<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
GIANT GROUP, LTD.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
LOGO
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 12, 1996
To the Stockholders of
GIANT GROUP, LTD.:
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of GIANT GROUP, LTD. (the "Company") will be held at the offices of
Christensen, White, Miller, Fink, Jacobs, Glaser & Shapiro, LLP, 2121 Avenue of
the Stars, 18th Floor, Los Angeles, California 90067 on July 12, 1996 at 9:30
a.m. (local time), for the following purposes:
(1) To elect a Board of four directors;
(2) To consider and vote upon a proposal to adopt the Company's 1996
Employee Stock Option Plan;
(3) To consider and vote upon a proposal to adopt the Company's 1996 Stock
Option Plan for Non-Employee Directors;
(4) To consider and vote upon a proposal to amend the Company's Certificate
of Incorporation to authorize a new class of non-voting Class A Common
Stock, $.01 par value per share;
(5) To ratify the appointment of Arthur Andersen LLP as the Company's
independent auditors for fiscal 1996; and
(6) To transact such other business as may properly come before the Meeting
and any adjournment(s) or postponements(s) thereof.
A Proxy Statement describing matters to be considered at the Meeting is
attached to this Notice. Only stockholders of record at the close of business on
June 6, 1996, will be entitled to notice of and to vote at the Meeting.
You are cordially invited to attend the Meeting.
By Order of the Board of Directors
/s/ CATHY WOOD
------------------------------
CATHY WOOD, Secretary
Beverly Hills, California
June 10, 1996
IMPORTANT
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE MARK, DATE
AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE SELF-ADDRESSED, POSTAGE PREPAID
ENVELOPE WHICH HAS BEEN PROVIDED FOR YOUR CONVENIENCE. IN THE EVENT YOU ATTEND
THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR SHARES IN PERSON.
<PAGE> 3
GIANT GROUP, LTD.
150 EL CAMINO DRIVE, SUITE 303
BEVERLY HILLS, CALIFORNIA 90212
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 12, 1996
GENERAL
This Proxy Statement and the accompanying proxy card are furnished in
connection with the solicitation of proxies by the Board of Directors of GIANT
GROUP, LTD., a Delaware corporation (the "Company"), for use at its Annual
Meeting of Stockholders (the "Meeting"), and any adjournment(s) or postponement
(s) thereof. The Meeting is to be held on July 12, 1996, at 9:30 a.m. (local
time) at the offices of Christensen, White, Miller, Fink, Jacobs, Glaser &
Shapiro, LLP, 2121 Avenue of the Stars, 18th Floor, Los Angeles, California
90067. The approximate date of the mailing of this Proxy Statement and
accompanying proxy card to the Company's stockholders is June 10, 1996.
In an effort to have as large a representation at the Meeting as possible,
proxy solicitation may be made personally or by telephone or telegram by
officers or employees of the Company, without added compensation, or by Morrow &
Company, which has been retained by the Company for a fee of $7,500 plus
expenses. The Company will reimburse brokers, banks and other custodians,
nominees and fiduciaries for their expenses in sending proxy materials to
beneficial owners.
RECORD DATE AND VOTING SECURITIES
The close of business on June 6, 1996 (the "Record Date"), has been fixed
as the Record Date for the determination of the stockholders of the Company
entitled to notice of and to vote at the Meeting. As of the Record Date, the
Company had outstanding 3,933,255 shares of Common Stock, par value $.01 per
share (the "Common Stock"). Each share of Common Stock entitles the record
holder thereof to one vote on all matters properly coming before the Meeting.
PRINCIPAL HOLDERS
The following lists the only stockholders who, to the knowledge of
management of the Company, based upon filings with the Securities and Exchange
Commission (the "SEC"), are the beneficial owners of more than 5% of the
outstanding shares of Common Stock.
<TABLE>
<CAPTION>
NAME & ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) CLASS(2)
---------------------------------------------------- ----------------------- ----------
<S> <C> <C>
Burt Sugarman....................................... 2,988,672 shares(3) 54.0%
150 El Camino Drive
Beverly Hills, CA 90212
Dimensional Fund Advisors, Inc...................... 369,250 shares(4) 9.4%
1299 Ocean Avenue
Santa Monica, CA 90401
John A. Levin & Co., Inc............................ 227,000 shares(5) 5.8%
One Rockefeller Plaza
New York, NY 10020
</TABLE>
- ---------------
(1) Under the rules of the SEC, a person is deemed to be the beneficial owner of
a security if such person has or shares the power to vote or to direct the
voting of such security, or the power to dispose or to direct the
disposition of such security. A person is also deemed to be the beneficial
owner of any securities of which that person has the right to acquire
beneficial ownership within 60 days as well as any securities owned by
<PAGE> 4
such person's spouse, children or other relatives living in the same house.
Unless otherwise indicated, the named person has sole voting and investment
power with respect to the shares held by them.
(2) Computed on the basis of 3,933,255 shares of Common Stock issued and
outstanding as of June 6, 1996.
(3) Includes 1,599,202 shares underlying presently exercisable stock options,
does not include 20,550 shares owned by Mr. Sugarman's spouse and 2,000
shares held as custodian of his minor child, as to which shares he disclaims
beneficial ownership.
(4) As reported in a Schedule 13G, dated February 7, 1996, Dimensional Fund
Advisors, Inc. ("Dimensional"), a registered investment advisor, is deemed
to have beneficial ownership of 369,250 shares of Common Stock as of
December 31, 1995, all of which shares are held in portfolios of DFA
Investment Dimensions Group Inc., a registered open-end investment company,
or in series of the DFA Investment Trust Company, a Delaware business trust,
or the DFA Group Trust and DFA Participation Group Trust, investment
vehicles for qualified employee benefit plans, all of which Dimensional
serves as investment manager. Dimensional disclaims beneficial ownership of
all such shares.
(5) The Company is informed that John A. Levin & Co., Inc., a registered
investment adviser, as of December 31, 1995 beneficially owned 227,000
shares.
2
<PAGE> 5
ELECTION OF DIRECTORS
[PROPOSAL NO. 1]
NOMINEES
At the Meeting, four directors are to be elected to serve until the Annual
Meeting of Stockholders in 1997 and until their successors are elected and
qualified. The Board of Directors has nominated Burt Sugarman, David Gotterer,
Terry Christensen and David Malcolm.
The Board of Directors has no reason to expect that any of the nominees
will be unable to stand for election. In the event that a vacancy among the
original nominees occurs prior to the Meeting, the proxies will be voted for a
substitute nominee or nominees named by the Board of Directors and for the
remaining nominees.
The following table sets forth information as of the Record Date about each
nominee for director and the ownership of equity securities by all directors and
executive officers of the Company as a group:
<TABLE>
<CAPTION>
SHARES AND
PERCENT OF
DIRECTOR COMMON STOCK
AGE SINCE OWNED(1)
--- -------- --------------
<S> <C> <C> <C>
BURT SUGARMAN................................................. 57 1982 2,988,672 shs.(2)
Mr. Sugarman has been Chairman of the Board of the Company 54.0%
since 1983, and President and Chief Executive Officer since
May 1985. Mr. Sugarman has been Chairman of the Board of
Rally's Hamburgers, Inc. (NASDAQ) ("Rally's"), an operator
and franchisor of double drive-through hamburger restaurants
in which the Company has a substantial investment, since
November 1994, having served as its Chairman of the Board
and Chief Executive Officer from 1990 through February 1994.
DAVID GOTTERER................................................ 67 1984 175,875 shs.(3)(5)
Mr. Gotterer has been Vice Chairman of the Company since May 4.4%
1986. He has been a senior partner in the accounting firm of
Mason & Company, LLP, New York, New York, for more than the
past five years. He is a Director of Rally's.
TERRY CHRISTENSEN............................................. 55 1994 7,167 shs.(4)(5)
Mr. Christensen has been a partner in the law firm *
Christensen, White, Miller, Fink, Jacobs, Glaser & Shapiro,
LLP, Los Angeles, California, for more than the last five
years. He is a Director of MGM Grand, Inc. (New York Stock
Exchange) and Rally's.
DAVID MALCOLM................................................. 43 -- 1,000 shs.(5)
Mr. Malcolm has been Chairman of the Board of Suncoast *
Financial Mortgage Corporation, mortgage banking and real
estate development since 1978, President of West Coast
Restaurant Enterprises, an owner operator of 15 Rally's
restaurants, since February 1995, and Executive Vice
President of Grigsby Brandford & Co., Inc., investment
banking, since February 1994. Mr. Malcolm is also a
Commissioner on the San Diego Unified Port District and a
Commissioner on the California Commission on Judicial
Performance.
All Directors and Executive Officers as a group (5 persons)...
3,192,047 shs.(5)
56.8%
</TABLE>
- ---------------
* indicates less than 1%
(1) Unless otherwise indicated, the beneficial owner has both sole voting and
sole investment power with respect to his shares. Computed on the basis of
3,933,255 shares of Common Stock outstanding as of June 6, 1996.
3
<PAGE> 6
(2) Includes 1,599,202 shares underlying presently exercisable stock options.
