-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HmSE1bF2k+2Ze4w75rmgKqMQhvxb51BDUvqKN4kPwAf2NhIe7Okui7WtgVQK3dp0 V26DGy2+4shgPJMFbtjc5A== /in/edgar/work/20000705/0000090045-00-000015/0000090045-00-000015.txt : 20000920 0000090045-00-000015.hdr.sgml : 20000920 ACCESSION NUMBER: 0000090045-00-000015 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20000705 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PARAGON TECHNOLOGIES INC CENTRAL INDEX KEY: 0000090045 STANDARD INDUSTRIAL CLASSIFICATION: [3530 ] IRS NUMBER: 221643428 STATE OF INCORPORATION: PA FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-40834 FILM NUMBER: 667863 BUSINESS ADDRESS: STREET 1: 600 KUEBLER ROAD CITY: EASTON STATE: PA ZIP: 18040 BUSINESS PHONE: 6102527321 MAIL ADDRESS: STREET 1: P O BOX 70 CITY: EASTON STATE: PA ZIP: 18040 FORMER COMPANY: FORMER CONFORMED NAME: SI HANDLING SYSTEMS INC DATE OF NAME CHANGE: 19920703 S-3 1 0001.txt REGISTRATION STATEMENT As filed with the Securities and Exchange Commission on July 5, 2000 Registration No. 333- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 --------------- FORM S-3 REGISTRATION STATEMENT under THE SECURITIES ACT OF 1933 --------------- PARAGON TECHNOLOGIES, INC. (Exact Name of Registrant as Specified in Charter)
PENNSYLVANIA 3535 22-1643428 (State or other jurisdiction of (Primary standard industrial (IRS employer identification incorporation or organization) classification code no.) number)
600 Kuebler Road Easton, Pennsylvania 18040 (610) 252-7321 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) ---------------- Ronald J. Semanick Chief Financial Officer Paragon Technologies, Inc. 600 Kuebler Road Easton, Pennsylvania 18040 (610) 252-7321 (Name, address, including zip code, and telephone number, including area code, of agent for service) COPY TO: Jeffery P. Libson, Esquire Pepper Hamilton LLP 1235 Westlakes Drive, Suite 400 Berwyn, Pennsylvania 19312-2401 (610) 640-7800 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [_] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [_]
Proposed Proposed Maximum Maximum Title of Each Class Amount Offering Price Aggregate Amount of of Securities to be Registered to be Registered Per Security(1) Offering Price(1) Registration Fee ------------------------------ ---------------- --------------- ----------------- ---------------- Common Stock, $1.00 par value 148,784 $7.59375 $1,129,829.00 $299.00 (1) Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(c) under the Securities Act based upon the average of the high and low prices of our Common Stock on the American Stock Exchange on July 3, 2000.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. Subject to Completion, dated July 5, 2000 PROSPECTUS PARAGON TECHNOLOGIES, INC. 148,784 SHARES OF COMMON STOCK This prospectus relates to the resale of common stock that we issued and will issue to the selling stockholders listed on page 11. We will not receive any proceeds from the sale of the shares by the selling stockholders. The selling stockholders, or their pledgees, donees, transferees or other successors in interest, may offer the common stock through public or private transactions, at prevailing market prices, at prices related to prevailing market prices or at privately negotiated prices. Our common stock is listed on the American Stock Exchange under the symbol "PTG." On July 3, 2000 the reported last sale price of our common stock on the American Stock Exchange was $7.50 per share. --------------- INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 3. --------------- The Securities and Exchange Commission and state securities regulators have not approved or disapproved these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. TABLE OF CONTENTS Page Who We Are....................................................................3 Risk Factors..................................................................3 Special Note Regarding Forward-Looking Statements............................10 Use of Proceeds..............................................................10 Selling Stockholders.........................................................10 Plan of Distribution.........................................................11 Legal Matters................................................................13 Experts......................................................................13 Additional Information.......................................................13 You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. We are offering to sell shares of common stock and seeking offers to buy shares of common stock, only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of common stock. 2 WHO WE ARE Paragon Technologies, Inc. formerly known as SI Handling Systems, Inc., provides a variety of material handling and conveyor systems through our SI Systems division and our wholly owned subsidiary, Ermanco Incorporated. Our SI Systems division is a systems integrator supplying automated, integrated materials handling systems to manufacturing, order selection, and distribution operations. The systems are designed, sold, manufactured, installed, and serviced by our staff or their agents, generally as labor-saving devices to improve productivity and reduce costs. SI Systems' products are utilized to automate the movement or selection of products and are often integrated with the automated equipment, such as conveyors and robots. These systems involve both standard and specially designed components and include integration of non-proprietary automated handling technologies so as to provide solutions for our customers' unique materials handling needs. SI Systems' develops and designs computer control programs required for the efficient operation of the systems. Our wholly owned subsidiary, Ermanco Incorporated, is a manufacturer of light to medium duty unit handling conveyor products, serving the material handling industry through local independent distributors in North America. Ermanco also provides complete conveyor systems for a variety of applications, including distribution and manufacture of computers and electronic products, utilizing primarily Ermanco's manufactured conveyor products, engineering services by its own staff, or subcontracted, and subcontracted installation services. Ermanco supplies material handling systems and equipment to both national and international markets. They offer services ranging from the delivery of basic transportation conveyors to turnkey installations of complex, fully automated work-in-process production lines and distribution centers, utilizing sophisticated, custom-designed controls software. We have also entered into two joint ventures. SI/BAKER, INC. is a joint venture with McKesson Automated Prescription Systems, Inc. which designs and installs computer controlled, fully automated, integrated systems for managed care pharmacy and automated refill center operations. SI-Egemin N.V. is a joint venture with a Belgian company. SI-Egemin N.V. targets the horizontal transport segment of the worldwide materials handling systems market, with the exception of certain territorial exclusions. RISK FACTORS You should carefully consider the risks described below, along with the other information contained or incorporated by reference in this prospectus, before making an investment decision. The risks described below are not the only ones facing our company. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. Our business, financial condition or results of operations could be materially adversely affected by any of these risks. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment. This offering memorandum also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks faced by us described below and elsewhere in this offering memorandum. You should not rely on our past results to predict our future performance because our operating results may fluctuate. 3 Our historical operating results may not be accurate indicators of our future performance. Our operating results have been subject to significant quarterly and annual fluctuations in the past, and we expect these fluctuations to continue in the future. For example, in the ten-month period ended December 31, 1999, we experienced a substantial net loss. Factors that may contribute to these fluctuations in the future include: o fluctuations in capital spending domestically and internationally in one or more industries in which we sell our products; o changes in product mix and pricing by us, our suppliers or our competitors; o timing of receipt and magnitude of orders; o management of costs incurred in completing projects; o availability of components and raw materials for our products; o new product introductions by us or by our competitors; o our failure to manufacture a sufficient volume of products in a timely and cost-effective manner; o our failure to anticipate the changing product requirements of our customers; o a lack of market acceptance of our products or a shift in demand for our products; o changes in the mix of sales by distribution channels; o changes in the spending patterns of our customers; and o extraordinary events such as litigation or acquisitions. During the ten months ended December 31, 1999 we experienced cost overruns on several contracts for which we recognized approximately $8,700,000 in sales with $11,700,000 in related costs of sales. Additional cost overruns in the future would negatively effect our financial performance. Sales of our products depend on the capital spending habits of our customers, which tend to be cyclical. Automated, integrated handling systems using our products can range in price from $75,000 to several million dollars. Accordingly, purchases of our products represent a substantial capital investment by our customers, and our success depends directly on their capital expenditure budgets. We are dependent upon a limited number of large contracts from large domestic corporations and the federal government. This dependence can cause unexpected fluctuations in sales volume. Our future operations may be subject to substantial fluctuations as a consequence of domestic and foreign economic conditions, industry patterns and other factors effecting capital spending. In the quarter ended March 31, 2000 we experienced a decline in sales across all SI Systems product lines, with the majority of the decrease relating to sales of the Cartrac, Lo-Tow, and Order Selection product lines. We cannot estimate when or if a sustained revival in the markets for our Cartrac, Lo-Tow, and Order Selection product lines will occur. If we are unable to increase sales of our higher margin products, our gross profit margins may be adversely affected. Domestic or international recessions or a downturn in one or more of our major markets, such as the electronics, telecommunications, semiconductor, appliance, pharmaceutical, food processing or automotive components industries, and resulting cutbacks in capital spending would have a direct, material adverse impact on our business. 