<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 11)
Giant Group, Ltd.
-----------------
(Name of Issuer)
Common Stock, par value $.01 per share
--------------------------------------
(Title of Class of Securities)
374503 1 10 0
--------------------------------------
(CUSIP Number)
Andrew F. Puzder
Executive Vice President and General Counsel
Fidelity National Financial, Inc.
17911 Von Karman Avenue
Irvine, California 92714
Tel. (714) 622-5000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
Copies to:
Lawrence Lederman, Esq.
Milbank, Tweed, Hadley & McCloy
One Chase Manhattan Plaza
New York, New York 10005
Tel. (212) 530-5000
March 22, 1996
--------------
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement / /.
Page 1 of 41 Pages
Exhibit Index on Page 10
<PAGE> 2
SCHEDULE 13D
CUSIP NO.: 374503 1 10 0
(1) NAME OF REPORTING PERSON:
Fidelity National Financial, Inc.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
IRS No. 86-0498599
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
(3) SEC USE ONLY
(4) SOURCE OF FUNDS: WC
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
(6) CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
(7) SOLE VOTING POWER: 705,489
(8) SHARED VOTING POWER: 0
(9) SOLE DISPOSITIVE POWER: 705,489
(10) SHARED DISPOSITIVE POWER: 0
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
705,489
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[x]
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 14.8(1)
(14) TYPE OF REPORTING PERSON: CO
____________________
(1) Based upon 4,778,385 shares of Common Stock outstanding as of
February 7, 1996, as disclosed in Item 5 to Amendment No. 13 of
the Schedule 13D filed by Burt Sugarman on February 13, 1996
with the Securities and Exchange Commission with respect to the
Common Stock.
Page 2 of 41 Pages
<PAGE> 3
CUSIP NO.: 374503 1 10 0
(1) NAME OF REPORTING PERSON:
William P. Foley, II(2)
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON:
IRS No. ###-##-####
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
(3) SEC USE ONLY
(4) SOURCE OF FUNDS: PF
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e) [ ]
(6) CITIZENSHIP OR PLACE OF ORGANIZATION: United States of America
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH:
(7) SOLE VOTING POWER: 0(3)
(8) SHARED VOTING POWER: 0
(9) SOLE DISPOSITIVE POWER: 0(3)
(10) SHARED DISPOSITIVE POWER: 0
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 0(3)
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[x]
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 0
____________________
(2) Mr. Foley owns 21.7% of the outstanding common stock of Fidelity
and he is the Chairman of the Board and Chief Executive Officer
of Fidelity. By virtue of such stock ownership and positions,
Mr. Foley may be deemed a "controlling person" of Fidelity.
(3) Mr. Foley disclaims beneficial ownership of 705,489 shares of
Common Stock held by Fidelity. Mr. Foley owns 21.7% of the
outstanding common stock of Fidelity, and he is Chairman of the
Board and Chief Executive Officer of Fidelity. By virtue of
such stock ownership and positions, Mr. Foley may be deemed a
"controlling person" of Fidelity.
Page 3 of 41 Pages
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(14) TYPE OF REPORTING PERSON: IN
Page 4 of 41 Pages
<PAGE> 5
This Amendment No. 11 amends the statement on Schedule 13D
filed with the Securities and Exchange Commission on December 8, 1995, as
heretofore amended (the "Schedule 13D"), with respect to the common stock, par
value $0.01 per share, of Giant Group, Ltd. (the "Common Stock"), a corporation
having its principal executive offices located at 150 El Camino Drive, Suite
303, Beverly Hills, California 90212 (the "Company"). All capitalized terms
not otherwise defined herein shall have the meanings ascribed thereto in the
Schedule 13D.
Other than as set forth herein, there has been no material
change in the information set forth in the Schedule 13D.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 3 of the Schedule 13D is hereby amended in its entirety
to read as follows:
Of the 705,489 shares of Common Stock to which this Statement
relates, (a) 585,000 of such shares were purchased by Fidelity with general
working capital funds of Fidelity during the period between July 13, 1995 and
March 15, 1996, for an aggregate purchase price of $3,622.198.50 (net of
brokerage commissions) and (b) 120,489 of such shares were purchased between
August 9, 1995 and January 4, 1996 by wholly-owned subsidiaries of Fidelity
with general working capital funds, for an aggregate purchase price of
$872,670.25 (net of brokerage commissions).
ITEM 4. PURPOSE OF TRANSACTION.
Item 4 of the Schedule 13D is hereby amended to add the
following:
(M) On March 22, 1996, Fidelity and Mr. Foley filed a
Second Amended Counterclaim against the Company and all of its directors (the
"Second Amended Counterclaim"). A copy of the Second Amended Counterclaim is
attached hereto as Exhibit 99.12, and is incorporated herein by reference. The
Second Amended Counterclaim clarifies and adds to Fidelity's and Mr. Foley's
prior counterclaims.
A summary of the counterclaims is contained in paragraph 21
to and including paragraph 43 of the Second Amended Counterclaim, attached
hereto as Exhibit 99.12. The Second Amended Counterclaim modifies the
declarations and injunctive relief Fidelity is seeking. In its counterclaims,
Fidelity seeks the following declarations: (1) that the Rights Plan adopted by
the Company's directors is invalid and unenforceable, (2) that the Exchange
Offer, as announced, is invalid and unenforceable and (3) that the Company's
directors, and each of them, breached their fiduciary duties in taking the
actions described in the counterclaims. Fidelity also seeks injunctive relief:
(1) prohibiting counterclaim defendants from taking any action in furtherance
of the Rights Plan, and directing them to rescind, or in the alternative to
redeem, the Rights and (2) prohibiting the counterclaim defendants from taking
any action in furtherance of the Exchange Offer, and directing the counterclaim
defendants to
Page 5 of 41 Pages
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rescind the Exchange Offer. Lastly, Mr. Foley seeks monetary damages with
respect to certain of the counterclaims.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5 of the Schedule 13D is hereby amended to add the
following:
As of the close of business on March 25, 1996, Fidelity was
the beneficial owner of 705,489 shares of Common Stock, which constitute in the
aggregate 14.8% of the outstanding shares of Common Stock (based on 4,778,385
shares of Common Stock outstanding as of February 7, 1996, as disclosed in Item
5 to Amendment No. 13 of the Schedule 13D filed by Burt Sugarman on February
13, 1995 with the Securities and Exchange Commission with respect to the Common
Stock). Mr. Foley disclaims beneficial ownership of the 705,489 shares of
Common Stock beneficially owned by Fidelity.
Schedule II to the Schedule 13D, a copy of which is attached
hereto and which Schedule is hereby incorporated by reference, has been amended
to reflect any purchases or sales of shares of Common Stock by Fidelity or Mr.
