<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Rally's Hamburgers, Inc.
------------------------
(Name of Issuer)
Common Stock, par value $.10 per share
--------------------------------------
(Title of Class of Securities)
751203-10-0
--------------------------------------
(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
May 3, 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 /x/.
Page 1 of 43 Pages
Exhibit Index on Page 12
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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) [x]
(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: 3,118,235(1)(2)
(8) SHARED VOTING POWER: 0
(9) SOLE DISPOSITIVE POWER: 3,118,235(1)(2)
(10) SHARED DISPOSITIVE POWER:
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON: 3,118,235(1)(2)
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [x]
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 19.89(3)
(14) TYPE OF REPORTING PERSON: CO
____________________
(1) Mr. William P. Foley, II, owns 21.4% 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. Mr. Foley disclaims
beneficial ownership of any of the shares of Common Stock
held by Fidelity.
(2) Includes shares of Common Stock issuable upon exercise of (i)
1,175,214 currently exercisable options and (ii) 1,175,214
options granted to CKE Restaurants, Inc., an entity that may be
deemed to be an affiliate of Fidelity, which options may be
exercised by Fidelity under certain circumstances. See Item 5 of
this Schedule 13D.
(3) Based upon 15,669,543 shares of Common Stock outstanding as of
March 6, 1996.
Page 2 of 43 Pages
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ITEM 1. SECURITY AND ISSUER.
The class of equity securities to which this Statement on
Schedule 13D (this "Statement") relates is the common stock, par value $0.10
per share (the "Common Stock"), of Rally's Hamburgers, Inc., a Delaware
corporation (the "Company"), with its principal executive offices located at
10002 Shelbyville Road, Suite 150, Louisville, Kentucky 40223.
ITEM 2. IDENTITY AND BACKGROUND.
This Statement is being filed by Fidelity National Financial,
Inc., a Delaware corporation ("Fidelity"). Mr. William P. Foley, II, is the
Chairman of the Board and Chief Executive Officer of both Fidelity and CKE
Restaurants, Inc. ("CKE"), and he owns 21.4% of the outstanding shares of
common stock of Fidelity. A limited partnership whose general partner is
controlled by Mr. Foley owns 20.0% of the outstanding common stock of CKE, a
corporation controlled by Mr. Foley owns 1.4% of the outstanding common stock
of CKE, and Fidelity owns 2.7% of the outstanding common stock of CKE. Mr.
Foley is a "controlling person" of Fidelity and CKE. The disclosure of this
information shall not be construed as an admission that Mr. Foley is the
beneficial owner of any of the Common Stock owned by Fidelity or CKE either for
purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended,
or for any other purposes and such beneficial ownership is expressly
disclaimed. The principal executive offices of Fidelity are located at 17911
Von Karman Avenue, Irvine, California 92714. Fidelity is a national
underwriter engaged in the business of issuing title insurance policies and
performing other title-related services through its underwriting subsidiaries.
CKE is primarily engaged through its Carl Karcher Enterprises subsidiary in the
operation of the "Carl's Jr." chain of fast food restaurants and through its
Boston Pacific, Inc. subsidiary in the operation of Boston Market Stores
(formerly known as Boston Chicken Restaurants).
Information regarding the directors and executive officers of
Fidelity is set forth on Schedule I attached hereto, which Schedule is
hereby incorporated by reference. Except as set forth on Schedule I, all of
the directors and executive officers of Fidelity are citizens of the
United States.
During the last five years, neither Fidelity, nor, to the best
knowledge of Fidelity, any person named in Schedule I attached hereto has
been (a) convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors) or (b) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect to such
laws.
Page 3 of 43 Pages
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ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Of the 3,118,235 shares of Common Stock to which this
Statement relates (a) 767,807 were purchased by Fidelity on May 3, 1996, for an
aggregate purchase price of $638,172.38, which purchase price was funded from
Fidelity's general working capital funds, (b) 1,175,214 are the subject of
currently exercisable options granted to Fidelity, (c) 1,175,214 are the
subject of currently exercisable options granted to CKE, which may be exercised
by Fidelity under certain circumstances. No brokerage commissions were paid in
connection with this purchase.
