Gad Threatens Board of Paragon With Further Litigation
Paragon Technologies (OTC PINK:PGNT) announced receiving a litigation threat from former executive Hesham "Sham" Gad against the company and its directors. In response, the board approved a 3-year tail D&O insurance policy providing $4 million in coverage at an annual net cost under $200,000.
The board, excluding Gad, justified this decision citing Gad's history of depleting company resources through litigation, which has already cost millions. They highlighted concerns about Gad's past actions, including alleged breaches of duty, unauthorized work status, and fund misappropriation. The announcement comes amid an ongoing proxy fight, with the voting deadline set for June 29, 2025.
Paragon Technologies (OTC PINK:PGNT) ha annunciato di aver ricevuto una minaccia legale dall'ex dirigente Hesham "Sham" Gad contro l'azienda e i suoi direttori. In risposta, il consiglio ha approvato una polizza assicurativa D&O con copertura residua di 3 anni che offre una copertura di 4 milioni di dollari a un costo netto annuo inferiore a 200.000 dollari.
Il consiglio, escludendo Gad, ha motivato questa decisione citando la storia di Gad di aver prosciugato le risorse aziendali attraverso cause legali, che hanno già comportato costi di milioni di dollari. Sono state evidenziate preoccupazioni riguardo alle azioni passate di Gad, inclusi presunti violazioni dei doveri, status lavorativo non autorizzato e appropriazione indebita di fondi. L'annuncio arriva in un momento di una battaglia per il controllo azionario, con la scadenza per il voto fissata al 29 giugno 2025.
Paragon Technologies (OTC PINK:PGNT) anunció haber recibido una amenaza de litigio por parte del ex ejecutivo Hesham "Sham" Gad contra la empresa y sus directores. En respuesta, la junta aprobó una póliza de seguro D&O con cobertura residual de 3 años que ofrece una cobertura de 4 millones de dólares con un costo neto anual inferior a 200,000 dólares.
La junta, excluyendo a Gad, justificó esta decisión citando el historial de Gad de agotar los recursos de la empresa mediante litigios, que ya han costado millones. Se destacaron preocupaciones sobre las acciones pasadas de Gad, incluyendo supuestas violaciones del deber, estatus laboral no autorizado y apropiación indebida de fondos. El anuncio se produce en medio de una lucha por el control accionario, con la fecha límite para votar establecida para el 29 de junio de 2025.
Paragon Technologies (OTC PINK:PGNT)는 전 임원 Hesham "Sham" Gad로부터 회사 및 이사들을 상대로 한 소송 위협을 받았다고 발표했습니다. 이에 이사회는 3년 기간의 D&O 보험을 승인했으며, 400만 달러의 보장 한도를 연간 순 비용 20만 달러 미만으로 제공하기로 했습니다.
Gad를 제외한 이사회는 Gad가 이미 수백만 달러의 비용을 초래한 소송을 통해 회사 자원을 고갈시킨 전력을 이유로 이 결정을 정당화했습니다. 또한 Gad의 과거 행위에 대해 의무 위반, 무단 근무 상태, 자금 횡령 의혹 등이 우려된다고 강조했습니다. 이 발표는 2025년 6월 29일로 예정된 주주 투표 마감일을 앞둔 대립 상황 중에 나왔습니다.
Paragon Technologies (OTC PINK:PGNT) a annoncé avoir reçu une menace de litige de la part de l'ancien cadre Hesham "Sham" Gad contre la société et ses administrateurs. En réponse, le conseil d'administration a approuvé une police d'assurance D&O avec une période de couverture résiduelle de 3 ans offrant une couverture de 4 millions de dollars pour un coût net annuel inférieur à 200 000 dollars.
Le conseil, à l'exception de Gad, a justifié cette décision en évoquant l'historique de Gad d'avoir épuisé les ressources de la société par des litiges, qui ont déjà coûté des millions. Ils ont souligné des inquiétudes concernant les actions passées de Gad, notamment des violations présumées de ses devoirs, un statut de travail non autorisé et un détournement de fonds. Cette annonce intervient au milieu d'une lutte pour le contrôle par procuration, la date limite de vote étant fixée au 29 juin 2025.
Paragon Technologies (OTC PINK:PGNT) gab bekannt, eine Klagedrohung des ehemaligen Geschäftsführers Hesham "Sham" Gad gegen das Unternehmen und dessen Direktoren erhalten zu haben. Als Reaktion darauf genehmigte der Vorstand eine 3-jährige Nachlauf-D&O-Versicherung mit einer Deckungssumme von 4 Millionen US-Dollar zu jährlichen Nettokosten von unter 200.000 US-Dollar.
