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
File by registrant [X}
File 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] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
Act Rule 14a-6(i)(3)
(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:
_________________________________________________________
<PAGE>
VALLEY FORGE SCIENTIFIC CORP.
136 Green Tree Road
Oaks, Pennsylvania 19456
________________________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
June 25, 1997
________________________________________
To the Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Shareholders of Valley Forge Scientific Corp. (the "Company") will be
held at the Valley Forge Hilton, at 251 West DeKalb Pike, King of
Prussia, Pennsylvania on June 25, 1997 at 4:00 P.M. local time, for the
following purposes:
1. To elect six 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 May
22, 1997 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 record at the close of business on May 22, 1997
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, 1996, 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
May 22, 1997
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.
<PAGE>
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 May 23, 1997) by the Board of Directors of
Valley Forge Scientific Corp. (the "Company") for use at the 1996 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 May 22, 1997.
VOTING SECURITIES
At May 22, 1997, 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 April 30, 1997, 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.
Amount of
Name and Address of Beneficial Percentage
Beneficial Owners (1) Ownership Owned
Jerry L. Malis (2)(3) 1,282,276 15.3%
Thomas J. Gilloway(2)(3) 1,001,375 12.0%
Dr. Leonard I. Malis(2) 895,575 10.9%
Bernard H. Shuman(2)(4) 136,467 1.7%
Bruce A. Murray(2)(5) 9,500 *
All officers and directors
as a group (5 persons) 3,325,193 38.8%
* less than 1%
(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) 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; 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 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.
(4) Includes 25,000 shares of Common Stock which may be
purchase by Mr. Shuman through the exercise of stock options
issued pursuant to the Company's Non-Qualified Stock Option
Plan at a per share exercise price of $2.31. The record owner of
111,467 shares of Common Stock is The Bernard H. Shuman
Living Trust, a trust in which Mr. Shuman is designated as the
sole trustee and for which he possesses the power to vote the
shares.
(5) Includes 5,000 shares of Common Stock which may be
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 of
Common Stock which may be purchased at a per share exercise
price of $4.25; 1,000 shares of Common Stock which may be
purchased at a per share exercise price of $2.50 per share; and
2,500 shares of Common Stock which may be purchased at a per
share exercise price of $2.31.
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 six. 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 May 8, 1996. Mr. Robert H. Dick,
who has been nominated for election by the Board of Directors, is not
currently a director of the Company. 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 six nominees named hereinafter. All nominees have expressed their
willingness 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.
Director
Name Age Position(s) Since
____________________________________________________________________________
Jerry L. Malis 64 Chairman of the Board and President 1980
Thomas J. Gilloway 59 Executive Vice President, Secretary, 1984
Treasurer and Director
Leonard I. Malis 77 Director 1989
Bruce A. Murray 60 Director 1992
Bernard H. Shuman 72 Vice President and Director 1994
Robert H. Dick 53
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 undergraduate 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 instruments. He has
published over one hundred articles in medical journals and reviews and
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 a Managing Member of The Change
Management Group, LLC, a management consulting company and a
Director and a consultant to Erbtech Engineering, Inc., a designer and
manufacturer of high power RF devices used in the medical industry.
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 of the Company since
September 1, 1994. Mr. Shuman is currently Vice President-Technology
for the Company and President of Diversified Electronics Company, Inc.,
a wholly owned subsidiary of the Company. Prior to September 1, 1994,
Mr. Shuman served as President and director of Diversified Electronic
Corporation ("Diversified"), a specialty electronics manufacturer which
merged into the Company on August 31, 1994.
Robert H. Dick has been a partner in Boles & Company, an
investment banking firm since April 1996. Prior to becoming a partner
in Boles & Company, he was President, CEO and CFO of two Boles &
Company clients: BioMagnetic Therapy Systems, Inc. (from September
1995 to April 1996) and Pharmx, Inc. (from May 1994 to May 1995).
From April 1987 to May 1994, Mr. Dick served as Vice President-International
for Codman & Shurtleff, Inc., a Johnson & Johnson
subsidiary, where he was responsible for new business development and
sales and marketing in non-U.S. markets. Mr. Dick has also held other
business development and sales and marketing positions with Codman &
Shurtleff, Inc., and product management positions with USCI Surgical
Products, a division of C.R. Bard.
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.
Meetings of the Board of Directors
During the fiscal year ended September 30, 1996 there were no
meetings of the Company's 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, 1996.
Summary Compensation Table
Number of Shares of
Name and Fiscal Common Stock Underlying
Principal Position Year Salary(1) Options Granted
_______________________________________________________________________________
Jerry L. Malis 1996 $163,592 --
President 1995 163,592 50,000
1994 146,628 --
Thomas J. Gilloway 1996 $139,634 --
Executive Vice 1995 139,634 50,000
President 1994 124,848 --
Bernard H. Shuman 1996 $105,000 25,000
Vice President
Technology
(1) Non-cash compensation did not exceed the lesser of $50,000 or 10%
of the cash compensation for the named individual.
Stock Options Granted in Fiscal Year 1996
Number of Shares Percent of
of Common Stock Total Options
Underlying Options Granted to Exercise Expiration
Name Granted Employees Price Date
____________________________________________________________________________
Bernard H. 25,000 57% $2.31 July 26, 2001
Shuman
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. For the year ended
September 30, 1996, Messrs. Malis and Gilloway waived their right to the
10% increase in base salary for that year. 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-Technology, 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 Non-Qualified 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
$9,240 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 $4,362 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 related expense for the
year ended September 30, 1996 was $51,565 The Company believes the
rental payments reflect fair rental value for the space.
For Fiscal 1996, the Company paid legal fees in the amount of
$70,962 to Hale & Schenkman, a law firm in which the son-in-law of
Jerry L. Malis is a partner.
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. Pursuant to an agreement between
Mr. Shuman and the Company, the $185,000 noninterest bearing note due
on March 1, 1996 was paid as follows: $100,000 on March 1, 1996;
$15,000 in April 1996 and $70,000 on August 1, 1996. On August 1,
1996, the note was canceled.
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, 1996. 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 1997.
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 1998, must be received by
the Company at 136 Green Tree Road, Oaks, Pennsylvania 19456 by
January 23, 1998.
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: May 22, 1997
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
VALLEY FORGE SCIENTIFIC CORP.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS-June 25, 1997
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 MAY 22, 1997 AT THE ANNUAL MEETING OF SHAREHOLDERS TO
BE HELD ON JUNE 25, 1997 OR ANY ADJOURNMENT THEREOF.
1. ELECTION OF DIRECTORS:
[ ] FOR ALL NOMINEES: [ ] WITHHOLD AUTHORITY
listed below to vote for all nominees
(except as marked to listed below
the contrary below)
Jerry L. Malis, Thomas J. Gilloway, Leonard I. Malis
Bruce A. Murray, Bernard H. Shuman, Robert H. Dick
NSTRUCTIONS: 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 and sign exactly as name(s) appear hereon.
If signing for an estate, trust or corporation, title
or capacity should be stated. If shares are jointly
held, each shareholder should sign.
_____________________________________________________
(Signature of Stockholder)
DATED: , 1997
Please date and sign this proxy and return it
promptly in the enclosed envelope.
