[LEGEND]
THIS IS AN ELECTRONIC CONFIRMING COPY OF A FORM 8-K WHICH WAS FILED
IN PAPER FORM ON OCTOBER 15, 1994.
[/LEGEND]
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): October 6, 1994
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GIANT GROUP, LTD.
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(Exact name or registrant as specified in its charter)
Delaware 1-4323 23-0622690
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(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
150 El Camino Drive, Beverly Hills, California 90212
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 273-5678
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Highway 453, P.O. Box 218, Harleyville, S.C. 29448 (803) 496-7880
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(Former name or former address, if changed since last report.)
Page 1 of 33 Pages
Exhibit Index on Page 6
<PAGE>
Item 2. Acquisition or Disposition of Assets.
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On October 6, 1994, KCC Delaware Company ("KCC"), a wholly-owned
subsidiary of GIANT GROUP, LTD., (the "Registrant"), sold all of the
outstanding shares of Common Stock of Giant Cement Holding, Inc. ("GCHI")
in an underwritten public offering pursuant to a registration statement on
Form S-1 (No. 33-78260) (the "GCHI Public Offering"). GCHI is a holding
company which wholly-owns Giant Cement Company ("Giant Cement"), Keystone
Cement Company ("Keystone Cement") and Giant Resource Recovery Company,
Inc., which own and operate cement manufacturing facilities and resource
recovery operations associated with each facility. Upon the sale, the
Registrant ceased its involvement in the cement manufacturing and resource
recovery businesses.
KCC had owned 10,000,000 shares of GCHI Common Stock, which
constituted all of the GCHI capital stock then outstanding. The public
offering price was $14.00 per share, which was determined by negotiations
among KCC, GCHI and PaineWebber Incorporated, on behalf of itself and as
representative of the underwriters. The net proceeds to KCC was $131.6
million, of which KCC contributed $2 million to GCHI as additional capital
and paid a dividend of $45.9 million to the Registrant.
Upon the closing of the GCHI Public Offering, the Registrant gave
notice to call all of its outstanding 14-1/2% Subordinated Notes due 1995
(the "Subordinated Notes") and its outstanding 7% Convertible Subordinated
Debenture due 2006 (the "Convertible Debentures"). The redemption date for
the Subordinated Notes is November 10, 1994, and the outstanding $9,058,116
principal amount will be redeemed at par, plus accrued interest to the
redemption date. The redemption date for the Convertible Debentures is
November 7, 1994, and the outstanding $34,350,000 principal amount will be
redeemed at 101.4% of par, plus accrued interest to the redemption date.
The amounts to be paid upon redemption were deposited with the respective
trustees.
Upon the closing of the GCHI Public Offering, Giant Cement
amended its Loan and Security Agreement, dated November 23, 1993, with The
CIT Group/Equipment Financing, Inc. ("CIT"). The Amendment provided for
termination of the Guaranty given by the Registrant of the CIT loan
agreement and release of 300,000 shares of Common Stock of Rally's
Hamburger's Inc. ("Rally's") owned by the Registrant which the Registrant
had pledged to CIT to secure the Guaranty, pursuant to a Termination,
Release and Receipt Agreement, dated October 6, 1994, between the
Registrant and CIT. At the same time, Giant Cement and Keystone Cement
amended their credit facility with General Electric Credit Corporation
which included the release of the Registrant and KCC from the Guaranty
Agreements whereby they had guaranteed the obligations under such credit
facility.
Effective upon the closing of the GCHI Public Offering, Terry
Christensen and Robert Wynn were elected directors of the Registrant to
fill vacancies caused by the resignations of Dean M. Boylan, Edward Brodsky
and Robert L. Jones. Messrs. Boylan, Brodsky and Jones are directors of
GCHI. Terry L. Kinder resigned his positions as Vice President-Business
Affairs, Secretary and Treasurer of the Registrant. Mr. Kinder serves as
Vice President, Chief Financial Officer, Secretary, Treasurer and a
director of GCHI. For the past five years, Mr. Christensen has been a
senior partner of Christensen, White, Miller, Fink & Jacobs, a law firm in
Los Angeles, California, and Mr. Wynn has been a producer and director of
television series and special programs.
The Registrant and KCC intend to review acquisition prospects,
and would use the net proceeds from the GCHI Public Offering as all or part
of the consideration for any such acquisition or acquisitions of other
companies or segments of companies. No acquisition candidates have been
identified, except that the Registrant will use up to $9 million to pay the
balance of purchase price for 2,500,000 shares of Rally's Common Stock it
has subscribed for pursuant to a Subscription Agreement, dated as of August
24, 1994, between the Registrant and Rally's, subject to fulfillment of the
closing conditions thereunder. Assuming the closing of such Subscription
Agreement, the Registrant would beneficially own 7,430,302 shares of
Rally's Common Stock, which would represent approximately 46.9% of the
outstanding Rally's shares. Pending use of the net proceeds for
acquisitions, the Registrant will invest such funds in short-term
investments and cash equivalents as well as other investment opportunities.
As of August 31, 1994, the Registrant owed GCHI $2.2 million for
advances made by GCHI as of such date. The Registrant is to repay all GCHI
advances by October 28, 1994.
Prior to the GCHI Public Offering, the Registrant and its
subsidiaries, including Giant Cement and Keystone Cement, filed
consolidated tax returns and allocated their taxes among themselves.
