EXHIBIT A

Case: 1:13-cv-01297 Document #: 30-1 Filed: 05/16/13 Page 1 of 15 PageID #:105

UNITED STATES DISTRICT COURT
DISTRICT OF ARIZONA
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nus DOCUMENT IS NOT IN PROPER FORM ACCORDING
TO FEDERAL AND/OR LOCAL RULES DPRACTICES
AND IS SUBJECT TO REJECTIO Y CO
REFERENCE:
1 Michael F. Bailey ryumber
Joel W. Nomkin (#011939)
2 Chad S. Campbell (#012080)
BROWN & BAIN, P.A.
3 2901 North Central Avenue
Post Office Box 400
4 Phoenix, Arizona 85001-0400
5 (602) 351-8000
Of Counsel
6 Laurence R. Hefter
. 7 Christopher P. Isaac
FINNEGAN, HENDERSON, FARABOW,
8 GARRETT & DUNNER, L.L.P.
1300 I Street, N.W.
9 Washington, D.C. 20005-3315
(202) 408-4000 Phone
10 (202) 408-4400 Fax
11 Attorneys for Plaintiff
TECHNOLOGIES. INC.. a Delat,tv '99
16 corporation, \ .
. ,-
LODGED
RECEIVED _ COpy
2251PHX ReB
17
18
v.
Plaintiff,
VERIFIED COMPLAINT
19 ROBERT E. and YVONNE ALMBLAD,
husband and wife; and LASER KEY II LP, an
20 Illinois limited partnership,
Defendant.
For its Complaint, Plaintiff ("Axxess"), alleges:
THE PARTIES
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1.
Plaintiff is a Delaware corporation with its principal place of business in
26 Tempe, Arizona.
Case: 1:13-cv-01297 Document #: 30-1 Filed: 05/16/13 Page 2 of 15 PageID #:106
1 2. Defendants Robert E. and Yvonne Almblad are citizens of Illinois. Robert
2 Almblad was one of the founders of a predecessor ofAxxess. Yvonne Almblad is named
3 as a defendant because, upon information and belief, Robert Almblad holds his assets in
4 her name to shield them from creditors.
5 3. Upon information and belief, defendant Laser Key II LP ("Laser Key") is a
6 limited partnership organized and existing under the laws of Illinois, with its principal
7 place of business in Libertyville, Illinois. Upon information and belief, no partner or
8 limited partner of Laser Key is a citizen of Arizona.
9 JURISDICTION
10 4. Defendants have caused events to occur in the District of Arizona out of
11 which this action arises, have agreed to submit to the jurisdiction of this Court and have
12 conducted business activities in this District sufficient to confer in personam jurisdiction
13 on this Court.
14 5. This Court has subject matter jurisdiction pursuant to 15 U.S.C. 1121
15 and 1125(a) and pursuant to 28 U.S.C. 1331 and 1367. Upon information and belief,
16 plaintiffs and defendants also are citizens of different states. The sum or amount in
17 controversy in this case exceeds the sum or value of $75,000, exclusive ofinterest and
18 costs. Accordingly, the Court also has jurisdiction under 28 U.S.C. 1332.
19 FACTUAL ALLEGATIONS
20 6. Defendants claim to have developed some "revolutionary" key-duplication
21 technology (the "New Technology"). Plaintiff has had a limited opportunity to review
22 some aspects of that technology, and conducted a limited field test of two vending
23 -machines incorporating some of the New Technology for the purpose of determining
24 whether it presented a commercially viable business opportunity. Certain agreements
25 exist between plaintiff and defendants, pursuant to which plaintiff enjoys rights of first
26 negotiation and first refusal with respect to the sale or license ofthe New Technology.
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1 7. The field tests were a near-tenn commercial failure, although Axxess
2 believes that the New Technology may have some long-tenn commercial value.
3 8. On or about December 16, 1999, defendants issued a press release (the
4 "Press Release"), in which defendants published a series of false and misleading
5 statements about Axxess and its product line. A copy of the Press Release, as it was
6 transmitted to Axxess from one ofthe major customers ofAxxess (Wal-Mart), is attached
7 as Exhibit A to this complaint.
8 9. Most significantly, the Press Release deceptively appeared to be ajoint
9 press release issued together by defendants and plaintiff (and a third company,
10 SunSource), which greatly multiplied the damaging effect of the statements that were
11 made about Axxess and its products.
12 10. The Press Release made false and disparaging statements about the
13 products and business plans ofAxxess, including the following:
14 A. Axxess' technology was said (apparently by Axxess itself) to be
15 obsolete and inferior to defendants' New Technology.
16 B. Axxess was said to be planning to replace its installed base of key-
17 duplication equipment with defendants' New Technology as soon as possible, and
18 was said to be engaged in discussions with defendants about how to do that.
