FAIRFIELD COMMUNITIES, INC.
THE RIGHT TO ELECT THE FORM OF CONSIDERATION WILL EXPIRE AT 5:00 P.M. (EASTERN
TIME) ON THE CLOSING DATE OF THE MERGER, WHICH IS SCHEDULED FOR APRIL 2, 2001,
THE "ELECTION DEADLINE." IT IS IMPERATIVE THAT WE RECEIVE YOUR INSTRUCTIONS NO
LATER THAN MARCH 29, 2001, IN ORDER TO FULFILL PROPERLY YOUR INSTRUCTIONS. ANY
INSTRUCTIONS RECEIVED AFTER THAT TIME WILL BE PROCESSED ON A "BEST EFFORTS"
BASIS.
To Our Clients:
Cendant Corporation, Fairfield Communities, Inc. and Grand Slam Acquisition
Corp., a subsidiary of Cendant, entered into an Agreement and Plan of Merger
dated as of November 1, 2000, as amended. Pursuant to the merger agreement,
Grand Slam will merge with and into Fairfield, with Fairfield continuing as the
surviving corporation. Following the merger, Fairfield will be a wholly-owned
subsidiary of Cendant.
Stockholders of Fairfield may make the election described below at any time
before the Election Deadline, which is 5:00 p.m. (Eastern Time) on the date that
the merger closes. The merger is expected to close on April 2, 2001, which would
require stockholders to make their election by 5:00 p.m. (Eastern Time) on that
date. Cendant and Fairfield may extend the merger closing to a later date, in
which case the Election Deadline would be extended to the actual date of the
closing. Fairfield expects to announce the anticipated closing date of the
merger by means of a press release to be issued not later than the date of the
special meeting of Fairfield's stockholders to consider the merger.
Stockholders of Fairfield have the right to elect to receive, in exchange
for their shares of Fairfield common stock, cash, shares of Cendant common stock
designated CD common stock or a combination of both. Under the terms of the
merger agreement, you have the following options:
- The "STOCK ELECTION," which consists of 1.2500 shares of CD common stock
for each share of Fairfield common stock, unless the average trading price
of CD common stock is more or less than $12.00. The "average trading
price" means the average of the 4:00 p.m. Eastern Time closing sales
prices of CD common stock reported on the New York Stock Exchange
Composite Tape for the 20 consecutive trading days ending on and including
the trading day immediately before the date of the special meeting of the
stockholders of Fairfield to consider the merger. The adjustments that may
be made to the exchange ratio are as follows:
AVERAGE TRADING PRICE EXCHANGE RATIO
- ------------------------------------- -------------------------------------
Equal to or greater than Equal to the quotient of $16.00
$13.5960 divided by the average trading price
Greater than $12.00 but less Equal to 0.6250 plus the quotient of
than $13.5960 $7.50 divided by the average trading
price
Equal to $12.00 1.2500
Less than $12.00 but greater Equal to the quotient of $15.00
than $7.00 divided by the average trading price
Equal to or less than $7.00 2.1428
- The "CASH ELECTION," which consists of $15.00 in cash for each share of
Fairfield common stock plus, if the average trading price is greater than
$12.00, a fraction of a share of CD common stock that equals the excess of
the value of the stock election, based on the average trading price, over
$15.00. The maximum value of that fractional share will not exceed $1.00.
You may also elect to receive the cash election for some of your shares of
Fairfield common stock and the stock election for your remaining shares of
Fairfield common stock. However, you may not elect to receive different forms of
consideration for a single share of Fairfield common stock.
IF NONE OF THESE OPTIONS ARE CHOSEN, YOU WILL RECEIVE THE STOCK ELECTION FOR
ALL OF YOUR SHARES OF FAIRFIELD COMMON STOCK.
Cendant and Fairfield will determine the final exchange ratio at the end of
the business day before the special meeting of Fairfield stockholders. Fairfield
and Cendant intend to issue a joint press release announcing the final exchange
ratio after it is determined.
