SIGNATURE RESORTS INC, DEF 14A, 1997-04-11

SIGNATURE RESORTS INC
DEF 14A, 1997-04-11
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGING PLACES

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<PAGE> 1

As filed with the Securities and Exchange Commission on April 11, 1997

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or 240.14a-12
</TABLE>

SIGNATURE RESORTS, INC.
------------------------------------
(Name of Registrant as Specified In Its Charter)

N/A
---------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

- --------------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

- --------------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------

(5) Total fee paid:

- --------------------------------------------------------------------------------

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

- --------------------------------------------------------------------------------

(2) Form, Schedule or Registration Statement No.:

- --------------------------------------------------------------------------------

(3) Filing Party:

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(4) Date Filed:

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<PAGE> 2

SIGNATURE RESORTS, INC.

NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS

The 1997 Annual Meeting of Stockholders of Signature Resorts, Inc. (the
"Company") will be held at the Embassy Suites Hotel -- LAX North, 9801 Airport
Boulevard, Los Angeles, California 90045 on Friday, May 16, 1997, at 10:00 a.m.
to:

1. elect three Class I directors of the Company;

2. consider and vote upon the adoption of the Company's 1996 Equity
Participation Plan, as amended;

3. ratify the appointment of Arthur Andersen LLP as the Company's
independent public accountants for the year ending on December 31, 1997;
and

4. transact such other business as may properly be brought before the 1997
Annual Meeting or any adjournments or postponements thereof.

Only stockholders of record at the close of business on April 4, 1997 are
entitled to notice of and to vote at the 1997 Annual Meeting. All stockholders
are cordially invited to attend the 1997 Annual Meeting.

PLEASE COMPLETE THE ACCOMPANYING PROXY AND RETURN IT IN THE ENCLOSED
ADDRESSED ENVELOPE.

By Order of the Board of Directors

/s/ Steven C. Kenninger

Steven C. Kenninger
Chief Operating Officer and Secretary

Los Angeles, California
April 11, 1997
<PAGE> 3

PROXY STATEMENT

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Signature Resorts, Inc. ("Signature" or the
"Company") for use at the Annual Meeting of Stockholders to be held on May 16,
1997 (the "1997 Annual Meeting").

The Company's principal executive offices are located at 5933 West Century
Boulevard, Suite 210, Los Angeles, California, 90045. A copy of the Company's
1996 Annual Report to Stockholders and this Proxy Statement and accompanying
proxy card will be first mailed to stockholders on or about April 14, 1997.

VOTING PROCEDURES

A proxy card is enclosed for your use. You are solicited on behalf of the
Board of Directors to sign, date and return the proxy card in the accompanying
envelope, which is postage prepaid if mailed in the United States.

You have three choices on each of the matters to be voted upon at the 1997
Annual Meeting. Concerning the election of Class I directors, by checking the
appropriate box on your proxy card you may: (a) vote for all of the director
nominees as a group; (b) withhold authority to vote for all director nominees as
a group; or (c) vote for all director nominees as a group except those nominees
you identify on the appropriate line. Concerning the adoption of the Company's
1996 Equity Participation Plan, as amended, and the ratification of Arthur
Andersen LLP as the Company's independent public accountants, by checking the
appropriate box you may: (a) vote "For" the item; (b) vote "Against" the item;
or (c) "Abstain" from voting on the item. As discussed below, if you "Abstain"
from voting on any matter it will have the effect of a vote "Against" the item
if a quorum is present.

Stockholders may vote by either completing and returning the enclosed proxy
card prior to the 1997 Annual Meeting, voting in person at the 1997 Annual
Meeting, or submitting a signed proxy card at the 1997 Annual Meeting.

YOUR VOTE IS IMPORTANT. ACCORDINGLY, YOU ARE URGED TO SIGN AND RETURN THE
ACCOMPANYING PROXY CARD WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.

You may revoke your proxy at any time before it is actually voted at the
1997 Annual Meeting by delivering written notice of revocation to the Secretary
of the Company at 5933 West Century Boulevard, Suite 210, Los Angeles,
California, 90045, by submitting a later dated proxy, or by attending the 1997
Annual Meeting and voting in person. Attendance at the 1997 Annual Meeting will
not, by itself, constitute revocation of the proxy. You may also be represented
by another person present at the 1997 Annual Meeting by executing a form of
proxy designating such person to act on your behalf.

Each unrevoked proxy card properly signed and received prior to the close
of the 1997 Annual Meeting will be voted as indicated. Unless otherwise
specified on the proxy, the shares represented by a signed proxy card will be
voted FOR items 1, 2 and 3 on the proxy card and will be voted in the discretion
of the persons named as proxies on the other business that may properly come
before the 1997 Annual Meeting.

If a proxy card indicates an abstention or a broker non-vote on a
particular matter, then the shares represented by such proxy will be counted for
quorum purposes. If a quorum is present, an abstention or a broker non-vote will
have no effect on the outcome.

The presence at the 1997 Annual Meeting, in person or by proxy, of a
majority of the shares of the Company's Common Stock ("Common Stock") issued and
outstanding on April 4, 1997, will constitute a quorum.

Votes cast at the 1997 Annual Meeting will be tabulated by the persons
appointed by the Company to act as inspectors of election for the 1997 Annual
Meeting.

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SHARES ENTITLED TO VOTE AND REQUIRED VOTE

Stockholders of record at the close of business on April 4, 1997 are
entitled to vote at the 1997 Annual Meeting. At that date, 19,890,841 shares of
Common Stock were outstanding. A majority of the votes cast at a meeting of
stockholders, duly called and at which a quorum is present, shall be sufficient
to take or authorize action upon any matter which may properly come before the
1997 Annual Meeting. Each share of Common Stock is entitled to one vote.

SHARE OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

Set forth in the following table is the beneficial ownership of the
Company's Common Stock as of March 31, 1997, for all current directors, the five
executive officers of the Company named under the table titled "Executive
Compensation" and all directors and executive officers as a group. Pursuant to
the rules of the Securities Exchange Commission, in calculating percentage
ownership, each person is deemed to beneficially own his own shares subject to
options exercisable within 60 days, but options owned by others (even if
exercisable within 60 days) are deemed not to be outstanding shares.

<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT
NAME OF BENEFICIAL OWNER(A) POSITION OWNED OF CLASS
- --------------------------------- --------------------------------- ------------- ---------
<S> <C> <C> <C>
Osamu Kaneko(b) Chairman of the Board and Chief 2,667,903 13.4%
Executive Officer
Andrew J. Gessow(c) Director and President 3,056,704 15.4%
Steven C. Kenninger(b)(d) Director, Chief Operating Officer 1,371,779 6.9%
and Secretary
James E. Noyes Director and Executive Vice 138,000(e) *
President
Michael A. Depatie Executive Vice President and 82,400(f) *
Chief Financial Officer
Juergen Bartels Director -- --
Sanford R. Climan Director 3,250 *
Joshua S. Friedman(g) Director -- --
W. Leo Kiely, III Director -- --
All directors and executive officers as a group (14 persons)(h) 7,466,784 37.6%
</TABLE>

- ---------------

* Less than 1%.

(a) Except as otherwise indicated, each beneficial owner has the sole power to
vote and to dispose of all shares of Common Stock owned by such beneficial
owner.

(b) The address of such person is 5933 West Century Blvd., Suite 210, Los
Angeles, California 90045.

(d) The shares indicated are held by Mr. Kenninger through trusts, pension plans
and profit sharing plans, under which Mr. Kenninger may be deemed to have,
or to share, beneficial ownership of such shares.

(e) Represents presently exercisable options to acquire shares of Common Stock
or options which will become exercisable within 60 days of March 31, 1997.

(f) Includes (i) presently exercisable options to acquire 75,000 shares of
Common Stock, (ii) 6,400 shares of Common Stock held through trusts and
retirement plans and (iii) 1,000 shares of Common Stock held by a
corporation in which Mr. Depatie is a director and a 7.2% stockholder.

(g) Canpartners Incorporated ("Canyon") is the beneficial owner of 42,219 shares
and is the sole general partner of CPI Securities L.P. (which holds 317,586
shares), Canpartners Investments II, L.P. (which holds 101,241 shares) and
Canpartners Investments V, L.P. (which holds 43,965 shares). Mr. Friedman,

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<PAGE> 5

Mitchell R. Julis and R. Christian B. Evensen are the sole stockholders and
directors of Canyon and may be deemed to share beneficial ownership of the
shares owned by Canyon and the indicated limited partnerships. Such persons
disclaim beneficial ownership of the shares. The 505,011 shares beneficially
owned by Canyon do not include 98,188 shares owned by Mr. Friedman's wife,
98,188 shares owned by Mr. Julis and 98,188 shares owned by Mr. Evensen's
wife, the beneficial ownership of which is disclaimed by Canyon. Taken as a
group, the entities and persons named in this note may be deemed to
beneficially own an aggregate of 799,575 shares, or 4.0% of the Common Stock
outstanding.

(h) Includes 357,400 shares which may be acquired upon exercise of presently
exercisable options or options which will become exercisable within 60 days
of March 31, 1997.