19 C. The Press Release said that existing technology, such as Axxess
20 technology, exhibits a 30-50% failure rate (i.e., it produces keys that do not work),
21 although defendants are well aware that the failure rate for keys made with Axxess
22 equipment is less than 5%.
23 D. Field tests of defendants' software were said to have been completed
24 by Axxess at two Fred Meyer Stores in a vending machine model, where as the field
25 tests related to commercial acceptance of the vending machine, not to analysis and
26 verification of defendants' software.
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1 E. The Press Release stated that the New Technology, having passed
2 successful field trials, was about to go into volume production. Instead, upon
3 information and belief, defendants have abandoned the product that actually was field
4 .tested because the test was commercially unsuccessful. Upon information and belief,
5 Defendants have neither the right nor a near-term plan to go into volume production
6 for sale or license of the New Technology.
7 11. Axxess and SunSource, Inc. ("SunSource"), recently announced plans for a
8 merger of the two companies (the "Proposed Acquisition"), under which SunSource will
9 acquire Axxess. The Proposed Acquisition presently is undergoing regulatory review and
10 due diligence investigation, as defendants are well aware.
11 12. Knowing of the announced acquisition by SunSource and, upon
12 information and belief, for the purpose of disrupting the proposed acquisition, defendants
13 first offered (in violation of their agreement with Axxess) to sell or license to SunSource
14 the New Technology, and thereafter wrote the Press Release in a way that assured
15 SunSource would receive it.
Warburg [the largest Axxess shareholder] can take less than
they planned [from the proposed merger with SunSource] and
make a deal with us. Sooner or later this will become clear to
all parties.
Upon information and belief, Defendant's conduct toward SunSource has been an attempt
to interfere with the Proposed Acquisition for the purpose of implementing that plan.
14. Defendants know ofAxxess' relationship with certain key customers,
including Wal-Mart. For the purpose of improperly interfering with those relationships,
Defendants sent bye-mail a copy of the Press Release to Wal-Mart, and perhaps to
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13. Defendant Robert Almblad proposed in writing to an Axxess officer that:
Axxess should acquire us [Laser Key], or our machine, before
we gain any more momentum, i.e. financing, distribution
agreements, and so on.
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1 others. Wal-Mart has stated to Axxess that it was misled into believing that Axxess was
2 a party to the Press Release, that Axxess had tested defendants' technology in its current
3 configuration and that Robert Almblad was "some sort of a partner" ofAxxess.
4 15. Axxess has approximately 10,000 installations of its own patented key
5 duplication technology. Its customers include substantial retail institutions as such Wal-
6 Mart, K-Mart and Home Depot. Axxess has invested approximately $30 million in
7 placing and maintaining its patented key duplication technology in retail sites.
8 16. Axxess' relationship with its customers and its proposed merger partner
9 depends in large part upon the trust and goodwill that exists betWeen those customers and
10 Axxess. The false statements in the Press Release already have damaged Axxess'
11 relationship with at least one major customer, and threaten its relationship with others and
12 with its merger partner. Moreover, the false statements in the Press Release threaten
13 irreparable injury to Axxess by disrupting the sale of its current technology to new
14 customers.
15 17. Unless defendants are restrained from continuing their false publicity
16 campaign and are required to correct the false statements they already have made,
17 plaintiffwill suffer irreparable injury.
18 18. In addition, plaintiffhas been damaged by defendants' false publicity
19 campaign in an amount to be proven at trial.
20 19. Plaintiff and defendant Robert E. Almblad are parties to an agreement (the
21 "Technology Agreement") relating to new key-duplication technology developed by Mr.
22 Almblad. Pursuant to that agreement, plaintiffhas a right of first negotiation and a right
23 of first refusal with respect to such technology, which Mr. Almblad must honor before he
24 sells or licenses such technology or any portion of it.
25 20. A present dispute exists about the rights of the parties under the
26 Technology Agreement. Mr. Almblad has asserted a right to sell product incorporating
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Case: 1:13-cv-01297 Document #: 30-1 Filed: 05/16/13 Page 6 of 15 PageID #:110
1 technology subject to the Technology Agreement without regard to his obligations to
2 plaintiff under the Technology Agreement. He has offered to sell or license technology
3 subject to the agreement to at least SunSource and Wal-Mart, in derogation of plaintiffs
4 rights under the Technology Agreement.
5 CLAIMS FOR RELIEF
6 COUNT I
7 21. Defendants' statements in the Press Release misrepresented defendants'
8 affiliation, connection or association with Axxess and the origin, sponsorship or approval
9 by Axxess of defendants' commercial actions, in violation of 43(a) of the Trademark
10 Act of1946 (the "Lanham Act"), as amended, 15 U.S.c. 1125(a).
11 22. Defendants' misrepresentations in the Press Release about Axxess and
12 Axxess' technology constitute false and misleading advertising, because they
13 misrepresent the nature, characteristics and qualities ofAxxess' products, all in violation
14 of 43(a) of the Lanham Act.
