HALIFAX CORPORATION
Alexandria, Virginia
ANNUAL MEETING OF SHAREHOLDERS
Dear Shareholders:
You are cordially invited to attend the Annual Meeting of
Halifax Shareholders which will be held on September 18, 1998, at
2:00 p.m. local time at our offices at 5250 Cherokee Avenue,
Alexandria, VA 22312.
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.
Sincerely,
Howard C. Mills
President
August 15, 1998
HALIFAX CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD September 18, 1998
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 its executive
offices, 5250 Cherokee Avenue, Alexandria, VA 22312 on Friday,
September 18, 1998, at 2:00 p.m. local time, for the purpose of
considering and acting upon the following:
1. Election of seven (7) directors for the ensuing year.
2. Ratification of the Board of Directors' appointment of Ernst &
Young Certified Public Accountants, as the Company's independent
accountants for the fiscal year ending March 31, 1999.
3. Approval of Amendment of Articles of Incorporation to increase
authorized Common Stock and to authorize Preferred Stock.
4. Approval of Amendment of the Company's "1994 Key Employee Stock
Option Plan" to increase the number of shares issuable from 180,000
to 280,000.
5. Transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on
Friday, August 7, 1998, as the record date for the determination of
shareholders entitled to notice of and vote at this meeting and any
adjournments thereof, and only shareholders of record at such time
will be so entitled to vote.
Shareholders who will not attend the meeting in person are
requested to specify their choices and to date, sign, and return the
enclosed Proxy in the envelope provided. Prompt response is helpful,
and your cooperation will be appreciated.
By Order of the Board of Directors
Ernest L. Ruffner
Secretary
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 18, 1998, at the offices
of the Company located at 5250 Cherokee Avenue, Alexandria,
Virginia 22312, 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 exercised 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 Ernst & Young Certified Public Accountants, to
be the Company's independent accountants for fiscal 1999, for
approval of an Amendment to the Articles of Incorporation to
increase authorized Common Stock and to authorize Preferred Stock,
for approval of an Amendment to the Company's 1994 Key Employee
Stock Option Plan to increase the number of shares issuable, 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 matter.
Management knows of no other matters to come before the Annual
Meeting at this time.
SHARES OUTSTANDING AND VOTING RIGHT
Shareholders of record at the close of business on August 7,
1998, will be entitled to notice of and vote at the Annual Meeting.
On that date there were 2,013,406 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.
FORM 10-K
The Annual Report on Form 10-K/A for the Company's fiscal year
ended March 31, 1998, has been filed with the Securities and Exchange
Commission. Shareholders should they so desire may obtain without
charge a copy of the Form 10-K/A from the Company by written request
which should be made to Halifax Corporation, 5250 Cherokee Avenue,
Alexandria, Virginia 22312, Attention: Corporate Secretary.
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 seven.
It is, therefore, proposed to elect a Board of Directors of
seven 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 seven of the nominees are now serving as directors and have
agreed to serve if elected. Those nominees receiving a majority of
or the greatest number of votes cast at the Annual Meeting by
Shareholders entitled to vote will be elected to the Board of
Directors.
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:
THE BOARD OF DIRECTORS RECOMMENDS THE FOLLOWING NOMINEES:
Date Principal Occupation and
Nominee Age First Employment; Other Background
Elected
Arch C. Scurlock 78 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.
Howard C. Mills 64 1984 Howard C. Mills, since October 16, 1984, has
been President, Chief Executive Officer and a
Director of the Company. Prior to that time he
served as Vice President and Executive Vice
President of the Company.
John H. Grover 70 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.
Clifford M. Hardin 82 1985 Clifford M. Hardin has been a Director of the
Company since 1985. From 1981 to 1987, Dr.
Hardin served as a Director of Stifel Financial
Corporation, the parent corporation of Stifel,
Nicolaus & Company, a St. Louis securities
brokerage firm registered with the Securities &
Exchange Commission.