Does not include 20,550 shares of Common Stock owned by Mr. Sugarman's
spouse and 2,000 shares of Common Stock held as custodian for his minor
child, as to which shares he disclaims beneficial ownership.
(3) Includes 63,375 shares that Mr. Gotterer may purchase under presently
exercisable stock options, but excludes 63,375 shares underlying options
held by Mr. Gotterer, as to which shares he disclaims beneficial ownership
since a business partner is entitled to the beneficial ownership of such
shares upon any exercise of such options.
(4) Includes 6,667 shares underlying presently exercisable stock options.
(5) This total includes 1,687,577 shares which such executive officers and
directors may acquire upon the exercise of presently exercisable stock
options, but does not include shares which Messrs. Gotterer, Christensen and
Malcolm may acquire upon the exercise of options granted pursuant to the
1996 Stock Option Plan for Non-Employee Directors (the "Director Plan"),
which plan has been adopted by the Board of Directors subject to stockholder
approval. If the stockholders approve the Director Plan, each of Messrs.
Gotterer, Christensen and Malcolm will receive options to purchase 10,000
shares of Common Stock pursuant to the Director Plan.
As of the Record Date, directors and officers of the Company, beneficially
owned the following shares of Common Stock of Rally's, in which the Company has
a significant equity investment. Mr. Sugarman -- 130,000 shares which may be
acquired under stock options exercisable within 60 days, but excluding (i) 2,000
shares held as custodian for his minor child, as to which he disclaims
beneficial ownership, (ii) 4,312,063 shares owned by the Company, of which Mr.
Sugarman may be deemed to be a controlling person, and (iii) 51,500 shares
beneficially owned by Mr. Sugarman's spouse, Mary Hart Sugarman (including
20,000 shares underlying presently exercisable options), as to which shares he
disclaims beneficial ownership; Mr. Gotterer -- 44,000 shares (including 22,500
shares which may be acquired under stock options exercisable within 60 days) but
excluding 22,500 shares underlying options held by Mr. Gotterer, as to which
shares he disclaims beneficial ownership since a business partner is entitled to
the beneficial ownership of such shares upon any exercise of such options; and
Mr. Christensen -- 2,000 shares.
Messrs. Sugarman, Gotterer and Christensen have been granted, subject to
the approval of Rally's stockholders, options to purchase 150,000, 172,500 and
150,000 shares of Rally's Common Stock, respectively, pursuant to its Stock
Option Plan for Non-Employee Directors. Such holdings (including the shares
underlying options which are subject to approval of Rally's stockholders) do
not, in the aggregate, exceed 4.8% of the outstanding Rally's Common Stock.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During the 1995 fiscal year, the Board of Directors of the Company met on
thirteen occasions and acted by unanimous consent on one occasion. Each of the
directors attended all meetings of the Board of Directors and the meetings held
by all committees of the Board on which such director served, during the periods
that such director served.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has an Executive Committee, a Compensation Committee, an Option
Committee and an Audit Committee. The members of each Committee are appointed by
the Board of Directors for a term beginning after the first regular meeting of
the Board of Directors following the Annual Meeting of Stockholders and until
their respective successors are elected and qualified.
The Executive Committee, consisting of Messrs. Sugarman and Gotterer, met
formally on two occasions during 1995, and its members consulted regularly on an
informal basis in connection with the functions of this Committee. This
Committee was established to generally manage the day-to-day business affairs of
the Company between regular Board meetings.
The Compensation Committee presently consists of Messrs. Christensen and
Gotterer. The Compensation Committee met on one occasion during 1995. See
"Compensation Committee Report."
4
<PAGE> 7
The Option Committee presently consists of Messrs. Christensen and
Gotterer. The Option Committee met on two occasions in 1995. The Option
Committee administers the Company's stock option plans.
The Audit Committee is responsible for exercising such supervisory control
over the internal auditing and accounting procedures, practices and personnel of
the Company as the Audit Committee deems necessary or advisable and makes
recommendations annually to the Board of Directors concerning the appointment of
the Company's independent auditors for the ensuing fiscal year. The members of
the Audit Committee are Terry Christensen and Robert Wynn. Mr. Wynn is not
standing for re-election as a director. The Audit Committee met on one occasion
during 1995, and its members consulted regularly on an informal basis in
connection with functions of this Committee.
There is no standing nominating committee or other committee performing
similar functions.
COMPENSATION OF DIRECTORS
Non-employee directors of the Company are compensated at a rate of $10,000
per annum plus $500 for each meeting of the Board of Directors attended and will
be eligible to participate in the Company's proposed 1996 Directors Plan.
Members of the Audit Committee are compensated for their services thereon at the
rate of $250 per meeting attended.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation for services in all capacities to the Company for the
three years ended December 31, 1995, 1994 and 1993 of those persons who were (1)
the Chief Executive Officer and (2) executive officers of the Company during
1995 and whose cash compensation exceeded $100,000, for services performed by
such persons for the Company during 1995 (collectively, the "Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION AWARDS
ANNUAL COMPENSATION -----------------------------------------
------------------------------------------- SECURITIES
OTHER ANNUAL RESTRICTED UNDERLYING ALL OTHER
SALARY BONUS COMPENSATION STOCK OPTION/SARS COMPENSATION
NAME & PRINCIPAL POSITION YEAR $ $ $ AWARD(S) # $
- ------------------------- ---- --------- ------- ------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Burt Sugarman............ 1995 1,000,000 -0- 26,774(1) -- 1,899,202(2) 25,000(3)
Chairman of The Board, 1994 1,000,000 600,000 76,579(1) -- -0- 174,038(3)
President and Chief 1993 998,000 -0- 78,121(1) -- -0- 275,000(3)
Executive Officer
Cathy L. Wood............ 1995(4) 166,123 -0- -0- -- 55,000(5) -0-
Vice President, Secretary
and Chief Financial
Officer
</TABLE>
- ---------------
(1) Amounts represent the value of use of the Company's airplane and automobile.
(2) 1,899,202 options held by Mr. Sugarman exercisable at $6.33 per share and
expiring in 1996, were canceled and an identical number of new options were
issued to him at $6.75, which was then the current market price. In 1996,
Mr. Sugarman exercised options with respect to 300,000 shares.
(3) Represents the following amounts paid to Mr. Sugarman by Rally's: $25,000,
$174,038 and $275,000 for services as Chairman and Chief Executive Officer
of Rally's in 1995, 1994 and 1993, respectively. In February 1994, Mr.
Sugarman ceased serving as Chairman and Chief Executive officer of Rally's,
however, in November 1994, Mr. Sugarman reassumed the duties of Chairman.
(4) Ms. Wood joined the Company in January 1995.
(5) Ms. Wood was granted 45,000 options in March 1995 and 10,000 options in July
1995.
5
<PAGE> 8
EMPLOYMENT CONTRACTS
Mr. Sugarman is employed as Chairman of the Board, President and Chief
Executive Officer of the Company pursuant to an employment agreement expiring
December 31, 1998 pursuant to which Mr. Sugarman receives an annual base salary
of $1,000,000, with an annual bonus in an amount determined from year to year by
the Compensation Committee of the Board of Directors, at its discretion, and
certain additional benefits. The employment agreement is terminable prior to
December 31, 1998 (1) by the Company for cause (as defined therein) and (2) by
Mr. Sugarman (a) for cause (as defined therein), (b) at any time for any reason,
after December 31, 1995 or (c) if Mr. Sugarman ceases to own or control at least
10% of the Common Stock of the Company. Should the employment agreement be
terminated by the Company without cause or by Mr. Sugarman for cause, Mr.
Sugarman shall be entitled to continuation of all compensation and benefits
through December 31, 1998, or for 24 months from termination, whichever period
is longer. Pursuant to the employment agreement, Mr. Sugarman has agreed during
the term of the agreement, not to render services to, or plan or organize, a
business which is competitive with or similar to the business of the Company or
any of its subsidiaries.
OPTION PLANS
The Company had a 1985 Incentive Stock Option Plan (the "Incentive Plan")
and a 1985 Non-Qualified Stock Option Plan (the "Non-Qualified Plan"). Both the
Incentive Plan and the Non-Qualified Plan were terminated in August 1995 and,
thereafter, no further grants of options will be made under such plans. The
Incentive Plan had provided for the grant of options to purchase an aggregate of
750,000 shares of Common Stock, of which no options are outstanding and options
to purchase 6,000 shares have been exercised. The Non-Qualified Plan had
provided for the grant of options to purchase 3,000,000 shares of GIANT Common
Stock. As of December 31, 1995, options to purchase 2,126,000 were outstanding
and options for 7,500 shares have been exercised. No options were exercised in
1995 under either plan. During 1995, 10-year options, vesting over 30 months,
for 100,000 shares of GIANT Common Stock were granted to directors and officers
of the Company under the Non-Qualified Plan. In addition, 2,026,000 options held
by Messrs. Sugarman and Gotterer, exercisable at $6.33 per share and expiring in
1996, were canceled and an identical number of new options were issued to such
persons. Such new options have an exercise price of $6.75 per share, which was
the fair market value of the shares at the time of the grant, and will expire in
2005. The new options (like the canceled options) are fully vested. There have
been no other option repricings during the last ten years.