Pursuant to the Tax Sharing and Indemnification Agreement, the Registrant
and GCHI have agreed to bear the liability or benefits for any federal or
state tax assessment or overpayment, respectively, for any period prior to
the consummation of the GCHI Public Offering based on the method the
companies have used, in their tax returns (and financial statements), to
allocate tax liability among the members of the consolidated group. For
the period subsequent to Offering, the Registrant will indemnify GCHI or
GCHI will indemnify the Registrant, as the case may be, for the tax
liabilities of the Registrant or GCHI, respectively. The Registrant will
utilize the net operating loss carryforward of approximately $8.0 million
existing with the consolidated companies.
GCHI agreed to indemnify and release the Registrant and KCC from
any claims made against either of them based upon environmental laws to
which they are parties solely by having been the parent companies of GCHI.
Under certain environmental laws, claims may be asserted against parent
companies for acts of their subsidiaries.
Item 7. Financial Statements, Pro Forma Financial Information
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and Exhibits.
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(b) Pro Forma Financial Information:
The Registrant shall file pro forma financial information showing
the effect of the sale of the GCHI capital stock. The pro forma financial
information shall be filed within the time period prescribed by the
instructions to this Item 7.
(c) Exhibits:
Page
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1. Tax Sharing and Indemnification Agreement,
dated as of September 27, 1994, between
GIANT GROUP, LTD. and Giant Cement Holding, 8
Inc.
2. Indemnification and Release Agreement,
dated as of September 27, 1994, among GIANT 30
GROUP, LTD. KCC Delaware Company and Giant
Cement Holding, Inc.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
GIANT GROUP, LTD.
Dated: October 14, 1994 By: /s/ David Gotterer
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David Gotterer,
Vice Chairman
Exhibit No. 1
TAX SHARING AND INDEMNIFICATION AGREEMENT
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AGREEMENT, made as of the 27th day of September, 1994, by and
between GIANT GROUP, LTD., a Delaware corporation ("GIANT"), and Giant
Cement Holding, Inc., a Delaware Corporation ("Cement").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, GIANT is the parent corporation of an affiliated group
or groups of corporations, including Cement;
WHEREAS, GIANT has filed consolidated Federal income tax returns
pursuant to the Code (hereinafter defined) which have included the Cement
Group (hereinafter defined);
WHEREAS, the parties hereto desire to provide that GIANT and its
Affiliates (hereinafter defined) and the Cement Group shall pay, with
respect to taxable years commencing on or after January 1, 1993, their
respective shares, as calculated in accordance with this Agreement, of
Federal and State Taxes (as defined herein) as a result of being included
in a consolidated Federal income tax return filed for an affiliated group
of which GIANT is the parent corporation or as a result of being included
in a consolidated, combined or unitary state income tax return;
WHEREAS, the parties hereto desire to provide that GIANT or
Cement, as the case may be, shall prepare the required Federal and State
Tax returns for the period(s) commencing on or after January 1, 1993 and
the parties also desire to provide each other with the relevant information
necessary to prepare such Tax returns;
WHEREAS, the parties desire to provide for mutual cooperation in
connection with audits by any Taxing Authority (hereinafter defined); and
WHEREAS, the parties desire to provide that Cement indemnify
GIANT or that GIANT indemnify Cement, as the case may be, for any Loss (as
hereinafter defined).
NOW, THEREFORE, intending to be legally bound, the parties hereto
agree as follows:
SECTION 1
DEFINITION
For the purposes of this Agreement, the following terms have the
following meanings:
"Affiliate" means, with respect to any Person, any Person
directly or indirectly controlling, controlled by, or under common control
with such other Person, provided that no member of Cement Group shall be
considered an Affiliate of GIANT.
"Cement Group" means, as of the Closing Date, with respect to
Federal Taxes, the members of the affiliated group of corporations (as
defined in Section 1504(a) of the Code), of which Cement would be the
lawful parent if Cement were not included in the GIANT GROUP, and with
respect to the State Taxes, the combined, consolidated or unitary group of
which such corporations (which would include Giant Cement Company, Keystone
Cement Company and Giant Resource Recovery Company, Inc.) are members if
Cement is also included as a member .
"Code" means the Internal Revenue Code of 1986, as amended.
"Closing Date" means the date upon which the sale of Cement
common stock occurs pursuant to the Registration Statement on Form S-1,
initially filed on April 28, 1994.
"Combined State Tax" means, with respect to each state, any
income or franchise Tax payable to such state in which members of the
Cement Group file Tax Returns with GIANT or any Affiliate of GIANT on a
consolidated, combined or unitary basis for purposes of such income or
franchise Tax.
"Federal Taxes" means United States Federal income, environmental
and alternative or add-on minimum taxes.
"Final Determination" shall mean (i) with respect to Federal
Taxes, a "determination" as defined in Section 1313(a) of the Code or
execution of an Internal Revenue Service Form 870AD and, with respect to
Taxes other than Federal Taxes, any final determination of liability in
respect of a Tax provided for under applicable law; and (ii) the payment of
Tax by GIANT or Cement (or their respective Affiliates), whichever is
responsible for payment of such Tax under applicable law, with respect to
any item disallowed by a Taxing Authority, provided that, if such payment
constitutes a Loss (as hereinafter defined), the indemnifying party is
notified that GIANT or Cement, whichever is responsible, determines that no
action should be taken to recoup such disallowed item, and the indemnifying
party consents to such determination, which consent shall not be
unreasonably withheld.
