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 30, 2004
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
Former name, former address, and former fiscal year, if changed since
last report: N/A
Check the appropriate box below if the Form 8-K filing is intended to
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))
FOREWARD-LOOKING STATEMENTS
Certain statements in this document constitute "forward-looking
statements" within the meaning of the Federal Private Securities
Litigation Reform Act of 1995. While forward-looking statements
sometimes are presented with numerical specificity, they are based on
various assumptions made by management regarding future circumstances
over many of which we have little or no control. Forward-looking
statements may be identified by words including "anticipate,"
"believe," "estimate," "expect" and similar expressions. Halifax
Corporation, a Virginia corporation ("Halifax" or the "Company"),
cautions readers that forward-looking statements, including without
limitation, those relating to future business prospects, revenues,
working capital, liquidity, and income, are subject to certain risks
and uncertainties that would cause actual results to differ materially
from those indicated in the forward-looking statements. Factors that
could cause actual results to differ from forward-looking statements
include the concentration of the Company's revenues, risks related to
fluctuation in interest rates and exchange rates, risks involved in
contracting with its customers including incurrence of start-up costs
prior to receiving revenues and contracts with fixed price provisions,
government contracting risks, potential conflicts of interest,
difficulties in attracting and retaining management, professional and
administrative staff, fluctuation in quarterly results, risks related
to acquisitions, including the acquisition of AlphaNational Technology
Services, Inc., risks related to the Company's acquisition strategy,
continued favorable banking relationships, the availability of capital
to finance operations and planned growth and make payments on
outstanding indebtedness, ramifications of the embezzlement matter,
risks related to competition and the Company's ability to continue to
perform efficiently on contracts, absence of dividends on common stock
and liquidity of common stock, effects of provisions in the Company's
charter documents delaying or preventing a change of control and other
risks and factors identified from time to time in the Company's Annual
Report on Form 10-K. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those anticipated,
estimated or projected.
Forward-looking statements are intended to apply only at the time
they are made. Moreover, whether or not stated in connection with a
forward-looking statement, the Company undertakes no obligation to
correct or update a forward-looking statement should we later become
aware that it is not likely to be achieved. If the Company were to
update or correct a forward-looking statement, you should not conclude
that the Company will make additional updates or correction thereafter.
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On September 30, 2004, Halifax Corporation and its wholly-owned
subsidiary, Halifax-AlphaNational Acquisition, Inc., a Delaware
corporation, entered into a definitive agreement with AlphaNational
Technology Services, Inc., a Texas corporation ("AlphaNational") and
nationwide hardware maintenance services company, and its stockholders
(the "Merger Agreement"), pursuant to which Halifax acquired all of the
outstanding capital stock of AlphaNational in a merger transaction, for
total consideration of approximately $1.9 million excluding the
contingent earnout payment described below. Pursuant to the Merger
Agreement, the merger consideration was comprised of:
(i) 235,294 shares of Halifax's common stock having an aggregate
value of $1,200,000; cash in an amount equal to $200,000; and notes in
an aggregate original principal amount of $500,000 with an interest
rate of 6% per annum of which $100,000 of the aggregate principal
amount has a term of 90 days and $400,000 has a term of 18 months, and
(ii) a contingent earnout payment pursuant to which an additional
$150,000 in cash or Halifax common stock is payable over the next 12
months if certain agreed upon financial targets are met.
The purchase price is also subject to possible adjustment resulting
from AlphaNational financial information to become available 45 days
after closing. Halifax expects to pay the principal and interest on
the notes with internally generated funds. The Merger Agreement
included representations, warranties, covenants and indemnifications
typical for transactions of this type.
In connection with the merger transactions, the AlphaNational
stockholders also received certain demand and piggyback registration
rights pursuant to a registration rights agreement and pursuant to a
restrictive covenants agreement, the AlphaNational stockholders agreed,
among other things, to keep proprietary information confidential and
not to compete with Halifax within a certain territory or solicit or
divert employees, consultants and customers from Halifax.
Halifax and AlphaNational have conducted business transactions
together in the ordinary course since April 2002. All terms of these
transactions were negotiated at arms-length.
On September 30, 2004 in connection with the acquisition of
AlphaNational, L.L. Whiteside became Senior Vice President, Service and
Support of Halifax and Mr. Whiteside entered into an Employee Severance
and Restrictive Covenant Agreement. The information contained in Item
5.02 below is hereby incorporated by reference into this item 1.01.
