Carnival Corporation
0000 XX 00xx Xxxxxx
Xxxxx, XX 00000-0000
January 23, 2000
Fairfield Communities, Inc.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
This letter sets forth our understanding with respect to a
contemplated business combination (the "Proposed Transaction") between
Carnival Corporation, a corporation organized under the laws of the Republic
of Panama ("Carnival"), and Fairfield Communities, Inc. ("Fairfield"), a
Delaware corporation. To induce each party to work towards definitive
agreements for the Proposed Transaction, the parties hereby agree as follows:
1. The Proposed Transaction. The Proposed Transaction will be a merger
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between a subsidiary of Carnival and Fairfield based upon a fixed
exchange ratio of 0.3164 share of Carnival common stock for each share
of Fairfield common stock outstanding (on a total outstanding amount of
44,601,728 shares on the date hereof), the principal terms of which are
set forth on Exhibit A hereto.
2. Conditions. Consummation of the Proposed Transaction is subject to the
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following conditions: (i) execution and delivery of definitive
agreements providing for the Proposed Transaction containing
representations, warranties, covenants and closing conditions customary
for transactions of this type and which are acceptable to Carnival and
Fairfield; (ii) approval of the Proposed Transaction by the Boards of
Directors of each of Carnival and Fairfield and the stockholders of
Fairfield; (iii) satisfactory completion by each party of its legal,
accounting and financial due diligence review of the other party;
(iv) receipt of all requisite regulatory approvals, including approval
with respect to the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended; (v) an effective registration statement relating to
the issuance of the shares of common stock in the merger and no issued
or pending stop order (or proceedings with respect thereto); (vi) the
exchange of Fairfield common stock for Carnival common stock by the
stockholders of Fairfield will qualify as a reorganization under Section
368 of the Internal Revenue Code of 1986, as amended; (vii) the Proposed
Transaction will qualify as a pooling of interests under generally
accepted accounting principles (provided that Carnival, in its sole
discretion, shall be entitled to waive any failure to qualify);
(viii) absence of a material adverse change in the business, operations,
prospects or financial condition of Fairfield and its subsidiaries or of
Carnival and its subsidiaries; (ix) no material breach by either party
of representations and covenants in the merger agreement or other
definitive agreements; and (x) other customary conditions to closing.
3. Press Release. Promptly after the execution and delivery of this letter
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by the parties hereto, Carnival and Fairfield shall issue a joint press
release in the form of Exhibit B hereto. Thereafter, except as may be
required by applicable law or pursuant to the rules and regulations of
the New York Stock Exchange, each party shall not, and shall cause its
affiliates, agents, advisors and representatives not to, issue or cause
the publication of any press release or other announcement with respect
to the Proposed Transaction without the prior written consent of the
other party.
4. Exclusivity.
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(a) From the date hereof until the termination of this letter of
intent, neither Fairfield nor any of its subsidiaries shall, nor shall
it or any of its subsidiaries authorize or permit any of their
respective officers, directors, employees, attorneys, accountants,
investment bankers, financial advisors, representatives, agents or
other authorized persons to (i) solicit, initiate, encourage (including
by way of furnishing information) or take any other action to
facilitate, any inquiry or the making of any proposal which constitutes,
or may reasonably be expected to lead to, any acquisition or purchase of
a material amount of assets of, or any equity interest in, Fairfield or
any of its subsidiaries or any tender offer (including a self tender
offer) or exchange offer, merger, consolidation, business combination,
sale of substantially all assets, sale of securities, recapitalization,
liquidation, dissolution or similar transaction involving Fairfield or
any of its subsidiaries (other than (i) the transactions contemplated by
this letter, (ii) sales of Fairfield's contracts receivable in any
financing in the ordinary course of business or (iii) pursuant to the
terms of (A) options and warrants outstanding and as in effect on the
date hereof and (B) agreements in effect on the date hereof and
expressly disclosed in writing to Carnival) or any other material
corporate transaction the consummation of which would or could
reasonably be expected to impede, interfere with, prevent or materially
delay the Proposed Transaction (collectively, "Transaction Proposals")
or agree to or endorse any Transaction Proposal or (ii) propose, enter
into or participate in any discussions or negotiations regarding any of
the foregoing, or furnish to any other person or entity any information
with respect to its business, properties or assets or any of the
foregoing, or otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, any effort or attempt by any
other person or entity to do or seek any of the foregoing.
