EXHIBIT 10.9
MEMORANDUM OF UNDERSTANDING
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This Memorandum of Understanding ("MOU") sets forth the terms of and shall
constitute an agreement among Giant Group, Ltd. ("Giant"), Periscope Sportswear,
Inc. ("Periscope"), David Gotterer (collectively, "Defendants"), and Glenn Sands
("Sands"), which includes a settlement of the lawsuit styled Sands v. Giant
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Group, Ltd., et al. No. 00 Civ. 3472 (the "Action"). This MOU shall constitute a
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binding agreement of the parties. This MOU will later be superseded by more
definitive documentation, including a formal settlement agreement ("Settlement
Documents").
A. Consideration to Sands:
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1. Effective upon the closing of the settlement contemplated herein (the
"Closing"), Defendants agree to withdraw their injunctive claims
asserted in the Action and Sands' employment agreement with Periscope
shall be deemed null and void; provided, however, that Sands agrees
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not to hire any Periscope employees and not to reveal or cause to be
revealed any or all of Periscope's trade secrets or other confidential
business information, including without limitation, its customer
lists, supplier lists, pricing information and margin information.
2. Effective upon the Closing, Defendants agree to extinguish any
outstanding loans owed to them by Sands.
3. Within three business days of the Closing, Defendants will file a
stipulation of dismissal of their counterclaims in the Action without
prejudice.
4. Giant and Periscope will represent in the Settlement Documents that
they have no present intention to sue Sands in the future for any
claims asserted in the Action; provided, however, that such
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representation will not extend to claims not asserted in the Action
and that Defendants reserve all rights they may have to assert any and
all claims against any third parties, irrespective of whether asserted
against Sands in the Action.
B. Consideration to Defendants:
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1. Effective upon the Closing, Sands will give a general release to
Defendants and their officers, directors and employees. Within three
business days of the Closing, Sands will file a stipulation of
dismissal of his complaint in the Action with prejudice.
2. Sands assigns to Century for the benefit of Periscope any right, title
and interest he may have to the collateral he had posted with Century,
plus accrued interest (totalling approximately $1.972 million) which
Century has previously applied to Periscope's indebtedness to Century,
and Sands immediately releases Defendants and their respective
officers, directors and employees from all claims arising therefrom.
3. In consideration of, among other things, amounts due and owing to Periscope,
Sands agrees to pay the following additional sums:
(a) $1,000,000, by certified check from a money center bank payable to
Akin, Gump, Strauss, Hauer & Feld, L.L.P. ("Akin Gump") immediately
upon the Closing which shall take place not later than July 14, 2000 at
2 p.m. EST at the New York offices of Akin, Gump unless otherwise
agreed in writing by Giant, time being of at the essence; and
(b) $528,000 by wire transfer or certified check from a money center bank
payable to Akin Group upon the earlier of:
(i) the sale of the Challenger 600 airplane, N600LG, S/N.1052 (the
"Airplane") owned by Sands or a corporation wholly owned and
controlled by him, or
(ii) January 14, 2001
4. Sands agrees to deliver to Giant at the Closing, all right, title and
interest in any and all Giant stock owned by Sands, including stock he
pledged to Bank of Boston (over 600,000 shares), free and clear of all
liens, claims and encumbrances. To the extent that Sands is unable to
deliver any such shares. Sands will deliver to Giant at the closing
$300,000 by certified check from a money center bank and a note in the
amount of $177,670, which may be reduced by the product of $.70/share
multiplied by the number of Giant shares Sands delivers at the Closing.
5. Sands agrees to execute and provide to Giant a confession of judgment in
the amount of $1 million to be held in escrow and enforceable only in the
event Sands defaults on his payment obligation under Paragraph 3(b) above.
6. Sands agrees to furnish to Giant a security interest in the Airplane in the
amount of $528,000, plus the amount of the note issued in connection with
Paragraph 4 above, if any, subordinated only to pre-existing liens.
7. Sands represents and warrants to the best of his knowledge that (i) he or a
corporation wholly owned and controlled by him has valid title to the
Airplane, free and clear of all liens and encumbrances except for a
mortgage in the amount of no greater than $6.7 million and (ii) the
security interest he is granting in the Airplane pursuant to Paragraph 6
would be valid, binding and enforceable, subject only to that mortgage.
8. Sands agrees to use his best efforts to sell the Airplane as expeditiously
as possible.
9. Effective upon the Closing, Periscope is released from any further
obligations owing to Sands arising under any contractual agreements or
loans (including the
$2 million loan) and all such contracts are extinguished (except
for this agreement and any Settlement Documents).
10. At the Closing, Sands agrees to deliver to Defendants general
releases signed by Mark Pashkoff and Jeffrey Sirchio
C. Additional Terms:
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1. This agreement remains subject to the approval of the Board of
Directors of Giant.
2. All parties will be available to execute Settlement Documents on
July 14, 2000, or such other Closing date as may be set by Giant,
including meeting on the business day immediately preceding the
Closing, if necessary.
3. Sands represents that he has consulted with experienced counsel
who has reviewed and discussed the terms of this MOU in detail
with Sands.
4. This agreement may be executed in one or more counterparts each
of which shall be deemed an original for all purposes, but all
counterparts together shall constitute one and the same
instrument. Facsimile copies of this agreement shall be
considered originals for all purposes.
/s/ Glenn Sands Dated: July 11, 2000
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Glenn Sands
/s/ Florence Hessen Dated: July 11, 2000
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Florence Hessen
Counsel for Sands
/s/ David Gotterer
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David Gotterer for
himself and for
Giant and Periscope