied by Paragon toward
payment for Shares acquired through exercise of the Over-Subscription Privilege.
Any further payment required from a stockholder must be received by the
Distribution Agent within ten (10) business days after the Confirmation Date,
and any excess payment to be refunded by Paragon to a stockholder will be mailed
by the Distribution Agent to the stockholder within ten (10) business days after
the Confirmation Date.
Issuance and delivery of certificates for the Shares subscribed for are
subject to collection of checks and actual payment through any notice of
Guaranteed Delivery.
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If a stockholder who acquires Shares through the Subscription or
Over-Subscription Privilege does not make payment of all amounts due, Paragon
reserves the right to: (i) apply any payment actually received by it toward the
purchase of the greatest number of whole Shares which could be acquired by such
stockholder upon exercise of the Subscription or Over- Subscription Privilege or
(ii) exercise any and all other rights or remedies to which it may be entitled.
ESCROW OF PROCEEDS UPON EXERCISE OF SUBSCRIPTION RIGHTS
Upon Expiration of the Subscription Period, the net proceeds to be
received by Paragon therefrom (the "Escrowed Proceeds") will be placed in an
interest-bearing escrow account maintained by the Distribution Agent, as escrow
agent, subject to release to Paragon upon written notification by Paragon that,
in the case of a proposed Business Combination, the Escrowed Proceeds represent
sufficient funds for the purpose of implementing the consummation of the
Business Combination, or where the Business Combination has previously been
consummated, that all other conditions for release of funds from Escrow have
been satisfied. If a proposed Business Combination is not consummated within 120
days from the effective date of the Expiration Date, the Escrowed Proceeds shall
be returned by first class mail or equally prompt means to all subscribing
stockholders on a pro-rata basis.
ESCROW OF SHARES AND SUBSCRIPTION RIGHTS
The Subscription Rights and all of the Shares of Paragon distributed
hereby and issuable upon exercise of the Subscription Rights will be placed in
escrow with the Distribution Agent, as escrow agent, until the earlier of (i)
written notification from Paragon that certain conditions have been satisfied
including, where applicable, that a proposed Business Combination is to be
consummated, in which case the Shares will be delivered to the subscribing
stockholders of Paragon, or (ii) the return of the Escrowed Proceeds to the
subscribing stockholders of Paragon, in which case the Shares will be returned
to Paragon. During the Escrow Period, the holders of Escrowed Shares will not be
able to sell or otherwise transfer their respective Shares (with the exceptions
described below), but will retain all other rights as Stockholders of Paragon,
including, without limitation, the right to vote the Escrowed Shares. Subject to
compliance with applicable securities laws, any owner of Shares held in escrow
may transfer his or her ownership of such Shares to a family member or in the
event of the holder's death by will or operation of law, provided that any such
transferee must agree as a condition to such transfer to be bound by the
restrictions on transfer applicable to the original holder.
DELIVERY OF SHARES UPON RELEASE FROM ESCROW
For Record Owners, stock certificates for all Shares acquired will be
mailed promptly after full payment for the Shares subscribed for has cleared,
and no later than 30 days after all of the escrow conditions have been fully
satisfied.
Stockholders whose shares are held of record by a Nominee on their
behalf will have the Shares they acquire credited to the account of such
Nominee.
LISTING AND TRADING OF THE SHARES
No current public trading market for the Shares of Paragon exists. The
Subscription Rights are non-transferable. Therefore, only the underlying Shares,
and not the Subscription Rights will be freely transferable upon release from
escrow. The extent of the market for the Shares and the prices at which the
Shares may trade after the Distribution cannot be predicted. See "Risk Factors -
Restricted Resales of the Securities under State Securities "Blue Sky Laws."
Once released from escrow, the Shares distributed to St. Lawrence
stockholders will be freely transferable, except for Shares received by persons
who may be deemed to be "affiliates" of Paragon under the Securities Act of
1933, as amended (the "Securities Act"). Persons who may be deemed to be
affiliates of Paragon after the Distribution generally include individuals or
entities that control, are controlled by or are
14
under common control with Paragon, and includes the directors and principal
executive officers of Paragon as well as any principal stockholder of Paragon.
Persons who are affiliates of Paragon will be permitted to sell Shares only
pursuant to an effective registration statement under the Securities Act or an
exemption from the registration requirements of the Securities Act, such as the
exceptions afforded by Section 4(2) of the Securities Act and Rule 144
thereunder. It is not expected that Rule 144 will be available for the sale of
Shares by affiliates of Paragon until 90 days after the effectiveness of
Paragon's Registration Statement on Form 8-A registering the Shares under the
Securities Exchange Act of 1934 (the "Exchange Act").
RESULTS OF THE DISTRIBUTION
After the Distribution, Paragon will be an independent, public company.
The number and identity of stockholders of Paragon immediately after the
Distribution will be substantially the same as the number and identity of
stockholders of St. Lawrence on the Record Date. In addition, PAR Holding will
own 85% of the outstanding Common Stock of Paragon. Immediately after the
Distribution, Paragon expects to have approximately __________ holders of record
of the Shares and approximately 3,414,191 Shares outstanding, based on the
number of record stockholders and outstanding shares of St. Lawrence common
stock and the number of warrants or options to acquire shares of St. Lawrence
common stock exercisable as of _______________, 1996, and the distribution ratio
of one Share for every one share of St. Lawrence common stock. The actual number
of Shares to be distributed will be determined as of the Record Date. The
Distribution will not affect the number of outstanding shares of St. Lawrence
common stock or any rights of St. Lawrence stockholders.
FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION
St. Lawrence has not requested nor does it intend to request a ruling
from the Internal Revenue Service as to the federal income tax consequence of
the Distribution. However, based on the facts of the proposed transaction, it is
the opinion of management of St. Lawrence that the transaction will not qualify
as a "tax free" spin off under Section 355 of the Internal Revenue Code of 1986,
as amended. Rather, the transaction is presumed to be a taxable Distribution to
which Section 301 applies. The amount of the Distribution will be its fair
market value and will be taxable as a dividend to the extent of current or
accumulated earnings and profits of St. Lawrence. Notwithstanding the presumed
taxability of the transaction, management is also of the opinion it will have
only minimal impact on the taxable income of any stockholder of St. Lawrence for
the reasons set forth below. Since Paragon is a development stage company and
has not commenced operations, it is not expected to have earnings or profits as
of the date of the Distribution. Furthermore, because there is no public market
for the Shares, the fair market value of the shares and hence the amount of the
Distribution, will probably be minimal on the date of Distribution. The net book
value of Paragon on the date of the Distribution is expected to be approximately
$155,141 or $.05 per share. This is the probable amount of the taxable value of
the Distribution per share.
The discussion is limited to domestic non-corporate stockholders of
Paragon who hold Shares as "capital assets" within the meaning of Section 1221
of the Internal Revenue Code of 1986, as amended (the "Code"). The 1986 Act has
increased the maximum effective tax rate on long-term capital gains of
individuals for taxable years beginning after December 31, 1987, and has
eliminated any preferential tax rate for such long-term capital gains for
taxable years beginning after December 31, 1987. The Federal Income Tax
consequences to corporate shareholders, foreign shareholders and shareholders
having special status under the Code may vary from those set forth below.
The foregoing sets forth the opinion of management. St. Lawrence will
distribute a Form 1099 or similar form to its stockholders which will also be
filed with the Internal Revenue Service basing the amount of the Distribution as
received by each stockholder on the net book value of Paragon on the date of
distribution. The Internal Revenue Service is not bound thereby and no assurance
exists that it will concur with the position of management regarding the value
of the stock or other matters herein discussed. Specifically, it is possible
that the Internal Revenue Service may assert that a substantially higher fair
market value existed for the stock
15
on the date of Distribution. If the Internal Revenue Service were to
successfully assert that a substantially higher value should be placed on the
amount of the Distribution, the taxation of the transaction to Paragon and its
stockholders would be based on such higher value. In such event, the tax impact
would increase significantly and would not be minimal. St. Lawrence would
recognize gain to the extent the value placed on the amount of the Distribution
exceeded its adjusted basis in the stock (which approximates the net book value
of Paragon). The Stockholders of St. Lawrence would be taxed on the amount so
determined for the distribution as a dividend to the extent of any current year
or accumulated earnings and profits of St. Lawrence and would recognize gain on
the balance of the Distribution to the extent it exceeded their adjusted basis
in Paragon's shares owned by them.
The state, local and foreign tax consequences of the Distribution may
vary from jurisdiction or jurisdiction. Accordingly, each Stockholder of Paragon
is advised to consult his/her personal advisor.
PROPOSED BUSINESS
INTRODUCTION
Paragon was formed in June 19, 1996 to serve as a vehicle to effect a
Business Combination with a Target Business which Paragon believes has
significant growth potential. Paragon intends to utilize the net proceeds from
the exercise of the Subscription Rights, equity securities, debt securities,
bank borrowings or a combination thereof in effecting a Business Combination.
Paragon's efforts in identifying a prospective Target Business will be limited
to businesses primarily located in the United States. Paragon has not had any
negotiations with representatives of any entity regarding a Business
Combination. Paragon may effect a Business Combination with a Target Business
which may be financially unstable or in its early stages of development or
growth.
