<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
HALIFAX CORPORATION
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(4) Date filed:
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<PAGE> 2
HALIFAX CORPORATION
5250 Cherokee Avenue
Alexandria, Virginia 22312
ANNUAL MEETING OF SHAREHOLDERS
Dear Shareholders:
You are cordially invited to attend the Annual Meeting of Halifax
Shareholders which will be held on Thursday, September 21, 2000 at 2:00 p.m.
local time at the Hilton Hotel, 5000 Seminary Road, Alexandria, VA 22311.
In addition to the meeting purposes enumerated in the attached Notice, it
shall be our pleasure to entertain questions pertaining to the affairs of the
Company which affect the interests of Shareholders as a whole.
We encourage your attendance and look forward to seeing you at the
meeting, but whether or not you plan to attend, your vote is very important to
us. Information about voting procedures can be found in the proxy statement and
on the stub portion of the enclosed proxy card. Please return a signed proxy
card so that you can be sure your shares will be properly voted.
Sincerely,
Charles L. McNew
President and Chief Executive Officer
August 15, 2000
<PAGE> 3
HALIFAX CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 21, 2000
To the Shareholders of Halifax Corporation:
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of Shareholders of Halifax
Corporation (The "Company") will be held at, the Hilton Hotel, 5000 Seminary
Road, Alexandria, VA 22311 on Thursday, September 21, 2000, at 2:00 p.m. local
time, for the purpose of considering and acting upon the following:
1. Election of six (6) directors for the ensuing year.
2. Ratification of the Board of Directors' appointment of Deloitte &
Touche LLP Certified Public Accountants, as the Company's
independent auditors for the fiscal year ending March 31, 2001.
3. Transact such other business as may properly come before the
meeting.
Stockholders of record at the close of business on August 10, 2000 are
entitled to vote. Your vote is important regardless of the number of shares that
you own. Kindly sign, date and return the enclosed proxy card.
By Order of the Board of Directors
Ernest L. Ruffner
Secretary
<PAGE> 4
HALIFAX CORPORATION
5250 CHEROKEE AVENUE
ALEXANDRIA, VIRGINIA 22312
PROXY STATEMENT
The Annual Meeting of Shareholders of Halifax Corporation (The "Company")
will be held on September 21, 2000 at the Hilton Hotel, 5000 Seminary Road,
Alexandria, Virginia 22311, for the purposes set forth in the accompanying
Notice of Annual Meeting of Shareholders and described more fully below.
The enclosed Proxy is solicited on behalf of the Board of Directors of
the Company.
The cost of preparing, assembling and mailing the Notice, Proxy Statement
and Proxy and miscellaneous costs with respect to the same will be paid by the
Company. The Company may, in addition, use the services of its officers,
directors and employees to solicit Proxies personally or by telephone and
telegraph, but at no additional salary or compensation. The Company intends to
request banks, brokerage houses and other custodians, nominees and fiduciaries
to forward copies of the proxy material to those persons for whom they hold
shares and to request authority for the execution of Proxies. The Company will
reimburse them for reasonable out-of-pocket expenses incurred by them in so
doing.
The Proxy may be revoked by the person giving it at any time before it
has been voted by delivering written notice to the Company or by delivering a
later dated Proxy.
Unless instructed to the contrary on the Proxy, each Proxy will be voted
for the persons named below in the election of directors to the Company's Board
of Directors; for ratification of the appointment of Deloitte & Touche LLP,
Certified Public Accountants, to be the Company's independent auditors for
fiscal 2001; and with respect to such other matters which may properly come
before the Annual Meeting. The persons named as proxy holders will exercise
their best judgment with respect to such other matters. A shareholder who
abstains from a vote by registering an abstention vote will be deemed present at
the meeting for quorum purposes but will not be deemed to have voted on the
particular matters. Management knows of no other matters to come before the
Annual Meeting at this time.
<PAGE> 5
SHARES OUTSTANDING AND VOTING RIGHT
Shareholders of record at the close of business on August 10, 2000, will
be entitled to notice of and vote at the Annual Meeting. On that date there were
2,050,686 shares of the Company's Common Stock outstanding. The holders of these
shares are entitled to one vote per share.
Under the rules of the American Stock Exchange (AMEX) brokers who hold
shares in street name for customers have the authority to vote on certain items
when they have not received instruction from beneficial owners. Such votes are
known as "broker non-votes", and are counted for purposes of determining the
presence of a quorum, but are not counted for purposes of determining whether a
director has been elected or whether a proposal has been approved by the
shareholders.
