Exhibit C
VALLEY FORGE SCIENTIFIC CORP.
2000 NON-EMPLOYEE
DIRECTORS' STOCK OPTION PLAN
1. Purpose. The purpose of this Plan is to advance the interests of
Valley Forge Scientific Corp., a Pennsylvania corporation (the "Company"), by
providing an additional incentive to attract and retain qualified and
competent directors, upon whose efforts and judgment the success of the
Company is largely dependent, through the encouragement of stock ownership in
the Company by such persons.
2. Definitions. As used herein, the following terms shall have the
meanings indicated:
(a) "Board" shall mean the Board of Directors of Valley Forge
Scientific Corp.
(b) "Committee" shall mean the committee, if any, appointed by the Board
pursuant to Section 12 hereof.
(c) "Date of Grant" shall mean the date on which an Option is granted
to an Eligible Person pursuant to Section 4 hereof.
(d) "Director" shall mean a member of the Board.
(e) "Eligible Person(s)" shall mean those persons who are Directors
of the Company and who are not either employees of the Company or a Subsidiary
or members of the immediate family of an employee-director of the Company or a
Subsidiary.
(f) "Fair Market Value" means: (i) if the Shares are admitted to
quotation on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), the Fair Market Value on any given date shall be
the average of the highest bid and lowest asked prices of a Share reported for
such date or, if no bid and asked prices were reported for such date, for the
last day preceding such date for which such prices were reported; or (ii) if
the Shares are admitted to trading on a United States securities exchange or
the NASDAQ National Market System, the Fair Market Value on any date shall be
the closing price reported for a Share on such exchange or system for such
date or, if no sales were reported for such date, for the last day preceding
such date for which a sale was reported; and (iiii) in the absence of an
established market for the Shares, the Fair Market Value thereof shall be
determined in good faith by the Committee.
(g) "Internal Revenue Code" or "Code" shall mean the Internal Revenue
Code of 1986, as it now exists or may be amended from time to time.
(h) "Nonstatutory Stock Option" shall mean an option that is not an
incentive stock option as defined in Section 422 of the Internal Revenue Code.
(i) "Option" shall mean any option granted pursuant to this Plan.
(j) "Optionee" shall mean a person to whom an Option is granted under
this Plan or any successor to the rights of such person under this Plan by
reason of the death of such person.
(k) "Plan" shall mean this 2000 Non-Employee Directors' Stock Option
Plan of Valley Forge Scientific Corp., as amended from time to time.
(1) "Share(s)" shall mean a share or shares of the common stock, no
par value per share, of the Company.
(m) "Subsidiary" shall mean a subsidiary corporation of the Company as
defined in Section 424(f) of the Code.
3. Shares and Options. The maximum number of Shares to be issued
pursuant to Options under this Plan shall be ONE HUNDRED FIFTY THOUSAND
(150,000) Shares. Shares issued pursuant to Options granted under this Plan
may be issued from Shares held in the Company's treasury or from authorized
and unissued Shares If any Option granted under this Plan shall terminate,
expire or be canceled or surrendered as to any Shares, new Options may
thereafter be granted covering such Shares. Any Option granted hereunder
shall be a Nonstatutory Stock Option.
4. Automatic Grant of Options. (a) Options shall automatically be
granted to Directors as provided in this Section 4. Each Option shall be
evidenced by an option agreement (an "Option Agreement") and shall contain
such terms as are not inconsistent with this Plan or any applicable law. Any
person who files with the Committee, in a form satisfactory to the Committee,
a written waiver of eligibility to receive any Option under this Plan shall
not be eligible to receive any Option under this Plan for the duration of such
waiver.
(b) The Options automatically granted to Directors under this Section
4 shall be in addition to any other Options granted pursuant to this Plan,
regular director's fees and other benefits with respect to the Director's
position with the Company or its Subsidiaries. Neither the Plan nor any
Option granted under the Plan shall confer upon any person any right to
continue to serve as a Director.