UNSPECIFIED INDUSTRY AND TARGET BUSINESS
Paragon will seek to acquire a Target Business primarily located in the
United States but its efforts will not be limited to a particular industry. In
seeking a Target Business, Paragon will consider, without limitation, businesses
which (i) offer or provide services or develop, manufacture or distribute goods
in the United States or abroad, including, without limitation, in the following
areas: health care and health products, educational services, environmental
services, consumer related products and services (including amusement and/or
recreational services), personal care services, voice and data information
processing and transmission and related technology development, (ii) is engaged
in wholesale or retail distribution, or (iii) engages in the financial services
or similar industries. None of Paragon's directors or its executive officers has
had any negotiations with any entity or representatives of any entity regarding
a Business Combination. To the extent that Paragon effects 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
revenues or income), Paragon will become subject to numerous risks inherent in
the business and operations of financially unstable and early stage or potential
emerging growth companies. In addition, to the extent that Paragon effects a
Business Combination with an entity in an industry characterized by a high level
of risk, Paragon will become subject to the currently unascertainable risks of
that industry. An extremely high level of risk frequently characterizes certain
industries which experience rapid growth. Although management will endeavor to
evaluate the risks inherent in a particular Target Business or industry, there
can be no assurance that Paragon will properly ascertain or assess all such
risks.
PROBABLE LACK OF BUSINESS DIVERSIFICATION
As a result of the limited resources of Paragon, Paragon, in all
likelihood, will have the ability to effect only a single Business Combination.
Accordingly, the prospects for Paragon's success will be entirely dependent upon
the future performance of a single business. Unlike certain entities which have
the resources to
16
consummate several Business Combinations of entities operating in multiple
industries or multiple segments of a single industry, it is highly likely that
Paragon will not have the resources to diversify its operations or benefit from
the possible spreading of risks or offsetting of losses. Paragon's probable lack
of diversification may subject Paragon to numerous economic, competitive and
regulatory developments, any or all of which may have a material adverse impact
upon the particular industry in which Paragon may operate subsequent to a
Business Combination. The prospects for Paragon's success may become dependent
upon the development or market acceptance of a single or limited number of
products, processes or services. Accordingly, notwithstanding the possibility of
capital investment in and management assistance to the Target Business by
Paragon, there can be no assurance that the Target Business will prove to be
commercially viable. Paragon has no present intention of purchasing or acquiring
a minority interest in any Target Business.
OPPORTUNITY FOR STOCKHOLDER EVALUATION OR APPROVAL OF BUSINESS COMBINATION
The Stockholders of Paragon will, in all likelihood, neither receive nor
otherwise have the opportunity to evaluate any financial or other information
which will be made available to Paragon in connection with selecting potential a
Target Business until after Paragon has entered into a definitive agreement to
effectuate a Business Combination, or until after a Business Combination is
consummated. As a result, Stockholders of Paragon will be almost entirely
dependent on the judgment of management in connection with the selection of a
Target Business and the terms of any Business Combination.
Under the Delaware General Corporation Law, various forms of Business
Combinations can be effected without stockholder approval, such as where shares
of common stock are issued as consideration for the Target Business. In
addition, the form of Business Combination will have an impact upon the
availability of dissenters' rights (i.e., the right to receive fair payment with
respect to the Common Stock) to stockholders disapproving of the proposed
Business Combination. Under current Delaware law, only a merger or consolidation
may give rise to a stockholder vote and to dissenters' rights. The Delaware
General Corporation Law requires approval of certain mergers and consolidations
by a majority of the outstanding stock entitled to vote.
Even if investors are afforded the right to approve a Business
Combination, no dissenters' rights to receive fair payment will be available for
stockholders if Paragon is to be the surviving corporation unless the
Certificate of Incorporation of Paragon is amended and as a result thereof: (i)
alters or abolishes any preferential right of such stock; (ii) creates, alters
or abolishes any provision or right in respect of the redemption of such shares
or any sinking fund for the redemption or purchase of such shares; (iii) alters
or abolishes any preemptive right of such holder to acquire shares or other
securities; or (iv) excludes or limits the right of such holder to vote on any
matter, except as such right may be limited by the voting rights given to new
shares then being authorized of any existing or new class.
LIMITED ABILITY TO EVALUATE TARGET BUSINESS MANAGEMENT
Paragon's present management intends to scrutinize closely the
management of a prospective Target Business in connection with its evaluation of
the desirability of effecting a Business Combination with such Target Business,
there can be no assurance that Paragon's assessment of such management will
prove to be correct, especially in light of the possible inexperience of current
key personnel of Paragon in evaluating certain types of businesses. While it is
possible that certain of Paragon's directors or its executive officers will
remain associated in some capacities with Paragon following a Business
Combination, it is unlikely that any of them will devote a substantial portion
of their time to the affairs of Paragon subsequent thereto. Moreover, there can
be no assurance that such personnel will have significant experience or
knowledge relating to the operations of the Target Business acquired by Paragon.
Paragon may also seek to recruit additional personnel to supplement the
incumbent management of the Target Business. There can be no assurance that
Paragon will successfully recruit additional personnel or that the additional
personnel will have the requisite skills, knowledge or experience necessary or
desirable to enhance the incumbent management. In addition there can be no
assurance that the future management of Paragon will have the necessary skills,
qualifications or abilities
17
to manage a public Company embarking on a program of business development. See
"Proposed Business" and "Management."
COMPETITION
Paragon expects to encounter intense competition from other entities
having business objectives similar to those of Paragon. Many of these entities,
including venture capital partnerships and corporations, blind pool companies,
large industrial and financial institutions, small business investment companies
and wealthy individuals, are well-established and have extensive experience in
connection with identifying and effecting Business Combinations directly or
through affiliates. Many of these competitors possess greater financial,
technical, human and other resources than Paragon and there can be no assurance
that Paragon will have the ability to compete successfully. Paragon's financial
resources will be limited in comparison to those of many of its competitors.
This inherent competitive limitation may compel Paragon to select certain less
attractive Business Combination prospects. There can be no assurance that such
prospects will permit Paragon to achieve its stated business objectives. See
"Proposed Business."
SELECTION OF A TARGET BUSINESS AND STRUCTURING OF A BUSINESS COMBINATION
Management of Paragon will have substantial flexibility in identifying
and selecting a prospective Target Business. As a result, stockholders of
Paragon will be almost entirely dependent on the judgment of management in
connection with the selection of a Target Business. In evaluating a prospective
Target Business, management will consider, among other factors, the following:
(i) costs associated with effecting the Business Combination; (ii) equity
interest in and opportunity for control of the Target Business; (iii) growth
potential of the Target Business; (iv) experience and skill of management and
availability of additional personnel of the Target Business; (v) capital
requirements of the Target Business; (vi) competitive position of the Target
Business; (vii) stage of development of the Target Business; (viii) degree of
current or potential market acceptance of the Target Business; (ix) proprietary
features and degree of intellectual property or other protection of the Target
Business; and (x) the regulatory environment in which the Target Business
operates.
The foregoing criteria are not intended to be exhaustive and any
evaluation relating to the merits of a particular Target Business will be based,
to the extent relevant, on the above factors as well as other considerations
deemed relevant by management in connection with effecting a Business
Combination consistent with Paragon's business objectives.
The time and costs required to select and evaluate a Target Business
(including conducting a due diligence review) and to structure and consummate
the Business Combination (including negotiating relevant agreements and
preparing requisite documents for filing pursuant to applicable securities laws
and state "blue sky" and corporation laws) cannot presently be ascertained with
any degree of certainty. Paragon's executive officers and its directors intend
to devote only a small portion of their time to the affairs of Paragon and,
accordingly, consummation of a Business Combination may require a greater period
of time than if Paragon's management devoted their full time to Paragon's
affairs. However, each officer and director of Paragon will devote such time as
they deem reasonably necessary to carry out the business and affairs of Paragon,
including the evaluation of potential Target Business and the negotiation of a
Business Combination and, as a result, the amount of time devoted to the
business and affairs of Paragon may vary significantly depending upon, among
other things, whether Paragon has identified a Target Business or is engaged in
active negotiation of a Business Combination.
Paragon anticipates that various prospective Target Businesses will be
brought to its attention from various non- affiliated sources, including
securities broker-dealers, investment bankers, venture capitalists, bankers,
other members of the financial community and affiliated sources, including,
possibly, Paragon's executive officer, and directors and their affiliates.
Paragon may elect to publish advertisements in financial or trade publications
seeking potential business acquisitions. While Paragon does not presently
anticipate engaging the services of professional firms that specialize in
finding business acquisitions on any formal basis,
18
Paragon may engage such firms in the future, to which event Paragon may pay a
finder's fee or other compensation.
As a general rule, federal and state tax laws and regulations have a
significant impact upon the structuring of business combinations. Paragon will
evaluate the possible tax consequences of any prospective Business Combination
and will endeavor to structure the Business Combination so as to achieve the
most favorable tax treatment to Paragon, the Target Business and their
respective stockholders. There can be no assurance that the Internal Revenue
Service or relevant state tax authorities will ultimately assent to Paragon's
tax treatment of a particular consummated Business Combination. To the extent
that the Internal Revenue Service or any relevant state tax authorities
ultimately prevail in recharacterizing the tax treatment of a Business
Combination, there may be adverse tax consequences to Paragon, the Target
Business and their respective stockholders. Tax considerations as well as other
relevant factors will be evaluated in determining the precise structure of a
particular Business Combination, which could be effected through various forms
of a merger, consolidation or stock or asset acquisition.
Paragon may utilize cash derived from the net proceeds of this offering,
equity securities, debt securities or bank borrowings or a combination thereof
as consideration in effecting a Business Combination. Although Paragon has no
commitments as of the date of this Prospectus to issue any shares of Common
Stock other than as described in this Prospectus, Paragon may issue a
substantial number of additional shares in connection with a Business
Combination. To the extent that such additional shares are issued, dilution to
the interests of Paragon's stockholders may occur. Additionally, if a
substantial number of shares of Common Stock are issued in connection with a
Business Combination, a change in control of Paragon may occur which may affect,
among other things, Paragon's ability to utilize net operating loss carry
forwards, if any.
There currently are no limitations on Paragon's ability to borrow funds
to effect a Business Combination. However, Paragon's limited resources and lack
of operating history may make it difficult to borrow funds. The amount and
nature of any borrowings by Paragon will depend on numerous considerations,
including Paragon's capital requirements, potential lenders evaluation of
Paragon's ability to meet debt service on borrowings and the then prevailing
conditions in the financial markets, as well as general economic conditions.