Ernest L. Ruffner 63 1985 Ernest L. Ruffner, elected Director of the
Company on March 25, 1985, is an attorney
engaged in the private practice of law as a
member of Pompan, Murray, Ruffner & Werfel in
Alexandria, Virginia. Mr. Ruffner is a Director
of Research Industries Incorporated. He was
elected Secretary of the Company effective July
2, 1985 and General Counsel on September 16,
1994.
Alvin E. Nashman 71 1993 Alvin E. Nashman, for 27 years until his
retirement in 1992, headed the multi-division
Systems Group of CSC, which under his leadership
experienced continued growth with 1992 revenues
in excess of $1 billion. He served two terms as
Chairman of the Board of the Armed Forces
Communications and Electronics Association
(AFCEA). He currently serves on the Boards of
Andrulis Corporation, Space Works; and Federal
Sources, Inc.
John M. Toups 72 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., NVR, Inc., Telepad Corporation and
Thermatrix, Inc.
OTHER EXECUTIVE OFFICERS
In addition to President Mills and Secretary/General Counsel Ruffner, the
following persons are executive officers of the company.
James L. Sherwood, IV, age fifty-six, is Vice President Contracts and
Administration. He has been with the Company and its subsidiaries for nineteen
years. He previously served as a Vice President managing the Company's
Facilities Services Division.
Melvin L. Schuler, age fifty-four, is the Vice President Operations,
Federal Services Division. Mr. Schuler has been with the Company for twenty-
six years, serving in various management positions within the Electronics
Services line.
James C. Dobrowolski, age thirty-five, joined Halifax as a result of the
Company acquiring EAI Services which he had managed for two years. Mr.
Dobrowolski currently serves as a Vice President, in charge of the Simulation
and Facilities Services Division. Prior to joining EAI as director of
contracts in April 1988, he was with Engineering and Professional Services,
Inc., where he served as Manager of Subcontract Administration for two years.
Thomas F. Nolan, age fifty-three, is the Vice President, Computer Services
Division. Before joining the Company, Mr. Nolan worked six years as an
independent executive in Financial Services Management. Prior to that, he was
Senior Vice President, Marketing for Decision Data Services, Inc., a nationwide
computer maintenance firm. For seventeen years Mr. Nolan held various
executive positions with Bell Atlantic Corporation's SORBUS Service Division.
John D. D'Amore, age forty-eight, Vice President, Treasurer, and Chief
Financial Officer, joined Halifax on April 10, 1996. He previously served as
Vice President Finance for CTA Space Systems and CTA International, Inc.,
subsidiaries of CTA Incorporated. Prior to that he served in various executive
finance positions including five years as Vice President Finance with Presearch
Inc. Mr. D'Amore is a Certified Public Accountant and a member of the Virginia
Bar.
Thomas L. Mountcastle, age forty-four, is a Vice President and Chief
Information Officer of Halifax, and President of Halifax Technology Services
Company, a wholly owned subsidiary of Halifax. Mr. Mountcastle joined Halifax
as a result of the Company acquiring CMS Automation, Inc. on April 1, 1996
where he had served as President since 1990. Prior to that he served in
various capacities in computer technology including two years as President of
Data Support Systems.
Frank J. Ostronic, age sixty-nine, Vice President of Business Development
and Head of the Federal Services Division, joined Halifax on May 24, 1996. Mr.
Ostronic has over forty years experience in various executive positions
including fourteen years with Computer Sciences Corporation as Vice President
of Program Development. A U.S. Naval Academy graduate, Mr. Ostronic retired
from the U.S. Navy with the rank of Captain.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based on a review of SEC Forms 3, 4 & 5 and amendments thereto furnished
to the Company, to the best of the knowledge and belief of management, no
person who was required to file said forms failed to do so on a timely basis.
Board of Directors; Committees
During the year ended March 31, 1998, the Board of Directors held seven
meetings. During that year, all members who were directors at the time
attended at least 75% of the total number of 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 the 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 public accountants; 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. The committee's
members are Messrs. Hardin, Toups and Nashman. The Audit
Committee held one meeting in Fiscal Year 1998.
