THIRD AMENDMENT AND WAIVER

Exhibit 10.1

THIRD AMENDMENT AND WAIVER

     This THIRD AMENDMENT AND WAIVER (this “ Amendment ”) is entered into as of April 30 , 2008, among HALIFAX CORPORATION OF VIRGINIA, f/k/a Halifax Corporation, a Virginia corporation (“ Halifax ”), HALIFAX ENGINEERING, INC. , a Virginia corporation (“ Engineering ”), MICROSERV LLC, a Delaware limited liability company (Microserv”) and HALIFAX ALPHANATIONAL ACQUISITION, INC., a Delaware corporation (“ AlphaNational ”; collectively with Halifax, Engineering and Microserv, “ Borrower ”), and PROVIDENT BANK, a Maryland banking corporation (“ Bank ”).

     WHEREAS, the Borrower and the Bank entered into that certain Fourth Amended and Restated Loan and Security Agreement dated as of June 29, 2007 (as amended, restated, supplemented or modified from time to time, including the amendments and waivers set forth in that certain First Amendment and Waiver dated November 13, 2007, and that certain Second Amendment and Waiver dated as of January 31, 2008 the “Loan Agreement”; capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Loan Agreement);

     WHEREAS, the following Events of Default have occurred under the Loan Agreement: (a) Borrower failing to maintain a minimum Tangible Net Worth plus Subordinated Debt of not less than $1,000,000 as of March 31, 2008; (b) Borrower failing to maintain a ratio of Total Liabilities less Subordinated Debt to Tangible Net Worth plus Subordinated Debt of not greater than 4.0:1 as of December 31, 2007; (c) Borrower failing to maintain a Current Ratio equal to or greater than 1:1 as of March 31, 2008; and (d) Borrower failing to deliver to the Bank, by April 15, 2008, Bank either: (i) a commitment for financing in sufficient amount to completely pay-off the Line of Credit and the Auxiliary Revolver Facility; or (ii) an engagement letter with an advisory firm satisfactory to the Bank to assist the Borrower in evaluating and pursuing alternative refinancing sources or the sale of all or substantially all of the Borrower’s assets pay the principal, interest and late charges owed under the Auxiliary Revolver Facility at the December 31, 2007 maturity thereof or (iii) an Account Control Agreement executed by Liberty Bank in form and substance acceptable to the Bank covering any accounts maintained by the Borrower at Liberty Bank (the “Existing Defaults”);

     WHEREAS, the Existing Defaults are continuing and remain unwaived, and the Borrower has requested that the Bank waive the Existing Defaults;

     WHEREAS, the Bank has agreed to the requested waiver on the terms and conditions provided herein; and

     WHEREAS, the Borrower has further requested that certain terms and conditions of the Loan Agreement and the Promissory Notes evidencing the Revolving Line of Credit and the Auxiliary Revolver Facility (each a “Promissory Note” and collectively, the “Promissory Notes”) be amended, and the Bank has agreed to the requested amendments on the terms and conditions provided herein;

     NOW THEREFORE, in consideration of the foregoing premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

     1.  Amounts Due. The Borrower acknowledges and agrees that as of April 29, 2008 the outstanding principal balance due under: (a) the Line of Credit is Three Million Six Hundred and Two Thousand Three Hundred Seventy-One Dollars and 96/100 ($3,602,371.96) with accrued interest due in the amount of Twenty-One Thousand Three Hundred Fifty-two Dollars and 03/100 ($21,352.03) and (b) the Auxiliary Revolver Facility is Thirty Five Thousand Four Hundred Thirty-Six Dollars and 95/00 ($35,436.95) with accrued interest due in the amount of Two Hundred and Seventy Dollars and 31/100 ($270.31) and that such sums are in fact now due and owing without defense, set-off or counterclaim whatsoever.

     2.  Amendment to the Loan Agreement.

          A. Section II.A. 1. of the Loan Agreement is hereby modified and amended by deleting the last two sentences thereof added by that certain Second Amendment and Waiver dated as of January 31, 2008 and replacing them with the following:

“All amounts outstanding under the Line of Credit shall be due and paid in full on June 30, 2008.”

          B. Section II.A.2. of the Loan Agreement is hereby modified and amended by deleting the last seven sentences thereof added by that certain Second Amendment and Waiver dated as of January 31, 2008 and replacing them with the following:

“Notwithstanding the provisions set forth above regarding the operation of the Auxiliary Revolver Facility, the Borrower cannot request any advance under the Auxiliary Revolver Facility after February 1, 2008 and all amounts outstanding under the Auxiliary Revolver Facility shall thereafter be due and paid in full as set forth above and finally on April 30, 2008.”

     3.  Amendment to Promissory Notes.

          A. Section 3(a) of the Promissory Note evidencing the Line of Credit shall be deleted in its entirety and replaced with the following:

“(a) Principal: The principal balance of this Promissory Note and any accrued but unpaid interest shall be paid in full by the Borrower in immediately available funds on June 30, 2008.”

          B. Section 3(a) of the Promissory Note evidencing the Auxiliary Revolver Facility shall be deleted in its entirety and replaced with the following:

“(a) Principal: The principal balance of this Promissory Note and any accrued but unpaid interest shall be paid in full by the Borrower in immediately available funds on April 30, 2008.”

     4.  Waiver. The Bank acknowledges that the Existing Defaults currently exist. Subject to the fulfillment of the conditions precedent to the effectiveness of this Amendment set forth in Section 4, the Bank hereby waives the Existing Defaults.

     5.  No Other Amendments or Waivers. Except in connection with the amendments and the waivers expressly set forth above, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Bank under the Loan Agreement or any of the other related documents, nor constitute a waiver of any provision of the Loan Agreement or any of the other related documents. Except for the amendments set forth above, the text of the Loan Agreement and all other related documents shall remain unchanged and in full force and effect and hereby ratifies and confirms its respective obligations thereunder. The Borrower acknowledges and expressly agrees that the Bank reserves the right to, and does in fact, require strict compliance with all terms and provisions of the Loan Agreement.

     6.  Conditions Precedent to Effectiveness. This Amendment shall become effective as of the date hereof when, and only when, the Bank shall have received the following, in form and substance satisfactory to the Bank:

	a.		counterparts of this Amendment executed by each Borrower;
	b.		payment in full, in immediately available funds, to the Bank of one-half of amendment fee described below in the amount of $15,000, such fee being fully earned and non-refundable upon the effectiveness of this Amendment;
	c.		payment in full of all other fees and expenses due and payable to the Bank under the Loan Agreement and in connection with the execution and delivery of this Amendment and the transactions described herein, including, without limitation, the fees and expenses of counsel to the Bank, if any; and
	d.		such other information, documents, including amended and restated promissory notes, instruments, certificates or approvals as may be set forth within this Agreement or as the Bank or the Bank’s counsel may reasonably require.

     7.  Additional Agreements. The Borrower agrees as follows:

	a.		By no later than May 31, 2008, the Borrower shall deliver to the Bank either: (i) a commitment for financing in sufficient amount to completely pay-off the Line of Credit by no later than June 30, 2008; or (ii) an engagement letter with an advisory firm satisfactory to the Bank to assist the Borrower in evaluating and pursuing alternative refinancing sources or the sale of all or substantially all of the Borrower’s assets.
	b.		By no later than May 15, 2008, the Borrower shall deliver to the Bank a fully executed Account Control Agreement acceptable to Bank perfecting the Bank’s security interest in all of the Borrower’s accounts at Liberty Bank.

c.

By no later than May 15, 2008, the Borr