Paragon does not have any arrangements with any bank or financial institution to
secure additional financing and there can be no assurance that such arrangements
if required or otherwise sought, would be available on terms commercially
acceptable or otherwise in the best interests of Paragon. The inability of
Paragon to borrow funds required to effect or facilitate a Business Combination,
or to provide funds for an additional infusion of capital into a Target
Business, may have a material adverse effect on Paragon's financial condition
and future prospects, including the ability to effect a Business Combination. To
the extent that debt financing ultimately proves to be available, any borrowings
may subject Paragon to various risks traditionally associated with indebtedness,
including the risks of interest rate fluctuations and insufficiency of cash flow
to pay principal and interest. Furthermore, a Target Business may have already
incurred debt financing and, therefore, all the risks inherent thereto.
FACILITIES
Paragon will use the offices of PAR Holding Company, LLC, located at 277
Park Ave, New York, NY 10017, a limited liability company controlled by
Paragon's officers.
EMPLOYEES
As of the date of this Prospectus, Paragon does not have any employees.
19
USE OF PROCEEDS
The net proceeds payable to Paragon upon the exercise of Subscription
Rights will be held in an interest-bearing escrow account maintained by XXX
Trust Company, subject to release to Paragon upon written notification by
Paragon of its need for all or substantially all of the Escrowed Proceeds for
the purpose of implementing or facilitating the consummation of a Business
Combination. If a Business Combination is not consummated within 120 days from
the effective date of the Expiration Date, the Escrowed Proceeds shall be
returned by first class mail or equally prompt means to all subscribing
stockholders, together with interest earned thereon on a pro-rata basis.
Paragon will use the Escrowed Proceeds together with the interest earned
thereon principally in connection with a Business Combination, including
structuring and consummating the Business Combination (including possible
payment of finder's fees or other compensation to persons or entities which
provide assistance or services to Paragon) repaying debt of the Target Business,
redeeming stock issued to the seller of the Target Business, or for working
capital. Paragon has no present intention of either loaning any of the proceeds
of this offering to any Target Business or purchasing a minority interest in any
Target Business. Paragon does not have discretionary access to income with
respect to the monies in the escrow account. Stockholders of Paragon will not
receive any distribution of income or have any ability to direct the use or
distribution of such income.
To the extent that Shares of Paragon are used as consideration to effect
a Business Combination, the balance of the net proceeds from the exercise of the
Subscription Rights not theretofore expended will be used to finance the
operations of the Target Business, and for other purposes described in the
Post-Effective Amendment. Paragon has not incurred any debt in connection with
its organizational activities. Accordingly, no portion of the proceeds are being
used to repay debt. No compensation will be paid to any officer or director
until after the consummation of the first Business Combination. Since the role
of present management after a Business Combination is uncertain, Paragon has no
ability to determine what remuneration, if any, will be paid to such persons
after a Business Combination.
The Escrowed Proceeds will be invested in general debt obligations of
the United States Government or other high- quality, short-term interest-bearing
investments, provided, however, that Paragon may attempt not to invest such net
proceeds in a manner which may result in Paragon being deemed to be an
investment company under the Investment Company Act. In the event a Business
Combination is not consummated in the time allowed, the Escrowed Proceeds and
the interest income derived from investment of such net proceeds will be
returned on a pro- rata basis, to each subscribing stockholder within five
business days thereafter by first class mail or other equally prompt means.
DILUTION
The difference between the Subscription Price per share of Common Stock
(through the exercise of the Subscription Rights) and the pro forma net tangible
book value per share of the Common Stock of Paragon after the Subscription
constitutes dilution to investors of Paragon. Net tangible book value per share
is determined by dividing the net tangible book value of Paragon (total tangible
assets less total liabilities) by the number of outstanding shares of Common
Stock.
On June 30, 1996, Paragon had 2,900,000 Shares of Common Stock
outstanding and a net tangible book value of $50,000 or $.017 per share. Giving
effect to the issuance of 514,191 Shares of Common Stock on July ___, 1996 to
St. Lawrence for $.01 per share and the payment of the $75,000 Subscription
Receivable by PAR Holding on July ___, 1996 , as of July ___, 1996, Paragon had
3,414,191 shares of Common Stock outstanding and a net tangible book value of
$130,141 or $.038 per share.
The Distribution by St. Lawrence of the 514,191 Shares to St. Lawrence
stockholders will not have an effect on the net tangible book value of Paragon.
Dilution from the exercise of Subscription Rights will occur
20
only in the event the Board of Directors of Paragon establish a Subscription
Price per share of less than $.045. The dilutive effect to Paragon stockholders
of the exercise of Subscription Rights will be reflected in a Post-Effective
Amendment which will establish the purchase price per share under the
Subscription Rights. The Board of Directors of Paragon does not anticipate
setting a Subscription Price per share of less than $.045 and therefore, the
estimated net proceeds from the exercise of Subscription Rights will likely
result in an immediate increase in net tangible book value per share.
CAPITALIZATION
The following table sets forth the capitalization of Paragon at June 30,
1996 and as adjusted to give effect to the Distribution of the Share(s):
<TABLE>
<CAPTION>
Actual Pro Forma
<S> <C> <C>
Stockholders' equity
Preferred Stock, $.01 par
value, 1,000,000 Shares
authorized; none issued
or outstanding 0 0
Common Stock $.01 par
value, 20,000,000 shares
authorized, 2,900,000 shares
issued and outstanding,
3,414,191 shares issued and
outstanding, as adjusted(2) $ 29,000 $ 34,141(2)
Subscription Receivable (75,000) 0
Additional Paid In Capital 121,000 121,000
Accumulated Deficit (5,000) (5,000)
------------ -----------
Total stockholders' equity $ 70,000 $150,141
============ ===========
</TABLE>
(1) The effect of the exercise of Subscription Rights will be reflected in a
post-effective amendment which will establish the purchase price under the
Subscription Rights.
(2) Gives effect to the purchase by St. Lawrence of 514,191 shares of Common
Stock of Paragon for a total purchase price of $5,141 on July __, 1996 and, the
payment by PAR Holding of the Subscription Receivable on July ___, 1996.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Paragon is a newly organized development stage company, the objective
of which is to acquire an operating business in the United States. To date,
Paragon's efforts have been limited to organizational activities.
In June 1996, the Company issued 2,900,000 shares of its Common Stock
for a purchase price of $75,000 in cash and a Promissory Note for $75,000 due on
or before July 31, 1996. The Promissory Note was
21
paid in full on July , 1996. In July 1996, the Company issued 514,191 shares of
Common Stock for an aggregate purchase price of $5,141.00.
Substantially all of Paragon's working capital needs subsequent to this
offering will be attributable to the identification, evaluation and selections
of a Target Business and, structuring, negotiating and consummating a Business
Combination. Such working capital needs are expected to be satisfied from the
$155,141 received by Paragon from PAR Holding and St. Lawrence.
22
MANAGEMENT
The officers and directors of Paragon, and further information
concerning them are as follows:
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Mitchell A. Kuflik 33 President, Assistant Secretary, Director
Peter A. Hochfelder 34 Vice President, Treasurer, Director
Robert J. Sobel 33 Vice President, Director
Joseph F. Mazzella 43 Secretary, Director
</TABLE>
Mitchell A. Kuflik has been President, Assistant Secretary and a
Director of the Company since its inception. Mr. Kuflik has been Vice President
and Secretary of Brahman Securities, Inc., an institutional brokerage firm since
December, 1987; Vice President of Brahman Capital Corp., an investment banking
firm since 1990; and a general partner of Brahman Partners, a private limited
partnership, since 1991. All of such entities are located in New York. Mr.
Hochfelder also serves as a director of Covenant Insurance Company, a
privately-held company in Cambridge Massachusetts. Mr. Kuflik earned an A.B. in
Economics from Harvard University in 1984.
Peter A. Hochfelder has been a Vice President, Treasurer and Director
of the Company since inception. Mr. Hochfelder has been Vice President and
Treasurer of Brahman Securities, Inc., an institutional brokerage firm since
December, 1987; President of Brahman Capital Corp., an investment banking firm
since 1990; and a general partner of Brahman Partners, a private limited
partnership, since 1991. All of such entities are located in New York. Mr.
Hochfelder earned a B.S. degree in Economics from the University of Pennsylvania
in 1984.
Robert J. Sobel has been a Vice President and a Director of the Company
since inception. Mr. Sobel has served as President of Brahman Securities, Inc.,
an institutional securities firm since 1987; Vice President of Brahman Capital
Corp., an investment banking firm since 1990; and a general partner of Brahman
Partners, a private investment partnership, since 1991. All of such entities are
located in New York. Mr. Sobel earned a bachelor's degree with a major in
International Relations and a concentration at the Wharton School of Business
from the University of Pennsylvania in 1985.
Joseph F. Mazzella has been Secretary and a Director of the Company
since inception. Since 1985, Mr. Mazzella has been a partner at the law firm of
Lane Altman & Owens LLP in Boston, Massachusetts. Mr. Mazzella joined Lane
Altman & Owens LLP as an associate in 1980 and prior thereto, was an attorney
with the Securities and Exchange Commission. Mr. Mazzella serves as a Director
and Chairman of the Compensation Committee of Alliant Techsystems Inc., a NYSE
listed company. Mr. Mazzella received a B.S. degree from the College of the City
of New York in 1974 and received his law degree from Rutgers University School
of Law in 1977.