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,
1998, the committee held two meetings.
Nominating Committee. The Nominating Committee was created by the
Board of Directors on May 21, 1993, 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 committee members are Messrs. Hardin, Grover, and
Scurlock. During the year ended March 31, 1998, the committee
held one meeting.
PRINCIPAL SHAREHOLDERS AND DIRECTORS
The following table sets forth as of June 16, 1998 (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 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.
Name of Amount and Nature of
Beneficial Owner Beneficial Ownership Percent
Research Industries Incorporated (1)(3)(4)(6) 660,300 32.8
123 North Pitt Street
Alexandria, Virginia 22314
Howard C. Mills (5) 68,367 3.4
5250 Cherokee Avenue
Alexandria, Virginia 22312
Arch C. Scurlock (1)(2) 661,800 32.9
123 North Pitt Street
Alexandria, Virginia 22314
John H. Grover (3) 1,500 0.1
123 North Pitt Street
Alexandria, Virginia 22314
Clifford M. Hardin 1,500 0.1
10 Roan Lane
St. Louis, Missouri 63124
Ernest L. Ruffner (4) 150 0
209 North Patrick Street
Alexandria, Virginia 22314
Alvin E. Nashman 4,500 0.2
3609 Ridgeway Terrace
Falls Church, VA 22044
John M. Toups 4,500 0.2
1209 Stuart Robeson Drive
McLean, Virginia 22101
Thomas L. Mountcastle 32,666 1.6
2215 Tomlynn Street
Richmond, VA 23230
Melvin L. Schuler 7,450 0.4
5250 Cherokee Avenue
Alexandria, VA 22312
John D. D'Amore 450 0
5250 Cherokee Avenue
Alexandria, VA 22312
James L. Sherwood, IV 425 0
5250 Cherokee Avenue
Alexandria, VA 22312
Frank J. Ostronic 150 0
5250 Cherokee Avenue
Alexandria, VA 22312
Thomas E. Nolan 100 0
5250 Cherokee Avenue
Alexandria, VA 22312
James C. Dobrowolski 0 0
5250 Cherokee Avenue
Alexandria, VA 22312
All officers and directors as
a group (14 persons) (2) 783,558 38.9
(1) Research Industries Incorporated is 93% owned by Arch C. Scurlock,
chairman of the Company's Board of Directors.
(2) Includes 660,300 shares owned by Research Industries.
(3) Mr. Grover is also a 5% owner and director of Research Industries
Incorporated.
(4) Mr. Ruffner is a director of Research Industries Incorporated.
(5) Includes 450 shares held by Mr. Mills' wife.
(6) Research Industries Incorporated owns $2 million face amount of Halifax
7% convertible debentures.
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 market place.
The primary component of the Company's executive compensation program is
base salary. 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 position. 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 since 1984, is largely based on the performance of the
Company, both for the fiscal year and since he has been CEO. The other
criteria considered to a lessor degree is the annual change in the cost of
living. Reflecting the Company's stated compensation policy, in September Mr.
Mills base salary was increased by 5 percent to $166,580 effective July 1,
1997. He also participated in the company's 401(k) Plan, to the extent set
forth below.
The second component of the executive compensation program is an annual
bonus determined in accordance with the Company's Profit Sharing Bonus Plan
approved annually by the Board of Directors based upon projected profit goals
set for each year. The Company creates separate profit pools related to
project, division and corporate performance. Employees in the Plan are
monetarily rewarded if the profitability of their profit pool meets specified
threshold goals, and further rewarded for exceeding these goals based upon a
fixed formula.
The final component of the executive compensation program is a 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.
No member of the Compensation and Incentive Committee is a former or
current officer or employee of the Company or any of its subsidiaries.