COMPLIANCE WITH SECTION 16(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and officers, and persons who
own more than 10% of a registered class of the Company's equity securities
("Insiders"), to file with the Securities and Exchange Commission (the
"Commission") initial reports of ownership and reports of changes in ownership
of Common Stock. Insiders are required by the Commission's regulations to
furnish the Company with copies of all Section 16(a) reports filed by such
persons.

To the Company's knowledge, based solely on its review of the copies of
such reports furnished to the Company and written representations from the
Insiders that no other reports were required, during the year ended December 31,
1996, all Section 16(a) filing requirements applicable to Insiders were complied
with, except that the Initial Statements of Beneficial Ownership of Securities
on Form 3 filed by Messrs. Kaneko, Gessow, Kenninger, Noyes, Depatie, Frey,
Levin, Bartels, Climan, Friedman, Kiely, Ms. Giannoni, Canpartners Incorporated
and Canpartners Investments II, L.P. were filed late with the Commission.

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<PAGE> 6

PROPOSAL NO. 1:

ELECTION OF CLASS I DIRECTORS

GENERAL INFORMATION -- ELECTION OF DIRECTORS

Pursuant to the Company's Articles of Incorporation, as amended (the
"Articles"), the Bylaws, as amended (the "Bylaws"), and resolutions adopted by
the Company's Board of Directors, the Company currently has eight directors. The
Company's Articles provide for its Board of Directors to be divided into three
classes, each serving a staggered term so that directors' initial terms will
expire either at the 1997, 1998 or 1999 annual meeting of stockholders. Starting
with the 1997 Annual Meeting, one class of directors will be elected each year
for three-year terms. Messrs. Kenninger, Noyes and Bartels have been classified
as Class I directors of the Company whose initial terms will expire at the 1997
Annual Meeting. Messrs. Gessow, Friedman and Kiely have been classified as Class
II directors whose initial terms will expire at the 1998 annual meeting of
stockholders. Messrs. Kaneko and Climan have been classified as Class III
directors whose initial terms will expire at the 1999 annual meeting of
stockholders. Directors elected at each annual meeting will serve until each
respective successor shall have been elected or appointed.

In the absence of instructions to the contrary, votes will be cast for the
election of the following as directors pursuant to the proxies solicited hereby.
In the event any nominee is unable or declines to serve as a director at the
time of the 1997 Annual Meeting, the proxy will be voted for any substitute
nominee selected by the current Board of Directors. However, the proxy cannot be
voted for a greater number of persons than the number of nominees designated by
the Board of Directors. Management has no reason to believe, at this time, that
the persons named will be unable or will decline to serve if elected, and each
nominee has informed the Company that he will serve if elected.

The following table sets forth the name of, and certain information with
respect to, the three persons nominated by the Company at the 1997 Annual
Meeting to serve as Class I directors.

<TABLE>
<CAPTION>
DIRECTOR
NOMINEES FOR DIRECTOR AGE SINCE POSITIONS CURRENTLY HELD WITH THE COMPANY
- --------------------------------- --- -------- ------------------------------------------------
<S> <C> <C> <C>
Steven C. Kenninger(1)(2) 44 1996 Chief Operating Officer, Secretary and Director
James E. Noyes 50 1996 Executive Vice President and Director
Juergen Bartels(2) 56 1996 Director
</TABLE>

- ---------------

(1) Member of Executive Committee.

(2) Member of Audit Committee.

STEVEN C. KENNINGER has served as a Director, Chief Operating Officer and
Secretary of the Company since its inception in May 1996. Mr. Kenninger
co-founded KOAR Group, Inc. (a real estate acquisition and development company
and predecessor of the Company) with Mr. Kaneko in 1985 and most recently served
as its President. Mr. Kenninger was a practicing attorney at the law firm of
Paul, Hastings, Janofsky & Walker, Los Angeles, California from 1977 through
1981 and at the law firm of Riordan & McKinzie, Los Angeles, California from
1981 through 1985, where he was a partner. Mr. Kenninger graduated with highest
distinction from Purdue University with a B.S. degree in Mechanical Engineering
in 1974, and received a J.D. degree from Stanford Law School in 1977. Mr.
Kenninger is a member of the Board of Visitors of the Stanford Law School and
has been a member of the State Bar of California since 1977.

JAMES E. NOYES has served as a Director and Executive Vice President of the
Company since July 1996 and has overall responsibility for the daily operation
of the Company's sales, marketing and resort/hotel management divisions. Prior
to joining the Company, from 1989 through June 1996 Mr. Noyes served as
President of The Trase Miller Group (a travel technology services company), the
parent company of MTI Vacations, Inc., with interests in vacation packaging,
travel technology and specialized teleservices, and previously served as its
Vice President of Marketing and Sales since 1980. Mr. Noyes served in various
management positions for Wilson Sporting Goods from 1976 to 1980. Mr. Noyes is a
director of Premier Yachts, Ltd. (a shipbuilding and repairing company), Preview
Travel, Inc. and Ball Horticultural, Inc. (a

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horticultural supply company). Mr. Noyes received a B.A. degree in 1970 from
Dartmouth College and received a M.B.A. degree in 1974 from Stanford Business
School.

JUERGEN BARTELS has served as a Director of the Company since August 1996.
Mr. Bartels has been Chairman and Chief Executive Officer of Westin Hotels &
Resorts since May 1995. From 1983 through April 1995, Mr. Bartels was President
and Chief Executive Officer of Carlson Hospitality Group, Inc. ("Carlson"),
where he directed Carlson's Radisson Hotels International, Radisson Seven Seas
Cruises and several restaurant companies, including the T.G.I. Friday's chain.
Prior to joining Carlson, Mr. Bartels held executive positions with Holiday Inn
and Ramada and was the founder of Ramada Renaissance Hotels (each a hotel
operating company).

COMPENSATION OF DIRECTORS

The Company pays its directors who are not officers of the Company
("Independent Directors") a fee of $1,000 per meeting of the Board of Directors
and any committee thereof (including telephonic meetings) for their services as
directors. In addition, the Company has granted options to purchase 15,000
shares of Common Stock at a price of $14.00 per share (which was the price per
share of the Common Stock issued in the Company's initial public offering of
Common Stock on August 20, 1996 (the "Initial Public Offering")) to each such
Independent Director to vest in equal portions over a term of three years. Each
Independent Director who is still a member of the Board of Directors at the end
of the three year vesting period of the initial grant of options will receive a
grant of additional options to purchase 15,000 shares of Common Stock at the
fair market value of the Common Stock on the date of the grant, with such
options to vest over an additional three year period. In addition to such option
grants, the Independent Directors will be reimbursed for expenses of attending
each meeting of the Board of Directors. Officers of the Company who are
directors will not be paid any director fees but will be reimbursed for expenses
of attending meetings of the Board of Directors.

BOARD OF DIRECTORS AND COMMITTEE MEETINGS

BOARD OF DIRECTORS

The Board of Directors met six times during the year ended December 31,
1996. During 1996, attendance at Board of Directors meetings averaged 95%.

AUDIT COMMITTEE

The Board of Directors has established an audit committee (the "Audit
Committee"), which consists of Messrs. Bartels, Friedman and Kenninger. The
Audit Committee makes recommendations concerning the engagement of independent
public accountants, reviews with the independent public accountants the plans
and results of the audit engagement, approves professional services provided by
the independent public accountants, reviews the independence of the independent
public accountants, considers the range of audit and non-audit fees and reviews
the adequacy of the Company's internal accounting controls. During the year
ended December 31, 1996, the Audit Committee held one meeting.

COMPENSATION COMMITTEE

The Board of Directors has established a compensation committee (the
"Compensation Committee"), which consists of Messrs. Kiely and Climan, to
determine compensation for the Company's senior executive officers, determine
awards under the Company's 1996 Equity Participation Plan and administer the
Company's Employee Stock Purchase Plan. During the year ended December 31, 1996,
the Compensation Committee held one meeting.

EXECUTIVE COMMITTEE

The Board of Directors has established an executive committee (the
"Executive Committee"), which will be granted such authority as may be
determined from time to time by a majority of the Board of Directors.

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The Executive Committee consists of Messrs. Gessow, Kenninger and Friedman. All
actions by the Executive Committee require the unanimous vote of all of its
members. During the year ended December 31, 1996, the Executive Committee held
one meeting.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
EACH OF THE CLASS I DIRECTORS NOMINATED IN PROPOSAL 1.

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<PAGE> 9

PROPOSAL NO. 2:

ADOPTION OF THE COMPANY'S 1996 EQUITY
PARTICIPATION PLAN, AS AMENDED

On January 31, 1997, the Board of Directors approved, subject to
stockholder approval, an amendment to the Company's 1996 Equity Participation
Plan to increase the number of shares of Common Stock reserved for issuance
thereunder from 1,750,000 shares to 2,500,000 shares. The Company's stockholders
are asked to approve the adoption of the 1996 Equity Participation Plan, as
amended, at the 1997 Annual Meeting.

GENERAL

The Company established the 1996 Equity Participation Plan to enable
executive officers, other key employees, Independent Directors and consultants
of the Company to participate in the ownership of the Company. The 1996 Equity
Participation Plan is designed to attract and retain executive officers, other
key employees, Independent Directors and consultants of the Company and to
provide incentives to such persons to maximize the Company's performance. The
1996 Equity Participation Plan provides for the award to executive officers,
other key employees, Independent Directors and consultants of the Company of a
broad variety of stock-based compensation alternatives such as nonqualified
stock options, incentive stock options, restricted stock and performance awards.
Awards under the 1996 Equity Participation Plan may provide participants with
rights to acquire shares of Common Stock. The 1996 Equity Participation Plan was
first approved by the Company's stockholders in June 1996, prior to the
consummation of the Company's Initial Public Offering.

