UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant /_/
Check the appropriate box:
/_/ Preliminary Proxy Statement
/_/ Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant toss.240.14a-12
Paragon Technologies, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and O-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule O-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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/_/ Fee paid previously with preliminary materials.
/_/ Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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[GRAPHIC OMITTED]
PARAGON TECHNOLOGIES, INC.
600 Kuebler Road, Easton, Pennsylvania 18040
Telephone (610) 252-3205
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 3, 2005
The Annual Meeting of Stockholders of Paragon Technologies, Inc., a
Delaware corporation (the "Company"), will be held at Pepper Hamilton LLP, 400
Berwyn Park, 899 Cassatt Road, Suite 300, Berwyn, PA 19312 on Wednesday, August
3, 2005, at 9:30 a.m., local time, for the following purposes:
1. To elect five directors to the Board of Directors; and
2. To transact such other business as may properly come before the meeting
or at any adjournments thereof.
Only stockholders of record as of the close of business on June 27, 2005
will be entitled to notice of the Annual Meeting and to vote at the Annual
Meeting and any adjournments thereof. A list of stockholders of the Company
entitled to vote at the meeting will be available for inspection by a
stockholder at the Annual Meeting and during normal business hours at the
Company's corporate offices during the ten-day period immediately prior to the
Annual Meeting.
IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE SIGN AND DATE
THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE PAID
ENVELOPE.
/s/ Ronald J. Semanick
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July 5, 2005 RONALD J. SEMANICK
Easton, Pennsylvania Secretary
[GRAPHIC OMITTED]
PARAGON TECHNOLOGIES, INC.
600 Kuebler Road, Easton, Pennsylvania 18040
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 3, 2005
This Proxy Statement and the accompanying form of proxy are being mailed on
or about July 5, 2005 to the stockholders of Paragon Technologies, Inc. (the
"Company"). They are being furnished in connection with the solicitation by the
Board of Directors of proxies to be voted at the 2005 Annual Meeting of
Stockholders to be held at Pepper Hamilton LLP, 400 Berwyn Park, 899 Cassatt
Road, Suite 300, Berwyn, PA 19312 on Wednesday, August 3, 2005, 9:30 a.m., local
time, and at any adjournments thereof. The cost of such solicitation will be
borne by the Company.
Only the holders of record of the outstanding shares of common stock of the
Company on June 27, 2005 will be entitled to vote at the Annual Meeting. A
stockholder giving a proxy may revoke it at any time by giving written notice of
such revocation to the Secretary of the Company before it is exercised. A proxy
may also be revoked by executing a later proxy or by attending the Annual
Meeting and voting in person, provided written notice of such actions are given
to the Corporate Secretary of the Company before the proxy is exercised.
At the close of business as of the above record date, there were
outstanding and entitled to vote 4,286,785 shares of the Company's common stock.
Each holder of shares entitled to vote has the right to one vote for each share
standing in the holder's name on the books of the Company.
The shares represented by each properly executed proxy will be voted in the
manner specified by the stockholder. If instructions are not given, the shares
will be voted by the persons named in the accompanying proxy for the election of
directors as specified below and in their discretion on any other matters
properly coming before the meeting.
Under Delaware law and the Company's Bylaws, the presence, in person or by
proxy, of stockholders entitled to cast at least a majority of the votes that
all stockholders are entitled to cast will constitute a quorum for the purposes
of the Annual Meeting. Abstentions and broker non-votes will be treated as
present for purposes of determining the presence of a quorum. Directors are
elected by a plurality of the votes cast at the meeting. Accordingly, directions
to withhold authority, abstentions, and broker non-votes will have no effect on
the outcome of the vote for the election of directors.
July 5, 2005
1
QUESTIONS AND ANSWERS
ABOUT THE ANNUAL MEETING
Why am I receiving this proxy statement and proxy card?
You are receiving a proxy statement and proxy card because you own shares
of our common stock. This proxy statement and proxy card relates to the
Company's 2005 Annual Meeting of Stockholders to be held on August 3, 2005 and
at any adjournment of that meeting. This proxy statement describes the matters
on which we would like you, as a stockholder, to vote. It also gives you
information on these matters so that you can make an informed decision.
What information is contained in this proxy statement?
The information included in this proxy statement relates to the election of
five members of the Board of Directors to be voted on at the Annual Meeting,
procedures for voting at the Annual Meeting, and other information required by
federal securities laws.
Who is soliciting my proxy?
The Board of Directors is soliciting your proxy for use at the Annual
Meeting.
What am I voting on?
You are voting for the election of five members of the Board of Directors
and any other matter brought before the meeting in accordance with law and our
bylaws.
Who is entitled to vote?
Holders of shares of common stock outstanding on the Company's books at the
close of business on June 27, 2005, the record date for the Annual Meeting, may
vote. There were 4,286,785 shares of common stock outstanding at that time.
How many votes do I have?
You have one vote for each share of common stock you hold as of the record
date for the Annual Meeting.
What vote is required to elect directors?
The Board of Directors are elected by a plurality of votes, which means
that the five nominees receiving the highest number of votes will serve as
members of the Board of Directors until their successors have been elected and
qualified.
Can I make a nomination?
Not for this Annual Meeting of Stockholders. However, for the 2006 Annual
Meeting of Stockholders, the Nominating Committee will consider nominees for
election to the Board that are timely recommended by stockholders provided that
a complete description of the nominees' qualifications, experience and
background, together with a statement signed by each nominee in which he or she
consents to act as such, accompany the recommendations. Such recommendations
should be submitted in writing to the attention of Chairman, Nominating
Committee, at the Company's address at Paragon Technologies, Inc., 600 Kuebler
Road, Easton, PA 18040, and should not include self-nominations.
Section 2.1.2 of the Company's Bylaws contains provisions setting forth the
requirements applicable to a stockholder nomination for director. These
requirements are summarized in this Proxy Statement under the caption "2006
Stockholder Proposals."
2
QUESTIONS AND ANSWERS
ABOUT THE ANNUAL MEETING
(Continued)
How do I vote?
After carefully reading and considering the information contained in this
proxy statement, you may cast your vote in one of the following ways:
o by completing the accompanying proxy card and returning it in the
enclosed envelope; or o by appearing and voting in person at the Annual
Meeting.
If your shares are held in "street name," which means that your shares are
held in the name of a bank, broker, or other financial institution instead of in
your own name, you must either direct the financial institution as to how to
vote your shares or obtain a proxy from the financial institution to vote at the
Annual Meeting.
What if I don't indicate my voting choices?
If the Company receives your proxy in time to permit its use at the Annual
Meeting, your shares will be voted in accordance with the instructions you
indicate. If you do not indicate instructions and have not indicated otherwise,
your shares will be voted as recommended by Paragon's Board of Directors. More
particularly, your shares will be voted FOR the election of the director
nominees listed in this proxy statement.
How does discretionary voting apply?
The Company is not aware of any matter that will be properly presented for
consideration at the Annual Meeting other than what is described in this proxy
statement. If another matter is properly presented, your shares will be voted on
the matter in accordance with the judgment of the person or persons voting the
proxy.
May I change my vote?
After mailing in your proxy, you may change your vote by following any of
these procedures. If you are a stockholder "of record," meaning that the shares
you own are registered in your name as of June 27, 2005, then to revoke your
proxy, you must do one of the following before the vote is taken at the Annual
Meeting:
o send written notice revoking your proxy to the Corporate Secretary at
Paragon Technologies, Inc., 600 Kuebler Road, Easton, PA 18040; or
o sign and return a proxy with a later date.
If you are not a holder of record but you are a "beneficial holder,"
meaning that your shares are registered in another name (for example, in "street
name"), you must follow the procedures required by the holder of record, which
is usually a brokerage firm, bank, or other financial institution, to revoke a
proxy. You should contact the holder of record directly for more information on
these procedures. In any event, you may not change your vote or revoke your
proxy after the vote is taken at the Annual Meeting.
How do I vote in person?
If you plan to attend the Annual Meeting and wish to vote in person, we
will give you a ballot when you arrive. If your shares are held in "street
name," you must bring a letter from the brokerage firm or bank showing that you
were the beneficial owner of the shares on June 27, 2005, the record date for
determining which of our stockholders are entitled to notice of, and to vote at,
the Annual Meeting, in order to vote at the Annual Meeting. In addition, if you
want to vote your shares that are held in street name, you must obtain a "legal
proxy" from the holder of record and present it at the Annual Meeting.
3
QUESTIONS AND ANSWERS
ABOUT THE ANNUAL MEETING
(Continued)
How does the Board of Directors recommend that I vote?
The Board of Directors recommends that you vote "FOR" each of the director
nominees.
What does it mean if I receive more than one set of proxy materials?
Receiving multiple sets of proxy soliciting materials generally means that
your shares are registered in different ways or are held in more than one
account. Please respond to all of the proxy requests to ensure that all your
shares are voted.
What constitutes a quorum at the Annual Meeting?
A majority of the outstanding shares entitled to vote on a matter, whether
present in person or by proxy, constitutes a quorum for consideration of that
matter at the Annual Meeting. A quorum is necessary for valid action to be taken
on the matter. Your shares will be present by proxy and count towards the quorum
if you give us your proxy by signing, dating, and returning a proxy form. As a
result, it is important that you return your proxy.