EXECUTIVE COMPENSATION
No executive officer has received any cash compensation from the
Company since its inception for services rendered. Prior to the consummation of
a Business Combination, if any, none of the Company's officers or directors will
receive any compensation except that the Company may reimburse such officers or
directors for any out-of-pocket expenses incurred in connection with activities
on behalf of the Company. None of the Company's officers or their respective
affiliates will receive any consulting or finder's fees or other compensation in
connection with introducing the Company to, or evaluating, a Target Business or
consummating a Business Combination. See "Proposed Business - Selection of a
Target Business and Structuring a Business Combination."
23
PRINCIPAL STOCKHOLDERS
As of the date of this Prospectus, PAR Holding and St. Lawrence are the
only shareholders of the Company. The following table sets forth information on
______________, 1996 and as adjusted to reflect the Distribution of Shares based
on information obtained from the persons named below, with respect to beneficial
ownership of Shares of Common Stock by (i) each person known by the Company to
be the owner of more than 5% of the outstanding shares of Common Stock, (ii)
each director and (iii) all executive officers and directors as a group:
<TABLE>
<CAPTION>
Amount and Percentage of Outstanding
Nature of Shares of Common Stock(1)
Beneficial Before After
Name and Address Ownership Distribution Distribution(1)
---------------- --------- ------------ ---------------
<S> <C> <C> <C>
PAR Holding Company, LLC 2,900,000 85% 85%
277 Park Avenue
New York, NY 10017
St. Lawrence Seaway Corporation 514,191 15% 0
520 N. Meridian Street
Suite 818
Indianapolis, IN 46204
Mitchell A. Kuflik(2) 2,900,000(3) 85% 85%
Peter A. Hochfelder(2) 2,900,000(3) 85% 85%
Robert J. Sobel(2) 2,900,000(3) 85% 85%
All executive officers and
directors as a group 2,900,000 85% 85%
(3 persons)
</TABLE>
(1) The effect of the exercise of Subscription Rights will be reflected in a
post-effective amendment.
(2) Each of the individuals listed has an address in care of Paragon.
(3) Ownership by Messrs. Kuflik, Hochfelder and Sobel is indirect as a result of
their membership interest in PAR Holding, LLC. Messrs. Kuflik, Hochfelder and
Sobel disclaim individual beneficial ownership of any Common Stock of Paragon.
Certain Transactions
In June 1996, Paragon issued 2,900,000 shares of its Common Stock, $.01
par value, to PAR Holding for a purchase price of $75,000 in cash and a
Promissory Note for $75,000 due on or before July 31, 1996, which was paid in
full on July __, 1996. In July, 1996, Paragon issued 514,191 Shares of its
Common Stock, $.01 par value, to St. Lawrence for a purchase price of $5,141 in
cash.
24
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of Paragon consists of 20,000,000 shares of
Common Stock, par value $.01 per share, and 1,000,000 shares of preferred stock,
par value $.01 per share (the "Preferred Stock"). The following statements
relating to the capital stock of Paragon are summaries and do not purport to be
complete. Reference is made to the more detailed provisions of, and such
statements are qualified in their entirety by reference to, the Certificate of
Incorporation (the "Certificate") and the By-laws of Paragon, copies of which
are filed as exhibits to the Registration Statement of which this Prospectus is
a part.
COMMON STOCK
Holders of Common Stock will be entitled to one vote per share with
respect to all matters required by law to be submitted to holders of Common
Stock. The Common Stock will not have cumulative voting rights. The Certificate
provides that any action required to be taken or that may be taken at an annual
or special meeting of stockholders may be taken by written consent in lieu of a
meeting of stockholders.
Subject to the prior rights of holders of Preferred Stock, if any,
holders of the Common Stock will be entitled to receive such dividends as may be
lawfully declared by the Board of Directors of Paragon. See "Dividend Policy."
Upon any dissolution, liquidation or winding up of Paragon, whether voluntary or
involuntary, holders of the Common Stock are entitled to share ratably in all
assets remaining after the liquidation payments have been made on all
outstanding shares of Preferred Stock, if any.
Upon the Distribution, the shares of the Common Stock offered hereby
will be fully paid and nonassessable. The Common Stock will not have any
preemptive, subscription or conversion rights (except for the Subscription
Rights defined herein). Under Paragon's Certificate, the Board of Directors of
Paragon has the authority to issue additional shares of Common Stock. Paragon
believes that the Board's ability to issue additional shares of Common Stock
could facilitate certain financings and acquisitions and provide a means for
meeting other corporate needs that might arise. The authorized but unissued
shares of Common Stock will be available for issuance without further action by
Paragon's stockholders, unless stockholder action is required by applicable law
or the rules of any stock exchange or system on which the Common Stock may then
be listed. The Board's ability to issue additional shares of Common Stock could,
under certain circumstances, either impede or facilitate the completion of a
merger, tender offer or other takeover attempt.
SUBSCRIPTION RIGHTS
Paragon will issue and distribute one Subscription Right for each share
of Common Stock to be distributed to stockholders of St. Lawrence pursuant to
the Distribution. Until a Subscription Right is exercised pursuant to the terms
of the Distribution, the holder thereof, as such, will have no rights as a
stockholder of Paragon, including the right to vote or receive dividends. Each
Subscription Right entitles the holder thereof to subscribe for and purchase
from Paragon two (2) authorized but heretofore unissued shares of Paragon's
common stock for each Subscription Right held. No certificates or other physical
rights will be distributed. Stockholders who fully exercise their Subscription
Rights will be entitled to the additional privilege of subscribing, subject to
certain limitations and subject to allocation or increase, for any Shares not
acquired by exercise of Subscription Rights (the "Over-Subscription Privilege").
No fractional Subscription Rights will be issued and no fractional shares will
be issued upon exercise of Subscription Rights. Subscription Rights are
non-transferable and will not be admitted for trading or quotation on any
exchange and therefore may not be purchased or sold. Only persons who are
stockholders of Paragon on the Record Date may hold Subscription Rights.
PREFERRED STOCK
Paragon is authorized to issue up to 1,000,000 shares of Preferred Stock
without further stockholder approval. The shares of Preferred Stock may be
issued in one or more series, with the number of shares of each series and the
rights, preferences and limitations of each series to be determined by the Board
of Directors.
25
Among the specific matters that may be determined by the Board of Directors are
dividend rights, if any, redemption rights, if any, the terms of a sinking or
purchase fund, if any, the amount payable in the event of any voluntary
liquidation, dissolution or winding up of the affairs of Paragon, conversion
rights, if any, and voting powers, if any.
The issuance of shares of Preferred Stock, or the issuance of rights to
purchase such shares, could be used to discourage an unsolicited acquisition
proposal. For instance, the issuance of a series of Preferred Stock might impede
a business combination by including class voting rights that would enable the
holder to block such a transaction, or facilitate a business combination by
including voting rights that would provide a required percentage vote of the
stockholders. In addition, under certain circumstances, the issuance of
Preferred Stock could adversely affect the voting power of the holders of the
Common Stock. Although the Board of Directors is required to make any
determination to issue such stock based on its judgment as to the best interests
of the stockholders of Paragon, the Board of Directors could act in a manner
that would discourage an acquisition attempt or other transaction that some, or
a majority, of the stockholders might believe to be in their best interests or
in which stockholders might receive a premium for their stock over the then
market price of such stock. The Board of Directors does not at present intend to
seek stockholder approval prior to any issuance of currently authorized stock,
unless otherwise required by law or stock exchange rules. Paragon has no present
plans to issue any Preferred Stock.
DIVIDENDS
Paragon does not expect to pay dividends prior to the consummation of a
Business Combination. Future dividends, if any, will be contingent upon
Paragon's revenues and earnings, if any, capital requirements and governmental
financial conditions subsequent to the consummation of a Business Combination.
The payment of dividends subsequent to a Business Combination will be within the
discretion of Paragon's then Board of Directors. Paragon presently intends to
retain all earnings, if any, for use in Paragon's business operations and
accordingly, the Board does not anticipate declaring any dividends in the
foreseeable future.
LEGAL MATTERS
The legality of the securities being registered by this Registration
Statement is being passed upon by Lane Altman & Owens LLP, of which Joseph F.
Mazzella, a Director of the Company is a partner.
EXPERTS
The financial statements included in this Prospectus have been audited
by BDO Seidman, LLP, independent certified public accountants, to the extent and
for the period set forth in their report appearing elsewhere herein, and is
included in reliance upon such report given upon the authority of said firm as
experts in accounting and auditing.
26
PARAGON ACQUISITION COMPANY, INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
JUNE 30, 1996
INDEX TO FINANCIAL STATEMENTS
PAGE
Report of Independent Certified Public Accountants ..................... 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 CERTIFIED PUBLIC ACCOUNTANTS
Paragon Acquisition Company, Inc.
New York, NY
We have audited the accompanying balance sheet of Paragon Acquisition
Company, Inc. (a corporation in the development stage) as of June 30, 1996, and
the related statements of operations, stockholders' equity and cash flows for
the period from June 19, 1996 (inception) to June 30, 1996. 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 generally accepted auditing
standards. 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 Paragon Acquisition
Company at June 30, 1996, and the results of its operations and its cash flows
for the period from June 19, 1996 (inception) to June 30, 1996 in conformity
with generally accepted accounting principles.