Under the 1996 Equity Participation Plan, initially not more than 1,750,000
shares of Common Stock (and, subject to stockholder approval of Proposal 2, not
more than 2,500,000 shares of Common Stock) are authorized for issuance upon
exercise of qualified stock options, incentive stock options, stock appreciation
rights, restricted stock awards, performance awards, dividend equivalents,
deferred stock awards and stock payments. Furthermore, the maximum number of
shares which may be subject to options or stock appreciation rights granted
under the 1996 Equity Participation Plan to any individual in any fiscal year
cannot exceed 450,000.

The 1996 Equity Participation Plan is administered by the Compensation
Committee, which is authorized to select from among the eligible participants
the individuals to whom options, restricted stock purchase rights and
performance awards are to be granted and to determine the number of shares to be
subject thereto and the terms and conditions thereof. The members of the
Compensation Committee, each of which is an Independent Director, select from
among the eligible participants the individuals to whom nonqualified stock
options are to be granted, determine the number of shares to be subject thereto
and the terms and conditions thereof and make all other determinations and take
all other actions necessary or advisable for the administration of the 1996
Equity Participation Plan. The Compensation Committee is also authorized to
adopt, amend and rescind rules relating to the administration of the 1996 Equity
Participation Plan.

Options, stock appreciation rights, restricted stock and other awards under
the 1996 Equity Participation Plan may be granted to individuals who are then
officers or employees of the Company or any of its present or future
subsidiaries or Independent Directors or consultants of the Company selected by
the Compensation Committee for participation in the 1996 Equity Participation
Plan.

Nonqualified stock options provide for the right to purchase Common Stock
at a specified price which may be less than fair market value on the date of
grant (but not less than par value), and usually will become exercisable in
installments after the grant date. Nonqualified stock options may be granted for
any reasonable term. Independent Directors shall be automatically granted
options to purchase 15,000 shares of Common Stock on the date of initial
election and options to purchase an additional 15,000 shares of Common Stock on
the third anniversary of such date, provided that he continues to serve on the
Board of Directors at such time.

Incentive stock options are designed to comply with the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), and will be subject to
restrictions contained in the Code, including exercise prices

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<PAGE> 10

equal to at least 100% of fair market value of Common Stock on the grant date
and a ten year restriction on their term, but may be subsequently modified to
disqualify them from treatment as an incentive stock option.

Restricted stock may be sold to participants at various prices (but not
below par value) and made subject to such restrictions as may be determined by
the Compensation Committee. Restricted stock typically may be repurchased by the
Company at the original purchase price if the conditions or restrictions are not
met. In general, restricted stock may not be sold, or otherwise transferred or
hypothecated, until restrictions are removed or expire. Purchasers of restricted
stock, unlike recipients of options, will have voting rights and will receive
dividends prior to the time when the restrictions lapse.

Performance awards may be granted by the Compensation Committee on an
individual or group basis. Generally, these awards will be based upon specific
agreements and may be paid in cash or in Common Stock or in a combination of
cash and Common Stock. Performance awards may include "phantom" stock awards
that provide for payments based upon increases in the price of the Company's
Common Stock over a predetermined period. Performance awards may also include
bonuses which may be granted by the Compensation Committee on an individual or
group basis and which may be payable in cash or in Common Stock or in a
combination of cash and Common Stock.

Dividend Equivalents represent the value of the dividends per share paid by
the Company, calculated with reference to the number of shares covered by the
stock options, stock appreciation rights or other awards held by the
participant.

Deferred Stock may be awarded to participants, typically without payment of
consideration, but subject to vesting conditions based on continued employment
or on performance criteria established by the Compensation Committee. Like
restricted stock, deferred stock may not be sold, or otherwise transferred or
hypothecated, until vesting conditions are removed or expire. Unlike restricted
stock, deferred stock will not be issued until the deferred stock award has
vested, and recipients of deferred stock generally will have no voting or
dividend rights prior to the time when vesting conditions are satisfied.

Stock Payments may be authorized by the Compensation Committee in the form
of shares of Common Stock or an option or other right to purchase Common Stock
as part of a deferred compensation arrangement in lieu of all or any part of
compensation, including bonuses, that would otherwise be payable in cash to the
key employee, officer, Independent Director or consultant.

Stock Appreciation Rights may be granted in connection with stock options
or other awards, or separately. Stock Appreciation Rights ("SARs") granted by
the Compensation Committee in connection with stock options or other awards
typically will provide for payments to the holder based upon increases in the
price of the Company's Common Stock over the exercise price of the related
option or other awards, but alternatively may be based upon criteria such as
book value. Except as required by Section 162(m) of the Code with respect to a
SAR intended to qualify as performance-based compensation as described in
Section 162(m) of the Code, there are no restrictions specified in the 1996
Equity Participation Plan on the exercise of SARs or the amount of gain
realizable therefrom, although restrictions may be imposed by the Compensation
Committee in the SAR agreements. The Compensation Committee may elect to pay
SARs in cash or in Common Stock or in a combination of both.

SECURITIES LAWS AND FEDERAL INCOME TAXES

Securities Laws. The 1996 Equity Participation Plan is intended to conform
to the extent necessary with all provisions of the Securities Act of 1933, as
amended (the "Securities Act") and the Exchange Act and any and all regulations
and rules promulgated by the Securities and Exchange Commission thereunder,
including without limitation Rule 16b-3. The 1996 Equity Participation Plan will
be administered, and options will be granted and may be exercised, only in such
a manner as to conform to such laws, rules and regulations. To the extent
permitted by applicable law, the 1996 Equity Participation Plan and options
granted thereunder shall be deemed amended to the extent necessary to conform to
such laws, rules and regulations.

General Federal Tax Consequences. Under current federal laws, in general,
recipients of awards and grants of nonqualified stock options, stock
appreciation rights, restricted stock, deferred stock, dividend

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<PAGE> 11

equivalents, performance awards, and stock payments under the 1996 Equity
Participation Plan are taxable under Section 83 of the Code upon their receipt
of Common Stock or cash with respect to such awards or grants and, subject to
Section 162(m) of the Code, the Company will be entitled to an income tax
deduction with respect to the amounts taxable to such recipients. Under Sections
421 and 422 of the Code, recipients of incentive stock options are generally not
taxable on their receipt of Common Stock upon their exercises of incentive stock
options if the incentive stock options and option stock are held for certain
minimum holding periods and, in such event, the Company is not entitled to
income tax deductions with respect to such exercises. Participants in the 1996
Equity Participation Plan will be provided with detailed information regarding
the tax consequences relating to the various types of awards and grants under
the plan.

Section 162(m) Limitation. In general, under Section 162(m) of the Code,
income tax deductions of publicly-held corporations may be limited to the extent
total compensation (including base salary, annual bonus, stock option exercises
and non-qualified benefits paid) for certain executive officers exceeds
$1,000,000 (less the amount of any "excess parachute payments" as defined in
Section 280G of the Code) in any one year. However, under Section 162(m), the
deduction limit does not apply to certain "performance-based compensation"
established by an independent compensation committee which is adequately
disclosed to, and approved by, stockholders. In particular, stock options and
SARs will satisfy the "performance-based compensation" exception if the awards
are made by a qualifying compensation committee, the plan sets the maximum
number of shares that can be granted to any person within a specified period and
the compensation is based solely on an increase in the stock price after the
grant date (i.e. the option exercise price is equal to or greater than the fair
market value of the stock subject to the award on the grant date). Rights or
awards granted under the 1996 Equity Participation Plan, other than options and
SARs, will not qualify as "performance-based compensation" for purposes of
Section 162(m) unless such rights or awards are granted or vest upon
preestablished objective performance goals, the material terms of which are
disclosed to and approved by the stockholders of the Company.

The Company has attempted to structure the 1996 Equity Participation Plan
in such a manner that subject to obtaining stockholder approval for the 1996
Equity Participation Plan, as amended, the remuneration attributable to stock
options and SARs which meet the other requirements of Section 162(m) will not be
subject to the $1,000,000 limitation.

AMENDMENT TO THE 1996 EQUITY PARTICIPATION PLAN

Under the Company's current 1996 Equity Participation Plan, which was first
approved by the Company's stockholders in June 1996, prior to the consummation
of the Company's Initial Public Offering, the aggregate number of shares of
Common Stock that may be issued thereunder cannot exceed 1,750,000 shares of
Common Stock. Due to the Company's acquisition efforts and its efforts to
attract, retain and reward its key employees, the number of shares issuable
pursuant to options granted under the 1996 Equity Participation Plan has reached
the 1,750,000 share limit. Furthermore, in order to attract Mr. Depatie to the
Company to be employed as its Executive Vice President and Chief Financial
Officer, the Company granted Mr. Depatie options to purchase 375,000 shares of
Common Stock, which options vest over a four year period. Mr. Depatie's grants
raise the number of shares issuable upon exercise of options granted under the
1996 Equity Participation Plan to above the current limit of 1,750,000 shares.
Therefore, in accordance with the 1996 Equity Participation Plan, the grants of
Mr. Depatie's options are subject to approval of the Company's stockholders of
the amendment described in this Proposal 2. The Company's Board of Directors
believes that, in order to continue its acquisition efforts and to retain,
motivate, and attract key personnel essential to the continued success of the
Company it is necessary to maintain its current practice of providing meaningful
incentive awards. The Board of Directors believes that incentive awards have
played a critical role in enabling them to create a motivated management team
and to build a growing, highly competitive business. The Board of Directors also
believes that the Company's 1996 Equity Participation Plan has helped to
stimulate a deeper

10
<PAGE> 12

commitment to the Company, minimize management turnover and reward continuous
improvement in financial performance.