"GIANT GROUP" means, with respect to Federal Taxes, the
affiliated group of corporations (as defined in Section 1504(a) of the
Code) of which GIANT is the common parent, and with respect to State Taxes,
the combined, consolidated or unitary group of which GIANT is a member.
"Group" means the GIANT GROUP and the Cement Group where the
distinction between the GIANT GROUP and the Cement Group is not relevant.
"Loss" is defined in Section 6.01 and 6.02 hereof.
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"Person" means an individual, a trust, estate, partnership,
association, company or corporation.
"Post-Closing Tax Period" means any Tax period (or portion
thereof) ending after the Closing Date.
"Pre-Closing Tax Period" means any Tax period (or portion
thereof) ending on or before the Closing Date.
"Tax" (and, with correlative meaning, "Taxes" and "Taxable")
means (A) any net income, alternative or add-on minimum tax, gross income,
gross receipts, sales, use, ad valorem, franchise, profits, license,
withholding on amounts paid, payroll, employment, excise, severance,
stamp, occupation, premium, property, environmental or windfall profit
tax, custom, duty or other tax, governmental fee or other like assessment
or charge of any kind whatsoever, together with any interest or any
penalty, addition to tax or additional amount imposed by any governmental
authority (hereinafter a "Taxing Authority") responsible for the
imposition of any such tax (domestic or foreign).
"Tax Asset" means any net operating loss, net capital loss,
investment Tax credit, foreign Tax credit, charitable deduction or any
other Tax credit or Tax attribute which could reduce Taxes (including,
without limitation, deductions and credits related to alternative minimum
Taxes).
"Tax Returns" shall mean all income, estimated income, excise,
sales, unemployment, employer and employee withholding, social security,
occupation, franchise, customs and other Tax returns or Tax reports with
respect to Taxes required by Federal (hereinafter "Federal Tax Return"),
State (hereinafter "State Tax Return"), or local law or regulation.
"Tax Sharing Agreement" means the tax sharing agreement, dated
November 23, 1993, that is currently in effect.
SECTION 2
TAX SHARING; TAX RETURNS
2.01 Pro Forma 1994 Tax Returns.
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a. On or before the date two (2) months prior to
respective due dates (including extensions) for filing of the 1994
consolidated Federal Tax Return of the GIANT GROUP (the "Pro Forma 1994
Federal Tax Return") and for filing of each Combined State Tax Return of
the GIANT GROUP (the "Pro Forma 1994 State Tax Return") for the Taxable
year that includes the Closing Date with respect to 1994, GIANT, subject to
Section 2.01(b) hereof, shall deliver to Cement the Pro Forma 1994 Federal
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Tax Return and each Pro Forma 1994 State Tax Return of, or including, the
Cement Group (or any member thereof) for (i) the period beginning prior to
the Closing Date and ending on the close of business on the Closing Date
with the Tax liability of each Group calculated in accordance with Section
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2.04 hereof and (ii) the period beginning prior to the Closing Date and
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ending after Closing Date with the Tax liability of each Group calculated
in accordance with Section 2.04 hereof; provided, however, that not later
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than five (5) months prior to each such respective due date for filing
(including extensions), GIANT shall have received from Cement all of the
data and information required for preparation of the Pro Forma 1994 State
Tax Returns and the Pro Forma 1994 Federal Tax Return. Unless Cement
timely objects as specified in Section 2.03 hereof, the Pro Forma 1994
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State Tax Returns shall be the Final Pro Forma 1994 State Tax Returns and
the Pro Forma 1994 Federal Tax Return shall be the Final Pro Forma 1994
Federal Tax Return binding on the parties without further adjustment.
b. At the option of GIANT, Cement will prepare one or more
of the Pro Forma 1994 State Tax Returns of the GIANT GROUP or the Pro Forma
1994 Federal Tax Return of the GIANT GROUP, provided not later than five
(5) months prior to the respective due date for filing (including
extensions) GIANT notifies Cement of this request in writing and provides
Cement all of the data and information required for preparation of the Pro
Forma 1994 Tax Returns. In such event, unless GIANT timely objects as
specified in Section 2.03 hereof, the Pro Forma 1994 State Tax Returns and
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Pro Forma 1994 Federal Tax Returns shall be the Final Pro Forma 1994 State
Tax Returns and Final Pro Forma 1994 Federal Tax Returns, respectively,
binding on the parties without further adjustment.
2.02 Pro Forma 1993 Tax Returns. GIANT has provided the
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information necessary for Cement to prepare the pro forma consolidated
Federal Tax Return and the pro forma State Tax Returns of the GIANT GROUP
for the Taxable year ending December 31, 1993 (a "Pro Forma 1993 Federal
Tax Return" and in each case, a "Pro Forma 1993 State Tax Return",
respectively). Cement shall endeavor to deliver to GIANT the Pro Forma
1993 Federal Tax Return and the Pro Forma 1993 State Tax Return at least
one (1) month prior to the filing date (including extensions) of each of
the Tax Returns so that GIANT will have a reasonable opportunity to review
the Pro Forma 1993 Tax Returns. Unless GIANT objects pursuant to the
procedure set forth in Section 2.03 hereof, the Pro Forma 1993 Federal Tax
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Returns and Pro Forma 1993 State Tax Returns shall be Final Pro Forma 1993
Federal Tax Returns and Final Pro Forma 1993 State Tax Returns,
respectively, binding on the parties without further adjustment.
