<PAGE> 1
As filed with the Securities and Exchange Commission on July 2, 1996
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
VALLEY FORGE CORPORATION
(Exact name of registrant as specified in its charter)
Georgia 58-0833796
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
100 Smith Ranch Road, Suite 326 94903
San Rafael, California (Zip code)
(Address of principal executive offices)
--------------------
VALLEY FORGE CORPORATION AMENDED AND RESTATED
1987 STOCK OPTION PLAN
(Full title of the plan)
---------------------
DAVID R. BRINING
President and Chief Executive Officer
Valley Forge Corporation
100 Smith Ranch Road, Suite 326
San Rafael, California 94903
(Name and address of agent for service)
(415) 492-1500
(Telephone number, including area code, of agent for service)
Copy to:
PETER M. MENARD, ESQ.
Manatt, Phelps & Phillips, LLP
11355 West Olympic Boulevard
Los Angeles, California 90064
(310) 312-4209
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
======================================================================================================================
Proposed Proposed
Amount Maximum Maximum Amount of
Title of Securities to be Offering Price Aggregate Registration
to be Registered Registered (1) Per Share (2) Offering Price Fee
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.50 Par Value 450,000 $13.75 $6,187,500 $2,134
======================================================================================================================
</TABLE>
(1) This Registration Statement covers, in addition to the number of shares of
Common Stock stated above, such indeterminate number of shares of Common
Stock as may be issued upon exercise of options granted under the Valley
Forge Corporation Amended and Restated 1987 Stock Option Plan as a result
of the adjustment provisions thereof.
(2) Estimated solely for purposes of calculating the amount of the registration
fee pursuant to Rule 457 based upon the average of the high and low prices
of the Common Stock on June 27, 1996.
================================================================================
This Registration Statement Includes a Total of 39 Pages.
Exhibit Index Appears on Page II-4.
<PAGE> 2
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The following documents listed under this Part I and the
documents incorporated by reference under Item 3 of Part II to this Form S-8,
taken together, constitute a prospectus that meets the requirements of Section
10(a) of the Securities Act of 1933, as amended (the "Securities Act"), and are
incorporated herein by reference.
Item 1. Plan Information.
a. Prospectus for the Valley Forge Corporation Amended and Restated
1987 Stock Option Plan
b. Valley Forge Corporation Amended and Restated 1987 Stock Option Plan
c. Form of Incentive Stock Option
d. Form of Non-Qualified Stock Option (Employee and Employee Director)
e. Form of Non-Qualified Stock Option (Non-Employee Director and
Consultant)
Item 2. Registrant Information and Employee Plan Annual Information.
The written statement required to be provided to participants
pursuant to this Item is set forth in the Prospectus referred to in Item 1
above.
I-1
<PAGE> 3
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Valley Forge Corporation (the "Registrant") hereby files this
Registration Statement on Form S-8 with the Securities and Exchange Commission
(the "Commission") to register 450,000 shares of the Registrant's Common Stock
for issuance pursuant to the Registrant's Amended and Restated 1987 Stock Option
Plan (the "Plan"), and such indeterminate number of shares as may become
available under the Plan as a result of the adjustment provisions thereof.
Item 3. Incorporation of Documents by Reference.
The following documents previously filed by the Registrant
with the Commission are incorporated in this Registration Statement by
reference:
(a) The Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995 filed pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
(b) All other reports filed by the Registrant pursuant to
Sections 13(a) or 15(d) of the Exchange Act since the end of
the fiscal year covered by the document referred to in (a)
above.
(c) The description of the Common Stock of the Registrant
contained in the Registrant's Registration Statement on Form
8-A dated April 5, 1988, including any amendment or report
filed for the purpose of updating such description.
(d) The Registrant's Registration Statement on Form S-8 (File
No. 33-50250).
All documents filed by the Registrant pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents.
Any statement made in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document which is also
incorporated or deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Section 14-2-851 of the Georgia Business Corporation Code (the "Code")
provides that, except as provided below, a corporation may indemnify or obligate
itself to indemnify an individual made a party to a proceeding because he is or
was a director against liability incurred in the proceeding if he acted in a
manner he believed in good faith to be
II-1
<PAGE> 4
in or not opposed to the best interests of the corporation and, in the case of
any criminal proceeding, he had no reasonable cause to believe his conduct was
unlawful. Notwithstanding the foregoing, a corporation may not indemnify a
director under Section 14-2-851, (i) in connection with a proceeding by or in
the right of the corporation in which the director was adjudged liable to the
corporation, or (ii) in connection with any other proceeding in which he was
adjudged liable on the basis that personal benefit was improperly received by
him.
Section 14-2-852 of the Code provides that, unless limited by
its Articles of Incorporation, to the extent that a director has been
successful, on the merits or otherwise, in the defense of any proceeding to
which he was a party, or in defense of any claim, issue or matter therein,
because he is or was a director of the corporation, the corporation shall
indemnify the director against reasonable expenses incurred by him in connection
therewith.
Section 14-2-853 of the Code provides that a corporation may
pay for or reimburse the reasonable expenses incurred by a director who is a
party to a proceeding in advance of final disposition of the proceeding, if (i)
the director furnishes the corporation a written affirmation of his good faith
belief that he has met the standard of conduct set forth in Section 14-2-851,
and (ii) the director furnishes the corporation a written undertaking to repay
any advances if it is ultimately determined that he is not entitled to
indemnification under the Code. Such undertaking must be an unlimited general
obligation of the director, but need not be secured and may be accepted without
reference to financial ability to make repayment.
Section 14-2-854 of the Code provides that, unless a
corporation's Articles of Incorporation provide otherwise, a director may apply
for indemnification or advances for expenses to any court of competent
jurisdiction. The court may order indemnification or advances for expenses, if
it determines that (i) the director is entitled to mandatory indemnification
under Section 14-2-852, (ii) the director is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances, whether or not he met
the standard of conduct set forth in Section 14-2-851 or was adjudged liable as
described in that section, but if he was adjudged so liable his indemnification
is limited to reasonable expenses incurred unless the Articles of Incorporation
or a Bylaw, contract or resolution approved or ratified by the shareholders
pursuant to the Code provides otherwise, or (iii) in the case of advances for
expenses, the director is entitled, pursuant to the Articles of Incorporation,
Bylaws or any applicable resolution or agreement, to payment or reimbursement of
his reasonable expenses in advance of final disposition of the proceeding.
Section 14-2-855 of the Code provides that a corporation may
not indemnify a director under Section 14-2-851 unless authorized thereunder and
a determination has been made in the specific case that indemnification of the
director is permissible in the circumstances because he has met the standard of
conduct set forth in Section 14-2-851. Such determination shall be made (i) by
the Board of Directors by majority vote of a quorum consisting of directors not
at the time parties to the proceeding, or (ii) if such a quorum cannot be
obtained, by majority vote of a committee duly designated by the Board of
Directors and consisting solely of two or more directors not at the time parties
to the proceeding, or (iii) by special legal counsel selected as specified in
Section 14-2-854 or (iv) by the shareholders, but shares owned by or voted under
the control of directors who are at the time parties to the proceeding may not
be voted on the determination.
Section 14-2-856 of the Code provides that, if authorized by
the Articles of Incorporation or a Bylaw, contract or resolution approved or
ratified by the shareholders by a majority of the votes entitled to be cast, a
corporation may indemnify or obligate itself to indemnify a director made a
party to a proceeding, including a proceeding brought by or in the right of the
corporation, without regard to the limitations in other sections of the Code.