The Board of Directors believes that the Company's 1996 Equity
Participation Plan, as amended, will further the purposes of the Company's 1996
Equity Participation Plan and promote the interest of the Company and its
stockholders by strengthening the Company's ability to structure acquisitions
and to attract, motivate and retain employees. The 1996 Equity Participation
Plan, as amended, will provide the Company a means to encourage stock ownership
and proprietary interest in the Company to valued employees upon whose judgment,
initiative, and efforts the continued financial success and growth of the
business of the Company largely depend.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE ADOPTION OF THE COMPANY'S 1996 EQUITY PARTICIPATION PLAN,
AS AMENDED, AS DESCRIBED IN PROPOSAL 2.

11
<PAGE> 13

PROPOSAL NO. 3:

RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
GENERAL

On September 17, 1996, the Company retained the accounting firm of Arthur
Andersen LLP as auditors for the year ending December 31, 1996 following Board
of Directors approval, which was obtained on September 16, 1996. The decision to
retain Arthur Andersen LLP was based upon the prior relationship with a
predecessor of the Company as auditors for the year ending December 31, 1994 and
Arthur Andersen LLP's experience in the Company's industry, and was not
motivated by any disagreements between the Company and Ernst & Young LLP (the
Company's public accountants prior to September 12, 1996) concerning any
accounting principles and/or policy matters. From the Company's inception to
September 17, 1996, the Company did not consult with Arthur Andersen LLP with
respect to the matters described in Item 304(a)(2) of Regulation S-K under the
Securities Act of 1933, as amended (the "Securities Act").

The Board of Directors, upon recommendation of the Audit Committee, has
appointed Arthur Andersen LLP as the Company's independent public accountants
for the year ending December 31, 1997. A representative of Arthur Andersen LLP
will be present at the 1997 Annual Meeting and will be given an opportunity to
make a statement and answer appropriate questions. This appointment is being
submitted for ratification at the 1997 Annual Meeting. If the appointment is not
ratified, the appointment will be reconsidered by the Board of Directors,
although the Board of Directors will not be required to appoint different
independent auditors for the Company.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

On September 12, 1996, Ernst & Young LLP (the Company's public accountants
at that time) advised the Company that it was resigning as independent auditors
for the Company. Ernst & Young LLP had been retained since the Company's
inception and there have been no disagreements between the Company and Ernst &
Young LLP with respect to accounting principles or practices, financial
statement disclosure, auditing scope or procedures, which if not resolved to
Ernst & Young LLP's satisfaction, would have resulted in a reference to the
subject matters of the disagreement in its audit report. Since the Company's
inception, Ernst & Young LLP's report on the Company's financial statements did
not contain an adverse opinion or a disclaimer of opinion, nor were the opinions
qualified or modified as to uncertainty, audit scope, or accounting principles,
nor were there any events of the type requiring disclosure under Item
304(a)(l)(v) of Regulation S-K under the Securities Act.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP
AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR
THE YEAR ENDING DECEMBER 31, 1997
AS DESCRIBED IN PROPOSAL 3.

12
<PAGE> 14

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information, as of March 31, 1997,
concerning each person who is a director or executive officer of the Company.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------ --- -----------------------------------------------
<S> <C> <C>
Osamu Kaneko 49 Chairman of the Board and Chief Executive
Officer
Andrew J. Gessow 39 Director and President
Steven C. 44 Director, Chief Operating Officer and Secretary
Kenninger
James E. Noyes 50 Director and Executive Vice President
Michael A. Depatie 40 Executive Vice President and Chief Financial
Officer
Charles C. Frey 42 Senior Vice President and Chief Accounting
Officer
Genevieve Giannoni 33 Senior Vice President of Operations
Andrew D. Hutton 32 Vice President and General Counsel
Timothy D. Levin 40 Vice President-Architecture
Dewey W. Chambers 39 Vice President and Treasurer
Juergen Bartels 56 Director
Sanford R. Climan 41 Director
Joshua S. Friedman 41 Director
W. Leo Kiely III 50 Director
</TABLE>

OSAMU KANEKO has served as a Director, Chairman of the Board and Chief
Executive Officer of the Company since its inception in May 1996. Mr. Kaneko, a
Japanese national, was born in Tokyo, Japan and received his B.A. degree from
Indiana State University in 1971. From 1974 to 1986 Mr. Kaneko was the Executive
Vice President of Hasegawa Komuten (USA) Inc., the American subsidiary of
Hasegawa Komuten Ltd., a large Japanese development company based in Tokyo. In
this capacity, Mr. Kaneko was responsible for the development of income
producing properties in Hawaii, including resort condominiums and hotels. Mr.
Kaneko co-founded KOAR (a real estate acquisition and development company and
predecessor of the Company) with Mr. Kenninger in 1985 and since that time has
served as its Chief Executive Officer. Pursuant to the Westin Agreement, Mr.
Kaneko serves as the Founder's designee on the Board of Directors of Westin
Hotels & Resorts.

ANDREW J. GESSOW has served as a Director and President of the Company
since its inception in May 1996. Mr. Gessow founded Argosy Group Inc. ("Argosy")
(a real estate acquisition and development company and predecessor of the
Company) in 1990 and served as President since inception. Mr. Gessow served as a
Partner with Trammell Crow Company (a real estate development, management and
investment company) from 1987 to 1990, and was President of Trammell Crow
Residential Services, Florida and West Coast, and Founder and President of
NuMarket Cable. From 1981 through 1987, Mr. Gessow was Founder and President of
Travel, Inc. and Home Search, Inc. (a real estate consulting firm) which he
co-founded with Citicorp Venture Capital. Mr. Gessow received his B.B.A. degree
in Finance from Emory University in 1978 and a M.B.A. degree from Harvard
Business School in 1980.

STEVEN C. KENNINGER has served as a Director, Chief Operating Officer and
Secretary of the Company since its inception in May 1996. Mr. Kenninger
co-founded KOAR (a real estate acquisition and development company and
predecessor of the Company) with Mr. Kaneko in 1985 and most recently served as
its President. Mr. Kenninger was a practicing attorney at the law firm of Paul,
Hastings, Janofsky & Walker, Los Angeles, California from 1977 through 1981 and
at the law firm of Riordan & McKinzie, Los Angeles, California from 1981 through
1985, where he was a partner. Mr. Kenninger graduated with highest distinction
from Purdue University with a B.S. degree in Mechanical Engineering in 1974, and
received a J.D. degree from Stanford Law School in 1977. Mr. Kenninger is a
member of the Board of Visitors of the Stanford Law School and has been a member
of the State Bar of California since 1977.

13
<PAGE> 15

management divisions. Prior to joining the Company, from 1989 through June 1996
Mr. Noyes served as President of The Trase Miller Group (a travel technology
services company), the parent company of MTI Vacations, Inc., with interests in
vacation packaging, travel technology and specialized teleservices, and
previously served as its Vice President of Marketing and Sales since 1980. Mr.
Noyes served in various management positions for Wilson Sporting Goods from 1976
to 1980. Mr. Noyes is a director of Premier Yachts, Ltd. (a shipbuilding and
repairing company), Preview Travel, Inc. and Ball Horticultural, Inc. (a
horticultural supply company). Mr. Noyes received a B.A. degree in 1970 from
Dartmouth College and received a M.B.A. degree in 1974 from Stanford Business
School.

MICHAEL A. DEPATIE has served as Executive Vice President and Chief
Financial Officer of the Company since November 1996, prior to which he served
as a consultant to the Company since September 1996. Prior to joining the
Company, Mr. Depatie was Senior Vice President of Finance and Chief Financing
Officer of La Quinta Inns, Inc. (a hotel operating company) from July 1992 to
August 1996. From April 1989 through June 1992, Mr. Depatie was co-founder and
Senior Vice President of Finance of Summerfield Hotel Corporation (a hotel
operating company). From April 1988 through April 1989, Mr. Depatie was founder
and Managing General Partner of Pacwest Capital Partners. From June 1984 through
April 1988, Mr. Depatie served as Senior Vice President of Finance and
Development of The Residence Inn Company, a division of Marriott International,
Inc.. Mr. Depatie received a B.A. degree with highest honors from Michigan State
University in 1979 and a M.B.A. degree from Harvard Business School in 1983.