Who counts the votes?
Representatives of our Transfer Agent, American Stock Transfer and Trust
Company, will tabulate the votes.
Who pays the costs of soliciting proxies?
The Company will pay all the costs of soliciting management proxies.
Brokerage firms, custodians, nominees, fiduciaries, and other intermediaries are
being asked to forward the proxy soliciting materials to beneficial owners of
the Company's common stock and to obtain their authority to give proxies. The
Company will reimburse these intermediaries for their reasonable expenses upon
request. Alternatively, the Company may engage a proxy solicitation firm to
distribute the proxy soliciting materials. If applicable, the Company will
compensate such proxy soliciting firm for all fees and costs associated with its
distribution of the proxy soliciting materials.
In addition to mailing proxy soliciting materials, the Company's directors,
officers, and regular employees may solicit proxies personally, by telephone, or
by other means. They will not receive additional compensation for these
services, other than normal overtime pay, if applicable. Representatives of the
Company's transfer agent may also solicit proxies.
4
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as of June 27, 2005
(unless otherwise noted) regarding the ownership of common stock (i) by each
person known by the Company to be the beneficial owner of more than five percent
(5%) of the outstanding common stock, (ii) by each director or nominee for
election as a director of the Company, (iii) by the executive officers of the
Company named in the Summary Compensation Table (included elsewhere in this
Proxy Statement), and (iv) by all current executive officers and directors of
the Company as a group. Unless otherwise stated, the beneficial owners exercise
sole voting and/or investment power over their shares.
Right to
Number of Acquire Under
Shares Options Percentage
Beneficially Exercisable of Class
Beneficial Owner (1) Owned Within 60 Days (2)
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Emerald Advisers, Inc. (3)................ 1,290,140 - 30.1%
1703 Oregon Pike
Suite 101
Lancaster, PA 17601
L. Jack Bradt (4)......................... 312,324 10,000 7.5%
580 Riverwoods Way
Bethlehem, PA 18018
Leon C. Kirschner......................... 190,091 50,000 5.5%
Theodore W. Myers (5)..................... 26,200 7,500 *
Anthony W. Schweiger ..................... 30,000 10,000 *
Steven Shulman............................ 169,109 10,000 4.2%
Leonard S. Yurkovic....................... 58,000 7,500 1.5%
Ronald J. Semanick........................ 7,839 17,083 *
Gordon A. Hellberg........................ 1,520 12,000 *
All current directors and
executive officers as a group
(8 persons) (4) (5).................... 795,083 124,083 20.8%
-------------------------------------------
*Represents less than 1%.
(1) Unless otherwise indicated, the address for each stockholder listed on the
table is c/o Paragon Technologies, Inc., 600 Kuebler Road, Easton, PA
18040.
(2) The percentage for each individual, entity or group is based on the
aggregate number of shares outstanding as of June 27, 2005 (4,286,785) and
all shares issuable upon the exercise of outstanding stock options held by
each individual or group that are presently exercisable or exercisable
within 60 days after June 27, 2005.
(3) This information is presented in reliance on information disclosed in a
Schedule 13G/A filed with the Securities and Exchange Commission on
February 2, 2005.
(4) Includes 45,883 shares held by members of Mr. Bradt's immediate family. Mr.
Bradt disclaims beneficial ownership of such shares.
(5) Includes 2,800 shares held by members of Mr. Myers' immediate family. Mr.
Myers disclaims beneficial ownership of such shares.
5
ELECTION OF DIRECTORS
At the meeting, five nominees will stand for election as directors of the
Company to hold office for a period of one year or until their successors have
been elected and qualified.
If the enclosed proxy is duly executed and received in time for the
meeting, the persons named therein will vote the shares represented thereby for
the five persons nominated for election as directors unless authority is
withheld.
If any nominee should refuse or be unable to serve, the proxy will be voted
for such other person as shall be designated by the Board of Directors.
Management has no knowledge that any of the nominees will refuse or be unable to
serve.
Information concerning the nominees for election as directors is set forth
below:
Name, Other Positions or Offices With The Company Director
and Principal Occupation for Past Five Years Since Age
---------------------------------------------------------------------------------- -------- ---
L. Jack Bradt.................................................................... 1958 77
L. Jack Bradt was the founder in 1958 and for 30 years President and CEO of SI
Handling Systems, Inc., renamed Paragon Technologies, Inc. shortly after the
Company acquired Ermanco Incorporated. Mr. Bradt has continued as a director
of the Company since its inception. He is active as a director in a number of
local, state, and national organizations involved in business, education,
human services, and government.
Theodore W. Myers.............................................................. 2002 61
Theodore W. Myers is the Chairman of the Board of the Company since June
2002. Mr. Myers retired from Tucker Anthony Sutro, an investment banking firm,
where he was First Vice President and Branch Manager of the Phillipsburg, NJ
satellite office, where he served from 1991 to 2000.
Anthony W. Schweiger............................................................. 2001 63
Anthony W. Schweiger is President and CEO of The Tomorrow Group, LLC, a
governance and management consultancy. He is also a principal of
e-brilliance, LLC, a software and IT education consultancy. Mr. Schweiger's
business experience includes governance oversight, capital market management,
risk management, technology, and strategic planning. Since 1992, he has been
a director and Governance Chair of Radian Group Inc., a NYSE traded global
provider of credit enhancement products. He also serves on Radian's Audit
and Executive Committees. Since 2004, Mr. Schweiger has been a director and
Audit Chair and Governance Chair of United Financial Mortgage Corp. In his
capacity as a consultant, Mr. Schweiger advises various service and
technology businesses on governance, operational, and strategic issues.
6
Name, Other Positions or Offices With The Company Director
and Principal Occupation for Past Five Years Since Age
---------------------------------------------------------------------------------- -------- ---
Steven Shulman................................................................... 1999 64
Steven Shulman has been an investment banker through his wholly-owned company,
The Hampton Group. Currently, Mr. Shulman is a shareholder and director in a
diversified group of companies, including TNP Enterprises, Inc., Terrace Food
Group, Inc., PlasmaSol Corp., Beacon Capital Partners, Inc., Ark Restaurants
Corp., and CyTerra Corporation. In addition, he serves as Chairman of Terrace
Food Group, Inc. Mr. Shulman serves as Vice Chairman of the Board of Stevens
Institute of Technology. Mr. Shulman was also a director of Ermanco
Incorporated at the time of its acquisition by the Company on September 30,
1999.
Leonard S. Yurkovic.............................................................. 2002 67
Leonard S. Yurkovic returned to the Company as President and CEO in October 2003
and is also the Vice Chairman of the Board of the Company. Mr. Yurkovic
started with the Company in 1979 as Vice President - Finance. Throughout the
1980s, Mr. Yurkovic was appointed to several executive-level positions at the
Company, having been named President and Chief Operating Officer in 1985,
Managing Director of European Operations in 1987, and then President and Chief
Executive Officer in 1988. Mr. Yurkovic originally retired from the Company as
CEO and a member of the Board of Directors in 1999.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
FIVE NOMINEES AS DIRECTORS OF THE COMPANY.
7
ADDITIONAL INFORMATION CONCERNING CERTAIN
DIRECTORS AND COMMITTEES
The Board of Directors performs certain of its functions through
committees. Set forth below is description of the functions of those committees
and the members of the Board serving on such committees.
There are four standing committees of the Board of Directors: the Audit
Committee, the Compensation Committee, the Committee on Strategic Alternatives,
and the Nominating Committee. The following table lists the current members of
each committee:
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Committee on
Audit Compensation Strategic Nominating
Committee Committee Alternatives Committee
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Anthony W. Schweiger (Chair) Steven Shulman (Chair) Theodore W. Myers (Chair) Theodore W. Myers (Chair)
L. Jack Bradt L. Jack Bradt L. Jack Bradt L. Jack Bradt
Theodore W. Myers Anthony W. Schweiger Steven Shulman Anthony W. Schweiger
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Audit Committee
---------------
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing the
financial reports and other financial information provided by the Company to any
governmental body or the public, the Company's systems of internal controls
regarding finance, accounting, legal compliance and ethics that management and
the Board of Directors have established, and the Company's accounting and
financial reporting processes generally. Consistent with this function, the
Audit Committee encourages continuous improvement of, and fosters adherence to
the Company's policies, procedures, and practices at all levels. The Audit
Committee's primary duties and responsibilities are to serve as an independent
and objective party to monitor the Company's financial reporting process and
internal control system, review and appraise the audit efforts of the Company's
independent auditors, and provide an open avenue of communication among the
independent auditors, financial and senior management, and the Board of
Directors. The Audit Committee approves the engagement of the independent
auditors and also approves the scope of the annual audit and any non-audit
services provided by such independent auditors. It reviews with the auditors the
results of the review of the quarterly financial statements, the annual audit,
and the year-end financial statements.
During the fiscal year ended December 31, 2004, the Audit Committee was
comprised of Mr. Bradt, Mr. Schweiger, Mr. Hallenbeck, and Mr. Myers. Mr.
Hallenbeck, a former director of the Company, served on the Audit Committee
until his resignation in March 2004, at which time Mr. Myers became a member of
the Audit Committee. The current members of the Audit Committee are Mr.
