Exhibit 99.3
EMPLOYEE SEVERANCE AND RESTRICTIVE COVENANT AGREEMENT
THIS EMPLOYEE SEVERANCE AND RESTRICTIVE COVENANT AGREEMENT
("Agreement") is made as of this 29th day of August, 2003, by and
between Halifax Corporation, a Virginia corporation ("Company"), and
Gary M. Lukowski ("Employee").
BACKGROUND
A. Pursuant to that certain Agreement and Plan of Merger (the
"Merger Agreement") dated August 29, 2003 by and among Company,
Employee, Microserv Merger Corp., a Delaware corporation, Microserv
Merger LLC, a Delaware limited liability company, Microserv, Inc., a
Washington corporation and certain shareholders of Microserv parties
thereto, Company has agreed to acquire Microserv through the
consummation of merger transactions more fully described in the Merger
Agreement (the "Transactions").
B. Company and Employee desire to set forth certain arrangements
in the event of Employee's separation from the Company.
C. It is a condition precedent to the respective obligations of
the parties to the Merger Agreement to consummate the Transactions that
Company and Employee enter into this Agreement.
NOW, THEREFORE, in consideration of the facts, mutual promises,
and covenants contained herein and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Severance.
(a) In the event Employee's employment with Company is
terminated for other than "Cause" or "Good Reason" (as defined below) or
as permitted in Section 1(c) during the period beginning on the date
hereof and ending on the third annual anniversary of the date hereof,
Employee's base salary shall continue as severance payments until, and
terminate upon, the 12 month anniversary of the date of such termination.
Upon termination of Employee's employment with Company, whether for Cause
or otherwise, Employee shall be entitled to any earned and unpaid
benefits (other than base salary) up to the date of termination, provided,
however, that Company may set off any amounts owed by Employee to
Company or its affiliates (including but not limited to any unearned
salary advances or outstanding loans) against any payments due Employee
hereunder (whether for severance or otherwise). The severance payments
referenced above shall be payable during the applicable severance
period specified above in accordance with Company's regular payroll
practices in effect and shall be subject to such withholding as may be
required by applicable law.
(b) For purposes of this Agreement, the term "Cause" shall
mean the following: (i) if Employee is in material violation or breach of
the terms of this Agreement or neglects or refuses to perform his
employment duties reasonably assigned to him or violates any express
direction of any lawful rule or regulation established by the Company
or its Board of Directors which is consistent with the scope of
Employee's employment duties and such neglect, refusal, violation or
breach continues uncured for ten (10) days following receipt by
Employee of written notice of such breach; provided, however, that
Employee shall have this cure right only twice during each twelve (12)
consecutive month period; provided, further, that the cure provision
contained in this Section 1(b)(i) shall not apply to any breaches of
the covenants contained in Section 2 hereof; (ii) if Employee engages
in misconduct which is injurious to Company and/or its subsidiaries or
affiliates; or (iii) if Employee commits fraud or theft against Company
and/or its subsidiaries or affiliates or is convicted of a felony
offense or any crime involving moral turpitude.
For purposes of this Agreement, termination by Employee
of employment with Company for "Good Reason" shall mean termination
based on any of the following: (i) a reduction by Company in Employee's
salary, compensation or benefits (as in effect on the date of this
Agreement or as increased at any time during the term of this
Agreement); (ii) material breach by Company of the terms of this
Agreement; or (iii) Company's requiring Employee to be based more than
25 miles from the greater Seattle, Washington area
(c) The Company shall have the right to terminate Employee's
employment without the payment of severance (i) in the event of
Employee's death or (ii) if, due to any physical or mental illness,
disability or incapacity, Employee is prevented from performing the
essential functions of his employment duties for a period of not less
than ninety (90) consecutive days or for an aggregate of one hundred
fifty days during any period of twelve consecutive months, even with
reasonable accommodations.
(d) Recognition. Employee recognizes and accepts that
(i) Employee is employed by Company on an "at will" basis, (ii) this
Agreement does not guarantee or otherwise provide for employment and
that, at any time and for any reason, Employee may resign or Company
may terminate Employee's employment with Company, and (iii) Company
shall not, in any case, be responsible for any additional amount,
severance pay, termination pay, severance obligation or other damages
whatsoever arising from the termination of his employment, above and
beyond those specifically provided for in this Agreement.