Notwithstanding the foregoing, the corporation shall not indemnify a director
under Section 14-2-856 for any liability incurred in a proceeding in which the
director is adjudged liable to the corporation or is subjected to injunctive
relief in favor of the corporation (i) for any appropriation, in violation of
his duties, of any business opportunity of the corporation, (ii) for acts or
omissions which involve intentional misconduct or a knowing violation of law,
(iii) for the liability for unlawful distributions set forth in Section 14-2-832
of the Code or (iv) for any transaction from which he received an improper
personal benefit. Where approved or authorized by the shareholders as aforesaid,
a corporation may advance or reimburse expenses incurred in advance of final
disposition of the proceeding only if (i) the director furnishes the corporation
a written affirmation of his good faith belief that his conduct does not
constitute behavior of the kind described
II-2
<PAGE> 5
above and (ii) the director furnishes the corporation a written undertaking to
repay any advances if it is ultimately determined that he is not entitled to
indemnification under Section 14-2-856.
Section 14-2-857 of the Code provides that, unless a
corporation's Articles of Incorporation provide otherwise, (i) an officer of the
corporation who is not a director is entitled to mandatory indemnification under
Section 14-2-852 and is entitled to apply for court ordered indemnification
under Section 14-2-854, in each case to the same extent as a director, and (ii)
a corporation may also indemnify and advance expenses to an officer, employee or
agent who is not a director to the extent, consistent with public policy, that
may be provided by its Articles of Incorporation, Bylaws, general or specific
action of its Board of Directors or contract.
Section 14-2-858 of the Code provides that a corporation may
purchase and maintain insurance on behalf of an individual who is or was a
director, officer, employee or agent of the corporation or who, while a
director, officer, employee or agent of the corporation, is or was serving at
the request of the corporation as a director, officer, partner, trustee,
employee or agent of another foreign or domestic corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise against liability
asserted against or incurred by him in that capacity or arising from his status
as a director, officer, employee or agent, whether or not the corporation would
have power to indemnify him against the same liability under Section 14-2-851 or
Section 14-2-852.
Article V of the Bylaws of the Company provides in full as
follows:
Each director or officer, whether or not then in
office, shall be indemnified by the corporation against all
costs and expenses reasonably incurred by or imposed upon him
in connection with or arising out of any action, suit, or
proceeding in which he may be involved by reason of his being
or having been a director or officer of the corporation, such
expenses to include the cost of reasonable settlements (other
than amounts paid to the corporation itself) made with a view
to curtailment of costs of litigation. The corporation shall
not, however, indemnify any director or officer with respect
to matters as to which he shall be finally adjudged in any
such action, suit, or proceeding to have been derelict in the
performance of his duty as such director or officer, nor in
respect of any matter in which any settlement or compromise is
effected, if the total expense, including the cost of such
settlement, shall substantially exceed the expense which might
reasonably be incurred by such director or officer in
conducting such litigation to a final conclusion. The
foregoing right of indemnification shall not be exclusive of
other rights to which any director or officer may be entitled
as a matter of law.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Description
<S> <C>
3.1* Articles of Incorporation, as amended.
3.2* Bylaws, as amended.
5.1 Opinion of Manatt, Phelps & Phillips, LLP.
23.1 Consent of Manatt, Phelps & Phillips, LLP (see Exhibit 5.1).
23.2 Consent of Independent Accountants (Coopers & Lybrand LLP).
24.1 Power of Attorney (See page II-7).
99.1 Valley Forge Corporation Amended and Restated 1987 Stock
Option Plan.
99.2* Form of Incentive Stock Option.
</TABLE>
II-3
<PAGE> 6
<TABLE>
<CAPTION>
<S> <C>
99.3* Form of Non-Qualified Stock Option (Employee and Employee Director).
99.4* Form of Non-Qualified Stock Option (Non-Employee Director and Consultant).
99.5 Prospectus.
</TABLE>
- -------------------------
* Filed as an exhibit to the Company's Registration Statement on Form S-8
filed with the Securities and Exchange Commission on July 30, 1992 (File No.
33-50250).
Item 9. Undertakings
(a) 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 this 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 this
Registration Statement; and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if this Registration Statement is on Form S-3 or Form S-8, and 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 into this 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.
(b) 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 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
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.
(c) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers or
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission 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 the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant
II-4
<PAGE> 7
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.
(d) The undersigned Registrant hereby undertakes to deliver or
cause to be delivered with the Prospectus, to each person the Prospectus is sent
or given, the latest annual report to security holders that is incorporated by
reference in the Prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14-c under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the Prospectus, to deliver, or
cause to be delivered to each person to whom the Prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the Prospectus to provide such interim financial information.
II-5
<PAGE> 8
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-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Rafael, State of California, on this first
day of July, 1996.
VALLEY FORGE CORPORATION
By /s/David R. Brining
-------------------------------------
David R. Brining,
President and Chief Executive Officer
II-6
<PAGE> 9
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints each of David R. Brining and
Monica J. Burke, his true and lawful attorney-in-fact and agent, each with full
power of substitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement, and to
file the same with all exhibits thereto, and all other documents in connection
therewith, with the Securities and Exchange Commission, granting unto each said
attorney-in-fact and agent with full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that each said attorney-in-fact and
agent, or his substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/David R. Brining President, Chief June 12, 1996
- ---------------------- Executive Officer and Director
David R. Brining (Principal Executive Officer)
/s/Monica J. Burke Vice President - Finance and Secretary June 12, 1996
- ---------------------- (Principal Financial and Accounting Officer)
Monica J. Burke
/s/Martin J. Bloom Director June 12, 1996
- ----------------------
Martin J. Bloom
/s/Theodore P. Desloge Director June 12, 1996
- ----------------------
Theodore P. Desloge
/s/Phillip F. Dressel Director June 12, 1996
- ----------------------
Phillip F. Dressel
/s/Dale J. Warner Director June 12, 1996
- ----------------------
Dale J. Warner
</TABLE>
II-7
<PAGE> 10
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
EXHIBITS
TO
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------
VALLEY FORGE CORPORATION
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Sequential
Number Description Page Number
---------- ----------- -----------
<S> <C> <C>
3.1* Articles of Incorporation, as amended.
3.2* Bylaws, as amended.
5.1 Opinion of Manatt, Phelps & Phillips, LLP. 13
23.1 Consent of Manatt, Phelps & Phillips, LLP (see Exhibit 5.1).
23.2 Consent of Independent Accountants (Coopers & Lybrand LLP). 18
24.1 Power of Attorney (See page II-7).
99.1 Valley Forge Corporation Amended and Restated 1987 Stock Option Plan. 20
99.2* Form of Incentive Stock Option.
99.3* Form of Non-Qualified Stock Option (Employee and Employee Director).
99.4* Form of Non-Qualified Stock Option (Non-Employee Director and Consultant)
99.5 Prospectus. 31
</TABLE>
- ------------------------
* Filed as an exhibit to the Company's Registration Statement on Form S-8
filed with the Securities and Exchange Commission on July 30, 1992 (File No.
33-50250).