4 Any problems we encounter integrating Ermanco into our business could increase our expenses and adversely affect our operating results. We recently completed the acquisition of Ermanco, a manufacturer of automated conveyor systems. This acquisition will require us to integrate two geographically separated companies that previously operated independently. We have limited experience with integration of acquired companies. We may encounter difficulties integrating our product offerings and operations with those of Ermanco. In addition, we may not be able to successfully market Ermanco's products or develop any new products as a result of the acquisition. Any problems related to the integration of Ermanco could result in suppliers, distributors, or customers of Ermanco canceling or otherwise terminating their arrangements with Ermanco. If we fail to achieve the product, marketing, distribution, and other operational benefits and efficiencies we originally anticipated in the merger, we will have overpaid for the acquisition without offsetting benefits. In addition, our future financial performance would be impaired. Our inability to complete or integrate future acquisitions effectively could harm our future growth. From time to time, we may consider the acquisition of companies or technologies that management believes may complement or extend our current products, businesses, or technologies. In the last three years, we have made some acquisitions of various sizes, including the recent acquisition of Ermanco. In the future, we may make material acquisitions of, or large investments in, other businesses that offer products, services, and technologies that management believes will further our strategic objectives. Any future acquisitions or investments we might make would present risks commonly associated with these types of transactions, including: o difficulty in combining the technology, operations, or work force of the acquired business; o failure to achieve anticipated operating savings; o disruptions of our on-going businesses; o restructuring charges will be greater than anticipated; o difficulties in realizing our potential financial and strategic position through the successful integration of the acquired business; o difficulty in maintaining uniform standards, controls, procedures, and policies; o potential negative impact in results of operation due to amortization of goodwill or other intangible assets acquired; and o the diversion of management attention. The risks described above, either individually or in the aggregate, could materially impair our business, operating results, and financial condition. Many of the key components and materials of our products come from a limited number of suppliers and their procurement requires lengthy lead times. We obtain many key components and materials and some significant mechanical subsystems from a limited number of suppliers. We have no guaranteed supply arrangements with these suppliers. In addition, some of our components and mechanical subsystems incorporated into our products have long procurement lead times. Our reliance on these suppliers involves several significant risks, including the following: o loss of control over the manufacturing process; o potential absence of adequate supplier capacity; 5 o potential inability to obtain an adequate supply of required components, materials or mechanical subsystems; and o reduced control over manufacturing yields, costs, timely delivery, reliability and quality of components, materials and mechanical subsystems. If any significant supplier were unable or unwilling to manufacture the components, materials or mechanical subsystems we need in the volumes we require, we would have to identify and qualify acceptable replacements. The process of qualifying suppliers may be lengthy, and additional sources may not be available to us on a timely basis, on acceptable terms, or at all. If supplies of these items were not available from our existing suppliers and a relationship with an alternative supplier could not be developed in a timely manner, shipments of our products could be interrupted, and we could be required to reengineer our products. In the past, we have experienced delays in filling customer orders due to the failure of certain suppliers to meet schedule requirements. Problems of this type with our suppliers may occur in the future. Disruption or termination of our supply sources could require us to seek alternative sources of supply, and could delay our product shipments and damage relationships with current and prospective customers. Any of these events could result in an increase in our expenses and reduction in our revenues and could result in a net loss. If we incorrectly forecast product mix for a particular period and we are unable to obtain sufficient supplies of any components or mechanical subsystems on a timely basis due to long procurement lead times, our business, financial condition and results of operations would be substantially impaired. Moreover, if demand for a product for which we have purchased a substantial amount of components fails to meet our expectations, we would be required to write off the excess inventory. A prolonged inability to obtain adequate timely deliveries of key components would also impair our business and results of operations. We face intense competition, which could harm our business and results of operations. There are many entities, both public and private, including larger, better capitalized domestic and international competitors, engaged in developing materials handling systems for applications similar to those targeted by us. Developments by these or other entities may render our products under development non-competitive or obsolete. Many of these companies have substantially greater resources than we have. Competitors may succeed in developing products that are more effective and less costly than any that may be developed by us and also may prove to be more successful in the manufacture and marketing of products. The markets in which we compete are highly competitive. We compete with a number of different manufacturers, both domestically and abroad, with respect to each of our products and services. Some of our competitors have greater financial and other resources than we do. Our ability to compete depends on factors both within and outside our control, including: o the timing and success of our newly developed products; o the timing and success of newly developed products by our competitors; o product availability, performance and price; o product brand recognition; and o distribution and customer support. These factors could possibly limit our ability to compete successfully. We may not be able to keep up with the rapid pace of technological change and new product development that characterizes the materials handling industry. 6 The materials handling industry is characterized by rapid technological change and new product introductions and enhancements. Our ability to remain competitive and our future success depends greatly upon the technological quality of our products and processes relative to those of our competitors. We must continue to develop new and enhanced products and to introduce these new products at competitive prices and on a timely and cost-effective basis. We may not be successful in selecting, developing and manufacturing new products or in enhancing our existing products on a timely basis or at all. Our new or enhanced products may not achieve market acceptance. If we cannot successfully develop and manufacture new products, timely enhance our existing technologies, or meet customers' technical specifications for any new products, our products could lose market share, our revenues and profits could decline, and we could experience operating losses. New technology or product introductions by our competitors could also cause a decline in sales or loss of market share for our existing products or force us to significantly reduce the prices of our existing products. From time to time, we have experienced and will likely continue to experience delays in the introduction of new products. We have also experienced and may continue to experience technical and manufacturing difficulties with introductions of new products and enhancements. Any failure by us to develop, manufacture and sell new products in quantities sufficient to offset a decline in revenues from existing products or to manage product and related inventory transitions successfully could harm our business. Our success in developing, introducing, selling and supporting new and enhanced products depends upon a variety of factors, including timely and efficient completion of hardware and software design and development, timely and efficient implementation of manufacturing processes and effective sales, marketing and customer service. Because of the complexity of our products, significant delays may occur between a product's initial introduction and commencement of our volume production. We depend on key personnel and may not be able to retain these employees or recruit additional qualified personnel, which would harm our business. We are highly dependent upon the continuing contributions of our key management, sales, and product development personnel. In addition, the loss of the services of any of our senior managerial, technical or sales personnel could materially adversely affect our business, financial condition, and results of operations. We do not maintain key man life insurance on the lives of any of our key personnel. Our future success also heavily depends on our continuing ability, to attract, retain, and motivate highly qualified managerial, technical and sales personnel. Competition for qualified technical personnel in the materials handling industry is intense. Our inability to recruit and train adequate numbers of qualified personnel on a timely basis would adversely affect our ability to design, manufacture, market and support our products. Our success is dependent upon the management skills of William R. Johnson, the Company's President and Chief Executive Officer and other members of our senior