9
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): September 9, 2005
HALIFAX CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 1-08964 54-0829246
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation)
5250 Cherokee Avenue, Alexandria, Virginia 22312
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (703) 658-2400
N/A
Former name, former address, and former fiscal year, if changed since
last report
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities
Act(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange
Act(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act(17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On September 9, 2005, the Company's shareholders approved the 2005
Stock Option and Stock Incentive Plan (the "Incentive Plan"). The
Company's Board of Directors adopted the Incentive Plan on April 17,
2005. The purpose of the Incentive Plan is to promote the long-term
interests of the Company and its shareholders by providing a means for
attracting and retaining officers, directors and other key employees of
and consultants to the Company and its affiliates by providing for
awards in the form of Common Stock.
Set forth below is a summary of the provisions of the Incentive
Plan. This summary is qualified in its entirety by the detailed
provisions of the text of the actual Incentive Plan, which is included
as Appendix A to the Company's definitive proxy statement on Schedule
14A filed with the Securities and Exchange Commission on July 29, 2005.
Eligibility
All officers, directors and key employees of and important
consultants to the Company and of or to any present or future Company
parent or subsidiary corporation are eligible to receive an option or
options or awards of restricted stock under the Incentive Plan.
Awards Under the Incentive Plan
Awards made pursuant to the Incentive Plan may be in the form of
options or grants of shares of restricted stock. ptions granted under
the Incentive Plan may be Incentive Stock Options or Non-Qualified
Stock Options. An Incentive Stock Option is an option which satisfies
all of the requirements of Section 422 of the Code and the regulations
thereunder, and a Non-Qualified Stock Option is an option which either
does not satisfy all of those requirements or the terms of the option
provide that it will not be treated as an Incentive Stock Option.
Unless the context otherwise requires, the term "option" includes both
Incentive Stock Options and Non-Qualified Stock Options. The
Committee, as described below, may also grant awards entitling the
participant to receive a stated number shares of Common Stock, which
awards may be subject to restrictions or forfeiture for a period of
time as stipulated by the Board of Directors or the Committee, as
applicable. The dollar value of awards of restricted stock granted
under the Incentive Plan shall be based upon the fair market value of
Common Stock on the date of grant.
Administration
The Incentive Plan shall be administered by the Board of Directors
of the Company, or a Compensation and Employee Benefits Committee
appointed by the Company's Board of Directors. Pursuant to the terms
of the Incentive Plan, the Compensation Committee must consist of a
minimum of two and a maximum of five members of the Board of Directors,
each of whom shall be a "Non-Employee Director" within the meaning of
Exchange Act Rule 16b-3(b)(3) or any future corresponding rule, except
that the failure of the Compensation Committee for any reason to be
composed solely of Non-Employee Directors shall not prevent an option
or restricted stock award from being considered granted under the
Incentive Plan. References to the term "Committee" refer to either the
Company's Board of Directors or a Compensation and Employee Benefits
Committee comprised of Non-Employee Directors. Under the Incentive
Plan, the Committee has the right to adopt such rules for the conduct
of its business and the administration of the Incentive Plan as it
considers desirable. The Committee has the right to construe the
Incentive Plan and the options or awards of restricted stock issued
pursuant to it, to correct defects and omissions and to reconcile
inconsistencies to the extent necessary to effectuate the purpose of
the Incentive Plan and the options or awards of restricted stock issued
pursuant to it.
Common Stock Subject to the Incentive Plan
Pursuant to the terms of the Incentive Plan, 260,000 shares of
Common Stock were reserved for issuance upon the exercise of options or
awards of restricted stock granted under the Incentive Plan. Of the
aggregate amount of shares of Common Stock issuable under the Incentive
Plan, 60,000 shares are reserved for issuance exclusively to directors
of the Company who are not also officers or employees of the Company
(the "Outside Director Reserve") and the remaining 200,000 shares are
reserved for issuance exclusively to officers and key employees of and
important consultants to the Company (the "Employee Reserve"). Up to
200,000 shares of Common Stock may be issued upon the exercise of
Incentive Stock Options.
