<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) . . . . . . . . April 26, 1996
GIANT GROUP, LTD.
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(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 1-4323 23-0622690
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification Number)
150 El Camino Drive, Suite 303
Beverly Hills, California 90212
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(Address of principal executive offices)
</TABLE>
Registrant's telephone number, including area code . . . . . . . (310) 273-5678
Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
On April 26, 1996 GIANT GROUP, LTD. ("GIANT"), Fidelity National
Financial, Inc. ("Fidelity") and CKE Restaurants, Inc. ("CKE") and certain other
persons entered into a Settlement Agreement and Release, a copy of which is
attached hereto as Exhibit 99.1 and incorporated herein by reference (the
------------
"Settlement Agreement"), pursuant to which the litigation among the parties to
the Settlement Agreement was settled.
Pursuant to the Settlement Agreement, GIANT, Fidelity and CKE entered into
a Purchase and Standstill Agreement (the "Purchase Agreement"), a copy of which
is attached hereto as Exhibit 99.2 and incorporated herein by reference. The
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Purchase Agreement provides, among other things, that GIANT will acquire from
Fidelity 705,489 shares of common stock of GIANT for a purchase price of $8.625
per share, payable in cash. Fidelity has also agreed for a period of ten years
not to acquire any common stock or other voting securities of GIANT if following
such acquisition Fidelity or its officers, directors, affiliates and their
family members would own more than .05% of the outstanding voting securities of
GIANT.
In addition, Fidelity will purchase from GIANT or its wholly owned
subsidiary, KCC Delaware Company ("KCC"), 767,807 shares of common stock of
Rally's Hamburgers, Inc. ("Rallys") for an aggregate purchase price of
$638,172.38 and CKE will purchase from GIANT or KCC 2,350,432 shares of common
stock of Rally's for $1.75 per share, to be paid in cash. The Purchase
Agreement also provides that Fidelity and CKE will have options to purchase a
total of an additional 2,350,428 shares of common stock of Rally's from GIANT.
One-half of such options have an exercise price of $3.00 per share and expire on
April 26, 1997 and one-half of such options have an exercise price of $4.00 per
share and expire on April 26, 1998. The obligations of Fidelity and CKE to
purchase the Rally's common stock is subject to satisfactory completion of a due
diligence review by them. In addition, the obligation of CKE to purchase the
Rally's common stock from GIANT is conditioned upon (i) the approval by the
Board of Directors of Rally's of CKE as an Interested Stockholder (as defined in
Section 203 of the General Corporation Law of the State of Delaware) and (ii)
the election of two (2) persons designated by CKE to the Board of Directors of
Rally's. If Fidelity or CKE do not purchase the Rally's common stock, the
options granted pursuant to the Purchase Agreement will be void.
The Purchase Agreement further provides that if GIANT or its affiliates
purchase additional shares of Rally's common stock, Fidelity and CKE will have
rights to purchase shares of Rally's common stock from GIANT such that the
proportional ownership of Rally's common stock among GIANT, Fidelity and CKE
will be the same as immediately prior to such purchases (without giving effect
to shares which may be purchased upon exercise of the options granted pursuant
to the Purchase Agreement). In addition, GIANT, on the one hand, and Fidelity
and CKE, on the other hand, have agreed to
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provide the other with rights of first refusal in the event that they propose to
dispose of shares of Rally's common stock. The parties further agreed that if
GIANT, on the one hand, and Fidelity and CKE, on the other hand, each own at
least 34.0% of the outstanding Rally's common stock (without giving effect to
shares which may be acquired upon exercise of the options granted pursuant to
the Purchase Agreement to the extent such options have not been exercised), then
at each election of directors of Rally's, GIANT may nominate up to one-half of
the number of directors to be elected and Fidelity and CKE may nominate up to
one-half of the number of directors to be nominated and the parties will vote
all their shares in favor of the other parties' nominees. Also, if one, but not
both of GIANT, on the one hand, and Fidelity and CKE, on the other hand, own at
least 34.0% of the outstanding Rally's common stock (without giving effect to
the shares which may be purchased upon exercise of the options granted pursuant
to the Purchase Agreement to the extent such options have not been exercised),
the parties agreed that at each election of directors the party owning at least
34.0% of the outstanding Rally's common stock may nominate up to one-half of the
number of directors to be elected and the other party will vote all shares of
Rally's common stock owned by them in favor of such nominees. The foregoing
provisions regarding the voting of shares of Rally's common stock will expire on
the tenth anniversary of the Purchase Agreement and will be of no force or
effect if Fidelity or CKE do not purchase the Rally's common stock.
A copy of the press release issued by GIANT, Fidelity and CKE is attached
hereto as Exhibit 99.3 and incorporated herein by reference.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
Exhibit No. Description of Exhibit Page
----------- ---------------------- ----
99.1 Form of Settlement Agreement and
Release dated April 26, 1996
among GIANT, Fidelity, CKE and
the other parties named therein
99.2 Purchase and Standstill Agreement
dated April 26, 1996 among GIANT,
Fidelity and CKE
99.3 Press Release dated April 26,
1996 issued by GIANT
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: May 1, 1996 GIANT GROUP, LTD., a Delaware
corporation
by: /s/ CATHY WOOD
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Cathy Wood
Vice President and Chief
Financial Officer
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SETTLEMENT AGREEMENT AND RELEASE
--------------------------------
1. Effective Date.
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This Settlement Agreement and Release (the "Agreement") is made as of the
Closing Date pursuant to Paragraph 9 herein.
2. Parties.
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The parties to this agreement (collectively, the "Parties") are as follows:
a. GIANT GROUP, LTD. ("GIANT");
b. Burt Sugarman;
c. Terry Christensen;
d. Robert Wynn;
e. David Gotterer;
f. William P. Foley, II;
g. Fidelity National Financial, Inc. ("Fidelity");
h. CKE Restaurants, Inc. ("CKE");
i. William Davenport; and
j. Robert Martyn.
3. Recitals.
--------
This agreement is entered into with reference to the following matters and
facts:
a. GIANT GROUP, LTD. V. William P. Foley, II; CKE Restaurants, Inc.;
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Fidelity National Financial, Inc.; William Davenport; and Robert Martin and
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Related Counterclaims, Case No. SACV 95-1095 LHM (EEx), United States District
- ---------------------
Court, Central District of California (the "Action"), involves both claims and
counterclaims between and among GIANT, Mr. Sugarman, Mr.
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Christensen, Mr. Wynn, Mr. Gotterer, Mr. Foley, Fidelity, CKE, Mr. Davenport and
Mr. Martyn.
b. GIANT commenced the Action on December 19, 1995 by filing a
complaint against Mr. Foley, CKE, Fidelity, Mr. Davenport and Mr. Martyn for
violations of section 13(d) of the Securities Exchange Act, fraud, breach of
fiduciary duty, conspiracy and breach of contract. GIANT amended the complaint
as of right on January 4, 1996 (the "First Amended Complaint").
c. Mr. Foley and Fidelity filed an answer to the First Amended
Complaint, denying all material allegations, and asserted counterclaims on
January 16, 1996 (the "Counterclaim") against GIANT, and its directors, Mr.