ITEM 4. PURPOSE OF TRANSACTION.
(A) The shares of Common Stock referred to above were acquired
as part of a settlement as described in the Settlement Agreement (as defined
below) and are held for investment purposes. Subject to the provisions of the
Purchase Agreement (as defined below), Fidelity may purchase additional shares
of Common Stock. In determining whether to purchase additional shares or to
dispose of its shares, Fidelity intends to consider and review various factors
on a continuous basis, including among other things, the Company's financial
condition, business and prospects, other developments concerning the Company,
other investment and business opportunities available to Fidelity, developments
with respect to Fidelity's business, and general economic, monetary and stock
market conditions.
(B) On April 26, 1996, Fidelity, Giant Group, Ltd. ("Giant"),
CKE and the other parties to the action instituted on December 19, 1995 in the
United States District Court for the Central District of California (the
"Federal Action"), entered into a Settlement Agreement and Release
(the "Settlement Agreement"), in which they agreed to settle the Federal Action
and to irrevocably release all of the claims subject to the Federal Action, and
the Purchase Agreement (as defined below) pursuant to which the shares of Common
Stock referred to above were acquired. (See Item 6 to this Schedule 13D, which
is incorporated herein by reference, for a description of the terms of the
Purchase Agreement.) The Settlement Agreement provides for the dismissal with
prejudice of all claims of the various parties against the other parties in the
Action and the release of all such claims and related claims. A copy of the
Settlement Agreement is attached as Exhibit 99.01 hereto and is incorporated
herein by reference.
Page 4 of 43 Pages
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Item 6 of this Schedule 13D describes certain rights and
obligations of Fidelity, relating to control over the management and policies
of the Company, which description is incorporated herein by reference.
Except as otherwise described herein, Fidelity has no plan or
proposal with respect to the Company which relates to or would result in any of
the matters listed in Items 4(a) - (j) of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) As of the close of business on May 13, 1996, Fidelity
will be the beneficial owner of 3,118,235 shares of Common Stock (including
767,807 shares which are owned directly by Fidelity, 1,175,214 shares which are
the subject of currently exercisable options granted to Fidelity and 1,175,214
shares which are the subject of currently exercisable options granted to CKE,
which options may be exercised by Fidelity under certain circumstances), which
constitute in the aggregate 19.89% of the outstanding shares of Common Stock
(based on 15,669,543 shares of Common Stock outstanding as of March 6, 1996).
As of the close of business on May 13, 1996, CKE will be the beneficial owner of
3,525,646 shares of Common Stock (including 2,350,432 shares which are owned
directly and 1,175,214 shares which are the subject of currently exercisable
options), which constitute in the aggregate 20.93% of the outstanding shares of
Common Stock (based on 15,669,543 shares of Common Stock outstanding as of
March 6, 1996). Fidelity disclaims beneficial ownership of any of the shares
of Common Stock owned by CKE.
Except as described in the preceding paragraph,
neither Fidelity, nor, to the best knowledge of Fidelity, any of the persons
referred to in Schedule I attached hereto beneficially owns any shares of
Common Stock.
(b) Fidelity has the sole power to vote, direct the
voting of, dispose of and direct the disposition of the Common Stock
beneficially owned by it.
(c) Transactions in the Common Stock by Fidelity effected
during the past 60 days are described in Schedule II hereto, which Schedule is
hereby incorporated by reference. All such transactions were effected by
Fidelity in a privately negotiated transaction pursuant to the Purchase
Agreement.
(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 beneficially owned by it.
