-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HEoegubOiErDmUPhFgydgp8dT3L7xiv+ibYWKqr7Jc4XAmxuGUHEIMlQpJPzByBS B3yUhS9CLnVC4dNlqtKsgg== 0000892569-96-000606.txt : 19960514 0000892569-96-000606.hdr.sgml : 19960514 ACCESSION NUMBER: 0000892569-96-000606 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19960513 SROS: NYSE GROUP MEMBERS: CKE RESTAURANTS INC GROUP MEMBERS: FIDELITY NATIONAL FINANCIAL SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: RALLYS HAMBURGERS INC CENTRAL INDEX KEY: 0000854873 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 621210077 STATE OF INCORPORATION: DE FISCAL YEAR END: 1230 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-40496 FILM NUMBER: 96562144 BUSINESS ADDRESS: STREET 1: 10002 SHELBYVILLE RD STE 150 CITY: LOUISVILLE STATE: KY ZIP: 40223 BUSINESS PHONE: 5022458900 MAIL ADDRESS: STREET 1: 10002 SHELBYVILLE RD STREET 2: STE 150 CITY: LOUISVILLE STATE: KY ZIP: 40223 FORMER COMPANY: FORMER CONFORMED NAME: RALLYS INC DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CKE RESTAURANTS INC CENTRAL INDEX KEY: 0000919628 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 330602639 STATE OF INCORPORATION: DE FISCAL YEAR END: 0130 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 1200 N HARBOR BLVD CITY: ANAHEIM STATE: CA ZIP: 92801 BUSINESS PHONE: 7147745796 SC 13D 1 SCHEDULE 13D-RALLY'S HAMBURGERS, INC. 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) Robert A. Wilson Vice President, General Counsel and Secretary CKE Restaurants, Inc. 1200 North Harbor Boulevard Anaheim, California 92801 Tel. (714) 774-5796 (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 42 Pages Exhibit Index on Page 11 2 CUSIP NO.: 374503 1 10 0 (1) NAME OF REPORTING PERSON: CKE Restaurants, Inc. S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: IRS No. 33-0602639 (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: 3,525,646(1)(2) (8) SHARED VOTING POWER: 0 (9) SOLE DISPOSITIVE POWER: 3,525,646(1)(2) (10) SHARED DISPOSITIVE POWER: (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 3,525,646(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): 20.93(2)(3) (14) TYPE OF REPORTING PERSON: CO ____________________ (1) Mr. William P. Foley, II, is Chairman of the Board and Chief Executive Officer of CKE Restaurants, Inc. ("CKE"). 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. By virtue of such stock ownership and positions, Mr. Foley may be deemed a "controlling person" of CKE. Mr. Foley disclaims beneficial ownership of any of the shares of Common Stock held by CKE. (2) Includes shares of Common Stock issuable upon exercise of 1,175,214 currently exercisable options. 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 42 Pages 3 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 CKE Restaurants, Inc. ("CKE"). Mr. William P. Foley, II, is the Chairman of the Board and Chief Executive Officer of both Fidelity National Financial, Inc., ("Fidelity") and 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 CKE are located at 1200 North Harbor Boulevard, Anaheim, California 92801. 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 CKE 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 CKE are citizens of the United States. During the last five years, neither CKE nor, to the best knowledge of CKE, 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 42 Pages 4 ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. Of the 3,525,646 shares of Common Stock to which this Statement relates (a) 2,350,432 were purchased by CKE on May 3, 1996, for an aggregate purchase price of $4,113,256.00, which purchase price was funded from CKE's general working capital funds, and (b) 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 purpose of the purchase by CKE of the shares of Common Stock referred to above is to acquire a significant equity position in the Company, and to settle the claims referred to in the Settlement Agreement (as defined below). CKE intends to work, together with Giant and the Company, to develop and implement strategies to increase the value of Common Stock. These strategies may include the acquisition by CKE of additional shares of Common Stock. (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 42 Pages 5 Item 6 of this Schedule 13D describes certain rights and obligations of Fidelity and CKE, respectively, relating to control over the management and policies of the Company, which description is incorporated herein by reference. Except as otherwise described herein, CKE 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, CKE will be the beneficial owner of 3,525,646 shares of Common Stock (including 2,350,432 shares which are owneddirectly 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). CKE disclaims beneficial ownership of any of the shares of Common Stock beneficially owned by Fidelity. 