/s/ BDO Seidman, LLP
----------------------------
BDO Seidman, LLP
New York, New York
July 1, 1996
F-2
PARAGON ACQUISITION COMPANY, INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
BALANCE SHEET
JUNE 30, 1996
ASSETS
<TABLE>
<S> <C>
Current Assets - Cash.............................................................. $75,000
-------
Deferred registration costs........................................................ 20,000
--------
$95,000
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities - Accounts payable and accrued expenses........................ $25,000
-------
Commitment (Note 4)
Stockholders' equity (Notes 2, 5 and 6):
Preferred stock, $.01 par value shares - authorized 10,000,000; none issued... -
Common stock, $.01 par value shares - authorized 20,000,000:
outstanding 2,900,000............................................................. 29,000
---------- ------
Subscription receivable............................................................ (75,000)
Additional paid-in capital......................................................... 121,000
Deficit accumulated during the development stage................................... (5,000)
Total stockholders' equity......................................................... $70,000
-------
Total Liabilities and Stockholders' Equity $95,000
=======
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
F-3
PARAGON ACQUISITION COMPANY, INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
STATEMENT OF OPERATIONS
Period from June 19, 1996 (inception) to June 30, 1996
<TABLE>
<S> <C>
General and administrative expenses.............................. $5,000
-----------
Net loss for the period.......................................... $5,000
===========
Net Loss per Share............................................... $(0.00)
===========
Weighted average Common Shares outstanding....................... 2,900,000
===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
F-4
PARAGON ACQUISITION COMPANY, INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
STATEMENT OF STOCKHOLDERS' EQUITY
PERIOD FROM JUNE 19, 1996 (INCEPTION) TO JUNE 30, 1996
<TABLE>
<CAPTION>
DEFICIT
ACCUMULATED
ADDITIONAL DURING THE TOTAL
COMMON STOCK SUBSCRIPTION PAID-IN DEVELOPMENT STOCKHOLDERS
SHARES AMOUNT RECEIVABLE CAPITAL STAGE EQUITY
------ ------ ---------- ------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Issuance of founders' shares ........ 2,900,000 $29,000 ($75,000) $121,000 $ - $75,000
Net loss for the period ............. - - - - (5,000) (5,000)
--------- ------- ------- -------- --------- -------
Balance June 30, 1996 ............... 2,900,000 $29,000 ($75,000) $121,000 $ (5,000) $70,000
========= ======= ======= ======== ========= =======
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
F-5
PARAGON ACQUISITION COMPANY, INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
STATEMENT OF CASH FLOWS
PERIOD FROM JUNE 19, 1996 (INCEPTION) TO JUNE 30, 1996
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss .............................................................. $ (5,000)
Adjustments to reconcile net loss to net cash
and in operating activities
Increase in accrued expenses...................................... $ 5,000
---------
Net cash used in operating
activities.............................................. -0-
---------
Cash flows from financing activities:
Proceeds from sale of common stock to
founding stockholders................................................ 75,000
---------
Net cash provided by financing
activities.............................................. 75,000
---------
Net Increase in cash...................................... 75,000
Cash, beginning of period.............................................. -0-
---------
Cash, end of period.................................................... $ 75,000
=========
</TABLE>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
The Company received a note for subscribed Common Stock amounting to
$75,000, which is a non-cash financing activity.
The Company incurred $20,000 in deferred registration costs (and
related accounts payable) which is a non-cash financing activity.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
F-6
PARAGON ACQUISITION COMPANY, INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies.
Income Taxes
The Company follows Statement of Financial Accounting Standards No. 109
("FAS 109), "Accounting for Income Taxes." FAS 109 is an asset and liability
approach that requires the recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been recognized in
the Company's financial statements or tax returns. The Company has net operating
loss carry forwards of approximately $5,000 available to reduce any future
income taxes. The tax benefit of these losses, approximately $2,000, has been
offset by a valuation allowance due to the uncertainty of its realization.
Deferred Registration Costs
As of June 30, 1996, the Company has incurred deferred registration
costs of $20,000 relating to expenses incurred in connection with the Proposed
Distribution (see note 2). Upon consummation of this Proposed Distribution, the
deferred registration costs will be charged to equity. Should the Proposed
Distribution prove to be unsuccessful, these deferred costs, as well as
additional expenses to be incurred, will be charged to operations.
Net Loss Per Common Share
Net loss per common share is computed on the basis of the weighted
average number of common shares outstanding during the period.
Use of Estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. Organization and Business Operations. Paragon Acquisition Company,
Inc. (the "Company") was incorporated in Delaware on June 19, 1996 to serve as a
vehicle to effect a merger, exchange of capital stock, asset acquisition or
other business combination the "Business Combination") with an operating
business (the "Target Business"). At June 30, 1996, the Company had not yet
commenced any formal business operations and all activity to date relates to the
Company's formation and proposed fund raising. The Company's fiscal year end is
December 31.
The Company's ability to commence operations is contingent upon its
ability to identify a prospective Target Business and raise the capital it will
require through the issuance of equity securities, debt securities, bank
borrowings or a combination thereof. The Company intends to obtain adequate
financial resources through the registration of a distribution of shares of its
Common Stock and Subscription Rights to its shareholders the ("Proposed
Distribution"). The Subscription Rights will entitle the holder to purchase two
(2) shares of Common Stock of the Company for each Subscription Right held for a
purchase price to be determined by the Company's Board of Directors at the time
a Business Combination is identified, such price to be not more than $2.00 per
Subscription Right.
Subscription Rights will not be exercisable until after a
Post-Effective Amendment to the Form S-1 Registration Statement to be filed by
the Company with the Securities and Exchange Commission describes a Business
Combination, establishes the Subscription Price and the number of Subscription
Rights which may be exercised in such Subscription Period and specifies the
Subscription Period established by the Company. The Shares to be distributed to
the shareholders, the Subscription Rights and any Shares issuable upon exercise
of Subscription Rights will be held in escrow and may not be sold or transferred
until the Company has consummated a Business Combination.
F-7
After the Business Combination is consummated, the Shares will be released from
escrow.
Due to the terms of the Proposed Distribution, the Company has not
established a time period within which to exercise the Subscription Rights as
such exercise is dependent upon the identification of a Target Business. The
Company anticipates that, due to the time constraints imposed on the management
of the Company, it is not possible to predict the length of the identification
process.
3. Proposed Distributions. The Proposed Distributions call for the
Company to register the 514,191 shares of Common Stock being distributed to the
stockholders of St. Lawrence Seaway Corporation (a public corporation who will
distribute the stock to its stockholders) and 6,828,382 shares of Common Stock
for issuance upon the exercise of the Subscription Rights. The Subscription
Price will be established by the Board of Directors and will be no more than
$2.00 per Subscription Right.
4. Commitment. The Company presently occupies office space provided by a
stockholder. Such stockholder 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 service, available to the Company, as may be required by
the Company from time to time at no charge.
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. Common Stock. On June 25, 1996 the Company issued 2,900,000 shares of
Common Stock par value $.01 per share to Par Holding Company, LLC for a
combination of $75,000 in cash and a promissory note of $75,000 due on or before
July 31, 1996 (aggregate of $150,000). During July, 1996 the Company intends to
issue a further 514,191 shares of Common Stock, par value $.01 per share to St.
Lawrence Seaway Corporation for a total consideration of $5,141.
F-8
=============================================
No dealer, salesman or any other person
has been authorized to give any information
or to make any representations other than
those contained in this prospectus, and, if
given or made, such information or
representations may not be relied on as
having been authorized by the Company or by
any of the Underwriters. Neither the delivery
of this Prospectus nor any sale made
hereunder shall under any circumstances
create an implication that there has been no
change in the affairs of the Company since
the date hereof. This Prospectus does not
constitute an offer to sell, or solicitation
of any offer to buy, by any person in any
jurisdiction in which it is unlawful for any
such person to make such offer or
solicitation. Neither the delivery of this
Prospectus nor any offer, solicitation or
sale made hereunder, shall under any
circumstances create any implication that the
information herein is correct as of any time
subsequent to the date of the Prospectus.
------------------------
TABLE OF CONTENTS
Page
Prospectus Summary.........................
The Company................................
Risk Factors...............................
Use of Proceeds............................
Dilution...................................
Capitalization.............................
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.............................
Proposed Business..........................
Management.................................
Certain Transactions.......................
Principal Stockholders.....................
Description of Securities..................
Shares Eligible for Future Sale............
Underwriting...............................
Legal Matters..............................
Experts....................................
Additional Information.....................
Index to Financial Statements..............
Until 90 days after the release of the
registered securities from the Escrow
Account, all dealers effecting transactions
in the registered securities, whether or not
participating in this distribution, may be
required to deliver a prospectus. This is in
addition to the obligations of dealers to
deliver a Prospectus when Acting as
underwriters and with respect to their unsold
allotments or subscriptions.
=============================================
=============================================
PARAGON ACQUISITION COMPANY, INC.
514,191 Shares of
Common Stock and
Subscription Rights to
Purchase 6,828,382 shares
of Common Stock
----------
PROSPECTUS
----------
July ____, 1996
=============================================
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses in connection with this
Registration Statement. All of such expenses are estimates, other than the
filing fees payable to the Securities and Exchange Commission.
Filing Fee - Securities and Exchange Commission $ 2,363.47
Fees and Expenses of Accountants 5,000.00
Fees and Expenses of Counsel 50,000.00
Blue Sky Fees and Expenses 10,000.00
Printing and Engraving Expenses 15,000.00
Transfer and Escrow Agent Fees 5,000.00
Miscellaneous Expenses 5,000.00
----------
Total $92,363.47
==========
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Paragon is incorporated in Delaware. Under Section 145 of the General
Corporation Law of the State of Delaware, a Delaware corporation has the power,
under specified circumstances, to indemnify its directors, officers, employees
and agents in connection with actions, suits or proceedings brought against them
by a third party or in the right of the corporation, by reason of the fact that
they were or are such directors, officers, employees or agents, against expenses
incurred in any action, suit or proceeding. Article Eighth of the Certificate of
Incorporation and Article VII, Section 7.7 of the By-laws of Paragon provide for
indemnification of directors and officers to the fullest extent permitted by the
General Corporation Law of the State of Delaware. Reference is made to the
Certificate of Incorporation of Paragon, filed as Exhibit 3.1 hereto and the
Certificate of Amendment of the Certificate of Incorporation, filed as Exhibit
3.1(i)(a) hereto.