Page 5 of 43 Pages
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ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
On April 26, 1996, Giant, Fidelity and CKE, entered into a
Purchase and Standstill Agreement (the "Purchase Agreement"). As provided in
the Purchase Agreement, Fidelity acquired from Giant 767,807 shares of Common
Stock (described above) for an aggregate purchase price of $638,172.38, payable
in cash, representing approximately 4.9% of the outstanding Common Stock (based
on 15,669,543 shares of Common Stock outstanding as of March 6, 1996) and CKE
acquired from Giant 2,350,432 shares of the Common Stock for an aggregate
purchase price of $1,343,662.20, payable in cash, representing approximately
15% of the outstanding Common Stock (based on 15,669,543 shares of Common Stock
outstanding as of March 6, 1996). Also, each of Fidelity and CKE were granted
options to buy an additional 587,607 shares of the Common Stock from Giant at
an exercise price of $3.00 per share (exercisable at any time prior to 5:00
p.m. Los Angeles time on April 26, 1997) and an additional 587,607 shares of
the Common Stock from Giant at an exercise price of $4.00 per share
(exercisable at any time prior to 5:00 p.m. Los Angeles time on April 26,
1998). In addition, the Company has agreed to elect to its Board of Directors
two persons designated by CKE, which persons are William P. Foley, II, Chairman
of the Board and Chief Executive Officer of Fidelity and CKE, and C. Thomas
Thompson, Carl's Jr.'s President.
In addition, the Purchase Agreement provides, among other
things, that if Giant or its affiliates purchase additional shares of Common
Stock, Fidelity and CKE will have the right to purchase shares of Common Stock
from Giant such that the proportional ownership of 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 to the extent such options
have not been exercised). Also, Giant, on the one hand, and Fidelity and CKE,
on the other hand, have agreed to provide the other party with rights of first
refusal in the event that they propose to dispose of shares of 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% of the outstanding 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 the Company,
Giant may nominate up to one-half of the number of directors to be nominated
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. The Purchase Agreement further provides that 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 Common Stock (without giving effect to shares
which may be acquired upon exercise of the options granted pursuant to
Page 6 of 43 Pages
<PAGE> 7
the Purchase Agreement to the extent such options have not been exercised), the
party owning at least 34% of the outstanding 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 Common Stock owned by them in favor of such nominees. The
foregoing provisions regarding the voting of shares of Common Stock will expire
on April 26, 2006. Giant has agreed not to become the beneficial owner of 35%
or more of the combined voting power of the Company without the consent of
Fidelity and CKE. Fidelity and CKE have agreed that for so long as the 9 7/8%
Senior Notes (the "Senior Notes") issued by the Company are outstanding,
Fidelity and CKE will not become the beneficial owners of 35% or more of the
combined voting power of the Company without (i) the approval of the Board of
Directors of the Company 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.
A copy of the Purchase Agreement is attached as Exhibit 99.02
hereto and is incorporated herein by reference. A copy of a press release
issued by Fidelity, Giant and CKE on April 29, 1996, announcing the Settlement
Agreement is attached as Exhibit 99.03 hereto and is incorporated herein by
reference.
Except as otherwise described herein, neither Fidelity or any
other person referred to in Schedule I attached hereto has any contracts,
arrangements, understandings or relationships (legal or otherwise) with any
person with respect to any securities of the Company, including, but not
limited to, transfer or voting of any of the securities, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees or profits,
division of profits or loss, or the giving or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
99.01 The Settlement Agreement between the Company, Giant, Fidelity,
CKE and the other parties to the Federal Action dated
April 26, 1996
99.02 The Purchase Agreement between the Company, Giant, Fidelity
and CKE dated April 26, 1996
99.03 The Press Release issued by the Company, Giant, Fidelity and
CKE dated April 26, 1996
Page 7 of 43 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.
May 13, 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 8 of 43 Pages
<PAGE> 9
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF THE REPORTING PERSON
The names, present principal occupations and business
addresses of the directors and executive officers of the Reporting Person are
set forth below. If no address is given, the director's or executive officer's
business address is that of Fidelity National Financial, Inc. (the "Reporting
Person"). Unless otherwise indicated, each occupation set forth opposite an
individual's name refers to the specified Reporting Person. Each of the named
individuals is a citizen of United States.
DIRECTORS OF FIDELITY:
- ---------------------
William P. Foley, II, Chairman of the Board, and Chief Executive Officer.
Frank P. Willey, President.
William A. Imparato, General Partner, Parkwest Development Company, 1515 East
Missouri Building A, Phoenix, AZ 85014.