Sugarman, Mr. Christensen, Mr. Wynn and Mr. Gotterer (collectively, the
"Directors") for defamation and breach of fiduciary duty with respect the
GIANT's adoption of a shareholder rights plan on January 4, 1996. Mr. Foley and
Fidelity amended the Counterclaim as of right on February 16, 1996 (the "First
Amended Counterclaim"), adding additional claims for breach of fiduciary duty
with respect to (1) GIANT's adoption of a program to exchange newly issued, non-
voting GIANT preferred stock for Rally's Hamburgers, Inc.'s ("Rally's") common
stock; (2) GIANT's repurchase of its shares pursuant to a stock repurchase
program (the "Stock Repurchases"); and (3) Rally's decision to repurchase from
GIANT some of its outstanding debt (the "Debt Buy-Back"). Mr. Foley and Fidelity
amended their First Amended Counterclaim with leave of the Court on March 22,
1996 (the "Second Amended Counterclaim"),
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eliminating the claims for breach of fiduciary duty with respect to the Stock
Repurchases and the Debt Buy-Back. Although GIANT and the Directors have not
answered the Second Amended Counterclaim, they deny all material allegations
therein.
d. CKE filed an answer to the First Amended Complaint on January 29,
1996, denying all material allegations therein.
e. Mr. Davenport and Mr. Martyn filed answers to the First Amended
Complaint on January 11, 1996, denying all material allegations therein.
f. Each of the Parties considers it to be in his or its best
interests, and to his or its advantage, forever to dismiss, settle, adjust and
compromise all claims and counterclaims which have been asserted, or which could
have been asserted, in the Action; and
g. The Agreement effects the compromise and settlement of claims and
counterclaims which are denied and contested, and nothing contained herein shall
be construed as an admission by any party hereto of any liability of any kind to
any other party hereto or to any person whatsoever, all such liability being
expressly denied.
4. Dismissals
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a. Subject to the satisfaction or waiver of the conditions to closing
specified below in Paragraphs 8 and 9 of the Agreement, the Parties will file a
stipulated request for dismissal with prejudice of the Action, substantially in
the form of Exhibit "A" hereto, and will file same promptly after the
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Closing Date. The Parties hereby authorized their respective counsel of record
in the Action to execute all documents necessary to effectuate such dismissal
with prejudice.
5. General Release.
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a. Effective at and upon the Closing Date of the Agreement, GIANT, Mr.
Sugarman, Mr. Christensen, Mr. Gotterer, and Mr. Wynn generally relieves,
releases and forever discharges Mr. Foley, CKE, Fidelity, Mr. Davenport and Mr.
Martyn and their respective officers, directors, employees, agents,
shareholders, subsidiaries, affiliates, successors, assigns, personal
representatives, predecessors, parent entities, affiliated organizations,
divisions, attorneys, and their heirs, executors, trustees, administrators,
successors and assigns or any such persons, entities, and each of them, of and
from any and all claims, debts, liabilities, demands, judgments, accounts,
obligations, promises, acts, agreements, costs, expenses (including but not
limited to attorneys' fees), damages, actions and causes of action, of any kind
or nature, whether known or unknown, suspected or unsuspected (collectively, the
"Claims") based on, arising out of, relating to, or in connection with the
Action and the transactions contemplated by or effected pursuant to the
Agreement or the Purchase and Standstill Agreement, dated as of April 26, 1996,
(the "Purchase Agreement") among GIANT, Fidelity and CKE.
b. Effective at and upon the Closing Date of the Agreement Mr. Foley,
CKE, Fidelity, Mr. Davenport and Mr. Martyn
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generally relieve, release and forever discharge GIANT, Mr. Sugarman, Mr.
Christensen, Mr. Wynn and Mr. Gotterer and their respective officers, directors,
employees, agents, shareholders, subsidiaries, affiliates, successors, assigns,
personal representative, predecessors, parent entities, affiliated
organizations, divisions, attorneys, and their heirs, executors, trustees,
administrators, successors and assigns or any such persons, entities, and each
of them, of and from any Claims based on, arising out of, relating to, or in
connection with the Action and the transactions contemplated by or effected
pursuant to the Agreement or the Purchase Agreement.
c. Notwithstanding the foregoing, nothing contained herein constitutes
a release of any Claim that might arise in the future based on (i) any
continuing obligation(s) owing by one party to any other party pursuant to the
Agreement or the Purchase Agreement or any other agreement referred to herein or
therein or contemplated hereby or thereby, or (ii) the breach by any party of
any representations, warranties, covenants or agreements contained in the
Agreement, the Purchase Agreement or any other agreement referred to herein or
therein or contemplated hereby or thereby.
6. Waiver Under Section 1542 of the California Civil Code.
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The Parties each understand, agree and do hereby waive any and all rights
each may have under Section 1542 of the California Civil Code, which provides as
follows:
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A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the release,
which if known by him must have materially affected his settlement with the
debtor.
In connection with this waiver and relinquishment, the Parties acknowledge that
they are aware that they may subsequently discover Claims presently unknown or
unsuspected, or facts in addition to or different from those which they now know
or believe to be true, with respect to the matters released herein.
Nevertheless, it is their intention, through the Agreement, to fully, finally
and forever settle and release all such matters, and all Claims relative
thereto.
7. Execution of Additional Documents.
---------------------------------
The Parties covenant and agree to execute and deliver such additional
documents and do all such acts and things as may be reasonably necessary or
requisite to carry out the full intent and meaning of the Agreement, including
but not limited to execution of documentation necessary to effectuate a
dismissal of the Action with prejudice.
8. Conditions to Closing.
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The following conditions must be satisfied on or prior to the Closing Date,
unless waived in writing by all Parties:
a. Execution of the purchase and standstill agreement by and among
Fidelity, CKE and GIANT (the "Purchase Agreement"),
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a true and correct copy of which is attached hereto as Exhibit "B," on or before
April 26, 1996.
9. Closing.
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a. The closing pursuant to the Agreement shall occur at 10:00 a.m on
April 26, 1996 (the "Closing Date"), at the offices of Christensen, White,
Miller, Fink, Jacobs, Glaser & Shapiro, LLP, 2121 Avenue of the Stars, 18th
Floor, Los Angeles, California 90067.
b. The following items must be delivered at closing:
i) Executed Settlement Agreement and Release;
ii) Executed Purchase Agreement and all items required to be
delivered at the closing pursuant thereto; and
iii) Executed request for dismissal of the Action.