Directors are elected by a plurality of the votes of the shares present
or represented at the meeting and entitled to vote. Approval of each other
matter to be voted upon requires the affirmative vote of a majority of the votes
of shares present or represented at the meeting and entitled to vote on such
matter.
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the Company shall be managed by a
Board of Directors consisting of between three and seven members, the precise
number of directors to be fixed from time to time by resolution of the Board of
Directors. The number of Directors has been fixed at six.
It is, therefore, proposed to elect a Board of Directors of six persons
to serve until the next annual meeting of Shareholders or until the election and
qualification of their respective successors. Unless authority is withheld, the
proxies shall be voted for the election as directors of the following persons
named below. All six nominees are now serving as directors. All six of the
nominees have agreed to serve if elected.
Management has no reason to believe that any nominee will not be
available to serve, but if any nominee should be or become unable to serve, the
shares represented by Management proxies will be voted, instead, for the
election of another person recommended by the Board of Directors as a director.
The following table sets forth the name and age of each of the nominees
to the Board of Directors of the Company, together with respective periods of
service as directors and other positions with the Company
<PAGE> 6
THE BOARD OF DIRECTORS RECOMMENDS THE FOLLOWING NOMINEES:
<TABLE>
<CAPTION>
DATE FIRST PRINCIPAL OCCUPATION AND
NOMINEE AGE ELECTED EMPLOYMENT; OTHER BACKGROUND
------- --- ---------- ----------------------------
<S> <C> <C> <C>
Arch C. Scurlock 80 1973 Arch C. Scurlock, presently Chairman of the Board of Directors,
has been a Director of the Company since 1973. He has been
President and a Director of Research Industries Incorporated, a
private investment company since 1968. He served from 1969 to 1992
as Chairman of the Board of TransTechnology Corporation, a
manufacturer of aerospace defense and other industrial products.
Charles L. McNew 48 2000 Charles L. McNew joined the Company in July 1999 and was appointed
President and Chief Executive Officer May 8, 2000. He had been
acting President and CEO from April 14, 2000 to May 7, 2000 and
prior to that was Executive Vice President and Chief Financial
Officer. Prior to joining the Company, from July 1994 through July
1999 Mr. McNew was Chief Financial Officer and later Chief
Operating Officer of NumereX Corporation, a public Company which
develops and markets communications and information products and
services.
John H. Grover 72 1984 John H. Grover became a Director of the Company in 1984. He has
served as Executive Vice President, Treasurer and Director of
Research Industries Incorporated since 1968, and as a Director of
TransTechnology Corporation from 1969 to 1992.
Alvin E. Nashman 73 1993 Alvin E. Nashman, elected Director of the Company on September 17,
1993, served on the Board of Directors of Computer Sciences
Corporation (CSC) and as President of its Systems Group until 1986
and 1991 respectively. Dr. Nashman currently serves on the Boards
of Andrulis Corporation, an information systems company, Micros to
Mainframes, Inc. (OTC), an information systems company, and on the
Advisory Boards of Dominion Wireless, a personal security company,
Unitech Inc., an information systems company, Trawick Assoicates,
an information systems company, Performance Engineering
Corporation, an information systems company, e-Greenbiz.com, an
internet portal company, and James Monroe Bank, a community bank.
John M. Toups 74 1993 John M. Toups served as President and CEO of Planning Research
Corporation (PRC) from 1978 to 1987. Prior to that he served in
various executive positions with PRC. For a short period of time
in 1990, he served as interim Chairman of the Board and CEO of the
National Bank of Washington and Washington Bancorp and is
currently a Director of CACI International, Inc., an information
technology company, NVR, Inc. a home builder company, Thermatrix,
Inc., an air emissions control technology company, Andrulis
Corporation, an information systems company and GTSI, a reseller
of software/hardware company.
Thomas L. Hewitt 61 2000 Thomas L. Hewitt founded Federal Sources in December of 1984, a
market research and consulting firm, and served as the Company's
CEO until the recent sale of the Company in 2000. Prior to
founding Federal Sources, Mr. Hewitt served as a Senior Vice
President of Kentron, an information technology professional
services company acquired by PRC, and held several senior level
positions at CSC, an information technology systems integration
company, including President of the Infonet Government Systems
Division and VP of Program Development of the Systems Group.