2. Restrictive Covenants.
(a) Employee will not, during the term of his employment with
Company and for one year thereafter and in any event no earlier than
two years from the date hereof (the "Restricted Period"), in any
capacity (including, but not limited to, owner, member, partner,
shareholder, consultant, advisor, financier, agent, employee, officer,
director, manager or otherwise), whether directly, indirectly or through
affiliates, within the States of Washington and Oregon, for his own
account or for the benefit of any person or entity, establish, engage
in or be connected with (i) the Business (as defined herein) or (ii)
any business which is similar to or in competition with the business
conducted by Company (or any subsidiaries or affiliates thereof) during
the Restricted Period.
(b) Employee will not, during the Restricted Period, in any
capacity (including, but not limited to, owner, member, partner,
shareholder, consultant, advisor, financier, agent, employee, officer,
director, manager or otherwise), whether directly, indirectly or through
affiliates, for their own account or for the benefit of any other
person or entity, including without limitation, a person or entity in
(i) the Business or (ii) any business in competition with Company (or
any subsidiaries or affiliates thereof) during the Restricted Period:
(i) Solicit, hire, contract, engage, retain, divert,
induce or accept business from or otherwise take away or interfere
with any customer of Company (or any subsidiaries or affiliates thereof)
or any prospective customer of Company (or any subsidiaries or affiliates
thereof) with which Company (or any subsidiaries or affiliates thereof)
has had a substantial business contact during the Restricted Period for
the purpose of providing the same or similar services or goods as that of
Company (or any subsidiaries or affiliates thereof); and/or
(ii) Solicit, divert or induce any of the employees or
consultants of Company (or any subsidiaries or affiliates thereof) to leave
or to work for Employee or any person or entity with which Employee is
connected.
(c) Employee will not, at any time after the date hereof,
whether directly, indirectly or through affiliates, disclose, communicate or
divulge to any person or entity, or use for the benefit of any person
or entity, any secret, confidential or proprietary knowledge or
information with respect to the conduct or details of the business
(including, without limitation, the Business) conducted by Company (or
any subsidiaries or affiliates thereof) including, but not limited to,
know-how, processes, customers, prospects, costs, pricing information,
trade secrets, products, employees, agents, representatives, policies,
marketing methods and strategies, finances, financial condition and
suppliers.
(d) Neither party will, at any time after the date hereof,
whether directly, indirectly or through affiliates, publish or communicate
disparaging or derogatory statements or opinions about the other party,
including but not limited to, disparaging or derogatory statements or
opinions about Company's and/or its subsidiaries' or affiliates'
management, products or services, to any third party. It shall not be
a breach of this Section for either party to testify truthfully in any
judicial or administrative proceeding or to make statements or
allegations in legal filings that are based on his reasonable belief
and are not made in bad faith.
(e) Employee agrees that at no time will it take any action,
directly or indirectly, to circumvent its respective obligations under, or
to deprive Company (or its subsidiaries or affiliates) of any benefit
intended by, any provision of this Agreement. Without limiting the
generality of the foregoing, Employee shall not in any way assist or
enable any person or entity to take any action that Employee is
prohibited from taking himself pursuant to this Agreement.
(f) The parties hereto agree that any breach by either party
of the covenants and agreements contained in this Section 2 will result in
irreparable injury to the other party (and its subsidiaries and
affiliates) for which money damages could not adequately compensate
them and, therefore, in the event of any such breach, either party
shall be entitled (in addition to any other rights and remedies which
it or they may have at law or in equity) to have an injunction issued
by any competent court of equity enjoining and restraining the other
party and any other person or entity involved therein from continuing
such breach.
(g) The parties hereto acknowledge that a breach of any other
agreement, whether written or oral, between or among, Employee, on the
one hand, and Company (or its subsidiaries or affiliates), on the other
hand, or any other actionable conduct by Company (or its subsidiaries
or affiliates), or any defense, set-off or counterclaim by Employee or
any other related rights of Employee, against Company (or its
subsidiaries or affiliates), will have no effect on any or all of the
terms and provisions of this Section 2 and its enforceability and
validity.