(b) Notwithstanding the foregoing paragraph 4(a), nothing herein shall
prohibit Fairfield from (i) furnishing information pursuant to an
appropriate confidentiality letter concerning Fairfield and its
businesses, properties or assets to a third party who has made a
Qualified Transaction Proposal (as defined below), (ii) engaging in
discussions or negotiations with such a third party who has made a
Qualified Transaction Proposal or (iii) following receipt of a
Qualified Transaction Proposal, taking and disclosing to its
stockholders a position contemplated by Rule 14e-2(a) under the
Securities Exchange Act of 1934, as amended, but in each case referred
to in the foregoing clauses (i) through (iii) only after the Board of
Directors of Fairfield concludes in good faith after consultation with
Xxxxxxxxx's outside counsel that such action is reasonably necessary for
the Board of Directors of Fairfield to comply with its fiduciary
obligations to stockholders under applicable law. If the Board of
Directors of Fairfield receives a Transaction Proposal, then Fairfield
shall (i) immediately inform Carnival of the terms and conditions of
such proposal and the identity of the person or entity making it, (ii)
keep Carnival informed of the status and material details of any such
Transaction Proposal and of all steps it is taking in response to such
Transaction Proposal and (iii) provide Carnival with copies of all
documents received in connection with such Transaction Proposal.
(c) For purposes of this letter, the term "Qualified Transaction
Proposal" shall mean any Transaction Proposal (i) with respect to which
any required financing is committed or, in the good faith judgment of
the Board of Directors of Fairfield, after consultation with its outside
financial advisors, is reasonably capable of being financed by the
person making the proposal, (ii) with respect to which the Board of
Directors of Fairfield shall have concluded in good faith, after
consultation with its outside legal counsel and financial advisors, is
reasonably capable of being completed, taking into account all legal,
financial, regulatory and other aspects of the Transaction Proposal and
the person making the proposal, and (iii) which would, if consummated,
result in a transaction more favorable to Fairfield's stockholders from
a financial point of view than the transactions contemplated by this
letter of intent.
5. Conduct of Business. Fairfield agrees that it shall conduct the
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business of Fairfield and its subsidiaries in the ordinary course and
that, without the prior written consent of Carnival, Fairfield and its
subsidiaries shall not enter into any extraordinary transactions other
than as expressly permitted hereby, or settle or compromise any material
litigations or claims. Without the prior written consent of Carnival,
neither Fairfield nor any of its subsidiaries shall declare or pay any
dividends or make any other distributions, issue any securities
(including, without limitation, the issuance of any stock options,
restricted stock or convertible securities to employees of Fairfield or
its subsidiaries) or incur any material indebtedness other than (i) in
connection with the conversion of outstanding securities pursuant to
their terms or the exercise of outstanding stock options or warrants or
pursuant to agreements in effect on the date hereof and expressly
disclosed in writing to Carnival and (ii) incurring any indebtedness or
entering into any financings in the ordinary course of business of
Fairfield and its subsidiaries. Fairfield represents to Carnival that,
as of the date hereof, there are 44,601,728 shares of its common stock
outstanding, outstanding options and warrants to acquire 3,935,318
shares of common stock at an average price per share of $6.86 and no
other convertible securities, warrants or options, stock appreciation
rights or other similar types of securities outstanding other than
pursuant to agreements in effect on the date hereof which have been
expressly disclosed in writing to Carnival. Neither Fairfield nor any
of its subsidiaries shall take any action which would cause the Proposed
Transaction to become ineligible for pooling of interests treatment
under generally accepted accounting principles.
6. Due Diligence and Negotiation Process. Each party hereby agrees to
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cooperate with the other party and its advisors and representatives with
a view to consummating its due diligence investigation as promptly as
practicable and to provide promptly to the other party such information,
documents and agreements as it may request.
The parties hereto agree to begin immediately the due diligence process
and the preparation of definitive agreements relating to the Proposed
Transaction. The parties hereto agree to use their commercially
reasonable efforts to consummate the Proposed Transaction as
contemplated hereby.
7. Expenses. Each party agrees to pay its own expenses in connection with
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the Proposed Transaction (including, without limitation, the
negotiation, execution and delivery of this letter). Notwithstanding
the foregoing, Xxxxxxxxx agrees to pay all of Carnival's out-of-pocket
expenses incurred in connection with the Proposed Transaction,
including, without limitation, all investment banking, legal and
accounting fees and expenses (a) if any fee is payable under paragraph
8(b) hereof, (b) if Carnival shall have terminated this letter of intent
after having learned of any fact or event which could reasonably be
expected, individually or in the aggregate, to result in a material
adverse effect on the assets, properties, business, results of
operations, condition (financial or otherwise) or prospects of Fairfield
and its subsidiaries, taken as a whole, or (c) if the Board of Directors
or stockholders of Fairfield shall fail to approve the Proposed
Transaction.
8. Termination.
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(a) The Proposed Transaction may be abandoned and this letter of intent
may be terminated (i) by any party if definitive agreements representing
the Proposed Transaction have not been executed on or before March 1,
2000, or (ii) by Carnival at any time if it determines, in its sole
discretion, not to proceed with the Proposed Transaction (A) due to the
disclosure of any fact not known to Carnival on the date hereof or (B)
because a condition set forth in paragraph 2 will not be satisfied.
