Exhibit 10.4
SHAREHOLDERS’ AGREEMENT
     THIS SHAREHOLDERS’ AGREEMENT (this “Agreement”) is made and entered into as
of September 21, 2005 by and among Valley Forge Scientific Corp., a Pennsylvania
corporation (the “Company”), and the shareholders identified on Schedule I
attached hereto (each, a “Shareholder” and collectively, the “Shareholders”) of
the Company.
RECITALS
     A. Concurrently with the execution of this Agreement, the Company,
Synergetics Acquisition Corporation, a Delaware corporation and a wholly-owned
subsidiary of the Company (“MergerSub”), and Synergetics, Inc. a Missouri
corporation (“Synergetics”), have consummated the Merger of the MergerSub with
and into Synergetics (the “Merger”) pursuant to that certain Agreement and Plan
of Merger (the “Merger Agreement”), dated as of May 2, 2005, as amended by
Amendment No. 1 to Agreement and Plan of Merger, dated as of June 2, 2005, and
as further amended by Amendment No. 2 to Agreement and Plan of Merger, dated as
of July 15, 2005, among Valley Forge, MergerSub and Synergetics (the “Merger
Agreement”);
     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 shares of the Common Stock, no par value per share, of the
Company (collectively, the “Shares”), as is indicated on Schedule I attached
hereto; and
     D. In consideration of and to induce the consummation of the Merger by the
Company, each of the Shareholders agrees not to sell or otherwise dispose of any
of the Shares held by the Shareholder, except in accordance with the terms
hereof, and to vote their Shares as provided herein.
     NOW, THEREFORE, in consideration of the mutual promises and the mutual
covenants contained herein, the parties agree as follows:
     1. Prohibited Transfers. For a period of twelve (12) months following the
date hereof, the Shareholders shall not sell, assign, transfer, pledge,
hypothecate, mortgage or dispose of, by gift or otherwise, or in any way
encumber (each, a “Transfer”), all or any part of the Shares beneficially owned
by them, without the prior written approval of the holders of at least 80% of
the Shares then held by the non-selling Shareholders. For purposes of this
Agreement, the term “Shares” shall include all Shares presently held or
hereafter acquired by the Shareholders. The Company shall not transfer on its
books any Shares which are subject to this Agreement unless the provisions
hereof have been complied with in full. Any purported Transfer without full
compliance with the provisions of this Agreement shall be null and void.
     2. Exempt Transfers. Notwithstanding anything contained herein to the
contrary, the restrictions on Transfers set forth in Section 1 hereof shall not
apply to any Transfer or Transfers by a Shareholder made to a Permitted
Transferee (as defined below) of such Shareholder, provided such Permitted
Transferee agrees in writing to be bound by, and to comply with, all provisions
of this Agreement. For purposes of this Agreement, “Permitted Transferee” shall

 

--------------------------------------------------------------------------------

 

mean with respect to any Shareholder, (i) the spouse or lineal descendants (but
not minor children) of such Shareholder, (ii) any trust created solely for the
benefit of such Shareholder, the spouse or lineal descendants of such
Shareholder, or such Shareholder’s estate, (iii) any corporation, limited
liability company or partnership in which such Shareholder, or the spouse or
lineal descendants of such Shareholder, are the direct and beneficial owners of
all of the equity interests (provided such Shareholder, spouse and lineal
descendants agree in writing to remain the direct and beneficial owners of all
such equity interests), or (iv) the personal representatives of such Shareholder
upon such Shareholder’s death for purposes of administration of such
Shareholder’s estate or upon such Shareholder’s adjudicated incapacity for
purposes of the protection and management of the assets of such Shareholder.
     3. Representations, Warranties and Covenants of the Shareholders. Each
Shareholder, severally and not jointly, hereby represents, warrants and
covenants to the Company and the other Shareholders the following:
          3.1 Ownership of Shares. The Shareholder (i) is the holder and
beneficial owner of the 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 the Company other than the Shares and (iii) has full power
and authority to make, enter into, deliver and carry out the terms of this
Agreement.
          3.2 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.
          3.3 No Voting Trusts and Agreements. Between the date of this
Agreement and the termination hereof, the Shareholder will not, and will not
permit any entity under the Shareholder’s control to, deposit any shares of the
Company’s capital stock held by the Shareholder or such entity in a voting trust
or subject any shares of the Company’s capital stock 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 the Company and
the other Shareholders, unless the trustee of such trust agrees in writing to be
bound by the terms of this Agreement.
     4. Representations, Warranties and Covenants of the Company.
          4.1 Due Authorization. This Agreement has been authorized by all
necessary corporate action on the part of the Company and has been duly executed
by a duly authorized officer of the Company.
          4.2 Validity; No Conflict. This Agreement constitutes the legal, valid
and binding obligation of the Company, enforceable against the Company 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 Company nor the consummation of the transactions contemplated
hereby will result in a breach or violation of the terms of any agreement by
which the Company is bound or of any decree, judgment, order, law or regulation
now in effect of any court or other governmental body applicable to the Company.
     5. Additional Documents. Each of the Shareholders and the Company hereby
covenant and agree to execute and deliver any additional documents necessary or
desirable, in the reasonable opinion of the Company’s legal counsel or the
Shareholders, as the case may be, to carry out the intent of this Agreement.
     6. Termination. This Agreement and the respective rights and obligations of
the parties hereto shall terminate upon on the first anniversary of the date
hereof.
     7. Miscellaneous.
          7.1 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.
          7.2 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, heirs 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.
          7.3 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.
          7.4 Specific Performance; Injunctive Relief. The parties hereto
acknowledge that the Company and the non-breaching Shareholders 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 any Shareholder set forth
herein. Therefore, it is agreed that, in addition to any other remedies which
may be available to the Company and non-breaching Shareholders upon such
violation, the Company and such non-breaching Shareholders shall have the right
to enforce such covenants and agreements by specific performance, injunctive
relief or by any other means available to it at law or in equity.
          7.5 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed duly given (a) on the date of delivery if
delivered personally, or by telecopy or telefacsimile, upon confirmation of
receipt, (b) on the first business day following the date of dispatch if
delivered by a recognized next-day courier service, or (c) on the tenth business
day following the date of mailing if delivered by registered or certified mail,
return receipt requested, postage prepaid. All notices hereunder shall be
delivered as set forth below, or

