<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>
/X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / 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):
/X/ $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:
------------------------------------------------------------------------
/ / 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
PRELIMINARY COPY
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
CATHY WOOD, Secretary
Beverly Hills, California
June 12, 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
PRELIMINARY COPY
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 12, 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 4,072,896 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.
<PAGE> 4
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 AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) CLASS (2)
- ------------------- ------------------------ ----------
<S> <C> <C>
Burt Sugarman 2,988,672 shares (3) 52.7%
150 El Camino Drive
Beverly Hills, CA 90212
The TCW Group, Inc. 382,700 shares (4) 9.4%
865 South Figueroa Street
Los Angeles, CA 90017
Dimensional Fund Advisors, Inc. 369,250 shares (5) 9.1%
1299 Ocean Avenue
Santa Monica, CA 90401
John A. Levin & Co., Inc. 227,000 shares (6) 5.6%
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 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 4,072,896 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 12, 1996, The TCW
Group, Inc. (formerly known as TCW Management Company), a parent
holding company, had, as of December 31, 1995, sole power to vote and
to dispose of 382,700 shares.
(5) 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.
- 2 -
<PAGE> 5
(6) The Company is informed that John A. Levin & Co., Inc., a registered
investment adviser, as of December 31, 1995 beneficially owned
227,000 shares.
- 3 -
<PAGE> 6
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.
- 4 -
<PAGE> 7
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 52.7%
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 4.3%
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(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(5)
55.4%
</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 4,072,896 shares of Common Stock outstanding as of June 6,
1996.
(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.
- 5 -
<PAGE> 8
(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 Plan, each of Messrs. Christensen, Malcolm and Gotterer
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 - 230,000 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."
- 6 -
<PAGE> 9
The Option Committee presently consists of Messrs. Christensen and
Gotterer. The Option Committee met on one occasion 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.
- 7 -
<PAGE> 10
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>
ANNUAL COMPENSATION LONG TERM COMPENSATION AWARDS
------------------------------------------------ ----------------------------------------
NAME & SECURITIES ALL OTHER
PRINCIPAL OTHER ANNUAL RESTRICTED UNDERLYING COMPEN-
- --------- SALARY BONUS COMPENSATION STOCK OPTION/SARS SATION
POSITION YEAR $ $ $ AWARD(S) # $
- -------- ---- --------- ------- ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Burt 1995 1,000,000 -0- 26,774(1) - 1,899,202(2) 25,000(3)
Sugarman, 1994 1,000,000 600,000 76,579(1) - -0- 174,038(3)
Chairman 1993 998,000 -0- 78,121(1) - -0- 275,000(3)
of The
Board,
President
and Chief
Executive
Officer
Cathy L. 1995 166,123 -0- -0- - 55,000(5) -0-
Wood, (4)
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.
- 8 -
<PAGE> 11
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 $6.75 per
share, which was the fair market value of the shares at the time of the grant,
and will expire in 2005. The new options (like the canceled options) are fully
vested. There have been no other option repricings during the last ten years.
FISCAL YEAR END OPTION VALUE
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED IN
THE MONEY
SHARES OPTIONS AT
ACQUIRED ON VALUE NUMBER OF UNEXERCISED OPTIONS AT DECEMBER 31,
NAME EXERCISE REALIZED($) DECEMBER 31, 1995 1995(1)
- ---- -------- ----------- ---------------------------------- -------
EXERCISABLE UNEXERCISABLE EXERCISABLE
----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Burt Sugarman -0- -0- 1,899,202 -0- $4,510,605
Cathy L. -0- -0- 15,000 40,000 31,875
Wood
</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.
- 9 -
<PAGE> 12
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.
- 10 -
<PAGE> 13
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 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, (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. and (iii) an index of a group of companies in the fast food
industry (the business of Rally's, in which the Company has a substantial
interest) selected by the Company, consisting of CKE Restaurants, Inc., Flagstar
Companies, Inc., Krystal Company, Checkers Drive In Restaurants, Foodmaker, Inc.
and Sonic Corporation.
- 11 -
<PAGE> 14
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
(FISCAL YEAR COVERED) GIANT GROUP, LTD. PEER GROUP S&P 500 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.
- 12 -
<PAGE> 15
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
(FISCAL YEAR COVERED) GIANT GROUP,LTD. PEER GROUP NYSE STOCK 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>
The index level for all series was set to 100.0 on 12/13/90.
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.
- 13 -
<PAGE> 16
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 16 b-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.
- 14 -
<PAGE> 17
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 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 the 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.
- 15 -
<PAGE> 18
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 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 16 b-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.
- 16 -
<PAGE> 19
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 $ 20,000
Terry Christensen 20,000
David Malcolm 10,000
</TABLE>
- -----------------
(1) Based the difference between the exercise price and the closing price
of the Common Stock of $____ as reported on the New York Stock Exchange
Composite Tape on _____________, 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 4 of the Company's Certificate of Incorporation to read in its
entirety as follows:
"FOURTH: (A)
(i) 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, $.10 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, a
reorganization, recapitalization or similar corporate events.
(ii) The designations and the powers, preferences and rights,
and the qualifications, limitations or restrictions of the Preferred
Stock and the classification or reclassification of any unissued shares
of the Preferred Stock in one or more series shall be determined by the
Board of Directors, or the Executive Committee thereof, and shall be
set forth in duly adopted resolutions in accordance with the Delaware
General Corporation Law, as amended."
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
- 17 -
<PAGE> 20
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.
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 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.
- 18 -
<PAGE> 21
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 12, 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 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.
- 19 -
<PAGE> 22
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.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Proxy Statement incorporates by reference the Company's Annual
Report to Shareholders 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), a copy of which is being delivered with this Proxy
Statement, and the Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1996.
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 1995 ANNUAL REPORT TO THE SEC 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 BY FIRST CLASS
MAIL OR OTHER EQUALLY PROMPT MEANS, WITHIN ONE BUSINESS DAY OF RECEIPT OF SUCH
REQUEST, WITHOUT CHARGE TO EACH STOCKHOLDER UPON WRITTEN OR ORAL 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
CATHY WOOD, Secretary
- 20 -
<PAGE> 23
EXHIBIT A
GIANT GROUP, LTD.
1996 STOCK OPTION PLAN
1. PURPOSE OF PLAN. The purpose of this 1996 Stock Option Plan is
to promote the interest of Rally's, Inc., 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 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.
<PAGE> 24
(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 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 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:
- 2 -
<PAGE> 25
(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.
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<PAGE> 26
(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 in 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
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<PAGE> 27
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 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
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<PAGE> 28
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
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<PAGE> 29
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/s
-----------------------
Chairman & CEO
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<PAGE> 30
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 Non-
Employee 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.
<PAGE> 31
(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 1995 Stock Option Plan for Non-Employee
Directors, as it may be amended from time to time.
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
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<PAGE> 32
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.
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
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<PAGE> 33
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
- 4 -
<PAGE> 34
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) 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 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/s
------------------------------
Chairman of the Board
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<PAGE> 35
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> 36
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