</TABLE>
<PAGE> 7
OTHER EXECUTIVE OFFICERS
In addition to Mr. McNew, the following persons serve as executive
officers of the Company.
Joseph Sciacca, age forty-seven, Vice President of Finance and Chief
Financial Officer since May 2000. He was appointed Corporate Controller in
December 2000 and provided consulting services to the Company prior thereto
beginning in March 1999. From September 1996 through September 1998, he was
Chief Financial Officer of On-Site Sourcing, a legal document management
services firm. From 1994 through 1996 he was a principal in a tax and consulting
firm.
Robert Santmyer, age forty, Vice President and General Manager,
Technology Services Division since June 1999. Prior to joining Halifax, he was
Vice President, Professional Services, Dictaphone Corporation from September
1998 to June 1999. Other positions held were General Manager, DCX Systems LTD, a
subsidiary of NumereX Corporation from February 1997 until September 1998; and
from April 1989 until February 1997 Vice President, Professional Services, MAXM
Systems Corporation.
Melvin L. Schuler, age fifty-six, is Vice President, Communications
Services Division. Mr. Schuler has been with Halifax since 1972, serving in
various management positions within the Communications services line of
business.
James L. Sherwood, IV, age fifty-eight, is Vice President, Contracts and
Administration. He previously served as Vice President of the Company's
Facilities Services Division. He has been with the Company and its subsidiaries
since 1978.
James L. May, age sixty-four, Vice President and General Manager,
Computer Maintenance Division. Mr. May has been with Halifax since April 1,
1997. Prior to joining the Company, Mr. May was an independent Consultant from
1992 to 1997. Prior to that time Mr. May was a Vice President of Decision Data
Corporation. Other positions held include Vice President, Bell Atlantic
Corporation, Sorbus Service Division. Also President and Chief Operating Officer
for Beta Products Corporation. Mr. May has also served on the Board of Directors
for Forney Special Products.
Ernest L. Ruffner, age sixty-five is Corporate Secretary. Until his
retirement in December 1999 he also served as General Counsel of the Company. He
was first elected Secretary in July of 1985.
<PAGE> 8
BOARD OF DIRECTORS; COMMITTEES
During the year ended March 31, 2000, the Board of Directors held six
meetings. During that year, all members who were directors at the time attended
all of the meetings held by the Board and by each committee of the Board of
which he was a member.
Set forth below is certain information regarding certain existing
committees of the Board of Directors:
Audit Committee. The Audit Committee reviews the results of, and
the suggestions provided in connection with, the Company's annual
audit by its independent auditors; reviews internal audit and
other accounting procedures established by management; and
considers the scope of the audit and non-audit services provided
by the Company's independent public accountants, including the
fees charged for those services, and recommends to the Board the
appointment of the Company's independent auditors. The committee's
current members are Messrs. Grover, Toups and Nashman. During the
year ended March 31, 2000, the committee held one meeting.
Compensation and Incentive Committee. The Compensation and
Incentive Committee advises the Board of Directors with respect to
compensation levels and the issuance of stock options to key
employees of the Company. The committee members are Messrs.
Scurlock, Grover, and Toups. During the year ended March 31, 2000,
the committee held two meetings.
Nominating Committee. The Nominating Committee was created for the
purpose of considering individuals to be nominated for election to
the Board of Directors. Selections are presented to the Board for
inclusion in the slate of management nominees submitted to the
shareholders for election. The current committee members are
Messrs. Nashman, Grover, and Scurlock. During the year ended March
31, 2000, the committee held one meeting.
<PAGE> 9
PRINCIPAL SHAREHOLDERS AND DIRECTORS AND OFFICERS
The following table sets forth as of July 31, 2000 (1) the number of
shares of the Company's common stock owned beneficially by each person who owned
of record, or is known by the Company to have owned beneficially, more than 5%
of such shares then outstanding (2) the number of shares owned by each director
and officer of the Company and (3) the number of shares owned beneficially by
all officers and directors as a group. Information as to the beneficial
ownership is based upon statements furnished to the Company by such persons.