Arch C. Scurlock John M. Toups John H. Grover
SUMMARY COMPENSATION TABLE
The following table sets forth information on compensation paid in fiscal
year 1998 and the two prior fiscal years to the Company's Chief Executive
Officer and the Company's seven other executive officers whose income exceeded
$100,000.
SUMMARY
COMPENSATION
TABLE
Annual Long Term
Compensatio Compensation
n
Awards Payouts
Other
Annual Restri All Other
Salary Bonus Compen- cted Options LTIP Compen-sation
sation Stock SARs payouts
Awards
Year ($) ($) ($) (1) ($) (#) ($) ($)
Howard C. 1998 164,417 none 4,119 none none none 3,227(2)
Mills(6)
CEO/President 1997 160,804 43,200 4,323 none 7,200 none 3,135(2)
1996 149,925 28,336 5,623 none 7,200 none 2,999(2)
James L. 1998 106,156 none none none none none 2,136(2)
Sherwood IV
1997 101,550 14,400 none none 3,000 none 2,013(2)
1996 96,785 13,970 none none 1,800 none 5,284(3)
James C. 1998 112,390 17,950 none none none none 2,607(2)
Dobrowolski
1997 113,549 28,430 none none 6,375 none 6,117(3)
1996 96,940 13,627 2,400 none 3,600 none 599(2)
Melvin L. 1998 103,650 54,096 none none none none 3,345(2)
Schuler
1997 97,786 57,670 none none 4,500 none 1,956(2)
1996 89,733 19,712 none none 1,500 none 1,794(2)
Thomas L. 1998 129,996 none none none none none 2,700(2)
Mountcastle
1997 127,497 none none none 13,500 none 1,200(2)
Thomas E. 1998 111,177 8,439 none none none none 2,399(5)
Nolan
1997 107,623 none none none 6,375 none 13,768(4)
John D. 1998 102,412 none none none 4,000 none 2,050(2)
D'Amore
Frank J. 1998 110,240 none none none 5,000 none 1,823(2)
Ostronic
(1) Value of Company furnished auto.
(2) Amounts contributed to officer under 401(k) plan.
(3) Amounts contributed to officer under 401(k) plan and paid
vacation.
(4) Amounts contributed to officer under 401(k) plan and living
expenses.
(5) Amount contributed to officer under 401(k) plan and Health
Club.
(6) The Company entered into an Executive Severance Agreement
("Agreement") with Mr. Mills in recognition of his position of high
responsibility and the substantial contributions he has made to the Company
over many years. The Agreement provides benefits under certain
circumstances including a change in control of the Company and is
automatically renewed from year to year. It confirms that employment is at
will and provides for termination without additional compensation in the
event of death, resignation, retirement or for cause. Except in connection
with a change of control, termination for any other reason results in
compensation equal to eighteen (18) months salary. In the event of
termination within one (1) year after a change in control or in the event
Mr. Mills resigns or retires during the first ninety (90) days after a
change in control, he would receive compensation equal to thirty-six (36)
months salary subject to statutory limitations.
Director Compensation
Directors who are not officers of the Company receive an annual fee of
$1,000. During the fiscal year ended March 31, 1998 Directors also received
$2,000 and reimbursement of expenses incurred for each meeting of the Board of
Directors which they attended. Alvin Nashman receives $2,000 per month for
consulting services provided the Company.