(c) Options shall be automatically granted as follows:
(i) Each Director who is an Eligible Person shall automatically receive
an Option for TEN THOUSAND (10,000) Shares on the date this Plan is adopted by
the Board of Directors of the Company, and each Eligible Person shall
automatically receive on the first business day after he/she is first
appointed or elected a Director an Option for TEN THOUSAND (10,000) Shares,
and such Options shall vest on the Date of Grant.
(ii) Each Director who is an Eligible Person shall automatically receive
on the first business day after the date of each annual meeting of
stockholders of the Company at which such Director is re-elected to the Board
of Directors of the Company, an Option to purchase TEN THOUSAND (10,000)
Shares, and such Options shall vest on the Date of Grant.
(d) Any Option that may be granted pursuant to subparagraph (c) of this
Section 4 prior to the approval of this Plan by the stockholders of the
Company may be exercised on or after the Date of Grant subject to the approval
of this Plan by the stockholders of the Company within twelve (12) months
after the effective date of this Plan. If any Optionee exercises an Option
prior to such stockholder approval, the Optionee must tender the exercise
price at the time of exercise and the Company shall hold the Shares to be
issued pursuant to such exercise until the stockholders approve this Plan. If
this Plan is approved by the stockholders, the Company shall issue and deliver
the Shares as to which the Option has been exercised. If this Plan is not
approved by the stockholders, the Company shall return the exercise price to
the Optionee.
5. Discretionary Grant of Options . In addition to the Options
automatically granted under Section 4 of this Plan, the Committee may grant
Options at any time during the term of this Plan to any Eligible Person.
Subject only to the applicable limitations set forth in this Plan and
applicable law, the number of Shares to be covered by an Option shall be as
determined by the Committee. Each Option granted pursuant to this Section 5
shall be evidenced by an Option Agreement and shall contain such terms as are
not inconsistent with this Plan or any applicable law.
6. Option Price. The Option price per Share of any Option granted
pursuant to this Plan shall be one hundred percent (100%) of the Fair Market
Value per Share on the Date of Grant.
7. Exercise of Options. Options may be exercised at any time after the
date on which the Options, or any portion thereto are vested until the Option
expires pursuant to Section 8. An Option shall be deemed exercised when (i)
the Company has received written notice of such exercise in accordance with
the terms of the Option Agreement, (ii) full payment of the aggregate Option
price of the Shares as to which the Option is exercised has been made, and
(iii) arrangements that are satisfactory to the Committee in its sole
discretion have been made for the Optionee's payment to the Company of the
amount, if any, that the Committee determines to be necessary for the Company
to withhold in accordance with applicable federal or state income tax
withholding requirements. Pursuant to procedures approved by the Committee,
tax withholding requirements, at the option of an Optionee, may be met by
withholding Shares otherwise deliverable to the Optionee upon the exercise of
an Option. Unless further limited by the Committee in any Option Agreement,
the Option price of any Shares purchased shall be paid solely in cash, by
certified or cashier's check, by money order, with Shares (but with Shares
only if permitted by the Option Agreement or otherwise permitted by the
Committee in its sole discretion at the time of exercise) or by a combination
of the above, provided, however, that the Committee in its sole discretion may
accept a personal check in full or partial payment of any Shares. If the
exercise price is paid in whole or in part with Shares, the value of the
Shares surrendered shall be their Fair Market Value on the date the Shares are
received by the Company.
8. Termination of Option Period. The unexercised portion of an Option
shall automatically and without notice terminate and become null and void at
the time of the earliest to occur of the following:
(a) with respect to Options granted automatically pursuant to Section
4(c), two (2) years after the date that an Optionee ceases to be a Director
regardless of the reason therefor, other than as a result of such termination
by death of the Optionee; or
(b) the tenth (10th) anniversary of the Date of Grant of the Option.