<TABLE>
<CAPTION>
NAME OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT
---------------- -------------------- -------
<S> <C> <C>
Research Industries Incorporated (1)(3)(5) 715,780 34.9
123 North Pitt Street
Alexandria, Virginia 22314
Arch C. Scurlock (1)(2) 722,530(8) 35.2
123 North Pitt Street
Alexandria, Virginia 22314
John H. Grover (3) 6,750(8) 0.3
123 North Pitt Street
Alexandria, Virginia 22314
Ernest L. Ruffner(4) 4,900(8) 0.2
5250 Cherokee Avenue
Alexandria, Virginia 22312
Alvin E. Nashman 9,750(8) 0.5
5250 Cherokee Avenue
Alexandria, VA 22312
John M. Toups 9,750(8) 0.5
5250 Cherokee Avenue
Alexandria, VA 22312
Thomas L. Hewitt 250(8) *
5250 Cherokee Avenue
Alexandria, VA 22312
Charles L. McNew(7) 1,000 *
5250 Cherokee Avenue
Alexandria, VA 22312
Melvin L. Schuler 12,100(9) 0.6
5250 Cherokee Avenue
Alexandria, VA 22312
James L. Sherwood IV 5,225(9) 0.3
5250 Cherokee Avenue
Alexandria, VA 22312
John J. Reis(6) 0 *
All officers and directors as a
group, including the above (10 ) persons 772,255(10) 37.6
</TABLE>
* Less than 1%
(1) Research Industries Incorporated is 93% owned by Arch C. Scurlock,
Chairman of the Company's Board of Directors. Dr. Scurlock is also
President and a director of Research Industries Incorporated.
<PAGE> 10
(2) Includes 715,780 shares owned by Research Industries Incorporated.
(3) Mr. Grover is also a greater than 5% owner, a director and Executive Vice
President and Treasurer of Research Industries Incorporated.
(4) Mr. Ruffner is Secretary of Halifax Corporation.
(5) Research Industries Incorporated owns $2 million face amount of the
Company's 7% Convertible Subordinated Debenture dated January 27, 1998
and $690,000, $310,000, $500,000 and $500,000 face amount of the
Company's Promissory Notes dated October 8, 1998, October 13, 1998,
November 2, 1998 and November 5, 1998, respectively.
(6) Mr. Reis ceased serving as President and CEO of the Company on April 14,
2000.
(7) Mr. McNew was appointed President and CEO on May 8, 2000.
(8) Includes options to purchase Common Stock under the Non-Employee Director
Stock Option Plan as follows: Arch C. Scurlock - 5,250; John H. Grover -
5,250; Ernest L. Ruffner - 4,750; Alvin E. Nashman - 5,250; John M. Toups
- 5,250 and Thomas L. Hewitt - 250.
(9) Includes options to purchase Common Stock under the Employee Stock Option
Plan as follows: Melvin L. Schuler - 5,250 and James L. Sherwood IV -
3,000.
(10) Includes options to purchase 34,250 shares of Common Stock under Company
stock option plans.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION AND INCENTIVE COMMITTEE
The overall philosophy regarding compensation of the Company's executive
officers continues to be based upon the concept that in order to achieve the
Company's objectives of progress, growth and profitability it is necessary to
attract and retain qualified executives who are motivated to provide a high
level of performance. A vital element in this motivation is to offer an
executive compensation program that is not only competitive but rewards those
executives whose efforts enable the Company to achieve its goals. To accomplish
this objective, the Committee has an established policy whereby a significant
segment of an executive's total compensation is related directly to performance
resulting in the interest of the Company's executives being in parallel with the
interest of its shareholders.
The executive compensation program includes three elements which are
intended to constitute a flexible and balanced method of establishing total
compensation. These are base salary, annual bonus and stock options. When
combined, these elements are intended to provide key executives sufficient
motivation and incentives so that their efforts will maximize corporate
performance thereby enhancing shareholder value. In accomplishing this
objective, the compensation program seeks to balance performance rewards with
what is reasonable under the total circumstances including the competitiveness
of the executive marketplace.
The base salaries of the executive officers are a reflection of the size
of the Company, the scope of responsibility of each individual and the extent of
experience in their particular positions. Reviewed annually, base salaries are
related indirectly to the Company's performance and marginally related to the
cost of living.
The base salary of Howard Mills, the Company's president and chief
executive officer from 1994 until his retirement in February 1999, was
increased by 5 percent to $175,000 effective July 1, 1998. He also participated
in the Company's 401(k) Plan, to the extent set forth below.
On March 1, 1999, John Reis was appointed President and CEO following Mr.
Mills' retirement. Mr. Reis' appointment was based on a thorough search by a
committee of the Board,
<PAGE> 11
which considered candidate qualifications and competitive salaries. Mr. Reis'
salary was $200,000 annually, effective March 1, 1999. Mr. Reis resigned from
his position effective April 14, 2000.