The following two tables present further details on stock options:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Name Potential Realizable Value at
Percent Total Assurred Annual Rates of Stock
Options/SARs Granted Exercise Price Appreciation for Option
Options/SARs to Employees in or Base Expiration Term(1)
Granted Fiscal Year Price(S) Date
5%(S) 10%(S)
John D. D'Amore 4,000 44.4 7.56 5/16/02 8,355 18,462
Vice President
Frank Ostronic 5,000 55.6 7.56 5/16/02 10,443 23,077
Vice President
(1) 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.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END VALUES OF UNEXERCISED OPTIONS/SARs
Shares Number of Unexercised Value ofUnexercised In-The-
Acquired on Value Options at Year-End Money Options at Year-end(s)
Name Exercise (#) Realized(S) Exercisable Unexercisable Exercise Unexercisable(1)
Howard C. Mills 3,000 12,750 7,200 21,600 32,976 87,264
President/CEO
James L. 900 3,825 2,700 7,500 12,366 29,682
Sherwood, IV
Vice President
Melvin L. 3,600 9,000 16,191 34,385
Schuler
Vice President
James 1,500 6,375 2,700 12,675 12,366 48,199
Dobrowolski
Vice President
Thomas Nolan --- --- --- 7,875 --- 26,927
Vice President
Thomas --- --- --- 13,500 --- 53,100
Mountcastle
Vice President
John D. D'Amore 7,750 --- 18,478
Vice President
Francis J. 5,000 --- 8,450
Ostronic
(1) Based on the fair market value of the Common Stock on March 31, 1998, of
$9.25 less the option exercised price.
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, 1993 and a reinvestment of
dividends in Halifax Corporation and each of the companies reported in the
indices through March 31, 1998 (the end of the Company's fiscal year).
COMPARISON OF FIVE CUMULATIVE TOTAL RETURN*
Among Halifax Corporation, The S&P 500 Index, and the S&P Technology Sector
Index
Years Mar-93 Mar-94 Mar-95 Mar-96 Mar-97 Mar-98
Halifax Corporation -HX 100 117 102 107 271 222
S&P 500 -1500 100 101 117 155 186 275
S&P Technology Sector -IHTC 100 118 149 201 272 411
*$100 Invested on March, 1993 In Stock or Index-
including Reinvestment of Dividends. Fiscal Year Ending March 31.
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, 1998, the firm received fees of $9,095 from
the Company. In addition, Mr. Ruffner, as General Counsel, receives $5,500
per month retainer from the Company.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of Ernst & Young,
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, 1999.
This year's financial statements were audited by Ernst & Young who
replaced Grant Thornton on September 16, 1994. The change was made by
recommendation of the Audit committee.
The company is advised that no member of Ernst & Young 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 Ernst & Young 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.
APPROVAL OF AMENDMENT OF ARTICLES OF
INCORPORATION TO INCREASE AUTHORIZED
COMMON STOCK AND TO AUTHORIZE PREFERRED STOCK
On July 10, 1998, the Board of Directors approved a proposal to amend
Halifax's Articles of Incorporation to increase the number of authorized
shares of Common Stock from 4,500,000 shares to 6,000,000 and to authorize
1,500,000 shares of preferred stock and further decreed that the proposal be
submitted to the shareholders with the recommendation that the amendment be
approved. The text of the proposed amendment is set forth in the Appendix
to this Proxy Statement.
At this time, the Company has no present plans, understandings, or
agreements for the issuance or use of the proposed additional shares of
Common Stock or the newly authorized Preferred Stock. Nevertheless, the
Board of Directors believes that the proposal is desirable so that, as the
need may arise, the Company will have more financial flexibility and be able
to issue shares of Common or Preferred Stock, without the expense and delay
of a special shareholders' meeting, in connection with future opportunities
for expanding the business through investments or acquisitions, possible
stock splits or stock dividends, equity financing, management incentive and
employee benefit plans, and for other purposes.
Authorized but unissued shares of the Company's Common and Preferred
Stock may be issued at such times, for such purposes and for such
consideration as the Board of Directors may determine to be appropriate
without further authority from the Company's shareholders, except as
otherwise required by applicable corporate law or stock exchange policies.
The Company's authorized but unissued Preferred Stock may be issued
with such rights, preferences, and limitations as the Board of Directors may
determine subject to applicable corporate law.