Notwithstanding the foregoing, paragraphs 4 and 7 through 13 shall
survive any such termination.
(b) Fairfield agrees that if at any time within 9 months following the
date of termination hereof (A) Fairfield enters into a letter of intent
or definitive agreement for a Business Combination, (B) a Business
Combination shall have occurred, (C) a special committee of the Board of
Directors or the Board of Directors of Fairfield shall have recommended
to its shareholders that Fairfield consummate any Business Combination
with any person or entity, or (D) (1) any person (other than Carnival or
any of its subsidiaries) shall have acquired beneficial ownership (as
such term is defined in Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act") or the right to acquire beneficial
ownership of, or any "group" (as such term is defined in the Exchange
Act) shall have been formed which beneficially owns or has the right to
acquire beneficial ownership of, shares of Fairfield common stock
aggregating 15% or more of the then outstanding Fairfield common stock,
or (2) either a Transaction Proposal shall have been made to Fairfield
or any of its subsidiaries or any of its stockholders or any person
shall have publicly announced an intention (whether or not conditional)
to make, or the making of, a Transaction Proposal with respect to
Fairfield or any of its subsidiaries and, in the case of clause (A),
(C), (D)(1) or (D)(2), thereafter either (i) the proposed Business
Combination shall have occurred or (ii) another Business Combination
shall have occurred within 18 months following the date of termination
hereof, then in such case Fairfield shall pay Carnival an amount equal
to the sum of $25 million. Notwithstanding the foregoing, no such fee
shall be paid under this paragraph 8(b) if (i) this letter of intent is
terminated (A) by Carnival (i) solely because it determines not to
proceed with the Proposed Transaction because it is not satisfied with
its due diligence review of Fairfield, (ii) if the Board of Directors of
Carnival does not approve the Proposed Transaction, or (iii) due to the
failure of any condition referred to in paragraph 2(iv), 2(vi) (unless
such failure results from acts or omissions by Fairfield), or 2(vii) (if
such failure results from acts or omissions of Carnival), or (B) by
Fairfield (i) if the Board of Directors of Carnival does not approve the
Proposed Transaction, or (ii) due to the failure of any condition
referred to in paragraph 2(iv) (except that if the failure to satisfy
such condition relates to (i) regulatory approvals applicable to
Fairfield, Fairfield must have used reasonable commercial efforts to
have obtained such approvals and failed to do so, or (ii) regulatory
approvals applicable to Carnival, Carnival must have attempted to obtain
such approvals and failed to do so, it being understood that neither
party is obligated to attempt to obtain such approvals prior to the
execution of definitive agreements for the Proposed Transaction), 2(vi)
(unless such failure results from acts or omissions by Fairfield), or
2(viii) (if a material adverse change relating to Carnival occurs after
August 31, 1999). As used in this paragraph 8(b), "person" shall have
the meaning specified in Sections 3(a)(9) and 13(d)(3) of the Exchange
Act.
(c) Any payment required to be made pursuant to this paragraph 8 shall
be made simultaneously with the occurrence of the Business Combination
referred to in clause (b) and shall be made by wire transfer of
immediately available funds in US Dollars to an account designated by
Carnival.
(d) For purposes of this letter, the term "Business Combination" shall
mean (i) any transaction or series of related transactions involving a
merger, consolidation, share exchange, business combination or similar
transaction or transactions relating to Fairfield (other than the
Proposed Transaction) resulting in Fairfield's stockholders holding,
directly or indirectly, less than 75% of the voting securities of the
resulting entity; (ii) a sale, lease, exchange, transfer or other
disposition (other than to Carnival or its affiliates) of 20% or more of
the assets of Fairfield and its subsidiaries taken as a whole, in a
single transaction or series of transactions (other than sales of
contracts receivable or other transactions in connection with financings
of Fairfield and its subsidiaries in the ordinary course of business);
or (iii) the acquisition by any person or "group" (as defined in Section
13(d) of the Securities Exchange Act of 1934, as amended and the rules
and regulations thereunder) (other than Carnival or its affiliates or
any such group controlled by Carnival or its affiliates) of "beneficial
ownership" of 25% or more of the Fairfield voting securities whether by
tender offer or exchange offer or otherwise.
9. Governing Law and Amendment.
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(a) THIS LETTER SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE
WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
(b) ANY ACTION OR PROCEEDING AGAINST ANY PARTY HERETO RELATING TO THIS
LETTER OF INTENT MAY BE BROUGHT AND ENFORCED EXCLUSIVELY IN THE COURTS
OF THE STATE OF DELAWARE OR THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF DELAWARE, AND THE PARTIES IRREVOCABLY SUBMIT TO THE
JURISDICTION OF SUCH COURTS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING.