CHARLES C. FREY has served as Senior Vice President and Chief Accounting
Officer of the Company since January 1997, previously serving as Senior Vice
President of the Company since July 1996. Prior thereto he had served as Senior
Vice President of Administration and Treasurer of Argosy since 1992. Prior to
joining the Company, Mr. Frey was Vice President and Chief Financial Officer of
Trammell Crow Residential Services -- Florida from 1986 to 1992. Mr. Frey is a
Certified Public Accountant, is a licensed real estate broker in Florida and
received a B.S. degree in Accounting and Economics from the Indiana University
of Pennsylvania in 1977.

GENEVIEVE GIANNONI has served as Senior Vice President of Operations of the
Company since July 1996 and has overall responsibility for operations at all of
the Company's resorts. Ms. Giannoni joined Argosy in May 1992 as Director of
Marketing and became a Vice President of Argosy in 1993 and a Senior Vice
President in 1995. Prior to joining Argosy, Ms. Giannoni was a marketing
director at Trammell Crow Residential Services -- Florida from 1987 to 1992. Ms.
Giannoni is a licensed real estate agent in Florida. She received her B.A.
degree from Rollins College in 1985 and graduated from the Crummer Management
Program at Rollins College in 1990.

ANDREW D. HUTTON has served as Vice President and General Counsel of the
Company since October 1996. Prior to joining the Company, from 1991 through
October 1996 Mr. Hutton practiced corporate securities and finance law with the
law firm of Latham & Watkins, located in Los Angeles, California. Mr. Hutton
received a J.D. degree with honors from the University of Minnesota Law School
in 1991 and received both B.S. and B.A. degrees from the University of Kansas in
1988. Mr. Hutton has been a member of the State Bar of California since 1991.

TIMOTHY D. LEVIN has served as Vice President -- Architecture of the
Company since its inception and of the Company's predecessor since December
1995. From 1989 through December 1995, Mr. Levin was the President of Sevelex
Consultants, Inc., a project management and design consulting firm affiliated
with Messrs. Kaneko and Kenninger. Prior thereto, Mr. Levin was the senior
design and production manager at Carl Wahlquist AIA Architects, Inc. from 1983
through 1988. Mr. Levin is a member of the American Institute of Architects. Mr.
Levin received his Bachelor of Architecture degree from Southern California
Institute of Architecture in 1986. Mr. Levin has been a licensed General
Contractor in the State of California since 1980.

DEWEY W. CHAMBERS has served as Vice President and Treasurer of the Company
since January 1997. Prior to joining the Company, Mr. Chambers served as Vice
President -- Treasurer of La Quinta Inns, Inc. from 1992 through December 1996.
Prior thereto, Mr. Chambers served with the accounting firm of KPMG Peat
Marwick, L.L.P. from 1983 to 1992, most recently as Senior Manager. Mr. Chambers
received a B.B.A.

14
<PAGE> 16

degree in Finance from the University of Oklahoma in 1980 and a B.B.A. degree in
Accounting from the University of Texas at San Antonio in 1983. Mr. Chambers is
a Certified Public Accountant.

SANFORD R. CLIMAN has served as a Director of the Company since August
1996. Mr. Climan has been Executive Vice President and President Worldwide
Business Development of Universal Studios ("Universal") since October 1995.
Prior to joining Universal, Mr. Climan was a member of the senior executive team
at Creative Artists Agency, Inc. ("CAA"), a leading literary and talent agency,
from June 1986 to September 1995. At CAA, Mr. Climan participated in a range of
corporate advisory activities, including mergers and acquisitions, and financial
restructurings. From 1979 to 1986, Mr. Climan held various positions in the
entertainment industry. Mr. Climan also serves as a director of PointCast, Inc.
(an internet computer software company) Mr. Climan received a B.A. degree from
Harvard College in 1977, a M.B.A. degree from Harvard Business School in 1979
and a Master of Science in Health Policy and Management from the Harvard School
of Public Health in 1979.

JOSHUA S. FRIEDMAN has served as a Director of the Company since August
1996. Mr. Friedman is a founder of Canyon Partners Incorporated, a private
merchant banking firm and an affiliate of Canpartners Incorporated, and has been
a Managing Partner of Canyon Partners Incorporated since its inception in 1990.
From 1984 through 1990, Mr. Friedman was Executive Vice President and
Co-Director, Capital Markets of Drexel Burnham Lambert Incorporated (an
investment bank). Mr. Friedman also serves as a director of First Aviation
Services, Inc., a publicly traded aircraft services supplier, and several
privately held companies and charitable organizations. Mr. Friedman received a
B.A. degree from Harvard College in 1976, a M.A. degree from Oxford University
in 1978, a J.D. degree from Harvard Law School in 1982 and a M.B.A. degree from
Harvard Business School in 1982.

W. LEO KIELY III has served as a Director of the Company since August 1996.
Mr. Kiely has been President and Chief Operating Officer of Coors Brewing
Company since 1993. From 1982 through 1993, Mr. Kiely held various executive
positions with Frito-Lay Inc. ("Frito-Lay"), a flavoring extract and syrup
manufacturer and subsidiary of PepsiCo, most recently serving as President of
Frito-Lay's Central Division. Prior to joining Frito-Lay, Mr. Kiely was
President of Ventura Coastal Corporation, a division of Seven-Up Corporation,
from 1979 through 1982. Mr. Kiely also serves as a director of Bell Sports, Inc.
(a bicycle helmet manufacturer). He is also on the advisory boards of the
National Association of Manufacturers and several educational and charitable
organizations. Mr. Kiely received a B.A. degree from Harvard College in 1969 and
a M.B.A. degree from the Wharton School of Business at the University of
Pennsylvania in 1971.

In August 1996, KEN/KOAR LAX Partners, L.P. (the "LAX Partnership"),
formerly an affiliate of Messrs. Kaneko and Kenninger, filed a voluntary
petition for relief under Chapter 11 of the Bankruptcy Code. At the time of the
Chapter 11 filing, the LAX Partnership owned the Embassy Suites Hotel-LAX North,
located at the Los Angeles International Airport. Subsequent to the Chapter 11
filing, the LAX Partnership sold its interest in the Embassy Suites hotel, and
in connection therewith, the Chapter 11 proceeding was dismissed concurrently
with the closing of such transaction. The Company has (and prior to the sale
had) no interest in the hotel or the LAX Partnership. Following the consummation
of the sale, neither Mr. Kaneko nor Mr. Kenninger holds any interest in or
obligation related to the hotel.

15
<PAGE> 17

EXECUTIVE COMPENSATION

The Summary Compensation Table below sets forth the annual base salary and
other annual compensation which the Company would have paid in 1996 on an
annualized basis to the Company's chief executive officer and each of the other
four most highly compensated executive officers whose cash compensation exceeded
$100,000 (salary and bonus) (the "Named Executive Officers"). The Company was
formed in May 1996 and, upon consummation of the Consolidation Transactions (as
defined herein) completed in connection with the consummation of the Company's
Initial Public Offering, succeeded to the operations of its predecessor
corporations, partnerships and limited liability companies.

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------------
-------------------------------------------- SECURITIES
NAME AND FISCAL OTHER ANNUAL UNDERLYING
PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) COMPENSATION($)(2) OPTIONS/SARS(#)(3)
- ------------------------------- ------ --------- ----------- ------------------ ------------------
<S> <C> <C> <C> <C> <C>
Osamu Kaneko................... 1996 $ 280,000 $ -- $ 2,500 150,000
Chairman of the Board and
Chief Executive Officer
Andrew J. Gessow............... 1996 280,000 -- 2,500 150,000
Director and President
Steven C. Kenninger............ 1996 280,000 -- 2,500 150,000
Director, Chief Operating
Officer and Secretary
James E. Noyes................. 1996 280,000 120,000 14,500 375,000
Director and Executive Vice
President
Michael A. Depatie............. 1996 280,000 -- 2,500 375,000(4)
Executive Vice President and
Chief Financial Officer
</TABLE>

- ---------------

(1) The Board of Directors in June 1996 approved the payment of such bonus to
Mr. Noyes under the terms of his employment agreement with the Company.
Although the other Named Executive Officers were eligible to receive bonuses
pursuant to the Company's Incentive Compensation Plan, no such bonuses were
paid in 1996. See "Employment Agreements and Covenants Not to Compete" and
"Compensation Committee Report" below for a discussion of annual performance
bonuses payable to key employees and executive officers.

(2) Represents automobile lease payments ($12,000 with respect to Mr. Noyes) and
insurance premiums for customary life and health benefits ($2,500 with
respect to each of Messrs. Kaneko, Gessow, Kenninger, Noyes and Depatie).

(3) Options to purchase an aggregate of 1,769,000 shares of Common Stock were
granted to directors, executive officers and other employees of the Company
in 1996. The Company granted Mr. Depatie options to purchase 375,000 shares
of Common Stock. Mr. Depatie's grant raises the number of shares issuable
upon exercise of options granted under the 1996 Equity Participation Plan
above the current limit of 1,750,000 shares. In accordance with the 1996
Equity Participation Plan, the grants to Mr. Depatie are subject to approval
of the Company's stockholders of the amendment described in Proposal 2. See
"Proposal No. 2 -- Adoption of the Company's 1996 Equity Participation Plan,
as amended."

(4) Pursuant to the 1996 Equity Participation Plan, these options have been
granted subject to approval of the Company's stockholders of an amendment to
such plan increasing the number of shares of Common Stock reserved for
issuance thereunder from 1,750,000 shares to 2,500,000 shares.