(Hereinafter the Pro Forma 1993 Federal and State Tax Returns and the Pro
Forma 1994 Federal and State Tax Return are collectively referred to as
"Pro Forma Tax Returns".)
2.03 Review of Pro Forma Tax Returns. Cement or GIANT, as the
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case may be, shall have the right at such party's expense to review all
work papers and procedures used to prepare the Pro Forma Tax Returns. If
Cement or GIANT, as the case may be, within ten (10) business days after
delivery of the Pro Forma Tax Returns, notifies the other party in writing
that it objects to any items on any Pro Forma Tax Return, specifying with
particularity any such item and stating the specific factual or legal basis
for any such objection, Cement and GIANT shall negotiate in good faith and
use their best efforts to resolve such items. Upon resolution of all such
items, the relevant Final Pro Forma Tax Return shall be adjusted to reflect
such resolution, and, as so adjusted, shall be with respect to the relevant
Pro Forma Tax Return, the corresponding Final Pro Forma Tax Return, binding
on the parties without further adjustment.
2.04 Calculation of Tax. (i) The calculation of the amount of
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income Tax liability of each Group reflected in the Pro Forma Tax Returns
shall be made as if the GIANT Group were filing a consolidated return for
the relevant period in a manner consistent with past practices; provided,
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further, that income, deductions, credits and losses and applicable state
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and local apportionment Tax factors shall be computed in a manner
consistent with past practices. GIANT and Cement agree that the Pro Forma
1994 Tax Returns for the period (or which includes the period) beginning
January 1, 1994 and ending on the Closing Date will be prepared (to the
extent that it is applicable) and filed on the basis of a closing of the
books of the members of the Cement Group as of the Closing Date.
(ii) In no event shall the Federal Tax liability or share thereof
of each company reflected on the Pro Forma Federal Tax Return (and the
Final Federal Tax Return) exceed the amount that would be payable had such
liability been calculated in accordance with Treasury Regulation Section
1.1552-1(a)(2) and Treasury Regulation Section 1.1502-33(d)(2)(ii) and in
no event shall Combined State Tax liability or share thereof of each
company reflected on a Pro Forma State Tax Return (and Final State Tax
Return) exceed the amount that would be payable had such liability been
calculated in accordance with the principles set forth in Treasury
Regulation Section 1.1552-1(a)(2) and Treasury Regulation Section 1.1502-
33(d)(2)(ii) or comparable provisions under applicable law.
2.05 Filing of Tax Returns. GIANT shall be responsible for the
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timely filing of any Federal Tax Return that includes Cement Group for a
Pre-Closing Tax Period, and shall, subject to Section 2.06, pay any Tax
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shown thereon as due. Cement shall cause to be filed each State Tax Return
for 1993 and 1994 for which a member of the Cement Group files on a
separate company basis or a consolidated, combined or unitary basis and all
the members of such consolidated, combined or unitary group are members of
the Cement Group, and shall pay any Tax shown thereon as due. GIANT shall
cause to be filed each State Tax Return for 1993 and 1994 for which GIANT
or any Affiliate of GIANT files on a separate company basis or on a
consolidated, combined or unitary basis and all members of such
consolidated, combined or unitary group are members of the GIANT GROUP, and
shall pay any Tax shown thereon as due. GIANT shall cause to be filed each
State Tax Return for which GIANT or any Affiliate of GIANT files with a
member of the Cement Group on a consolidated, combined or unitary basis,
and shall, subject to Section 2.07, pay any Tax shown thereon as due.
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2.06 Payment of Federal Tax. On or before the respective due
----------------------
dates for the filing of the Federal Tax Returns for 1993 and 1994, Cement
shall pay to GIANT, or GIANT shall pay to Cement, as appropriate, an amount
reflecting the difference between (i) the sum of the liabilities reflected
on the Final 1993 or 1994 Federal Tax Return, as the case may be, of each
member of the Cement Group determined under Section 2.04 herein and (ii)
the aggregate of all amounts previously paid by the members of the Cement
Group with respect thereto.
2.07 Payment of State Tax. On or before the respective due
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dates for the filing of the State Tax Returns for 1993 and 1994, Cement
shall pay to GIANT or GIANT shall pay to Cement, as appropriate, an amount
reflecting the difference between (i) the sum of the liabilities reflected
on the Final Pro Forma 1993 Combined State Tax Returns or the sum of the
portion of the liabilities reflected on the Final Pro Forma 1994 Combined
State Tax Returns, as the case may be, of each member of the Cement Group
determined under Section 2.04 herein over (ii) the aggregate of all amounts
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previously paid by such members of the Cement Group with respect thereto.
2.08 Interest. Any payment required under this Section and not
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made when due shall bear interest at the rate per annum determined, from
time to time, under the provisions of Section 6621(a)(2) of the Code for
each day until paid.