management team. The loss of any of these individuals or an inability to attract and retain additional personnel could adversely affect our business, financial condition and results of operations. We may face costly intellectual property infringement claims. On a few occasions, we have received communications from third parties asserting that we are infringing certain patents and other intellectual property rights of others or seeking indemnification against the alleged infringement. As claims arise, we evaluate their merits. Any claims of infringement brought by third parties could result in protracted and costly litigation, in our paying damages for infringement, and in the need for us to obtain a license relating to one or more of our products or current or future technologies. Such a license may not be available on commercially reasonable terms or at all. Litigation, which could result in substantial cost to us and diversion of our resources, may be necessary to enforce our patents or other intellectual property rights or to defend us against claimed infringement of the rights of others. Any intellectual property litigation and the failure to obtain necessary licenses or other rights could have a material adverse effect on our business, financial condition and results of operations. Our failure to protect our intellectual property and proprietary technology may significantly impair our competitive advantage. Third parties may infringe or misappropriate our copyrights, trademarks and similar proprietary rights. We cannot be certain that the steps we have taken to prevent the misappropriation of our intellectual property are 7 adequate, particularly in foreign countries where the laws may not protect our proprietary rights as fully as in the United States. We rely on a combination of patent, copyright and trade secret protection and nondisclosure agreements to protect our proprietary rights. However, we cannot be certain that patent and copyright law and trade secret protection will be adequate to deter misappropriation of our technology, that any patents issued to us will not be challenged, invalidated or circumvented, that the rights granted thereunder will provide competitive advantages to us, or that the claims under any patent application will be allowed. We may be subject to or may initiate interference proceedings in the United States Patent and Trademark Office, which can demand significant financial and management resources. The process of seeking patent protection can be time consuming and expensive, and there can be no assurance that patents will issue from currently pending or future applications or that our existing patents or any new patents that may be issued will be sufficient in scope or strength to provide meaningful protection or any commercial advantage to us. We may in the future initiate claims or litigation against third parties for infringement of our proprietary rights in order to determine the scope and validity of our proprietary rights or the proprietary rights of our competitors. These claims could result in costly litigation and the diversion of our technical and management personnel. Our software products may contain defects that could harm our reputation and future business prospects. New or existing software products or enhancements may contain errors or performance problems when first introduced, when new versions or enhancements are released or even after such products or enhancements have been used in the marketplace for a period of time. Despite our testing, product defects may be discovered only after a product has been installed and used by customers. Errors and performance problems may be discovered in future shipments of our products. These errors could result in expensive and time consuming design modifications or large warranty charges, damage customer relationships and result in loss of market share, any of which could harm our reputation and future business prospects. We rely on distributors to sell many of Ermanco's products. We believe that our ability to sell Ermanco's products through distributors will continue to be important to our success. A substantial portion of our sales are to distributors that specialize in material handling equipment. Our relationships with distributors are generally not exclusive, and some of our distributors may expend a significant amount of effort or give higher priority to selling products of our competitors. In the future, any of these distributors may discontinue their relationships with us or form additional competing arrangements with our competitors. Although to date none of our distributors has accounted for a material percentage of our net revenues, the loss of, or a significant reduction in revenues from, distributors to which we sell a significant amount of our product could have a material adverse effect on our results of operations. As we enter new geographic and applications markets, we must locate distributors to assist us in building sales in those markets. We may not be successful in obtaining effective new distributors or in maintaining sales relationships with them. If a number of our distributors experience financial problems, terminate their relationships with us or substantially reduce the amount of our products they sell, or if we fail to build an effective systems integrator channel in any new markets, our revenues and operating results would be materially adversely affected. Our presence in international markets exposes us to risk. We anticipate that international sales will continue to account for a portion of our net revenues; however, we cannot assure you that international sales will increase or that the current level of international sales will be sustained. Net revenues from international sales, including sales to Canada, have accounted for a portion of net revenues. As a result, our operating results are subject to the risks inherent in international sales and purchases, which include the following: o different regulatory requirements; o political and economic changes and disruptions; 8 o transportation delays; o foreign currency fluctuations; o export/import controls; o tariff regulations; o higher freight rates; o greater difficulty in accounts receivable collection; and o potentially adverse tax consequences. In addition, duty, tariff and freight costs can materially increase the cost of crucial components for our products. Foreign exchange fluctuations may render our products less competitive relative to locally manufactured product offerings, or could result in foreign exchange losses. Moreover, because substantially all of our foreign sales are denominated in United States dollars, increases in the value of the dollar relative to the local currency would increase the price of our products in foreign markets and make our products relatively more expensive and less price competitive than competitors' products that are priced in local currencies. Any of these factors may result in a reduction in our revenues, a decrease in our earnings, or in our incurring operating or net losses. Volatility of raw material prices could harm our profitability. The principal raw material used by us in our operations is steel. The steel industry as a whole is cyclical, and steel prices can be volatile due to numerous factors beyond our control. This volatility can significantly affect our raw material costs. Our ability to pass any steel price increases on to our customers will be determined by competitive conditions. We are subject to various environmental laws and regulations. Like many manufacturing companies, we are subject to various federal, state and local environmental laws, including, but not limited to, those governing air emissions, water discharges, and the storage, handling, disposal and remediation of hazardous substances. We have in the past and will likely in the future incur expenditures in order to ensure compliance with such environmental laws. Due to the possibility of unanticipated factual or regulatory developments, the amount and timing of future environmental expenditures could vary substantially from those currently anticipated. Moreover, certain of our facilities have been in operation for many years and, over such time, we have generated and disposed of wastes which are or may be considered hazardous. Accordingly, although we have undertaken considerable efforts to comply with applicable environmental laws, it is possible that environmental requirements or facts not currently known will require unanticipated efforts and expenditures which cannot be currently quantified. We may be subject to product liability claims, which may harm our business, financial condition and results of operations regardless of the outcome. On a few occasions, we have received communications from third parties asserting that our products have caused bodily injury to others. Product liability claims can be expensive, difficult to defend and may result in large judgments or settlements against us. In addition, third party collaborators and licensees may not protect us from product liability claims. Although we maintain product liability insurance, claims could exceed the coverage obtained. A successful product liability claim in excess of our insurance coverage could harm our business, financial condition and results of operations. In addition, any successful claim may prevent us from obtaining adequate product liability insurance in the future on commercially desirable terms. Even if a claim is not successful, defending such a claim may be time-consuming and expensive. 9 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Some of the statements in the sections entitled "Summary," "Risk Factors," "Use of Proceeds," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and elsewhere in this offering memorandum constitute forward-looking statements. These statements involve known and unknown risks, uncertainties, and other factors that may cause our or our industry's results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements. Such factors include, among others, those listed under "Risk Factors" and elsewhere in this offering memorandum. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "intend," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential," or "continue" or the negative of such terms or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, events, levels of activity, performance, or achievements. We do not assume responsibility for the accuracy and completeness of the forward-looking statements. We do not intend to update any of the forward-looking statements after the date of this offering memorandum to conform them to actual results. USE OF PROCEEDS All common stock is being sold by the selling stockholders or by their pledgees, donees, transferors or other successors in interest. We will not receive any proceeds from the sale by any selling stockholders of common stock. SELLING STOCKHOLDERS We issued 481,284 shares of common stock in connection with our acquisition of Ermanco Incorporated on September 30, 1999. In addition, we will issue shares of our common stock as payment of interest payable to the holders of notes in the principal amount of $3,000,000 issued in connection with the acquisition of Ermanco Incorporated. Interest is payable quarterly, in arrears, at a rate equal to ten percent per annum. Interest payments are made on the last day of March, June, September and December. Each of the selling stockholders, except Steven Shulman, has been an employee of our wholly owned subsidiary, Ermanco Incorporated. Steven Shulman serves as one of our directors and Leon C. Kirschner serves as our Corporate Vice President, President of Ermanco Incorporated and one of our directors. We do not know when or in what amounts the selling stockholders may offer shares for sale. The selling stockholders may, or may not, sell all or any of the shares offered by this prospectus. Because the selling stockholder may offer all or some of the shares pursuant to this offering, and because there are currently no agreements, arrangements or understandings with respect to the sale of any of the shares that will be held by the selling stockholder after completion of the offering, we cannot estimate the number of the shares that will be held by the selling stockholders after completion of the offering. However, for purposes of this table, we have assumed that, after completion of the offering, none of the shares covered by this prospectus will be held by the selling stockholder. The following table sets forth, to our knowledge, certain information regarding the beneficial ownership of the shares of common stock by the selling stockholders as of July 3, 2000. Beneficial ownership is calculated based upon SEC requirements and is not necessarily indicative of beneficial ownership for any other purpose. Unless otherwise indicated below, each stockholder named in this table has sole voting and investment power with respect to all shares beneficially owned. The presentation is based on 4,194,869 shares of our common stock outstanding as of July 3, 2000: 10
Shares Shares Beneficially Owned Beneficially Owned Prior to Offering Number of After Offering ------------------------ Shares Being ------------------ Name of Selling Stockholder Number Percentage Offered(1) Number Percent - --------------------------- ------- ---------- ------------ ------- ------- Steven Shulman............................. 226,459 5.40 4,609 221,850 5.29 Leon C. Kirschner.......................... 163,987 3.91 3,337 160,650 3.83 Thomas C. Hubbell.......................... 28,859 * 28,859 0 0 Lee F. Schomberg........................... 28,179 * 28,179 0 0 Guy G. Hollister........................... 9,166 * 9,166 0 0 Wilton W. Wyman, Jr........................ 8,827 * 8,827 0 0 Gordon A. Hellberg......................... 6,111 * 6,111 0 0 Andrew Knaut............................... 4,413 * 4,413 0 0 Thomas L. Bergy............................ 4,073 * 4,073 0 0 Robert R. Nezbeth.......................... 4,073 * 4,073 0 0 Donald H. Kloosterhouse.................... 3,395 * 3,395 0 0 James J. Bronsema.......................... 2,716 * 2,716 0 0 John R. Planteroth......................... 678 * 678 0 0 William C. Pipp............................ 339 * 339 0 0 --- - --- - - Total...................................... 491,275 11.71 108,775 382,500 9.12 - ------------------------------------------------ * Less than one percent. (1)The number of shares being offered does not include shares to be issued in the future as interest payments. - ------------------------
We prepared this table based on the information supplied to us by the selling stockholders named in the table. PLAN OF DISTRIBUTION The shares covered by this prospectus may be offered and sold from time to time by the selling stockholders. The term "selling stockholders" includes pledgees, donees, transferees or other successors in interest selling shares received after the date of this prospectus from the selling stockholders as a pledge, gift or other non-sale related transfer. To the extent required, we may amend and supplement this prospectus from time to time to describe a specific plan of distribution. The selling stockholders will act independently of Paragon Technologies, Inc. in making decisions with respect to the timing, manner and size of each sale. The selling stockholders may make these sales at prices and under terms then prevailing or at prices related to the then current market price. The selling stockholders may also make sales in negotiated transactions, including pursuant to one or more of the following methods: - purchases by a broker-dealer as principal and resale by such broker- dealer for its own account pursuant to this prospectus; - ordinary brokerage transactions and transactions in which the broker solicits purchasers; - block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; 11 - an over-the-counter distribution in accordance with the rules of the American Stock Exchange; and - in privately negotiated transactions. In connection with distributions of the shares or otherwise, the selling stockholders may: - enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the shares in the course of hedging the positions they assume; - sell the shares short and redeliver the shares to close out such short positions; - enter into option or other transactions with broker-dealers or other financial institutions which require the delivery to them of shares offered by this prospectus, which they may in turn resell; and - pledge shares to a broker-dealer or other financial institution, which, upon a default, they may in turn resell. In addition, the selling stockholders may sell any shares that qualify for sale pursuant to Rule 144 of the Securities Act of 1933, as amended, under Rule 144 rather than pursuant to this prospectus. In effecting sales, broker-dealers or agents engaged by the selling stockholders may arrange for other broker-dealers to participate. Broker-dealers or agents may receive commissions, discounts or concessions from the selling stockholders, in amounts to be negotiated immediately prior to the sale. In offering the shares covered by this prospectus, the selling stockholders, and any broker-dealers and any other participating broker-dealers who execute sales for the selling stockholders may be deemed to be "underwriters" within the meaning of the Securities Act in connection with these sales. Any profits realized by the selling stockholders and the compensation of such broker-dealer may be deemed to be underwriting discounts and commissions. In order to comply with the securities laws of certain states, the shares must be sold in those states only through registered or licensed brokers or dealers. In addition, in certain states the shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with. We have advised the selling stockholders that the anti-manipulation rules of Regulation M under the Securities Exchange Act of 1934, as amended, may apply to sales of shares in the market and to the activities of the selling stockholders and their affiliates. In addition, we will make copies of this prospectus available to the selling stockholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling stockholders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act. At the time a particular offer of shares is made, if required, we will distribute a prospectus supplement that will set forth: - the number of shares being offered; - the terms of the offering, including the name of any underwriter, dealer or agent; - the purchase price paid by any underwriter; 12 - any discount, commission and other underwriter compensation; - any discount, commission or concession allowed or reallowed or paid to any dealer; and - the proposed selling price to the public. We have agreed to indemnify the selling stockholders against certain liabilities, including certain liabilities under the Securities Act. We have agreed with the selling stockholders to keep the registration statement of which this prospectus constitutes a part effective until the earlier of (i) such time as all of the shares covered by this prospectus have been disposed of pursuant to the registration statement, or (ii) the first anniversary of the effective date of this prospectus, plus any periods during which the selling stockholders were not permitted to sell the shares covered by this prospectus. LEGAL MATTERS The validity of Paragon Technologies, Inc.'s securities offered hereby will be passed upon for Paragon Technologies, Inc. by Pepper Hamilton LLP, Berwyn, Pennsylvania. EXPERTS The financial statements of Paragon Technologies, Inc. (formerly, SI Handling Systems, Inc.) as of December 31, 1999 and for the ten months ended December 31, 1999 and for the years ended February 28, 1999 and March 1, 1998, have been incorporated by reference herein and in the registration statement in reliance upon the report of KPMG LLP, independent certified public accountants, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. ADDITIONAL INFORMATION A registration statement on Form S-3 with respect to the shares offered hereby (together with any amendments, exhibits and schedules thereto) has been filed with the Securities and Exchange Commission under the Securities Act. This prospectus does not contain all of the information contained in such registration statement on Form S-3, certain portions of which have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission. For further information with respect to Paragon Technologies, Inc. and the shares offered hereby, reference is made to the registration statement on Form S-3. Statements contained in this prospectus regarding the contents of any contract or any other documents are not necessarily complete and, in each instance, reference in hereby made to the copy of such contract of document filed as an exhibit to the registration statement on Form S-3. The registration statement may be inspected without charge at the Securities and Exchange Commission's principal office in Washington D.C., and copies of all of any part thereof may be obtained from the Public Reference section, Securities and Exchange Commission, Washington D.C., 20549, upon payment of prescribed fees. We also file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission. You may read and copy any reports, statements or other information we file at the Securities and Exchange Commission public reference rooms located at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661 and 7 World Trade Center, Suite 1300, New York, NY 10048. 