THE PARTIES IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION THAT THEY MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH
ACTION OR PROCEEDING IN SUCH COURTS AND ANY CLAIM THAT ANY SUCH ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
(c) This letter may not be amended, modified or waived except by a
written instrument executed by both parties.
10. Third Party Beneficiaries. No third party beneficiary rights are
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granted hereunder.
11. Remedies. Each of the parties acknowledges and agrees that no failure
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or delay in exercising any right, power or privilege hereunder will
operate as a waiver thereof, nor will any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise
of any right, power or privilege hereunder. The parties to this letter
further acknowledge and agree that money damages would not be a
sufficient remedy for any breach hereof, and that the non-breaching
party will be entitled to specific performance as a remedy for any such
breach. Such remedy will not be deemed to be the exclusive remedy for a
breach hereof but will be in addition to all other remedies available at
law or equity to the non-breaching party.
12. Other. It is understood that this letter agreement and the exhibit
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hereto merely set forth a statement of intentions with respect to the
Proposed Transaction, do not contain all matters upon which agreement
must be reached in order for the Proposed Transaction to be consummated,
do not constitute an obligation binding on any person to complete the
Proposed Transaction or enter into definitive agreements or create
rights in favor of any person and no claim shall be made by any party
hereto that any withdrawal from the Proposed Transaction was not made in
good faith and, except as expressly provided herein, there shall be no
liability to any person on the basis of such claim or withdrawal. A
binding agreement with respect to the Proposed Transaction will result
only from the execution of definitive agreements with respect thereto
and will be entirely subject to the terms and conditions contained
therein. Notwithstanding the foregoing, the provisions of paragraphs 3,
4, 5, 6, 7, 8, 9, 10, 11, 12 and 13 are acknowledged and agreed to be
fully binding on the parties hereto.
13. Counterparts. This letter agreement may be executed in one or more
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counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
If this letter correctly sets forth our understanding, please so
acknowledge by signing in the space indicated below and returning the
enclosed copy of this letter.
Very truly yours,
CARNIVAL CORPORATION
By: /s/ Xxxxxx X. Xxxxx
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Name: Xxxxxx X. Xxxxx
Title: Vice Chairman
ACCEPTED AND AGREED:
FAIRFIELD COMMUNITIES, INC.
By: /s/ Xxxxx X. Xxxx
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Name: Xxxxx X. Xxxx
Title: President and Chief Executive Officer
Exhibit A
Seller: Fairfield Communities, Inc.
Buyer: A corporation to be formed by Carnival.
Merger Consideration: Seller and Buyer will merge (the "Merger").
In the Merger, each share of Fairfield common
stock outstanding will be converted into
0.3164 shares of Carnival common stock.
Each option and warrant to purchase shares of
Fairfield common stock will be converted into
options and warrants for a number of shares of
Carnival common stock (based on the exchange
ratio described above) on the same terms and
conditions (with appropriate adjustments to
the number of shares and the exercise price to
reflect the exchange ratio).
Definitive Agreements: The transaction is subject to negotiation,
execution and delivery of definitive
agreements setting forth the terms of the
Merger. Prior to the execution of definitive
agreements, Xxxxxxxxx's stockholder rights
plan will be amended so that the execution and
delivery of the definitive agreements and the
consummation of the Merger and related
transactions will be exempted from the
provisions of the stockholder rights plan.
Lock-up and Voting Fairfield shall use its reasonable best
Agreements: efforts to cause Xxxxx Xxxxxx, Xxxxxxxx Group,
Inc., its executive officers and directors to
enter into customary lock-up and voting
agreements with Carnival.
Representations, Warranties Customary for transactions of this nature
and Covenants: (including no-shop, expense reimbursement and
break-up fee provisions (which shall provide
for a $30 million fee and a 12-month break up
fee tail period), which may be different from
the terms set forth in the letter of intent to
which this Exhibit A is attached) involving
the sale of a publicly owned corporation.
There will be no survival of any
representations, warranties or covenants by
Fairfield.
Tax Treatment: The exchange of Fairfield common stock for
Carnival common stock pursuant to a
transaction is expected to qualify as a
"reorganization" within the meaning of Section
368 of the Internal Revenue Code of 1986, as
amended.
Accounting Treatment: The exchange of Fairfield common stock for
Carnival common stock pursuant to a
transaction is expected to qualify as a
pooling of interests under generally accepted
accounting principles; provided that Carnival,
in its sole discretion, shall be entitled in
the definitive agreement to waive any failure
so to qualify.
Exhibit B
Included as Exhibit 99.2 to this Form 8-K