<PAGE> 1
EXHIBIT 5.1
Opinion of Manatt, Phelps & Phillips, LLP
<PAGE> 2
[MANATT, PHELPS & PHILLIPS, LLP LETTERHEAD]
June 28, 1996
Valley Forge Corporation
100 Smith Ranch Road
Suite 326
San Rafael, California 94903
RE: REGISTRATION STATEMENT ON FORM S-8
Gentlemen:
At your request, we have examined the Registration Statement
on Form S-8 (the "Registration Statement") to be filed by Valley Forge
Corporation, a Georgia corporation (the "Company"), with the Securities and
Exchange Commission (the "SEC") in connection with the registration under the
Securities Act of 1933, as amended (the "Securities Act"), of 450,000 shares of
the Company's common stock, $0.50 par value (the "Common Stock"), issuable upon
the exercise of awards granted under the Company's Amended and Restated 1987
Stock Option Plan (the "Plan").
In rendering this opinion, we have examined such documents and
records as we deemed relevant, including, but not limited to, the following:
1. The Articles of Incorporation of the Company, as amended;
2. The Bylaws of the Company, as amended;
3. The Plan;
4. The forms of stock option agreements (the "Agreements")
to be used in connection with the Plan;
5. Records of proceedings of the Company's Board of
Directors and shareholders pertaining to the adoption,
amendment and restatement of the Plan and the Agreements;
and
6. The Registration Statement.
With respect to the foregoing documents, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals and the conformity to
<PAGE> 3
[MANATT, PHELPS & PHILLIPS, LLP LETTERHEAD]
Valley Forge Corporation
June 28, 1996
Page 2
originals of all documents submitted to us as certified or reproduced copies.
We also have obtained from the officers of the Company certificates as to such
factual matters as we consider necessary for the purpose of this opinion, and
insofar as this opinion is based on such matters of fact, we have relied on such
certificates.
Based upon the foregoing and such further review of fact and
law as we have deemed necessary or appropriate under the circumstances, and
assuming, without further inquiry, that (i) all options granted under the Plan
to date have been, and all options to be granted under the Plan in the future
will be, duly and validly granted in accordance with the terms of the Plan, (ii)
the consideration for the shares of Common Stock to be issued pursuant to the
exercise of such options will be received prior to the issuance thereof, (iii)
the shares of Common Stock to be issued pursuant to the exercise of such options
will be issued in accordance with the terms of the Plan and the Agreements, (iv)
the Registration Statement will become effective under the Securities Act prior
to the issuance of any shares of Common Stock under the Plan and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or be
pending before the SEC and (v) the prospectus attached as Exhibit 99.5 to the
Registration Statement will be updated and delivered to participants in the Plan
as required by the Securities Act and the rules and regulations promulgated by
the SEC thereunder, upon which assumptions the following opinion is expressly
conditioned, it is the opinion of the undersigned that the 450,000 shares of
Common Stock issuable by the Company upon the exercise of options granted
pursuant to the Plan will be, when issued and delivered against payment therefor
in accordance with the Plan, the Agreements and the Registration Statement, duly
authorized, validly issued, fully paid and non-assessable.
This opinion is limited to the current laws of the State of
Georgia and the Securities Act and the rules and regulations promulgated by the
SEC thereunder, to present judicial interpretations thereof and to facts as they
presently exist. In rendering this opinion, we have no obligation to revise or
supplement it should the current laws of the State of Georgia or the Securities
Act or such rules and regulations be changed by legislative action, judicial
decision or otherwise.
This opinion is issued to you solely for use in connection
with the Registration Statement and is not to be quoted or otherwise referred to
in any financial statements of the Company or related document, nor is it to be
filed with or furnished to any government agency or other person, without the
prior written consent of the undersigned in each instance.
<PAGE> 4
[MANATT, PHELPS & PHILLIPS, LLP LETTERHEAD]
Valley Forge Corporation
June 28, 1996
Page 3
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement.
Respectfully submitted,
Manatt, Phelps & Phillips, LLP
<PAGE> 1
EXHIBIT 23.2
Consent of Independent Accountants
<PAGE> 2
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Valley Forge Corporation and Subsidiaries on Form S-8 (File No.333-________) of
our report dated March 1, 1996, on our audits of the consolidated financial
statements and financial statement schedule of Valley Forge Corporation and
Subsidiaries as of December 31, 1995 and 1994, and for each of the three years
ended December 31, 1995.
COOPERS & LYBRAND LLP
Oakland, California
July 1, 1996
<PAGE> 1
EXHIBIT 99.1
Valley Forge Corporation Amended and Restated 1987 Stock Option Plan
<PAGE> 2
VALLEY FORGE CORPORATION
AMENDED AND RESTATED
1987 STOCK OPTION PLAN
Adopted May 29, 1987
Amended and Restated November 23, 1987
Amended and Restated May 15, 1992
Amended and Restated June 12, 1996
1. PURPOSE
(a) The purpose of the Valley Forge Corporation
Amended and Restated 1987 Stock Option Plan (the "Plan") is to strengthen Valley
Forge Corporation (the "Company") and its subsidiaries by providing to
participating employees (the "Employees"), employee directors (the "Employee
Directors"), non-employee directors (the "Non-Employee Directors") and
consultants (the "Consultants") added incentives for high levels of performance
and to encourage stock ownership in the Company. The Plan seeks to accomplish
these goals by providing a means whereby the Employees, Employee Directors,
Non-Employee Directors and Consultants of the Company and its subsidiaries may
be given an opportunity to purchase, by way of option, Common Stock of the
Company.
(b) The word "subsidiary" as used in the Plan means
any subsidiary corporation of the Company, as defined in Section 424(f) of the
Internal Revenue Code of 1986, as amended (the "Code").
(c) The Company, by means of the Plan, seeks to
secure and retain the services of such Employees, Employee Directors,
Non-Employee Directors and Consultants of the Company or any of its
subsidiaries, and to provide incentives for such persons to exert maximum
efforts for the success of the Company and its subsidiaries.
(d) The Company intends that the options issued under
the Plan shall, in the discretion of the Board of Directors of the Company (the
"Board") or any committee to which responsibility for administration of the Plan
has been delegated pursuant to subparagraph 2(d), be either "incentive stock
options" as that term is used in Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), or any successor thereto ("incentive stock
options"), or options which do not qualify as incentive stock options
("nonqualified stock
-1-
<PAGE> 3
options"). All options shall be separately designated as incentive stock options
or nonqualified stock options at the time of grant, and a separate certificate
or certificates shall be issued for shares purchased on the exercise of each
type of option.
2. ADMINISTRATION
(a) The Plan shall be administered by the Board
unless and until the Board delegates administration to a committee (the
"Committee"), as provided in subparagraph 2(d). Board action shall be taken
pursuant to a majority vote or the unanimous written consent of its members.
(b) The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan and the Code:
(i) To determine from time to time
which of the persons eligible under the Plan shall be granted an option; when
and how the option shall be granted; whether the option will be an incentive
stock option or a nonqualified stock option; the provisions of each option
granted (which need not be identical), including, without limitation, the time
or times during the term of each option within which all or portions of such
option may be exercised; the duration of and purposes of leaves of absence
which may be granted to participants without constituting a termination of
their employment for purposes of the Plan; and the number of shares for which
an option shall be granted to each such person.
(ii) To determine any conditions or
restrictions imposed on Common Stock acquired pursuant to the exercise of an
option (including, but not limited to, repurchase rights, forfeiture
restrictions and restrictions on transferability).
(iii) To construe and interpret the Plan
and the options granted under it, to construe and interpret any conditions or
restrictions imposed on Common Stock acquired pursuant to the exercise of an
option, to define the terms used herein and to establish, amend and revoke rules
and regulations for its administration. The Board, in the exercise of this
power, may correct any defect, omission or inconsistency in the Plan or in any
option agreement in a manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective.