13 Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the public reference rooms. Our filings are also available to the public from commercial document retrieval services and at the web site maintained by the Securities and Exchange Commission at http://www.sec.gov. The Securities and Exchange Commission allows us to incorporate by reference information into this prospectus, which means that we can disclose important information to you by referring you to another document filed separately with the Securities and Exchange Commission. The information incorporated by reference is deemed to be part of this prospectus, except for any information superseded by information in this prospectus. This prospectus incorporates by reference the documents set forth below that we have previously filed with the Securities and Exchange Commission. These documents contain important information about us, our business and our finances. The documents that we are incorporating by reference are: 1. Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2000; 2. Our Annual Report on Form 10-K for the ten months ended December 31, 1999 as amended; and 3. The description of our common stock contained in the Registration Statement on Form 8-A filed with the Securities and Exchange Commission on March 8, 2000. Any documents which we file pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus but before the end of any offering of securities made under this prospectus will also be considered to be incorporated by reference. If you request, either orally or in writing, we will provide you with a copy of any or all documents which are incorporated by reference. We will provide such documents to you free of charge, but will not include any exhibits, unless those exhibits are incorporated by reference into the document. You should address written requests for documents to Ronald J. Semanick, Chief Financial Officer, Paragon Technologies, Inc., 600 Kuebler Road, Easton, Pennsylvania 18040, (610) 252-7321. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our 10-Q, 8-K and 10-K reports to the Securities and Exchange Commission. Also note that we provide a cautionary discussion of risks and uncertainties relevant to our business in the "Risk Factors" section of this prospectus. These are factors that we think could cause our actual results to differ materially from expected results. Other factors besides those listed here could also adversely affect us. This discussion is provided as permitted by the Private Securities Litigation Reform Act of 1995. 14 Part II Information Not Required In Prospectus Item 14. Other Expenses of Issuance and Distribution The following table shows the estimated expenses of the issuance and distribution of the securities offered hereby: SEC registration fee........................................$ 299.00 Legal fees and expenses..................................... 10,000.00 Accounting fees and expenses................................ 5,000.00 Miscellaneous fees and expenses............................. 2,000.00 -------- TOTAL .............................................$ 17,299.00 All of the amounts shown are estimates except for the Securities and Exchange Commission registration fee. Item 15. Indemnification of Directors and Officers Subchapter D of Chapter 17 of the PBCL provides in general that a corporation may indemnify any person, including its directors, officers and employees, who was or is a party or is threatened to be made a party to any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative (including actions by or in the right of the corporation) by reason of the fact that he or she is or was a representative of or serving at the request of the corporation, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with the action or proceeding if he or she is determined by the board of directors, or in certain circumstances by independent legal counsel to the shareholders, to have acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal proceeding, had no reason to believe his conduct was unlawful. In the case of actions by or in the right of the corporation, indemnification is not permitted in respect of any claim, issue or matter as to which the person has been adjudged to be liable to the corporation except to the extent a court determines that the person is fairly and reasonably entitled to indemnification. In any case, to the extent that the person has been successful on the merits or otherwise in defense of any claim, issue or matter, he or she shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him or her in connection therewith. Subchapter D of Chapter 17 also provides that the indemnification permitted or required thereby is not exclusive of any other rights to which a person seeking indemnification may be entitled. Section 7.02 of Paragon Technologies, Inc.'s Bylaws provides for the indemnification, to the full extent authorized by the Pennsylvania Business Corporation Law, of any person made, or threatened to be made, a party to an action or proceeding, whether criminal, civil, administrative or investigative, by reason of the fact that such person, his testator or intestate, is or was a director, officer or employee of Paragon or any predecessor of Paragon, or serves or served any other enterprise as a director, officer or employee at the request of Paragon or any predecessor of Paragon provided, however, that no indemnification shall be made in any case where the act or failure to act giving rise to the claim for indemnification is determined by a court to have constituted willful misconduct or recklessness. II-1 Item 16. List of Exhibits The exhibits filed as part of this registration statement are as follows:
Exhibit Description - ---------------- ----------------------------------------------------------------------------------------------------- 5.1* Opinion of Pepper Hamilton LLP regarding legality of securities being registered 10.1* Form of Registration Rights Agreement 10.2(1) Stock Purchase Agreement, dated as of August 6, 1999 among SI Handling Systems, Inc., Ermanco Incorporated, and the Stockholders of Ermanco Incorporated 23.1* Consent of KPMG LLP 23.2* Consent of Pepper Hamilton LLP (included in its Opinion filed as Exhibit 5.1 hereto) 24.1* Powers of Attorney (included on signature page) * Filed herewith (1) Incorporated by reference to exhibits filed with the registrant's Quarterly Report on Form 10-Q for the Quarter Ended August 29, 1999
Item 17. Undertakings The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. Provided, however, that paragraph (1)(i) and 1(ii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. The Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in successful defense of any action, II-2 suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in Easton, Pennsylvania on July 5, 2000. Paragon Technologies, Inc. By /s/ William R. Johnson ------------------------------------- William R. Johnson President and Chief Executive Officer POWER OF ATTORNEY Pursuant to the requirements of the Securities Exchange Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. Each person whose signature appears below in so signing also makes, constitutes and appoints Ronald J. Semanick and William R. Johnson, and each of them acting alone, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to execute and cause to be filed with the Securities and Exchange Commission any and all amendments and post-effective amendments to this Registration Statement and a related registration statement that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, and in each case to file the same, with all exhibits thereto and other documents in connection therewith, and hereby ratifies and confirms all that said attorney-in-fact or his substitute or substitutes may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
Signature Title Date - ---------------------------------------- --------------------------------------------------- --------------------------- /s/ Elmer D. Gates Chairman of the Board of Directors July 5, 2000 - ------------------ Elmer D. Gates /s/ William R. Johnson President, Chief Executive Officer and Director July 5, 2000 - ---------------------- (Principal Executive Officer) William R. Johnson /s/ Ronald J. Semanick Vice President, Chief Financial Officer and July 5, 2000 - ---------------------- Treasurer (Principal Financial and Accounting Ronald J. Semanick Officer) /s/ Leon C. Kirschner Corporate Vice President, President of Ermanco July 5, 2000 - --------------------- Incorporated and Director Leon C. Kirschner /s/ L. Jack Bradt Director July 5, 2000 - ----------------- L. Jack Bradt /s/ Michael J. Gausling Director July 5, 2000 - ----------------------- Michael J. Gausling /s/ Steven Shulman Director July 5, 2000 - ------------------ Steven Shulman
II-4 Exhibit Index
Exhibit Description - ---------------- ----------------------------------------------------------------------------------------------------- 5.1* Opinion of Pepper Hamilton LLP regarding legality of securities being registered 10.1* Form of Registration Rights Agreement 10.2(1) Stock Purchase Agreement, dated as of August 6, 1999 among SI Handling Systems, Inc., Ermanco Incorporated, and the Stockholders of Ermanco Incorporated 23.1* Consent of KPMG LLP 23.2* Consent of Pepper Hamilton LLP (included in its Opinion filed as Exhibit 5.1 hereto) 24.1* Powers of Attorney (included on signature page) * Filed herewith (1) Incorporated by reference to exhibits filed with the registrant's Quarterly Report on Form 10-Q for the Quarter Ended August 29, 1999