Section 102(b)(7) of the General Corporation Law of the State of
Delaware provides that a certificate of incorporation may contain a provision
eliminating the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director
provided that such provision shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 (relating to liability for unauthorized acquisitions or redemptions
of, or dividends on, capital stock) of the General Corporation Law of the State
of Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit. Article Ninth of Paragon's Certificate of
Incorporation contains such a provision.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
On June 25, 1996, Paragon issued 2,900,000 shares of Common Stock par
value $.01 per share to PAR Holding Company, LLC, a Delaware limited liability
company for a consideration of $75,000 in cash and a $75,000 promissory note due
July 31, 1996 in reliance upon the exemption from registration provided by
Section 4(2) of the Securities Act of 1933. On July , 1996, Paragon issued
514,191 shares of Common Stock, par value $.01 per share to The St. Lawrence
Seaway Corporation, an Indiana corporation ("St. Lawrence") for a total
consideration of $5,141 in reliance upon the exemption from registration
provided by Section 4(2) of the Securities Act of 1933.
II-1
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
3.1(i) Certificate of Incorporation of the Company
3.1(i)(a) Certificate of Amendment of Certificate of Incorporation
3.1(ii) By-Laws of the Company (includes description of Common Stock)
4.1 Form of Common Stock Certificate (included in Exhibit 3.2)
4.2 Form of Subscription Form by which stockholders of Company's Common
Stock may exercise their non-transferable Subscription Rights and
Over-Subscription Privileges*
5. Opinion of Lane Altman & Owens LLP*
10.1 Form of Escrow Agreement for proceeds from exercise of Subscription
Rights*
10.2 Form of Escrow Agreement for Common Stock and Subscription Rights*
24.1 Consent of BDO Seidman LLP
24.2 Consent of Lane Altman & Owens LLP (to be included in Exhibit 5)*
25. Power of Attorney (included at page II-4)
27. Financial Data Schedule
- --------------
*To be filed by Amendment.
(b) The following financial statement schedules are included in this
Registration Statement.
None.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a) 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;
(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.
(b) 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 provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission is that such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
II-2
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.
(c) The undersigned registrant hereby undertakes that:
(i) 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 497(h) under the Securities
Act shall be deemed to be part of this registration statement as of the
time it was declared effective.
(ii) 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-3
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 New York
and the State of New York, on the 8th day of July, 1996.
Paragon Acquisition Company, Inc.
By: /s/ Mitchell A. Kuflik
-----------------------------
Mitchell A. Kuflik, President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Robert Sobel, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
to act, without the other, for him and in his name, place and stead, in any and
all capacities, to sign any or all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as full to all
intents and purposes as he might or could be in person, hereby ratifying and
confirmation all that said attorneys-in-fact and agents, or any of them, their
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
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.
<TABLE>
<S> <C> <C>
/s/ Mitchell A. Kuflik President, Assistant Secretary and July 8, 1996
- ---------------------------
Mitchell A. Kuflik Director
/s/ Peter A. Hochfelder Vice President, Treasurer and Director July 8, 1996
- ---------------------------
Peter A. Hochfelder
/s/ Robert A. Sobel Vice President and Director July 8, 1996
- ---------------------------
Robert A. Sobel
/s/ Joseph F. Mazzella Secretary and Director July 8, 1996
- ---------------------------
Joseph F. Mazzella
</TABLE>
II-4
EXHIBIT INDEX
3.1(i) Certificate of Incorporation of the Company
3.1(i)(a) Certificate of Amendment of Certificate
3.2 By-Laws of the Company (includes description of Common Stock)
4.1 Form of Common Stock Certificate (included in Exhibit 3.2)
5. Opinion of Lane Altman & Owens*
10.1 Form of Escrow Agreement*
10.2 Form of Subscription Form by which stockholders of Company's Common
Stock may exercise their non-transferable Subscription Rights and
Over-Subscription Privileges*
24.1 Consent of BDO Seidman LLP
24.2 Consent of Lane Altman & Owens LLP (to be included in Exhibit 5)
25. Power of Attorney (included at page II-4)
27. Financial Data Schedule*
*To be filed by Amendment
CERTIFICATE OF INCORPORATION
OF
PARAGON ACQUISITION COMPANY, INC.
FIRST. The name of the corporation (the "Corporation") shall be:
Paragon Acquisition Company, Inc.
SECOND. The Corporation's registered office in the State of Delaware is to
be located at 1013 Centre Road, Wilmington, Delaware 19805-1297, County of New
Castle; and the name of the registered agent of the corporation in the State of
Delaware at such address is The Prentice-Hall Corporation System, Inc.
THIRD. The purpose or purposes of the Corporation shall be to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH. The total number of shares of stock which the Corporation shall
have the authority to issue is One Hundred One Million (101,000,000) shares,
consisting of One Hundred Million (100,000,000) shares of Common Stock having a
par value of $.01 per share and One Million (1,000,000) shares of Preferred
Stock having a par value of $.01 per share.
FIFTH. The name and address of the incorporator of the Corporation is
Joseph F. Mazzella, Esq., Lane Altman & Owens LLP, 101 Federal Street, Boston,
Massachusetts 02110.
SIXTH. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to adopt, amend or
repeal the by-laws of the Corporation.
SEVENTH. Members of the Board of Directors of the Corporation may be
elected either by written ballot or by voice vote.
EIGHTH. The Corporation shall indemnify and hold harmless to the fullest
extent permitted by the General Corporation Law of the State of Delaware, as
amended from time to time, all persons whom it may indemnify and hold harmless
pursuant thereto.
NINTH. A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation violation of law, (iii) under Section 174 of the General Corporation
Law of the State of Delaware, or (iv) for any transaction from which the
director derived an improper personal benefit.
IN WITNESS WHEREOF, The undersigned, being the incorporator hereinbefore
named, has executed, signed and acknowledged this Certificate of Incorporation
this 19th day of June, 1996.
/s/ Joseph F. Mazzella
--------------------------------
Joseph F. Mazzella, Incorporator
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
PARAGON ACQUISITION COMPANY, INC.
Paragon Acquisition Company, Inc., a corporation organized and existing
under the Laws of the State of Delaware (the Corporation), does hereby certify:
FIRST: That, as of the date of this Certificate, the Corporation has not
received any payment for any of its stock or elected any officers or directors;
and
SECOND: That, by unanimous written consent of the Sole Incorporator, the
following resolution, which sets forth a proposed amendment to the Certificate
of Incorporation of the Company was duly adopted and declared to be advisable.
The Resolution setting forth the proposed amendment is as follows:
RESOLVED:That the total number of Common Stock, $.01 par value, that the
Company shall have the authority to issue is hereby decreased from 100,000,000
shares to 20,000,000 shares; and that the Certificate of Incorporation of the
Corporation be amended by changing Article Fourth thereof so that, as amended,
said Article Fourth shall be and read as follows:
FOURTH: The total number of shares of stock
which the Corporation shall have the authority to
issue shall be Twenty-One Million (21,000,000) shares
consisting of Twenty Million (20,000,000) shares of
Common Stock having a par value of $.01 per share and
One Million (1,000,000) shares of Preferred Stock
having a par value of $.01 per share.
THIRD:That said amendment was duly adopted in accordance with the
provisions of Section 241 of the General Corporations Law of the State of
Delaware.
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
hereunto affixed and this certificate to be signed by its sole incorporator,
this 24th day of June, 1996.
By: /s/ Joseph F. Mazzella
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Joseph F. Mazzella, Sole Incorporator
BY-LAWS
OF
PARAGON ACQUISITION COMPANY, INC.
ARTICLE I
OFFICES
Section 1.1 Delaware Registered Office. The registered office of the
Corporation in the State of Delaware shall be located at 1013 Centre Road,
Wilmington, Delaware 19805-1297.
Section 1.2 Other Offices. The Corporation may also have offices at such
other places both within and outside of the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.1 Annual Meeting. The annual meeting of the stockholders of the
Corporation for the election of directors and for the transaction of such other
business as may properly come before said meeting shall be held on such date and
at such hour and place, within or outside of the State of Delaware, as shall be
fixed by the Board of Directors with respect to each such meeting and as shall
be stated in the notice thereof. Members of the Board of Directors may be
elected either by written ballot or by voice vote.
Section 2.2 Special Meetings. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called by the President and shall be called
by the President or Secretary at the request in writing of a majority of the
Board of Directors, or at the request in writing of stockholders owning at least
5% in amount of the entire capital stock of the Corporation issued and
outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting. Special meetings of the stockholders may be
held at such time and place, within or outside of the State of Delaware, as
shall be stated in the notice of the meeting or in a duly executed waiver of
notice thereof.
Section 2.3 Notice of Meetings. Except as otherwise provided or permitted
by law or by the Certificate of Incorporation or these By-laws, written notice
of all meetings of stockholders, stating the date, place and hour and, in
general terms only, the purpose or purposes thereof, shall be given by the
President or a Vice President or the Secretary or an Assistant Secretary to each
stockholder of record entitled to vote in respect of the business to be
transacted thereat, either by serving such notice upon him personally or by
mailing or telegraphing the same to him at his address as
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it appears on the records of the Corporation, at least ten days but not more
than sixty days before the date of the meeting, and the Secretary or any
Assistant Secretary or the transfer agent or agents of the Corporation shall
make affidavit as to the giving of such notice.
Section 2.4. Quorum and Adjournments. The holders of a majority of the
stock issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise provided by
statute or by the Certificate of Incorporation. If, however, such quorum shall
not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented any business may be transacted which might have been transacted at
the meeting as originally notified. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
Section 2.5 Voting of Shares. When a quorum is present at any meeting, the
vote of the holders of a majority of the stock having voting power present in
person or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which by express provision of the
statutes or of the Certificate of Incorporation, a different vote is required in
which case such express provision shall govern and control the decision of such
question. Unless otherwise provided in the Certificate of Incorporation each
stockholder shall at every meeting of the stockholders be entitled to one vote
in person or by proxy for each share of the capital stock having voting power
held by such person.