SECTION 3
COOPERATION ON TAX MATTERS
3.01 General. Cement and GIANT shall cooperate fully, as, and
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to the extent, reasonably requested by the other party, in connection with
any audit, litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the other party's
request) the provision of records and information which are reasonably
relevant to any such audit, litigation or other proceeding and, subject to
this Section 3, making employees available on a mutually convenient basis
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to provide additional information and explanation of any material provided
hereunder. GIANT and Cement agree (i) to retain all books and records with
respect to Tax matters pertinent to the Cement Group and the GIANT GROUP
(other than Cement Group members) relating to any Pre-Closing Taxable
Period, and to abide by all record retention agreements entered into with
any Taxing Authority, and (ii) to give the other party reasonable written
notice prior to destroying or discarding any such books and records and, if
the other party so requests, Cement or GIANT, as the case may be, shall
allow the other party to take possession of such books and records.
3.02 Provide Information. Subject to Section 2, GIANT shall, at
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Cement's request, prepare and provide such information as Cement deems
reasonably necessary to enable Cement (and/or members of the Cement Group)
to file all Tax Returns relating to the 1993 Taxable year. Subject to
Section 2 Cement shall, at GIANT's request, prepare and provide such
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information as GIANT deems reasonably necessary to enable GIANT to file all
Tax Returns relating to Pre-Closing Tax Periods during 1994. In addition,
five (5) months prior to the due date (including extensions) for filing
GIANT's Tax Returns for 1994, Cement shall deliver to GIANT the schedules,
worksheets, and data required by GIANT to include the operations of any
member of GIANT GROUP and any member of the Cement Group in the Pro Forma
Tax Returns for 1994. After the Closing Date, members of the Cement Group
shall make available their personnel to (i) satisfy their obligations
pursuant to this Section 3 and (ii) satisfy their obligations pursuant to
---------
Section 2 provided that, as to the Cement Group's obligation pursuant to
---------
Section 2, GIANT shall reimburse Cement for the time spent by such
---------
personnel at their average annual hourly rate of compensation, plus any
travel costs.
SECTION 4
TERMINATION OF EXISTING TAX SHARING AGREEMENT
The Tax Sharing Agreement and any and all existing Tax sharing
agreements or arrangements binding any member of the Cement Group or GIANT
GROUP, and any other agreement, express or implied, relating to Taxable
income or Tax Assets of either group shall be terminated as of the
effective date hereof. After the effective date hereof, no member of the
GIANT GROUP or the Cement Group shall have any further rights or
liabilities thereunder for any amounts attributable to a Pre-Closing
Period, and this Agreement shall be the sole Tax sharing agreement relating
to members of the Cement Group and GIANT and any Affiliate of GIANT for all
Pre-Closing Tax Periods.
SECTION 5
ELECTIONS
Without the prior written consent of Cement or GIANT, as the case
may be, which shall not be unreasonably withheld, the parties shall not
make or change any election, change an annual accounting period, adopt or
change any accounting method, file any amended Tax Return, enter into any
closing agreement, settle any Tax claim or assessment relating to any
member of the other Group, surrender any right to claim a refund of Taxes,
consent to any extension or waiver of the limitation period applicable to
any Tax claim or assessment relating to any member of the respective Group,
take any other action or omit to take any action, if any such election,
adoption, change, amendment, agreement, settlement, surrender, consent or
other action or omission would have the effect of increasing the liability
for Taxes of any member of the other Group for any Tax period.
SECTION 6
TAX INDEMNIFICATION
6.01 Indemnification By GIANT. GIANT hereby indemnifies the
------------------------
Cement Group against and agrees to hold each member thereof harmless from
any (x) Tax of GIANT and any Affiliate of GIANT (determined, in the case of
income Taxes, pursuant to the principles set forth in Section 2.04 and
------------
Section 6.03 hereof), any liability of GIANT for Taxes of any Affiliate of
------------
GIANT, and any liability of GIANT or Affiliate of GIANT as a successor and
any liability of GIANT or Affiliate of GIANT as a result of any agreement
to indemnify any Person for Taxes, whether express or implied, for any Pre-
Closing Tax Period and any Post-Closing Tax Period, and (y) liabilities,
costs, expenses (including, without limitation, reasonable expenses of
investigation and attorneys' fees and expenses), losses, damages,
assessments, settlements or judgments arising out of or incident to the
imposition, assessment or assertion of any such Taxes, and any liability as
transferee, and, in each case, incurred or suffered by Cement or any of
its Affiliates on or after the Closing Date (the sum of (x) and (y) being
referred to herein as a "Cement Loss" or "Loss" where the distinction
between Cement Loss and GIANT Loss is not relevant).
6.02 Indemnification by Cement. Cement hereby indemnifies GIANT
-------------------------
against and agrees to hold it harmless from any (x) Tax of any member of
the Cement Group attributable to the Post-Closing Tax Period and Pre-
Closing Tax Period (determined, in the case of income Taxes, pursuant to
the principles set forth in Section 2.04 and Section 6.03 hereof), any
------------ ------------
liability of Cement for Taxes of any member of the Cement Group for any
Post-Closing and Pre-Closing Period, any liability of any member of the
Cement Group as a successor and any liability of a member of the Cement
Group as a result of any agreement to indemnify any Person for Taxes,
whether express or implied, for any Pre-Closing Tax Period and any Post
Closing Tax Period, and (y) liabilities, costs, expenses (including,
without limitation, reasonable expenses of investigation and attorneys'
fees and expenses), losses, damages, assessments, settlements or judgments
arising out of or incident to the imposition, assessment or assertion of
any such Taxes, and any liability as transferee, and, in each case,
incurred or suffered by GIANT, or any of its Affiliates on or after the
Closing Date (the sum of (x) and (y) being referred to herein as a "GIANT
Loss" or "Loss" where the distinction between Cement Loss and GIANT Loss is
not relevant).