Mr. McNew was appointed President and CEO effective May 8, 2000 at an
annual salary of $200,000.
The second component of the executive compensation program is incentive
compensation related to the achievement of business plan objectives. The
business plan and related objectives are reviewed and approved by the Board of
Directors. Executives who qualify under the program are monetarily awarded if
specific objectives are achieved and can be further rewarded, based upon a
formula calculation if assigned objectives are exceeded. Mr. Reis earned
incentive compensation of $150,000 for the fiscal year ended March 31, 2000. Mr.
McNew earned incentive compensation of $100,000 for the fiscal year ended March
31, 2000. For the fiscal year ended March 31, 2001, Mr. McNew may qualify for
incentive compensation which could total $100,000 or more based on the
achievement of certain objectives.
The final component of the executive compensation program is the 1994 Key
Employee Stock Option Plan ("Plan") which was adopted and approved by the
Company's shareholders at the 1994 annual meeting and is for the benefit of the
Company's key employees, including officers, who meet certain criteria. The
purpose of the Plan is to attract, motivate, and retain those highly competent
individuals upon whose judgment, initiative, and leadership, the continued
success of the Company depends. The Plan is administered by a committee of three
members of the Board of Directors who are not eligible to participate in the
Plan. Subject to the provisions of the Plan, the Committee has sole discretion
and authority to determine from among eligible employees those to whom and time
or times at which, options may be granted, the numbers of shares of Common Stock
to be subject to each option, and the type of option to be granted. On October
5, 1999 options were granted to Mr. Reis to acquire 75,000 shares of the
Company's common stock at $5.75 per share. These options are exercisable upon
the earlier of the share price reaching $9 (1/3), $12 (1/3), $15 (1/3), October
5, 2003, or a change of control event. The options expired 90 days after Mr.
Reis' departure from the Company. On October 5, 1999 and May 18, 2000 Mr. McNew
was granted 45,000 and 25,000 options, respectively, to acquire the Company's
common stock at exercise prices of $5.75 and $5.50 per share, respectively.
No member of the Compensation and Incentive Committee is a former or
current officer or employee of the Company or any of its subsidiaries.
<TABLE>
<S> <C> <C>
Arch C. Scurlock John M. Toups John H. Grover
</TABLE>
<PAGE> 12
SUMMARY COMPENSATION TABLE
The following table sets forth information relating to the Chief
Executive Officers and the only other officers whose compensation exceeded
$100,000 serving except as otherwise indicated at the close of the fiscal year
ended March 31, 2000 for services rendered in all capacities during the fiscal
years ended March 31, 2000, 1999, and 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------- ----------------------
Payouts
-------
Other
Annual All Other
Compen- Options Compen-
Salary Bonus sation SARs sation
Year ($) ($) ($)(1) (#) ($)(2)
---- ----- ----- ------ ----- -------
<S> <C> <C> <C> <C> <C> <C>
Charles L. McNew(3) 2000 100,451 75,000 925 45,000 1,962
John J. Reis(4) 2000 201,247 150,000 675 25,000 5,948
Former CEO/President 1999 11,539 - - 50,000 -
Howard C. Mills(5) 2000 38,777 - 2,958 - 1,307
Former CEO/President 1999 172,603 - 4,697 - 22,900
1998 164,417 - 4,119 - 3,227
James L. Sherwood, IV 2000 113,543 6,000 - 5,000 2,390
1999 111,348 3,220 - 5,000 9,453
1998 106,156 - - - 2,136
Robert V. Santmyer 2000 118,466 35,000 - 25,000 -
Melvin L. Schuler 2000 110,921 6,243 - 5,000 2,502
1999 108,764 - - 3,000 2,443
1998 103,650 54,096 - 3,345
James C. Dobrowolski 2000 117,903 - - - 2,358
1999 113,659 6,864 2,400 8,000 2,130
1998 112,390 17,950 - - 2,607
</TABLE>
(1) Value of Company furnished auto.
(2) Amounts contributed to officer under 401(k) plan, insurance plans, and
paid vacation.
(3) Mr. McNew's annual base salary is $200,000.
(4) Mr. Reis' employment with the Company ceased effective April 2000.