Donald M. Koll, Chairman and Chief Executive Officer, The Koll Company, 4343
Von Karman Avenue, Newport Beach, CA 92660.
Daniel D. (Ron) Lane, Chairman and Chief Executive Officer, Lane/Kuhn Pacific,
Inc., 14 Corporate Plaza, Newport Beach, CA 92660.
Stephen C. Mahood, Stephen C. Mahood Investments, 500 Crescent Court, Suite
270, Dallas, TX 75201.
J. Thomas Talbot, Owner, The Talbot Company, 500 Newport Center Drive, Suite
900, Newport Beach, CA 92660.
Cary H. Thompson, Chief Operating Officer, Aames Financial Corporation, 3731
Wilshire Blvd. 10th Flr., Los Angeles, CA 90010.
EXECUTIVE OFFICERS OF FIDELITY:
- ------------------------------
William P. Foley, II, Chairman of the Board and Chief Executive Officer.
Frank P. Willey, President.
Carl A. Strunk, Executive Vice President, Chief Financial Officer and
Treasurer.
Andrew F. Puzder, Executive Vice President and General Counsel.
Patrick F. Stone, Executive Vice President.
Page 9 of 43 Pages
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M'Liss Jones Kane, Senior Vice President, Corporate Counsel and Corporate
Secretary.
Raymond R. Quirk, Vice President.
Gary R. Nelson, Vice President.
Page 10 of 43 Pages
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SCHEDULE II
Schedule of Transactions in the Shares
--------------------------------------
<TABLE>
<CAPTION>
No. of Shares Price Per
Date Purchased Share(1)
---- ------------- ---------
<S> <C> <C> <C>
Fidelity:
- --------
05/03/96 767,807 $ .831
</TABLE>
_______________
(1) Net of brokerage commissions.
Page 11 of 43 Pages
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EXHIBIT INDEX
99.01 The Settlement Agreement and Release between
Rally's Hamburgers, Inc., Giant Group, Ltd.,
Fidelity National Financial, Inc., CKE Restaurants,
Inc. and the other parties to the Federal Action
dated April 26, 1996 Page 13
99.02 The Purchase Agreement between Rally's Hamburgers,
Inc., Giant Group, Ltd., Fidelity National
Financial, Inc., and CKE Restaurants, Inc. dated
April 26, 1996 Page 28
99.03 The Press Release issued by Rally's Hamburgers,
Inc., Giant Group, Ltd. Fidelity National
Financial, Inc., and CKE Restaurants, Inc. dated
April 26, 1996 Page 42
Page 12 of 43 Pages
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EXHIBIT 99.01
SETTLEMENT AGREEMENT AND RELEASE
1. Effective Date.
This Settlement Agreement and Release (the "Agreement") is made as of
the Closing Date pursuant to Paragraph 9 herein.
2. Parties.
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.; Fidelity National Financial, Inc.; William Davenport; and
Robert Martin and 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.
Page 13 of 43 Pages
<PAGE> 2
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"),
Page 14 of 43 Pages
<PAGE> 3
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
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
Page 15 of 43 Pages
<PAGE> 4
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.
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
Page 16 of 43 Pages
<PAGE> 5
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.
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:
Page 17 of 43 Pages
<PAGE> 6
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.
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"),
Page 18 of 43 Pages
<PAGE> 7
a true and correct copy of which is attached hereto as Exhibit "B," on or
before April 26, 1996.
9. Closing.
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
Page 19 of 43 Pages
<PAGE> 8
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
Page 20 of 43 Pages
<PAGE> 9
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.
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.
Page 21 of 43 Pages
<PAGE> 10
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.
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
Page 22 of 43 Pages
<PAGE> 11
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.
Page 23 of 43 Pages
<PAGE> 12
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.
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.
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
Page 24 of 43 Pages
<PAGE> 13
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
Page 25 of 43 Pages
<PAGE> 14
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.
Page 26 of 43 Pages
<PAGE> 15
IN WITNESS WHEREOF, the Parties each have approved and executed the
Agreement effective as of the date first set forth hereinabove.