(iv) At any time and from time to time,
with the consent of the affected optionee or optionees, to modify any or all
outstanding options granted under the Plan and to cancel any or all such options
and to grant in substitution therefor new options under the Plan covering the
same or different number of shares of Common Stock at an option price per share
in all events not less than the fair market value on the new grant date.
(v) To amend the Plan as provided in
paragraph 11.
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<PAGE> 4
(vi) To accelerate the time during which
an option may be exercised, notwithstanding the provisions in the option stating
the time during which it may be exercised.
(vii) Generally, to exercise such powers
and to perform such acts as it deems necessary or expedient to promote the best
interests of the Company.
(c) The Board shall use its best efforts to cause the
Plan to comply with the provisions of Rule 16b-3 promulgated pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"), as in effect from
time to time, to the extent applicable to the Plan.
(d) The Board may delegate administration of the Plan
to a Committee composed of not fewer than two (2) members of the Board. All of
the members of the Committee shall be "disinterested persons" as provided in
Rule 16b-3(c)(2)(i) promulgated pursuant to the 1934 Act. If administration is
delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board as set
forth in the Plan, subject, however, to such resolutions, not inconsistent with
the provisions of the Plan, as may be adopted from time to time by the Board.
Any action of the Committee with respect to administration of the Plan shall be
taken pursuant to a majority vote or to the unanimous written consent of its
members. The Board may abolish the Committee at any time and revest in the Board
the administration of the Plan.
(e) The determinations of the Board or the Committee
on matters referred to in the Plan shall be final and conclusive.
3. SHARES SUBJECT TO THE PLAN
Subject to the provisions of paragraph 9 relating to
adjustments upon changes in Common Stock, the Common Stock that may be offered
pursuant to options granted under the Plan shall not exceed the aggregate of
750,000 shares of the Company's Common Stock. If any option granted under the
Plan shall for any reason expire, be cancelled or otherwise terminate without
having been exercised in full, the Common Stock not purchased under such option
shall again become available for the Plan.
4. ELIGIBILITY
(a) All Employees and Employee Directors of the
Company or its subsidiaries shall be eligible to receive incentive stock
options. Non-Employee Directors and Consultants of the Company or its
subsidiaries shall not be eligible to receive incentive stock options.
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<PAGE> 5
(b) All Employees, Employee Directors, Non-Employee
Directors and Consultants of the Company or its subsidiaries shall be eligible
to receive nonqualified stock options.
(c) The Company may issue incentive stock options
provided that the aggregate fair market value (determined at the time the
incentive stock option is granted) of the stock with respect to which incentive
stock options are exercisable for the first time by the optionee during any
calendar year (under all incentive stock option plans of the Company and its
subsidiaries) shall not exceed One Hundred Thousand Dollars ($100,000). Should
it be determined that any incentive stock option granted pursuant to the Plan
exceeds such maximum, such incentive stock option shall be considered to be a
nonqualified stock option and not to qualify for treatment as an incentive stock
option under Section 422 of the Code to the extent, but only to the extent, of
such excess.
5. OPTION PROVISIONS
Each option shall be in such form and shall contain
such terms and conditions as the Board or the Committee shall deem appropriate.
The provisions of separate options need not be identical, but each option shall
include (through incorporation of the provisions hereof by reference in the
option or otherwise) the substance of each of the following provisions:
(a) Each option granted and all rights or obligations
thereunder by its terms shall expire on such date as the Board or the Committee
may determine as set forth in such stock option agreement, but not later than
ten (10) years from the date the option was granted and shall be subject to
earlier termination as provided elsewhere in the Plan. For purposes of the Plan,
the date of grant of an option shall be the date on which the Board or the
Committee (as the case may be) takes final action approving the award of the
option, notwithstanding the date the optionee accepts the option, the date of
execution of the option agreement or any other date with respect to such option.
(b) The exercise price of each option shall be
determined by the Board or the Committee and shall be not less than one hundred
percent (100%) of the fair market value of the Common Stock subject to the
option on the date the option is granted. The fair market value of such Common
Stock shall be determined by the Board or the Committee in accordance with any
reasonable valuation method, including the valuation method described in
Treasury Regulation Section 20.2031-2.
(c) The purchase price of Common Stock acquired
pursuant to an option shall be paid at the time the option is exercised, as
specified in the option, either: (i) in cash or check payable to the order of
the Company in an amount equal to the option price for the shares being
purchased or (ii) at the discretion of the Board or the Committee, (A) in whole
shares of Common Stock of the Company owned by the optionee having a fair market
value on the exercise
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<PAGE> 6
date (determined by the Board or the Committee in accordance with any reasonable
valuation method including the valuation method described in Treasury Regulation
Section 20.2031-2) equal to the option price for the shares being purchased, (B)
according to a deferred payment or other arrangement (which may include, without
limiting the generality of the foregoing, the use of other Common Stock of the
Company) with the person to whom the option is granted or to whom the option is
transferred pursuant to paragraph 5(d) below, or (C) a combination of Common
Stock, cash or check or deferred payment arrangement equal in the aggregate to
the option price for the shares being purchased. Payments of Common Stock shall
be made by delivery of stock certificates properly endorsed for transfer in
negotiable form. If other than the optionee, the person or persons exercising
the option shall be required to furnish the Company appropriate documentation
that such person or persons have the full legal right and power to exercise the
option on behalf of and for the optionee.
(d) An option by its terms may only be transferred by
will or by the laws of descent and distribution upon the death of the optionee,
shall not be transferable during the optionee's lifetime, and shall be
exercisable during the lifetime of the person to whom the option is granted only
by such person.
(e) Except as provided in paragraph 10, each option
shall be exercisable in such installments, which need not be equal, and upon
such contingencies as the Board or the Committee shall determine. The Board or
the Committee may determine, in its discretion at the time the option is
granted, that during each of such installment periods the option may be
exercised with respect to some or all of the shares allotted to that period, or
with respect to some or all of the shares allotted to any prior period as to
which the option was not fully exercised. The option may also provide that
during the remainder of the term of the option (if its term extends beyond the
end of the installment periods), the option may be exercised from time to time
with respect to any shares then remaining subject to the option. The provisions
of this subparagraph 5(e) are subject to any option provisions governing the
minimum number of shares as to which an option may be exercised.
(f) The Company may require any optionee, or any
person to whom an option is transferred under subparagraph 5(d), as a condition
of exercising any such option, to give written assurances satisfactory to the
Company stating that such person is acquiring the Common Stock subject to the
option for such person's own account and not with any present intention of
selling or otherwise distributing the stock. The requirement of providing
written assurances, and any assurances given pursuant to the requirement, shall
be inoperative if (i) the shares to be issued upon the exercise of the option
have been registered under a then currently effective registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), or (ii) a
determination is made by counsel for the Company that such written assurances
are not required in the circumstances under the then applicable federal or state
securities laws.
