SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material under Rule 14a-12
Valley Forge Scientific Corp.
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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.
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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/ / 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,
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VALLEY FORGE SCIENTIFIC CORP.
136 Green Tree Road
Oaks, Pennsylvania 19456
________________________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held Tuesday, June 27, 2000
________________________________________
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Meeting") of Valley Forge Scientific Corp. (the "Company") will be held at the
Hampton Inn at Route 422 and Egypt Road, Oaks, Pennsylvania on Tuesday, June
27, 2000 at 10:00 a.m. local time, for the following purposes:
1. To elect six directors to hold office until the Annual Meeting of
Shareholders in 2001 and until their respective successors are duly
elected and qualified;
2. To consider and act upon any other matter which may properly come
before the meeting or any adjournment thereof. The Board of
Directors of the Company is presently unaware of any other business
to be presented to a vote of shareholders at the Meeting.
The Board of Directors has fixed the close of business on May 23, 2000 as
the record date for the Meeting. Only shareholders of record on that date are
entitled to notice of and vote at the Meeting and any adjournment or
postponement thereof.
The enclosed proxy is solicited by the Board of Directors of the Company.
Reference is made to the accompanying Proxy Statement for further information
with respect to the business to be transacted at the meeting.
By Order of the Board of Directors
/s/Thomas J. Gilloway
THOMAS J. GILLOWAY,
Oaks, Pennsylvania Secretary
May 25, 2000
IMPORTANT
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. EVEN IF YOU
PLAN TO BE PRESENT PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY AT
YOUR EARLIEST CONVENIENCE IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE MEETING, YOU MAY VOTE EITHER
IN PERSON OR BY PROXY.
VALLEY FORGE SCIENTIFIC CORP.
136 Green Tree Road
Oaks, Pennsylvania 19456
_______________
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Valley Forge Scientific Corp., a
Pennsylvania corporation (the "Company"), in connection with the Company's
Annual Meeting of Shareholders (the "Meeting"), which is scheduled to be held
at 10:00 a.m., local time, on Tuesday, June 27, 2000, at the Hampton Inn, Route
422 and Egypt Road, Oaks, Pennsylvania, and at any adjournment or postponement
thereof, for the purposes set forth in the accompanying Notice of the Meeting.
This Proxy Statement, the foregoing notice, the enclosed proxy, and the Annual
Report to Shareholders are being sent to shareholders on or about May 25, 2000.
The Board of Directors knows of no matters that are likely to be brought
before the Meeting, other than the matters specifically referred to in the
Notice of the Meeting. If any other matter properly comes before the Meeting,
however, the persons named in the enclosed proxy, or their duly constituted
substitutes acting at the Meeting, will be authorized to vote or otherwise act
thereon in accordance with their judgment on such matters. If the enclosed
proxy is properly executed and returned prior to voting at the Meeting, the
shares represented thereby will be voted in accordance with the instructions
marked thereon. In the absence of instructions, executed proxies will be voted
"FOR" the six nominees of the Board of Directors for election as directors.
Any proxy may be revoked at any time prior to its exercise by notifying
the Secretary of the Company in writing, by delivering a duly executed proxy
bearing a later date, or by attending the Meeting and voting in person.
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 23, 2000.
VOTING SECURITIES
At May 23, 2000, the Company had 8,213,309 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. The presence at the meeting, in person or by
proxy, of shareholders entitled to cast at least a majority of the votes that
all shareholders are entitled to cast will constitute a quorum for the Meeting.
[2]
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of May 23, 2000, 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)(7) 1,001,375 12.0%
Dr. Leonard I. Malis(2)(8) 882,242 11.9%
Bernard H. Shuman(2)(4) 126,467 1.5%
Bruce A. Murray(2)(5) 13,500 *
Robert H. Dick(2)(6) 4,000 *
--------- ----
All officers and directors
as a group (6 persons) 3,309,860 38.6%
____________________
* 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, Murray and Dick
and Dr. Malis, directors of the Company, is 136 Green Tree Road, P.O. Box
1179, Oaks, Pennsylvania 19456-1179.
(3) Includes 150,000 shares issuable to Mr. Malis subject to options
exercisable currently or within 60 days.
(4) Includes 25,000 shares issuable to Mr. Shuman subject to options
exercisable currently or within 60 days, and includes 101,467 shares held
in the Bernard H. Shuman Living Trust, a trust in which Mr. Shuman holds
voting and dispositive control.
(5) Includes 13,500 shares issuable to Mr. Murray subject to options
exercisable currently or within 60 days.
(6) Includes 4,000 shares issuable to Mr. Dick subject to options exercisable
currently or within 60 days.
(7) Includes 150,000 shares issuable to Mr. Gilloway subject to options
exercisable currently or within 60 days, and includes 250,000 shares held
in the Gilloway Family, L.P., a limited partnership in which Mr. Gilloway
is a general partner and possesses voting and dispositive control.