10. Representations and Warranties.
------------------------------
The Parties, and each of them, represent and warrant to each other and
agree with each other as follows:
a. Each of the Parties has carefully read and reviewed the Agreement
and understands it fully, and each of the Parties has reviewed the terms of the
Agreement with an attorney of the Parties' choice prior to executing the
Agreement, or has had a full opportunity to obtain an attorney for this purpose
and has expressly elected not to do so with full knowledge of the consequences.
b. Each of the Parties specifically does not rely upon any statement,
representation, legal opinion, accounting opinion, or promise of any other party
or any person representing
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them, in executing the Agreement, or in making the settlement provided for
herein, except as expressly stated in the Agreement.
c. There have been and are no other agreements or understandings
between the Parties relating to the matters settled or released herein, except
as stated in the Agreement.
d. Each of the Parties has made such an investigation of the law and
the facts pertaining to this settlement and the Agreement and of all matters
pertaining thereto as it deems necessary. The Agreement has been carefully read
by, the contents hereof are known and understood by, and it is signed freely by,
each person executing the Agreement.
e. The Agreement is the result of protracted, arms' length negotiation
between the Parties.
f. Each of the Parties agrees that, absent and subject to an order
from a court of competent jurisdiction or similar compulsion of law, such party
will not, either directly or indirectly, take any action which would interfere
with the performance of the Agreement by any party hereto, or which would
adversely affect any of the rights provided for herein.
g. Each of the Parties hereto hereby covenants and agrees not to bring
any claim, action, suit or proceeding against any other party hereto, directly
or indirectly, regarding or related in any manner to the matters settled and
released hereby, except as provided in the Agreement.
h. Each of the Parties hereto represents and warrants to every other
party hereto that he or it is the sole and lawful
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owner of all right, title and interest in and to every claim and other matter
which he or it releases herein, and that he or it has not otherwise heretofore
assigned or transferred, or purported to assign or transfer, to any person or
entity, any claim or other matter which he or it releases herein.
i. Each of the Parties executing the Agreement warrants that he or it
has the authority to execute the Agreement from the party on whose behalf said
person is purporting to execute it.
11. Integration.
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The Agreement and all of its exhibits constitute a single integrated,
written contract expressing the entire agreement of the Parties relative to the
subject matter hereof. No recitals, covenants, agreements, representations or
warranties of any kind whatsoever have been made and/or relied upon by any of
the Parties except as specifically set forth in the Agreement. All prior
discussions and negotiations have been or are merged and integrated into, and
are superseded by, the Agreement.
12. Joint Negotiation.
-----------------
The Agreement has been jointly negotiated and drafted. The language the
Agreement shall be construed as a whole according to its fair meaning and not
strictly for or against any party, and it is agreed that no provision hereof
shall be construed against any party hereto by virtue of the activities of that
party or such party's attorneys.
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13. Severability.
------------
The Parties covenant and agree that in the event that any provision of the
Agreement should be held by a court of competent jurisdiction to be void,
voidable, illegal or unenforceable in any respect, the remaining portions
thereof and provisions hereof shall nevertheless remain in full force and effect
as if such void, voidable, illegal or unenforceable provision had never been
contained herein.
14. Governing Law.
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The Agreement shall be construed in accordance with, and governed by, the
laws of the State of California, and each party hereto consents to the
jurisdiction of any court of competent subject matter jurisdiction located in
the State of California, County of Los Angeles, for the purpose of an action,
suit or proceeding arising out of or based on the Agreement or any provision
hereof, in accordance with Paragraph 16 herein.
15. Execution in Counterparts.
-------------------------
The Agreement may be executed and delivered in two or more counterparts,
each of which, when so executed and delivered, shall be an original.
16. Dispute Resolution.
------------------
a. Any controversy or claim arising out of or relating to the
Agreement, or any breach thereof, shall be settled by the appointment of a
retired judge of the Superior or Appellate Courts of California who shall act
pursuant to Section 638.1 of the California Code of Civil Procedure "to try any
and
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all of the issues in an action or proceeding, whether of fact or of law, and to
report a state of decision thereon." The Parties stipulate to the use of the
reference procedure and agree that the Superior Court of Los Angeles County of
the State of California may issue such orders as are necessary to implement the
Parties' intent that any such controversy or claim shall be resolved through the
use of the reference procedure.
b. In accordance with the foregoing paragraph, the Parties shall be
entitled to discovery as provided in the California Code of Civil Procedure.
However, the referee may regulate the extent and scope of such discovery based
upon the nature of the controversy, the amounts involved and the expected
benefits from any discovery.
c. If the Parties are unable to agree on the appointment of a retired
judge to serve as a referee, then the court shall appoint a retired judge to act
as the referee.
d. The referee shall apply applicable substantive law and the rules of
evidence set forth in the California Evidence Code and applicable case
authority. The Parties shall not be required to file formal pleadings and shall
take other steps as may be appropriate and necessary to assure that any
controversy be resolved as efficiently and expeditiously as possible.
e. The decision reached by the referee shall be entered as a judgment
of the Superior Court appointing the referee and such decision shall be fully
appealable.
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f. All fees and expenses of the referee shall be initially borne on a
pro rata basis by the Parties, but shall be recoverable by the prevailing party.
17. Cost of Suit.
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If, suit, action or arbitration is brought to enforce or interpret any
provision of the Agreement, or the rights or obligations of any party hereto,
the prevailing party shall be entitled to recover, as an element of such party's
costs of suit, action or arbitration and not as damages, all reasonable costs
and expenses incurred or sustained by such prevailing party in connection with
such suit, action or arbitration, including, without limitation, legal fees and
court costs.
18. Notices.
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Any notice or communication by or between the Parties to the Agreement is
duly given if in writing and delivered in person, mailed by registered or
certified mail, postage prepaid, return receipt requested or delivered by
telecopier or overnight air courier guaranteeing next day delivery to the
other's address:
If to GIANT, Mr. Sugarman, Mr. Christensen, Mr. Wynn or Mr. Gotterer:
GIANT GROUP, LTD.
150 El Camino Drive, Suite 303
Beverly Hills, CA 90212
Attn: Burt Sugarman
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With a copy to:
Eric Landau
Christensen, White, Miller, Fink, Jacobs, Glaser & Shapiro, LLP
2121 Avenue of the Stars, 18th Floor
Los Angeles, CA 90067
Telephone: (310) 553-3000
Telecopier: (310) 553-2920
If to Mr. Foley or Fidelity:
Fidelity National Title Insurance
17911 Von Karman Avenue
Irvine, CA 92714
Attn: Andrew Puzder
With a copy to:
Stephen Howard
Milbank, Tweed, Hadley & McCloy
601 S. Figueroa Street, 30th Floor
Los Angeles, CA 90017-5735
Telephone: (213) 892-4000
Telecopier: (213) 629-5063
If to CKE:
CKE Restaurants, Inc.
1200 N. Harbor Boulevard
Anaheim, CA 92801
Attn: Thomas Thompson
With a copy to:
Richard Goodman
Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, CA 92660
Telephone: (714) 725-4000
Telecopier (714) 725-4100
If to Mr. Davenport:
PaineWebber, Inc.