FISCAL YEAR END OPTION VALUE
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED IN
THE MONEY
NUMBER OF UNEXERCISED OPTIONS OPTIONS AT
AT DECEMBER 31,
SHARES DECEMBER 31, 1995 1995(1)
ACQUIRED ON VALUE ----------------------------- --------------
NAME EXERCISE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE
- --------------------- ----------- ----------- ----------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Burt Sugarman........ -0- -0- 1,899,202 -0- $4,510,605
Cathy L. Wood........ -0- -0- 15,000 40,000 31,875
</TABLE>
- ---------------
(1) Based upon the closing price of the Common Stock on December 31, 1995, minus
the option exercise price of (1) $6.75 per share for Mr. Sugarman and (2)
$7.00 per share for Ms Wood. Mr. Sugarman exercised options to purchase
300,000 shares of Common Stock in February 1996. The value realized, i.e.,
the difference between the aggregate closing price of such shares on the
exercise date and the aggregate exercise price was $413,000.
6
<PAGE> 9
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------------------------
% OF TOTAL
OPTIONS/SARS
GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION GRANT DATE
NAME GRANTED # FISCAL YEAR $/SH DATE PRESENT VALUE($)(1)
- ------------------------------- ------------ ------------ ----------- ---------- -------------------
<S> <C> <C> <C> <C> <C>
Burt Sugarman.................. 1,899,202 97.2% $6.75 3/15/2005 $ 8,319,000
Cathy L. Wood.................. 45,000 2.3% 7.00 2/28/2005 205,650
10,000 .5% 6.88 7/31/2005 43,600
</TABLE>
- ---------------
(1) Options are granted at market price on the day of the grant. The proxy rules
require that either potential realizable values at assumed annual stock
price appreciation rates or present values at the grant date be assigned to
options. The Company has chosen a present value method known as the
"Black-Scholes" Option Pricing Model. The assumptions used to arrive at the
values shown were as follows: expected volatility-38.8%, risk-free rate of
return-7.4%, 7.3% and 6.6% for the February 28, 1995, March 15, 1995 and
July 31, 1995 issuances, respectively, dividend yield-0% and time of
exercise-ten years. The choice of the Black-Scholes valuation method does
not reflect any belief by the Company's management that such method, or any
other valuation method, can accurately assign a value to an option at the
grant date.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1995, the Compensation Committee and Option Committee of the Board
of Directors consisted of David Gotterer and Terry Christensen. David Gotterer
is a Senior Partner in the accounting firm of Mason & Company, LLP, which
received $158,364 from the Company for rendering consulting, financial and
accounting services to the Company during 1995. Terry Christensen is a partner
in the law firm of Christensen, White, Miller, Fink, Jacobs, Glaser & Shapiro,
LLP, which represents the Company and Rally's in certain corporate and
litigation matters. Both Mr. Gotterer and Mr. Christensen are directors of
Rally's.
COMPENSATION COMMITTEE REPORT
In 1995, the Compensation Committee and Option Committee of the Board of
Directors consisted of Terry Christensen and David Gotterer. Mr. Gotterer is
Vice-Chairman of the Company. The Compensation Committee and the Option
Committee consist of the same directors so that the same persons can administer
all aspects of the Company's compensation programs.
The Compensation Committee is responsible for developing and making
recommendations to the Company with respect to executive officer compensation
policies addressing such matters as salaries, bonuses, incentive plans, benefits
and overall compensation. The Compensation Committee also determines the
compensation to be paid to the Chief Executive Officer and each of the other
executive officers of the Company.
The objectives of the Compensation Committee in determining the type and
amount of executive officer compensation are to provide a level of compensation
which allows the Company to attract and retain competent executives. The
Compensation Committee further believes that the Company's compensation programs
should provide personnel with a financial interest in the Company similar to the
interests of the Company's stockholders and that there should be a correlation
between the performance of the Company and individual performance and
compensation. During 1995, the Compensation Committee did not award any bonuses
to either of the Named Executives.
Mr. Sugarman, the Chief Executive Officer of the Company, is eligible to
participate in the same compensation plans available to the Company's other
executives. In 1995, Mr. Sugarman received base compensation of $1,000,000
pursuant to the terms of his employment agreement. The Compensation Committee
did not award Mr. Sugarman a discretionary bonus for 1995. Options to purchase
1,899,202 shares of Common Stock held by Mr. Sugarman were scheduled to expire
in 1995. In order to provide the Chief
7
<PAGE> 10
Executive Officer with continued incentive to exert his best efforts on behalf
of the Company through the opportunity to benefit from appreciation in the value
of the Common Stock, the Option Committee canceled such options (which had an
exercise price of $6.33 per share) and granted an identical number of new
options, expiring in 2005, at an exercise price of $6.75 per share, the fair
market value of the shares on the date of grant.
DAVID GOTTERER
TERRY CHRISTENSEN
PERFORMANCE GRAPHS
The following graph compares the yearly percentage change in the Company's
cumulative total stockholder return on its Common Stock for the five fiscal
years ended December 31, 1995, based upon the market price of the Company's
Common Stock as reported on the New York Stock Exchange with the cumulative
total return (and assuming reinvestment of dividends) with (i) the S&P 500 Stock
Index and (ii) an index of a group of companies in the cement industry (the
former principal business of the Company until October 1994) selected by the
Company, consisting of Medusa Corporation, Lafarge Corporation and Southdown,
Inc.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN AMONG GIANT GROUP LTD.,
S&P 500 INDEX AND PEER GROUP INDEX
TOTAL RETURN TO SHAREHOLDERS
<TABLE>
<CAPTION>
MEASUREMENT PERIOD GIANT GROUP, S&P 500
(FISCAL YEAR COVERED) LTD. PEER GROUP INDEX
<S> <C> <C> <C>
1990 100 100 100
1991 137.68 102.15 130.48
1992 197.73 112.88 140.46
1993 186.86 215.84 154.62
1994 117.33 161.02 156.66
1995 158.62 180.41 215.54
</TABLE>
In October 1994, the Company sold its cement operations which were its
principal business activity since prior to 1990. Therefore, the table above is
not indicative of future performance of the Company's Common Stock.
8
<PAGE> 11
The following graph compares the yearly percentage change in the Company's
cumulative total stockholder return on its Common Stock for the five years ended
December 31, 1995, based upon the market price of the Company's Common Stock as
reported on the New York Stock Exchange with the cumulative total return (and
assuming reinvestment of dividends) with (i) the NYSE Stock Index and (ii) an
index of a group of companies in the fast food industry selected by the Company,
consisting of CKE Restaurants, Inc., Flagstar Companies, Inc., Krystal Company,
Checkers Drive In Restaurants, Foodmaker, Inc., and Sonic Corporation. The
Company, through its equity investment in Rally's, is involved in the fast food
industry.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN AMONG GIANT GROUP, LTD.
NYSE STOCK MARKET AND PEER GROUP INDEX
TOTAL RETURN TO SHAREHOLDERS
<TABLE>
<CAPTION>
MEASUREMENT PERIOD GIANT GROUP, NYSE STOCK
(FISCAL YEAR COVERED) LTD. PEER GROUP INDEX
<S> <C> <C> <C>
12/31/90 100.000 100.000 100.000
12/31/91 137.681 141.291 131.321
12/31/92 197.826 203.282 142.808
12/31/93 186.956 141.878 157.712
12/31/94 117.391 72.218 157.678
12/31/95 158.696 74.731 213.751
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In July 1991, Mr. Sugarman, without admitting or denying the allegations in
a complaint filed by the Securities Exchange Commission (the "SEC"), consented
to an Order of the United States District Court, District of Columbia,
permanently enjoining him from violating Section 17(a)(2) of the Securities Act
of 1933 and paid $600,000, including pre-consent decree interest of $63,000. The
SEC complaint had alleged that Mr. Sugarman violated Section 17(a)(2) in
connection with purchases in October 1989 made by the Company and others of
shares of Rally's common stock. In 1991, the Company indemnified Mr. Sugarman
for amounts paid by him to the SEC and for his expenses in connection with the
SEC investigation.
David Gotterer, Vice Chairman and a Director of the Company and of Rally's,
is a Senior Partner in the accounting firm of Mason & Company, LLP, which
received $158,364 from the Company for rendering consulting, financial and
accounting services to the Company during 1995.
9
<PAGE> 12
Terry Christensen, a Director of the Company and Rally's, is a partner in
the law firm of Christensen, White, Miller, Fink, Jacobs, Glaser & Shapiro, LLP,
which represents the Company and Rally's in certain corporate and litigation
matters.
ADOPTION OF 1996 EMPLOYEE STOCK OPTION PLAN
[PROPOSAL NO. 2]
On May 20, 1996, the Board of Directors, pursuant to the recommendation of
the Compensation Committee and Option Committee and subject to the approval of
the stockholders, adopted the 1996 Employee Stock Option Plan (the "1996 Plan").