(g) If an Employee or Employee Director optionee
ceases to be employed by the Company or its subsidiaries or a Non-Employee
Director or Consultant optionee
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<PAGE> 7
ceases to serve as a director or consultant of the Company or its subsidiaries,
respectively, then such optionee's option shall terminate three (3) months
thereafter, and during such three month period, such option shall be exercisable
only as to those shares with respect to which installments, if any, had accrued
as of the date on which the optionee ceased to be employed by the Company or its
subsidiaries or ceased to serve as a director or consultant of the Company or
its subsidiaries, as the case may be, unless:
(i) Such termination is due to such person's
permanent and total disability, within the meaning of Section 22(e)(3) of the
Code, in which case the stock option agreement may, but need not, provide that
it may be exercised at any time within one (1) year following such termination
of employment or cessation of directorship or consulting agreement, as the case
may be, and provided further that if such optionee dies during such specified
period following such termination of employment or cessation of directorship or
consulting agreement, then the stock option agreement may, but need not, provide
that such option may be exercised at any specified time up to one (1) year
following the death of the optionee by the person or persons to whom the
optionee's rights under such option pass by will or by the laws of descent and
distribution, but only to the extent that the optionee was entitled to exercise
such option immediately prior to the termination of the optionee's employment or
cessation of the optionee's directorship or consulting agreement, as the case
may be;
(ii) The optionee dies while in the employ of
the Company or its subsidiaries or while serving as a director or consultant of
the Company or its subsidiaries (which shall constitute termination of
employment or cessation of directorship or consulting agreement), or within not
more than three (3) months after termination of such employment or cessation of
directorship or consulting agreement, in which case the option may, but need
not, provide that it may be exercised at any time within one (1) year following
the death of the optionee by the person or persons to whom the optionee's rights
under such option pass by will or by the laws of descent and distribution, but
only to the extent that the optionee was entitled to exercise such option
immediately prior to the termination of the optionee's employment or cessation
of the optionee's directorship or consulting agreement;
(iii) The option by its terms specifies either
(A) that it shall terminate sooner than three (3) months after termination of
the optionee's employment or cessation of the optionee's directorship or
consulting agreement, or (B) that in the case of nonqualified stock options it
may be exercised more than three (3) months after termination of the optionee's
employment or cessation of the optionee's directorship or consulting agreement,
but only to the extent that the optionee was entitled to exercise such option
immediately prior to the termination of the optionee's employment or cessation
of the optionee's directorship or consulting agreement;
(iv) The Employee or Employee Director
optionee's employment, or the Consultant optionee's consulting agreement, is
terminated for cause, whereupon the option terminates immediately unless such
termination is waived by the Board or the Committee. Termination for cause shall
include termination for malfeasance or gross misfeasance in the
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<PAGE> 8
performance of duties, or conviction of illegal activity in connection
therewith, conviction for a felony or any conduct detrimental to the interests
of the Company or any of its subsidiaries, and the determination of the Board or
the Committee with respect thereto shall be final and conclusive; or
(v) The Employee Director or Non-Employee
Director optionee is removed from the Board of Directors of the Company or any
of its subsidiaries for cause, whereupon the option terminates immediately on
the date of such removal. Removal for cause shall include removal of a director
who has been declared of unsound mind by an order of court or convicted of a
felony.
This subparagraph 5(g) shall not be construed to extend the
term of any option or to permit anyone to exercise the option after expiration
of its term, nor shall it be construed to increase the number of shares as to
which any option is exercisable from the amount exercisable on the date of
termination of the optionee's employment.
(h) Options may be exercised by ten (10) days
written notice delivered to the Company stating the number of shares with
respect to which the option is being exercised together with payment for such
shares. Not less than ten (10) shares may be purchased at any one time unless
the number purchased is the total number of shares which may be purchased under
the option.
(i) Any option granted hereunder shall provide
as determined by the Board or the Committee for appropriate arrangements for the
satisfaction by the Company or its subsidiaries and the optionee of all federal,
state, local or other income, excise or employment taxes or tax withholding
requirements applicable to the exercise of the option or the later disposition
of the shares of stock thereby acquired. Such arrangements shall include,
without limitation, the right of the Company or any subsidiary thereof to deduct
or withhold in the form of cash or, if permitted by law, shares of stock from
any transfer or payment to an optionee or, if permitted by law, to receive
transfers of shares of stock or other property from the optionee, in such amount
or amounts deemed required or appropriate by the Board or the Committee in its
discretion. Any shares of Common Stock issued pursuant to the exercise of an
option and transferred by the optionee to the Company for purposes of satisfying
any withholding obligation shall not again be available for purposes of the
Plan.
6. COVENANTS OF THE COMPANY
(a) During the terms of the options granted under the
Plan, the Company shall keep available at all times the number of shares of
Common Stock required to satisfy such options.
(b) The Company shall seek to obtain from each
regulatory commission or agency having jurisdiction over the Plan or the Company
such authority as may be required to
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<PAGE> 9
issue and sell shares of Common Stock upon exercise of the options granted under
the Plan; provided, however, that this undertaking shall not require the Company
to register under the Securities Act either the Plan, any option granted under
the Plan or any Common Stock issued or issuable pursuant to any such option or
grant. If the Company is unable to obtain from any such regulatory commission or
agency the authority that counsel for the Company deems necessary for the lawful
issuance and sale of Common Stock under the Plan, the Company shall be relieved
from any liability for failure to issue and sell Common Stock upon exercise of
such options unless and until such authority is obtained.
(c) The Company shall indemnify and hold harmless the
members of the Board and the Committee in any action brought against any member
in connection with the administration of the Plan to the maximum extent
permitted by then applicable law, except in the case of willful misconduct or
gross misfeasance by such member in connection with the Plan and its
administration.
7. USE OF PROCEEDS FROM COMMON STOCK
Proceeds from the sale of Common Stock pursuant to
options granted under the Plan shall constitute general funds of the Company.
8. MISCELLANEOUS
(a) Neither an optionee nor any person to whom an
option is transferred under subparagraph 5(d) shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares of
Common Stock subject to such option unless and until such person has satisfied
all requirements for exercise of the option pursuant to its terms.
(b) Nothing contained in the Plan, or in any option
granted pursuant to the Plan, shall obligate the Company or any of its
subsidiaries to employ any employee for any period or interfere in any way with
the right of the Company or any of its subsidiaries to reduce the compensation
of any employee.
9. ADJUSTMENTS UPON CHANGES IN STOCK
If the outstanding shares of the Common Stock of the
Company are increased, decreased or changed into, or exchanged for, a different
number or kind of shares or securities of the Company, without receipt of
consideration by the Company, through reorganization, merger, recapitalization,
reclassification, stock split, stock dividend, stock consolidation or otherwise,
an appropriate and proportionate adjustment shall be made in the number and kind
of shares as to which options may be granted. A corresponding adjustment
changing the number or kind of shares and the exercise price per share allocated
to unexercised options, or portions thereof, which shall have been granted prior
to any such change shall likewise be made. Any such adjustment, however, in an
outstanding option shall be made without change
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<PAGE> 10
in the total price applicable to the unexercised portion of the option but with
a corresponding adjustment in the price for each share subject to the option.
Adjustments under this section shall be made by the Board or the Committee whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final and conclusive. No fractional shares of Common Stock shall be
issued under the Plan on account of any such adjustment.
10. TRIGGERING EVENTS
Not less than thirty (30) days prior to the
dissolution or liquidation of the Company, or a reorganization, merger or
consolidation of the Company with one or more corporations as a result of which
the Company will not be the surviving or resulting corporation, or a sale of
substantially all the assets of the Company to another person, or a reverse
merger in which the Company is the surviving corporation but the shares of the
Company's Common Stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property (a "Triggering Event"),
the Board or the Committee shall notify each optionee of the pendency of the
Triggering Event. Upon delivery of such notice, any option granted prior to the
Triggering Event shall be, notwithstanding the provisions of paragraph 5 hereof,
exercisable in full and not only as to those shares with respect to which
installments, if any, have then accrued, subject, however, to earlier expiration
or termination as provided elsewhere in the Plan and subject to the consummation
of the Triggering Event. Upon the effective date of the Triggering Event, the
Plan and any option or portion thereof not exercised shall terminate, unless
provision is made in connection with the Triggering Event for the assumption of
options theretofore granted, or substitution for such options of new options
covering stock of a successor employer corporation or a parent or subsidiary
corporation thereof, solely at the option of such successor corporation or
parent or subsidiary corporation with appropriate adjustments as to number and
kind of shares and prices.