Der Vorstand, ausgenommen Gad, begründete diese Entscheidung mit Gads Vorgeschichte, Unternehmensressourcen durch Rechtsstreitigkeiten erschöpft zu haben, was bereits Millionen gekostet hat. Es wurden Bedenken hinsichtlich Gads früheren Handlungen hervorgehoben, darunter angebliche Pflichtverletzungen, unautorisierter Arbeitsstatus und Mittelveruntreuung. Die Bekanntgabe erfolgt mitten in einem laufenden Proxy-Kampf, wobei die Abstimmungsfrist auf 29. Juni 2025 festgesetzt ist.
- Board secured protective D&O insurance coverage of $4 million for 3 years at reasonable cost
- Proactive risk management by current board to protect company assets
- Ongoing legal disputes and litigation threats causing significant company expense
- Internal management conflict potentially affecting company stability
- History of millions spent on previous litigation
- Risk of continued corporate resource depletion through legal battles
EASTON, PA / ACCESS Newswire / June 27, 2025 / Paragon Technologies (OTC PINK:PGNT) announces that it is in receipt of a letter from Mr. Hesham "Sham" Gad's counsel threatening new litigation against the company and its directors.
"This action by Mr. Gad shows exactly what we have been pointing out to shareholders," stated Mr. Tim Eriksen, chairman of the Nominating and Corporate Governance Committee. "It is clear that Mr. Gad has not changed and will use company resources to achieve his personal goals."
At a board meeting held on June 27, 2025, the board approved the purchase of a tail D&O policy in order to protect the company. After evaluating the situation, the Board, excluding Mr. Gad, determined that, given Mr. Gad's demonstrated willingness to use litigation to deplete company resources, totaling millions of dollars to date, purchasing the tail D&O policy was in the best interests of the company and its stockholders. For instance, he could have easily settled the bylaw litigation after the bylaws were changed in December 2024. Instead, he caused the company to spend millions of dollars because he apparently wasn't satisfied with simply having the bylaws repealed and sought to have Mr. Jacobs and Mr. Weiser found to have breached their fiduciary duty. The only possible benefit from these actions was personal - creating a false narrative for his proxy fight.
To further his personal agenda and again create a false narrative, we believe Mr. Gad concocted a false entrenchment theory regarding the rights plan passed by independent directors to bring charges of breach of fiduciary duty against them. We know that the board acted on the advice of the experienced Delaware counsel who informed the board that it would likely be a breach of fiduciary duty to not adopt the rights plan. They made it clear - directors have a fiduciary duty to prevent a creeping takeover, which was clearly taking place.
We believe Gad's slate of nominees lack public company board experience, appear to be ignorant of their duties and Delaware law (based on Mr. Ting's public comments), will likely not be independent, possibly vindictive, and if victorious, presumably led by someone willing to lie and waste corporate resources for personal benefit.
The board believes that Gad breached his duties knowing he lacked work authorization and misclassifying himself as an independent contractor. Add to that, his misappropriation of funds, his lack of transparency with his board and his repeated lying and misrepresentations about his immigration status. Clearly Mr. Gad has no regard for the shareholders of Paragon.
Thus, the board believes that the company faces significant litigation risk for past and potential future actions by Mr. Gad. Directors have a duty to act in the best interest of the company and its stockholders. They have a duty to protect the company from risks. Due to the company facing an elevated risk of shareholder lawsuits based on past and potential future actions by Mr. Gad and Mr. Gad's unwillingness to communicate to the Board his views on the appropriate level of coverage for the company should he win the proxy contest, we had a duty to act versus potentially leaving it up to an incoming inexperienced board. As we saw with Mr. Gad's litigation against the company, legal bills can mount quickly.
Since the end of 2024, the company has had a layered policy in place providing an aggregate of
Subsequent to approving the policy, Mr. Gad had his counsel send the board a letter falsely accusing the board of not giving proper notice of a board meeting, claiming the policy costs three times its actual amount, was a material transaction forbidden in the settlement agreement, was designed to protect directors (when it was actually about protecting the company), and that it was a violation of the directors' fiduciary duty, which it clearly isn't. Mr. Eriksen noted, "Mr. Gad's response to not getting what he wants shows precisely why the company and its shareholders need to be protected. He immediately inflated the costs of the policy threefold, fabricated a rationale, threatened litigation against directors, and wasted company resources knowing full well the company would have to pay both sides in resolving the matter. The only way to stop this madness is to not allow Mr. Gad to regain control of Paragon."
We urge shareholders to vote the WHITE proxy card. The future of Paragon is at stake. The deadline to vote or change your vote is Sunday, June 29, 2025.
About Paragon Technologies
Paragon Technologies, Inc. is a holding company owning subsidiaries that engage in diverse business activities, including material handling, distribution, real estate, and investments. For additional information please visit: www.pgntgroup.com.
Investor Relations Contact:
Alliance Advisors IR
ParagonIR@allianceadvisors.com
SOURCE: Paragon Technologies Inc.
View the original press release on ACCESS Newswire
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