The Board of Directors believes that the 1996 Plan will benefit the Company by
helping to attract, motivate and retain qualified executive, administrative and
professional employees. Consistent with the Company's compensation objectives,
rewards under the 1996 Plan are dependent upon those factors which directly
benefit the Company's stockholders and appreciation in the market value of the
Common Stock. A copy of the 1996 Plan is attached hereto as Exhibit A. The
following summary of the principal features of the 1996 Plan is qualified in its
entirety by reference to Exhibit A.
The affirmative vote of the holders of at least a majority of the shares of
Common Stock voted at the Annual Meeting is required to approve the Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE ADOPTION OF THE 1996 PLAN
DESCRIPTION OF THE 1996 PLAN
The Plan will cover up to an aggregate of 250,000 shares of Common Stock,
and has a ten-year duration. The 1996 Plan is administered by the Option
Committee, whose members are appointed by the Board of Directors. All employees
of the Company and its subsidiaries are eligible to receive options. As of May
20, 1996, there were approximately nine employees currently eligible to
participate in the option plan. The exercise price in each instance is not less
than 100% of the fair market value of the Common Stock on the date of grant,
subject to any repricing at the option of the Option Committee, and is payable
in cash or shares of previously acquired Common Stock having a fair market value
equal to the option exercise price. The vesting schedule and term (which shall
not exceed ten years) of options granted under the 1996 Plan is at the
discretion of the Option Committee. Generally, options terminate six months
(three months in the case of an incentive option) after termination of the
optionee's employment for any reason other than the optionee's death and one
year after termination of the optionee's employment due to death. Options are
non-transferable by the holder other than by will or laws of descent and
distribution.
In the event any change is made in the Company's capitalization that
results from a stock dividend, recapitalization, reorganization, merger,
consolidation, split-up, combination or exchange of shares of any similar change
affecting the Common Stock, appropriate adjustment, as determined by the Option
Committee, will be made in the exercise price and in the number and class of
shares subject to the option.
In the event of a sale of all or substantially all of the assets of the
Company or the merger of the Company with or into another corporation, holders
of outstanding options will have the right to receive, upon exercise of the
option and payment of the exercise price, the same consideration which the
stockholders of the Company received pursuant to such transaction.
The Board of Directors may amend or terminate the 1996 Plan from time to
time in such respects as the Board may deem advisable; provided that any
amendment requiring stockholder approval pursuant to Rule 16b-3 (as in effect
from time to time) under the Securities Exchange Act of 1934, as amended, shall
not be effective unless such approval is obtained.
An optionee who is granted an incentive option generally will not recognize
taxable income either upon the grant or the exercise of an incentive option,
although the exercise may be subject to the alternative minimum tax. No
deduction will ordinarily be available to the Company as a result of the grant
or exercise of
10
<PAGE> 13
incentive options. Upon the sale or exchange of the shares underlying an
incentive option more than two years after the date of grant and one year after
the date of exercise, any gain or loss will be treated as long-term capital gain
or loss. If these holding periods are not satisfied, the optionee will recognize
ordinary income at the time of sale or exchange equal to the difference between
the exercise price and the lower of (i) the fair market value of the shares of
the date of exercise or (ii) the sale price of the shares. Any gain recognized
on such a premature disposition of shares in excess of the amount treated as
ordinary income will be characterized as long-term or short-term capital gain,
depending on the holding period.
An optionee granted nonqualified stock options will not recognize any
taxable income at the grant of the option, but will generally realize ordinary
income for federal income tax purposes at the time of exercise of such options
equal to the difference between the fair market value of the Common Stock on the
date of exercise and the exercise price. Any taxable income recognized in
connection with an option exercised by an optionee who is an employee of the
Company will be subject to tax withholding by the Company. Upon resale of such
shares by the optionee, any difference between the sale price and the optionee's
exercise price, to the extent not recognized as taxable income as described
above, will be treated as long-term or short-term capital gain or loss,
depending upon on the holding period. The Company will be entitled to a tax
deduction in the same amount as the ordinary income recognized by the optionee
with respect to shares acquired upon exercise of a nonstatutory option.
The foregoing is only a summary of certain effects of federal income
taxation upon the optionee and the Company with respect to the grant and
exercise of options under the 1996 Plan, does not purport to be complete and
does not discuss the tax consequences of the optionee's death or the income tax
laws of any local, state or foreign jurisdiction in which any optionee may
reside.
ADOPTION OF 1996 STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS
[PROPOSAL NO. 3]
On May 20, 1996, the Board of Directors, pursuant to the recommendation of
the Compensation Committee and the Option Committee and subject to the approval
of the stockholders, adopted the Director Plan. The Board of Directors believes
that the Director Plan will benefit the Company by helping to attract and retain
qualified persons to serve as directors and by providing an incentive to
directors whose rewards are dependent upon those factors which directly benefit
the Company's stockholders and appreciation in the market value of the Common
Stock. A copy of the Director Plan is attached hereto as Exhibit B. The
following summary of the principal features of the Director Plan is qualified in
its entirety by reference to Exhibit B.
The affirmative vote of the holders of at least a majority of the shares of
Common Stock voted at the Annual Meeting is required to approve the Director
Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE ADOPTION OF THE DIRECTOR PLAN
DESCRIPTION OF THE DIRECTOR PLAN
The Director Plan will cover up to an aggregate of 250,000 shares of Common
Stock, and has a ten-year duration. The Director Plan is administered by the
Option Committee, whose members are appointed by the Board of Directors.
Pursuant to the Director Plan, each Non-Employee Director of the Company,
as of May 20, 1996 (the "Adoption Date"), who is standing for reelection at the
Meeting, will be granted an option to purchase 10,000 shares of Common Stock
effective as of the Adoption Date. Each Non-Employee Director (other than
current Non-Employee Directors) who is elected or appointed subsequent to the
Adoption Date will be granted an option to purchase 10,000 shares of Common
Stock as of the date of such election or appointment. In addition, each Non-
Employee Director of the Company who is elected or appointed to the Executive
11
<PAGE> 14
Committee on July 12, 1996 shall be granted an additional option to purchase
10,000 shares of Common Stock, and each Non-Employee Director who is appointed
to the Executive Committee subsequent to July 12, 1996 shall be granted an
additional option to purchase 10,000 shares of Common Stock.
On each anniversary of the Adoption Date, or in the case of a Non-Employee
Director who is elected or appointed subsequent to the Adoption Date, on each
anniversary of the date of such election or appointment, each Non-Employee
Director shall be automatically granted an option to purchase 10,000 shares of
Common Stock, and each Non-Employee Director who is a member of the Executive
Committee shall be automatically granted an additional option to purchase 10,000
shares of Common Stock on the anniversary of the date of his election or
appointment to the Executive Committee. All such subsequent grants are subject
to availability of sufficient authorized shares of Common Stock. As of the
Adoption Date, there were two Directors eligible to participate in the Director
Plan.
The exercise price in each instance is not less than 100% of the fair
market value of the Common Stock on the date of grant, subject to any repricing
at the option of the Option Committee, and is payable in cash or shares of
previously acquired Common Stock having a fair market value equal to the option
exercise price. All options will have a five-year term and be immediately
exercisable. Options are non-transferable by the holder other than by will or
laws of descent and distribution.
In the event any change is made in the Company's capitalization that
results from a stock dividend, recapitalization, reorganization, merger,
consolidation, split-up, combination or exchange of shares or any similar change
affecting the Common Stock, appropriate adjustment, as determined by the Option
Committee, will be made in the exercise price and in the number and class of
shares subject to the option.
In the event of a sale of all or substantially all of the assets of the
Company or the merger of the Company with or into another corporation, holders
of outstanding options will have the right to receive, upon exercise of the
option and payment of the exercise price, the same consideration which the
stockholders of the Company received pursuant to such transaction.
The Board of Directors may amend or terminate the Director Plan from time
to time in such respects as it may deem advisable; provided that any amendment
requiring stockholder approval pursuant to Rule 16b-3 (as in effect from time to
time) under the Securities Exchange Act of 1934, as amended, shall not be
effective unless such approval is obtained.
Any Non-Employee Director granted options pursuant to the Director Plan
will not recognize any taxable income at the grant of the option, but will
generally realize ordinary income for federal income tax purposes at the time of
exercise of such options equal to the difference between the fair market value
of the Common Stock on the date of exercise and the exercise price. Upon resale
of such shares by the optionee, any difference between the sale price and the
optionee's exercise price, to the extent not recognized as taxable income as
described above, will be treated as long-term or short-term capital gain or
loss, depending upon on the holding period. The Company will be entitled to a
tax deduction in the same amount as the ordinary income recognized by the
optionee with respect to shares acquired upon exercise of a nonstatutory option.
The foregoing is only a summary of certain effects of federal income
taxation upon the optionee and the Company with respect to the grant and
exercise of options under the Director Plan, does not purport to be complete and
does not discuss the tax consequences of the optionee's death or the income tax
laws of any local, state or foregoing jurisdiction in which any optionee may
reside.
12
<PAGE> 15
The following table sets forth certain information with respect to stock
options granted pursuant to the Director Plan as of the Adoption Date to the
Company's Non-Employee Directors.