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
Halifax completed the acquisition of AlphaNational described above
on September 30, 2004. The information contained in Item 1.01 above is
hereby incorporated by reference into this Item 2.01.
ITEM 3.02 SALE OF UNREGISTERED SECURITIES
In connection with the acquisition of AlphaNational described
above, Halifax issued 235,294 shares of its common stock on September
30, 2004. Halifax also agreed to issue $150,000 in shares of common
stock pursuant to the earnout arrangement described above, provided
Halifax common stock is selected as the method of payment, as opposed
to cash. These securities were issued in a private placement exempt
from registration pursuant to Rule 506 of Regulation D of the rules and
regulations of the Securities and Exchange Commission promulgated under
the Securities Act of 1933, as amended, to accredited investors. The
private placement was completed without any general or public
solicitation. The information contained in Item 1.01 above is hereby
incorporated by reference into this Item 3.02.
ITEM 5.02. DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF
DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS.
On September 30, 2004 in connection with the acquisition of
AlphaNational described above, L.L. Whiteside became Senior Vice
President Service & Support of Halifax. On such date Halifax entered
into an Employee Severance and Restrictive Covenant Agreement
("Severance Agreement") with Mr. Whiteside. The Severance Agreement
provides for benefits under certain circumstances described below and
remains in effect so long as Mr. Whiteside continues to be employed by
the Company. The Severance Agreement provides for an annual base
salary of $193,000. It confirms that employment is at will and
provides for termination without additional compensation in the event
of death, disability, resignation by Mr. Whiteside without "good
reason," as defined in the Severance Agreement, or termination by
Halifax "for cause," as defined in the Severance Agreement.
Termination for any other reason results in compensation equal to
twelve months salary if such termination occurs within three years of
the date the Severance Agreement was entered into.
In connection with the AlphaNational acquisition, Mr. Whiteside
received, as consideration in exchange for all of his shares of
AlphaNational, 108,597 shares of Halifax common stock, $92,307.69 in
cash and a note in the principal amount of $230,769.23, subject to
adjustment as described above in Item 1.01 above, with an interest rate
of 6% per annum. Mr. Whiteside has the opportunity to receive
additional consideration if the contingent earnout payment requirements
are met. The information contained in Item 1.01 above is hereby
incorporated by reference into this Item 5.02.
Mr. Whiteside, 64, served as Chief Executive Officer of
AlphaNational from 1992 until September 2004. Halifax and
AlphaNational, of which Mr. Whiteside was Chief Executive Officer and a
greater than 10% stockholder, have conducted business transactions
together in the ordinary course since April 2002. All terms of these
transactions were negotiated at arms-length. Mr. Whiteside is not
related to any of the officers or directors of Halifax.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired
Required financial statements will be filed as an amendment
to this Form 8-K as soon as practicable, but not later than
71 calendar days after the date this Form 8-K is required to
be filed with the Securities and Exchange Commission.
(b) Pro-forma Financial Information
Required pro forma financial statements will be filed as an
amendment to this Form 8-K as soon as practicable, but not
later than 71 calendar days after the date this Form 8-K is
required to be filed with the Securities and Exchange
Commission.
(c) Exhibits
The following exhibit is filed herewith:
Exhibit
Number Description
2.1 Agreement and Plan of Merger dated September
30, 2004 by and among AlphaNational Technology Services,
Inc., Halifax Corporation, Halifax-AlphaNational
Acquisition, Inc., et al. (Schedules and exhibits are
omitted pursuant to Regulation S-K, Item 601(b)(2);
Halifax agrees to furnish supplementally a copy of such
schedules and/or exhibits to the Securities and Exchange
Commission upon request.)
99.1 Press Release dated October 4, 2004.
SIGNATURE
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: October 6, 2004 By: /s/Joseph Sciacca
Joseph Sciacca
Vice President, Finance & CFO
EXHIBIT INDEX
Exhibit No. Description
2.1 Agreement and Plan of Merger dated September
30, 2004 by and among AlphaNational Technology Services,
Inc., Halifax Corporation, Halifax-AlphaNational
Acquisition, Inc., et al. (Schedules and exhibits are
omitted pursuant to Regulation S-K, Item 601(b)(2);
Halifax agrees to furnish supplementally a copy of such
schedules and/or exhibits to the Securities and Exchange
Commission upon request.)
99.1 Press Release dated October 4, 2004.