Exhibit 10.1
EXECUTION COPY
VALLEY FORGE VOTING AGREEMENT
THIS VALLEY FORGE VOTING AGREEMENT (this "Agreement") is made and
entered into as of May 2, 2005 by and among VALLEY FORGE SCIENTIFIC CORP., a
Pennsylvania corporation ("Valley Forge"), SYNERGETICS, INC., a Missouri
corporation ("Synergetics"), and the undersigned shareholders (each a
"Shareholder" and collectively, the "Shareholders") of Valley Forge.
RECITALS
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A. Concurrently with the execution of this Agreement, Valley
Forge, Synergetics Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of Valley Forge ("MergerSub"), and Synergetics have
entered into an Agreement and Plan of Merger (the "Merger Agreement"), providing
for the merger of MergerSub with and into Synergetics (the "Merger");
B. All capitalized terms not otherwise defined herein shall have
the meaning ascribed to them in the Merger Agreement;
C. The Shareholders are the beneficial holders of record of the
number of shares of outstanding Valley Forge Shares as is indicated on Schedule
I attached hereto;
D. In connection with the Merger, Valley Forge will acquire the
Synergetics shareholders' entire equity interest in Synergetics and each of such
Synergetics shareholders will receive a percentage of the Synergetics Merger
Consideration; and
E. In consideration of and to induce the execution of the Merger
Agreement by Valley Forge, MergerSub and Synergetics, until the Expiration Date
(as defined below), each of the Shareholders, solely in their capacity as a
shareholder, agrees not to sell or otherwise dispose of any Valley Forge Shares
held by the Shareholder, and to vote the Valley Forge Shares so as to facilitate
consummation of the Merger and approve certain other actions as more fully
described below.
NOW, THEREFORE, in consideration of the mutual promises and the mutual
covenants contained herein, the parties agree as follows:
1. Agreement to Retain Valley Forge Shares. Each Shareholder,
severally and not jointly, agrees not to transfer, pledge, sell, exchange or
offer to transfer or sell or otherwise dispose of or encumber ("Transfer") any
of the Valley Forge Shares at any time prior to the Expiration Date, as defined
herein, excluding (i) Transfers by testamentary or intestate succession or
otherwise by operation of law, (ii) any Transfer to a family member or
charitable organization provided that the transferee agrees in writing to be
bound by the terms of this Agreement to the same extent as such Shareholder and
(iii) any Transfer pursuant to court order. The "Expiration Date" shall mean the
earlier of (i) the date and time on which the Merger shall become effective in
accordance with the terms and provisions of the Merger Agreement or (ii) the
date on which the Merger Agreement shall be terminated pursuant to the terms
therein. Each Shareholder agrees that this Agreement and the obligations
hereunder shall attach to the Valley Forge Shares owned by it and shall be
binding upon any person or entity to whom legal or beneficial ownership of such
Valley Forge Shares shall pass, whether by operation of law or otherwise,
including, without limitation, their respective heirs, guardians, administrators
or successors.
