Exhibit 10.5


 


PRO-DEX, INC.


 


AMENDED AND RESTATED


EMPLOYEE SEVERANCE POLICY


 


	I.	PURPOSE



 


This Amended and Restated Employee Severance
Policy (the “Policy”) is established to be effective as of September 16, 2014 (the “Effective Date”) to
provide benefits to certain employees of Pro-Dex, Inc. (the “Company”), upon termination of employment from the Company.
The Policy has been adopted by the Board of Directors of the Company and shall remain in force and effect until amended or rescinded
by action of the Board of Directors. This Policy amends, restates and supersedes in its entity the Company’s former Employee
Severance Policy dated July 1, 2011.


 


	II.	EXCLUSIVITY OF POLICY



 


The Policy sets forth the Company’s
sole policy regarding severance pay for Eligible Employees. All other statements, policies and agreements relating to severance
pay for an Eligible Employee, whether oral or in writing, and, including without limitation, any statement in any employee handbooks
or other policy statements of the Company, shall have no force or effect. Nothing set forth herein shall have any effect on any
employee’s at-will employment status.


 


	III.	ELIGIBILITY



 


(1)          To be eligible for the benefits set
forth herein, an employee must be an active full-time employee who, at the time of employment separation, satisfies all of the
following requirements, and is not otherwise excluded by any other provision of this Section III:


 


(a)          Employee is not covered by
a collective bargaining agreement (unless it expressly provides for coverage under the Policy);


 


and


 


(b)          Employee is (i) permanently
laid off, (ii) voluntarily terminates employment on account of a qualifying change in work location, or (iii) is involuntarily
terminated under the Company’s at-will employment policy, including terminations for inadequate or unsatisfactory performance
other than Disqualifying Conduct as defined herein.


 


(1)          An employee will be considered
“laid off” if his or her services as an employee of the Company are terminated because of a reduction in the work force
for economic reasons such as lack of work, elimination of the employee’s job classification or changes in the Company’s
organization. A lay off will be deemed “permanent” only if, at the time of termination of employment, the Company does
not expect to rehire the employee, as determined by the Company in its sole discretion.


 




    	 



    	 



    

 


(2)          A qualifying change in work
location is an employer-required permanent change in the employee’s primary work location, but only if the change both (i)
increases the employee’s commuting distance, and (ii) requires a one-way commute of more than 30 miles, determined based
on the employee’s place of residence when the change in work location was announced. An employee will not be deemed to have
terminated employment on account of a qualifying change in work location if the employee voluntarily resigns before the effective
date of the change in location.


 


(3)          A termination for Disqualifying
Conduct is one in which the Company separates the employment relationship due to an employee’s serious misconduct, as determined
by the Company in its sole discretion. Such serious misconduct includes the following types of behavior and other comparable misconduct:
illegal conduct or a credible allegation thereof that (i) relates to job duties or job performance or (ii) reasonably could result
in material injury or damage to the Company (including its reputation); gross misconduct such as dishonesty, fighting, misappropriation
or misuse of Company assets; repeated violation of Company work rules or rules of conduct; and willful or grossly negligent violation
of Company work rules or rules of conduct in situations that reasonably could result in material injury or damage to the Company.
A termination for inadequate or unsatisfactory performance (not accompanied by serious misconduct as described above) does not
constitute a termination for Disqualifying Conduct.


 


(2)          An employee will not be eligible for
benefits under the Policy if, within 30 days following termination of employment with the Company, the employee commences employment
with any successor, acquirer or affiliate of the Company in a position which is comparable to or better than the position the employee
held with the Company prior to termination of employment. Similarly, an employee whose employment is deemed terminated by the Company
as the result of an acquisition of the Company but who has been offered substantially comparable employment with a successor, acquirer
or affiliate of the Company will not be eligible for benefits under this Policy. Whether an employer is a successor, acquirer or
affiliate of the Company and whether a position is comparable to or better than another position shall be determined by the Company
in its sole discretion.


 


(3)          Benefits
under the Policy are payable only under the conditions set forth in this Section III. Any termination for Disqualifying
Conduct is expressly excluded from benefits hereunder. Benefits are not payable under the Policy if an employee separates from
the Company voluntarily for any reason, including retirement, but not including voluntarily resignation of employment on account
of a qualifying change in work location. Benefits also are not payable under the Policy on account of a separation of employment
that occurs (i) due to death, (ii) due to an employee’s failure to return to work at the expiration of an approved or legally-mandated
leave of absence, or (iii) after an employee has begun receiving disability benefits under the Company’s long term disability
insurance coverage or disability benefits pursuant to a workers’ compensation claim.


 


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(4)          An employee who meets all of the
requirements of this Section III and does not come within one of the exclusions from benefits is referred to throughout this Policy
as an “Eligible Employee.”