11. AMENDMENT OF THE PLAN
The Board at any time, and from time to time, may
amend the Plan. However, except as provided in paragraph 9 relating to
adjustments upon changes in stock, no amendment shall be effective unless
approved by the vote of a majority of the outstanding shares of the Company
entitled to vote or by the unanimous written consent of the holders of all
outstanding shares of the Company entitled to vote, within twelve (12) months
before or after the adoption of the amendment, if the amendment will:
(a) Increase the number of shares reserved for
issuance under the Plan;
(b) Materially modify the requirements as to
eligibility for participation in the Plan; or
(c) Materially increase the benefits accruing to
participants under the Plan;
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<PAGE> 11
provided, however, that approval at a meeting or by written consent may be
obtained by a lesser degree of shareholder approval if the Board determines, in
its discretion after consultation with the Company's legal counsel, that such
lesser degree of shareholder approval will comply with all applicable laws and
will not adversely affect the qualification of the Plan under Section 422 of the
Code.
The Board, in its sole discretion, may amend the Plan in any respect the Board
deems necessary or advisable to provide optionees with the maximum benefits
provided or to be provided under the provisions of the Code and the regulations
promulgated thereunder relating to incentive stock options or to bring the Plan
or options granted under it into compliance therewith.
12. TERMINATION OR SUSPENSION OF THE PLAN
(a) The Board may suspend or terminate the Plan at
any time. Unless sooner terminated, the Plan shall terminate at the end of the
day immediately preceding the tenth anniversary of the Effective Date (as
defined in paragraph 13) of the Plan. No options may be granted under the Plan
while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any option granted
pursuant to the Plan, while the Plan is in effect, shall not be altered or
impaired by suspension or termination of the Plan, except with the consent of
the person to whom the option was granted.
13. EFFECTIVE DATE OF PLAN
The Plan (as amended and restated herein) shall
become effective on June 12, 1996 (the "Effective Date"), but no options granted
under the Plan after the Effective Date shall be exercised unless and until the
Plan has been approved by the vote of the holders of a majority of the
outstanding shares of the Company entitled to vote or by the unanimous written
consent of the holders of all of the outstanding shares of the Company entitled
to vote, and, if required, an appropriate permit has been issued by the
appropriate state securities authorities and approval has been obtained from the
appropriate federal or state regulatory authorities.
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<PAGE> 1
EXHIBIT 99.5
Prospectus
<PAGE> 2
VALLEY FORGE CORPORATION
AMENDED AND RESTATED 1987 STOCK OPTION PLAN
This Prospectus relates to a total of 750,000 shares of the
Common Stock of Valley Forge Corporation (the "Company") to be offered and sold
pursuant to the Amended and Restated 1987 Stock Option Plan (the "Plan"), as
well as to such indeterminate number of shares as may become available under the
Plan pursuant to the adjustments provisions thereof.
--------------------------------------------
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING
SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THIS
DOCUMENT MAY NOT BE USED FOR RESALE OF THE SECURITIES ACQUIRED HEREUNDER. SEE
"RESTRICTIONS ON RESALE."
--------------------------------------------
No person has been authorized to give any information or to
make any representation not contained in this Prospectus, and, if given or made,
such information or representation should not be relied upon as having been
authorized. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, any security in any jurisdiction in which, or
to any person to whom, such offer or solicitation would be unlawful. Neither the
delivery of this Prospectus nor any distribution of the securities referred to
in this Prospectus shall under any circumstances create any implication that
there has been no change in the affairs of the Company or any other information
contained herein since the date of this Prospectus.
THE DATE OF THIS PROSPECTUS IS JULY 1, 1996.
1
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Documents Incorporated by Reference and Available Information................................................... 3
Stock Option Plan
Purpose .............................................................................................. 4
Administration......................................................................................... 4
Eligibility............................................................................................ 4
Option Price and Exercisability........................................................................ 4
Adjustments............................................................................................ 5
Expiration, Termination and Transfer of Option......................................................... 5
Termination and Amendment of Plan...................................................................... 6
Federal Income Tax Consequences........................................................................ 6
Restrictions on Resale........................................................................................... 8
Future Information............................................................................................... 9
</TABLE>
2
<PAGE> 4
DOCUMENTS INCORPORATED BY REFERENCE AND
AVAILABLE INFORMATION
The following documents are incorporated herein by reference:
a. The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995 filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
b. All other reports filed by the Company pursuant to Sections
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), since the end of the fiscal year covered by the document referred to in
(a) above.
c. The description of the Common Stock of the Company is
contained in the Company's Registration Statement on Form 8-A dated April 5,
1988, including any amendment or report filed for the purpose of updating such
information.
d. The Company's Registration Statement on Form S-8 (File No.
33-50250).
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Summary
Plan Description and prior to the filing of a post-effective amendment which
indicates that all securities offered hereby have been sold or which deregisters
all securities then remaining unsold shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such documents.
Any person receiving a copy of this Prospectus may obtain without
charge, upon written or oral request, a copy of any of the documents
incorporated by reference herein (not including the exhibits to such documents
unless such exhibits are specifically incorporated by reference), and the
Company's annual report to shareholders. Requests should be directed to Valley
Forge Corporation, 100 Smith Ranch Road, Suite 326, San Rafael, California
94903, Attention: Monica J. Burke, or by calling (415) 492-1500.
3
<PAGE> 5
STOCK OPTION PLAN
Purpose
The purpose of the Plan is to enable the Company to attract, retain and
motivate officers, directors, employees and independent contractors by providing
for or increasing their proprietary interests in the Company and, in the case of
non-employee directors, to attract such directors and further align their
interests with those of the Company's shareholders by providing for or
increasing their proprietary interests in the Company.
The Plan authorizes the grant of options which qualify as "incentive
stock options" ("Incentive Stock Options") under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), and options which do not qualify
as Incentive Stock Options ("Nonqualified Stock Options").
The Plan is not qualified under Section 401(a) of the Code and is not
subject to any provisions of the Employee Retirement Income Security Act of
1974.
This summary of the Plan does not purport to be complete, and reference
is made to the Plan and the form of stock option agreements for a full and
complete statement of the terms and provisions thereof. Copies of such documents
are available for review at the Company's principal office and will be furnished
to any optionholder without charge upon a written or oral request directed to
the Secretary of the Company at 100 Smith Ranch Road, Suite 326, San Rafael,
California 94903, telephone number (415) 492-1500. Each optionholder should
refer to his particular stock option agreement for its terms and conditions. All
statements herein are qualified by the particular provisions of each
optionholder's stock option agreement.
Administration
The Plan is administered by a committee (the "Committee") of not less
than two members of the Board of Directors, each of which is a "disinterested
person" as defined in Rule 16b-3(c)(2)(i) promulgated pursuant to the Securities
Exchange Act of 1934, as amended (the "1934 Act"). The Committee currently
consists of Messrs. Bloom, Desloge and Dressel. The Committee has the full power
and authority in its discretion to take any and all action required or permitted
to be taken under the Plan, including the selection of participants to whom
stock options may be granted, the determination of the number of shares which
may be covered by each stock option, the exercise price and the other terms and
conditions of the stock options.