AMENDED PLAN BENEFITS
NONQUALIFIED STOCK OPTION PLAN
<TABLE>
<CAPTION>
NAME & POSITION DOLLAR VALUE ($)(1) NUMBER OF OPTIONS
-------------------------------------------------- ------------------- -----------------
<S> <C> <C>
David Gotterer.................................... $30,000 20,000(2)
Terry Christensen................................. 30,000 20,000(2)
David Malcolm..................................... 15,000 10,000
</TABLE>
- ---------------
(1) Based upon the difference between the exercise price of options granted on
May 20, 1996 ($7.625 per share), which is also assumed (for purposes of this
table) to be the exercise price of options to be granted on July 12, 1996,
and the closing price of the Common Stock of $9.125 per share, as reported
on the New York Stock Exchange Composite Tape on June 6, 1996.
(2) Includes options to acquire 10,000 shares to be granted on July 12, 1996.
PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO
AUTHORIZE NON-VOTING COMMON STOCK
[PROPOSAL NO. 4]
The Board of Directors has unanimously approved and declared advisable an
amendment to the Company's Certificate of Incorporation, as amended, which would
authorize 5,000,000 shares of Class A Common Stock, $.01 par value per share
(the "Class A Common Stock"). The proposed amendment would amend Clause A of
Article FOURTH of the Company's Certificate of Incorporation to read in its
entirety as follows:
"FOURTH: (A) The total number of shares of all classes of stock which
the Corporation shall have authority to issue is 19,500,000 shares, of which
2,000,000 shares are to be Preferred Stock, $.01 par value per share
(hereinafter referred to as "Preferred Stock"), 12,500,000 shares are to be
Common Stock, $.01 par value per share, and 5,000,000 shares are to be Class A
Common Stock, $.01 par value per share. Holders of Common Stock shall have the
right to cast one vote for each share held of record on all matters submitted to
a vote of the holders of Common Stock. Holders of Class A Common Stock shall not
have any voting rights on any matters (including without limitation the election
of directors) except to the extent required under applicable law. The Class A
Common Stock shall be in all respects identical to the Common Stock (except with
respect to voting rights), including without limitation rights to dividends and
distributions and treatment in a merger, reorganization, recapitalization or
similar corporate event except that, in the case of dividends or other
distributions payable in stock of the Corporation, including distributions
pursuant to stock splits or divisions, only shares of Class A Common Stock shall
be distributed with respect to the Class A Common Stock."
The Common Stock and the Class A Common Stock will be identical in all
respects, including without limitation rights to dividends and distributions and
treatment in a merger, a reorganization, recapitalization or similar corporate
events, except that each share of Common Stock will be entitled to one vote on
all matters submitted to stockholders and each share of Class A Common Stock
will have no voting rights (including with respect to the election of directors)
except to the extent required by applicable law and except that, in the case of
dividends or other distributions payable in stock of the Company, including
distributions pursuant to stock splits or divisions, only shares of Class A
Common Stock shall be distributed with respect to the Class A Common Stock.
Although the Company has no present plans or commitments for any of the
proposed of Class A Common Stock, the Board of Directors believes that the
issuance of such shares may prove to be advisable in the future, and the
availability of shares of Class A Common Stock will provide flexibility in
connection with future corporate transactions, including recapitalization,
acquisitions, financings, stock dividends, employee benefit plans or other
corporate purposes. Stockholders have no preemptive rights to purchase any of
such
13
<PAGE> 16
authorized but unissued shares of Common Stock or Class A Common Stock which may
be issued, and their respective interests in the Company could be diluted by
such issuance.
The affirmative vote of holders of a majority of all outstanding shares of
Common Stock entitled to vote at the Meeting is required to adopt the proposed
amendment to the Certificate of Incorporation increasing the authorized shares
of Common Stock and authorizing the Class A Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR AUTHORIZATION AND APPROVAL OF
THE PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION.
RATIFICATION OF AUDITORS
[PROPOSAL NO. 5]
Arthur Andersen LLP has been selected by the Board of Directors to serve as
the independent auditors for the Company for the year ending December 31, 1996.
This firm acted as auditors for the Company for the year ended December 31,
1995. A representative of Arthur Andersen LLP will be present at the Meeting and
will be given the opportunity to make a statement if he or she so desires and to
respond to appropriate questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR
FISCAL 1996.
Arthur Andersen LLP, which was engaged by the Company on January 29, 1996
as independent auditors to perform all procedures related to the 1996 year-end
audit, are the independent accountants for Rally's in which the Company has a
significant investment. The work of Coopers & Lybrand LLP as independent
auditors for the Company was terminated effective January 25, 1996. The decision
to change accountants was approved by the Audit Committee of the Board of
Directors.
During the two most recent fiscal years and subsequent interim period prior
to January 25, 1996, there have been no disagreements with Coopers & Lybrand LLP
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure or any reportable events. Coopers &
Lybrand LLP's report on the financial statements for the past two years
contained no adverse opinion or disclaimer of opinion and was not qualified or
modified as to uncertainty, audit scope or accounting principles. Coopers &
Lybrand LLP has furnished the Company with a letter addressed to the SEC stating
whether it agrees with the above statements. A copy of which was filed as an
exhibit to the Company's Form 8-K dated January 29, 1996.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1997 Annual Meeting
must be received by the Company for inclusion in its proxy statement and form of
proxy by February 11, 1997. To assure that a stockholder's proposal is included
in the proxy statement and form of proxy, it will be necessary for the
stockholder to comply with the regulations of the SEC governing inclusion of
such proposals in such documents. In addition, stockholders may directly
nominate persons for director only by complying with the following procedure set
forth in the Company's By-Laws: the stockholder must submit the names of such
persons in writing to the Secretary of the Company not less than 70 days nor
more than 90 days prior to the date of the preceding year's annual meeting. The
nominations must be accompanied by all information relating to such person that
is required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended, and the name, record
address, and class and number of shares of the Company owned by the stockholder
making the nomination. A stockholder may properly bring business before the
Annual Meeting of Stockholders only by complying with the following procedure
set forth in the Company's By-Laws: the
14
<PAGE> 17
stockholder must submit to the Secretary of the Company, not less than 70 days
nor more than 90 days prior to the date of the preceding year's annual meeting,
a written statement describing the business at the Annual Meeting, the name,
record address, and class and number of shares of the Company owned by the
stockholder making the submission, and a description of any material interest of
the stockholder in such business.
Any such proposal should be communicated in writing to the Secretary of the
Company at 150 El Camino Drive, Suite 303, Beverly Hills, California 90212.
VOTING PROCEDURES
At the Meeting, stockholders will be requested to act upon the matters set
forth in this Proxy Statement. If you are not present at the Meeting, your
shares can be voted only when represented by proxy. The shares represented by
your proxy will be voted in accordance with your directions if the proxy is
properly signed and returned to the Company at or before the Meeting. If no
instructions are specified in the proxy with respect to any proposal, the shares
represented thereby will be voted for the nominees for the Board of Directors
listed in this Proxy Statement. If any other matters shall properly come before
the Meeting, the enclosed proxy will be voted in accordance with the best
judgment of the persons voting such proxy.
A proxy may be revoked at any time prior to it being voted at the Meeting
by delivering to the Secretary of the Company a signed writing revoking the
proxy or a duly executed proxy bearing a later date, or by appearing and voting
in person at the Meeting. The mere presence at the Meeting of a person
appointing a proxy does not revoke the appointment. Please note that it is
important to date your proxy because the last dated proxy will revoke any
earlier dated proxies and will be the one that is voted at the Meeting.
A majority of the outstanding shares of Common Stock represented at the
Meeting, in person or by proxy, will constitute a quorum. The votes of
stockholders present in person or represented by proxy at the Meeting will be
tabulated by an inspector of election appointed by the Company. The four
nominees for directors of the Company who receive the greatest number of votes
cast by stockholders present in person or represented by proxy at the Meeting
and entitled to vote thereon will be elected directors of the Company. The
affirmative vote of the holders of a majority of the shares of Common Stock
represented at the Meeting is required to ratify the appointment of the
independent auditors. Abstentions will have no effect on the outcome of the vote
for the election of directors, but will have the effect of being cast against
each of proposals 2, 3, 4 and 5. Broker "non-votes" will have no effect on
proposals 2, 3 and 5 but will have the effect of being cast against proposal 4.
OTHER BUSINESS
The Board of Directors does not know of any matters to be presented for
action at the Meeting other than as set forth in this Proxy Statement. If any
other business should properly come before the Meeting, the persons named in the
proxy intend to vote thereon in accordance with their best judgment.
The Company's Annual Report to Stockholders for the fiscal year ended
December 31, 1995 (which contains a copy of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1995) accompanies this Proxy
Statement.