15 23. Axxess has suffered, and will continue to suffer, irreparable injury as a
16 result of defendants' false and misleading statements in violation of the Lanham Act.
17 COUNT II
18 24. Defendants' conduct in connection with the Press Release constitutes unfair
19 competition in Arizona and is a violation of the common law of Arizona, by reason of
20 which Axxess has suffered, and will continue to suffer, irreparable injury.
21 25. Defendants' conduct has been willful, wanton and was undertaken with an
22 evil mind.
23 COUNT III
24 26. Defendants' false and misleading press campaign denigrated the quality of
25 Axxess' key duplication technology and misrepresented Axxess' business plans. The
26 false statements in the Press Release were made with intent to cause harm to Axxess'
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Case: 1:13-cv-01297 Document #: 30-1 Filed: 05/16/13 Page 7 of 15 PageID #:111
1 business. Defendants made those statements knowing them to be false and with reckless
2 disregard for the truth.
3 27. Defendants' false publicity campaign constitutes product disparagement
4 and trade libel in violation of the common law of Arizona, by reason of which Axxess
5 has suffered, and will continue to suffer, irreparable injury.
6 COUNT IV
7 28. Defendants made the false representations in, and thereafter publicized, the
8 Press Release with full knowledge ofAxxess' business relationships with, among other
9 companies, Wal-Mart, K-Mart, Home Depot and SunSource, Inc. Defendants'motive
10 was to disrupt those existing relationships and to interfere with Axxess' prospective
11 business advantage with potential customers ofAxxess' products.
12 29. Defendants' conduct constitutes improper interference with both current
13 and prospective business relationships ofAxxess in violation of the common law of
14 Arizona, by reason of which Axxess has suffered, and will continue to suffer, irreparable
15 Injury.
16 COUNT V
17 30. Plaintiff seeks a declaratory judgment against defendants Robert E.
18 Almblad and Laser Key II LP (which is an entity controlled by Mr. Almblad within the
19 meaning of the Technology Agreement) declaring the rights of the parties under the
20 Technology Agreement.
21 NOW THEREFORE, Axxess prays for relief as follows:
22 A. Temporary, preliminary and permanent injunctive relief requiring
23 defendants to:
24 1) Cease publication and distribution of the Press Release and of any
25 other false and misleading publicity or statements about plaintiff or plaintiff s
26 products;
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Case: 1:13-cv-01297 Document #: 30-1 Filed: 05/16/13 Page 8 of 15 PageID #:112
1 2) Delete, remove and destroy any copies of the Press Release that are
2 available for view by the public, whether they are available on the internet or
3 otherwise;
4 3) Disclose forthwith to the Court and to plaintiff the identity of each
5 and every person, web site, e-mail address and other location to which the Press
6 Release or any similar misleading communication, has been sent, together with
7 such information as defendants have about the further distribution by third parties
8 of the Press Release or similar communication; and
9 4) Promptly correct the false and misleading statements made in the
10 Press Release by transmitting in the same manner in which the Press Release was
11 originally transmitted, a copy of the temporary restraining order.
12 B. For money judgment in favor of Axxess sufficient to compensate Axxess
13 for the damages it has suffered and will suffer as a result of defendants' misconduct; in an
14 amount sufficient to punish the defendants for their misconduct; and in an amount
15 sufficient to reimburse plaintiff for its costs and attorneys' fees incurred in this case;
16 C. For a declaratory judgment stating the rights and responsibilities of plaintiff
17 and defendants Robert E. Almblad and Laser Key II LP under the Technology
18 Agreement.
19 D. For such other and further relief as is just and proper.
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Case: 1:13-cv-01297 Document #: 30-1 Filed: 05/16/13 Page 9 of 15 PageID #:113
By M i f e k [ ~ ~ ) ---
Joel W. Nomkin
Chad S. Campbell
2901 North Central Avenue
Post Office Box 400
Phoenix, Arizona 85001-0400
Attorneys for Plaintiff
OF COUNSEL
1 Dated: December/'( 2-, 1999.
2 Respectfully submitted
3 BROWN & BAIN, P.A.
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12 Laurence R. Hefter
Christopher P. Isaac
13 FINNEGAN, HENDERSON, FARABOW,
GARRETT & DUNNER, L.L.P.
14 1300 I Street, N.W.
Washington, D.C. 20005-3315
15 (202) 408-4000 Phone
(202) 408-4400 Fax
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Case: 1:13-cv-01297 Document #: 30-1 Filed: 05/16/13 Page 10 of 15 PageID #:114
1
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VERIFICATION
3 David M. Richards declares under penalty of perjury under the laws of the United
4 States:
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1.
