UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarter ended September 30, 1997
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ________ to ________
Commission File Number: 1-8096
FAIRFIELD COMMUNITIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 71-0390438
(State of Incorporation)(I.R.S. Employer Identification No.)
11001 Executive Center Drive, Little Rock, Arkansas 72211
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (501)228-2700
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90
days. Yes X No
---- ----
The number of shares of the registrant's Common Stock,
$.01 par value, outstanding as of October 17, 1997 totaled
16,979,201. <PAGE>
1
FAIRFIELD COMMUNITIES, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
Page
No.
----
PART 1. - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of
September 30, 1997 and December 31, 1996 3
Consolidated Statements of Earnings
for the Three and Nine Months Ended
September 30, 1997 and 1996 4
Consolidated Statements of Cash Flows
for the Nine Months Ended September
30, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results
of Operations 11
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
2
PART I - FINANCIAL INFORMATION
- ------ ---------------------
ITEM I - FINANCIAL STATEMENTS
- ------ --------------------
FAIRFIELD COMMUNITIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
September 30, December 31,
1997 1996
---- ----
(Unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 18,822 $ 7,008
Loans receivable, net 186,583 152,069
Real estate inventories 50,379 42,284
Property and equipment, net 17,491 14,527
Restricted cash and escrow accounts 6,334 7,777
Deferred tax assets, net 4,188 16,576
Other assets 14,764 13,558
-------- --------
$298,561 $253,799
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Financing arrangements $ 81,774 $ 58,110
Deferred revenue 19,855 20,332
Accounts payable 7,015 7,171
Net liabilities of assets
held for sale - 8,293
Other liabilities 33,177 25,594
-------- --------
141,821 119,500
-------- --------
Stockholders' equity:
Common stock, $.01 par value,
25,000,000 shares authorized,
16,979,201 and 16,574,169
outstanding as of September 30,
1997 and December 31, 1996,
respectively 193 137
Paid-in capital 93,609 91,876
Retained earnings 63,456 43,580
Unamortized value of restricted stock (518) (1,294)
Treasury stock, at cost, 2,296,131
shares as of September 30, 1997 and
2,335,295 as of December 31, 1996 - -
-------- --------
156,740 134,299
-------- --------
$298,561 $253,799
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
FAIRFIELD COMMUNITIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES
Vacation ownership, net $50,524 $33,348 $120,693 $ 84,460
Lots, net 1,947 2,950 6,584 7,217
Resort management 4,976 4,296 13,051 11,252
Interest 6,368 5,054 17,326 14,577
Other 4,911 3,553 12,184 9,985
------- ------- -------- --------
68,726 49,201 169,838 127,491
------- ------- -------- --------
EXPENSES
Cost of sales:
Vacation ownership 12,839 8,368 30,336 21,260
Lots 570 742 1,782 1,684
Provision for loan losses 2,374 1,455 5,524 4,186
Selling 24,560 18,437 60,815 46,801
Resort management 3,813 3,382 11,118 9,208
General and administrative 5,004 3,596 13,134 10,718
Interest, net 1,346 1,554 3,822 5,119
Other 3,961 3,065 10,258 8,660
------- ------- -------- --------
54,467 40,599 136,789 107,636
------- ------- -------- --------
Earnings before provision
for income taxes 14,259 8,602 33,049 19,855
Provision for income taxes 5,685 3,389 13,173 7,810
------- ------- -------- --------
Net earnings $ 8,574 $ 5,213 $ 19,876 $ 12,045
======= ======= ======== ========
NET EARNINGS PER SHARE $.48 $.32 $1.11 $.74
==== ==== ===== ====
WEIGHTED AVERAGE SHARES
OUTSTANDING 18,008,283 16,362,441 17,954,738 16,190,590
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
FAIRFIELD COMMUNITIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
Nine Months Ended
September 30,
-------------------------
1997 1996
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 19,876 $ 12,045
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation 2,104 1,559
Amortization 1,501 607
Provision for loan losses 5,524 4,186
Other 425 (167)
Utilization of pre-confirmation
income tax attributes - 10,000
Changes in operating assets and liabilities:
Real estate inventories (9,101) (1,909)
Deferred tax assets 12,388 -
Deferred revenue, accounts payable and
other liabilities 6,823 4,997
Other (2,085) (4,783)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 37,455 26,535
--------- ---------
INVESTING ACTIVITIES
Purchases of property and equipment, net (4,021) (5,269)
Principal collections on loans receivable 76,549 63,658
Originations of loans receivable (116,306) (73,300)
Net investment activities of net
liabilities of assets held for sale (8,293) 12
Other - 706
--------- ---------
NET CASH USED IN INVESTING ACTIVITIES (52,071) (14,193)
--------- ---------
FINANCING ACTIVITIES
Proceeds from financing arrangements 298,911 186,980
Repayments of financing arrangements (275,247) (200,434)
Issuances of stock under employee
stock plans 1,323 981
Net decrease in restricted cash and
escow accounts 1,443 551
--------- ---------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES 26,430 (11,922)
--------- ---------
Net increase in cash and cash equivalents 11,814 420
Cash and cash equivalents, beginning of period 7,008 2,095
--------- ---------
Cash and cash equivalents, end of period $ 18,822 $ 2,515
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid, net of amounts capitalized $ 4,360 $ 5,903
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
FAIRFIELD COMMUNITIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)
NOTE 1 - BACKGROUND
- ------ ----------
The accompanying consolidated financial statements
of Fairfield Communities, Inc. ("Fairfield") and its
wholly owned subsidiaries (collectively, the "Company")
have been prepared in accordance with generally
accepted accounting principles for interim financial
statements and with the rules and instructions of the
Securities and Exchange Commission. Accordingly, they
do not include all of the information and footnotes
required by generally accepted accounting principles
for complete financial statements. The interim
financial information is unaudited, but reflects all
adjustments consisting only of normal recurring
accruals which are, in the opinion of management,
necessary for a fair presentation of the results of
operations for such interim periods. Operating results
for the three and nine months ended September 30, 1997
are not necessarily indicative of the results that may
be expected for the entire year. For further
information, refer to the consolidated financial
statements and footnotes thereto included in the Annual
Report on Form 10-K for the year ended December 31,
1996.
Certain previously reported amounts in the
consolidated financial statements have been
reclassified to conform to the presentation used for
the current period. All significant intercompany
balances and transactions have been eliminated in
consolidation.
NOTE 2 - PROPOSED MERGER
- ------ ---------------
On August 8, 1997, the Company entered into a
definitive merger agreement with Vacation Break U.S.A.,
Inc. ("VBUSA"), whereby the Company will acquire VBUSA
in an all stock transaction. VBUSA develops, markets
and operates vacation ownership interests in Florida
and a hotel interest in the Bahamas. Under the terms
of the agreement, the Company will issue up to
approximately 5,826,000 shares of Fairfield Common
Stock in exchange for (i) all the outstanding
options/warrants of VBUSA and (ii) all of the
outstanding VBUSA Common Stock based on an exchange
rate of .6075 shares of the Company's Common Stock in
exchange for each share of VBUSA Common Stock. For
accounting purposes, the merger is expected to be
accounted for as a pooling-of-interests. The proposed
merger is subject to the approval of the stockholders
of both companies, regulatory approval and other
customary conditions.
NOTE 3 - STOCKHOLDERS' EQUITY
- ------ --------------------
On June 5, 1997, Fairfield's Board of Directors
authorized a three-for-two common stock split in the
form of a stock dividend effective July 15, 1997 to
shareholders of record on July 1, 1997. All references
to numbers of shares, per share amounts and average
shares outstanding in the consolidated financial
statements have been restated.
The Company's 1997 Stock Option Plan, as approved
by the Company's stockholders in May 1997, provides for
the grant of options to purchase up to 825,000 shares
of Common Stock. During the nine months ended
September 30, 1997, options totaling 675,000 shares,
net of forfeitures, were granted and remain
outstanding, at prices not less than the fair market
value of such shares at the date of grant.
NOTE 4 - IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
- ------ ----------------------------------------------
In February 1997, the Financial Accounting
Standards Board ("FASB") issued SFAS No. 128, "Earnings
per Share", which is required to be adopted on December
31, 1997. At that time, the Company will be required
to change the method currently used to compute earnings
per share, disclose both primary and diluted earnings
per share and restate all prior periods. Under the new
requirements, primary earnings per share will be
renamed basic earnings per share and will exclude the
dilutive effect of stock options. The impact is
expected to result in an increase in primary earnings
per share for the three months ended September 30, 1997
and 1996 of $.03 and for the nine months ended
September 30, 1997 and 1996 of $.08 and $.03,
respectively. The impact of SFAS No. 128 on fully
diluted earnings per share, which has been renamed
diluted earnings per share, is not expected to be
significant.
6
In June 1997, the FASB issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and
Related Information". SFAS No. 131 establishes
standards for the reporting of financial information
from operating segments in annual and interim financial
statements issued to shareholders. SFAS No. 131 also
establishes standards for related disclosures with
respect to products and services, geographic areas of
operations, and major customers. SFAS No. 131, which
is effective for fiscal years beginning after December
15, 1997, will have no impact on the Company's
consolidated results of operations, financial position
or cash flows.
NOTE 5 - VACATION OWNERSHIP REVENUES
- ------ ---------------------------
Vacation ownership revenues are summarized as
follows (In thousands):
<TABLE>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- --------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Vacation ownership
revenues $50,185 $36,056 $119,519 $86,486
Less: Deferred revenue on
current year
sales, net (872) (2,956) (2,983) (4,674)
Add: Revenue recognized
on prior year sales 1,211 248 4,157 2,648
------- ------- -------- -------
$50,524 $33,348 $120,693 $84,460
======= ======= ======== =======
</TABLE>
NOTE 6 - LOANS RECEIVABLE
- ------ ----------------
Loans receivable consisted of the following (In
thousands):
<TABLE>
September 30, December 31,
1997 1996
---- -----
<S> <C> <C>
Contracts $192,407 $154,906
Mortgages 9,871 11,413
-------- --------
202,278 166,319
Less allowance for loan losses (15,695) (14,250)
-------- --------
$186,583 $152,069
======== ========
</TABLE>
NOTE 7 - REAL ESTATE INVENTORIES
- ------ -----------------------
Real estate inventories are summarized as follows
(In thousands):
<TABLE>
September 30, December 31,
1997 1996
---- ----
<S> <C> <C>
Land:
Under development $15,398 $16,196
Undeveloped 7,235 5,515
------- -------
22,633 21,711
------- -------
Residential housing:
Vacation ownership 23,905 16,765
Homes 3,841 3,808
------- -------
27,746 20,573
------- -------
$50,379 $42,284
======= =======
</TABLE>
7
NOTE 8 - FINANCING ARRANGEMENTS
- ------ ----------------------
Financing arrangements are summarized as follows
(In thousands):
<TABLE>
September 30, December 31,
1997 1996
---- ----
<S> <C> <C>
Notes payable collateralized by
contracts receivable:
FCC Notes $65,974 $29,944
FFC Notes 14,134 24,370
Notes payable - other 1,666 3,796
------- -------
$81,774 $58,110
======= =======
</TABLE>
Pursuant to its Amended and Restated Credit
Agreement (the "FCC Agreement"), Fairfield Capital
Corporation, a wholly owned subsidiary of Fairfield
Acceptance Corporation ("FAC"), borrowed, during
September 1997, $44.8 million, of which $24.2 million
was used to reduce borrowings under FAC's revolving
credit agreement and $.6 was used primarily to pay
transaction fees, with the remaining balance invested
in short-term investment grade securities (included in
"Cash and cash equivalents" in the Consolidated Balance
Sheet at September 30, 1997). Borrowings under the FCC
Agreement mature principally within 60 months and bear
interest at varying rates, based on commercial paper
rates, subject to an interest rate cap of 9.0%. There
are no additional fundings available under the FCC
Agreement.
At September 30, 1997, notes payable
collateralized by contracts receivable were secured by
a pool of contracts receivable totaling $112.8 million.
NOTE 9 - NET LIABILITIES OF ASSETS HELD FOR SALE
- ------ ---------------------------------------
During the first quarter of 1997, the Company
transferred $7.9 million in cash and the assets
collateralizing the 10% Senior Subordinated Secured
Notes (the "FCI Notes"), with an appraised market value
of $7.2 million (the "Real Estate Collateral"), in
settlement of the FCI Notes. The indenture trustee, at
the direction of the majority noteholders, has filed
suit, pending in the United States District Court for
the Southern District of New York, contesting the
Company's method of satisfying this obligation and
claiming a default under the indenture securing the FCI
Notes. This action alternatively (a) disputes the
Company's right to transfer the Real Estate Collateral
in satisfaction of the FCI Notes, seeking instead a
cash payment of $7.2 million, plus penalty interest and
the fees and expenses of the action, or (b) disputes
the $7.9 million cash transfer, seeking instead the
issuance of 882,352 shares of the Company's Common
Stock (the "Contested Shares"),previously reserved
for issuance if a deficiency resulted on the FCI
Notes at maturity. Pursuant to the indenture for the
FCI Notes, the noteholders are entitled to retain,
as a premium, up to $2 million from the proceeds of the
collateral transferred in satisfaction of the FCI Notes
(including, if applicable, shares of the Company's
Common Stock) in excess of the amount of principal and
accrued interest due at maturity. The indenture
trustee has asserted that the $2 million premium limit
is not applicable to the Contested Shares, has
accordingly claimed entitlement to all of the Contested
Shares and on September 24, 1997 filed a motion seeking
to require the immediate issuance and sale of the
Contested Shares, with the proceeds to be held in
escrow, pending the outcome of the litigation. The
Company has been advised that the Real Estate Collateral
has been sold for approximately $4.4 million. The Company
intends to vigorously defend this action and believes
that it has substantive defenses. The Contested Shares
are not included in the number of shares outstanding
for earnings per share or other purposes.
NOTE 10 - SUPPLEMENTAL INFORMATION
- ------- ------------------------
Other revenues for the nine months ended September
30, 1997 and 1996 include home sales totaling $8.5
million and $6.8 million, respectively. Other expenses
for the nine months ended September 30, 1997 and 1996
include costs of home sales, including selling
expenses, totaling $7.5 million and $6.3 million,
respectively.
Included in other assets at September
30, 1997 and December 31, 1996 are (i) $3.1 million and
$2.9 million, respectively, related to the assets of
the Company's life insurance subsidiary and (ii)
unamortized capitalized financing costs totaling $2.5
million and $2.3 million, respectively. Included in
other liabilities at September 30, 1997 and December
31, 1996 are (i) accruals totaling $11.6 million and
$9.4 million, respectively, related to the Company's
employee benefits, (ii) accruals totaling $7.6 million
and $4.1 million, respectively, for
8
the fulfillment costs associated with the Company's
marketing and sales programs, including the Company's
Discovery Vacations program and (iii) deposits associated
with sales contracts totaling $3.4 million and $2.9 million,
respectively.