15
<PAGE> 18
THE COMPANY'S 1995 ANNUAL REPORT ON FORM 10-K (INCLUDING THE FINANCIAL
STATEMENTS AND SCHEDULES THERETO) AND QUARTERLY REPORT ON FORM 10-Q FOR THE
QUARTERLY PERIOD ENDED MARCH 31, 1996 WILL BE PROVIDED WITHOUT CHARGE TO EACH
STOCKHOLDER UPON WRITTEN REQUEST. EACH REQUEST MUST SET FORTH A GOOD FAITH
REPRESENTATION THAT, AS OF JUNE 6, 1996, THE RECORD DATE FOR THE MEETING, THE
PERSON MAKING THE REQUEST WAS THE BENEFICIAL OWNER OF SHARES OF COMMON STOCK OF
THE COMPANY. THE REQUEST SHOULD BE DIRECTED TO: CATHY WOOD, SECRETARY, GIANT
GROUP, LTD., 150 EL CAMINO DRIVE, SUITE 303, BEVERLY HILLS, CALIFORNIA 90212,
TELEPHONE (310) 273-5678.
By Order of the Board of Directors
/s/ CATHY WOOD
CATHY WOOD, Secretary
16
<PAGE> 19
EXHIBIT A
GIANT GROUP, LTD.
1996 EMPLOYEE STOCK OPTION PLAN
1. PURPOSE OF PLAN. The purpose of this 1996 Employee Stock Option Plan is
to promote the interest of GIANT GROUP, LTD., its subsidiaries and stockholders,
by encouraging selected key employees of the Corporation to acquire a
proprietary interest in the Corporation. Such investments should increase the
personal interest and the special effort of such persons in providing for the
continued success and progress of the business of the Corporation and should
enhance the Corporation's efforts to attract and retain competent key employees.
2. DEFINITIONS. The following terms when used herein shall have the
meanings set forth below, unless a different meaning is plainly required by the
context:
(a) Board. The Board of Directors of the Parent.
(b) Code. The Internal Revenue Code of 1986, as it may be amended
from time to time. Reference to any section of the Code shall include any
provision successor thereto.
(c) Committee. The Committee provided for in Section 7.
(d) Common Stock. Shares of the Parent's common stock, par value $.01
per share.
(e) Corporation. The Parent and its "subsidiaries" (as that term is
defined in section 425(f) of the Code).
(f) Disability. Permanent and total disability within the meaning of
section 22(e)(3) of the Code.
(g) Employees. Officers and other key management personnel of the
Corporation, as determined by the Committee from time to time.
(h) Fair Market Value. The fair market value of a share of Common
Stock on a given date, as determined by the Committee; provided, however,
that if the Common Stock on such date is (i) traded on the New York Stock
Exchange ("NYSE"), the Fair Market Value shall be the closing price of the
Common Stock on the NYSE; or (ii) traded on an established securities
exchange or the NASDAQ national market system ("NASDAQ"), the Fair Market
Value shall be the closing price of the Common Stock in the reported
consolidated trading of such exchange or NASDAQ. If there are no Common
Stock transactions reported for such date, the determination shall be made
as of the last immediately preceding date on which Common Stock
transactions were reported. If there shall be any material alteration in
the present system of reporting sales prices of Common Stock shall no
longer be traded or listed as set forth above, the Fair Market Value of the
Common Stock as of a particular date shall be determined under such method
as shall be determined by the Committee.
(i) Incentive Option. An option defined in section 422A of the Code,
which meets the requirements of Sections 5 and 6.
(j) Non-Qualified Option. An option which is not an Incentive Option.
(k) Option. An Incentive Option or a Non-Qualified Option granted to
an Optionee pursuant to the Plan.
(l) Option Agreement. A written agreement between the Corporation and
an Optionee evidencing the grant of an Option and containing terms and
conditions concerning the exercise of the Option.
(m) Option Price. The price to be paid for shares to be purchased
pursuant to the exercise of an Option.
(n) Optionee. An Employee who has been granted an Option or the
personal representative, heir or legatee of an Optionee who has the right
to exercise the Option upon the death of the Optionee.
(o) Parent. GIANT GROUP, LTD., a Delaware corporation.
(p) Plan. This 1996 Employee Stock Option Plan, as it may be amended
from time to time.
3. ELIGIBILITY AND PARTICIPATION. Persons eligible to receive Options
under the Plan shall be Employees who are selected by the Committee. In
determining the Employees to whom Options shall be
<PAGE> 20
granted, the number of shares to be covered by each Option and whether the
Options shall be Incentive Options or Non-Qualified Options, the Committee shall
take into account the duties of the respective Employees, their present and
potential contribution to the success of the Corporation, their anticipated
number of years of active service remaining and such other factors as it deems
relevant in connection with accomplishing the purposes of the Plan. An Employee
who has been granted an Option may be granted an additional Option or Options as
the Committee shall so determine.
4. SHARES SUBJECT TO THE PLAN. The stock to be offered under the Plan
shall be shares of Common Stock, which shares may be unissued shares or treasury
shares. Subject to the adjustments provided for in Section 8, the aggregate
number of shares to be delivered upon exercise of all Options granted under the
Plan shall not exceed 250,000 shares. Shares of Common Stock subject to, but not
delivered under, an Option terminating or expiring for any reason prior to its
exercise in full shall be deemed available for Options to be granted thereafter
during the term of the Plan.
5. TERMS AND CONDITIONS OF OPTIONS. All Options granted hereunder shall be
subject to the following terms and conditions:
(a) To Whom Options may be Granted. Options shall be granted only to
Employees. In the case of Incentive Options, Options shall not be granted
to any Employee who immediately after the granting of an Incentive Option
under the Plan owns more than 10% of the issued and outstanding Common
Stock unless such Incentive Option is granted at 110% of the Value of the
Common Stock at the time of the grant of the Incentive Option. For the
purpose of this Section 5(a) (and Section 6(d)), consistent with the
provisions of section 425(d) of the Code, an Employee is considered as
owning all of the Common Stock owned by his brothers, sisters, spouse,
ancestors and lineal descendants and his pro rata share of all Common Stock
owned by corporations, partnerships, estates and trusts in which he has an
interest.
(b) Non-Transferability of Option. The Option shall not be
transferable by the Optionee otherwise than by bequest or the laws of
descent and distribution, and shall be exercisable during the Optionee's
lifetime only by the Optionee.
(c) Termination of Option upon Termination of Employment. (i) Subject
to Section 5(c)(ii), if the Optionee's employment by the Corporation shall
terminate for any reason other than death, Disability or termination for
cause, the Option shall terminate six months (three months in the case of
an Incentive Option) after the Optionee's employment terminates (unless the
Optionee dies during such period), or on the Option's expiration date, if
earlier, and shall be exercised during such period after termination of
employment only with respect to the number of shares which the Optionee was
entitled to purchase on the day preceding the termination of the Optionee's
employment, except that the Committee may, in specific cases, and in its
sole discretion, permit exercise by an Optionee of all, or a part of, the
unexercised Option within the period referred to above after the Optionee's
employment terminates. If the Optionee's employment shall terminate because
of discharge for cause, the Option shall terminate on the date of the
Optionee's discharge.
(ii) Notwithstanding Section 5(c)(i), the Committee may, in its
discretion, vary the foregoing provisions with respect to a particular
Optionee or particular Options granted to such Optionee to make the
termination provisions applicable to such Optionee more favorable to
such Optionee so long as such variation does not extend the expiration
date of such Options. Any such variation shall be set forth in the
applicable Option Agreement or an amendment thereto.
(d) Termination of Option Upon Death or Disability. In the event of
the Optionee's death or Disability while in the employ of the Corporation,
or Optionee's death within six months (three months in case of an Incentive
Option) after the termination of the Optionee's employment (other than by
reason of discharge for cause) the Option shall terminate upon the earliest
to occur of (i) 12 months after the date of the Optionee's death or
Disability or such other date as shall be specified in the Option
Agreement, or (ii) the Option's expiration date. The Option shall be
exercisable during such period after the Optionee's death or Disability
with respect to the number of shares as to which the Option shall have been
exercisable on the date preceding the Optionee's death or Disability, as
the case may be.
A-2
<PAGE> 21
(e) Limitation on Incentive Option. If the aggregate value
(determined at the time the Option is granted) with respect to which
Options are exercisable for the first time by an Optionee during any
calendar year under the Plan or any other plan of the Corporation exceeds
$100,000, then notwithstanding anything contained herein, such Option shall
be treated as a Non-Qualified Option to the extent of the excess.
6. OTHER TERMS AND CONDITIONS OF OPTION AGREEMENTS. The Committee shall
have the power, subject to the limitations contained in the Plan, to prescribe
any terms and conditions regarding the grant or exercise of any Option under the
Plan and in particular shall prescribe the following terms and conditions which
shall be contained in the Option Agreement for all Options:
(a) Type of Option. Whether the Option is an Incentive Option or a
Non-qualified Option.
(b) Number of Shares Of Common Stock. The number of shares of Common
Stock to which it pertains.
(c) Exercise Price. The exercise price of the Option, which shall not
be less than 100% of the Fair Market Value of the Common Stock at the time
of the grant of an Incentive Option, except as otherwise provided in
Section 5(a).
(d) Term of Option. The term of the Option, which shall not exceed 10
years from the date on which the Option is granted, unless the Optionee
owns more than 10% of the issued and outstanding Common Stock, in which
case the term shall not exceed five years.
(e) How Exercised. The method or time when the Option may be
exercised in whole or in part, including, but not limited to, whether it
may be exercised by delivery of previously owned shares of Common Stock.