9. Adjustment of Shares. (a) If at any time while this Plan is in
effect or unexercised Options are outstanding, there shall be any increase or
decrease in the number of issued and outstanding Shares through the
declaration of a stock dividend or through any recapitalization resulting in a
stock split-up, combination or exchange of Shares, then and in such event:
(i) appropriate adjustment shall be made in the maximum number of Shares then
subject to being optioned under this Plan, so that the same proportion of the
Company's issued and outstanding Shares shall continue to be subject to being
so optioned, and
(ii) appropriate adjustment shall be made in the number of Shares and the
exercise price per Share thereof then subject to any outstanding Option, so
that the same proportion of the Company's issued and outstanding Shares shall
remain subject to purchase at the same aggregate exercise price.
In addition, the Committee shall make such adjustments in the Option
price and the number of shares covered by outstanding Options that are
required to prevent dilution or enlargement of the rights of the holders of
such Options that would otherwise result from any reorganization,
recapitalization, stock split, stock dividend, combination of shares, merger,
consolidation, issuance of rights, spin-off or any other change in capital
structure of the Company.
(b) Except as otherwise expressly provided herein, the issuance by the
Company of shares of its capital stock of any class, or securities convertible
into shares of capital stock of any class, either in connection with a direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such
shares or other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number of or exercise price of
Shares then subject to outstanding Options granted under this Plan.
(c) Without limiting the generality of the foregoing, the existence of
outstanding Options granted under this Plan shall not affect in any manner the
right of power of the Company to make, authorize or consummate (i) any or all
adjustments recapitalizations, reorganizations, or other changes in the
Company's capital structure or its business; (ii) any merger or consolidation
of the Company; (iii) any issue by the Company of debt securities, or
preferred or preference stock that would rank above the Shares subject to
outstanding Options; (iv) the dissolution or liquidation of the Company; (v)
any sale, transfer or assignment of all or any part of the assets or business
of the Company; or (vi) any other corporate act or proceeding, whether of a
similar character or otherwise.
10. Transferability of Options. Each Option Agreement shall provide
that such Option shall not be transferable by the Optionee other than by will
or the laws of descent and distribution or pursuant to a qualified domestic
relations order and that, so long as an Optionee lives, only such Optionee or
his guardian or legal representative shall have the right to exercise the
related Option; provided however, that the Committee may, in its discretion,
at the time of grant of an Option or by amendment of an Option, provide that
Options granted to or held by an Eligible Person may be transferred, in whole
or in part, to one or more transferees and exercised by any such transferee,
provided further that: (i) any such transfer must be without consideration;
(ii) each transferee must be a member of such Eligible Person's "immediate
family" (as defined below) or a trust, family limited partnership or other
estate planning vehicle established for the exclusive benefit of one or more
members of the Eligible Person's immediate family; and (iii) such transfer is
specifically approved by the Committee following the receipt of a written
request for approval of the transfer. In the event an Option is transferred
as contemplated in this Section, such transfer shall become effective when
approved by the Committee and such Option may not be subsequently transferred
by the transferee other than by will or the laws of descent and distribution.
Any transferred Option shall continue to be governed by and subject to the
terms and conditions of this Plan and the relevant Option Agreement, and the
transferee shall be entitled to the same rights as the Eligible Person as if
no transfer had taken place. As used in this Section, "immediate family"
shall mean, with respect to any person, any spouse, child, stepchild or
grandchild, and shall include relationships arising from legal adoption.
11. Issuance of Shares. No person shall be, or have any of the rights or
privileges of, a stockholder of the Company with respect to any of the Shares
subject to an Option unless and until certificates representing such Shares
shall have been issued and delivered to such person. As a condition of any
transfer of the certificate for Shares, the Committee may obtain such
agreements or undertakings, if any, as it may deem necessary or advisable to
assure compliance with any provision of this Plan, any Option Agreement or any
law or regulation, including, but not limited to, the following:
(i) A representation, warranty or agreement by the Optionee to the
Company, at the time any Option is exercised, that he is acquiring the Shares
to be issued to him or her for investment and not with a view to, or for sale
in connection with, the distribution of such Shares; and
(ii) A representation, warranty or agreement to be bound by any legends that
are, in the opinion of the Committee, necessary or appropriate to comply with
the provisions of any securities law deemed by the Committee to be applicable
to the issuance of the Shares and are endorsed upon the Share certificates.