2. Agreement to Vote Valley Forge Shares. At any time prior to
the Expiration Date, at any meeting of the Valley Forge shareholders called with
respect to any of the following, and at any adjournment thereof, and with
respect to any written consent solicited with respect to any of the following,
each Shareholder agrees to vote the Valley Forge Shares: (i) in favor of
approval of the Merger Agreement and the Merger and any matter which would, or
could reasonably be expected to, facilitate the Merger, and (ii) against (A)
approval of any proposal made in opposition to or competition with consummation
of the Merger and the Merger Agreement, (B) any merger, consolidation, sale of
assets, reorganization or recapitalization with any other party, (C) any
liquidation, or winding up of Valley Forge and (D) any other matter which would,
or could reasonably be expected to, prohibit or discourage the Merger (each of
the foregoing is referred to as an "Opposing Proposal"). In addition to the
foregoing, each Shareholder agrees to vote the Valley Forge Shares in favor of
approval of (w) the Reincorporation, (x) if necessary, a proposal to increase
the number of authorized Valley Forge Shares to an amount not less than the sum
of the number of outstanding Valley Forge Shares immediately following the
effectiveness of the Merger plus any Valley Forge Shares reserved for issuance
pursuant to Valley Forge's stock option plans, (y) a proposal to increase the
number of directors on the Valley Forge Board of Directors to seven (7)
(effective upon consummation of the Merger), and (z) a proposal to divide the
Valley Forge Board of Directors into three (3) classes with three-year staggered
terms with the term of office of the Class "A" directors expiring at Valley
Forge's (or its successor's) annual meeting of shareholders in 2006, the term of
office of the Class "B" directors expiring at Valley Forge's (or its
successor's) annual meeting of shareholders in 2007 and the term of office of
the Class "C" directors expiring at Valley Forge's (or its successor's) annual
meeting of shareholders in 2008 (effective upon consummation of the Merger). The
Shareholders further agree to vote the Valley Forge Shares in favor of election
of the directors as follows (effective upon consummation of the Merger): (i)
Class "A" directors shall be Larry Cardinale and Robert Dick; (ii) Class "B"
directors shall be Juanita Hinshaw and an individual to be mutually agreed to by
Valley Forge and Synergetics; and (iii) Class "C" directors shall be Jerry
Malis, Gregg D. Scheller and Kurt W. Gampp, Jr. The Shareholders hereby
acknowledge that, effective upon consummation of the Merger, the members of each
of the New Synergetics Audit Committee, Compensation Committee and Nominating
Committee shall be constituted as set forth in Section 8(c)(viii) of the Merger
Agreement. Each Shareholder, as the holder of the Valley Forge Shares agrees to
be present, in person or by proxy, at all meetings of shareholders of Valley
Forge so that all Valley Forge Shares are counted for the purposes of
determining the presence of a quorum at such meetings. This Agreement is
intended to bind the Shareholders in their capacity as a shareholder only and
only with respect to the specific matters set forth herein, and shall not
prohibit any Shareholder from acting in accordance with his fiduciary duties as
an officer or director of Valley Forge.
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3. Irrevocable Proxy. Concurrently with the execution of this
Agreement, each Shareholder agrees to deliver to Synergetics a proxy in the form
attached hereto as Annex A (the "Proxy"), which shall be irrevocable to the
extent provided therein; provided that the Proxy shall be revoked upon
termination of this Agreement in accordance with its terms or at the Expiration
Date.
4. Additional Shares. For purposes of this Agreement, the term
Valley Forge Shares shall include any shares of Valley Forge capital stock which
any Shareholder purchases or otherwise acquires after the execution of this
Agreement and prior to the termination of this Agreement.
5. Representations, Warranties and Covenants of Shareholders.
Each Shareholder, severally and not jointly, hereby represents, warrants and
covenants to Valley Forge and Synergetics the following:
5.1. Ownership of Valley Forge Shares. The Shareholder (i)
is the holder and beneficial owner of the Valley Forge Shares set forth opposite
such Shareholder's name on Schedule I attached hereto, which at the date hereof
and at all times until the termination of this Agreement will be free and clear
of any liens, claims, options, charges or other encumbrances, (ii) does not
beneficially own any shares of stock of Valley Forge other than such Valley
Forge Shares and (iii) has full power and authority to make, enter into, deliver
and carry out the terms of this Agreement and the Proxy and to vote or otherwise
direct the voting of such Valley Forge Shares.
5.2. Validity; No Conflict. This Agreement constitutes the
legal, valid and binding obligation of the Shareholder, enforceable against the
Shareholder in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting or
relating to creditors' rights generally and by general principles of equity.
Neither the execution of this Agreement by the Shareholder nor the consummation
of the transactions contemplated hereby will result in a breach or violation of
the terms of any agreement by which the Shareholder is bound or of any decree,
judgment, order, law or regulation now in effect of any court or other
governmental body applicable to the Shareholder.