Foley since the filing of Amendment No. 10 to the Schedule 13D on March 1,
1996. As indicated on Schedule II, on March 15, 1996, Fidelity purchased
10,000 shares of Common Stock from Mr. Foley for a price equal to his cost.
Item 5(b) of the Schedule 13D is hereby amended in its
entirety to read as follows:
(b) Fidelity has the sole power to vote, direct the voting
of, dispose of and direct the disposition of the Common Stock owned by it.
Item 5(b) of the Schedule 13D is hereby amended in its
entirety to read as follows:
(d) Fidelity has the sole right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of, the
Common Stock owned by it.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Item 7 of the Schedule 13D is hereby amended to add the
following:
99.12 Second Amended Counterclaim filed March 22, 1996
Page 6 of 41 Pages
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
March 25, 1996
FIDELITY NATIONAL FINANCIAL, INC.
By: /s/ WILLIAM P. FOLEY, II
-------------------------------
Name: William P. Foley, II
Title: Chairman of the Board and
Chief Executive Officer
Page 7 of 41 Pages
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
March 25, 1996
/s/ WILLIAM P. FOLEY, II
--------------------------
William P. Foley, II
Page 8 of 41 Pages
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SCHEDULE II
Schedule of Transactions in the Shares
<TABLE>
<CAPTION>
No. of Shares No. of Shares Price Per
Date Purchased Sold Share(1)
---- ------------- ------------- ---------
<S> <C> <C> <C> <C>
FIDELITY:
- --------
03/15/96 10,000(3) 7.250
MR. FOLEY:
- ---------
03/15/96 10,000(3) 7.250
</TABLE>
_______________
(1) Net of brokerage commissions.
(3) Shares originally purchased by Mr. William P. Foley, II, Chairman of
the Board and Chief Executive Officer of Fidelity, on September 27,
1995. On March 15, 1996, Mr. Foley sold these shares to Fidelity for
the same price he paid for the shares plus his expenses.
Page 9 of 41 Pages
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EXHIBIT INDEX
-------------
99.12 Second Amended Counterclaim filed
March 22, 1996 Page 11
Page 10 of 41 Pages
<PAGE> 1
EXHIBIT 99.12
C. STEPHEN HOWARD (State Bar No. 43434)
JEFFERY D. McFARLAND (State Bar No. 157628)
SCOTT VICK (State Bar No. 171944)
MILBANK, TWEED, HADLEY & McCLOY
601 South Figueroa Street, 30th Floor
Los Angeles, California 90017-5704
(213) 892-4000
Attorneys for Defendants
and Counterclaim Plaintiffs
FIDELITY NATIONAL FINANCIAL, INC. and
WILLIAM P. FOLEY, II
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
GIANT GROUP, LTD., a Delaware ) CASE NO. SA CV-95-1095 LHM
corporation, ) (EEx)
)
Plaintiff, )
) SECOND AMENDED COUNTERCLAIM OF
v. ) COUNTERCLAIM PLAINTIFFS
) FIDELITY NATIONAL FINANCIAL,
WILLIAM P. FOLEY, II, a ) INC. AND WILLIAM P. FOLEY, II
California citizen; CKE ) FOR DECLARATORY AND INJUNCTIVE
RESTAURANTS, INC., a Delaware ) RELIEF AND FOR DAMAGES
corporation; FIDELITY NATIONAL )
FINANCIAL, INC., a Delaware ) DEMAND FOR JURY TRIAL
corporation; WILLIAM DAVENPORT, )
a California citizen; and )
ROBERT MARTIN, a Missouri )
citizen, )
)
Defendants. )
- ------------------------------------)
FIDELITY NATIONAL FINANCIAL, )
INC. and WILLIAM P. FOLEY, II, )
)
Counterclaim )
Plaintiffs )
)
v. )
)
GIANT GROUP, LTD. )
)
Counterclaim )
Defendant )
)
and )
)
)
Page 11 of 41 Pages
<PAGE> 2
BURT SUGARMAN; TERRY )
CHRISTENSEN; DAVID GOTTERER and )
ROBERT WYNN )
)
Additional )
Counterclaim )
Defendants. )
)
- ----------------------------------------
COUNTERCLAIMS
-------------
Counterclaim Plaintiffs Fidelity National Financial, Inc.
("Fidelity") and William P. Foley, II ("Foley"), for their second amended
counterclaims, allege as follows:
JURISDICTION AND VENUE
----------------------
1. This Court has jurisdiction over each of the
counterclaims set forth herein under 28 U.S.C. Section 1367(a) in that said
counterclaims arise from a common nucleus of operative facts and are so
intertwined with Plaintiff's purported federal claim for relief that the
counterclaims form part of the same case or controversy under Article III of
the United States Constitution.
2. Venue is proper in the Central District of California
pursuant to 18 U.S.C. Section 1391(b) and (c) in that at least one
Counterclaim Defendant resides in this District, all of the Counterclaim
Defendants transact affairs and do business in this District, and, further,
because a substantial part of the events giving rise to the counterclaims
occurred in this District.
THE PARTIES
-----------
3. Fidelity is a corporation duly organized and validly
existing under the laws of the State of Delaware, and qualified to do and doing
business in the State of California.
Page 12 of 41 Pages
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Fidelity's principal place of business is located at 17911 Von Karman Avenue,
Suite 300, Irvine, California 92714.
4. Foley serves as Chairman of Fidelity's Board of
Directors and as its Chief Executive Officer. Foley resides in Orange County
and is a citizen of the State of California.
5. Counterclaim Defendant Giant Group, Ltd. ("Giant") is
a publicly traded holding company duly organized and validly existing under the
laws of the State of Delaware, and qualified to do and doing business in the
State of California. One of Giant's principal assets is its ownership of a 48%
equity interest in another publicly traded company, Rally's Hamburgers, Inc.
("Rally's"). Giant also has more than $45 million of net cash and liquid
investments. Giant's principal place of business is located at 150 El Camino
Drive, Suite 303, Beverly Hills, California 90212.
6. Additional Counterclaim Defendant Burt Sugarman
("Sugarman") is Chairman of the Board and Chief Executive Officer of Giant and
owns approximately 29% of the common stock of Giant. Sugarman has options to
purchase approximately 17.9% more of Giant's common stock, for a total of 46.9%
of Giant's common stock. Sugarman is also Chairman of the Board, and a
shareholder of, Rally's. Sugarman controls both Giant and Rally's.
7. In addition to Sugarman, the other members of Giant's
Board of Directors are, and at all material times herein were, Counterclaim
Defendants Terry Christensen ("Christensen"), David Gotterer ("Gotterer"), and
Robert Wynn ("Wynn"). Sugarman, Christensen, Gotterer, and Wynn are
collectively referred to herein as the "Giant Directors."