6.03 Determination of Tax Liability. For purposes of this
------------------------------
Section 6, the liability for Taxes of each member of the GIANT GROUP shall
---------
be determined in a manner consistent with prior practice used for the
allocation of Taxes under Code Section 1552 (regardless of whether the
corporation allocated the Tax paid such Tax), adjusted where applicable
commencing January 1, 1993 by the principles set forth in Section 2.04
------------
herein.
6.04 Indemnification Payment. Upon payment by an indemnified
-----------------------
party of any Loss, the indemnifying party shall discharge its obligation to
indemnify the indemnified party against such Loss by paying to the
indemnified party an amount equal to the amount of such Loss; provided
--------
that, if the receipt or accrual of any indemnification payment hereunder is
----
determined in a Final Determination to not constitute a tax-free receipt
for Federal Tax purposes the indemnifying party shall pay to the
indemnified party an After-Tax Amount.
6.05 Time of Payment. Any payment pursuant to this Section 6
--------------- ---------
shall be made promptly after receipt by the indemnifying party of written
notice from the indemnified party stating that payment with respect to a
Loss by an indemnified party was required and that such Loss has been paid
by the indemnified party and any of its Affiliates and the amount thereof
and of the indemnity payment requested, together with all relevant written
documentation related to such Loss and the payment except to the extent
that the indemnifying party challenges in good faith its obligation to pay
the Loss pursuant to Sections 6.01 and 6.02 herein.
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6.06 Definitions. For purposes of this Section 6:
----------- ---------
(i) an "After-Tax Amount" means an amount that, on an
after-Tax basis reflecting the hypothetical Tax consequences of the receipt
of such amount, shall be equal to the Loss indemnified pursuant to this
Section 6, taking into account the hypothetical Tax consequences of the
---------
payment or occurrence of such Loss;
(ii) references to "after-Tax basis" and "hypothetical
Tax consequences" refer to calculations of Tax at the maximum statutory
rate (or rates, in the case of an item of income or deduction Taxable or
deductible for purposes of more than one Tax) applicable to the indemnified
party for the relevant year, after taking into account, for example, the
effect of deductions available for interest paid or accrued and Taxes such
as state and local income Taxes, which effect would similarly be calculated
on the basis of the maximum statutory rate (or rates) of the Tax (or Taxes)
for which such deduction was available.
6.07 Notice of Claim; Defense. The indemnified party agrees to
------------------------
give prompt notice to the indemnifying party of written assertion of any
claim (including any correspondence, notice, or other written communication
from a Taxing Authority or any representative thereof of any pending or
threatened Tax audits, or any pending or threatened judicial proceedings
involving Taxes), or the commencement of any suit, action or proceeding in
respect of which indemnity may be sought hereunder and of any Loss, which
the indemnified party deems to be within the ambit of this Section 6
---------
(specifying with reasonable particularity the basis therefor) and will give
the indemnifying party such information with respect thereto as the
indemnifying party may reasonably request. The indemnifying party may, at
its own expense, upon notice to the indemnified party, assume the defense
of any such suit, action or proceeding; provided that (i) the indemnifying
--------
party shall thereafter consult with the indemnified party upon the
indemnified party's reasonable request for such consultation from time to
time with respect to such suit, action or proceeding and (ii) the
indemnifying party shall not, without the indemnified party's consent,
which consent shall not be unreasonably withheld, agree to any settlement
with respect to any Tax if such settlement could adversely affect the past,
present or future Tax liability of the indemnified party. If the
indemnifying party assumes such defense, the indemnified party shall have
the right (but not the duty) to participate in the defense thereof and to
employ counsel, at its own expense, separate from the counsel employed by
the indemnifying party. The indemnifying party shall be liable for the
fees and expenses of counsel employed by the indemnified party for any
period during which the indemnifying party has not assumed the defense
thereof and the indemnified party shall not settle any claim relating to a
Loss, unless written consent is received from the indemnifying party.
Whether or not the indemnifying party chooses to defend or prosecute any
claim, all of the parties hereto shall cooperate in the defense or
prosecution thereof, which cooperation shall include, without limitation,
the retention and the provision upon reasonable request of records and
information relating to such claim, and, subject to Section 3, making
---------
employees available on a mutually convenient basis to provide additional
information or explanation of any material provided hereunder or to testify
at proceedings relating to such claim.
6.08 Limitation on Liability. The indemnifying party shall not
-----------------------
be liable under this Section 6 with respect to any Tax resulting from a
---------
claim or demand the defense of which it was not offered the opportunity to
assume as provided under Section 6.07 hereof to the extent the indemnifying
------------
party's liability under this Section 6 is adversely affected as a result
---------
thereof. No investigation by the indemnified party or any of its
Affiliates at or prior to the Closing Date shall relieve the indemnifying
party of any liability hereunder.
SECTION 7
OTHER TAX MATTERS
7.01 Other Taxes. All transfer, documentary, sales, use, stamp,
-----------
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with the transaction contemplated by this
Agreement (including any New York State Gains Tax, New York City Transfer
Tax and any similar tax imposed in other states or subdivisions), shall be
paid by GIANT when due, and GIANT will, at its own expense, file all
necessary Tax returns and other documentation with respect to all such
transfer, documentary, sales, use, stamp, registration and other taxes and
fees, and if required by applicable law, Cement will, and will cause its
Affiliates to, join in the execution of any such Tax returns and other
documentation.
