UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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) May 13, 2005
Neoware Systems, Inc.
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(Exact Name of Registrant as Specified in Its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
000-21240 23-2705700
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(Commission File Number) (IRS Employer
Identification No.)
400 Feheley Drive, King of Prussia, Pennsylvania 19406
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(Address of Principal Executive Offices) (Zip Code)
(610) 277-8300
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, 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 (see General Instruction A.2. below):
|_| 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 May 13, 2005, the Compensation and Stock Option Committee (the
"Committee") of the Board of Directors of Neoware Systems, Inc. (the "Company"),
and Board of Directors, upon recommendation of the Committee, approved the
acceleration of the vesting of "underwater" unvested stock options held by
certain current employees, including executive officers. No stock options held
by non-employee directors were subject to the acceleration. A stock option was
considered "underwater" if the option exercise price was greater than $14.00 per
share.
The decision to accelerate vesting of these underwater stock options
was made primarily to avoid recognizing compensation cost in the Consolidated
Statements of Income in future financial statements upon the Company's adoption
of Statement of Financial Accounting Standards No. 123 (revised 2004),
"Share-Based Payment" ("FAS 123R"), which when adopted by the Company will
require all share-based payments to employees, including grants of employee
stock options, to be recognized on the Company's financial statements based on
their fair values. FAS 123R will become effective as to the Company beginning
July 1, 2005. Additionally, the Company believes underwater stock options may
not be offering the affected employees sufficient incentive when compared to the
potential future compensation expense that would have been attributable to these
stock options.
The accelerated vesting was effective as of May 13, 2005, although
holders of incentive stock options (within the meaning of Section 422 of the
Internal Revenue Code of 1986) to purchase 58,899 shares of common stock have
the opportunity to decline the accelerated vesting in order to prevent changing
the status of the incentive stock options for federal income tax purposes to
non-qualified stock options. Assuming that no holders of incentive stock options
elect to decline the accelerated vesting, options to purchase 532,376 shares of
the Company's common stock became immediately exercisable on May 13, 2005, of
which 260,000 are held by executive officers. The exercise prices of the
accelerated options range from $14.27 to $20.00 per share. All other terms and
conditions of such options remain unchanged. The following table summarizes
outstanding underwater options held by executive officers which were subject to
the acceleration and became exercisable on May 13, 2005.
OPTIONS SUBJECT TO
NAME POSITION ACCELERATION
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Michael G. Kantrowitz President and Chief Executive Office 87,500
Peter Bolton Executive Vice President 32,500
Eric N. Rubino Chief Operating Officer 92,500
Matt D. Wrabley Executive Vice President Business Development 47,500
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits. The following document is filed as an exhibit to this report.
99.1 Press Release dated May 19, 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.
Dated: May 19, 2005 Neoware Systems, Inc.
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(Registrant)
/s/ Keith D. Schneck
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Keith D. Schneck
Executive Vice President and
Chief Financial Officer