Schweiger, Chairman, and Messrs. Bradt and Myers. Each of the members of the
Audit Committee are considered independent within the meaning of the rules of
the American Stock Exchange and the Securities and Exchange Commission. The
Board of Directors has further determined that all of the Audit Committee
members are "financially literate," and that based on Mr. Schweiger's education,
his previous experience as a chief financial officer and chief executive
officer, his participation on other audit committees, and his professional
experience, Mr. Schweiger is an "audit committee financial expert" within the
meaning of the rules of the Securities and Exchange Commission and, therefore,
Mr. Schweiger qualifies as a financially sophisticated audit committee member
within the meaning of the rules of the American Stock Exchange. No member of the
Audit Committee simultaneously serves on the audit committees of more than three
public companies.
8
Compensation Committee
----------------------
The Compensation Committee has adopted a formal written Charter that has
been approved by the Board. The Charter specifies the scope of the Compensation
Committee's responsibilities and procedures for carrying out such
responsibilities. A copy of the Charter is attached as Appendix A to this Proxy
Statement. The Compensation Committee reviews and recommends to the Board of
Directors matters with respect to the remuneration arrangements for officers and
directors of the Company including salaries and other direct compensation and
incentive stock option awards. During the fiscal year ended December 31, 2004,
the Compensation Committee was comprised of Mr. Shulman, Mr. Bradt, Mr.
Hallenbeck, and Mr. Schweiger. Mr. Hallenbeck served on the Compensation
Committee until his resignation in March 2004, at which time Mr. Schweiger
became a member of the Compensation Committee. While Mr. Shulman receives
additional compensation from the Company as the result of his affiliation in a
limited liability corporation that leases the Spring Lake, Michigan facility to
the Company, the Board of Directors believes that Mr. Shulman's financial
insight and expertise makes him an invaluable member of the Compensation
Committee. The Board of Directors has determined that it is in the best
interests of the Company and its stockholders to have Mr. Shulman serve as
Chairman of the Compensation Committee and be considered by the Board of
Directors to be independent for an interim period not to exceed one year from
this Annual Meeting of Stockholders. The current members of the Compensation
Committee are Mr. Shulman, Chairman, and Messrs. Bradt and Schweiger.
Committee on Strategic Alternatives
-----------------------------------
In October 2003, the Board of Directors established the Committee on
Strategic Alternatives. The Committee on Strategic Alternatives'
responsibilities include, but are not limited to such matters as assessing
alternate uses of capital and studying strategic alternatives to enhance
stockholder value. The members of the Committee on Strategic Alternatives are
Mr. Myers, Chairman, and Messrs. Bradt and Shulman.
The Company is currently exploring various business strategies designed to
enhance the value of the Company's assets for its stockholders over the long
term. The Company has retained the investment banking firm, Boenning &
Scattergood, Inc., to advise the Company in evaluating its strategic options.
The Company is continuing to evaluate and actively explore a range of possible
options, including mergers, acquisitions, the possible sale of the Company or
one or more of its divisions. The Company may not be able to effect any of these
strategic options on favorable terms or at all.
Nominating Committee
--------------------
In March 2004, the Board of Directors established the Nominating Committee.
The Nominating Committee has adopted a formal written Charter that has been
approved by the Board. The Charter specifies the scope of the Nominating
Committee's responsibilities and procedures for carrying out such
responsibilities. A copy of the Charter is available on the Company's website,
www.ptgamex.com, and is also attached as Appendix B to this Proxy Statement. The
members of the Nominating Committee are Mr. Myers, Chairman, and Messrs. Bradt
and Schweiger, each of whom is independent, as that term is defined in the
listing standards of the American Stock Exchange.
Prior to the formation of the Nominating Committee in March 2004, the full
Board of Directors performed the functions of a nominating committee with
responsibility for considering appropriate candidates for election as directors.
The Nominating Committee functions include establishing the criteria for
recommending candidates to the Board for nomination; actively seeking candidates
who meet those criteria; and making recommendations to the Board of nominees to
fill vacancies on, or as additions to, the Board.
9
The Nominating Committee has not established specific, minimum
qualification standards for nominees to the Board. From time to time, the
Nominating Committee may identify certain skills or attributes (e.g., material
handling industry experience, technology/ information/data systems experience,
financial experience) as being particularly desirable for specific director
nominees.
In the case of potential independent director candidates, such eligibility
criteria shall be in accordance with Securities and Exchange Commission and
American Stock Exchange rules.
The Nominating Committee will conduct an annual assessment of the
composition of the Board and its committees and review with the Board the
appropriate skills and characteristics required of Board members. The Nominating
Committee does not expect to rely upon third-party search firms to identify
Board candidates. Instead, it expects to rely upon recommendations from a wide
variety of its business contacts, including current executive officers,
directors, community leaders, and stockholders as a source for potential board
candidates.
The Nominating Committee has sole authority to retain and terminate any
search firm to be used to identify director candidates, including sole authority
to approve the search firm, fees, and other retention terms. The Nominating
Committee has not engaged, or paid any fees to, a search firm in connection with
the nomination of any of the directors for election at the Annual Meeting of
Stockholders covered by this Proxy Statement.
The Nominating Committee will consider nominees for election to the Board
that are timely recommended by stockholders provided that a complete description
of the nominees' qualifications, experience and background, together with a
statement signed by each nominee in which he or she consents to act as such,
accompany the recommendations. Such recommendations should be submitted in
writing to the attention of Chairman, Nominating Committee, at the Company's
address at Paragon Technologies, Inc., 600 Kuebler Road, Easton, PA 18040, and
should not include self-nominations.
Section 2.1.2 of the Company's Bylaws contains provisions setting forth the
requirements applicable to a stockholder nomination for director. These
requirements are summarized in this Proxy Statement under the caption "2006
Stockholder Proposals."
Each of the current nominees for director listed under the caption
"ELECTION OF DIRECTORS" is an existing director standing for re-election. In
connection with the 2005 Annual Meeting of Stockholders, the Nominating
Committee did not receive any recommendation for a candidate from any
stockholder or group of stockholders owning more than 5% of the Company's common
stock.
----------------------------------
There were four meetings of the Audit Committee, two meetings of the
Compensation Committee, three meetings of the Committee on Strategic
Alternatives, and one meeting of the Nominating Committee during the year ended
December 31, 2004. Also, the entire Board continues to work together to provide
an expanded and ongoing effort relating to the responsibilities of the Committee
on Strategic Alternatives. The Board of Directors met six times during the year
ended December 31, 2004. Each director attended all of the meetings of the Board
of Directors and committees of the Board of Directors on which he served, with
the exception of Mr. Myers who missed one meeting of the Audit Committee of the
Board of Directors.
Independent directors shall meet in executive session (where no members of
management shall be present) at least once annually.
10
Communication with Directors
----------------------------
The Company's Annual Meeting of Stockholders provides an opportunity each
year for stockholders to ask questions of or otherwise communicate directly with
members of the Company's Board of Directors on matters relevant to the Company.
Each of the Company's directors is requested to personally attend the Annual
Meeting. All of the Company's directors attended the Company's 2004 Annual
Meeting of Stockholders and are expected to attend the 2005 Annual Meeting of
Stockholders. In addition, stockholders may, at any time, communicate in writing
with the Chairman of the Nominating Committee, or non-management directors as a
group, by sending such written communication to the attention of Chairman,
Nominating Committee, at the Company's address at Paragon Technologies, Inc.,
600 Kuebler Road, Easton, PA 18040, (fax (610) 252-3102).
Copies of written communications received at such address will be provided
to the Chairman of the Nominating Committee or the non-management directors as a
group unless such communications are considered, in the reasonable judgment of
the Corporate Secretary, to be improper for submission to the intended
recipient(s). Examples of stockholder communications that would be considered
improper for submission include, without limitation, customer complaints,
solicitations, communications that do not relate directly or indirectly to the
Company or the Company's business, or communications that relate to improper or
irrelevant topics.
----------------------------------
COMPENSATION OF DIRECTORS
Directors who are also employees of the Company receive no additional
remuneration for their services as directors. The Chairman of the Board of
Directors and other non-employee directors receive an annual retainer of $24,000
and $12,000, respectively; a fee of $1,500 for each Board meeting attended; a
fee of $600 per day for all Company-related activities undertaken at the request
of the Chairman of the Board or the Chief Executive Officer of the Company; a
fee of $300 per interview for all Company-related activities undertaken in
connection with interviewing qualified candidates to fill vacancies in key
positions within the Company; and a fee of $250 for each Board Meeting held by
telephone conference.
The Chairman of the Audit Committee receives an annual retainer of $5,000,
and directors are paid for serving on Committees of the Board of Directors.
Committee members receive a fee of $250 for each Committee Meeting held by
telephone conference, a fee of $250 for each Committee Meeting held in
conjunction with a Board Meeting, and a fee of $1,500 for each Committee Meeting
except those held in conjunction with a Board Meeting. Directors are also
reimbursed for their customary and usual expenses incurred in attending Board
and Committee Meetings including those for travel, food, and lodging.
The Company permits its directors, at their election, to defer receipt of
payment of directors' fees. During the year ended December 31, 2004, $3,250 of
directors' fees were deferred. Deferred directors' fees accrue interest at the
prime rate of interest charged by the Company's principal bank or may be
invested in units equivalent to shares of common stock of the Company. During
the year ended December 31, 2004, there were no distributions under the
Directors' Deferred Compensation Plan.