<TABLE>
<S> <C>
GIANT GROUP, LTD. BURT SUGARMAN
Dated: April 26, 1996 Dated: April 26, 1996
------------------------ --------------------------
By: /s/ BURT SUGARMAN /s/ BURT SUGARMAN
--------------------------- --------------------------------
Burt Sugarman
Its: Chief Executive Officer
TERRY CHRISTENSEN ROBERT WYNN
Dated: April 26, 1996 Dated: April 26, 1996
------------------------ --------------------------
/s/ TERRY CHRISTENSEN /s/ ROBERT WYNN
- ------------------------------ --------------------------------
Terry Christensen Robert Wynn
DAVID GOTTERER WILLIAM P. FOLEY, II
Dated: April 26, 1996 Dated: April 26, 1996
------------------------ --------------------------
/s/ DAVID GOTTERER /s/ WILLIAM P. FOLEY, II
- ------------------------------ --------------------------------
David Gotterer William P. Foley, II
CKE RESTAURANTS, INC. FIDELITY NATIONAL FINANCIAL, INC.
Dated: April 26, 1996 Dated: April 26, 1996
------------------------ --------------------------
By: /s/ WILLIAM P. FOLEY, II By: /s/ WILLIAM P. FOLEY II
--------------------------- -----------------------------
Its: Chairman of the Board and Its: Chairman of the Board and
Chief Executive Officer Chief Executive Officer
WILLIAM DAVENPORT ROBERT MARTYN
Dated: April 26, 1996 Dated: April 26, 1996
------------------------ -------------------------
/s/ WILLIAM DAVENPORT /s/ ROBERT MARTYN
- ------------------------------ -------------------------------
William Davenport Robert Martyn
</TABLE>
Page 27 of 43 Pages
<PAGE> 1
EXHIBIT 99.02
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.
Page 28 of 43 Pages
<PAGE> 2
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.
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
Page 29 of 43 Pages
<PAGE> 3
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
Page 30 of 43 Pages
<PAGE> 4
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.
Page 31 of 43 Pages
<PAGE> 5
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
Page 32 of 43 Pages
<PAGE> 6
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
Page 33 of 43 Pages
<PAGE> 7
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.
Page 34 of 43 Pages
<PAGE> 8
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.
Page 35 of 43 Pages
<PAGE> 9
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.
Page 36 of 43 Pages
<PAGE> 10
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.
Page 37 of 43 Pages
<PAGE> 11
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.
Page 38 of 43 Pages
<PAGE> 12
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
Page 39 of 43 Pages
<PAGE> 13
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]
Page 40 of 43 Pages
<PAGE> 14
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: /s/ BURT SUGARMAN
------------------------------
name: Burt Sugarman
title: Chief Executive Officer
Fidelity National Financial,
Inc., a Delaware corporation
by: /s/ WILLIAM P. FOLEY, II
------------------------------
name: William P. Foley, II
title: Chairman of the Board
and Chief Executive Officer
CKE Restaurants, Inc., a
Delaware corporation
by: /s/ WILLIAM P. FOLEY, II
------------------------------
name: William P. Foley, II
title: Chairman of the Board
and Chief Executive Officer
Page 41 of 43 Pages
<PAGE> 1
EXHIBIT 99.03
HEADLINE: GIANT GROUP, FIDELITY AND CKE RESTAURANTS SETTLE LITIGATION CARL'S
JR. AND FIDELITY TO PURCHASE RALLY'S SHARES
DATELINE: BEVERLY HILLS, CALIF., APRIL 29, 1996
BODY:
Burt Sugarman, Chairman and Chief Executive Officer of GIANT GROUP, LTD.
(NYSE: GPO), William Foley, Chairman and Chief Executive Officer of Fidelity
National Financial, Inc. (NYSE: FNF), and CKE Restaurants, Inc. (NYSE: CKR),
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. BEVERLY HILLS, Calif., April 29
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 an
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. CONTACT: Terry
Christensen, 310-553-3000, or Andrew Puzder, 714-622-4322, or Robert Wilson,
714-778-7133 LANGUAGE: ENGLISH
Page 42 of 43 Pages