Shares Subject to the Amended Plan and Outstanding Options
The maximum number of shares of Common Stock that may be issued pursuant
to awards granted under the Plan is 750,000 (subject to adjustment to prevent
dilution). If any option granted under the Plan shall for any reason expire, be
canceled or otherwise terminate without having been exercised in full, the
shares not purchased under such option shall again become available under the
Plan.
Eligibility
Under the Plan, employees and employee directors are eligible to receive
Incentive Stock Options and Nonqualified Stock Options, and non-employee
directors and independent contractors are eligible to receive Nonqualified Stock
Options. The Company may issue Incentive Stock Options under the Plan provided
that
4
<PAGE> 6
the aggregate fair market value (determined at the time the Incentive Stock
Option is granted) of the stock with respect to which Incentive Stock Options
are exercisable for the first time by the optionee during any calendar year
(under all Incentive Stock Option plans of the Company and its subsidiaries)
shall not exceed $100,000. Should it be determined that any Incentive Stock
Options granted pursuant to the Plan exceed such maximum, such Incentive Stock
Options shall be considered to be Nonqualified Stock Options and not to qualify
for treatment as Incentive Stock Options under Section 422 of the Code to the
extent, but only to the extent, of such excess.
Option Price and Exercisability
The exercise price of each option granted under the Plan shall be
determined by the Committee and shall not be less than 100% of the fair market
value of the stock subject to the option on the date the option is granted;
provided, however, that the purchase price of the stock subject to an Incentive
Stock Option may not be less than 110% of such fair market value (without regard
to any restriction other than a restriction which, by its terms, will never
lapse) where the optionee owns (or is deemed to own pursuant to Section 424(d)
of the Code) stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company. The purchase price of stock acquired
pursuant to an option granted under the Plan shall be paid in cash or check
payable to the order of the Company at the time the option is exercised or, at
the discretion of the Committee, in whole shares of stock of the Company owned
by the optionee having a fair market value on the exercise date (determined by
the Committee in accordance with any reasonable valuation method, including the
valuation method described in Treasury Regulation Section 20.2031-2) equal to
the option price for the shares being purchased, or according to a deferred
payment arrangement equal to the aggregate to the option price for the shares
being purchased. Payments in stock shall be made by delivery of stock
certificates properly endorsed for transfer in negotiable form.
Under the Plan, options shall be exercisable in such installments and
upon such contingencies as the Committee shall determine. If other than the
optionee, the person exercising an option granted under the Plan shall be
required to furnish the Company appropriate documentation that such person has
the full legal right and power to exercise the option on behalf of the optionee.
Adjustments
If the outstanding shares of the capital stock of the Company are
increased, decreased, or changed into or exchanged for a different number or
kind of shares or securities of the Company, without receipt of consideration by
the Company, through a reorganization, merger, recapitalization,
reclassification, stock split, stock dividend, stock consolidation, or
otherwise, an appropriate adjustment shall be made in the number and kind of
shares as to which options may be granted under the Plan. A corresponding
adjustment changing the number or kind of shares and the exercise price per
share allocated to unexercised options, or portions thereof, which shall have
been granted under the Plan prior to any such change likewise shall be made. Any
such adjustment, however, in an outstanding option shall be made without change
in the total price applicable to the unexercised portion of the option but with
a corresponding adjustment in the price for each share subject to the option.
Any such adjustment shall be made by the Committee, whose determination as to
what adjustments shall be made, and the extent thereof, shall be final and
conclusive. No fractional shares of stock shall be issued under the Plan on
account of any such adjustment.
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Expiration, Termination and Transfer of Options
No option under the Plan may extend more than ten years from such date.
Notwithstanding the foregoing, any Incentive Stock Option granted to an optionee
who owns (or is deemed to own pursuant to Section 424(d) of the Code) stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or any of its affiliates shall expire not later than five
years from the date of grant. The date of grant of an option shall be the date
on which the Committee takes final action approving the award of the option,
notwithstanding the date the optionee accepts the option.
Except in the event of termination of employment due to death,
disability or termination for cause, options granted under the Plan will
terminate three months after an employee or employee director ceases to be
employed by or ceases to serve as a director, a non-employee director ceases to
serve as a director or a consultant ceases to serve as a consultant unless the
options by their terms were scheduled to terminate earlier. During that three
month period after the employee or employee director ceases to be employed by or
ceases to serve as a director, or the non-employee director or consultant ceases
to serve as a director or consultant, such option shall be exercisable only as
to those shares with respect to which installments, if any, had accrued as of
the date of which the optionee ceased to be employed or ceased to serve as a
director or consultant, as the case may be. If such termination was due to the
optionee's permanent and total disability, or the optionee's death, the option,
by it terms, may be exercisable for one year after such termination of
employment or cessation of directorship or consulting agreement. If the employee
or employee director's employment or the consultant's consulting agreement is
terminated for cause, the option terminates immediately, unless the termination
is waived by the Committee. Termination for cause shall include termination for
malfeasance or gross misfeasance in the performance of duties, or conviction of
illegal activity in connection therewith, conviction for a felony, or any
conduct detrimental to the interests of the Company. If the employee director or
non-employee director is removed from the Board of Directors for cause, the
option terminates immediately on the date of such removal. Removal for cause
shall include removal of a director who has been declared of unsound mind by an
order of court or convicted of a felony. Any option by its terms may only be
transferred by will or by the laws of descent and distribution upon the death of
the optionee, shall not be transferable during the optionee's lifetime, and
shall be exercisable during the lifetime of the person to whom the option is
granted only by such person. The Committee shall have the power to accelerate
the time during which an option granted under the Plan may be exercised,
notwithstanding the provisions in the option stating the time during which the
option may be exercised.
Termination and Amendment of Plan
The Plan and any option or portion thereof not exercised will terminate
upon the occurrence of a terminating event, including, but not limited to, a
liquidation, reorganization, merger, or consolidation of the Company with
another corporation as a result of which the Company is not the surviving or
resulting corporation, or a sale of substantially all the assets of the Company
to another person, or a reverse merger in which the Company is the surviving
corporation but the shares of the Company's stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property
(a "Triggering Event"). The Committee shall notify each optionee not less than
thirty days prior thereto of the pendency of a Triggering Event. Upon delivery
of such notice, any option outstanding shall be exercisable in full and not only
as to those shares with respect to which installments, if any, have then
accrued, subject, however, to earlier expiration or termination as provided
elsewhere in the Plan and subject to the consummation of the Triggering Event.
The Board of Directors may also suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate ten years from its effective
date, June 12, 1996 (the "Effective Date").
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No options may be granted under the Plan while it is suspended or after it is
terminated. Rights and obligations under any option granted pursuant to the
Plan, while it is in effect, shall not be altered or impaired by suspension or
termination of the Plan, except with the consent of the person to whom the stock
option was granted.
Federal Income Tax Consequences
The following discussion is only a summary of the principal federal
income tax consequences of options granted under the Plan, and is based on
existing federal law (including administrative regulations and rulings) which is
subject to change, in some cases retroactively. This discussion is also
qualified by the particular circumstances of individual optionees, which may
substantially alter or modify the federal income tax consequences herein
discussed.