NOTE 11 - CONTINGENCIES
- ------- -------------
In July 1993 and September 1993, two lawsuits (the
"Recreation Fee Litigation") were filed by 29
individuals and a company against Fairfield in the
District Court of Archuleta County, Colorado. The
Recreation Fee Litigation, which seeks certification as
class actions, alleges that Fairfield and its
predecessors in interest wrongfully imposed an annual
recreation fee on owners of lots, condominiums,
townhouses, VOIs and single family residences in
Fairfield's Pagosa, Colorado development. The amount
of the recreation fee, which was adopted in August
1983, is $180 per lot, condominium, townhouse and
single family residence subject to the fee and $360 per
unit for VOIs. The Recreation Fee Litigation in
general seeks (a) a declaratory judgment that the
recreation fee is invalid; (b) the refund, with
interest, of the recreation fees which were allegedly
improperly collected by Fairfield; (c) damages arising
from Fairfield's allegedly improper attempts to collect
the recreation fee (i) in an amount of not less than
$1,000 per lot in one case and (ii) in an unstated
amount in the other case; (d) punitive damages; and (e)
recovery of costs and expenses, including attorneys'
fees. The court has not yet ruled on whether or not
the Recreation Fee Litigation will be allowed to
proceed as class actions. Because of the nature of the
litigation and uncertainty concerning the time period
covered by the suits' allegations, Fairfield is unable
to determine with certainty the dollar amount sought by
plaintiffs.
In November 1993, Fairfield filed an adversary
proceeding in the Bankruptcy Court, alleging that the
Recreation Fee Litigation violates the discharge
granted to Fairfield in its Chapter 11 bankruptcy
reorganization and the injunction issued by the
Bankruptcy Court against prosecution of any claims
discharged in the bankruptcy proceedings. By orders
and opinions dated September 29, 1994, the Bankruptcy
Court decided motions filed by the plaintiffs in the
Recreation Fee Litigation, in response to Fairfield's
adversary proceeding. The Bankruptcy Court retained
jurisdiction over one of the lawsuits (the Storm
lawsuit) and determined that any purchaser of a lot
from Fairfield and its predecessors prior to August 14,
1992 would be limited to a pre-confirmation cause of
action. The Bankruptcy Court determined that it did
not have jurisdiction over the second lawsuit (the
Daleske lawsuit), involving eight individuals and one
company, due to prior proceedings in the case in
Colorado federal district court, which ruled that the
plaintiffs in this lawsuit had post-confirmation causes
of action, although all nine plaintiffs are believed to
have purchased their lots prior to August 14, 1992.
Fairfield appealed the Bankruptcy Court's decision in
the Daleske lawsuit, and the plaintiffs in the Storm
lawsuit appealed the Bankruptcy Court's decision in
that case, to the United States District Court, Eastern
Division of Arkansas, Western Division (the "District
Court"). Two additional related lawsuits have also
been filed in the Archuleta County District Court,
raising similar issues and demands as the Storm and
Daleske cases. The Fiedler case, filed in October 1994,
was filed individually, while the second of these
cases, the Lobdell case, was filed in November 1994, as
a purported class action. In February 1995, Fairfield
filed an adversary proceeding in the Bankruptcy Court
against the Fiedler and the Lobdell plaintiffs, seeking
relief similar to that requested in the Storm and
Daleske adversary proceeding. The Colorado District
Court entered summary judgment against Fairfield in the
Fiedler case, holding that the individual lot in
question is not subject to the recreation fee, based
upon facts unique to the Fiedler case. Fairfield
appealed the summary judgment decision in the Fiedler
case. The Bankruptcy Court determined, by decision
dated September 18, 1995, that it does not have
jurisdiction in the Fiedler case, but also determined
that it does have jurisdiction in the Lobdell case,
based upon similar reasoning to the Storm case. Both
the Fiedler and the Lobdell cases were appealed to the
District Court. By order dated March 27, 1997, the
District Court ruled in the Daleske, Storm and Lobdell
appeals, finding in favor of the plaintiffs that the
recreation fees arising after August 14, 1992 are post-
confirmation claims and that the plaintiffs may pursue
actions seeking to enjoin Fairfield from continuing to
collect such fees. Fairfield has filed a notice of
appeal from the District Court's decision with the
United Stated Court of Appeals for the Eighth Circuit,
which remains pending. Motions and cross motions for
summary judgment have been filed in Colorado state
court in three of the cases and remain pending.
Fairfield intends to defend vigorously the
Recreation Fee Litigation, and the two related cases,
including any attempt to certify a class in any of the
cases. Fairfield has previously implemented recreation
fee charges at certain other of its resort sites which
are not subject to the pending action.
9
In December 1993, Charlotte T. Curry, who, with
her husband, purchased a lot from Fairfield under an
installment sale contract subsequently sold to First
Federal Savings and Loan Association of Charlotte
("First Federal"), filed suit against First Federal,
currently pending in Superior Court in Mecklenburg
County, North Carolina, alleging breach of contract,
breach of fiduciary duty and unfair trade practices. In
April 1994, the complaint was amended, (a) adding
Fairfield as a party, (b) adding an additional count
against both Fairfield and First Federal alleging
violation of the North Carolina's Racketeer Influenced
and Corrupt Organizations ("RICO") Statute and (c)
adding a count against Fairfield alleging fraud. The
litigation, which seeks class action certification,
contests the method by which Fairfield calculated
refunds for lot purchasers whose installment sale
contracts were cancelled due to failure to complete
payment of the deferred sales price for the lot. Most
installment lot sale contracts require Fairfield to
refund to a defaulting purchaser the amount paid
in principal, after deducting the greater of (a) 15%
of the purchase price of the lot or (b) Fairfield's
actual damages. The plaintiff disputes Fairfield's
method of calculating damages, which has historically
included certain sales, marketing and other expenses.
In the case of Ms. Curry's lot, the amount of refund
claimed as having been improperly retained is
approximately $3,600. The Curry lawsuit seeks damages,
punitive damages, treble damages under North Carolina
law for unfair trade practices and RICO, prejudgment
interest and attorney's fees and costs. By order dated
July 6, 1994, the court dismissed Ms. Curry's claims
for (a) breach of contract, due to the statute of
limitations, (b) breach of fiduciary duty, due to the
lack of a fiduciary duty and the statute of limitations,
(c) fraud, due to the statute of limitations, and (d)
RICO, due to failure to state a claim. The court, by
order dated August 16, 1994, dismissed Ms. Curry's
only remaining claim against Fairfield, for unfair
trade practices, subject to possible appeal rights.
By order filed September 15, 1995, the court denied
the plaintiff's motion for class certification. The
plaintiff appealed the denial of the motion for class
certification to the North Carolina Court of Appeals,
which dismissed the appeal by order dated January 8,
1997. Subsequently, the plaintiff requested that the
Supreme Court of North Carolina grant discretionary
review of the decision denying class certification,
which the Supreme Court of North Carolina declined.
Trial on this litigation is scheduled for the week of
November 17, 1997.
Under the Stock Purchase Agreement for the sale of
First Federal, Fairfield agreed to indemnify the buyer
against any liability in the Curry litigation. While
Fairfield is no longer a defendant in the litigation,
it intends to coordinate the defense of this lawsuit
with the counsel who have been representing First
Federal, to defend the Curry litigation vigorously.
Fairfield also has cancelled defaulted lot installment
sales contracts owned by it and its subsidiaries (other
than First Federal), using the same method of
calculating refunds as is at issue in the Curry
litigation.
The Company is party to litigation concerning the
FCI Notes (see Note 9). Additionally, the Company is
involved in various other or threatened lawsuits and
contingencies on an ongoing basis as a result of its
day-to-day operations. However, the Company does not
believe that any of these other or threatened lawsuits
or contingencies will have a materially adverse effect
on the Company's financial position or results of
operations.
10
ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- ------ --------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- ---------------------------------------------
RESULTS OF OPERATIONS
Nine Months Ended September 30, 1997 Compared to Nine
Months Ended September 30, 1996
Vacation Ownership
------------------
Gross sales of vacation ownership interests
("VOIs") increased 38.2% to $119.5 million for the nine
months ended September 30, 1997 as compared to $86.5
million for the nine months ended September 30, 1996.
Gross VOI sales at the Company's destination resorts,
which include Branson, Missouri; Orlando, Florida;
Myrtle Beach, South Carolina; Nashville, Tennessee and
Williamsburg, Virginia, continue to be the largest
dollar contributor to total VOI sales. Gross VOI sales
for the nine months ended September 30, 1997 increased
34.8% at the Company's five destination resorts, 49.9%
at the Company's ten regional resorts and 37.5% at the
Company's four off-site sales offices.
Net VOI revenues increased to $120.7 million for
the nine months ended September 30, 1997 from $84.5
million for the nine months ended September 30, 1996.
The increase in net VOI revenues is attributable to the
same factors as noted above and the recognition of
previously net deferred revenue of $1.2 million during
the nine months ended September 30, 1997, related to
the percentage of completion method of accounting, as
compared to net deferred revenue of $2.0 million during
the nine months ended September 30, 1996. Under the
percentage of completion method of accounting, the
portion of revenues attributable to costs incurred as
compared to total estimated construction costs and
selling expenses, is recognized in the period of sale.
The remaining revenue is deferred and recognized as the
remaining costs are incurred.
Selling expenses, including commissions, for both
VOI and lot sales, as a percentage of related net
revenues, were 47.6% and 50.7%, for the nine months
ended September 30, 1997 and 1996, respectively. The
Company continues to benefit from sales efficiencies
experienced at its destination resorts, including its
destination resorts located in Orlando, Florida and
Nashville, Tennessee. Management continues to work to
improve sales efficiencies at its newer locations and
future efficiencies are expected as these projects
mature and expand their base of property owners.
Interest
--------
Interest income increased to $17.3 million for the
nine months ended September 30, 1997 as compared to
$14.6 million for the nine months ended September 30,
1996. This increase is primarily attributable to an
increase in the average balance of outstanding
contracts receivable ($167.0 million for the nine
months ended September 30, 1997 versus $140.1 million
for the nine months ended September 30, 1996).
Interest income is expected to increase in tandem with
the net increase in contracts receivable.
Interest expense, net of amounts capitalized,
totaled $3.8 million and $5.1 million for the nine
months ended September 30, 1997 and 1996, respectively.
This decrease is primarily attributable to the
reduction in the average outstanding balance of
interest-bearing debt ($63.2 million for the nine
months ended September 30, 1997 as compared to $78.0
million for the nine months ended September 30, 1996).
The weighted average interest rate for the Company's
financing arrangements collateralized by contracts
receivable, including certain fees and expenses,
remained constant at 8.6% for each of the nine month
periods ended September 30, 1997 and 1996,
respectively.
General and Administrative
--------------------------
Increases in general and administrative expenses
during the nine months ended September 30, 1997
resulted primarily from the additional expenses
incurred related to the increased VOI sales volumes as
previously discussed. However, as a percentage of total
revenues, general and administrative expenses decreased
from 8.4% for the nine months ended September 30, 1996
to 7.7% for the nine months ended September 30, 1997.
11
Other
-----
Other revenues for the nine months ended September
30, 1997 and 1996 include home sales totaling $8.5
million and $6.8 million, respectively. Other expenses
for the nine months ended September 30, 1997 and 1996
include costs of home sales, including selling
expenses, totaling $7.5 million and $6.3 million,
respectively.
Three Months Ended September 30, 1997 Compared to Three
Months Ended September 30, 1996
Revenue and expense trends for the three months
ended September 30, 1997 were generally consistent with
those of the related nine month period as described
above with (i) an increase in gross and net VOI sales,
(ii) an increase in interest income, (iii) a decrease
in selling expenses as a percentage of related
revenues, and (iv) a decrease in interest expense.
Net VOI revenues increased 51.5% to $50.5 million
for the three months ended September 30, 1997 as
compared to $33.3 million for the three months ended
September 30, 1996. Net VOI revenues for the three
months ended September 30, 1997 increased 54.6% at the
Company's five destination resorts, 49.4% at the
Company's ten regional resorts and 33.9% at the
Company's four off-site sales offices. Net VOI
revenues for the three months ended September 30, 1997
includes the recognition of previously net deferred
revenue of $.3 million, related to the percentage of
completion method of accounting, as compared to net
deferred revenue of $2.7 million during the three
months ended September 30, 1996.
Selling expenses, including commissions, for both
VOI and lot sales, as a percentage of related net
revenues, were 46.8% and 50.6% for the three months
ended September 30, 1997 and 1996, respectively.
Interest income increased 26.0% to $6.4 million
for the three months ended September 30, 1997 as
compared to $5.1 million for the three months ended
September 30, 1996 reflecting the continual growth in
contracts receivable. Interest expense decreased to
$1.3 million for the three months ended September 30,
1997 as compared to $1.6 million for the three months
ended September 30, 1996 reflecting a reduction in the
weighted average interest rate of financing
arrangements collateralized by contracts receivable
from 8.8% for the three months ended September 30, 1996
to 8.2% for the three months ended September 30, 1997.
Other revenues and expenses for the three months
ended September 30, 1997 include home sales totaling
$3.2 million and related costs of sales, including
selling expenses, totaling $2.8 million. For the three
months ended September 30, 1996, home sales and related
costs of sales, including selling expenses, totaled
$2.3 million and $2.1 million, respectively.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1997, the Company's cash and
cash equivalents totaled $18.8 million, an increase of
$11.8 million from December 31, 1996. This increase
was related to $37.5 million provided from operating
activities and $26.4 million provided by financing
activities, which was partially offset by $52.1 million
used in investing activities.
Cash provided by operating activities totaled
$37.5 million and $26.5 million for the nine months
ended September 30, 1997 and 1996, respectively.
During the nine months ended September 30, 1997, net
deferred tax assets decreased by $12.4 million
resulting from the deferred tax provision recorded for
the nine months ended September 30, 1997. In July
1997, the Company purchased, for $3.8 million,
additional VOI inventory located in Myrtle Beach, South
Carolina and, for $1.7 million, additional land located
on Edisto Island, South Carolina. In March 1997, the
Company exercised its option, for $3.4 million, to
acquire additional land located near Orlando, Florida.
Cash used in investing activities totaled $52.1
million and $14.2 million for the nine months ended
September 30, 1997 and 1996, respectively. During the
nine months ended September 30, 1997, the Company
repaid $7.9 million of outstanding indebtedness under
the FCI Notes (see Note 9 of "Notes to Consolidated
Financial Statements"). Due to increased VOI sales
volumes, originations of loans receivable exceeded
principal collections by $39.8 million for the nine
months ended September 30, 1997 as compared to $9.6
million for the nine months ended September 30, 1996.
12
Cash provided by financing activities totaled
$26.4 million for the nine months ended September 30,
1997 as compared to the usage of cash of $11.9 million
for the nine months ended September 30, 1996. During
the nine months ended September 30, 1997, proceeds from
financing arrangements exceeded repayments by $23.7
million. During the nine months ended September 30,
1996, repayments of financing arrangements exceeded
proceeds therefrom by $13.5 million.
At September 30, 1997, Fairfield Capital
Corporation ("FCC"), a wholly-owned subsidiary of FAC,
had borrowings outstanding of $66.0 million under
the FCC Agreement, which provides for the purchases of
contracts receivable from FAC. Pursuant to the FCC
Agreement, FCC borrowed, during September 1997, $44.8
million, of which $24.2 million was used to reduce
borrowings under FAC's revolving credit agreement and
$.6 million was used primarily to pay transaction fees,
with the remaining balance invested in short-term
investment grade securities (included in "Cash and cash
equivalents" in the Consolidated Balance Sheet at
September 30, 1997). There are no additional fundings
available under the FCC Agreement.
