PERISCOPE FOUNDER SUES FIRM, CHARGING WRONGFUL TERMINATION AS CEO, PRESIDENT
Byline: Vicki M. Young
NEW YORK — The former chief executive of Periscope has filed a lawsuit alleging that he was wrongfully terminated from the company he founded, and is seeking unspecified punitive damages.
The lawsuit was filed earlier this month in Manhattan federal court by Glenn Sands, now president and owner of Global Inc., a women’s and children’s sportswear manufacturer. Named as defendants are Periscope; its owner, Giant Group Ltd., and David Gotterer, a director of both entities.
According to the suit, Sands’ employment agreement provided that he would be president and chief executive until Dec. 31, 2002. In January of this year, Sands and Giant entered into discussions concerning Sands’ reacquisition of a majority interest in Periscope. Giant became the sole shareholder in December 1998.
In a binding repurchase agreement dated Jan. 18, Sands agreed to pay $8 million for a 65 percent stake in Periscope, with the purchase price split between a $5 million cash infusion and $3 million collateral held by Century Factors. The lawsuit said stock had been placed in escrow pending the close of the transaction.
Sands said in the suit that his employment ended on April 11, without the requisite notification period and without any specifics on alleged breaches of conduct. As part of his anticipated purchase of the 65 percent stake in Periscope, Sands said he invested $1.9 million to secure a factoring agreement between Periscope and Century, which required him to sign a personal guarantee for “past, present and future debts of Periscope.” Although the stock repurchase transaction never closed, Sands said in the suit that he was told by Century that he was “personally liable” for Periscope’s past debts and a portion of its future debts.
In addition to the wrongful termination charge, Sands also alleged breach of the reacquisition agreement, and negligent and fraudulent misrepresentation.
The former chief executive wants a preliminary injunction barring Periscope from incurring any further debt with Century, and performance of the stock reacquisition agreement. Periscope president Scott Pianin was traveling overseas and couldn’t be reached for comment. Larry Greenfield, an attorney at Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro in Los Angeles, said Friday, “Giant and Periscope have filed an answer and a significant counterclaim [as well as] a motion for a preliminary injunction against Glenn Sands. A hearing is set for Friday.”
The counterclaim referred to by Greenfield was not immediately available.
In the latest Securities and Exchange Commission filing by Giant, the company said Periscope’s largest customer was Kmart, which accounted for 30.7 percent of its sales in 1999. Sears was the second largest at 14.5 percent. Sales in 1999 hit $76.6 million.