Under the Company's 1997 Equity Compensation Plan, directors are eligible
to receive grants of stock options at the discretion of the Company's Board of
Directors. No grant of stock options were made to any of the directors in 2004.
----------------------------------
11
NOTWITHSTANDING ANYTHING TO THE CONTRARY, THE FOLLOWING REPORTS OF THE AUDIT
COMMITTEE AND THE COMPENSATION COMMITTEE AND THE STOCK PERFORMANCE GRAPH ON PAGE
19 SHALL NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT
INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY FILING UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE EXCHANGE ACT, EXCEPT TO THE
EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE,
AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
----------------------------------
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors assists the Board in
fulfilling its oversight responsibilities. The Board has determined that each of
the members of the Audit Committee is "independent," as that term is defined in
the independence requirements for Audit Committee members contained in the
applicable rules of the Securities and Exchange Commission and standards of the
American Stock Exchange. The Audit Committee acts under a Charter adopted by the
Board. A copy of the Charter is attached to this proxy statement as Appendix C.
Management is responsible for the Company's internal controls and the
financial reporting process. KPMG LLP, the Company's independent auditors, is
responsible for performing an independent audit of the Company's consolidated
financial statements in accordance with U.S. generally accepted auditing
standards and to issue a report thereon. The Audit Committee's responsibility is
to monitor and oversee these processes.
In performing these responsibilities, the Audit Committee reviewed and
discussed the Company's audited consolidated financial statements with
management and KPMG LLP. The Audit Committee discussed with KPMG LLP matters
required to be discussed by the Statement on Auditing Standards No. 61,
"Communication with Audit Committees." KPMG LLP also provided to the Audit
Committee the letter and written disclosures required by Independent Standards
Board Standard No. 1, "Independence Discussions with Audit Committees," and the
Audit Committee discussed with KPMG LLP the matter of the firm's independence.
Based on the review and discussions described above, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2004, as filed with the Securities and Exchange Commission.
Current Members of the Audit Committee:
Anthony W. Schweiger, Chairman
L. Jack Bradt
Theodore W. Myers
Mr. Hallenbeck, a former director of the Company, served on the Audit
Committee until his resignation in March 2004, at which time Mr. Myers became a
member of the Audit Committee.
----------------------------------
12
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is currently comprised of Mr. Shulman, Chairman,
and Messrs. Bradt and Schweiger. Mr. Bradt was formerly the CEO of the Company
until 1987. No executive officer of the Company serves as a member of the Board
of Directors or Compensation Committee of any entity that has one or more
executive officers serving as a member of the Company's Board of Directors or
Compensation Committee.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Philosophy and Practices
It is the Company's policy to offer competitive compensation opportunities
for its employees based on a combination of factors, including corporate
performance and individual contribution to the business consistent with
corporate needs and objectives.
The Compensation Committee of the Company, whose members are identified
above, annually reviews and recommends compensation for the Company's executive
officers to the Board of Directors. The annual compensation review permits an
ongoing evaluation of the link between the Company's performance and its
executive compensation in the context of the compensation programs of other
companies. A portion of executive officers' total compensation is dependent upon
the Company's annual financial performance, including orders, sales, operating
income, earnings per share, and effective management of the Company's
operations.
Salaries for executive officers are determined with reference to a position
rate for each officer. The position rates are determined annually by evaluating
the responsibilities of the position and taking into consideration, among other
things, salaries paid to other executives in comparable positions in comparably
sized companies, levels of experience, and job responsibilities. The
Compensation Committee determines adjustments to executive officer salary based
on the recommendation of the Chief Executive Officer. The salary adjustment
recommendations are based on performance criteria such as financial performance,
strategic decisions, personnel development, individual performance, and
potential of the individual in the job. The Company regards salaries as a base
for compensation and relies on the bonus opportunity and stock options to reward
fairly and to provide an incentive for excellence of service and loyalty.
The Compensation Committee awards bonuses to the Company's executive
officers pursuant to an existing Management Incentive Plan. The bonus amounts
for executive officers are at risk and may vary from year to year. Bonuses are
awarded after the close of each year to the executive officers, based upon the
Company's financial performance, primarily the attainment of orders, sales,
operating income, and earnings per share goals. No executive officer is assured
of any minimum bonus. However, in the event the Company does not reach its
financial objectives, the Board of Directors has discretionary authority to
award bonuses based on an executive officer's individual performance and
personal contribution to the business.
There are three basic elements to executive officer compensation: salary,
bonus, and stock options. The stock option program rewards executive officers
for successful long-term strategic management and enhancement of stockholder
value by providing an opportunity to acquire equity ownership in the Company
stressing both annual and long-term performance and supporting a
performance-oriented environment which allows the Company to attract and retain
qualified management personnel. The Compensation Committee believes equity
ownership in the Company by management aligns the
13
interests of stockholders and management. The Compensation Committee may
grant stock options each year to executive officers and other employees based on
a variety of factors, including the financial performance of the Company and an
assessment of personal contribution. The options are granted with an exercise
price equal to the market price of the Company's common stock on the date of
grant, vest over a period of four years, and expire after five years. The
options provide value to the recipients as the price of the Company's stock
appreciates from the date when the options were granted. Historically, stock
options have been granted based on position rate. The Compensation Committee did
not award any bonuses or grant any stock options in 2004.
CEO Compensation
In October 2003, Mr. Yurkovic was hired as the Company's President and CEO
at a salary of $212,160 per annum. The compensation paid to Mr. Yurkovic was
arrived at through negotiations with Mr. Yurkovic. Mr. Yurkovic's compensation
was set in an effort to provide him with compensation acceptable to an executive
of his caliber and experience based on the Compensation Committee's assessment
of Mr. Yurkovic's ability and dedication to provide the leadership and vision
necessary to enhance the Company's long-term value. The Compensation Committee
believes that, as compared to most other public companies, the salary paid to
Mr. Yurkovic is modest, but generally competitive with like-size companies in
the region. Mr. Yurkovic does not have an employment agreement with the Company.
Salary
------
Subsequent to the year ended December 31, 2004, Mr. Yurkovic's performance
was reviewed by the Compensation Committee and discussed with the Board of
Directors and Mr. Yurkovic. The Compensation Committee determined that a $6,364
or 3% increase in the Chief Executive Officer's base salary to $218,524
effective March 1, 2005 was appropriate in light of the Company's strong balance
sheet, net earnings performance for fiscal 2004, strong backlog at the end of
fiscal 2004, his significant role in the Company's operations, and his efforts
to increase the Company's visibility in the material handling marketplace.
Bonuses and Stock Options
-------------------------
The Compensation Committee did not grant any bonuses or stock options to
Mr. Yurkovic or any other employees during the year ended December 31, 2004.
Conclusion
----------
The Company's executive compensation program is designed to link the
performance of management to accomplishing both short and long-term earnings
goals, building stockholder value, and personal contribution to the business.
The individual elements together provide compensation that is well suited for
the Company. The management team understands the linkage of operating
performance, personal contribution to the business, and their own compensation.
The foregoing constitutes the report of the Compensation Committee of the
Board of Directors for the Company's year ended December 31, 2004.
Respectfully submitted,
COMPENSATION COMMITTEE: Steven Shulman, Chairman
L. Jack Bradt
Anthony W. Schweiger
----------------------------------
14
EXECUTIVE COMPENSATION
Set forth below is certain information relating to compensation received by
the Company's Chief Executive Officer and the other executive officers (the
"Named Executive Officers") of the Company.
Summary Compensation Table
--------------------------
Long
Term
Comp.
Awards
Fiscal Other Annual Stock All Other
Year Salary Bonus Compensation Options Compensation
Name and Position Ended ($)(1) ($) ($)(2) (#)(3) ($)(4)
------------------- -------- -------- ------- ------------ ------- ------------
Leonard S. Yurkovic 12/31/04 $212,160 $ - $9,600 - $28,838
President and 12/31/03 48,960 - 2,215 - 7,894
Chief Executive 12/31/02 - - - 10,000 -
Officer (5)
Leon C. Kirschner 12/31/04 272,328 - 9,600 - 2,050
Chief Operating 12/31/03 260,545 - 9,600 - 2,000
Officer and 12/31/02 272,328 - 8,800 - 2,000
President of
Ermanco
Incorporated
Gordon A. Hellberg 12/31/04 136,927 - 8,991 - 1,040
Vice President - 12/31/03 117,678 - 7,164 - 1,060
Sales and Vice 12/31/02 126,950 - 6,628 - 1,040
President - Sales
of Ermanco
Incorporated (6)
Ronald J. Semanick 12/31/04 119,755 - 9,600 - 4,967
Vice President - 12/31/03 112,236 - 9,969 - 4,843
Finance, Chief 12/31/02 115,000 - 9,600 - 4,452
Financial Officer,
and Treasurer
(1) This column includes employee pre-tax contributions to the Company's
401(k) Retirement Savings Plans.
(2) This column consists of an auto allowance for the business usage of
personal automobiles for Messrs. Yurkovic and Semanick, and also
automobile benefits for Messrs. Kirschner and Hellberg. The monthly auto
allowance is $800.