610 Newport Center Drive, 13th Floor
Newport Beach, CA 92660
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With a copy to:
Milford Dahl, Jr.
Rutan & Tucker
611 Anton Boulevard, 14th Floor
Cosa Mesa, CA 92626
Telephone: (714) 641-5100
Telecopier: (714) 546-9035
If to Mr. Martyn:
Burns Pauli Mahoney Co
7733 Forsyth Boulevard, Suite 2000
St. Louis, Missouri 63105
With a copy to:
Milford Dahl, Jr.
Rutan & Tucker
611 Anton Boulevard, 14th Floor
Cosa Mesa, CA 92626
Telephone: (714) 641-5100
Telecopier: (714) 546-9035
Any party by notice to the others may designate additional or different
addresses for subsequent notices or communications.
All notices and communications shall be deemed to have been duly given at
the time delivered by hand, if personally served; the date receipt is
acknowledged, if mailed by registered or certified mail; when confirmation is
received, if telecopied; and the next business day after timely delivery to the
courier, if sent by overnight air courier guaranteeing next day delivery.
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IN WITNESS WHEREOF, the Parties each have approved and executed the
Agreement effective as of the date first set forth hereinabove.
GIANT GROUP, LTD. BURT SUGARMAN
Dated:___________________ Dated:______________________
By:______________________ _______________________
Burt Sugarman
Its:_____________________
TERRY CHRISTENSEN ROBERT WYNN
Dated:___________________ Dated:______________________
_________________________ ____________________________
Terry Christensen Robert Wynn
DAVID GOTTERER WILLIAM P. FOLEY, II
Dated:___________________ Dated:______________________
_________________________ ____________________________
David Gotterer William P. Foley, II
CKE RESTAURANTS, INC. FIDELITY NATIONAL FINANCIAL, INC.
Dated:___________________ Dated:______________________
By:______________________ By:_________________________
Its:_____________________ Its:________________________
WILLIAM DAVENPORT ROBERT MARTYN
Dated:___________________ Dated:______________________
_________________________ ____________________________
William Davenport Robert Martyn
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Exhibit 99.2
PURCHASE AND STANDSTILL AGREEMENT
This PURCHASE AND STANDSTILL AGREEMENT ("Agreement") is made as of
April 26, 1996 by and among GIANT GROUP, LTD., a Delaware corporation ("GIANT"),
Fidelity National Financial, Inc., a Delaware corporation ("Fidelity"), and CKE
Restaurants Inc., a Delaware corporation ("CKE").
R E C I T A L S
- - - - - - - -
This Agreement is made with reference to the following facts and
objectives:
A. GIANT, Fidelity, CKE and certain other persons are parties to that
certain action entitled GIANT GROUP, LTD. v. William P. Foley, II; CKE
----------------------------------------------
Restaurants, Inc.; Fidelity National Financial, Inc.; William Davenport and
- ---------------------------------------------------------------------------
Robert Martyn (and related counterclaims), currently pending in the United
- -------------
States District Court for the Central District of California (Case No. SACV 95-
1095 LHM (EEx)) (the "Civil Action").
B. GIANT and its wholly owned subsidiary KCC Delaware Company, a
Delaware corporation ("KCC"), are the owners of an aggregate of 7,430,302 shares
of the outstanding common stock, par value $.10 per share (the "Rally's Stock"),
of Rally's Hamburgers, Inc., a Delaware corporation ("Rally's").
C. Fidelity is the beneficial owner of 705,489 shares of the
outstanding common stock, par value $.01 per share (the "GIANT Stock"), of
GIANT.
D. GIANT, Fidelity and CKE are parties to a Settlement Agreement and
Release (the "Settlement Agreement") pursuant to which the Civil Action will be
dismissed.
E. The obligations of the parties to the Settlement Agreement are
conditioned upon the execution by GIANT, Fidelity and CKE of this Agreement.
A G R E E M E N T
- - - - - - - - -
NOW, THEREFORE, in consideration of the foregoing, and the
representations, warranties, covenants and agreements contained herein, the
parties agree as follows:
1. Sale of Stock.
--------------
a. Fidelity hereby agrees to sell to GIANT, and GIANT hereby
agrees to purchase from Fidelity, 705,489 shares of GIANT Stock for a purchase
price of $8.625 per share, payable in cash.
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b. GIANT hereby agrees to sell, or cause KCC to sell, to CKE, and CKE
hereby agrees to purchase from GIANT or KCC, as applicable, 2,350,432 shares of
Rally's Stock for a price of $1.75 per share, payable in cash.
c. GIANT hereby agrees to sell, or cause KCC to sell, to Fidelity,
and Fidelity hereby agrees to purchase from GIANT or KCC, as applicable, 767,807
shares of Rally's Stock for an aggregate purchase price of $638,172.38, payable
in cash.
2. Closing.
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a. The closing of the purchase and sale of the Rally's Stock (the
"Closing") shall take place on May 3, 1996 at 5:00 p.m., Los Angeles time, at
the offices of Christensen, White, Miller, Fink, Jacobs, Glaser & Shapiro, LLP
("Christensen, White"), 2121 Avenue of the Stars, 18th Floor, Los Angeles,
California 90067, provided, however, that GIANT may in its sole discretion elect
to have the Closing take place on May 6, 1996 at 10:00 a.m., Los Angeles time,
at the offices of Christensen, White.
b. At the Closing: (i) Fidelity shall deliver to GIANT stock
certificate(s), duly endorsed for transfer or accompanied by separate stock
transfer powers, representing an aggregate of 705,489 shares of GIANT Stock and
$638,172.38 in cash; and (ii) GIANT shall deliver to Fidelity stock
certificate(s) duly endorsed for transfer or accompanied by separate stock
transfer powers, representing an aggregate of 767,807 shares of Rally's Stock
and $6,084,842.63 in cash.
c. At the Closing, GIANT shall deliver to CKE stock certificate(s),
duly endorsed for transfer or accompanied by separate stock transfer powers,
representing an aggregate of 2,350,432 shares of Rally's Stock and CKE shall
deliver to GIANT $4,113,256.00 in cash.