 

--------------------------------------------------------------------------------

 

pursuant to such other instructions as may be designated in writing by the party
to receive such notice:

     
If to the Company:
  With a copy to:
 
   
Gregg D. Scheller, CEO
  Robert Guest, Esquire
3845 Corporate Center Drive
  Doster Mickes James Ullom Benson & Guest LLC
O’Fallon, Missouri 63368
  17107 Chesterfield Road, Suite 300
636.939.5100 (p)
  Chesterfield, Missouri 63005
636.939.6885 (f)
  (636) 532-0042 (p)
 
  (636) 532-1082 (f)

If to any Shareholder: To the address set forth on Schedule I attached hereto.
          7.6 Governing Law. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of Delaware without giving
effect to principles of conflicts of law.
          7.7 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.
          7.8 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.
          7.9 Effect of Headings. The section headings herein are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
[Signature pages follow]

 

--------------------------------------------------------------------------------

 

          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
 
       
 
           Name: Jerry L. Malis
 
           Title: President
 
            SHAREHOLDERS:
 
            /s/ Jerry L. Malis           Jerry L. Malis
 
            MALIS FAMILY, L.P.
 
       
 
  By:   /s/ Jerry L. Malis
 
       
 
           Name: Jerry L. Malis
 
           Title: General Partner

[Signature Page to Shareholders’ Agreement]

 

--------------------------------------------------------------------------------

 

              GREGG D. SCHELLER REVOCABLE
LIVING TRUST DATED 3/5/02
 
       
 
  By:   /s/ Gregg D. Scheller
 
       
 
           Name: Gregg D. Scheller
 
           Title: Trustee
 
            DONNA M. SCHELLER REVOCABLE
LIVING TRUST DATED 3/5/02.
 
       
 
  By:   /s/ Donna M. Scheller
 
       
 
           Name: Donna M. Scheller
 
           Title: Trustee
 
            KURT W. GAMPP, JR., REVOCABLE
LIVING TRUST DATED 10/1/02
 
       
 
  By:   /s/ Kurt W. Gampp, Jr.
 
       
 
           Name: Kurt W. Gampp, Jr.
 
           Title: Trustee

[Signature Page to Shareholders’ Agreement]

 

--------------------------------------------------------------------------------

 

              ESTATE OF LEONARD I. MALIS
 
       
 
  By:    
 
       
 
           Name:
 
           Title:

[Signature Page to Shareholders’ Agreement]

 

--------------------------------------------------------------------------------

 

              LEONARD MALIS AND RUTH MALIS FAMILY L.P.
 
       
 
  By:    
 
       
 
           Name: Ruth Malis
 
           Title: General Partner

 

--------------------------------------------------------------------------------

 

[Signature Page to Shareholders’ Agreement]

 

--------------------------------------------------------------------------------

 

Schedule I
SHAREHOLDERS

          Name and Address   Number of Shares
Gregg D. Scheller Revocable Living Trust
    807,840  
Dated 3/5/02
       
17820 Suzanne Ridge Road
       
Wildwood, MO 63038
     
 
       
Donna M. Scheller Revocable Living Trust
    817,020  
Dated 3/5/02
       
17820 Suzanne Ridge Road
       
Wildwood, MO 63038
     
 
       
Kurt W. Gampp, Jr., Revocable Living Trust
    958,392  
Dated 10/1/02
       
2029 Sundowner Ridge
       
Wildwood, MO 63011
         
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.
       
3600 Horizon Drive
       
King of Prussia, PA 19406
     
 
       
Estate of 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 Ruth Malis
       
219-44 Peck Avenue
       
Hollis Hills, NY 11427