At September 30, 1997, FAC had no borrowings
outstanding under its Third Amended and Restated
Revolving Credit Agreement (the "FAC Agreement"). The
FAC Agreement provides for revolving loans of up to
$35.0 million, including up to $1.0 million for letters
of credit. The revolving loans mature on January 1,
1999, if not extended in accordance with the terms of
the FAC Agreement, with Fairfield being a guarantor
pursuant to the FAC Agreement. At September 30, 1997,
FAC had borrowing availability totaling $17.0 million.
In addition, Fairfield held approximately $8 million of
contracts receivable which, if transferred to FAC, would
create additional availability under the FAC Agreement
of approximately $6 million.
At September 30, 1997, Fairfield had no borrowings
outstanding under its Amended and Restated Revolving
Credit Agreement (the "FCI Agreement"). The FCI
Agreement provides for revolving loans of up to $25.0
million, including up to $7.0 million for letters of
credit. The revolving loans mature on January 1, 1999,
if not extended in accordance with the terms of the FCI
Agreement. At September 30, 1997, Fairfield had
borrowing availability under the FCI Agreement of $23.8
million, net of outstanding letters of credit totaling
$1.2 million.
The Company is currently evaluating the
acquisition and/or development of certain resort
properties. In addition, the Company is currently
evaluating several VOI, marketing and property
management acquisitions to integrate into or to expand
the operations of the Company. At September 30, 1997,
the Company had $18.8 million in cash and cash
equivalents, which will be used, in part, to satisfy
the Company's short-term capital requirements,
including the costs related to the acquisition of
VBUSA. The Company expects to finance its long-term
cash needs, including potential acquisitions, from (i)
contract payments generated from its contracts
receivable portfolio, (ii) operating cash flows, (iii)
borrowings under its credit facilities, and (iv) future
financings, including additional securitizations of
contracts receivable.
FORWARD-LOOKING INFORMATION
This Quarterly Report includes certain forward-
looking statements, including (without limitation)
statements with respect to anticipated future operating
and financial performance, growth and acquisition
opportunities and other similar forecasts and
statements of expectation. Words such as "expects,"
"anticipates," "intends," "plans," "believes," "seeks,"
"estimates," and "should," and variations of these
words and similar expressions, are intended to identify
these forward-looking statements. Forward-looking
statements made by the Company and its management are
based on estimates, projections, beliefs and
assumptions of management at the time of such
statements and are not guarantees of future
performance. The Company disclaims any obligation to
update or revise any forward-looking statement based on
the occurrence of future events, the receipt of new
information, or otherwise.
Actual future performance, outcomes and results
may differ materially from those expressed in forward-
looking statements made by the Company and its
management as a result of a number of risks,
uncertainties and assumptions. Representative examples
of these factors include (without limitation) general
industry and economic conditions; interest rate trends;
cost of capital and capital requirements; availability
of real estate properties; competition from national
hospitality companies; shifts in customer demands;
changes in operating expenses, including employee
wages, benefits and training; economic cycles; the
continued availability of financing in the amounts and
at the terms necessary to support the Company's future
business and the success achieved or problems
encountered in integrating the operations of VBUSA into
the Company.
13
PART II - OTHER INFORMATION
- ------- -----------------
Item 1 - Legal Proceedings
Incorporated by reference (see Note 11 of
"Notes to Consolidated Financial Statements").
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
--------
Reference is made to the Exhibit Index.
(b) Reports on Form 8-K
-------------------
None
14
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FAIRFIELD COMMUNITIES, INC.
Date: November 10, 1997 /s/Robert W. Howeth
--------------------- -----------------------------------------------
Robert W. Howeth, Senior Vice President and
Chief Financial Officer
Date: November 10, 1997 /s/William G. Sell
--------------------- ----------------------------------------------
William G. Sell, Vice President and Controller
(Chief Accounting Officer)
15
FAIRFIELD COMMUNITIES, INC.
EXHIBIT INDEX
-------------
Exhibit
Number
- ------
3(a) Second Amended and Restated
Certificate of Incorporation of the
Registrant, effective September 1, 1992
(previously filed with the Registrant's
Current Report on Form 8-K dated September 1,
1992 and incorporated herein by reference)
3(b) Fifth Amended and Restated Bylaws of the
Registrant, dated May 9, 1996 (previously
filed with the Registrant's Current Report on
Form 8-K dated May 22, 1996 and incorporated
herein by reference)
4.1 Certificate of Designation, Preferences,
and Rights of Series A Junior Participating
Preferred Stock, dated September 1, 1992
(previously filed with the Registrant's
Current Report on Form 8-K dated September 1,
1992 and incorporated herein by reference)
10.1 Protected Interest Rate Agreement, dated as of
September 4, 1997 between BankBoston, N.A. and
Fairfield Capital Corporation (attached)
10.2 Letter Agreement on Certain Contracts, Forms of Colorado
Contracts, Environmental Disclosure Schedule and Pool Limit
Excess, dated as of September 8, 1997 between Capital Markets
Assurance Corporation, as Collateral Agent, Triple-A One Funding
Corporation, BankBoston, N.A. as L/C Bank, Fairfield Capital
Corporation, Fairfield Acceptance Corporation, Fairfield Myrtle
Beach, Inc. and Registrant (attached)
COMPENSATORY PLANS OR ARRANGEMENTS
10.3 Registrant's Employee Stock Purchase Plan (attached)
10.4 Registrant's Second Amended and Restated 1992 Warrant
Plan (attached)
10.5 Registrant's First Amended and Restated 1997 Stock
Option Plan (attached)
11 Computation of earnings per share (attached)
27 Financial Data Schedule (attached)
as of September 4, 1997
Fairfield Capital Corp.
11001 Executive Center Drive
Little Rock, Arkansas 72211
Attn: Ralph Turner
FAX: 501-228-2771
PHONE: 501-312-3961
PROTECTED INTEREST RATE AGREEMENT
This letter agreement and Schedule A attached
hereto and incorporated herein (the "Agreement")
confirms the oral agreement entered into between
Fairfield Capital Corp. (the "Company") and The
BankBoston, N. A. (the "Bank") on the Trade Date set
forth below under which we have agreed to provide you
interest rate protection under the following terms and
conditions:
1. Trade Date: September 4, 1997
2. Effective Date: September 8, 1997
3. Termination Date: November 6, 2003,
provided that if any such
Termination Date is not a
Business Day, then such
Termination Date shall be
the next succeeding
Business Day, or, if such
adjusted Termination Date
would fall in the next
calendar month, then the
Termination Date shall
be the immediately
preceding Business Day.
4. Principal Protected: See Schedule A attached.
5. Reference Interest Rate: Weighted average for each day in the
month preceding each Calculation Date
of the rate set forth in the Federal
Reserve statistical release H.15(519)
under the caption "CommercialPaper-
Non Financial", raised to a Money Market
yield basis and settled quarterly.
6. Cap Rate: 8.8245%
7. Protected Period: As set forth in attached Schedule A.
8. Transaction Fee: USD 104,000.00, payable on September 5, 1997.
-2-
In consideration of the payment of the Transaction
Fee of US $104,000.00 the Bank agrees to pay to the
Company the excess, if any, of the Calculated Interest
Amount over the Protected Interest Amount for each
Protected Period as determined in accordance with this
Agreement, such payments to be made in arrears on each
Settlement Date ("Settlement Date" being the Reset Date
for the next succeeding Protected Period, or, in the
case of the final Protected Period, the Termination
Date). The Bank shall pay each amount due hereunder to
the Company by crediting the same to the Company's
account at the principal office of the Bank at 100
Federal Street, Boston, Massachusetts 02106, or by
deposit to such other location in the United States as
the Company may designate in writing to the Bank (such
payment being subject to it being a business day in
such locale). The Company agrees to deliver to the
Bank payment of the Transaction Fee to an account
designated by the Bank on September 5, 1997, in same
day U.S. Dollar funds.
Each party hereto hereby represents and warrants
to the other party hereto that, as of the Trade Date,
it is duly organized, validly existing and in good
standing under the laws of its jurisdiction of
organization, and has the power and authority to
execute and deliver this Agreement, and perform its
obligations thereunder, and that it has taken all
necessary action for and has obtained all necessary
consents to its execution and delivery of this
Agreement and the performance of its obligations
hereunder, and this Agreement has been duly executed
and delivered and constitutes its legal, valid and
binding obligation.
This Agreement contains the entire agreement
between the parties relating to the subject matter
hereof and supersedes all oral statements and prior
writings with respect thereto. This Agreement may be
terminated, modified or amended only by an instrument
in writing executed by the parties hereto. This
Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective
successors and assigns. The rights and obligations of
each party hereto may not be assigned or transferred
without the prior written consent of the other party
hereto (such consent not to be unreasonably withheld);
provided, however, that the foregoing shall not
- -------- -------
prohibit the security interest created by the Company
in this Agreement pursuant to the Amended and Restated
Credit Agreement, dated as of July 31, 1996, among the
Company, certain other creditors, and the Bank, which
security interest the Company hereby confirms.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS.
Notices hereunder shall be in writing and may be
given or made by personal delivery or by first class
mail and shall be deemed given when actually received.
Notices shall be addressed to the Company at 11001
Executive Center Drive, Little Rock, Arkansas 72211,
Attn: Ralph Turner, and to the Bank at BankBoston, N.
A. 100 Federal Street, Boston, Massachusetts 02106,
Attn: Cap Desk, Arbitrage Operations, 01-13-08, with a
copy to Paul Divito, BankBoston, N. A., GA-FML-Atlanta.
-3-
Very truly yours,
BANKBOSTON, N. A.
By: /s/Thomas P. Corcoran By: /s/Paul Divito
------------------------------ ---------------------------------
Name: Thomas P. Corcoran Name: Paul Divito
Title: Director Title: Relationship Manager
Agreed and accepted as of the 4th day of September, 1997.
Name of Company: FAIRFIELD CAPITAL CORP.
By: /s/Ralph E. Turner
--------------------------------------
Title: Treasurer
------------------------------------
Kindly return two copies confirming acceptance on your behalf.
SCHEDULE A
FAIRFIELD CAPITAL CORP.
Principal
Protected Protected Period Cap
----------------
(amounts in thousands) From* Through* Rate
---------------------- ----- -------- ----
USD 38,046. 09/08/97 10/06/97 8.8245%
USD 37,918. 10/07/97 11/06/97 8.8245%
USD 37,797. 11/07/97 12/06/97 8.8245%
USD 37,680. 12/07/97 01/06/98 8.8245%
USD 39,073. 01/07/98 02/06/98 8.8245%
USD 38,244. 02/07/98 03/06/98 8.8245%
USD 37,235. 03/07/98 04/06/98 8.8245%
USD 36,237. 04/07/98 05/06/98 8.8245%
USD 35,257. 05/07/98 06/06/98 8.8245%
USD 34,286. 06/07/98 07/06/98 8.8245%
USD 33,342. 07/07/98 08/06/98 8.8245%
USD 32,419. 08/07/98 09/06/98 8.8245%
USD 31,513. 09/07/98 10/06/98 8.8245%
USD 30,784. 10/07/98 11/06/98 8.8245%
USD 30,084. 11/07/98 12/06/98 8.8245%
USD 29,381. 12/07/98 01/06/99 8.8245%
USD 28,687. 01/07/99 02/06/99 8.8245%
USD 28,565. 02/07/99 03/06/99 8.8245%
USD 27,967. 03/07/99 04/06/99 8.8245%
USD 27,284. 04/07/99 05/06/99 8.8245%
USD 26,614. 05/07/99 06/06/99 8.8245%
USD 25,954. 06/07/99 07/06/99 8.8245%
USD 25,318. 07/07/99 08/06/99 8.8245%
USD 24,637. 08/07/99 09/06/99 8.8245%
USD 23,955. 09/07/99 10/06/99 8.8245%
USD 23,272. 10/07/99 11/06/99 8.8245%
USD 22,595. 11/07/99 12/06/99 8.8245%
USD 21,923 12/07/99 01/06/00 8.8245%
USD 21,261. 01/07/00 02/06/00 8.8245%
USD 21,471. 02/07/00 03/06/00 8.8245%
USD 20,845. 03/07/00 04/06/00 8.8245%
USD 20,225. 04/07/00 05/06/00 8.8245%
USD 19,613. 05/07/00 06/06/00 8.8245%
USD 19,008. 06/07/00 07/06/00 8.8245%
USD 18,421. 07/07/00 08/06/00 8.8245%
USD 17,841. 08/07/00 09/06/00 8.8245%
USD 17,270. 09/07/00 10/06/00 8.8245%
USD 16,730. 10/07/00 11/06/00 8.8245%
USD 16,199. 11/07/00 12/06/00 8.8245%
USD 15,672. 12/07/00 01/06/01 8.8245%
USD 15,153. 01/07/01 02/06/01 8.8245%
USD 15,138. 02/07/01 03/06/01 8.8245%
USD 14,590. 03/07/01 04/06/01 8.8245%
USD 14,049. 04/07/01 05/06/01 8.8245%
USD 13,521. 05/07/01 06/06/01 8.8245%
USD 13,000. 06/07/01 07/06/01 8.8245%
SCHEDULE A (CONT'D)
FAIRFIELD CAPITAL CORP.
Principal
Protected Protected Period Cap
----------------
(amounts in thousands) From* Through* Rate
-------------------- ----- -------- ----
USD 12,486. 07/07/01 08/06/01 8.8245%
USD 11,982. 08/07/01 09/06/01 8.8245%
USD 11,488. 09/07/01 10/06/01 8.8245%
USD 11,003. 10/07/01 11/06/01 8.8245%
USD 10,523. 11/07/01 12/06/01 8.8245%
USD 10,046. 12/07/01 01/06/02 8.8245%
USD 9,574. 01/07/02 02/06/02 8.8245%
USD 9,301. 02/07/02 03/06/02 8.8245%
USD 8,932. 03/07/02 04/06/02 8.8245%
USD 8,568. 04/07/02 05/06/02 8.8245%
USD 8,211. 05/07/02 06/06/02 8.8245%
USD 7,859. 06/07/02 07/06/02 8.8245%
USD 7,517. 07/07/02 08/06/02 8.8245%
USD 7,181. 08/07/02 09/06/02 8.8245%
USD 6,653. 09/07/02 10/06/02 8.8245%
USD 5,995. 10/07/02 11/06/02 8.8245%
USD 5,346. 11/07/02 12/06/02 8.8245%
USD 4,706. 12/07/02 01/06/03 8.8245%
USD 4,075. 01/07/03 02/06/03 8.8245%
USD 1,730. 02/07/03 03/06/03 8.8245%
USD 1,431. 03/07/03 04/06/03 8.8245%
USD 1,143. 04/07/03 05/06/03 8.8245%
USD 900. 05/07/03 06/06/03 8.8245%
USD 634. 06/07/03 07/06/03 8.8245%
USD 359. 07/07/03 08/06/03 8.8245%
USD 79. 08/07/03 09/06/03 8.8245%
USD 431. 09/07/03 10/06/03 8.8245%
USD 170. 10/07/03 11/06/03 8.8245%
*provided that if any such Date is not
a Business Day, then such Date shall be
the next succeeding Business Day, or, if
such adjusted Date would fall in the
next calendar month, then the Date shall
be the immediately preceding Business Day.
The Calculated Interest Amount shall equal the
Reference Interest Rate, divided by 360 and multiplied
by the actual number of days in the Protected Period,
multiplied by the Principal Amount Protected. The
Protected Cap Interest Amount shall equal the Cap Rate,
divided by 360 and multiplied by the actual number of
days in the Protected Period, multiplied by the
Principal Amount Protected.