3. Grant of Options.
----------------
a. Subject to paragraph c. of this Section 3, GIANT hereby grants to
(i) Fidelity an irrevocable option (the "Fidelity First Option") to purchase
from GIANT, on the terms and conditions set forth herein, 587,607 shares of
Rally's Stock for an exercise price of $3.00 per share and (ii) CKE an
irrevocable option (the "CKE First Option" and together with the Fidelity First
Option, the "First Options") to purchase from GIANT, on the terms and conditions
set forth herein 587,607 shares of Rally's Stock for an exercise price of $3.00
per share.
b. Subject to paragraph c. of this Section 3, GIANT hereby grants to
(i) Fidelity an irrevocable option (the "Fidelity Second Option") to purchase
from GIANT, on the terms and conditions set forth herein, 587,607 shares of
Rally's Stock for an exercise price of $4.00 per share and (ii) CKE an
irrevocable option (the "CKE Second Option" and together with the Fidelity
Second Option, the "Second Options") to
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<PAGE>
purchase from GIANT, on the terms and conditions set forth herein 587,607 shares
of Rally's Stock for an exercise price of $4.00 per share.
c. In the event of any change in the Rally's Stock by reason of any
stock dividend, recapitalization, reorganization, merger, consolidation, split-
up, combination, or exchange of shares, or of any similar change affecting the
Rally's Stock (a "Recapitalization Event"), the number and class of shares or
other consideration which thereafter may be acquired upon exercise of the First
Options and the Second Options and the exercise price of such options following
the Recapitalization Event, shall be appropriately adjusted consistent with such
change such that Fidelity and CKE shall upon exercise of the First Options and
Second Options after such Recapitalization Event, to the extent such options are
exercisable, receive the same securities and other consideration as they would
have received had they exercised the First Options and Second Options
immediately prior to the Recapitalization Event.
d. In the event that Fidelity or CKE shall not purchase the Rally's
Stock pursuant to Section 7 hereof, then the First Options and the Second
Options shall be void.
4. Exercise of the Options.
-----------------------
a. Unless earlier terminated pursuant to Section 5 hereof and subject
to the requirements of Section 9 hereof, the Fidelity First Option and the CKE
First Option may be exercised by Fidelity and CKE, respectively, in whole or in
part at any time after the date hereof until 5:00 p.m., Los Angeles time, on the
first anniversary of the date hereof, provided, however, that if CKE shall not
have exercised the CKE First Option on or before April 21, 1997 then thereafter
until the first anniversary of the date hereof either Fidelity or CKE may
exercise the CKE First Option (but GIANT shall not be obligated to sell more
than 587,607 shares of Rally's Stock pursuant to the CKE First Option).
Thereafter the First Options may not be exercised.
b. Unless earlier terminated pursuant to Section 5 hereof and subject
to the requirements of Section 9 hereof, the Fidelity Second Option and the CKE
Second Option may be exercised by Fidelity and CKE, respectively, in whole or in
part at any time after the date hereof until 5:00 p.m., Los Angeles time, on the
second anniversary of the date hereof, provided, however, that if CKE shall not
have exercised the CKE Second Option on or before April 20, 1998 then thereafter
until the second anniversary of the date hereof either Fidelity or CKE may
exercise the CKE Second Option (but GIANT shall not be obligated to sell more
than 587,607 shares of Rally's Stock pursuant to the CKE Second Option).
Thereafter the Second Options may not be exercised.
c. Fidelity and CKE may exercise the First Options and/or the Second
Options, as applicable, by delivering written notice (the "Exercise Notice") to
GIANT at
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<PAGE>
the address set forth in Section 15 hereof. The Exercise Notice shall set forth
which of the options are being exercised and the number of Rally's Shares to be
purchased.
d. The closing of the purchase and sale of the Rally's Stock pursuant
to the First Options and/or the Second Options (a "First Option Closing" and a
"Second Option Closing," respectively) shall occur three (3) business days
following receipt by GIANT of the applicable Exercise Notice.
e. At each First Option Closing and Second Option Closing, if the
First Options and the Second Options, respectively, are exercised GIANT will
deliver to Fidelity and/or CKE, as applicable, stock certificate(s), duly
endorsed for transfer or accompanied by separate stock transfer powers,
representing the number of shares of Rally's Stock to be purchased and Fidelity
and/or CKE, as applicable, shall deliver to GIANT the purchase price for the
Rally's Stock to be purchased. Such purchase price shall be paid in cash.
5. Rights of First Refusal on Sales of Rally's Stock by Fidelity or CKE.
--------------------------------------------------------------------
a. If, prior to the tenth (10th) anniversary of the date hereof,
Fidelity or CKE proposes to sell shares of Rally's Stock, Fidelity or CKE, as
applicable, shall give notice to GIANT (the "Fidelity/CKE Sale Notice") of their
intent to sell such shares of Rally's Stock. A Fidelity/CKE Sale Notice shall
set forth the number of shares of Rally's Stock proposed to be sold and the
proposed sales price of such shares. A Fidelity/CKE Sale Notice shall
constitute an offer by Fidelity or CKE, as applicable, to sell the Rally's Stock
described therein to GIANT for the price set forth in the Fidelity/CKE Sale
Notice.
b. If GIANT elects to purchase the shares of Rally's Stock described
in the Fidelity/CKE Sale Notice: (i) GIANT shall give written notice to
Fidelity or CKE, as applicable, of such election within four (4) business days
after receipt of the Fidelity/CKE Sale Notice; and (ii) the closing of such
purchase shall take place at 10:00 a.m., Los Angeles time, on the sixth (6th)
business day following receipt by GIANT of the Fidelity/CKE Sale Notice at the
offices of Christensen, White, 2121 Avenue of the Stars, 18th Floor, Los
Angeles, California 90067. If GIANT elects not to purchase the Rally's Stock
described in the Fidelity/CKE Sale Notice or shall not respond to the
Fidelity/CKE Sale Notice within the time specified herein, Fidelity or CKE, as
applicable, shall be entitled to sell the Rally's Stock described in the
Fidelity/CKE Sale Notice for a price per share no less than that specified in
the Fidelity/CKE Sale Notice, provided however, that if such sale is not
consummated within thirty (30) days of the date of the Fidelity/CKE Sale Notice
then Fidelity and CKE may not sell such shares without renewed compliance with
the provisions of this Section 5.
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<PAGE>
6. Early Termination of Options; Rights of First Refusal on Sales of
-----------------------------------------------------------------
Rally's Stock by GIANT.
----------------------
a. If, prior to the tenth (10th) anniversary of the date hereof,
GIANT proposes to sell shares of Rally's Stock, GIANT shall give notice to
Fidelity and CKE (the "GIANT Sale Notice") of its intent to sell such shares of
Rally's Stock. A GIANT Sale Notice shall set forth the number of shares of
Rally's Stock proposed to be sold and the proposed sales price of such shares.
b. A GIANT Sale Notice delivered on or prior to December 31, 1996 or
after the period the First Options and Second Options are exercisable, shall
constitute an offer to Fidelity and CKE to sell the Rally's Stock described in
the GIANT Sale Notice to them (in equal amounts unless otherwise agreed between
them) for the price set forth in the GIANT Sale Notice.