(8) Includes 400,000 shares held in the Leonard and Ruth Malis Family, L.P., a
limited partnership in which Dr. Malis is a general partner and possesses
voting and dispositive control.
[3]
PROPOSALS TO BE ACTED UPON AT THE ANNUAL MEETING
PROPOSAL 1 - ELECTION OF DIRECTORS
At the Meeting, the shareholders will elect six directors to hold office
until the Annual Meeting of Shareholders in 2001, and until their respective
successors are duly elected and qualified.
The Company's by-laws provide that the Board of Directors shall consist of
not fewer than three 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, Bernard H. Shuman and Robert H. Dick, who have each been nominated
for election as a director by the Board of Directors, were elected to serve
their present terms on June 30, 1999. 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 above. 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
shareholders present in person or by proxy at the Meeting is required for the
election of the nominees.
The directors and executive officers of the Company are as follows:
Director
Name Age Position(s) Since
Jerry L. Malis (1) 67 Chairman of the Board and President 1980
Thomas J. Gilloway 62 Executive Vice President, Secretary, 1984
Treasurer and Director
Leonard I. Malis 80 Director 1989
Bruce A. Murray (1) 63 Director 1992
Bernard H. Shuman 75 Vice President and Director 1994
Robert H. Dick (1) 56 Director 1997
(1) Member of the Audit Committee
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 currently devotes
approximately half of his business time to the business of the Company.
[4]
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
and Chairman Emeritus at Mount Sinai School of Medicine. Dr. Malis designed
and built the first commercial bipolar coagulator in 1955, and his original
units were the standard in neurosurgery for many years. 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 a textbook 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 Principal of Adair & Murray Associates, Inc., a
management consulting company. 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 of the Company
since September 1, 1994. Mr. Shuman is currently Vice President-Technology.
Prior to September 1, 1994, Mr. Shuman served as President and director of
Diversified Electronic Corporation, a specialty electronics manufacturer which
merged into the Company on August 31, 1994.
Robert H. Dick has been a director of the Company since 1997. He is the
principal of R.H. Dick & Company, Inc., an investment banking firm. From April
1996 to 1998, he was a partner in Boles & Company, an investment banking firm.
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.
[5]
Meetings and Committees of the Board of Directors
The Company has an Audit Committee and a Compensation Committee, but does
not have a Nominating Committee.
The Audit Committee, which held two meetings in the fiscal year ended
September 30, 1999, consists of Bruce A. Murray, Robert H. Dick and Jerry L.
Malis. The Compensation Committee, which held one meeting, consists of Bruce A.
Murray and Robert H. Dick. The functions of the Audit Committee generally
include reviewing with the Company's independent public accountants the scope
and results of their engagement and reviewing the adequacy of the Company's
system of internal accounting controls.
The Board of Directors held five meetings in the fiscal year ended
September 30, 1999.
Section 16(a) Beneficial Ownership Reporting Compliance
For the 1999 fiscal year, Robert H. Dick and Bruce A. Murray each failed
to file one report with the Securities and Exchange Commission involving one
transaction regarding the common stock of the Company.
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. In November 1998, each director who was not an
employee of the Company (except Leonard I. Malis) received a grant of stock
options to purchase 2,000 shares of Common Stock pursuant to the Company's
Stock Option Plan.
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 Codman &
Shurtleff, Inc., formerly known as Johnson & Johnson Professional, Inc., a
principal customer of the Company. Dr. Malis has developed and in the future
may develop passive hand instruments for Codman & Shurtleff, Inc. 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 $4,618 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 this lease for the year ended September 30, 1999 was $55,707. The
Company believes the rental payments reflect fair rental value for the space.
For the year ended September 30, 1999, the Company paid legal fees and
costs in the amount of $81,314 to a law firm in which a son-in-law of Jerry
L. Malis is a partner.
[6]
In fiscal 1998, the Company retained R. H. Dick & Company, Inc., an
investment banking and business consulting company, owned by Robert H. Dick, a
director of the Company, to perform investment banking and business consulting
services for the Company.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding the
compensation paid by the Company to its executive officers for the three fiscal
years ended September 30, 1999.
SUMMARY COMPENSATION TABLE
Name and Number of Shares
Principal Position Fiscal Year Salary (1) of Common Stock
Underlying
Options Granted
Jerry L. Malis, 1999 $ 188,222 ---
President 1998 188,949 ---
1997 179,951 ---
Thomas J. Gilloway, 1999 $ 100,013 ---
Executive Vice President 1998 161,278 ---
1997 153,598 ---
Bernard H. Shuman 1999 $ 105,000 ---
Vice President-Technology 1998 105,000 ---
1997 105,000 ---
(1) Non-cash compensation did not exceed the lesser of $50,000 or 10% of the
cash compensation for the named individual.