(5) Mr. Mills retired from the Company effective April 16, 1999. The Company
entered into a consulting agreement with Mr. Mills whereby he provides
certain advisory services. The Agreement is for a term of ten (10) years
commencing April 16, 1999 and ending April 15, 2009. Mr. Mills receives
$50,000 per year, payable monthly, in exchange for his services.
<PAGE> 13
DIRECTOR COMPENSATION
Except for Howard Mills, who became a consultant to the Company upon his
retirement as President and CEO, directors who are not officers of the Company
receive an annual fee of $1,000. During the fiscal year ended March 31, 1999
Directors also received $2,000 and reimbursement of expenses incurred for each
meeting of the Board of Directors which they attended. Each Director is granted
5,000 options on the date of their initial election and 2,000 options on each
anniversary thereafter to the extent they continue to serve as a Director of the
Company. Alvin Nashman (Director) received $2,000 per month for consulting
services provided the Company through September 1999.
Upon his retirement as President and CEO in February 1999, Howard Mills
(Director) entered into a Consulting Agreement with the Company for a period of
ten years based on an annual rate of $50,000.
OPTION GRANTS IN FISCAL YEAR 2000
1994 STOCK OPTION PLAN
<TABLE>
<CAPTION>
Potential Realizable Value
at Assured Annual Rates
of Stock Price
Percent Total Appreciation for Option
Options Granted Exercise Term (3)
Options to Employees in or Base Expiration --------------------------
NAME Granted(1) Fiscal Year Price($) Date 5%($) 10%($)
---- ---------- ----------- -------- ---- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Charles L. McNew 45,000 22.2 5.75 10/5/99 129,916 338,915
CEO/President
John J. Reis(2) 75,000 37.1 5.75 expired --- ---
Former CEO/President
Howard C. Mills 0 0 0 --- 0 0
Former CEO/President
Robert V. Santmyer 25,000 12.4 5.75 10/5/09 72,175 188,286
Vice President
James L. Sherwood, IV 5,000 2.5 5.75 10/5/09 14,435 37,657
Vice President
Melvin L. Schuler 5,000 2.5 5.75 10/5/09 14,435 37,657
Vice President
James C. Dobrowolski 0 0 0 --- 0 0
Vice President
</TABLE>
(1) On October 5, 1999 options were granted to the following individuals:
John J. Reis (75,000), Charles L. McNew (45,000), Robert Santmyer
(25,000), Melvin Schuler (5,000) and James Sherwood (5,000). These
options may
<PAGE> 14
be exercised at a price of $5.75 and are exercisable in 1/3 increments
upon the earlier of the share price reaching $9 (33%), $12 (33%), $15
(33%), October 5, 2003, or a change of control event. The options expire
October 5, 2009. Mr. Sciacca was granted an option for 10,000 shares
under similar terms on December 6, 1999. Mr. May was granted an option
for 10,000 shares under similar terms on March 2, 2000.
(2) Mr. Reis' options expired 90 days after his resignation from the Company.
(3) Discloses the potential realizable value assuming that the market price
of the underlying security appreciates at annualized rates of 5 and 10
percent over the term of the award.
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
No options were granted in Fiscal Year 2000
<PAGE> 15
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END VALUES OF UNEXERCISED OPTIONS
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised In-The-
Shares Options at Year-End Money Options at Year-end(1)
Acquired on Value ($) ------------------- ----------------------------
Name Exercise(#) Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles L. McNew 0 0 0 45,000 $0 $0
President & CEO
John J. Reis(2) 0 0 0 0 0 0
Former President & CEO
Howard C. Mills(3) 7,200 $15,624 5,400 1,800 0 0
Former President/CEO
Robert V. Santmyer 0 0 0 25,000 0 0
Vice President
James L. Sherwood, IV 1,800 $4,131 3,500 9,500 0 0
Vice President
Melvin L. Schuler 0 0 4,125 8,375 0 0
Vice President
James C. Dobrowolski 0 0 10,381 7,994 0 0
Vice President
</TABLE>
(1) Based on the fair market value of the Common Stock on June 30, 2000 of
$5.50, less the option exercise price.
(2) Mr. Reis served as President/CEO from March 1, 1999 to April 14, 2000.
(3) Mr. Mills was President/CEO through February 1999, when he retired.
