exv10w5



 




Exhibit
10.5




EXECUTIVE SEVERANCE AGREEMENT

AMENDED AND RESTATED




     AGREEMENT, dated as of March 31, 2003, between Halifax Corporation, a Virginia
corporation (''Company”), and Charles L. McNew (“Executive”), amending and
restating the agreement dated September 20, 2001.



WITNESSETH:




     WHEREAS, Executive has been employed by the Company in a position of high
responsibility and authority and is presently its chief executive officer, and



     WHEREAS, it is in the best interest of the parties hereto that orderly and
equitable provisions be made in the event of termination of the Executive.



     WHEREAS, Company and Executive seek to clarify their understanding and agreement
with regard to Section 7 hereof.



     NOW THEREFORE, in consideration of the mutual promises herein contained and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:


1. The Company and the Executive agree that the Executive is employed on an
at-will basis. Unless otherwise specifically provided in a written agreement
signed by both the Company and the Executive, the parties understand that the
Executive is employed for no fixed term or period, that either the Company or
the Executive may terminate the Executive’s employment with the Company at any
time with or without a reason, and that this Agreement creates no contract of
employment between the Company and the Executive.



2. This Agreement shall remain in full force and effect so long as the Executive
continues to be employed by the Company.



3. The Company shall have the right to terminate the Executive’s employment
without payment of severance as provided below in the event of the Executive’s
death, or on thirty (30) days written notice in the event that the Executive
shall be unable, or shall fail, to perform all of the services required of his
position with the Company as a result of any mental or physical incapacitating
disability, to the extent that such inability or failure to perform required
duties shall exist for any consecutive ninety (90) day period. The Company’s
right to terminate the Executive’s employment without payment of severance under
this Paragraph shall not limit or reduce in any way the Executive’s right to
receive benefits under any disability insurance or plan maintained by the
Company for the benefit of the Executive.



4. The Executive shall have the right to terminate his employment with the
Company at any time on written notice to the Company indicating the Executive’s
desire to retire or to resign from the Company’s employment.




 









 







5. Except as provided in Paragraph 3 and 4, the Executive’s employment with the
Company may be terminated, without payment of severance as provided below only
in the event of a termination for cause as defined in this Paragraph. For the
purposes of this Agreement, “Cause” shall be defined as gross negligence,
willful misconduct, fraud, willful disregard of the Board of Directors’
direction or breach of published Company policy. The Executive may be terminated
for Cause only in accordance with a resolution duly adopted by an absolute
majority of the Company’s Board of Directors finding that, in the good faith
opinion of the Board of Directors, the Executive; engaged in conduct justifying
a termination for Cause as that term is defined above and specifying the
particulars of the conduct motivating the Board’s decision to terminate the
Executive. Such resolution may be adopted by the Board of Directors only after
the Board has provided to the Executive (1) five (5) days advance written notice
of a meeting of the Board called for the purpose of determining Cause for
termination of the Executive, (2) a statement setting forth the alleged grounds
for termination, and (3) an opportunity for the Executive and, if the Executive
so desires, the Executive’s counsel to be heard before the Board.



6. In the event of termination without cause prior to May 7, 2001, Executive
shall receive twelve months of his then current salary. Thereafter, except in
connection with a Change of Control Disposition as defined in Paragraph 12, if
the Executive’s employment with the Company is terminated for any reason other
than those set forth in Paragraphs 3, 4 or 5 above, then the Company shall pay
to the Executive an amount equal to twelve (12) months salary based upon the
current salary of the Executive at the time of termination.



7. If following a
Change of Control Disposition (herein “Change of Control Disposition” shall be
as defined below in Paragraph 12) of the Company, the Executive’s employment is
terminated within one (1) year of the “Change of Control Disposition Date” (as
herein defined below in Paragraph 12) for any reason other than the reasons set
forth in Paragraphs 3, 4 or 5 above, then the Company shall pay to the Executive
an amount equal to two (2) times the amount that the Company would have been
required to pay the Executive under Paragraph 6 above if the Executive’s
employment had been terminated in the absence of a Change of Control
Disposition. In the event Executive terminates his employment for any reason or
the Company terminates Executive’s employment for any reason within ninety (90)
days following the Change of Control Disposition Date, the Company shall pay to
the Executive an amount equal to two (2) times his then current salary.
Notwithstanding the foregoing, maximum compensation payable to the Executive
pursuant to this Paragraph is limited to no more than 299% of the “base amount”
of Executive’s compensation as defined in the Tax Reform Act of 1984 (Section
280G and applicable regulations thereunder and any amendments thereto).



