Citizen Staff Writer
By DAVID PITTMAN
dpittman@tucsoncitizen.com
It’s a world of rainbows and unicorns.
A colorful world filled with purple, lime green, pink and powder blue that is based in a 320,000-square-foot structure near Tucson International Airport.
It’s the only building in town with bright hearts, stars and music notes all over the side of it.
But all is not well in the make-believe, sugar-coated world of Lisa Frank Inc., where a Tucson power couple is in a bitter power struggle over a business that designs, manufactures and sells girls’ toys, stickers, stationery, school supplies and lifestyle products. Details of the couple’s corporate and marital battles have spilled into Pima County Superior Court, exposing them to public view.
Lisa Frank Green, the founder and chairman of the board of the company, wants her husband, James Green, ousted as CEO and president of the business, according to documents filed by his attorney.
The corporate battle is significant because Lisa Frank Inc., at 6760 S. Lisa Frank Ave., is big business. The company has pulled in more than $1 billion in retail sales over the last 15 years.
The couple, who married in 1994, are the company’s only stockholders. Frank Green owns 51 percent of Lisa Frank Inc. and claims she “gifted” 49 percent of the business to her husband.
In a ruling made Monday, Pima County Superior Court Judge Deborah Bernini denied a request from Frank Green to order a shareholders meeting of the company.
Michael R. King, a Phoenix lawyer representing Frank Green, argued a shareholders meeting is needed immediately because the couple is “deadlocked on issues critical to the business” and directors who can “break the deadlock” should be elected.
Green’s lawyer, John N. Iurino, of the firm of Lewis & Roca, countered that Frank Green requested “an unauthorized, illegal shareholders meeting” for the “sole purpose” of ousting Green. He maintains such a meeting must be held on the last Monday in December to comply with company bylaws.
In court documents, Iurino said Frank Green wants to take full control of the company to force Green to sell his shares back to her at a discounted price as dictated under a buy-sell agreement entered into in December 1995.
“Under the buy-sell agreement, if Ms. Frank Green files a petition for divorce, (Lisa Frank Inc.) purportedly has the right to purchase Mr. Green’s shares at a discounted price in the event Mr. Green no longer works for” the company.
Green asked the court for a judgment finding the buy-sell agreement invalid. Judge Bernini issued no such ruling.
Iurino also charged that Frank Green has taken actions creating “a destructive and demoralizing atmosphere at the company.” He said she has told key staff members that Green would be fired, that she and her husband will be divorced and that workers should “choose sides” and consider “which side their bread is buttered on.”
Frank Green’s attorney didn’t return a message from a reporter seeking a response to Green’s allegations. Frank Green’s attorney, who has yet to respond to the allegations in court documents, did not return a call from t he Tucson Citizen.
Green also alleges that his wife has directed the company’s outside computer consultants to provide her with access to all employee e-mail accounts, and she has used this access to monitor employee communications, delete company e-mails and redirect company e-mails, which has created a “siege-like atmosphere.”
According to the counterclaim filed on behalf of Green, his wife’s “conduct could not have come at a worse time” because it is in the midst of efforts to sell the company.
In November 2004, the counterclaim says, the company retained a New York City business broker to sell Lisa Frank Inc. for “in excess of several hundred million dollars.”
The business broker has contacted about a dozen potential purchasers and has circulated the confidential offering memorandum to many of them, the document stated.
“Ms. Frank Green’s current campaign to oust Mr. Green and seize control of the company will adversely affect the ongoing efforts to sell the company and will damage (Lisa Frank Inc.) and its shareholders,” it continued.
According to Lisa Frank Inc.’s Web site, when Lisa Frank started the business in 1979, “she was working out of a guest house behind where she lived.”
The business quickly outgrew the guest house. In fact, growth throughout the 1980s and ’90s forced the company to move into three different facilities before it began occupying its current building in 1998. There also are plans to build an entertainment complex called “The Fantastic World of Lisa Frank.”
Court documents filed on behalf of Green claim he was the driving force in building the company. He has been employed at the company since 1982, has been an officer of the business since 1988 and has served as president and CEO since 1990, when he also began serving on the firm’s two-person board.
Green claims to have been “the architect of the development and growth” of the Lisa Frank brand, both in the United States and abroad.
In happier times, Green says in his counterclaim, his wife acknowledged as much, often telling people that “James is Lisa Frank.”
GRAPHIC: LISA FRANK – BY THE NUMBERS
Annual sales
Year —- Sales
2005 (projected) $35.5 million
2004 $32.2 million
2003 $49.6 million
2002 $56.7 million
2001 $58.3 million
2000 $61.1 million
1999 $66.5 million
1998 $64.6 million
1997 $66.3 million
1996 $64.0 million
Shareholder Payments
Year — Frank Green — Green
1999 $5.7 million $5.5 million
2000 $5.6 million $5.4 million
2001 $2.7 million $2.6 million
2002 $9.3 million $9.0 million
2003 $2.3 million $2.2 million
2004 $2.9 million $2.8 million
Source: Pima County Superior Court documents