(h) If any portion of the covenants and agreements contained
in this Section 2, or the application thereof, is construed to be invalid or
unenforceable, then the other portions of such covenant(s) or
agreement(s) or the application thereof shall not be affected and shall
be given full force and effect without regard to the invalid or
unenforceable portions. If any covenant or agreement in this Section 2
is held to be unenforceable because of the area covered, the duration
thereof, or the scope thereof, then the court making such determination
shall have the power to reduce the area and/or duration and/or limit
the scope thereof, and the covenant or agreement shall then be
enforceable in its reduced form.
(i) The term, "Business", as used herein, means providing enterprise
maintenance solutions, including without limitation, multi-vendor
computer hardware support services that focus on providing customized
equipment service and support primarily to the desktop market, such as
personal and notebook computers, monitors, terminals, printers and
storage devices.
3. Miscellaneous.
(a) Waivers and Amendments. This Agreement may be
amended or modified only by a written instrument signed by all the
parties. Neither the failure, nor any delay, on the part of any party
to exercise any right, remedy, power or privilege hereunder shall
operate as a waiver thereof, nor shall any waiver on the part of any
party of any right, remedy, power or privilege hereunder, nor shall any
single or partial exercise of any right, remedy, power or privilege
hereunder, preclude any other or further exercise thereof or the exercise
of any other right, remedy,power or privilege hereunder.
(b) Controlling Law. This Agreement and all questions
relating to its validity, interpretation, performance and enforcement
(including, without limitation, provisions concerning limitations of
actions), shall be governed by and construed in accordance with the laws
of the State of Delaware (notwithstanding any conflict-of-laws doctrines of
such state or other jurisdiction to the contrary), and without the aid
of any canon, custom or rule of law requiring construction against the
draftsman.
(c) Notices. All notices, requests, demands and other
communications required or permitted under this Agreement shall be in
writing andshall be deemed to have been duly given, made and received
only when delivered (personally, by courier service such as Federal
Express, or by other messenger) or when deposited in the United States
mails, registered or certified mail, postage prepaid, return receipt
requested, addressed as set forth below:
(i) If to Employee:
Gary M. Lukowski
24107 NE 180th Street
Woodinville, WA 98077-6779
(ii) If to Company:
Halifax Corporation
5250 Cherokee Avenue
Alexandria, Virginia 22312
Attn: Joseph Sciacca, Chief Financial Officer
Telefax: (703) 658-2426
with a copy, given in the manner prescribed above, to
Blank Rome LLP
One Logan Square
Philadelphia, PA 19103
Attn: Barry H. Genkin, Esq.
Telefax: (215) 832-5514
In addition, notice by mail shall be by air mail if posted outside
of the continental United States.
Any party may alter the addresses to which communications or
copies are to be sent by giving notice of such change of address in
conformity with the provisions of this Section for the giving of
notice.
(d) Binding Nature of Agreement. The rights and obligations
of both parties under this Agreement shall inure to the benefit of and shal
l be binding upon their heirs, successors and assigns.
(e) Assignment. This Agreement may not be assigned by
Employee. Company, without the consent of Employee, may assign its rights
and obligations hereunder to an affiliate thereof or in connection with a
sale of substantially all of its assets.
(f) Execution in Counterparts. This Agreement may be
executed in any number of counterparts, including by facsimile, each of
which shall be deemed to be an original as against any party whose
signature appears thereon, and all of which shall together constitute one
and the same instrument. This Agreement shall become binding when one or
more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.
(g) Provisions Severable. If any provision of this
Agreement is construed to be invalid or unenforceable, such determination
shall not affect the remaining provisions of this Agreement, all of which
shall remain in full force and effect.
(h) Entire Agreement. This Agreement contains the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements, written or oral, with respect thereto.
(i) Section Headings. The Section headings in this
Agreement are for convenience only; they form no part of this Agreement
and shall not affect its interpretation.
(j) Gender, Etc. Words used herein, regardless of the
number and gender specifically used, shall be deemed and construed to
include any other number, singular or plural, and any other gender,
masculine, feminine or neuter, as the context indicates is appropriate.
[Signature page follows]
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement, intending to be legally bound hereby, as of the date
first above written.
HALIFAX CORPORATION
By: /s/ Charles McNew
Name: Charles McNew
Title: President & CEO
EMPLOYEE:
/s/ Gary M. Lukowski
GARY M. LUKOWSKI
[Signature Page to Employee Severance and Restrictive Covenant
Agreement]