c. A GIANT Sale Notice delivered after December 31, 1996 and during
the period the First Options and the Second Options are exercisable shall
constitute an offer to Fidelity and CKE to sell the Rally's Stock described in
the GIANT Sale Notice for the lower of (i) the price set forth in the GIANT Sale
Notice and (ii) the exercise price of the First Options to the extent
exercisable or the Second Options to the extent exercisable. In the event that
following such sale GIANT would not own a sufficient number of shares of Rally's
Stock to permit the exercise in full of the First Options and the Second
Options, the number of shares of Rally's Stock subject to the First Options and
Second Options shall be reduced by the number of shares of Rally's Stock which
are subject to a GIANT Sale Notice delivered after December 31, 1996 and during
the period the First Options and the Second Options are exercisable and only to
the extent the Rally's Stock GIANT owns following such sale is below the amount
needed to satisfy GIANT's obligations under the First Options and the Second
Options, whether or not such shares are purchased by Fidelity and/or CKE. Such
reduction shall apply first equally to the First Options until no shares of
Rally's Stock are subject to the First Options and then equally to the Second
Options.
d. If Fidelity and/or CKE elects to purchase the shares of Rally's
Stock described in a GIANT Sale Notice: (i) Fidelity and/or CKE, as applicable,
shall give written notice to GIANT of such election within three (3) business
days after receipt of the Sale Notice, provided, however, that if CKE shall not
elect to purchase the shares of Rally's Stock within such time period, then
Fidelity may elect to purchase such shares by giving written notice to GIANT of
such election within four (4) business days after receipt of the GIANT Sale
Notice; and (ii) the closing of such purchase shall take place at 10:00 a.m.,
Los Angeles time, on the sixth (6th) business day following receipt by Fidelity
and CKE of the GIANT Sale Notice at the offices of Christensen, White, 2121
Avenue of the Stars, 18th Floor, Los Angeles, California 90067. If Fidelity and
CKE elect not to purchase the Rally's Stock described in the GIANT Sale Notice
or shall not respond to the GIANT Sale Notice within the time specified herein,
GIANT shall be
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<PAGE>
entitled to sell the Rally's Stock described in the GIANT Sale Notice, for a
price per share no less than that specified in the GIANT Sale Notice, provided
however, that if such sale is not consummated within thirty (30) days of the
date of the GIANT Sale Notice then GIANT may not sell such shares without
renewed compliance with the provisions of this Section 6.
7. Due Diligence. From the date hereof through 11:00 a.m. Los Angeles
-------------
time on May 3, 1996, CKE and Fidelity may conduct such due diligence
investigation of the operations, books and records of Rally's as they determine
to be advisable. At any time through and including 11:00 a.m. Los Angeles time,
on May 3, 1996, Fidelity and/or CKE may notify GIANT of its intent not to
purchase the Rally's Stock as provided in Sections 1.b. and 1.c. hereof, in
which case they shall not be obligated to purchase such shares.
8. Standstill Provisions.
---------------------
a. From the date hereof through and including the tenth (10th)
anniversary of the date hereof Fidelity agrees that, without GIANT's prior
written consent, Fidelity will not:
(i) acquire, announce an intention to acquire, offer or propose
to acquire, or agree to acquire, directly or indirectly, by purchase or
otherwise beneficial ownership of any GIANT Stock or other voting
securities of GIANT (collectively with the GIANT Stock, the "Voting
Securities") or direct or indirect rights or options to acquire (through
purchase, exchange, conversion or otherwise) any Voting Securities if
immediately after such acquisition, Fidelity would own Voting Securities
representing more than 0.5% of the total voting power of all outstanding
Voting Securities (after giving effect to the transactions provided for in
Section 1.a.);
(ii) make, or in any way participate, directly or indirectly, in
any "solicitation" of "proxies" (as such terms are defined in Rule 14a-1
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
to vote any Voting Securities, seek to advise, encourage or influence any
person or entity with respect to the voting of any Voting Securities,
initiate or propose any shareholder proposal or induce or attempt to induce
any other person to initiate any shareholder proposal;
(iii) make any statement or proposal, whether written or oral,
to the Board of Directors of GIANT, or to any director, officer or agent of
GIANT, or make any public announcement or proposal whatsoever with respect
to a merger or other business combination, sale or transfer of assets,
recapitalization, dividend, share repurchase, liquidation or other
extraordinary corporate transaction with GIANT or any other transaction
which could result in a change
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<PAGE>
of control, or solicit or encourage any other person to make such statement
or proposal;
(iv) after consummation of the transactions described in
Sections 1.a. and 1.b. hereof, form, join or in any way participate in a
"group" (within the meaning of Section 13(d)(3) of the Exchange Act) with
respect to any securities of GIANT;
(v) otherwise act, alone or in concert with others, to seek to
exercise any control over the management, Board of Directors or policies of
GIANT;
(vi) make a public request to GIANT (or its directors, officers,
shareholder's employees or agents) to amend or waive any provisions of this
Agreement, the Certificate of Incorporation or By-Laws of GIANT, the GIANT
Stockholders Rights Plan or Rights issued pursuant thereto, including
without limitation any public request to permit Fidelity or any other
person to take any action not permitted by this Section 8.a.;
(vii) take any action which might require GIANT to make a public
announcement regarding the possibility of any transaction referred to in
paragraph (iii) above or similar transaction or, advise, assist or
encourage any other persons in connection with the foregoing; or
(viii) disclose any intention, plan or arrangement inconsistent
with the foregoing.
b. For purposes of this Section 8 the term "Fidelity" shall include
Fidelity, its officers, directors, affiliates and associates and their
respective family members.
9. Future Acquisitions of Rally's Stock by Fidelity and CKE. For so long
--------------------------------------------------------
as the 9 7/8% Senior Notes (the "Senior Notes") issued by Rally's are
outstanding, Fidelity and CKE each agree that neither they nor their affiliates
will, individually or as part of a group of persons, take any action that would
cause them to become the beneficial owner (within the meaning of Rule 13d-3 of
the Exchange Act), whether pursuant to the exercise of the First Options or the
Second Options or otherwise, of 35% or more of the combined voting power of the
then outstanding voting stock of Rally's without first obtaining (i) approval of
the Board of Directors of Rally's, and (ii) a waiver from the holders of the
Senior Notes of the provisions of Section 4.14 of the Indenture pursuant to
which the Senior Notes were issued.