Capital Markets Assurance Corporation,
as Collateral Agent and
Administrative Agent
885 Third Avenue
New York, NY 10022
Triple-A One Funding Corporation
c/o Capital Markets Assurance Corporation,
its Attorney-in-Fact
885 Third Avenue
New York, NY 10022
BankBoston, N.A.,
as L/C Bank
115 Perimeter Center Place, N.E
Suite 500
Atlanta, GA 30346
Re: Letter Agreement On Certain Contracts, Forms of
Colorado Contracts, Environmental Disclosure Schedule
and Pool Limit Excess
Ladies and Gentlemen:
This letter agreement, ("Agreement"), dated as of
September 8, 1997, (i) amends and modifies that certain
Amended and Restated Credit Agreement, dated as of July 31,
1996, by and among Fairfield Capital Corporation, a Delaware
corporation (the "Borrower"), Fairfield Acceptance
Corporation, a Delaware corporation in its capacity as
Servicer thereunder ("Servicer or FAC"), Fairfield
Communities, Inc., a Delaware corporation ("FCI"), Triple-A
One Funding Corporation, a Delaware corporation ("Triple-
A"), Capital Markets Assurance Corporation, a New York stock
insurance company, individually and as Collateral Agent and
Administrative Agent (in such capacities, "CapMAC") and
BankBoston, N.A., formerly known as The First National Bank
of Boston, a national banking association as L/C Bank, (in
such capacity, the "L/C Bank"), as amended by a First
Amendment to Amended and Restated Credit Agreement and
Waiver Agreement, dated as of March 5, 1997 (the "Credit
Agreement"), (ii) amends and modifies that certain Amended
and Restated Receivables Purchase Agreement, dated as of
July 31, 1996 (the "Purchase Agreement"), among FCI, FAC,
Fairfield Myrtle Beach, Inc., a Delaware corporation ("FMB")
and Borrower and (iii) waives the application of certain
provisions contained in the Credit Agreement.
WHEREAS, the Borrower has requested that Triple-A
make a loan under the Credit Agreement to FCC on
September 8, 1997, and in connection therewith, the
parties to the Credit Agreement and Purchase Agreement
have agreed and consented to (i) make certain clarifying
and conforming changes to the Credit Agreement and the
Purchase Agreement and (ii) waive certain provisions
contained in
1
the Credit Agreement.
NOW THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to them in the
Definitions List to the Credit Agreement. The Definitions
List is hereby amended by adding thereto the following
definition:
"Colorado Contract Forms" means the "Purchase
------------------------
and Sale Agreement," the "Purchase Money Promissory
Note" and the "Mortgage" relating to the Development
in Fairfield Pagosa, Colorado (the "Colorado
Contract Forms"), copies of which are attached
hereto as Attachment 1.
------------
2. The language beginning on the first line of
subparagraph (x)(ii) of Section 4.02(x) of the Credit
Agreement which reads "... in the case of any Contracts
relating to VOIs or Lots located in Developments in North
Carolina or South Carolina, ..." is hereby amended and
restated to read "... in the case of any Contracts
relating to VOIs located in Developments in North
Carolina or South Carolina, ..."
3. The language beginning on the thirteenth line of
subparagraph (a)(x) of Section 6.01 of the Credit
Agreement which reads "... (which repository shall
initially be Southern Officer Services, Inc. in Little
Rock, AR...." is hereby amended and restated to read "...
(which repository shall be Offsite Data Storage, Inc. in
Mabelvale, AR...."
4. Exhibit D to the Purchase Agreement and Exhibit
G to the Credit Agreement, each of which sets forth the
forms of Contracts, are hereby amended and supplemented
to add thereto the Colorado Contract Forms.
5. Each of FAC, FCI and FMB hereby supplement their
representations and warranties contained in subparagraph
(b)(xvii) of Section 7 of the Purchase Agreement as
follows: each Contract relating to the Development at
Fairfield Pagosa, Colorado that is an additional Eligible
Contract purchased by FCC on any Contract Grant Date
occurring after the Effective Restatement Date, was
executed in substantially in the form of the Colorado
Contract Forms, except for changes required by applicable
law and for certain other modifications which do not,
individually or in the aggregate, affect the
enforceability or collectibility of such Contracts.
6. The Borrower hereby supplements its
representations and warranties contained in subparagraph
(q) of Section 4.02 of the
2
Credit Agreement as follows:
each Contract relating to the Development at Fairfield
Pagosa, Colorado that is a Pledged Contract Granted or
purported to be Granted on any Contract Grant Date
occurring after the Effective Restatement Date, was
executed in substantially in the form of the Colorado
Contract Forms, except for changes required by applicable
law and for certain other modifications which do not,
individually or in the aggregate, affect the
enforceability or collectibility of such Contracts.
7. Schedule 4.02(u) of the Credit Agreement is
hereby amended and restated in its entirety by Attachment 2
------------
attached hereto.
8. The Contract Sub-Pool relating to the Pledged
Contracts to be Granted or purported to be Granted to the
Collateral Agent on the Contract Grant Date to occur on
September 8, 1997 contains
Pledged Contracts (the "1997 Overconcentration
Contracts") of a type the inclusion of which in the
Contract Pool would give rise to the existence of a Pool
Limit Excess in the amount of $4.5 million as a result of
the effect of clause (ii) of the definition of the term
"Pool Limit Excess". Each of Triple-A, CapMAC and L/C
Bank hereby waive the application of clause (ii) of the
definition of the term "Pool Limit Excess" to the 1997
Overconcentration Contracts and agree that the inclusion
of the 1997 Overconcentration Contracts in the Contract
Pool will not result in a Pool Limit Excess greater than
zero solely as a result of the effect of clause (ii) of
the definition of the term "Pool Limit Excess".
9. Reference is made to Section 4.02(x) of the
Credit Agreement pursuant to which the Borrower makes
certain representations and warranties with respect to
the Contract File relating to each Pledged Contract. The
Borrower has identified the Contracts listed on
Attachment 3 (the "Florida Defective Contracts"),
-------------
Attachment 4 (the "Colorado Defective Contracts") and
------------
Attachment 5 (the "Repurchase Contracts") which fail to
------------
satisfy certain provisions of Section 4.02(x) of the
Credit Agreement. The Borrower has requested that the
Collateral Agent and the L/C Bank waive the application
of Section 4.02(x) to these Contracts so that they may be
included in the calculation of the Borrowing Base with
respect to the proposed Triple-A Loan to be made to the
Borrower on September 8, 1997, and the Collateral Agent
and the L/C Bank have agreed to waive the application of
Section 4.02(x) to such Contracts as specified herein.
The Collateral Agent and the L/C Bank hereby waive
the application of Section 4.02(x) to the Florida
Defective Contracts, the Colorado Defective Contracts and
the Repurchase Contracts on the following terms and
conditions:
3
(a) With respect to the Florida Defective
Contracts, if the Servicer has not caused the actions
set forth in subclause (i) immediately below to occur
with respect to each such Contract on or before September
18, 1997, it will cause the actions set forth in
subclause (ii) immediately below to occur with respect to
each such Contract on or before the Determination Date
next preceding the first Settlement Date to occur after
September 8, 1997 (the "Initial Determination Date"):
(i) the delivery to CapMAC and L/C Bank of a listing
of all recording information for all mortgages
relating to Florida Defective Contracts necessary
for the assignment and the collateral assignment of
mortgages in substantially the forms of Exhibit T
and U to the Credit Agreement, respectively, to be
in recordable form; or
(ii) the release of the Contract from each of the
Primary Lien and the L/C Bank Lien of the Credit
Agreement by making all payments and allocations
required to be made under Section 7.11(b) of the
Credit Agreement.
(b) With respect to the Colorado Defective
Contracts, if the Servicer has not caused the actions
set forth in subclause (i) immediately below to occur
with respect to each such Contract on or before September
12, 1997, it will cause the actions set forth in
subclause (ii) immediately below to occur with respect to
each such Contract on or before the Initial Determination
Date:
(i) the delivery to CapMAC and L/C Bank of a listing
of all recording information for all mortgages
relating to Colorado Defective Contracts necessary
for the assignment and the collateral assignment of
mortgages in substantially the forms of Exhibit T
and U to the Credit Agreement, respectively, to be
in recordable form and the recording of such
assignments and collateral assignments of mortgages
with the Circuit Clerk of Archuleta County,
Colorado; or
(ii) the release of the Contract from each of the
Primary Lien and the L/C Bank Lien of the Credit
Agreement by making all payments and allocations
required to be made under Section 7.11(b) of the
Credit Agreement.
(c)(1) Attachment 5 contains the list of Repurchase
Contracts which include Contracts:
(i) previously included in the 1995 Contract
Pool or the 1996 Contract Pool;
(ii) originated not in accordance with the
Colorado Contract Forms; or
4
(iii) for which there is no executed original
Contract in the Contract File.
(c)(2) With respect to the Repurchase Contracts,
the Servicer will cause the following action to occur
with respect to each such Contract on or before Initial
Determination Date:
(i) the release of the Contract from each of the
Primary Lien and the L/C Bank Lien of the Credit
Agreement by making all payments and allocations
required to be made under Section 7.11(b) of the
Credit Agreement.
10. Except as expressly provided in this Agreement,
all of the terms and conditions of the Credit Agreement,
the Purchase Agreement and the other Facility Documents
shall remain in full force and effect. The L/C Bank
hereby acknowledges, represents and warrants that the
Letter of Credit is in full force and effect after giving
effect to this Agreement.
11. This Agreement shall be governed by, and
construed in accordance with the laws of the State of New
York.
12. This Agreement may be executed in any number of
counterparts and by each party on a separate counterpart,
each of which when so executed and delivered shall be an
original, but all of which together shall constitute one
instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
5
Please agree to the terms of, and acknowledge receipt
of, this letter agreement by signing in the space provided
below.
Very truly yours,
FAIRFIELD CAPITAL CORPORATION
By:/s/Robert W. Howeth
---------------------------------
Title: President
Address: 11001 Executive Center Drive
Little Rock, AR 72211
FAIRFIELD ACCEPTANCE CORPORATION
By:/s/Robert W. Howeth
----------------------------------
Title: President
Address: 11001 Executive Center Drive
Little Rock, AR 72211
FAIRFIELD COMMUNITIES, INC.
By:/s/Robert W. Howeth
-----------------------------------
Title:Senior Vice President and Chief
Financial Officer
Address: 11001 Executive Center Drive
Little Rock, AR 72211
FAIRFIELD MYRTLE BEACH, INC.
By:/s/Robert W. Howeth
-----------------------------------
Title: Vice President
Address: 11001 Executive Center Drive
Little Rock, AR 72211
ACKNOWLEDGED AND AGREED:
CAPITAL MARKETS ASSURANCE
CORPORATION, as Collateral Agent and
Administrative Agent
By:/s/Jeremy Reifsnyder
---------------------------------
Title:Managing Director
------------------------------
TRIPLE-A ONE FUNDING CORPORATION
By: Capital Markets Assurance Corporation,
its Attorney-in-Fact
By:/s/Jeremy Reifsnyder
----------------------------------
Title: Managing Director
------------------------------
BANKBOSTON, N.A., as L/C Bank
By:/s/Paul Divito
---------------------------------
Title: Managing Director
------------------------------
<PAGE>
ATTACHMENT 1
<PAGE>
Contract No.__________ Sales Price:________ Eagles Loft (Survivorship)
This Instrument Prepared By: Fairfield Communities, Inc.
Pagosa Springs, Colorado
CORPORATION DEED
EAGLE'S LOFT
STATE OF COLORADO )
)SS.
COUNTY OF ARCHULETA )
THIS DEED, made this _____ day of ___________
A.D. 19_____, by and between Fairfield Communities,
Inc. a Delaware corporation, as beneficial owner, and
Colorado Land Title Company, a Colorado corporation,
as nominee for Fairfield Communities, Inc.
"Grantors,"and ______________________________________
_____________________________________________________
_____________________________________________________
joint tenants, with the right of survivorship, and
not as tenants in common, "Grantees," whose address
is___________________________________________________
_____________________________________________________
WITNESSETH:
That the Grantors, in consideration of Ten
Dollars and other good and valuable consideration to
them paid by the Grantees, the receipt of which is
hereby acknowledged, have bargained and sold, and by
these presents do grant, bargain, sell and convey,
reserving and/or excepting all oil, gas, coal, water and
other mineral rights, and subject to the
restrictions, easements and other conditions
hereinafter contained, unto the aforesaid Grantees,
their heirs, devisees, successors, and assigns, the
following described property from 4:00 P.M. on the
first day until 4:00 P.M. on the last day assigned to
said Grantees during the below described Lot Week(s)
Number(s) as said Lot Week is numbered and defined in
the Declaration of Individual and/or Interval
Ownership recorded in the public records of Archuleta
County, Colorado in the Book at the page number
hereinafter described below, which estate is to be
succeeded forthwith by a succession of other estates
in consecutive and chronological order, revolving
among the other Lot Weeks described in the aforesaid
Declaration of Individual and/or Interval Ownership,
in order annually, it being the intent of this
instrument that each Lot Week shall be considered a
separate estate held separately and independently by
the respective owners thereof for and during the
period of time assigned to each in said Declaration,
each said estate being succeeded by the next in
unending succession governed by said Declaration
until 4:00 P.M. on the first Saturday in the year
2023, as of which date said estate shall terminate,
unless extended as provided by said Declaration.
TOGETHER with a vested remainder over in fee
simple absolute, as tenant in common with the other
owners of all Lot Weeks in the hereafter described
Lot in Eagle's Loft in that percentage interest
determined and established by said Declaration for
the following described real estate located in the
County of Archuleta and State of Colorado, as
follows:
Lot (Unit) Week(s) Number(s)____________________
Lot (Unit) Number_______________________________
Building Number_________________________________
of Eagle's Loft Phase _____________ as recorded under
Reception No.____________, subject to Declaration of
Individual and/or Interval Ownership for Eagle's Loft
recorded under Reception No. 117700, and in Book 200
at page 834 et seq and amendments and supplements
thereto, in the Office of the County Clerk and
Recorder in and for Archuleta, County, Colorado.
This conveyance is subject to and by accepting this
Deed the Grantee(s) do(es) hereby agree to assume the
following:
1. Taxes for the current year and subsequent years;
2. Conditions, restrictions, limitations, reservations,
existing easements, and other matters of record;
3. Declaration of individual and/or Interval Ownership
and, if applicable, the Fairshare Vacation Plan Use
Management Trust and Use Restriction, and any
supplements or amendments thereto or hereafter filed.
TO HAVE AND TO HOLD unto Grantees and Grantees'
heirs, executors, administrators, successors and
assigns forever; subject, however, to the
restrictions, easements and other conditions
hereinabove contained. Fairfield Communities, Inc.
does hereby fully warrant the title of all of the
premises hereby conveyed and will defend the same
against the lawful claims of all persons whomsoever.
And Colorado Land Title Company hereby covenants
with the said Grantees that it will warrant and
defend title to said lands against all claims and
encumberances due by, or through it, but against none
other.
The plural number as used herein shall equally
include the singular and vice versa. The masculine
or feminine gender as used herein shall equally
include the neuter.