Section 2.6 Proxies. At any meeting of stockholders or whenever the
stockholders express consent or dissent to corporate action in writing without a
meeting, each stockholder entitled to vote any shares on any matter to be voted
upon at such meeting or in a written expression of such consent or dissent may
exercise such voting right either in person or by proxy appointed by an
instrument in writing, which shall be filed with the secretary of the meeting
before being voted or with the written evidence of the consent or dissent, which
shall be delivered to the Secretary of the Corporation for filing with the
minutes of proceedings of stockholders of the Corporation. Such proxies shall
entitle the holders thereof to vote at any adjournment of such meeting (unless a
new record date is set by the Board of Directors), but shall not be valid after
the final adjournment thereof. All questions regarding the qualification of
voters, the validity of proxies and the acceptance or rejection of votes shall
be decided by two inspectors of election who shall be appointed by the Board of
Directors or, if not so appointed, then by the presiding officer of the meeting.
No proxy shall be voted on after three years from its date unless said proxy
provides for a longer period.
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Section 2.7 Voting List of Stockholders. The officer who has charge of the
stock ledger of the Corporation shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.
Section 2.8 Conduct of Meetings. Each meeting of stockholders shall be
presided over by the President or, in his absence, by a Vice President thereunto
designated by the President or by the Board of Directors, or in the absence of
the President and a Vice President so designated, by any other person selected
to preside by vote of the holders of a majority of the outstanding stock present
in person or by proxy and entitled to vote at the meeting. The Secretary, or in
his absence an Assistant Secretary, or in the absence of both the Secretary and
an Assistant Secretary any person designated by the person presiding at the
meeting, shall act as secretary of the meeting.
Section 2.9 Consent in Lieu of Meeting. Unless otherwise provided in the
Certificate of Incorporation, any action required to be taken at any annual or
special meeting of stockholders of the Corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
ARTICLE III
DIRECTORS
Section 3.1 Powers of the Board of Directors. The business and affairs of
the Corporation shall be managed by or under the direction of its Board of
Directors which may exercise all such powers of the Corporation and do all such
lawful acts and things as are not by statute or by the Certificate of
Incorporation or by these By-laws directed or required to be exercised or done
by the stockholders.
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Section 3.2 Number, Election and Term. The number of directors which shall
constitute the whole Board shall be not less than one (1) nor more than fifteen
(15) persons. The first Board shall consist of four members. Thereafter, the
exact number of directors within the minimum and maximum limits above specified,
shall be fixed from time to time by the Board of Directors pursuant to a
resolution adopted by a majority of the entire Board of Directors. Directors
need not be stockholders. The number of directors may be increased or decreased
by action of the Board of Directors. Each director shall be elected to serve
until the next annual meeting of stockholders and shall hold office until a
successor is duly elected and qualified subject to the provisions of Section 3.3
hereof.
Section 3.3 Removal; Resignation. Subject to the rights of the holders of
any series of preferred stock then outstanding, any director, or the entire
Board of Directors, may be removed from office at any time, with or without
cause, but only by the affirmative vote of the holders of at least two-thirds of
the voting power of all of the outstanding shares of stock of the Corporation
entitled to vote for the election of directors.
Any director may resign at any time by giving written notice to the Board
of Directors or to the President or to the Secretary of the Corporation, and any
member of any committee may resign at any time by giving notice either as
aforesaid or to the committee of which he is a member or to the chairman
thereof. Any such resignation shall take effect at the time specified therein
or, if the time be not specified, upon receipt thereof and unless otherwise
specified therein, acceptance of such resignation shall not be necessary to make
it effective.
Section 3.4 Vacancies and Newly Created Directorships. Subject to the
rights of the holders of any series of preferred stock then outstanding, newly
created directorships resulting from any increase in the authorized number of
directors or any vacancies in the Board of Directors resulting from death
resignation, retirement, disqualification, removal from office or other cause
shall be filled by a majority vote of the directors then in office, and
directors so chosen shall hold office for a term expiring at the annual meeting
of stockholders at which the term of the class to which they have been elected
expires. No decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.
Section 3.5 Regular Meetings; Notice. Regular meetings of the Board of
Directors shall be held at such time and place, either within or outside of the
State of Delaware, as may be determined by resolution of the Board of Directors.
No notice of a regular meeting need be given and any business may be transacted
at a regular meeting held as aforesaid.
Section 3.6 Special Meetings. Special meetings of the Board of Directors
may, unless otherwise expressly provided by law, be called from time to time by
the President, or any Vice President,or by a written call signed by any one or
more directors and filed with the Secretary. Each special meeting of the Board
shall be held at such time and place, either
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within or outside of the State of Delaware, as shall be designated in the notice
of such meeting.
Section 3.7 Notice of Special Meetings. Notice of a special meeting of the
Board of Directors, stating the place, date and hour thereof, shall, except as
otherwise expressly provided by law or as provided in Article V of these
By-laws, be given by mailing or telegraphing the same to each director at his
residence or business address at any time on or before the second day before the
day of the meeting or by delivering the same to him personally or by faxing the
same to him personally at his residence or business address not later than the
day before the day of the meeting, unless, in case of exigency, the President,
or in his absence a Vice President or the Secretary, shall prescribe a shorter
notice to each director at his residence or business address. Except as
otherwise required by law or these By-laws, no notice or waiver of notice of a
special meeting of the Board need state the purposes or purposes of such meeting
and any business may be transacted thereat.
Section 3.8 Quorum and Voting. At all meetings of the Board a majority of
the directors shall constitute a quorum for the transaction of business and the
act of a majority of the directors present at any meeting at which there is a
quorum shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the Certificate of Incorporation. If a
quorum shall not be present at any meeting of the Board of Directors the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Except as otherwise provided by law, by the Certificate of Incorporation or by
these By-laws, when a quorum is present at any meeting of the Board of
Directors, a majority of the directors present at such meeting shall decide any
question brought before such meeting and the action of such majority shall be
deemed to be the action of the Board.
Section 3.9 Conduct of Meetings. Each meeting of the Board of Directors
shall be presided over by the President, or in his absence, by any director
selected to preside by vote of a majority of the directors present. The
Secretary, or in his absence, an Assistant Secretary, or in the absence of both
the Secretary and an Assistant Secretary, any person designated by the person
presiding over the meeting, shall act as secretary of the meeting.
Section 3.10 Consent in Lieu of Meeting. Unless otherwise restricted by the
Certificate of Incorporation or these By-laws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the board or committee.
Section 3.11 Conference Telephone Meetings. Unless otherwise
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restricted by the Certificate of Incorporation or these By-laws, the Board of
Directors, or any committee designated by the Board of Directors, may
participate in a meeting of the Board of Directors, or any committee, by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at the meeting.
Section 3.12 Committees. The Board of Directors may, by resolution or
resolutions adopted by a majority of the entire Board, designate one or more
committees. Except as otherwise provided by these By-laws, each committee shall
consist of one or more of the directors of the Corporation. The Board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee.
In the absence or disqualification of a member of a committee, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absent or disqualified member.
Any such committee, to the extent provided in the resolution of the Board
of Directors, shall have and may exercise all the powers and authority of the
Board of Directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the Certificate of Incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the Corporation's property and
assets, recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, or amending the By-laws of the Corporation; and,
unless the resolution or the Certificate of Incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the Board of Directors.
Each committee shall keep regular minutes of its meetings and report the
same to the Board of Directors when required.
Section 3.13 Compensation of Directors. Unless otherwise restricted by the
Certificate of Incorporation or these By-laws, the Board of Directors shall have
the authority to fix the compensation of directors. The directors may be paid
their expenses, if any, of attendance at each meeting of the Board of Directors
and may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as director. No such payment shall preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be allowed
like compensation for attending committee
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meetings.
ARTICLE IV
OFFICERS
Section 4.1 Number and Election. The officers of the Corporation shall be
chosen by the Board of Directors and shall be a president, a secretary and a
treasurer. The Board of Directors may also choose one or more vice-presidents,
and one or more assistant secretaries and assistant treasurers. Any number of
officers may be held by the same person, unless the Certificate of Incorporation
or these By-laws otherwise provide.
The Board of Directors at its first meeting after each annual meeting of
stockholders shall choose a president, a secretary and a treasurer.
Section 4.2 Other Officers and Agents. The Board of Directors may appoint
such other officers and agents as it shall deem necessary who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board.
Section 4.3 Salaries. The salaries of all officers and agents of the
Corporation shall be fixed by the Board of Directors.
Section 4.4 Term of Office; Removal; Resignation. The officers of the
Corporation shall hold office until their successors are chosen and qualified.
Any officer elected or appointed by the Board of Directors may be removed at any
time by the affirmative vote of a majority of the Board of Directors. Any
vacancy occurring in any office of the Corporation shall be filled by the Board
of Directors. Any officer or agent of the Corporation may, subject to contrary
provision in any applicable contract, resign at any time by giving written
notice to the Board of Directors or to the President of the Corporation. Any
such resignation shall take effect at the time specified therein or,if the time
be not specified, upon receipt thereof and unless otherwise specified therein,
acceptance of such resignation shall not be necessary to make it effective.
Section 4.5 Vacancies. If the office of the President, any Vice President,
the Secretary or the Treasurer, or of any other officer or agent or member of
any committee, becomes vacant at any time by reason of death, resignation,
retirement, disqualification, removal from office, or otherwise, such vacancy or
vacancies shall be filled by the Board of Directors.
Section 4.6 The President. The president shall be the chief executive
officer of the Corporation, shall preside at all meetings of the stockholders
and the Board of Directors, shall have general and active management of the
business of the Corporation and shall see that all orders and resolutions of the
Board of Directors are carried into effect.