II-5 EX-5.1 2 0002.txt REGISTRATION STATEMENT ON FORM S-3 EXHIBIT 5.1 ----------- July 5, 2000 Paragon Technologies, Inc. 600 Kuebler Road PO Box 70 Easton, PA 18044-0070 Re: Registration Statement on Form S-3 ---------------------------------- Ladies and Gentlemen: We have acted as counsel to Paragon Technologies, Inc., a Pennsylvania corporation (the "Company"), in connection with the registration under the Securities Act of 1933, as amended (the "Act"), an aggregate of 148,784 shares of the Company's Common Stock, $1.00 par value (the "Common Stock"), 98,784 of which (the "Purchase Agreement Shares") have been issued in connection with a Stock Purchase Agreement (the "Purchase Agreement") among the Company, Ermanco Incorporated and the Stockholders of Ermanco Incorporated (the "Selling Shareholders"), and 9,991 shares of Common Stock issued to the Selling Shareholders pursuant to the terms of Subordinated Promissory Notes (the "Interest Shares"), and an additional 40,009 shares of Common Stock which may be issued to the Selling Shareholders pursuant to the terms of Subordinated Promissory Notes (the "Future Shares" and, together with the Purchase Agreement Shares and the Interest Shares, the "Shares"). The opinion is delivered in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Act. We have examined originals or copies, certified or otherwise identified to our satisfaction, of (i) the Registration Statement on Form S-3 (the "Registration Statement"); (ii) the Purchase Agreement; (iii) the Subordinated Promissory Notes (iv) a registration rights agreement between the Company and each of the Selling Shareholders; (v) the Company's Certificate of Incorporation and Bylaws, as in effect on the date hereof; (vi) certain resolutions of the Board of Directors of the Company relating to, among other things, the issuance of the Shares; and (vii) such other documents relating to the Company and the proposed issuance of the Shares as we have deemed necessary or appropriate as a basis for the opinions set forth below. In our examination, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such latter documents. As to any facts material to the opinions expressed herein which were not independently established or verified, we have relied upon statements and representations of officers and other representatives of the Company and others. Members of our firm are admitted to the Bar of the Commonwealth of Pennsylvania, and we express no opinion as to the laws of any other jurisdiction other than the Federal laws of the United States of America. Based upon and subject to the foregoing, we are of the opinion that the Purchase Agreement Shares and the Interest Shares have been duly and validly issued and are fully-paid and non-assessable by the Company under the Pennsylvania Business Corporation Law and that when issued and delivered in accordance with the terms of the Subordinated Promissory Notes, the Future Shares will be duly and validly issued, fully paid and nonassessable by the Company under the Pennsylvania Business Corporation Law. Paragon Technologies, Inc. July 5, 2000 Page 2 We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to this firm under the caption "Legal Matters" in the prospectus filed as part of the Registration Statement. In giving this consent, we do not hereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act. This opinion is furnished by us, as your counsel, in connection with the filing of the Registration Statement and, except as provided in the immediately preceding paragraph, is not to be used, circulated, quoted or otherwise referred to for any other purpose without our express written permission or relied upon by any other person. Very truly yours, /S/ PEPPER HAMILTON LLP PEPPER HAMILTON LLP EX-10.1 3 0003.txt REGISTRATION RIGHTS AGREEMENT EXHIBIT 10.1 ------------ REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of June , 2000, by and among PARAGON TECHNOLOGIES, INC., (formerly known as SI Handling Systems, Inc.), a Pennsylvania corporation, with headquarters located at 600 Kuebler Road, Easton, Pennsylvania 18040 (the "Company"), and the individuals identified on Exhibit A attached hereto (the "Investors"). WHEREAS: A. The Company issued an aggregate of 481,284 shares of the Company's common stock (the "Common Stock") pursuant to the Stock Purchase Agreement dated as of August 6, 1999 among SI Handling Systems, Inc., Ermanco Incorporated ("Ermanco") and the Investors (the "Stock Purchase Agreement"). B. The Company executed certain promissory notes in the original aggregate principal amount of $3,000,000, each dated September 30, 1999 (the "Promissory Notes") in favor of the Investors, pursuant to which the Company is obligated to make payments of interest on a quarterly basis. The Company may elect to make the interest payment in shares of Common Stock, provided however, that the Company agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder as amended or supplemented from time to time, or any successor thereto (the "1933 Act"), and applicable state securities laws, subject to the conditions contained herein; C. In connection with the Stock Purchase Agreement, the Company agreed to provide certain piggyback registration rights under the 1933 Act, and applicable state securities laws, subject to the conditions contained herein; D. The Company and the Investors are entering into this Agreement to set forth the terms and conditions under which the Company will file and maintain the effectiveness of a shelf registration statement for the Registrable Securities. NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Company and the Investors hereby agree as follows: 1. DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings unless the context shall otherwise require: a. "register," "registered," and "registration" refer to a registration effected by preparing and filing a Registration Statement or Statements in compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any successor rule providing for offering securities on a continuous basis ("Rule 415"), and the declaration or ordering of effectiveness of such Registration Statement by the United States Securities and Exchange Commission (the "SEC"). b. "Registrable Securities" means the Shares and any shares of capital stock issued or issuable as a dividend on or in exchange for or otherwise with respect to any of the foregoing. c. "Registration Period" means the period beginning on the date on which the initial Registration Statement filed under this Agreement is declared effective by the SEC and ending on the date which is the earlier of: (i) the date on which all of the Registrable Securities have been sold pursuant to any Registration Statement, whether filed pursuant to this Agreement or otherwise; and (ii) the first date on which public sale of any of the Registrable Securities is permitted pursuant to Rule 144 or any other rule or regulation permitting public sale without registration under the 1933 Act (in any case, as amended or supplemented, or any successors thereto). d. "Registration Statement" means a registration statement of the Company under the 1933 Act. e. "Shares" means the Common Stock issued pursuant to the Stock Purchase Agreement and the interest paid to the Investors as shares of Common Stock. 2. REGISTRATION. The Company shall use its commercially reasonable ------------ efforts to effect the registration of all of the Registrable Securities under the 1933 Act on a Registration Statement on Form S-3, to obtain effectiveness of the Registration Statement filed to effect such registration as soon as reasonably practicable thereafter, and to continue to use such commercially reasonable efforts to maintain such effectiveness for the Registration Period, subject to the provisions of Sections 4 and 5 hereof. Notwithstanding anything herein to the contrary, the Company shall have no obligation to file a Registration Statement or maintain the effectiveness of a Registration Statement if it is, or at any time becomes, ineligible to use short form registration on Form S-3. 3. REGISTRATION PROCEDURES. In connection with the registration of ----------------------- the Registrable Securities, pursuant to Section 2, the Company shall: a. prepare and file with the SEC a Registration Statement with respect to the Registrable Securities, as expeditiously as is reasonably practicable, and thereafter use its commercially reasonable efforts to cause such Registration Statement to become effective as soon as reasonably practicable after such filing, and keep the Registration Statement effective pursuant to Rule 415 until the expiration of the Registration Period; b. use its commercially reasonable efforts to prepare and file with the SEC such amendments (including post-effective amendments) and supplements to the Registration Statement and the prospectus used in connection with the Registration Statement as may be necessary to keep the Registration Statement effective at all times during the Registration Period, and, during such period, comply with the Company's obligations under the provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company covered by the Registration Statement until such time as all of such Registrable Securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in the Registration Statement; c. furnish to the Investors (i) promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company, one copy of the Registration Statement and any amendment thereto, each preliminary prospectus and prospectus and each amendment or supplement thereto, and (ii) such number of copies of a prospectus, including a preliminary prospectus, and all amendments and supplements thereto and such other documents in the Company's possession as the Investors may reasonably request in order to facilitate the disposition of the Registrable Securities owned by the Investors; d. use commercially reasonable efforts to register or qualify the Registrable Securities covered by the Registration Statement under such other securities or "blue sky" laws of such jurisdictions in the United States, to the extent required pursuant to such laws, and as the Investors who hold an interest in the Registrable Securities being offered reasonably request, provided, however, that the Company shall not for any purpose be required in connection therewith or as a condition thereto to (i) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), (ii) subject itself to general taxation in any such jurisdiction, (iii) file a general consent to service of process in any such jurisdiction, (iv) provide any undertakings that cause the Company undue expense or burden, or (v) make any change in its charter or bylaws, which in each case the Board of Directors of the Company determines to be contrary to the best interests of the Company and its shareholders; e. as promptly as practicable after becoming aware of such event, notify the Investors of the happening of any event, of which the Company has knowledge, as a result of which the prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not misleading, and use its reasonable best efforts promptly to prepare a supplement or amendment to the Registration Statement to correct such untrue statement or omission, and deliver such number of copies of such supplement or amendment to the Investors as the Investors may reasonably request; f. use its commercially reasonable efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, and, if such an order is issued, to obtain the withdrawal of such order at the earliest possible moment and to notify the Investors of the issuance of such order and the resolution thereof; g. make generally available to its security holders as soon as practical, but not later than ninety (90) days after the close of the period covered thereby, an earnings statement (in form complying with the provisions of Rule 158 under the 1933 Act) covering a twelve-month period beginning not later than the first day of the Company's fiscal quarter next following the effective date of the Registration Statement; h. provide a transfer agent and registrar, which may be a single entity, for the Registrable Securities not later than the effective date of the Registration Statement; and i. use its commercially reasonable efforts to list the Registrable Securities covered by any Registration Statement filed under this Agreement with the securities exchange or to cause such Registrable Securities to be designated or approved for designation as a national market system security on the inter-dealer quotation system on which the Common Stock is then listed or designated. 