IN WITNESS WHEREOF, Fairfield Communities, Inc.
has caused these presents to be signed in its
corporate name by its duly authorized Officer(s) and
its Corporate Seal to be hereto affixed on the day
and year first above written. In executing this
Deed, the beneficial owner hereby authorizes and
requests Colorado Land Title Company by its Attorney
in Fact to execute this Deed for the purpose of
conveying legal title to the above-described
property.
FAIRFIELD COMMUNITIES, INC.,
AS BENEFICIAL OWNER
BY:_____________________________
Assistant Vice President
COLORADO LAND TITLE COMPANY
AS NOMINEE, BY ITS ATTORNEY IN FACT
BY:______________________________(SEAL)
<PAGE>
STATE OF ARKANSAS )
) SS.
COUNTY OF PULASKI )
The foregoing instrument was acknowledge before me this _____ day
of _____________ , 19____, by Paul A. Lipsmeyer Assistant Vice President
-------------------------------------------
in and for Fairfield Communities, Inc., and Paul A. Lipsmeyer as
Attorney in Fact for Colorado Land Title Company, a coporation, under that
certain Limited Power of Attorney filed of record on June 21, 1983, in the
Office of the Recorder of Archuleta County, Colorado.
--------------------------------------
Notary Public
Address: P.O. Box 3375
Little Rock, Arkansas 72203
My Commission Expires:
_____________________
<PAGE>
FAIRFIELD PAGOSA
PURCHASE AND SALE AGREEMENT --------------------
CONTRACT NUMBER
THIS PURCHASE AND SALE AGREEMENT ("Agreement") executed in
quadruplicate this ________ day of _______________ , 19_______
by and between FAIRFIELD COMMUNITIES, INC., hereinafter
referred to as "SELLER", and ________ Social Security Number:___________
Telephone Number:_______________ of ________ hereinafter referred to as
"BUYER,"
WITNESSETH:
This Agreement is made pursuant to that certain
Declaration of Covenants, Conditions and Restrictions for
____________________________________________________________
____________________________________________________________
in the Office of the Clerk and County Recorder for Archuleta
County, Colorado, as the same may be supplemented or amended
from time to time (the"Declaration"). All terms
with initial capital letters as used herein shall have the
same meaning as those used in the Declaration.
1. AGREEMENT TO BUY AND SELL. Subject to the Terms and
Conditions set forth herein, BUYER agrees to purchase, and
SELLER agrees to sell, the following described Interval Unit
Week(s) in__________________________________________________
____________________________________________________________
hereinafter referred to as "Regime", a subdivision located
within Fairfield Pagosa, Archuleta County, Colorado subject
to all provisions contained in the recorded Declaration:
Unit Number:______________
Unit Week Number(s):________ Building Number: ______________
The boundaries of which are further defined in the
Declaration applicable hereto.
BUYER, upon consummation of the sale will become a
member of the_______________________________________________
____________________________________________________________
Owner's Association (the "Association") and BUYER
understands and agrees that upon execution of this Agreement
and in accordance with the "Declaration," applicable to
the above described property, BUYER will be responsible as
a Unit Week Purchaser for the above described Unit Week(s)
owner's share of common expenses, assessments
and maintenance fee, and any and all other expenses incurred
in the operation of the Association, which shall include
BUYER'S membership in the Pagosa Lake Property
Owners Association, Inc., during the BUYER'S Unit Week(s).
The annual maintenance fee for a Unit Week for the
current calendar year is $______________. If your Unit Week
will be available for occupancy during the year of
purchase, and your Unit Week begins at least 60 days from
the date of this Agreement or you use or exchange your Unit
Week, the full maintenance fee must be paid to the
Association for such year. If your Unit Week will not be
available for occupancy during the current year you will be
required to pay annual maintenance fees in January of the
upcoming year, the amount, manner of payment, and the due
date(s) for which shall be determined annually by the Board
of Directors of the Association.
2. PURCHASE PRICE. The purchase price of the Unit Week is
the sum of $__________. BUYER has delivered to SELLER this date
the sum of $_________ as a good faith deposit (the "Total Down
Payment") toward the purchase of the Unit Week. The Total
Down Payment shall be applied against the purchase price
of the Unit Week. Buyer agrees to pay the remaining balance
of the purchase price either by payment in full of the remaining
balance of the purchase price in cash or by certified check
or by executing a promissory note (the "Note") on a form supplied
by SELLER and on terms as described in that certain Truth-in-
Lending Disclosure Statement (the "Disclosure Statement")
delivered to BUYER with this Agreement.
The Note shall be secured by a Mortgage or Deed of Trust
(the "Mortgage") encumbering the Unit Week on a form supplied
by SELLER and according to terms described in the Disclosure
Statement. Payment under the Note shall commence 45
days from the date of said Note. Interest on the unpaid
principal shall commence one payment period before the first
payment under the Note is due, but in no event
prior to the date of said Note. After acceptance by SELLER
and prior to delivery of a Corporation Deed, all funds
paid by BUYER will be deposited in SELLER'S
general operating account and no restrictions will be placed
on the use of these funds.
3. UNIT WEEK. Unit Week No. 1 is the seven (7) days
commencing on the first _________________ in each year.
Unit Week No. 2 is the seven (7) days succeeding. Additional
weeks up to and including Unit Week No. 51 are computed
in a like manner, Unit Week No. 52 contains the seven (7)
days succeeding Unit Week No. 51 plus any excess days not
otherwise assigned and without regard to the month or year.
BUYER'S Unit Week shall run from four o'clock (4:00) p.m.
on the first _________________ thereof to four o'clock
(4:00) p.m. on the last _____________ thereof, provided however,
the BUYER does hereby agree to relinquish occupancy for the last
six (6) hour period of his Unit Week from ten o'clock (10:00) a.m.
until four o'clock (4:00) p.m. on _________________ to allow
for cleaning, repairs, maintenance and any other preparation
needed for the occupancy of the next Unit Week.
4. TRANSFER OF TITLE/CLOSING. Provided BUYER complies with
all provisions in connection with this Agreement prior to
the Closing Date, including but not limited to the payment
of the balance of the purchase price, or if financed
the balance of the downpayment, if any, the SELLER shall
deliver to BUYER within sixty (60) days from the date of
this Agreement a Corporation Deed to be recorded in the
Office of the Clerk and County Recorder for Archuleta County,
Colorado, conveying title free and clear of all
encumbrances, subject to mineral reservations and Covenants
and Restrictions and Easements set forth in the
recorded Plat and Declarations. The date of closing shall
occur within sixty (60) days of the date of the execution
of this Agreement. The hour and place of closing shall be
as designated by SELLER.
TITLE INSURANCE PREMIUMS IN THE AMOUNT OF $____________
AND FILING FEES IN THE AMOUNT OF $________________ ARE TO BE
PAID BY THE PURCHASER and shall be due and payable upon the
signing of this Agreement. There will be no title insurance
commitment issued prior to delivery of the policy. The title
insurance policy will be delivered within sixty (60) days
following recording of the Corporation Deed. A processing
fee of $_________ shall be due and payable upon the signing of
this Agreement.
5. OFFER TO PURCHASE: RESCISSION RIGHT.
EACH PURCHASER MAY CANCEL HIS/HER AGREEMENT WITHIN FIVE (5)
CALENDAR DAYS AFTER EXECUTION OF THE AGREEMENT BY GIVING
NOTICE OF RESCISSION BY TELEGRAM, MAIL OR HAND DELIVERY TO
OFFICE OF SELLER. THIS RIGHT TO CANCEL MAY NOT BE WAIVED.
TEXAS RESIDENTS ONLY: SEE EXHIBIT A.
THIS AGREEMENT is subject to the terms and conditions
set forth herein which by reference are made a part hereof.
IN WITNESS WHEREOF, the parties have hereunto set their
respective hands and seals on the day and year first above
written.
BUYER(S):_________________________
Receipt is hereby acknowledged of ( ) check ( ) cash
deposit in the amount of $__________________________
Requested by _______________________________________
Broker Fairfield Pagosa Realty, Inc. P.O. Box 4040,
Pagosa Springs, CO 81157
By:______________________________
Broker/Salesman - Witness FAIRFIELD COMMUNITIES, INC.
a Delaware corporation
______________________________
WITNESS - NOTARY
______________________________ By:____________________________
WITNESS - NOTARY AUTHORIZED REPRESENTATIVE
OF SELLER
Down Payment monies to be
retained by Broker until this
Purchase and Sale Agreement is
accepted and signed by Seller.
ACCOUNTING DEPARTMENT
<PAGE>
6. PURCHASER'S ACKNOWLEDGEMENTS. BUYER, by his
execution of this Agreement, does hereby represent that he
is of legal age, and that he has received a copy of this
Agreement and understands the conditions of this Agreement.
BUYER HAS FURTHER AGREED THAT THIS INTERVAL UNIT WILL NOT BE
USED AS HIS PRINCIPAL RESIDENCE. BUYER does further
acknowledge, agree and warrant that the purchase of this
Unit Week is made for his personal use and that there have
been no representations concerning rentals, rent returns,
tax advantages, depreciation or investment potential or
other monetary or financial advantages and that none of such
things have been represented to him by SELLER, its agents,
employees or associates.
SELLER has submitted the real property as hereinabove
designated, and the building situated thereon, to the Regime
Declarations named in the Agreement. The Declaration
referred to above allocates the Unit and the BUYER'S
interval ownership therein and specifies BUYER'S voting
rights, assessments and other obligations as an owner of an
interest in the Regime. BUYER understands and agrees that
he will be a member of the Association and agrees to be
bound by the rules and provisions of such Association, and
the Declarations referred to herein, including a plat
reflecting the accurate locations of Units.
BUYER understands that his interest will be determined
for all purposes by reference to the plat and the
Declaration of Individual and/or Interval Ownership
applicable hereto. BUYER understands and agrees that the
Declaration shall grant to the Board of Directors of the
Association the right to place liens upon the interval
ownership of the BUYER should he be in default or fail to
pay annual assessments and maintenance fees, when due.
7. TIME IS OF THE ESSENCE/DEFAULT/REMEDIES. Time is
of the essence hereof. If any note or check received as
Total Down Payment hereunder or any payment due hereunder is
not paid or honored when due or if any other obligation
hereunder is not performed or waived as herein provided,
there shall be the following remedies:
a. If BUYER is in default SELLER may elect to treat this
Agreement as cancelled in which case all payments and things
of value received hereunder shall be forfeited by BUYER and
delivered to SELLER. SELLER may recover such damages as may
be proper or SELLER may elect to treat this Agreement as
being in full force and effect, and, SELLER shall have the
right to specific performance or damages or both. Upon
BUYER'S default Broker shall deliver forfeited deposits to
SELLER.
b. If SELLER is in default, BUYER may elect to treat this
Agreement as cancelled in which case all payments and things
of value received hereunder shall be returned by Broker or
SELLER as the case may be and BUYER may recover such damages
as may be proper.
c. Notwithstanding anything to the contrary herein, in the
event of any litigation or arbitration arising out of this
Agreement or the alleged or actual breach hereof, the
prevailing party shall be entitled to recover all reasonable
costs and expenses including attorney's fees from the other
party.
8. MODIFICATIONS AND CHANGES. SELLER reserves the right
to make changes in the Declaration herein referenced for the
purpose of correcting errors in the preparation and filing
of all documents relating to the Regime. In addition,
SELLER may add additional properties and Interval Units to
the Regime by filing appropriate plats and Supplemental
Declarations to reflect the additional properties.
9. FURNISHINGS. Although all models are for display purposes
only, the herein described unit shall have furniture,
appliances, equipment and all accent furnishings
substantially similar to, or of equal quality to, those
shown or used in the models. All furnishings shall be owned
by the Association, for the use and benefit of the Interval
Owner(s), and the Association shall be responsible for
maintaining and replacing such furnishing within each unit.
10. MANAGEMENT AGREEMENT. BUYER understands and agrees by
virtue of his purchase of the aforesaid Unit Week(s), that
he shall be a member of the Association organized for the
purpose of operating the Units and maintaining the common
elements, payment of common expenses of Unit Week owners,
and thereby specifically authorizes the Board of Directors
of the Association to enter into a Management Agreement with
the SELLER or other entity by which such firm may act on
behalf of the Association as provided in the above
referenced Declaration and said BUYER ratifies and approves
same and agrees to be bound by the terms and conditions
thereof.
11. BINDING EFFECT. This Agreement is binding upon the
parties hereto and their heirs, legal representatives,
successors, and assigns. This Agreement will supersede any
and all understandings and agreements between the parties
hereto, and it is mutually
understood and agreed that this Agreement represents the
entire Agreement between the parties hereto, and no
representations or inducements prior hereto, which are not
included and embodied in the Agreement shall be of any force
and effect, and this Agreement may only be amended or
modified by an instrument in writing between the parties. This
Agreement may not be transferred or assigned in any manner
without the prior written consent of SELLER. This Agreement
shall be construed under the laws of the State of Colorado.
12. GENDER AND TENSE. Wherever appropriate in this
Agreement, the singular shall be deemed to refer to the
plural and the plural to the singular, and pronouns of
masculine, feminine and neuter gender shall be deemed to
include either, both or all of the other genders.
13. TAXES. SPECIAL TAXING DISTRICTS MAY BE SUBJECT TO
GENERAL OBLIGATION INDEBTEDNESS THAT IS PAID BY REVENUES
PRODUCED FROM ANNUAL TAX LEVIES ON THE TAXABLE PROPERTY
WITHIN SUCH DISTRICTS. PROPERTY OWNERS IN SUCH DISTRICTS
MAY BE PLACED AT RISK FOR INCREASE MILL LEVIES AND EXCESSIVE
TAX BURDENS TO SUPPORT THE SERVICING OF SUCH DEBT WHERE
CIRCUMSTANCES ARISE RESULTING IN THE INABILITY OF SUCH A
DISTRICT TO DISCHARGE SUCH INDEBTEDNESS WITHOUT SUCH AN
INCREASE IN MILL LEVIES. PURCHASERS SHOULD INVESTIGATE THE
DEBT FINANCING REQUIREMENT OF THE AUTHORIZED GENERAL
OBLIGATION INDEBTEDNESS OF SUCH DISTRICTS, EXISTING MILL
LEVIES OF SUCH DISTRICT SERVICING SUCH INDEBTEDNESS, AND THE
POTENTIAL FOR AN INCREASE IN SUCH MILL LEVIES.
ACKNOWLEDGEMENT
STATE OF COLORADO
COUNTY OF ARCHULETA
The foregoing instrument was acknowledged before me
this ____ day of ______________ , 19____ by ______________________
as _________________________ for Fairfield Communities, Inc.
WITNESS my hand and official seal.
______________________________
NOTARY PUBLIC
Address:____________________________
My Commission Expires: _____________ ____________________________
(SEAL)
ACKNOWLEDGEMENT
STATE OF ___________________
COUNTY OF _________________
The foregoing instrument was acknowledged before me
this _____ day of ______________ , 19____ by
______________________ and _____________________, his wife.
WITNESS my hand and official seal.
_____________________________
NOTARY PUBLIC
Address: _______________________
My Commission Expires:__________ _______________________
(SEAL)
<PAGE>
STATE OF COLORADO )
) SS.
COUNTY OF ARCHULETA)
The foregoing instrument was acknowledged before me
this _____________ day of_________________________________,
19____, by _______________________________________________.
____________________________
Notary Public
Address: P.O. Box 4040
________________________
Pagosa Springs, CO 81517
------------------------
________________________
My Commission Expires:
_____________________
ASSIGNMENT OF MORTGAGE
STATE OF ARKANSAS )
) SS.