Page 13 of 41 Pages
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8. Besides being a director of Giant, Gotterer is an
officer of Giant and both an officer and a director of Rally's. Gotterer is
also a partner in a two-partner accounting firm; and Gotterer and said firm
annually receive substantial remuneration for accounting services to both Giant
and Rally's and their affiliates.
9. Besides being a director of Giant, Christensen is a
name partner in the law firm of Christensen, White, Miller, Fink, Jacobs,
Glaser & Shapiro (the "Christensen/Glaser Firm"). Another name partner in the
Christensen/Glaser Firm, Patricia Glaser ("Glaser"), is a director of Rally's.
Christensen, Glaser, and the Christensen/Glaser Firm annually receive
substantial remuneration for legal services to both Giant and Rally's and their
affiliates.
10. Fidelity currently desires to, and is attempting to,
acquire control of Giant and has so informed Giant, the Giant Directors, and
the investing public. As set forth hereinafter, Sugarman and the other Giant
Directors -- solely to serve their own interests and not those of Giant or its
shareholders -- are trying to maintain control of Giant in Sugarman and to
prevent Fidelity from acquiring control of Giant.
FIDELITY'S INITIAL INVESTMENTS
------------------------------
IN, AND SUBSEQUENT EFFORTS
--------------------------
TO ACQUIRE CONTROL OF, GIANT
----------------------------
11. Between July and October 1995, Fidelity acquired
239,700 shares, or 4.7%, of Giant's common stock in open market transactions at
prices ranging from $6.625 to $7.50 per share.
12. Between November 28, 1995, and December 8, 1995,
Fidelity purchased 184,889 additional shares of Giant's common
Page 14 of 41 Pages
<PAGE> 5
stock, at prices ranging from $6.375 to $7.625 per share, bringing Fidelity's
percentage ownership of Giant's common stock up to 8.2%.
13. On December 8, 1995, Fidelity timely filed a 13D
public disclosure statement, disclosing its investment in Giant. In its 13D
disclosure statement Fidelity stated that its purpose in purchasing Giant stock
was "to acquire a significant equity position in [Giant]." The disclosure also
pointedly advised that "Fidelity does not consider itself a passive investor
and should not be regarded as such."
14. Between December 11, 1995, and March 15, 1996,
Fidelity acquired 270,900 additional shares of Giant's common stock at prices
ranging from $8.125 to $10.380 per share and acquired an additional 10,000
shares of Giant's common stock from Foley at Foley's historical cost.
15. Fidelity currently owns 705,489 shares, or 14.8%, of
Giant's common stock. Fidelity currently desires to, and in fact would,
purchase additional shares of Giant's common stock, to make Fidelity a holder
of more than 15% of Giant's common stock and therefore a holder of a block of
Giant stock closer to or equal to the amount of Giant stock held by Sugarman
(although Fidelity does not currently intend to purchase 35% or more of Giant's
common stock, as such a purchase might trigger certain provisions in Rally's
bond indenture). However, Fidelity cannot now purchase 15% or more of Giant's
common stock because of Giant's "Poison Pill" adopted by the Giant Directors on
or about January 4, 1996 to thwart Fidelity, as more particularly described
hereinafter.
Page 15 of 41 Pages
<PAGE> 6
16. Representatives of Fidelity have stated publicly that
one of the reasons for Fidelity's interest in Giant is Giant's large holdings
of cash and liquid investments, which could be distributed to, or otherwise
realized for the benefit of, Giant's common shareholders in a partial or
complete liquidation of Giant.
17. On February 14, 1996, Fidelity delivered to the Giant
Directors a formal offer by which Fidelity proposed to acquire Giant through a
negotiated merger between Fidelity and Giant. Under the terms of Fidelity's
merger offer, holders of Giant common stock would receive Fidelity common stock
worth $12 per Giant share, representing nearly a 100% premium over the trading
price of $6.375 for Giant stock in November 1995. Fidelity's offer of merger
has been publicly filed, and a copy is attached hereto as Exhibit A.
18. On February 22, 1996, the Giant Directors rejected
Fidelity's merger offer. Without addressing the fairness of the $12 per share
price offered by Fidelity for Giant stock, the Giant Directors simply declared
that "Giant is not for sale." In rejecting Fidelity's merger offer, the Giant
Directors acted solely to further their own interests and in derogation of the
interests of Giant and its shareholders.
19. Unable to acquire Giant through open market stock
purchases (because of the Poison Pill) and unable to acquire Giant through a
negotiated merger (because of the Giant Directors' wrongful rejection of
Fidelity's merger offer), Fidelity has decided to proceed next with a hostile
proxy contest as a means of acquiring Giant. On March 1, 1996, Fidelity
Page 16 of 41 Pages
<PAGE> 7
formally nominated, for election at Giant's next annual meeting, a rival slate
of candidates for Giant's Board of Directors. The candidates nominated by
Fidelity are committed to effecting a merger of Giant with Fidelity or, in the
alternative, considering a liquidation of Giant's assets. Fidelity's letter
nominating rival candidates for Giant's Board of Directors has been publicly
filed, and a copy is attached hereto as Exhibit B.
20. Although Giant's last annual meeting was held on May
15, 1995, to date the Giant Directors have conspicuously failed to give any
notice of Giant's next annual meeting. If Giant does not hold an annual
meeting by June 15, 1996, Fidelity intends to sue Giant and the Giant Directors
to compel them to hold an annual meeting of Giant shareholders.
THE GIANT DIRECTORS'
--------------------
CAMPAIGN OF ENTRENCHMENT
------------------------
21. From the moment that the Giant Directors learned of
Fidelity's investment in Giant, the Giant Directors embarked upon a relentless
campaign to entrench themselves in their positions at Giant and to prevent at
all costs an acquisition of control of Giant by Fidelity. In so doing, the
Giant Directors have acted in complete disregard for, and in breach of, their
fiduciary duties to Giant and its shareholders and have been motivated solely
by a desire to perpetuate Sugarman's control of Giant and thereby to preserve
the extensive personal benefits that each of them receive from Giant and from
Sugarman's and Giant's control of Rally's, as more specifically described
hereinafter. Throughout their campaign of entrenchment, the Giant Directors
have not served the interests of Giant and its
Page 17 of 41 Pages
<PAGE> 8
shareholders but rather have strived to injure Fidelity, and have injured
Fidelity, specifically and specially, by so far preventing Fidelity from
acquiring control of Giant. In the process, the Giant Directors have injured
Giant and Giant's shareholders as well.