(3) Options become exercisable in increments of 25% on the anniversary date
of the grant. Thus, at the end of four years the options are fully
exercisable. All options have a term of five years.
(4) This column includes the amounts expensed for financial reporting
purposes for Company contributions to the Company's 401(k) Retirement
Savings Plans pertaining to basic, matching, and profit sharing
contributions for all Named Executive Officers. This column includes
meals and lodging expenses of $20,515 and $6,262 for 2004 and 2003,
respectively, for Mr. Yurkovic while away from his Maryland residence and
working at the Company's headquarters in Easton, Pennsylvania.
(5) Mr. Yurkovic became President and Chief Executive Officer of the Company
in October 2003. His fiscal year 2003 compensation represents
compensation from October 2003 through December 2003.
(6) Mr. Hellberg was appointed Vice President - Sales of the Company on
March 10, 2004. His fiscal year 2004 compensation represents total
compensation for the entire fiscal year 2004.
15
Stock Options Granted to Named Executive Officers During The Year Ended
December 31, 2004.
There were no options for the purchase of the Company's common stock
awarded to the Named Executive Officers during the year ended December 31, 2004.
Stock Options Exercised During The Year Ended December 31, 2004 and Held by
Named Executive Officers as of December 31, 2004.
The following table sets forth certain information regarding options for
the purchase of the Company's common stock that were exercised and/or held by
the Company's Named Executive Officers during the year ended December 31, 2004.
Aggregated Option Exercises in the Year Ended December 31, 2004
and Year-End Option Values
--------------------------
Number of Value of
Shares Covered Unexercised
# of By Unexercised In-The-Money
Shares Options at Options at
Acquired December 31, 2004 December 31, 2004
On Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
------------------- ------------ -------- ----------------- -----------------
Leonard S. Yurkovic - $ - 5,000/5,000 $ 8,900/8,900
Leon C. Kirschner 50,000 (1) 92,188 43,750/6,250 126,875/15,000
Ronald J. Semanick 7,839 (2) 26,229 15,833/1,250 48,572/3,000
Gordon A. Hellberg - - 17,750/1,250 51,788/3,000
(1) On June 23, 2004, Mr. Kirschner acquired 50,000 shares of common stock by
exercising 50,000 options to obtain the shares
(2) On June 23, 2004, Mr. Semanick acquired 7,839 shares of common stock by
exercising 7,839 options to obtain the shares.
Employment Agreement with Leon C. Kirschner
The Company entered into an employment agreement with Leon C. Kirschner, a
former stockholder of Ermanco Incorporated, on October 1, 1999. In accordance
with the employment agreement, Mr. Kirschner was appointed as Corporate Vice
President and a director of the Company and President of Ermanco Incorporated.
On June 25, 2001, Mr. Kirschner was appointed Chief Operating Officer of the
Company. The employment agreement was amended and restated effective August 28,
2002. Terms of the employment agreement include a base salary of $272,328 per
year. The employment agreement entitles Mr. Kirschner to participate in the
Company's Management Incentive Plan that provides for the opportunity to receive
a bonus based upon the achievement of goals as defined for each fiscal year by
the Board of Directors. Effective January 6, 2003, Mr. Kirschner's annual salary
was temporarily reduced by 10% to $245,095 as part of a cost reduction
initiative. Effective June 30, 2003, Mr. Kirschner's annual salary was adjusted
to $258,712 and, effective October 13, 2003, Mr. Kirschner's annual salary was
restored to $272,328. Effective March 1, 2005, Mr. Kirschner's base salary was
increased to $280,500 per year.
Under the terms of the employment agreement, Mr. Kirschner shall perform
his duties and responsibilities at the Company's Spring Lake, Michigan facility
or at such other location in western Michigan as may be established from time to
time by the President and CEO of the Company.
16
The Company has the right to terminate Mr. Kirschner's employment with or
without cause. Cause is defined as any material breach of the employment
agreement, disloyalty to the Company, willful misconduct, and conviction of a
felony or other criminal act. Mr. Kirschner has the right to terminate the
employment agreement voluntarily by giving the Company written notice of such
termination no less than 180 days prior to the effective date of the
termination. The employment agreement may also be terminated upon a change in
control of the Company. The employment agreement provides for severance benefits
that allow Mr. Kirschner to receive his salary for a period of 18 months plus a
lump sum payment in an amount equal to one and one-half times the average of the
bonus paid for the two (2) fiscal years preceding the year in which the
termination becomes effective in the event of termination upon a change of
control. In the event of termination without cause, the employment agreement
also provides for severance benefits that allow Mr. Kirschner to receive his
salary and health insurance coverage for a period of one year following the
effective date of the termination.
Other benefits normally made available by the Company to executive
officers, including participation in a health plan, retirement savings plan, and
receipt of automobile benefits are also made available to Mr. Kirschner under
the employment agreement.
Executive Officer Severance Policy
The Company has an Executive Officer Severance Policy (the "Policy") for
executive officers without an employment agreement, which applies in the event
that an executive officer is terminated by the Company for reasons other than
for cause. Under the Policy, executive officers will receive one week's regular
straight-time pay based on their years of service with the Company in accordance
with the following schedule:
--------------------------------------------------------------------------------------------------
Severance Pay
Years of Service (Weeks)
--------------------------------------------------------------------------------------------------
1 year of service or less 13 Weeks
Greater than 1 year of service, but less than 7 years of service 26 Weeks
Greater than 7 years of service, but less than 14 years of service 39 Weeks
Greater than 14 years of service or CEO of the Company 52 Weeks
--------------------------------------------------------------------------------------------------
During the aforementioned severance payout period, the Company will provide
the executive officer continued medical coverage in accordance with the same
terms offered during employment. The Company will also provide executive
outplacement services for terminated executive officers.
Certain Relationships and Related Transactions
To complete the acquisition of Ermanco on September 30, 1999, the Company
issued $3,000,000 in subordinated promissory notes to the stockholders of
Ermanco, including notes in the amounts of $1,382,861 and $1,001,382 to Steven
Shulman and Leon C. Kirschner, respectively. During 2003, the Company prepaid
all of its outstanding subordinated debt. Mr. Shulman is a director of the
Company, and Mr. Kirschner serves as the President of Ermanco and Chief
Operating Officer of the Company. The notes, with an original term of seven
years, bore interest at an annual rate of 10% through September 30, 2002, and
12% from October 1, 2002 through the prepayment date. Interest on the promissory
notes was payable quarterly, in cash or under certain conditions, in the
Company's common stock upon approval of the Company's Board of Directors.
17
Ermanco's operations are located in a 94,000 square foot steel building in
Spring Lake, Michigan. The building is leased from a limited liability company
that is affiliated with the Company through a common director and officer of the
Company, Messrs. Shulman and Kirschner. The leasing agreement, as amended,
requires fixed monthly rentals of $29,310 (with annual increases of 2.5%). The
terms of the lease require the payment by Ermanco of all taxes, insurance, and
other ownership related costs of the property. The lease, as amended on April 1,
2004, expires on September 30, 2008.
The Company has an employment agreement with Leon C. Kirschner, an officer
of the Company and President of Ermanco Incorporated. The employment agreement
entitles Mr. Kirschner to receive annual compensation during the term of the
employment agreement, participate in a bonus plan, plus usual and customary
fringe benefits associated with being an employee of the Company. Under certain
circumstances, the employment agreement provides for post-termination severance
payments.
----------------------------------
18
STOCK PERFORMANCE CHART
The following graph illustrates the cumulative total stockholder return on
the Company's common stock during the years ended December 31, 2004, December
31, 2003, December 31, 2002, December 31, 2001, and December 31, 2000 with
comparison to the cumulative total return on the AMEX Composite Index, and a
Peer Group of Construction and Related Machinery Companies. This comparison
assumes $100 was invested on December 31, 1999 in the Company's common stock and
in each of the foregoing indexes and assumes reinvestment of dividends.
[GRAPHIC OMITTED]
12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04
-------- -------- -------- -------- -------- --------
Paragon Technologies, Inc. 100 84 92 89 102 104
(1) Peer Group 100 124 128 131 149 188
AMEX Composite Index 100 130 137 147 192 228
-----------------------------------
(1) The self-constructed Peer Group of Construction and Related Machinery
Companies includes: A.S.V., Inc., Bolt Technology Corporation, Columbus
McKinnon Corporation, Industrial Rubber Products, Inc., Lufkin Industries,
Inc., Quipp, Inc., and Tesco Corporation. The total returns of each member
of the Peer Group were determined in accordance with Securities and
Exchange Commission regulations; i.e., weighted according to each such
issuer's stock market capitalization.
19
INDEPENDENT AUDITORS
Selection of the independent auditors is made solely by the Audit
Committee. KPMG LLP ("KPMG") served as the Company's independent auditors for
2004 and 2003. A representative of KPMG is expected to be present at the Annual
Meeting and will have an opportunity to respond to appropriate questions of
stockholders and make a statement if desired to do so.