That he is Vice President, Sales and Service, ofAxxess Technologies, Inc.,
6 which is the plaintiff in this action;
David M. Richards
facts alleged upon information and belief, he has received information that they are true
and he believes them to be true.
Executed this J ~ d a y of December, 1999, in Maricopa County, Arizona.
~ ~ t L i
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That he has read the foregoing Verified Complaint; and
That the facts alleged in the complaint are true; except that with respect to
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Case: 1:13-cv-01297 Document #: 30-1 Filed: 05/16/13 Page 11 of 15 PageID #:115
Case: 1:13-cv-01297 Document #: 30-1 Filed: 05/16/13 Page 12 of 15 PageID #:116
Sent:
To:
Subject:
Monday, December 20,19997:02 AM
'kdharris@ axxesstech.com'; Axxess Technolo - Karen Harris
FW: Press release
What's up with this?
John
-----Original Message-----
I
ISMTP: alnibla
Sent: . Friday, December 17, 1999 6:44 AM
To: Sandy Chapman; Jesus Garcia; Christopher Hynes; Paul Jurczak; Scott
Nielson; John Niznik; Crister Ringkvist; Crister flag Ringkvist; Crister
Ringkvist; Janusz Ruszel; Roger Sanders; Paula Studt
ISUbject: Press release
Laser Key Announces New Digital Software
E < http://www.axxesstech.com/>
LIBERTYVILLE, 111., Dec. 16 /PRNewswire/ -- Laser Key II LP announced
that
its new Laser Key 2000 digital imaging software has successfully completed
field tests and will begin serial production in the 1st quarter of 2000.
"Digital imaging technology is transforming the key duplication industry
by
making possible a key duplication machine that does not really duplicate
keys," said Robert Almblad, President. "Instead, the'machine takes a
digital
picture of a customer's key and compares that digital image with original
equipment manufacturers (OEM) specifications, which are stored in the
machine's memory, and then reproduces an original key according to those
specifications with a micro controller and servo motors. No human skill
is
involved. All other machines rely on the skill of an operator to trace
cut a
key and that is why 30% to 50% of keys don't work. Digital imaging has
eliminated the human skill factor in making a key and this technology will
replace existing key cutting machines in the very near future."
After testing the machine, Jonathan Taylor, formerly head of Taylor
Lock
Company said: "Customers can now get their keys cut and have complete
confidence that they will work, first time, every time. Just like
customers
have the confidence that their new TV will work after they take it hO,me
from
the store, so too will their Laser Key work properly. No more lock outs,
no
more aggravation of returning to the store."
The field tests of the software were completed by Axxess Technologies
at
two Fred Myers stores in Tempe, AI.. in a vending machine model.
"We chose Axxess Technology to carry out some of the first field tests
because I was the original Founder ofAxxess in 1985, and because Axxess
has
Case: 1:13-cv-01297 Document #: 30-1 Filed: 05/16/13 Page 13 of 15 PageID #:117
successfully placed my older style key cutting machine I invented 10 years
ago
in about 8,000 locations including Wal-Mart, K-Mart and Home Depot,"
Almblad
said. "Right now we are discussing the best method of replacing these
older
Axxess machines. Both Axxess and the stores that have seen the Laser Key
machine agree that they want to replace these old machines with the new
digital imaging based machines as soon as possible."
According to a recent PR Newswire release, SunSource (NYSE) has agreed
to
acquire Axxess and will be the new owner ofAxxess.
Laser Key 1\ LP is a leading edge digital imaging Rand D firm located
in
Libertyville, IL.
Axxess Technologies (http://www.Axxesstech.cbm
<http://www.axxesstech.com/>) manufactures and distributes
high-tech and conventional key duplication systems, as well as an
innovative,
consumer-operated identification engraving system. Axxess is also a
leading
manufacturer of letter, numbers and signs, key accessories and emergency
keys.
SunSource Inc. is one of the nation's leading providers of value-added
services and products to retail and industrial markets in North America.
Its
Industrial Services businesses provide parts supply, engineering and
repair
services throughout the U.S., Canada and Mexico. Its Hillman Group
subsidiary
is a leading provider to hardware outlets of merchandising systems,
in-store
service work and small parts such as fasteners, letters, signs and keys.
Its
Harding Glass subsidiary operates the largest chain of full service glass
shops in the U.S. .
SOURCE Laser Key \I LP
Web Site: http://www.Axxesstech.com <http://www.axxesstech.com/>
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Kindest personal regards,
Robert Almblad
Laser Key II LP, 1840 Industrial Drive, Unit 110
Libertyville, IL 60048, Voice 8478167786 Ext 14
Fax 847 816 0569 E-mail address: almblad@yahoo.com
Do You Yahoo!?
Thousands of Stores. Millions of Products. All in one place.
Yahoo! Shopping <http://shopping.yahoo.com/>.
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