<PAGE> 16
PERFORMANCE GRAPH--SHAREHOLDERS RETURN
Set forth below is a graph comparing the cumulative return of Halifax
Corporation, the Standard & Poor's ("S&P") 500 Composite Stock Index ("S&P 500")
and the Technology Sector Composite Index compiled by S&P. The graph assumes a
$100 initial investment on March 31, 1994 and a reinvestment of dividends in
Halifax Corporation and each of the companies reported in the indices through
March 31, 2000 (the end of the Company's fiscal year).
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG HALIFAX CORPORATION, THE S & P 500 INDEX
AND THE S & P TECHNOLOGY SECTOR INDEX
[PERFORMANCE GRAPH]
* $100 INVESTED ON 03/31/95 IN THE STOCK OR INDEX.
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING MARCH 31.
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<CAPTION>
CUMULATIVE TOTAL RETURN
----------------------------------------------
3/95 3/96 3/97 3/98 3/99 3/00
<S> <C> <C> <C> <C> <C> <C>
HALIFAX CORPORATION 100.00 105.76 265.84 218.10 181.62 175.56
S & P 500 100.00 132.11 158.30 234.27 277.52 327.32
S & P TECHNOLOGY SECTOR 100.00 135.01 182.52 275.84 442.48 783.40
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<PAGE> 17
TRANSACTIONS WITH MANAGEMENT
On May 1, 1986, Ernest L. Ruffner, a director of the Company, joined the
law firm of Pompan, Murray, Ruffner & Werfel. Jacob Pompan of that firm has
represented Halifax in its government contract affairs since 1984. During the
fiscal year ended March 31, 2000, the firm received fees of $53,968 from the
Company. In addition, Mr. Ruffner, as General Counsel, until his retirement on
December 31, 1999, was paid $102,725 for legal services as General Counsel.
Upon his retirement as President and CEO in February 1999, Howard Mills
entered into a consulting agreement with the Company for a period of ten years
at an annual rate of $50,000.
Dr. Alvin Nashman provided consulting services to the Company, while also
performing as a Director of the Company, for which he was compensated at the
rate of $2,000 per month. This arrangement concluded in September 1999.
The Company on May 8, 2000 entered into an Executive Severance Agreement
("Agreement") with Mr. McNew in recognition of his position of high
responsibility and authority. The Agreement provides benefits under certain
circumstances including a change in control of the Company and remains in effect
so long as Mr. McNew continues to be employed by the Company. It confirms that
employment is at will and provides for termination without additional
compensation in the event of death, resignation, retirement or "for cause," as
defined therein. Except in connection with a change of control event termination
for any other reason results in compensation equal to twelve (12) months salary.
In the event of termination within one (1) year after a change in control Mr.
McNew would receive compensation equal to twenty-four (24) months salary subject
to statutory limitations.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of Deloitte & Touche LLP,
independent accountants, subject to the ratification of such appointment by the
Shareholders, to serve as independent accountants for the Company and its
subsidiaries for the year ending March 31, 2001. Deloitte & Touche LLP served as
the Company's independent accountants for the year ended March 31, 2000.
Ernst & Young LLP (the "Former Accountants") resigned as the independent
accountants for Halifax Corporation (the "Company") on October 19, 1999.
No report prepared by the Former Accountants on the consolidated
financial position of the Company at March 31, 1999 and 1998, and the
consolidated results of operations and its cash flows of each of the three years
in the period ended March 31, 1999, contained an adverse opinion or disclaimer
of opinion, or was qualified or modified as to uncertainty, audit scope, or
accounting principles.
In connection with the audit conducted by the Former Accountants for the
fiscal year ended March 31, 1999, which was concluded on September 7, 1999, and
which included the consolidated balance sheets of the Company as of March 31,
1999 and 1998, and the related consolidated statements of operations, changes in
stockholders' equity (deficit) and cash flows
<PAGE> 18
for each of the three years in the period ended March 31, 1999, there were no
disagreements between the Company and the Former Accountants on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
the Former Accountants, would have caused them to make reference thereto in
their report on the financial statements for those years.
The fiscal year 1999 audit was completed on September 7, 1999 with the
issuance, by the Former Accountants, of a clean opinion as presented in the
Company's Form 10-K which was filed with the SEC on September 9, 1999.
The Company is advised that no member of the Former Accountants had and
Deloitte & Touche LLP has any direct or indirect interest in the Company or any
of its subsidiaries or has had, since its appointment, any connection with the
Company or any of its subsidiaries in the capacity of promoter, underwriter,
voting trustee, director, officer or employee. Representatives of Deloitte &
Touche LLP will be invited to the annual meeting and, if present, will have the
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of a registered class of
the Company's equity securities, to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors and
greater than 10% shareholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) reports they file. The Company believes
that all of these filing requirements were satisfied by its officers and
directors and by the other beneficial owners of more than 10% of the Company's
Common Stock. On making the foregoing statements, the Company has relied upon
copies of the reporting forms received by it and certain written
representations.