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). Except as described in the preceding paragraph, neither CKE nor, to the best knowledge of CKE, any of the persons referred to in Schedule I attached hereto beneficially owns any shares of Common Stock. (b) CKE 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 CKE 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 CKE in a privately negotiated transaction pursuant to the Purchase Agreement. Page 5 of 42 Pages 6 (d) CKE 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. 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 42 Pages 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 CKE, 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 42 Pages 8 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 CKE RESTAURANTS, INC. By: /s/ WILLIAM P. FOLEY, II -------------------------------- Name: William P. Foley, II Title: Chairman of the Board and Chief Executive Officer Page 8 of 42 Pages 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 CKE Restaurants, 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 CKE: - ---------------- William P. Foley, II, Chairman and Chief Executive Officer Carl N. Karcher, Chairman Emeritus, CKE W. Howard Lester, Chairman and Chief Executive Officer, Williams-Sonoma, Inc., 3250 Van Ness, San Francisco, CA 94109 Frank P. Willey, President, Fidelity Peter Churm, Chairman Emeritus, Furon Company, 29982 Ivy Glenn Drive, Laguna Niguel, CA 92677 Daniel D. (Ron) Lane, Chairman and Chief Executive Officer, Lane/Kuhn Pacific, Inc., 14 Corporate Plaza, Newport Beach, CA 92660 Carl L. Karcher, President, CLK, Inc., 73-101 Highway 111, Suite 1, Palm Desert, CA 92260 EXECUTIVE OFFICERS OF CKE: - ------------------------- William P. Foley, II, Chairman and Chief Executive Officer C. Thomas Thompson, President and Chief Operating Officer Robert E. Weaton, Executive Vice President Joseph N. Stein, Senior Vice President, Chief Financial Officer Robert W. Wisely, Senior Vice President, Marketing Loren C. Pannier, Senior Vice President, Purchasing/Distribution Rory J. Murphy, Senior Vice President, Restaurant Operations Richard C. Celio, Senior Vice President, Development Robert A. Wilson, Vice President, General Counsel and Secretary Page 9 of 42 Pages 10 SCHEDULE II Schedule of Transactions in the Shares --------------------------------------
No. of Shares Price Per Date Purchased Share(1) ---- ------------- --------- CKE: 05/03/96 2,350,432 $1.75 - ---
_______________ (1) Net of brokerage commissions. Page 10 of 42 Pages 11 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 12 99.02 The Purchase Agreement between Rally's Hamburgers, Inc., Giant Group, Ltd., Fidelity National Finanial, Inc., and CKE Restaurants, Inc. dated April 26, 1996 Page 27 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 41 Page 11 of 42 Pages EX-99.01 2 SETTLEMENT AGREEMENT 1 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 12 of 42 Pages 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 13 of 42 Pages 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 14 of 42 Pages 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 15 of 42 Pages 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 16 of 42 Pages 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 17 of 42 Pages 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 18 of 42 Pages 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 19 of 42 Pages 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 20 of 42 Pages 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 21 of 42 Pages 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 22 of 42 Pages 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 23 of 42 Pages 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 24 of 42 Pages 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 25 of 40 Pages 15 IN WITNESS WHEREOF, the Parties each have approved and executed the Agreement effective as of the date first set forth hereinabove. GIANT GROUP, LTD. BURT SUGARMAN Dated: 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
Page 26 of 42 Pages EX-99.02 3 PURCHASE AGREEMENT 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 27 of 42 Pages 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 28 of 42 Pages 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 29 of 42 Pages 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 30 of 42 Pages 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 31 of 42 Pages 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 32 of 42 Pages 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 33 of 42 Pages 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 34 of 42 Pages 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 35 of 42 Pages 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 36 of 42 Pages 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 37 of 42 Pages 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 38 of 42 Pages 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 39 of 42 Pages 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 40 of 42 Pages EX-99.03 4 PRESS RELEASE 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 41 of 42 Pages -----END PRIVACY-ENHANCED MESSAGE-----