The Bogus Complaint
-------------------
in this Action
--------------
22. The first step in the Giant Directors' campaign to
entrench themselves was the filing of Giant's complaint in this action. The
allegations of the complaint (and the first amended complaint) were, and are,
wholly specious and, on information and belief, were made in bad faith. On
information and belief, the only purpose of the Giant Directors' bringing this
action was to deter Fidelity from any effort it might undertake to acquire
Giant.
The Poison Pill
---------------
23. On or about January 4, 1996 -- two weeks after filing
this action -- the Giant Directors took action designed solely to erect a
barrier to insulate the Giant Directors -- and Sugarman in particular -- from
any change in control of Giant. The Giant Directors unanimously adopted a
blatantly discriminatory "Stockholders Rights Plan" (the "Poison Pill"), which
ensures that Fidelity will not be able to acquire control of Giant from
Sugarman without first obtaining the blessing of Giant's Board of Directors
(who can always rescind the Poison Pill).
24. The Poison Pill is triggered when any person (except
Sugarman) acquires voting control of 15% or more of
Page 18 of 41 Pages
<PAGE> 9
Giant's stock. If Fidelity were to trigger the Poison Pill, various rights
("Rights") issued to Giant shareholders would become exercisable and would
inflict economic destruction on Fidelity. Among other things, the Rights, if
exercised, would entitle each holder (except Fidelity) to buy additional shares
of Giant common stock at a 50% discount. In addition, each Rights holder could
purchase a new series of Giant preferred stock, entitling them to receive
dividends and other payments in an amount 1000 times that to be received by
each share of common stock. These provisions, if triggered by Fidelity, would
specially injure and disadvantage Fidelity by diluting its interest in Giant,
both economically and in terms of its percentage ownership, and by severely
impacting and undercutting Fidelity's voting rights in Giant. At bottom, the
Poison Pill makes acquisition of 15% or more of Giant's stock, without
cooperation of Giant's Board of Directors, prohibitively expensive for Fidelity
or any prospective acquiror, except Sugarman. Thus the present effect of the
Poison Pill is to prevent Fidelity from purchasing 15% or more of Giant's
common stock as it so desires, and to prevent Fidelity from acquiring control
of Giant.
25. The Giant Directors' real, and illicit, purpose for
adopting the Poison Pill is made evident by the fact that the Poison Pill would
be triggered if Fidelity acquires 15% of Giant's stock, but the Poison Pill
would not be triggered if Sugarman (who owned approximately 20% of Giant's
stock at the time the Poison Pill was adopted) exercises his options to
purchase almost 47% of the company. The 15% trigger level in the
Page 19 of 41 Pages
<PAGE> 10
Poison Pill was intentionally selected by the Giant Directors to be
substantially less than Sugarman's then present, or potential future, holdings
of Giant stock, so that Fidelity could never acquire nearly as much Giant stock
as Sugarman owned without the cooperation of Giant's Board of Directors.
26. There is no rational or legitimate business purpose
for such a Poison Pill; the disparate treatment of Fidelity vis-a- vis Sugarman
was enacted solely to perpetuate Sugarman's control of Giant and to prevent
Fidelity from purchasing 15% or more of Giant's stock.
Giant Purchases of its Own Stock
--------------------------------
27. Next, beginning two weeks after the filing of this
action, and for no reason other than to further tighten Sugarman's grip on
Giant, the Giant Directors caused Giant to purchase 535,527 shares of Giant
stock beginning at a price barely shy of its fifty-two week high (the "Stock
Purchases"). The Stock Purchases increased Sugarman's percentage ownership
over, and voting power in, Giant -- at no expense to Sugarman. The Stock
Purchases had the practical effect of increasing Sugarman's percentage
ownership in Giant to the point where he could then exercise options to buy,
without triggering the Poison Pill, close to a 50% interest in Giant, thereby
all but definitively thwarting any attempt by Fidelity to gain control of
Giant. Thus, while Fidelity's percentage increase in Giant was also increased
by the Stock Purchases, the increase was more beneficial to Sugarman by placing
his potential ownership perilously close to 50%.
///
Page 20 of 41 Pages
<PAGE> 11
The Exchange Offer
------------------
28. Next, or about January 22, 1996 -- without any vote
of Giant's shareholders -- the Giant Directors announced that Giant would offer
to exchange a new series of its $9.00 liquidation preference, participating,
non-voting preferred stock for shares of common stock of Rally's, which Giant
presently controls (the "Exchange Offer").
29. The Exchange Offer, if consummated, will be nothing
less than a giveaway designed to discourage an acquisition of Giant by Fidelity
- -- corporate waste just to hurt Fidelity. Under the Exchange Offer, the Giant
preferred stock to be received by Rally's shareholders will receive a "double
dip" in any liquidation of Giant -- both a $9.00 preference and then an
additional equal sharing with Giant's common stockholders. The holders of
Giant's common stock will thus fare very badly in any liquidation of Giant, if
the Exchange Offer is made and consummated -- far worse than they would have if
Giant were liquidated without the Exchange Offer being made and consummated.
Fidelity sees an attractive value for Giant's shareholders in a potential
liquidation of some or all of Giant's assets. If the Exchange Offer is made
and consummated, the immediate effect will be a substantial diminishment in the
value of having control of Giant and an immediate injury to Fidelity.
30. Moreover, for no rational or legitimate reason, the
proposed exchange ratio gives Rally's stockholders a 39% premium over the
trading price of Rally's common stock immediately prior to the announcement of
the Exchange Offer. A holder of 4.5 shares of Rally's common stock, then
trading at
Page 21 of 41 Pages
<PAGE> 12
approximately $1.4375 per share, i.e., a value of $6.47, would receive one
share of Giant preferred in the Exchange Offer with a liquidation preference of
$9.00 per share. Given the consistent operating losses of Rally's, such a
premium for Rally's stock is unjustifiable and provides no possible benefit to
Giant or its shareholders.
31. In addition, the Giant Directors structured the
Exchange Offer with non-voting stock in order to circumvent Giant's listing
agreement with the New York Stock Exchange, which requires that Giant obtain
stockholder approval for material issuances of voting securities. As the Giant
Directors know well, the holders of Giant's common stock would never approve
such a wholesale giveaway program, which was designed solely to injure Fidelity
and thwart Fidelity from acquiring control over Giant.
32. Not surprisingly, the Giant Directors have not sought
any fairness opinion that the proposed Exchange Offer is fair to Giant or its
shareholders. Indeed, in view of (i) the substantial and unjustifiable premium
that Giant will be offering for the stock of a losing affiliated company (i.e.
the "giveaway"), (ii) the participating preference of the preferred stock to be
offered (i.e., the "double dip"), and (iii) the dilutive effect of the Exchange
Offer on Giant's equity, it seems most unlikely that any reputable, independent
firm could render such a fairness opinion.
33. Although announced on January 22, 1996, the Exchange
Offer has not yet formally been made by Giant to the Rally's shareholders.