5.3. No Voting Trusts and Agreements. Between the date of
this Agreement and the Expiration Date, the Shareholder will not, and will not
permit any entity under the Shareholder's control to, deposit any Valley Forge
Shares held by the Shareholder or such entity in a voting trust or subject any
Valley Forge Shares held by the Shareholder or such entity to any arrangement or
agreement with respect to the voting of such shares of capital stock, other than
agreements entered into with Valley Forge and Synergetics, unless the trustee of
such trust agrees in writing to be bound by the terms of this Agreement.
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5.4. No Proxy Solicitations. Between the date hereof and
the Expiration Date, the Shareholder will not, and will not permit any entity
under the Shareholder's control to (a) solicit proxies or become a participant
in a "solicitation" (as such term is defined in Rule 14a-11 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), with respect to an
Opposing Proposal or otherwise encourage or assist any party in taking or
planning any action which would compete with, restrain or otherwise serve to
interfere with or inhibit the timely consummation of the Merger in accordance
with the terms of the Merger Agreement, (b) initiate a shareholders' vote or
action by written consent of Valley Forge shareholders or (c) become a member of
a "group" (as such term is used in Section 13(d) of the Exchange Act) with
respect to any voting securities of Valley Forge with respect to an Opposing
Proposal.
6. Representations, Warranties and Covenants of Valley Forge and
Synergetics. Each of Valley Forge and Synergetics, severally and not jointly,
hereby represents, warrants and covenants to the Shareholders the following:
6.1. Due Authorization. This Agreement has been authorized
by all necessary corporate action on the part of Valley Forge and Synergetics,
as the case may be, and has been duly executed by a duly authorized officer of
Valley Forge and Synergetics, as the case may be.
6.2. Validity; No Conflict. This Agreement constitutes the
legal, valid and binding obligation of Valley Forge and Synergetics, as the case
may be, enforceable against them, in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to creditors' rights generally and by general
principles of equity. Neither the execution of this Agreement by Valley Forge or
Synergetics, as the case may be, nor the consummation of the transactions
contemplated hereby will result in a breach or violation of the terms of any
agreement by which Valley Forge and Synergetics, as the case may be, is bound or
of any decree, judgment, order, law or regulation now in effect of any court or
other governmental body applicable to Valley Forge and Synergetics, as the case
may be.
7. Additional Documents. The Shareholders, Valley Forge and
Synergetics hereby covenant and agree to execute and deliver any additional
documents necessary or desirable, in the reasonable opinion of Valley Forge or
Synergetics (or their respective legal counsel) or the Shareholders, as the case
may be, to carry out the intent of this Agreement.
8. Consent and Waiver. Each Shareholder, solely in their capacity
as a shareholder, hereby gives any consent or waivers that are reasonably
required in connection with a meeting of shareholders or consent in lieu of such
meeting in order to approve and consummate the Merger under the terms of any
agreement to which such Shareholder is a party or pursuant to any other rights
such Shareholder may have.
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9. Stop Transfer. Valley Forge agrees to make a notation in its
records and give instructions to its transfer agent(s) to not permit, at any
time during the term of this Agreement, the Transfer of any Valley Forge Shares,
except as may be expressly permitted by this Agreement.
10. Miscellaneous.
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10.1. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
10.2. Binding Effect and Assignment. This Agreement and all
of the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but,
except as otherwise specifically provided herein, neither this Agreement nor any
of the rights, interests or obligations of the parties hereto may be assigned by
any of the parties without the prior written consent of the other. Additionally,
notwithstanding the foregoing or anything to the contrary contained in this
Agreement, Valley Forge is specifically permitted to consummate the
Reincorporation and assign this Agreement to its successor in such
Reincorporation.
10.3. Amendments and Modifications. This Agreement may not
be modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the parties hereto.
10.4. Specific Performance; Injunctive Relief. The parties
hereto acknowledge that Valley Forge and Synergetics will be irreparably harmed
and that there will be no adequate remedy at law for a violation of any of the
covenants or agreements of the Shareholders set forth herein. Therefore, it is
agreed that, in addition to any other remedies which may be available to Valley
Forge and Synergetics upon such violation, Valley Forge and Synergetics shall
have the right to enforce such covenants and agreements by specific performance,
injunctive relief or by any other means available to them at law or in equity.