Limitation on Maximum Number of Options Awarded
The Incentive Plan provides that the maximum number of options or
restricted stock which may be awarded to any single participant under
the Incentive Plan shall be no more than is equal to 90% of the shares
reserved for issuance from the Outside Director Reserve for awards to
outside directors of the Company and shall be no more than is equal to
90% of the shares reserved for issuance from the Employee Reserve for
awards to officers and key employees of and important consultants to
the Company. The purpose of this limitation is to enable awards of
options made pursuant to the Incentive Plan to comply with one of the
conditions of Section 162(m) of the Code, which limits the annual
deductibility of compensation paid to the Company's "named executive
officers," as that term is defined in Item 402(a)(3) of Regulation S-K
unless it is performance based.
Exercise Price of Options/Payment of Exercise Price
The exercise price for options issued under the Incentive Plan
shall be at least equal to the fair market value of Common Stock on the
date of grant of the option. The exercise price of an option may be
paid in cash or the delivery of already owned shares of Common Stock of
the Company having a fair market value equal to the exercise price, or
a combination thereof.
The Board of Directors has interpreted the provision of the
Incentive Plan that allows payment of the option price in Common Stock
of the Company to permit the "pyramiding" of shares in successive
exercises. Thus, an optionee could initially exercise an option in
part, acquiring a small number of shares of Common Stock, and
immediately thereafter effect further exercises of the option, using
the Common Stock acquired upon earlier exercises to pay for an
increasingly greater number of shares received on each successive
exercise. This procedure could permit an optionee to pay the option
price by using a single share of Common Stock or a small number of
shares of Common Stock and to acquire a number of shares of Common
Stock having an aggregate fair market value equal to the excess of (a)
the fair market value of all shares to which the option relates over
(b) the aggregate exercise price under the option.
Special Provisions for Incentive Stock Options
The maximum aggregate fair market value of the shares of Common
Stock (determined when the Incentive Stock Option is granted) with
respect to which Incentive Stock Options are first exercisable by an
employee in any calendar year cannot exceed $100,000. In addition, no
Incentive Stock Option may be granted to an employee owning directly or
indirectly stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company, unless the exercise price
is set at not less than 110% of the fair market value of the shares
subject to such Incentive Stock Option on the date of the grant and
such Incentive Stock Option expires not later than five years from the
date of grant. No Incentive Stock Option granted under the Incentive
Plan is assignable or transferable, otherwise than by will or by the
laws of descent and distribution. Except in the event of death or
disability, any Incentive Stock Option granted under the Incentive Plan
is exercisable only during the lifetime of an optionee, and is
exercisable only by such optionee. Awards of Non-Qualified Stock
Options are not subject to these special limitations.
Exercisability and Expiration of Options
All options granted pursuant to the Incentive Plan are exercisable
in accordance with a vesting schedule (if any), which is set by the
Committee at the time of grant. The expiration date of an option is
also determined by the Committee at the time of grant, but in no event
will an option be exercisable after the expiration of ten years from
the date of grant of the option.
All unexercised options of officers and key employees of the
Company terminate three months following the date on which the
officer's or key employee's employment with the Company terminates,
other than by reason of disability or death. An exercisable option
held by an officer or key employee who dies or who ceases to be
employed by the Company because of disability may be exercised by the
officer or key employee or his representative within one year after the
officer or key employee dies or becomes disabled (but not later than
the scheduled option termination date).
All unexercised options of directors of and important consultants
to the Company terminate three months following the date on which (but
not later than the scheduled option termination date) the individual
ceases for any reason to be a director of or important consultant to
the Company, whether by death, disability, resignation, removal,
failure to be reappointed, reelected or otherwise, or the expiration of
any consulting agreement, and regardless of whether the failure to
continue as a director or consultant was for cause or without cause or
otherwise.
The Committee may, in its sole discretion, provide in an option
agreement the circumstances under which the option shall become
immediately exercisable and may accelerate the date on which all or any
portion of an option may be exercised.
Vesting of Awards of Restricted Stock
All awards of restricted stock of Common Stock granted pursuant to
the Incentive Plan may be subject to vesting for a period of time and
will become unrestricted under the Incentive Plan in accordance with a
vesting schedule (if any) set by the Committee at the time of grant.
Under the terms of the Incentive Plan, the Committee may also establish
an additional time period during which the participant must hold the
vested shares prior to resale. During the restricted period, if any,
the participant shall have the right to vote the shares subject to the
award.