Share certificates issued to an Optionee who is a party to any
stockholder agreement or a similar agreement shall bear the legends contained
in such agreements.
12. Administration of the Plan. (a) This Plan shall be administered by a
stock option committee (the "Committee") consisting of not fewer than two (2)
non-employee members of the Board, provided, however, that if no Committee is
appointed, the Board shall administer this Plan and in such case all
references to the Committee shall be deemed to be references to the Board.
The Committee shall have all of the powers of the Board with respect to this
Plan. Any member of the Committee may be removed at any time, with or without
cause, by resolution of the Board, and any vacancy occurring in the membership
of the Committee may be filled by appointment by the Board.
(b) The Committee, from time to time, may adopt rules and regulations for
carrying out the purposes of this Plan The determinations and the
interpretation and construction of any provision of this Plan by the Committee
shall be final and conclusive.
(c) Any and all decisions or determinations of the Committee shall be
made either (i) by a majority vote of the members of the Committee at a
meeting or (ii) without a meeting by the written approval of a majority of the
members of the Committee.
(d) This Plan is intended and has been drafted to comply with Rule 16b-3,
as amended, under the Securities Exchange Act of 1934, as amended. If any
provision of this Plan does not comply with Rule 16b-3, as amended, this Plan
shall be automatically amended to comply with Rule 16b-3, as amended.
13. Interpretation. (a) If any provision of this Plan is held invalid
for any reason, such holding shall not affect the remaining provisions hereof,
but instead this Plan shall be construed and enforced as if such provision had
never been included in this Plan.
(b)THIS PLAN SHALL BE GOVERNED BY THE LAWS OF THE STATE OF PENNSYLVANIA
EXCEPT TO THE EXTENT SUPERSEDED BY THE LAWS OF THE UNITED STATES OR THE
PROPERTY LAWS OF ANY STATE.
(c) Headings contained in this Plan are for convenience only and shall
in no manner be construed as part of this Plan.
(d) Any reference to the masculine, feminine or neuter gender shall be a
reference to such other gender as is appropriate.
14. Section 83(b) Election. If as a result of exercising an Option an
Optionee receives Shares that are subject to a "substantial risk of
forfeiture" and are not "transferable" as those terms are defined for purposes
of Section 83(a) of the Code, then such Optionee may elect under Section 83(b)
of the Code to include in his gross income, for his taxable year in which the
Shares are transferred to such Optionee, the excess of the Fair Market Value
of such Shares at the time of transfer (determined without regard to any
restriction other than one which by its terms will never lapse), over the
amount paid for the Shares. If the Optionee makes the Section 83(b) election
described above, the Optionee shall (i) make such election in a manner that is
satisfactory to the Committee, (ii) provide the Company with a copy of such
election, (iii) agree to promptly notify the Company if any Internal Revenue
Service or state tax agent, on audit or otherwise, questions the validity or
correctness of such election or of the amount of income reportable on account
of such election, and (iv) agree to such withholding as the Committee may
reasonably require in its sole and absolute discretion.
15. Effective Date and Termination Date. This Plan is adopted as of
December 12, 2000. The effective date of any amendment to the Plan is the
date on which the Board adopted such amendment, provided, however, if this
Plan is not approved by the stockholders of the Company within twelve (12)
months after the effective date, then, in such event, this Plan and all
Options granted pursuant to this Plan shall be null and void. This Plan shall
terminate on December 12, 2010, and any Option outstanding on such date will
remain outstanding until it has either expired or has been exercised.