16
<PAGE> 18

The following table contains information concerning the grant of stock
options under the Company's 1996 Equity Participation Plan made during the year
ended December 31, 1996 to the Named Executive Officers. The table also lists
potential realizable values of such options on the basis of assumed annual
compounded stock appreciation rates of 5% and 10% over the life of the options
which are set for a maximum of ten years.

OPTION GRANTS DURING YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------
NUMBER OF POTENTIAL REALIZABLE
SECURITIES PERCENT OF VALUE AT ASSUMED
UNDERLYING TOTAL OPTIONS EXERCISE ANNUAL RATES OF SHARE
OPTIONS GRANTED TO OR BASE PRICE APPRECIATION(3)
GRANTED EMPLOYEES IN PRICE EXPIRATION ---------------------
NAME (1) FISCAL YEAR(2) PER SHARE DATE 5%($) 10%($)
- ---------------------------- ---------- -------------- --------- ------------------ -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Osamu Kaneko................ 150,000 8.5% $14.00 August 2006 $ 1,321 $ 3,347
Andrew J. Gessow............ 150,000 8.5% $14.00 August 2006 $ 1,321 $ 3,347
Steven C. Kenninger......... 150,000 8.5% $14.00 August 2006 $ 1,321 $ 3,347
James E. Noyes.............. 375,000 21.3% $12.00 June 2006 $ 2,830 $ 7,172
Michael A. Depatie.......... 110,000(4) 6.2% $18.13 September 2006 $ 1,254 $ 3,178
Michael A. Depatie.......... 265,000(4) 15.0% $24.13 November 2006 $ 4,021 $ 10,191
Total Optionees............. 1,769,000 100.0% $12.00 June 2006 $ 12,068 $ 43,521
to $24.13 to November 2006
All Stockholders(5)......... N/A N/A N/A N/A $153,130 $388,062
All Optionees as a percent
of All Stockholders
Gain...................... N/A N/A N/A N/A 7.9% 11.2%
</TABLE>

- ---------------

(1) The options granted to Messrs. Kaneko, Gessow, and Kenninger will vest in
three equal installments on the first, second, and third anniversaries of
the date of the grant. The options granted to Mr. Depatie vested with
respect to 22,000 shares at $18.13 per share and with respect to 53,000
shares at $24.13 per share upon the date of the respective grant, with the
balance of such shares vesting in four equal annual installments beginning
on the first anniversary of the date of grant. The options granted to Mr.
Noyes vested with respect to 75,000 shares on the date of the grant and with
respect to the remaining 300,000 shares will vest in 48 equal installments
at the end of each of the first 48 months that Mr. Noyes is employed by the
Company.

(2) During the year ended December 31, 1996 the Company issued options to
employees and directors of the Company to purchase an aggregate of 1,769,000
shares of Common Stock. The Company granted Mr. Depatie options to purchase
375,000 shares of Common Stock. Mr. Depatie's grant raises the number of
shares issuable upon exercise of options granted under the 1996 Equity
Participation Plan above the current limit of 1,750,000 shares. In
accordance with the 1996 Equity Participation Plan, the grants of Mr.
Depatie's options are subject to approval of the Company's stockholders of
the amendment described in Proposal 2. See "Proposal No. 2 -- Adoption of
the Company's 1996 Equity Participation Plan, as amended."

(3) The potential realizable value (in thousands of dollars) is reported net of
the option price, but before income taxes associated with exercise. These
amounts represent assumed annual compounded rates of appreciation at 5% and
10% only from the date of grant to the expiration date of the option, or in
the case of all stockholders, 10 years from the date of the Initial Public
Offering.

(5) These amounts represent the appreciated value which common stockholders
would receive at the hypothetical 5% and 10% appreciation rates based on the
per share Initial Public Offering Price of $14.00 and based on 17,392,205
shares outstanding upon consummation of the Initial Public Offering.

17
<PAGE> 19

EMPLOYMENT AGREEMENTS AND COVENANTS NOT TO COMPETE

Each of Messrs. Kaneko, Gessow, Kenninger, Noyes and Depatie have entered
into an employment agreement with the Company for a term of two years, subject
to extension. The employment agreement for each of such executives provides for
an annual salary of $280,000 per year for the first year and at such salary as
may be determined by the Compensation Committee thereafter, with annual
performance bonuses determined by the Compensation Committee in connection with
the achievement of performance criteria to be determined (except with respect to
Mr. Noyes, who will receive a quarterly bonus of $30,000 for each quarter he is
employed by the Company). In addition, each of Messrs. Kaneko, Gessow,
Kenninger, Noyes and Depatie have received options to purchase shares of Common
Stock as described in "Option Grants During Year Ended December 31, 1996." In
addition, each of Messrs. Kaneko, Gessow, Kenninger, Noyes and Depatie shall
receive severance payments equal to base compensation and bonus at the most
recent annual amount for the longer of the balance of the employment term or two
years upon the death, disability, termination or resignation of such executive,
unless such executive resigns without "good cause" or unless the Company
terminates such executive as a result of gross negligence, willful misconduct,
fraud or a material breach of the employment agreement. Each such executive will
have "good cause" to terminate his employment with the Company in the event of
any reduction in his compensation or benefits, material breach or material
default by the Company under his employment agreement or following the merger or
change in control of the Company.

Each of Messrs. Kaneko, Gessow, Kenninger, Noyes and Depatie have also
agreed to devote substantially full time to the business of the Company and not
engage in any competitive businesses. In particular, the foregoing individuals
are prohibited from managing, consulting or participating in any way in any
timeshare business or from acquiring any property with the intent to convert the
property to a timeshare operation, unless the Independent Directors of the
Company determine that such investment is in the best interest of the Company.
Such noncompetition provisions shall survive for two years following any
termination of employment. Such individuals are not, however, prohibited from
acquiring hotels, including hotels which may compete directly with properties of
the Company.

COMPENSATION COMMITTEE REPORT

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Board of Directors has established the Compensation Committee, which
consists of Messrs. Kiely and Climan, to determine compensation for the
Company's senior executive officers, determine awards under the Company's 1996
Equity Participation Plan and administer the Company's Employee Stock Purchase
Plan. Neither Mr. Kiely nor Mr. Climan was an officer or employee of the Company
at any time during 1996 nor did any such person engage in any insider
transactions with the Company that is required to be disclosed pursuant to the
Exchange Act.

REPORT ON ANNUAL COMPENSATION OF EXECUTIVE OFFICERS

The report of the Compensation Committee shall not be deemed incorporated
by reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act or under the Exchange Act,
except to the extent that the Company specifically incorporates this information
by reference, and shall not otherwise be deemed filed under such Acts.

* * * * * *

The Compensation Committee's policy is to establish compensation levels for
the Company's executive officers, including its Chief Executive Officer Osamu
Kaneko (the "CEO"), which reflect the Company's overall performance and the
individual executive's performance, responsibilities and contributions to the
long-term growth and profitability of the Company. The Compensation Committee's
policy is to determine the

18
<PAGE> 20

appropriate executive compensation levels which will enable the Company to
attract and retain qualified executives.

The Compensation Committee determines the compensation of the Company's
executive officers based on its evaluation of the Company's overall performance,
primarily based on the Company's revenues and earnings performance compared with
the Company's operating and growth plan, as well as various qualitative factors
such as the extent to which the executive officer has contributed to forming a
strong management team and other factors which the Compensation Committee
believes are indicative of the Company's ongoing ability to achieve its
long-term sales growth and profit objectives. With respect to each executive,
the Compensation Committee focuses on that individual executive's areas of
responsibility and his contribution toward achieving corporate objectives.

Total compensation of each executive officer of the Company consists of
four components: base salary, annual incentive in the form of a cash bonus,
long-term incentive in the form of equity based stock compensation alternatives
and miscellaneous benefits and perquisites. Each component is discussed below.

The principal component of the compensation of each executive officer is
the executive's base salary. As described above under "Employment Agreements and
Covenants Not To Compete," the base salaries for each of the CEO and Messrs.
Gessow, Kenninger, Depatie and Noyes are based on each's rights under an
employment agreement with the Company. Each employment agreement established a
minimum annual salary that was established based on negotiations with the Board
of Directors and the relevant executive. In setting these initial base salaries,
the Board of Directors reviewed the corporate and individual performance factors
described above and the practices of a peer group of other public
growth-oriented timeshare, lodging and hospitality companies. This comparison
peer group is not identical to the peer group included in the performance
comparison graph under "Stock Performance Graph" below. The Board of Directors
attempted to set the Company's base executive compensation levels at levels that
generally approximate or are less than the executive base compensation levels at
the companies in its peer group. The annualized base salary of the CEO for the
year ended December 31, 1996 was $280,000. After the first full year of service
under the employment agreements, the Compensation Committee can adjust each
executive's salary either upwards or downwards and any such adjustments will be
made based on the factors discussed above.