All unvested awards of officers, directors and key employees of
and important consultants to the Company terminate immediately upon
termination of the officer's or key employee's employment or the
director's directorship or the consultant's consultancy with the
Company, other than by reason of disability or death. If the officer
or key employee participant ceases to be employed by or the director
ceases to be a director of or the consultant ceases to be a consultant
of the Company because of death or disability, any unvested awards will
immediately vest. Additionally, unless the Committee shall otherwise
provide, if the officer's or key employee's employment or the
director's directorship or the consultant's consultancy with the
Company is involuntarily terminated for any reason, except for cause,
during an 18 month period after a change in control of the Company, the
shares of Common Stock subject to the participant's award will fully
vest and no longer be subject to the restrictions under the Incentive
Plan. A change in control includes a change within a 12 month period
in holders of more than 50% of the outstanding voting stock of the
Company, or any other events deemed to be a change in control by the
Committee.
The Committee has the authority, in its sole discretion, to
accelerate the time at which any or all of the restrictions shall lapse
with respect to restricted shares, or to remove any or all of such
restrictions, whenever it may determine such action is appropriate by
reason of changes in applicable tax or other laws or other changes in
circumstances occurring after the commencement of the restricted
period.
Expiration of the Incentive Plan
Unless terminated earlier by the Board of Directors, the Incentive
Plan will remain in effect until all awards granted under the Incentive
Plan have been satisfied by the issuance of shares provided that no new
options or restricted stock awards may be granted under such Incentive
Plan more than ten years from the date the Incentive Plan was adopted
by the Board of Directors of the Company.
Adjustments
In the event of any change in the outstanding shares of Common
Stock by reason of a stock dividend, stock split, combination of
shares, recapitalization, merger, consolidation, transfer of assets,
reorganization, conversion or what the Committee deems in its sole
discretion to be similar circumstances, the aggregate number of shares
that may be issued under the Incentive Plan, the amounts available for
issuance under the Outside Director Reserve and the Employee Reserve,
and the number and kind of shares subject to options and the option
price of such shares shall be appropriately adjusted in a manner to be
determined in the sole discretion of the Committee.
Transferability
Except as otherwise provided in Section 422 of the Code and
regulations thereunder or any successor provision, no Incentive Stock
Option granted pursuant to the Incentive Plan shall be transferable
other than by will or the laws of descent and distribution.
Except as otherwise provided by the rules and regulations of the
SEC, the Incentive Plan provides that the Committee at the time of
grant of a Non-Qualified Stock Option may provide that such stock
option is transferable to any "family member" of the optionee by gift
or qualified domestic relations order. For purposes of this section, a
family member includes any child, stepchild, grandchild, parent, step-
parent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-
law, or sister-in-law, including adoptive relationships, any person
sharing the grantee's household (other than a tenant or employee), a
trust in which these persons have more than 50% of the beneficial
interest, a foundation in which these persons (or the grantee) controls
the management of assets, and any other entity in which these persons
or the grantee own more than 50% of the voting interests.
During the restricted period, no award of restricted stock nor any
right of interest of a participant in such award set forth in the
restricted stock agreement evidencing any award under the Incentive
Plan may assigned, encumbered or transferred except, in the event of
death, by will or the laws of descent and distribution.
Amendments
The Board of Directors may amend or supplement the Incentive Plan,
including the forms of option or restricted stock agreement, in any
way, or suspend or terminate the Incentive Plan, effective as of such
date, which date may be either before or after the taking of such
action, as may be specified by the Board of Directors; provided,
however, that such action shall not affect options or restricted stock
granted under the Incentive Plan prior to the actual date on which such
action occurred. If an amendment of or supplement to the Incentive
Plan is required by the Code or the regulations thereunder to be
approved by the shareholders of the Company in order to permit the
granting of Incentive Stock Options pursuant to the amended or
supplemented Incentive Plan, such amendment or supplement shall also be
approved by the shareholders of the Company in such manner as is
prescribed by the Code and the regulations thereunder. If the Board of
Directors voluntarily submits a proposed amendment, supplement,
suspension or termination for shareholder approval, such submission
shall not require any future amendments, supplements, suspensions or
terminations (whether or not relating to the same provision or subject
matter) to be similarly submitted for shareholder approval.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
10.1 2005 Stock Option and Stock Incentive Plan (Incorporated
by reference to Appendix A to the Company's definitive proxy
statement on Schedule 14A filed with the Securities and
Exchange Commission on July 29, 2005.)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
HALIFAX CORPORATION
Date: September 20, 2005 By: /s/Joseph Sciacca
Joseph Sciacca
Vice President, Finance & CFO