However, in no event shall an Option be exercisable within six months of
the date of grant in the case of an Optionee subject to Section 16(b) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
(f) Withholding of Taxes. For a Non-Qualified Option, the provisions
for the withholding of federal, state and local income or other taxes which
are due in connection with the exercise of the Non-Qualified Option.
7. ADMINISTRATION. The Plan shall be administered by the Committee
appointed by the Board which shall consist of two or more disinterested persons
(within the meaning of Rule 16b-3 promulgated pursuant to the Exchange Act
("Rule 16b-3")). In accordance with and subject to the provisions of the Plan,
the Committee shall have full power and authority to interpret the provisions
and supervise the administration of the Plan. All decisions, determinations and
selections made by the Committee pursuant to the provisions of the Plan shall be
final. Each Option granted shall be evidenced by an Option Agreement containing
such terms and conditions as may be approved by the Committee and which shall
not be inconsistent with the Plan.
8. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Notwithstanding the
limitations set forth in Section 4, in the event of a merger, consolidation,
reorganization, stock dividend, stock split or other change in corporate
structure or capitalization affecting the Common Stock, the Committee shall make
an appropriate adjustment in the maximum number of shares available under the
Plan or to any one individual and in the number, kind and Option Price, of
Common Stock subject to Options granted under the Plan. Any such adjustment
regarding an Incentive Option shall be made so as not to constitute a
modification, extension or renewal of the Incentive Option within the meaning of
Section 425(h) of the Code.
9. TIME OF GRANTING OPTIONS. Nothing contained in the Plan or in any
resolution adopted or to be adopted by the Board or by the stockholders of the
Parent, and no action taken by the Committee (other than the granting of a
specific Option), shall constitute the granting of an Option hereunder. The
granting of an Option pursuant to the Plan shall take place only on the date
such Option is approved by the Committee.
10. AMENDMENT AND DISCONTINUANCE. The Board may discontinue, amend, alter
or suspend the Plan; provided, however, that any amendment requiring stockholder
approval under Rule 16b-3, as in effect from time to time, shall not be made
without obtaining such approval. Unless amended in
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<PAGE> 22
accordance with the amended Plan with the consent of the Optionee, any Option
which is outstanding under the Plan at the time of its amendment or termination
shall remain in effect in accordance with its terms and conditions and those of
the Plan as in effect which the Option was granted.
11. MERGER, CONSOLIDATION, ETC.
(a) Conversion on Merger. In the event the Corporation merges or
consolidates with another corporation, or all or substantially all of the
Corporation's capital stock or assets are required by another corporation,
and the surviving or acquiring corporation issues shares of its stock to
the Corporation's shareholders in connection with the merger, consolidation
or acquisition, the surviving or acquiring corporation shall adopt the Plan
and, upon the exercise of an Option, the Optionee shall, at no additional
cost (other than the Option Price), be entitled to receive, in lieu of the
number of shares of Common Stock to which such Option is then exercisable,
the number and class of shares of stock or other securities to which the
Option would have been entitled pursuant to the terms of the merger,
consolidation or acquisition if immediately prior thereto the Optionee had
been the holder of record of the number of shares of Common Stock equal to
the number of shares of Common Stock as to which the Option shall then be
exercisable.
(b) No Conversion on Certain Mergers. In the event that the
Corporation merges or consolidates with another corporation, or all or
substantially all of the Corporation's capital stock or assets are acquired
by another corporation, and the surviving or acquiring corporation does not
issue shares of its stock to the Corporation's shareholders in connection
with the merger, consolidation or acquisition, then, notwithstanding any
other provision of the Plan to the contrary, no Option may be exercised
after the effective date of the merger, consolidation or acquisition.
12. EFFECTIVENESS AND TERMINATION OF THE PLAN.
(a) Effective Date. The Plan shall become effective upon adoption by
the Board. The Plan shall be rescinded and all Options granted hereunder
shall be null and void unless within 12 months from the date of the
adoption of the Plan by the Board it shall have been approved by the
holders of a majority of the outstanding Common Stock present or
represented and entitled to vote on the Plan at a stockholders' meeting.
(b) Termination Date. The Plan shall terminate on the earliest to
occur of (i) the date when all the Common Stock available under the Plan
shall have been acquired through the exercise of Options granted under the
Plan, (ii) 10 years after the date of adoption of the Plan by the Board or
(iii) such other date as the Board may determine.
13. GOVERNING LAW. The provisions of the Plan shall be construed,
administered and enforced according to the laws of the Commonwealth of Kentucky
and shall be construed in such a fashion that all Incentive Options shall
qualify as "incentive stock options" within the meaning of section 422A of the
Code.
14. REPLACEMENT OPTIONS. The Committee may permit the voluntary surrender
of all or a portion of any Option granted under the Plan, conditioned upon the
granting of the Optionee of a new Option under the Plan for the same or
different number of shares as the Committee may determine. The new Option shall
be exercisable at such price, during such period and in accordance with such
other terms and conditions as the Committee may determine, consistent with the
provisions of the Plan, without regard to the price, period of exercise or other
terms or conditions of the Option surrendered.
ORIGINALLY ADOPTED: May 20, 1996
GIANT GROUP, LTD.
By: /s/ Burt Sugarman
--------------------------------
Chairman & CEO
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<PAGE> 23
EXHIBIT B
GIANT GROUP, LTD.
1996 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
1. PURPOSE OF PLAN. The purpose of this 1996 Stock Option Plan for
NonEmployee Directors is to promote the interests of GIANT GROUP, LTD., its
subsidiaries and stockholders, by encouraging non-employee directors of the
Corporation to acquire a proprietary interest in the Corporation. Such
investments should increase the personal interest and the special effort of such
persons in providing for the success and progress of the business of the
Corporation and should enhance the Corporation's efforts to attract and retain
competent non-employee directors.
2. DEFINITIONS. The following terms when used herein shall have the
meanings set forth below, unless a different meaning is plainly required by the
context:
(a) Adoption Date. May 20, 1996, which is the date this Plan is
adopted by the Board.
(b) Board. The Board of Directors of the Corporation.
(c) Committee. The Committee provided for in Section 6.
(d) Common Stock. Shares of the Corporation's common stock, par value
$.01 per share.
(e) Corporation. GIANT GROUP, LTD., a Delaware corporation.
(f) Employee. An employee of the Corporation or any of its
subsidiaries.
(g) Fair Market Value. The fair market value of a share of Common
Stock on a given date, as determined by the Committee; provided, however,
that if the Common Stock on such date is (i) traded on the New York Stock
Exchange (the "NYSE"), the Fair Market Value shall be the closing price of
the Common Stock on the NYSE; (ii) traded on an established securities
exchange or the NASDAQ national market system ("NASDAQ"), the Fair Market
Value shall be the closing price of the Common Stock in the reported
consolidated trading of such exchange or NASDAQ. If there are no Common
Stock transactions reported for such date, the determination shall be made
as of the last immediately preceding date on which the Common Stock
transactions were reported. If there shall be any material alteration in
the present system of reporting sales prices of the Common Stock, or if the
Common Stock shall no longer be traded or listed as set forth above, the
Fair Market Value of the Common Stock as of a particular date shall be
determined under such method as shall be determined by the Committee.
(h) Non-Employee Director. A member of the Board who is not an
Employee of the Corporation or any of its subsidiaries.
(i) Option. An option granted to an Optionee pursuant to the Plan.
(j) Option Agreement. A written agreement between the Corporation and
an Optionee evidencing the grant of an Option and containing terms and
conditions concerning the exercise of the Option.
(k) Option Price. The price to be paid for shares to be purchased
pursuant to the exercise of an Option.
(l) Optionee. A Non-Employee Director who has been granted an Option
or the personal representative, heir or legatee of an Optionee who has the
right to exercise the Option under the death of the Optionee.
(m) Plan. This 1996 Stock Option Plan for Non-Employee Directors, as
it may be amended from time to time.
<PAGE> 24
3. ELIGIBILITY AND PARTICIPATION.
(a) Each Non-Employee Director as of the Adoption Date, who is
standing for reelection at the Annual Meeting of Stockholders to be held on
July 12, 1996, shall be granted on the date hereof an Option to purchase
10,000 shares of Common Stock.
(b) Each new Non-Employee Director who is elected subsequent to the
Adoption Date shall automatically be granted an Option to purchase 10,000
shares of Common Stock upon the initial date of election to the Board,
provided the number of shares of Common Stock available for grant under the
Plan is sufficient to permit such automatic grant.
(c) Each Non-Employee Director who is elected (or reelected) to the
Executive Committee at the meeting of the Board immediately following the
Annual Meeting of Stockholders to be held on July 12, 1996, shall upon such
election (or reelection) automatically be granted an additional Option to
purchase 10,000 shares of Common Stock.
(d) Each new Non-Employee Director who is elected subsequent to the
Adoption Date and thereafter is elected to the Executive Committee shall
upon such election automatically be granted an additional Option to
purchase 10,000 shares of Common Stock, provided the number of shares of
Common Stock available under the Plan is sufficient to permit such
automatic grant.