Generally under present law, when an option qualifies as an Incentive
Stock Option: (i) an optionee will not realize taxable income either upon the
grant or the exercise of the option; (ii) any gain or loss upon a qualifying
disposition of the shares acquired upon exercise of the option will be treated
as capital gain or loss; and (iii) no deduction will be allowed to the Company
for federal income tax purposes in connection with the grant or exercise of the
option or a qualifying disposition of the shares acquired upon exercise thereof.
A disposition by an optionee of stock acquired upon exercise of an Incentive
Stock Option will constitute a qualifying disposition if it occurs more than two
years after the grant of the option and more than one year after the issuance of
the shares to the optionee. The Company obtains no deduction in connection with
the grant or exercise of an Incentive Stock Option or a qualifying disposition
of the shares. If such stock is disposed of by the optionee before the
expiration of those time limits, the transfer would be a "disqualifying
disposition" and the optionee, in general, will recognize ordinary income equal
to the lesser of (i) the aggregate fair market value of the shares as of the
date of exercise less the option price or (ii) the amount realized on the
disqualifying disposition less the option price. Ordinary income from a
disqualifying disposition will constitute compensation for which withholding may
be required under federal and state law. Any gain in addition to the amount
reportable as ordinary income from a "disqualifying disposition" generally will
be capital gain.
Upon the exercise of an Incentive Stock Option, the difference between
the fair market value of stock on the date of exercise and the option price
generally is treated as a "tax preference" item in the taxable year for
alternative minimum tax purposes, as are a number of other items specified by
the Code. Such tax preference items (with adjustments) form the basis for the
alternative minimum tax (presently at a rate of 24% for individuals), which may
apply depending on the amount of the computed "regular tax" of the employee for
that year. Under certain circumstances the amount of alternative minimum tax is
allowed as a carry forward credit against regular tax liability in subsequent
years.
In the case of Nonqualified Stock Options, no income generally is
recognized by the optionee at the time of the grant of the option. The optionee
generally will recognize ordinary income at the time the Nonqualified Stock
Option is exercised equal to the aggregate fair market value of the shares
acquired less the option price. However, if the shares received upon the
exercise of a Nonqualified Stock Option are subject to certain restrictions, the
taxable event is postponed until the restrictions lapse. For example, if a sale
of the shares at a profit would subject an optionee to liability under Section
16(b) of the 1934 Act, the optionee generally will recognize taxable income on
the date that the optionee is no longer subject to such liability in an amount
equal to the fair market value of the shares on such date less the option price.
Notwithstanding the foregoing, the optionee may make a special election with
thirty days of receiving restricted shares to recognize
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taxable income as of the date of exercise. Ordinary income for a Nonqualified
Stock Option will constitute compensation for which withholding may be required
under federal and state law.
Subject to special rules applicable when an optionee uses stock of the
Company to exercise an option, shares acquired upon exercise of a Nonqualified
Stock Option will have a tax basis equal to their fair market value on the
exercise date or other relevant date on which ordinary income is recognized, and
the holding period for the shares generally will begin on the date of exercise
or such other relevant date. Upon subsequent disposition of the shares, the
optionee generally will recognize capital gain or loss. Provided the shares are
held by the optionee for more than one year prior to disposition, such gain or
loss will be long-term capital gain or loss.
The Company will generally be entitled to a deduction equal to the
ordinary income (i.e., compensation) portion of the gain recognized by the
optionee in the case of a "disqualifying disposition" of an Incentive Stock
Option or in connection with the exercise of a Nonqualified Stock Option
provided the Company complies with withholding requirements of federal and state
law.
THE FOREGOING SUMMARY OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES
IS NOT INTENDED TO BE AND DOES NOT CONSTITUTE A COMPLETE DESCRIPTION OF ALL
POSSIBLE FEDERAL, OR ANY STATE OR LOCAL, TAX CONSEQUENCES OF THE GRANT OR
EXERCISE OF STOCK OPTIONS OR THE SALE OR DISPOSITION OF THE UNDERLYING
SECURITIES. ALSO, TAX CONSEQUENCES OF SUCH TRANSACTIONS MAY VARY DEPENDING ON
THE PARTICULAR FACTS RELATING TO EACH OPTIONEE. ACCORDINGLY, EACH OPTIONEE IS
URGED TO CONSULT SUCH OPTIONEE'S OWN TAX ADVISER WITH RESPECT TO THE TAX
CONSEQUENCES TO SUCH OPTIONEE OF TRANSACTIONS IN CONNECTION WITH THE AMENDED
PLAN.
RESTRICTIONS ON RESALE
Restrictions on resale of Common Stock acquired pursuant to the
Plan may be imposed by the terms of any award made under the Plan.
Any person receiving shares of Common Stock under the Plan who is
an "affiliate" of the Company may re-offer or resell such shares only pursuant
to (i) a registration statement filed under the Securities Act, (ii) an
appropriate exemption from the registration requirements of the Securities Act
or (iii) Rule 144 promulgated under the Securities Act. The Company has no
obligation to file a registration statement for such purpose. The term
"affiliate" is defined as a person that directly, or indirectly through one or
more intermediaries, controls or is controlled by, or is under common control
with, the Company. Any person who may be an "affiliate" of the Company should
consult legal counsel before effecting a transfer of Common Stock.
In general, under Rule 144 promulgated under the Securities Act,
as currently in effect, an affiliate of the Company is entitled to sell within
any three-month period a number of shares of Common Stock that does not exceed
the greater of (i) 1% of the then outstanding shares of the Company's Common
Stock or
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(ii) the average weekly trading volume of the Company's Common Stock in the
public market during the four calendar weeks immediately preceding such sale.
Sales under Rule 144 are also subject to certain requirements as to the manner
of sale, notice and availability of current public information regarding the
Company.
Pursuant to Section 16(b) of the Exchange Act, directors, certain
officers and ten percent shareholders of the Company (an "insider") are
generally liable to the Company for repayment of any "short-swing" profits
realized from any non-exempt purchase and sale of Common Stock occurring within
a six-month period. Rule 16b-3, promulgated under the Exchange Act, provides an
exemption from Section 16(b) liability for certain transactions by an officer or
director pursuant to an employee benefit plan that complies with such rule.
Specifically, the grant of an option under an employee benefit plan that
complies with Rule 16b-3 will not be deemed a purchase of a security for
purposes of Section 16(b). The Plan is designed to comply with Rule 16b-3. An
insider also is required to report to the Securities and Exchange Commission
(the "SEC") his holdings and transactions in the Company's equity securities.
The SEC has adopted regulations affecting the circumstances under
which an insider may purchase or sell securities of an issuer in compliance with
Section 16 of the Exchange Act. These rules impose significant obligations upon
insiders under the reporting and short swing liability provisions of Section 16.
Since the compliance procedures are complex, an insider should pay close
attention to these requirements. Any person who may be an insider of the Company
for purposes of Section 16 should consult with legal counsel before effecting
any transactions in connection with the Company's Common Stock or derivative
securities (including awards under the Plan).
FUTURE INFORMATION
Prospectuses covering the Plan will not be furnished annually to
participants in the Plan except upon specific request. Instead, participants in
the Plan will be provided with information concerning any material changes to
the Plan itself or the information set forth in this Prospectus. However, a copy
of this Prospectus with the most current updates will be provided to new
participants in the Plan and, upon request, to any participant.
In addition to the foregoing, the Company will transmit to each
participant in the Plan, who does not otherwise receive such materials as a
shareholder of the Company, a copy of all reports, proxy statements and other
communications distributed to its shareholders generally at the time and in the
manner such materials are distributed to shareholders.
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