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Their dispute first went to arbitration, in a proceeding
initiated by Mr. Polsky in September 1990. Mr. Polsky contended,
inter alia, that because his termination had been wrongful, he
was entitled to the value of his shares as of the June 1, 1993,
expiration of his employment term under the Employment
Agreement,15 at which time the shares would have appreciated to
$56.3 million, in present value terms, he claimed.
Alternatively, Mr. Polsky claimed that the $501,000 per share
PowerLink offer set a floor, but not a ceiling, on the value of
his shares. In response, Indeck took the position that the
arbitrator lacked jurisdiction to consider the value or sale of
Mr. Polsky’s shares. Then, by letter dated October 1, 1991,
Indeck took the position that since no bona fide offers for its
stock had been received within the year following Mr. Polsky’s
termination, the price for his shares should be set under the net
15 Mr. Polsky’s position was far from frivolous, as Indeck’s
own counsel advised its board of directors in February 1991 that
if Mr. Polsky’s termination were found to be wrongful, he had no
obligation to sell his shares to Indeck until the June 1, 1993,
expiration of his term of employment under the Employment
Agreement.
Mr. Polsky’s position, and the advice given by Indeck’s
attorney, were apparently based on the fact that the
Shareholders’ Agreement’s provisions governing Indeck’s purchase
of Mr. Polsky’s shares in the event of his involuntary
termination presupposed a termination effected in accordance with
the provisions of the Employment Agreement. Mr. Polsky contended
that his termination violated the Employment Agreement, and the
arbitrator subsequently agreed. The portion of the arbitration
award covering damages for wrongful termination was confirmed and
not appealed by Indeck.
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