Employment Contracts and Termination of Employment Arrangement
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 expiring on September 30, 1999. 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 ending September 30, 1998,
Messrs. Malis and Gilloway waived their right to a full 10% increase of base
salary, opting to reduce the annual base salary increase from 10% to 5% for
1998, and for the year ending September 30, 1999 they waived their right to the
10% increase of base salary. The reduction of Mr. Gilloway's base salary for
the year ended September 30, 1999 was due to his being employed on a half-time
basis effective January 1, 1999. On September 30, 1999, the Company extended
the term of the employment agreements for an additional year effective October
1, 1999, under which Messrs. Malis and Gilloway are to receive an annual base
salary of $198,950 and $90,000, respectively. The agreements 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.
[7]
On August 31, 1994, the Company entered into an employment agreement with
Bernard H. Shuman, Vice President-Technology, for a term of 59 months ending on
July 31, 1999. The agreement provided 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. Although the employment agreement has not been extended,
the Company continues to provide compensation to Mr. Shuman on an annual basis
of $105,000.
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 $10,000 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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION
OF THE INDIVIDUALS NOMINATED FOR ELECTION AS DIRECTORS
[8]
INFORMATION CONCERNING INDEPENDENT PUBLIC ACCOUNTANTS
Samuel Klein & Company was selected by the Board of Directors as the
independent public accountants to audit the financial statements of the Company
for the fiscal year ended September 30, 1999. A representative of Samuel Klein
& Company is not expected to be present at the Annual Meeting of Shareholders.
The Auditing Committee of the Board has not had an opportunity to consider the
selection of the Company's independent public accountant for the year ending
September 30, 2000.
SHAREHOLDER PROPOSALS - 2001 ANNUAL MEETING
Under Rule 14a-8 of the Securities Exchange Act of 1934, as amended,
("Rule 14a-8") proposals of shareholders intended to be presented at the
Company's Annual Meeting of Shareholders in 2001 must be received by February
1, 2001 to be considered for inclusion in the Company's Proxy Statement and
form of proxy relating to that annual meeting. Alternatively, shareholders who
submit a proposal for consideration by the Company outside the processes
established by Rule 14a-8 must do so by April 17, 2001 or face the possibility
that management proxies may use their discretionary voting authority if and
when any such proposal is raised at the 2001 Annual Meeting of Shareholders,
without any discussion of the matter at the meeting. If the 2001 Annual
Meeting of Shareholders date is more than 30 days away from the anniversary of
the 2000 Annual Meeting date, the Company will disclose changes in the February
1 and April 17 deadlines above in its earliest possible report on Form 10-Q.
Shareholders proposals should be directed to the Company's Secretary, at the
address of the Company set forth on the first page of this Proxy Statement.
SOLICITATION OF PROXIES
The accompanying form of proxy is being solicited on behalf of the Board
of Directors of the Company. The Company will pay the expense of solicitation
of proxies for the meeting. In addition to the mailing of the proxy material,
such solicitation may be made in person or by telephone or telecopy by
directors, officers or regular employees of the Company.
By Order of the Board of Directors,
/s/Thomas J. Gilloway
THOMAS J. GILLOWAY,
Secretary
May 25, 2000
[9]
VALLEY FORGE SCIENTIFIC CORP
PROXY ANNUAL MEETING OF SHAREHOLDERS JUNE 27,2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PLEASE MARK, SIGN, DATE AND RETURN IN THE ENCLOSED ENVELOPE.
The undersigned shareholder of Valley Forge Scientific Corp. (the "Company")
hereby appoints Jerry L. Malis and Thomas J. Gilloway, or each of them, proxies
of the undersigned with full power of substitution to vote at the Annual
Meeting of Shareholders of the Company to be held on Tuesday June 27, 2000, at
10:00 a.m., local time, and at any adjournment thereof, the number of votes
which the undersigned would be entitled to cast if personally present:
[1] ELECTION OF DIRECTORS [ ] WITHOUT AUTHORITY to
vote for nominees
listed below
Jerry L. Malis, Thomas J. Gilloway, Leonard I. Malis
Bruce A. Murray, Bernard H. Shuman, Robert H. Dick
INSTRUCTIONS: To withold authority to vote for a nominee, draw a
line through or strik out nominee's name as set
forth above.
(Continued, and to be signed and dated, on the reverse side)
(Continued from other side)
[2] To consider and act upon any other matter which may properly
come before the meeting or any adjournment thereof;
all as more particularly described in the Proxy Statement dated
May 25,2000, relating to such meeting, receipt of which is
hereby acknowledged.
This proxy when properly executed will be voted in the manner
directed herein by the undersigned shareholder. If no direction is
made, this proxy will be voted FOR the nominees listed in Proposal 1.
-----------------------
Signature of Shareholder(s)
Please sign your name exactly as it appears hereon. Joint owners must
each sign. When signing as attorney, executor, administrator, trustee
or guardian, please dive your full title as it appears hereon.
Dated: , 2000