Fees for all services provided by KPMG for the fiscal years ended December
31, 2004 and 2003 were as follows:
------------------------------------------------------------------------------------------------
Category of Services 2004 2003
------------------------------------------------------------------------------------------------
Audit fees (1) $ 145,000 159,800
Audit-related fees (2) 10,000 10,000
------- -------
Total audit and audit-related fees 155,000 169,800
Tax fees (3) 63,100 80,850
All other fees (4) - -
------- -------
Total fees $ 218,100 250,650
======= =======
------------------------------------------------------------------------------------------------
(1) Audit Fees
----------
This category includes fees for professional services rendered in
connection with the audit of financial statements included in the Company's
Form 10-K and review of financial statements included in the Company's
Forms 10-Q and all other SEC regulatory filings.
(2) Audit-Related Fees
------------------
These services for fees under this category were rendered in connection
with audits of the Company's employee benefit plans.
(3) Tax Fees
--------
The services for fees related to this category include tax compliance and
tax consultation services related to the Company's annual federal and state
tax returns.
(4) All Other Fees
--------------
No other fees were charged by KPMG to the Company in 2004 and 2003 other
than those referenced above.
Fee Approval Policy
-------------------
In accordance with the Company's Audit Committee Charter, the Audit
Committee approves in advance any and all audit services, including audit
engagement fees and terms, and non-audit services provided to the Company by its
independent auditors (subject to the de minimus exception for non-audit services
contained in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934, as
amended), all as required by applicable law or listing standards. The
independent auditors and the Company's management are required to periodically
report to the Audit Committee the extent of services provided by the independent
auditors and the fees associated with these services. Specific services being
provided by the Company's independent auditors are regularly reviewed in
accordance with the pre-approval policy. All services rendered by KPMG are
permissible under applicable laws and regulations, and the Audit Committee
pre-approved all audit, audit-related, and non-audit services performed by KPMG
during 2004.
The Audit Committee expects an increase in audit fees, primarily due to the
audit of internal controls for compliance with the Sarbanes-Oxley Act of 2002.
----------------------------------
20
2006 STOCKHOLDER PROPOSALS
Appropriate stockholder proposals and nominations of directors which are
intended to be presented at the 2006 Annual Stockholders' Meeting must be
received by the Company no later than March 8, 2006, in order to be included in
the 2006 proxy materials.
With respect to stockholder proposals and nominations of directors not
included in the Company's proxy statement, the stockholder must give advance
notice to the Company prior to the deadline for such meeting determined in
accordance with the Bylaws (the "Bylaw Deadline"). Under the Company's Bylaws,
in order to be deemed properly presented, notice must be delivered to the
Secretary of the Company at the principal executive offices of the Company no
less than 90 days nor more than 120 days prior to the first anniversary of the
preceding year's Annual Meeting. If the date of next year's Annual Meeting is
earlier than July 4, 2006 or later than October 2, 2006, however, your written
notice of intent must be delivered between the 120th day before next year's
Annual Meeting and the later of the 90th day before next year's Annual Meeting,
or the 10th day after the Company's first public announcement of next year's
Annual Meeting date. The stockholder's notice must set forth the information
required by the Bylaws.
If the Board of Directors decides to propose, for next year's Annual
Meeting, an increase in the number of directors, the advance notice requirements
will differ from those described above solely with respect to nominations of
individuals for the new position(s) created by the increase if we fail to make a
timely public announcement of the proposal. The Company's public announcement
must be made as described in the Company's Bylaws. To be considered timely, the
Company's first public announcement of such a proposal must be made at least 70
days prior to the first anniversary of the preceding year's Annual Meeting. If
the Company fails to meet the applicable deadline for making a timely public
announcement and you would like to nominate individuals for the new position(s)
created by the increase, you must deliver your written notice of intent by no
later than the 10th day after the Company's first public announcement. Your
written notice of intent may nominate individuals only for new position(s)
created by the increase, and must contain the information required by the
Bylaws.
The Company may utilize discretionary authority conferred by proxy voting
on any proposals not included in the Company's proxy if the stockholder does not
give the Company notice of such matter by May 22, 2006. Proxy proposals are to
be sent to the attention of Corporate Secretary, Paragon Technologies, Inc., 600
Kuebler Road, Easton, PA 18040.
----------------------------------
SECTION 16(a) -- BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who beneficially own more than 10%
of the Company's common stock (collectively, the "reporting persons") to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission and to furnish the Company with copies of these reports. Based on the
Company's records and other information, in 2004 all of the Company's directors
and executive officers met all applicable Section 16(a) filing requirements.
----------------------------------
21
OTHER MATTERS
Expenses of Solicitation
------------------------
The Company may pay brokers, nominees, fiduciaries, or other custodians for
their reasonable expenses in sending proxy materials to, and obtaining
instructions from, persons for whom they hold stock of the Company. The Company
expects to solicit proxies primarily by mail, but directors, officers, and
regular employees of the Company may also solicit in person, by telephone,
telegraph, or telefax.
Code of Conduct
---------------
The Company has a Code of Business Conduct and Ethics which can be viewed
on the Company's website at www.ptgamex.com. The Company requires all employees,
officers, and directors to adhere to this Code in addressing the legal and
ethical issues encountered in conducting their work. The Code of Business
Conduct and Ethics requires that the Company's employees avoid conflicts of
interest, comply with all laws and other legal requirements, conduct business in
an honest and ethical manner, and otherwise act with integrity and in the
Company's best interests. The Company's Code of Business Conduct and Ethics is
intended to comply with Item 406 of the SEC's Regulation S-K and the rules of
the American Stock Exchange.
The Code of Business Conduct and Ethics includes procedures for reporting
violations of the Code, which are applicable to all employees. The
Sarbanes-Oxley Act of 2002 requires companies to have procedures to receive,
retain, and treat complaints received regarding accounting, internal accounting
controls, or auditing matters and to allow for the confidential and anonymous
submission by employees of concerns regarding questionable accounting or
auditing matters. The Code of Business Conduct and Ethics also includes these
required procedures.
Other Items of Business
-----------------------
As of the date of this Proxy Statement, management has no knowledge of any
matters to be presented at the meeting other than those referred to above. If
any other matters properly come before the meeting, the persons named in the
accompanying form of proxy intend to vote such proxy in accordance with their
best judgment.
THE COMPANY WILL PROVIDE WITHOUT CHARGE, ON THE WRITTEN REQUEST OF ANY
STOCKHOLDER, A COPY OF ITS ANNUAL REPORT ON FORM 10-K, FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION FOR THE YEAR ENDED DECEMBER 31, 2004. REQUESTS SHOULD BE
DIRECTED TO THE CORPORATE SECRETARY, PARAGON TECHNOLOGIES, INC., 600 KUEBLER
ROAD, EASTON, PA 18040.
----------------------------------
22
Appendix A
----------
PARAGON TECHNOLOGIES, INC.
BOARD OF DIRECTORS
COMPENSATION COMMITTEE CHARTER
I. PURPOSE
The primary function of the Compensation Committee is to assist the
Board of Directors (the "Board") in fulfilling its oversight responsibilities
with respect to all types of compensation of the directors, officers, and
employees of the Corporation.
The Compensation Committee's compensation policies with respect to the
Corporation's executive officers are based on the principles that compensation
should, to a significant extent, be reflective of the financial performance of
the Corporation, align the interests of the Corporation's management with the
interests of its stockholders, and that a portion of executive officers'
compensation should provide long-term incentives. The Compensation Committee
seeks to have executive compensation set at levels that are sufficiently
competitive so that the Corporation may attract, retain, and motivate high
quality executives to contribute to the Corporation's success. In assessing
overall compensation for executive officers, the Compensation Committee
considers the Corporation's performance and industry position, general industry
data, and the recommendations of third-party consultants.
II. COMPOSITION
The Compensation Committee consists of two or more independent members
of the Board of Directors. Every member of the Compensation Committee shall be
an "outside director" as such term is used in U.S. Internal Revenue Regulation
1.162-27 (e), as modified or supplemented from time to time; provided, that one
(but no more than one) member of the Compensation Committee may be a
non-independent director, provided that the Board determines the appointment of
such non-independent director to the Compensation Committee is in the best
interests of the Corporation and its stockholders, and the Board discloses the
reasons for that determination in the Corporation's next annual proxy statement.
The members of the Compensation Committee shall be elected by the Board
at the annual organizational meeting of the Board and shall serve until their
successors shall be duly elected and qualified. Unless a Chairman of the
Compensation Committee is elected by the full Board, the members of the
Compensation Committee may designate a Chairman of the Compensation Committee by
majority vote of the full Compensation Committee Membership.
III. MEETINGS
The Compensation Committee shall meet at least two times annually, or
more frequently as circumstances dictate. A majority of the members of the
Compensation Committee shall constitute a quorum for the transaction of
business. Minutes of each meeting of the Compensation Committee should be
recorded by the Secretary to the Compensation Committee. Approval by a majority
of the members present at a meeting at which a quorum is present shall
constitute approval by the Compensation Committee.
