SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities and Exchange Act of 1934
Filed by registrant [X]
Filed by a party other than the regristrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive addtional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Valley Forge Scientific Corp.
(Name of Registrant as Specified in its Charter)
Valley Forge Scientific Corp.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
______________________________________________________________
(2) Aggregate number of securities to which transaction applies:
______________________________________________________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11. (Set forth the amount on
which the filing fee is calculated and state how it was determined.
______________________________________________________________
(4) Proposed maximum aggregate value of transaction:
______________________________________________________________
(5) Total fee paid:
__________________________________________________________
[ ] Fee paid previously with preliminary materials.
__________________________________________________________
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
__________________________________________________________
(2) Form, Scheudle or Registration Statement No.:
__________________________________________________________
(3) Filing Party:
_________________________________________________________
(4) Date Filed:
_________________________________________________________
VALLEY FORGE SCIENTIFIC CORP.
136 Green Tree Road
Oaks, Pennsylvania 19456
________________________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 8, 1996
________________________________________
To the Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders
of Valley Forge Scientific Corp. (the "Company") will be held at Park Ridge
Hotel, at 480 North Gulph Road, King of Prussia, Pennsylvania on
May 8, 1996 at 4:00 P.M. local time, for the following purposes:
1. To elect five directors of the Company to serve for the following
year and until their successors have been elected and qualified;
2. To receive reports of Officers; and
3. To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on March 1, 1996
as the record date for determining shareholders entitled to notice of the
meeting and to vote at such meeting or any adjournment thereof, and only
shareholders of recordat the close of business on March 1, 1996 are entitled
to notice of and vote at such meeting.
A copy of the Company's Annual Report for the fiscal year ended
September 30, 1995, is enclosed herewith.
You are cordially invited to attend the meeting. Whether or not you
plan to attend, you are urged to complete, date and sign the enclosed proxy
and return it promptly. If you receive more than one form of proxy, it is an
indication that your shares are registered in more than one account, and
each such proxy must be completed and returned if you wish to vote all of
your shares eligible to be voted at the meeting.
By Order of the Board of Directors
Thomas J. Gilloway, Secretary
Dated: Oaks, Pennsylvania
March 27, 1996
PLEASE COMPLETE AND RETURN THE PROXY IN THE ENCLOSED
ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. IF YOU ATTEND THE MEETING, YOUR PROXY WILL BE
RETURNED TO YOU UPON REQUEST TO THE SECRETARY OF THE
COMPANY.
VALLEY FORGE SCIENTIFIC CORP.
136 Green Tree Road
Oaks, Pennsylvania 19456
_______________
PROXY STATEMENT
The enclosed proxy is solicited pursuant to this proxy statement (to be
mailed on or about March 27, 1996) by the Board of Directors of Valley Forge
Scientific Corp. (the "Company") for use at the 1995 Annual Meeting of
Shareholders to be held at the time and place shown in the attached Notice
of Annual Meeting of Shareholders. Shares represented by the properly executed
proxies, if returned in time, will be voted at the meeting as specified, or,
if not otherwise specified, in favor of the election of directors of the
nominees named herein. Such proxies are revocable at any time before they
are exercised by written notice to the Secretary of the Company. Management
is not aware at the date hereof of any matters to be presented at this
meeting other than the election of directors. If any other materials
are properly presented, the persons named in the proxy will vote thereon
according to their best judgment.
RECORD DATE
The record date for determining the holders of common stock ("Common
Stock") of the Company who are entitled to notice and to vote at the annual
meeting was March 1, 1996.
VOTING SECURITIES
At March 1, 1996, the Company had 8,229,384 shares of Common Stock
outstanding. Holders of record of Common Stock as of such date will be
entitled to one vote for each share held.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth as of March 1, 1996, certain
information with respect to the beneficial ownership of Common Stock, by
each person known to the Company to own beneficially 5% or more of the
outstanding Common Stock, by each director and nominee, and by all officers
and directors as a group.