BECAUSE WE ARE THE HOLDER OF RECORD FOR YOUR SHARES, ONLY WE CAN MAKE AN
ELECTION FOR YOU IN ACCORDANCE WITH YOUR INSTRUCTIONS. PLEASE INSTRUCT US BELOW
ON HOW TO EXCHANGE YOUR SHARES OF FAIRFIELD COMMON STOCK.
PLEASE NOTE THE FOLLOWING:
- The Election Deadline is at 5:00 p.m. (Eastern Time) on the closing date
of the merger, which is scheduled for April 2, 2001. WE MUST RECEIVE YOUR
COMPLETED INSTRUCTIONS NO LATER THAN MARCH 29, 2001, IN ORDER FOR US TO
ACT UPON YOUR INSTRUCTIONS IN A TIMELY MANNER.
- If you miss our processing deadline and we are unable to comply with the
Election Deadline, you will receive the stock election for your shares of
Fairfield common stock.
CENDANT AND FAIRFIELD CANNOT GUARANTEE THAT ALL FAIRFIELD STOCKHOLDERS WILL
RECEIVE THEIR ELECTION CHOICES. The total amount of cash Cendant is required to
pay in the merger will not exceed the product of $7.50 multiplied by the total
number of outstanding shares of Fairfield common stock immediately prior to the
effective time of the merger. In addition, the amount of cash available for
persons making the cash election will be reduced by the product of the number of
shares held by Fairfield stockholders exercising their appraisal rights
multiplied by the value, based on the final average trading price, of the stock
election. If the total amount of cash to be paid to stockholders choosing the
cash election plus the amount attributable to stockholders exercising their
appraisal rights is greater than the total amount that Cendant is required to
pay in cash, then the amount of cash a stockholder making the cash election will
receive shall be reduced on a pro rata basis with the other stockholders making
the cash election. In lieu of cash, each of the stockholders making the cash
election will receive a number of shares of CD common stock equal to the value,
based on the final average trading price, of the cash that was reduced.
Fairfield stockholders electing cash may also receive up to $1.00 of CD common
stock if the average trading price for CD common stock is greater than $12.00.
Cendant has the right, exercisable at any time prior to the closing of the
merger, to pay cash for any shares of Fairfield common stock instead of issuing
CD common stock. Any increase in the amount of cash to be paid by Cendant will
first be paid to Fairfield stockholders electing to receive cash who were
subject to proration and then will be paid on a pro rata basis to Fairfield
stockholders making the stock election.
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PLEASE PROVIDE YOUR SIGNED INSTRUCTIONS BELOW:
ELECTION OPTIONS
/ / "Cash Election"--Exchange all Fairfield shares for cash
/ / "Stock Election"--Exchange all Fairfield shares for Cendant common
stock designated CD common stock
/ / Exchange ____ shares of Fairfield common stock for the Cash Election
and the balance for the Stock Election.
IF NONE OF THESE OPTIONS IS CHOSEN, YOU WILL RECEIVE THE STOCK ELECTION.
Account Number ________________
- --------------------------- --------------------------- ---------------------------
Signature of Account holder Signature of Account holder Area Code and Daytime Phone
(if joint account) No.
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE OPTION AND RISK OF THE
ELECTING ACCOUNT HOLDER. IF DELIVERED BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE DELIVERY.
If you have any questions, please contact your broker or financial advisor
directly, or alternatively contact Mellon Investor Services LLC at 866-892-5622
(toll free).
YOUR PROMPT ACTION IS REQUIRED. PLEASE NOTE THAT THE RIGHT TO ELECT THE FORM
OF CONSIDERATION WILL EXPIRE AT 5:00 P.M. (EASTERN TIME) ON THE CLOSING DATE
OF THE MERGER, WHICH IS SCHEDULED FOR APRIL 2, 2001. OUR PROCESSING DEADLINE
FOR THE ELECTION IS 5:00 P.M. (EASTERN TIME) MARCH 29, 2001.
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