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<PAGE>
10. Future Acquisitions of Rally's Stock by GIANT
---------------------------------------------
a. In the event that GIANT or its affiliates (other than Rally's)
shall purchase additional shares of Rally's Stock (other than on exercise of a
first refusal right pursuant to Section 5 hereof), GIANT shall give notice to
Fidelity and CKE (the "Purchase Notice") of such purchase. The Purchase Notice
shall set forth the number of shares of Rally's Stock purchased and the average
purchase price of such shares. Fidelity and CKE may, upon written request to
GIANT received within three (3) business days after receipt of the Purchase
Notice, purchase from GIANT, for the same average price set forth in the
Purchase Notice, a portion of the shares of Rally's Stock described in the
Purchase Notice such that following such purchases the proportional ownership of
Rally's Stock among GIANT, Fidelity and CKE shall be the same as immediately
prior to such purchases (without giving effect to the First Options and Second
Options to the extent not exercised); provided, however, that if Fidelity or CKE
shall not elect to purchase shares of Rally's Stock pursuant to a Purchase
Notice, the other party may purchase all the shares of Rally's Stock described
in the Purchase Notice.. If Fidelity and/or CKE elects to purchase the shares
of Rally's Stock described in the Purchase Notice the closing of such purchase
shall take place at 10:00 a.m. on the sixth (6th) business day following receipt
by Fidelity and CKE of the Purchase Notice at the offices of Christensen, White,
2121 Avenue of the Stars, 18th Floor, Los Angeles, California 90067.
b. GIANT agrees that neither it nor its affiliates will individually
or as part of a group of persons, become the beneficial owner (within the
meaning of Rule 13d-3 of the Exchange Act) of 35%, or more of the combined
voting power of Rally's without the consent of Fidelity and CKE.
c. In the event that GIANT on the one hand, and Fidelity and CKE on
the other hand, shall each own at least 34.0% of the outstanding Rally's Stock
(without giving effect to the First Options and Second Options to the extent not
exercised), the parties agree that at each election of directors of Rally's,
GIANT may nominate up to one-half of the number of directors to be elected and
Fidelity and CKE may nominate up to one-half of the number of directors to be
elected. The parties further agree that they will vote all shares of Rally's
Stock owned by them in favor of the election of the nominees of the other
parties. In addition, if one, but not both, of GIANT on the one hand, and
Fidelity and CKE on the other hand, own at least 34.0% of the outstanding
Rally's Stock (without giving effect to the First Options and Second Options to
the extent not exercised), the parties agree that at each election of directors
the party(ies) owning at least 34.0% of the outstanding Rally's Stock may
nominate up to one-half of the number of directors to be elected and the other
party(ies) will vote all shares of Rally's Stock owned by them in favor of such
nominees.
d. The provisions of this Section 10 shall expire and be of no
further force or effect on the tenth (10th) anniversary of the date hereof.
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<PAGE>
e. In the event that Fidelity or CKE shall elect not to purchase the
Rally's Stock pursuant to Section 7 hereof, then this Section 10 shall be of no
force or effect.
11. Conditions to CKE's Obligation to Purchase Rally's Stock. The
--------------------------------------------------------
obligation of CKE to purchase the Rally's Stock shall be conditioned upon, in
addition to any other conditions contained herein, (i) the approval by the Board
of Directors of Rally's of CKE as an Interested Stockholder (as defined in
Section 203 of the General Corporation Law of the State of Delaware) (ii) the
election of two (2) persons designated by CKE to the Board of Directors of
Rally's conditioned upon the occurrence of the Closing, and (iii) CKE shall not
have notified GIANT in accordance with Section 7 hereof of CKE's election not to
purchase the Rally's Stock.
12. Representation and Warranties of Fidelity and CKE. Fidelity and CKE,
-------------------------------------------------
severally and not jointly, hereby represent and warrant to GIANT as follows:
a. Fidelity and CKE are each purchasing the Rally's Stock (including
the Rally's Stock to be purchased upon exercise of the First Option and the
Second Option) for their own account for the purpose of investment and not with
a view to or for sale in connection with any distribution thereof. Fidelity and
CKE acknowledge that the Rally's Stock acquired from GIANT will be "restricted
securities" under the Securities Act of 1933, as amended. Fidelity and CKE
further acknowledge that the certificates representing the Rally's Stock
acquired by them from GIANT will contain appropriate legends to indicate that
such Rally's Stock are "restricted securities." Fidelity and CKE agree that
they will not, directly or indirectly, offer, transfer, sell, pledge,
hypothecate or otherwise dispose of any of the Rally's Stock in violation of
applicable securities laws.
b. Fidelity and CKE each has such knowledge and experience in
financial and business matters that they are capable of evaluating the merits
and risks of the investment in the Rally's Stock.
c. This Agreement has been duly and validly authorized, executed and
delivered by Fidelity and CKE, and constitutes a valid and binding agreement of
each of them, enforceable against them in accordance with its terms.
d. Fidelity and its wholly owned subsidiary Fidelity National Title
Insurance Company of Pennsylvania are the sole record and beneficial owners of
the shares of GIANT Stock to be sold to GIANT pursuant to this Agreement and
upon payment therefor and delivery thereof at the Closing as provided herein,
GIANT will own the shares of GIANT Stock purchased free and clear of all claims,
liens and encumbrances other than those created by GIANT.
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<PAGE>
e. The execution and delivery of this Agreement by Fidelity and CKE
do not, and the performance by them of their obligations hereunder will not,
violate, conflict with or result in a breach of any agreement to which Fidelity
or CKE is a party which would cause a material adverse effect on the business or
assets of Fidelity or CKE.
13. Representations and Warranties of GIANT. GIANT hereby represents,
---------------------------------------
warrants and covenants to Fidelity and CKE as follows:
a. GIANT and KCC are the sole record and beneficial owners of the
shares of Rally's Stock to be sold to Fidelity and CKE pursuant to this
Agreement and upon payment therefor and delivery thereof at the Closing, the
First Option Closing and/or the Second Option Closing, as applicable, Fidelity
and CKE will own the shares of Rally's Stock purchased free and clear of all
claims, liens and encumbrances other than those created by GIANT.
b. This Agreement has been duly and validly authorized, executed and
delivered by GIANT and constitutes a valid and binding agreement of it,
enforceable against it in accordance with its terms.
c. The Form 10-K of Rally's for the year ended December 31, 1995
(the "Form 10-K") and any filings made by Rally's with the Securities and
Exchange Commission since December 31, 1995 comply in all material respects with
applicable securities laws and regulations. None of such filings contain any
misstatements of material fact or fail to state all material facts necessary to
make the statements therein not misleading. The capitalization of Rally's is as
set forth in the Form 10-K.
d. GIANT agrees that until the tenth (10th) anniversary of the date
hereof it shall not, without the consent of Fidelity and CKE, take any action to
increase the size of the Board of Directors of Rally's and shall vote its shares
in favor of the two persons designated by CKE pursuant to Section 11 hereof (and
their successors).
e. The execution and delivery of this Agreement by GIANT does not,
and the performance by it of its obligations hereunder will not, violate,
conflict with or result in a breach of any agreement to which GIANT or Rally's
is a party which would cause a material adverse effect on the business or assets
of GIANT or Rally's.
14. Entire Agreement. This Agreement, together with the Settlement
----------------
Agreement and any exhibits attached hereto and thereto shall be deemed to be the
complete and entire agreement among the parties hereto with respect to the
subject matter hereof and supersedes any and all prior negotiations,
correspondence, understandings or other agreements or statements between the
parties and/or their representatives.