10.5. Notices. All notices, requests, claims, demands and
other communications hereunder shall be delivered in accordance with Section
12(f) of the Merger Agreement. All notices, requests, claims, demands and other
communications hereunder shall be delivered to a Shareholder at the address set
forth on Schedule I attached hereto for such Shareholder.
10.6. Governing Law. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the Commonwealth of
Pennsylvania without giving effect to principles of conflicts of law.
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10.7. Entire Agreement. This Agreement contains the entire
understanding of the parties in respect of the subject matter hereof, and
supersedes all prior negotiations and understandings between the parties with
respect to such subject matter.
10.8. Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
10.9. Effect of Headings. The section headings herein are
for convenience only and shall not affect the construction or interpretation of
this Agreement.
10.10. Termination. Notwithstanding anything else in this
Agreement, this Agreement and the Proxy, and all obligations of the Shareholders
under either of them, shall automatically terminate as of the Expiration Date.
[Signature page follows]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the day and year first above written.
VALLEY FORGE SCIENTIFIC CORP.
By: /s/ JERRY L. MALIS
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Name: Jerry L. Malis
Title: President and CEO
SYNERGETICS, INC.
By: /s/ GREGG D. SCHELLER
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Name: Gregg D. Scheller
Title: President
SHAREHOLDERS:
/s/ JERRY L. MALIS
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Jerry L. Malis
MALIS FAMILY, L.P.
By: /s/ JERRY L. MALIS
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Name: Jerry L. Malis
Title: General Partner
/s/ LEONARD I. MALIS
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Leonard I. Malis
LEONARD MALIS AND RUTH MALIS FAMILY L.P.
By: /s/ LEONARD I. MALIS
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Name: Leonard I. Malis
Title: General Partner
[Signature Page to Valley Forge Voting Agreement]
FRANCES W. GILLOWAY MARITAL TRUST
By: /s/ RUSSELL U. SCHENKMAN
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Name: Russell U. Schenkman
Title: Trustee
FRANCES W. GILLOWAY RESIDUE TRUST
By: /s/ RUSSELL U. SCHENKMAN
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Name: Russell U. Schenkman
Title: Trustee
[Signature Page to Valley Forge Voting Agreement]
Schedule I
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SHAREHOLDERS
Name and Address Number of Valley Forge Shares
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Jerry L. Malis 932,276
3000 Valley Forge Circle PH 43
King of Prussia, PA 19406-1110
Malis Family L.P. 200,000
c/o Jerry L. Malis
Valley Forge Scientific Corp.
136 Green Tree Road
Oaks, PA 19456
Leonard I. Malis 482,242
219-44 Peck Avenue
Hollis Hills, NY 11427
Leonard Malis and Ruth Malis Family L.P. 400,000
c/o Leonard I. Malis
219-44 Peck Avenue
Hollis Hills, NY 11427
Frances W. Gilloway Marital Trust 308,571
c/o Schenkman Jennings & Howard, LLC
13 Roszel Road
Suite C-225
Princeton, NJ 08540
Frances W. Gilloway Residue Trust 292,804
c/o Schenkman Jennings & Howard, LLC
13 Roszel Road
Suite C-225
Princeton, NJ 08540
ANNEX A
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The undersigned shareholder of Valley Forge Scientific Corp., a
Pennsylvania corporation ("Valley Forge"), hereby irrevocably appoints and
constitutes Synergetics, Inc., a Missouri corporation (the "Proxyholder"), the
agent and proxy of the undersigned, with full power of substitution and
resubstitution, to the full extent of the undersigned's rights with respect to
the shares of capital stock of Valley Forge beneficially owned by the
undersigned, which shares are listed below (collectively, the "Shares"), and any
and all other shares or securities issued or issuable in respect thereof on or
after the date hereof and prior to the date this proxy terminates, to vote the
Shares as follows:
The agents and proxies named above are empowered at any time prior to
termination of this proxy to exercise all voting and other rights (including,
without limitation, the power to execute and deliver written consents with