(e) On each anniversary of the Adoption Date, or in the case of a
Non-Employee Director who is elected subsequent to the Adoption Date, each
anniversary date of the grant of an Option pursuant to Section 3(b) hereof,
each Non-Employee Director shall automatically be granted an Option to
purchase 10,000 (plus an additional 10,000 in the case of a member of the
Executive Committee) shares of Common Stock, provided they hold such
position(s) on that date and the number of shares of Common Stock available
for grant under the Plan is sufficient to permit such automatic grant.
4. SHARES SUBJECT TO THE PLAN. The stock to be offered under the Plan
shall be shares of Common Stock, which shares may be unissued shares or treasury
shares. Subject to the adjustments provided for in Section 7, the aggregate
number of shares to be delivered upon exercise of all Options granted under the
Plan shall not exceed 250,000 shares. Shares of Common Stock subject to, but not
delivered under, an Option terminating or expiring for any reason prior to its
exercise in full shall be deemed available for Options to be granted thereafter
during the term of the Plan.
5. TERMS AND CONDITIONS OF OPTIONS. All Options granted hereunder shall be
subject to the following terms and conditions which shall be set forth in the
Option Agreement for all Options to the extent applicable:
(a) To Whom Options May Be Granted. Options shall be granted only to
Non-Employee Directors.
(b) Non-Transferability of Option. Options shall be granted only to
Non-Employee Directors.
(c) Termination of Option. The Option shall terminate five (5) years from
the date of grant, and shall be exercisable whether or not such Non-Employee
Director is at the time of exercise a member of the Board, and, in the event of
the death of the Non-Employee Director, may be exercised by his or her estate.
(d) Number of Shares of Common Stock. The number of shares of Common Stock
to which the Option pertains.
(e) Exercise Price. The exercise price of the Option, which shall not be
less than 100% of the Fair Market Value of the Common Stock at the time of the
grant of the Option.
(f) The Term of Option. The term of the Option, which shall be five (5)
years.
(g) How Exercised. The method or time when the Option may be exercised in
whole or in part. The Option shall be exercisable in whole or in part at any
time or times from and after the date of grant through and including the last
day of the term of the Option.
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<PAGE> 25
The Option price shall be paid in cash or check at the time of exercise,
except that in lieu of all or part of such payment, the Optionee may tender to
the Corporation Common Stock owned by the Optionee having a Fair Market Value
equal to the exercise price, less any amount paid by cash or check. The Fair
Market Value of such tendered shares of Common Stock shall be determined as of
the close of the business day immediately preceding the day on which the Option
is exercised.
6. ADMINISTRATION. The Plan shall be administered by the Board or a
Committee consisting of at least two members selected by, and serving at the
pleasure of, the Board (in either case, the "Committee"). The Committee shall
meet at such times and places as it determines and may meet through a telephone
conference call. A majority of its members shall constitute a quorum, and the
decision of the majority of those present at any meeting at which a quorum is
present shall constitute the decision of the Committee. Any decision reduced to
writing and signed by a majority of the members of the Committee shall be fully
effective as if it had been made by a majority at a meeting duly held. No
discretion concerning decisions under the Plan shall be afforded to a person who
is not a disinterested person. All decisions, determinations and selections made
by the Committee pursuant to the provisions of the Plan shall be final. Each
Option granted shall be evidenced by an Option Agreement containing such terms
and conditions as may be approved by the Committee and which shall not be
inconsistent with the Plan.
7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Notwithstanding the
limitations set forth in Section 4, in the event of a merger, consolidation,
reorganization, stock dividend, stock split or other change in corporate
structure or capitalization affecting the Common Stock, the Committee shall make
an appropriate adjustment in the maximum number of shares available under the
Plan or to any one individual and in the number, kind and Option Price of Common
Stock subject to Options granted under the Plan.
8. AMENDMENT AND DISCONTINUANCE. The Board may discontinue, amend, alter
or suspend the Plan; provided, that any amendment requiring stockholder approval
under Rule 16b-3 promulgated pursuant to the Securities Exchange Act of 1934, as
amended, as in effect from time to time, shall not be made without obtaining
such approval. Section 3 shall not be amended more than once every six months,
other than to comply with changes in the Internal Revenue Code or the
regulations thereunder. Any Option which is outstanding under the Plan at the
time of its amendment or termination shall remain in effect in accordance with
its terms and conditions and those of the Plan as in effect when the Option was
granted.
9. MERGER, CONSOLIDATION, ETC.
(a) Conversion on Merger. In the event the Corporation merges or
consolidates with another corporation, or all or substantially all of the
Corporation's capital stock or assets are acquired by another corporation,
and the surviving or acquiring corporation issues shares of its stock to
the Corporation's shareholders in connection with the merger, consolidation
or acquisition, the surviving or acquiring corporation shall adopt the Plan
and, upon the exercise of an Option, the Optionee shall, at no additional
cost (other than the Option Price), be entitled to receive, in lieu of the
number of shares of Common Stock to which such Option is then exercisable,
the number and class of shares of stock or other securities to which the
Optionee would have been entitled pursuant to the terms of the merger,
consolidation or acquisition, if immediately prior thereto the Optionee had
been the holder of record of the number of shares of Common Stock equal to
the number of shares of Common Stock as to which the Option shall then be
exercisable.
(b) No Conversion on Certain Mergers. In the event that the
Corporation merges or consolidates with another corporation, or all or
substantially all of the Corporation's capital stock or assets are acquired
by another corporation, and the surviving or acquiring corporation does not
issue shares of its stock to the Corporation's shareholders in connection
with the merger, consolidation or acquisition, then, notwithstanding any
other provision of the Plan to the contrary, no Option may be exercised
after the effective date of the merger, consolidation or acquisition.
10. EFFECTIVENESS AND TERMINATION OF THE PLAN.
(a) Effective Date. The Plan shall become effective upon adoption by
the Board. The Plan shall be rescinded and all Options granted hereunder
shall be null and void unless within 12 months from the date
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<PAGE> 26
of the adoption of the Plan by the Board it shall have been approved by the
holders of a majority of the outstanding Common Stock present or
represented and entitled to vote on the Plan at a stockholder's meeting
(b) Termination Date. The Plan shall terminate on the earliest to
occur of (i) the dates when all the Common Stock available under the Plan
shall have been acquired through the exercise of Options granted under the
Plan; (ii) 10 years after the Adoption Date; or (iii) such other date as
the Board may determine.
11. GOVERNING LAW. The provisions of the Plan shall be construed,
administered and enforced according to the laws of the State of Delaware.
DATED: May 20, 1996
GIANT GROUP, LTD.
By: /s/ Burt Sugarman
--------------------------------
Chairman & CEO
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<PAGE> 27
P R O X Y
GIANT GROUP, LTD.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS -- JULY 12, 1996
The undersigned hereby appoints Burt Sugarman and David Gotterer, and each
of them, proxies with power of substitution each, for and in the name of the
undersigned to vote all shares of Common Stock of GIANT GROUP, LTD., a Delaware
corporation (the "Company"), that the undersigned would be entitled to vote at
the Company's 1996 Annual Meeting of Stockholders (the "Meeting"), and at any
adjournments thereof, upon the matters set forth in the Notice of the Meeting as
stated hereon, hereby revoking any proxy heretofore given. In their discretion,
the proxies are further authorized to vote upon such other business as may
properly come before the Meeting.
The undersigned acknowledges receipt of the Notice of the Meeting and the
accompanying Proxy Statement and Annual Report.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE> 28
THE BOARD RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2, 3, 4 AND 5. Please mark
your vote as
indicated in
this example /X/
FOR WITHHELD
1. Election of Directors Below. / / / /
Nominees: Terry Christensen, David Gotterer, David Malcolm, Burt Sugarman
For, except vote withheld from the following member(s):
- ---------------------------------------------------------------------------
FOR WITHHELD ABSTAIN
2. Adoption of the Company's 1996 Employee Stock Option / / / / / /
Plan.
3. Adoption of the Company's 1996 Stock Option Plan for / / / / / /
Non-Employee Directors.
4. Approve the authorization of a new class of non-voting / / / / / /
Class A Common Stock.
5. Ratification of the appointment of Arthur Andersen LLP / / / / / /
as Independent Auditors.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF THE NOMINEES FOR DIRECTORS LISTED ABOVE, FOR
ADOPTION OF THE COMPANY'S 1996 EMPLOYEE STOCK OPTION PLAN, FOR ADOPTION OF THE
COMPANY'S 1996 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS AND THE
AUTHORIZATION OF A NEW CLASS OF NON-VOTING CLASS A COMMON STOCK, FOR
RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS
AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE THE
MEETING.
Signature Signature Date
------------------------ ------------------------ ----------
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
ADMISSION TICKET
ANNUAL MEETING
OF
STOCKHOLDERS OF GIANT GROUP, LTD.
FRIDAY, JULY 12, 1996
9:30 AM (LOCAL TIME)
CHRISTENSEN, WHITE, MILLER, FINK, JACOBS, GLASER & SHAPIRO, LLP
2121 AVENUE OF THE STARS
18TH FLOOR
LOS ANGELES, CALIFORNIA 90067