7.02 Payment of Refunds. GIANT shall promptly pay or shall
------------------
cause prompt payment to be made to Cement of the amount of any refund of an
overpayment of Taxes with respect to the members of the Cement Group,
determined in the case of income Taxes, under the principles of Section
-------
2.04, upon receipt by GIANT or any Affiliate of GIANT (or any successor of
----
GIANT or any Affiliate of GIANT) of such refund. Cement shall promptly pay
or shall cause prompt payment to be made to GIANT of the amount of any
refund of an overpayment of Taxes with respect to GIANT and any Affiliate
of GIANT, determined in the case of income Taxes, under the principles of
Section 2.04, upon receipt by any member of the Cement Group (or any
------------
successor of such Cement Group member) of such refund.
7.03 Carrybacks and Carryforwards. GIANT will not pay to Cement
----------------------------
the benefit received by the Cement Group, GIANT or any Affiliate thereof
from the use in any Pre-Closing Tax Period of a carryback of any Tax Asset
from a Post-Closing Tax Period. Cement will not pay to GIANT the benefit
received by the GIANT GROUP, Cement or any Affiliate thereof from the use
in any Post-Closing Tax Period of a carry-forward of any Tax Asset from a
Pre-Closing Tax Period.
SECTION 8
SURVIVAL
Notwithstanding anything in this Agreement to the contrary, the
provisions of this Agreement shall survive for the full period of all
applicable statutes of limitations (giving effect to any waiver, mitigation
or extension thereof) and, as to the liabilities for Taxes arising from
agreement to indemnify Persons for payment of Taxes, shall survive for the
indemnification period of the applicable agreement.
SECTION 9
NOTICES
All notices, requests, demands and other communications required
or permitted hereunder shall be in writing and shall be deemed to have been
duly given if delivered by hand or mailed, by certified or registered mail
with postage prepaid:
(a) If to GIANT or to the GIANT GROUP,
GIANT GROUP, LTD.,
150 El Camino
Beverly Hills, California 90212
Attention: Burt Sugarman, Chairman
with copies to:
Mason & Company
400 Park Avenue
New York, New York 10022
Attention: David Gotterer, Vice Chairman
or to such other party or address as the GIANT shall furnish to Cement in
writing.
(b) If to Cement or to the Cement Group
Giant Cement Holding, Inc.
P.O. Box 218
Highways 453 and I-26
Harleyville, South Carolina 29448
Attention: Terry L. Kinder, Vice President
with a copy to:
Keystone Cement Company
P.O. Box 14
Bath, Pennsylvania 18014-0058
Attention: Gary L. Pechota, Chairman
or to such other party or address as Cement shall furnish to GIANT in
writing.
SECTION 10
ASSIGNMENT
This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by either
party hereto without the prior written consent of the other party hereto,
which consent cannot be unreasonably withheld.
SECTION 11
GOVERNING LAW
This Agreement and the legal relations between the parties hereto
shall be governed by and construed in accordance with the laws of the State
of New York, without reference to the conflict of laws principles thereof.
SECTION 12
COUNTERPARTS
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 13
HEADINGS
The headings of the Sections of this Agreement are inserted for
convenience only and shall not constitute a part thereof or affect in any
way the meaning or interpretation of this Agreement.
SECTION 14
ENTIRE AGREEMENT
This Agreement and the other documents and certificates delivered
pursuant to the terms hereof, set forth the entire agreement and
understanding of the parties hereto in respect of the subject matter
contained herein, and supersede all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral
or written, by any officer, employee or representative of either party
hereto.
SECTION 15
THIRD PARTIES
Except as specifically set forth or referred to herein, nothing
herein expressed or implied is intended or shall be construed to confer
upon or give to any person or corporation other than the parties hereto and
their successors or assigns, any rights or remedies under or by reason of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their duly authorized officers, all as of the day and
year first written above.
GIANT GROUP LTD.
By: /s/ David Gotterer
----------------------------
David Gotterer, Vice Chairman
GIANT CEMENT HOLDING, INC.
By: /s/ Terry Kinder
------------------------------
Terry L. Kinder, Vice President
Exhibit No. 2
RELEASE AND INDEMNIFICATION AGREEMENT
AGREEMENT, dated as of September 27, 1994, by and among GIANT
GROUP, LTD., a Delaware corporation ("GROUP"); KCC Delaware Company, a
Delaware corporation ("KCC"); and Giant Cement Holding, Inc., a Delaware
corporation ("GCHI").