 


	IV.	BENEFITS



 


(1)          Each Eligible Employee shall receive
severance benefits under the Policy determined on the basis of: (i) the number of complete years of active employment of the Eligible
Employee by the Company or an affiliate of the Company, measured from the Eligible Employee’s most recent hire date after
subtracting any breaks in service, other than statutorily-mandated temporary leaves of absence, and (ii) the position held by the
Eligible Employee on his or her last day of active work; subject, however, to (iii) the Eligible Employee’s execution (and,
if applicable, non-revocation) of a Release pursuant to Section VI. In the event Employee and the Company have entered into an
Indemnification Agreement with each other, Employee shall not be required to release any rights afforded to Employee under such
Indemnification Agreement, or any provisions concerning indemnification under the Company’s Bylaws or Articles of Incorporation,
and the Company shall continue to indemnify Employee under any such Agreement and/or provisions which may be applicable to Employee.


 


(2)          Schedule A, attached hereto, sets
forth the total number of weeks of separation pay plus severance pay to be received by the Eligible Employee based on the criteria
specified in Section IV(1) above. Each Eligible Employee shall receive a two weeks’ of Base Pay as a separation payment in
accordance with Section IV(1), subject to required withholding, to be paid unconditionally to the Eligible Employee on his
or her last day of employment, provided such Eligible Employee meets all of the requirements of Section IV(1) (“Separation
Pay”). After deducting this two weeks from the amount shown in Schedule A for the applicable Eligible Employee, the remaining
number of weeks (“Severance Weeks”) shall be multiplied by the Eligible Employee’s base salary or regular rate
of pay on his or her last day of active work to determine the amount of severance pay the Eligible Employee is entitled to. Such
base salary or rate of pay (“Base Pay”) shall not include overtime, bonuses, commissions, premium pay, employee benefits
and expense reimbursement or other similar pay. It shall include base pay not received because of elections under Internal Revenue
Code Sections 125 and 401(k). In addition, in the event the Employee is subject to the Company’s Annual Incentive Plan and/or
Long Term Incentive Plan (not the Company’s general bonus plan), the Employee shall be entitled to receive bonus or compensation
award payment, if any, in accordance with the terms of such Annual Incentive Plan and Long Term Incentive Plan, as the case may
be. Severance pay meeting all of the requirements of this Section IV is referred to throughout this Policy as the “Severance”
owed to the Eligible Employee.


 


	V.	METHOD OF PAYMENT AND REPAYMENT



 


(1)          The Severance will be paid in a
lump sum (subject to required withholding) within five business days after the effective date (including the expiration of any
applicable revocation periods) of the release of claims by an Eligible Employee.


 


(2)          An employee who has received the
Severance and is recalled to work may, as a condition of reinstatement, be required to repay a portion of the Severance received
by the


 


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Eligible Employee. If the number of weeks paid for Severance
exceeds the number of weeks the Eligible Employee was actually laid off, the Eligible Employee must repay the excess Severance
within 30 days of re-employment in order to be eligible for severance benefits in the event of a future layoff or other qualifying
termination of employment.


 


	VI.	RELEASE OF ALL CLAIMS



 


In order to receive the Severance, an Eligible
Employee must sign a release (“Release”) of all claims the Eligible Employee had, has or may have against the Company,
in form and content satisfactory to the Company and its legal counsel and within the time period required by the Company for such
signature. If a revocation period is applicable to the Release, the revocation period must expire without revocation having occurred
before the Severance shall become payable. Eligible Employees who choose not to sign the Release (or, if applicable, sign the Release
but revoke it) shall receive only the two weeks of unconditional Separation Pay. In the event Employee and the Company have entered
into an Indemnification Agreement with each other, Employee shall not be required to release any rights afforded to Employee under
such Indemnification Agreement or any provisions concerning indemnification under the Company’s Bylaws or Articles of Incorporation
and the Company shall continue to indemnify Employee under such Indemnification Agreement and provisions.


 

 

 

 

 

 

 

 

 

 

 


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Schedule A






Separation Plus Severance Table


 


Note: These amounts include the two weeks
of Separation Pay. 


The Severance Weeks equal the number
of weeks shown 


in this Schedule A minus two weeks. 


 


	 	 	 	 	 	 
	 	 	 	Category
	Years of Service 	 	All Other	Managers

and

Directors	Vice

Presidents

and CEO
	More

than 	but less than or

equal to	Percentage of

Maximum

Severance

Pay	Number of Weeks of Severance Pay

(inclusive of Two Weeks of

Separation Pay) 
	0.0	0.5	0%	2.0	2.0	2.0
	0.5	1	25%	4.0	5.0	6.0
	1	2	40%	5.2	6.8	8.4
	2	3	55%	6.4	8.6	10.8
	3	4	70%	7.6	10.4	13.2
	4	5	85%	8.8	12.2	15.6
	5	n/a 	100%	10.0	14.0	18.0