<TABLE>
<S> <C> <C>
Name and Address Amount of Percentage
of Beneficial Owner Beneficial Owned
Ownership
Jerry L. Malis(2)(4) 1,282,276 15.6%
Thomas J. Gilloway (2)(4) 1,001,375 12.2%
Dr. Leonard I. Malis (2) 895,575 10.9%
Knowlton Brothers, Inc. (6) 693,900 8.4%
Carl Anderson (3) 412,074 5.0%
Bernard H. Shuman (2) 111,467 1.4%
Bruce A. Murray (2)(5) 7,000 *
All officers and directors 3,297,693 38.7%
______________________________________________
* less than 1%
</TABLE>
(1) Except as indicated in the footnotes to this table, the persons
named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned
by them.
(2) The mailing address of Messrs. Malis, Gilloway, Shuman and Murray and
Dr. Malis, directors of the Company, is 136 Green Tree Road, Oaks,
Pennsylvania 19456.
(3) The foregoing information was provided by Mr. Anderson. The address
of Mr. Anderson is 15414 E. Burrel Drive, Lutz, Florida 33549.
(4) Includes 50,000 shares of Common Stock which may be purchased by each
of Jerry L. Malis and Thomas J. Gilloway through the exercise of stock
options issued pursuant to the Company's Non-Qualified Stock Option
Plan at a per share exercise price of $1.56; includes 50,000 shares of
Common Stock which may be purchased by each of Jerry L. Malis and
Thomas J. Gilloway through the exercise of stock options at a per share
exercise price of $3.625; and includes 50,000 shares of Common Stock
which may be purchased by each of Jerry L. Malis and Thomas J.
Gilloway through the exercise of stock options at a per share
exercise price of $2.375.
(5) Includes 5,000 shares of Common Stock which may purchased by Mr.
Murray through the exercise of stock options issued pursuant to the
Company's Non-Qualified Stock Option Plan at a per share exercise price
of $3.625; 1,000 shares which may be purchased at a per share exercise
price of $4.25; and 1,000 shares at a per share exercise price of
$2.50 per share.
(6) Based on information provided by Knowlton Brothers, Inc. and on the
joint filing on Schedule 13D made by the "group" (as defined in
Rule 13d-5 under the Securities Exchange Act of 1934, as amended)
consisting of Knowlton Brothers, Inc., The Family Partnership, L.P.,
The Frontier Partnership, L.P., Flagship Partners, Ltd., Family
Partners & Co., Frontier Partners & Co., Knowlton Brothers, Inc.,
Knowlton Associates, Inc., Winthrop Knowlton, Stanley Knowlton,
Christopher Knowlton, and Hugh Knowlton Trust for the Benefit of
Erica Knowlton. The principal office and business address of all
the members of the group except Flagship Partners, Ltd. is c/o
Knowlton Brothers, Inc., 530 Fifth Avenue, New York, New York 10036.
The principal office and business address of Flagship Partners, Ltd.
is c/o Deltec Panamerica Trust Company, Limited, Deltec House, P.O.
Box N-3229, Lyford Cay, Nassau, Bahamas.
PROPOSALS TO BE ACTED UPON AT THE ANNUAL MEETING
PROPOSAL 1 - ELECTION OF DIRECTORS
The Company's by-laws provide that the Board of Directors shall consist
of not fewer than 3 members. The Board of Directors has fixed the number of
Directors at five. Jerry L. Malis, Thomas J. Gilloway, Leonard I. Malis,
Bruce A. Murray and Bernard H. Shuman, who have each been nominated for
election as a director by the Board of Directors, were elected to serve
their present terms on April 5, 1995. All directors hold office until the
next annual meeting of shareholders, or until their successors are elected
and qualified.
It is the intention of the persons named in the accompanying proxy
to vote, unless otherwise instructed, for the election as directors of the
five nominees named hereinafter. All nominees have expressed their
willingness to continue to serve as directors. If any of the nominees should
be unable to serve, the proxies will be voted for the election of such other
person or persons as shall be determined by the person in the proxy in
accordance with their judgment. The Company is not aware of any reason why
any of the nominees, if elected, should be unable to serve as a director.
The vote of a plurality of a quorum of stockholders present in person or
by proxy at the annual meeting of shareholders is required for the election
of the nominees.
<TABLE>
<S> <C> <C> <C>
Name Age Position(s) Director Since
Jerry L. Malis 63 Chairman of the
Board and President 1980
Thomas J. Gilloway 58 Executive Vice
President,
Secretary, 1984
Treasurer and Director
Leonard I. Malis 76 Director 1989
Bruce A. Murray 59 Director 1992
Bernard H. Shuman 71 Vice President
and Director 1994
</TABLE>
Jerry L. Malis has served as President or Vice-President and a
Director of the Company since its inception in March, 1980. As of June
30, 1989, Mr. Malis was elected as Chairman of the Board of the Company.