APPROVAL OF AMENDMENT OF THE
COMPANY'S 1994 KEY EMPLOYEE STOCK
OPTION PLAN TO INCREASE THE NUMBER
OF SHARES ISSUABLE
At the present time the Company's 1994 Key Employee Stock Option Plan
("Plan") as approved by the shareholders authorizes the issuance of 180,000
shares of Common Stock (adjusted to reflect prior 3 for 2 stock split) to
key employees. To date the Company has granted options for 136,800 shares
of stock pursuant to the Plan leaving a total of 43,200 shares available
under the Plan for future grants. The Plan expires September 15, 2004.
The Board of Directors believes strongly that it is essential to
incentivize key employees by insuring they have a direct interest in the
overall success of the Company. A principal means of doing this is to
encourage ownership of corporate stock which can be realized on an
advantageous basis through stock options. In this regard, the Company
intends to continue with an aggressive stock option program to hold and
recruit individuals valuable to the organization.
In order to be able to carry out its objectives throughout the
remaining six (6) years of the Plan, the Board of Directors recommends that
the shareholders approve an amendment to the Plan, at this time, which will
add 100,000 shares of Common Stock to the present number of shares issuable.
SHAREHOLDERS' PROPOSALS
Any proposal which a shareholder wishes to have presented at the next
annual meeting of shareholders should be sent to the Secretary of the
Company at 5250 Cherokee Avenue, Alexandria, Virginia 22312, and must be
received not later than the close of business on April 1, 1999. Material
filed with the Company in a timely manner will be considered, pursuant to
the requirements of all applicable laws and regulations, for inclusion the
Company's 1999 proxy materials for such annual meeting.
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.
By Order of the Board of Directors
Ernest L. Ruffner
Secretary
For a menu of Halifax Corporation news releases available by fax 24
hours (no charge) or to retrieve a specific release, please call 1-800-758-
5804, ext. 391950, or access the address http://www.prnewswire.com on the
Internet.
APPENDIX
Article III of the Corporation's Articles of Incorporation is proposed
to be amended as follows:
ARTICLE III
A. The total number of shares of stock of all classes that the
Corporation has authority to issue is 7,500,000, consisting of 6,000,000
shares of common stock, $0.24 par value per share (the "Common Stock"), and
1,500,000 shares of preferred stock without nominal or par value (the
"Preferred Stock").
B. The Preferred Stock may be issued from time to time in one or more
series.
C. The Board of Directors of the Corporation is authorized to fix, in
whole or in part, the preferences, limitations and relative rights, within
the limits set forth in the Code of Virginia, on any wholly unissued class
of Preferred Stock by the adoption of an amendment of the Articles of
Incorporation as provided for in the relevant provisions of the Code of
Virginia.
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, 2, 3, AND 4.
The undersigned acknowledges receipt with this Proxy a copy of the Proxy
Statement for the Annual Meeting of Shareholders to be held September 18,
1998.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
PLEASE CHECK IF YOU INTEND TO BE PRESENT AT THE MEETING.
IMPORTANT: Please date this proxy and sign exactly as 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 corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign partnership name by authorized person.
Dated: , 1998
Signature of Shareholder
Signature, if held jointly
PROXY HALIFAX CORPORATION PROXY
5250 Cherokee Avenue
Alexandria, Virginia 22312
Annual Meeting of Shareholders to be held September 18, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Ernest L. Ruffner and Richard J. Smithson or
either of them, 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 18, 1998, and at any adjournment thereof.
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
INSTRUCTION: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name in the list below.
Arch C. Scurlock Howard C. Mills Clifford M. Hardin
John H. Grover Ernest L. Ruffner John M. Toups
Alvin E. Nashman
2. Proposal to ratify Ernst & Young as Independent Public Accountants of the
Company.
FOR AGAINST ABSTAIN
3. Amendment of Articles of Incorporation to increase authorized common stock
and to authorize preferred stock.
FOR AGAINST ABSTAIN
4. Approval of amendment of the Company's "1994 Key Employee Stock Option
Plan" to increase the number of shares issuable from 180,000 to 280,000.
FOR AGAINST ABSTAIN
5. In their discretion, upon such other matters as properly may come
before the meeting.