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He shall execute bonds, mortgages and other contracts requiring a seal,
under the seal of the Corporation, except where required or permitted by law to
be otherwise signed and executed and except where the signing and execution
thereof shall be expressly delegated by the Board of Directors to some other
officer or agent of the Corporation.
Section 4.7 The Vice Presidents. In the absence of the president or in the
event of his inability or refusal to act, the vice-president (or in the event
there be more than one vice- president, the vice-presidents in the order
designated by the directors, or in the absence of any designation, then in the
order of their election) shall perform the duties of the president, and when so
acting, shall have all the powers of and be subject to all the restrictions upon
the president. The vice-presidents shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
Section 4.8 The Secretary and Assistant Secretary. The secretary shall
attend all meetings of the Board of Directors and all meetings of the
stockholders and record all the proceedings of the meetings of the Corporation
and of the Board of Directors in a book to be kept for that purpose and shall
perform like duties for the standing committees when required. He shall give, or
cause to be given, notice of all meetings of the stockholders and special
meetings of the Board of Directors, and shall perform such other duties as may
be prescribed by the Board of Directors or president, under whose supervision he
shall be. He shall have custody of the corporate seal of the Corporation and he,
or an assistant secretary, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be attested by his signature
or by the signature of such assistant secretary. The Board of Directors may give
general authority to any other officer to affix the seal of the Corporation and
to attest the affixing by his signature.
The assistant secretary, or if there be more than one, the assistant
secretaries in the order determined by the Board of Directors (or if there be no
such determination, then in the order of their election) shall, in the absence
of the secretary or in the event of his inability or refusal to act, perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the Board of Directors may from time to
time prescribe.
Section 4.9 The Treasurer and Assistant Treasurer. The treasurer shall have
the custody of the corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
Corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the Corporation in such depositories as may be designated
by the Board of Directors.
He shall disburse the funds of the Corporation as may be ordered by the
Board of Directors, taking proper vouchers for such disbursements, and shall
render to the president and the Board of Directors, at its regular meetings, or
when the Board of Directors so requires, an account of all his
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transactions as treasurer and of the financial condition of the Corporation.
If required by the Board of Directors, he shall give the Corporation a bond
(which shall be renewed every six years) in such sum and with such surety or
sureties as shall be satisfactory to the Board of Directors for the faithful
performance of the duties of his office and for the restoration to the
Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation.
The assistant treasurer, or if there shall be more than one, the assistant
treasurers in the order determined by the Board of Directors (or if there be no
such determination, then in the order of their election), shall, in the absence
of the treasurer or in the event of his inability or refusal to act, perform the
duties and exercise the powers of the treasurer and shall perform such other
duties and have such other powers as the Board of Directors may from time to
time prescribe.
ARTICLE V
NOTICES
Section 5.1 Manner of Giving. Whenever, under the provisions of the
statutes, the Certificate of Incorporation or these By-laws, notice is required
to be given to any director or stockholder, it shall not be construed to mean
personal notice, but such notice may be given in writing, by mail, addressed to
such director or stockholder, at his address as it appears on the records of the
Corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 5.2 Waiver of Notice. Whenever any notice is required to be given
under the provisions of the statutes or of the Certificate of Incorporation or
of these By-laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
ARTICLE VI
CAPITAL STOCK
For purposes of this Article VI, unless otherwise defined herein,
capitalized terms shall have the meaning set forth in that certain Prospectus of
the Corporation (the "Prospectus") to be furnished to the holders of common
stock of The St. Lawrence Seaway Corporation (the "St. Lawrence Stockholders").
Section 6.1 Description of Capital Stock.
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(a) Common Stock - Holders of Common Stock shall be entitled to one vote
per share with respect to all matters required by law to be submitted
to holders of Common Stock. The Common Stock will not have cumulative
voting rights. Subject to the prior rights of holders of Preferred
Stock, if any, holders of the Common Stock will be entitled to receive
such dividends as may be lawfully declared by the Board of Directors of
the Corporation. Upon any dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, holders of the Common
Stock are entitled to share ratably in all assets remaining after the
liquidation payments have been made on all outstanding shares of
Preferred Stock, if any.
(b) Preferred Stock - The shares of Preferred Stock may be issued in one or
more series, with the number of shares of each series and the rights,
preferences and limitations of each series to be determined by the
Board of Directors. Among the specific matters that may be determined
by the Board of Directors are dividend rights, if any, redemption
rights, if any, the terms of a sinking or purchase fund, if any, the
amount payable in the event of any voluntary liquidation, dissolution
or winding up of the affairs of the Corporation, conversion rights, if
any, and voting powers, if any.
Section 6.2 Form and Issuance. Every holder of stock in the Corporation
shall be entitled to have a certificate. Certificates of stock shall be issued
in such form as may be approved by the Board of Directors and shall be signed
by, or in the name of the Corporation by, the chairman or vice-chairman of the
Board of Directors, or the president or a vice-president and the treasurer or an
assistant treasurer, or the secretary or an assistant secretary of the
Corporation, certifying the number of shares owned by him in the Corporation.
Any of or all the signatures on the certificate may be facsimile. In case
any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if he were such officer,
transfer agent or registrar at the date of issue.
Section 6.3 Lost, Stolen and Destroyed Certificates. The Board of Directors
may direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the Corporation alleged to
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate of stock to be lost, stolen or
destroyed. When authorizing such issue of a new certificate or certificates, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as it shall require and/or to give the Corporation a bond in such
sum as it may direct as
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indemnity against any claim that may be made against the Corporation with
respect to the certificate alleged to have been lost, stolen or destroyed.
Section 6.4 Transfers of Stock. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate of stock duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books. The Board of Directors shall have power and
authority to make such other rules and regulations or amendments thereto as they
may deem expedient concerning the issue, registration and transfer of
certificates of stock and may appoint transfer agents and registrars thereof.
Section 6.5 Fixing Record Date. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
Section 6.6 Registered Stockholders. The Corporation shall be
entitled to recognize the exclusive right of a person registered on its books as
the owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Delaware.
ARTICLE VII
GENERAL PROVISIONS
Section 7.1 Stockholder Rights. Subject to the provisions of the General
Corporation Law of Delaware, no special rights or duties among the stockholders
inter se or between any stockholder and the Corporation shall arise by virtue of
the number of stockholders of the Corporation, the absence of a ready market for
the sale of its capital stock or the existence of stockholder participation in
the management of the Corporation. In furtherance, and not in limitation, of the
foregoing:
(a) The Corporation may purchase or redeem shares of its capital
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stock from any stockholder without offering other stockholders
an equal opportunity to have their shares purchased or redeemed
by the Corporation;
(b) The status of a stockholder of the Corporation shall confer no
right to be elected a director of the Corporation;
(c) Except as otherwise provided by written agreement, the status of
stockholder of the Corporation shall confer no right to be
employed by the Corporation in any capacity or to receive any
salary from the Corporation, or in the event that such
employment should exist or such salary should be paid, the
status of stockholder of the Corporation shall confer no right
to the continuation of such employment or salary; and
(d) The Board of Directors of the Corporation shall have full and
absolute discretion to determine whether to declare dividends
upon the capital stock of the Corporation from funds legally
available therefor or to refrain from declaring such dividends;
the status of stockholder of the Corporation shall confer no
right to require that any dividends be declared.
Section 7.2 Dividends. Dividends upon the capital stock of the Corporation,
subject to the provisions of the Certificate of Incorporation, if any, may be
declared by the Board of Directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the Certificate of Incorporation.
Before payment of any dividend, there may be set aside out of any funds of
the Corporation available for dividends such sum or sums as the directors from
time to time, in their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for such other purpose as the
directors shall think conducive to the interest of the Corporation, and the
directors may modify or abolish any such reserve in the manner in which it was
created.
Section 7.3 Annual Statement. The Board of Directors shall present at each
annual meeting, and at any special meeting of the stockholders when called for
by vote of the stockholders, a full and clear statement of the business and
condition of the Corporation.
Section 7.4 Checks. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
Section 7.5 Corporate Seal. The corporate seal shall have inscribed
-12-
thereon the name of the Corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it to be impressed
or affixed or reproduced or otherwise.
Section 7.6 Fiscal Year. The fiscal year of the Corporation shall be fixed
by resolution of the Board of Directors.
Section 7.7 Indemnification. The Corporation shall indemnify and hold
harmless to the fullest extent permitted by the General Corporation Law of the
State of Delaware, as amended from time to time, all person whom it may
indemnify and hold harmless pursuant thereto. Neither the amendment nor repeal
of this provision, nor the adoption of any provisions of the Certificate of
Incorporation inconsistent with this provision, shall eliminate or reduce the
effect of this provision in respect of any matter occurring, or any cause of
action, suit or claim that arises prior to such amendment, repeal or adoption of
an inconsistent provision.
Section 7.8 Amendments. These By-laws may be altered, amended or repealed
or new By-laws may be adopted by the stockholders or by the Board of Directors,
when such power is conferred upon the Board of Directors by the Certificate of
Incorporation, at any regular meeting of the stockholders or of the Board of
Directors or at any special meeting of the stockholders or of the Board of
Directors if notice of such alteration, amendment, repeal or adoption of new
By-laws be contained in the notice of such special meeting. If the power to
adopt, amend or repeal By-laws is conferred upon the Board of Directors by the
Certificate of Incorporation it shall not divest or limit the power of the
stockholders to adopt, amend or repeal By-laws.
-13-
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Paragon Acquisition Company, Inc.
New York, NY
We hereby consent to the use in the Prospectus constituting a part of this
Registration Statement of our report dated July 1, 1996, relating to the
financial statements of Paragon Acquisition Company, Inc. which is contained in
that Prospectus.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/s/ BDO Seidman, LLP
-------------------------------------
BDO Seidman, LLP
New York, NY
July 8, 1996
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
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0
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