COUNTY OF PULASKI )
For valuable consideration, Fairfield Communities,
Inc., by its authorized representative, does hereby sell,
set over, transfer, assign and deliver to
The First National Bank of Boston, its successors
and assigns, all its right, title and interest in and to
this Mortgage and the property described herein, with
recourse, this________ day of___________________, 19_____ .
FAIRFIELD COMMUNITIES, INC.
By:____________________________________
Title:____________________Vice President
Authorized Signature
STATE OF ARKANSAS )
) SS.
COUNTY OF PULASKI )
The foregoing instrument was acknowledged before me
this ___________ day of___________________________________,
19__________, by __________________________________________
as ________________________________________ Vice President
of Fairfield Communities, Inc.
____________________________________
Notary Public
Address: P.O. Box 3375
----------------------------
Little Rock, Arkansas 72203
----------------------------
____________________________
My Commission Expires:
______________________
RECORDING INFORMATION
STATE OF COLORADO )
) SS.
COUNTY OF ARCHULETA )
I hereby certify that this instrument was filed for
record in my office at _______________ o'clock __________. M.,
_______________, 19_____, and is duly recorded under Reception
No. ________________________.
_______________________________
Recorder
_______________________________
Deputy Recorder
<PAGE>
Recorded at ____________ o'clock ___________.M.
Reception No. _____________________ _________________ Recorder
MORTGAGE
THIS INDENTURE is made this ___________ day of
,_____________________, 19_____, by ______________________
__________________________________________________________
_____________________________________________,("Mortgagor")
of________________________________________________________.
Mortgagor has executed his promissory note as evidenced
in Mortgagor's Real Estate Sales Contract, dated
__________________________________________________________,
for the principal sum of __________ Dollars ($_____________), payable
to the order of Fairfield Communities, Inc., (Mortgagee), after date
thereof, with interest thereon from date until maturity at
the rate of________________________________________________
percent (_______ %) per annum payable in___________________
____________ installment payments of $_____________________,
including principal and interest, with the first such
payment due on or before the __________________ day of
______________, 19____, and a like sum due on or before the
same day of each successive payment period thereafter until
the whole amount is fully paid. Said payments are applied
first to interest accrued and the balance to principal.
Mortgagor is desirous of securing said promissory note
and does hereby grant and convey unto Mortgagee a Mortgage
in the following described property, situate in Archuleta
County, Colorado, to-wit:
Building Number_______ Lot (Unit) Number ________
Lot (Unit) (Week)(s) Numbers_______________
of Eagle's Loft Phase _________________ as recorded under
Reception No.__________, subject to Declaration of Individual
and/or Interval Ownership for Eagle's Loft recorded under
Reception No. 117700, and in Book 200 at page 834, et seq and
amendments and supplements thereto, in the Office of the
County Clerk and Recorder in and for Archuleta County,
Colorado.
together with all improvements thereon situate.
Mortgagor hereby covenants to Mortgagee as follows:
1. Title. That Mortgagor is well seized of the said
property in fee simple and has good right and lawful
authority to grant this mortgage and does hereby fully and
absolutely waive and release all rights and claims to said
lands, tenements and property as a homestead exemption or
any other exemption under or by virtue of any act of the
General Assembly of the State of Colorado or as any
exemption under or by virtue of any act of the United
States Congress, now existing or which may hereafter be
passed in relation thereto and that the same are free and
clear of all liens and encumbrances except those which
exist on the plat describing said lands and the prior
existing liens and encumbrances of record in Archuleta
County, Colorado, existing as of the date of Mortgagor's real estate
contract. Mortgagor shall warrant and defend said title
forever.
2. Taxes. Insurance and Prior Encumbrances. During the
continuance of said indebtedness or any part thereof,
Mortgagor will timely pay all taxes and assessments levied
on said property; all amounts due on account of principal
and interest on prior encumbrances, if any: and will keep
all improvements that at any time may be on said property,
insured against loss by fire with extended coverage
endorsements in such company or companies as Mortgagee may,
from time to time, direct. In the case of failure to
provide insurance, or pay tax, taxes or assessments, or
amounts due or to become due on any prior encumbrances,
then Mortgagee may procure such insurance, or pay such taxes
or assessments or amounts due upon prior encumbrances, and
all monies thus paid, with interest thereon at twelve
percent (12%) per annum, shall become so much additional
indebtedness, secured by this Mortgage, and shall be paid
out of the proceeds of any foreclosure if not otherwise
paid by Mortgagor and Mortgagee may, in case of such
default, declare a violation of this covenant and agreement.
3. Maintaining Improvements. Mortgagor shall maintain
all improvements on the property in reasonably good repair
and shall not permit any improvements to be removed or
demolished without Mortgagee's prior written consent.
4. Mortgagee's Remedies. In the case of default in the
payment, or any other terms, of said note, or a default of
any of the terms, conditions, covenants and agreements contained in
this mortgage. Mortgagee may declare a violation of any of
the covenants herein contained and elect to foreclose upon the
property, judicial or otherwise, pursuant to the laws of
the State of Colorado now enacted or hereafter amended.
Out of the proceeds of any mortgage foreclosure after first
paying and retaining all fees, charges and costs for such
foreclosure, the proceeds from the foreclosure shall be
paid to Mortgagee to pay the principal and interest due
thereon according to the tenor and effect thereof, and all
the monies advanced by Mortgagee, for insurance, taxes and
assessments and prior encumbrances, with interest thereon
at twelve percent (12%) per annum, rending the overplus, if
any, unto the Mortgagor. If a release deed is required it
is agreed that Mortgagor will pay the expense thereof.
Mortgagee may purchase the property or any part thereof at
any judicial sale and they will not be obligated at any
such sale to see to the application of the purchase money.
At the foreclosure sale the property may be sold or
disposed of en masse or in separate parcels as the
Mortgagee may thing best.
5. Transfer of Property. If all or any part of the
property or interest therein is sold without Mortgagee's
prior written consent, excluding (a) a transfer by devise,
descent or operation of law upon the death of a joint
tenant (b) the creation of a lien or encumbrance
subordinate to this Mortgage, (c) the creation of a purchase
money security interest for household appliances (d) the
grant of any leasehold interest of three years or less not
containing an option to purchase. Mortgagee may, at its
option, declare all sums secured by this Mortgage to be
immediately due and payable. This right of acceleration
shall be subject to the laws of the State of Colorado.
6. Possession. Whenever a right of foreclosure occurs
hereunder, the Mortgagee shall at once become entitled to
the possession, use and enjoyment of the property and to
the rents, issues and profits thereof, from the accruing of
such right, and during the time of foreclosure proceedings
and any redemptive periods, such possession shall be at
once delivered to Mortgagee of said note on request, and if
refused the delivery of such possession may be enforced by
Mortgagee by any appropriate civil suit or proceeding and
they shall be entitled to a receiver for said property and
of the rents, issues and profits thereof after any such
default, including the time for foreclosure proceedings and
the period of redemption, if any, without regard to the
solvency or insolvency of Mortgagor and without regard to
the value of the property. Such receiver may be appointed
by any court of competent jurisdiction upon ex parte
application and without notice -- such notice being hereby
expressly waived -- and all rents, issues and profits,
income and revenues therefrom shall be applied by such
receiver to the payment of the indebtedness hereby secured
according to the law and order of the court.
7. Acceleration. In case of default in any payments of
principal or interest according to the tenor of the
promissory note, or a breach or violation of any of the
covenants or agreements contained in said note or herein,
by Mortgagee, then and in that case the whole of the
principal sum with interest due, at the option of
Mortgagee, shall become due and payable forthwith.
8. Attorney's Fees and Court Costs. Any reasonable
attorney's fees and court costs for services and the
supervision of any foreclosure pursuant to this mortgage
shall be taxed as a part of the costs of the foreclosure
proceedings.
9. Liability. If the Mortgagor consists of more than
one party then the Mortgagors shall be jointly and severally
liable under any and all obligations, covenants and
agreements contained herein.
10. Miscellaneous.
(a) Binding Effect. This Mortgage shall be
binding upon, and inure to the benefit of, the parties
herein, their heirs, personal representatives, successors
and assigns. The benefits conferred upon, or burdens on,
Mortgagee shall extend to, and be for the benefit of, any
successors or assigns or Mortgagee's interest in this
Mortgage. All rights Mortgagee may exercise herein my be
exercised by the legal holder of the promissory note
secured hereby.
(b) Covenants Run With the Land. The covenants,
agreements and conditions contained in the Mortgage shall
run with land and remain in effect until the total
obligations described therein are paid in full.
(c) Applicable Law. This Mortgage shall be
subject to the laws of the State of Colorado and the
parties agree that proper venue in the event of any
foreclosure or other litigation regarding this Mortgage is
Archuleta County, Colorado.
(d) Provision Violation. Should any provision of
this mortgage be found to violate this statue or court
decisions of the State of Colorado, or of the United
States, such provisions shall be deemed to be amended to
comply with and conform to such statues and decisions.
EXECUTED this _________ day of___________________ 19____.
_____________________________
Mortgagor
<PAGE>
Attachment 2
<PAGE>
SCHEDULE 4.02(u)
-----------------
To Fairfield Capital Corporation
Amended and Restated Credit Agreement
--------------------------------------
A. Storage Tanks. The following is a
--------------
description of certain storage tanks located on
FCI's Properties:
1. Pagosa: All underground storage
------
tanks were removed by the lessee.
2. Plantation. There is one 1,000
----------
gallon registered, underground storage tank at the
maintenance facility owned by Fairfield.
3. Fairfield Harbour. Two aboveground
-----------------
tanks are located at Grounds Maintenance, one of
which is a 2,000 gallon unleaded tank and the other
is a 500 gallon diesel tank. Also, a 1,000 gallon
aboveground propane tank is located at the laundry
facility.
4. Fairfield Westwinds. There is a
-------------------
1,000 gallon propane tank located underground at
this site. This tank has been emptied, left on the
premises and filled with water. There is a 40
gallon diesel tank used with the generator and
located on the roof. At Sea Watch Villa I there is
a 500 gallon propane underground tank used in
conjunction with the spa. At Sea Watch II there is
a 320 gallon propane underground tank used in
conjunction with the spa. At Sea Watch Tower I
there is a diesel tank used with the generator and
located on the roof.
B. Chemicals and Oil Storage. In addition
-------------------------
to underground storage tanks, FCI (and to the best
of Borrower's and FCI knowledge, third party owners
of amenities) store and use oil, pesticides,
fertilizers, herbicides and other chemicals
necessary for the ordinary maintenance and upkeep
of amenities and other grounds at the Developments.
C. Other Environmental Conditions. Although
------------------------------
the amenities at Fairfield Glade are no longer
owned by FCI, FCI agreed to remediate certain
environmental conditions as part of a post-closing
agreement. Currently, the environmental conditions
have been cleaned up or remediated as currently
required and monitoring wells were installed to
determine whether further action is needed. The
state of Tennessee continues to monitor the
remediation and well test results. At Sapphire
Valley, the old building maintenance and
construction area, which is not currently occupied,
is sometimes used by unknown parties to dump
refuse.
<PAGE>
Attachment 3
<PAGE>
CYPRESS PALMS
(Sent for recordation in Osceola County, Florida.
No recording information available yet.)
CONTRACT NUMBER NAME OF OBLIGOR
21-9615580 Farmer
21-9616612 Hall
21-9619061 Haskins
22-9606025 Sabo
25-9604189 Hurd
25-9605293 McClure
27-9600597 Premius
27-9600621 Staskiewicz
27-9601751 Piper
27-9601769 Phan
27-9601819 Rivers
27-9601827 Crawford
27-9601843 White
27-9601884 Whiting
27-9601892 Brown
<PAGE>
Attachment 4
<PAGE>
PAGOSA AT RECORDER AND EXPECTING RECORDING INFORMATION
17-9604970 STOPPEL
17-9607338 ALLEN
17-9607429 HOEKSEMA
17-9607536 FRAKES
17-9607593 MCMURY
<PAGE>
Attachment 5
<PAGE>
REPURCHASE LIST
------------------------------------------------
CONTRACT NUMBER NAME
------------------------------------------------
07-9600292 COOK
------------------------------------------------
07-9700167 GAUDET
------------------------------------------------
08-8807375 TOPSEY
------------------------------------------------
15-8756296 BENNETT
------------------------------------------------
17-9506764 JACKSON
------------------------------------------------
17-9506845 VANONI
------------------------------------------------
17-9605001 BLACK
------------------------------------------------
17-9605886 AGNES, SR.
------------------------------------------------
17-9606744 MIELKE
------------------------------------------------
17-9607841 DOWNHAM
------------------------------------------------
17-9608310 EOFF
------------------------------------------------
17-9608534 SORRELLS
------------------------------------------------
17-9608542 HAWKINS
------------------------------------------------
17-9701545 ROLLINS
------------------------------------------------
17-9701545 ROLLINS
------------------------------------------------
17-9701743 YAWAKIE
------------------------------------------------
17-9701750 TOLER
------------------------------------------------
17-9701776 DICKSON
------------------------------------------------
17-9701800 VIGIL
------------------------------------------------
17-9701826 MCLAUGHLIN
------------------------------------------------
17-9701875 DICKSON
------------------------------------------------
17-9701883 THURSTON
------------------------------------------------
17-9701909 PEBBLES
------------------------------------------------
17-9702006 BOOE
------------------------------------------------
17-9702022 SEYMOUR
------------------------------------------------
17-9702048 THORNE
------------------------------------------------
17-9702055 RUMPEL
------------------------------------------------
17-9702097 JONES, JR.
------------------------------------------------
20-9622828 BROWN
------------------------------------------------
21-9627056 GRAFFEO
------------------------------------------------
21-9708955 SONGER
------------------------------------------------
26-9217832 CROW
------------------------------------------------
26-9616751 ADAMS
------------------------------------------------
26-9616983 ADELEKAN
------------------------------------------------
26-9701348 JEFFRIES
------------------------------------------------
28-9700776 ROTH
------------------------------------------------
28-9701781 SMITH
------------------------------------------------
28-9701908 ROGERS
------------------------------------------------
30-9700011 MILLER
------------------------------------------------
<PAGE>
REPURCHASE LIST
-------------------------------------------------
30-9700052 CART
-------------------------------------------------
30-9700094 GODAT
-------------------------------------------------
30-9700128 BURGESS
-------------------------------------------------
30-9700151 MACKIEWICZ
-------------------------------------------------
30-9700151 NEWTON
-------------------------------------------------
30-9700219 MCKINNERNEY
-------------------------------------------------
30-9700409 SUSUKI
-------------------------------------------------
<PAGE>
CONTRACT NUMBER
PREVIOUS CAPMAC
CONTRACT NUMBER
05 9511873
15 8901421
15 9504356
19 9400144
20 9507334
22 9405394
22 9408232
22 9506639
25 9502516
25 9503365
26 9414199
<PAGE>
1993-A
CONTRACT NUMBER
11 8916352
15 9001643
FAIRFIELD COMMUNITIES, INC.
EMPLOYEE STOCK PURCHASE PLAN
Purpose
The Fairfield Communities, Inc. Employee Stock Purchase Plan (the
"Plan") is intended to give employees of Fairfield Communities, Inc. and
its subsidiaries (except for those subsidiaries the participation of which
is excluded during such time as may be determined by the Board of Directors
(the "Board") of Fairfield Communities, Inc.) (collectively, the "Company")
the opportunity to purchase, through regular payroll deductions, shares of
common stock of the Company ("Common Stock") at a 15% discount to the
market price of the Common Stock and without paying any brokerage
commissions.