The Company has established an incentive compensation plan for executive
officers of the Company. This plan provides for payment of a cash bonus to
participating executive officers and key employees if certain performance
objectives established for each individual are achieved. Such objectives include
the formation of new strategic relationships and ventures and the consummation
of strategic acquisitions that are accretive to the earnings of the Company.
Pursuant to such plan and the employment agreements discussed above, each of the
CEO and Messrs. Gessow, Kenninger and Depatie are entitled to receive a cash
bonus of up to 100% of their respective base compensation, respectively, upon
the achievement by the Company of specified targets of growth in revenues,
earnings per share and other key operating factors as determined by the
Compensation Committee. Due to the limited operating history of the Company as
an integrated entity (less than six months at December 31, 1996) and as a public
company (see "Certain Transactions -- Consolidation Transactions"), and in light
of the stock options granted to such executives during the year ended December
31, 1996, the Company elected not to pay a cash bonus to any of the CEO or
Messrs. Gessow, Kenninger or Depatie for the year ended December 31, 1996.
Pursuant to his employment agreement discussed above, Mr. Noyes received a cash
bonus of $30,000 per quarter for each quarter in 1996 that he was employed by
the Company.

The Company established the 1996 Equity Participation Plan to enable
executive officers, other key employees, Independent Directors and consultants
of the Company to participate in the ownership of the Company. The 1996 Equity
Participation Plan is administered by the Compensation Committee and is designed
to attract and retain executive officers, other key employees, Independent
Directors and consultants of the Company and to provide incentives to such
persons to maximize the Company's performance. The 1996 Equity Participation
Plan provides for the award to executive officers, other key employees,
Independent Directors and consultants of the Company of a broad variety of
stock-based compensation alternatives such as nonqualified stock options,
incentive stock options, restricted stock and performance awards ("Equity-Based
Compensation"). The Compensation Committee annually considers grants of
Equity-Based Compensation for

19
<PAGE> 21

each of the executive officers, including the CEO. The Compensation Committee
determines the amount of Equity-Based Compensation for executives based on the
responsibility of the executive, the historic levels of Equity-Based
Compensation granted to other executives and the Compensation Committee's
judgment as to the appropriate incentive level for purposes of achieving the
objectives of the 1996 Equity Participation Plan. The Compensation Committee
also determines the amount of Equity-Based Compensation based upon its review of
overall corporate performance and individual performance. Pursuant to his
employment agreement, the Board of Directors granted the CEO options to purchase
150,000 shares of stock in year ended December 31, 1996.

The last component of total compensation is Company benefits and
perquisites generally consisting of car allowances for one of the executives and
customary life and health benefits.

During 1993, the Internal Revenue Code of 1986 was amended to include
Section 162(m) which denies a deduction to any publicly held corporation for
compensation paid to any "covered employee" (which is defined as the CEO and the
Company's other four most highly compensated officers, as of the end of a
taxable year) to the extent that the compensation exceeds $1,000,000 in any
taxable year of the corporation beginning after 1993. Compensation which
constitutes "performance based compensation" is excludable in applying the
$1,000,000 limit. It is the Company's policy to qualify compensation paid to its
top executives for deductibility under Section 162(m) in order to maximize the
Company's income tax deductions wherever, in the judgment of the Compensation
Committee, to do so would be consistent with the objectives of the Company's
compensation policies.

By the Compensation Committee

W. Leo Kiely III
Sanford R. Climan

20
<PAGE> 22

STOCK PERFORMANCE GRAPH

The Stock Performance Graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act or under the Exchange Act,
except to the extent the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.

Set forth below is a line graph comparing the total cumulative return of
the Company's Common Stock since initiation of trading of the Company's Common
Stock on August 16, 1996 to (a) a group of peer issuers with vacation ownership
resort development and operation businesses, lodging businesses and/or other
travel and leisure businesses and (b) the Nasdaq Composite Index.

COMPARISON OF FOUR MONTH CUMULATIVE TOTAL RETURN(1)
FOR SIGNATURE RESORTS, INC., A PEER GROUP(2) AND THE
NASDAQ COMPOSITE INDEX

<TABLE>
<CAPTION>
MEASUREMENT PERIOD SIGNATURE NASDAQ COMPOSITE
(FISCAL YEAR COVERED) RESORTS, INC. PEER GROUP INDEX
<S> <C> <C> <C>
8/15/96 100 100 100
12/31/96 254 105 114
</TABLE>

- ---------------

(1) Assumes $100 was invested on August 16, 1996 (the date of initiation of
trading of the Company's Common Stock) in stock of the Company, the Peer
Group (which investment is allocated among the companies comprising the Peer
Group based upon such companies' market capitalization) and the Nasdaq
Composite Index and assumes dividends are reinvested.

(2) The Peer Group companies consist of Bristol Hotel Company, Carnival
Corporation, Fairfield Communities, Inc., Hilton Hotels Corporation,
Marriott International, Inc. and Prime Hospitality Corporation.

21
<PAGE> 23

CERTAIN TRANSACTIONS

FOUNDERS' OTHER BUSINESS INTERESTS

Affiliates of Messrs. Kaneko and Kenninger currently have managing general
partner or similar interests in entities which own investment properties which
the Company does not consider to be competitive with its timeshare business (the
"KOAR Interests"). These properties include a 225-unit condominium project in
Long Beach, California which is being marketed for whole share unit sales or
long-term residential use rather than vacation use (and with respect to which
the KOAR Interests, as of the date of this Proxy Statement, own 42 of the total
225 units, the balance having been sold to third parties); and several retail
centers. Messrs. Kaneko and Kenninger are also currently the constituent general
partners of a number of partnerships in which they owe fiduciary duties to
limited partners who invested over $80 million of equity therein (which
partnerships include certain Embassy Suites hotels which are still owned by
partnerships controlled by Affiliates of Messrs. Kaneko and Kenninger (the
"Prior Partnerships")). Messrs. Kaneko and Kenninger are authorized by the
Company to meet their duties and responsibilities to the Prior Partnerships
pursuant to the terms thereof, including the sale, refinancing, restructuring
and packaging of the Prior Partnerships, and including with respect to the
formation of public or private entities for such purpose, including a public
real estate investment trust ("REIT") for one or all of the Embassy Suites
hotels in the Prior Partnerships (provided, that Messrs. Kaneko and Kenninger
agree not to serve as an officer or employee of such REIT). Messrs. Kaneko and
Kenninger agree to continue to retain third party management companies to manage
these properties (e.g., Promus Hotels manages all of the KOAR Interests' Embassy
Suites hotels), and to employ personnel not employed by the Company to carry out
the day-to-day responsibilities of managing and overseeing these properties.
However, Messrs. Kaneko and Kenninger reserve the right to do what is reasonably
necessary within these constraints to carry out their duties and
responsibilities to the Prior Partnerships pursuant to the terms thereof. The
Company does not believe that such activities will detract materially from
Messrs. Kaneko's and Kenninger's services to the Company.

PAYMENTS TO AFFILIATES

A total of $15.7 million of the net proceeds from the Consolidation
Transactions and the Initial Public Offering were used to repay outstanding debt
to affiliates of Osamu Kaneko, Andrew J. Gessow and Steven C. Kenninger (the
"Founders"). The exchange of direct and indirect interest in, and obligations
of, certain limited partnerships, limited liability companies and other
corporations affiliated with the Founders for shares of Common Stock in the
Company are referred to herein as the "Consolidation Transactions." Of the $15.7
million of the funds paid to the affiliates of the Founders, $15.3 million was
used to pay off existing debt to third party financial institutions or other
third party financing sources or to pay tax liabilities. The proceeds from the
loans were previously either invested in or loaned either to the Company or its
predecessors or to acquire or develop certain of the Company's resorts.

In addition, pursuant to the Consolidation Transactions, during the three
months ended September 30, 1996 Founders also received $2.3 million of
distributions from certain predecessor partnerships of the Company to fund
income tax obligations which had accrued through the date of the Initial Public
Offering and with respect to whom no pre-Initial Public Offering profits of the
Company had been distributed.

In addition, $12.2 million of the net proceeds of the Initial Public
Offering were used to repay outstanding indebtedness owed to partnerships in
which an affiliate of Mr. Friedman, a director of the Company, is a general
partner. Of such repayment, approximately $3.0 million was repaid directly to
Mr. Friedman or his affiliates.

CONSOLIDATION TRANSACTIONS

The Company's nine vacation ownership resorts existing prior to the
Consolidation Transactions were previously owned and operated by partnerships,
each affiliated with the Founders. Such partnerships consisted of Grand Beach
Resort, L.P., a Georgia limited partnership (Embassy Vacation Resort Grand
Beach); AKGI-Flamingo C.V., a Netherlands Antilles limited partnership (Flamingo
Beach Club); AKGI-Royal

22
<PAGE> 24

Palm C.V., a Netherlands Antilles limited partnership (Royal Palm Beach Club);
Port Royal Resort, L.P., a South Carolina limited partnership (Royal Dunes
Resort); an approximately 30% interest in Poipu Resort Partners, L.P., a Hawaii
limited partnership (Embassy Vacation Resort Poipu Point); Fall Creek Resort,
L.P., a Georgia limited partnership (Plantation at Fall Creek); Cypress Pointe
Resort, L.P., a Delaware limited partnership (Cypress Pointe Resort); Lake Tahoe
Resort Partners, LLC, a California limited liability company (Embassy Vacation
Resort Lake Tahoe); and San Luis Resort Partners, LLC, a Georgia limited
liability company (San Luis Bay Resort) (collectively the "Property
Partnerships"). Affiliates of the Founders were previously the sole general
partners or the sole members of each of the Property Partnerships. Each of the
Property Partnerships (other than the Embassy Vacation Resort Poipu Beach) which
remained in existence following the Consolidation Transactions and the Initial
Public Offering are wholly owned by the Company.