He has published over fifty articles in the biological science, electronics
and engineering fields, and has been issued twelve United States patents.
Mr. Malis coordinates and supervises the development, engineering and
manufacturing of the Company's products and is in charge of the daily
business operations of the Company. He devotes substantially all his
business time to the business of the Company.
Thomas J. Gilloway has been Executive Vice President and a Director of
the Company since December 1984, and as of June 30, 1989 was appointed Secretary
and Treasurer of the Company. From the Company's inception in March 1980 to
December 21, 1984, Mr. Gilloway served in capacities as a Vice-President and
Treasurer. Mr. Gilloway received his undergraudate degree from LaSalle
University in 1959 and his graduate degree from Temple University in 1963.
Prior to his involvement with the Company, Mr. Gilloway was employed in a
marketing capacity for Scott Paper Company, C.R. Bard, Inc., and CheckPoint
Systems as Director of Marketing. He is involved with marketing, regulatory
and contract administration matters for the Company and devotes substantially
all his business time to the business of the Company.
Leonard I. Malis, M.D., a consultant to the Company since its inception
in March, 1980, has been a director since June 30, 1989. Dr. Malis was
Professor and Chairman of the Department of Neurosurgery at Mount Sinai
School of Medicine, New York, New York, from 1971 until 1993, and is
currently Professor Emeritus at Mount Sinai School of Medicine. Dr. Malis
has been issued five United States patents and has designed and trademarked
over one hundred surgical instruments. He has published over one hundred
articles in medical journals and reviews, and he is the author of ten
chapters in textbooks on neurosurgery.
Bruce A. Murray has been a director of the Company since October 14,
1992. He is Executive Vice President, Chief Operating Officer and Director
of Erbtec Engineering, Inc., a designer and manufacturer of high power RF
devices. From 1991 to May 1993, he was a senior consultant with the
management consulting firm of Rath and Strong. From 1984 to August 1991,
Mr. Murray held positions within the Pfizer Hospital Products Group, as
Director of Engineering-Surgical Products, Corporate Vice President -
Research and Development, and Senior Vice President and Business Manager -
Surgical Products. He has also held senior management positions with
Valleylab, Inc., Picker Corporation Electronics Division, Ball Brothers
Research Corporation and IIT Research Institute. Mr. Murray received
both his B.S. in Engineering and his M.B.A. from the Illinois Institute
of Technology, and is an adjunct instructor in business strategies at the
University of Colorado.
Bernard H. Shuman has been a director and Vice President-Manufacturing
of the Company since September 1, 1994. Prior to September 1, 1994, Mr. Shuman
served as President and director of Diversified Electronic Corporation
("Diversified"), a specialty electronics manufacturer. Diversified merged
into the Company on August 31, 1994.
Jerry L. Malis and Dr. Leonard I. Malis are brothers. The Company's
executive officers are elected annually by the Company's directors and shall
continue to serve until their successors are elected and qualified. For the
1995 fiscal year, Bernard Shuman, Jerry L. Malis and Thomas J. Gilloway
each failed to file one report with the Securities and Exchange Commission on
a timely basis in one transaction involving Common Stock of the Company
beneficially owned by them. In making these statements, the Company has
relied on the written representations of its officers and directors and
copies of the reports they have filed with the Securities and Exchange
Commission.
Meetings of the Board of Directors
During the fiscal year ended September 30, 1995 there were 2
meetings of the Company's Board of Directors. During the 1995 fiscal year,
each director attended at least 75% of the meetings of the Board of
Directors. The Company does not have any standing committees.
Executive Compensation
The following table sets forth the compensation paid by the Company to
its executive officers for the three fiscal years ended September 30, 1995.
<TABLE>
SUMMARY COMPENSATION TABLE
<S> <C> <C> <C>
Number of
Shares
Underlying
Name and Fiscal Salary(1) Options
Principal Position Year Granted
Jerry L. Malis 1995 $163,592 50,000
President 1994 146,628 --
1993 140,360 50,000
Thomas J. Gilloway 1995 $139,634 50,000
Executive 1994 124,848 --
Vice President 1993 118,580 50,000
________________________________________________________
(1) Non-cash compensation did not exceed the lesser of $50,000 or
10% of the cash compensation for the named individual.