Who is Eligible
All active full-time, commission sales and seasonal employees (in each
case as defined in the Company's employee handbook) of the Company may
purchase shares through the Plan, provided they are actively employed on
the first day of the fourth calendar month of employment with the Company
and have attained the age of majority in their states. Employees whose
service with the Company terminates (excluding employees who return to
active employment at the expiration of approved leaves of absences) who
subsequently are reemployed by the Company will be considered to be new
employees as of the effective dates of their reemployment.
Purchases through Payroll Deductions
The Company is making its payroll deduction facilities available to
eligible employees to enable them to make purchases. Use the accompanying
Plan Enrollment Form if you desire to authorize payroll deductions. The
amount of the deduction will be the amount of your choice between 1% and
10% of your gross cash compensation (defined as salary, wages, commissions
and cash bonus payments (including any amounts which have been deducted for
401(k) plans, salary reduction deferral agreements, Section 125 cafeteria-
style plans, etc., but excluding moving expenses, severance pay, benefit
plan distributions, disability, etc.)) (minimum of $5.00 per pay period),
rounded off to the next highest even dollar. You may not, however,
purchase more than $25,000 of Common Stock per year through payroll
deductions under the Plan. The purchase price for Common Stock will be the
closing price on the Composite Tape of the New York Stock Exchange (or such
other principal exchange on which the Common Stock may be listed for
trading from time to time) on the last trading day of the month for which
deductions were accumulated. No interest will be paid on funds held
pending purchases of the Common Stock.
You may increase or decrease the amount of your payroll deductions
once each quarter or discontinue deductions entirely at any time with re-
entry permitted at the beginning of a subsequent quarter. Any changes will
take effect as soon as possible after your written request is received by
the Human Resources Department of the Company.
Merrill Lynch, Pierce, Fenner & Smith Incorporated or a successor
brokerage firm selected by the Company (the "Broker") will act as the agent
of the Plan to purchase shares of Common Stock for the participants'
accounts.
Direct Purchases
In addition to the payroll deduction method of purchasing shares, you
may also make "direct" purchases of shares by sending a check, along with
written instructions, directly to the Broker. Because you are a Plan
participant, transaction fees and commissions related to direct purchases
will be discounted from the Broker's regular rates.
Orders for direct purchases of additional Common Stock will be
combined on a daily basis with all orders received by the Broker for shares
of the Company's Common Stock. Orders will typically be entered on the
first business day following acceptance of your order by the Broker, or as
soon as practicable thereafter. Shares purchased in the open market may be
purchased over a period of time. In this case, your price will be the
average of all shares purchased over that period.
Listing of the Common Stock
The Company's Common Stock is traded on the New York Stock Exchange.
The price is listed in major newspapers every day under the trading symbol
"FFD." The listing in the newspaper typically includes, among other
things, the high price, the low price and the closing price for the prior
day.
Ownership
The shares purchased through the Plan will be allocated to each
employee based upon the amount of his or her payroll deduction and the
average cost of shares purchased for the Plan on a given date. The
allocation will be made in whole shares and in fractions calculated to one
ten-thousandth of a share (4 decimals). Upon allocation of shares to an
employee's account, the employee will acquire immediate and full ownership
of such shares.
Record of Purchase
The Broker will mail a quarterly statement of account to you showing
the status of your account including the number of shares purchased, the
price per share and the total number of shares, including fractions, held
in your account.
Costs of Investment
The brokerage commissions on all purchases through payroll deductions,
as well as the costs of administering the Plan, will be paid by the
Company.
Registration of Shares
The certificates for shares purchased, whether through payroll
deduction or direct purchase, will be registered in the name of a nominee
of the Broker. The certificates will be held in safekeeping, and the
Broker will act as custodian without charge to you.
You may also designate a co-owner to be a joint tenant of your account
by completing a Joint Account Agreement available from your site or office
benefits coordinator.
Shareholder Privileges
You are the legal owner of the shares in your account. You will
receive notices of meetings, proxy statements, annual and interim reports
and other communications sent to shareholders. You will have the right to
vote whole shares and to receive any dividends paid with respect to your
shares.
Sale of Shares
You may instruct the Broker to arrange for the sale of any or all of
the whole shares in your account. However, the Company will not pay the
costs of the sale of your shares. Promptly after executing the sale, the
Broker will mail you a check for the proceeds, less the normal commission
and any transfer taxes that may be applicable.
You may, of course, also sell your shares by requesting your
certificates, pursuant to the procedure described in "How To Obtain
Certificates" below, and selling them through the broker of your choice.
How to Obtain Certificates
You may request the Broker to issue a certificate for any or all of
the whole shares held in your account, but you will be charged a
certificate fee by the Broker.
The shares so issued will be registered in your name (or jointly with
a co-owner) and mailed to you.
Termination
You may terminate your participation in the Plan at any time. If you
terminate your participation in the Plan, your account with the Broker will
remain open unless you choose to close it. You can continue to buy and
sell securities through your brokerage account, but different transaction
fees and an annual account fee will apply. If you wish to close your
account, you should instruct the Broker to:
(1) Issue a certificate to you for the whole shares and sell any
fraction in your account; or
(2) Sell all shares and any fraction in your account. Promptly after
the sale, the Broker will remit by check the total proceeds from the sale
less the normal commission and transfer taxes that may be applicable. A
brokerage confirmation of the transaction will also be mailed.
Continuation of the Plan
The Plan became effective on or about January 1, 1997. The Company
has reserved 287,513 shares of Common Stock (as adjusted for the 3-for-2
share stock split which became effective on July 15, 1997) held in its
treasury to be purchased from the Company and sold pursuant to the Plan.
Upon the sale of all 287,513 shares, the Plan will terminate, unless
extended by the Company. The Company reserves the right to amend or
terminate the Plan at any time. Upon termination of the Plan, you will
have the same options for the disposition of your shares as if you had
elected to terminate your participation in the Plan.
Adjustments
The Board may make or provide for such adjustments in the number or
kind of shares of the Common Stock that may be sold under the Plan as the
Board in its sole discretion may determine is equitably required in
connection with (a) any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company,
(b) any merger, consolidation, spin-off, split-off, spin-out, split-up,
separation, reorganization, liquidation, or other distribution of assets or
issuance of rights or warrants to purchase Common Stock, or (c) any other
corporate transaction or event having an effect similar to any of the
foregoing.
Conflicts
In the event of any conflict or inconsistency between the provisions
of this Plan and any other document, the provisions of the Plan shall
govern with respect to the matter.
Administration
This Plan will be administered by the Compensation Committee of the
Board. The Compensation Committee currently consists of three members of
the Board who are selected annually by the Board and may be removed at any
time by action of the Board. The Compensation Committee will have
authority to interpret the Plan, to prescribe, amend and rescind rules
relating to it, and to make all other determinations deemed necessary or
advisable in administering the Plan. The Compensation Committee's
determination with respect to any matter pertaining to the Plan will be
final, absent manifest error. No trust or fiduciary relationship with the
Company is created hereby. No officer, director or employee of the Company
shall be liable to any person for any action taken or omitted in connection
with the administration of this Plan, nor shall the Company be liable to
any such person for any such omission.
Employment Rights
Neither the establishment of this Plan nor the status of an employee
as a participant shall give any participant any right to be retained in the
employ of the Company.
Governing Law
The construction, validity and operation of the Plan will be governed
by the laws of the State of Arkansas.
Assignment
Participants may not assign or hypothecate their interests in the
Plan.
How to Participate
If you desire to participate in the Plan, complete the accompanying
Plan Enrollment Form as indicated and give it to your site or office
benefits coordinator or mail it to the Company at the following address:
Human Resources Department
Employee Stock Purchase Plan
Fairfield Communities, Inc.
11001 Executive Center Drive
Little Rock, Arkansas 72211
FAIRFIELD COMMUNITIES, INC.
Second Amended and Restated 1992 Warrant Plan
Fairfield Communities, Inc., a Delaware corporation (the
"Corporation") hereby establishes this Second Amended and Restated 1992
Warrant Plan (this "Plan") effective as of September 1, 1992.
1. Purpose. The purpose of this Plan is to attract and retain
Directors of the Corporation and officers and other key executives and
employees of the Corporation and its Subsidiaries.
2. Definitions. As used in this Plan, the following terms have the
following meanings when used herein with initial capital letters:
"Board" means the Board of Directors of the Corporation and, to
the extent of any delegation by the Board to a committee pursuant to
Section 8 of this Plan, such committee.
"Common Shares" means shares of the common stock, $.01 par value,
of the Corporation or any security into which such Common Shares may be
changed by reason of any transaction or event of the type referred to in
Section 6 of this Plan.
"Date of Grant" means the date specified by the Board on which a
grant of Warrants shall become effective (which date shall not be earlier
than the date on which the Board takes action with respect thereto).
"Market Value per Share" means any of the following, as
determined by the Board at the time of any such determination: (i) the
closing sale price per share of the Common Shares as reported in the United
States securities exchange on which the Common Shares are traded (the
"Exchange") for the trading day immediately preceding such date, or such
other date or dates as the Board of Directors may in its sole discretion
establish, or if there are no sales on such date, on the next preceding day
on which there were sales, (ii) the average (whether weighted or not) or
mean price, determined by reference to the closing sales prices, average
between the high and low sales prices, or any other standard for
determining price adopted by the Board, per share of the Common Shares as
reported in the Exchange or (iii) in the event that the Common Shares are
not listed for trading on an exchange, an amount determined in accordance
with standards adopted by the Board.
"Participant" means a person who is selected by the Board to
receive benefits under this Plan and who at the time is a Director of the
Corporation or an officer, executive or other employee of the Corporation
or any one or more of its Subsidiaries, or who has agreed to commence
serving in any of such capacities.
"Subsidiary" means a corporation, more than 50 percent of whose
outstanding shares or securities (representing the right to vote for the
election of directors) are, now or hereafter, owned or controlled, directly
or indirectly, by the Corporation.
"Warrants" means the warrants issued pursuant to Section 4 of
this Plan that entitle the holder thereof to purchase Common Shares.
"Warrant Price" means the purchase price payable upon exercise of
a Warrant.
3. Shares Available Under the Plan. Subject to adjustment as
provided in Section 6 of this Plan, the number of Common Shares that may be
issued or transferred upon the exercise of the Warrants shall not exceed in
the aggregate 1,399,000 shares. Such shares may be shares of original
issuance or treasury shares or a combination of the foregoing.
4. Warrants. The Board may from time to time and upon such terms and
conditions as it may determine, authorize the granting to Participants of
Warrants to purchase Common Shares. Each such grant may utilize any or all
of the authorizations, and shall be subject to all of the requirements,
contained in the following provisions:
(a) Each grant shall specify the number of Common Shares to
which it pertains.
(b) Each grant shall specify a Warrant Price per share, which
may be equal to or more than the Market Value per Share on the Date of
Grant.
(c) Each grant shall specify whether the Warrant Price shall be
payable (i) in cash or by check acceptable to the Corporation, (ii) by
the actual or constructive transfer to the Corporation of
nonforfeitable, unrestricted Common Shares already owned by the
Warrant holder having a value at the time of exercise equal to the
total Warrant Price, (iii) by a combination of such methods of payment
or (iv) such other consideration as the Board of Directors may in its
sole discretion prescribe.
(d) Any grant may provide for deferred payment of the Warrant
Price from the proceeds of sale through a bank or broker on the
exercise date of some or all of the shares to which such exercise
related.
(e) Successive grants may be made to the same Participant
whether or not any Warrants previously granted to such Participant
remain unexercised.
(f) Each grant shall specify the period or periods of continuous
service by the Warrant holder with the Corporation or any Subsidiary
which is necessary before the Warrants or installments thereof will
become exercisable and may provide for the earlier exercise of such
Warrants in the event of a change in control of the Corporation or
other similar transaction or event.
(g) Each grant of a Warrant shall be evidenced by an agreement
executed on behalf of the Corporation by any officer and delivered to
the Warrant holder and containing such terms and provisions,
consistent with this Plan, as the Board may approve.
5. Transferability. (a) Warrants granted under this Plan shall not
be transferable by a Warrant holder other than by will or the laws of
descent and distribution, except (in the case of a Participant who is not a
Director or officer of the Corporation) to a fully revocable trust of which
the Warrant holder is treated as the owner for federal income tax purposes.
Warrants shall be exercisable during the Warrant holder's lifetime only by
him or by his guardian or legal representative.
(b) The Board may specify at the Date of Grant that part or all
of the Common Shares that are to be issued or transferred by the
Corporation upon the exercise of a Warrant shall be subject to further
restrictions on transfer.
6. Adjustments. The Board may make or provide for such adjustments
in the numbers of Common Shares covered by outstanding Warrants granted
hereunder, in the prices per share applicable to such Warrants and in the
kind of shares covered thereby, as the Board may determine is equitably
required to prevent dilution or enlargement of the rights of Participants
that otherwise would result from (a) any stock dividend, stock split,
combination of shares, recapitalization or other change in the capital
structure of the Corporation, (b) any merger, consolidation, spin-off,
split-off, spin-out, split-up, reorganization, partial or complete
liquidation or other distribution of assets, issuance of rights or warrants
to purchase securities or (c) any other corporate transaction or event
having an effect similar to any of the foregoing. In the event of any such
transaction or event, the Board, in its discretion, may provide in
substitution for any or all outstanding awards under this Plan such
alternative consideration as it may determine to be equitable in the
circumstances and may require in connection therewith the surrender of all
awards so replaced. The Board may also make or provide for such
adjustments in the numbers of shares specified in Section 3 of this Plan as
the Board may determine is appropriate to reflect any transaction or event
described in this Section 6. The number of shares specified in Section 3
of this Plan has been adjusted for the 3-for-2 share split of the Common
Stock which became effective on July 15, 1997.
7. Withholding Taxes. To the extent that the Corporation is required
to withhold federal, state, local or foreign taxes in connection with any
benefit realized by a Participant or other person under this Plan, and the
amounts available to the Corporation for such withholding are insufficient,
it shall be a condition to the realization of such benefit that the
Participant or such other person make arrangements satisfactory to the
Corporation for payment of the balance of such taxes required to be
withheld, which arrangements (in the discretion of the Board) may include
relinquishment of a portion of such benefit. The Corporation and a
Participant or such other person may also make similar arrangements with
respect to the payment of any taxes with respect to which withholding is
not required.
8. Administration of the Plan. (a) This Plan shall be administered
by the Board, which may from time to time delegate all or any part of its
authority under this Plan to a committee of the Board, in accordance with
the By-Laws of the Corporation.
(b) The Board shall take such actions as are required to be taken
by it hereunder, may take the actions permitted to be taken by it
hereunder, and shall have the authority from time to time to interpret this
Plan and to adopt, amend and rescind rules and regulations for implementing
and administering this Plan. All such actions shall be in the sole
discretion of the Board, and when taken, shall be final, conclusive and
binding. Without limiting the generality or effect of the foregoing, the
interpretation and construction by the Board of any provision of this Plan
or of any agreement, notification or document evidencing the grant of
Warrants and any determination by the Board in its sole discretion pursuant
to any provision of this Plan or of any such agreement, notification or
document shall be final and conclusive. Without limiting the generality or
effect of any provision of the Certificate of Incorporation of the
Corporation, no member of the Board shall be liable for any such action or
determination made in good faith.