As a result of the consummation of the Consolidation Transactions, the
partnership and limited liability company interests in each of the Property
Partnerships, certain of the stock of certain other corporations affiliated
therewith (the "Affiliated Companies") held by "accredited investors" (as
defined pursuant to Regulation D under the Securities Act) and certain debt
obligations of the Property Partnerships and affiliates (and, as a result,
ownership of each of the Existing Resorts) have been directly or indirectly
transferred to the Company and in exchange the holders of such partnership
interests and certain of such stock will receive shares of Common Stock in the
Company. Holders of any such partnership interests who are not "accredited
investors" received cash at a price commensurate with the value received by the
accredited investors to be determined prior to the Consent Solicitation. As a
result of the Consolidation Transactions, 11,354,705 shares of Common Stock were
issued to the holders of partnership interests in the Property Partnerships and
to certain stockholders of the Affiliated Companies. The Affiliated Companies
include Argosy/KOAR Group, Inc., Resort Management International, Inc., Resort
Marketing International, Inc., RMI-Royal Palm C.V.o.a., RMI-Flamingo C.V.o.a.,
AK-St. Maarten, LLC, Premier Resort Management, Inc., Resort Telephone & Cable
of Orlando, Inc., Kabushiki Gaisha Kei, LLC, Vacation Ownership Marketing
Company and Vacation Resort Marketing of Missouri, Inc., each of which are
controlled by the Founders and previously provided administrative, utility,
management and/or marketing services to certain of the Property Partnerships.

Signature Resorts, Inc. was incorporated in Maryland in May 1996 by the
Founders to effect the Consolidation Transactions and the Initial Public
Offering. Pursuant to a Private Placement Memorandum
dated as of May 28, 1996, the Company in the Consent Solicitation solicited and
received on or before June 13, 1996 the consent and agreement of the ultimate
owners of interests in the Property Partnerships, the stockholders of the
Affiliated Companies and the holders of certain debt obligations to exchange
their partnership interests or shares in, and obligations of, the Property
Partnerships or Affiliated Companies (or their direct or indirect interests in
the owners thereof), as applicable, for shares of Common Stock in the Company.
Such exchange occurred simultaneously with the closing of the Initial Public
Offering. Direct and indirect holders of interests in, and obligations of,
certain Property Partnerships received, upon consummation of the Consolidation
Transactions, shares of Common Stock in the Company equal to a predetermined
dollar value based on agreement between the Company and such holders as set
forth in the Private Placement Memorandum for the Consent Solicitation. The
balance of the shares of Common Stock issued in the Consolidation Transactions
were issued to the holders of interests in the remaining Property Partnerships
and to the holders of interests in the Affiliated Companies, which are comprised
solely of the Founders or their affiliates.

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<PAGE> 25

OTHER INFORMATION

CERTAIN STOCKHOLDERS

The table below sets forth certain information regarding the beneficial
owners of more than 5% of the Company's Common Stock as of March 31, 1997, other
than directors and executive officers.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
----------------------
NAME AND ADDRESS OF BENEFICIAL OWNER(S) SHARES PERCENTAGE
-------------------------------------------------------- --------- ----------
<S> <C> <C>
Putnam Investments, Inc.(1)............................. 2,210,585 11.1%
One Post Office Square
Boston, Massachusetts 02109
</TABLE>

- ---------------

(1) Information based solely on a Schedule 13G filed on January 31, 1997 with
the Commission by, among others, Putnam Investments, Inc. ("PI"). Of the
shares beneficially owned by PI, Putnam Investment Management, Inc. ("PIM")
beneficially owns 1,706,217 (or 8.6%) of the outstanding shares of Common
Stock and The Putnam Advisory Company, Inc. ("PAC") beneficially owns
504,368 (or 2.5%) of the outstanding shares of Common Stock. The shares of
Common Stock reported as being beneficially owned by PI consist of
securities beneficially owned by subsidiaries of PI which are registered
investment advisers, which in turn include securities beneficially owned by
clients of such investment advisers, which clients may include investment
companies registered under the Investment Company Act and/or employee
benefit plans, pension funds, endowment funds or other institutional
clients. PI, which is a wholly owned subsidiary of Marsch & McLennan
Companies, Inc. ("M&MC"), wholly owns two registered investment advisers:
PIM, which is the investment adviser to the Putnam family of mutual funds
and PAC, which is the investment adviser to Putnam's institutional clients.
Both subsidiaries have dispository power over the shares as investment
managers, but each of the mutual fund's trustees have voting power over the
shares held by each fund, and PAC has shared voting power over the shares
held by the institutional clients. M&MC and PI disclaim beneficial ownership
of the shares of Common Stock reported as being beneficially owned by PI.

OTHER MATTERS AT THE MEETING

The Board of Directors does not know of any matters to be presented at the
1997 Annual Meeting other than those mentioned in this Proxy Statement. If any
other matters are properly brought before the 1997 Annual Meeting, it is
intended that the proxies will be voted in accordance with the best judgment of
the person or persons voting such proxies.

COST OF SOLICITATION

The expense of soliciting proxies and the cost of preparing, assembling and
mailing material in connection with the solicitation of proxies will be paid by
the Company. In addition to the use of mails, certain directors, officers or
employees of the Company and its subsidiaries, who receive no compensation for
their services other than their regular salaries, may solicit and tabulate
proxies. The Company has retained D.F. King & Co., Inc. to assist in the
solicitation of proxies with respect to shares of Common Stock held of record by
brokers, nominees and institutions. The estimated cost of the services of D.F.
King & Co., Inc. is $4,000, plus expenses.

STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING

Any stockholder who meets the requirements of the proxy rules under the
Exchange Act may submit to the Board of Directors proposals to be considered for
submission to the stockholders at the 1998 Annual Meeting of Stockholders. Any
such proposal must comply with the requirements of Rule 14a-8 under the Exchange
Act and be submitted in writing by notice delivered or mailed by first-class
United States mail, postage prepaid, to the Corporate Secretary, Signature
Resorts, Inc., 5933 West Century Boulevard, Suite 210, Los Angeles, California
90045, and must be received no later than December 15, 1997. Any such notice
shall set forth: (a) the name and address of the stockholder and the text of the
proposal to be

24
<PAGE> 26

introduced; (b) the number of shares of stock held of record, owned beneficially
and represented by proxy by such stockholder as of the date of such notice; and
(c) a representation that the stockholder intends to appear in person or by
proxy at the meeting to introduce the proposal specified in the notice. The
chairman of the meeting may refuse to acknowledge the introduction of any
stockholder proposal not made in compliance with the foregoing procedures. In
addition, the Company's Bylaws provide for notice procedures to recommend a
person for nomination as a director and to propose business to be considered by
stockholders at a meeting.

By Order of the Board of Directors

/s/ Steven C. Kenninger

Steven C. Kenninger
Chief Operating Officer and Secretary
Los Angeles, California
April 11, 1997

25
<PAGE> 27
PROXY

SIGNATURE RESORTS, INC.

Proxy for the 1997 Annual Meeting of Stockholders

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned stockholder of Signature Resorts, Inc., a Maryland
Corporation, hereby acknowledges receipt of the Notice of 1997 Annual Meeting
of Stockholders and Proxy Statement and hereby appoints Andrew J. Gessow,
Michael A. Depatie and Andrew D. Hutton as proxies, each with the power to
appoint his substitute, and hereby authorizes them to represent and to vote, as
designated below, all the shares of the Common Stock of Signature Resorts, Inc.
held of record by the undersigned on April 4, 1997 at the 1997 Annual Meeting of
Stockholders to be held May 16, 1997 or any adjournment or postponement thereof.

This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted FOR Proposals 1, 2 and 3 and in accordance with the recommendations of
the Board of Directors on any other matters that may properly come before the
meeting.

(Continued and to be signed on reverse side)

- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 28
<TABLE>
<CAPTION>
Please mark
your votes as
indicated in [X]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3. this example.

<S> <C> <C> <C> <C> <C> <C>
FOR WITHHOLD 2. Adoption of the Company's FOR AGAINST ABSTAIN
all nominees AUTHORITY 1996 Equity Participation [ ] [ ] [ ]
listed below to vote for Plan, as amended.
(except as marked all nominees
to the contrary listed below 3. Ratification of the FOR AGAINST ABSTAIN
below) appointment of Arthur [ ] [ ] [ ]
[ ] [ ] Andersen L.L.P. as the
1. ELECTION OF CLASS I independent accountants of
DIRECTORS the corporation.

Nominees: Steven C. Kenninger 4. The Proxies are authorized to vote upon such other business
James E. Noyes as may properly come before the meeting.
Juergen Bartels
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
(Instruction: To withhold authority to vote for any USING THE ENCLOSED ENVELOPE.
nominee, strike a line through that nominee's name in
the list above)

Signature(s) ____________________________________________________________________________ Dated: ______________________, 1997

Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney,
as executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate
name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person.

- -----------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE

</TABLE>