Page 22 of 41 Pages
<PAGE> 13
34. At the time that the Giant Directors approved the
Exchange Offer, Sugarman and Gotterer were both directors and shareholders of
Rally's; Christensen's partner Glaser was a director of Rally's; and, for
reasons described below, Christensen and Wynn, as well as Sugarman and
Gotterer, each stood to gain from perpetuating Sugarman's control of Giant.
None of the Giant Directors was disinterested in the Exchange Offer.
35. Prior to Fidelity's announcing its then 8.2%
investment in Giant in December 1995, Giant had not adopted any poison pill,
had not purchased its own stock in the large quantities that it now has, and
had not announced any exchange offer.
THE GIANT DIRECTORS' MOTIVATION
-------------------------------
TO PREVENT FIDELITY FROM
------------------------
ACQUIRING GIANT
---------------
36. The Giant Directors, consisting of Sugarman, his
lawyer (Christensen), his accountant (Gotterer), and his friend (Wynn), are
anything but disinterested or independent. With the help of his hand-picked
colleagues, Sugarman has long used his control over Giant, and in turn the
companies that Giant controls, to extract for himself, the other Giant
Directors, and people associated with them, huge benefits in the form of
salaries, stock options, perquisites, professional fees, and questionable
purchase payments.
37. The Giant Directors' current campaign of entrenchment
is motivated by a desire to preserve and continue the great personal benefits
that each of the Giant Directors, and those associated with them, receive, and
have received, from
Page 23 of 41 Pages
<PAGE> 14
Giant and from Giant's control of Rally's and other companies. Sugarman and
the Giant Directors are entangled in a web of conflicts. Examples of ways in
which Sugarman and the Giant Directors, and their affiliates, benefit, and have
benefitted, often wrongfully, from their control of Giant and Giant's control
of Rally's and other companies, include the following:
a. Although Giant has a mere nine employees, no
business operations, and has lost money for three of the last four years,
Sugarman currently draws a salary from Giant of approximately $1.9 million to
support his opulent lifestyle. From 1987 until 1991, Sugarman and Gotterer
were the only two members of Giant's compensation committee. While serving on
that committee in 1990, Sugarman awarded himself a $1.5 million bonus on top of
his $1 million annual salary, even though Giant had been losing money and had
cut employee health benefits.
b. In addition to his salary and bonuses,
Sugarman enjoys excessive, and wholly unnecessary perquisites from Giant. For
example, despite no apparent corporate need, Sugarman caused Giant to acquire
for his use a lavish Gulfstream jet, for which Giant retains two pilots on a
stand-by basis. On information and belief, Sugarman has exclusive control over
use of the jet, and frequently uses it to fly himself and his spouse Mary Hart
("Hart") on personal vacations at Giant's expense, including trips to the South
of France, to their vacation homes in Colorado and Montana, and a recent trip
to a Harley Davidson biker convention in Sturgis, South Dakota.
///
///
Page 24 of 41 Pages
<PAGE> 15
c. Sugarman, Gotterer, Christensen, and Wynn, as
directors of Giant, receive $10,000 per year, plus $500 and expenses for each
directors' meeting that they attend.
d. In addition to his directors' pay, Gotterer
receives substantial remuneration for financial services that he and/or his
accounting firm provide to Giant. Moreover, on information and belief,
Gotterer receives substantial remuneration for financial services that he
and/or his accounting firm provide to (1) Sugarman individually, (2) Burt
Sugarman, Inc., (3) Mary Hart individually (Sugarman's wife), (4) Mary Hart,
Inc., (5) KCC Delaware Co. (a wholly owned Giant subsidiary), and (6) Self
Service Drive Thru (a Giant affiliate).
e. In addition to his directors' pay,
Christensen receives substantial remuneration for legal services that he and/or
the Christensen/Glaser Firm provide to Giant. Moreover, on information and
belief, Christensen receives substantial remuneration for legal services that
he and/or the Christensen/Glaser Firm provide to (1) Burt Sugarman
individually, (2) Burt Sugarman, Inc., (3) Mary Hart individually, (4) Mary
Hart, Inc., (5) KCC Delaware Co. (a wholly owned Giant subsidiary), and (6)
Self Service Drive Thru (a Giant affiliate).
f. By controlling Giant, Sugarman is also able
to control Rally's and to reap benefits from Rally's for himself and his
colleagues. At Rally's, Sugarman has installed a Board of Directors, a
majority of which consists of himself, his spouse
///
Page 25 of 41 Pages
<PAGE> 16
(Hart), his accountant (Gotterer), and another of his lawyers, Glaser. Apropos
of Sugarman's conduct with respect to Rally's:
(1) Giant and Sugarman acquired control
of Rally's in a public offering in October 1989, which drew the attention of
the Securities and Exchange Commission ("SEC"). After an investigation by the
SEC, Sugarman was personally fined by the SEC in the amount of $619,855,
including interest, and consented to the entry of an Order by the United States
District Court for the District of Columbia, which permanently enjoined
Sugarman from violating Section 17(a)(2) of the Securities Act of 1933. The
Order was sought on the grounds that Sugarman, concealed his plans to take over
control of Rally's in connection with purchases of Rally's stock. Although
Sugarman was personally fined, Giant paid his fine as well as Sugarman's
$545,000 legal bill from the Christensen/Glaser law firm and other lawyers;
(2) As part of Sugarman's acquisition of
control of Rally's, Sugarman caused Giant to loan Glaser approximately $2
million with which to invest in Rally's stock, along with Giant, Gotterer, and
others, and thereby allow Sugarman to acquire control of Rally's in its initial
public offering. Glaser subsequently sold her Rally's stock for $3.8 million,
apparently realizing a profit of $1.8 million. Glaser's trading in Rally's
securities is currently the subject of a federal securities lawsuit in the
Western District of Kentucky;
(3) Once in control of Rally's, Sugarman
caused Hart, Gotterer, and Glaser to be elected to Rally's board.
Page 26 of 41 Pages
<PAGE> 17
At various times, Hart, Glaser, Gotterer, and Sugarman himself have served on
the Rally's three-member Compensation Committee, thereby enabling, inter alia,
Sugarman, his spouse, his lawyer, and his accountant, at various times, to
determine Sugarman's compensation and other benefits from Rally's, including
compensation that has been running approximately $200,000 to $340,000 per year
along with extensive stock options; and
(4) Since Sugarman has acquired control
of Rally's, Christensen and Glaser and the Christensen/Glaser Firm have
received substantial remuneration for legal services to Rally's and its
affiliates.
g. By controlling Giant, Sugarman was also able
for a time to control Barris Industries ("Barris") and to reap benefits from
Barris for himself and his colleagues. For example, in June 1987, Sugarman and
Gotterer caused Barris to pay to Sugarman's own personal holding company --
Burt Sugarman, Inc. -- non-refundable advances of over $1 million in exchange
for worthless distribution rights of limited duration in regard to long-dormant
television shows produced by Sugarman; Barris never developed these properties.