(c) The provisions of Section 4 shall be interpreted as
authorizing the Board, in taking any action under or pursuant to this Plan,
to take any action it determines in its sole discretion to be appropriate
subject only to the express limitations therein contained and no
authorization in such Section or other provision of this Plan is intended
or may be deemed to constitute a limitation on the authority of the Board.
(d) The existence of this Plan or any right granted or other
action taken pursuant hereto shall not affect the authority of the Board or
the Corporation to take any other action, including in respect of the grant
or award of any option, security or other right or benefit, whether or not
authorized by this Plan, subject only to limitations imposed by applicable
law as from time to time applicable thereto.
9. Amendments, Etc. (a) This Plan may be amended from time to time
by the Board, but without further approval by the stockholders of the
Corporation no such amendment shall increase the maximum number of shares
specified in Section 3 of this Plan (except that adjustments and additions
expressly authorized by this Plan shall not be limited by this provision).
(b) The Board may, with the concurrence of the affected Warrant
holder, cancel any agreement evidencing Warrants granted under this Plan.
In the event of such cancellation, the Board may authorize the granting of
new Warrants (which may or may not cover the same number of Common Shares
which had been the subject of the prior award) in such manner, at such
Warrant Price and subject to such other terms, conditions and discretions
as would have been applicable under this Plan had the canceled Warrants not
been granted.
(c) In case of termination of employment by reason of death,
disability or normal or early retirement, or in the case of hardship or
other special circumstances, of a Participant who holds a Warrant not
immediately exercisable in full, the Board may, in its sole discretion,
accelerate the time at which such Warrant may be exercised.
(d) This Plan shall not confer upon any Participant any right
with respect to continuance of employment or other service with the
Corporation or any Subsidiary, nor shall it interfere in any way with any
right the Corporation or any Subsidiary would otherwise have to terminate
such Participant's employment or other service at any time.
Amended and Restated by authority of the Board of Directors of
the Corporation through actions taken on September 29, 1993 and June 5,
1997.
FAIRFIELD COMMUNITIES, INC.
By: /s/ Marcel J. Dumeny
------------------------
Marcel J. Dumeny
Secretary
FAIRFIELD COMMUNITIES, INC.
FIRST AMENDED AND RESTATED 1997 STOCK OPTION PLAN
-------------------------------------------------
Fairfield Communities, Inc., a Delaware corporation (the "Company"),
hereby establishes this 1997 Stock Option Plan (the "Plan"), effective as
of March 7, 1997, as amended and restated pursuant to action taken by the
Compensation Committee of the Board of Directors of the Company on June 5,
1997, to reflect adjustments resulting from the 3-for-2 share split of the
Company's Common Stock which became effective on July 15, 1997, which
action was approved by the Board of Directors of the Company on June 5,
1997.
1. Purpose. The purpose of the Plan is to attract and retain the
best available talent and encourage the highest level of performance by
executive officers, key employees, directors, advisors and consultants,
and to provide them with incentives to put forth maximum efforts for the
success of the Company's business, in order to serve the best interests of
the Company and its stockholders. All options granted under the Plan are
intended to be nonstatutory stock options.
2. Definitions. The following terms, when used in the Plan with
initial capital letters, will have the following meanings:
(a) "Act" means the Securities Exchange Act of 1934, as in
effect from time to time.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as in
effect from time to time.
(d) "Common Stock" means the common stock, par value $.01 per
share, of the Company or any security into which such common stock
may be changed by reason of any transaction or event of the type
described in Paragraph 6.
(e) "Compensation Committee" means the Compensation Committee
which is a committee of the Board whose members are appointed by the
Board from time to time. All of the members of the Compensation
Committee, which may not be less than two, are intended at all times
to qualify as "outside directors" within the meaning of Section
162(m) of the Code and as "Non-Employee Directors" within the meaning
of Rule 16b-3; provided, however, that the failure of a member of
such committee to so qualify shall not be deemed to invalidate any
Stock Option granted by such committee.
(f) "Date of Grant" means the date specified by the
Compensation Committee or the Board, as applicable, on which a grant
of Stock Options will become effective (which date will not be
earlier than the date on which such committee or the Board takes
action with respect thereto).
(g) "Market Value per Share" means the fair market value per
share of the Common Stock on the Date of Grant as determined by the
Compensation Committee or the Board, as applicable.
(h) "Option Price" means the purchase price per share payable
on exercise of a Stock Option.
(i) "Participant" means a person who is selected by the
Compensation Committee or the Board, as applicable, to receive Stock
Options under Paragraph 5 of the Plan and who is at that time (i) an
executive officer or other key employee of the Company or any
Subsidiary, (ii) an advisor or consultant to the Company or any
Subsidiary, or (iii) a member of the Board.
(j) "Rule 16b-3" means Rule 16b-3 under Section 16 of the Act,
as such Rule is in effect from time to time.
(k) "Stock Option" means the right to purchase a share of
Common Stock upon exercise of an option granted pursuant to
Paragraph 5.
(l) "Subsidiary" means any corporation, partnership, joint
venture or other entity in which the Company owns or controls,
directly or indirectly, not less than 50% of the total combined
voting power or equity interests represented by all classes of stock
issued by such corporation, partnership, joint venture or other
entity.
3. Shares Available Under Plan. The shares of Common Stock which
may be issued under the Plan will not exceed in the aggregate 825,000
shares, subject to adjustment as provided in this Paragraph 3. Such
shares may be shares of original issuance or treasury shares or a
combination of the foregoing.
(a) Any shares of Common Stock which are subject to Stock
Options that are terminated unexercised, forfeited or surrendered or
that expire for any reason will again be available for issuance under
the Plan.
(b) The shares available for issuance under the Plan also will
be subject to adjustment as provided in Paragraph 6.
4. Individual Limitation on Stock Options. The maximum aggregate
number of shares of Common Stock with respect to which Stock Options may
be granted to any Participant during any calendar year will not exceed
150,000 shares.
5. Grants of Stock Options. The Compensation Committee or the
Board may from time to time authorize grants to any Participant of Stock
Options upon such terms and conditions as such committee or the Board, as
applicable, may determine in accordance with the provisions set forth
below.
(a) Each grant will specify the number of shares of Common
Stock to which it pertains.
(b) Each grant will specify the Option Price, which will not be
less than 100% of the Market Value per Share on the Date of Grant.
(c) Each grant will specify whether the Option Price will be
payable (i) in cash or by check acceptable to the Company, (ii) by
the transfer to the Company of shares of Common Stock owned by the
Participant for at least six months (or, with the consent of the
Compensation Committee or the Board, as applicable, for less than six
months) having an aggregate fair market value per share at the date
of exercise equal to the aggregate Option Price, (iii) with the
consent of the Compensation Committee or the Board, as applicable, by
authorizing the Company to withhold a number of shares of Common
Stock otherwise issuable to the Participant having an aggregate fair
market value per share on the date of exercise equal to the aggregate
Option Price or (iv) by a combination of such methods of payment;
provided, however, that the payment methods described in clauses (ii)
and (iii) will not be available at any time that the Company is
prohibited from purchasing or acquiring such shares of Common Stock.
Any grant may provide for deferred payment of the Option Price from
the proceeds of sale through a bank or broker of some or all of the
shares to which such exercise relates.
(d) Successive grants may be made to the same Participant
whether or not any Stock Options previously granted to such
Participant remain unexercised.
(e) Each grant will specify the required period or periods (if
any) of continuous service by the Participant with the Company or any
Subsidiary and/or any other conditions to be satisfied before the
Stock Options or installments thereof will become exercisable, and
any grant may provide, or may be amended to provide, for the earlier
exercise of the Stock Options in the event of a change in control of
the Company (as defined in the stock option agreement evidencing such
grant or in any agreement referred to in such stock option agreement)
or in the event of any other similar transaction or event.
(f) Each Stock Option granted pursuant to this Paragraph 5 may
be made subject to such transfer restrictions as the Compensation
Committee or the Board, as applicable, may determine.
(g) Each grant will be evidenced by a stock option agreement
executed on behalf of the Company by the Chief Executive Officer (or
another officer designated by the Compensation Committee or the
Board, as applicable) and delivered to the Participant and containing
such further terms and provisions, consistent with the Plan, as such
committee or the Board, as applicable, may approve.
6. Adjustments. The Compensation Committee or the Board will make
or provide for such adjustments in the maximum number of shares specified
in Paragraph 3 and Paragraph 4, in the number of shares of Common Stock
covered by outstanding Stock Options granted hereunder, in the Option
Price applicable to any such Stock Options, and/or in the kind of shares
covered thereby (including shares of another issuer), as such committee or
the Board, as applicable, in its sole discretion, exercised in good faith,
may determine is equitably required to prevent dilution or enlargement of
the rights of Participants that otherwise would result from any stock
dividend, stock split, combination of shares, recapitalization or other
change in the capital structure of the Company, merger, consolidation,
spin-off, reorganization, partial or complete liquidation, issuance of
rights or warrants to purchase securities or any other corporate
transaction or event having an effect similar to any of the foregoing. In
the event the Compensation Committee disagrees with the Board with respect
to the foregoing adjustments, the Board's determination will be final and
conclusive. Any fractional shares resulting from the foregoing
adjustments will be eliminated.
7. Withholding of Taxes. To the extent that the Company is
required to withhold federal, state, local or foreign taxes in connection
with any benefit realized by a Participant under the Plan, or is requested
by a Participant to withhold additional amounts with respect to such
taxes, and the amounts available to the Company for such withholding are
insufficient, it will be a condition to the realization of such benefit
that the Participant make arrangements satisfactory to the Company for
payment of the balance of such taxes required or requested to be withheld.
In addition, if permitted by the Compensation Committee or the Board, a
Participant may elect to have any withholding obligation of the Company
satisfied with shares of Common Stock that would otherwise be transferred
to the Participant on exercise of the Stock Option.
8. Administration of the Plan.
(a) The Plan will be administered by the Compensation Committee
and the Board.
(b) The Compensation Committee and the Board have the full
authority and discretion to administer the Plan and to take any
action that is necessary or advisable in connection with the
administration of the Plan, including without limitation the
authority and discretion to interpret and construe any provision of
the Plan or of any agreement, notification or document evidencing the
grant of a Stock Option. The interpretation and construction by the
Compensation Committee or the Board, as applicable, of any such
provision and any determination by the Compensation Committee or the
Board pursuant to any provision of the Plan or of any such agreement,
notification or document will be final and conclusive; provided, that
in the event the Compensation Committee disagrees with the Board with
respect to such interpretation, construction or determination, the
Board's determination will be final and conclusive. No member of the
Compensation Committee or the Board will be liable for any such
action or determination made in good faith.
(c) Notwithstanding any provision of the Plan to the contrary,
the Compensation Committee will have the exclusive authority and
discretion to take any action required or permitted to be taken under
the provisions of Paragraph 6, Paragraph 8(a), Paragraph 8(b),
Paragraph 9(a) and Paragraph 9(b) with respect to Stock Options
granted under the Plan that are intended to comply with the
requirements of Section 162(m) of the Code.
9. Amendments, Etc.
(a) The Compensation Committee or the Board, as applicable,
may, without the consent of the Participant, amend any agreement
evidencing a Stock Option granted under the Plan, or otherwise take
action, to accelerate the time or times at which the Stock Option may
be exercised, to extend the expiration date of the Stock Option, to
waive any other condition or restriction applicable to such Stock
Option or to the exercise of such Stock Option, to reduce the
exercise price of such Stock Option, to amend the definition of a
change in control of the Company (if such a definition is contained
in such agreement) to expand the events that would result in a change
in control of the Company and to add a change in control provision to
such agreement (if such provision is not contained in such agreement)
and may amend any such agreement in any other respect with the
consent of the Participant.
(b) The Plan may be amended from time to time by the Board or
any duly authorized committee thereof. In the event any law, or any
rule or regulation issued or promulgated by the Internal Revenue
Service, the Securities and Exchange Commission, the National
Association of Securities Dealers, Inc., any stock exchange upon
which the Common Stock is listed for trading, or any other
governmental or quasi-governmental agency having jurisdiction over
the Company, the Common Stock or the Plan, requires the Plan to be
amended, or in the event Rule 16b-3 is amended or supplemented (e.g.,
by addition of alternative rules) or any of the rules under
Section 16 of the Act are amended or supplemented, in either event to
permit the Company to remove or lessen any restrictions on or with
respect to Stock Options, the Compensation Committee and the Board
each reserves the right to amend the Plan to the extent of any such
requirement, amendment or supplement, and all Stock Options then
outstanding will be subject to such amendment.
(c) The Plan may be terminated at any time by action of the
Board. The termination of the Plan will not adversely affect the
terms of any outstanding Stock Option.
(d) The Plan will not confer upon any Participant any right
with respect to continuance of employment or other service with the
Company or any Subsidiary, nor will it interfere in any way with any
right the Company or any Subsidiary would otherwise have to terminate
a Participant's employment or other service at any time.
FAIRFIELD COMMUNITIES, INC.
By: /s/ J. W. McConnell
-----------------------------------------
J. W. McConnell
President and Chief Executive Officer
Exhibit 11
----------
FAIRFIELD COMMUNITIES, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ --------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average shares:
Shares issued 19,275,332 17,407,589 19,054,999 17,337,946
Estimated increase in
shares outstanding due
to allowed claims
exceeding $85 million (1) - 280,500 187,000 302,393
Less treasury stock (2,305,115) (2,395,295) (2,318,076) (2,395,295)
Net effect of dilutive
warrants based on the
treasury stock method 1,038,066 1,069,647 1,030,815 945,546
---------- ---------- ---------- ----------
Total weighted average shares
outstanding 18,008,283 16,362,441 17,954,738 16,190,590
========== ========== ========== ==========
Net earnings $8,574,000 $5,213,000 $19,876,000 $12,045,000
========== ========== =========== ===========
Net earnings per share $0.48 $0.32 $1.11 $0.74
===== ===== ===== =====
</TABLE>
(1) On June 30, 1997, the bankruptcy court approved a settlement
agreement between the Company and the county and property owners'
association for its Pagosa Springs, Colorado resort location. Based on
the terms of the settlement, the Company subsequently issued 280,500
shares of its common stock. The Company previously estimated the total
number of shares which would be issued in connection with this claim at
approximately 1,020,000 shares. As a result, the number of contingent
shares included in the computation of earnings per share for prior
periods was reduced by approximately 740,000 shares, resulting in an
increase in earnings per share of $.02 and $.03 per share for the three
and nine month periods ended September 30, 1996, respectively.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Registrant's September 30, 1997 10-Q and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 18822
<SECURITIES> 0
<RECEIVABLES> 202278
<ALLOWANCES> 15695
<INVENTORY> 50379
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 298561
<CURRENT-LIABILITIES> 0
<BONDS> 81774
0
0
<COMMON> 193
<OTHER-SE> 156547
<TOTAL-LIABILITY-AND-EQUITY> 298561
<SALES> 140328
<TOTAL-REVENUES> 152512
<CGS> 43236
<TOTAL-COSTS> 53494
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 5524
<INTEREST-EXPENSE> 3822
<INCOME-PRETAX> 33049
<INCOME-TAX> 13173
<INCOME-CONTINUING> 19876
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19876
<EPS-PRIMARY> 1.11
<EPS-DILUTED> 0
</TABLE>