A-1
The Compensation Committee may also act by unanimous written consent without a
meeting. The Compensation Committee should meet at least annually with the
President and Chief Executive Officer of the Corporation.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Compensation Committee
shall:
A. coordinate the Board's role in establishing performance criteria for
the President and Chief Executive Officer and evaluate his performance annually;
B. review and recommend to the Board the annual salary, bonus, equity
awards, stock options, and other benefits, direct and indirect, of the
Corporation's President and Chief Executive Officer;
C. review the salaries, bonuses, and benefits of the Corporation's
executives, as established by the President and Chief Executive Officer, and,
upon the recommendation of the President and Chief Executive Officer and taking
into consideration such other factors as the Committee believes appropriate,
recommend to the Board equity awards, stock options, and other incentive
compensation for Corporation employees;
D. review and recommend to the Board the terms of any employment
agreement executed by the Corporation with an executive officer of the
Corporation;
E. review and recommend to the Board new executive compensation
programs; review annually the operation of the Corporation's executive
compensation programs to determine whether they are properly coordinated and
achieving their intended purpose(s); establish and periodically review policies
for the administration of executive compensation programs; and take steps to
ensure that the Corporation's executive compensation programs comport with the
Compensation Committee's compensation philosophy stated above;
F. assess succession planning for the Corporation's President and Chief
Executive Officer; and
G. review and recommend to the Board the appropriate structure and
amount of compensation for the members of the Board.
V. REPORTING RESPONSIBILITY
The minutes of the Compensation Committee reflecting, among other
things, all actions taken by the Compensation Committee, shall be distributed to
the Board at the next Board meeting following the meeting of the Compensation
Committee that is the subject of such minutes.
In addition, matters within the responsibility of the Compensation
Committee may be discussed by the full Board from time to time during the course
of the year.
A-2
Appendix B
----------
PARAGON TECHNOLOGIES, INC.
BOARD OF DIRECTORS
NOMINATING COMMITTEE CHARTER
I. ORGANIZATION
Membership
----------
The Nominating Committee shall consist of two or more independent
directors, in accordance with Securities and Exchange Commission
("SEC") and American Stock Exchange ("AMEX") rules. In addition to the
independent directors, if the Nominating Committee consists of three or
more directors, at least two of whom are independent, the Nominating
Committee may include one member who is not independent pursuant to
AMEX rules.
Membership on the Nominating Committee shall be determined annually by
the Board upon the recommendation of the Nominating Committee. Unless a
Chairman of the Nominating Committee is elected by the full Board, the
members of the Nominating Committee may designate a Chairman of the
Nominating Committee by majority vote of the full Nominating Committee
Membership. A Secretary of the Nominating Committee shall be selected
by the Chairman of the Nominating Committee. Should any member of the
Nominating Committee cease to be independent, such member shall
immediately resign his or her membership on the Nominating Committee.
The Board of Directors may remove a member of the Nominating Committee.
In case of a vacancy on the Nominating Committee, the Board may appoint
an independent director to fill the vacancy for the remainder of the
term.
Meetings
--------
The Nominating Committee shall meet at least once each year. Additional
meetings may be scheduled as needed and may be called by the Chairman
of the Nominating Committee. A majority of the members of the
Nominating Committee shall constitute a quorum for the transaction of
business. Minutes shall be recorded by the Secretary to the Nominating
Committee. Approval by a majority of the members present at a meeting
at which a quorum is present shall constitute approval by the
Nominating Committee. The Nominating Committee may also act by
unanimous written consent without a meeting.
II. BASIC FUNCTION AND PURPOSE
The Nominating Committee shall recommend the nomination of Company
directors to be nominated by the Board of Directors for election by the
stockholders. In the case of vacancies to the Board, the Nominating
Committee shall recommend the nomination of directors to be elected by
the Board.
III. RESPONSIBILITIES
The Nominating Committee, in consultation with the Chairman of the
Board and the Chief Executive Officer, shall:
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1. Review and make recommendations on the range of skills and
expertise which should be represented on the Board, and the
eligibility criteria for individual Board and committee
membership. In the case of potential independent director
candidates, such eligibility criteria shall be in accordance
with SEC and AMEX rules.
2. Review and recommend to the Board the appropriate structure of
the Board.
3. Identify and recommend potential candidates for election or
re-election to the Board.
4. Develop policies and procedures for consideration of Board
nominees recommended by stockholders.
5. Have sole authority to retain and terminate any search firm to
be used to identify director candidates, including sole
authority to approve the search firm, fees, and other
retention terms.
6. Review and recommend to the Board the appropriate structure of
Board committees, recommend committee assignments, and the
position of chairman of each committee. Review and make
recommendations to the Board on the Company's efforts to
promote diversity among directors.
7. Have authority to delegate any of its responsibilities to
subcommittees or individuals as the Nominating Committee deems
appropriate.
8. Have authority to obtain advice and assistance from internal
and external legal, accounting, or other advisors.
9. Review and reassess the adequacy of this Charter annually and
recommend any proposed changes to the Board for approval.
10. Annually evaluate its own performance.
The Nominating Committee's authority and responsibilities shall not
deprive the right to determine nominations where that right legally
belongs to a third party.
IV. REPORTING RESPONSIBILITY
All action taken by the Nominating Committee shall be reported to the
Board at the next Board meeting following such action.
In addition, nomination matters may be discussed in executive session
with the full Board during the course of the year.
B-2
Appendix C
----------
PARAGON TECHNOLOGIES, INC.
BOARD OF DIRECTORS
AUDIT COMMITTEE CHARTER
I. PURPOSE
The primary function of the Audit Committee is to assist the
Board of Directors in fulfilling its oversight responsibilities by reviewing: 1)
the financial reports and other financial information provided by the
Corporation to any governmental body or the public; 2) the Corporation's systems
of internal controls regarding finance, accounting, legal compliance and ethics
that management and the Board have established; and 3) the Corporation's
accounting, financial and business reporting processes generally. Consistent
with this function, the Audit Committee should encourage continuous improvement
of, and should foster adherence to, the Corporation's policies, procedures, and
practices at all levels. The Audit Committee's primary duties and
responsibilities are to:
A. Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal control systems.
B. Review and appraise the audit efforts of the Corporation's
independent auditors.
C. Provide an open avenue of communication among the independent
auditors, financial and senior management, and the Board of Directors.
The Audit Committee does not plan or conduct audits, nor does
it determine that the Corporation's financial statements and disclosures are
complete, accurate and in accordance with U.S. generally accepted accounting
principles and applicable rules and regulations. These functions are the
responsibility of Corporation management and the independent auditor.
The Audit Committee will primarily fulfill these
responsibilities by carrying out the activities enumerated in Section IV of this
Charter.
II. COMPOSITION
The Audit Committee shall be comprised of three or more
directors as determined by the Board, each of whom shall (i) be free from any
relationship that, in the opinion of the Board, would interfere with the
exercise of his or her independent judgment as a member of the Audit Committee,
(ii) meet the independence requirements of Section 10A(m)(3) of the Securities
and Exchange Act of 1934 (the "Exchange Act") and the rules and regulation of
the Commission, (iii) meet the independence and financial literacy requirements
of the listing standards of the American Stock Exchange, as modified or
supplemented from time to time. If a member of the Audit Committee ceases to be
independent in accordance with the requirements of the Exchange Act and the
corresponding provisions of the listing standards of the American Stock Exchange
for reasons outside the member's reasonable control, that person, with prompt
notice to the Exchange, may remain an audit committee member in accordance with
the listing standards of the American Stock Exchange. All members of the Audit
Committee shall be able to read and understand fundamental financial statements,
including balance sheets, income statements, and cash flow statements, and at
least one member of the Audit Committee shall be financially sophisticated as
defined in the listing standards of
C-1
the American Stock Exchange. Audit Committee members may enhance their
familiarity with finance and accounting by participating in educational programs
conducted by the Corporation or an outside consultant. Audit Committee members
shall not simultaneously serve on the audit committees of more than two other
public companies.
The members of the Audit Committee shall be elected by the
Board at the annual organizational meeting of the Board and shall serve until
their successors shall be duly elected and qualified. Unless a Chairman of the
Audit Committee is elected by the full Board, the members of the Audit Committee
may designate a Chairman of the Audit Committee by majority vote of the full
Committee Membership.
III. MEETINGS
The Audit Committee shall meet at least four times annually,
or more frequently as circumstances dictate. A majority of the members of the
Audit Committee shall constitute a quorum for the transaction of business.
Minutes of each meeting of the Audit Committee should be recorded by the
Secretary to the Audit Committee. Approval by a majority of the members present
at a meeting at which a quorum is present shall constitute approval by the Audit
Committee. The Audit Committee may also act by unanimous written consent without
a meeting. As part of its job to foster open communication, the Audit Committee
should meet at least annually with management and the independent auditors in
separate executive sessions to discuss any matters that the Audit Committee or
each of these groups believe should be discussed privately. In addition, the
Audit Committee or at least its Chairman, or his designee, should meet with the
independent auditors and management quarterly to review the Corporation's
financials consistent with IV.4. below. The Audit Committee may request any
officer or employee of the Corporation or the Corporation's outside counsel or
independent auditor to attend a meeting of the Audit Committee or to meet with
any members of, or consultants to, the Audit Committee.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Audit
Committee shall:
Documents/Reports Review
------------------------
1. Review and update this Charter periodically, at least
annually, as conditions dictate.
2. Review the Corporation's annual financial statements and
any reports or other financial information submitted to any governmental body,
or the public, including any certification, report, opinion, or review rendered
by the independent auditors.
3. Review with financial management and the independent
auditors the Form 10-Q and Form 10-K prior to its filing or prior to the release
of earnings. The Chairman of the Audit Committee, or his designee, may represent
the entire Audit Committee for purposes of this review.