SHAREHOLDERS' PROPOSALS
Pursuant to the proxy rules under the Exchange Act, the Company's
shareholders are notified that the deadline for providing the Company timely
notice of any shareholder proposal to be submitted outside of the Rule 14a-8
process for consideration at the Company's 2001 Annual Meeting of Stockholders
(the "2001 Meeting") will be June 30, 2001. As to all such matters which the
Company does not have notice on or prior to June 30, 2001, discretionary
authority shall be granted to the persons designated in the Company's proxy
related to the 2001 Meeting to vote on such proposal. A shareholder proposal
regarding the 2001 Meeting must be submitted to the Company at its office
located at 5250 Cherokee Avenue, Alexandria, Virginia 22312, by April 17, 2001
to receive consideration for inclusion in the Company's 2001 proxy materials.
Any such proposal must also comply with the proxy rules under the Exchange Act,
including Rule 14a-8.
<PAGE> 19
TRANSFER AGENT AND REGISTRAR
The American Stock Transfer & Trust Company, is the Company's transfer
agent and registrar.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of
no additional matters to be presented for vote of the shareholders at the Annual
Meeting, nor has it been advised that others will present any other matters.
Should any matters be properly presented at the Annual Meeting for a vote of the
shareholders, the proxies will be voted in accordance with the best judgment of
the proxy holder.
FORM 10-K
THE ANNUAL REPORT ON FORM 10-K FOR THE COMPANY'S FISCAL YEAR ENDED MARCH
31, 2000, HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
SHAREHOLDERS, SHOULD THEY SO DESIRE, MAY OBTAIN A COPY OF THE FORM 10-K WITHOUT
CHARGE, EXCEPT FOR EXHIBITS TO THE REPORT, FROM THE COMPANY BY WRITTEN REQUEST
WHICH SHOULD BE MADE TO HALIFAX CORPORATION, 5250 CHEROKEE AVENUE, ALEXANDRIA,
VIRGINIA 22312, ATTENTION: CORPORATE SECRETARY.
By Order of the Board of Directors
Ernest L. Ruffner
Secretary
<PAGE> 20
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
HALIFAX CORPORATION
SEPTEMBER 21, 2000
<PAGE> 21
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 AND 2.
The undersigned acknowledges receipt with this Proxy a copy of the
Proxy Statement for the Annual Meeting of Shareholders to be held
September 21, 2000.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
PLEASE CHECK IF YOU INTEND TO BE PRESENT AT THE MEETING
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<S> <C>
IMPORTANT: Please date this proxy and sign exactly as Dated:_________________________, 2000
your name(s) appear in the Company records. If shares held
jointly, signatures should include both names. Executors,
administrators, trustees, guardians, and others, signing in a __________________________
representative capacity, please give full title. If a Signature of Shareholder
corporation, please sign in full corporate name by president
or other authorized officer. If a partnership, please sign __________________________
partnership name by authorized person. Signature, if held jointly
PROXY HALIFAX CORPORATION PROXY
5250 Cherokee Avenue
Alexandria, Virginia 22312
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Annual Meeting of Shareholders to be held September 21, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Ernest L. Ruffner and Joseph Sciacca or either
of them, as proxies and attorneys in fact with full power of substitution to
represent and to vote for the undersigned all shares of Common Stock, $0.24 par
value, of Halifax Corporation that the undersigned would be entitled to vote if
personally present at the Annual Meeting of Shareholders of Halifax Corporation
to be held on September 21, 2000 and at any adjournment thereof..
<TABLE>
<S> <C>
1. Election of Directors: FOR ALL NOMINEES listed below WITHHOLD AUTHORITY
(except as marked on the contrary below) to vote for all nominees listed below
Arch C. Scurlock Charles L. McNew John M. Toups
John H. Grover Alvin E. Nashman Thomas L. Hewitt
2. Proposal to ratify Deloitte & Touche, LLP as Independent Public Accountants of the Company for
the fiscal year ending March 31, 2001.
FOR AGAINST ABSTAIN
3. In their discretion, upon such other matters as properly may come before the meeting.
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