EXHIBIT INDEX
Exhibit
Number Document Description
99.1 Executive Compensation Agreement between the
Company, ACX Technologies, Inc. and Xxxxxx X. Xxxxxxxx
dated November 20, 1996 (filed as Exhibit 10.10 to the
Company's Annual Report on Form 10-KSB for the year
ended August 31, 1996 and incorporated by reference
herein).
99.2 Executive Compensation Agreement between the
Company and Xxxxxx XxXxx dated November 20, 1996 (filed
as Exhibit 10.11 to the Company's Annual Report on Form
10-KSB for the year ended August 31, 1996 and
incorporated by reference herein).
99.3 Demand for Arbitration and Statement of the Nature
of the Dispute
Exhibit 99.3
Xxxxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
XXXXXX XXXXXXX, P.A.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
(000) 000-0000
Attorneys for Claimant Photocomm, Inc.
BEFORE THE AMERICAN ARBITRATION ASSOCIATION
PHOTOCOMM, INC., an )
Arizona corporation, ) Case No._______________
)
Claimant, )
)
vs. ) DEMAND FOR
) ARBITRATION AND
XXXXXX X. XXXXXXXX and XXXXXX ) STATEMENT OF THE
X. XXXXX, individuals, ) NATURE OF THE DISPUTE
)
Respondents. )
)
In support of its Demand for Arbitration, Photocomm, Inc.
states as follows:
1. Photocomm, Inc. is an Arizona corporation,
headquartered in Scottsdale. It manufactures and markets
solar electric (photovoltaic) systems and products for
wireless power applications.
2. Respondent Xxxxxx X. Xxxxxxxx ("Xxxxxxxx") is the
former President and Chief Executive Officer of Photocomm.
Respondent Xxxxxx X. XxXxx ("XxXxx") is the former Chief
Financial Officer of Photocomm.
3. On or about November 21, 1996, Photocomm entered into
separate Employment Agreements with Xxxxxxxx and XxXxx. The
Xxxxxxxx Employment Agreement is attached hereto as Exhibit
A; the XxXxx Employment Agreement is Exhibit B hereto.
4. Both the Xxxxxxxx and XxXxx Employment Agreements
contain arbitration provisions. (See Exhibit A Sec. XVIII;
Exhibit B Sec. XVII.)
5. Pursuant to the Employment Agreements, Photocomm had
the right to terminate the employment of Xxxxxxxx and XxXxx
without cause. (See Exhibit A Sec. VII (C); Exhibit B Sec.
VI(C).) On January 31, 1997, the Photocomm Board of
Directors terminated the employment of Xxxxxxxx and XxXxx
without cause.
6. Section VII(C) of the Xxxxxxxx Employment Agreement and
Section VI(C) of the XxXxx Employment Agreement specify
certain severance benefits that Xxxxxxxx and XxXxx are
entitled to receive upon the satisfaction of certain
conditions (the "Severance Payments").
7. Importantly, the Employment Agreements obligate
Xxxxxxxx and XxXxx to execute an "appropriate legal release"
before they are entitled to receive the Severance Payments.
(See Exhibit A Sec. VII(C)(7); Exhibit B Sec. VI(C)(7).) The
Employment Agreements state that this requirement is a
"condition precedent" of Xxxxxxxx and XxXxx receiving "any"
Severance Payments.
8. The Employment Agreements are clear that Xxxxxxxx and
XxXxx must agree in the legal release both: (a) "not to
bring any legal claims against [Photocomm] of whatever
nature or kind in connection with [their] employment and
separation from employment, except for benefits of
employment . . ."; and (b) to "surrender all of [their]
rights to bring any legal claim against [Photocomm], other
than for such vested rights, under any federal or state law,
statute, or ordinance." (Id. (emphasis added).) Thus, the
Employment Agreements obligate Xxxxxxxx and XxXxx to execute
broad, complete releases in favor of Photocomm.