WITNESSETH:
----------
WHEREAS, GROUP is the sole stockholder of KCC, and KCC is the
sole stockholder of GCHI:
WHEREAS, pursuant to a registration statement on Form S-1 (File
No. 33-78260) (the "Registration Statement"), KCC is to sell all of the
shares of GCHI capital stock owned by KCC, after which sale neither GROUP
nor KCC would have any further interest in GCHI or the subsidiaries of
GCHI;
WHEREAS, as a condition to the closing (the "Closing") of the
sale of the GCHI shares, KCC and GROUP desire to be released and
indemnified from any and all claims which may be asserted against them
after the Closing under or based upon environmental laws (as defined
herein) solely by reason of having been the parent company of GCHI and its
subsidiaries; and
WHEREAS, in consideration of the Registration Statement and the
sale of the shares thereunder, GCHI is willing to grant such release and
indemnification to GROUP and KCC;
NOW, THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties hereto agree as follows:
1. Representation. GROUP and KCC each represents and warrants to
---------------
GCHI that it is not aware of any pending or threatened claim against GCHI
or its subsidiaries Giant Cement Company, Keystone Cement Company or Giant
Resource Recovery Company, Inc. (collectively, the "Subsidiaries") by any
governmental agency (whether federal, state or local) or by any private
party except for any claim deriving from the matters disclosed in the
section "Business-Legal Proceedings" and "Business-Environmental Matters"
in the preliminary prospectus, dated August 31, 1994, to Amendment No. 4 to
the Registration Statement. Nothing in this Agreement shall release or
require indemnification by GCHI with respect to a claim which was known by
KCC or GROUP in breach of this representation.
2. Release. Upon the Closing, GCHI shall release and forever
--------
discharge KCC and GROUP, and their respective officers, directors,
employees and agents solely in such capacities with KCC and/or GROUP
(collectively, the "Releasees"), from every claim, liability, demand,
obligation, cost, expense, damage, action or cause of action (collectively,
the "Claim") which GCHI or the Subsidiaries may have against any Releasee,
whether known or unknown, direct or contingent, by reason of any matter,
cause or thing whatsoever, from the beginning of time to the Closing, with
respect to any matter or arising out of or alleging or based upon any
federal, state or local law (including common law), regulation and
ordinance relating to air and water quality, as well as to the handling,
treatment and storage of and disposal of wastes (the "Environmental Laws")
instituted by reason of KCC and/or GROUP having been the "parent company"
or "controlling person" of GCHI or one of the Subsidiaries prior to the
Closing; provided, however, that a Releasee shall not be released hereunder
if the action or failure to act which gave rise to the Claim was caused by
its or his gross negligence or willful misconduct.
3. Indemnification. At any time or from time to time after the
----------------
Closing, GCHI shall indemnify, defend and hold harmless KCC, GROUP and all
other Releasees, as defined in Section 2 herein (the "Indemnitees") from
and against all losses, claims, damages, costs, expenses (including
attorneys' fees and disbursements), liabilities, judgments or amounts paid
in investigation or settlement incurred by or asserted against any of the
Indemnitees in an action or threatened action or investigation brought by
any governmental agency or private party in connection with any matter or
arising out of or alleging violations of or based upon Environmental Laws
by reason of actions taken or should have been taken by GCHI or one of the
Subsidiaries prior to the Closing and instituted against the Indemnitee by
reason of KCC and/or GROUP having been the "parent company" or "controlling
person" of GCHI or one of the Subsidiaries prior to the Closing; provided
however, that an Indemnitee shall not be entitled to indemnification
hereunder if the loss or damage which gave rise to the action or
investigation was caused by its or his gross negligence or willful
misconduct. An Indemnitee shall give prompt notice to GCHI upon having
knowledge of any matter which may give rise to a claim for indemnification
hereunder; provided, however, GCHI shall not be relieved of its obligations
hereunder if such Indemnitee's failure to give notice to GCHI does not
materially prejudice GCHI's rights with respect to the matter as to which
indemnification may be sought. An Indemnitee shall have the right to
settle any matter and be entitled to indemnification hereunder upon giving
notice of such settlement to GCHI and obtaining its writtten consent, which
consent shall not be unreasonably withheld.
4. Miscellaneous.
--------------
4.01 Entire Agreement. This Agreement sets forth the entire
-----------------
agreement among the parties hereto with respect to the matters herein, and
cannot be amended, modified or terminated except by an agreement in writing
executed by the parties hereto.
4.02 Severability. Should any provision of this Agreement be
-------------
declared or determined by any court to be illegal or invalid, the validity
of the remaining parts, terms or provisions shall not be affected thereby,
and such illegal or invalid part, term or provision shall be deemed not to
be part of this Agreement.
4.03 Survival. The obligations of GCHI in this Agreement shall
---------
survive for the period of the respective statute of limitations under the
applicable environmental laws.
4.04 Governing Law. This Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of Delaware.
4.05 Notices. Any notice, request, demand or other communication
--------
given under this Agreement must be in writing and shall be delivered
personally or sent by facsimile, express mail or certified or registered
mail, to the following addresses:
To KCC or GROUP: GIANT GROUP, LTD.
150 El Camino
Beverly Hills, California 90212
Attn: Burt Sugarman, Chairman
(310) 273-5249 (FAX)
To GCHI: Giant Cement Holding, Inc.
P. O. Box 218
Highway 453 and I-26
Harleyville, S. C. 29448
Attn: Terry L. Kinder, VP
(803) 496-5071 (FAX)
or to such other address as any party hereto may duly give to the others.
4.06 Binding. This Agreement shall be binding upon the parties
--------
hereto, and their respective successors and assigns.
4.07 Counterparts. This Agreement may be executed in any number of
-------------
counterparts, each of which shall be deemed an original and all of which
shall constitute a single document.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
GIANT GROUP, LTD.
By: /s/ David Gotterer
------------------
David Gotterer,
Vice Chairman
KCC DELAWARE COMPANY
By: /s/ Terry Kinder
------------------
Terry L. Kinder,
Vice President
GIANT CEMENT HOLDING, INC
By: /s/ Terry Kinder
------------------
Terry L. Kinder,
Vice President
