Exhibit 99.2
Carnival Corporation
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January 23, ▇▇▇▇
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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 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
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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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 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.
(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
Fairfield'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 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
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 the
Proposed Transaction (including, without limitation, the negotiation,
execution and delivery of this letter). Notwithstanding the foregoing,
Fairfield 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.
(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.
(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 granted
hereunder.
11. Remedies. Each of the parties acknowledges and agrees that no failure 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 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
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:
Name:
Title:
ACCEPTED AND AGREED:
FAIRFIELD COMMUNITIES, INC.
By:
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
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, Fairfield'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 efforts to cause
Agreements: ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Group, Inc., its executive
officers and directors to enter into
customary lock-up and voting agreements
with Carnival.
Representations, Customary for transactions of this nature (including no-
Warranties and Covenants: 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.