4. LIMITATIONS ON REGISTRATION RIGHTS; HOLDBACK. Notwithstanding -------------------------------------------- anything to the contrary contained in this Agreement: a. The Company may delay the filing, suspend the effectiveness of a Registration Statement under Section 2(a) or require the Investors to suspend sales or other dispositions of Registrable Securities under an effective Registration Statement for such time as may be required by the Company, (i) if in the Company's Board of Directors' judgment, the sale of Registrable Securities pursuant thereto would interfere with or be detrimental to a planned offering, by the Company of any of the Company's securities, (ii) if in the Company's Board of Directors' judgment, the sale of Registrable Securities thereunder would have a material adverse effect on the business, prospects, operations, results of operations, assets, liabilities, or condition (financial or otherwise) of the Company; or (iii) for such time as may be required by the Company at any time when the Company is engaged in discussions concerning any merger, financing, business combination, sale of the Company or any similar transaction or when the Company would be required to disclose in such Registration Statement material information that it would not otherwise be required to disclose in its filings with the SEC pursuant to the Securities Exchange Act of 1934, and the rules and regulations thereunder as amended or supplemented from time to time, or any successor thereto (the "1934 Act") and that it has not then disclosed in such filings with the SEC (an "Allowed Delay"). In the event of an Allowed Delay, the Company shall promptly (x) notify the Investors in writing (a "Delay Notice") of the existence (but not the substance) of material non-public information giving rise to an Allowed Delay and (y) advise the Investors in writing to cease all sales under the Registration Statement until the expiration of the period provided for in the Delay Notice. Upon expiration of the Allowed Delay, the Company shall again be bound by the first sentence of Section 3(e) with respect to the information giving rise thereto. b. If during any period when a Registration Statement covering Registrable Securities filed pursuant to Section 2(a) is effective, the Company proposes to file a Registration Statement on Forms S-1 or S-4 (or any of their respective successor forms), then the Company shall have the right to terminate the effectiveness of the Registration Statement covering such Registrable Securities for a period of not more than one hundred and eighty (180) days. During such one hundred and eighty (180) day period the Company shall use reasonable efforts to prepare and file a Registration Statement covering the shares of Common Stock sought to be registered by the Company and the Registrable Securities for which such Registration Statement was filed pursuant to Section 2(a). In any such event, the Investors shall include such Registrable Securities in the Company Registration Statement. c. If the Company shall at any time register any of its securities under the 1933 Act, for offer or sale to the public, then the Investors shall not make any short sale of, grant an option for the sale, assignment, transfer, pledge, hypothecation, gift or other disposition of any Registrable Securities (other than for the public sale of those Registrable Securities included in and sold pursuant to such registration) without the prior written consent of the Company for such period as may be designated by the Company, or, if the registration shall be, in whole or in part, an underwritten offering, the managing underwriter, in writing to the Investors; provided that no such period shall begin more than ten (10) days prior to the effectiveness of the registration statement pursuant to which such public offer or sale will be made and shall not last more than one hundred and eighty (180) days after the effective date of such registration statement. d. The Company shall use its commercially reasonable efforts to keep the Registration Statement effective during the requisite period unless (i) required by applicable law to suspend the effectiveness of the Registration Statement, (ii) the continued effectiveness of the Registration Statement would require the Company to disclose a material financing, acquisition or other corporate transaction, and the Board of Directors shall have determined in good faith that such disclosure is not in the best interests of the Company and the holders of its outstanding Common Stock, or (iii) the Board of Directors shall have determined in good faith that there is a valid business purpose or reason for such suspension. 5. OBLIGATIONS OF THE INVESTORS. In connection with the registration ---------------------------- of the Registrable Securities, the Investors shall: a. furnish to the Company a Questionnaire for Selling Shareholders in the form attached to this Agreement as Exhibit B and such other information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the registration of such Registrable Securities and shall execute such documents in connection with such registration as the Company may reasonably request; b. cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of the Registration Statement hereunder; c. upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(e) or 3(f), immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until, in the case of an event of the kind described in Section 3(e), the Investors' receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(e) or, in the case of an event of the kind described in Section 3(f), written notification by the Company of the resolution of the event and authority to continue the disposition of Registrable Securities pursuant to the Registration Statement, and, if so directed by the Company, deliver to the Company (at the expense of the Company) or destroy (and deliver to the Company a certificate of destruction) all copies in the Investors' possession, of the prospectus covering such Registrable Securities current at the time of receipt of the notice of the happening of an event as described in Section 3(e) or 3(f); d. notify the Company of its desire to sell Registrable Securities pursuant to the Registration Statement filed under this Agreement at least three (3) business days prior to any intended sale of such Registrable Securities pursuant to such Registration Statement; e. upon receipt of any Delay Notice, immediately discontinue disposition of Registrable Securities until the expiration of the Delay Period or any extension thereof pursuant to a subsequent Delay Notice; f. sell, transfer and otherwise dispose of the Registrable Securities only through broker and dealer transactions; and g. comply with all applicable laws and regulations in connection with any sale, transfer or other disposition of Registrable Securities. 6. EXPENSES OF REGISTRATION. All reasonable expenses, other than -------------------------- underwriting fees, discounts and commissions (which shall be borne by the Investors), incurred in connection with registrations, filings or qualifications pursuant to the Company's obligations under Section 2 and 3 including, without limitation, all registration, listing and qualifications fees, printers and the Company's accounting fees, and the fees and disbursements of counsel for the Company, shall be borne by the Company. 7. INDEMNIFICATION. In the event any Registrable Securities are --------------- included in a Registration Statement under this Agreement: a. To the extent permitted by law, the Company will indemnify, hold harmless and defend the Investors, each of the Investors' directors, officers, partners, employees, agents and each person who controls the Investors within the meaning of the 1933 Act or the 1934 Act, if any, (each, an "Investor Indemnified Person"), against any losses, claims, damages, liabilities or expenses (collectively, together with actions, proceedings or inquiries by any regulatory or self-regulatory organization, whether commenced or threatened, in respect thereof, "Claims") to which any of them may become subject insofar as such Claims are caused by: (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement or the omission or alleged omission to state therein a material fact required to be stated or necessary to make the statements therein not misleading, or (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading, (the matters in the foregoing clauses (i) and (ii) being, collectively, "Violations"). Subject to the restrictions set forth in Section 7(c) with respect to the number of legal counsel, the Company shall reimburse the Investors and each such controlling person, promptly as such expenses are incurred and are due and payable, for any reasonable legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 7(a): (x) shall not apply to a Claim to the extent it is caused by a Violation which is based upon or arises out of information furnished in writing to the Company by any Indemnified Person or agent for such Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto; (y) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld; and (z) with respect to any preliminary prospectus or prospectus, shall not inure to the benefit of any Indemnified Person if the untrue statement or omission of material fact contained therein was corrected on a timely basis in the final prospectus or a corrected prospectus, as then amended or supplemented, such final or corrected prospectus was timely made available by the Company pursuant to Section 3(c) hereof, and the Indemnified Person was promptly advised in writing not to use the incorrect prospectus prior to the use giving rise to a Violation and such Indemnified Person, notwithstanding such advice, used it. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the Investors. b. In connection with any Registration Statement in which the Investors are participating, the Investors will indemnify, hold harmless and defend, to the same extent and in the same manner set forth in Section 7(a), the Company, each of its directors, officers, employees, agents and each person who controls the Company within the meaning of the 1933 Act or the 1934 Act, any underwriter and any other shareholder selling securities pursuant to the Registration Statement or any of its directors or officers or any person who controls such shareholder or underwriter within the meaning of the 1933 Act or the 1934 Act (collectively, a "Company Indemnified Person"), against any Claim to which any of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim is caused by any Violation, in each case to the extent (and only to the extent) that such Violation is based upon or arises out of written information furnished to the Company by the Investors or agent for the Investors expressly for use in connection with such Registration Statement; and subject to Section 7(c) the Investors will reimburse any legal or other expenses (promptly as such expenses are incurred and are due and payable) reasonably incurred by them in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 7(b) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Investors, which consent shall not be unreasonably withheld; provided, further, however, that the Investors shall be liable under this Agreement (including this Section 7(b) and Section 8) for only that amount as does not exceed the net proceeds (i.e., after deduction of selling commissions and discounts) to the Investors as a result of the sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Indemnified Person. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 7(b) with respect to any preliminary prospectus shall not inure to the benefit of any Indemnified Person if the untrue statement or omission of material fact contained in the preliminary prospectus was corrected on a timely basis in the prospectus, as then amended or supplemented. c. Promptly after receipt by an Investor Indemnified Person or a Company Indemnified Person (as applicable, an "Indemnified Person") under this Section 7 of notice of the commencement of any action (including any governmental action), such Indemnified Person shall, if a Claim in respect thereof is to be made against any indemnifying person under this Section 7, deliver to the indemnifying person a written notice of the commencement thereof, and the indemnifying person shall have the right to participate in, and, to the extent the indemnifying person so desires, jointly with any other indemnifying person similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying person and the Indemnified Person; provided, however, that an Indemnified Person shall have the right to retain its own counsel with the fees and expenses to be paid by the indemnifying person, if, in the reasonable opinion of counsel retained by the indemnifying person, the representation by such counsel of the Indemnified Person and the indemnifying person would be inappropriate due to actual or likely differing interests between such Indemnified Person and any other person represented by such counsel in such proceeding. The indemnifying person shall pay for only one separate legal counsel for the Indemnified Persons, and such legal counsel shall be selected by the persons and entities identified on Schedule A attached to this Agreement holding a majority-in-interest of the Registrable Securities included in the Registration Statement to which the Claim relates, if the Investors is entitled to indemnification hereunder, or the Company, if the Company is entitled to indemnification hereunder, as applicable. The failure to deliver written notice to the indemnifying person within a reasonable time of the commencement of any such action shall not relieve such indemnifying person of any liability to the Indemnified Person under this Section 7, except to the extent that the indemnifying person is actually prejudiced in its ability to defend such action. The indemnification required by this Section 7 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as such expense, loss, damage or liability is incurred and is due and payable. 8. CONTRIBUTION. To the extent any indemnification by an indemnifying person is prohibited or limited by law, the indemnifying person agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 7 to the fullest extent permitted by law; provided, however, that (i) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 7, (ii) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of such fraudulent misrepresentation, and (iii) contribution (together with any indemnification or other obligations under this Agreement) by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities and provided, further, that such contribution shall be made in such proportion as is appropriate to reflect the relative fault of the Company on the one hand, and the Investors on the other, in connection with the statements or omissions which resulted in such claims. 9. REPORTS UNDER THE 1934 ACT. With a view to making available to -------------------------- the Investors the benefits of Rule 144 promulgated under the 1933 Act or any other similar rule or regulation of the SEC that may at any time permit the Investors to sell restricted securities of the Company to the public without registration ("Rule 144"), the Company shall use its commercially reasonable efforts to: a. make and keep public information available, as those terms are understood and defined in Rule 144; and b. file with the SEC in a timely manner all reports and other documents required of the Company under the 1934 Act so long as the Company remains subject to such requirements and the filing of such reports and other documents is required for the applicable provisions of Rule 144. 10. AMENDMENT OF REGISTRATION RIGHTS. Provisions of this Agreement may -------------------------------- be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with written consent of the Company and the Investors holding a majority of the Registrable Securities. Any amendment or waiver effected in accordance with this Section 10 shall be binding upon the Investors and the Company. 11. MISCELLANEOUS. ------------- a. Notices required or permitted to be given hereunder shall be in writing and shall be deemed to be sufficiently given when personally delivered (by hand, by courier, by facsimile transmission or other means) or sent by certified mail, return receipt requested, properly addressed and with proper postage pre-paid, if to the Company: Paragon Technologies, Inc. 600 Kuebler Road, Easton, Pennsylvania 18040 Attention: Chief Financial Officer Telecopy: (610) 252-3102 with a copy to: Pepper Hamilton LLP Suite 400 1235 Westlakes Drive Berwyn, PA 19312 Attention: Jeffrey P. Libson, Esquire Telecopy: (610) 640-7825 if to the Investors: Leon C. Kirschner Ermanco Incorporated 6870 Grand Haven Road Spring Lake, MI 49456 Telecopy: (231) 798-8322 or at such other address as each such party furnishes to the Company by notice given in accordance with this Section 11(b), and shall be effective, when personally delivered, upon receipt, when by overnight courier, or the business day after delivery or drop off with such courier, and, when so sent by certified mail, four (4) days after deposit with the United States Postal Service. b. Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof. c. This Agreement shall be enforced, governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania applicable to agreements made and to be performed entirely within Pennsylvania. In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof. The parties hereto hereby submit to the exclusive jurisdiction of the United States Federal Courts located in the Eastern District of Pennsylvania with respect to any dispute arising under this Agreement or the transactions contemplated hereby. d. This Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof. e. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto; provided that the Investors shall not have the right to assign their rights under this Agreement. f. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. g. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement. h. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. IN WITNESS WHEREOF, the Company and the Investors have caused this Agreement to be duly executed as of the date first above written. PARAGON TECHNOLOGIES, INC. By:_______________________________ Name:_____________________________ Its:______________________________ INVESTOR By:_______________________________ EXHIBIT A INVESTORS Steven Shulman Leon C. Kirschner Thomas C. Hubbell Lee F. Schomberg Guy G. Hollister Wilton W. Wyman, Jr. Gordon A. Hellberg Andrew Knaut Thomas L. Bergy Robert R. Nezbeth Donald H. Kloosterhouse James J. Bronsema John R. Planteroth William C. Pipp EX-23.1 4 0004.txt CONSENT TO INCORPORATION EXHIBIT 23.1 ------------ The Board of Directors Paragon Technologies, Inc. (formerly SI Handling Systems, Inc.): We consent to the incorporation by reference in the registration statements on Form S-3 of Paragon Technologies, Inc., formerly SI Handling Systems, Inc., of our report dated March 7, 2000, except for Note 14, which is as of March 30, 2000, relating to the consolidated balance sheets of SI Handling Systems, Inc. and subsidiary as of December 31, 1999, and the related statements of operations, stockholders' equity, and cash flows for the ten months ended December 31, 1999 and for the years ended February 28, 1999 and March 1, 1998, and all related schedules, which report appears in the December 31, 1999 annual report on Form 10-K of Paragon Technologies, Inc., formerly SI Handling Systems, Inc., and to the reference to our firm under the heading "Experts" in the prospectus. /s/ KPMG LLP KPMG LLP Allentown, Pennsylvania June 30, 2000 -----END PRIVACY-ENHANCED MESSAGE-----