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): July 6, 2006
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
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 July 6, 2006, we and our subsidiaries amended and restated our
Second Amended and Restated Loan and Security Agreement with Provident
Bank to extend the maturity date under the agreement to June 30, 2008.
The aggregate amount available to us under the agreement remains at
$12.0 million. We also amended and restated the agreement to provide
for an auxiliary revolver facility with a maximum borrowing capacity of
$1.0 million, which is based upon a borrowing base of up to 25% of our
eligible inventory. We are permitted to use the proceeds of the
auxiliary revolver facility for costs related to the commencement of
any new contract. The amount outstanding under the agreement bears
interest at the bank's prime rate plus one-quarter percent (0.25%). We
will also pay an unused commitment fee on the difference between the
maximum amount we can borrow and the amount advanced, determined by the
average daily amount outstanding during the period. The difference is
multiplied by one-quarter percent (0.25%). This amount is payable on
September 30, 2006 and on the last day of each quarter until the
agreement has been terminated. Additionally, we will pay a fee of
$1,000 per month. Advances under the agreement are collateralized by a
first priority security interest on all of our assets as defined in the
agreement. As of March 31, 2006, $6.9 million was outstanding and $5.1
million was available to us. The interest rate at March 31, 2006 was
8%.
The agreement contains representations, warranties and covenants
that are that are customary in connection with a transaction of this
type. The agreement contains certain covenants including, but not
limited to: (i) maintaining our accounts in a cash collateral account
at Provident Bank, the funds in which accounts we may apply in our
discretion against our obligations owed to Provident Bank, (ii)
notifying Provident Bank in writing of any cancellation of a contract
having annual revenues in excess of $250,000, (iii) in the event
receivables arise out of government contracts, we will assign to
Provident Bank all government contracts with amounts payable of
$100,000 or greater and in duration of six months or longer, (iv)
obtaining written consent from Provident Bank prior to permitting a
change in ownership of more than 25% of the stock or other equity
interests of us and our subsidiaries or permit us or any of such
entities to enter into any merger or consolidation or sell or lease
substantially all of our or its assets, and (v) obtaining prior written
consent of Provident Bank, subject to exceptions, to make payments of
debt to any person or entity or making any distributions of any kind to
any officers, employees or members. The agreement also contains
certain financial covenants which we are required to maintain
including, but not limited to tangible net worth, current ratio, total
liabilities to net worth ratio, debt service coverage and current
ratio, as more fully described in the agreement.
Events of default, include, but are not limited to: (i) a
determination by Provident Bank that the financial condition of us or
any person or entity that generally is now or hereafter liable,
directly, contingently or otherwise obligated to pay Provident Bank
under the agreement ("Other Obligor") is unsatisfactory, (ii) we or an
Other Obligor becomes insolvent, (iii) the suspension of business, or
commission of an act amounting to business failure by us or any Other
Obligor, (iv) a change in more than 25% of the ownership of us without
the prior written consent of Provident Bank, and (v) the occurrence of
an event which is, or with the passage of time or the giving of notice
or both, a default under any indebtedness in excess of $100,000 of us
or any Other Obligor. Upon an event of default, our lender may (i)
accelerate and call immediately due and payable all of the unpaid
principal, accrued interest and other sums due as of the date of
default, (ii) impose the default rate of interest with or without
acceleration, (iii) file suit against us or any Other Obligor, (iv)
seek specific performance or injunctive relief to enforce performance
of the our obligations (v) exercise any rights of a secured creditor
under the Uniform Commercial Code, (vi) cease making advances or
extending credit to us and stop and retract the making of any advances
which we may have requested, and (vii) reduce the maximum amount we are
permitted to borrow under the agreement. We have also authorized
Provident Bank, upon a default, but without prior notice to or demand
upon us and without prior opportunity of us to be heard, to institute
an action for replevin, with or without bond as Provident Bank may
elect, to obtain possession of any of the collateral.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(C) Exhibits.
10.1 Third Amended and Restated Loan and Security Agreement, dated
July 6, 2006, by and between Halifax Corporation, Halifax Engineering,
Inc., Microserv LLC, Halifax AlphaNational Acquisition, Inc. and
Provident Bank and related documents.
Forward Looking Statements
Certain statements in this Current Report on Form 8-K 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 events
over which we have little or no control. Forward-looking statements
may be identified by words including "anticipate," "believe,"
"estimate," "expect" and similar expressions. We caution 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 our revenues, risks involved in contracting with our
customers, including difficulties to accurately estimate costs when
bidding on a contract and the occurrence of start-up costs prior to
receiving revenues and contract with fixed price provisions, government
contracting risks, potential conflicts of interest, difficulties we may
have in attracting and retaining management, professional and
administrative staff, fluctuation in quarterly results, risks related
to acquisitions and acquisition strategy, continued favorable banking
relationships, the availability of capital to finance operations and
ability to make payments on outstanding indebtedness, weakened economic
conditions, acts of terrorism, risks related to competition and our
ability to continue to perform efficiently on contracts, and other
risks and factors identified from time to time in the reports we file
with the Securities and Exchange Commission ("SEC"), including our
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, we undertake no obligation to correct or
update a forward-looking statement should we later become aware that it
is not likely to be achieved. If we were to update or correct a
forward-looking statement, you should not conclude that we will make
additional updates or correction thereafter.
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: July 6, 2006 By: /s/Joseph Sciacca
Joseph Sciacca
Vice President, Finance & CFO
INDEX TO EXHIBITS
Exhibit Description
Number
10.1 Third Amended and Restated Loan and Security
Agreement, dated July 6, 2006, by and between
Halifax Corporation, Halifax Engineering,
Inc., Microserv LLC, Halifax AlphaNational
Acquisition, Inc. and Provident Bank and
related documents.