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<PAGE>
15. Notices. Any and all notices and demands by any party hereto to any
-------
other party, required or desired to be given hereunder, shall be in writing and
shall be validly given or made only if (i) sent by United States mail, express,
certified or registered, postage prepaid, return receipt requested, (ii) made by
Federal Express or other similar delivery service keeping records of deliveries
and attempted deliveries, or (iii) sent by telecopy. The parties may change
their address for the purpose of receiving notices or demands as herein provided
by a written notice given in the manner aforesaid to the other. Notices sent by
United States mail, express, certified or registered or by Federal Express or
other similar delivery service shall be deemed received upon receipt or
attempted delivery. Notices sent by telecopy shall be deemed received upon
electronic confirmation of transmission. Notices shall be sent to the parties
as follows:
To GIANT: GIANT GROUP, LTD.
150 El Camino Drive, Suite 303
Beverly Hills, California 90212
Attention: Chief Executive Officer
Fax: (310) 273-5249
with a copy to: Gary N. Jacobs, Esq.
Christensen, White, Miller, Fink, Jacobs, Glaser &
Shapiro, LLP
2121 Avenue of the Stars, 18th Floor
Los Angeles, California 90067
Fax: (310) 556-2920
To Fidelity: Fidelity National Financial, Inc.
17911 Von Karman Avenue, Suite 500
Irvine, California 92714
Attention: Andrew Puzder, Esq.
Fax: (714) 622-4116
with a copy to: Lawrence Lederman, Esq.
Milbank, Tweed, Hadley & McCloy
One Chase Manhattan Plaza
New York, New York 10005
Fax: (212) 530-5219
To CKE: CKE Restaurants, Inc.
1200 N. Harbor
Anaheim, California 92801
Attention: Chief Executive Officer
Fax: (714) 490-3965
with a copy to: Richard Goodman, Esq.
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<PAGE>
Stradling Yocca, Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
Fax: (714) 725-4100
16. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of California, without regard to conflicts
of laws principles. The parties agree that the sole forum for any action
relating to this Agreement shall be the appropriate state or federal court in
Los Angeles County, California. Each party hereto consents to personal
jurisdiction in such courts and waives all rights to contest the venue of any
action brought in such courts relating to this Agreement.
17. Specific Performance. The parties hereto acknowledge and agree that
--------------------
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, it is agreed that, in addition to any other
remedies which they may have, the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of competent jurisdiction.
18. Further Assurances. Each party to this Agreement shall execute all
------------------
instruments and documents and take all actions as may reasonably be necessary in
order to effectuate this Agreement.
19. Amendments. This Agreement may be amended or modified only in a
----------
writing executed by the party(ies) to this Agreement against whom enforcement of
such amendment or modification is sought.
20. Construction. Each party to this Agreement and its counsel have
------------
reviewed and revised this Agreement. The rule of construction that any
ambiguity shall be resolved against the drafting party shall not be employed in
the interpretation of this Agreement.
21. Survival. All representations, warranties and agreements contained
--------
herein shall survive the execution of this Agreement and the closing of the
transactions contemplated hereby.
22. Successors and Assigns; Assignment. All of the terms, covenants and
-----------------------------------
conditions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. No party hereto
shall be permitted to assign its rights under this Agreement other than to a
wholly-owned subsidiary. No assignment or transfer permitted hereunder shall
relieve any such assignor or transferor of any of its obligations hereunder and
any assignee or transferee
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<PAGE>
shall assume in writing all of the undertakings of assignor or transferor under
this Agreement.
23. Attorneys' Fees. Should an action be instituted by either of the
---------------
parties hereto in any court of law or equity pertaining to the enforcement of
any of the provisions of this Agreement, the prevailing party shall be entitled
to recover, in addition to any judgment or decree rendered therein, all court
costs and reasonable attorneys' fees and expenses.
24. Headings. All of the section headings herein are inserted for
--------
convenience only and shall have no meaning for purposes of this Agreement.
25. Counterparts. This Agreement may be executed in any number of
------------
counterparts, which when so executed and delivered shall be deemed an original,
and such counterparts shall constitute one and the same Agreement.
[remainder of page intentionally left blank]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement as
of the date first above written.
GIANT GROUP, LTD., a Delaware corporation
by: _______________________________
name: Burt Sugarman
title: Chief Executive Officer
Fidelity National Financial, Inc.,
a Delaware corporation
by: _______________________________
name: William P. Foley, III
title: Chief Executive Officer and
Chairman
CKE Restaurants, Inc., a Delaware
corporation
by: _______________________________
name: William P. Foley, II
title: Chief Executive Officer and
Chairman
- 14 -
<PAGE>
Exhibit 99.3
GIANT GROUP, FIDELITY AND CKE RESTAURANTS SETTLE LITIGATION
CARL'S JR. AND FIDELITY TO PURCHASE RALLY'S SHARES
Beverly Hills, California--April 26, 1996. Burt Sugarman, Chairman and Chief
Executive Officer of GIANT GROUP, LTD. (GPO-NYSE), William Foley, Chairman and
Chief Executive Officer of Fidelity National Financial, Inc. (FNF-NYSE), and CKE
Restaurants, Inc. (CKR-NYSE), the parent company of Carl's Jr., announced today
the settlement of all litigation between them.
Under the settlement, GIANT will acquire from Fidelity 705,489 shares of GIANT
common stock for cash. Fidelity will acquire from GIANT a 4.9% stake in Rally's
for cash and Carl's Jr. will acquire from GIANT a 15% stake in Rally's for cash.
Fidelity and Carl's Jr. will have options to buy a total of an additional 15% of
Rally's stock from GIANT.
Rally's will appoint to its Board of Directors William P. Foley, II, Carl's Jr.
and Fidelity's Chairman and Chief Executive Officer and C. Thomas Thompson,
President of Carl's Jr.
Mr. Thompson said: "Carl's Jr. is very happy with this agreement. It gives us
the opportunity to participate in Rally's turnaround and growth, and should be
good for both companies. Since both of us are in the quick-service market, we
will find many opportunities to cross promote and increase operating
efficiencies."
Donald Doyle, Rally's President and Chief Executive Officer, said: "I look
forward to working with my former colleagues at Carl's Jr. where they are
experiencing a highly successful turnaround."
Mr. Foley said: "I personally look forward to working with Burt Sugarman.
Fidelity is pleased to have resolved the litigation with GIANT in a way which
benefits both companies and their shareholders."
Burt Sugarman said: "This is an excellent result for all four companies. We
have ended costly litigation, and have brought in Carl's Jr., a dynamic and
successful restaurant operator. Carl's Jr., under the leadership of Bill Foley
and Tommy Thompson, will provide increased strength to Don Doyle and his team at
Rally's."
The Rally's portion of the transaction is subject to normal corporate due
diligence which will be completed Friday, May 3, 1996.
FOR FURTHER INFORMATION CONTACT:
Terry Christensen - (310) 553-3000
Andrew Puzder - (714) 622-4322
Robert Wilson - (714) 778-7133