</TABLE>
Effective July 1, 1994, the Company entered into employment agreements with
Jerry L. Malis, President, and Thomas J. Gilloway, Executive Vice President
for a term of 63 months. The agreements provide for annual base salaries to
Mr. Malis and Mr. Gilloway of $148,720 and $126,940, respectively, in 1994,
with annual base salary increases of 10% commencing on October 1, 1994.
The agreements also provide that Messrs. Malis and Gilloway may each receive
such other cash and stock bonuses as may be determined from time to time by
the Board of Directors. The employment agreements may be terminated for
cause. In addition, the agreements provide that in the event of a change of
control (as defined in the Securities Exchange Act of 1934) of the Company,
the employee may terminate his employment for "good reason" and shall be
entitled to receive a payment equal to the lesser of (i) 2.99 times the
employee's average annual compensation (including bonuses, if any)
during the three years preceding the date of termination; or (ii) the
compensation payable for the remaining term of the agreement. The term
"good reason" includes the assignment to the employee of duties inconsistent
with the employee's then position, a relocation of the Company's office more
than 30 miles from the Company's present offices, a failure of the Company
to continue in effect any benefit or compensation plan, depriving the employee
of any fringe benefit, or the failure of any successor entity to assume the
employment agreement.
On September 1, 1994, the Company entered into an employment
agreement with Bernard H. Shuman, Vice President-Manufacturing, for a term of 59
months. The agreement provides for an annual salary to Mr. Shuman of $50,000 for
the period from September 1, 1994 to July 31, 1995, and a salary of $105,000 for
each twelve month period thereafter. The agreement provides that Mr. Shuman may
receive additional compensation and benefits as may be determined from time to
time by the Board of Directors. The agreement provides for certain death and
disability benefits. The employment agreement may be terminated for cause.
Directors' Compensation
Directors of the Company do not receive any compensation for their
services as members of the Board of Directors, but Directors who are not
officers of the Company are entitled to reimbursement for expenses incurred
in connection with their attendance at meetings and are entitled to participate
in the Company's Stock Option Plan.
Stock Option Plan
The Company and its shareholders adopted a Non-Qualified Stock Option
Plan (the "Plan") pursuant to which 500,000 shares of Common Stock have been
reserved for issuance to employees, officers, directors or consultants of the
Company. Options granted pursuant to this Plan will be non-transferable and
expire if not exercised after ten years. Options may be granted to employees,
consultants, officers and directors of the Company in such amounts and at
such prices as determined by the Board of Directors, but the price per share
shall not be less than the fair market value of the Company's Common Stock on
the date of grant.
401(k) Plan and Profit-Sharing Plan
Effective January 1, 1990, the Company adopted a 401(k) Plan and Profit
Sharing Plan that covers full-time employees who have attained age 21 and have
completed at least one year of service with the Company. Under the 401(k) Plan,
an employee may contribute an amount up to 25% of his compensation to the 401(k)
Plan on a pre-tax basis not to exceed $9,500 per year (adjusted for cost of
living increases). Amounts contributed to the 401(k) Plan are non-forfeitable.
Under the Profit Sharing Plan, a participant in the plan participates in
the Company's contributions to the Plan as of December 31 in any year, with
allocations to individual accounts based on annual compensation. An employee
does not fully vest an interest in the plan until completion of three years
of employment. The Board of Directors determines the Company's contributions
to the plan on a discretionary basis. The Company has not made any contributions
to date.
Certain Relationships and Related Transactions
Since the late 1960's, Dr. Leonard I. Malis, a director of the
Company, on an individual basis, has been a party to royalty arrangements
with Johnson & Johnson Professional, Inc. ("J&J"), formerly known as Codman
& Shurtleff, Inc., a principal customer of the Company. Dr. Malis has developed
and in the future may develop passive hand instruments for J&J with no pecuniary
benefits to the Company.
The Company has entered into a five year lease commencing on July 1,
1995 for approximately 4,200 square feet of office and warehouse space at a base
monthly rent of $4,276 with GMM Associates, a Pennsylvania general partnership,
whose partners are Jerry L. Malis, Thomas J. Gilloway and Leonard I. Malis,
principal shareholders, directors and/or officers of the Company. The Company
believes the rental payments reflect fair rental value for the space.