4. Discuss with management the Corporation's earnings press
releases, including the use of "pro forma" or "adjusted" non-GAAP information,
as well as financial information and earnings guidance provided to analysts and
rating agencies. Such discussion may be done generally (consisting of discussing
the types of information to be disclosed and the types of presentations to be
made).
C-2
5. Review disclosures made to the Audit Committee by the
Corporation's CEO and CFO during their certification process for the Form 10-K
and Form 10-Q about any significant deficiencies in the design or operation of
internal controls or material weaknesses therein and any fraud involving
management or other employees who have a significant role in the Corporation's
internal controls.
Independent Auditors
--------------------
6. The Audit Committee shall have the sole authority to
appoint or replace the independent auditor (subject, if applicable, to
stockholder ratification). The Audit Committee shall be directly responsible for
the compensation and oversight of the work of the independent auditor (including
resolution of disagreements between management and the independent auditor
regarding financial reporting) for the purpose of preparing or issuing an audit
report or related work. The independent auditor shall report directly to the
Audit Committee.
7. The Audit Committee shall pre-approve all auditing
services and permitted non-audit services (including the fees and terms thereof)
to be performed for the Corporation by its independent auditor, subject to the
de minimus exceptions for non-audit services described in Section 10A(i)(1)(B)
of the Exchange Act which are approved by the Audit Committee prior to the
completion of the audit. The Audit Committee may form and delegate authority to
subcommittees consisting of one or more members when appropriate, including the
authority to grant pre-approvals of audit and permitted non-audit services,
provided that decisions of such subcommittee to grant pre-approvals shall be
presented to the full Audit Committee at its next scheduled meeting.
8. Review and discuss reports from the independent auditors
on:
a. All critical accounting policies and practices
to be used.
b. All alternative treatments of financial
information within U.S. generally accepted accounting
principles that have been discussed with management, ramifications of the use of
such alternative disclosures and treatments, and the treatment preferred by the
independent auditor.
c. Other material written communications between
the independent auditor and management, such as any
management letter or schedule of unadjusted differences.
9. Review the independence, performance, and qualifications
of the independent auditors at least annually. As part of such review, the Audit
Committee shall obtain and review a report from the independent auditors at
least annually regarding:
a. the independent auditors' internal
quality-control procedures,
b. any material issues raised by the most recent
internal quality-control review, or peer review, of
the firm, or by any inquiry or investigation by governmental or professional
authorities within the preceding five years respecting one or more independent
audits carried out by the firm, and
c. any steps taken to deal with any such issues.
C-3
10. Require the independent auditors to submit annually to
the Audit Committee a formal written statement, delineating all relationships
between the independent auditors and the Corporation in accordance with
Independence Standards Board (ISB) Standard No. 1. Actively engage in a dialogue
with the independent auditors about any relationships or services that could
impact their objectivity and independence. Take appropriate action in response
to the independent auditors' report regarding their independence.
11. Periodically consult with the independent auditors, out
of the presence of management, about internal controls and the fullness and
accuracy of the Corporation's financial statements.
12. Ensure the rotation of the lead (or coordinating) audit
partner having primary responsibility for the audit and the audit partner
responsible for reviewing the audit as required by law.
13. Recommend to the Board policies for the Corporation's
hiring of employees or former employees of the independent auditor who
participated in any capacity in the audit of the Corporation.
Financial Reporting Processes
-----------------------------
14. In consultation with the independent auditors, review the
integrity of the Corporation's financial reporting processes, both internal and
external.
15. Consider the independent auditors' judgments about the
quality and appropriateness of the Corporation's accounting principles as
applied in its financial reporting.
16. Consider and approve, if appropriate, major changes to
the Corporation's auditing and accounting principles and practices as suggested
by the independent auditors or management.
Process Improvement and Business Controls
-----------------------------------------
17. Establish regular and separate systems of reporting to
the Audit Committee by each of management and the independent auditors regarding
any significant judgments made in management's preparation of the financial
statements, and the view of each as to appropriateness of such judgments.
18. Following completion of the annual audit, review
separately with each of management and the independent auditors any significant
difficulties encountered during the course of the audit, including any
restrictions on the scope of work or access to required information.
19. Review any significant disagreement among management and
the independent auditors in connection with the preparation of the financial
statements.
20. Review with the independent auditors and management the
extent to which changes or improvements in financial or accounting practices, as
approved by the Audit Committee, have been implemented. (This review should be
conducted at an appropriate time subsequent to implementation of changes or
improvements, as decided by the Audit Committee.)
21. Establish regular and separate systems of reporting to
the Audit Committee by management regarding controls and operations of the
Corporation's business units with particular emphasis on risk and profitability.
C-4
22. Establish procedures for the receipt, retention and
treatment of complaints received by the Corporation regarding accounting,
internal accounting controls or auditing matters, and the confidential,
anonymous submission by employees of concerns regarding questionable accounting
or auditing matters.
Ethical and Legal Compliance
----------------------------
23. Establish, review, and update periodically a Code of
Business Conduct and Ethics, and ensure that management has established a system
to enforce this Code.
24. Review management's monitoring of the Corporation's
compliance with the Corporation's Code of Business Conduct and Ethics, and
ensure that management has the proper review system in place to ensure that
Corporation's financial statements, reports, and other financial information
disseminated to governmental organizations and the public satisfy legal
requirements.
25. Review with the Corporation's counsel, legal compliance
matters, including corporate securities trading policies.
26. Review with the Corporation's counsel, any legal matter
that could have a significant impact on the Corporation's financial statements.
27. Perform any other activities consistent with this
Charter, the Corporation's Bylaws and governing law, as the Audit Committee or
the Board deems necessary or appropriate.
28. The Audit Committee shall have the authority, to the
extent it deems necessary or appropriate, to retain independent legal,
accounting, or other advisors. The Corporation shall provide for appropriate
funding, as determined by the Audit Committee, for payment of compensation to
the independent auditor for the purpose of rendering or issuing an audit report
and to any advisors employed by the Audit Committee.
29. Review and approve any transactions between the
Corporation and its officers, directors, or 5% stockholders which would be
reportable in the Corporation's proxy statement.
V. REPORTING RESPONSIBILITY
The minutes of the Audit Committee reflecting, among other
things, all actions taken by the Audit Committee, shall be distributed to the
Board at the next Board meeting following the meeting of the Audit Committee
that is the subject of such minutes.
The Audit Committee shall prepare the report required by the
rules of the Securities and Exchange Commission to be included in the
Corporation's annual proxy statement.
In addition, matters within the responsibility of the Audit
Committee may be discussed by the full Board from time to time during the course
of the year.
C-5
ANNUAL MEETING OF STOCKHOLDERS OF
PARAGON TECHNOLOGIES, INC.
August 3, 2005
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
Please detach along perforated line and mail in the envelope provided.
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The Board of Directors recommends a vote "FOR" the Election of Directors.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE |X|
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1. ELECTION OF DIRECTORS 2. In their discretion, the Proxies are authorized
to vote upon such other matters as may properly
NOMINEES: come before the meeting or at any adjournments
/__/ FOR ALL NOMINEES /__/ L. Jack Bradt thereof.
/__/ Theodore W. Myers
/__/ Anthony W. Schweiger PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY CARD
/__/ WITHHOLD AUTHORITY /__/ Steven Shulman PROMPTLY USING THE ENCLOSED ENVELOPE.
FOR ALL NOMINEES /__/ Leonard S. Yurkovic
/__/ FOR ALL EXCEPT
(See instructions below)
INSTRUCTION: To withhold authority to vote for any individual nominee(s),
----------- mark "FOR ALL EXCEPT" and fill in the circle next to each
nominee you wish to withhold as shown here: / X /
---
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MARK "X" HERE IF YOU PLAN TO ATTEND THE MEETING. /_/
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To change the address on your account, please check the box at
right and indicate your new address in the address space above.
Please note that changes to the registered name(s) on the account
may not be submitted via this method. /__/
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---------------- ---------- ---------------- ----------
Signature of Stockholder Date: Signature of Stockholder Date:
---------------- ---------- ---------------- ----------
NOTE: Please sign exactly as your name appears on this Proxy. When shares are held jointly, each holder should sign.
When signing as executor, administrator, attorney, trustee or guardian, please give full title as such.
If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such.
If signer is a partnership, please sign in partnership name by authorized person.
PARAGON TECHNOLOGIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Theodore W. Myers and Ronald J.
Semanick, or either of them acting in the absence of the other, as proxy
holders, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated on the reverse side, all shares of
common stock of Paragon Technologies, Inc., held of record by the undersigned on
June 27, 2005, at the Annual Meeting of Stockholders to be held on August 3,
2005, at 9:30 a.m., local time, or at any adjournments thereof.
This proxy when properly executed will be voted in the manner directed
on the reverse side. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF DIRECTORS. This proxy may be voted, in the discretion of the proxy
holders, upon such other business as may properly come before the Annual Meeting
of Stockholders or any adjournments thereof. The Board of Directors does not
presently know of any other matters to be presented at the meeting.
Please vote and sign on the other side. No postage is required if this
proxy is returned in the enclosed envelope and mailed in the United States.
(Continued and to be signed on the reverse side)