In addition, the Christensen/Glaser Firm (and/or its predecessor) received
substantial remuneration for legal services to Barris during the time that
Sugarman and Giant controlled Barris.
FIDELITY'S SPECIAL INJURY
-------------------------
38. While the wrongful actions of the Giant Directors
have injured Giant and Giant's shareholders generally, said actions have
specially and particularly injured, are presently injuring, and will in the
future injure, Fidelity. Said injuries
Page 27 of 41 Pages
<PAGE> 18
to Fidelity are separate and distinct from the injuries suffered by Giant
and/or Giant's shareholders generally. Under Delaware law, Fidelity is
entitled to seek relief in this Court directly in Fidelity's own right to
invalidate and enjoin the Giant Directors' wrongful actions alleged herein.
39. Among other ways, Fidelity is specially injured by
the Giant Directors' wrongful actions, separate and distinct from the injuries
suffered by Giant and/or Giant's shareholders generally, in that Fidelity is
currently attempting to acquire control of Giant from Sugarman, and the Giant
Directors' wrongful actions are intentionally designed to prevent such change
in control to Fidelity. Among other special injuries to Fidelity:
a. The Poison Pill wrongfully discriminates
between Sugarman and Fidelity. Fidelity desires to purchase 15% or more of
Giant's stock and to acquire control of Giant from Sugarman. The present
effect of the Poison Pill is to prevent Fidelity from purchasing 15% or more of
Giant's stock and from acquiring control of Giant without the cooperation of
Giant's Board of Directors, which currently consists of the entrenched Giant
Directors.
b. Giant's Stock Purchases have specially
injured Fidelity by allowing Sugarman to acquire -- at Giant's expense --
virtually a majority stake in Giant upon exercise of his remaining stock
options; Sugarman has, in effect, used Giant's money to buy himself de facto,
inviolable control of Giant, so that Fidelity cannot acquire such control; and
c. The Exchange Offer, if made and consummated,
will immediately and specially injure Fidelity because it will
Page 28 of 41 Pages
<PAGE> 19
prevent Fidelity from realizing value on Giant's common stock in a liquidation
of some or all of Giant's assets. If the announced Exchange Offer is made and
consummated, its immediate effect will be to reduce and impair the value of
control of Giant to Fidelity by preventing Fidelity from realizing value in a
liquidation of Giant. Fidelity's present contractual rights to participate in
a liquidation of Giant will thus be impaired. The Exchange Offer has the
present effect of deterring Fidelity from seeking to acquire control of Giant.
DEFAMATION OF FOLEY
-------------------
40. Foley is an honest and successful businessman who has
earned the high esteem of his peers and associates in the business community.
Foley graduated from the United States Military Academy in West Point, New York
with a Bachelor of Science degree, and served his country as an Air Force
Captain. Through hard work, and with the respect he earned from his
colleagues, Foley built a tiny Arizona storefront operation into the nation's
fourth-largest title insurance company with over 4,700 employees in forty-eight
states. His efforts won him plaudits from industry analysts, who have
described Fidelity as one of the nation's best-run title companies. In 1993,
Foley was elected Chairman and CEO of Carl Karcher Enterprises, Inc. (operator
of the Carl's Jr. restaurant chain), at which he engineered a turn around from
a four-year slide. Foley is a member of the Board of Directors and the
Foundation Board of the University of California at Irvine. In 1995, Foley was
the recipient of the distinguished Human Relations Award for Orange County
awarded by the American Jewish Committee. Past recipients
Page 29 of 41 Pages
<PAGE> 20
of this award have included former President Ronald W. Reagan. Foley's success
and good name have allowed him to occupy, and enjoy, a position of prominence
and high standing in the community.
41. As part of the Giant Directors' campaign of
entrenchment, on December 19, 1995, Giant -- with the full knowledge and
participation of Christensen -- prepared and issued a press release. That
press release, a copy of which is attached hereto as Exhibit C, identified
Christensen as Giant's corporate contact. In the press release, Christensen
made the following blatantly false, unprivileged, defamatory statements that
explicitly and implicitly accused Foley of acting illegally, dishonestly, and
unprofessionally in his business dealings:
"Terry Christensen, a director of Giant stated, 'We were shocked to
learn that Mr. Foley and Fidelity were buying Giant stock while Mr.
Foley and his officers were constantly asking about the profit and
loss projections, cash positions and business plans of both Giant and
Rally's.' Christensen further stated, 'When we learned that Mr.
------------------------
Foley's stockbrokers were utilizing confidential and insider
------------------------------------------------------------
information to buy Giant stock for a group of investors acting with Mr.
------------------------------
Foley, we felt that this lawsuit was absolutely necessary.'
Christensen stated, 'The directors of Giant do not oppose legitimate
actions by its stockholders, but we have a duty to prevent flagrant
--------
violations of the securities laws.'" (emphasis added).
----------------------------------
Page 30 of 41 Pages
<PAGE> 21
42. Giant and Christensen did not stop there. Giant,
with the full knowledge and participation of Christensen, prepared and issued
another press release on January 4, 1996. That press release, a copy of which
is attached hereto as Exhibit D, again identified Christensen as Giant's
corporate contact. In this press release, Christensen made the following
blatantly false, unprivileged, defamatory statements that explicitly and
implicitly accused Foley of acting illegally, dishonestly, and unprofessionally
in his business dealings:
"Terry Christensen, a director of Giant, stated, 'Giant will not stand
idly by while these individuals attempt to loot Giant and Rally's to
------------------------------------------------------------
the detriment of these companies and their shareholders.'" (emphasis
added.)
43. Giant's and Christensen's written and oral statements
set forth in Paragraphs 41 and 42 above were not privileged. Said statements
were not made in any judicial proceeding and did not merely report allegations
made in any judicial proceeding. Nor were said statements required to be made
by any federal or state law or other legal obligation of Giant or Christensen.
FIRST CLAIM FOR RELIEF
----------------------
(BY FIDELITY AGAINST ALL COUNTERCLAIM DEFENDANTS: FOR
DECLARATORY RELIEF THAT THE POISON PILL IS INVALID
AND FOR INJUNCTIVE RELIEF AGAINST ITS ENFORCEMENT)
44. Counterclaim Plaintiffs repeat, re-aver and
incorporate by this reference paragraphs 1 through 43 above, as though fully
set forth herein.