respect to the Shares) of the undersigned at every annual, special or adjourned
meeting of Valley Forge shareholders, and in every written consent in lieu of
such a meeting, or otherwise:
1. In favor of approval of the Merger (as defined in the
Valley Forge Voting Agreement dated as of May 2, 2005 among the
Shareholders (as defined therein), Valley Forge and the Proxyholder
(the "Voting Agreement")) and that certain Agreement and Plan of Merger
dated as of May 2, 2005 by and among Valley Forge, the Proxyholder and
Synergetics Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of Valley Forge ("MergerSub"), and any matter
that could reasonably be expected to facilitate the Merger;
2. Against (i) approval of any proposal made in
opposition to or competition with consummation of the Merger and the
Merger Agreement, (ii) any merger, consolidation, sale of assets,
reorganization or recapitalization with any other party, (iii) any
liquidation, or winding up of Valley Forge and (iv) any other matter
which would, or could reasonably be expected to, prohibit or discourage
the Merger;
3. In favor of approval of (i) the Reincorporation, (ii)
if necessary, a proposal to increase the number of authorized Valley
Forge Shares to an amount not less than the sum of the number of
outstanding Valley Forge Shares immediately following the effectiveness
of the Merger plus any Valley Forge Shares reserved for issuance
pursuant to Valley Forge's stock option plans, (iii) a proposal to
increase the number of directors on the Valley Forge Board of Directors
to seven (7) (effective upon consummation of the Merger), and (iv) a
proposal to divide the Valley Forge Board of Directors into three (3)
classes with three-year staggered terms with the term of office of the
Class "A" directors expiring at Valley Forge's (or its successor's)
annual meeting of shareholders in 2006, the term of office of the Class
"B" directors expiring at Valley Forge's (or its successor's) annual
meeting of shareholders in 2007 and the term of office of the Class "C"
directors expiring at Valley Forge's (or its successor's) annual
meeting of shareholders in 2008 (effective upon consummation of the
Merger); and
4. In favor of election of the directors as follows
(effective upon consummation of the Merger): (i) Class "A" directors
shall be Larry Cardinale and Robert Dick; (ii) Class "B" directors
shall be Juanita Hinshaw and an individual to be mutually agreed to by
Valley Forge and Synergetics; and (iii) Class "C" directors shall be
Jerry Malis, Gregg D. Scheller and Kurt W. Gampp, Jr.
The Proxyholder may not exercise this proxy on any other matter. The
undersigned shareholder may vote the Shares on all such other matters.
The proxy granted by the shareholder to the Proxyholder hereby is
granted as of the date of this Agreement in order to secure the obligations of
the shareholder set forth in Section 2 of the Voting Agreement, and is
irrevocable and coupled with an interest in such obligations and in the
interests in the Proxyholder to be purchased and sold pursuant to the Merger
Agreement and in consideration of Valley Forge entering into the Voting
Agreement and the Merger Agreement and incurring certain related fees and
expenses. This proxy will terminate upon the termination of the Voting Agreement
in accordance with its terms.
Upon execution hereof, all prior proxies given by the undersigned with
respect to the Shares and any and all other shares or securities issued or
issuable in respect thereof on or after the date hereof and hereby revoked and
no subsequent proxies will be given until such time as this proxy shall be
terminated in accordance with its terms.
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned. The undersigned shareholder
authorizes the Proxyholder to file this proxy and any substitution or revocation
of substitution with the Secretary of Valley Forge and with any Inspector of
Elections at any meeting of the shareholders of Valley Forge.
This proxy is irrevocable and shall survive the insolvency, incapacity,
death or liquidation of the undersigned.
Dated: May 2, 2005
Signature of Shareholder:__________________________
Print name of Shareholder:_________________________
Shares beneficially owned:_________________________
_____________________________shares of Common Stock