9. The Severance Payments also are contingent on Photocomm
receiving a report from KPMG Peat Marwick, Photocomm's 1996
auditors, as to whether any portion of the Severance
Payments are an "excess parachute payment" pursuant to
Section 280G of the Internal Revenue Code ("Section 280G").
The Employment Agreements specify that Xxxxxxxx and XxXxx
are not entitled to receive any Severance Payments above the
limits set forth in Section 280G. Photocomm currently is
waiting for KPMG Peat Marwick to complete its analysis.
10. On January 31, 1997, Xxxxxxxx and XxXxx were given
draft Severance Agreements containing legal releases. The
draft Severance Agreements did not contain all actual dollar
amounts Xxxxxxxx and XxXxx were to receive because Photocomm
did not have all necessary information available to it,
including the required information from KPMG Peat Marwick.
And, of course, Photocomm did not request KPMG Peat Marwick
to begin its analysis until after the Board voted to
terminate the employment of Xxxxxxxx and XxXxx.
11. Since January 31, 1997, Photocomm representatives have
attempted to contact Xxxxxxxx and XxXxx to discuss the draft
Severance Agreements. Xxxxxxxx and XxXxx did not return
repeated phone calls or otherwise contact Photocomm.
Eventually, a Photocomm representative reached Xxxxxxxx, who
refused to discuss the matter except to say that Photocomm
would be hearing from his attorney. Additionally, Photocomm
has recently learned that Xxxxxxxx and his attorneys have
contacted KPMG Peat Marwick, and such contact may have
delayed KPMG Peat Marwick from completing its Section 280G
analysis for Photocomm.
12. Recently, Xxxxxxxx and XxXxx, through counsel, have
informed Photocomm that they will not comply with the
release provisions of the Employment Agreements. Despite
the clear language of the Employment Agreements specifying
that Xxxxxxxx and XxXxx must execute a legal release in
which they agree to "surrender all of [their] rights to
bring any legal claim against [Photocomm]", Xxxxxxxx and
XxXxx have taken the position that they are not required to
sign complete, broad releases.
13. Photocomm bargained for the right to complete, broad
releases from Xxxxxxxx and XxXxx. Xxxxxxxx and XxXxx are in
breach of the terms of the Employment Agreements for failing
to provide such releases. A dispute exists between the
parties as to the scope of the releases Xxxxxxxx and XxXxx
must execute under the Employment Agreements.
14. Through counsel, Xxxxxxxx and XxXxx have also asserted,
prematurely, that the Severance Payments do not constitute
an "excess parachute payment" under Section 280G and have
demanded payment of amounts in excess of the Severance
Payments. Thus, a dispute exists as to the amounts
Photocomm is obligated to pay Xxxxxxxx and XxXxx.
15. To be sure, Photocomm does not dispute that it must pay
Xxxxxxxx and XxXxx the Xxxxxxxxx Payments described in the
Employment Agreement at the appropriate time. Photocomm
remains ready, willing, and able to pay the Severance
Payments once the conditions precedent in the Employment
Agreement are fully satisfied.
16. Photocomm is unable to calculate with precision the
amount in controversy at this time.
WHEREFORE, Photocomm requests the following relief in this
Arbitration:
A. An order requiring Xxxxxxxx and XxXxx to execute
complete, broad releases in accordance with the provisions of the
Employment Agreement; and
B. A declaration that Photocomm, upon payment to Xxxxxxxx
and XxXxx of the Severance Payments (after receipt of appropriate
releases and the report from KPMG Peat Marwick), has satisfied
all obligations owed to Xxxxxxxx and XxXxx; and
X. A declaration that Xxxxxxxx and XxXxx are not entitled
to treble damages pursuant to the Arizona Wage Act; and
X. Xxxx other relief as is appropriate.
Respectfully submitted this 25th day of February, 1997.
XXXXXX XXXXXXX, P.A.
By /s/ Xxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attorneys for Claimant