45. In conducting the business of Giant, the Giant
Directors owed a duty of care, loyalty and independence to Giant
Page 31 of 41 Pages
<PAGE> 22
and to its shareholders. As described in detail above, the Giant Directors, in
adopting the Poison Pill, violated their fiduciary duties to Giant and its
shareholders and acted solely to entrench themselves and to prevent Fidelity
from acquiring control of Giant from Sugarman. The Poison Pill serves no
rational business purpose for Giant.
46. The adoption of the Poison Pill by the Giant
Directors was a breach of the Giant Directors' fiduciary duties; and the Poison
Pill is void and invalid because:
(a) In adopting the Poison Pill, the Giant Directors
did not act on an informed basis, in good faith, and in the honest belief that
the Poison Pill was in the best interests of Giant. The Board's decision to
adopt the Poison Pill cannot be attributed to any rational or legitimate
business purpose. The Giant Directors' adoption of the Poison Pill was not a
proper exercise of the Giant Directors' business judgment and therefore cannot
be sustained unless all aspects of the Poison Pill are objectively or
intrinsically fair to Giant's shareholders. The Poison Pill is not in fact
objectively or intrinsically fair to Giant's shareholders and is therefore void
and invalid; and
(b) In the alternative, the Giant Directors
adopted the Poison Pill in an effort to resist a perceived threat that Fidelity
might seek to acquire control of Giant from Sugarman. In taking actions to
fend off such a possible change in corporate control, the Giant Directors owed
an enhanced duty of care to Giant and its shareholders, and the actions of the
Giant Directors in such context are subject to enhanced judicial scrutiny. The
Giant Directors adopted the Poison Pill solely to
Page 32 of 41 Pages
<PAGE> 23
entrench and perpetuate themselves as Giant Directors and to prevent Fidelity
from acquiring control of Giant from Sugarman. The Giant Directors have not
shown, and cannot show, that they had reasonable grounds for believing that a
danger to Giant's corporate policy and effectiveness existed. Even if the
Giant Directors could make such a showing, they have not shown, and cannot
show, that the adoption of the Poison Pill was reasonable in relation to the
threat posed. Accordingly, the Court should treat the Poison Pill as an
instance of self-dealing and require the Giant Directors to show that the
Poison Pill was entirely fair to Giant's shareholders. The Giant Directors
cannot make this showing, and the Poison Pill is therefore void and invalid.
47. An actual controversy has arisen and now exists
between the parties relating to the validity and enforceability of the Poison
Pill, for which Fidelity desires a declaration of rights. A declaratory
judgment is necessary and appropriate in that the parties contest whether the
Poison Pill is or is not valid and enforceable. Fidelity is entitled to a
Declaration from this Court that the Poison Pill is invalid and unenforceable.
48. Fidelity is specially injured by the Poison Pill,
which injury is irreparable and for which Fidelity has no adequate remedy at
law. Unless implementation of the Poison Pill is enjoined, Fidelity will be
denied its full voting rights in Giant, Fidelity will be unable to purchase 15%
or more of Giant's stock, and Fidelity will be unable to acquire control of
Giant without the cooperation of Giant's board.
Page 33 of 41 Pages
<PAGE> 24
49. Fidelity is entitled to an injunction from this Court
prohibiting Counterclaim Defendants from taking any action in furtherance of
the Poison Pill, and directing them to rescind, or in the alternative to redeem
the Poison Pill.
SECOND CLAIM FOR RELIEF
-----------------------
(BY FIDELITY AGAINST ALL COUNTERCLAIM DEFENDANTS: FOR
DECLARATORY RELIEF THAT THE EXCHANGE OFFER IS INVALID
AND FOR INJUNCTIVE RELIEF AGAINST ITS EXECUTION)
50. Counterclaim Plaintiffs repeat, re-aver and
incorporate by this reference paragraphs 1 through 49 above, as though fully
set forth herein.
51. In conducting the business of Giant, the Giant Directors
owed a duty of care, loyalty and independence to Giant and to its shareholders.
As described in detail above, the Giant Directors, in approving the Exchange
Offer, violated their fiduciary duties to Giant and its shareholders and acted
solely to entrench themselves and to prevent Fidelity from acquiring control of
Giant from Sugarman. The Exchange Offer serves no rational business purpose
for Giant.
52. The approval of the Exchange Offer by the Giant
Directors was a breach of the Giant Directors' fiduciary duties; and the
Exchange Offer, if made, is void and invalid because:
(a) In approving the Exchange Offer, the Giant
Directors did not act on an informed basis, in good faith, and in the honest
belief that the Exchange Offer was in the best interests of Giant. The Board's
decision to approve the Exchange Offer cannot be attributed to any rational or
legitimate business purpose. The Giant Directors' approval of the Exchange
Offer was not a proper exercise of the Giant Directors' business judgment
Page 34 of 41 Pages
<PAGE> 25
and therefore the Exchange Offer, as announced, cannot be sustained unless all
aspects of the Exchange Offer are objectively or intrinsically fair to Giant's
shareholders. The Exchange Offer, as announced, is not in fact objectively or
intrinsically fair to Giant's shareholders and is therefore void and invalid;
(b) In the alternative, the Giant Directors approved
the Exchange Offer in an effort to resist a perceived threat that Fidelity
might seek to acquire control of Giant from Sugarman. In taking actions to
fend off such a possible change in corporate control, the Giant Directors owed
an enhanced duty of care to Giant and its shareholders, and the actions of the
Giant Directors in such context are subject to enhanced judicial scrutiny. The
Giant Directors approved the Exchange Offer solely to entrench and perpetuate
themselves as Giant Directors and to prevent Fidelity from acquiring control of
Giant from Sugarman. The Giant Directors have not shown, and cannot show, that
they had reasonable grounds for believing that a danger to Giant's corporate
policy and effectiveness existed. Even if the Giant Directors could make such
a showing, they have not shown, and cannot show, that the approval of the
Exchange Offer was reasonable in relation to the threat posed. Accordingly,
the Court should treat the Giant Directors' approval of the Exchange Offer as
an instance of self-dealing and require the Giant Directors to show that the
Exchange Offer was entirely fair to Giant's shareholders. The Giant Directors
cannot make this showing, and the Exchange Offer, if made, is therefore void
and invalid; and
Page 35 of 41 Pages
<PAGE> 26
(c) In the alternative, the Exchange Offer, as
announced, constitutes an interested director transaction under Delaware
General Corporation Law Section 144, inter alia, in that the Exchange Offer, if
made, will be a transaction between Giant and Sugarman and Gotterer, as
shareholders of Rally's to whom the Exchange Offer is made. On information and
belief, each of the Giant Directors has interests in the Exchange Offer within
the meaning of Section 144. Accordingly, none of the Giant Directors who
approved the Exchange Offer was "disinterested" within the meaning of Section
144(a)(1); and the Exchange Offer has never been approved by Giant's
shareholders as provided in Section 144(a)(2). Therefore, the Exchange Offer,
if made, is void and voidable under Section 144, unless it is fair to Giant
under Section 144(a)(3). The Exchange Offer is not fair to Giant and, if made,
is therefore void and invalid.