On August 31, 1994, the Company acquired Diversified Electronic
Corporation, a Pennsylvania corporation, ("Diversified") pursuant to an
Agreement and Plan of Merger ("Merger Agreement"), in which the Company was the
surviving corporation. Pursuant to the Merger Agreement, the Company issued to
Bernard H. Shuman, the President and sole shareholder of Diversified, the
following consideration: (i) cash in the amount of $161,500; (ii) a noninterest
bearing note in the amount of $185,000 payable on March 1, 1996; (iii) a
noninterest bearing note in the amount of $47,188, payable upon the collection
of certain accounts receivable of Diversified; and (iv) 139,334 shares of
unregistered common stock of the Company. The note for $47,188 was paid and
canceled in October 1994. Prior to the Merger, a wholly-owned subsidiary of
the company acquired from Diversified the real property and building which
constituted Diversified's manufacturing facility for $95,000. Subsequent to
the Merger, Mr. Shuman has been a director and Vice President of Manufacturing
of the company. In 1994, the Company paid $682,096 to Diversified for contract
manufacturing and research and development.
INDEPENDENT PUBLIC ACCOUNTANT
Samuel Klein & Company, a certified public accounting firm, was
selected by the Board of Directors to audit the financial statements of the
Company for the fiscal year ended September 30, 1995. A representative of
Samuel Klein & Company is not expected to be present at the Annual Meeting of
Shareholders. The Board has not had an opportunity to consider the selection
of the Company's public accountant for fiscal year 1996.
COST OF SOLICITATION
The cost of soliciting proxies in the accompanying form has been or
will be borne by the Company.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the next annual
meeting of shareholders, to be held in 1997, must be received by the Company
at 136 Green Tree Road, Oaks, Pennsylvania 19456 by September 30, 1996.
It is important that your shares be represented at the meeting. If
you are unable to be present in person, you are respectfully requested to
sign the enclosed proxy and return it in the enclosed stamped and addressed
envelope as promptly as possible.
By Order of the Board of Directors,
Thomas J. Gilloway, Secretary
Dated: March 27, 1996
[CAPTION]
<PROXY CARD>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
VALLEY FORGE SCIENTIFIC CORP.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
May 8, 1996
THE UNDERSIGNED HEREBY APPOINTS JERRY L. MALIS
AND THOMAS J. GILLOWAY, EACH WITH THE POWER
TO APPOINT HIS SUBSTITUTE, AND HEREBY AUTHORIZES
THEM TO REPRESENT AND TO VOTE, AS DESIGNATED BELOW,
ALL THE SHARES OF COMMON STOCK OF VALLEY FORGE
SCIENTIFIC CORP. HELD ON RECORD BY THE
UNDERSIGNED ON MARCH 1, 1996 AT THE ANNUAL
MEETING OF SHAREHOLDERS TO BE HELD ON
MAY 8, 1996 OR ANY ADJOURNMENT THEREOF.
1. ELECTION OF DIRECTORS:
[ ] FOR ALL NOMINEES JERRY L. MALIS; THOMAS J. GILLOWAY;
LEONARD I. MALIS; BRUCE A. MURRAY; AND BERNARD H. SHUMAN
[ ] WITHHOLD AUTHORITY
[ ] INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, PLACE AN 'X' IN THE BOX ON THE LEFT AND
STRIKE A LINE THROUGH THE NOMINEE'S NAME LISTED ABOVE.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER.
IF NO DISCRETION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSAL 1.
PLEASE DATE, SIGN, AND RETURN THIS PROXY IN THE
ENCLOSED ENVELOPE.
DATED: , 1996
__________________________________L.S.
__________________________________L.S.
(NOTE: PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS HEREON. EXECUTORS, ADMINISTRATORS,
TRUSTEES, ETC. SHOULD SO INDICATE WHEN
SIGNING, GIVING FULL TITLE AS SUCH.
IF SIGNER IS A CORPORATION, EXECUTE IN FULL
CORPORATE NAME BY AUTHORIZED OFFICER.
IF SHARES HELD IN THE NAME
OF TWO OR MORE PERSONS, ALL SHOULD SIGN.)