8. At the time of termination of the Executive’s employment for any reason the
Executive shall be paid all other compensation and benefits due to the Executive
at the time of termination.



9. The Executive may elect to receive the compensation payable in accordance
with this Agreement in a lump sum or in equal payments at intervals no more
often than semimonthly, over a period of the Executive’s choice not to exceed
the number of months of compensation due him pursuant to this Agreement.





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10. The Executive shall not disclose, publish, or use for any purpose not directly
related to the
performance of the Executive’s duties for the Company, or permit anyone else to disclose,
publish, or use any proprietary or confidential information or trade secrets of the Company at any
time during or after his employment with the Company. This obligation shall continue so long
as such information remains legally protectable as to persons receiving it in a confidential
relationship. Executive agrees to return to the Company all proprietary material which he
possesses on the date of termination of the Executive’s active employment with the Company.



11. For a period of six (6) months following termination of Executive’s employment with the
Company for any reason other than “Cause,” as defined in Paragraph 5 above, the Executive shall
not (1) directly or indirectly, sell, market, or otherwise provide any client or previously
identified
prospective client of the Company, products or services similar to or in competition with those
sold or distributed by the Company, in any geographic area in which the Company offers any
such products or services, or (2) participate directly or indirectly in the hiring or soliciting
for
employment of any person employed by the Company.



12. By reason of the special and unique nature of the obligations hereunder, it is agreed that
neither party hereto may assign any interests, rights or duties which the party may have in this
Agreement without the prior written consent of the other party, except that upon any “Change of
Control Disposition” of the Company through purchase, merger, consolidation, liquidation,
change in control by reason of any single entity (individual or group) other than, the Company or
a Company Employee Stock Ownership Plan and Trust, acquiring twenty-five percent (25%) or
more of the voting power of the Company’s stock, or sale of all or substantially all of the assets
of the Company to another party whether or not the Company is the surviving corporation, this
Agreement shall inure to the benefit of and be binding upon the Executive and the purchasing,
surviving or resulting entity, company or corporation in the same manner and to the same extent
as though such entity, company or corporation were the Company. Notwithstanding the
foregoing, any sale or sales of company stock by or for the benefit of Research Industries
Incorporated which does not result in a purchaser or “group” as defined under Rule 13d-5 under
the Securities Exchange Act of 1934, acquiring or holding greater than twenty-five percent
(25%) of the Company stock, or greater than twenty-five percent (25%)
of the voting power,
shall not be deemed a “Change of Control Disposition.” The “Change of Control Disposition
Date” shall be that calendar date on which the Change of Control Disposition event was
consummated and legally binding upon the parties.



13.
Any controversy or claim arising out of, or relating to this Agreement, or its breach, or
otherwise arising out of or relating to the Executive’s employment (including without limitation to
any claim of discrimination whether based on race, color, religion, national origin, gender, age,
sexual preference, disability, status as a disabled or Vietnam-era veteran, or any other legally
protected status, and whether based on federal or State law, or otherwise) by the Company shall be
resolved by arbitration. This arbitration shall be held in Fairfax County, Virginia in accordance
with the model employment arbitration procedures of the American Arbitration Association. Judgment
upon award rendered by the arbitrator shall be binding upon both parties and may be entered and
enforced in any court of competent jurisdiction.



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14. In consideration of any payment made to the Executive
pursuant to this Agreement, the
Executive, for himself, his heirs and legal representatives, releases
and forever discharges the
Company, its predecessors, successors or anyone, and all of the past,
present or future officers,
directors, agents and employees of the Company from any and all
claims, demands, or causes of
action, whether known or unknown, exactly at the time of payment or
arising subsequently
thereto, arising out of or related to the Executive’s employment by
the Company.



15. This Agreement shall be construed and enforced in
accordance with the laws of the
Commonwealth of Virginia.



16. This Agreement constitutes the entire understanding and agreement
between the Company
and the Executive with regard to all matters herein. This Agreement
may be amended only in
writing, signed by both parties hereto.



In witness whereof the parties have executed this Amended and
Restated Agreement to be effective the day and year first above
written.



	 	 	 	 	 
	 	HALIFAX CORPORATION

 	 
	 	By:  	/s/
John H. Grover

 	 
	 	 	Chairman of the Board 	 
	 	 	 	 
	 



	 	 	 	 	 
	 	EXECUTIVE

 	 
	 	/s/ Charles L. McNew
 	 
	 	Charles L. McNew 	 
	 	 	 
	 




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