53. An actual controversy has arisen and now exists
between the parties relating to the validity and enforceability of the Exchange
Offer, for which Fidelity desires a declaration of rights. A declaratory
judgment is necessary and appropriate in that the parties contest whether the
Exchange Offer, if made, is or is not valid and enforceable. Fidelity is
entitled to a Declaration from this Court that the Exchange Offer, if made, is
invalid and unenforceable.
54. Fidelity is specially injured by the Exchange Offer,
which injury is irreparable and for which Fidelity has no adequate remedy at
law. Unless implementation of the Exchange Offer is enjoined, Fidelity will be
denied its full voting rights in Giant, Fidelity will be denied its contractual
rights as a
Page 36 of 41 Pages
<PAGE> 27
holder of Giant's common stock to participate in a liquidation of Giant,
Fidelity will not be able to realize value on its Giant stock by a liquidation
of some or all of Giant's assets, the value of control of Giant to Fidelity
will be reduced and impaired, and Fidelity may be deterred from its efforts to
acquire Giant.
55. Fidelity is entitled to an Injunction from this Court
prohibiting Counterclaim Defendants from taking any action in furtherance of
the Exchange Offer, and directing them to rescind the Exchange Offer, if made.
THIRD CLAIM FOR RELIEF
----------------------
(BY FOLEY AGAINST GIANT AND
CHRISTENSEN: FOR LIBEL)
56. Counterclaim Plaintiffs repeat, re-aver and
incorporate by this reference paragraphs 1 through 55 above, as though fully
set forth herein.
57. On information and belief, Giant and Christensen
intentionally and maliciously made blatantly false, unprivileged and defamatory
statements in written press releases concerning Foley. With Christensen's
knowledge and cooperation, Giant issued the defamatory written press releases
to the media, which republished some or all of the defamatory statements to
mass audiences. On information and belief, at the time that Giant issued the
press releases, both Giant and Christensen knew that statements contained
therein concerning Foley were blatantly false and defamatory. The statements
in the press releases (a) were widely published, (b) were defamatory without
the necessity of explanatory matter, (c) had the natural and probable
Page 37 of 41 Pages
<PAGE> 28
effect in the minds of average people of accusing Foley of acting illegally,
dishonestly, and unprofessionally in his business dealings, (d) tended directly
to injure Foley in his office, profession, and business, and (e) charged Foley
with a crime.
58. As a direct and proximate cause of such defamatory
statements, Foley's good name and professional reputation has been injured, and
he has suffered financial damage.
59. Foley seeks presumed, special, actual, and punitive
damages in an amount to be determined at trial.
FOURTH CLAIM FOR RELIEF
-----------------------
(BY FOLEY AGAINST
CHRISTENSEN: FOR SLANDER)
60. Counterclaim Plaintiffs repeat, re-aver and
incorporate by this reference paragraphs 1 through 59 above, as though fully
set forth herein.
61. On information and belief, Christensen intentionally
and maliciously made blatantly false, unprivileged and defamatory oral
statements, in person and over the telephone, concerning Foley. On information
and belief, Christensen made these statements to private individuals and to
members of the media so that they would be republished to mass audiences. On
information and belief, Christensen knew at the time he made such defamatory
oral statements that they were blatantly false and defamatory. Christensen's
oral statements (a) were widely published, (b) were defamatory without the
necessity of explanatory matter, (c) had the natural and probable effect in the
minds of average people of accusing Foley of acting illegally, dishonestly, and
unprofessionally in his business
Page 38 of 41 Pages
<PAGE> 29
dealings, (d) tended directly to injure Foley in his office, profession, and
business, and (e) charged Foley with a crime.
62. As a direct and proximate cause of such defamatory
statements, Foley's good name and professional reputation has been injured, and
he has suffered financial damage.
63. Foley seeks presumed, special, actual, and punitive
damages in an amount to be determined at trial.
WHEREFORE, Counterclaim Plaintiffs pray for judgment as
follows:
1. On Counterclaim Plaintiffs' First Claim for Relief:
---------------------------------------------------
a. For a Declaration that the Poison Pill is
invalid and unenforceable; and
b. For a Preliminary and Permanent Injunction
prohibiting Counterclaim Defendants from taking any action in furtherance of
the Poison Pill and requiring them to rescind, or in the alternative, to redeem
the Poison Pill.
2. On Counterclaim Plaintiffs' Second Claim for Relief:
----------------------------------------------------
a. For a Declaration that the Exchange Offer
is invalid and unenforceable; and
b. For a Preliminary and Permanent Injunction
prohibiting Counterclaim Defendants from taking any action in furtherance of
the Exchange Offer and requiring them to rescind the Exchange Offer.
3. On Counterclaim Plaintiffs' Third and Fourth Claims
---------------------------------------------------
for Relief:
-----------
Page 39 of 41 Pages
<PAGE> 30
For presumed, special, actual, and punitive damages
in amounts to be determined at trial;
4. On All of Counterclaim Plaintiffs' Claims for Relief:
-----------------------------------------------------
a. For attorneys' fees and costs; and
b. For such other and further relief as this
Court may deem just and proper.
DATED: March 22, 1996 MILBANK, TWEED, HADLEY & McCLOY
C. STEPHEN HOWARD
JEFFERY D. McFARLAND
SCOTT VICK
By: /s/ C. STEPHEN HOWARD
----------------------------------
C. Stephen Howard
Attorneys for Defendants and
Counterclaim Plaintiffs
FIDELITY NATIONAL FINANCIAL, INC.
and WILLIAM P. FOLEY, II
Page 40 of 41 Pages
<PAGE> 31
DEMAND FOR JURY TRIAL
---------------------
Pursuant to Rule 38(b) of the Federal Rules of Civil Procedure
and Local Rule 3.4.10, Counterclaim Plaintiffs hereby demand a trial by jury of
all issues triable of right by jury in Giant's First Amended Complaint and in
Counterclaim Plaintiffs' Second Amended Counterclaim.
DATED: March 22, 1996 MILBANK, TWEED, HADLEY & McCLOY
C. STEPHEN HOWARD
JEFFERY D. McFARLAND
SCOTT VICK
By: /s/ C. STEPHEN HOWARD
-------------------------------------
C. Stephen Howard
Attorneys for Defendants and
Counterclaim Plaintiffs
FIDELITY NATIONAL FINANCIAL, INC.
and WILLIAM P. FOLEY, II
58525
Page 41 of 41 Pages
